1 Finnish Aid in a PRS Context Day 1: Introduction and Overview Helsinki Workshop May 2003

2 Plan for Day 1 Introductions and general information Session 1: What are PRSPs and why do we have them? Session 2: Assessing the experience so far Session 3: Aid instruments and the PRSP Session 4: Finnish aid – where are we?

3 Introductions and general information Finnish Aid in a PRS Context Helsinki Workshop May 2003

4 Who are we? ODI is “Britain's leading independent think- tank on international development and humanitarian issues” Team for today: –David Booth and Karin Christiansen, Poverty & Public Policy Group –Erin Coyle and Alison Evans, PRSP Monitoring and Synthesis Project

5 How do we work on PRSPs? Practical engagement: –support to country activities –policy work with donors –training Studies and reviews: –of current practice –of key obstacles and challenges

6 Materials All the training materials for the four-day workshop can be found on: ountry_level/helsinki/index1.html or via Ministry of Foreign Affairs website

7 Some points about language PRSP = Poverty Reduction Strategy Paper PRS = Poverty Reduction Strategy (what is behind the paper) “Aid” = development cooperation (but it’s shorter!) If we use unclear language, please tell us!

8 Session 1: What are PRSPs and why do we have them? Finnish Aid in a PRS Context Helsinki Workshop May 2003

9 What are PRSPs? What everyone knows: They replace the old Policy Framework Papers as a basic condition for IMF and World Bank (IDA) concessional lending They play a similar role in Enhanced HIPC debt relief, for eligible countries They are increasingly the focus for bilateral donors (DAC, SPA, etc.) in improving the quality of aid

10 The PRSP schedule I-PRSP PRSP (I) PRSP (II) 9-24 months 2-5years HIPC(II)DecisionPoint HIPC(II)CompletionPoint 1 st Annual ProgressReport PreparationStatusReport 2 nd Annual Progress Report etc.. NB. Joint Staff Assessment (JSAs) are made of all I/PRSPs, status & progress reports; the joint WB/IMF Boards endorse JSAs but do not approve PRSPs

11 The PRS cycle Policy formulation Communication Policy implementation Monitoring and evaluation Poverty analysis Like projects, PRSs are supposed to involve a series of steps, so that design is based on evidence and is then improved by learning (M&E) Financing

12 The five PRS “principles” PRSPs are meant to be: 1) country-driven - involving broad- based participation by civil society and the private sector in all operational steps 2) results-oriented - focusing on outcomes that benefit the poor 3) comprehensive - in recognising the multidimensional nature of poverty

13 4) partnership-oriented - involving co- ordinated participation of development partners (bilateral, multilateral, and non-governmental) 5) based on a long-term perspective for poverty reduction But what is all this really about? We need to dig a bit deeper...

14 Two things that PRSPs are not They are not a sophisticated new technical device - a “magic bullet” that will solve fundamental problems of development and cooperation They are not, on the other hand, just a new fad or fashion of the aid business - soon to be replaced by something new Because...

15 The PRSP initiative responds to three long-term realities Pro-poor policy reforms have been failing for lack of real country commitment (“ownership”) When country authorities really don’t want to do something, conditionality does not make them do it (that is, do it properly) Projects get around the immediate problem but further weaken commitment and capacity (disincentives + transaction costs)

16 Other key antecedents Poverty top of the international agenda since Social Summit 1995 From 1996 DAC seeking partnership for more effective, recipients taking a larger role; but not clear how UNDP support to national anti-poverty strategies from but usually weakly-linked to core national decisions such as budget (still in “project” mode)

17 Implications PRSPs offer important opportunities: –for poverty to be “mainstreamed” in national systems, providing priorities for both aid and the national budget –for poverty reduction efforts to be more “country owned” and thus more successful But these are opportunities, not certainties The success of the PRS initiative depends on three gambles...

18 Gamble 1 If governments are obliged to discuss poverty, and what they are doing about it, with citizens, then they are likely to take it more seriously and be held to account more effectively

19 Gamble 2 If donors have a national PRSP to coordinate around, then donor behaviour and aid management will improve - leading to lower transaction costs, and less damage to national institutions

20 Gamble 3 If the PRS is taken seriously by all parties, then relations between donors and governments will change more fundamentally - with increased domestic accountability, more effective aid and better poverty outcomes