AR NEE D 24616 May 2002 20 -Annul - Revnoew off IDCVe lpment ~g ch@E= ~& ' 49 / '1 itš OPERATIONS EVALUATION DEPARTMENT ENHANCING DEVELOPMENT EFFECTIVENESS THROUGH EXCELLENCE AND INDEPENDENCE IN EVALUATION The Operations Evaluation Department (OED) is an independent unit within the World Bank, it reports directly to the Bank's Board of Executive Directors. OED assesses what works, and what does not; how a borrower plans to run and maintain a project; and the lasting contribution of the Bank to a country's overall development The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank's work, and to provide accountability in the achievement of its objectives it also improves Bank work by identifying and disseminating the lessons learned from experience and by framing recommendations drawn from evaluation findings WORLD BANK OPERATIONS EVALUATION DEPARTMENT cm 2001 Annual Review of evelopment Effectiveness Making Choices William Battaile 2002 THE WORLD BANK http://www.worlcbank.org/oec Washington, D.C. 0 2002 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 All rights reserved. Manufactured in the United States of America First Printing May 2002 1 2 3 4 03 02 01 The findings, interpretations, and conclusions expressed here are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denomina- tions, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is copyrighted. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or inclusion in any information storage and retrieval system, without the prior written permission of the World Bank. The World Bank encourages dissemination of its work and will normally grant permission promptly. For permission to photocopy or reprint, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. Cover photo: World Bank photo library. ISBN 0-8213-5139-7 Library of Congress Cataloging-in-Publication Data has been applied for. Printed on Recycled Paper Contents vii Acknowledgments ix Foreword, Prefacio, Avant-Propos xiii Executive Summary, Resumen, Resume Analytique xxix Abbreviations and Acronyms 1 1. Making Development Choices 5 2. Instruments of Bank Assistance 5 Financial Services 5 Investment, Adjustment, and Other Instruments 7 Recent Lending Choices 9 Nonfinancial Services 9 ESW Reflecting Corporate Priorities 10 Clear Instrument Guidance Is Key 13 3. Performance at the Instrument Level 13 Performance of Lending Assistance 14 Performance Trends 14 Outcome Trends 15 Institutional Development Impact 15 Sustainability 15 Aggregate Project Performance Index (APPI) 17 Performance by Region 17 Performance by Sector 19 Performance by Lending Instrument 22 Determinants of Success 22 Country Conditions Matter 24 Project-Level Performance Also Matters 25 Performance of Nonlending Assistance 2001 Annual Review of Development Effectiveness 29 4. Country Strategies, Instruments, and Outcomes 29 Corporate Selectivity and Country Strategies 32 Country Strategies and Instrument Choice 32 Defining Comparative Advantage Depends on Partners 33 Logical Framework Application in the CAS 34 Country Strategies Are Dominated by Lending 35 Country Strategies in the Absence of a Lending Program 37 Risk Management Through Gradual Engagement/Disengagement 37 How Instruments Contribute to Country Outcomes 37 Country Capacity 38 Borrower Commitment and Policy Environment 39 Directions for Effective Instrument Use in Country Strategies 41 5. Sector and Thematic Strategies, Instruments, and Outcomes 41 Selectivity Across Sectors 43 Instrument Choice and Performance 43 Instrument Choice Among Sectors 44 Sector-Specific Issues in Instrument Choice 46 Combining and Sequencing Instruments 48 Innovative Approaches to Sector Assistance: SWAPs and Social Funds 51 Policies and Actions in Support of Thematic Strategies 53 High-Potential Approaches for Implementation 57 6. Findings and Implications 57 Continued Gains in Performance 57 Implications for Policy 57 Corporate Selectivity 58 Enhancing Country Strategies 59 Instrument Selection in Support of Sector Strategies 59 Implications for Evaluation Annexes 61 Annex A: The Bank's Lending Instruments 63 Annex B: A List of Disclosed OED Country Assistance Evaluations 65 Annex C: Statistical Tables 65 Table C.1. Outcome, Sustainability, Institutional Development (ID) Impact and Aggregate by Various Dimensions, Weighted by Projects, FY96-99 and FYOO-01 Exits; Projects at Risk, Similarly Disaggregated, for the Active Portfolio 66 Table C.2. Outcome, Sustainability, Institutional Development (ID) Impact and Aggregate by Various Dimensions, Weighted by Disbursements, FY96-99 and FYOO-01 Exits; Disbursements at Risk, Similarly Disaggregated, for the Active Portfolio 67 Annex D: OED Evaluation Methodology 71 Annex E: Managing Development Effectiveness: An Overview from the CODE Chairperson 73 Endnotes 77 Bibliography iv C o 11 t e n t s Boxes 20 Box 3.1. Which Objectives Have Bank Projects Been Most Effective in Achieving? 27 Box 3.2. Bank-Managed Special Programs 28 Box 3.3. Quality of the Bank's Poverty Assessments 35 Box 4.1. Synergy Between Sector Work and Lending 36 Box 4.2. Kenya: Enhancing Lending Strategy in a Poor Policy Environment 38 Box 4.3. Getting Better Instrument Results in Poorly Performing Countries 48 Box 5.1. Combining Investment and Adjustment Lending for Institutional ReformPv Tables 9 Table 2.1. Evolution of Diagnostic ESW 10 Table 2.2. Country Coverage of Fiduciary Diagnostic ESW (FY97-01) 25 Table 3.1. Reasons for Unsatisfactory Outcomes 34 Table 4.1. Country Program and Portfolio Performance 39 Table 4.2. Quality of ESW by Country Policy and Institutional Environment 50 Table 5.1. Core Features of SWAPs and Social Funds 51 Table 5.2. Tools to Support Thematic Strategies Figures 2 Figure 1.1. Three Dimensions of Selectivity 6 Figure 2.1. The Instrument Toolkit 6 Figure 2.2. Lending Instrument Choice (FY90-01) 8 Figure 2.3. Lending Risks, by CPIA and Credit Ratings (FY96-01 Approvals) 8 Figure 2.4. Costs Differ by Lending Instrument (FY96-01 Exits) 14 Figure 3.1. Approval Years of Recently Evaluated Projects 15 Figure 3.2. Trends in Outcomes 16 Figure 3.3. Trends in Institutional Development Impact 16 Figure 3.4. Trends in Sustainability 17 Figure 3.5. Trends in Outcomes for Africa and Other Regions 18 Figure 3.6. Trends in Outcomes by Region 18 Figure 3.7. Trends in Outcomes by Sector 19 Figure 3.8. Trends in Outcomes of Adjustment Operations 21 Figure 3.9. Trends in Outcomes of Investment Operations 22 Figure 3.10. Risks and Rewards of Lending Instruments 23 Figure 3.11. The Cost Dimension, by CPIA Groups (FY90-FYO1 Exits) 23 Figure 3.12. Instrument Performance Is Sensitive to Country Conditions (FY96-01 Exits) 24 Figure 3.13. Adjustment Outcomes in Africa Related to the CFA Devaluation 26 Figure 3.14. Improved Bank Performance as Evaluated by OED and QAG 31 Figure 4.1. Better Lending Outcomes Associated with Higher Policy and Institutional Quality (FY96-01 Exits) 31 Figure 4.2. More Lending to Countries with Better Project Outcomes (FY96-01 Exits) V 2001 Annual Review of Development Effectiveness 42 Figure 5.1. Major Shifts in Sectoral Commitments (FY90-92 to FY99-01 Approvals) 43 Figure 5.2. Different Sectors Rely on Different Instrument Groups (FY96-01 Approvals) 44 Figure 5.3. The Move to Adjustment Lending in Finance (FY90-01 Approvals) 47 Figure 5.4. Costs and Outcomes Are Influenced by Quality of Operating Environment vi Acknowledgments T his report was prepared by a team led Muioz, David Hughart, Shawki Barghouti, Jaime by William Battaile. Carlos Reyes was Biderman, Aloysius Ordu, and Tim Johnston. The responsible for Chapter 3 on instrument Review was completed under the guidance of performance trends. Other team members were Victoria Elliott, Manager of OEDCM. Zamir Islamshah, Gillian Perkins, and Deepa This study was published in the Partnerships Chakrapani. The team received excellent support and Knowledge Group (OEDPK) by the Out- from Parveen Moses, Annisa Cline-Thomas, and reach and Dissemination Unit. The task team Bill Hurlbut. The report benefited from exten- includes Elizabeth Campbell-Pag6 (task team sive contributions from OED staff, and drew on leader), Caroline McEuen (editor), and Juicy a wide range of recent OED country, sector, and Qureishi-Huq (administrative assistant). thematic evaluations. Background papers and supplemental analyses were provided by Manuel Penalver-Quesada, Laurie Effron, Nalini Kumar, Director-GenerA, Operations Evaluation: Robed Picciotlo .Jed Shilling, Catherine Gwin, Diana Qualls, Directolr Operations Evaluation Department: Anara Omarova, and Oliver Rajakaruna. Gtegw:lr' rant The comments and guidance from peer Nmigcr, Corporate Evaluation ind Methods: reviewers are gratefully acknowledged, includ- Victoria El/ioH ing Susan Stout, Irene Xenakis, Marisela Montoliu Task Manager: Wil/in BolaUi Vii FOREWORD PREFACIO AVANT- - PROPOS ln the face of a rapidly En el actual contexto de