1 | P a g e

Poverty Reduction Strategy Papers: The Underlying Reality

Mid Term Paper

Submitted to: Prof. Dr.

Aamir Saeed Submitted

by: Mahmood ul Hassan

Roll No. 01, M.Phil

(2014-16)

Contents

1. Abstract:.........................................................32. The PRSP in Context:..............................................3

3. The Rhetoric:.....................................................44. Unveiling the Reality:............................................5

4.1. Questioning Sovereignty:.......................................64.2. Myth of Ownership, Participation and Quality:..................8

4.2.1. Myth of National Ownership:................................84.2.2. Myth of Participation:....................................10

4.3. ..............................................The Policy Matrix:11

4.3.1. The Growth Trap:..........................................114.3.2. Free Trade and Foreign Investment:........................13

4.3.3. Minimizing the Role of Public Sector:.....................144.3.4. Private Sector: An Elixir:................................15

4.3.5. Deregulation of Economic Sectors:.........................164.3.6. Forced Legislation:.......................................17

5. Conclusion:......................................................18

2 | P a g e

Poverty Reduction Strategy Papers: The UnderlyingIdeology

1. Abstract: This paper offers a critique on PRSPs framework,

process and content. The PRSPs is a sugar coated version of

erstwhile Structural Adjustment Programme (SAP) – there is little

change in policy conditionalities, still operate supreme in the

Bank-Fund operations. The paper seeks to explore the underlying

intention of these programs and the agenda they intend to promote

in the name of economic growth poverty reduction. The buzzword of

poverty has been used to masquerade the hidden intentions of

promoting the real agenda of trade liberalization and

privatization of public sector institutions, which, in turn,

traces their roots in the western cultural ideals, take for

example, political liberalism and the instrumental conception of

human action. The application of scientific methods to collect,

classify and analyze data on growth and poverty has been used as

a tool in order to contrive the results further supporting these

ideals – double hermeneutics.

2. The PRSP in Context: After widespread failure of the

SAP, developed in the 1990s, the Breton Wood twins, the

3 | P a g e

International Monetary Fund (IMF) and the World Bank initiated

the Poverty Reduction Strategy Papers in September 1999. Since

SAPs were widely criticized for being top-down and lacking

sensitivity to the national priorities, the PRSPs were,

therefore, claimed to have been developed by national government

and had poverty reduction as their central goal. As a matter of

fact, the PRSPs replaced the old tripartite Policy Framework

Paper (PFP) drawn between the IMF, World Bank and a country

government for concessional loans.1 Both the World Bank and the

IMF aligned their lending programs, namely the Country Assistance

Strategy (CAS) and the Poverty Reduction Growth Strategy

respectively, to a country’s PRSP. Originally, the PRSP framework

was conceived as a condition of the Heavily Indebted Poor Country

(HIPC) initiative; countries seeking debt relief through HIPC

were required to prepare a PRSP to show how money freed up from

debt servicing would be used to alleviate poverty. Later, it

became the centerpiece for policy dialogue and negotiation in all

countries that received financing from the World Bank’s

International Development Association (IDA)2.

4 | P a g e

Pakistan has, so far, developed and implemented three PRSPs:

Interim Poverty Reduction Strategy Paper (I-PRSP) (2001-2003),

PRSP-I (2004-2006) and PRSP-II (2008-2010). The PRSP-II has been

built upon nine pillars: (i) Macro Stability and Real Sector

Growth; (ii) Protecting the Poor and the Vulnerable; (iii)

Increasing Productivity and Value Addition in Agriculture; (iv)

Integrated Energy Development Program; (v) Making Industry

Internationally Competitive; (vi) Human Development for the 21st

Century; (vii) Removing Infrastructure Bottlenecks through Public

Private Partnership; (viii) Capital and Finance for Development;

and (ix) Governance for a just and fair system. The PRSP-II

claims that, for the first time, the IMF accepted Pakistan’s own

proposal/programms which had two main objectives: (i) to restore

the confidence of domestic and external investors by addressing

macroeconomic imbalances through tightening of fiscal and

monetary policies; and (ii) to protect the poor and preserve

social stability through a well-targeted and adequately funded

social nets3.

