The International Monetary Fund’s Poverty Reduction and Growth Facility (PRGF) is supposed to provide policy flexibility and Poverty and Social Impact Analysis (PSIA) of key reforms to ensure it is focused on poverty reduction. In practice, PRGFprogrammes globally have failed to incorporate either of these objectives. This paper shows that in the PRGF the IMF continues to use the same rigid economic models and fails to recognize the different macroeconomic policy options that exist. It then provides examples of the considerable work going on outside the IMF on developing techniques for PSIA of macroeconomic frameworks, which the fund has failed to take an active role in. The paper concludes that unless the IMF takes clear steps to ensure policy flexibility and PSIA as soon as possible the much hailed poverty focus of the PRGF will become largely discredited.