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Open on impact? Slow Progress in World Bank and IMF Poverty Analysis

Author: L Hayes
Date: 2005
Size: 28 pages (2.16 MB)

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Summary

What is the impact of poverty and social impact analysis (PSIA) in developing countries? Has it strengthened national institutions and improved reform designs? This study by the European Network on Debt and Development (Eurodad) examines the effectiveness of PSIA undertaken by the World Bank and the International Monetary Fund (IMF) using case studies from Ghana, Nicaragua, Mali and Vietnam. It finds that PSIA has not had any clear effects on national policy making processes and recommends that the quality of and the process of carrying out PSIAs needs to be improved, taking into account increased country ownership.

Poverty and social impact analysis (PSIA) has been developed as a tool to assist the design of policy reforms. It involves examining the likely poverty and social consequences of different reform policies, particularly for the poorest and most vulnerable groups. Donors have committed to carrying out PSIA based on some key principles: (i) PSIA should be country-owned, transparent, multi-dimensional, multi-disciplinary and involve broad stakeholder participation (ii) The analysis should be conducted before a reform is agreed, and highlight alternative policy choices.

Progress on PSIA has been slow. Moreover, it has been wrongly focussed, inadequately disseminated and has not had clear effects on national decision-making. The World Bank has invested considerable resources into PSIA, but it needs to be improved. The PSIA team at the IMF has been poorly resourced and produced extremely limited research. Overall, PSIA has had limited impact for several reasons:

Many developing countries view PSIA as a donor imposition. The PSIA agenda has usually been set by the World Bank, and has not been part of national policy processes. There has been little country participation, with PSIA undertaken mainly by external, rather than national researchers.
Participation in PSIA by civil society organisations has been weak.
The analysis has not considered different policy options.
PSIA have sometimes been carried out too late to influence policy.
Analysis of social, political and institutional factors has been weak, with an over-emphasis on economic issues.
There have been few PSIAs of macroeconomic frameworks.

The PSIA process should be transparent, facilitating national ownership and policy dialogue. All reforms selected for PSIA need to be based on a country-owned plan and should be the result of a country-driven process. Different policy options for reform design need to be taken into account. Improving national knowledge and capacity by involving more national researchers in PSIA is necessary. Other recommendations include:

There should be greater emphasis on multidisciplinary analysis, taking account of political, social and institutional factors.
Funds are required for training to build national research capacity. This will also facilitate country ownership of PSIA.
The research process should be made more transparent. For instance, draft documents should be shared with relevant national stakeholders.
There should be more multi-lingual dissemination of PSIA results. PSIA needs to be disseminated in more simple language with less technical jargon to facilitate public debate.
The World Bank and IMF should ensure that funds continue to be allocated for carrying out PSIA.
The IMF should make resources available to do systematic poverty impact analysis on macroeconomic frameworks.

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Source: Hayes, L., 2005, 'Open on impact? Slow progress in World Bank and IMF Poverty Analysis,' European Network on Debt and Development, Brussels

Author: European Network on Debt and Development (Eurodad), http://www.eurodad.org/