ráp- Confrontée à l'évolution changing development ida transformación de las rapide de l'ordre du jour du agenda, the World Bank has proven actividades de desarrollo, el Banco développement, la Banque mondiale remarkably flexible in adapting and Mundial ha demostrado una notable a réussi à adapter et élargir la expanding its operational toolkit. flexibilidad para adaptarse y gamme de ses instruments opéra- New lending instruments, analytical ampliar sus instrumentos operacio- tionnels avec une souplesse remar- tools, and partnership arrangements nales. Han aparecido nuevos dispo- quable. Elle a su répondre aux have emerged to respond to the myr- sitivos crediticios, herramientas besoins multiples des emprunteurs iad needs and preferences of bor- analiticas y mecanismos de asocia- et satisfaire leurs préférences en rowers and to implement corporate ción en respuesta a las innumera- créant de nouveaux instruments de strategies. These innovations have bles necesidades y preferencias de prêt et de nouveaux outils d'analyse, contributed to improvements in pro- los prestatarios y para aplicar las et en forgeant des accords de parte- ject and program performance. estrategias institucionales. Estas nariat. Ces innovations ont contribué The broad endorsement of the innovaciones han significado mejo- à améliorer les résultats des projets Millennium Development Goals ras en los resultados de los proyec- et des programmes. within the development commu- tos y los programas. L'adoption des « Objectifs cie nity has put the spotlight on the La amplia aceptaciôn de los développement pour le millé- results of development activities. objetivos de desarrollo del mile- naire » par l'ensemble de la com- Accordingly, attainment of tan- nio entre las instituciones intere- munauté internationale a mis en gible, measurable, and sustainable sadas en el desarrollo ha puesto évidence l'importance des résul- improvements in the health, edu- en primer piano los resultados de tats des activités de développe- cation, and standard of living of las actividades de desarrollo. En ment. La mission primordiale que the worlcl's poor is the overarch- consecuencia, el logro de mejoras se sont fixée la Banque et cie ses ing challenge facing the Bank and tangibles, cuantificables y sosteni- partenaires pour le développe- its clevelopment partners. bles en los terrenos de la salud, ment, d'améliorer de façon tangi- This is the fifth AnnualReview educación y nivel de vida de los ble, mesurable et durable la santé, ofDevelopment Effectiveness pobres de todo el mundo es el l'éducation et le niveau de vie des (ARDE). The 1997 Review con- desafío general con que se pauvres du monde entier, est centrated on the linkages between enfrentan el Banco y sus asocia- donc plus que jamais d'actualité. aid and development. The 1998 clos en el desarrollo. Nous publions cette année la Review reflected the lessons of Este es el quinto Examen cincuième édition de l'Examen the East Asia financial crisis. The anual de la eficacia en términos annuel de l'efficacité clu dévelop- 1999 Review looked at the chal- de desarrollo. El Examen de 1997 pement (ARDE). L'examen lenges of implementing the Com- se centrô en las vinculaciones de 1997 décrivait les liens entre prehensive Development existentes entre la ayuda y el des- l'aide et le développement et Framework, and identified prom- arrollo. En el de 1998 se conside- celui de 1998 tirait les leçons cie ising practices for dealing with raron las enseñanzas extraidas de la crise financière d'Asie de l'Est. them, predicated on strong coun- la crisis financiera de Asia orien- L'examen de 1999 se penchait sur try commitment to poverty reduc- tal. En el de 1999 se analizaron les problèmes de mise en œuvre tion and sustainable growth. The los clesafios que representaba la Clu Cadre de développement inté- 2000 Review concluded that the aplicaciôn ciel Marco Integral de gré et dégageait des moyens pro- Bank could implement its strate- Desarrollo, y se identificaron las metteurs pour les résoudre, gies more effectively by judicious prácticas más prometedoras para reposant sur la ferme volonté des ix 2001 Annual Review of Development Effectiveness adaptation to diverse insti- superarlos, basaclas en un pays de faire reculer la tutional and social environ- decidido compromiso de pauvreté et de promouvoir cents, as well as by los países con la reduccin une croissance durable. acknowledging and manag- de la pobreza y el creci- L'examen de 2000 notait en ing differences between miento sostenible. En el conclusion que la Banque client and Bank priorities. Examen de 2000 se con- pourrait mettre en oeuvre This year's Review high- cluyô que el Banco podria ses stratégies plus efficace- lights the choice of lending aplicar sus estrategias con ment en s'adaptant judi- and nonlending instruments and mayor eficacia si se adaptaba pru- cieusement au contexte activities to achieve developmnent dentemente a los distintos entor- institutionnel et social, tout en objectives. It complements the nos institucionales y sociales, y prenant en compte et en gérant Quality Assurance Group's annual reconocia y resolvía las diferen- les différences entre les priorités assessment of the active lending cias entre las prioridades de los des clients et celles de la Banque. portfolio and of recent analytical clientes y del Banco. L'examen de cette année met and advisory services. As in prior En el Examen del presente año en évidence la gamme des instru- years, the Review concentrates on se hace hincapié en la gama de ments de prêt et des services hors long-term development effective- instrumentos y actividades de prêt qui permettent d'atteindre les ness trends. It finds that selecting financiamiento y de otro tipo dis- objectifs de développement. Il the right combination and ponibles para el logro de los complète l'évaluation annuelle du sequence of activities for a partic- objetivos del desarrollo. Es un portefeuille actif et des services ular set of objectives can make complemento de la evaluaciôn récents d'analyses et de conseil the difference between success anual del Grupo de garantia de effectuée par le Groupe d'assu- and failure. calidad sobre la cartera de présta- rance de la qualité. Comme les This conclusion holds at all mos activos y sobre los recientes années précédentes, l'examen se levels-the individual project, the servicios de análisis y asesoria. concentre sur les tendances de country assistance program, and Como en años anteriores, el Exa- l'efficacité du développement à the Bank's global, sectoral, and men se concentra en las tenden- long terme. Il aboutit à la conclu- thematic priorities. At each level cias a largo plazo de la eficacia en sion que la différence entre le there is unexploited potential to términos de desarrollo. Se com- succès et l'échec réside dans le make judicious use of lending prueba que la selecciôn de la dosage et l'échelonnement d'acti- and nonlending activities, to combinación y secuencia adecua- vités adaptées à une série particu- choose instruments that are das de actividades para un con- lière d'objectifs. adapted to the problems faced, junto determinado de objetivos Cette conclusion est valable à and to leverage work done by puede representar la diferencia tous les niveaux - les projets indi- partners. Such strategic selectivity entre el éxito y el fracaso. viduels et les programmes d'aide is especially important in coun- Esta conclusiôn es vàlida en aux pays comme les priorités glo- tries with a poor policy frame- todos los niveles: proyectos indi- bales, sectorielles et thématiques work, small or newly reactivated viduales, programas de asistencia de la Banque. Il existe à chaque lending programs, or acute institu- a los paises y prioridades mundia- niveau un potentiel que l'on tional development needs. les, sectoriales y temáticas del pourrait exploiter en utilisant judi- The findings of the 2001 ARDE Banco. En cada nivel, hay margen cieusement des services de prêt et demonstrate sustained progress in para utilizar sabiamente las activi- hors prêt, en choisissant des portfolio performance and suggest dades de financiamiento y otro instruments adaptés aux problè- several directions for future Bank tipo, elegir instrumentos que mes qui se posent et en tirant operations. First, the ongoing estén en consonancia con los pro- parti des travaux accomplis par updating of the policy framework blemas existentes, y conseguir un les partenaires. Il est particulière- for investment and adjustment efecto multiplicador con las activi- ment important de faire preuve lending offers a good opportunity dades realizadas por las institucio- de cette sélectivité stratégique to offer operational guidance and nes asociadas. Esta selectividad dans les pays où le cadre de x Foreword improve instrument choice. estratégica es especial- l'action des pouvoirs Second, in poorly perform- mente importante en los publics est défaillanr, Cont