What Role for the Multilateral Institutions, Donors, and NGOs in the New Framework for Poverty Eradi

Briefing by: Angela Wood

Bretton Woods Project

November 1999

This paper considers how the relationships and roles of intenational and national non-governmental organisations, donors and the multilateral institutions are likely to change as a result of new initiatives to put poverty reduction and country ownership at the centre of the development process.

Introduction

One of the highlights of this year’s annual meetings of the World Bank and IMF was watching Mr Camdessus, Managing Director of the IMF, producing from his top pocket a small, grey card on which was printed the poverty reduction and social goals which comprise the International Development Targets. Watching this spectacle, you could be forgiven for thinking you had accidently fallen down a rabbit hole into Wonderland. Indeed, at this point some NGOs are considering packing up their bags and moving on to new territory – possibly the WTO.

This is just one indication that the IMF is signalling that it is prepared to take poverty reduction and social policy seriously. The IMF has also renamed the Enhanced Structural Adjustment Facility as the Poverty Reduction and Growth Facility and has announced the replacement of the Policy Framework Paper with the Poverty Reduction Strategy Paper (PRSP). At this stage it is only possible to guess at what changes this will bring in practice. However, NGOs are concerned that it should not lead the Fund deeper into prescribing social policies, instead the IMF should limit the negative social implications of its macroeconomic agenda.

Similarly, the World Bank, in the context of the severe social crisis caused by the financial crash in East Asia, has launched the Comprehensive Development Framework and the Social Principles. Both initiatives reflect greater recognition of the links between economic, structural and social policies for achieving long-term reductions in poverty and improvements in peoples’ lives, and the need to put poverty reduction at the “front and centre” of the agenda.

“We cannot adopt a system in which the macroeconomic and financial is considered apart from the structural, social and human aspects, and vice versa. Integration of each of these subjects is imperative at the national level and among the global players.” James Wolfensohn, 1999.

“Strong social policies that address poverty at its roots lay the foundation for sustained economic growth.” Michel Camdessus, 1999.

“Sustainable macroeconomic conditions are absolutely necessary to achieve progress in poverty reduction and improvement in social conditions. At the same time, good social policy will foster and sustain economic growth. Thus, there should be explicit assessment of any trade-offs affecting the poor in the design of all macroeconomic and financial policy reforms – particularly in times of crisis.” Report to the Development Committee on an Approach to Developing Principles and Good Practices in Social Policy, April 1999.

“Ownership matters. Countries and their governments must be in the driver’s seat, and, in our experience, the people must be consulted.” James Wolfensohn 1998.

These initiatives are important because they are the product of many years campaigning by NGOs and others who have been concerned with both the content of IMF and Bank programmes and their impacts on the poor, and how the IMF and World Bank have helped to undermine democratic processes in developing countries. In particular, the demise of the Enhanced Structural Adjustment Facility and the new poverty focus of the IMF can be clearly linked to the significant efforts of the global Jubilee 2000 debt campaign.

By putting countries “in the driving seat” they signal a potential for more flexibility at the Bank and the Fund and, in particular, an opportunity for greater involvement of other specialists in the development arena in advising governments and civil society.

The first part of this paper briefly looks at the linkages between social policy and these new initiatives. Part 2 focuses on the PRSP as a mechanism for operationalising the CDF and taking forward the original aims of the Social Principles. I propose to take the process of developing PRSPs as a framework for discussing how relations between international non-governmental organisations (INGOs), national non-governmental organisations (NGOs), bilateral donors and multilateral institutions are likely to change in the light of new processes and the implications for the role each plays, particularly in terms of the policy dialogue.

Part 1: Linking macroeconomic with structural and social objectives

The Comprehensive Development Framework

The Comprehensive Development Framework has 3 key features, it is based on:

• coherence between economic, social and structural policies with the understanding that their success and impact are inter-related;
• encouraging government leadership of the agenda setting and development process, which should also involve civil society, the private sector and parliaments;
• coordination of development partners.

The framework offers important steps forward. The CDF is the Bank’s answer to the problem that conditionality can not effectively induce sustainable policy reforms and that adjustment programmes have not led to poverty eradication because economic tools have taken precedent over social objectives. The CDF aims to redress the balance between macroeconomic and structural and social policies by establishing a framework for understanding the linkages between them.

“What is key is that the two parts, namely macroeconomic aspects on the one side and the social, structural and human on the other, must be considered together.” Wolfensohn, 1999 p5.

