Memorandum submitted by World Vision
1. This memorandum constitutes the written
comments/evidence of World Vision in response to the announcement
that the Treasury Committee will hold a hearing with Mr Horst
Kohler, Managing Director, International Monetary Fund (Press
Notice No 32). World Vision does not intend to give oral evidence.
2. World Vision is a Christian relief, development
and advocacy partnership that serves more than 70 million people
in nearly 90 countries. World Vision works directly with communities
through its area development programmes, often large-scale interventions
benefiting many thousands of people. World Vision believes in
enabling the poor to take control of their own development through
participatory methodologies and also lays emphasis on southern
3. The principal issue in this submission
relates to the role of the International Monetary Fund (IMF) as
one of the principal architects of the Poverty Reduction Strategy
Papers (PRSPs). The launch of PRSPs represented a significant
movement for the IMF, with the Fund for the first time explicitly
adopting, with Board approval, poverty reduction as a formal objective
of its activities. The prospect of comprehensive, country-owned,
plans for poverty reduction, which enables improved donor co-ordination,
is extremely attractive to all those who work alongside the poor.
World Vision has concerns, based on field-level experiences, which
indicate that the legacy of the past seems to have pushed the
Fund, and indeed the World Bank, towards actions that sacrifice
effectiveness for the sake of their organisational interests.
4. World Vision, from the inception of the
PRSP initiatives, has sought to engage constructively with the
development of this new approach to social conditionality. The
experience of World Vision in relation to PRSPs within four of
our programmatic regions (Asia, East Africa, Latin America and
West Africa) is documented in a recent publication Masters
of their own development?PRSPs and the Prospects for the
Poor, copies of which have been submitted as part of this
evidence. This submission draws on this report, as well as utilising
information from a wider cross-section of World Vision national
entities currently participating in PRSP processes. This allows
World Vision to speak from experience of contexts in which full
PRSPs have been completed as well as those in which the process
is still in its relatively early stages. The studies undertaken
by World Vision point to a diversity of perceptions of PRSPs including
very real grassroots frustrations with the process and to more
deep seated problems in the management approach taken, particularly
by the IMF, towards PRSPs. These problems are suggestive not so
much of teething troubles in a new process, but rather a basic
mismatch between the IMF's underlying organisational aims and
externally stated objectives.
5. World Vision has identified concerns
regarding the PRSP approach, grouped around the areas of process,
content and resources.
The four case studies point very firmly to the
wider truth that World Vision has not yet encountered what might
be termed a satisfactory participatory process. In several contexts
the process has been limited to a select group of NGOs who received
invitations to events at which the intentions of a government
was outlined for their agreement. Elsewhere, World Vision has
witnessed poor dissemination of documentation and information
and inadequate explanations of the processes for the constituencies
whose views were being sought. Timing was also clearly a factor
that affected participation, with some countries attempting processes
in a limited timeframe (as in Ethiopia with 100 districts being
targeted over three days). In Senegal, there was limited inclusion
of traditional groups and village level participation and parliamentarians
were only included in the final PRSP ratification. Civil Society
groups have frequently complained that there has been a tendency
for governments to call them together for meetings to provide
an endorsement of an already formulated approach. Ultimately,
lack of participation will erode public commitment and weaken
the quality of information. For national governments there is
an inherent tension between the encouragement given to use existing
sectoral plans as the basis for the PRSPs and the requirement
for participation. The Bank and Fund must do more to address this
dilemma directly by encouraging governments to revisit those sectoral
plans in a more fundamental wayin many cases at present
even the original national sectoral line ministries are not included
in the conversation. These criticisms amount to an abrogation
of responsibility on the part of the IMF and Bank.
Recommendation: Capacity building for participation
by both governments and civil society group must be provided by
the IMF and Bank if levels of participation are to increase in
the implementation of PRSPs, especially relating to budgets, public
expenditure management, and monitoring and evaluation.
It has been argued consistently that the rapid
development of comprehensive national plans for poverty reduction
mitigates against quality, a dilemma that has surfaced in relation
to both Senegal and Latin America. HIPC conditionality has created
considerable pressure to speed up the transition to a full PRSP.
Recommendation: De-link PRSPs from the HIPC
process, placing greater reliance on Poverty Reduction Strategy-linked
ODA funding and further debt relief as incentives for the development
of the strategies.
