Poverty Reduction Strategies under intense scrutiny

8 May 2002

The release of an IMF/Bank review of PRSPs coincides with an avalanche of independent investigations calling into question the strategies’ effectiveness. Despite lauding increased participation, the IMF/Bank report concedes that the role of parliamentarians, trade unions, women and the poor has been “limited”. Furthermore, it calls on the staff of the Bank and Fund to resist making “extensive comments that could undermine ownership”.

Similar observations were made about the PRSP process in Malawi at a civil society forum on economic governance in late February. Participants noted a lack of accountability and transparency of the final PRSP document whose drafting was dominated by an inner circle from the Finance Ministry and the Bank.

A second major critique of the process by the IMF/Bank researchers was a lack of “prioritizing” and “specificity” on the part of government drafters. According to Ethiopian NGOs, this shortcoming may be related to a lack of coherence between PRSPs and national development goals. “The relationship between the PRS, the policy matrix and the list of targets/indicators is not put clearly in the document”, they argue. Governments which are sceptical about Bank and Fund policies may simply be playing the tune that the Bretton Woods institutions want to hear.

And the IMF/Bank report does not miss the opportunity to bang the drum for the Washington consensus, urging PRSP countries to recognize “the paramount importance of macro-economic stability”; acknowledge “the primacy of the private sector for growth”; and support “the desirability of trade openness in broad terms.” It is this dogmatic approach which is heavily criticized by two new NGO reports. A report by German NGO WEED on the first five PRSPs and a case study of the Ugandan experience by Nyamugasira and Rowden, of a Ugandan NGO network and a US-based NGO, highlight the lack of any ‘real’ discussions of macroeconomic policies in the PRSPs. “Ugandan NGOs were invited to provide input on the development of poverty-reduction goals, but not on the nature of the policies to achieve those goals.” This despite the IMF/Bank noting the “desireability of debate about alternative policy choices.”

The IMF/Bank review also urges PRSP timing to respect national cycles for decision-making to avoid over-burdening government resources. However, according to a World Vision-sponsored study in Cambodia, just the opposite has happened. Author Kelly Currah argues that the Bank’s unwillingness to accept the urgings of both the Asian Development Bank and the Royal Cambodian Government to compile two strategies into one paper, shows that the PRSP process has “become a tool with which to muscle in on other development banks’ territory”.

The serious risk posed by linking bilateral and multilateral aid to country compliance with IFI poverty reduction instruments has been put in stark relief in Bolivia. Late last year, after failing to introduce tax reforms agreed with the IMF, the Bolivian government experienced a domino process of credit cancellation. Some US$170 million in loans from four different World Bank and IMF initiatives were withheld, a situation which may force the government to borrow either on the domestic or international markets, triggering further violations of IMF criteria.

IMF/Bank Review of the PRSP Approach

Sign-on letter to WB and IMF from CSOs who participated in the PRSP Review conference

Malawi Economic Justice Network and ActionAid Malawi, Report on Civil Society Economic Governance Forum

NGO Summary Perspective on PRSP for Ethiopia

Nyamugasira and Rowden New Strategies, Old Loan Conditions

World Vision report, Masters of their own development? PRSPs and the Prospects for the Poor