The CDF also responds to the need to ensure donors are better coordinated to make the best use of limited aid resources and that recipient governments are not overburdened with reporting and monitoring requirements.

Putting the CDF into practice will take considerable effort:

• donors will be expected to loosen control of the policy agenda and become more cooperative in their relations with governments and each other. This will be particularly important for the Bank and the IMF;
• governments will be required to be more inclusive, accountable and transparent in their policy setting – drawing on the input of the wider government, civil society and the private sector;
• civil society groups will have to strengthen themselves to demonstrate accountability and ensure that they are able to adequately represent wide-ranging views and needs and deliver effective inputs into policy making and monitoring processes. This will require considerable capacity building and network strengthening.

The CDF approach is now being tested in 13 countries: Bolivia, Cote d’Ivoire, Dominican Republic, Ethiopia, Eritrea, Ghana, Jordan, Kyrgyz Republic, Morocco, Romania, Uganda, Vietnam, West Bank and Gaza.

The Social Principles

The Social Principles are a response from the international community to the social crisis triggered by the financial collapse in South East Asia. Like the codes on monetary policy and fiscal transparency the Social Principles are intended to establish guidelines for good social policy which all countries should be required to implement. They are important because they acknowledge that:

• economic growth by itself is not sufficient to ensure sustainable livelihoods; and
• IMF policies to address the financial crisis had significant, negative social impacts which will be longer lasting than the economic impacts.

The Bank was given the task of drawing up the principles but this task has now been handed over to the UN and is being taken forward through the Copenhagen +5 process. The Bank is working on establishing best practices for implementing them.

Initially the principles offered hope that:

• they would establish certain social policy guidelines (ie conditions) that the Bank and Fund would have to comply with when designing adjustment programmes; and
• that governments (in both developed and developing countries) would be encouraged to develop good social systems to protect vulnerable people in both normal periods and times of crisis.

The principles could have been a useful mechanism for ensuring that the impacts of macroeconomic prescriptions were fully considered and consistent with social objectives, as such they could have been helpful in operationalising the CDF; and possibly a useful resource for governments designing poverty reduction strategies. However, the process of developing the principles has stalled, largely because some governments do not necessarily agree with certain principles, such as core labour standards, and they are wary that the end result could be more conditionality in Bank and Fund programmes. Moreover, the Bank’s contribution has narrowed to a focus on best practice for social policy in times of crisis.

At the moment the future of this initiative is uncertain. In terms of the World Bank, it seems likely that this exercise will simply lead to a statement of policy to guide it when addressing social issues in crisis situations. This severely limits the scope of the principles to prioritise social policy in macroeconomic decision making. It is not clear that the IMF will be required to adhere to the principles.

How the Social Principles will be taken forward at the Copenhagen +5 Social Summit is also unclear. One concrete measure which could be taken is to enforce the eighth commitment of the Copenhagen platform established at the 1995 Copenhagen Summit for Social Development. This is a commitment to ensuring that social development goals are included in structural adjustment programmes. Also, even if a “new” set of principles is not established, the summit could be an opportunity for binding the IMF and World Bank to respect already established UN conventions and platforms.

Linking Debt Reduction to Poverty Eradication: the Case for the PRSP

International and national NGOs have been instrumental in linking debt relief to poverty reduction goals. In particular, they argued that debt relief was essential to provide governments with more resources for the social sectors. Secondly, they called for debt relief to be delinked from the IMF‘s structural adjustment programmes (a country must undertake several years of uninterrupted adjustment in order to qualify for HIPC debt reduction); arguing that the IMF‘s ESAF programmes were inappropriate for tackling poverty and probably made matters worse for many vulnerable groups. ESAF programmes are unable to address poverty issues because:

• their objectives are growth and balance of payments stability and they are not required to address distributional or social impacts;
• social policies cannot simply be grafted on to economic programmes, social and macro policies need to be fully integrated and coherent but the IMF does not have the expertise to do this.