5 | P a g e

3. The Rhetoric: Theoretically, the PRSPs have been intended

to be a document prepared by a country government – under the

supervision of Bank-Fund team – that identify the incidence and

causes of poverty, who the poor are, and strategies for

overcoming poverty, including policy and expenditure targets. It

is supposed to be “locally generated and owned,” developed

through “wide participatory dialogue,” and focused at both the

micro and macro policy level. The PRSP framework is expected to

“encourage the accountability of governments to their own people

and domestic constituencies rather than to external funders,”

whereby, “the poor become active participants, not just passive

recipients”.4 However, experiences from many countries in Asia,

Africa and Latin America indicate that country governments have

little control over the structure, content and policy

prescriptions suggested in their respective PRSP; thus making a

mockery of Bank-Fund claims in relations to national ownership,

public accountability and broad based participation. Despite

lofty claims of “nationally driven” development, the PRSPs and

PRGF frameworks continue to conflict with local and national

priorities of reducing poverty, fostering domestically meaningful

6 | P a g e

economic development, promoting equality and equity and

encouraging popular participation in the design of national

development policies. 5

4. Unveiling the Reality: The following sections of the

paper attempt to deconstruct the text and the context of the

PRSPs in a bid to decipher the underlying agenda of Breton Wood

twins, aiming to promote western cultural ideals, take for

example, liberal individualism, scientism, utilitarianism,

embedded in seventeenth century’s enlightenment movement. The

paper, further, examines as to how science, particularly

statistics, has been used to dictate the superiority of western

cultural ideals and to interpret poverty in economic terms alone,

ignoring the context and the social constructions of the

discourse of poverty. The PRSPs framework, content and processes

have also been examined critically to see as to how they conflict

with the national plans and priorities; thus undermine the

recipient countries’ sovereignty. The vision of PRSP-II

comprising: regaining of macroeconomic stability; creation of

adequate employment opportunities; deregulation and transparent

7 | P a g e

privatization; improving income distribution; enhancing global

competitiveness through economic liberalization has been

questioned critically to see as to how and to what extent agenda

synchronizes with national priorities. In this regard, the Policy

Matrix, a set of conditionalities attached to PRSP, is of a

special focus.

4.1. Questioning Sovereignty: Given the central role of the

Bank and Fund in global policy making and governance, the PRSPs

have become a key policy instruments through which the world’s

major donors relate themselves with low income and crises ridden

countries. Without Bank-Fund approved PRSP, a low income country

can be virtually cut off from international aid, trade and

finance. The United States (US), European Union (EU) and other

OECD member countries have fully endorsed the PRSPs framework and

agreed to base their respective official aid programms to low

income countries on the approved PRSPs. Many have also agreed to

co-finance poverty reduction credits, grants and technical

assistance in conjunction with PRGF and CAS (Malaluan & Guttal,

2003).

8 | P a g e

Combined with HIPC initiatives, the PRSP package has grave

consequences for economic sovereignty of low income countries.

