PRSP: Advancing Poverty Reduction Strategies Globally

The Impact of PRSP on Global Poverty Reduction

The Poverty Reduction Strategy Paper (PRSP) approach is well-established in many countries and has been linked with major advances in identifying countries with programs, helping the fight against poverty figure prominently in policy discussions and promoting a more open dialogue. On 31 August 2005, the IMF Executive Board had reviewed 49 PRSPs, and 11 countries had completed their PRSPs. In these countries, attention is now focused on the effective implementation of strategies.

The PRSP process is continually refined through regular reviews of progress in implementation and more detailed assessments. The last progress report was completed in September 2004. In September 2005, the Boards of the IMF and World Bank concluded the second detailed review.

Previous reviews ratified the importance of country ownership of the programs, the need to prioritize more effectively, realistic and flexible objectives and targets, and a more open debate about different policy options. Also stressed was the importance for donors to augment the overall efficiency of care by aligning their support to a greater extent with the priorities defined in the PRSP and harmonize and simplify their policies and practices. The last detailed assessment makes some conclusions regarding the strategy of poverty reduction as a model to achieve more effective cooperation for development and identify best practices and measures that can be taken to strengthen this strategy. It is noted that it would be beneficial to transform it into an operational framework for increased efforts to achieve the MDGs. It also highlights that strategies of poverty reduction can provide the means to reduce the tension that exists between different priorities, especially between setting realistic goals and lofty ones, and accountability among internally – which is closely linked to national ownership of strategies – and accountability to donors and other external partners in development.

As a result of previous reviews and evaluations, the PRSP process has been amended to provide greater flexibility to countries in designing and implementing their own strategies and to clarify that this process is not governed solely by the requirements of the IMF and the World Bank. In particular, the PRSP need not be explicitly endorsed by the Executive Boards of both institutions to guarantee loans under the PRGF. The technical staff of the IMF and World Bank should focus on developing countries’ comments about the PRSP through the advisory notes that replaced joint assessments, and linking the granting of credit operations of the two institutions more explicitly to the strategy and priorities of the PRSP.

A good start has been the linkage of the IMF-supported programs through concessional PRGF with the PRSP approach. To further improve operations and meet the needs of countries, the IMF’s priorities in the short term are as follows:

  • Helping countries to design realistic and flexible macroeconomic policies that are linked with the strategies and national budgets.
  • Focusing further attention on the factors driving and inhibiting growth, and the effects of policies on growth and its distributional impact.
  • Strengthening public expenditure management and analysis of the impact on poverty and social situation of policy options.
  • Collaborating with other donors to better coordinate the assistance to enhance the effectiveness of that support and streamline the implementation of PRSPs.

In my opinion, if everyone ultimately helped with a little more care in this matter, much of this problem would be settled.