PSIA and the World Bank Anis Dani & Stefano Paternostro DFID-DGIS workshop of bilaterals on PSIA, The Hague, Oct 13-14, 2003

What do we mean by PSIA? What is PSIA? PSIA is not new An approach to the analysis of the impacts of policy reforms on the well-being (income and non-income dimensions) of different groups, especially the poor. PSIA is not new PRSP impetus for more systematic analysis of poverty and social impacts of associated reforms Gradually extending to IBRD countries as well PSIA: responsibility of Borrowing countries Bank and others assist LICs in undertaking PSIA for reforms we support

Scaling up PSIA work PSIA work expanding rapidly TF pilots: 6 in FY02, 5 more in FY03 Incremental BB-funds: 15 mini-PSIA in FY03, and 37 PSIA in FY04 PSIA increasingly integrated as an approach in poverty assessments and other core ESW Total 71 identifiable PSIA activities ongoing, of which 62 are in PRSP countries PSIA ongoing in 43 countries, of which 38 are PRSP countries But much more needs to be done to mainstream PSIA in borrowing countries

PSIA in the Regions

PSIA Sectors: All countries

Lessons from sectoral PSIA Utility tariff reforms Tariff reforms to recover cost-of-service can have adverse impacts on poor and increase risk of non-payment Issues: pace, quality and sustainability of reform Agricultural reforms Restructuring of state monopolies needs to be balanced against food security concerns Issues: weak institutions, poor agri. Infrastructure, subsidies in industrialized countries Enterprise restructuring Design of mitigation measures for laid off workers needs to be balanced by impact on regional economy, especially in mono-industrial areas

Lessons from Bank experience PSIA more feasible for individual reforms than for entire reform program Reforms identified by PRSP process and included in PRSC Ownership created through consultation on reform priorities, e.g. Cambodia Flexibility needed: tools and methods based on context but multi-disciplinarity helps Dilemma: Short-term results easier to analyze, many positive impacts have longer time horizon Forward-looking elements (M&E, policy dialogue) help to overcome limits of ex-ante PSIA Criteria for selection of reforms: Expected magnitude of distributional impact Significance in reform program Timing and urgency of reform Level of controversy Country teams encouraged to consult with government, donors and other stakeholders, e.g. Cambodia

Collaboration with donor partners Phase One: DfID Pilots, Collaborative PSIA with GTZ (Malawi, Cambodia, Armenia) Coordinated parallel activities (KfW Ghana, DfID Uganda) Phase Two: Staff secondments: DfID, Norway Framework for collaboration with GTZ Framework for collaboration with IMF PSIA website with access to PSIA User’s Guide, toolkit, country cases, etc.

Issues for discussion Potential of PSIA to inform donors’ own analytical agenda and policy dialogue Options for partnership in PSIA for PRSC/PRGF Collaborative PSIA Staff secondments Structured partnership with research organizations Single or multi-donor trust funds Coordinated donor effort to build country capacity for PSIA