INGOs and NGOs have argued that the conditions attached to debt reduction should be poverty focused and mechanisms must be established to ensure debt relief resources are used appropriately. Several mechanisms have been proposed, for example:

• Oxfam has called for a “human development window” through which resources from debt relief could be channelled into poverty oriented programmes. Governments which commit to poverty reduction programmes should be eligible for deeper, quicker debt reduction; the resources freed from debt reduction should then be channelled into a fund for implementing the programme. Uganda is an example of how this can work in practice. The Ugandan government developed the Poverty Eradication Action Plan and established the Poverty Action Fund to finance it. (Oxfam International 1998)
• CAFOD has advocated that debt relief should be based on a “human development approach”. This approach starts from the assumption that priority should be given to meeting basic human needs (ie health and education services). Debt service obligations should be calculated after money has been set aside for these needs. Governments and civil society should be involved in allocating debt reduction savings to these areas. (CAFOD 1998)
• Christian Aid has proposed that eligibility for debt reduction should be based upon a few key economic indicators; whether or not a country respects the freedoms of speech and association (which are necessary if a programme is to be owned by civil society and not just the government); and a poverty reduction plan developed through a national, consultative process. (Christian Aid 1999a)
• Southern NGOs in the “Lusaka Declaration” have called for conditions to be defined by southern civil society not by those outside the country. They also insist that debt relief resources must be monitored by NGOs and civil society, possibly in collaboration with parliaments.

The case for linking debt relief and poverty reduction objectives was accepted by donors at the G8 Koln summit. The modalities for putting this into practice were established at the Annual Meetings of the Bank and IMF with the creation of the Poverty Reduction Strategy Paper.

The Poverty Reduction Strategy Paper

The Poverty Reduction Strategy Paper (PRSP) will be an important mechanism for operationalising the CDF in the poorest countries. The PRSP will also be important for coordinating the efforts of the Bank and the Fund (and presumably other donors). It replaces the Policy Framework Paper which was supposed to be a joint IMF–WB paper but in effect never was.

Governments must produce a PRSP in consultation with civil society, the private sector, local government, the IMF and World Bank, bilateral donors and other expertise it wishes to call on. The PRSP must be endorsed by the Boards of the Bank and Fund before it forms the basis for Bank and Fund lending programmes. While the IMF will remain focused on macroeconomic concerns it will be required to consider the distributional consequences of its policy advice and advocate stabilisation and growth strategies that at least do not harm the poorest. The World Bank is expected to assist this process by analysing the anticipated social impacts of the macroeconomic strategy and the trade-offs between various macroeconomic formulations before the strategy is applied. The two institutions will be required to collaborate more closely to ensure coherence between macroeconomic, social and structural reforms.

We are still waiting to see which will be the first countries to develop PRSPs, likely candidates are Uganda, Tanzania, Bolivia, Mali, Guyana and the Gambia amongst others. At this stage it is not possible to gauge how the process will actually work in practice but it is possible to examine how we think it should work and how different stakeholders will participate in it, and therefore the implications for their roles and responsibilities. This is the focus for part 2 of this paper.

Part 2: Roles and responsibilities in designing and implementing prsps

Ownership is Desirable But Leadership is Realistic

Firstly it is worth considering to what extent we can really talk about ownership. Whilst we would like to think that ownership is possible – governments should have complete freedom to define their strategies in consultation with civil society – the reality is that the poorest developing countries are desperately in need of finance and do not have the luxury to forsake external funding if donors do not like their home-grown programmes. This means that governments are constrained by their need to satisfy donors ie they must produce programmes which donors are willing to fund. At best then the government can really only have a leadership role in the process.

Also, since the objectives for these programmes are poverty reduction and these have been defined by bilateral donors as the International Development Targets (IDTs), governments also do not have ownership of the programme’s aims. We may not disagree with these objectives, but we must admit that many governments and many parts of civil society may not see them as priorities.

Whilst ownership is in effect unrealistic, governments will be able to take the lead in several areas:

• choosing with whom they want to consult – the IFIs, donors, academics, NGOs, civil society;
• choosing what areas they want to seek advice on in order to develop the strategy;
• defining the targets for poverty reduction on a medium- and long-term basis and criteria for monitoring progress.

Furthermore, Southern governments have not been involved in current discussions on how the PRSP process should be implemented. Discussions so far have been Washington-based and have focused on the internal dynamics at the Bank and the Fund and collaboration between the two. Even work underway to fashion guidelines for good participatory processes is Washington-based and no effort has yet been made to involve southern governments and civil society in defining what elements comprise an acceptable process. A precondition for government ownership must be that they are involved right from the beginning in discussing the process and defining parametres of involvement in the PRSP process.

