Official report confirms PRSP criticisms

17 November 2003

A report produced by the Bank and Fund for their annual meetings reflects on the continuing problems with implementing the lofty goals of Poverty Reduction Strategy Papers (PRSPs). Since they were introduced four years ago, some 50 countries have prepared PRSPs or Interim PRSPs. The PRSP Progress in Implementation paper prepared for the Bank/Fund Annual Meetings indicated that the PRSP process is charged with multiple objectives, many of which are in tension. This “inevitably means that PRSPs will reflect compromises”.

There has been much concern about which parts of government and civil society have been involved in creating and debating strategies. The report claims that PRSPs have been presented to parliaments in half of countries to date. A role for parliaments during implementation is envisaged in a similar number of countries. Some strategies have been reviewed by parliamentary committees. Guinea and Benin are cited as positive examples. The report notes that PRSPs are sometimes developed in parallel with other documents, so their role in government decision-making is unclear. It expresses concerns about the creation of ‘PRSP units’, often dependent on external financing and assistance, on top of the existing government structure. Mali and Mongolia are cited as positive examples of strong line ministry involvement. However “some line ministries are typically less involved, for example ministries of transport and rural development”.

The report says civil society groups frequently complain about being asked to react to existing programmes rather than contribute to an overall rethink of the government’s programme. It finds that participation in PRSP formulation has been “broad rather than deep, with a wide range of stakeholders engaged, but only to a limited extent”. Ensuring the voices of marginalised groups are included in the PRSP dialogue “remains a challenge given the technical nature of some PRSP discussions, language issues, and the relative isolation of the poorest.” Additionally “the limited participation of women in PRSP formulation remains a cause for concern”.

The limited participation of women remains a cause for concern

One aim of PRSPs is for countries to organise donors rather than the other way round. But “the government took a material lead in donor coordination in only three of the 48 PRSP countries studied”, and there is evidence that priorities are being driven by the supply of specific donor financing rather than deriving from newly articulated national policy agendas. The report notes that “some recent PRSPs have continued to simply attach [already costed donor programmes and projects] to policy matrices”, for example in the Kyrgyz Republic, Mali, Senegal and Sri Lanka. The report finds that low-income countries blame uncoordinated, restrictive and frequently changing donor requirements and procedures, while donors point to national systems of procurement and financial management which do not meet international good practice standards”. The report notes that financing using the new World Bank lending instrument introduced to match the PRSP objectives amounts to just nine per cent of total lending from the Bank’s IDA low-income country window.

The report finds that the linkage between PRSPs and the annual budget and Medium-Term Expenditure Frameworks generally remains weak, and that few PRSPs examine macroeconomic trade-offs and how such choices relate to the countries’ broader goals. It states, however, that “reported poverty-reducing spending has increased in the 14 PRSP countries where data are available”. There continues to be limited evidence of distributional analysis to inform PRSP design in many countries, “but plans for this are gradually being introduced.” The report suggests that governments, not the IMF, should lead public discussions of the macroeconomic framework.

“The treatment of trade issues is symptomatic of the weak links in many PRSPs between overall strategic goals and priority public actions. Most trade-related measures are formulated in general terms, without clearly specifying the timetable or the need for complementary actions. While the coverage of trade issues has improved over time, these are still not always clearly identified, integrated with other reform policies, or linked explicitly to growth (e.g., Sri Lanka and Senegal). There is little consideration of the distributive implications of trade policy”. The report sets out Cambodia as a rare case where risks associated with multilateral liberalisation were analysed, and proposals made to carefully sequence the reduction of rice import tariffs. And in Vietnam analysts are considering the impact of trade liberalization on women. It concludes, though, that “none of the PRSPs presents an explicit poverty impact analysis or considers safety net arrangements.”

The Development Committee of ministers, which considered this paper at the September Bank/Fund Annual Meetings, agreed that: “PRSPs are charged with multiple and sometimes competing objectives and the challenge now is to achieve successful implementation.” Among other ways forward, the Committee emphasized donor alignment and harmonisation around national strategies and asked the Bank and the Fund to respond to requests for assistance from countries undertaking Poverty and Social Impact Analyses and developing alternative scenarios to meet the MDGs. Some ministers noted, however, that the PRSP process has become unwieldy, slow to adjust to shocks that invalidate projections in the strategy, and too distant from expenditure decision and budgetary processes. These issues are being further examined in the joint evaluation of PRSPs by the World Bank’s Operations Evaluation Department and the IMF’s Independent Evaluation Office which is expected in the first quarter of 2004.