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The Poverty Reduction Strategy Initiative

This report presents the findings of two independent assessments conducted by the World Bank and IMF on the Poverty Reduction Strategy (PRS) Initiative. It highlights the achievements and challenges of the PRS process and provides recommendations for improvement, including greater country ownership, improved domestic processes, and better alignment of aid. The report also emphasizes the need for a clear framework and accountability for both the World Bank and IMF in supporting the PRS approach.

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The Poverty Reduction Strategy Initiative

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  1. The Poverty Reduction Strategy Initiative Independent Assessments of World Bank and IMF Support by Operations Evaluation Department & Independent Evaluation Office Presented to the DAC Evaluation Network November 9, 2004 Gregory K. Ingram

  2. Two evaluations with joint background work • Ten country case studies with agreed methodology; four produced jointly • Albania, Cambodia, Ethiopia, Guinea, Mauritania, Mozambique, Nicaragua, Tajikistan, Tanzania, Vietnam • Joint workshop to vet the preliminary country findings • Stakeholder survey developed jointly, and administered in all ten countries

  3. Significant net benefits to collaboration • Lower transactions costs to country evaluees (e.g., joint mission, single reports) • No significant cost change for evaluators • Working together took more time • Broader base of evaluative material for each evaluation (e.g., ten case studies) • Recommendations carried more weight, as both Boards heard some common messages

  4. PRS Process: Achievements • Better than Policy Framework Papers • Increased attention to poverty diagnosis • More stakeholders involved • Strategies often provided a framework for policy dialogue with governments • Relevant and should be supported….but has not yet reached potential

  5. Initiative’s design inhibits country ownership • PRSP is a condition for access to IDA/PRGF • Washington review process inhibits ownership • More focus on producing documents than on improving domestic processes • Little guidance on adaptation to country conditions

  6. Donor alignment on processes, not yet on programs • Donors’ processes improved… where governments already manage aid well • Donors - including Bank - haven’t defined how program content will change • Lack of prioritization in PRSPs makes alignment difficult to demonstrate

  7. Strategies do not feature poverty impact and growth • Weak analytical base • Narrow public expenditure focus • Inordinate attention to the social sectors

  8. Aid to both PRSP and non-PRSP countries is increasing Average Net ODA Flows Per Country 2000 - 2002

  9. Poverty impact still largely unknown Progress on MDGs Between 1999 and 2003 (12 PRSP Countries)

  10. To improve the PRS process, both OED and IEO recommend • Allow greater country-driven flexibility in implementation of the PRS approach • Focus on improving domestic processes, not on submitting documents • Clarify the purpose and role of the JSA to ensure that BWI assessments are transparent, candid, and helpful as a basis for the selectivity judgments underlying financing decisions

  11. World Bank: alignment has not entailed major changes CASs Before And After PRSPs

  12. World Bank: country-specific analytical work declined 140 120 100 80 Number of Analytical Tasks 60 40 20 0 96-99 00-04 Country-Specific Analytical Work Required Analytical Work

  13. OED also recommends • Change Board review processes to more transparently support country ownership and more effectively link to decision about the Bank’s program • Help identify actions with the most poverty pay-off • Use PRSP to define a partnership framework with mutual accountability

  14. IMF: Main Findings on PRGF • Limited alignment: PRGF programs draw on and fit with PRSPs only to a limited extent • Compared to ESAF, programs have more fiscal flexibility and support increases in social spending • There is no evidence of generalized aid pessimism or disinflation bias in programs • IMF structural conditionality has been streamlined, but judging change in Bank-Fund aggregate conditionality is difficult

  15. IMF: Main Findings on Role of IMF • Some broadening of policy space where macro-stability is not a pressing concern • Little involvement in broadening participation in macroeconomic policy debate • Little contribution to filling country-specific knowledge gaps about micro-macro linkages • Increased attention to protecting key social objectives and more accommodation of higher aid flows in program design • However, institutional framework for determining appropriate medium-term resource envelope is vague and IMF “catalytic” role is unclear

  16. IEO also recommends Clarify what the PRS approach implies for the IMF’s own operations • in terms of IMF engagement in the PRS process • regarding PRGF program design and formulation Strengthen prioritization and accountability on what the IMF itself is supposed to deliver • Expectations on IMF’s contribution need to be matched by appropriate staff resources • But even a “smaller” role for the IMF will require more fundamental changes in its way of doing business • Use country-driven PRS process to set priorities Strengthen framework for establishing the external resource envelope

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