8. Ownership (government commitment)
World Vision's experience is that much work
remains to be done to create an atmosphere of ownership rather
than conditionality. In-country discussions with many stakeholders
highlight the lack of consistency in this regard. Information
from Cambodia illustrates some of the unnecessary pressures that
have been placed on governments and that can only serve to reduce
Our research in Latin America and Cambodia both
provided startling illustrations of one of the most frustrating
aspects of the PRSP experience to date. In both instances key
documents have only been available to civil society groups (including
local NGOs) in English. In Cambodia, for example, key documents
had to run through six versions before they were finally made
available in Khmer. The concept of a participatory process in
which essential materials appear only in a foreign language is
Recommendation: Ensure that essential documents
are at least available in the major languages of the countries
Overall data has played an inadequate role with
only limited attempts at poverty mapping or thorough research
prior to the completion of the strategy. This problem has been
common to almost all of the countries in which World Vision has
been actively involved in the PRSP process. One of the earliest
full PRSPs to be given the official seal of approval by the World
Bank and IMF was that of Tanzania. The data used for much of the
planning within the document was, however, based on a 10 year
old household survey.
Recommendation: The quality of data gathering
and poverty mapping must be dramatically improved.
11. Social Impact Assessments and Monitoring
World Vision has been unhappy with the limited
and late planning for social impact monitoring in relation to
implementation of PRSPs. Processes for assessments and monitoring
must be incorporated during the planning stage of poverty reduction
initiatives if they are to give an accurate picture of results.
This has clearly not happened as a general rule within PRSP design
processes. One DFID funded study was particularly scathing, stating
"a blind eye is being turned to well-known
facts about the unreliability of the official reporting systems
and administrative data on which implementation monitoring depends.
This is not picked up even in JSAs (Joint Staff Assessmentsby
the Bank and Fund). The potential for using known shortcut techniques,
such as participatory beneficiary assessments and facilitated
staff self-assessments, to provide quick feedback on critical
implementation issues is not being explored creatively enough.
Recommendation: Priority must be given by the
Fund and Bank to conducting social impact assessments on all proposals
in PRSPs that have wide-ranging implications for the poor.
12. A Rights-based Approach
Throughout its short history, the PRSP initiative
has lacked an explicit commitment to the principles of rights-based
development. The identification of areas for intervention is intimately
connected to the fulfilment of key instruments, not least the
Convention on the Rights of the Child. The fulfillment of basic
rights is therefore both an obligation on the parts of donors,
lenders and states and also an effective tool in the formation
of policy itself. A related problem is the relative absence of
the issue of human rights from those sections of PRSPs dealing
specifically with governance, judicial and law enforcement reform.
World Vision welcomes the inclusion of issues relating to the
rule of law within PRSPs but is disappointed that this seems to
be primarily orientated towards creating an improved climate for
Recommendation: PRSPs should be rights based.
As a step towards this goal, all PRSPs must recognize the role
of rights within governance and institution building. Reform of
legal processes should also include improved ability for the poor
to have recourse to the law, particularly on issues such as land
title. In addition, law enforcement agencies should be the focus
for human rights training, including education in dealing with
issues relating to the legal protection of children.
13. Macro-economic content
Attaining higher rates of growth for many of
the countries involved depends upon the success of the advice
they are receiving from the Fund and the Bank. Yet the track record
of IMF macroeconomic advice in promoting growth is not impressive
and the results of World Vision's research in Latin America indicates
that many of the problems have frequently been seen as rooted
in conditionality applied by the Fund. The basic ingredients of
PRSP macroeconomic packages seem to be the traditional structural
adjustment approach with little substantive innovation or learning
from elsewhere, as found in Senegal. Although market led growth
and trade liberalisation are important in reducing poverty, the
evidence is missed, as to whether IMF advice helps to achieve
Recommendation: The IMF should move to a target-based
approach to conditionality based on medium-term policy rather
than short-term attempts to direct the main instruments of economic
policy. The IMF should also expand the range of policy options
considered and available to developing states in the construction
of national macroeconomic frameworks.
14. Economics and a Safer World for Children
Building a safer world for children means taking
deliberate steps to address issues of violence against children,
child abuse and child exploitation. Yet outside the realms of
education and health care, PRSPs often discuss children without
policy prescriptions being defined. Previous experience has shown
that safety nets for families must be built during times of economic
growth to avoid problems during crises, and investments must be
made in social provision, law enforcement, participation by children
and awareness-raising among children.
Recommendation: PRSPs should include specific
policy prescriptions to ensure resources are allocated to the
area of child protection. Children should be included in participatory
monitoring and evaluation of PRSP implementation.
15. Government capacity
An issue that has affected the PRSP process
in every country and will ultimately have a determining effect
on successful strategy implementation is government capacity.
The impact of structural adjustment programmes was to erode and
shrink state sectors. Often this shrinkage was felt keenly in
the social policy arena. Not
surprisingly government capacity has been a key factor in producing
problematical design processes (poor participation, inadequate
data etc). Other countries, including Cambodia, have been emerging
from long periods of conflict and political instability that have
also eroded capacity. The same capacity issues could have a more
damaging effect as governments seek to expand educational, health
or other provision based on weak departmental infrastructures.
Capacity problems may also still exist within essential parts
of the central financial administrative system. One
area that has clearly concerned the Bank and Fund is budget tracking
and Public Expenditure Management (PEM), something the two institutions
have identified as an urgent area for strengthening.
