In the last issue of Economic Justice News, Nancy Alexander and Charles Abugre wrote about the Poverty Reduction Strategy Paper (PRSP) and its role in "whitewashing [the] blackmail" practiced by the IMF and World Bank. That blackmail, of course, is the package of economic conditions the institutions coerce governments into accepting as part of structural adjustment programs.  The whitewash is the new program designed to convince us that the countries, including civil society organizations, are designing ˜ asking for ˜ the economic policies that have devastated nation after nation.

This follow-up article is intended to emphasize a few key points about the PRSP and the related Poverty Reduction and Growth Facility (PRGF).  We devote this much attention to the change in language and process by the IMF and World Bank not because the moves herald the promise of positive change, but because, as Alexander and Abugre suggest with their phrase "whitewashing blackmail," there is a great danger that the improved rhetoric of "participation" and "country ownership" will convince some that the institutions have changed course when in fact they have only found more clever ways to conceal their agenda. 

The introduction of the PRGF/PRSP is the biggest change in how structural adjustment is administered in 20 years. Launched a year ago at the fall meetings of the IMF and World Bank in Washington, the PRGF is, for the time being, merely a change of name for the IMF‚s Enhanced Structural Adjustment Facility (ESAF).  But it could become a joint Bank-Fund facility overseeing all lending to and conditionalities on the world‚s most impoverished countries. The PRSPs, the documents ostensibly composed by the borrowing governments in conjunction with civil society, are the leading edge of the reform; several countries have now undertaken to produce them or "interim" PRSPs (which are apparently exempted to a great degree from the civil society participation requirements).

The PRSP replaces the "Policy Framework Papers" formerly required and co-authored by the IMF, and is intended to eventually overtake in importance the World Bank‚s Country Assistance Strategy (CAS) documents. The PRSP is not, then, simply the outline of a particular structural adjustment program, but a framework for a country‚s entire approach to economic development, with the main priority being measures that will reduce poverty. The document is to be composed in the borrowing country by the government and civil society organizations, with the IMF and World Bank acting merely as advisers. The completed document is then to be presented to the Boards of the international financial institutions, which will decide whether, and to what degree, to provide funding in support of the programs outlined.

The two main claims for the PRSP ˜ that it will be "country-owned" and that it will prioritize poverty reduction ˜ have, in the first few PRSPs, already been cast in doubt. Reports from several countries undertaking the PRSP or interim PRSP process suggest that the civil society organizations being consulted are not being invited to offer input on macroeconomic policies. Rather, they are being asked to make suggestions for how to gauge social progress and in monitoring the impact of the programs. This is very different from seeking contributions from civil society about the most influential and potentially damaging policies, and even further from allowing the people a role in determining the direction of economic policy.

As long as macroeconomic policies are considered beyond the competence of civil society, there can be no grounds for calling the PRSP "participatory" or indeed any sort of reform at all. The IMF continues to sing its familiar song: poverty reduction can only occur in the context of sound macroeconomic policies and (implicitly) we know what sound macroeconomic policies are. A key IMF Board document, "Poverty Reduction Strategy Paper ˆ Operational Issues" (December 10, 1999) is particularly revealing in this regard, for it directly contradicts the spirit of the institutions‚ public pronouncements on the PRSP by specifying that civil society organizations are well-positioned for monitoring the impacts of policies, but pointedly omitting any mention of a role for them in the policy formulation process. (That IMF document is the subject of a detailed analysis by the European Network on Debt and Development [EURODAD], which is a main source for this article.)

The claim that the PRSPs will be country-owned and authored is further undermined by the IMF‚s insistence on listing several core elements it predicts will be included in most PRSPs ˜ all of them familiar SAP macroeconomic conditions. For example, one key sentence from the document states: "The impediments to faster sustainable growth should be identified and policies agreed to promote more rapid growth: such as structural reforms to create free and more open markets, including trade liberalization, privatization and tax reform and policies that create a stable and predictable environment for private sector activity."

Perhaps the most telling indication that the input of civil society is not at the center of the PRSP process is the astounding sentence in the IMF document pondering whether "the authorities‚ first draft of the PRSP could be prepared before consultations with national stakeholders or it could be an input to these initial discussions." In the formulation of any plan, a great deal of power resides with the author of the first draft; once it has been submitted, changing course completely or escaping the biases of the author becomes unlikely. That the IMF seems to assume it, with the governments, will outline the initial PRSP before approaching civil society requires little further commentary.

