Poverty Reduction Strategy Papers Origins, experience and challenges ahead Jeni Klugman World Bank February 10, 2003

Outline 1. Origins and the PRSP concept 2. The Joint Reviews: experience and good practice to date 3. Future challenges

PRSPs: Origins zLittle progress in reducing poverty and inequality in the 1980s and 1990s, especially in Africa zCriticism that development decisions are made by a few, with little consultation zPressure to heighten poverty impact of development resources and to show results zIntellectual underpinnings: WDR 2000/1 on empowerment, vulnerability, security

What is the PRSP concept? 1. Core elements of PRSps :  A participatory process: openness and transparency (of all actors) key  Poverty diagnostics: monetary and non-monetary  Indicators and targets, monitoring & evaluation systems  Priority public actions, including public expenditures and policy reforms to tackle poverty 2. There is no blueprint for a PRSP zCountry ownership is the guiding principle zNational design of the process and content 3. Alignment & harmonization of external assistance to support PRS implementation

Countries Engaged in the PRSP Approach

PRSP Reviews: Main messages zCountry ownership valued as the guiding principle – growing but still fragile zOpenness and transparency of the PRSP process is important – improvements relative to baseline zPoverty reduction has gained a more prominent place in policy discussions – engagement of MoFs zNeed for realism- in goals and targets, and in expectations and for better prioritization within strategies zDonor community has come to strongly embrace PRSP principles and approach

The participatory process Government Citizens Intermediary organizations Parliament Consultation groups

Key good practice: participation z“Institutionalisation” of participatory processes – linked to regular government decision making zHowever, what is manageable and realistic varies substantially across countries depending on: yNature of existing development dialogue yNature and capacity of parliament, civil society and local governments yIs there systematic exclusion of certain groups? yCapacity to expand these processes in the short term

Key good practice: poverty diagnostics and policy actions z Poverty diagnostics and past performance linked to public actions z Policies and programs costed and prioritised, & implementation linked to the budget y Malawi z Clear articulation of proposed policies and expected timing y Education in Cambodia z Full investigation of projected sources of growth and distribution

Key good practice: targets and indicators Setting realistic targets and indicators – realistic in terms of expected rate of change, and institutional capacity to monitor ySubject to debate and discourse, informed by realistic projections of economic growth and likely financing yGrounded in country reality and priorities -- include the MDGs when relevant -- customizing targets to country circumstances : e.g. Viet Nam ySelectivity of targets and indicators – multi-dimensional, but limited in number yAppropriate annual indicators of performance in order to monitor implementation: xintermediate indicators which focus on inputs and outputs, that are likely linked to long-term outcome targets

PRSP Reviews: Key challenges zFor PRSP countries yImprove public expenditure management systems yGreater emphasis on monitoring and evaluation yStrengthen & institutionalize the participatory process zFor development partners – including the Bank & Fund yMake alignment real: align assistance programs with country priorities, reduce transaction costs etc ySupport utilization and development of national capacities, including for poverty and social impact analysis

Concluding Notes zPatience and Perseverance are key to success yPreparing and implementing PRSPs is a very challenging task for every government zThe first PRSP cannot achieve good practice in every dimension: each country should focus on improving relative to its starting point zSignificant implications for the process and content of Bank operations – beginning with the Country Assistance Strategy, and extending to policy conditionalities, selecting areas for support, etc