I am reposting here a great interview we have conducted almost a year ago with Carolina Diaz-Bonilla.
How long have you been involved with PSIAs, the PSIA MDTF, and have things improved over the years?
I have been doing research and analyzing the poverty impact of public policies for at least 15 years, and learned about the World Bank’s PSIA approach when I joined the World Bank in 2004. At the time, I was in DEC working for Franςois Bourguinon, who was the Chief Economist and had recently co-edited the book “The impact of economic policies on poverty and income distribution: evaluation techniques and tools.” We became heavily focused on analyzing policies related to the achievement of the Millennium Development Goals. Around 2010 or 2011, having already moved to the LAC region, I first heard about the new PSIA Multi-Donor Trust Fund that had recently been set up to help streamline and fund PSIA work throughout the Bank. I began looking more seriously at the PSIA MDTF in late-2012 and then became a TTL for a PSIA MDTF-funded project in early 2013. It focused on an analysis of the distributional and poverty impacts of different fiscal policies that the government of Paraguay was at the time considering, and this project became part of the Public Expenditure Review and was very-well received by the government. In mid-2013 I became the Window Manager for the EAP PSIA MDTF, helping to promote the PSIA approach in East Asia: to make sure that the Bank’s policy dialogue and lending was being guided by this impact analysis and that country capacity was being strengthened.
In terms of improvements over the years, I can only speak about the last couple of years as I was not involved in the PSIA MDTF from its inception in 2010. I believe that the PSIA MDTF has indeed improved. As more and more teams have undertaken PSIA MDTF-funded projects, best practices have begun to emerge and more examples are now available to inspire and guide other project teams, as well as highlight possible challenges. The management of the MDTF has also improved over time as we learned best practices from across the regions and applied them. In addition, over the last year the MDTF put a stronger focus on the training of counterparts and on dissemination, and this is strengthening the ability of policymakers to continue to include PSIA analysis in their policymaking.
Are PSIAs relevant to the new World Bank Group? What role can it play with the new twin goals?
As long as the World Bank Group is involved in operations, PSIAs will always remain relevant. Even well-designed policy reforms and projects can impact negatively on the poor and vulnerable, thus it is important that these negative impacts are sought out, analyzed, and if possible, mitigated. In the new World Bank Group, all Global Practices have to consider and analyze the potential impacts of their projects on the poor and vulnerable, as well as on the bottom 40 percent of the welfare distribution. Thus there is a growing demand for the types of tools and approaches that the PSIA can offer. The World Bank Group’s work on Country Partnership Frameworks, and through the creation of Systematic Country Diagnostics, also should focus on helping to design policy reforms that are strategic and that are done in a way that minimize the negative impact on the most vulnerable in society. There is another, possibly surprising, way that the PSIA is playing an important role: it is helping to strengthen in-country partnerships and knowledge exchange, which also lead to promoting shared prosperity. For example, in coordination with the PER and BOOST projects, the PSIA grant-financed project in Paraguay brought to light the surprising lack of knowledge and data exchange among government institutions (such as the Ministry of Finance, several Line Ministries, the National Statistical Institute, and the Central Bank) and greatly facilitated this exchange during and after the project. In addition, the PSIA work was instrumental to help gather the data needed for the creation of the Paraguay BOOST Data Tool, which made Paraguay the first country in Latin America and the fourth in the world to release disaggregated budget and expenditure data to the public. Many other PSIA MDTF-funded projects have helped improve the dialogue across stakeholders that included not just the government, but also civil society, local research institutions, etc.
What are the top three reasons you would recommend a PSIA to a TTL?
First, as stated above, even well-designed policy reforms can impact negatively on the poor and vulnerable. Therefore it is important that these negative impacts are sought out, analyzed, and if possible, mitigated. Reforms or projects could be used to instead increase the positive impact on poverty reduction and more opportunities for all. Ideally, reforms should be designed with an ex-ante analysis of their benefits and costs. Second, PSIAs are helping to increase knowledge exchange and the understanding among government officials, donors, and other in-country stakeholders of the poverty and distributional consequences of policies. This also strengthens the policymaking process and in-country partnerships. Third, the PSIA MDTF projects provide resources to help strengthen in-country capacity, so that our counterparts can also undertake poverty and social impact analyses and thus continue to strengthen the policymaking process. I think I would also add that the availability of the TF resources as either small grants or large grants allows for both the implementation of longer-term projects, as well as the ability of the WB to be highly responsive and flexible to government requests.
What is exciting about the PSIA approach? Main challenges?
What is exciting about the PSIA approach is the possibility of finding better solutions to end extreme poverty and to promote shared prosperity, while helping to increase in-country partnerships, knowledge exchange, and technical capacity. It is exciting that our technical work can have some influence on policy decisions, and that we can use the PSIA resources to then transfer the technical skills to our counterparts (strengthening institutions and knowledge exchange).
I am not sure what would be the most challenging aspect of the PSIA approach from a technical perspective. This may change if I have more time to think about it, but one challenge that comes to mind is the fact that we are working with models and data and trying to capture as best we can reality. It is not a perfect science, so we should be careful in how we present our results, and we should make every effort to assure the quality of the work. Another challenge is that sometimes we don’t have the best data to be able to carry out the best analysis – either because the data does not exist, or it has not been well-collected or well-shared. However this in itself is useful information that can help guide decision-making by pointing out where better data is required. From a non-technical perspective, many challenges come to mind from my experience with the PSIA. First, timelines can be tight, especially when government counterparts are asking for inputs that need to fit quickly into a political timeline. Second, governments change and sometimes projects need to find a way to adapt to new priorities. Third, communication across government ministries and institutions can be challenging, and data sharing can be quite constrained. It can be difficult to find ways to increase the flow of knowledge and ideas. The latter, however, can provide the World Bank the opportunity to serve as a convener within governments and across different stakeholders. One last challenge that comes to mind is the political economy dimension of the PSIA – even the best analysis may not necessarily be well-received by our counterparts when there are competing views and competing stakeholders involved.
Carolina Diaz-Bonilla is a Senior Economist in the Poverty Global Practice working in the East Asia and Pacific Region of the World Bank. She is currently the EAP PSIA MDTF Window Manager, the Regional Focal Point and TTL of the EAP Regional Poverty Monitoring System, and co-TTL of a 3-year programmatic poverty task in the Philippines. Previously she worked for 5.5 years in the Poverty Unit of the Latin America and the Caribbean Region and before that for 4 years in the Development Economics Prospects Group. Before joining the World Bank, Carolina worked for three years in the International Food Policy Research Institute (IFPRI). She has a Ph.D. in Economics from the Johns Hopkins University.