1.  As part of the joint Bank/Fund PRSP review, the IMF and the World Bank invited OECD DAC members to participate in an exchange of views on the PRSP approach at a joint meeting at the IMF Office in Europe on September 18, 2001. The meeting was jointly chaired by the OECD DAC, World Bank and IMF. Presentations on the review process were made by Masood Ahmed (Deputy Director of the IMF Policy Review Department ) and John Page (Director of World Bank Poverty Reduction Strategy Group), participating by video conference from Washington. Brian Ames (IMF) and Jeni Klugman (World Bank) also participated in the meeting in Paris, and briefed the participants on the main focus points of the review that were emerging following a recent meeting with 32 partner countries in Dakar.

I.  Background

2.  At the launch of the PRSP approach in December 1999, Executive Directors of the Bank and the Fund called for a joint staff review after two years of operation, with external contributions from international organizations, bilateral donor agencies, civil society organizations, and partner country governments. The review was launched in July 2001, and is to be completed in March 2002, with a joint report prepared for the International Monetary and Finance Committee and Development Committee during the 2002 Bank Fund Spring Meetings. An international conference on the PRSP review is to be held in Washington in January 2002. At the same time, a review of the IMF Poverty Reduction and Growth facility (PRGF) is to be carried out in coordination with the PRSP review.

3.  The focus of the review will be to assess achievements to date, identify obstacles and constraints, and propose modifications to the guidelines, modalities, and architecture of the PRSP approach. The review will consist of four regional events: Africa (Dakar, early September 2001), Central Asia (Budapest, November 2001), East Asia (Hanoi, December 2001), and Latin America (to be determined). Contributions from other multilateral and bilateral donor agencies are actively sought with a request for submissions on the IMF and World Bank external websites. With a view to transparency and completeness, the review would include supplements on external contributions (in their entirety) with the consent of the parties concerned.

II.  Role of the DAC

4.  The IFIs were actively seeking the input of the DAC and DAC membership, and believed they could play a valuable role in (a) helping to facilitate the flow of information regarding the review between Bank/Fund staff and the donor community, and (b) facilitating an exchange of information between and amongst donor agencies with regard to their individual contributions to the review. They greatly appreciated the opportunity to meet with the DAC, and were particularly interested, at this stage, in the members' views on the main focal points of the review. The joint meeting thus provided DAC members with a useful and timely opportunity to help shape the review process, ensuring that bilateral donor concerns are adequately reflected. This will hopefully strengthen the relevance and focus of the review.

III.  Shaping the Review Process

5.  Masood Ahmed noted that a wide range of studies and analysis of the PRSPs was underway in different quarters. The aim of the review process was to bring all these perspectives together and confront different visions. There was much scepticism on whether international agencies and bilateral donors would really change their behaviour. Will they take a sufficiently broad view of policy options? Will they be flexible enough on process, procedures and haromonisation? Will they be ready to provide budget support and coordinate their efforts in PRSP frameworks? We need to ask ourselves: how do we organise work and analysis on these issues; how do we assess the extent of behaviour change at country level; and how do we assess participatory processes.

6.  John Page summarized the main messages that were emerging following the Dakar meeting: (a) the PRSP was beginning to become owned by the countries concerned, and was not just seen as an externally imposed requirement for debt relief, (b) the participatory process was taking hold, (c) and on a less positive note, there was more to be done to make growth more pro-poor and link poverty strategies with domestic processes, and (d) international and bilateral donors needed to "walk the talk" and do more to adapt their development cooperation policies to the requirements of nationally-owned PRSPs.

7.  The main thematic messages that emerged from the discussion are summarized below, organized around (a) the approach, (b) key issues related to the PRSP process, including multilateral/bilateral interaction, (c) the content of the PRSP strategies, and (d) longer-term challenges.

A.  Approach

Multiple frameworks and multiple objectives

8.  Several participants questioned whether we were asking countries to do too much, and more needed to be done to "prioritize" and adopt a unified approach to strategic development planning Many of the interim PRSP strategy papers were looking like "wish lists", and turning them into reality was going to be a difficult process. There was a also a need to examine the relationship with other frameworks, such as the NSSD. One suggestion for streamlining the approach was to have a stronger link between the PRSPs and the Millennium Development Goals. Other delegates questioned whether there was too much focus on social issues, to the detriment of governance and other concerns.

B.  Process

Country ownership and leadership of the PRSP process

9.  Participants emphasized the need for the review to examine the question of ownership carefully. While they appreciated that the consultations in Dakar appeared to suggest that PRSPs were strongly integrated into country processes, there was a need for a clear basis for making this determination. In particular, to what extent have governments been preparing PRSPs in an open and participatory way. For example, has there been a meaningful participation of the private sector. Some PRSPs appeared to be in danger of becoming an all embracing government planning exercise, reminiscent of state-run development planning of the 1950s, rather than a genuine participatory process. This could create a tension with the open, transparent, enabling environment needed to encourage private sector growth.

