News Brief: IMF to Review Experience with Poverty Reduction and Growth Facility

August 3, 2001


The International Monetary Fund (IMF) is to review the implementation of the Poverty Reduction and Growth Facility (PRGF) created in 1999 to provide concessional financing to poor countries. This review will be done in parallel with a review being carried out jointly with the World Bank of the Poverty Reduction Strategy Paper (PRSP) approach, which was introduced in 1999 to better focus poor countries on poverty reduction (see Press Release No. 99/57).

The review, which will seek a wide range of views regarding experiences with the facility, will examine the extent to which the PRGF has met its objectives and consider possible improvements. The review will be conducted in an open manner and will draw on contributions from participating countries, development partners, and other stakeholders. It will also draw on the PRSP review and its series of outreach efforts, including an international conference. A staff report, which will be publicly available, will summarize the findings of the PRGF review and present recommendations to the IMF Executive Board for its consideration in March 2002.

The review will also discuss how conditionality and program design has been modified since the transition from the previous Enhanced Structural Adjustment Facility (ESAF) to the PRGF. Particular emphasis in the review will be placed on the extent to which PRGF programs over the past two years have incorporated the seven key features (see Box) introduced at the time the facility was created.

Organizations or persons wishing to provide comments for the PRGF Review should forward their contributions to Mr. Tom Dorsey at IMF headquarters, to IMF Resident Representatives in PRGF-eligible countries, or by e-mail to prgf@imf.org.

Terms of reference for the upcoming review are attached.

Key Features of PRGF-Supported Programs

1. Broad participation and greater ownership.
2. Embedding the PRGF in the overall strategy for growth and poverty reduction.
3. Budgets that are more pro-poor and pro-growth.
4. Ensuring appropriate flexibility in fiscal targets.
5. More selective structural conditionality.
6. Emphasis on measures to improve public resource management/accountability.
7. Social impact analysis of major macroeconomic adjustments and structural
reforms.

Source: News Brief No. 00/81, September 7, 2000.


ATTACHMENT
REVIEW OF THE PRGF: TERMS OF REFERENCE

In December 1999, the Fund Board called for a review of the Poverty Reduction and Growth Facility (PRGF) with external participation, including contributions from member countries, international institutions, other aid providers, and civil society.1 At that time, it was expected that most or all PRGF users would have prepared at least one full PRSP by end-2001. In the event, only five full PRSPs have been presented for Board consideration to date and an additional 10-15 full PRSPs are expected to be presented by the end of the calendar year. With a view to ensuring that the review can reflect the experience of a sufficiently large number of PRGFs based on first full PRSPs, the staff proposes that the review be completed prior to the 2002 Spring Meetings in parallel with the Review of the PRSP Approach. This revised timetable would also allow both reviews to benefit from various studies and evaluations of the PRSP approach and of the PRGF which will be completed by external partners and stakeholders by the end of the year.

Output

The output of the review would be a paper prepared by Fund staff to the Executive Board and to the International Monetary and Finance Committee that takes stock of the experience to date vis-à-vis the original objectives of the PRGF and recommends any desirable changes in the guidelines and modalities of implementation. As a public document, the review would also communicate to the global community how we are attempting to improve the PRGF.

Focus

The review of PRGF implementation will focus on the degree to which the "key features" or main principles underlying the facility have been manifested in new three-year arrangements and new annual programs under ongoing arrangements (see "Key Features of PRGF-Supported Programs"). Specifically, attention will focus on the degree to which PRGF-supported programs are embedded within countries' overall strategy for growth and poverty reduction; reflect greater ownership and broader participation in their design; support budgets that are more pro-poor and pro-growth; set fiscal targets that are appropriately flexible; place increased emphasis on improving public resource management and accountability; take into account the social impact of major macroeconomic adjustments and structural reforms in program design and contain structural conditionality that is more selective. In this regard, the review will discuss how conditionality and program design was modified in the transition from the ESAF to the PRGF and assess the lessons learned. The review will also assess performance under PRGF-supported programs with respect to program targets.

Inputs

There will be five main inputs into the PRGF Review. First, the review will incorporate the inputs to, and output from, the PRSP review as they pertain to the PRGF (see the accompanying joint Staff Note on the Proposed Review of the PRSP Approach). Second, contributions from participating countries, development partners and stakeholders regarding their views of, and experience with, PRGF implementation will be solicited through the Fund's external web site and possibly through more targeted questionnaires. Third, PRGF country views will be solicited in the context of regional and country-specific PRSP learning events, to which the majority of PRGF countries would have participated. Fourth, a half-day workshop focusing on the PRGF will be held in conjunction with the PRSP conference. Finally, as regards analyses carried out by the Fund, the staff will examine the extent to which the "key features" have been reflected in new three-year arrangements and new annual programs under existing arrangements.


1 Also the Bank and Fund Boards requested in December 1999 a review of the Poverty Reduction Strategy Paper (PRSP) approach to be carried out by the end of 2001 with external participation. As described in a separate note to the IMF Board, this would be done in parallel with the review of the PRGF.



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