Taking Stock of Poverty Reduction Efforts

• Author: Brian Ames, Gita Bhatt, and Mark Plant
• Position: Advisor in the IMF's Policy Development and Review Department/Policy and Development Review Department when this article was written/Division Chief

What exactly is a poverty reduction strategy paper (PRSP), the centerpiece of the international community's new assault on poverty? It is essentially a road map prepared by countries themselves to help them better target public policies in support of poverty reduction. The emphasis is on putting countries in the driver's seat-so that they take ownership of their economic reforms-and encouraging a broad participatory process involving not only governments and donors but also local communities and civil society groups, such as nongovernmental organizations (NGOs), labor unions, faith-based organizations, and research and policy development institutes. In addition, PRSPs are to be results-oriented, focusing on outcomes that would benefit the poor; take a holistic, long-term perspective; and stress transparency and accountability.

Although there is no single blueprint, all PRSPS contain four core elements: (1) a description of the participatory process used in preparing them; (2) a poverty diagnosis, including the identification of obstacles to poverty reduction and growth; (3) targets, indicators (such as annual growth rates or primary school enrollments), and monitoring systems, based on the poverty diagnosis; and (4) priority public actions countries are committed to taking-within specific budget constraints-to attain the targets established in the PRSPs.

So far, 10 countries (Albania, Bolivia, Burkina Faso, Honduras, Mauritania, Mozambique, Nicaragua, Niger, Tanzania, and Uganda) have completed their first full PRSPs, and more than 40 others have prepared interim PRSPs-short documents that describe a country's current poverty situation and policies, along with a plan for preparing full PRSPs.

How is this novel approach going? In July 2001, the IMF and the World Bank launched a major review, drawing on internal evaluations and extensive external consultations. Because only a few PRSPs have been completed to date, the review focused primarily on process and, more tentatively, on content, rather than on the impacts on poverty outcomes and indicators. A second review, to be completed by early 2005, should provide more information on the latter.

Although the pace at which countries are completing their full PRSPs is slower than originally expected, there is enough information to begin drawing lessons and sharing experiences-in effect, defining "good practices" (see box). Moreover, the efforts of these countries should not be undervalued. Besides managing a complex policy dialogue with development partners, governments of low-income countries are being asked to put together an integrated medium-term economic and poverty reduction strategy, complete with short- and long-term goals and monitoring systems-a set of tasks that few industrial countries could systematically do well. And, in many countries, these tasks must be managed with limited technical and institutional capacity and in ways that reinforce-rather than undermine-existing national institutions, processes, and governance systems.

Checklist of good PRSP practices

For countries:

* Involve parliaments, cabinets, and sectoral ministries in PRSP preparation at appropriate stages.

* Analyze the impact of major poverty programs and policy actions.

* Develop appropriate indicators to enable timely monitoring of performance and feedback.

* Set realistic targets for growth and poverty outcomes.

* Develop alternative macroeconomic scenarios in PRSPs, including contingency spending plans and measures supporting alternative...