ing low-income countries, países con un marco de les programmes de prêts simple operations, pilot políticas poco adecuado, sont limités ou ont été projects, and nonfinancial programas de financia- réactivés depuis peu ou activities have particular miento de pequeña escala dont les besoins de dléve- potential to deliver results. o recientemente reactiva- loppement institutionnel Third, for adjustment oper- dos o con necesidades sont aigus. ations-a growing share of Bank agudas de desarrollo institucional. LExamen annuel de l'efficacité lending-success is more likely Las conclusiones cíe este Exa- du développement 2001 révèéle when the domestic consensus for men anual de la eficacia en térmi- que des progrés durables ont été reform is strong and other Bank nos de desarrollo revelan un réalisés en matiére de perfor- instruments are brought to bear continuado progreso en los resul- mance clu portefeuille, et propose both upstream and downstream tados de la cartera y parecen indi- pilusieurs orientations pour les of the adjustment process. car varias orientaciones para las opérations futures de la Banque. operaciones futuras de Banco. En Premiérement, une mise a jour primer lugar, la actualización régulière du cadre dians lequel constante del marco de políticas s'inscrivent les préts d'investisse- para la inversión y los préstamos ment et les préts à 'ajustement est de ajuste representa una buena un bon moyen dimprimer des oportunidad de ofrecer asesora- orientations opérationnelles et miento operacional y mejorar la d'améliorer le choix des instru- gama de instrumentos disponi- ments. Deuxièmement, dians les bles. En segundo lugar, en los pays a faible revenu dont les países de ingreso bajo con resul- résultats sont médiocres, des opé- tados inadecuados, pueden resul- rations simples, des projets pilotes tar especialmente eficaces las et des activités autres CIue finan- operaciones de peclueña enverga- ciéres sont les plus aptes a don- dura, los proyectos piloto y las ner des résultats. Troisiémement, actividades no financieras. En ter- les opérations d'ajustement - qui cer lugar, por lo que se refiere a représentent une part croissante las operaciones de ajuste --una des préts de la Banque - ont parte creciente de los préstamos davantage de chances de réussir del Banco- es imás probable que lorsque le consensus national en se consigan éxitos cuando el con- faveur des réformes est solide, et senso interno en favor de la que cl'autres instruments de la reforma es firme y se cuenta con Banque interviennent tant en otros instrumentos del Banco amont qu'en aval du processus tanto en las fases iniciales como d'ajustement. finales del proceso de ajuste. Robert Picciotto Director-General, Operations Evaluation Xi EXECUTIVE RESUMEN RESUMÉ SUMMARY ANALYTIQUE The challenge of develop- El desafio del desarrollo, Le défi du développement, ment, never straightforward, siempre complicado, ha qui n'a jamais été simple, has become even more complex as adquirido mayor complejidad toda- devient encore plus complexe à the number of actors has grown and via a medida que se ha multiplicado mesure que davantage d'acteurs the desire for demonstrable results el número de agentes y se ha inten- interviennent et que la volonté has intensified. In seeking to imple- sificado el deseo de resultados d'obtenir des résultats tangibles ment its poverty reduction mission, demostrables. El Banco Mundial, s'intensifie. Pour accomplir sa mis- the World Bank has to match over empeiado en cumplir su misión de sion de faire reculer la pauvreté, la 100 client countries tackling innu- reduccién de la pobreza, tiene que Banque mondiale doit offrir à plus merable development issues with a integrar la realidad de sus más de d'une centaine de pays clients financial product line ranging from 100 paises clientes -con innumera- confrontés à d'innombrables problè- small grants to large loans, a bles problemas de desarrollo- con mes de développement l'accès à diverse nonfinancial product line, una linea de productos financieros ceux de sa ligne de produits finan- and a growing cast of public, pri- que van desde pequeias donaciones ciers, allant de dons modestes à des vate, and civil society partners. If a grandes préstamos, una amplia prêts importants, et à ceux de sa the Bank is to continue improving its linea de productos no financieros y vaste gamme de produits non finan- development effectiveness, it will un grupo cada vez más numeroso de ciers dont ils ont précisément have to make the right choices interlocutores del sector público y besoin chacun, et les mettre en rap- about how, when, and with whom to privado y de la sociedad civil. Para port avec les partenaires de plus en engage (and disengage). Making the que el Banco continúe mejorando su plus nombreux des secteurs public right choices with client countries eficacia en términos de desarrollo, et privé et de la société civile qui and other development partners- tendrà que tomar las decisiones ade- conviennent. Si la Banque veut what is often called selectivity-is cuadas sobre cómo, cuándo y con continuer à améliorer l'efficacité du the theme of this Review. quién va a mantener (o dejar de développement, elle devra choisir The Bank exercises selectivity tener) relaciones. El tema del pre- judicieusement dans quelles condi- through the choices it makes in sente Examen es precisamente tions, quand et avec qui prendre des three dimensions: its corporate cómo tomar las decisiones adecua- engagements (ou se désengager). goals, strategies for countries, and das con los paises clientes y otras Faire les choix qui s'imposent avec specific activities or instruments. instituciones interesadas en el des- les pays clients et les autres parte- Decisions on each of these arrollo: bo que suele conocerse con naires du développement, ce qu'on dimensions help determine the el nombre de selectividad. appelle souvent la sélectivité, sera institution's development effec- El Banco ejerce la selectividad le thème du présent Examen. tiveness. The overarching corpo- a través de las decisiones que La Banque fait des choix sélec- rate mission-to reduce poverty adopta en tres dimensiones: sus tifs dans trois domaines : ses through a focus on results-has metas institucionales, las estrate- objectifs institutionnels, les straté- been translated into corporate gias para los países y las activida- gies pour les pays et les activités goals and institutional initiatives des o instrumentos especificos. ou les instruments particuliers. Les in support of them. Individual Las decisiones sobre cada una de décisions prises dans chacun de country strategies are expected to estas dimensiones ayudan a deter- ces domaines contribuent à déter- reflect the Bank's corporate goals, minar la eficacia en términos de miner l'efficacité de l'institution while at the same time matching desarrollo de la instituciôn. La en matière de développement. La client needs and the comparative misiôn institucional general - mission institutionnelle primor- advantages of partners in particu- reducir la pobreza mediante una diale, à savoir de faire reculer la x iii 2001 Annual Review of Development Effectiveness lar settings. Even with the mayor atención a los resul- pauvreté en se concentrant right strategies in place, tados- se ha traducido en sur les résultats, se concré- results on the ground - metas e iniciativas institu- tise par des buts et des depend on choosing the cionales en apoyo de éstos. initiatives institutionnels right instruments-the Se espera que las estrate- adaptés. Les stratégies ' focus of this report. gias de los distintos paises adoptées pour chaque pays The ARDE's review of estén en consonancia con doivent refléter les buts selectivity identifies three las metas institucionales del institutionnels de la Ban- themes common to the project, Banco, y que al mismo tiempo que, tout en faisant coïncider les sector, and country levels of correspondan a las necesidades besoins des clients et les avanta- analysis: del cliente y a las ventajas compa- ges comparatifs des partenaires en • Good diagnosis, provided by rativas de los socios en los dife- fonction des circonstances parti- high-quality economic and sec- rentes contextos. Aun cuando se culières. Même si des stratégies tor work, is critical for estab- apliquen las estrategias pertinen- adéquates sont mises en place, les lishing realistic development tes, los resultaclos sobre el terreno résultats sur le terrain ne peuvent objectives. Country assistance dependen de la elecciôn de los être obtenus qu'en choisissant les strategies, sector strategies, and instrumentos adecuados: ese es instruments adéquats. C'est l'objet operational guidance all inform precisamente el tema del presente de ce rapport. the matching of instruments informe. L'examen de la sélectivité, dans with objectives. El examen sobre la selectividad le cadre de lARDE, permet de • The choice of instrument revela