World Bank's New Poverty Strategy Assessed

By Jim Lobe
OneWorld US

While the World Bank's three-year-old anti-poverty strategy has prompted low-income countries to pay more attention to the problems faced by their impoverished populations, it has so far failed to permit a broader questioning of the economic policies long favored by the Bank and its sister institution, the International Monetary Fund (IMF), according to a new report by a prominent development think-tank.

The 52-page report, released by the London-based Panos Institute on the eve of annual Bank-IMF meetings in Washington, D.C. this weekend, notes that the Bank's Poverty Reduction Strategy (PRS) has also promoted greater transparency by governments in poor countries, but its efforts to involve civil society and community organizations in planning and implementing development projects have generally fallen short.

"Reducing Poverty: Is the World Bank's Strategy Working?" also suggests that Bank and government planners should work more with local media to raise awareness about the strategy and encourage community participation in it.

The PRS was adopted by both the Bank and the IMF in 1999 as a result of a growing consensus--formed in major part by strong criticism from nongovernmental organizations (NGOs) active at the grassroots level--that too little progress was being made in reducing the numbers of people living in absolute poverty.

Many of the NGOs blamed the two Bretton Woods agencies, and particularly their Structural Adjustment Programs (SAPs), for the lack of progress. Aimed at integrating poor countries into the global economy, SAPs--whose implementation was often made a condition by the IMF and the Bank for other lending during the 1980s and 1990s--required governments to sharply cut their budgets, reduce tariffs, sell off state-controlled companies, and open their economies to foreign investment.

NGOs argued that these policies often worsened the plight of those living in poverty, who rely heavily on goods and services, such as food subsidies, education, and healthcare, that were hit by government budget cuts. Tariff reductions often resulted in a flood of cheaper imports that devastated local industry and employment.

Under the PRS, governments are required to develop Poverty Reduction Strategy Papers (PRSP) as a condition for receiving concessional loans, debt relief, or other forms of IMF-Bank support. Papers begin with a diagnosis by the government of the country's poverty problems and devise ways to reduce them. In putting PRSPs together, however, governments are obliged to consult with civil society.

The strategy--which has won mixed support among NGOs, such as ActionAid, lobbying at this weekend's meetings--is designed to ensure that governments derive "ownership" over the plan so that it is no longer seen as imposed from the outside by donor agencies and to broaden popular support and understanding of the plan by inviting the "participation" of those who are supposed to benefit from it.

More than 70 countries, most of them in Africa, have adopted PRSPs to date.

"On the positive side, the process of developing PRSPs has generated a new focus on poverty by governments, and a greater awareness of the nature of poverty and understanding of its causes," according to the Panos report, which found that relations between governments and civil society had improved as a result of the process.

"Governments are opening up their budgeting processes and spending to public scrutiny and NGOs have had to come together in what has been for many a new way of working," the report said.

On the other hand, PRSPs have, at the grassroots level, generally not been as effective as had been hoped. Indeed in three case studies covering Uganda, Ethiopia, and Lesotho, Panos found little public awareness of the process with the result that the "sense of ownership" is not very strong.

Moreover the failure of PRSPs to address the macro-economic policies that NGOs have identified as especially harmful to those living in poverty has led many groups to decide against participating. And in some cases, the government's control over the process has excluded them.

"The participation in economic policy-making to which civil society is being invited in the PRSP process is strictly limited," according to Panos.