Commentary on the Draft Interim Poverty Reduction Strategy Paper, 23 July 2002

In May 2002, the Government of Montenegro submitted to the International Monetary Fund and to the World Bank a draft Interim Poverty Reduction Strategy Paper.



On the basis of the “Draft Guidelines on a Human Rights Approach to Poverty Reduction Strategies”, the Office of the High Commissioner for Human Rights formulates the following comments.


Guideline 1: Identification of the poor



Any strategy for poverty reduction must begin with the identification of the poor. This task is composed of two steps: (a) identification of the attributes that are deemed to constitute poverty, and (b) identifying the population groups that possess those attributes.



Commentary on the Interim Poverty Reduction Strategy Paper: On the basis of these principles, the process of identification of the poor adopted by the Government of Montenegro, which equates poverty with low income/expenditure thresholds, cannot be considered satisfactory (p.4).

The multi-dimensional nature of poverty should be explicitly recognised; focus should concentrate less on a purely economic dimension and should shift towards a wider definition of poverty, which identifies basic capabilities and assess their enjoyment in the Montenegrin society. It appears that although the rhetoric in the draft interim strategy is poverty focussed, the actual policies listed (p.3) as key elements of this Poverty Reduction Strategy (stable macroeconomic environment, reduction of the gray economy, restructuring of the enterprise sector and promoting private ownership and improved targeting of social welfare) do not have clear poverty reducing consequences. For instance, it is very interesting that the I-PRSP explicitly refers to “wage restraint” as one of the elements to achieve macroeconomic stability, but contains no commitment to upheld workers’ rights including the right to a fair wages and a decent living for them and their families (p.9). No mention of social housing programs is included.

This office is aware that the requirements for an I-PRSP are deliberately minimal; however, it appears that the Montenegrin I-PRSP does not meet the minimum requirements of adequately describing the existing situation with respect to poverty (poverty diagnosis) and does not contain any real poverty reduction strategy.



The draft I-PRSP includes a description of several “causative elements” of the poverty levels in Montenegro, which include age, family size, education level, gender, health and disability and region (p.4-5), which might be understood as identifying the different categories of poor in Montenegro (though this process is not explicit). However, all these “causative elements” concentrate on income indicators, to the exclusion of any reference to the concept of poverty as inadequate command over economic resources, as limited access to and poor quality of basic services like education, health, housing. For instance, it is interesting that the I-PRSP indicates “age” as one of the “causative elements” of poverty; however “age” does not refer to children or elderly, but to young unemployed (“the mean age of unemployment is 29 years”) and to pensioners. Genuine analysis is missing also in the description of gender as one of the causative elements of poverty: analysis focuses exclusively on employment/unemployment ratio, without any reference to the need to reduce the gap separating the social and political participation of men and women. While acknowledging that poverty in Montenegro is largely a rural phenomenon (p.11), the I-PRSP does not contain a single reference to the importance of environment and natural resources conservation. Finally, there is no mention of IDPs and refugees, which are indicated to as the cause of the significant increase of the social burden in Montenegro over the past decade (p.4), but which are simply considered as an added cost in social protection without any attention to their specific needs.



The range of groups identified in the I-PRSP should be expanded to include other categories of poor, such as the IDPs and refugees, the Roma and other minorities, the elderly. Beside it, the current document tends to imply that the poor are a single undifferentiated mass There are many categories of poor people in Montenegro and each category will require distinct poverty alleviation strategies.



This Office expresses its concern that, in order to qualify for interim debt relief, the Government of Montenegro might be preparing its I-PRSPs too hastily and that the push to reach its Decision Point at the earliest possible date might come at the expense of the quality of the I-PRSPs’ roadmaps, for example, participation plans, proposed institutional arrangements, plans for identifying and developing appropriate policies, targets, and indicators, and a system for monitoring and evaluating implementation.


Guideline 2: International Human Rights Framework



While PRSPs are not legal instruments, they must be consistent with, and informed by, the state’s national and international human rights commitments, for two reasons: (a) this will enhance the strategy’s effectiveness and (b) otherwise, some features of the strategy might be unlawful.



Commentary on the Interim Poverty Reduction Strategy Paper: The I-PRSP contains no reference whatsoever to Montenegro’s human rights commitments and international obligations, including the Millennium Development Goals. This deficiency should be amended and explicit reference to the Government’s responsibility to guarantee basic civil, social and economic and other rights should be explicitly included.



Furthermore, while the I-PRSP identifies monitoring mechanisms of the identified poverty causes (p.15) it does not envisages any process through which monitoring human rights. Arrangements, also with international organizations, should be put in place to secure the preparation and scrutiny of ex ante and ex post human rights assessments.


