Poverty Alleviation
Concern For The International Community

Siddhi B. Ranjitkar

THE world has billions of people living under the poverty line even when the line is drawn at one dollar a day income. The International Community foresees to reduce the number of people living on less than one dollar a day to a half. To this end, the International Community thought it necessary to adopt development goals and then draw a road map to reach those goals.

Seven Goals

The International Community of one hundred and eighty nine countries coming together at the Millennium Summit in September 2000 set seven Millennium Development Goals such as eradicate extreme poverty, achieve universal primary education, promote gender equality and empower women, reduce child mortality, improve maternal health, combat HIV/AIDS, malaria and other diseases and ensure environmental sustainability. The summit targeted at achieving these goals by 2015. A year later, an eighth goal: develop a global partnership for development was added to the Millennium Development Goals.

The International Community agreed on preparing a Poverty Reduction Strategy Paper (PRSP) to achieve the target set for 2015. It is in fact a road map to be prepared by the low-income countries for better targeting their public policies of poverty alleviation. More than ten developing countries have completed their first full PRSPs.

The financiers such as International Monetary Fund (IMF) and the World Bank have decided to provide the low-income countries with debt relief and concessionary lending based on their PRSPs. In fact, the IMF has used PRSP for lending the poor countries since 1999. The IMF has replaced the Enhanced Structural Adjustment Facility (ESAF) by the Poverty Reduction and Growth Facility (PRGF). It is targeted at poverty reduction. The IMF and the World Bank have taken debt relief initiatives for providing the heavily indebted poor countries (HIPCs) with deeper and faster debt relief for implementing their poverty relief strategies.

Poverty Reduction Strategy Paper is a centerpiece of the International Community for assaulting the poverty prevailing in the developing countries. Every low-income country prepares a PRSP with the participation of government and donor officials, non-governmental organisations, labour unions, religious organizations, research and policy development institutes and other stakeholders. It is a result-oriented paper, focuses on the outcomes that will benefit the poor, takes a long-term holistic perspective, and stresses transparency and accountability.

There is no standard prescription for preparing a PRSP; however, each PRSP needs to contain at least four main elements such as description of a participatory process used for preparing it, poverty diagnosis: identification of poverty growth and of obstacles to poverty reduction, realistic socio-economic growth targets based on the poverty diagnosis, and systems for monitoring outcomes of actions, and finally priority public actions within specific budget constraints to achieve the targets set in a PRSP.

A country needs to involve parliament, cabinet and line ministries in preparing a good PRSP at appropriate stages, analyze the impact of major poverty reduction programmes and policy actions on the poor, develop appropriate indicators of targets to enable timely monitoring of performance and feedback, set realistic targets for economic growth and poverty reduction, develop alternative macroeconomic scenarios, contingency spending plans, and measures supporting alternative revenue mobilisation, and include policies to reduce the risks from external shocks and ensure debt sustainability.

Development partners particularly donors assisting a country in their efforts to poverty reduction need to provide a PRSP team with timely and constructive feedback but resist making extensive comments on a draft that might undermine country ownership. They need to coordinate assistance for diagnosing poverty, for poverty and social impact analysis, provide timely and appropriate analysis of key areas of a PRSP. They also need to intensify efforts to understand links between policy actions and pro-poor growth, then align their assistance for government decision making with annual budget cycles of the recipient countries, and align their business plans with a national PRSP, and support capacity building of civil society.

The IMF and the World Bank launched a major review of PRSPs in July 2001. Only a few countries have completed their PRSPs by that time. Therefore, these two multi-lateral donor agencies focused on the process of preparing PRSPs and their contents rather than on the impacts of PRSPs on poverty reduction while reviewing them. The next review of PRSPs is scheduled for 2005. Most probably the reviewers might be able to concentrate on the impact and outcomes of PRSPs at that time.

The review of PRSPs revealed interesting things that are useful for both the government and other stakeholders. Most governments have intensified their efforts to identify the causes of poverty and have been serious about designing poverty reduction strategies. The policymakers have gained the better knowledge of poverty and the priorities of the poor. Some countries have projected unrealistic revenue forecasts and then higher expenditure on poverty alleviation programmes.

Low-income countries are very vulnerable to external shocks. They therefore need to be alert to possible external shocks and to their extreme vulnerability to such shocks. The immediate impact of external shocks is always on the poor. They therefore need to develop appropriate social safety nets to insulate the poor from such shocks.

Countries preparing PRSPs have difficulties in clearly linking their policy actions with either a comprehensive diagnosis of poverty or an analysis of their impact on the poor despite the availability of poverty data and analysis. The main problem is of national capacity constraints and inherent technical difficulties. Therefore, it is felt that development partners particularly the World Bank needs to step in to help those countries needing the assistance.

The next main finding of the review of PRSPs is that the donor community - from major UN organizations to bilateral donors - has accepted the principles of the PRSP and has agreed to align their assistance programmes with the support for PRSPs. However, there is a gap between donors' pledges and practices. Some recipient governments have been concerned with the procedures and reporting requirements associated with PRSP related lending operations because they find it difficult to meet the requirements. Therefore, donors need to simplify their reporting requirements for the recipient governments to be able to meet the donors' requirements.

Monitoring

The concerned government needs to do periodic evaluation of progresses in reaching the goals of poverty reduction and sustainable growth to ensure the PRSP implementation is on track and the country strategies remain relevant. The International Community needs to assess the movement toward achieving the Millennium Development Goals. Such a monitoring of achieving the goals will help the world community focus on providing low-income countries with sustained support for their efforts to the poverty alleviation.

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