The PRSPs bind the borrowing government to implement Bank-Fund

directed policies as conditions for receiving credits and other

support from the Bank, Fund and bilateral donors. Experience

shows that Bank-Fund conditions often prove to be more powerful

than national laws as borrowing countries have no other

alternative recourse available to them to fulfill their urgent

financial needs. Important national policies such as trade,

investment, assets ownership, natural resources, fiscal

management, public administration, social development, and even

judicial reforms are determined more by the Bank, Fund and donor

pressures than by domestic priorities and aspirations (Malaluan &

Guttal, 2003). For example, the IMF informed the Zambian

government to sell the state owned Zambia National Commercial

Bank to qualify for one billion US dollars in debt relief under

the HIPC program; though, it was vehemently opposed by the

Zambian public and the parliament.6 In Nicaragua, the Bank and

Fund demanded the government to privatize its water resources,

including its hydroelectric dams, as a condition to further

9 | P a g e

loans. The demand of the Fund was contrary to the legislation

passed by the Nicaraguan National Assembly in August 2002,

suspending all water privatization plans until a national debate

takes place on the issue.7 In the Solomon Island, the IMF,

supported by bilateral donors, refused to provide funds for the

country’s National Economic Recovery Plan unless the country

first agreed to reduce government spending and implement severe

job cuts. 8 In Pakistan, a range of consumer rights groups,

research institutes, workers unions, political parties,

journalists, and the Pakistan Human Rights Commission formally

rejected the structure, content and process of the PRSP. In an

open letter to the Ministry of Finance, they pointed out that the

PRSP reinforces a previously tried and failed paradigm of

development, undermining democratic process and threatens the

sovereignty of the state. They objected to the imposition of

privatization, liberalization, deregulation and regressive

taxation through the PRSP and the undue influence of

International Financial Institutions (IFIs) – the World Bank, IMF

and the Asian Development Bank – on the Pakistani state.9

10 | P a g e

It is evident that, despite promises that borrowing

countries will have greater say in determining economic programs

under the PRSPs framework, not much has changed in the modus

operandi of the Ban and Fund approach to extend loan to debit

trapped countries. The emphasize is still on structural changes

aiming at trade and investment liberalization, privatization,

deregulation, reducing government expenditure, restructuring of

public service and sectors , low inflation and rapid economic

growth with little focus on targeting the poverty. Further, the

Bank and Fund have been using these policy reforms as a condition

to oblige the low income countries to abide by them, disregarding

their national priorities. It is important to note that the Bank-

Fund learnt no lesson from the findings of the tripartite reviews

of SAPs that: (i) adjustment is a difficult process; (ii) to be

successful, adjustment has to be “owned”; and (b) institutions,

approach, and safety nets are essential in the adjustment

process10. It makes it clear that the PRSPs, though initiated

under the garb of poverty reduction, have an agenda of promoting

the ideals of the classical political economy; free trade and

laissez faire economics, keeping the government away for setting

11 | P a g e

development priorities in line with their domestic needs and

priorities. The document entirely focuses on the economic

definition and solution of the problem of poverty, defying

attention to the context and the discourse. While completely akin

to the prevailing discourse of poverty, the PRSPs emphasize only

on collection of data pertaining to economic indicators and using

established scientific protocols to classify and analyze it to

further reinforce and perpetuate the dominating discursive

practices.

4.2. Myth of Ownership, Participation and Quality: On the

face of it, the PRSPs framework is supposed to result in a long

term, comprehensive, result oriented, country driven and

participatory strategy to reduce poverty. Nevertheless,

experiences show that the quality of a national poverty reduction

strategy acceptable to the World Bank and IMF is not in keeping

with broader principles of the PRSP framework: national

ownership, participation and public accountability.

4.2.1. Myth of National Ownership: From the Bank-Fund vantage

point, ownership means commitment of a country to implement a

12 | P a g e

strategy the Bank-Fund approves, no matter how little it

resonates with socio-economic, historic and geographic

peculiarities – experiences across Asia, Africa and Latin America

bear this out. The Bank-Fund missions come prepared and advise

the countries how to prepare the PRSPs. Despite claims that,

“causes and solutions of poverty are country specific” all PRSPs

are expected to contain “core elements” that the Bank-Fund

consider essential to poverty reduction. 11 These include: rapid

economic growth, private sector development and expansion, good

governance (largely oriented towards facilitating privatization

regimes), deregulation, trade and investment liberalization,

fiscal stability, macroeconomic management, public expenditure

management and consultation with selected NOGs. During Joint

Staff Assessments (JSAs), the Bank-Fund staff makes sure whether

the proposed PRSP provides a credible framework within which the

Bank-Fund has designed their programmes of concessional

assistance. 12

The criteria for judging the quality and acceptability of a

PRSP relate to a government’s macroeconomic framework, structural

13 | P a g e

reform policies and strategies for rapid economic growth, no

matter how relevant these formulae are in reducing poverty in any

quantitative or sustained sense. The IMF documents essentially

take into consideration the economic growth of the country

whenever poverty reduction is mentioned.13 Three dimensions that

the Fund considers essential in order to approve a PRSP include:

broad based consultation; faster pro poor growth; and maintaining

macroeconomic stability, keeping inflation and exchange rate

volatility down. However, in practice, it does not seem possible

to include and apply broad based consultation to the latter two

dimensions (Abugre C. , 2000). Although the Fund documents claim

that there is no blue print for PRSPs and that experimentation in

the form of PRSPs is encouraged, but most PRSPs come out looking

remarkably similar in both their poverty analyses and policy

prescriptions that would purportedly result in poverty

alleviation (Malaluan & Guttal, 2003).

On the surface, it appears that the PRSPs are supposed to be

firmly grounded on existing national plans. However, it has a

pre-prepared format and is accompanied by a massive, thousand-

14 | P a g e

page source book that spells out how a PRSP should be prepared.