la existencia de tres temas définir trois thèmes communs aux should reflect not only the comunes en los tres niveles de trois niveaux de l'analyse (projet, objectives of the individual análisis (proyectos, sectores y secteur et pays) : operation, but also past perfor- paises): • il est essentiel, pour fixer des mance in the country and sec- • Un diagnóstico correcto, conse- objectifs de développement tor context. Appropriate guido a través de estudios eco- réalistes, cde réaliser un bon sequencing and tapping of nômicos y sectoriales de alta diagnostic à l'issue d'études complementarities among caliclad, es condiciôn decisiva économiques et sectorielles de instruments help improve para establecer objetivos de qualité. Les stratégies d'aide- outcomes. desarrollo realistas. Las estrate- pays, les stratégies sectorielles • A poor policy and institutional gias de asistencia a los paises, et les orientations opérationnel- environment compromises the las estrategias sectoriales y la les sont autant de moyens de effectiveness of both lending orientaciôn operacional contri- faire coïncider les instruments and nonlending interventions buyen a emparejar los instru- et les objectifs ; and calls for a nuanced selec- mentos con los objetivos. • le choix d'un instrument doit tion of instruments. In weak • La elección de instrumento cadrer non seulement avec les country environments, stand- debe corresponder no sôlo a objectifs d'une opération parti- alone technical assistance oper- los objetivos de cada operaciôn culière, mais également avec ations have performed best, sino también al rendimiento les antécédents du pays et du while structural adjustment anterior del pais y el contexto secteur. En choisissant le lending tends to be the riskiest sectorial. Los resultados pue- moyen approprié d'échelonner instrument. Simple project den mejorar gracias a una ade- les instruments et d'exploiter designs--or a series of simple cuada selección del orden de leurs complémentarités, on interventions-provide better los instrumentos y al aprove- peut améliorer les résultats results than complex and multi- chamiento de las complemen- • la médiocrité des politiques et faceted undertakings. Even if tariedades entre distintos des institutions compromet lending is constrained by poor instrumentos. l'efficacité des interventions de performance, carefully selected • Un entorno normativo e insti- prêt et hors prêt et exige un nonlending activities can be tucional desacertado pone en choix nuancé des instruments. Xiv Executive Sumrnary useful, especially peligro Ia eficacia Cie las i Danls les pav's no Ie to keep the Bank pre- intervenciones crediti- cadre d'action est faible, pared for possible re- cias y no crecliticias y les op6rations dC pure engagement. requiere una selecci6n assistance technique matizada de instrumen- donnent generalement An Evolving Toolkit tos. En los paises cloncle lmeilleurs rsultats, Development effectiveness las circunstancias son tandis Clue les pr&ts I depends on selecting the poco favorables, las I lajustement structurl right instruments and deploying operaciones cle asistencia t6c- sont les instruments les plIs them in appropriate sequence and nica indepenclientes han daco risqu6s. La formulation dCe pro- combination, in light of country los mejores resultados, mien- jets simples, ou une s6rie and sector characteristics. The tras que el pr6stamo para fines dinterventions simples, don- framework for the Bank's activ- de ajuste estructural suele ser nent dc meilleurs resultats Clue ities, as set out in the Articles of el instrumento de mayor des oprations complexes et Agreement, is sufficiently broad to riesgo. La sencillez del diseho multiclimensionnelles. Mme permit a wide range of develop- cle los proyectos -o de una clans les cas ou les pr&ts sont ment assistance activities as well serie de intervenciones- per- limit6s par une performance as innovation over time as cir- mite obtener mejor resultado mdiocre, des activit6s hors cumstances have changed and que iniciativas complejas y en pr&t choisies avec soin peuvent understanding of the develop- clistintos frentes. Aun cuando se revler utiles, en particIlier ment process has improved. Many los cr6clitos se vean limitados pour preparer la Banque 'I un innovations to the Bank's financial por un mal clesempebo, una eventuel reengagement. and nonfinancial toolkit were selecci6n esmeracla de activida- introduced over the 1990s. For des no crecliticias puede resul- Un 6ventail d'instruments en example, the new adaptable lend- tar Citil, sobre toclo para que el evolution ing instruments promise to Banco est6 preparadlo para un Le cl6veloppement ne peUt &tre increase the Bank's flexibility, posible nuevo compromiso. efficace que si Ion choisit les reduce risks to borrowers and the instruments ad6Cuats et si on les Bank, and facilitate exit from Instrumentos en evoluci6n d6ploie en les echelonnant et en floundering operations. Similarly, La eficacia en t6rminos de des- les combinant cle fagon appro- nonfinancial activities became arrollo depende cle la selecci6n pride, en fonction des caract6risti- more diversified and participatory cle los instrumentos adecuaclos y ques Cu pays et clu secteur. Le with greater emphasis on nurtur- cle su utilizaci6n en un orden y cadre des activit6s cle la Banque, ing reform and enhancing the con una combinaci6n adecuados, tel qu'il est d6fini clans les Statuts, quality of partnerships. teniendo en cuenta las caracteris- est suffisamment large pour per- Distinctions among lending ticas de cada pais y sector. El mettre non seulement cle mener instruments reflect their ability to marco para las activiclacles del une vaste gamme c'activites address differing development Banco, establecido en el Conve- d'aide au d6veloppement, mais objectives and their costs, syner- nio Constitutivo, es lo suficiente- aussi d'innover .I mesure clue la gies, and complementarities. mente amplio como para permitir situation 6volue et clue le proces- Sharper operational guidance una gran variedclad de actividades sus cle developpement est mieux would help country assistance dce asistencia para el clesarrollo asi compris. Dans les ann6es 90, la strategies choose instruments como para introducir innovacio- Banque a introduit dce nombreux appropriate to specific objectives nes a lo largo del tiempo a instruments financiers et non and to sector and country condi- medidla que vayan cambianclo las financiers novateurs. Ainsi, les tions. In particular, now that con- circunstancias y se llegue a una nouveaux pr&ts evolutifs promet- siderable effort has been devoted mejor comprensi6n del proceso tent clugmenter la souplesse dCe to establishing the stanclards and de clesarrollo. Durante el decenio la Banque, cle recluire les risqLIes scope of diagnostic instruments, cle 1990 se introdLujeron muchas auxquels s7exposent les emprun- xv 2001 Annual Review of Development Effectiveness they should be deployed to innovaciones en el instru- teurs et la Banque et de ensure priority coverage of mental financiero y no faciliter le retrait en cas countries with high financiero del Banco. Por d'échec. De même, les acti- vulnerability. ejemplo, los nuevos instru- vités non financières sont mentos crediticios adapta- devenues plus diversifiées Improved Instrument bles ofrecen posibilidades et participatives et privilé- Performance de aumentar la flexibilidad gient davantage les réfor- As forecast in last year's del Banco, reducir los ries- mes et l'amélioration ce la Review, the Strategic Compact tar- gos para los prestatarios y el qualité des partenariats. get of 75 percent satisfactory out- Banco y facilitar el abandono de Ce qui distingue les instruments comes for lending has been met. operaciones condenadas al fra- de prêt, c'est leur capacité à viser The latest project evaluation data caso. De la misma manera, las des objectifs ce développement confirm significant improvement actividades no financieras son différents ainsi que leurs coûts, les in the Bank's lending perfor- ahora más diversificadas y basa- synergies qu'ils permettent et leurs mance, especially for FYOO exiting das en la participación, y hacen complémentarités. Des directives projects. The upward trend contin- mayor hincapié en fomentar la opérationnelles plus précises aide- ues into FYO1. The first half of reforma y mejorar la caliclad ce raient à choisir les instruments qui FYO1 exiting projects, now evalu- las asociaciones. conviennent à des objectifs parti- ated by OED, has 82 percent satis- Las distinciones entre los ins- culiers et qui sont adaptés à la factory outcome ratings. Solid trumentos crediticios responden a situation d'un secteur et d'un pays improvements in sustainability and su capacidad de abordar los clife- donnés dans le cadre des Straté- institutional development impact rentes objetivos del desarrollo y gies d'aide aux pays. Alors que are also evident. Seventy-one per- sus