PRSP Learning Event

1. PRSP Learning Event EECAD - Low income countries 11 April 10 am

2. Origins of the PRSP Initiative • Poor record on poverty reduction in the 1990s • Findings on aid effectiveness and limits of traditional conditionality • Justification for increase in multilateral funding through debt relief

3. PRSP Principles • Key principles: • Country-led and ownership increased through participation • Comprehensive - macro, structural, social • Medium to long term perspective • Outcome-oriented, based on analysis of poverty, and prioritised • Donor partnership under government leadership • What is new about this? • Linking macro and fiscal framework to PR strategy - costed strategy • Opening up policy process to broad based participation • Opportunities for new ways of delivering aid

4. Context matters • No cookie cutters! • Low-income transition countries have specific features: • Weak history of evidence-based policy making • Lack of civil society participation • Lack of familiarity with international aid community - but rising levels of debt. Different players than other regions. • Poor governance environment, with several countries affected by conflict • Country-specific politics- elections, parties, conflicts

5. Expectations - Ownership • National poverty reduction strategy more likely to succeed if supported by broad based ownership • Broad based ownership more likely if civil society and the poor influence policies • Accountability to citizens strengthened, thereby reducing poverty (where related to weak governance and poor service delivery record) • Technical benefits too: policies to benefit the poor are more readily identified (though danger of ‘shopping lists’)

6. Experience - Ownership • Ownership of externally driven process? • MoF involvement key - difficulties with line ministry involvement (Tanzania, Rwanda) • Weak capacity for process across govt. (Albania) • PRSP ideally builds on existing nat plans - augmenting with more participation, linking to resource envelope, and results orientation. (Nepal) • Importance of working with existing dynamics - including political dynamics (Moldova)

7. Experience - Participation • Some opening of ‘policy space’ in country - fragile • Generally limited to consultation with limited feedback to CS • Broadly similar formats: local, regional, national workshops, plus some PPAs (Ethiopia) Parliaments not generally involved • Strong advocacy of some key themes but not on macroeconomic policy (Kenya) • Very high expectations on the part of civil society - some bitter disappointments (Kampala declaration, PRSP Review)

8. Country examples • Kenya - very positive participatory process despite lack of high level political commitment and poor governance environment • Bolivia - legal framework for participation established in the National Dialogue Law • Albania - GoA needed convincing of merits of participation - achieved through training of officials & active collaboration of PRSP Secretariat across ministries • Vietnam - High quality PPA underpinned consultation linked to ongoing process of national policy formulation

9. Links with resource envelope • Budget and MTEF • Key lesson is to move on these in parallel with the PRSP • Constrained fiscal choices in CIS means spending must be limited - but some budget process measures can have pro-poor impact • PEM/PER • Tanzania - good example of nesting the PER process within the overall PRS process • Watch for over-optimistic growth forecasts (Bolivia) • Is donor financing ‘on budget’? (TA in Nepal)

10. Results orientation • Policy making based on analysis of needs - but there are serious gaps in data in many cases (and data gathering capacity) • ‘Missing middle’ - lack of concrete steps from analysis to interventions • Feedback of M&E and PSIA into future iterations of PRSP (inc Annual Reports) - needs institutionalisation • (Somewhat covert) expectations around participation in this area - PPA and civil society monitoring of implementation. Need to stimulate demand for information

11. Results orientation 2 • Vietnam Development Targets - country-specific version of the MDGs, established in DFID-financed workshop with civil society and donor participation. Intermediate benchmarks to measure progress. (Also PPA mentioned earlier) • Uganda - UDN involved in public expenditure tracking at local level • Bolivia - Bilat Coop Network identified need for indicators and targets in the area of institutional development

12. Donor behaviour • Leading edge DFID thinking in this area: • lower transactions costs - harmonisation • streamlined conditionality • predictable aid flows • transparency of operations • untied aid • general budget support • donor “obligations” on aid • external assessment of partnership

13. Donor behaviour 2 • Perhaps agenda not realistic where DFID not a big player and where big players are unsympathetic • Coordination can take place without common financing mechanisms (Georgia) • Projects and SWAps - can support the PRSP • Is direct budget support an option? Risks and safeguards • Are there opportunities to influence the agenda in these countries?

14. For discussion • What is relevant for LICs in transition? • What is already happening? • How can DFID feasibly and constructively support the processes of change implied by the PRSP agenda? • Ownership • Participation • Results-orientation • Other donors

15. PRSP Schedule Key Events Preparation Status Report 1st Annual Progress Report 2nd Annual Progress Report etc.. I-PRSP I-PRSP PRSP (I) PRSP (II) 9-24 months 2-5 years PRSP elements: • Poverty analysis • Goals/targets • Policy actions • M&E plan • Med-term budget fw • Financing plan • External assistance • Participatory process HIPC(II) Completion Point HIPC(II) Decision Point