10.  Many participants pointed to a need for a better balance between "speed, quality and ownership". If ownership and learning by doing was the real key to development progress IFIs should be more patient and respect ownership even if this means poorer quality. In some of those countries regarded as good performers, such as Uganda, Bolivia and Ghana, there had been widespread use of consultants to draft documents to meet the expectations of the IFIs

11.  Ownership also implies the ability to "learn by your mistakes", which in turn requires accountability. The review should therefore focus on what mechanisms there are in place to ensure accountability. For example, key focal points could be the extent of the support provided to strengthen the capacity of civil society, the extent to which democratic institutions are involved in the PRSP consultation process, and the effectiveness of consultations and feedback.

12.  Others questioned whether it was feasible to expect "full" ownership at this stage. Rather a key question for the review is how the development community could collaborate with partners in ways that do not undermine country capacity and that build the necessary foundations to strengthen ownership. This implies giving partner countries sufficient "space" to develop their own capacity and a greater willingness of donors to take risks.

Bilateral/multilateral interaction

13.  Many of the participants, indicated that they were restructuring their development cooperation policies to address the PRSP. However, there was a feeling that the IFIs could do more to change their own "work habits" to accommodate the new approach. This does not just mean adapting the lending instruments used (e.g. PRGF). In particular, the Fund and the Bank continue to have a "mission" mentality, with interaction with other donors limited often to debriefings at the end of missions, and the Fund also suffers from a lack of "in-country" presence.

Consultation with partners

14.  The concentration of IFIs on mission work has often provided insufficient opportunity for consultations with other donors, particularly those that are not providing direct budgetary support. For example, this could lead to serious coordination problems in countries, for example, Mozambique, where the level of assistance outside the budget is greater than direct budgetary support.

15.  In the initial development of the PRSP approach, the IMF and the Bank had a clear lead role. However, the review now provides an opportunity for the IFIs to pause, and give more consideration to how their operational procedures could be adapted to allow for better interaction with the donor community in what will, inevitably, be a long-term fight against poverty. For example, pre-consultation, more joint missions and decentralization of staff, decision-making and expertise.

16.  So far most coordination efforts had appropriately taken place at the local level. However, there was also a need to consider how coordination could be better carried out at the level of development cooperation institutions/ministries. In particular, if local coordination doesn't go well there could be a role for the DAC (which has the advantage of distance). The DAC peer review process was also an important vehicle for determining whether donors were adapting their strategies to fit into the PRSP framework.

C.  Content

Focus on poverty reduction

17.  Several participants stressed the need for the review to focus on the lessons learnt on how to link poverty reduction strategies, the selection and monitoring of targets, and budget and expenditure planning. PRSPs contained too many indicators, and there was a need for more selectivity in targets. It was thought that the work of the OECD Task Force on Donor Practices on unifying indicators/benchmarks (to meet donor reporting requirements under the PRSP framework) could be useful in this regard.

18.  The review needed to look at the realism of the poverty strategies and whether they could be financed. For example, it was not clear how the Ghana strategy was going to fit in with the budget plans. PRSPs should also not just be seen as a vehicle for use of HIPC or a wish list for donor resources, but should be integrated into the counties' own resource mobilization efforts.

19.   Some participants considered that there was a need to look at how structural policies were being adjusted to take account of the impact on the poor. It was questioned whether it was not too early for the review to begin to look at results, given the tight deadline to meet the IDGs.

Role of budgetary support

20.  There was an extensive discussion of the need for donors to adapt their lending structures from project aid towards sector and budget support. Participants suggested that the review could examine the obstacles to moving to budgetary support, such as capacity constraints, fungibility of resources, fiduciary requirements, poor public expenditure management systems, and differing reporting requirements. The example of the banking sector problems had posed to donors in Mozambique was cited. Many donors had initially focused on budget support in the 1950s, and we had now come full-circle. What was different today and what was going to ensure its success this time round?

Sectoral issues

21.  The review should examine the extent to which external assistance to support the PRSPs is being provided through sector programs, and the extent to which this is creating absorptive capacity constraints. It was noted that a move to sector support was not necessarily complementary to the PRSP process. In particular, if a sector approach entailed additional monitoring and reporting requirements this could place an extra burden on country governments already strained from preparing the PRSPs. Sector support also did not automatically imply greater ownership, but could be seen as "ganging-up" by donors against the government.

Capacity building and ownership

22.  Participants stressed that capacity building was central to the development and implementation of PRSPs. Capacity building for financial management systems and accountability in partner countries was seen as crucial. Many speakers emphasized that the review needed to examine whether technical assistance was being provided in a way that enhanced local capacity building and ownership. For example in the new trade capacity building approach under the Integrated Framework, it was important that partner countries were involved from the beginning of the process, including the initial diagnostic studies and budget. The key is to build ownership and not provide "technical assistancein a capacity destroying way".

D.  Longer-term challenges

23.  Participants stressed the danger that once HIPC completion points have been reached the momentum for implementing the PRSPs may slow. The review could look at what is needed to ensure that PRSPs are established as an ongoing process, and what is likely to prevent the successive failures that we have seen with previous programs being repeated this time round. For example, how is the early experience with ownership and participation being absorbed?