PRSPs: a continuation of structural adjustment

5 April 2004

Poverty Reduction Strategy Papers (PRSPs) are the policy framework used by international financial institutions to determine debt financing and relief for low income countries. Debate remains over their formulation, as well as their policy content. Many analysts suggest that they continue the trajectory of the highly discredited structural adjustment policies.

According to the World Bank and the IMF, PRSPs are anchored around:

  • Country ownership and broad-based participation
  • Pro-poor results-orientation
  • Recognition of poverty’s multidimensional nature
  • A long-term poverty reduction perspective

A critical analysis of their content reveals that they can not deal with the dynamics and issues that broad participation brings to the table. They often fail to integrate gender, minority and poverty interests. The messy realm of the informal economy does not fit well with the neat and predictable world of foreign direct investment, and private sector and export-led growth strategies. The continued use of aggregated statistics, GDP projections, and national level poverty lines masks vast differences between countries and inequalities within countries.

The fact that the content of PRSPs is very similar to previous adjustment packages suggests that little real change has occurred through this process

Consequently, the challenge of multidisciplinary analysis that distinguishes means and ends and factors in long term sustainability remains. The IMF’s professed new poverty focus is further testimony to the gap between rhetoric and reality. There is no real break with past policy failure.

In a paper produced for the University of Oxford, Frances Stewart and Michael Wang contend: “Governments appear to take a bigger role, but are also heavily constrained, especially with respect to macro-policy. The fact that the content of PRSPs is very similar to previous adjustment packages suggests that little real change has occurred through this process”.

UNCTAD asserts: “A review of African PRSPs suggests that their elements of policy are strikingly similar to those pursued under structural adjustment programmes, adding that expectations of what would be acceptable by bilateral donors and IFIs may influence significantly the way PRSPs are prepared”.

Participation, new containment agenda?

This suggests that participation is being invoked for legitimation rather than a fundamental shift in policy making. Selective or ineffective engagement of parliaments, preference for consulting only selected groups to the exclusion of trade unions, cooperative societies and local authorities, points to a democratic deficit. David Booth, senior researcher at the Overseas Development Institute, comments: “In general, it appears that in most African countries there is a tendency for PRSPs to be seen as technical planning processes that are properly the affair of the government, and not a subject for party-political debate”.

The World Bank in its source book for PRSPs defines participation as “the process by which stakeholders’ influence and share control over priority setting, policymaking, resource allocations, and program implementation”. A fundamental disconnect between PRSPs and national budgets illustrate where financing priorities lie. The stick of suspended assistance enforces compliance.

Rhetoric of country ownership unmasked

PRSPs are approved by IFI boards based on country Joint Staff Assessments (JSA) and Country Policy and Institutional Assessment (CPIA) which are staff judgements of the credibility of the proposed frameworks. Board concurrence with these determines funding. The methodology used to compute CPIAs is not open to public scrutiny and has been criticized for subjectivity and unfair weighting. Rather than citizens’ recommendations and analysis, it is International Development Association (IDA) priorities filtered through the Country Assistance Strategy that defines the content of PRSPs. Usually IDA priorities differ markedly from PRSPs.

The evaluation arms of the Bank and the Fund are currently examining the institutions’ experiences with PRSPs. David Goldsbrough, deputy director of the Fund’s evaluation office commented: “In many PRSPs the final objectives of poverty reduction are linked to the MDGs yet the macro economic frameworks are not elaborated with the MDGs in mind”. The final evaluation report is expected to be presented to the Boards in April/May.

Civil society groups will continue to push for the PRSP objectives to be fully implemented. Some progress could be made if the next round of PRSPs are embedded within national budgetary processes and parliamentary oversight mechanisms ensured.