If a government insists that existing national plans become the

country’s PRSP, it is the national plan that has to be adjusted

to the PRSP and not the other way round. Internal memo of the

World Bank makes it clear that the PRSP and related documents

such as those pertaining to Poverty Reduction Support Credit

(PRSC) take primacy over a country’s own national medium-term

plans.14 For example, in Cambodia, the Lao PDR, Vietnam and

Uganda - among others – PRSPs have conflicted with national

medium-term plans for poverty reduction and economic and social

development, which are passed through the National Assemblies and

Parliaments. But, since PRSPs are backed by the financial and

political clout of the Bank and Fund, capital hungry governments

are both unable and unwilling to put up fight and stand by their

parliaments (Malaluna & Guttal, 2002).

4.2.2. Myth of Participation: Participation of a country

government and that of civil society has been assigned priority

in the PRSPs. However, in reality, PRSPs process is extremely

narrow in both substance and participation. Participation has

15 | P a g e

been usually restricted to inviting prominent and well resourced

NGOs to offer their comments on a pre-prepared document. Unions,

workers’ organizations, professional associations like bar

associations, medical associations, women groups, and academia

are hardly invited to these consultative workshops. Local

population is not consulted at any stage of policy formulation

and they have no role in monitoring the results of the policy

reforms. Civil society is not given access to the Bank-Fund

financial programs and macroeconomic planning on the pretext that

the civil society organizations lack expertise and competence in

these areas. However, it has been noted that it is more of an

issue of exclusion than of capacity (Abugre C. , 2000). In most

of the cases, the document is not translated into local language

until final stage, thus excluding the local input at formulation

stage. The time allocated to read and absorb the content is also

limited, making it difficult to contribute productively and

meaningfully. Often absence of civil society means absence of

NGOs, familiar with jargon and discursive practices of the Breton

Wood Institutions. Here comes the capacity building package for

the capacity enhancement of civil society organizations. However,

16 | P a g e

it raises serious question whether it is the role of

international institutions to improve the dialogue between the

civil society and the government. It is, therefore, clear that

the PRSPs lack genuine participation of stakeholders. It is only

used as a ruse to make the hidden agenda of economic

liberalization and privatization of public sector institutions

palatable to the masses of the low income client countries. It is

worth mentioning that a report by UN special rapporteurs Joseph

Oloka-Onyango and Deepika Udagama criticizes the Bank and the

Fund’s emphasis on free market reforms and conditionalities,

saying that it deprives communities of the rights to health,

education and basic welfare.15

4.3. The Policy Matrix: The policy matrix is an

operational document attached with the PRSPs, specifying the

concrete policy and legislative reforms the country must

undertake within a given timeframe. This matrix is translated

into a loan document and is in effect attains the status of a set

of conditionalities to be complied with by the borrowing

countries. Despite different historical background and diverse

17 | P a g e

political and socio-cultural and socio-economic milieu, the set

of policy matrices attached with the PRSPs implemented in Asian,

African and Latin American countries share the same common

elements (Malaluna & Guttal, 2002). It is in effect the

reminiscent of the one-size-fits-all approach of SAP in the

1980s, where indiscriminate adoption of liberalization measures

was common to many economies. In the same vein, the PRSPs promote

open trade, investment and financial regimes, and seek to roll

back the government’s direct role in the economy by attempting to

abolish state-owned enterprises. Its response to critical socio-

cultural issues and reforms in areas such as health and education

are narrowly oriented to serve the needs of the market – all this

is done in the name of the fast economic growth.

4.3.1. The Growth Trap: Rapid economic growth and macroeconomic

stability is what the PRSPs are all about. Growth rate with

timelines are the most clearly defined targets in the PRSPs,

while projections as to poverty reduction are not quite so clear.

It is not defined with clarity as to how the achievement of high

economic growth would lead to corresponding reduction in poverty.

18 | P a g e

Further, economic growth would not automatically address the

issues of equity. The fixation on growth is based on the concept

of the trickle-down effect – an approach failed to yield

significant result in Pakistan during Ayub era (Haq, 1983).

Reliance on trickle-down effect reduces the role of socio-

economic institutions in reaching the poor and renders them as

passive participants in the growth process. As such, the response

of the PRSPs is inadequate in addressing the chronic issue of

poverty in client countries. This implies that the real agenda of

PRSPs is to promote trade liberalisms and laissez faire approach with

respect to government’s role in regulating the market forces.

Apparent emphasize on poverty reduction is nothing but a tool to

promote western liberalism in the garb of poverty reduction and

economic stability. This is an open manifestation of instrumental

conception of the social action – the entire universe is a mean

to reach the desired individual ends, no matter how moral or

immoral is the use of these resources; reduce the entire universe

to objects and use them to one’s own individual gains.

