Sociology

Poverty reduction is one of the foremost strategies in every countrys development initiative. Due to this, Poverty Reduction Strategy Paper processes have thus gained enormous popularity basing on their capacity to significantly reduce poverty. The Poverty Reduction Strategy Paper (PRSP) outlines a nations structural, social and macroeconomics policies that are meant to enhance growth and development and hence reduce poverty (Gobind and Allen, 2004, p. 11). PRSPs come as a necessity for any nation seeking to control the poverty situation among its people through access to development loans from aides such as the, Poverty Reduction and Growth Facility (PRGF) fund and the World Bank. PRSP provides a significantly transformative basis for poverty reduction reforms, donors to cooperate with individual countries processes and priorities and to facilitate for the poverty reduction oriented policy formulation (IDA-IMF, 2002, p. 2). The PRSP also promotes consulting between a country and its citizens in order to enhance the effectiveness of the resultant policies and the accountability of the PRSP process in meeting the set objectives. However, there exist some drawbacks with regard to the PRSP in that the governments implementation of PRSP principles may fail to support transformation and instead override internal policy making political systems (Bradshaw and Linneker, 2001, p. 7). This is because of the establishment of international principles. International principles have the capacity to undermine domestic political accountability. However, the PRSPs merits outweigh the challenges in that the PRSP approach promotes incremental progress. The PRSP process is thus paramount in engendering dynamic processes and new relationships in countries thus facilitating effective implementation of poverty reduction policies.

According to the IMF and the World Bank, PRSP is the vehicle for economic growth necessary for poverty reduction is formulated basing on six key elementsprinciples (Bradshaw and Linneker, 2001, p. 8). Thus, PRSPs ought to be
Comprehensive this encompasses the combination of structural, social, macroeconomic and sectarian elements.

Focused on alliances between the government and other development actors.
Results-oriented should involve monitorable and tangible goals that are aimed at poverty reduction.
Participatory involving the contribution of every relevant stakeholder towards formulation and implementation of the PRSP,

Long term addressing institutional reforms and capacity building including short term goals.
Country-drive focuses on consensual opinion of the kind of actions that ought to be taken.
The levels of poverty and vulnerability in Nicaragua worsened further following the 1998s Central Americas Hurricane Mitch. This called for a thorough approach to help the country to revive its economy once again. The hurricane damage greatly affected the poorest regions in the most vulnerable areas of Nicaragua. Following this calamity, there was a need for transformation of both the material aspects revolving around the economy and the context under which the aspects were being influenced (Bradshaw and Linneker, 2001, p. 8). This prompted the establishment of the PRSP that would facilitate a joint undertaking by both the international and national authorities aimed at enhancing reconstruction of Nicaragua. This PRSP would be required to meet the changes in both the global and the national policy with a major shift from the sole idea of reconstruction to include poverty reduction (Brinkerhoff, 2000, p. 23). The formulated PRSP was expected to serve as a prerequisite for Nicaraguas entry into the IMF and World Banks Heavily Independent Poor countries Initiative (HIPC II).      

The PRSP was developed by a formalized Civil-Coordinator for Emergency and Reconstruction (CCER) serving as a key player in the poverty reduction strategy. Founded on participatory principles, the PRSP presented an alternative perspective on poverty reduction from a regional view. Nicaraguas case involved an organized and strong civil society serving as civil actors and whose involvement was very influential in the procedure (Brinkerhoff, 2000, p. 24). The PRSP is thus built with participation and poverty in mind. With the origin of PRSPs being in the conditional initiatives to reduce debts in 1990s, they have with time adopted more objectives as regards to the ultimate goals of poverty reduction.

Over time, PRSPs have assumed the central role in providing assistance for development with regards to loans and grants. A PRSP process is formulated to learn from previous assessments of limitations and failures resulting from traditional approaches to development enhancement. According to a joint 2004 PRSPs report by the World Bank and IMF, PRSP process has successfully
Been able to solicit for the involvement of the civil society in debates on poverty policy formulation on a scale not achieved before.

Directed attention to donor involvement both nationally and internationally.
Emphasized more attention to poverty issues within the government.

In 1995, Nicaragua formalized an international commitment towards the reduction of poverty in the Copenhagen Declaration with the major objective of downsizing by about half the number of people living in abject poverty by 2015 (Gobind and Allen, 2004, p. 10). Through the HIPC, Nicaragua introduced a debt relief with the aim of creating a poverty reduction national framework. The framework was also aimed at marking a change in the nature of relationship between Nicaragua, IMF and the World Bank so as to promote coordination necessary for economic growth (IDA-IMF, 2002, p. 17). It played an important role in advising on taxation, macroeconomics and exchange rate policies whereas the World Bank would help in the designing of the poverty reduction strategy papers which are specific to a country. The country-specific PRSP is designed following a thorough diagnosis of the poverty situation in a country thus forming the basis for a participatory PRSP process. The PRSP seeks to have consultations made specifically on the areas that allow the government to make appropriate modifications to promote economic growth (Bradshaw and Linneker, 2001, p. 12). The PRSP makes this possible by involving stakeholders and the poor population in the integration and of implementation of the PRSP program. Recognizing economic growth as the most critical element revolving around poverty reduction and that stableness in macroeconomics is necessary for an accelerated growth rate the PRSP aims to enhance a high economic growth rate that will in turn produce a high economic growth rate. The effort to spur economic growth through the PRSP is noticeable from the striking similarity between PRSP and SAPs-ESAF policies.