costos, sinergias y comple- des efforts considérables sont cent of projects exiting during the mentariedades. Una orientaciôn aujourd'hui déployés pour définir FYOO-01 period are rated to have operacional mâs acertada ayuda- les normes et la portée des outils likely or highly likely resilience to ria a las estrategias de asistencia - de diagnostic, il est particulière- future risks; one of every two pro- los paises a elegir instrumentos ment important d'appliquer ces jects evaluated during the same adaptados a objetivos especificos outils en priorité aux pays les plus period also shows substantial or y a la situaciôn de cada sector y vulnérables. better institutional development pais. En particular, ahora que se impact ratings. han desplegado notables esfuer- Des instruments plus Recent evaluations show zos por establecer las normas y performants improved performance from pro- alcance de los instrumentos de Comme le prévoyait l'examen de jects in the Africa Region follow- diagnôstico, deberian utilizarse l'an dernier, l'objectif du Pacte ing its portfolio improvement éstos para garantizar una cober- stratégique, qui fixait à 75 % la drive. Looking at lending instru- tura prioritaria de los paises más proportion des prêts devant obte- ment groups, the outcomes of vulnerables. nir des résultats satisfaisants, a été adjustment operations declined atteint. Les dernières données sur slightly for the FYOO-01 exit Mejor desempeio de los l'évaluation des projets confirment period, while investment project instrumentos que les résultats des prêts de la outcomes improved markedly. Como se preveia en el Examen Banque se sont sensiblement The quality of project-level inputs del afño pasado, se ha alcanzado améliorés, en particulier pour les remains a key determinant of el objetivo del Pacto Estratégico projets sortis du portefeuille project success. The outcomes of de un 75% de resultados satisfac- durant l'exercice 00. Cette ten- projects are also closely correlated torios para las actividades crediti- dance s'est poursuivie durant with the Bank's Country Policy cias. Los datos más recientes de l'exercice 01. La première moitié and Institutional Assessment las evaluaciones de proyectos des projets sortis du portefeuille (CPIA) ratings. Moreover, invest- confirman una significativa mejora durant l'exercice 01 (qui ont ment interventions cost signifi- en el desempefño de los présta- aujourd'hui été évalués par xvi Executive Summary cantly more, per amount mos del Banco, sobre todo IOED) ont obtenu des disbursed, when under- en lo que respecta a los résultats satisfaisants pour taken in low CPIA proyectos vigentes en el . 82 % d'entre eux. De nettes countries. ejercicio de 2000. La ten- améliorations en matiére The Strategic Compact dencia ascendente se pro- cíe viabilité et c'impact sur goal-of 85 percent satis- longa en el ejercicio ce . le céveloppement institu- factory-has also been 2001. La primera mitad de tionnel sont également évi- achieved in nonlending los proyectos finalizados ¡ centes. Soixante et onze services. Self-evaluation results en este último ejercicio, evaluados pour cent des projets sortis CIu show a broad improvement in the ahora por el Departamento de portefeuille durant les exercices cluality of economic anc sector Evaluación de Operaciones 00-01 ont été jugés susceptibles work (ESW) as it becomes more (DEO), ha merecido un 82% de ou trés susceptibles cíe résister a participatory, client-oriented, and calificaciones satisfactorias. Se des risclues futurs. Parmi les pro- result-focused. There remains observan también mejoras consis- jets évalués durant cette méme room for improvement in the tentes en la sostenibilidad y en période, un sur deux est consi- poverty focus of these instru- los efectos del desarrollo institu- déré comme ayant au moins un ments, as well as in the quality cional. Se considera que el 71% impact appréciable sur le déve- and impact of ESW in poorly de los proyectos existentes loppement institutionnel. performing countries, especially durante los ejercicios 2000-01 Les évaluations récentes idi- fiduciary reviews. resistirán probablemente -o muy cuent que les résultats des projets probablemente- a los riesgos cíe la région Afrique se sont amé- Instrument Choice Affects futuros; uno de cada dos proyec- liorés gráce au lancement du pro- Country-Level Results tos evaluados durante el mismo gramme cPamélioration du The outcome of country pro- período tendría efectos cuando portefeuille. En matiére d'instru- grams, as measured in the more menos considerables en el des- ments de prêt, le résultat des opé- than 50 Country Assistance Evalu- arrollo institucional. rations d'ajustement a légèrement ations (CAEs) conducted thus far Evaluaciones recientes revelan décliné pour les projets sortis du by OED, depends in part on how una mejora en los resultados de portefeuille Curant les exercices well selectivity has been exercised los proyectos en la región cíe 00-01, alors que le résultat cies at the corporate, country, and África tras la campaña empren- projets c'investissement s'est nota- instrument leveis. Corporate prior- dica para mejorar su cartera. Si se blement amélioré. La qualité cies ities are conveyed to individual consideran los grupos de instru- apports aux projets reste un élé- country programs through the mentos crediticios, los resultados ment déterminant du succès des Bank's support for the Compre- de las operaciones de ajuste dis- projets. Le résultat CIes projets est hensive Development Framework minuyeron ligeramente en el perí- également étroitement lié a la and the Poverty Reduction Strat- odo de salida correspondiente a note qui leur est attribuée dans le egy Initiative, inter-country lend- los ejercicios de 2000-01, mien- cadre de lÉvaluation de la politi- ing allocation decisions, and the tras que los resultados de los pro- que et des institutions nationales distribution of administrative yectos de inversión mejoraron (EPIN). En outre, les opérations resources among Regions and notablemente. La calidad de los d'investissement sont beaucoup Networks. OED's recent IDA insumos de los proyectos conti- plus coiteuses, par montant Review finds that the núa siendo un determinante clave décaissé, lorsqu'elles sont entre- performance-based lencing allo- del éxito de los mismos. Los prises cans des pays ciont la per- cation system has evolved over resultados están también estrecha- formance est jugée faible dans le the past decade to reflect new mente correlacionados con las cadre de l'EPIN. development knowledge and calificaciones cíe la evaluación de L'objectif dtu Pacte stratégique, evolving corporate priorities. las políticas e instituciones nacio- d'obtenir 85 % de projets satisfai- These changes have strengthened nales (EPIN), del Banco Munclial. sants, a également été atteint pour the link between countries' policy Además, las intervenciones en les services hors prêt. Les résUltats XviI 2001 Annual Review of Development Effectiveness and institutional perfor- forma de inversión tienen des auto-évaluations révè- mance and lending levels. un costo significativamente lent une nette amélioration In its allocation decisions mayor, por cantidad des- de la qualité des études for IBRD (International embolsada, cuando se rea- économiques et sectorielles Bank for Reconstruction lizan en paises donde la ' (ESW), qui font davantage and Development; also EPIN ha ofrecido califica- appel à la participation et World Bank) borrowers, ciones bajas. sont plus axées sur les the Bank has also recog- Se ha conseguido tam- besoins des clients et les nized that better development bién la meta de Pacto Estratégico résultats. Ces instruments doivent prospects result from lending -85% de calificaciones satisfacto- encore accorder davantage under good country policies and rias- en los servicios no crediti- d'importance au problème de la institutions. There is untapped cios. Los resultados de la pauvreté, et il y a également potential to select and sequence autoevaluaciôn revelan una nature à améliorer la qualité et instruments more strategically in amplia mejora de la calidad de los l'impact des ESW, en particulier individual country programs, link- estudios económicos y sectoriales, les examens fiduciaires, dans les ing them more explicitly to objec- que ahora están más basados en pays dont la performance est tives. When country circum- la participaciôn, más orientaclos a jugée faible. stances require unanticipated los clientes y más centrados en changes in the assistance pro- los resultados. Sigue habiendo Le choix des instruments gram, it is important to use timely margen de mejora en la orienta- conditionne les résultats au CAS updates and progress reports ciôn de estos instrumentos hacia niveau des pays to provide an agreed-upon strate- la pobreza, asi como en la calidad Les résultats des programmes par gic context for Bank activities. y efectos de los estudios