PRS in Fragile States: A stocktaking of what we know

1. PRS in Fragile States: A stocktaking of what we know Nora Dudwick PRMPR

2. Defining fragile states (FSs) • FSs lack functional authority, capacity and/or legitimacy to provide for citizens’ basic needs • FSs are vulnerable to conflict, humanitarian crises, economic collapse and political fragmentation • Conflict-affected FSs exhibit breakdown of law, services, & economic activities; conflict-related poverty (forced labor, theft/destruction of crops, epidemics, new vulnerable groups)

3. The new “fragile states agenda” • This agenda responds to (i) inability of FSs to perform core state functions, and (ii) the threat they represent to neighbors in the form of economic impacts, organized crime, disease, refugees • FS agenda calls for sustained international engagement and improved donor coordination to promote government legitimacy, accountability and greater capacity to fulfil core state functions

4. State-building, growth and poverty reduction: which comes first? • Do good institutions and effective governance precede or follow growth? • Can institutional reform in FSs stimulate growth enough to reduce poverty? • How to balance priorities - restoring services and building core state functions? • For post-conflict states, when is less rather than more assistance preferable?

5. PRSs may not be the best approach… • where governments lack legitimacy • where governments don’t demonstrate at least minimal commitment to poverty reduction • where governments lack minimal capacity: to collect data, formulate credible budget and policies, form country partnerships • in countries emerging from conflict where international support may “freeze” rather than help resolve conflict, or provide financing likely to be diverted to military conflict with neighbors • Where security situation is too volatile for data collection or participation, and planning horizons are short

6. When adapting PRSs to fragile states, accept that…. • PRSs may require multiple iterations • donors must confront and address entrenched obstacles to coordination & harmonization • expectations of participation in volatile environments must be tempered by recognition of risks • poverty diagnostics depend on creative use of multiple data sources • it is critical that capacity building is integrated into all activities and long-term rather than ad-hoc

7. Prioritizing reforms in fragile states • Aim for “good enough” governance; attack corruption only selectively to avoid destabilization • Macreoconomic reforms should pay more attention to employment (including in infrastructure/rehab) • PFM reforms should be prioritized where governments lack basic capacity to allocate and use resources • Substitution can be considered, but with a clear exit strategy • When restoring urgent services, donors should keep a low profile and promote the state’s role as coordinator/enabler

8. Adapting the PRS to conflict countries • PRS should integrate analysis of conflict drivers and triggers • Security needs should be addressed in spending plans

9. Evaluating PRS implementation in FS: questions for further research • Did the PRS improve capacity to gather, analyze & use data for policymaking? • How effective was PRS implementation? • Did benefits of implementation outweigh time and resource costs of PRS preparation? • Were there negative outcomes to implementing the PRS? • Should there be alternative instruments that can satisfy HIPC debt relief conditionality in FSs?