Ghana - Poverty reduction strategy paper (PRSP) preparation status report and joint assessment

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 23595-GH REPUBLIC OF GHANA JOINT IDA-IMF STAFF ASSESSMENT OF THE POVERTY REDUCTION STRATEGY PAPER PREPARATION STATUS REPORT FEBRUARY 4, 2002 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   THE INTERNATIONAL DEVELOPMENT ASSOCIATION AND THE INTERNATIONAL MONETARY FUND GHANA Joint Staff Assessment of the PRSP Preparation Status Report Prepared by the Staffs of the International Development Association and the International Monetary Fund Approved by Donal Donovan and Shigeo Kashiwagi (IMF), and Callisto Madavo and Gobind Nankani (IDA) February 4, 2002 1. The Ghanaian authorities completed and presented to the Executive Boards of the IMF and IDA in July 2000 the interim Poverty Reduction Strategy Paper (PRSP), and the Boards agreed that the document provided a sound basis for the formulation of a full, participatory PRSP. Subsequently, task teams composed of key stakeholders, including civil society and the private sector as well as ministries and development partners, developed policy recommendations which were discussed in a major forum called the National Economic Dialogue in May 2001. Concurrently, a participatory poverty assessment was conducted with local consultative workshops. Partly based on the development agenda agreed in the forum, the National Development Planning Commission (NDPC), under the guidance of the Ministry of Economic Planning and Regional Cooperation (MEPRC), prepared and presented the first draft of the Ghana Poverty Reduction Strategy (GPRS), as the PRSP is called in Ghana, to civil society and development partners in July 2001. 2. Since then, the NDPC has continued to revise and update the document in partnership with other ministries and through public consultations with civil society in various regions of the country. In the latter part of 2001, interministerial working group meetings were held within the government in order to integrate the GPRS into the budgetary process. The ultimate objective is for the three-year Medium-Term Expenditure Framework (MTEF), which encompasses the 2002 budget, to incorporate the policy priorities of the GPRS. 3. As the document will not be finished within one year of the interim PRSP, the authorities have prepared a Preparation Status Report for presentation to the Boards of the World Bank and IMF. The Preparation Status Report outlines the main activities that have been accomplished so far, with emphasis on the period since the National Economic Dialogue of May 2001. It is clear that major efforts have been made to undertake a broad consultative process in the formulation of policies, and to link the GPRS with the budget process. Furthermore, the Preparation Status Report identifies the key next steps: (a) monitoring and evaluation; (b) tracking of public expenditure; (c) district and subdistrict consultations; (d) district plans based on GPRS priorities; and (e) costing.  -2 - 4. The staffs agree that the GPRS has been a country-driven process. The poverty diagnosis is based on a comprehensive household survey carried out in 1998/99, which led to the identification of the key sectors for poverty reduction. The staffs agree with the strategic focus on increasing agricultural productivity and the incomes of the rural poor through improved infrastructure, market access, and extension services. The creation of an enabling environment for private sector development is identified as one of the main roles of government. A key component of this strategy is the strengthening of governance through public sector reform, decentralization, public expenditure management reform, and the transparency and accountability of the public sector. The draft GPRS also improves upon the interim PRSP in its treatment of the constraints to investment in Ghana by addressing issues such as the systems for contract enforcement, the supply of credit, and land reform. 5. Social sector policies focus on providing equitable access to education and health services, particularly in the poor northern regions. Improved resource allocation and accelerated rural water provision to poor and deprived areas are key components of the health strategy, while facility improvements, combined with targeted teacher deployrnent, management reforms, and partnerships with nongovernmental organizations (NGOs) and community groups, form the core of the education strategy. Prevention of the transmission of HIVlAIDS receives particular attention. The overall strategy follows from both quantitative and qualitative poverty diagnoses which indicate that food subsistence farmers in the northern regions suffer the highest rate of poverty. 6. The staffs note that the Preparation Status Report, while documenting the process of consultation and drafting, provides only a limited update on the strategy itself, and how this evolved as a result of the consultation process. However, based on the draft GPRS, the staffs' assessment is that, in the course of 2001, substantial progress was made in improving the document, resulting in a sharper focus on poverty reduction. The strategy relies to a greater extent than in the interim PRSP on monitorable output-based targets and indicators, and sectoral and regional considerations are more fully integrated into the report. Overall, the poverty-monitoring mechanisms are satisfactory, and the draft GPRS has improved on the interim PRSP by including more qualitative analysis of poverty trends. In addition, three major surveys-the fifth Ghana Living Standards Survey, the Demographic and Health Survey, and the Core Welfare Indicators Questionnaire-will be carried out in 2002/03. However, more attention is still needed in setting priorities and implementation arrangements, particularly for the northern regions where implementation capacity is limited. Despite improvements, the sections on the programs and policies and the long-term growth strategy could still be linked more closely to the poverty diagnostics. The strategy would be strengthened by additional diagnosis of the poverty trends, including further disaggregation down to the district level and within the rural sector. 