econó- pays, mesurés d'après plus de cin- A special challenge is getting micos y sectoriales en los paises quante évaluations de l'aide aux better results in poor policy and con resultados deficientes, sobre pays (CAE) effectuées jusqu'à pré- institutional environments. todo en los exámenes fiduciarios. sent par l'OED, dépendent en par- Reviews of country and project tie de la qualité de la sélectivité au evaluations show that the perfor- La eleccién del instrumento niveau de l'institution, du pays et mance of both lending and non- influye en los resultados de l'instrument. La Banque fait lending instruments is under- obtenidos en los paises passer ses priorités dans les pro- mined by weak policies and Los resultados de los programas grammes-pays en apportant son institutions. In such adverse envi- por paises, cuantificados en más soutien au Cadre de développe- ronments, stand-alone technical de 50 evaluaciones cde asistencia a ment intégré et au Cadre stratégi- assistance fares better than other los paises realizadas hasta ahora que de réduction de la pauvreté, forms of lending, suggesting that por el DEO, dependen en parte en décidant de l'affectation des the Bank should continue focus- del acierto con que se ha practi- prêts entre les différents pays et ing on capacity and institution cado la selectividad en cuanto a en répartissant les ressources building in such countries. Partic- la instituciôn, el pais y el instru- administratives entre les Régions ular care is needed for adjustment mento. Las prioridades institucio- et les Réseaux. L'examen de l'IDA operations, which tend to have a nales se transmiten a los récemment réalisé par l'OED lower likelihood of success in low programas de cada pais a través révèle que le système d'octroi des CPIA countries. For all lending, del apoyo del Banco al Marco crédits en fonction des résultats a recent CAEs show that a series of Integrado de Desarrollo y la ini- évolué en dix ans, et reflète les simple interventions provides bet- ciativa de lucha contra la pobreza, nouvelles connaissances acquises ter results than complex undertak- las decisiones de asignaciones en matière de développement, ings. Pilot programs also provide crediticias entre los distintos pai- ainsi que l'évolution des priorités a valuable instrument to test ses y la distribuciôn de los recur- institutionnelles. Ces changements uncertain environments and to sos administrativos entre regiones renforcent le lien entre l'efficacité build capacity. The success of y redes. En el reciente examen de des politiques et des institutions xviii Executive Summary pilot initiatives suggests la AIF realizado por el nationales et les niveaux ce scope for their expanded DEO se observa que el sis- financement. Dans ses dCci- use in poorly performing tema dCe asignaci6n de cre- sions relatives I Faffectation countries-with a gradual clitos en funci6n dcel aux emprunteurs des res- shift to up-scaling as imple- resultaCo ha evolucionado sources de la Banque inter- mentation conditions Clurante el pasado deceno nationale pour la improve. Diagnostic studies de aicuerclo con la nueva reconstruction et le d6ve- are critical in these coun- concepci6n del desarrollo loppement (BIRD, ou Ban- tries to ensure accurate assess- y las nuevas priorilades institu- que mondiale) la Banque tient ment of borrower ownership and cionales. Estos cambios han inten- compte aussi du fait que les per- program risks. sificado la relaci6n entre la spectives de d6veloppement sont Across the spectrum of country politica y resultclos instituciona- meilleures lorsque les pr&ts sont environments, recent evaluative les de los paises y el volumen ce accords Clans le cadre ce bonnes evidence confirms country capac- financiamiento. En sus decisiones politiClues nationales et cl'institu- ity and borrower commitment as de asignaci6n para los prestatarios tions solices. 11 est possible, dans key drivers of effectiveness. The del Banco Internacional de le cadre cle chaque programme- evidence suggests that the Bank Reconstrucci6n y Fomento (BIRF), pays, cle choisir les instruments et can do more to take these factors el Banco ha reconocido tambi6n d'chelonner leur utilisation Ce into account-for example, que los pr6stamos en el marco de maniere plus strategique, en les through better assessments of politicas e instituciones nacionales liant plus precisement aux objec- implementation capacity and aclecuadas se manifiestan en tifs. Lorsque les circonstances par- greater reliance on local knowl- mejores perspectivas para el des- ticulieres d'un pays obligent " edge. Since many borrowers are arrollo. Sigue habiendo posibilida- apporter des modifications impr>- unfamiliar with the full menu of des cle seleccionar y ordenar vues au programme daide, il est Bank instruments, the Bank needs debiclamente los instrumentos en important Cutiliser les actualisa- to keep them abreast of the forma mzis estrat6gica en los pro- tions de Ia Strat6gie cl'aide au pays choices offered by the Bank's gramas de los distintos paises, et les rapports 6tablis sur l'avance- expanding toolkit so as to secure vincuLinclolos mis expresamente ment dCe sa mise en oeuvre pour their full ownership. con los objetivos. Cuanclo las cir- convenir du contexte strat6giclue cunstancias cle un pais requieren des activit6s de la BanClue. Implementing Sector and cambios imprevistos en el pro- 11 est particulibrement difficile Thematic Strategies grama cle asistencia, es importante d'amliorer les rtsultats clans les The evolution of the Bank's cor- utilizar actualizaciones oportunas pays o6 le cadre clirectif et institu- porate priorities is reflected in the de las estrategias cle asistencia a tionnel est d6favorable. L'examen recent expansion of lending for los pafses e informes dCe situaci6n des 6valuations nationales et des social protection, economic pol- para ofrecer un contexto estrat6- evaluations des projets rvle Clue icy, and finance, and in a stronger gico convenido para las activica- la performance cles instruments focus on public sector manage- des del Banco. ce pr&t et services hors pr&t est ment and institutional reform. Un dcesafto especial es conseguir compromise lorsque les politiCIues Declines in the share of lending mejores resultados cuando las con- et les institutions laissent I desi- for rural development and educa- diciones normativas e instituciona- rer. Dans ces conditions cl6favora- tion, by contrast, seem inconsis- les no son las mejores. Del examen bles, les op6rations cassistance tent with defined priorities and de las evaluaciones sobre paises y technique pure donnent alors dCe highlight the need for updated proyectos se desprende Clue el des- meilleurs r6sultats que les pr&ts, operational strategies in these sec- empeho ce los instrumentos crediti- ce Clui tend -r inclicluer Lue Ila tors. Specific investment loans cios y no crecliticios se ve afectaclo Banque Clevrait continuer a se continue to be the predominant cuando las politicas e instituciones concentrer sur le renforcerent lending instrument, and the use of son cl6biles. En estas concliciones des capacit6s et des institutions new programmatic lending instru- adversas, la asistencia tecnica por si Clans ces pays. 11 faut &tre particu- xiX 2001 Annual Review of Development Effectiveness ments is growing. Overall, sola da mejores frutos que lièrement vigilant pour les the sequencing of opera- otras formas de financia- opérations d'ajustement, tions and the synergies - miento, lo que parece indi- qui ont en général moins between them are particu- car que el Banco debería de chances de réussir dans larly important when objec- continuar concentrándose les pays dont la perfor- tives include complex insti- en el fortaleciientco de la mance est jugée faible dans tutional reforms. In capacidad de las institucio- le cadre des EPIN. Les éva- particular, success is more nes de esos paises. Debe luations de l'aide aux pays likely where lending is under- prestarse especial atención a las réalisées récemment montrent que pinned by upstream analytical operaciones de ajuste, que suelen dans toutes les opérations de prêt, work together with parallel sup- ofrecer menor probabilidaci de une série d'interventions simples port for piloting and flexible éxito en los paises donde la EPIN donne de meilleurs résultats que downstream implementation, and no ha sido satisfactoria. En relaciôn des opérations complexes. Les by continuity in policy dialogue con el conjunto cie todos los présta- programmes pilotes sont égale- where relevant. mos, las recientes evaluaciones ment un moyen précieux d'éva- The Bank's crosscutting the- sobre la asistencia a los paises reve- luer des situations mal connues et matic objectives, such as environ- lan que una serie de intervenciones cie renforcer les capacités. Le suc- mental sustainability and gender, sencillas permite mejores resultaclos cès des programmes pilotes indi- can best be achieved