19 | P a g e

While placing heavy reliance on rapid economic growth, the

PRSPs failed to appreciate and address the ills associated with

growth, take for example, problems related to urban congestion,

rural migration, environmental degradation and the overall limits

to the carrying capacity of the earth’s natural and human

resources. It is a fact that economic growth is an important

component of development planning; however, it should not be the

sole criteria of development. There is a need for more sensible

poverty reduction strategy, prioritizing policies that foster

equity and address social, economic and political imbalances over

growth targets. It is worth considering formulating anti poverty

and equity enhancing programs first and then ensuring that they

are appropriately funded and implemented (Malaluan & Guttal,

2003). As noted above, in the guise of poverty reduction, the

PRSPs have been launched to take forward the agenda of the

erstwhile SAP, promoting liberal individualism and securing more

space for private entrepreneurs in the third world countries.

4.3.2. Free Trade and Foreign Investment: The PRSPs approach

calls for trade programs that focus on market access and

20 | P a g e

liberalization, placing heavy reliance on exports, especially of

cash crops and minerals, as means of increasing income; Whereas,

as a matter of fact, it obliges the borrowing countries to import

from other countries. Export of cash crops has serious

consequences for subsistence farmers in the poor countries. The

approach is bound to induce scarcity of agricultural outputs for

domestic consumption, leading to rising inflation (Yapa, 1996).

The PRSPs offer no solution to challenges faced by a client

country in terms of market access in the rich north, as the

developed countries have yet to shed their protectionist

tendencies. It has been noticed that the PRSPs lack appreciation

for the political economy operating inside countries and the

skewed power dynamics in the global trading system. For example,

the section on trade policy in Vietnam’s PRSP policy matrix

carries a provision that reads:

“Make active preparation to take part in committed bilateral and multi-lateral

cooperation mechanisms. Carry out the bilateral agreement with the United

States, paving the way for accession to the World Trade Organization.”16

21 | P a g e

In response to dearth of capital in the developing

countries, the policy matrix enlists the liberalization of

foreign investment regime as another major reform area. However,

entire focus is on Export Processing Zones (EPZs), as a strategy

to attract foreign investments, shows a limited understanding of

the behavior of foreign investment. It is worth taking note that

record of the EPZs in terms of creation of jobs and transfer of

technology has not been very encouraging in the past. The EPZs

are, rather, notorious for exploitation of labor, women and youth

and environmental degradation. It is evident from these reforms

that the PRSPs are like ‘old wine in new bottle’ to carry forward

the unfinished agenda of SAPs, aiming at promotion of western

liberalism and opening up more opportunities for the businessmen

and traders of the rich north.

4.3.3. Minimizing the Role of Public Sector: The PRSPs policy

matrices provide a range of privatization processes to be

followed by the client countries. These, inter alia, include:

corporatization, equitisation or the transformation of government

ownership into “shares” that can be sold to private sector,

22 | P a g e

liquidation, sale, lease, divestiture, and contracting out. It is evident

that emphasize of poverty reduction measures is clearly on

recasting the state’s role in the economy and to reconfigure the

control over national resources. The PRSPs, however, say little

on the consequences of privatization of state owned institutions

that may manifest in large scale downsizing, leading to

widespread unemployment. It puts an unnecessary ban on the state

as an efficient allocator of resources. Pilferage and leakages in

public sector notwithstanding, the governments in East Asian

countries, take for example, Hong Kong, South Korea, Singapore

and Taiwan have proved themselves as an efficient and necessary

mover in industrial and development policy, ensuring equitable

access to crucial assets and opportunities.

It is worth taking note that emphasize on a range of

privatization options provided in the PRSPs is meant to minimize

the role of state as an allocator of resources and

reconfiguration of ownership patterns of national resources. The

entire focus, under the garb of poverty reduction, is on

introducing a laissez faire economic order – leaving everything at

23 | P a g e

the disposal of the forces of market and thereby in the hands of

those who have control over means of production and have

dominating role in economic relations. There are no ethical and

moral standings of this approach. Rather, it reflects

zeweckrational (technocratic thinking) approach, means and ends must

be chosen on empirical bases. This is a classical example of

reliance on brute data to understand the cause and effect

mechanism, and then manipulate the cause to achieve desired

effects of the action. Since the privatization has been conceived

as a sure recipe of poverty reduction and economic growth across

the globe, paying no heed to socio-cultural factors responsible

for causing poverty, it also refers to universal conception of

science.

