Now that Bolivia, Guyana, Honduras and Nicaragua have prepared full Poverty Reduction Strategy Papers (PRSPs), they hope that follow-on Poverty Reduction Growth Facilities (PRGFs) will relieve their debt burdens. Is this likely to happen? Is the PRSP process locally owned? Can states and civil society be helped to negotiate as equals with the international financial institutions (IFIs)?

A report entitled ‘Experience with Poverty Reduction Strategies in Latin America and the Caribbean’ from the PRSP Monitoring and Synthesis Project of the Overseas Development Institute (ODI) assesses poverty reduction strategies in the four states in the Latin America and Caribbean (LAC) region included in the Highly Indebted Poor Country debt relief initiative (HIPC). The report suggests how DFID and other donors can encourage greater local participation in more effective PRSP processes.

High levels of inequality in Latin America are a particular challenge for translating growth into poverty reduction. Poor LAC states are dangerously dependent on aid (in Nicaragua this amounts to 23 per cent of GDP), remittances and global commodity price swings.

However, as democratisation deepens, a number of civil society and church groups are succeeding in linking PRSP debates with campaigns to promote accountability and end corruption. Bolivia has shown that decentralisation can be combined with poverty reduction and the country is now committed to disproportionately disbursing HIPC funds to the poorest municipalities. Honduras is developing a mechanism to bring together groups of line ministry officials, local government and NGOs to jointly support the PRSP.

Reviewing the ownership and coherence of the PRSP process, the report notes that:

• Roles and responsibilities of governments and civil society concerning drafting, monitoring and implementation remain confused.
• PRSPs are not linked with existing planning processes: some suspect that PRSP enthusiasm is driven by aspirations to reduce debt and not to tackle poverty.
• PRSP documents often overestimate likely future growth rates.
• The lack of a Medium Term Expenditure Framework in the four LAC states restricts prioritisation of national budgets on poverty reduction.
• The cultural, ethnic and political dimensions of poverty in Latin America are often overlooked by IFIs, donors and governments: indigenous people are generally excluded by lack of translation into local languages.
• Civil society groups are concerned at IFI insistence that PRGF requirements demand privatisation.

The report calls on:

• IFIs to open up public discussion around the relationship between the PRSP and PRGF and HIPC and to make their own conditionalities more transparent
• LAC countries to build on processes to engage with civil society and do more to ensure indigenous voices are heard
• donors to stop sending one message when talking to governments and another when talking to IFIs
• donors to do more to promote in-country co-ordination and joint assessment of particular PRSPs and associated PRGFs
• DFID to organise cross-regional workshops to share experience on how to incorporate the suppressed voices of the poor.

Source(s):
‘Experience with Poverty Reduction Strategies in Latin America and the Caribbean’, PRSP Monitoring and Synthesis Project, synthesis note 5, by Lydia Richardson, October 2002 Full document.

Funded by: Department for International Development, UK

id21 Research Highlight: 30 May 2003

Further Information:
PRSP Monitoring and Synthesis Project
Overseas Development Institute
Costain House
111 Westminster Bridge Road
London SE1 7JD
UK

Tel: +44 (0)20 7922 0300
Contact the contributor: prsp@odi.org.uk

PRSP Monitoring and Synthesis Project, ODI, UK

Lydia Richardson
Triple Line Consulting Ltd
The Oxford Centre for Innovation
Mill Street
Oxford OX2 0JX
UK

Tel: +44 (0)1865 811144
Fax: +44 (0)1865 793165
Contact the contributor: lydia@tripleline.com

Triple Line Consulting Ltd., UK

Other related links:
'Poverty reduction strategies in LDCs: repeating past mistakes?'

'Climbing the ladder: involving the poor in poverty reduction strategies'

'PRSPs investigated: structural adjustment in another guise?'

'IMF/World Bank Poverty Reduction Strategy: effective, participatory and locally owned?'

See the World Bank site on poverty reduction strategies and PRSPs

More from the PRSP Document Library

Eldis provides a useful resource on PRSPs