Poverty Reduction Strategy Paper

Last updated

Poverty Reduction Strategy Papers (PRSPs) are documents required by the International Monetary Fund (IMF) and World Bank before a country can be considered for debt relief within the Heavily Indebted Poor Countries (HIPC) initiative. [1] [2] PRSPs are also required before low-income countries can receive aid from most major donors and lenders. [2] The IMF specifies that the PRSP should be formulated according to five core principles. [1] The PRSP should be country-driven, result-oriented, comprehensive, partnership-oriented, and based on a long-term perspective. [1] The PRS process encourages countries to develop a more poverty-focused government and to own their own strategies through developing the plan in close consultation with the population. [3] [4] A comprehensive poverty analysis and wide-ranging participation are vital parts of the PRSP formulation process. [5] [6] There are many challenges to PRS effectiveness, such as state capacity to carry out the established strategy. Criticism of PRSP include aid conditionality, donor influence, and poor fulfillment of the participatory aspect. [2]

Contents

Purpose

The World Bank and IMF require countries to produce a Poverty Reduction Strategy Paper as a condition for debt relief through the HIPC initiative and other monetary aid, as do several bilateral donors. [2] PRSPs are intended to help aid recipient countries meet the Millennium Development Goals (MDGs). [1] They detail a country's plan to promote growth and reduce poverty through implementation of specific economic, social and structural policies over a period of three years or longer. [7] [1] PRSPs provide lending organizations, like the World Bank and the IMF, assurance that aid receiving countries will utilize aid to pursue development outcomes that have been elaborated in the PRSPs and approved by lenders.

Goals

The IMF has outlined five core principles for the process through which PRSPs are elaborated. [1] First, it should be country-driven, meaning that country ownership of the strategy should be culminated through broad-based participation of civil society. [1] It should also be result-oriented by focusing on outcomes that will benefit the poor, comprehensive in exploring and understanding the multidimensional nature of poverty, partnership-oriented by involving development partners such as the government, domestic stakeholders, and external donors. [1] Lastly, the development of the PRSP should be based on a long-term perspective geared towards reducing poverty. [1] These core principles are central to the goals of the PRS process.

Poverty-focused government

One central goal is to create a more poverty-focused government. Previously, poverty reduction had been largely a marginalized concern within governments of developing countries. [3] Through the PRSP process, the issue of poverty has moved up in priority, creating more comprehensive plans addressing poverty specifically than ever before. [3] There has also been an increase in “pro-poor” spending within the health, education and transportation sectors. [3] Due to the demands from the donors to show results, there has been an increase in poverty monitoring through participatory poverty assessments and household surveys. [3]

Civil society involvement

One major function of the PRS is to encourage more participation from the population. The purpose of civil society involvement is to increase the influence of stakeholders in policy creation, program implementation, resource allocation and priority setting. [4] The intent here is to cultivate a degree of national consensus, thereby creating a poverty reduction strategy that is more representative of stakeholder's interests. [4] The idea behind this is that the PRS will then be owned by the population and will be sustainable, as it suits the needs and capacities of the country. [4]

Ownership

Ownership of the PRSP by the government and population is a very important goal of PRS. [8] It addresses the ineffectiveness of donor imposition of policy conditions from the outside, a common approach of lending organizations. [2] One way the PRS process encourages ownership is by having governments create their own PRSPs in close consultation with the population. [8] This allows them to take ownership over, and thereby stick to, the strategies they and their population deem necessary to improve conditions in their counties. [8] Additionally, the hope is that in developing a PRSP together, a country will gain a more comprehensive understanding of the poverty issues it faces. The PRSP process is also meant to encourage government leadership in implementing their own strategies by allowing them to allocate the aid money themselves in accordance with the strategies they had drawn up in the PRSP. The emphasis on government leadership stems from the problems that arise when donors establish their own strategy implementation agencies within the client countries, bypassing state agencies and therefore undermining the development of state capacity as well as creating a dependency on aid organizations. [2]