Involvement from first principles is crucial if governments are to really take ownership of the poverty reduction agenda. For example, many African governments have plans and funds for poverty reduction, however, these are often produced and implemented by small, less important ministries and they tend not be given priority by the more powerful ministries and so they remain marginalised within the government. An exception to this is Uganda, where the responsibility for implementing the poverty reduction strategy lies with the ministry of finance and consequently the commitment to poverty reduction is a government wide priority.

Governments and NGOs Need to Build Capacity for Effective Consultation

It is important that the PRSP is intended to be a country-owned strategy not a government-owned strategy and therefore consultation with civil society will be an imperative. Indeed, we have been told that the decision of the IMF and Bank boards to endorse a strategy will depend partly on the adequacy of the consultation process.

Consulting with civil society is not easy. It often is not clear who represents civil society or how to reach them. Moreover, civil society does not have just one point of view. It will be necessary for civil society organisations to consider what mechanisms can be used to help to settle differences. However, in many cases a unified civil society position will not be achieved. In these cases it will be essential for governments to be able to clearly establish why they have taken a particular decision and that in doing so they have made a balanced consideration of the various points of view.

Consultation will be a difficult and costly task for governments, especially if they are to reach out to the local level which they must do if they are to develop an effective strategy that can respond to a range of needs. Donors will have to provide considerable resources for governments to enable them to do so. This may not imply additional resources, instead money spent on costly consultant fees could be diverted for this purpose. This could result in a more cost effective use of resources as well as building government capacity. Moreover, resources are available for development of participatory approaches which should also aim to develop government capacity.

NGOs will be an important point of contact for their governments and a bridge to the grass roots community. However, their capacity is in many cases limited and INGOs will need to provide resources and share experience with NGOs to assist them in building broad-based networks to communicate the experience of grass roots organisations to the centre.

Whilst governments should be responsible for reaching out to civil society it cannot be assumed that they are either willing or capable of doing so well. Therefore, INGOs will need to alert NGOs to the consultation process; informing their partners that these processes are underway and ensuring that those who want to engage in the process are able to do so.

In the case of Bolivia, which is a CDF pilot country, NGOs were not effectively consulted during the development of the National Dialogue, the country’s poverty strategy, and the government failed to engage with them after it was completed. INGOs were able to raise these problems with their governments who put pressure on the Bolivian government and the Bank to engage the Bolivian NGOs more fully in the CDF process. In other CDF countries, such as Ethiopia, it appears that government leadership has focused on coordinating donors whilst consulting with national stakeholders is not a priority or even an objective.

Assessing the Extent and Causes of Poverty

The first step will be to establish the extent and causes of poverty. At the moment there is typically a lack of good poverty data. Where good data is lacking a participatory poverty assessment (PPA) will be needed. To fund them, southern governments should be persuaded to divert resources away from expensive, under-used surveys and into cheaper, grass roots focused PPAs. Donors – the UNDP and some bilateral donors have been important funders of recent PPAs – should continue to provide resources to fund PPAs which should include building government capacity to systematically collect data on an ongoing basis, for example, as the Uganda PPA has done. It may also be necessary to assist neutral third-parties to systematically monitor government efforts to address the causes of poverty, particularly at the level of local government. Whilst donor resources are essential, the success of the Ugandan PPA demonstrates the importance that PPAs are owned and managed by the government.

PPAs have demonstrated how partial and incomplete the perception of poverty from the top has been and they have been important for broadening understanding of what defines poverty for those who are poor. For example, the need to address governance and institutional aspects is a priority for many poor people. Whilst some donors, including the World Bank, have accepted a broader concept of poverty they are yet to appreciate what the implications are for programme design and funding. Donors must address this.

PPAs can be useful for building relations between civil society and local and national government, and for strengthening links between civil society, particularly in rural areas, and NGOs, which are often urban-based. Thus these processes can potentially add to “social capital”. Such processes should be encouraged. Where possible, programmes should not simply address social development through better social and economic policies but should also look to enhance social capital (Harper, 1999).

Whilst there has been some work by the Bank and academics to draw together experiences with developing PPAs to help identify best practice guidelines it would be useful if INGOs could undertake to synthesise NGO experience with participating in and managing PPAs, although more experience might be needed first. Communications between national-based NGOs involved in PPAs and their counterparts at the international level need to be enhanced to encourage better sharing of experiences but also to use PPA information more strategically to counterbalance other sources of information.

