Monday, October 4, 2004
8:30 am - 12:00 pm
InterAction, Friends of the Earth Conference Room
The summary note was taken and drafted by an independent consultant, Paula Duggan, and reviewed and edited by the speakers. Attribution is given only to the panelists since it was not feasible to allow audience participants to review the draft text of the questions and comments before posting this note on the web. If any of the participants have comments or suggested edits to this text we ask that they send an email to the Bank’s Civil Society Team at civilsociety@worldbank.org. This session was organized by InterAction with assistance from the International Monetary Fund and the World Bank. The purpose of the session was to discuss the progress in implementing the PRS approach. This panel followed an earlier session in which representatives of the Fund’s Independent Evaluation Office (IEO) and the Bank’s Operations Evaluation Department (OED) presented their recent evaluations. The session was moderated by Pamela Baldwin (Senior Vice President, World Learning), and the panel was composed of the following persons: Elliott Harris (Advisor, Policy Development and Review Department (PDR), International Monetary Fund); Linda Van Gelder (Lead Economist in the Poverty Reduction Group (PREM), World Bank); Moreblessings Chidaushe (Project Officer, African Forum and Network on Debt and Development / AFRODAD); Ana Quiros-Viquez (General Director, Center of information and Advisory Services on Health / CISAS in Nicaragua), Keith Muhakanazi (Director of Economic Studies and Planning, Ministry of Finance, Uganda) Meeting Notes COMMENTS BY PANELISTS Moderator Pamela Baldwin opened this session on the Poverty Reduction Strategy Papers (PRSPs) saying that this forum presented a significant opportunity for effective dialogue between the Bank and the Fund on one hand, and direct stakeholders from PRSP countries and civil society advocacy organizations on the other. She introduced Elliot Harris and Linda Van Gelder who together sketched out the principal findings of the recently completed PRSP Progress Report. Mr. Harris began by stating that in conducting the progress reports, the Fund and the Bank found that while countries have made good progress in addressing straightforward aspects of the PRS approach, there remain challenges that are technically, institutionally and politically more difficult. The joint progress report was organized around four general pillars where sustained attention is needed to realize the full potential of the PRS approach: enhancing the analytical underpinnings of the PRSs; enhancing aid effectiveness; strengthening institutional capacities to implement the PRSs; and reaffirming the PRS as a country-driven approach. Mr. Harris spoke to the first two of these; Ms. Van Gelder spoke to the second two. With regard to the analytical underpinnings, there were four main areas that require further work: 1) strengthening analysis of growth and its distributional implications; 2) formulating more flexible macro-economic frameworks; 3) better identifying pro-poor expenditures and 4) undertaking poverty and social impact analysis (PSIA). The report found that there has been some progress in these areas but improvement is needed in each. In the first area, there needs to be a better understanding of what the sources of and impediments to growth are. In the second, there is the need for more sensitivity analysis, contingency planning, and stress testing to enable governments to respond more flexibly to unforeseen circumstances, in particular through use of alternative scenarios. This is especially important as countries will need to develop more ambitious macro frameworks to scale up efforts to meet the Millennium Development Goals (MDGs). Regarding pro-poor expenditures, while governments have increased their budget allocations and actual spending on poverty reduction, the efficiency of this spending and its impact on the poor are not well-understood. In the fourth area, the PSIAs, there is the need to build capacities in countries to undertake the analysis and there is the need for realism in terms of expectations. Turning to aid effectiveness, Mr. Harris said there is a clear sense in the international community that the PRS is a very useful vehicle for bringing donors together and coordinating external assistance. In countries where the government has embraced the PRS process and taken the lead, there has been considerable progress in the coordination of donor activity. In addition to country leadership, some factors in the success or failure of donor harmonization around the PRSs are: the operational content in the PRS, capacity constraints, the ability to build on domestic processes and domestic systems, and the ability to identify appropriate indicators for monitoring progress over time. Ms. Van Gelder began by noting that the PRSP has helped throw into sharper relief the country specific constraints to development. It has made clearer the analytical, institutional and implementational gaps to more effective development. What the PRSP also has done is provide a good operational framework to identify constraints around which development partners can organize. Taking the third of four pillars in the progress report, strengthening institutional capacity, Ms. Van Gelder said the report focuses on two critical areas. First, staffs note that enhancing the link between the PRS and the budget, and strengthening public expenditure management systems are key to helping countries better prioritize their development and poverty reduction strategies. Second, focused attention is needed on continuing to strengthen monitoring systems to support the results-oriented nature of the PRSs. Regarding the fourth pillar, reinforcing the country-driven approach, counties should be encouraged to customize the MDGs to their circumstances and to use their PRS a an operational framework for realizing these goals. It is also important to encourage closer links between the PRS and domestic processes such as the budget and the Medium Term Expenditure Framework (MTEF). Institutionalizing participation will require attention to broadening the scope of actors in the participatory process and sustaining that participation through implementation and monitoring. To reinforce the PRS as a country-driven approach, the Bank and the Fund have introduced a number of changes in the architecture of the PRSP process, largely related to the annual progress report, how well it is linked with domestic processes and the mechanisms for reporting on the country processes. The intent is to encourage countries to use the instrument flexibly and to move away from a document-driven culture toward a process-driven culture. In next year’s implementation progress report, staffs intend to delve more deeply into a number of areas: broadening and deepening participation; strengthening the link between the PRS and domestic decision making processes such as the MTEF and the budget; strengthening the medium term nature of the PRS; tailoring the approach to countries that have particularly weak capacity or particularly difficult circumstances; and finally, looking at how the PRS can be better used as a mutual accountability framework between countries and their development partners. In the report next year, the staff will also try to find mechanisms to include the views of other partners and is looking forward to being able to draw on the work and experience of many Civil Society Organizations (CSOs). After the comments by Mr. Harris and Ms. Van Gelder, Ms. Baldwin invited the other panelists to comment beginning with Mr. Muhakanazi. In his remarks Mr. Muhakanazi voiced several concerns. 1) Everyone underestimated the work that needs to be done, even in countries where there is presumed capacity for participatory macro-economic planning. 2) Capacity needs to be strengthened across the board, particularly institutional capacity. Capacity really needs to be developed down to the local government level if enhanced service delivery is going to be achieved. And it needs to be recognized that capacity building is a long-term process that everyone, including donors, needs to engage in. 3) First and foremost when building capacity, everyone needs to think about data. 4) The work requires the involvement of all stakeholders beyond government, particularly from civil society and the private sector. Ms. Quirez-Viquez began her comments by highlighting what she sees as a divide between the Bank / Fund and CSOs, as they have different perceptions of development and poverty. For CSOs poverty is lack of opportunities for wellbeing. The Bank and the Fund, on the other hand, talk about poverty as measured by income or consumption, and they talk about increasing economic growth as the key way of addressing poverty. The CSOs would like to see a more holistic approach. Increasing growth is not enough and sometimes growth does not lead to poverty reduction, as evidenced historically in many countries of my region of Latin America. For this reason, it is important to talk about distribution and inequalities as limits to opportunities. The Bank and the Fund are also inconsistent about the country-driven approach as it is country-driven in some things and not in others, especially macro-economics. There needs to be more consistency, either it is country-driven or it is not. Also country-driven must mean more than simply driven by governments. All of the stakeholders (i.e. civil society, private sector) must participate and the Bank and the Fund should be more active in this area. Furthermore, the progress in pro-poor expenditures is exaggerated. In countries like Nicaragua, much of the savings from HIPC debt relief goes to paying internal debt. So CSOs would like to see an evaluation of the quality of pro-poor expenditures and they would like to see a “more committed approach” to women’s issues and women’s participation in the PRSs. In her comments, Ms. Chidaushe underscored the importance of several issues CSOs are concerned about, some of which had been raised by other panelists. Participation is a key area. In many PRSP countries, consultation with CSOs in preparing the PRSP has been extremely limited. To deal with this, in some countries like Zambia, CSOs have had to do their own parallel process. While the PRSPs have opened a little space for government and civil society to interact, that space is too small. In addition, the quality of the input that comes from civil society is not very effective. Part of the problem is that the process has been rushed because of the incentive for debt relief and thus, even if they are willing, the governments have not had time to consult adequately. The macro-economic framework for the PRSP and IMF conditionalities are other issues of concern. Afrodad finds that the PRSP process has potential, but its potential is being undermined by the IMF and Bank’s own processes. For example, some countries had national plans for poverty reduction before the PRSP process was instituted and they either had to abandon or adjust them to qualify for HIPC debt relief. Furthermore even where there is economic growth, it seldom has had much of an impact on poverty reduction. In fact, in many countries the poverty statistics are growing worse. Then too, a lot of issues are not discussed openly and CSOs are left out. Also, governments in fact have little flexibility to negotiate with IFIs because of IMF and Bank conditionalities. A third issue that needs to be emphasized going into the second round is technical capacity. Neither governments nor civil society have had enough time to build their capacity and that needs to be done in order for them to effectively participate. A fourth issue is political will. There is already a lot of information that exists that could help to improve the PRSP process, but there is a lack of political will. What civil society wants to see is action. A worrisome aspect of the PRSP Progress Report is that apparently the IMF and the Bank are under no obligation to follow even the recommendations of their own evaluation departments. Moving forward, country priorities and ownership need to be strengthened, the