Guideline 3: Equality and Non-Discrimination



The poor are usually victims of discrimination on various grounds, such as their birth, property, social origin, ethnicity, colour, gender or religion. Depending on the particular circumstances of every society, poverty may affect primarily members of certain socially disadvantaged classes, or of certain ethnic groups, women, elderly people, but in most cases poverty is aggravated by some sort of inequality/discrimination. It is responsibility of the governments not only to prohibit and cease all discriminatory laws and practices, but also to take special measures in order to provide to their most vulnerable, discriminated and socially excluded groups effective protection against discrimination by governmental authorities as well by private actors.



Commentary on the Interim Poverty Reduction Strategy Paper: the I-PRSP makes no mention to linking economic growth with equality and to the need to ensure that the poor equally benefits from this growth. The strategy seems to focus on economic growth without, on the most part, addressing how this growth is to be redistributed to the poor. The draft I-PRSP contains no reference to the discrimination to which, for instance, Roma and women and exposed. Addressing and reversing discrimination attitudes and practices must be considered a key element in any poverty reduction strategy.



The Government of Montenegro has to recognize that economic growth that does not translate into improvements in the standard of living for everyone is socially, politically, economically and environmentally unsustainable. To ensure that sustainable economic growth is inclusive and therefore sustainable, the government will have to promote human development through the design and implementation of comprehensive and integrated strategies in health, education, child poverty, and social protection sectors.


Guideline 4: Progressive Realization of Human Rights, Indicators and Benchmarks



The idea of progressive realization of human rights has two major strategic implications. First, it allows for a time dimension in the strategy for human rights fulfilment by recognising that full realization of rights may have to occur in a progressive manner over a period of time. Second, it allows for setting priorities among different rights at any point in time since the constraint of resources may not permit a strategy to pursue all rights simultaneously with equal vigour.



Commentary on the Interim Poverty Reduction Strategy Paper: the draft I-PRSP arises serious concerns in as much as it reads like a blue print for general economic growth, inspired to the principle that income boosting will automatically trickle down to finally benefit the poor. While evidence demonstrates that economic growth is essential for poverty reduction, in itself it is not sufficient; to the contrary, it is a sour reality that economic growth strategies which implies radical reforms (the ones which the Government of Montenegro considers necessary, see p. 3) often lead to augmented sufferance for the vulnerable groups, at least in the short-term. It appears that the Government of Montenegro might underestimate the likely detrimental impact of structural adjustment policies and therefore might not be adequately equipped to face these backlashes.



For instance, while recognising that because of “severe over-employment in the public and formerly state-owned enterprise sector” (p.1) “the burden of unemployment can be expected to grow in the near term”, the draft I-PRSP appears confident that the already in place “Enterprise Restructuring and Labour Transformation Initiative” (p. is an adequate instrument to protect the new poor that will be borne out of the auspicated radical reform. More information on the Government’s poverty prevention strategies would be welcomed, together with a gross but realistic estimation of the number of workers likely to lose their job in the impending restructuring process.





While the draft I-PRSP (p.14) acknowledges that “many of the improvements planned in the course of the poverty reduction strategy take many years to come to fruition” and therefore the “government will concentrate on monitoring the implementation of policies to measure progress in its strategy”, the monitoring procedure suggested in the I-PRSP appears very generic and vague. There is no realistic definition of targets (which are incidentally referred to in “well-targeted social welfare support”) or of indicators.


Accountability



There is a growing consensus on the centrality of accountability in poverty reduction and developmental strategies. Critically, rights and obligations demand accountability: unless supported by a system of accountability, they become no more than window-dressing. Accordingly, the human rights approach to poverty reduction emphasizes obligations and requires that all duty-holders are held to account for their conduct in relation to international human rights.



Commentary on the Interim Poverty Reduction Strategy Paper: the issue of accountability remains largely overlooked in the draft-IPRSP; this omission potentially exerts a fatal impact on effective participation, country ownership and, in last instance, on the effectiveness of the poverty reduction strategy. The draft I-PRSP does not mention the establishment or the development of any accountability mechanism, which might include ombudspersons, anti-corruption bureaus, auditor generals and human rights commissions among other possible instruments.



This office is deeply concerned at this omission, especially as it does not link to already existing processes and institutions which could potentially have a role in increasing accountability. Reference could be made, for instance, to the existing Anti-Corruption Initiative which was established under the Stability Pact, or to the role of the to-be-established Ombudsperson; also, the Economic and Social Council established in January 2001, with the task of analysing, following and promoting economic and social issues in Montenegro could have found a role in the process. These omissions might reveal a lack of coordination with already in place policies which is potentially highly detrimental to the success of the process.



