Steps toward More Effective PRSPs

One emerging area of debate surrounding PRSPs is whether these strategies will enable countries to successfully meet the MDGs. The UN suggests that existing PRSPs often are not adequate for this purpose and has called for so-called “MDGbased poverty reduction strategies” that are more ambitious, scaled-up, and focused on a longer planning horizon, laying out a path to achievement of the MDGs by 2015. A pivotal step in ramping up PRSPs will be identifying additional sources of capital, since lack of existing capital to finance needed national investments is one of the reasons that interventions described in current PRSPs generally are not ambitious enough to meet the MDGs.

Increased capital to spark poverty-reducing growth could come from various sources, including mobilizing developing countries’ own domestic sources of natural wealth as well as expanded development aid and private sector-led trade and investment. Key challenges will be to understand the strategic and policy elements necessary to scale up investment to meet the MDGs and to strike a thoughtful balance between ambition and realism in PRSPs.

To this end, stakeholders could take several important steps toward PRSPs that emphasize scaled-up investment for pro-poor growth while also protecting the ability of ecosystems to provide sustainable services that underlie human well-being and the livelihoods of the poor.

• The World Bank and IMF can support efforts to achieve the MDGs by adapting macroeconomic frameworks for PRSPs according to specific country circumstances. For example, the Bank can encourage countries to work with the poor to invest in ecosystem services such as water resources, soil conservation, and forests and woodlands that generate needed provisioning services such as food, fiber, and fuel. These investments, as shown by the Millennium Ecosystem Assessment, also provide regulating services such as water regulation, erosion control, pest control, and natural-hazard regulation which reduce vulnerability of the poor to damaging effects of drought, floods, loss of soil productivity, and crop failures.
  
  
• The United Nations can provide support to developing countries to help them strategically link Poverty Reduction Strategies to efforts to meet the MDGs. This assistance can take several forms, including building national capacities to develop and implement scaled-up investment programs and encouraging the exchange of experiences and lessons learned between countries.
  
  
• Developing countries can contribute to the process by ensuring that their PRSP-related efforts emphasize transparency and inclusion and by being accountable for measurable progress in reducing poverty. To this end, monitoring and assessment of poverty and environment outcomes using appropriate data and benchmarks is essential.
  
  
• Donor countries can help by ramping up the levels of assistance provided to developing countries to help them reach the MDGs. Development aid needs to be delivered in a stable and predictable manner to facilitate effective planning as well as to avoid destabilizing macroeconomic impacts. Donors should complement development assistance with rapid and significant debt relief to create fiscal “space” for pro-poor, MDG-based investments.