Designing a Policy Matrix for Development Policy Lending

Rwanda’s Poverty Reduction Strategy Paper

Budget Support to Rwanda’s Poverty Reduction Strategy

Joint PRSP matrix as a tool for the development of sectoral strategies &

basis of government led harmonization

From Conditionality to Ownership:

the experience w. integrating matrices under government

leadership

Budget Support to Rwanda’s Poverty Reduction Strategy

Joint PRSP matrix as a tool for the development of sectoral strategies &

basis of government led harmonization

From Conditionality to Ownership:

the experience w. integrating matrices under government

leadershipMohamed Toure, Agnes Soucat, Kene Ezemenari, Negda Jahanshahi,

OUTLINEOUTLINE

Background

Process

Integrating Limelette I principles

Results

Next Steps

Some remaining Issues

Background Background Genocide in 1994; 1 million deaths

Post conflict recovery; average growth rate of 7 %

Vision 2020: GoR’s long term vision

PRSP July 2002– Comprehensive, ambitious government program, including

six priority areas– Well articulated sectoral vision in education, health, water– In line with MDGs objectives

PRSP monitoring report , July 2003– Good progress on social sectors outcomes– Progress in poverty reduction– Progress on reform

Structural Reforms 1995-2003: selected examplesStructural Reforms 1995-2003: selected examples

Public enterprise reform: By 2003, 50 out of 70 public enterprises had been sold.

Trade liberalization: The trade restrictiveness index fell from 8 in 1995–97 to 2 by mid-2000.

Exchange regime: A fully liberalized and market-determined exchange rate system has been adopted, foreign exchange bureaux licensed, and current account restrictions abolished.

Domestic prices and marketing: Price controls have been eliminated for all but a handful of commodities  

Significant achievements in the social sectorsSignificant achievements in the social sectors

Outcomes:– 67% primary school completion– 75% immunization coverage– 90% utilization of antenatal care

System building/reforms Strong HIV/AIDS program, good availability of essential drugs Most successful micro-insurance schemes in SSA Half of health providers are private, receiving subsidies from

government Successful experiences with contracting/performance based

payments Successful experiences with grants for demand side subsidies for

education at district level

Social sector budget allocations: Budget allocations to social sectors have increased significantly in real terms since 1998. These allocations are now protected from budget cuts.

GovernanceGovernance

Economic governance: A National Tender Board was created to oversee procurement. An independent Office of the Auditor General was established. FARAP Action Plan adopted in 2003.

Expenditure management: Expenditure monitoring system,CEPEX, MTEF process established. Pilot Joint Monitoring system implemented in 2003 ;  

Relatively transparent financial management and procurement, low levels of corruption

Situation in 2003 Situation in 2003

Good understanding of sectoral issues due to very strong analytical underpinnings: PER/PEMR, PETS, FARAP, Poverty Assessment, DHS, Country Status Report on Education and Health etc…

Requests from government: focus on education, health, water, energy and agriculture (export promotion), as well as public sector reform

However: no fully developed sector strategy papers, unclear articulation of Mid Term programs

Challenges facing PRSC Challenges facing PRSC

Limited capacity at country level: PSCBP as a companion to the PRSC

Large coverage of PRSP: focus on policy dialogue in services, fiduciary/accountability; complementarity with investment projects

Preparation timing (9 months): preparation resources made available to government (Trust Funds, consultants, government workshops); emphasis on coordination (PAF); strong involvement of non Budget Supporters

ProcessProcess

November 2003, MOU on harmonization and alignment of budget support

Use of PRSMR matrix as base document Expansion and further development of sectoral sections

of PRSP matrix Government taking lead role– donors engaged behind

the government in development of sector policy matrixes as part of the sector strategy development process (“2nd generation SWAPs”)

Process (cont.)Process (cont.)

