5.2.2 PRS-related instruments of the IFIs
The International Finance Instituitions (IFIs) have introduced technical and financial approaches to support PRS programmes.
Assistance provided by the World Bank
The World Bank provides credits for low-income countries that are highly concessional in the sense that no interest rate is charged (only a small service charge is levied on committed funds), and repayments are stretched over a 40-year period. This means that these credits are 70% equivalent to a grant (in other words, a World Bank credit of $100 is equivalent to a grant of $70).
The World Bank sees its work as fitting within a broad strategic vision of development. In 1999 the Bank introduced the Comprehensive Development Framework (CDF), which forms the conceptual basis of the PRS. This framework “emphasised the multisector, long-term development vision approach, as well as country leadership in designing the ‘architecture’ of local donor co-operation” (Rogerson, Hewitt and Waldenberg, 2004, p. 17). This means that development should not focus on single projects, but should rather be seen in a wider context and with regard to all relevant aspects.
The World Bank also provides analytical services. At the request of governments, it prepares economic reports such as country economic memoranda, public expenditure reviews and poverty assessments. For the PRSP, the Bank produced a “Sourcebook of Poverty Reduction Strategies”, a two-volume manual on how to prepare PRSPs.
To guide its programme of assistance to countries, the Bank has developed a Country Assistance Strategy (CAS), which resembles a medium-term business plan (Oxfam Guide, p. 6). Its objective is to indicate how the Bank’s lending programme and planned analytical work will be implemented over the medium term. The countries’ governments – and sometimes also representatives of the civil society – participate in preparing this document, although the World Bank clearly states that “it is not a negotiated document” (World Bank, 2003, p. 38). The CAS system already existed before the PRSP approach, but must now be modified in order to indicate more clearly how CAS instruments (e.g. investment projects, analytical advice and/or budgetary support in the form of Poverty Reduction Support Credit (PRSC) will contribute to the implementation of each country’s PRS. This is not easy as both instruments follow a different logic: PRSP implies a bottom-up approach, whereas CAS works top-down.
Assistance provided by the IMF
The IMF’s lending instrument for low-income countries is the Poverty Reduction and Growth Facility (PRGF). The PRGF mainly supports macroeconomic programmes such as tax policy, fiscal management or customs administration. The IMF provides its expertise in these areas in particular to client countries.
Comprehensive Development Framework: www.worldbank.org/cdf
Country Assistance Strategies: www.worldbank.org/cas
World Bank FAQs (frequently asked questions)
World Bank (2003): A Guide to the World Bank