PRSP Learning Event EECAD - Low income countries 11 April 10 am

2 Origins of the PRSP Initiative Poor record on poverty reduction in the 1990s Findings on aid effectiveness and limits of traditional conditionality Justification for increase in multilateral funding through debt relief

3 PRSP Principles Key principles: Country-led and ownership increased through participation Comprehensive - macro, structural, social Medium to long term perspective Outcome-oriented, based on analysis of poverty, and prioritised Donor partnership under government leadership What is new about this? Linking macro and fiscal framework to PR strategy - costed strategy Opening up policy process to broad based participation Opportunities for new ways of delivering aid

4 Context matters No cookie cutters! Low-income transition countries have specific features: Weak history of evidence-based policy making Lack of civil society participation Lack of familiarity with international aid community - but rising levels of debt. Different players than other regions. Poor governance environment, with several countries affected by conflict Country-specific politics- elections, parties, conflicts

5 Expectations - Ownership National poverty reduction strategy more likely to succeed if supported by broad based ownership Broad based ownership more likely if civil society and the poor influence policies Accountability to citizens strengthened, thereby reducing poverty (where related to weak governance and poor service delivery record) Technical benefits too: policies to benefit the poor are more readily identified (though danger of shopping lists)

6 Experience - Ownership Ownership of externally driven process? MoF involvement key - difficulties with line ministry involvement (Tanzania, Rwanda) Weak capacity for process across govt. (Albania) PRSP ideally builds on existing nat plans - augmenting with more participation, linking to resource envelope, and results orientation. (Nepal) Importance of working with existing dynamics - including political dynamics (Moldova)

7 Experience - Participation Some opening of policy space in country - fragile Generally limited to consultation with limited feedback to CS Broadly similar formats: local, regional, national workshops, plus some PPAs (Ethiopia) Parliaments not generally involved Strong advocacy of some key themes but not on macroeconomic policy (Kenya) Very high expectations on the part of civil society - some bitter disappointments (Kampala declaration, PRSP Review)

8 Country examples Kenya - very positive participatory process despite lack of high level political commitment and poor governance environment Bolivia - legal framework for participation established in the National Dialogue Law Albania - GoA needed convincing of merits of participation - achieved through training of officials & active collaboration of PRSP Secretariat across ministries Vietnam - High quality PPA underpinned consultation linked to ongoing process of national policy formulation

9 Links with resource envelope Budget and MTEF Key lesson is to move on these in parallel with the PRSP Constrained fiscal choices in CIS means spending must be limited - but some budget process measures can have pro-poor impact PEM/PER Tanzania - good example of nesting the PER process within the overall PRS process Watch for over-optimistic growth forecasts (Bolivia) Is donor financing on budget? (TA in Nepal)

10 Results orientation Policy making based on analysis of needs - but there are serious gaps in data in many cases (and data gathering capacity) Missing middle - lack of concrete steps from analysis to interventions Feedback of M&E and PSIA into future iterations of PRSP (inc Annual Reports) - needs institutionalisation (Somewhat covert) expectations around participation in this area - PPA and civil society monitoring of implementation. Need to stimulate demand for information

11 Results orientation 2 Vietnam Development Targets - country-specific version of the MDGs, established in DFID-financed workshop with civil society and donor participation. Intermediate benchmarks to measure progress. (Also PPA mentioned earlier) Uganda - UDN involved in public expenditure tracking at local level Bolivia - Bilat Coop Network identified need for indicators and targets in the area of institutional development

12 Donor behaviour Leading edge DFID thinking in this area: lower transactions costs - harmonisation streamlined conditionality predictable aid flows transparency of operations untied aid general budget support donor obligations on aid external assessment of partnership

13 Donor behaviour 2 Perhaps agenda not realistic where DFID not a big player and where big players are unsympathetic Coordination can take place without common financing mechanisms (Georgia) Projects and SWAps - can support the PRSP Is direct budget support an option? Risks and safeguards Are there opportunities to influence the agenda in these countries?

14 For discussion What is relevant for LICs in transition? What is already happening? How can DFID feasibly and constructively support the processes of change implied by the PRSP agenda? Ownership Participation Results-orientation Other donors

15 PRSP Schedule Key Events I-PRSP I-PRSP PRSP (I) PRSP (II) 9-24 months 2-5 years HIPC(II)DecisionPoint HIPC(II)CompletionPoint 1 st Annual ProgressReport PreparationStatusReport 2 nd Annual Progress Report etc.. PRSP elements: Poverty analysis Poverty analysis Goals/targets Goals/targets Policy actions Policy actions M&E plan M&E plan Med-term budget fw Med-term budget fw Financing plan Financing plan External assistance External assistance Participatory process Participatory process