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2007 Annual Meetings

Issues and Challenges in Assessing the Impact of Policy Reforms on Affected Groups

Session organized by Oxfam International
November 20, 2007


This session provided an opportunity for WBG and IMF officials to respond to the “Joint NGO Briefing Note” published by 10 international NGOs (among them Oxfam, Christian Aid, New Rules for Global Governance and Norwegian Church Aid) in September 2007 on the WBG and IMF’s work on Poverty and Social Impact Analysis (PSIA). The NGO Briefing sought to address the “continued failure of the World Bank and IMF to fully assess the impact of their advice on poor people”. Elizabeth Stuart presented the Briefing on behalf of the NGOs. She stressed the profound interest of the NGO community in PSIA, and said NGOs were concerned at the slow progress in mainstreaming the approach in the two institutions.

The NGO perspective was that the World Bank falls short of its commitment to consistently integrate PSIA in development policy lending operations, as stated in OP 8.60. The NGOs identify three areas of concern:

  1. Insufficient and unsystematic coverage: Distributional analysis is not applied systematically to all reform areas in which significant likely social and poverty impacts can be expected. It is not transparent which reform area becomes subject to a poverty and social impact analysis and which one does not.
  2. Implementation issues which impede PSIAs’ effectiveness in informing Bank operations and policy dialogue in country. The claim is that in cases where a PSIA was conducted, results remained behind expectations for a variety of reasons: i) results from PSIAs are often not considered in program design because analyses were carried out too late to feed into decision-making; ii) focusing analysis predominantly on positive outcomes of a policy reform with no comprehensive analysis of potential negative consequences; iii) lack of real space for discussion of likely impacts of alternative policy options; and, iv) PSIA results inform the policy dialogue to a lesser extent than hoped, as reports are often not circulated to spark broad based debate over policy reform; 
  3. Decline in conducting PSIA at the World Bank: The NGO community is worried to see a decline in the number of PSIAs conducted by the World Bank after the depletion of a Bank internal incremental fund.

In their recommendations to the World Bank, the IMF and donors, the NGOs suggest that the World Bank presents a comprehensive strategy that outlines how country-led PSIA is included in the design of, and carried out prior to, all key structural and economic reforms. The Bank should further ensure sufficient human and financial capacity to conduct PSIA systematically, and provide an annual progress report on how much PSIA has been done and how it informed the policy dialogue with client governments. Donor governments are requested to ensure that the final IDA 15 agreement states that country-led PSIA be used in all IDA supported lending where significant distributional impacts are likely.

In his response Luca Barbone highlighted that a lot has been achieved in the last five years and that distributional analysis is taken much more serious in the Bank today. He raised attention to the fact that much more work is done in the Bank than what is trackable under the label PSIA. A lot of distributional analysis is not called PSIA, and is not visible as a discrete piece of analysis as it is often embedded within other pieces of Bank analytical work (e.g. Poverty Assessments or PERs). He suggested to embrace a concept that distributional analysis can be performed in a wide variety of ways depending on circumstances, ranging from multi-year, multi-method products to short policy notes.

Steen Jorgensen pointed out that PSIA is more than just analyzing distributional impacts from an economic perspective. While much progress on this agenda has been achieved, grounding an assessment of the likely poverty and social impact of a policy reform on multi-disciplinary analysis, which includes an institutional, stakeholder and political economy dimension, is still a tremendous challenge for the organization. He further pointed to the inherent tension that NGOs are expecting the World Bank to do more and better PSIA, as an instrument to provide better due diligence in the preparation of loan operations, while at the same time demanding that such analysis should be owned and conducted by partner governments. While the vision of country-led PSIA is shared, this requires a concerted effort by all development partners at the country level. So far, there has been only moderate involvement from bilateral agencies and the NGO community to build capacity of national stakeholders. However, he shared the NGOs’ concern that at present PSIA application is declining and acknowledges that the incentive structures for Bank staff to conduct PSIA more routinely and more systematically may be rather weak. Changing the incentive structure will require strong support from the Bank’s management.

Robert Gillingham said the analysis of poverty and social impacts of policy reform should not be confused which a process that tries to enhance evidence in policy making. The raised questions of what is actually meant by calling for more country-led PSIA, as he sees this merely as an instrument that informs donor operations.

Participants stressed that they fully supported how PSIA has been outlined by the World Bank in the Good Practice Note, but said that attention was declining. They described themselves as wanting to ensure that the 'rock makes it to the top of the hill and does not slide backwards”.

Drafted by: Renate Kirsch and Jeff Thindwa, World Bank

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