growth leads to a more sluggish demand for unskilled labor and lower wag-
es, and depressed sales of agricultural and informal sector output, and thus
directly affects the poor23. To make matters worse, the government would be
hampered in its efforts to increase poverty-related public spending, unless it
were to make sacrifices elsewhere in the budget. To give an example, more
primary education for the rural and urban underprivileged can be paid out of
higher tax proceeds from economic growth, or, if that fails, by cutting back
on subsidies to the state universities. Most observers realize that Bolivia will
face such stark trade-offs in the implementation of its PRSP, but these are
generally avoided in the document itself. It frontloads the promises, but is
short on identifying the political hard choices that will have to be made. This
is to some extent inevitable given the preliminary nature of the data avail-
able to the authors of the document, but it is also an indication of the clev-
erness of the government of offering the donor community what it wanted
while shying away from hard commitments. The Joint Staff Assessment by
the World Bank and the IMF, while being on the whole very positive, makes
a similar point when it criticizes the PRSP for being “weak on identify-
ing priorities among the long list of actions proposed” and laments that the
action plan “does not present policy plans for the initial stages of imple-
mentation of the PRSP in the areas of public sector administration and good
governance, although these areas have been identified as key for the success
of the strategy” (IMF and IDA 2001:10).
23 In their projections the authors
of the PRSP document use a
growth-poverty elasticity of
-0.77 for urban areas and -0.52
for rural areas. This means
that an increase of 1% in the
economic growth rate leads to
a reduction in the prevalence of
urban and rural poverty of 0.77%
and 0.52% respectively.
Returning to our question, what influence did the participation proc-
ess have on the PRSP? Given the intensive and widely acclaimed participa-
tion of civil society, the somewhat surprising answer is that such influence
has been relatively mooted. The major input from civil society has come
through the social forum. Importantly, this led to the earmarking of the
HIPC II resources for decentralization to the municipalities, with associ-
ated allocation procedures and controls. HIPC II funds, consisting of freed
budgetary resources the central government no longer has to set aside for
international debt service payments, amount to US$ 428 million in the
planning period 2001-2006. This is not a negligible sum of money in a poor
country like Bolivia, and it will constitute a considerable increase of the
financial resources to the municipalities, but it also constitutes only 6% of
total estimated public sector spending on the PRSP during the same period.
As argued before, by offering civil society a major say in the allocation of
the HIPC II funds, the government diverted attention away from the impor-
tant strategic choices that are embedded in the rest of the document. Indeed,
apart from the transfers to the municipalities, most civil society actors we
spoke to protested that their inputs had not led to any substantive impact
on the final PRSP document. Official actors did not endorse this view, and
argued that the participation process had been an important inspiration to
them, for instance in grasping the prominence to poor farmers of supportive
measures to increase their productivity. They also correctly pointed out that
civil society would be involved in the monitoring of the PRSP. Nevertheless,
they concurred that the major impact of the participation process had been in
influencing the rules for allocating HIPC II resources.
26 • IDPM-UA Discussion Paper 2002-05