Economic Policy Reform Sector

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Economic Policy Reform Sector

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The Economic Policy Reform Sector includes those departments that were responsible for policy, review, and operational support functions related to the areas of macroeconomic growth, fiscal policy, international trade, structural adjustment, and debt management. These functions primarily lie in the Economic Policy Division (PRMEP) of the Poverty Reduction and Economic Management Network (PREM), as well as in related units such as the Heavily Indebted Poor Countries Unit (PRMHP) and the International Trade Department (PRMTR).

The creation of PRMEP occurred as part of a Bank-wide reorganization in 1997 that included the introduction of Bank networks and a simultaneous reorganization of the Development Economics Vice Presidency (DEC); the Bank's research and policy development group. As part of the latter, functions then maintained by DEC, such as research and policy work and operational support in fields related to economic policy reform as well as country strategy and adjustment operational review, were transferred into PRMEP. This move was made in order to promote greater collaboration between DEC, sector departments, Bank Regions, and other networks related to economic policy reform. Further, it was recognized that the country strategy and adjustment operations review functions were unsustainable in DEC and more appropriate in a sector department which offered closer proximity to staff and operational work in the Bank's regions and the ability to work across Bank operations as a network division.

During the DEC reorganization, three DEC units were terminated: the global economics research oriented International Economics Department (IEC); the development economics policy research oriented Policy Research Department (PRD); and the Development Policy Group (DPG), which was responsible for adjustment operations and country strategy review. Before its termination, IEC consisted of the following divisions: the International Trade Division (IECIT); the International Finance Division (IECIF); the International Economic Analysis and Prospects Division (IECAP); the Systems Division (IECSD); and the Socio-Economic Data Division (IECSE). PRD included the following divisions: the Environment, Infrastructure and Agriculture Division (PRDEI); the Finance and Private Sector Development Division (PRDFD); the Poverty and Human Resources Division (PRDPH); the Public Economics Division (PRDPE); the Trade Policy Division (PRDTP); and the Transition and Macro-Adjustment Division (PRDTM). DPG did not have subordinate units.

The functions and staff of IEC, PRD, and DPG were subsequently absorbed into the following new units: the Development Research Group (DECRG) and the Development Prospects Group (DECPG) in DEC, and the Economic Policy Division (PRMEP). DECRG absorbed the divisions, functions, and budget of PRD, and was established as the primary development economics policy research unit in Bank operations. The former IECIF, IECAP, and the subordinate Commodity Policy and Analysis Unit (IECCP) were merged to create the new DECPG,replacing IEC as the Bank's primary global economics and financial analysis policy research unit. The Economic Policy Division (PRMEP) absorbed economic research staff from both the PRD and IEC divisions. The DPG functions and staff were primarily mapped and absorbed into PRMEP, but other adjustment operations and country strategies review staff were also mapped into the other PREM divisions, including: the Gender Division (PRMGE); the Poverty Division (PRMPO); and the Public Sector Management Division (PRMPS).

PRMEP was responsible for coordinating World Bank strategy, knowledge management, quality enhancement, staffing and professional development, and partnerships related to economic policy. More specifically, PRMEP objectives included:

  • preparing and maintaining a knowledge base in selected areas;

  • coordinating Bank activities: Country Assistance Strategies (CAS), adjustment loans, technical assistance (TA) loans, economic sector work (ESW), seminars, workshops, local capacity building;

  • building and maintaining data bases, analytical tools and other resource materials to reduce costs;

  • improving consensus with partners by constructing a Bank view on relevant topics; and

  • improving staff skills.

PRMEP supported operational and policy work in five thematic areas: development effectiveness; macroeconomic and financial management; growth and inequality; macroeconomic sustainability and creditworthiness; and trade and competiveness. The functions of PRMEP were undertaken in close collaborationwith DECRG and DECPG, the Bank regions, and the other departments of PREM.