issue of conditionalities needs to be addressed so that governments do have more flexibility and the time cycles for the PRSP need to be changed in order for all stakeholders to be able to participate. CSOs are not convinced that countries are in the driver’s seat or if they are in the driver’s seat they still don’t seem to have control of the process. QUESTIONS AND DISCUSSION Ms. Baldwin began the discussion period by thanking the panelists and by asking a question of her own about participation. The group has heard a lot about participation, she said, and there seems to be some agreement that there has been an increase in consultation between governments and civil society, but civil society participants have not felt that the consultations have translated into influence on the content of the PRSPs or country priorities. CSOs also feel constrained in terms of subject areas, certain topics are considered “out of bounds” such as macro-economic policies in particular. Any comments? Ms. Van Gelder was the first to respond: In terms of the whole process of consultation, it would be helpful to have more clarity about who is participating and what the rules of the game are on participation so that everyone is starting with an understanding of where it is possible to actually influence decisions. Certainly in the early rounds of the PRS, some of the concerns have been right: while there was progress in terms of consultation, it was not always clear where that consultation went. Over time some countries have been making progress in involving groups not just in the production of the paper, but in implementation and monitoring, but the progress is uneven. To the extent consultation is treated as a one-off event to produce a paper, it will be disappointing to everyone. To the extent that people deal with it as a process there is opportunity. Certainly one area that many actors would like to see broadened is the consultation on macro issues. Mr. Harris noted the need for a distinction between discussing policies and negotiating programs. The institutions are willing to open up policy discussions to a broader range of people but there are several constraints even on that aspect. Very often the people who would like to participate in the policy discussions do not have the type of information they need to be able to formulate their positions. That is something everyone can work on. Another constraint is the lack of capacity to understand the macroeconomic tradeoffs. A third constraint is that governments are sometimes not too willing to discuss their policies openly especially when it comes to decisions about things like exchange rates and interest rates. Discussions around these would not happen even in more advanced economies.
Another issue is the call for openness to alternative scenarios. If the IFIs were themselves to present different options, that would occupy some of the policy space that is being called for by domestic participants, so a balance needs to be struck between identifying what the constraints are and demonstrating more willingness to listen to different policies or different proposals. Ms. Quires-Viquez: Regarding constraints to participation: 1) The Bank and the Fund and other international financial institutions (IFIs) have the responsibility to share their information. There are codes of transparency in making information available so everyone has the full picture. 2) In terms of capacity, it is not up to the governments or the IFIs to decide if the CSOs have the technical capacity to participate; participation is not just a technical issue, it is a rights issue. 3) About how open the governments to participation: while the IMF frequently says that the governments are not open to discussions on certain issues, governments say that it is the IMF that is not open, and CSOs are caught in between. There needs to be the opportunity for all actors to be at the same table. 4) There is a difference between consultations and participation. Many CSOs are tired of consultations because they often do not result in policy changes. They want, instead, real participation especially in the implementation, monitoring, and evaluation phases. Mr. Muhakanazi: It seems that there is a lot of agreement that some things need improvement and there is agreement on the areas for improvement. For one, we need to strengthen not consultation, but participation of civil society, academia and others in the process, and we need to move away from a focus on drafting of the PRSP itself, toward implementation, monitoring, and evaluation. Another area that needs to be strengthened is the impact of consultation in the PRSP. Not all input can be used in the PRSP, but somebody has to draft it. Who that person/group is, how the drafting is done, and who decides are critical choices. A third area that needs to be strengthened is information as reliable data/statistics need to be developed and they need to be made accessible. Ms. Chidaushe agreed that access to information is critical and she said there needs to be better coordination between what the governments say and what the IFIs say because they often are contradictory. In addition the process does need to be customized for different country circumstances. Finally there are too many conditionalities. Countries need more flexibility and there needs to be more discussion of this issue. Q. The group has heard from almost everyone that there is a lack of information and analysis at the disposal of many stakeholders. There have been many studies, including the PSIAs but there are many questions: who will choose the topics for analytical work, how will these topics be studied and at the end of the day who will benefit and will these studies level the playing field so that people, who want to, can get into discussions of what the tradeoffs really are. Q. There is clearly a lack of civil society participation when it comes to the way poverty is measured. Why do the Bank and the Fund single out income as the measure of poverty and focus on the issue of growth in poverty reduction? Mr. Harris in response, challenged