Debt relief and poverty alleviation are extremely important for sustainable development, especially in sub-Saharan Africa where the number of poor is still growing. Since the introduction of the wider debt relief initiative HIPC II (heavily indebted poor countries), Poverty Reduction Strategy Papers (PRSPs) have served as the priority measures helping to reduce poverty in a specific country. PRSPs aim to determine the use of the funds released by debt relief and to steer the country’s development strategy towards sustainable poverty alleviation. These strategies are drawn up in accordance with the principles of transparency, participation and ownership. As of the year 2000, the strategies have been integrated into the international efforts to achieve the Millennium Development Goals (MDGs).
The first Poverty Reduction Strategy Papers, known as the “PRSPs of the first generation”, focused on the key social sectors of health and education. Initially little attention was paid to productive areas, for example to agriculture as one of the main sources of income in Africa. For a Poverty Reduction Strategy (PRS) to succeed in reducing poverty sustainably, it must comprise a combination of measures producing medium-term effects as well as measures with long-term impact. Investments in productive sectors generally reduce income poverty because they create jobs. Promoting the education sector only shows results much later.
Recent developments have indicated that stakeholders are being more widely involved in devising strategies than was previously the case. Poverty analyses and monitoring are also being improved. The countries taking part are becoming increasingly aware how important it is to harmonise the PRS with budget planning in order to achieve the strategy objectives. Only improved public budget management and greater transparency will ensure that budget spending is geared to the goals in the PRSP.