Reforms for poverty reduction in the former Soviet Union

All the states of the former Soviet Union suffered economic problems in the years that followed independence. Most are yet to fully recover. Poverty affects more than half the population in most of these Newly Independent States (NIS) and some still lack the basic functions of government that support poverty reduction.

Donor involvement in the NIS occurred at the same time as the fundamental move from central planning to regulation by markets that are generally under-developed or inefficient. Research from the School of Oriental and African Studies at the University of London, UK, looks at the ways Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, Moldova, Tajikistan and Uzbekistan are implementing donor requirements for preparing and implementing poverty reduction strategies in such challenging circumstances.

The main mechanism for donors to support the NIS is through the Poverty Reduction Strategy Paper (PRSP) process, a partnership-based approach to reducing poverty in low-income countries. The PRSP focuses on local ownership of poverty reduction planning and sets measures that are, where possible, linked to the Millennium Development Goals. It is, especially from a political perspective, a new way of working for the NIS.

The three key features of an effective PRSP process are: integration into the national budget process; the existence of sector strategies with clear priorities; and the extent to which indicators, monitoring and feedback are developed and utilised. Unfortunately, data from 2004 suggests these features are not in place in the NIS and the PRSP process remains mostly ineffective.

Other findings include:

• The process has been poorly implemented in five NIS countries with approved PRSPs.
• There is limited monitoring and evaluation capacity in most of the countries.
• A shortage in qualified people in the government, as well as in civil society and the private sector, has limited the preparation and implementation of PRSPs.
• The absence of any comprehensive national planning frameworks at the start of the PRSP process, in any of the countries was advantageous as it prevented conflict between the process and the existing system
• There is a greater focus on poverty as a result of the PRSP process, but it is too early to tell if this has helped poverty reduction.

The researchers offer recommendations for each individual state, as well as suggest donors reform their own practices in line with the PRSP. They must take into account that contexts for poverty reduction change and their processes should be amended as these arise.

Donors should:

• support long-term reform of the state and public administration, through new approaches such as pooling funds, as done in Azerbaijan
• increase the use of budget support where public administration systems are adequate and support reform where conditions for budget support are not yet in place
• increase accountability to the people of the countries to which they provide assistance
• include their own work in regional information sharing processes.

NIS governments should take a long-term view, and:

• place the PRSP at the centre of the planning process
• ensure greater accountability between themselves and the donor community
• focus more on communicating both the role of the PRSP in the overall development planning framework.

Source(s):
‘Implementation of Poverty Reduction Strategies in the NIS’, Centre for Development Policy and Research (CDPR), SOAS at the University of London, January 2005. Full document.
Further details about this research project 'Implementation of Poverty Reduction Strategies in the NIS ' Full document.

Funded by: UK Department for International Development (European Commission’s Poverty Reduction Effectiveness Programme - EC-PREP)

id21 Research Highlight: 28 April 2006

Further Information:
Shruti Patel
Centre for Development Policy and Research
School of Oriental and African Studies
University of London
Thornhaugh Street, Russell Square London WC1H 0XG
UK Tel +44 (0)20 78984022

Fax: +44 (0)20 78984199
Contact the contributor: sp27@soas.ac.uk

School of Oriental and African Studies

Other related links:
'Encouraging non-farm activities for poverty reduction in Georgia, Armenia and Romania'

'Return to co-operative farming prevents poverty in former socialist countries'

'Primary health care reform in Russia: can it succeed?'

'Older people in post-communist Europe: can marginalisation be challenged?'

World Bank's pages on Eastern Europe and Central Asia