Poverty Reduction Strategy Papers are prepared by governments in low-income countries through a participatory process involving domestic stakeholders and external development partners, including the IMF and the World Bank. A PRSP describes the macroeconomic, structural and social policies and programs that a country will pursue over several years to promote broad-based growth and reduce poverty, as well as external financing needs and the associated sources of financing.
The world economy has grown steadily in recent decades, bringing widespread prosperity and lifting many millions out of poverty, especially in Asia. Nevertheless, in the next 25 years, the world's population is projected to grow by about 2 billion people, most of which will be born in developing and emerging market economies. Without concerted efforts by countries to help themselves through sound policies and by the development community to increase its support of countries' own efforts, many of these people will be doomed to poverty.
The PRSP approach, initiated by the IMF and the World Bank in 1999, is a comprehensive country-based strategy for poverty reduction. It aims to provide the crucial link between national public actions, donor support, and the development outcomes needed to meet the United Nations' Millennium Development Goals (MDGs), which are centered on halving poverty between 1990 and 2015.
Five core principles underlie the PRSP approach. Poverty reduction strategies are:
• country-driven, promoting national ownership of strategies through broad-based participation of civil society;
• result-oriented and focused on outcomes that will benefit the poor;
• comprehensive in recognizing the multidimensional nature of poverty;
• partnership-oriented, involving coordinated participation of development partners (government, domestic stakeholders, and external donors); and
• based on a long-term perspective for poverty reduction.

Salient Features
Under pressure from donors, Poverty Reduction Strategy Paper (PRSP) was placed before the Executive Committee on the National Economic Council (ECNEC) for consideration. The country’s donors will release the decision in December this year as desired. The three-year strategic document has already been reviewed by the 21-member National Steering Committee on the PRSP headed by principal secretary to the Prime Minister, Dr Kamal Uddin Siddiqui.

Despite Bangladesh's a sustained 5.5 per cent economic growth in the last decade, poverty remains a nagging problem. Around 48 percent (>68 million) of the population is still living on less than a dollar a day, a benchmark of the United Nations to measure poverty.

The revised PRSP document also includes the issues of good governance, corruption and administrative reform as desired by donors. It also includes tourism, urban poverty, land and the rights of indigenous people, graft, and targets of the economic growth and export. The General Economics Division (GED) of the Planning Commission would monitor the status of the ultra-poor, and track implementation process in the next three years. The final PRSP would see an updated medium term macro-economic framework (MTMF) and policy matrices.

The PRSP contains time-bound action plans and various reforms measures. It seeks to attack poverty on five different fronts: adequate thrust was given to agriculture and rural non-farm sectors as the main areas for employment generation. About a million people join the workforce every year: emphasis has to be given to the sectors that can create jobs in huge numbers).

The growth projection of the GDP by FY07 could halve its poverty by 2015 as per the Millennium Development Goals (MDGs), even if the country enjoys 6.5 per cent growth in next 10 years. The donors estimate that the country needs to achieve growth rate of 7.0 per cent per annum to achieve the MDG by 2015.

The document focuses on eight priority areas-employment, nutrition, quality education, eternal health, sanitation, law and order, good governance, and monitoring. To generate employment, priority has been given to the areas like agriculture and agro-based industry, small and medium enterprise (SMEs), development of rural infrastructure, and information communication technology (ICT

Economists believe that the PRSP has targeted private sector-led growth so that investment is made in the country efficiently. Good governance is one of the four supporting strategies in the PRSP as the success of the PRSP will largely depend on curbing corruption, combating crimes, making the judiciary accessible to the poor and ensuring good-governance through devolution of power to the local administration. In fact, the heart of the PRSP is a policy matrix it has suggested for the next three years.

According to the medium-term macro-economic framework, set in the PRSP, the economy will grow at a rate of 5.5, 6.0 and 6.5 per cent between FY05 and FY07. Inflation will be kept at 6.5, 5.5 and 5.0 per cent in the next three fiscals. Fiscal deficit will be bottled up at 4.5 per cent of the GDP by FY07 while keeping domestic borrowing at 1.9 per cent and external loans and grants at 2.6 per cent of the GDP by FY07. The growth of exports and imports has conservatively been set at 7.0 and 9.5 per cent by FY07 while private credit and broad money will, as a proportion of GDP, be 15.2 per cent and 13.5 per cent respectively by FY07.

There must be a multi-dimensional poverty reduction strategy that encompasses human development, reduces vulnerability and promotes social inclusion and empowerment as well. Moreover the country's growth has seen growing inequality that has reduced its poverty reduction impact.

The drawback of the document, as envisaged by the civil society, is that it reaffirms and rests on the belief that proper macroeconomic policies lead to poverty reduction. Only micro-economic improvements i.e. only better incomes for each individual family - result in broad-based economic progress, which results in broad-based GDP growth.
Macro-economic approaches that ignore micro-economic realities have proved time and again to be pro-rich policies, which result in widening inequality.

The final PRSP has to be tuned to the actual requirements of the country's teeming millions in order to both accelerate growth and make it more pro-poor. A more pro-poor sustainable pattern of growth must have the potential to be more equitable.

-by MF Karim

Business and poverty reduction
Business must work toward poverty reduction. This is good business. The equation is simple. Lower poverty level equals higher purchasing capacity. Around the world, many business houses are conscious of this relationship. Some in Bangladesh are aware too.

Populations living in poverty do not create market demand. They exist at the subsistence level, and nothing more. Business loses out as a result. That apart, business must return some of its wealth to society which generates it. At the individual level, poverty comes from an absence of opportunity. Business can help create opportunities through philanthropic efforts in health care and education, in particular. This is its social responsibility.

At the national level, poverty indicates absent or poor growth and development. Growth results from presence of infrastructure such as roads, power, schools, water supply, health care, etc. Business can help by indicating to governments inadequacies in infrastructure. It is important for business to do so and to partner in their removal. In the absence of adequate facilities, the cost of doing business increases. This is detrimental to all- the consumer, the state and business itself.

In Bangladesh, some of the leading business houses contribute to poverty reduction and social improvement. However, this is largely with marketing content as sponsors of cultural and sporting events. Such efforts may have significant impact in creating brand equity and temporary demand but their long- term impact, if any, is surely marginal.

Business has to shift focus to infrastructure development as it has a strong correlation with poverty reduction. Given the size of our business houses, going it alone is not always feasible. Public-private partnership is the answer. We have some examples of this in the Dhaka beautification project. This is a good example of long-term beneficial public-private cooperation.

This attempt needs to be taken a step further. Accordingly business houses will lend its expertise in technology and management and, of course, money while the public sector provides the enabling environment and non-market finance. In the area of philanthropy, the areas which suggest themselves are generous and continuing support to public universities, cultural events, scientific research and scholarships.

In doing all this, business builds capacity. Not the capacity that is reflected in their factory or organization size but capacity that is reflected in the market or nation that it operates in. Here capacity building is creation of skills in technology, in health care, in community service and even in farming and agriculture. This is not a costly or difficult task. All business houses have training expertise and facilities in one or more fields. These are not necessarily in use at all times. The general public can be made to benefit.

In time, the business community here will find that public-private participation in poverty reduction has helped the poor and business in almost equal measure.
 
- by Joseph Michael Pereira