1 PRSP and NDS as entry points for PEI Vladimir Mikhalev, UNDP Bratislava Regional Center PEI Inception Workshop Bratislava, 9-10 December 2008

2 Entry points for PEI PRSP / NDS PRSP / NDS  PRSP is a national policy framework comprising key development objectives and policy tools aimed at poverty reduction  PRSPs operationalise long-term objectives such as MDGs by specifying concrete public policies and expenditure priorities  Serve as a framework for all external development assistance Sub/national – regional, local development strategies and plans Sub/national – regional, local development strategies and plans Sector strategies Sector strategies

3 PRSPs / NDSs in ECIS region PRSP countries that rely on IFI financing: PRSP countries that rely on IFI financing:  Tajikistan, Kyrgyzstan, Armenia, Moldova, Albania, Serbia, Montenegro, Bosnia-Herzegovina, Kosovo (under preparation) National development strategies analogous to PRSP but not linked to IFI funding: National development strategies analogous to PRSP but not linked to IFI funding:  Azerbaijan (SPRSD), Uzbekistan (WIS) Poverty reduction as sector programmes Poverty reduction as sector programmes  Belarus, Ukraine, Kazakhstan (completed) Other type of national development strategies or plans: Other type of national development strategies or plans:  Georgia, Macedonia, Croatia, Russia, Turkmenistan New EU member states and EU accessions countries incorporate poverty reduction policy in EU social inclusion agenda New EU member states and EU accessions countries incorporate poverty reduction policy in EU social inclusion agenda

4 PRSP/NDS structural components Macroeconomic programme Macroeconomic programme  including growth projections and key fiscal choices Structural and sectoral polices Structural and sectoral polices  including private sector & SME development, financial and trade liberalisation Polices for social inclusion and equity: Polices for social inclusion and equity:  employment policies, rural development, education, health, social protection Policies for environmental protection Policies for environmental protection Governance and public sector management Governance and public sector management Prioritized and costed action plans in all policy components Prioritized and costed action plans in all policy components Monitoring framework with relevant set of feasible target indicators Monitoring framework with relevant set of feasible target indicators

5 Prominence of Environment in PRSPs All PRSPs / NDSs have detailed sections on environment All PRSPs / NDSs have detailed sections on environment PRSPs in Central Asia prioritise sustainable land and water management but focus heavily on public investment projects–particularly for irrigation and flood control PRSPs in Central Asia prioritise sustainable land and water management but focus heavily on public investment projects–particularly for irrigation and flood control  Uzbekistan: Welfare Improvement Strategy calls for gradual transition from growing cotton towards other crops, 18 percent of the public investment budget directed to rehabilitating irrigation systems and more efficient water usage, (e.g. introducing meters)  Kyrgyzstan’s Country Development Strategy: more efficient water use via modernization of irrigation system and expansion of water user associations  Tajikistan’s second Poverty Reduction Strategy Paper (for ): renovation of irrigation and drainage systems to reclaim degraded areas

6 Fiscal dimension Instruments linking poverty and environmental targets to relevant macroeconomic and sectoral policies The medium-term expenditure frameworks The medium-term expenditure frameworks Annual budgets Annual budgets Public investment programmes Public investment programmes

7 Setting realistic quantifiable targets Estimates of investments & operating costs of infrastructure and environmental protection systems required Estimates of investments & operating costs of infrastructure and environmental protection systems required Linking strategies to macroeconomic & balance of payment forecast Linking strategies to macroeconomic & balance of payment forecast Embedding policy decisions in budgetary planning (MTEFs & PIPs) of internal resources and external aid required to fill identified gaps Embedding policy decisions in budgetary planning (MTEFs & PIPs) of internal resources and external aid required to fill identified gaps