Formulation process

Poverty analysis

The PRSP process begins with an analysis of poverty within the country, taking into account both quantitative and qualitative data. [6] This analysis becomes the basis for the poverty reduction strategy as it indicates the priority issues. [6] It is important at this stage for the government to initiate civil participation, though to the degree with which this is done varies by country. [6]

Participatory process

One of the most important factors of the PRSP is the participatory process through which it is created. It is vital to increasing country ownership of the PRS and promote accountability. The World Bank outlines the following participatory levels:

Participation has been facilitated by civil society organizations, mainly NGOs. However, since there is no clear framework for consultation with the masses, nor a clear definition of participation, many governments are able to conduct and organize it in whichever way they decide. [9] This often results in governments coordinating selective participation and employing other such tactics aimed at diluting public influence over government objectives. Governments have also been unclear on how much they should incorporate the opinions of the poor into their PRSP, especially while also trying to appease the donors. [9] Furthermore, there is no clear criteria on which to judge whether or not the participatory aspect has been fulfilled in the PRSP. [9] This means that the PRSP might be approved by the IMF and World Bank regardless of the lack of true civil society participation in its making. [9]

Content

According to the World Bank's PRS Sourcebook, a PRSP should contain a poverty analysis, a prioritization of the programs needed to achieve development objectives, targets and indicators, a plan for keeping track of progress towards goals and evaluating effectiveness of implementation of programs, and a description of the participatory process in preparing the strategy. [5]

Criticism and challenges

Even with an approved PRSP, some countries have difficulty following through with intended policies and therefore do not reach the PRS outcomes. A large factor of this is the misallocation of budgetary funds that were intended to go towards the PRS.

The PRSP process has been scrutinized for increasing aid conditionality even though it was supposedly created to undo the imposition of policy conditions from the outside by increasing country ownership. [2] Some have argued that it is a "process conditionality" not a "content conditionality". This differentiation is important because it means donors are only monitoring if the country has made a PRSP and if it was made in a participatory way. However, this might still pose a problem. Since in the past donors were unable to impose content effectively in the client country's policies, it seems unlikely that donors would be able to impose process standards in making a PRSP. [2] It has already been shown that donor's attempts to influence domestic politics have not been successful in the past. [2] Furthermore, international financial institutions do in fact evaluate PRSP content, not process alone. [8]

A clear definition of what civil participation means has not been laid out by the IMF or World Bank. [9] This creates a problem when evaluating one of the key requirements of the PRSP, which is that it has to be formulated with civil participation. In fact, participation that involves the population working with the government to develop specific strategies to reduce poverty doesn't exist in any developing country. This seems to suggest that the WB and IMF approve PRSPs regardless of the fulfillment of this condition. [9]

See also

Related Research Articles

Good governance is the process of measuring how public institutions conduct public affairs and manage public resources and guarantee the realization of human rights in a manner essentially free of abuse and corruption and with due regard for the rule of law. Governance is "the process of decision-making and the process by which decisions are implemented ". Governance in this context can apply to corporate, international, national, or local governance as well as the interactions between other sectors of society.

<span class="mw-page-title-main">Heavily indebted poor countries</span> IMF and World Bank classification for special eligibility

The heavily indebted poor countries (HIPC) are a group of 39 developing countries with high levels of poverty and debt overhang. Because of these factors, the International Monetary Fund (IMF) and the World Bank have classified them as eligible for special assistance.

Governance is the overall complex system or framework of processes, functions, structures, rules, laws and norms born out of the relationships, interactions, power dynamics and communication within an organized group of individuals. It sets the boundaries of acceptable conduct and practices of different actors of the group and controls their decision-making processes through the creation and enforcement of rules and guidelines. Furthermore, it also manages, allocates and mobilizes relevant resources and capacities of different members and sets the overall direction of the group in order to effectively address its specific collective needs, problems and challenges.

<span class="mw-page-title-main">Millennium Development Goals</span> Eight international development goals for the year 2015 by the United Nations

In the United Nations, the Millennium Development Goals (MDGs) were eight international development goals for the year 2015 created following the Millennium Summit, following the adoption of the United Nations Millennium Declaration. These were based on the OECD DAC International Development Goals agreed by Development Ministers in the "Shaping the 21st Century Strategy". The Sustainable Development Goals (SDGs) succeeded the MDGs in 2016.

