Regional forums on PRSPs
As the international conference on poverty reduction strategies gets under way in Washington on January 14-17, it draws heavily on a series of regional forums that were held in Africa, Asia, Latin America, and Eastern Europe in recent months. The aim of the conference is to enable participants from all interested countries and institutions to exchange views on the achievements and problems with the IMF’s and World Bank’s new approach to fighting poverty.
About two years ago, the two institutions revamped their efforts to help low-income countries as part of a renewed effort on many fronts—including reducing the burden of external debt, urging rich countries to lower the barriers to poor countries’ exports, and calling for increased donor aid and technical assistance. One of the chief products of this has been a refocusing of lending decisions around national poverty reduction strategy papers (PRSPs), which more than 40 countries are now developing and implementing.
The PRSP process is succeeding in making poverty reduction the central focus of policy development and in increasing a sense of country ownership.
What sets the PRSP apart from previous poverty reduction strategies is not so much its goal as its means. The PRSP process emphasizes poor country involvement in identifying root causes of poverty and in “owning” its proposed reforms. The debate and consultation that lead up to a formal PRSP tap a broad cross-section of society, striving especially to incorporate the views of the poor. To increase efficiency, the PRSP also seeks to improve coordination among the country’s development partners (including bilateral donors and multilateral development banks) and focuses the international community’s analytical, advisory, and financial resources on achieving concrete results.
It was the very novelty of this approach that prompted the IMF and World Bank Executive Boards to call for an early evaluation of country experience with it. What worked well needed to be shared; what didn’t work needed to be fixed. This evaluation, under way since July 2001, began with internal reviews but then moved on to extensive external consultations. IMF and Bank staff have consulted with representative poor countries implementing PRSPs, bilateral donors and multilateral development banks and institutions assisting the poorest countries, and representatives of civil society organizations, both North and South, involved in country development work. These consultations have included written evaluations from the country perspective and regional forums.
Although the January conference will be the high point of the external evaluation, it is not the final step. Bank and IMF staff will marry the results of their internal analyses with the external evaluations and produce a paper for their respective Executive Boards summarizing the variety of views put forward and suggesting changes. The Boards are expected to consider the paper early in March 2002, in time to take the findings to the UN Financing for Development Conference in Mexico, March 18-22, and then present the results to the meetings of the IMFC and Development Committee in April.
To lay the groundwork for the January conference, the IMF and the World Bank organized forums in Senegal in September; Hungary in November; and Bolivia and Vietnam in December. The Senegal forum drew the largest number of participants—267 representatives from 32 PRSP or pre-PRSP African countries. But each of the forums had a similar composition of participants, with government officials providing more than half, and the remainder including parliamentarians, civil society, and the private sector. International organizations, such as the United Nations Development Program, the World Bank, and the IMF; regional institutions; and bilateral aid agencies also attended.
Openness and frankness characterized the discussions. Although the Bank and the IMF were the titular organizers, country representatives took the lead, exchanging accounts of their experiences—both good and bad—with their PRSPs. With some countries, such as Uzbekistan, East Timor, and Guatemala, just starting to develop their strategies and others, among them Bolivia, Uganda, and Tanzania, having several years of experience, there was much opportunity for country-to-country learning. Bank and IMF staff mostly listened—leading many country representatives to comment wryly that they had never seen the staff so quiet.
Often, it seemed more questions were asked than answered, but the forums were meant to put issues on the table and seek input. Were the voices of the poor truly being heard? Who really speaks for the poor? What are the biggest obstacles to poverty alleviation? What tools do we need to diagnose and track poverty? Will countries alter their budgeting process and tracking of government spending to ensure that PRSP priorities are acted upon? Is the PRSP a one-off exercise with no follow-through? Are the policies included in the PRSPs the right ones? Are the economic growth targets too ambitious or not ambitious enough? How should a country set priorities? Should donor support take the form of direct budget support rather than aid channeled through donor-funded and -controlled projects? How could donors be assured that aid released to country budgets went to PRSP budgets?
Despite the seeming cacophony of ideas, several points of consensus emerged:
- The PRSP process is succeeding in making poverty reduction the central focus of policy development and in increasing a sense of country ownership.
- The PRSP process is also broadening participation in the preparation of poverty reduction strategies, sharpening the diagnosis of the nature and causes of poverty, and underscoring the difficult policy choices countries face.
- PRSPs have political dimensions and must be rooted in political realities. Their preparation should not undermine existing political structures.
- Economic growth is necessary for poverty reduction, and sustainable growth requires macroeconomic stability. But targeted programs and policies must also ensure that poor households benefit from economic growth.
- The donor community has strongly embraced the principles of the PRSP approach and is increasingly linking its financial assistance strategies to it.
International poverty conference
These thoughts now feed into the international poverty conference in Washington, which will be attended by more than 300 participants representing PRSP countries, civil society organizations, the donor community, and multilateral organizations. The regional forums highlighted areas of consensus and concern across countries, facilitating the design of the conference agenda. The topics of discussion mirror the agenda for the regional forums: the preparation, content, and use of PRSPs.
