National Poverty Reduction Strategies (PRSs) in South Eastern Europe

1. National Poverty Reduction Strategies (PRSs) in South Eastern Europe SEE Team PRS Learning Event 21 March 2003 PRSP Monitoring and Synthesis Project

2. Origins of the PRSP Idea • Mixed record on poverty reduction in 1990s (Africa, Transition economies, post-1997 Asia) • Findings on aid effectiveness – off-budget projects, ex ante conditionality, parallel donor processes • International Development Targets/MDGs • Multilateral funding for debt relief (HIPC II)

3. What’s new? • ‘Costed’ poverty reduction strategy linked to macro & fiscal framework • Outcome focused; making the links between policy & results • Opening-up the policy process to new forms of participation • New incentives for monitoring & evaluation • New partnership possibilities & new forms of aid delivery

4. Assumptions behind PRS initiative? • Conflict study - no explicit ‘preconditions’ for embarking on a PRS but there are implicit expectations about: • Credible political authority with control over people & territory • Commitment to peace & poverty reduction • Functioning government (that follows certain basic good governance and economic policies) • Some space for public participation • As in Africa, a PRS may be embarked on without these being met, but constrains chances for ‘success’ • Politics study - implicit empowerment model in PRS approach and assumption that it will support political devt.

5. Is PRS approach appropriate to transition countries? • Principles are appropriate & poverty levels are very high - but specific context of transition countries means it will play out differently than elsewhere • No HIPC incentive – but concessional lending • EU accession agenda • Thus donor profile is different than elsewhere (EU-IFI relations) • Complex conflicts • New states in most cases • Extremely fragile civil society

6. Participation • Context for participation • History of conflict • Extreme distrust between govt and NGO/CSO in many cases • Fragile civil society, sometimes aid dependent, very low capacity • Low capacity within government for carrying out PPA • Globally, there has been some opening of policy debate to broader participation by domestic constituencies - extent of gains dependent on starting point • Broadly true in transition countries…

7. Participation • Much information provision - drafts disseminated in relevant languages (Macedonia) and discussed in workshops nationally, regionally and sectorally • Albania – promoted a national debate on poverty, talk shows, radio programs, newspaper coverage • Who is involved? Many groups nominally engaged, but depth hard to judge and not necessarily respresentative • Parliamentary involvement usually weak • No PPAs and little community level consultation • Not clear that participation is institutionalised (e.g. in monitoring plans or national fora for continued dialogue)

8. Governmental ownership • Context for ownership of PRS in SEE • Recent states carrying out new functions • Complex political institutional environment in many cases • Budget systems weak • Relationships with donors – incentives for owning PRS? • Welfarist understanding of poverty • Globally, there are challenges with ‘mainstreaming’ the PRS – especially building political engagement & improving links with other planning and reform processes.

9. Governmental ownership • Note ownership may look different at different stages - only Albania has full PRS • Understanding of PRS principles may be weak even in key counterparts • PRS sometimes in context of national development strategy • Links between centre/PRS unit and sectoral ministries and regional bodies often extremely weak – PRS process exposes this weakness…and strengthens? • Considerable use of consultants in formulating PRSs – sustainability questionable • Donor behaviour also affects possibilities for ownership – more later, but governments somewhat fatigued.

10. Links with budget reform • PRS units established in MoF in some cases, and in Social/Welfare departments in other cases – prospects for links with resource allocation? • Acceptance among governments that MTEFs are a positive tool. • But no MTEF process in most SEE countries – though Albania MTEF formulation very closely linked with PRS formulation (and implementation prospects hopeful). • Globally, prioritisation and costing have proved difficult (but worthwhile) exercises for most governments – SEE no exception

11. Results orientation • Context for results-orientation • Some experience of data collection and monitoring but incentives under Soviet system led to distortions • Very weak data and work on poverty assessments in early stages • Little room for CSO monitoring • Will require a considerable shift in culture – not yet evident given PRSs not complete • Albania PSIA pilot • Globally, operational M&E plans are often developed after first PRS is complete – considerable time needed toget buy-in from a range of stakeholders. Tendency towards somewhat top-heavy, outcome-oriented, cumbersome systems.

12. Part II – Donor behaviour • Donor profile in SEE is exceptional • EU accession most prominent agenda • IFIs present but not main actors • Bilateral community in early stages of coordination • Donors making transition out of relief/reconstruction to development • PRS is an opportunity to bring about greater harmonisation and alignment amongst donors – globally, it is providing considerable impetus to in some countries • Not clear that this is the case in SEE?

13. World Bank and IMF • Experience of DFID engagement with IFIs is variable • Sometimes good relations, open lines of communication (esp with WB) • In other cases, mixed messages on key issues, less open relations with other donors generally, sudden decisions • Timetables for PRS preparation are often driven by IFIs and prescriptive on content • JSA process likely to be a key area for engagement as PRSs are finished – experience elsewhere suggests that this is not necessarily straightforward or open for comments • Links between CAS and PRS - again, not automatic links

14. The EU • EU accession is driving force for reform in all SEE countries • There are high-level commitments from both Bank and EU to work more closely on PRS and SAA • On the ground, this is not generally translated into practice • Indications that the EU tends to see SAA as a political process as distinct from the PRS developmental process • WB/IMF do not always acknowledge the prominence of the SAA agenda for these countries

15. UNDP • UNDP is most closely associated with PRS agenda globally – but also with MDG agenda • In practice not a great deal of harmony between these processes at present (in SEE and globally) • In theory governments can monitor progress towards MDGs by monitoring PRS implementation outcomes, but at present parallel processes

16. Aid instruments • There are problems with transactions costs of aid and off-budget aid (CIS countries and maybe SEE?) • Little evidence of move towards programmatic finance – PRS not affecting reasons for this (no PRGF, corruption) • PRSC – not clear that Bank is doing business differently • Performance assessment requirements of different agencies taxing – PRS, SAA, Stability Pact, MDGs, projects • Some countries will graduate to IBRD status – no formal requirement for a PRS