Structural adjustment programs (SAPs) consist of loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their stated purpose is to adjust the country's economic structure, improve international competitiveness, and restore its balance of payments.

Aid effectiveness is the degree of success or failure of international aid. Concern with aid effectiveness might be at a high level of generality, or it might be more detailed.

<span class="mw-page-title-main">Poverty reduction</span> Measures to reduce poverty permanently

Poverty reduction, poverty relief, or poverty alleviation is a set of measures, both economic and humanitarian, that are intended to permanently lift people out of poverty. Measures, like those promoted by Henry George in his economics classic Progress and Poverty, are those that raise, or are intended to raise, ways of enabling the poor to create wealth for themselves as a conduit of ending poverty forever. In modern times, various economists within the Georgism movement propose measures like the land value tax to enhance access to the natural world for all. Poverty occurs in both developing countries and developed countries. While poverty is much more widespread in developing countries, both types of countries undertake poverty reduction measures.

Private sector development (PSD) is a term in the international development industry to refer to a range of strategies for promoting economic growth and reducing poverty in developing countries by building private enterprises. This could be through working with firms directly, with membership organisations to represent them, or through a range of areas of policy and regulation to promote functioning, competitive markets.

<span class="mw-page-title-main">Education in Yemen</span>

Yemen ranked 150 out of 177 in the 2006 Human Development Index and 121 out of 140 countries in the Gender Development Index (2006). In 2005, 81 percent of Yemen's school-age population was enrolled in primary school; enrollment of the female population was 74 percent. Then in 2005, about 46 percent of the school-age population was enrolled in secondary school, including only 30 percent of eligible females. The country is still struggling to provide the requisite infrastructure. School facilities and educational materials are of poor quality, classrooms are too few in number, and the teaching faculty is inadequate.

The Bretton Woods Project works as a networker, information-provider, media informant and watchdog to scrutinise and influence the World Bank and International Monetary Fund (IMF). Through briefings, reports and the bimonthly digest Bretton Woods Update, it monitors projects, policy reforms and the overall management of the Bretton Woods institutions with special emphasis on environmental and social concerns.

<span class="mw-page-title-main">Communication for Development</span> Communication model

Communication for Development (C4D) is all the different types of communication that need to take place in societies if sustainable democratic development is to occur.

Local economic development (LED) is an approach to economic development, of note in the developing world that, as its name implies, places importance on activities in and by cities, districts and regions. Local economic development combines economic development activities, urban planning, infrastructure development and social development activities to improve local conditions. LED encompasses a range of disciplines including physical planning, economics and marketing, all with the goal of building up the economic capacity of a local area to improve its economic future and the quality of life for all.

The Federal Ministry of Budget and Economic Planning is one of the Federal Ministries of Nigeria.

Participatory development (PD) seeks to engage local populations in development projects. Participatory development has taken a variety of forms since it emerged in the 1970s, when it was introduced as an important part of the "basic needs approach" to development. Most manifestations of public participation in development seek "to give the poor a part in initiatives designed for their benefit" in the hopes that development projects will be more sustainable and successful if local populations are engaged in the development process. PD has become an increasingly accepted method of development practice and is employed by a variety of organizations. It is often presented as an alternative to mainstream "top-down" development. There is some question about the proper definition of PD as it varies depending on the perspective applied.

Community-driven development (CDD) is an initiative in the field of development that provides control of the development process, resources and decision making authority directly to groups in the community. The underlying assumption of CDD projects are that communities are the best judges of how their lives and livelihoods can be improved and, if provided with adequate resources and information, they can organize themselves to provide for their immediate needs. CDD projects work by providing poor communities with direct funding for development with the communities then deciding how to spend the money. Lastly, the community plans and builds the project and takes responsibility for monitoring its progress.