Access and Input Into Background Analysis and Other Key Documents

In addition to the poverty assessment the Bank and Fund both undertake extensive background analysis and research which informs programme design. This economic and sector work will presumably be important for informing the design of the PRSP.

At the moment this work tends not to be made public nor is it poverty focused. INGOs should ensure this is rectified. Access to this type of information, including information from the government, will be essential for NGOs if they are going to have useful engagement with their governments on policy design. However, there is also an issue concerning the relevance of much of this work. Often processes are led by the Bank with little involvement from governments or civil society which lessens their applicability. The responsibility for carrying out this background work should be the government’s with the Bank and other donors providing advice and financial support. Input from civil society should also be sought. For example, a recent evaluation by the Bank’s Operations Evaluation Department of Public Expenditure Reviews concluded that, “if the Bank can adopt a more flexible, client oriented, institutional, interdisciplinary, consultative and results oriented approach to designing and producing realistic PERs, the prospects for improved implementation and impacts would be greatly enhanced.” (OED, 1998 p26)

Designing Programme Content Should Involve Many Stakeholders

In designing its poverty reduction strategy, the government will be responsible for consulting with national stakeholders and soliciting their input into the design process. To what extent civil society will be involved in programme design needs to be spelled out up front. There is a wide gulf between participating in the design of a poverty reduction strategy compared with being consulted on a proposed strategy. The level of engagement civil society can expect needs to be clarified early on so that civil society representatives can choose whether or not to be involved.

Clearly both national and international NGOs have considerable experience with addressing poverty needs and they could have very useful input into programme design and should not simply be regarded as service providers. This is most obviously the case in the social sectors but there is also a case for civil society involvement in macroeconomic policy decisions, for example budget setting.

Past experience with involving NGOs in national processes, particularly input into the Bank’s Country Assistance strategy, has tended to limit their input to a consultation role although there has been some involvement in the policy-formulation process. It will be useful if INGOs can draw together these experiences to facilitate better advocacy work and engagement.

National NGOs and particularly NGO networks could be very important for organising widespread input into the policy discussions. INGOs can help NGOs input into the policy process by helping to build advocacy and networking capacity especially the capacity to analyse and translate very specific, grass-roots experience into the wider development debate and process.

Governments are also likely to draw on the advice of the IFIs and other donors early on in the process. This is both practical from a capacity point of view and for ensuring that donors have buy-in to the programme from an early stage. However, there should also be considerable scope for governments to call on a wide variety of expertise to assist them in programme design, for example, universities, independent consultants, UN bodies and policy advisors of INGOs operational in the country.

It is envisaged that there will be an iterative process between donors and the government to agree the content of the programme especially in terms of the trade-off between aspects of the macroeconomic framework and actions for poverty reduction. INGOs will have a role in monitoring the Bank and Fund to ensure they do not limit the policy options for governments.

The World Bank already has detailed guidelines as to what it regards as a good economic strategy (World Bank, 1999). These guidelines determine how much IDA resources will be allocated to each country. The IMF is currently drawing up similar guidelines for its staff and Board focusing on good macroeconomics and good governance. These guidelines are important because they will determine which programmes the IFIs will support. Therefore, it will be important for INGOs to monitor how these guidelines are being drawn-up and to ensure that they are not too prescriptive and are poverty focused.

Whilst the Bank argues that the twenty criteria it uses are all poverty focused, in fact a significant number of them are macroeconomic targets which are not directly poverty focused. Some governance criteria are used but these are largely focused on protecting private property rights rather than stemming corruption or improving citizens’ rights. These criteria will be open for review when the negotiations for replenishing IDA start in 2001. Until then INGOs will have to pay careful attention to ensure that good PRSPs are not underfinanced on the basis that they do not comply with the Bank’s criteria.

Monitoring the IFIs

A fundamental concern for many INGOs is whether the IMF and World Bank are able to change their working practices and allow governments the space to define their own strategies. Flexibility on the part of the IMF will be particularly important, yet initial discussions with staff suggest that it is doubtful they are yet ready to concede ground in this area.

