The IMF’s Independent Evaluation Office (IEO) recent review of the poverty reduction strategy paper (PRSP) concedes to shortcomings in the design of the initiative and points out that “actual achievements fall considerably short of potential”. Focusing on the alignment of the Fund’s low income countries lending tool-the poverty reduction and growth facility (PRGF)-to the PRSP process, the review also explored the Fund’s role in low income countries.

Calling for greater country policy ownership, the report notes that PRSP processes are not well embedded within national processes. Country ownership is restricted to “officialdom”. Although PRSP processes are perceived to be more participatory than previous IFI strategies “participatory processes were typically not designed to strengthen existing domestic institutional processes for policy formulation and accountability such as through the involvement of parliaments”. The report is not categorical on whether Fund conditionality has been reduced following streamlining efforts. The report highlights a general failure to explore alternative macro-economic policy options and notes that little influence is exerted on policy outcomes.

The review acknowledges that Poverty and Social Impact Analysis has not been mainstreamed in programme design. Neither have improved poverty diagnostics informed intervention strategies.

The report notes donors’ need for an IMF signal on the quality of the macro-economic environment, but questions whether this signal necessarily has to involve the provision of financing and conditionality. Clarity in identifying what roles the IMF is being asked to fulfil is needed. The review recommends:

• Greater flexibility in the implementation of the PRS approach to better fit the needs of countries;
• Monitoring progress against an explicit set of country-determined benchmarks. Greater results-orientation is suggested.
• Making criteria and benchmarks used in Joint Staff Assessments more explicit.