Participatory evaluation is an approach to program evaluation. It provides for the active involvement of stakeholder in the program: providers, partners, beneficiaries, and any other interested parties. All involved decide how to frame the questions used to evaluate the program, and all decide how to measure outcomes and impact. It is often used in international development.

<span class="mw-page-title-main">Post-2015 Development Agenda</span>

In the United Nations, the Post-2015 Development Agenda was a set of talks and discussions that led to the creation of the 2016 Sustainable Development Goals. This replaced the 2015 Millennium Development Goals.

After its independence from Portugal in 1975, the Mozambique government established a primary health care system that was cited by the WHO as a model for other developing countries. Over 90% of the population had been provided with vaccination. During the period of the early 1980s, around 11% of the government budget was targeted on health care. The Mozambique civil war led to a great setback in the primary health system in Mozambique. RENAMO's attack on government infrastructures included health and education systems from 1980 to 1992.

The Poverty Reduction Strategy (PRS) is a country-based process which leads to the formation of a Poverty Reduction Strategy Paper. The paper is then presented to major donors such as the International Monetary Fund (IMF) and the World Bank for approval. Approval allows foreign aid to be given to the country. Approval was given to Honduras on August 20, 2001. Honduras' goal was to reduce the rate of poverty in the nation from 70 percent to 40 percent by 2015. The PRS was a continuation of the "Master Plan for Reconstruction and National Transformation." The PRS had an annual budget of 4.4 million Honduran lempiras which was distributed in about 300 million lempira lots to each of 18 of the Honduran Government departments. The funds were to be used for specific projects aimed at benefiting communities.

Wahidullah Waissi is a career Afghan diplomat. He is now serving as the ambassador of the Islamic Republic of Afghanistan to the Commonwealth of Australia, New Zealand and Republic of Fiji. After Taliban's takeover in August 2021, the Ambassador and the Embassy of Islamic Republic of Afghanistan in Canberra continue in fulfilling diplomatic responsibilities under the Vienna Convention of Diplomatic Relations of 1961, operating outside the realm of Taliban influence.

References

  1. 1 2 3 4 5 6 7 8 9 "Factsheet -- Poverty Reduction Strategy Papers". IMF.
  2. 1 2 3 4 5 6 7 8 9 Dijkstra, Geske (2011). "The PRSP Approach and the Illusion of Improved Aid Effectiveness: Lessons from Bolivia, Honduras and Nicaragua". Development Policy Review. 1. 29: 111–133. doi:10.1111/j.1467-7679.2011.00522.x. S2CID   154715187.
  3. 1 2 3 4 5 Driscoll, Ruth; Alison Evans (2005). "Second-Generation Poverty Reduction Strategies: New Opportunities and Emerging Issues". Development Policy Review. 23 (1): 5–25. doi:10.1111/j.1467-7679.2005.00274.x. S2CID   153404316.
  4. 1 2 3 4 Lazarus, Joel (2008). "Participation in Poverty Reduction Strategy Papers: reviewing the past, assessing the present and predicting the future". Third World Quarterly. 29 (6): 1205–1221. doi:10.1080/01436590802201188. S2CID   58946172.
  5. 1 2 3 Klugman, Jeni. "PRSP Sourcebook: Overview" (PDF). World Bank.
  6. 1 2 3 4 "Making PRSP Inclusive". CBM.{{cite web}}: Missing or empty |url= (help)
  7. ↑ Craig, David; Doug Porter (2003). "Poverty Reduction Strategy Papers: A New Convergence". World Development. 31 (1): 53–69. doi:10.1016/s0305-750x(02)00147-x.
  8. 1 2 3 4 Seshamani, Venkatesh (March 2005). "The same old wine in the some old bottle? Content, process and donor conditionalities of the PRSP" (PDF).{{cite journal}}: Cite journal requires |journal= (help)
  9. 1 2 3 4 5 6 Kamruzzaman, Palash (February 2009). "Poverty Reduction Strategy Papers and the rhetoric of participation". Development in Practice. 19 (1): 61–71. doi:10.1080/09614520802576385. S2CID   154376832.

Further reading

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.