Sustainable and equitable development can only be achieved if we can manage to eliminate the extreme poverty that exists in the world. Poverty reduction is therefore one of the key tasks of development cooperation in the 21st century. For the past five years, national Poverty Reduction Strategies (PRSs) have been the main approach to poverty reduction.

The high debt level of heavily indebted poor countries, or HIPCs, is one of the main obstacles to their development. The extended debt relief initiative, also known as the HIPC initiative, defined serious poverty reduction efforts as a criterion for debt relief. Since then, the countries concerned have been developing national Poverty Reduction Strategy Papers (PRSPs) to lift their populations out of poverty. These papers are designed to present the policy measures and activities a country intends to undertake to alleviate poverty on a sustainable basis. Since 2000, a total of 45 countries have prepared a PRSP. Participatory preparation of a PRS is in itself a huge challenge, and many small countries are pushed to their limits when it comes to actually implementing the measures contained in the PRS. Institutional capacity building and development is therefore the key element of German support for PRSs. GIZ is currently helping 26 countries to implement their PRS effectively.