Recommendation: The IMF and Bank should be more
active in building the capacity of key parts of state structures,
especially those responsible for public expenditure management
systems and participatory monitoring and evaluation.
16. NGO Capacity
The gradual progression towards new initiatives
such as participatory budget setting highlighted a substantial
capacity problem among NGOs. This is an issue highlighted with
World Vision research in Cambodia, Ethiopia and Senegal. The Bank
and Fund has tried to help to address these concerns with some
Recommendation: As more PRSPs move into their
implementation phase, the IMF and Bank should increase NGO capacity
building initiatives, particularly with regard to participatory
monitoring and evaluation.
17. Resource siphoning
The focus during the development of PRSPs has
very strongly been on two specific areas of social policy: health
and education. Governments may feel pressured to divert funding
from lower profile areas of social policy into the health and
education sectors. This problem is likely to challenge countries
such as Honduras and Nicaragua that already devote high levels
of government budget to other social sectors.
Recommendation: Public expenditure reviews will
ultimately enable governments to identify unproductive expenditures,
thereby reducing the threat of siphoning funds from pro-poor areas.
Improved public expenditure reviews should mean that budget savings
might go some way to bridging the funding gap.
18. Paying for the PRSPs
The Bank and Fund were clear at the start of
the PRSP initiative that new funding would also be required particularly
from OECD donors. Although some donors have agreed to organise
their existing aid flows around the PRSP concept, few have actually
committed substantially increased volumes of aid. Should Tanzania
continue to increase expenditure on key social sectors by 25 per
cent per annum, it will only be able to fund 80 per cent of the
cost of its PRSP. This issue has been encountered by World Vision
in Latin America and many other contexts. Another major assumption
within the PRSP initiative is that HIPC2 will reduce developing
country debt to sustainable and manageable levels, but this too
may be problematic for some countries. Ultimately the quality
of PRSPs may prove to be academic if sufficient resources are
not available to allow them to be fully implemented.
Recommendation: The IMF and Bank must greatly
increase their advocacy for increased development resources from
the north. Continued calls for northern trade liberalisation are
also important. The World Bank and IMF should also make clear
the insufficiency of HIPC and the need for substantial increases
in the level and extent of debt relief. Debt relief should be
substantially increased based on a realistic analysis of in-country
19. Poverty Reduction and Growth Facility
The PRGF is supposed to make up one part of
the funding for poverty reduction, but it has proved to be problematic.
It has remained primarily a means to support monetary policy and
fiscal reform. In Latin American and Senegalese experiences there
has been a divorcing of the PRSP and IMF lending from the PRSP
process. This has created parallel processes in which conditionality
surrounding the PRGF has superseded and over-ridden the policy-making
process of the PRSP.
Recommendation: Early signs are that action
is needed to make the PRGF concessional, more appropriate for
development, better linked to PRSPs and less focused on stabilisation.
20. Are the Fund and Bank Learning the Lessons?
In the past World Vision has been impressed
by the open and constructive approach taken by the Fund and Bank
to dialogue on the issue of PRSPs. However, there were serious
problems, especially at regional level, with the openness and
limited level of participation in the PRSP Comprehensive Review.
The original terms of reference for the review were limiting and
they were not extensively shared with participating civil society
in the south. Most disturbing, however, was the experience of
the review process in relation to the regional consultation seminars,
organised by the IMF Institutes and World Bank. In Asia World
Vision staff were informed that development workers were specifically
not wanted at the regional consultation event. Those NGOs who
did manage to gain admittance to the Hanoi meeting found the event
organised around governmental input, with no real opportunity
for civil society comment. The Latin American event was similarly
problematic. World Vision did have a registered participant for
the Bolivia meeting and was therefore surprised to find that the
process for civil society representation was structured so that
actual participation was almost impossible (including failure
to give details of location, timing or registration).
Recommendation: The IMF and Bank must give greater
priority to increased accountability and transparency in order
to foster public confidence in their commitment to participatory
processes and country ownership.
World Vision is committed to try to help make
PRSPs work in all the contexts in which we are operational. Yet
it is concerned that without substantial change, and a willingness
on the part of the Bank and the Fund to prioritise the original
aim of poverty reduction over other organisational pressures,
then PRSPs may be written off as a good idea badly implemented.
12 David Booth, Henry Lucas, Desk Study of Good
Practice in the Development of PRSP Indicators and Monitoring
Systems, Initial Review of PRSP Documentation, commissioned
by DFID for the SPA, ODI London May 2001 p. vi. Back
David Booth, "Overview of PRSP processes and Monitoring",
in PRSP institutionalisation study: Final Report, ODI report prepared
for the Strategic Partnership with Africa (15 October 2001). Back
Ibid, p. ix. Back