4.3.4. Private Sector: An Elixir: It is easily discernible from

the perusal of the PRSPs that privatization has been placed as a

de facto condition to access concessional loans of the Bank and

Fund. Private sector part of the policy matrix emphasizes much on

creation of level playing field. The target is to enact, revise

or implement a code of commerce. Changes to Foreign Investment

24 | P a g e

Laws have also been proposed. It is urged upon the client

countries to develop a mechanism allowing the private sector to

participate in infrastructure development projects, like the

Build Operate Transfer (BOT) mode of public private participation

and many of its variants. The Bank-Fund reforms are geared

towards creating hospitable environment for foreign private

investment, and not necessarily towards expanding a responsible

and publicly accountable domestic private sector. It has also

been noted that much of these private sector investors, hailing

from donor countries, are interested in public sector utilities.

It raises serious question as to the motivation behind these

reforms. There have been instances where privatization processes

found to have been marred by scandals, controversies and overtly

questionable provisions. Yet, donors have not raised questions,

giving rise to the suspicion that it is not efficiency that is

important for them. The bottom line in privatization processes is

for the private sector to take over from government, mo matter

what and how. 17

25 | P a g e

It is clear that role of private sector in development

process has been emphasized to create more space for foreign

investors, that too belonging to donor countries. This is

evidence unto itself that the PRSPs have been designed and

launched to achieve hidden objectives of multi-nationals, and not

to alleviate poverty in true sense. Liquidation, equitisation,

divestitures and participation of private sector in

infrastructure development project against sovereign guarantees

all indicate that the underlying reality of these Bank-Fund

funded initiatives is to serve the objectives of the capitalistic

powers, and not to ameliorate the living conditions of the poor.

It is an agenda of asking the client governments to keep their

hands away from development planning processes.

4.3.5. Deregulation of Economic Sectors: From agriculture to

finance, water to power, transport to telecommunication, policy

matrices for Asian, African and Latin American client countries

dictate varying levels of wide ranging reforms in the regulatory

set-up of these key economic sectors. However, the PRSP dilates

little on the consequences of the abrogation of preferential

26 | P a g e

access or treatment for unprotected domestic constituencies. For

instance, what would be the fate of small domestic producers and

users of credit when development banking is recast in favor of

financial sector reforms? The PRSPs also tackles the issues

related to land rights and access to natural resources through

amendments in the legal framework for access, use, ownership and

transfer of lands and water. It emphasizes on tradability and

marketability of land, making it more attractive for investors.

Nevertheless, the PRSPs fail to recognize that farmers have

emotional affiliations with land and its trade may lead to

serious socio-cultural issues. Further, economic concepts like

user fee and cost recovery touched upon in the PRSPs reminds the

resurrection of erstwhile SAP of 1980s.18

It provides incontrovertible evidence that the real target is not

to reduce poverty, but to rolling back the state sector and

making room for foreign investors to invest in public sector

utilities and make money. The deregulation of economic sector

also makes it clear that the PRSPs have very craftily been

designed to promote the agenda of economic liberalism, using

27 | P a g e

scientific data to prove that private sector is more efficient

than public sector.

4.3.6. Forced Legislation: As mentioned above, the policy

matrix attached with the PRSPs enumerates a wide range of reforms

the client country has to implement within give timeframe. Of

these reforms, many require legislative action and a few would

even require tinkering with the national constitutions. These

have been integrated into the PRGF and the Structural Adjustment

Credits (SAC) as conditions tied with release of loan tranches.

Given the broader advocacy for stronger national institutions and

the principle of sovereignty, these policy conditions asking for

legislative action for implementations of the reform agenda

imposed by the Bank-Fund documents seems highly inappropriate.

The national constitutions are considered very sacred documents

made by the consensus of the parliaments have got no sanctity

when they reflect the aspirations of the people of the country

contrary to the reform agenda of the IMF. As a matter of

principle, structural reforms such as trade and investment

liberalization measures should not fall within the jurisdiction

28 | P a g e

of the Fund. These long term policy issues must be decided by

indigenous people through their representatives, taking into

account the socio-economic and ideological basis of the country.

The Fund’s role should be, at the best, as recommendatory.

The cross conditionality aspect of the IMF-World Bank

relationship is well documented. The IMF is supposed to take on

the macroeconomic and short-term stabilization measures, while

the Bank takes care of the longer-term structural measures, all

within a twin package supported by both institutions. Over the

years, the Bank and Fund have consolidated their policy advice

towards market orientation, to the exclusion of alternative

policies. They have thus failed to consider varied options for

structural reforms. For instance, the fiscal burden of public

utilities (at once a macro and a micro concern) can be addressed

in many ways. Yet, it is only privatization in one form or

another that is always promoted (Malaluan & Guttal, 2003).