INGOs have been quick to raise these concerns with donors who have been keen to reassure that monitoring the implementation of this new approach will be a priority for them. However, donors do not have good capacity for doing so and they will need to rely heavily upon INGOs who in turn must be in touch with their partners in each country. This will require INGOs to work together to ensure they are not duplicating efforts or overlooking countries. Whilst INGOs have significant experience of sharing information this is still tricky given their own resource and capacity constraints. It will also be important for donors to share information amongst themselves in order to facilitate the monitoring process.

layers and layers of conditionality

The new approach has in effect brought in another layer of conditionality: process conditionality. This is probably not a problem where the government has the capacity, willingness and political strength to develop its own programmes. However, for weak governments, who lack the political might to stand up to the Bank and Fund, the new process is likely to mean the usual policy conditionality with the added headache of having to go through a process which it may rather avoid.

Whilst many international and national NGOs would probably be happy with process conditionality (obviously depending on what type of process is required), we must acknowledge that once again something is being imposed from outside which could be said to undermine the democratic process.

Also, the IMF intends to prioritise governance in its programmes thus we can expect to see additional layers of governance conditionality. Whilst many of us might support rights-based governance conditions which could be very significant from a vulnerability/empowerment perspective, the IMF‘s approach to governance will be restricted to the rights of private property owners which could be harmful to the poor, for example, if common property resources are allocated to private owners. The IMF‘s involvement in governance issues is very doubtful as it has no expertise. INGOs should be doing more to stem the IMF‘s mission creep into deeper structural areas which it has no legitimacy to involve itself in.

Another important concern for INGOs and NGOs is whether the IMF and World Bank are able to judge what is a good consultation process as this will be a factor in the decision whether or not the IFIs should fund a programme. The IMF and Bank are currently drawing up best practice guidelines on consultation and participation. It is not clear who is being consulted about this process. INGOs are taking steps to improve their own participatory processes and these experiences could be usefully shared with the IMF and Bank. They could also seek guidance from groups working in national and international arenas to improve accountability and democracy such as Amnesty International and Article 19.

In many cases judgement of the consultation/participation process will be subjective. It is not clear how a decision will be taken if a government comes up with a programme donors want to fund but it did not apply a good process or conversely a good process produced a poor strategy (in the eyes of donors). This is a question which both the Fund and Bank are trying to grapple with. In the end it is likely to come down to donor preferences, political considerations and long-term relationships, thus it will be important that INGOs, with their capacity to have an overview of the processes in each country, ensure that there is comparability of treatment and to highlight cases of bias.

From the Bretton Woods Project’s perspective, the better the process the better the outcome is likely to be, therefore, there should be considerable emphasis placed on insisting that governments encourage as much participation and comment on the programme as possible and that this is reflected in a meaningful way to donors. For example, donors could ask to see what range of people the government has included in the policy framing process, how extensively it has solicited comments, how it has addressed those comments, why it has or has not changed its strategy in the light of them, whether there has been media debate on the strategy etc. Such a process is necessary because donors are not in a position to make objective judgements or specify indicators which can tell them what a “good” poverty strategy is in each case. This can really only be judged by those in the country, this is why enabling a wide range of civil society perspectives to influence the process is important.

In terms of the policy conditionality the new framework suggests that this is an opportunity for governments to frame their own conditionality. IMF staff have suggested that if a government is able to tightly define its strategy with monitorable targets and a clear timetable then it will be difficult for either the IFIs or other donors not to use them in their own programmes. On the other hand, if a government produces a rather vague programme then it leaves the door open for the IFIs to define targets themselves. Thus, to what extent the government can take control of the process will depend on its capacity and political strength to stand up to the IFIs and argue its case. It can be envisaged that a government that a) has strong domestic support for a programme; and b) good planning and budgeting processes will be better able to stand up to the Bank and Fund. Where there are gaps in capacity and process there may be opportunities for NGOs or donors to assist.

Beauty Contests and Effective Solutions

An important role for INGOs will be to ensure that the competition for resources does not become simply a beauty contest amongst rival PRSPs and that detailed technical fixes are not given greater priority than more limited but effective and possible solutions. It will be a positive step forward if donors select among countries according to the poverty-content of their strategies – at the moment they do not – but given that each national strategy should be different, how to judge between them will be difficult. This suggests that basing judgements on the process is the most useful way forward.

Monitoring Implementation

In terms of implementation, the government should be primarily responsible and accountable to the parliament and people, not donors. This suggests that an inclusive process for setting and monitoring targets would be useful. Joint indicator development will help to clarify the different expectations of various stakeholders and can help build ownership of the outcomes. Capacity building will be necessary to enable stakeholders to develop and monitor indicators.