7. The staffs agree that the areas identified in the Preparation Status Report for further work are appropriate. The authorities are in the process of estimating the costs of the GPRS programs, and preliminary figures indicate that the overall costs exceed likely resource availability, thus suggesting the need to further prioritize for the near term. It is hoped that the costing exercises can be integrated into the revitalized MTEF process, such that the  - 3 - policy objectives of the GPRS are linked to resource availability and provide a basis for seeking additional donor resources in later years, if necessary. Meanwhile, an action plan is being prepared by donors and the MEPRC to coordinate the technical and project assistance that donors, the World Bank and the IMF will provide in support of the implementation of the GPRS. 8. The GPRS includes a specific definition of those government expenditures that are considered poverty related; it indicates that 80 percent of debt relief received under the enhanced HIPC Initiative will be used to fund additional poverty-related expenditures, with the other 20 percent devoted to domestic debt reduction. Mechanisms have been developed to track HIPC Initiative-financed and other poverty-related spending, building on the existing budget coding system. The monitoring and evaluation system, which is needed to ensure that the policies and programs in the GPRS have the desired impact on the poor, is more fully developed in the latest draft GPRS, but further clarification will be needed on the allocation of responsibilities and the methodologies to be used, particularly concerning the role of civil society. 9. Finally, development partners have been encouraging the authorities to allow for further consultations with civil society, and to fully incorporate the feedback from these consultations. Some civil society groups have voiced concerns regarding the lack of depth of the consultations. The staffs have emphasized that the authorities should maintain and build on the participatory process, including by providing feedback to civil society participants on how their concerns have been taken into account. 10. Despite several areas that will need further development, rapid progress has been made in recent months, and the authorities have identified appropriate areas for future work. The costing exercise is expected to be completed in late February, and the full PRSP published in the first half of 2002. This timetable would appear to be realistic and appropriate. 11. The staffs of the World Bank and the IMF consider that progress on the development of the full PRSP, as evidenced by the PRSP Preparation Status Report, is satisfactory and provides a sound basis for continued access to IDA adjustment lending and Fund concessional assistance. The staffs recommend that the Executive Directors of the World Bank and IMF reach the same conclusion.   P- I .W . REPUBLIC OF GHANA GHANA POVERTY REDUCTION STRATEGY PROGRESS REPORT 2002   - 1 - 1.0 PROGRESS REPORT ON GHANA POVERTY REDUCTION STRATEGY 1.1 Process of preparing the Ghana Poverty Reduction Strategy A participatory process to formulate the GPRS has been used, comprising: a) Establishment of core teams to constitute the focus of analysis and recommendations for poverty reduction. Five core teams were established along findings of a preliminary situation analysis by the task force. Core team areas were as follows: - Macro-Economic Issues - Production and Gainful Employment - Human Resource Development and Basic Services - Vulnerability & Exclusion and - Governance b) Local level consultations on dimensions of poverty and recommended solutions involving a sample of 36 communities, 12 districts and six administrative regions. c) Consultation among core teams and key agencies on analysis of data from local consultations and quantitative data, leading to identification of priority issues and required actions for poverty reduction. d) Forum of civil society, private sector, government agencies and development partners to review and harmonise priority issues and actions e) Special forum for civil society to validate priority issues and actions f) Review and prioritisation at the National Economic Dialogue, comprising representatives of development stakeholders in Ghana. 1.2 GPRS process from May 15, 2001 (National Economic Dialogue to date) Outputs of GPRS Core Teams were discussed and validated at the National Economic Dialogue (NED) held in May 2001 to build consensus on the way forward for the Ghanaian economy. Six thematic areas were addressed including one on poverty reduction. Comments and inputs were solicited from participants during the workshop breakout sessions. The general consensus was that the document addressed the challenges facing the country with respect to poverty reduction and growth. 