Commonwealth SecretariatPRSP Learning Event

9 July 2003

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Impetus behind the PRSP initiative Mixed record on poverty reduction in 1990s International Development Targets/MDGs Multilateral funding for debt relief (HIPC II) Findings on aid effectiveness

Pro-poor policy reforms have been failing for lack of real country commitment (“ownership”) When country authorities really don’t want to do something, conditionality does not make them do it (properly) Projects get around the immediate problem but further weaken commitment and capacity (disincentives + transaction costs)

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What are PRSPs? They replace the old Policy Framework Papers as

a basic condition for IMF and World Bank (IDA) concessional lending

They play a similar role in Enhanced HIPC debt relief, for eligible countries

They are increasingly the focus for bilateral donors (DAC, SPA, etc.) for improving the quality of aid

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Country-led/owned, based on broad-based participation Comprehensive – macro, structural, social, environmental Long term perspective Results-oriented Costed & prioritised Partnership-oriented

Core PRSP Principles

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What’s new? ‘Costed’ poverty reduction strategy linked to

macro & budget framework (encouraging the tough choices!)

Outcome/monitoring focused; making the links between policy & results

Opening-up the policy process to participation

New incentives, new partnership possibilities & new forms of aid delivery

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PRSPs are…

…NOT a sophisticated new technical device - a “magic bullet” that will solve fundamental problems of development and cooperation

…offering important opportunities: for poverty to be “mainstreamed” in national systems,

providing priorities for both aid and the national budget

for poverty reduction efforts to be more “country owned” and thus more successful

But these are not certainties - the success of the PRS initiative depends on three gambles ...

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Gamble 1 If governments are obliged to

discuss poverty, and what they are doing about it, with citizens, then they are likely to take it more seriously and be held to account more effectively

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Gamble 2

If partners have a national PRSP to coordinate around, then donor behaviour and aid management will improve - leading to lower transaction costs, and less damage to national institutions

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Gamble 3

If the PRS is taken seriously by all parties, then relations between partners and governments will change more fundamentally - with increased domestic accountability, more effective aid and better poverty outcomes

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I-PRSP PRSP (I) PRSP (II)9-24 months 2-5 years

HIPC(II)Decision

Point

HIPC(II) Completion

Point

1st AnnualProgress

Report

Preparation

Status Report

2nd APR

PRS Schedule

IMPLEMENTATION & MONITORINGPREPARATION

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How many PRSPs? The PRSP initiative is now 3.5 years old 65 countries are engaged in the PRSP process in

some way Currently 28 countries have full PRSPs – 9 of these

are Commonwealth countries 37 more are in the process of producing a PRSP (or

I-PRSP) – 8 of these are Commonwealth countries 17 (of 54) Commonwealth countries involved in the

PRSP process

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Examples from the C’wealth Tanzania – completed its full PRSP October 2000 and

it went to the Boards in November 2000. Has completed two Annual Progress Reports since then – most recently April 2003

Mozambique – completed its full PRSP in April 2001 and it went to the Boards in September 2001

Sri Lanka – Full PRSP went to the Boards in April 2003 Guyana – completed its full PRSP Feb 2002 (macro

addition April 2002) - went to the Boards in September 2002

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Policy formulation

Communication

Policy implementation

Monitoring and evaluation

Poverty analysis

Like projects, PRSs are supposedto involve a series of steps, so thatdesign is based on evidence and

is then improved by learning (M&E)

Financing

PRS Process

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Policy formulation

Communication

Policy implementation

Monitoring and evaluation

Poverty analysis

Like projects, PRSs are supposedto involve a series of steps, so thatdesign is based on evidence and

is then improved by learning (M&E)

Financing

Engaging with the PRS process

Shared analytical work; TA defined by govt; support civil society inputs

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Policy formulation

Communication

Policy implementation

Monitoring and evaluation

Poverty analysis

Like projects, PRSs are supposedto involve a series of steps, so thatdesign is based on evidence and

is then improved by learning (M&E)

Financing

Engaging with the PRS process

TA on policy (govt led); engaging civil society; country strategies linked to goals, targets and macro framework in PRSP

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Policy formulation

Communication

Policy implementation

Monitoring and evaluation

Poverty analysis

Like projects, PRSs are supposedto involve a series of steps, so thatdesign is based on evidence and

is then improved by learning (M&E)

Financing

Engaging with the PRS process

Financing on-budget; in line with budget/MTEF cycle; conditions & benchmarks streamlined with PRSP matrix

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Policy formulation

Communication

Policy implementation

Monitoring and evaluation

Poverty analysis

Like projects, PRSs are supposedto involve a series of steps, so thatdesign is based on evidence and

is then improved by learning (M&E)

Financing

Engaging with the PRS process

Consultative and transparent process; supporting others’ communication efforts

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Policy formulation

Communication

Policy implementation

Monitoring and evaluation

Poverty analysis

Like projects, PRSs are supposedto involve a series of steps, so thatdesign is based on evidence and

is then improved by learning (M&E)

Financing

Engaging with the PRS process

Projects/programmes support PRS; implementation managed by govt agencies

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Policy formulation

Communication

Policy implementation

Monitoring and evaluation

Poverty analysis

Like projects, PRSs are supposedto involve a series of steps, so thatdesign is based on evidence and

is then improved by learning (M&E)

Financing

Engaging with the PRS process

Monitoring, review & audit drawing on govt. systems; annual PRSP review; support creation of M&E strategy; support involvement of CS

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Reminder: Gamble 1 If governments are obliged to

discuss poverty, and what they are doing about it, with citizens, then they are likely to take it more seriously and be held to account more effectively

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Progress on Gamble 1

PRSs are beginning to provide focus for allocation and use of domestic and external resources – they are being taken seriously

They show improved analysis of poverty, and this is used to justify PRS priorities

But policy detail often has limited poverty focus, and lacks a critical review of past failures

Implementation is seriously limited by enduring weaknesses in budget and public-sector management

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More on Gamble 1

Some opening of policy debate to broader participation by domestic constituencies

consultations, PPAs, civil society involvement in policy working groups, and monitoring (tho involvement of formal political institutions weak so far)

But domestic accountability structures remain (very) weak, so not clear how much increase in real commitment

Difficulties sustaining gains from participatory processes - disappointment following (unreasonably) high initial expectations

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Reminder: Gamble 2

If partners have a national PRSP to coordinate around, then donor behaviour and aid management will improve - leading to lower transaction costs, and less damage to national institutions

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Progress on Gamble 2 A wide range of experience in respect of partner

behaviour with some significant changes by some agencies

In general, partners are coordinating their PRSP work but this is not the same as realigning agency programmes to PRSP priorities

Realigning priorities requires strong national strategy with clear priorities (and good sector/local policies) – many PRSPs fall short of this

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Reminder: Gamble 3

If the PRS is taken seriously by all parties, then relations between donors and governments will change more fundamentally - with increased domestic accountability, more effective aid and better poverty outcomes

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Progress on Gamble 3 Not clear that domestic accountability institutions will

soon be able to “take over” from donor accountability There is little evidence of streamlined conditionality -

possibly an increase Some tentative moves towards “mutual accountability”

- e.g. the Independent Monitoring Group in Tanzania, and SPA

Partners supporting PRSs will continue to face a dilemma on strengthening the poverty impact of policy versus encouraging a good country-specific process