In this office’s opinion, the very low degree of the Government’s accountability in public expenditure management could pose a serious threat to the poverty reduction process. In fact, the Government remains largely unhindered by any control mechanism in its management of the budget. While, for instance, the Budget Law requires the budget to be rebalanced in case of a disparity over 5% (as it happened also in 2001), the government is not effectively held accountable for its spending. There is no treasury department or supreme auditing body. The parliamentary committee system is largely ineffective and thus the legislature exercises little or no control over public finances.



Furthermore, to improve transparency and accountability in fiscal management, it is necessary to ensure full budget coverage and control. Instead, as a widely acknowledged fact, the budgets submitted by the Government of Montenegro over the last years have been largely unrealistic. This trend was confirmed in 2001, when large distortions emerged on both the revenue and expenditure sides of the budget compared to the original plan. Expenditures were about 32% of nominal GDP2, and original revenues were about 27%. Original revenues3 were more than 20% higher than planned, and expenditures were more than 16% higher, while on the other side foreign assistance was half of what was expected.[1]



In conclusion, albeit the I-PRSP presents the intention to increase expenditure towards sectors traditionally regarded as important for poverty reduction, (education, p.10), the lack of attention for good governance issues, including corruption and accountability and the need of progress in budget formulation, execution and reporting might compromise the good intention of the process.


Guideline 5 Participation and Empowerment



Since States have primary responsibility for fulfilling the rights of the people living in their respective jurisdiction, it follows that any PRSP must be a country-driven process. Country ownership should thus be an essential attribute of any PRS. However, country ownership should not be interpreted narrowly to mean ownership on the part of government alone. The strategy must be owned by all the relevant stakeholders within the country, including the poor. This can only be possible only when all the stakeholders are involved in the process and participate effectively in all stages of the process.



Commentary on the Interim Poverty Reduction Strategy Paper: in the preparation of the draft I-PRSP the Government of Montenegro did not involve any voice from civil society, asserting time constrains. This omission is acknowledged in the text of the draft I-PRSP itself (p.13) along with the promise of seeking “comments from a wide range of civil society, including representatives of research institutes, NGOs and donor agencies” in the phase of finalizing the I-PRSP. The draft I-PRSP also envisages the participation of NGOs, experts from specialized institutions, the business community and the media in the working groups (six) in charge of the consultative process.



Despite the fact that I-PRSP are not requested to be participatory, but only to give a road-map of the participatory process, it seems that the importance of the PRS process as an instrument to reinforce both intra-governmental relations and initiate a new partnership with civil society has not been fully appreciated.



In first instance, as a general comment, this office believes that real participation can only be implemented if it starts from the beginning; in fact, once the I-PRSP is defined, it will be almost impossible for Civil Society Organizations (CSOs) to alter the position already taken on the causes of poverty and the strategies for their eradication, especially in consideration of the fact that the timeframe is generally very short. In the case of the Montenegrin I-PRSP, the representatives of the six domestic NGOs signatories of a commentary on the I-PRSP were given a deadline of four days to submit their comments: this timeframe made clearly impossible for them to provide a detailed analysis. This approach might disclose some resistance on the side of the Government to share information with civil society.



Secondly, if participation of has to be effective, the process of consultation requires to be decentralized. The I-PRSP contains no reference to the need to decentralize the process of consultation and no mention on how to involve marginalized groups in the consultation (for instance, groups from the north). It is important that the process of consultation will not be restricted to national level CSOs to the detriment of smaller CSOs.



Last, the absence of any reference to the role of the Parliament and of trade unions in the I-PRSP raises serious concerns as to the extent to which the process will lead to the adoption of a document which enjoys wide support. Inclusion of these two actors would help to ensure long-term political commitment to the strategy and would help to make it sustainable.



Finally, the timetable envisaged in the I-PRSP does not seem to allow for an appropriate time frame to ensure adequate participation. In fact, it does not seem reasonable to expect the six working groups to be able to submit their reports to the Civil Society Poverty Reduction Forum within only two months from their planned establishment (end of July). Beside the short timeframe allowed, this office is concerned that the summer period will hinder participation to the working groups and finally compromise the quality of their reports. In conclusion, it does not seem realistic to expect the process to be finalized before the end of 2003.



This office is concerned that the Government of Montenegro might be willing to consult civil society, but not sincerely devoted to facilitate and stimulate real participation.



[1] all data from MONET March 2002 and December 2001