8 Targets setting: methdodlgical issues Target setting is not an exact science but a political economy exercise Target setting is not an exact science but a political economy exercise CGE models can be used for identifying targets and policy measures by simulating their impact CGE models can be used for identifying targets and policy measures by simulating their impact Methodological and data weaknesses Methodological and data weaknesses Assumptions required Assumptions required  Macroeconomic projections: growth rates, tax revenues, public and private investment – current crisis alters all earlier forecasts  Poverty reduction elasticity of growth  Linear versus non-linear trends  Unit costs  Externalities, economies of scale The UN Millennium Project developed costing models / templates for each MDG, but application is country specific The UN Millennium Project developed costing models / templates for each MDG, but application is country specific

9 Tajikistan: Financial Estimations for MDG 7 (environment), (US$ million) Tajikistan: Financial Estimations for MDG 7 (environment), (US$ million) Source: Tajikistan MDG Needs Assessment, 2005 Baseline scenario (5% growth) High growth (7%) scenario Total needs Sate budget inputs 2484 As % of capital needs 9%32% Foreign aid 4444 As % of needs 17%17% Financing gap As % of needs 74%51%

10 Costing of needs and interventions Costing can be done when targets are set and interventions identified Costing can be done when targets are set and interventions identified Sector based costing can be used aligned with MTEF and PIP Sector based costing can be used aligned with MTEF and PIP Based on key parameters and unit costs (capital and incremental) associated with the interventions, their sequencing and timing total resources required can be calculated Based on key parameters and unit costs (capital and incremental) associated with the interventions, their sequencing and timing total resources required can be calculated

11 Strengths of existing PRSPs /NDSs Improved focus on poverty and social inclusion Improved focus on poverty and social inclusion Based on sound diagnostics of poverty and vulnerability Based on sound diagnostics of poverty and vulnerability Capture multidimensional income and non-income poverty aspects Capture multidimensional income and non-income poverty aspects Gather sector strategies and expenditure plans under poverty reduction umbrella Gather sector strategies and expenditure plans under poverty reduction umbrella Decentralised, coherent action plans with relevant targets and implementing agencies Decentralised, coherent action plans with relevant targets and implementing agencies Enhanced monitoring systems Enhanced monitoring systems Broad participation Broad participation

12 World Bank assessment of PRSPs after 7 years of implementation No PRSP received a score of "A" and 5 PRSPs received a score of "B“ No PRSP received a score of "A" and 5 PRSPs received a score of "B“ 67% of PRSPs need greater elaboration of underlying strategies 67% of PRSPs need greater elaboration of underlying strategies 72% are weak for costing and financing scenarios 72% are weak for costing and financing scenarios 85% weak for greater specificity, prioritization and sequencing of time-bound actions 85% weak for greater specificity, prioritization and sequencing of time-bound actions PRS does not provide guidance to achieve the MDGs PRS does not provide guidance to achieve the MDGs

13 Weakness of linkages with the environment agenda Environment is treated as a sector rather than a cross- cutting issue Environment is treated as a sector rather than a cross- cutting issue Need for Strategic Environmental Assessment (SEA) of all components of PRSP Need for Strategic Environmental Assessment (SEA) of all components of PRSP Lacking much-needed changes in policy environments and legal frameworks Lacking much-needed changes in policy environments and legal frameworks Insufficient linkage/coordination between PRSP and national Sustainable Development Strategies (different government bodies in charge) Insufficient linkage/coordination between PRSP and national Sustainable Development Strategies (different government bodies in charge) Lack of skilled specialists in land and water management in the state, private, and third sectors not addressed Lack of skilled specialists in land and water management in the state, private, and third sectors not addressed

14 Lessons learned from PRSPs PRSP goals and targets must be SMART: PRSP goals and targets must be SMART:  Specific, Measurable, Affordable, Relevant and Time-bound Higher level of ownership of PRSP with budgetary commitments required for integration of activities of sector ministries Higher level of ownership of PRSP with budgetary commitments required for integration of activities of sector ministries PRSPs plan increased resource flow to MDG sectors: job creation, micro financing, education, health, environment but not sufficient for MDG achievement PRSPs plan increased resource flow to MDG sectors: job creation, micro financing, education, health, environment but not sufficient for MDG achievement Better monitoring indicators, systems and data are required Better monitoring indicators, systems and data are required