1.2.1 First draft GPRS By mid May, a drafting team for further work on the GPRS was set up to undertake further analytical work and validated targets set by Core Teams to produce a zero draft document, which was circulated among key government decision-makers. Comments and detailed technical input from the drafting team culminated in the first draft document, the Ghana Poverty Reduction Policy Framework.  -2 - 1.2.2 Comments from stakeholders Comments were solicited from other stakeholders in development including planning and budget staff of Government Ministries, Departments and Agencies. A full week of training was held for these staff members on the process and content of the Poverty Reduction Policy Framework. Their comments were sought and used to update the document. The GPRS was discussed with development partners at a meeting organized for that purpose. In July 2001, the development partners formed five working groups to comment on the first draft document. 1.2.3 Consultation workshops Workshops were held with the following groups: - Ghana Association of Private Voluntary Organisation in Development (GAPVOD), which is the coalition of NGOs (draft implementation guidelines were discussed with this group to ensure clarity of roles during implementation). - The Trades Union Congress and the Civil Society Coalition - Women's Groups and the Media - Policy activists and think tanks 1.2.4 Comments from Organised Groups The draft Poverty Reduction Policy Framework was circulated for comments from the following groups: - The Ghana Employers Association - Private Enterprises Foundation - Association of Ghana Industries - Ghana National Chamber of Mines - National Union of Ghana Students - National Association of Local Governments - The GPRS Core Teams - Divisions/departments of Government Ministries, Departments & Agencies - Identified individuals in the development arena. The draft GPRS has since been reviewed by Cabinet. 1.2.5 Budget Process and the GPRS Consultations have also been held with the Budget Division of the Ministry of Finance and the Medium Termn Expenditure Framework Secretariat on preparation of a common set of guidelines for the preparation of the MTEF for the 2002-2004 period. Locational priorities for sectoral allocations have been prepared by the GPRS team and agreed with  - 3 - the Ministry of Finance, to guide the allocations made by MDAs for budgeting. This process of linking up the GPRS with the budgeting process has been on going since June 2001. A one-day training workshop was held with the budget officers of the Ministry of Finance on the content of the GPRS, the locational priorities for sectoral and sub-sectoral allocations for poverty reduction within the GPRS. From the beginning of September 2001, the following activities have been undertaken: - Policy Review Workshops for MDAs on using the GPRS to guide budgeting - Harmonization of actions among sectors - Policy Hearing and Preparation of Strategic Plans by MDAs - Review of Strategic Plans of MDAs incorporating GPRS policies - Budget Hearings for MDAs 1.2.6 Involvement of Parliament In the case of Parliament, its Finance and Public Accounts Committees have had one-day workshops each on the draft GPRS. The Final GPRS will be laid formally before the entire body of Parliament. 1.2.7 Monitoring and Evaluation of the GPRS The elements of monitoring and evaluation for the GPRS are currently under discussion. The need to link up with current Monitoring and Evaluation (M&E) processes and systems is recognized as well as the need to include more participatory forms in M&E. Recognition has been given the need to track expenditures especially those to be received from the HIPC initiative and working groups have been set to work out the modalities and system for tracking HIPC expenditures including the formats for monitoring, software requirements. 1.2.8 Regional Consultations Regional consultations have been completed. The regional consultations included discussions with civil society groups as well as the political leadership and technical personnel operating at regional and district levels. These consultations have been used as dissemination and orientation for the GPRS framework. The regional consultations will be followed by district and sub district meetings organized by each region to validate the targets and interventions in the GPRS. Districts Assemblies are being required to prepare implementation plans based on the priority interventions of the GPRS. 1.2.9 Political opinion on the GPRS On the political front, a forum for all political parties has been held to ascertain the views and comments of the various shades of political opinion of the GPRS. In addition a two-  - 4 - day meeting has been held with all Ministers, chaired by the President, to review the content and scope of the Strategy and deliberate on the expenditure shares by administrative categories. Another meeting has been held in January 2002 with all Ministers, chaired by the President to finalize the review of the GPRS documents. 1.2.10 Costing the GPRS Currently costing the entire GPRS is being undertaken with Sector MDAs having to cost the Government component of the process. 1.2.11 Finalisation and Submission of GPRS The process of preparing the GPRS and budgeting will culminate in submission of the final GPRS, the three-year MTEF and the 2002 budget to Cabinet and Parliament. The GPRS Framework will be finalized by January 31, 2002. Costing of GPRS actions and programmes will be completed by February 22, 2002 to ensure inclusion in the 2002 budget.