through que iniciativas más complejas. Los que aussi qu'il y a matière à les complementary use of both lend- programas piloto son también un utiliser davantage dans des pays ing and nonlending tools. Of the instrumento valioso para compro- dont la performance est médiocre, strategies recently reviewed by bar entornos inciertos y para el des- en élargissant progressivement OED, environmental sustainability arrollo de la capacidad. El éxito de leur champ d'application à has exploited the widest range of las iniciativas piloto indica que hay mesure que les conditions de instruments, leveraging effective margen para una mayor utilización mise en oeuvre s'améliorent. Les implementation of safeguards, en los paises con resultados bajos, études de diagnostic sont essen- along with direct environmental donde se podria avanzar gradual- tielles dans ces pays, afin d'éva- lending and substantial reliance mente hacia iniciativas de más luer précisément l'adhésion des on regional and global partner- envergadura a medica que mejora- emprunteurs et les risques du ships. Successful mainstreaming ran las condiciones de aplicaciôn. programme. of thematic initiatives requires the Los estudios de diagnôstico son Quel que soit le contexte qui strategic use of instruments as fundamentales en estos paises para prévaut dans les différents pays, well as clearer Regional and Net- garantizar una evaluación adecuaca les évaluations récentes confir- work accountability. de la identificaciôn de los prestata- ment que les capacités des pays For the successful implementa- rios y de los riesgos ce los et le degré d'engagement de tion of both sector and thematic programas. l'emprunteur sont les facteurs strategies, several broad lessons Evaluaciones recientes confir- déterminants cie l'efficacité. Tout emerge. Making the right choice man que, cualquiera que sea la porte à croire que la Banque peut of instrument when undertaking situaciôn nacional, la capacidad faire plus pour tenir compte de institutional reform requires clarity del pais y el compromiso del ces facteurs, par exemple en éva- about the operation's objectives prestatario son factores decisivos luant mieux la capacité de mise and a goodi understanding of cie la eficacia. Los testimonios en oeuvre et en faisant davantage country and sector conditions. For parecen indicar que el Banco appel au savoir local. Étant donné example, programmatic invest- puede hacer más para tener en que de nombreux emprunteurs ne ment lending may be appropriate cuenta estos factores -por ejem- connaissent pas toute la gamme where the emphasis is on a sus- plo, mejorando las evaluaciones des instruments cie la Banque, tained medium- to long-term pro- de la capacidad de aplicación y celle-ci doit les tenir informés des gram of phased policy and recurriendo iás al conocimiento options que leur offre l'éventail institution-building reforms- local. Como muchos prestatarios toujours plus grand d'instruments xx Executive Sunnary especially when the range no están familiarizados con à leur disposition, afin de of stakeholders and institu- todos los instrumentos del s 'assurer de leur pleine tions involved is large, and - Banco, éste debe ayudarles adhésion. when there are substantial a actualizar sus conoci- challenges for consultation, mientos sobre las opciones Mise en ouvre de ' consensus building, pilot- cada vez más amplias ofre- stratégies sectorielles ing, monitoring, and evalu- cidas por el Banco, con el et thématiques ation. The Bank's system- fin de conseguir su total L'évolution des priorités atic interactions with international identificación. institutionnelles de la Banque se and national stakeholders have traduit par l'accroissement récent improved Bank policies and Aplicaciôn de estrategias des prêts destinés à la protection helped build a broad consensus sectoriales y temáticaS sociale, des opérations portant sur around some of its thematic prior- La evoluciôn de las prioriclades la politique économique et les ities, but consultative processes institucionales del Banco se pone finances, et par une attention need to become more expeditious de manifiesto en la reciente accrue à la gestion du secteur and businesslike. At the country expansiôn del crédito para fines public et aux réformes institution- level, partnerships have a crucial de protecciôn social, las politicas nelles. Par comparaison, la baisse role in setting the pace and direc- económicas y el financiamiento, y de la proportion des prêts en tion of reform, particularly in la mayor atenciôn a la gestiôn del faveur du développement rural et large countries where selectivity is sector público y la reforma institu- cie l'éducation semble aller à essential to leveraging the Bank's cional. La disminución de la parte l'encontre des priorités définies, et relatively small share in external de los préstamos para desarrollo souligne la nécessité d'actualiser assistance. The transaction costs rural y educaciôn, por el contra- les stratégies opérationnelles dans can be high in some cases, and rio, parece estar en contradicciôn ces secteurs. Les prêts d'investis- more strategic attention is needed con las prioridades estableciclas y sement spécifiques continuent to improve cost effectiveness and subraya la necesidad de estrate- d'être l'instrument prédominant, selectivity in the use of partner- gias operacionales actualizadas en et les nouveaux instruments de ships. Finally, the effectiveness of esos sectores. Los préstamos prêt programmatiques sont de lending operations for sector and orientacos expresamente a la plus en plus utilisés. Dans thematic objectives is strongly inversiôn continúian siendo el ins- l'ensemble, l'échelonnement des influenced by the extent and trumento crediticio predominante, opérations et les synergies sont quality of stakeholder y está aumentando la utilizaciôn particulièrement importants lors- participation. de nuevos instrumentos de finan- que les objectifs comprennent des ciamiento programático. En térmi- réformes institutionnelles com- Corporate Implications nos generales, la secuencia de las plexes. En particulier, les chances In the continuing drive to operaciones y las sinergias entre de succès sont accrues lorsque les enhance the impact of develop- ellas adquieren especial importan- prêts sont étayés par des travaux ment assistance on poverty and cia cuando entre los objetivos se analytiques en amont, parallèle- growth, this Review has high- incluyen complejas reformas insti- ment à un appui à des expérien- lighted areas in which the Bank tucionales. En particular, es más ces pilotes et à une mise en can further increase its develop- probable que se consiga el éxito oeuvre souple en aval, et à un ment effectiveness-by making cuando los préstamos están sus- dialogue permanent sur les mesu- the right choices in line with tentaclos en estudios analiticos res à prendre, le cas échéant. country performance and poten- previos -junto con un apoyo Le meilleur moyen pour la tial, corporate priorities, and com- paralelo a la experimentación y Banque d'atteindre ses objectifs parative advantage. una aplicaciôn más flexible en thématiques pluridisciplinaires, At the instrument level, a uni- etapas sucesivas- y en un conti- tels que la préservation à long form treatment covering each nuado diálogo sobre políticas, terme de l'environnement et la instrument's role, design, and les- cuando convenga. parité des sexes, est d'utiliser de ×xi 2001 Annual Review of Development Effectiveness sons from past perfor- Los objetivos temAticos fagon compl6mentaire les mance could constructively transversales del Banco, instruments de pr&t et les inform instrument choice comO la sostenibilidad services hors pr&t. Parmi for Bank managers and ambiental y el genero, pue- les strat6gies r6cemment borrowers. The ongoing den lograrse mAs fAcil- examin6es par l'OED, c'est update and conversion of mente mediante la celle ayant trait au d6ve- the Operational Policy on utilizaci6n complementaria loppement 6cologiquement adjustment lending, to be de instrumentos crecliticios viable qui a exploit6 la followed by a similar process for y no crediticios. De las estrategias plus vaste gamme d'instruments, investment lending, will offer a recientemente examinadas por el en tirant parti des m6canismes de good opportunity to incorporate DEO, la sostenibilidacl ambiental protection efficaces mis en place these improvements. es la que ha utilizado la mayor et cle prets directs en faveur de The Bank is devoting renewed variedac de instrumentos, habi- 'environnement, et en forgeant attention to achieving better endo multiplicado la aplicaci6n de nombreux partenariats r6gio- results in countries with poor pol- eficaz de salvaguardias junto con naux et mondiaux. L'int6gration icy and institutional environments, el financiamiento ambiental r&Issie des initiatives th6matiques with a current focus on nonlend- directo y una considerable utiliza- passe