PRSP: the story so far….

Eurodad has provided interconnected resources, concerning:

• The HIPC initiative
• The PRSP story so far
• Debt relief and poverty reduction

Although these are discrete documents, they complement each other thematically:

PRSP

The first document entitled 'PRSP - The story so far' explores the new World Bank and IMF instrument called the Poverty Reduction Strategy Paper (PRSP). The key aspects of PRSP are that it should:

• Lay out a policy framework and agenda for tackling poverty
• Be comprehensive: integrating macroeconomic, structural, sectoral and social elements - with all policies consistent with the goal of poverty reduction
• Be developed in a participatory way
• Be 'nationally owned'

EURODAD has established a 'PRSP-Watch' programme, which serves as a central information 'clearing house' on PRSP and provides analyses of PRSP process and content. They have found that there is a significant variability between different country PRSP processes and you cannot characterise PRSP overall as a success or a failure. These include:

• The link between PRSP and the HIPC Initiative is delaying debt relief and lowering the quality of PRSPs
• PRSP does not appear to have been successful in aligning macro-economic issues and poverty issues more closely than in the past. in PRSPs available so far, growth is consistently prioritised as the primary motor of poverty reduction.
• Growth is a necessary but not sufficient factor for poverty reduction, and there has been little attention to the quality aspects of growth (such as equity and distribution)
• There is a need for open, transparent ex-ante impact assessments
• The Bank and the Fund remain the final arbiters of PRSPs. This is undesirable.
• There are signs that participation is better organised and being taken more seriously by governments as a result of PRSP

To read the fulltext of this document click on the 'Read the full text of this report button'

The HIPC Initiative

The second of these resources What's wrong with the HIPC Initiative? explores the unsatisfactory effects of the Heavily Indebted Poor Countries (HIPC) Initiative and the move away from this Initiative. The Initiative was considered unsatisfactory, affording only a minimal number of countries meaningful debt relief. Proposed changes to this Initiative (announced by the IMF and World Bank in September 1999):

• Eased the complex 'debt sustainability' criteria that determine eligibility for the Initiative
• Dictated the amount of debt to be cancelled - thus increasing the amount of debt cancelled when a country reaches the 'Completion Point' of the HIPC Initiative, and making some extra countries eligible for the Initiative.
• Introduced direct links to poverty reduction through the Poverty Reduction Strategy paper (PRSP) which countries need to produce in order to reach the Completion Point - where debt stocks are cancelled

Despite these positive developments, these changes have been slow and still compel many countries to spend more money on debt servicing than on priority spending areas.

Debt relief and poverty eradication mechanisms and policies seminar reportThe third resource, What's wrong with the HIPC Initiative? indicates that the:

• The PRSP should be prepared in consultation with civil society and parliament. Mechanisms should be developed, or existing mechanisms should be used, to ensure the participation of civil society and endorsement by parliament
• Capacity building at all levels - government, parliament, and civil society - is necessary
• There are concerns that the PRSP might not be a genuine nationally-owned product. To ensure that IMF and World Bank are stakeholders, instead of 'gatekeepers', the paper (and external financing) could be discussed at (UNDP-led) Round Table conferences instead of (IMF and World Bank-led) Consultative Group meetings.