In 1999 the World Bank and IMF replaced structural adjustment programmes (SAPs) with new conditions for loans and debt relief – the Poverty Reduction Strategy Paper (PRSP). Should bilateral donors buckle to pressure to coordinate aid through PSRPs? Are PSRPs as pro-poor and participatory as they sound?

PRSP, alleges the World Development Movement (WDM), really stands for ‘Policies to Roll-back the State and Privatise’. In a report which examines four completed and twelve interim PRSPs, the WDM's conclusions are deeply critical of the international financial institutions (IFIs).

Developing countries are obliged to have an IFI-approved PRSP if they wish to access loans from the IMF’s Poverty Reduction and Growth Facility. To qualify for the full amount of debt relief available via the Heavily Indebted Poor Countries (HIPC) initiative they must have successfully implemented a PRSP for at least a year.

Doubting whether the IFIs realise the difference between consultation and participation, the report notes that PRSPs do reflect the IFI’s newfound enthusiasm for ‘participation’. IFIs seem to regard participation as a technical issue, fail to see its political nature and do not monitor who is being invited to participate.

Criticism of PRSPs, from in-country parliamentarians, trade unionists and NGOs, include complaints of being sidelined, and that national ownership is undermined by externally imposed parameters and use of foreign consultants. Moreover, all PRSPs seem very similar and fail reflect the different histories, characteristics and economies of individual countries.

Other key points regarding PSRPs are:

• The IFI’s objective of fighting corruption is not furthered by rushed PRSPs that encourage privatisation but are not subject to scrutiny.
• Omissions from PRSPs are revealing: most do not mention land reform, labour laws, minimum wages, safety standards or children’s rights.
• PRSPs all cite a growth rate target of 5-7 percent. Given predictions of a slow-down of the global economy, this is surely too optimistic.
• The universal PSRP goal of keeping inflation under 5 percent can probably only be achieved by reigning in public expenditure at the expense of the poor.
• The IFIs are mistaken in their belief that decentralisation, another favoured PRSP goal, necessarily gives a voice to the poor.
• The continued PSRP reliance on cost recovery/user fee schemes is surprising, given the consensus, even among US policymakers, that they harm the poor.

WDM notes that although the IFIs have never formally evaluated the impact of SAPs on the poor, they continue to assume that the rehashed trickle-down theory behind PRSPs will reduce poverty. The report urges the IFIs to:

• Support countries to monitor and assess the poverty impact of their PRSP.
• Permit an independent assessment of IFI’s role in the PRSP process.

Source(s):
‘Policies to roll-back the state and privatise? Poverty reduction strategy papers investigated’ by Alison Marshall, Jessica Woodroffe and Petra Skell, World Development Movement, April 2001 Full document.

Funded by: World Development Movement

id21 Research Highlight: 18 September 2001

Further Information:
Alison Marshall / Jessica Woodroffe
World Development Movement
25 Beehive Place
London SW9 7QR
UK

Tel: +44 (0)20 7737 6215
Fax: +44 (0)20 7274 8232
Contact the contributor: wdm@wdm.org.uk

World Development Movement, UK

Other related links:
'Structural adjustment - pro or anti-poor?'

'The excluded of the earth: minimising poverty and discrimination'

See the World Bank site on PSRPs

See also the PRSP Documentary Library

'PRSPs: should they carry a health warning?' from IPHN

Visit MOST for more on Poverty and Social Exclusion

DAC Guidelines on Poverty Reduction 2001