Designing a Policy Matrix for Development Policy Lending

1. Designing a Policy Matrix for Development Policy Lending

2. Rwanda’s Poverty Reduction Strategy Paper

3. Budget Support to Rwanda’s Poverty Reduction Strategy Joint PRSP matrix as a tool for the development of sectoral strategies & basis of government led harmonizationFrom Conditionality to Ownership:the experience w. integrating matrices under government leadership Mohamed Toure, Agnes Soucat, Kene Ezemenari, Negda Jahanshahi,

4. OUTLINE • Background • Process • Integrating Limelette I principles • Results • Next Steps • Some remaining Issues

5. 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

6. Structural 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  

7. Significant 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.

8. Governance • 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

9. 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

10. 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

11. Process • 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”)

12. 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

13. 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

14. Integrating Limelette I Principles 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 • 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

15. Results – 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

16. PRSC 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

17. 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

18. 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,

19. 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.

20. Issues • 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

21. THE END -- 000 -- THANK YOU

22. PRSP 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