Commonwealth Secretariat

Commonwealth Secretariat PRSP Learning Event 9 July 2003

Impetus behind the PRSP initiative • Mixed record on poverty reduction in 1990s • International Development Targets/MDGs • Multilateral funding for debt relief (HIPC II) • Findings on aid effectiveness • Pro-poor policy reforms have been failing for lack of real country commitment (“ownership”) • When country authorities really don’t want to do something, conditionality does not make them do it (properly) • Projects get around the immediate problem but further weaken commitment and capacity (disincentives + transaction costs)

What are PRSPs? • They replace the old Policy Framework Papers as a basic condition for IMF and World Bank (IDA) concessional lending • They play a similar role in Enhanced HIPC debt relief, for eligible countries • They are increasingly the focus for bilateral donors (DAC, SPA, etc.) for improving the quality of aid

Core PRSP Principles • Country-led/owned, based on broad-based participation • Comprehensive – macro, structural, social, environmental • Long term perspective • Results-oriented • Costed & prioritised • Partnership-oriented

What’s new? • ‘Costed’ poverty reduction strategy linked to macro & budget framework (encouraging the tough choices!) • Outcome/monitoring focused; making the links between policy & results • Opening-up the policy process to participation • New incentives, new partnership possibilities & new forms of aid delivery

PRSPs are… • …NOT a sophisticated new technical device - a “magic bullet” that will solve fundamental problems of development and cooperation • …offering important opportunities: • for poverty to be “mainstreamed” in national systems, providing priorities for both aid and the national budget • for poverty reduction efforts to be more “country owned” and thus more successful • But these are not certainties - the success of the PRS initiative depends on three gambles ...

Gamble 1 If governments are obliged to discuss poverty, and what they are doing about it, with citizens, then they are likely to take it more seriously and be held to account more effectively

Gamble 2 If partners have a national PRSP to coordinate around, then donor behaviour and aid management will improve - leading to lower transaction costs, and less damage to national institutions

Gamble 3 If the PRS is taken seriously by all parties, then relations between partners and governments will change more fundamentally - with increased domestic accountability, more effective aid and better poverty outcomes

PRS Schedule Preparation Status Report 1st Annual Progress Report 2nd APR PREPARATION IMPLEMENTATION & MONITORING I-PRSP PRSP (I) PRSP (II) 9-24 months 2-5 years HIPC(II) Completion Point HIPC(II) Decision Point

How many PRSPs? • The PRSP initiative is now 3.5 years old • 65 countries are engaged in the PRSP process in some way • Currently 28 countries have full PRSPs – 9 of these are Commonwealth countries • 37 more are in the process of producing a PRSP (or I-PRSP) – 8 of these are Commonwealth countries • 17 (of 54) Commonwealth countries involved in the PRSP process

Examples from the C’wealth • Tanzania – completed its full PRSP October 2000 and it went to the Boards in November 2000. Has completed two Annual Progress Reports since then – most recently April 2003 • Mozambique – completed its full PRSP in April 2001 and it went to the Boards in September 2001 • Sri Lanka – Full PRSP went to the Boards in April 2003 • Guyana – completed its full PRSP Feb 2002 (macro addition April 2002) - went to the Boards in September 2002

PRS Process Policy formulation Financing Like projects, PRSs are supposed to involve a series of steps, so that design is based on evidence and is then improved by learning (M&E) Communication Poverty analysis Monitoring and evaluation Policy implementation

Engaging with the PRS process Policy formulation Financing Shared analytical work; TA defined by govt; support civil society inputs Like projects, PRSs are supposed to involve a series of steps, so that design is based on evidence and is then improved by learning (M&E) Communication Poverty analysis Monitoring and evaluation Policy implementation

Engaging with the PRS process Policy formulation Financing Like projects, PRSs are supposed to involve a series of steps, so that design is based on evidence and is then improved by learning (M&E) Communication Poverty analysis TA on policy (govt led); engaging civil society; country strategies linked to goals, targets and macro framework in PRSP Monitoring and evaluation Policy implementation

Engaging with the PRS process Policy formulation Financing Financing on-budget; in line with budget/MTEF cycle; conditions & benchmarks streamlined with PRSP matrix Like projects, PRSs are supposed to involve a series of steps, so that design is based on evidence and is then improved by learning (M&E) Communication Poverty analysis Monitoring and evaluation Policy implementation

Engaging with the PRS process Policy formulation Financing Consultative and transparent process; supporting others’ communication efforts Like projects, PRSs are supposed to involve a series of steps, so that design is based on evidence and is then improved by learning (M&E) Communication Poverty analysis Monitoring and evaluation Policy implementation

Engaging with the PRS process Policy formulation Financing Projects/programmes support PRS; implementation managed by govt agencies Like projects, PRSs are supposed to involve a series of steps, so that design is based on evidence and is then improved by learning (M&E) Communication Poverty analysis Monitoring and evaluation Policy implementation

Engaging with the PRS process Policy formulation Financing Monitoring, review & audit drawing on govt. systems; annual PRSP review; support creation of M&E strategy; support involvement of CS Like projects, PRSs are supposed to involve a series of steps, so that design is based on evidence and is then improved by learning (M&E) Communication Poverty analysis Monitoring and evaluation Policy implementation

Reminder: Gamble 1 If governments are obliged to discuss poverty, and what they are doing about it, with citizens, then they are likely to take it more seriously and be held to account more effectively

Progress on Gamble 1 • PRSs are beginning to provide focus for allocation and use of domestic and external resources – they are being taken seriously • They show improved analysis of poverty, and this is used to justify PRS priorities • But policy detail often has limited poverty focus, and lacks a critical review of past failures • Implementation is seriously limited by enduring weaknesses in budget and public-sector management

More on Gamble 1 • Some opening of policy debate to broader participation by domestic constituencies • consultations, PPAs, civil society involvement in policy working groups, and monitoring (tho involvement of formal political institutions weak so far) • But domestic accountability structures remain (very) weak, so not clear how much increase in real commitment • Difficulties sustaining gains from participatory processes - disappointment following (unreasonably) high initial expectations

Reminder: Gamble 2 If partners have a national PRSP to coordinate around, then donor behaviour and aid management will improve - leading to lower transaction costs, and less damage to national institutions

Progress on Gamble 2 • A wide range of experience in respect of partner behaviour with some significant changes by some agencies • In general, partners are coordinating their PRSP work but this is not the same as realigning agency programmes to PRSP priorities • Realigning priorities requires strong national strategy with clear priorities (and good sector/local policies) – many PRSPs fall short of this

Reminder: Gamble 3 If the PRS is taken seriously by all parties, then relations between donors and governments will change more fundamentally - with increased domestic accountability, more effective aid and better poverty outcomes

Progress on Gamble 3 • Not clear that domestic accountability institutions will soon be able to “take over” from donor accountability • There is little evidence of streamlined conditionality - possibly an increase • Some tentative moves towards “mutual accountability” - e.g. the Independent Monitoring Group in Tanzania, and SPA • Partners supporting PRSs will continue to face a dilemma on strengthening the poverty impact of policy versus encouraging a good country-specific process

Commonwealth Secretariat