Minding the Gaps: Integrating Poverty Reduction Strategies and Budgets for Domestic Accountability
April 2007
World Bank, GTZ, German Federal Ministry for Economic Development and Cooperation (BMZ)
By integrating their poverty reduction strategies, national budgets, and the corresponding reporting processes, low-income countries can strengthen domestic accountability and the implementation of pro-poor policies. This study, based on case studies in nine low-income countries (Uganda, Tanzania, Rwanda, Mozambique, Mali, Malawi, Madagascar, Burkina Faso and Albania) and a review of relevant experience in four higher-income countries, offers practical insights for donors and national governments on how to strengthen the links between poverty reduction strategies and budgets.
PRS countries’ past reforms for this purpose have often had limited effect. Their policymaking, planning, and budgeting are embedded in fragmented processes and institutions that are hard to tackle using mainly technical fixes. To explain why, the study introduces a simple framework that explains domestic accountability in terms of ownership and incentive structures. Would-be reformers need to consider the level of ownership of different policy instruments by presidents, cabinet ministers, and parliamentarians, as well as the degree of wider societal ownership, and the extent to which this brings with it an effective demand for delivery against stated policy objectives. When ownership is contested and incentives are poor, domestic accountability tends to be weak. Ownership of a reform by a restricted group of technocrats and senior civil servants in central ministries does not create the incentives needed to bridge the gaps between the PRS and budget systems.
Experience counsels the use of an approach that is not too ambitious but simple, centrally led, and makes use of existing systems while gradually improving them. The authors advise: (1) Strengthen and harmonize existing processes and adopt a gradual approach to reform; (2) Build support from within; (3) Foster incentives for integration, including by targeting PRS and budget reporting on actual decision making processes; (4) Keep it simple. Simple budget reforms can significantly improve the budget’s responsiveness to policies.
Structuring a poverty reduction strategy paper in a more budget-friendly manner, for example by sector, can facilitate the interface with the budget by involving sector agencies in elaborating policy priorities and establishing the resource implications. It can expand ownership and boost incentives for integration of a greater number of stakeholders, thereby strengthening domestic accountability.
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