Ms. Quires’s characterization of the IMF/World Bank approaches to poverty. The whole reason for the PRSP approach is the recognition that growth alone is not going to do it and that income is just one of a multitude of dimensions that affect poverty. There is no doubt, he said, that it is critical to address all aspects so the question is how best to do it and the PRSP is one tool. So in answer to the question, in the IMF and the Bank the focus is not just on income and growth. On the question of information, there is a lot of analytical work, and the institutions need to find ways of getting it out and making it truly accessible to those who need to use it. The challenge is to decide what needs to be done and where and how to get it done early enough so that it can inform policy choices and the process as it goes along. The PSIAs and other analytical work need to go together as a whole. Ms. Van Gelder noted that in terms of analytical information, one of the things that the PRS process has done is to highlight, on a country specific basis, the factors in poverty reduction that are not well understood. It is not that growth is good in and of itself. Growth does tend to help reduce poverty, but it is important to understand at a country level, what needs to be done to increase growth and what the distributional impact of that growth would be. Among the other questions that need to be answered is what defines pro-poor expenditures? These kinds of questions need to be answered country by country and the PRS provides a very useful framework for countries and their partners to be able to identify what the most important priorities are for better analytical work. In some countries it might be gender, in others it might be the incidence of public expenditures on the poor. It also helps donors to develop partnerships around analytical work. Ms. Quires-Viquez responded to Mr. Harris and Ms. van Gelder, quoting from a report from the Operations Evaluations Division (OED) of the Bank and the committee on development effectiveness: “The [progress] report will again emphasize the centrality of growth for poverty reduction in low-income countries.” Comparing it to a situation in a classroom where the students are told what is going to be on the test, Ms. Ciquez said, if growth is the emphasis, there is little reason to focus on anything else. Also, taking the issue of gender, she said that, while there is a lot of talk about it, there is little real commitment to the issue in PRS. In Nicaragua, for example, it is a cross-cutting issue in the PRS, but it has no budget allocation. So it is possible to say that the perspective on poverty reduction is multidimensional but when the measure is only one dimensional that is the perspective. Mr. Sudhir Shetty, from the Bank, highlighted that the centrality of growth to poverty reduction is not inconsistent with a view of poverty that is multidimensional. He also stressed that World Bank supported poverty assessments do in fact take a multi-dimensional view of poverty. He also challenged the notion that a low-income country can reduce poverty without accelerating and sustaining growth. It is true that it is easier to measure income poverty, he said, and the Bank and the Fund do need to do a better job of measuring the non-income dimensions of poverty, particularly when it comes to issues of empowerment. On the distributional issues and pro-poor growth, the Bank is doing a 14-country study on this with other development partners and hopes to have some results in the early part of 2005. Q. Will an outline of consultations with stakeholders be sketched out so that they can feed into the 2005 PRSP progress report? Ms. Van Gelder indicated that in next year’s implementation progress report, as previously noted, the intention is to delve more deeply into a number of areas, and the staffs hopes that the report will reflect a range of views on those areas. Q. To follow-up: When a comprehensive review did take place one of the positive things about it was that it brought together representatives of the Bank and the Fund, representatives of government and representatives of civil society to discuss these issues. Will there be that process and will it be regional or not? CSOs would like to know this and would like an outline of consultations. Mr. Mark Plant, from the IMF, responded to that in 2002 there was a larger evaluation of the PRSP that involved a number of partners. The Bank and the Fund think it is more important in 2005 to focus on four or five areas, and will put together a clear plan for consultations as soon as possible. Q. And will those be regional and tripartite? Q. The Fund is actually farther ahead than the Bank in disclosing loans-related documents. I can’t understand why the Bank doesn’t yet disclose the letters of development policy for all adjustment loans so CSOs can have a better understanding of what these policy entail for the given countries. Unless the Bank and Fund improve the participation track record within the PRSs, many CSOs who have given both institutions the benefit of the doubt up to now may start declining participation in these processes. Ms. Van Gelder. Different mechanisms are being considered. To the extent possible they will be regional. Mr. Harris: The year 2005 will be supercharged for development discussions and so the questions are how to work in these consultations with other forums and how to make use of the information? He said that they would consider the desire for tripartite discussions. Mr. Muhakanazi: Regarding reporting mechanisms, countries have their own reporting mechanisms for the PRSP. It is an annual evaluation in which the governments reports on the recent developments in all areas. The way forward is to strengthen those mechanisms. Part of the strengthening of those mechanisms is to link priorities to the budget and also to strengthen consultation within the budget framework. Ms. Baldwin then thanked the panelists and participants and closed the meeting. top Back to Annual Meetings 2004 Dialogues |
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