Select Committee on Treasury Written Evidence

Memorandum submitted by World Vision

  Poverty Reduction Strategies, the overall country strategies are designed to tackle poverty with country specific policies. Currently, most developing countries are designing and negotiating their 2nd generation PRSPs (or the equivalent) With the World Bank and IMF.

  World Vision has been engaging with the review process, and based on extensive research in Bolivia and Zambia World Vision designed a number of recommendations for consideration[71]—primarily around the needs of accountability and civil society engagement at the time of planning and implementation of PRS. What was agreed in principle now needs to be implemented in practice, pressure now needs to be put on the World Bank and the IMF from the UK government and other EU governments to ensure these changes happen and promises are met.

  Making the second generation of PRS more effective is not only vital in development terms, but is also politically salient, particularly as issues of aid effectiveness are likely to raise to the fore as aid flows are increased substantially in coming years—following recent G8 and EU commitments.

  In response to the inquiry by the Treasury Select Committee World Vision would like to raise concerns about the space given by the IMF for dialogue around macro economic framework that supports the implementation of PRSPs. One of the areas that need to change is the space available to civil society and parliamentarians to negotiate around the Poverty Reduction and Growth Facility. This submission will address the financial relationship of the UK with the IMF and the funding agreements of IMF.


  1.  Negotiation space around this needs to be opened up as part of the PRS process, currently the dialogue process for the PRSP is not able to change the PRGF framework. This means that there is greater dialogue on the micro-part and not the macro, which is already fixed, creating a bottleneck. To say that the PRGF is drawn from the PRSP is not the same as the PRGF dialogue taking place together with the PRSP or at some point within the PRS cycle that feeds into the PRS process. PRGFs have a strong trigger/signalling effect on the behaviour of other donors, despite the size of funding under them.

  2.  Currently the IMF provides analysis in the PRGF to the country government, which determines the budget for a number of donors categorising the priority sectors with which the country should be concentrating on. It is not about giving greater discussion between the country government and the IMF country representative on the budget. The issue is that the IMF needs to be making available the information for dialogue and consultation to all. The analysis of the IMF, which takes into account impacts of inflation rates/bank rates and resource mobilization for MDGs, need to be made available for dialogue to interested stakeholders within country allowing greater transparency.

  3.  When we speak of greater "dialogue" it may not always include civil society organisations, but transparency on what those issues are, especially the underlying policy assumptions that are being used to come up with policy options and their links to poverty reduction. Most civil society organisations can adequately engage with the assumptions rather than the economic detail, which the IMF plays, this could be a function that donors could play.

  4.  The demand by civil society organisations on governments and the IMF to make this process more transparent and create dialogue around the results and analysis made by the IMF is very high. This has become increasingly apparent now that the issue of mutual and domestic accountability has been brought to the frontline of international negotiations eg the UN Summit resolutions, the Paris Declaration, the Africa Partnership Forum etc. The 2005 PRS review itself projects a strong emphasis on balancing accountabilities by working more domestically. Macro-economic dialogue is a significant part of this accountability framework.

  5.  Equally critical is addressing IMF staff behaviour, including their lack of attendance at PRS thematic group dialogue meetings and donor meetings, reliance on donor missions from Washington to review PRGF and other macro-economic issues within few days. CSOs deplore the lack of adequate time to prepare for these meetings and mostly even lack of knowledge of their coming into a country This is not just about government failure but transparency on both government and IMF part.

  6.  Strong governments need strong civil society and parliaments which are able to exploit their comparative advantage eg in the area of addressing rights and voices of the marginalized groups, such as children and women. This will support greater opening of space for dialogue, without undue fear of "sensitive areas", as alluded to in the PRS report. Training is also not adequate, a genuine "capacity development" approach would also enable the IMF staff themselves to learn the politics of interrelationships and negotiations among government, civil society, parliaments, donors and the private sector at country level, instead of limiting themselves to macro-economic formulae, as a technical project. Examples of good practice are emerging in countries such as Tanzania and Mozambique. This should be about capacity building and not "technical assistance".

  7.  This means that donors have to invest in either more IMF staff in each country, with an exit strategy, and linking IMF staff skills to available in-country skills with civil society organisations and research institutes to develop a multiplier effect.

  8.  Donors should invest in capacity to demystify macro-economic policies in working with both government and civil society. However, civil society would add value to this by enabling such information to reach citizens at low cost, for example the case where the Civil Society for Poverty Reduction in Zambia was able to communicate their government's Memorandum of Understanding with the IMF. This should, however, not be about only the decisions already made but including debates on the assumptions and options included in the PRS dialogue at different stages.

  9.  Tools such as the poverty social impact analysis that the World Bank, IMF and donors such as DFID are using to assess the impact of economic policy on the poor need to be opened up for dialogue with the countries civil society and parliament. So that they are sufficiently tailored to there priorities.

January 2006

71   Tembo, Dr Fletcher/World Vision UK, "Poverty Reduction-are the strategies working?", 2005-World Vision UK research based on case studies of Zambia and Bolivia. Back

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