Meeting on PRSPs and Poverty and Social Impact Analysis

DFID, 8 May 2002

Present:

Lucia Hanmer (DFID, chair)

Tony Burdon (Treasury)

Robin Robison (Quaker Peace and Social Witness)

Jonathon Wolsey (EURODAD)

Constantino Casasbuenas (Oxfam)

Mary O’Connell (Water Aid)

Henry Northover (CAFOD)

Fabien Lefrancois and Alex Wilks (Bretton Woods Project, notes)

Stuart Keen (World Vision)

Key points

The World Bank and DFID are moving forward with test approaches to improve the assessment of the social impacts of economic policies. Pilot studies are being funded by DFID in 6 countries and by the World Bank in some others. There will be a workshop in September to look at some of the results.

The DFID pilot studies examine issues such as the impacts of petrol tax reforms on the poor (Mozambique), the size of the fiscal deficit (Rwanda), a strategic export initiative (Uganda), energy prices (Pakistan). Other countries where work is being done include Armenia and Honduras.

The Bank has just produced a “Users’ Guide” to Poverty and Social Impact Analysis (PSIA). This is a lengthy document describing different methodologies for evaluating individual reforms as well as economy-wide changes. Comments can be made on this to the Bank.

It is unclear to some what is PSIA and how it fits with existing work by the Bank and others. Is PSIA intended to outline likely impacts of reforms before they are agreed and implemented, or to help also evaluate the effects of previous reforms? Is this guide just a shopping list of methodologies, or will Bank staff really change the type and nature of the studies they conduct or commission as a result of it? Will it persuade them to listen more to analysis produced by different organisations? Will PSIA‘s impact be limited to changing the timing or sequencing of reforms or marginally changing them or will it encourage a first principles examination of what are the appropriate policies?

There is concern that whilst the IMF may move rapidly to implement any agreed new methodologies, the Bank may not. There is internal resistance to making anything else mandatory at the Bank and it is now a fairly decentralised institution, with Country Directors holding much power to decide what happens in their countries. Recent signals from the Bank appear to indicate a downgrading of attention to PSIA work. The forthcoming consultation on the conversion of the Bank’s Structural Adjustment Operational Directive give an opportunity to clarify this, but a strategy needs to be developed to help ensure that the Bank does implement/take seriously PSIA. It is not clear how PSIA will be funded, whether for example donors should give extra money to the Bank for this, or commission work themselves or from other sources independent of the Bank.

DFID has been pushing for the Fund to release a schedule of what key policies are to be addressed by PRGF loans and who will be responsible for conducting analysis of their likely impacts. This has not yet been agreed. The Bank and Fund agreed to something along these lines in their August 2000 PRSP policy statement.

The Bretton Woods Project is producing a briefing airing some of the issues and concerns about PRSP-related analytical processes. To be ready in time for the annual meetings. Other organisations are developing papers/approaches independently of the Bank, ie ISODEC (Ghana) has produced an alternative economic model to guide PRSP-style discussions.

Diary dates

• Next meeting to discuss PRSPs/PSIA and to strategise about the WB‘s consultations on revising its Structural Adjustment Operational Directive: 2 July, Hamlyn House, Archway, (organiser: Bretton Woods Project email flefrancois@brettonwoodsproject.org)
• Consultation meeting on Adjustment Operational Directive: mid-July (organiser DFID)
• Bank/DFID Workshop on PSIA pilot studies: September 2002
• European meeting on PSIA, Nov/Dec 2002 (TBC)

Relevant Documents

• PSIA Users Guide comment deadline
• Distributional Effects of Economic Policies, a Modelling Project by the Integrated Social Development Centre: available from Bretton Woods Project, flefrancois@brettonwoodsproject.org
• Fixing Economic Sector Work: Phase 11: Challenges and Next Steps in the ESW Reform Process, World Bank, June 28, 2001, available from Bretton Woods Project, flefrancois@brettonwoodsproject.org
• Making PRSPs Work: the Role of Poverty Assessments, Oxfam International, April 2001, available from Max Lawson, Oxfam, mlawson@oxfam.org.uk
• Impact Analysis in IMF and World Bank Policy-based Lending, Bread for the World, Catholic Relief Services, Globalization Challenge Initiative, Oxfam International, August 2001, available from Max Lawson, Oxfam, mlawson@oxfam.org.uk
• Terms of Reference: (working draft) Piloting Social Impact Analysis of Stabilisation and Adjustment Programmes, Department for International Development, July 2001, available from Michelle Price at DFID, m-price@dfid.gov.uk
• Blinding with Science or Encouraging Debates, Unpacking the World Bank’s PRSP Toolbox, Bretton Woods Project, forthcoming