This clearly shows the callousness of the International

Financial Institutions. On the one hand, they talk about national

ownership and participatory processes, on the other hand, they

29 | P a g e

pay no respect to even the national constitutions and insist upon

making necessary amendment to them to bring them in conformity

with their conditionality packages. This is clear manifestation

of means-end rationality – treat everything as objects and use

them as means to attain the ends, no matter what it costs to the

client countries. At times, it becomes such a compulsion for the

client governments that they have to lobby in the national

legislature in order to get the desired amendments in the legal

framework. More often than not, it leads to horse-trading and

jockeying between elected representatives and the appointed

government officials. The most painful aspect of all this

callousness is that all this is being done in the name of poverty

reduction.

5. Conclusion: It is evident from the critical analysis of

the basic tenants of the PRSPs that it is not about poverty

reduction, regardless how often the words poverty and poor have

been used in the strategy papers and the policy matrices. The

PRSPs fail to appreciate the historically entrenched and long-

term causes of the poverty. The PRSPs conceives the poverty as a

30 | P a g e

material condition experienced by the people of third world

countries. It diagnosis the causative factors to explain poverty.

At third level, it suggests the solution based on the actions

manipulating the factors which are deemed to be the most

important causative agents. In the light of policy matrix, the

remedies lie in economic growth and divestiture of the state

owned enterprises. It pays little attention to the context and

the social construction of the discourse of poverty. Instead

focusing on redistribution of income, wealth, land, employment

and opportunity, the PRSPs seek to promote private property

rights and oversimplify the more delicate social relations of

use, exchange, tenure and ownership of commodities. From the

critical theory’s perspective, the PRSPs are responsible to

aggravate the inequalities exists in the prevailing patterns of

the ownership of means of production and economic relations

between bourgeois and proletariats. In this sense, the PRSP packages

are promoting the cause of capitalists at the expense of the

poor.

31 | P a g e

It is important to note that in case of agricultural

produce, the PRSPs focus on cultivation of cash crops and their

export to markets aliens to the poor population of the borrowing

countries. This is a sure recipe of creating shortage of

essential food items in the local market and in raising their

prices, rather than to reduce poverty as claimed in the PRSPs. It

is a clear manifestation of the capitalist mentality, Marx

expressed as Money-Commodity- Money schema of capitalism.

Everything is treated as a resource and is used to convert it

into object, attaching monetary value to it. On the other hand,

there is no comprehensive strategy in the PRSPs to basic food

import substitution. With regard to taxation, the emphasis is on

the simplest taxes like value added taxes, rather focusing on as

to how progressive taxation can be made more broad-based.

The poor have been left at the mercy of social nets and the

trickledown effect of the trade liberalization and privatization

of public sector enterprises. Transfer of even the most

fundamental social and economic services to external private

enterprises backed by wealthy western government has serious

32 | P a g e

implications to the government’s role to ensure fair and

equitable access to essential goods and services. As opposed to

need of client governments in creation of sustainable, secure and

dignified livelihood opportunities, the PRSPs demand for such

structural adjustments that lead to widespread unemployment and

underemployment. The workers are being stripped of fair wages,

compensations, entitlements, workplace protection and the right

to organize and negotiate. Take for example, the recruitments in

the government sector, especially in education and health sectors

in Pakistan, on contract basis and depriving the employees of the

benefits of pension and job security and other benefits attached

with regular appointments. Outsourcing of basic services to

private sector is yet another example of exploitation of the poor

in the name of poverty reduction. As a matter of fact, this

entire situation, in the name of policy reforms, is being created

to make sure the entry of private entrepreneur in the sectors,

which hitherto are served by the public sector; establishment of

waste management and parking companies are some of the examples.

Punjab Municipal Development Fund Company, established with the

33 | P a g e

assistance of the World Bank, is another example of such ventures

undertaken on behest of Breton Wood Institutions.

The PRSPs, instead of guiding the client countries in

developing indigenous solution of their political and economic

governance structures, call for the fragmentation of national

institutions and the dismantling of domestic economic capacities.

