Poverty Reduction Strategic Paper Politics

In September 1999 the World Bank (WB) and the International Monetary Fund (IMF), decided that to get loan and eligibility for debt reliefs low income countries should prepare 'poverty reduction strategies'. So the Heavily Indebted Poor Countries Debt Relief Initiative (HIPC), which was launched in 1996 to help developing countries to exit from the burden of unsustainable debts; and all other concessional financing of WB and IMF were made conditional to force the developing countries to prepare a PRSP. It was perceived that this document would be a national plan of action to reduce poverty and promote growth. This three-year rolling plan would be the basis of all social, macroeconomic and structural development of a nation. Aimed to be nationally owned, this document is prepared by the respective countries in collaboration with the staffs of the WB-IMF and also with the participation of local stakeholder groups.

The framework for Poverty Reduction Strategy is presented in the following flowchart, which indicates that the main goal of this document obviously is poverty reduction. This goal is based on a vision for poverty reduction formed on the basis of the understanding of key issues of the present state of the economy. To fulfil the vision of poverty reduction, four strategic blocks are identified. These four blocks are enhancing pro-poor growth, boosting critical sectors for pro-poor economic growth, devising effective safety nets and targeted programmes and finally ensuring social development. The framework also identifies four supporting strategies or crosscutting issues. These are (i) ensuring participation, social inclusion and empowerment of all sections, groups and classes of people, (ii) promoting good governance by ensuring transparency, accountability and rule of law, (iii) providing service delivery efficiently and effectively, particularly to the poor and (iv) caring for the environment and sustainable development on a long-term basis. Identification of problems and recommendations of actions to be taken in four strategic blocks and four supporting strategies are based

The participatory approach of the PRSP process is also questionable. The basic aim of a participatory model was very partially achieved because of the lack of appropriate institutional framework for participation. In the high level consultation meetings, the language (mainly English) used for discussion and lack of access to information lowered the voices of common people and only facilitated the influence of foreign donors. Participation of labor unions, women and rural communities were very limited

Issues which were not covered in the PRSP

In preparing PRSP it created a lot of confusion among country's economist independent agencies and intellectuals. There were lot of seminars and proposal about what should be included in PRSP. Some of them are discussed below:

Tax Breaks for philanthropic activity:

To develop the country tax break for the philanthropic activity should be encouraged. So that it can increase and consequently help in the poverty reduction. Besides that there should be a legal framework for non- resident Bangladeshi's to contribute in that poverty reduction process.

Access to Assets

There is a need for reviewing the current pattern of operational use of entire khas resources (such as agricultural land, ponds, forest) held under government ownership. While precise estimates are difficult to come by-there is significant informational rents associated with such statistics-it is widely held that the amount of actual khas lands and ponds is much higher than what is reported by official statistics. These khas lands and ponds are used inequitably and often inefficiently. The present Task Force, therefore, recommends the distribution of all khas lands and ponds to the poor and the poorest on a priority basis by evicting their illegal owners both in rural and urban areas.

Ensuring Universal Primary and Secondary Education

The focus on universal primary and secondary education needs to be pursued vigorously with emphasis on capacity building (both hardware and software), improving the access of the poor, ensuring quality education for the poor, and removing the gender gap.

Private donations, especially by the Bangladeshis living abroad, to construct quality schools and colleges at the village level may be encouraged by simplifying the procedure for setting up of such schools.

Left-Outs in Microcredit

All willing poor borrowers should get access to microcredit as a way of climbing out of poverty. Large and small NGOs should come together to cover all the segments of the poor who have been left-outs from the MFI operations. Umbrella organizations such as PKSF can play a key role in the process.

Monitoring and Advocacy

Create a Poverty Focal Point within the Government for effective poverty-monitoring and tracking progress in implementing anti-poverty policies and programs.

The World Bank's assessment about policy reform in Bangladesh was both disingenuous and self-serving. It was disingenuous in the sense that, as the international experience suggests changing policies or institutions is a gradual, evolutionary process; it is difficult to superimpose externally from above. It was self-serving because the World Bank heaped all the blame on the government, but part of the responsibility must lie with the World Bank for proceeding without a thorough analysis of Bangladesh's political economy constraints and for imposing conditionalities that were unrealistic and beyond the government's capacity to deliver.

Finally, it imposed policy conditionalities with the "agreement" of the bureaucracy, excluding the larger society, even the parliament. The consequence has been inappropriate policies, weakened democratic processes, and poor economic outcomes.

these policies have not produced any major breakthroughs in economic growth or poverty alleviation.

RecommendationReforms should be prepared by local policy makers and approved by parliament:

Reforms which are proposed are prepared by aid agencies and imposed as part of the aid package. The reforms should be generated within the country; such reform ideas can emerge from the respective ministries or by independent local. Such reform ideas could be discussed by the civil society and approved by parliament.

The PRSP is a poor substitute for planning:

It replaced the long-established planning process that used to the practice in the country. It is an inadequate substitute for the traditional five-year or long-term planning documents.

Inappropriate Donor policies:

While some policies advocated by donors are good in theory, they are often formulated in the abstract without considering the political-economic realities of the country. As a consequence, it is difficult to implement these policies because they are not easily acceptable by society. Thus, even if the first-best policies are considered the most desirable, the second-best policies are the only ones that are feasible in practice.

Washington-consensus:

Donors have usually taken a cookie-cutter -one-size-fits-all- approach to policy formulation. This approach is based on the blueprint of the Washington-consensus of policies with emphasis on privation, liberalization and stabilization. Donor agencies have often advocated policies that pushed undiluted privatization rather than advance the development of the private sector; forced immediate and wholesale liberalization rather than advance gradual adjustment, and coerced countries into deregulation rather than support regulatory redesign. As the recent experience suggests, these policies have not produced any major breakthroughs in economic growth or poverty alleviation.

In short, the foregoing comments suggest that aid has been less than effective and has had little direct impact on poverty reduction; that it has led to a plethora of inappropriate policies imposed exogenously by donors who have exerted a disproportionate influence on policies that were neither owned by the country nor went through the usual democratic vetting mechanism; and above all, that the PRSP exercise, which was artificially imposed by donors, has few indigenous roots and has helped undermine the traditional planning mechanism.

Conditionality

Governance and corruption

Implementation Capacity

To erode mistrust about a genuine commitment to poverty reduction and to ensure a broad-based participation and consensus in the preparation and support of the PRSP, public debates on the actionable programmes based on the strategies mentioned in the PRSP Draft should be encouraged.

The Draft should be discussed in the Parliament and with all political parties in an informed and objective manner. This would provide scope for informed debate and introduce greater transparency into the PRSP process. Through this process a credible PRSP will emerge out of a credible process of public and political consultation. Debate and endorsement by the Parliament will ensure national ownership, consistency in resource allocation and thus, pave the way for implementing the strategy.

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