This evaluation examines the relevance and effectiveness of Poverty Reduction Support Credits (PRSCs), introduced by the Bank in early 2001 to support comprehensive growth, improve social conditions, and reduce poverty in IDA countries. PRSCs were intended to allow greater country-ownership, provide more predictable annual support, exhibit more flexible conditionality, and strengthen budget processes in a results-based framework. By September 2009, the Bank had approved 99 PRSCs totaling some $7.5 billion and representing 38% percent of IDA policy based lending. The evaluation finds that in terms of process, PRSCs were effective in easing conditionality, increasing country ownership and aid predictability, stimulating dialogue between central and sectoral ministries, and improving donor harmonization. In terms of content, PRSCs succeeded in emphasizing public sector management and pro-poor service delivery. Yet in terms of results, it is difficult to distinguish growth and poverty outcomes in countries with PRSCs from other better performing IDA countries. There is scope for further simplifying the language of conditionality and underpinning PRSCs with better pro-poor growth diagnostics. PRSCs can also strengthen their results frameworks and limit sector policy content in multi-sector DPLs to high-level or cross-cutting issues. Today, Bank policy has subsumed PRSCs under the broader mantle of Development Policy Lending and the rationale for a separate ‘brand name’ although differences linger from the past. Since PRSCs and other policy-based lending have gradually converged in design, remaining differences compared to other Development Policy Loans should be clearly spelled out, or the separate PRSC brand name should be phased out.
Author(s): World Bank
Year: 2010
Language: English
Pages: 135
Contents......Page 5
Abbreviations......Page 9
Acknowledgments......Page 11
Foreword......Page 13
Executive Summary......Page 15
Management Response......Page 21
Chairperson’s Summary: Committee on Development Effectiveness (CODE)......Page 27
Synthesis of Comments from External Expert Panel Review......Page 29
1 Introduction......Page 33
Adjustment Lending and Poverty Reduction Support Credits......Page 35
1.1 PRSCs: Shares in Policy-Based and Total Lending (FY01–08)......Page 37
1.2 PRSCs in the Bank’s Regions—Diverse Patterns......Page 40
1.3 The Debate over Aid and Budget Support......Page 41
1.4 Poverty Reduction Support Credit Evaluation: Results Chain......Page 42
2 PRSC Design......Page 43
Country Selection......Page 45
Sector Focus......Page 46
Conditionality......Page 51
2.4 PRSC Countries—Number of Conditions in Pre-PRSC Policy Loans (72 operations)......Page 53
Predictability and Regularity......Page 56
3 PRSC Process......Page 61
Alignment with National Development Strategies......Page 63
3.2 PRSCs: Adopting Measures Outside the PRSP in Armenia......Page 64
3.2 PRSC and Non-PRSC Countries: Operationalization of Development Strategies......Page 67
Results Frameworks, Monitoring, and Evaluation......Page 68
4 PRSCs and Donor Harmonization......Page 75
Overview of PRSC Contributions to Aid Flows......Page 77
4.1 All PRSC Countries: Aid Flows (%)......Page 78
4.3 Donor Harmonization—Negotiating a Common PAF......Page 81
Joint Missions and Joint Analytic Work—PRSC and Non-PRSC Countries......Page 85
Views on Harmonization: Clients, Staff, and Donors......Page 86
5 PRSC Outcomes: Public Financial Management and Procurement......Page 89
PRSCs and Public Financial Management Reforms......Page 91
5.1 Methodology of PFMP Evaluation of PRSCs......Page 92
5.3 PFMP Results Frameworks—Examples of Shortcomings......Page 94
5.1 Government PFMP Strategy and Donor Support......Page 95
6 Growth, Poverty, and PRSCs......Page 101
PRSC Countries—Creating a Growth-Enabling Environment......Page 103
6.1 Overall Scores on Policy Dialogue and Influence on Growth......Page 106
6.8 PRSC Country Scores: Achieving Results in Sectors That Deliver Services to the Poor......Page 113
7 Conclusions and Recommendations......Page 117
Findings on Design and Process......Page 119
Findings on PRSC Outcomes......Page 121
Findings on PRSC as an Instrument of Sectoral Support......Page 122
Recommendations......Page 123
Appendixes......Page 125
A Appendix Tables......Page 127
B Additional Data and Annexes Available......Page 133
Endnotes......Page 135
Bibliography......Page 145
1.1 Is the PRSC a Distinct Instrument?......Page 36
2.1 PRSC Sector Coverage—Narrowing over Time......Page 48
2.2 PRSCs: Client Perceptions of Conditionality......Page 54
2.6 PRSC Countries: Adjustment in Loan Amounts or Termination of Series (FY01–08)......Page 57
2.4 Factors Leading to Downward Adjustments of PRSC Amounts—Examples......Page 58
2.5 PRSC Predictability and Regularity—Achievements and Limitations......Page 60
3.4 Ownership of the PRSC Process—Legislative Bodies......Page 65
3.7 PRSC Results Frameworks: Task Team Leaders’ Views......Page 71
3.8 Monitoring and Evaluation in PRSC Countries......Page 73
4.2 PRSC and Donor Harmonization: The Nature of Budget Support Coordination......Page 79
4.4 Harmonization and Alignment with the PRS Process......Page 82
4.6 Harmonization of Policy Matrixes and Increases in Conditionality......Page 83
4.7 Harmonization of Policy Matrixes and Weakened Program Content......Page 84
5.2 PFMP Diagnostic Work and Incorporation in PRSC Design......Page 93
5.4 Delays in Implementation of the PFMP Reform Plan—Examples......Page 96
6.1 PRSC Growth Orientation—Policies Supported......Page 105
6.2 PRSCs and Bank Country Program Successes......Page 115
1.2 PRSC Lending in Proportion to Country Income, Budget, and Aid Flows (1995–2008)......Page 38
1.1 PRSCs: Countries, Series, and Operations (FY01–08)......Page 39
2.1 PRSC Sector Focus Compared with Earlier Policy-Based Lending (FY1995–2000)......Page 47
2.3 PRSCs and Other Policy-Based Loans: Average Number of Conditions (FY1980–2008)......Page 52
2.7 PRSCs: Indicators of Disbursement Regularity Relative to Recipient Fiscal Year......Page 59
2.2 PRSC Operations: Intended and Actual Replacement of Sectoral Lending (FY01–08)......Page 49
2.5 PRSC Countries—Trigger Flexibility in PRSC Operations (FY01–08)......Page 55
3.1 PRSC Process: Impact on Government Policy Dialogue......Page 66
3.3 PRSC and Other Countries: Comparison of Ratings on Results Orientation......Page 72
4.3 Share in Budget Support Recipient Country—Donor Contributions, 2007......Page 80
4.4 Country Client Perceptions of Donor Coordination and Budget Support......Page 87
5.3 PRSC and Non-PRSC Countries: Change in CPIA Indicators on Budget Management and Accounting (1999–2007)......Page 98
5.4 PRSC Overall Scores on Improving the Public Financial Management System......Page 99
6.3 PRSC and IDA Countries on Millennium Development Goals......Page 107
6.4 Number of PRSCs with Social Sector Objectives, FY01–08......Page 108
6.5 Monitoring and Evaluation in PRSC Series (% positive)......Page 109
6.7 PRSC Social Sectors—Project Ratings......Page 110
6.10 Poverty Reduction Support Credits—Outcomes (FY01–08)......Page 114