The interim PRSP for Central Americas Nicaragua presented to the IMF and World Bank had the core objective of reducing poverty by 17.5  by 2005 (Brinkerhoff, 2000, p 25). This PRSP thus gave Nicaragua an advantage to benefit from a maximum reduction of its debt amounting to about US  3,267 translating to 72.2  of debt (Bradshaw and Linneker, 2001, p. 16). This would allow Nicaragua to rebuild its economy through the PRSP process with funds available now that its debt burden had been reduced. Basing on poverty metrics adopted by the World Bank for ranking poverty, Nicaragua ranks as the poorest nation in Latin America whereby close to 44 of the population rely on not more than US  1 in a day while 75  live on not more than US  2 in a day.

Through the PRSPs, sectarian level infrastructure is covered and seeks to enhance the poor peoples access to telecommunications, transport and energy networks. Water, education and health in this case are taken as social sectors. This encourages a more focused approach to poverty reduction by categorizing each infrastructure sector wise. The PRSP seeks to improve links between development in rural agriculture and infrastructure (World Bank, 2002, p. 3). Development of the small enterprises aimed at reducing poverty levels in the urban areas are also a priority under the PRSP. With respect to rural poverty reduction, the PPRSP strongly emphasizes on the rural road   networks to improve rural access to the markets and thus in the long run increase the movement of goods and services between sectors. Infrastructure is treated as a production factor under the enterprise sections. The PRSP addresses the challenges facing the infrastructure already in place such as rail, irrigation channels and roads and therefore encourages the adoption of labor intensive option for the maintenance and construction of this infrastructure to reduce cost of investing to improve economic growth (Bradshaw and Linneker, 2001, p. 33).

PRSP encompasses the contribution of a number of sectors in a bid to reduce poverty. This then enhances informed decision making which provides for effective resource allocation at the countrys level.  They PRSP influences donor funding in the infrastructure sector to add up to the governments allocation on domestic projects. The PRSP thus channels a considerable sum to infrastructure development through the national budget thus enhancing donor involvement in the nation-led development (World Bank, 2000, p. 2). The PRSP focuses strongly on sector alignments with working groups that constitute of donors, NGO groups, civil society, and the government stakeholders. PRSPs thus promote donor involvement in national development and allow for the monitoring of progress in poverty reduction. Generally, a more harmonized donor   support is achieved through the PRSP process and hence development projects requiring donor support are effectively implemented (Brinkerhoff, 2000, p. 41). Implementation of the project facilities both to the sectarian and national economic growth helps to effectively reduce poverty levels in the country. PRSP also seeks to enhance sector budgeting and investment planning. The strategies under PRSP helps to address infrastructure expansion including upgrading of the electricity grid, water systems and transport network. Maintenance of this infrastructure to ensure uninterrupted operation is necessary to meet the planned growth.

Through the PRSPs, there is a reduction in the both the recipient and donor transactions costs as recurrent expenditures are sufficiently funded and sector lobbying enhanced (IDA-IMF, 2002, p. 34). This is because of the efficient coordination between sectors plus sector-wide strategies which boast of long-term framework plans. For extremely poor countries, this is specifically important in that it helps reduce the infrastructure maintenance and operation cost way below the investment needs. This assists a country to effectively handle poverty matters and assign strategic measures to increase economic growth and eventually reduce poverty. This also helps to ensure technical assistance by donors thus making the PRSP strategies to be owned by the sectarian development institutions (Bradshaw and Linneker, 2001, p. 47).  With enhanced donor support through PRSPs, there are beneficial sectarian linkages thus providing an opportunity to articulate the contribution of the approach to other goals from a broader perspective.    

PRSP are formulated strategically to focus on crucial policies and integrating development goals with the countrys budgetary system. This helps solve challenges on development policies on the side of the donor community (World Bank, 2002, p. 4). Through the PRSP, government facilities and systems are employed in delivering aid and carry out appropriate budgeting for the aid. This is especially important in such cases as when the aid is not factored in the budget. This helps the donor to successfully adhere to the countrys planning process, for instance, the plans for the expansion of networked infrastructure. This will effectively aid poverty reduction as it creates a strong sector support which includes an enhanced budgeting, regulation and planning together with a sector approach that is jointly coordinated (Brinkerhoff, 2000, p. 57). In fragile nations, PRSPs are paramount in integrating investment in infrastructure with aid elements and issues of governance. The convergence of Millennium Development Goals (MDGs) with the PRSP objectives assists a country to integrate domestic goals with international priorities. This in turn results into a hastened economic growth in a country thus reducing poverty levels considerably. This is because the PRSP is regarded as the conditionality for the key government support by donors. Poverty reduction is thus addressed effectively as potential challenges to poverty reduction and budget support fiduciary risks and impact attributions are properly handled.

PRSP aids in governance decentralization reform to make development services more accountable and responsive to the plight of the poor. PRSP process thus brings development agencies closer to the institutions delivering services and to the citizens (Gobind and Allen, 2004, p. 38).  This ensures that the citizens have close and easy access to utilities that are useful in poverty reduction operations. As the World Bank notes, PRSP process involves a consultative approach in its formulation thus engaging the formal and informal private sector to stimulate growth. This engagement opens important macro-economic aspects for debate on policy to enhance the development agenda. The public and private sector alignment through the PRSP helps enhance the understanding of business processes and thus improving credibility and transparency. This attracts potential investors and also improves the knowledge on poverty reduction government policies by the private sector. A core trend in PRSP processes is economic growth a top priority agenda in poverty reduction.