The PRSP Initiative: Multilateral Policy Change and the Role of Research

Working Paper 216 The PRSP Initiative: Multilateral Policy Change and the Role of Research Karin Christiansen with Ingie Hovland August 2003 Overseas Development Institute 111 Westminster Bridge Road London SE1 7JD UK ISBN 0 85003 666 6 © Overseas Development Institute 2003 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publishers. ii Contents Acknowledgements iv Acronyms v Executive Summary vii 1 Introduction 1 1.1 Bridging research and policy 1 1.2 Case study of the PRSP initiative 2 1.3 Outline of the working paper 5 2 Research Framework and Approach 6 2.1 Research framework: ‘context, evidence, links’ 6 2.2 Research approach 7 3 Backdrop, Narratives and Players 9 3.1 Shifts in international development policy discourse 9 3.2 Description of the players 12 3.3 IFI processes preceding the adoption of the PRSPs 23 3.4 The last few months 27 3.5 Epilogue 30 4 Analysis and Reflection 31 4.1 Policy context: politics and institutions 31 4.2 Evidence: credibility and communication 34 4.3 Links: influence and legitimacy 35 5 Conclusion 37 Bibliography 39 Appendix 1: Research Methodology and Timing 44 Appendix 2: Key Informants 45 Appendix 3: The Research Questions 47 Appendix 4: The PRSP Initiative Chronology 50 Box 1 Schematic History of Development Cooperation 9 iii Acknowledgements Many thanks for their invaluable assistance in different stages of the preparation of this paper to Cari Aleta, David Booth and Mark Poston. I would also like to extend my gratitude to all of those who spared the time for me to interview them, some of whom subsequently read and commented on drafts of the paper. Thanks must go in particular to Masood Ahmed and other staff in PRD, Tony Boote, Tony Burdon, Tim Conway, Alison Evans, Mike Foster, Damoni Kitabire, Jeni Klugman, Andy Norton and Paul Spray. They do not, however, bear responsibility for the views expressed in the paper. Karin Christiansen is a Research Officer working in the Poverty and Public Policy Group (PPPG) and the Centre for Aid and Public Expenditure (CAPE) at ODI. She joined PPPG/CAPE after having worked as an ODI Fellow at the Ministry of Finance and Planning in Rwanda. Email: [email protected] Ingie Hovland is a research associate on the Research and Policy in Development (RAPID) programme at ODI and a PhD student in the Anthropology Department at the School of Oriental and African Studies (SOAS). Email: [email protected] iv Acronyms AfDB African Development Bank Afrodad The African Forum and Network on Debt and Development CAFOD Catholic Fund for Overseas Development CAS Country Assistance Strategy of the World Bank CDF Comprehensive Development Framework of the World Bank CDRN Committee Development Resource Network, a Ugandan NGO CG Consultative Group DAC Development Assistance Committee of the Organisation of Economic Cooperation and Development (OECD) DC Development Committee DFID Department for International Development of the UK Government DRI Debt Relief International ESAF Enhanced Structural Adjustment Facility of the IMF (replaced by PRGF) EU European Union G7 Group of 7 Countries (Canada, France, Germany, Italy, Japan, USA, UK) G8 G7 plus Russia GBS General Budget Support HIPC Initiative Heavily Indebted Poor Countries Initiative (also known as HIPC1) HIPC2 Enhanced Heavily Indebted Poor Countries Initiative IBRD International Bank for Reconstruction and Development, World Bank Group, which provides financing to middle income countries IDA International Development Association of the World Bank IDT International Development Targets IFI International financial institution (used in this paper to denote World Bank and IMF only) IMF International Monetary Fund IMFC International Monetary and Financial Committee IPRSP Interim PRSP JSA Joint Staff Assessment LICs Low-income developing countries MDF Multilateral Debt Fund MDG Millennium Development Goals MTEF Medium Term Expenditure Framework NGO Non-governmental organisation ODA Official development assistance ODA Overseas Development Administration of the UK Government (became DFID in 1997) PAF Poverty Action Fund of the Ugandan Budget/PRSP PDR Policy Development and Review Department of the IMF PEAP Poverty Eradication Action Plan of Uganda PE Public Expenditure PEM Public Expenditure Management PER Public Expenditure Review (World Bank methodology) PFP Policy Framework Paper (IMF/World Bank framework document) PPA Participatory Poverty Assessment PREM Poverty Reduction and Economic Management (the policy department of the World Bank) PRGF Poverty Reduction and Growth Facility of the IMF PRSC Poverty Reduction Support Credit of the World Bank v PRSP Poverty Reduction Strategy Paper SAP Structural