It will also be important to ensure access to information. For example, it will be important to disseminate the PRSP widely and to ensure that government procedures, particularly budgeting and expenditure procedures, are transparent. Whilst NGOs have been involved in consultation exercises with the World Bank in the past, the secrecy of the final Country Assistance Strategy document has limited any further effective engagement by civil society in monitoring its implementation.

Obviously monitoring is not effective if there are not effective channels to communicate results to policy makers and managers. NGOs should help to establish permanent channels of communication with government departments to ensure that where problems arise these are quickly and effectively communicated to ministers.

Some monitoring mechanisms are already being applied. In Brazil, NGOs have been effective in ensuring that economic programmes are discussed in parliament as the consistitution stipulates. And in Uganda all loans contracted or guaranteed by the Uganda Government must be authorised by Parliament, this gives opportunities for NGOs to alert parliamentarians to potential problems with them.

Timing

A good process cannot be rushed, particularly a participative process. Whilst some countries already have the initial building blocks in place and will not need as much time as others, there is great concern that the process of drawing up poverty strategies will be rushed to ensure countries secure debt relief as soon as possible (implementing a PRSP is a condition for HIPC debt relief).

A rush to complete the PRSP is likely to limit the ability of NGOs and the communities they represent from participating in the policy process, and limit the opportunity for governments to consult with other experts outside the Bank and Fund. However, with some countries reaching decision point in the HIPC Debt Process as early as January 2000 and with a total of 19 countries expected to reach decision point in 2000 the potential for pushing the process too far too fast is very real.

An important function for INGOs will be to ensure that the financial and political pressures to give debt relief does not limit the scope for effective processes.

Beyond this immediate pressure, it will be important for donors, both multilateral and bilateral, to ensure that countries are not hurried to finalise programmes in order to fit with lending cycles. Operational changes such as flexible accounting and loan disbursement procedures and revising staff incentives will be important for ensuring that these pressures are reduced.

Financing Poverty Reduction Strategies

For the first time it will be possible to identify social programmes and have them fully costed. In the past, financing has been constrained by donor supply, the new approach offers the possibility of looking at the demand side of the poverty reduction equation, shifting the pressure towards donors to come up with the finance necessary to bridge fiscal deficits.

It can be envisaged that governments will prepare strategies according to a number of scenarios. The base-line scenario will be a strategy based on resources available under existing commitments laid out in the medium-term expenditure framework (although still not many of these exist yet).

However, given that the targets have been set in terms of the IDTs, the government could then set out a “high-case” scenario which would detail what actions and resources are necessary to set the country on track to achieve the targets. This would be a challenge to donors to come up with more funding in order to allow the country to achieve the targets they themselves have set for it. It would also be practical for the country to develop a medium-case scenario which would anticipate more resources than it currently expects to receive but would be less than what is necessary to achieve the targets.

INGOs could take the lead in pushing donors to make more resources available. A focus for these efforts could be donor meetings such as Consultative Groups. Christian Aid has made the case for INGO and NGO participation in aid coordination meetings (Richmond and McGee, 1999). A particularly useful role for NGOs in these meetings could be to report on the process of designing the strategy and progress with implementing it (Petesch, 1996).

Aid coordination will be necessary for ensuring appropriate resources to fund the strategies and to harmonise monitoring and reporting arrangements to free-up government resources. The Medium Term Expenditure Frame should be a focus for cooperation or possibly the Pubic Expenditure Review (PER). Although the quality of PERs, which tend to be Bank-owned, has been very poor they could be improved by involving the government and civil society. (OED 1998)

Bilateral and Multilateral Coordination and Cooperation

Donor coordination and cooperation will be essential if governments are to effectively manage and control their development processes. Coordination will be important not just in terms of providing resources (and being more selective about which countries receive them), but also for monitoring participation, design and implementation of programmes and for monitoring how effective the Bank and Fund are in reforming their work methods and policy prescriptions. Coordination will also be important for sharing knowledge of best practices in donor organisation and working methods.

The PRSP can also be seen as an attempt by donors to force the World Bank and IMF to work together. This is necessary if macroeconomic programmes are to be poverty focused, simply because the IMF does not have the expertise to understand the micro impacts of macro reforms. However, it should not be assumed that the World Bank is good at addressing poverty issues. A recent internal review of adjustment lending found that “the majority of loans do not address poverty directly, the likely economic impact of proposed operations on the poor, or ways to mitigate negative effects of reform. … The connection to poverty is left at the abstract level (e.g. the poor benefit from lower inflation and efficiency gains).” (World Bank, 1999b). Donors, INGOs and NGOs must continue to put pressure on the Bank to put its stated commitment to poverty eradication into practice. In this regard, it will be important for the Bank to draw together the many different poverty-related initiatives that are under the control of an increasingly large number of vice presidents.

