A Poverty Reduction Strategy (PRS) is a document that sets out a framework for domestic policies and programmes to reduce poverty in low-income countries. Since 1999, the International Monetary Fund and the World Bank have required governments to produce a Poverty Reduction Strategy Paper (PRSP) as a condition for debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) initiative. PRSPs are also required for concessional loans (at low or zero interest) through the Banks International Development Association and the IMFs Poverty Reduction and Growth Facility.
Some non-HIPC countries also are formulating PRSs unrelated to the World Bank/IMF initiative. The Asian Development Bank, for example, is supporting a PRS in consultation with six developing member countries.
The underlying principle of the PRS process is that countries should direct their own development agendas, as policy reforms and programmes are unlikely to be sustainable without full country ownership. The process for preparing a PRS is intended to be inclusive and participatory, taking into account the perspectives of a range of stakeholders – civil society organizations, representatives of the poor and women, the private sector, trade unions, donors and UN system partner in addition to government – in its design and implementation.
Increasingly, efforts are being made to include input from young people, a large and critical but often overlooked constituency in terms of spurring economic growth. A 2007 expert consultation about including young people in poverty reduction strategies calls for special efforts to reach marginalized, disadvantaged girls, both as a matter of social justice and as an essential step in meeting the Millennium Development Goals.
Beyond World Bank/IMF mandates, PRSs have become important instruments for coordination of development assistance and elaboration of domestic policies and programmes. Multilateral and bilateral donors and UN agencies are using them as a framework for aid. In many countries, the PRS has become the basis for formulation of the national budget and for medium-term expenditures, and has been merged with the national development plan.
PRSs also serve as country-based action plans for meeting the Millennium Development Goals and targets through short- and medium-term plans. Recent decisions of the UN General Assembly and the Economic and Social Council emphasized the importance of focusing poverty reduction strategies on these agreed-upon targets, and the UN system has identified engagement in the PRS process as an essential platform for advocating a holistic and rights-based approach to eliminating poverty.
In its advocacy and dialogue regarding PRSs, UNFPA is guided by the following Principles for UN Country Team Engagement in PRSPs identified by the UN Development Group.
Pro-poor policies Advocate economic and social policies that place equity at the core of PRSPs.
Equity Encourage the adoption of policies that contribute to increasing equity in the distribution of income, wealth, and services to increase the effectiveness of poverty reduction strategies.
Human rights-based approach to development Promote the human rights of people, in particular poor people, and the most vulnerable and marginalized groups.
Gender sensitivity Identify and address gender biases that are often inherent in macroeconomic and sectoral policies.
Macroeconomic policy Ensure that macroeconomic goals and policies fully integrate employment growth and poverty-reduction goals.
Globalization that benefits poor people Advocate for strengthening international rules and institutions so that for poor people the opportunities of globalization are maximized and the vulnerabilities it creates are minimized.
Peace and security Encourage conflict-sensitive approaches to development strategies.
UNFPA participates in the development of PRSs by engaging in dialogue with policymakers, making available international and national evidence based on the latest data, of the interactions between population dynamics, reproductive health and poverty.
UNFPA helps countries collect data and strengthen their statistical capacities, and provides the technical assistance they need for policy analysis, costing and budgeting, and monitoring and evaluating the population dimensions of their PRSs.
The Fund also fosters the involvement in the process of other important stakeholderspoor people, womens and youth groups, the aged, reproductive health/family planning advocates, civil-society and non-governmental organizationsand towards that end, organizes regional and country-level presentations and workshops, prepares informational material and participates in awareness-raising campaigns.