How PRSPs are prepared. PRSPs, which governments prepare and monitor through a participatory process, involve a great number and wide range of people and have established a presumption of openness and transparency in the formulation of anti-poverty policy. Early experience with the process suggests that civil society’s efforts have affected the content of PRSPs, particularly on issues of social exclusion and bad governance and on specific policy issues—for example, the elimination of school fees in Tanzania. Despite these achievements, the PRSP process has room to improve its inclusiveness and its organization and to develop a stronger and more effective role for civil society. The conference will examine options for doing so.
A second area of concern is how to achieve a more appropriate balance between the speed and the quality of the first full PRSPs. It was clear, from the onset, that PRSPs would take time to develop, but the preparation period has proved longer than expected. This poses a particular problem for the heavily indebted poor countries (HIPCs) that are benefiting from debt relief and require one year’s implementation of a full PRSP for debt relief to become irrevocable. Some in the regional forums felt that this requirement pushed countries to rush their PRSP process. The conference will consider ways to improve the current framework to ensure an effective link between debt relief and poverty reduction.
Early experience with the process suggests that civil society’s efforts have affected the content of PRSPs, particularly on issues of social exclusion and bad governance and on specific policy issues.
Another issue is posed by the unique problems that conflict-affected countries confront. These countries often lack the capacity to organize an effective participatory process and face highly specialized and urgent needs, such as resettlement, demining, and demobilizing and reintegrating former combatants. The conference will discuss how the PRSP approach could be adapted to make the process more useful for conflict-affected countries.
What PRSPs contain. Each PRSP is expected to contain diagnostics on the causes of and trends in poverty, quantitative targets for poverty reduction, and short-term indicators for monitoring progress toward those targets. Most countries have made good progress in putting together this information. The process of gathering the data has improved communication and the sharing of information within the government, and generated a stronger sense of national responsibility for data collection and analysis. Important gaps in poverty data have also been identified and, with donor assistance, are beginning to be addressed. Nonetheless, the compilation and analysis of data remain a tall order for PRSP countries with generally limited capacities. The conference will discuss specific measures to improve data and diagnostics, and strengthen monitoring and evaluation capacity.
PRSPs are expected to identify a set of priority public actions for poverty reduction over a three-year horizon within the context of a stable macroeconomic framework and a sound public expenditure program. The first set of PRSPs demonstrated an impressive ability to consolidate policy actions in many different areas in a single document. These actions were not always clearly linked, however, to a comprehensive diagnosis of poverty or to an analysis of the impact of these policies on poverty.
Countries have found it difficult to set priorities in the face of uncertainties about their overall growth strategy, the cost of various actions, and the effective budget constraint under which they would operate. Some countries pointed to unrealistically high growth rates in the macroeconomic program—something they attributed either to weakness in the analysis of likely sources of growth or to changes in world economic conditions. Other countries found it hard to treat governance concerns consistently. The conference will seek ways to improve the clarity and coherence of public actions and prioritization in the PRSPs.
Participants in the regional forums endorsed the idea that the PRSP could serve as a unique reference document from which donors could design their own lending programs.
PRSP policies are to be framed by a public expenditure program, preferably cast as a three-year framework. Participants in the regional forums underscored the importance of good budgetary planning and execution to ensure that government money goes to poverty-reducing activities and to garner continued donor support. But public expenditure mechanisms in PRSP countries are often too weak to support a meaningful presentation of a medium-term framework. Also, budget allocations and execution are different, and sometimes budgetary information does not include donor-financed projects. Although the Bank, the IMF, and other donors devote considerable technical assistance to improving public expenditure management systems, the conference will be asked to consider what might be done to accelerate these efforts and ensure that the PRSPs contain adequate budgetary information on both planning and execution.
How PRSPs are used. Forum participants emphasized how critical a tool the PRSP can be in ensuring the coherence of a government’s policy program across government agencies and over time. But for the PRSP to be effective in this regard, it must be integrated into a government’s overall decision-making process. While this is obvious in theory, in practice countries have found it difficult. Some countries began elaborating PRSPs in parallel with other multiyear planning processes, such as budgets; often, ad hoc committees, separated from line ministry decision-making processes, prepared the PRSPs. The conference will consider what steps can be taken to better integrate PRSPs with other governmental decision-making processes.
The PRSP process, and the document itself, is intended to promote stronger partnerships between donors and countries and to improve donor coordination. Participants in the regional forums endorsed the idea that the PRSP could serve as a unique reference document from which donors could design their own lending programs. But the modalities that donors use to align their lending bear further consideration. For example, some governments expressed concern about overly demanding reporting requirements associated with lending operations in support of the PRSP, while donors indicated they were hesitant to expand program lending for PRSPs until better financial management systems were in place. Some complained that conditions attached to loans remained overly burdensome, while others argued that such conditionality was necessary to ensure proper use of donor funds. These are only a few of the issues that the conference will take up in an effort to improve country-donor and donor-donor coordination.
Finally, while regional participants rejected the view that the PRSP is a once-and-for-all exercise, there remains the question of what types of monitoring and updating will be needed to ensure that the implementation of the PRSP remains on track and that country strategies remain relevant.
For more information on the conference—including the agenda and an issues paper—ssee the IMF’s website (www.imf.org). For more info on the PRSP review, see www.worldbank.org/poverty/strategies/review/extrev.htm).