It directly challenges the political and economic sovereignty of

client countries by imposing external agenda favoring the

developed nations. It enjoins upon the debit ridden countries to

allow their land, environment, natural resources, and populations

to feed and serve distant markets and foreign, often trans-

national corporations. Notwithstanding the rhetoric of poverty

reduction in the PRSPs, it is no more a mystery that these papers

are aimed at weakening the governance structures in the poor

countries and extracting their resources to serve the benefits of

capitalists, most of them are backed by their own investment

arms.

Free trade and globalization are some of the buzzwords of

the PRSPs, which urge the poor client countries to reduce

34 | P a g e

government’s role in regulating the trade and investment and open

their markets to global competition; while the poor countries

lack required expertise and technological advances to face and

compete the onslaught of the western multi-nationals. As such,

this is virtually placing the resources at their disposal and

dictating the government to relinquish their role as allocator of

resources. While the Bank and Fund, in the garb of the PRSP, are

avidly looking for resources of the poor nations, these

institutions, despite having tremendous resources at their

disposal, do not seem to have been willing to assist countries to

develop nationally relevant and locally responsive approaches to

human development, well being, poverty reduction and wealth

creation. It would, therefore, be safe to conclude that the PRSPs

claim of being nationally owned and driven is nothing but an

attempt to conceal their ulterior motives. The term poverty

reduction has been used to camouflage the hidden motive of taking

forward the unfinished reform agenda of SAPs. Further

deconstruction of these structural reforms make it abundantly

clear that the Breton Wood Institutions are hell bent on

introducing fundamental changes in the socio-economic structures

35 | P a g e

of the developing countries, depriving them of their social,

cultural and religious values. Interestingly, this is being done

in the name of science and titled as value neutral and objective;

while in reality these claims are heavily value laden and are

aimed at promoting a particular perspective – the perspective the

rich north wants to impose on the poor south.

36 | P a g e

1Notes Concessional loans or assistance refers to World Bank financingthrough its International Development Association (IDA). IDA provideslong term loans with minimal or zero interest to the poorestdeveloping countries; the loan packages, however, come with policyconditionalities that the borrowing country must adhere to in orderto qualify for concessional finance. 2 Still Sapping the Poor: A critique of IMF Poverty Reduction Strategies, Charles Abugre, ISODEC, June 2000. 3 The Poverty Reduction Strategy Paper-II (2008-2010) 4 Participation in Poverty Reduction Papers, Caroline M. Robb, AfricaDepartment, International Monetary Fund, August 2000 5 The World and the PRSP: Flawed Thinking and Failing Experiences, Jubilee South, Focus on the Global South, AWEPON, Centro de Estudios Internationals. November 16, 2002. PRSP – Politics, Power and Poverty: A Civil Society Perspective. Economic Policy Empowerment Program, European Network on Debt and Development (EURODAD). 6 MPs Stop Zambia National Commercial Bank Privatization. December 5,2002. The Post, Lusaka; Opposition MPs Against ZNCP Sale. December 6,2002. 7 IMP Strong-Arming Debtors Despite New Lending Guidelines. Emad Mekay, Inter Press Service (IPS), December 10, 2002.8 Solomon Island begins implementing IMF demand for severe job cuts.Peter Byrne, World Socialist. November 21, 2002. 9 Letter to the Ministry of Finance. Advocacy Program, Sustainable Development Policy Institute, No. 3, UN Boulevard, Diplomatic Enclave1, G-5 Islamabad, Pakistan. December 20, 2002.10 Adjustments from Within: Lessons from the Structural Adjustment Participatory Review Initiative. The World Bank, July 2001.11 Poverty Reduction Strategy Paper – Operational Issues, IMF-World Bank, December 10, 1999. 12 Guidelines for Joint Staff Assessment of Poverty Reduction StrategyPaper, IMF-World Bank, April 18, 2001 13 An Independent Guide to PRSP. EURODAD, 2000. 14 Poverty Reduction Support Credits, World Bank Operations Policy andCountry Services, May 11, 2001.

15 The Sub-Commission on Human Rights Resolution 2001/5 and Progress Report by Joseph Oloka-Onyango and Deepika Udagama.16 Socialist Republic of Vietnam, The Comprehensive Poverty Reductionand Growth Strategy (CPRGS), May 2002.17 The Philippine Electric Power Industry Reform: A Tragedy of ADB andWorld Bank Private Sector Fundamentalism and Unaccountable Government, October 2002. 18 Policies to roll-back the State and Privatize? Poverty Reduction Strategy Paper Investigated. World Development Movement, April 2001.