The government's plans of action for various programs/sectors (--i.e. FARAP, Education SWAP, and sector strategies) have been developed in consultation with donors (versus conditionality without adequate consultation or prior analytical basis)

Both budget support and non-budget support donors invited by the government to assist in developing the matrix; non budget support donors full participants in pre-appraisal and appraisal missions of PRSC. Matrix became a basis for promoting/facilitating harmonization

Identification of triggers and conditionality is taken directly from the PRSP matrix

Process (.cont)Process (.cont)

Identification of conditionality cleared with the government so they have buy in

Review cycle for PRSC and disbursement aligned with the PRSP review process and government budget cycle in line with the Partnership Framework—

In this context, having the MoU to begin with provided framework for the PRSC and harmonization

Integrating Limelette I PrinciplesIntegrating Limelette I Principles

Focus on 6 priority areas of PRSP

Led by GoR / Head of State Focus on MDGs through

growth+services+accountability “2nd generation SWAP” (health) Missions synchronized with

Fund and PRS, timeline developed

Sector groups led by government

7 field based staff, 6 staff working on WB Projects in Rwanda, 2 PRSC staff

PRSC relies on EU led FARAP

Based on PRSP

National ownership

Result Orientation

Link priority sectors with budget

Increased Use of Programmatic Support

Government lead in sector and budget support groups

Mission timing synchronized with country process

More delegation to the field

Rely on each others’ document

Results – Our assessmentResults – Our assessment

Strongly government owned policy matrix aligned with sectoral strategies- with process led by Head of State

PRSP matrix presented to Cabinet for discussion/ approval

PRSP matrix including health, education, water, energy, public sector reform, agriculture, macro-management, investment climate

PRSP matrix included in APR

PRSC focus as part of government’s programPRSC focus as part of government’s program

Focus on MDGS achievements through i) private led growth ii) services iii) strengthening of public sector underpinnings

Strong focus on outcomes:

– macro-economic stability, – time-lag to open a private business– primary school completion rates, – immunization coverage, use of bed nets, number and

rates of assisted deliveries, – access to clean water, frequency of hand-washing,– reduction in electricity shortages,

Focus on accountability: results, contracts, transparency, Voice

Next Steps (appraisal in July 2004)Next Steps (appraisal in July 2004)

Focus of PRSC on five sectors in the three years cycle, PRSC1 focuses on 2 sectors with preliminary measures for other three

Development of budget support matrix including PRSC matrix

Agreement on prior actions and triggers

Monitoring of the PRSP/PRSC: Monitoring of the PRSP/PRSC:

Rwanda approach is to monitor outcomes as part of overall assessment of program

Monitoring of Outcomes is essential

However, exogenous factors outside of government control influence outcomes; and there are key actions or intermediate outputs required in order to move toward final outcomes,

Monitoring (cont.)Monitoring (cont.)

Monitoring of intermediate process/actions plays following role:

– help identify areas where additional assistance to government is warranted (particularly in context of limited capacity)

– help to quickly identify potential problems/risks and signal need for corrective action, etc. to ensure movement toward final outcome

– helps in context of PRSC, in assessing the country's efforts towards achieving agreed triggers/targets, particularly in case where there are extenuating circumstances/exogenous shocks that have compromised achievement.

IssuesIssues

Highly committed government and ambitious program of reform; vs strong dependence on budget support (50 %) => tensions on who runs the show

Rwanda’s program development more government driven than donor driven (“2nd generation SWAP”); difficulties of donors to follow government speed => rationale for slowing down linked to government or donors’ capacity ?

Normative process versus country tailored/flexibility=> applicability of other countries’ models to special case of Rwanda

Communication: local dialogue versus HQ loop

THE END

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THANK YOU

PRSP CoveragePRSP Coverage

1. Agriculture transformation and rural development, 2. Human resources development and improving the

quality of life: including health, education and training, water and sanitation , control and prevention of HIV/AIDS.

3. Economic infrastructure: including energy for poor households and rural enterprises,

4. Good governance: including civil service reform, accountability and transparency.

5 Building an enabling environment for private sector development: including private sector investment promotion, financial sector reform, privatization of state enterprises,

6. Social capital to support vulnerable groups