February 17, 2003
National Graduate Institute for Policy Studies（GRIPS）
Izumi Ohno

Asian Approach to PRSP
―Diversity for Strategic Alternatives, Institutions, and Aid Modalities―

1. PRSP・ PRSP (Poverty Reduction Strategy Paper), introduced by WB/IMF in late 1999.
・ Centerpiece of global poverty reduction partnership・ Why is PRSP so important for poor countries and donors?
¾ Country-owned development strategy, 3-year action plan for poverty reduction,
result-oriented with monitorable indicators & system.
¾ Regarded as a tool to achieve MDGs(UN Millennium Development Goals).
¾ Conditional on eligibility for the Enhanced HIPC Initiative, as well as access toIMF/IDA concessional finance.
¾ Aid coordination tool for donors.
・ PRSP status
・ Lessons learned from the early PRSP experiences¾ Views of Japanese development professionals
2. Diversity in Asian countries
・ HIPC status
・ Aid dependency
・ Donor composition
・ Grants vs. Loans・ Causes of poverty
・ Relationship with the existing national development plans
・ Institutional capacity, etc.
3. PRSP (1)--Strategic Contents
・ Causes of poverty matter.
¾ Recently, increased attention to “sources of growth” and “pro-poor growth” (…but,not enough!)・ Pro-poor growth¾ Definition?, desirability?, policy implications?
¾ Need to broaden the scope
・ Channels and Linkages¾ Three channels for pro-poor growth: direct channel, market channel, policy channel
4. PRSP (2)--Institutional Application
・ Relationship with the existing national development plans¾ PRSP as a primary document vs. PRSP as a supplementary document
・ In Asia, many countries historically have medium-and long-term national developmentplans¾ Implying the need to consider the relationship between the newly-introduced PRSP
and the existing planning documents.

5. PRSP (3)--Aid Harmonization
・ Basic principle: Donors should reduce “transaction costs” (T/C) arising from proliferationof different aid practices.
¾ Pros: common strategic framework, on-budgeting of aid, simplification of donor
practices (e.g., joint missions, common reporting formats).
¾ Cons: uniform application of a specific aid modality desirable?, different comparativeadvantages among various tools (project aid, TA, non-project aid)?
・ Need for a balanced approach¾ Dilemma (WB 98, Harrold 95),
¾ How should and can we do for countries with high aid dependency, donor proliferation,
and weak institutional capacity?
・ T/C reduction is only one factor to enhance development effectiveness. Sound policies andinstitutional capacity are also key. (WB 98).
・ The local context matters, too.
¾ Sector conditions, type of interventions, aid menu by donor, etc.
¾ Country-specific needs for aid harmonization
6. Example: Vietnam’s PRSP Experience・ Strong government ownership・ Strategic contents: PRSP renamed to CPRGS, embracing growth-oriented national
development vision
・ Institutional aspects: PRSP as a supplementary document; highest national documents are
the existing 5-Year Plan and 10-Year Strategy).
・ Aid harmonization: progress on diverse fronts¾ Loan-giving donors (JBIC, WB, ADB accounting for 2/3 of total ODA to Vietnam);¾ Grant-giving donors (LMDG, providing small-scale grant); and¾ JICA (T/C study underway to identify specific bottlenecks)
・ In Vietnam:¾ Sector: transport (30%), power (30%), health & education (15%)¾ GoV wants to receive both projects and non-project aid.
¾ SWAp means a common strategic framework, not unification of aid modality.
7. Implications: “Best Mix” Approach・ Agree on general principle, but apply them locally.
・ Best-mix approach for what?
¾ Strategic alternatives: pro-poor targeting and broad-based growth promotion¾ Institutional application: due attention to the existing planning system and institutional
capacity¾ Choice of aid modality: non-project aid and project-aid, TA (--again, depending onstrategy and institutions)
・ Probably, more realistic to start with a common strategic framework, procedural
simplification by each donor, harmonization among donors with procedural similarity, andsupport to capacity building of recipient countries….

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