PRMEP was governed by the Economic Policy (EP) Sector Board. The EP Sector Board main objectives included:

  • strengthening the analytical underpinnings of Country Assistance Strategies (CASs);

  • improving the quality of economic analysis and policy dialogue; and

  • advising the Bank on strategic economic policy matters including adjustment lending operations.

The EP Sector Board consisted primarily of representatives from theabove mentioned units, and representatives from the Finance, Private Sector Development, and Infrastructure Network (FPSI). Many of DEC's representatives on the Sector Board served in a dual appointment within DEC units and PRMEP. This was done to promote greater synergy and cross-support between economic policy research and operational staff in DEC, PREM, and the Bank regions.

Homi Kharas assumed the role of Director for PRMEP in July 1997.

In 2000, the Heavily Indebted Poor Countries Unit (PRMHP) was established in PREM, following the termination of the Debt Initiative Group (AFTD1), which was focused on HIPC related issues and located in the Africa Vice Presidency (AFR). The HIPC Initiative, a joint program of the International Monetary Fund (IMF) and World Bank, was originally launched in 1996 and served as a comprehensive country debt relief program that worked in close collaboration with bilateral creditors, other multilateral banks, and representatives from civil society groups and non-governmentalorganizations (NGOs). At its inception, the AFTD1 was placed in the Africa Vice Presidency (AFR) primarily because most countries eligible under the HIPC program were located in Sub-Saharan Africa. AFTD1 was replaced by PRMHP, however, due to the raised profile of the program following the launch of the Enhanced HIPC Initiative in 1999 and an increasing number of eligible heavily indebted poor countries in other regions. PRMHP was created in order to serve as the main implementation unit in the Bank. PRMHP operated as a separate unit in PREM but coordinated closely with PRMEP in the area of debt management within the thematic area of macroeconomic sustainability and creditworthiness. PRMHP would later be merged in 2005, however, with PRMEP due to the growing demand of debt management advisory services in Bank operations. Axel von Trotsenburg, the former Manager of AFTD1, assumed the role of Senior Manager for PRMHP.

In 2000, Uri Dadush assumed the dual appointment of Director for PRMEP and DECPG.

In 2002, the international trade functions were transferred from PRMEP to a new International Trade Department (PRMTR) within PREM. Uri Dadush was appointed the new Director for PRMTR. With Dadush's new appointment, Yaw Ansu was named Director for PRMEP. The PRMEP was re-organized shortly thereafter to coordinate economic policy work in the following thematic economic policy areas:

  • growth and labor markets;

  • managing volatility;

  • fiscal policy;

  • subnational regional economies; and

  • data and tools foreconomic analysis.

Operational and policy work focused on the following areas:

  • macroeconomic management in the areas of economic growth, debt management, fiscal sustainability, managing volatility, and subnational economic management;

  • integrative policy analysis; and

  • country strategies.

PRMEP functions included: providing support to economic sector work (ESW) in the Regions; reviewing Country Assistance Strategies (CASs) and adjustment operations; preparing papers for the Executive Board; preparing policy notes on major country or global economic developments or issues; preparing briefs and speeches for senior management; and leading special task forces.

In 2004, PRMHP was mapped into the Debt Department (PRMDE) located in PREM. Around 2005, PRMDE was merged with PRMEP and renamed the Economic Policy and Debt Department (PRMED).

In 2005, Vikram Nehru replaced Ansu as Director of PRMED and in 2008, Carlos A. Primo Braga succeeded him.

As of 2014, PRMED continues to be responsible for the Bank's operational and policy work on macroeconomic management and growth, fiscal policy, and debt issues. It also continues to play a significant role in debt management activities. In addition to the HIPC Initiative, it is involved in coordinating: the multi-donor Debt Management Facility (DMF); the Debt Reduction Initiative; the Debt Reduction Facility (DRF) for IDA-Only Countries; the Debt Sustainability Framework (DSF); and medium-term debt management strategies (MTDS).


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