Poverty Reduction Strategy Papers (PRSPs) are documents required by the International Monetary Fund (IMF) and World Bank before a country can be considered for debt relief within the Heavily Indebted Poor Countries (HIPC) initiative. These core principles are central to the goals of the PRS process.

Poverty-focused government

One central goal is to create a more poverty-focused government. Previously, poverty reduction had been largely a marginalized concern within governments of developing countries.

Civil society involvement

One major function of the PRS is to encourage more participation from the population. The purpose of civil society involvement is to increase the influence of stakeholders in policy creation, program implementation, resource allocation and priority setting.

Ownership

Ownership of the PRSP by the government and population is a very important goal of PRS.

Formulation process

Poverty analysis

The PRSP process begins with an analysis of poverty within the country, taking into account both quantitative and qualitative data.

Participatory process

One of the most important factors of the PRSP is the participatory process through which it is created. It is vital to increasing country ownership of the PRS and promote accountability. The World Bank outlines the following participatory levels:

  • Government participation, including ministries, parliament and sub-national governments
  • Stakeholder participation and involvement. This can include civil society groups, women’s groups, ethnic minorities, policy research institutes and academics, the private sector, trade unions and representatives from different regions of the country.
  • Participation of bilateral and multilateral external development partners
  • Participation and consultation of the poor or their representatives

Criticism and challenges

Even with an approved PRSP, some countries have difficulty following through with intended policies and therefore do not reach the PRS outcomes. A large factor of this is the misallocation of budgetary funds that were intended to go towards the PRS.

The PRSP process has been scrutinized for increasing aid conditionality even though it was supposedly created to undo the imposition of policy conditions from the outside by increasing country ownership.

A clear definition of what civil participation means has not been laid out by the IMF or World Bank. This creates a problem when evaluating one of the key requirements of the PRSP, which is that it has to be formulated with civil participation. In fact, participation that involves the population working with the government to develop specific strategies to reduce poverty doesn't exist in any developing country. This seems to suggest that the WB and IMF approve PRSPs regardless of the fulfillment of this condition.