Should the alarm evoked by this approach need any further fuel, the IMF document goes on to predict that the PRSP process will not mean a reduction in IMF/World Bank involvement in impoverished countries, but rather "requests for assistance that go beyond currently agreed work programs. [Governments] are likely to approach the Bank for unprecedented assistance." A helpful listing of what sorts of help the IMF and the World Bank, respectively, should expect to offer is provided in the IMF paper.

The IMF steadfastly refuses to consider that the problem with structural adjustment, the reason for its failures, could possibly be in the actual policies recommended. The design of the PRSP and PRGF reflects the IMF‚s self-forgiving attitude that the problems must be rooted in how countries implement the policies, or in how "social safety net" programs are designed, or in public relations. The PRSP process, then, attempts to address the three possible problems the IMF sees, while leaving the obvious problem ˜ the macroeconomic policies themselves ˜ untouched.

To address both the question of weak implementation and faulty safety nets, the IMF, with the PRSP, does at last address a common criticism: that there is little public participation in determining the policies. If the governments can feel more "ownership" of the structural adjustment program, they will, it is thought, more wholeheartedly enforce its requirements. If civil society organizations can be brought into the process, they will relent in their criticisms and help design "social safety net" programs that will appease the victims of structural adjustment. And if the IMF can point to the mollification ˜ some would say co-optation ˜ of civil society and government ministers, its public relations problems will be largely resolved, since its critics will be committed to working within the framework of the PRSP by virtue of their participation in the process.

One of the greatest dangers of the PRSP/PRGF, then, is the possibility that the new process will muffle the voices of critics of IMF/World Bank neo-liberal structural adjustment, particularly those in countries going through the exercise. A civil society organization in an indebted and impoverished country which has been working to counter the effects of structural adjustment, or even one which has, often under perilous circumstances, developed political opposition to governmental acquiescence to the IMF and World Bank, may reasonably see an opportunity or an obligation when an invitation arrives from the institutions to participate in a consultation with civil society about "poverty reduction and growth." The threat is that the discussion they find themselves involved in will not go beyond suggesting how to gauge unemployment or hunger in their country and where to set goals for improvement. And at the end of the session, the IMF and World Bank will be able to claim that a number of civil society organizations are cooperating with them in creating the new Poverty Reduction Strategy Paper ˜ a document which will include structural adjustment conditions, probably unseen by the civil society representatives.

Marjorie Mbilinyi of the Tanzania Gender Networking Project has been active in pointing out this danger, and underlines that the prospect of co-optation of NGOs is particularly serious when one considers that the PRSP process is being implemented first in countries undergoing the IMF/World Bank Heavily Indebted Poor Countries (HIPC) debt initiative. Indeed, the link between the ostensibly more participatory PRSP and the HIPC initiative is trumpeted by the IMF and World Bank as evidence that their approach to debt is an enlightened one. However, as the 50 Years Is Enough Network never tires of explaining, the HIPC process amounts to little more than a small bribe to governments in the form of pledged, often meager debt relief for the purpose of getting them to commit to several additional years of structural adjustment. Mbilinyi points out that the schedule of relief for some of those debts, particularly those of the World Bank‚s soft-loan agency (IDA), extends over 20 years -- meaning "unsatisfactory performance" could interrupt the debt relief benefits at any time. Hence Southern NGOs participating in the PRSP process risk legitimizing a scheme through which their countries are submitted to 20 years of coercion to follow structural adjustment policies.

As some have pointed out, the adoption of goals like "poverty reduction" and debt relief by the international financial institutions in themselves reflect a victory for our campaigns: the institutions are having to concede our moral, and to some extent, economic points. Activists could be forgiven, however, for feeling, as they watch terms they‚ve coined and campaigned for floating around on the IMF website, rather like devout parents witnessing their children turned into huckster television evangelists. Until the IMF and World Bank reject, or are forced to abandon, the cynical substitution of clever public relations for honest examination of the damage done by their structural adjustment policies, their efforts to re-label their poisonous medicine should be met by ever more militant public rejection.

Governments should be accountable primarily to their own people in the development and approval of economic policy, but for the last twenty years the IMF and World Bank have held the crucial power and have been the audience that matters for indebted countries‚ Finance Ministries. The movement for global economic justice that has made such strides in Seattle, Washington, and around the world in the last year must insist that the dubious debt burdens are without legitimacy and that the IMF and World Bank have no right to continue positioning themselves at the center of countries‚ development and economic policy-making. We must at last move beyond clever re-naming and deceitful public relations schemes cooked up in Washington, and free the people of each country to determine their own economic fate.