The World Bank and IMF introduced Poverty Reduction Strategy Papers (PRSPs) for countries to develop nationally owned strategies to reduce poverty. In 2001/2002 the two international finance institutions (IFIs) conducted a review of progress with PRSPs. In this focus on PRSPS we look at a briefing paper prepared by Save the Children Fund UK for the review and at the main findings of the review. We start with a brief introduction to the PRSP initiative.
8.1 PRSPs in Brief
According to the World Bank’s PRSP Sourcebook, ‘National poverty reduction strategies can improve the poverty impact of expenditures financed by external partners and the effectiveness of technical advice by increasing country ownership and shifting policy to a more results-oriented approach. … The objective is to encourage low-income countries to reduce poverty by focusing on a renewed growth oriented strategy.’ (WB, p1)
The IMF defines PRSPs as follows. ‘Poverty Reduction Strategy Papers (PRSP) are prepared by the member countries through a participatory process involving domestic stakeholders as well as external development partners, including the World Bank and International Monetary Fund. Updated every three years with annual progress reports, PRSPs describe the country's macroeconomic, structural and social policies and programs over a three year or longer horizon to promote broad-based growth and reduce poverty, as well as associated external financing needs and major sources of financing. Interim PRSPs (I-PRSPs) summarize the current knowledge and analysis of a country's poverty situation, describe the existing poverty reduction strategy, and lay out the process for producing a fully developed PRSP in a participatory fashion.’ (www.imf.org)
PRSPs are needed to qualify for concessional lending and debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. Over 70 countries are at present participating in the initiative, including a number in the SADC region. (See box for further details) Once a country has completed its PRSP it must submit it to a joint staff assessment (JSA) by the World Bank and IMF. Based on this assessment the boards will consider its approval.
|The HIPC Initiative
The Heavily Indebted Poor Countries Initiative (HIPC) is a comprehensive debt reduction approach for poor countries unable to sustain debt burdens. The country must show continued effort toward macroeconomic adjustment and structural and social policy reforms and must adopt a PRSP to qualify for support under the initiative. It must show progress in implementing this strategy to secure ongoing support.
SADC countries at present classified as heavily indebted poor countries are Angola, Democratic Republic of Congo, Malawi, Mozambique, Tanzania and Zambia.
Tanzania and Mozambique have reached completion point, the final stage in the HIPC process; Zambia has submitted its PRSP and Malawi has completed an I-PRSP and is in the process of completing its PRSP.
Factsheet – HIPC, www.imf.org