Nor is it clear that the Bank has the experience of analysing the linkages between macroeconomic reforms and poverty outcomes. However, other organisations such as the UNDP and UNCTAD have done some work on these linkages. Focusing on coordination between the IMF and the World Bank could, therefore, limit the involvement of other institutions.

Whilst the Bank and IMF have effectively marginalised UN institutions, especially in terms of the social policy debate, the greater openness of the PRSP process, which allows governments the opportunity and time to consult widely with experts outside the Bank and Fund, provides an opportunity for the UN to steal some ground from them. Particularly since the UN has already established itself as an advisor to governments as opposed to the Bank which tends to prescribe to governments.

Disseminating Lessons Learned

At all levels of the process it is important that information and lessons learned are shared between NGOs in different countries involved in similar processes. NGOs need to build networks across countries to do this. They can draw on the experience of their INGO colleagues to do so. It is also important for NGOs to share information directly with INGOs who are able to disseminate this widely.

At the moment there are some efforts by INGOs to monitor how the CDF is being implemented in the pilot countries but this task is limited by the lack of capacity of NGOs to respond to information requests from INGOs and by their limited engagement in the CDF process.

Increasingly southern NGOs are organising themselves to share information and to develop “southern” advocacy strategies. INGOs should support such initiatives, particularly in disseminating “southern” positions to their colleagues in the north.

The PRSP provides a key opportunity for democratising decision making processes with regard to how economic programmes are developed and who is involved, and in whose interest they are applied. It emphasises national control and local involvement. This is very welcome.

However, whilst processes will hopefully improve at the national level, the World Bank and IMF remain extremely undemocratic. The US holds veto power over key decisions and the G7 countries dictate the focus of policy and research, and dominate the Executive Boards, the Development Committee and the International Monetary and Finance Committee (previously known as the Interim Committee). This concentration of power ensures that the Bank and Fund prioritise the interests of the G7. Democratising these institutions should be a key concern for both INGOs and NGOs. Until this is achieved, improving processes at the national level will be limited.

Conclusion

With the emphasis on national ownership of the development process, it can be expected that the roles of various stakeholders are likely to change over the coming months and years. Firstly, the government must be encouraged to take the lead in developing its programme and in organising donors and other stakeholders to help operationalise it. This means a more hands-off role for the Bank and the Fund which should become advisors to the government rather than leaders of the process.

The focus on poverty reduction implies that the IMF will have to collaborate much more closely with the World Bank when advising governments about possible macroeconomic reforms. It should also look to other institutions such as the UNDP and UNCTAD for advice on the distributional implications of various macroeconomic strategies.

Whether the IMF and Bank will be able to make this shift will depend to a considerable extent on how they can reform themselves internally to improve operational procedures and provide the correct incentives to staff. It will be important for donors and NGOs to monitor this process.

Bilateral donors will need to be more coordinated and cooperative both in terms of ensuring their programmes support the national strategy and that sufficient resources are committed and provided on time to implement it effectively. In some cases it can be expected that bilateral donors will have a greater role in the programme formulation process, where they are invited to do so by governments.

Reform of internal processes will be as important for bilateral donor’s as it will be for the Bank and Fund. At the moment not all donors have accepted the need for better coordination or are willing to change their procedures. NGOs must put pressure on their governments to ensure they take these steps and that they commit more money to poverty eradication strategies. The Bank is also making the case for greater coordination with donors to operationalise the CDF. Coordination will be encouraged, and the importance of the IMF‘s seal of approval will be lessened, if governments involve key donors in the process of developing the poverty reduction strategy.

International NGOs are likely to see their roles change to reflect a greater emphasis on monitoring and as a channel of information between national NGOs and donors and the international financial institutions. They will also have a greater role to play in building the capacity of national NGOs to do their own advocacy work and to engage with policy makers to translate grass roots experience into policy.

National NGOs will have to build capacity to improve their networking with each other and their communication with civil society, particularly in rural areas. More emphasis will have to be placed on engaging in the policy process and drawing out lessons learned from their programme work. They will also need to develop capacity to monitor implementation of programmes at the local and national level.

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