Adjustment Programme SAPRIN Structural Adjustment Participatory Review International Network (formerly Structural Adjustment Participatory Review Initiative, SAPRI) SLA Sustainable Livelihoods Approach SPA Strategic Partnership with Africa (formerly Special Program of Assistance for Africa) SWAP Sector Wide Approach UK United Kingdom UK DEL The UK delegation to the Boards of the IMF and World Bank UNDAF United Nations Development Assistance Framework UNDP United Nations Development Programme UNICEF United Nations Children’s Fund US United States (of America) WB World Bank WDR World Development Report vi Executive Summary This paper traces the emergence of the Poverty Reduction Strategy Paper (PRSP) initiative and the various factors that contributed to its adoption in September 1999, including the role and relative influence of research in this process. A PRSP is a document that sets out an analysis of poverty in a country and defines the national strategy on how the government is going to reduce it. Preparation of a PRSP is an entry criterion for debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative, and is also an eligibility criterion for concessional lending from the International Development Association (IDA) of the World Bank and the Poverty Reduction Growth Facility (PRGF) programme of the International Monetary Fund (IMF). This Working Paper forms part of ODI’s Research and Policy in Development (RAPID) programme, which seeks to learn more about linkages between development research, policy and practice. The main questions addressed are: • How did the idea of the Poverty Reduction Strategy Paper (PRSP) come to be adopted? • What was the role of research in this process? The relative contribution of research is considered using a three-dimensional framework: • Policy context: politics and institutions • Evidence: credibility and communication • Links: influence and legitimacy Policy context Probably the most important contextual factor that shaped the PRSP initiative was the major convergence of debates and controversies in the field of international development in the late 1990s. This led to a widespread sense of there being ‘a problem’ within the international development policy field even though policy-makers did not agree on the exact nature of the problem. The challenges that needed to be addressed – particularly by the World Bank and the IMF – included: • The mandates of the IMF and World Bank were being questioned – the IMF particularly in the light of the 1997 Asia Crisis and the 1998 Reviews of the Enhanced Structural Adjustment Facility (ESAF) lending framework, and the World Bank in the light of deteriorating economic growth in sub-Saharan Africa and the commonly believed failure of Structural Adjustment Programmes (SAPs) to reverse this trend; • The fall into disuse of the Policy Framework Paper (PFP), which was meant to be the operational mechanism for cooperation between the IMF and World Bank, but which by the late 1990s had, for practical purposes, become exclusively a tool of the IMF; • The 1999 Review of the Heavily Indebted Poor Countries (HIPC) Initiative, which raised the question of how to link debt relief to poverty reduction in the design of the Enhanced HIPC Initiative, or HIPC2. There was a backdrop of substantial external pressure building up around this issue, particularly from the NGO movement, such as Jubilee 2000, to make debt relief ‘broader, deeper, faster, better’, and from the US administration to ensure that resources freed up by debt relief would be ‘well spent’; vii • The need to operationalise the new conceptual framework for aid put forward by Wolfensohn’s Comprehensive Development Framework (CDF) in early 1999, and to find a means of combining this with an explicit focus on poverty reduction. Poverty reduction had become a central concern for the UK Department for International Development (DFID), headed by Clare Short, who was also active in promoting a link between poverty reduction and debt relief. At the same time, poverty reduction strategies were a concern for the World Bank team that were preparing the World Development Report 2000/01, ‘Attacking Poverty’. The PRSP initiative can be viewed as bringing together all these interlinked concerns, and providing answers, or at least partial solutions, to the issues that needed to be addressed. It was, therefore, bought into by many different parties. The simultaneous recognition of similar sets of problems and similar ideas for solutions by various actors in the international development field in the late 1990s is probably the reason why the PRSP idea, which was a substantial challenge to current practice,

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