par une utilisation strat6gi- ing support. It has established a ci6n de asociaciones regionales y que des instruments, et par une high-level task force devoted to muncliales. La incorporaci6n efi- d6finition plus claire des respon- improving Bank support to low- caz de las iniciativas temiticas sabilit6s des R6gions et des income, poorly performing coun- requiere la utilizaci6n estrat6gica R6seaux. tries. This Review presents evalua- de instrumentos asi como una On peut tirer plusieurs legons tion findings that are germane to delimitaci6n m-is clara cle respon- g6n6rales en vue de la bonne this difficult task. Recognizing the sabilidades entre regiones y redes. mise en Ceuvre de strat6gies sec- significant performance differen- En lo que se refiere a la aplica- torielles et th6matiques. Pour tial across instruments is an ci6n eficaz de las estrategias secto- choisir judicieusement l'instru- important first step. In addition, riales y temiticas, pueden ment ad6quat lorsqu'on veut r6ali- over-complexity of projects when extraerse varias enseianzas gene- ser des r6formes institutionnelles, country capacity is limited leads rales. Para elegir adecuadamente il faut une bonne connaissance to excessive risks. More conscious el instrumento cuando se des objectifs de Ilop6ration, ainsi tailoring of instruments and part- emprencle la reforma institucional que de la situation du pays et du nerships to country conditions se requiere claridad acerca de los secteur. Ainsi, des pr&ts program- should bring precious develop- objetivos cle la operaci6n y una matiques peuvent &tre indiqu6s ment effectiveness gains in diffi- comprensi6n adecuada de las lorsque laccent est mis sur un cult operating environments. condiciones del pais y el sector. programme continu & moyen/long Experimentation with outcome- Por ejemplo, los pr6stamos para terme de r6formes progressives based operations and innovative inversiones programaticas pueden des politiques et des institutions - partnerships with private and vol- resultar indicados cuando lo que en particulier lorsque les parties untary sector organizations should interesa es un programa conti- prenantes et les institutions be encouraged. Lastly, the role of nuado a mediano o largo plazo de concern6es sont nombreuses et nonfinancial activities in poorly reformas escalonadas normativas y qu'il existe des besoins importants performing countries deserves de fortalecimiento institucional - de consultation, de recherche de special attention, even when cli- sobre todo cuando la varieclact de consensus, d'interventions pilotes, ents are not actively borrowing. partes interesadas e instituciones de suivi et d'6valuation. Les con- Implementation of sector strat- es considerable, y cuando existen tacts 6troits que la Banque entre- egies within countries requires dificultades notables para entablar tient syst6matiquement avec les clarity about the country's devel- consultas o lograr el consenso y parties prenantes au niveau natio- opment objectives and a good para las actividades de experimen- nal et international ont amelior6 understanding of country and sec- taci6n, seguimiento y evaluaci6n. les politiques de la Banque et xxii Executive Sumimary tor conditions. Adjustment Las interrelaciones sistemá- contribué à forger un vaste lending, supportec as nec- ticas del Banco con las consensus autour de certai- essary by capacity-building partes interesadas interna- nes de ses priorités théma- assistance, is more effective cionales y nacionales han tiques. Le processus de when national ownership mejorado las politicas de consultation doit cependant and consensus on sector éste y ayuLdaclo a conseguir devenir plus rapide et pro- reforms are strong and un amplio consenso en fessionnel. Au niveau des when monitoring and eval- torno a algunas de las prio- 1 pays, les partenariats ont uation arrangements are in place. ridades ternâticas, pero los proce- un rôle crucial à jouer en fixant le In sectors where these prerequi- sos consultivos deben ser imáts rythme et l'orientation des réfor- sites are lacking-for example, acelerados y sistemáticos. Dentro mes, en particulier dans les education and health in some de los paises, las asociaciones grands pays où la sélectivité est countries-programmatic invest- pueden desempefñar un papel essentielle pour assurer un maxi- ment lending may be the pre- decisivo para establecer el ritmo y mum d'efficacité à la part relative- ferred approach, supported where orientaciôn de la reforma, sobre ment faible de la Banque dans relevant by Learning and Innova- toclo en los grandes paises donde l'aide extérieure. Les coûts de tion Loans (LILs) and targeted la selectividad es fundamental transaction peuvent être élevés capacity building. Support of the para multiplicar los efectos de la clans certains cas, et il faut s'atta- Bank's crosscutting, thematic parte relativamente pequeña del cher davantage, sur un plan stra- objectives depends less on the Banco en la asistencia externa. tégique, à recourir aux use of specific lending instru- Los costos de transacciôn pueden partenariats de façon plus écono- ments than on genuine main- ser elevaclos en algunos casos, y mique et sélective. Enfin, leffica- streaming of these operational se requiere más atención estraté- cité des opérations de prêt clu emphases across instruments and gica para mejorar la eficacia en point de vue des objectifs secto- on strategic application of safe- función de los costos y la selecti- riels et thématiques est fortement guards and partnerships. viclac en el uso de asociaciones. influencée par le degré et la qua- The findings in this Review Finalmente, la eficacia de las ope- lité de la participation des parties have implications for evaluation: raciones crediticias con respecto a prenantes. • Nonfinancial activities continue los objetivos sectoriales y temáti- to grow in importance. A cos depende fuertemente del Implications pour l'institution strong evaluative framework is alcance y calidad de la participa- S'inscrivant dans la ligne de l'ac- needed to ensure their contin- ciôn de las partes interesaclas. tion menée pour accroître l'impact ued effectiveness, building on de l'aide au développement sur la the Quality Assurance Group's Repercusiones institucionales pauvreté et la croissance, le pré- current assessments of their En el constante esfuerzo por sent Examen appelle l'attention quality at entry-extending aumentar los efectos de la asisten- sur les domaines dans lesquels la quality assurance to all services cia para el desarrollo en la Banque peut encore améliorer of the Knowledge Bank. pobreza y el crecimiento, en el son efficacité sur le développe- " The quality of Poverty Recluc- presente Examen se han clesta- ment, en opérant les choix qui tion Strategy Papers (PRSPs) is cado las áreas en que el Banco s'imposent compte tenu de la per- critical to the Bank's develop- puede aumentar todavia su efica- formance et du potentiel du pays, ment effectiveness because cia en términos de clesarrollo, de ses priorités institutionnelles, PRSPs provicle the framework adoptando las clecisiones adecua- et de son avantage comparatif. for a comprehensive approach das de conformidad con el des- En ce qui concerne les instru- to ownership, partnership, and empefño y potencial de un pais, ments, une étude analysant de la results orientation. PRSPs las prioridades institucionales y même manière le rôle de chaque already emphasize monitoring las ventajas comparativas. instrument, leur conception et les progress on selected inclicators; En bo que se refiere a los ins- leçons à tirer des résultats obte- this now shoulC be comple- trumentos, un tratamiento uni- nus par chacun pourrait éclairer xxiii 2001 Annual Review of Development Effectiveness mented by comparable forme en que se considere utilement les choix des res- attention to capacity la funciôn, diseño y ense- ponsables de la Banque et building for systematic - ñanzas del pasado de cada des emprunteurs. L'actuali- program evaluation of uno de ellos podria orien- sation et l'adaptation en interventions and their tar a los administradores cours de la Politique opéra- results. del Banco y a los prestata- tionnelle sur l'ajustement • Country and sector strat- rios a tomar decisiones con structurel, ainsi que la egies can be strength- conocimiento de causa. El démarche similaire prévue ened through a more transpar- actual proceso de actualizaciôn y pour la politique relative aux ent and objective record of conversión de la Politica Opera- prêts d'investissement, offrent une past performance. A stronger cional sobre financiamiento para bonne occasion d'introduire ces independent and self- fines de ajuste, que deberá ir améliorations. evaluation focus would be seguida de un proceso semejante La Banque s'emploie plus que facilitated by a closer alignment con los préstamos para proyectos jamais à obtenir de meilleurs of inputs to results, using a log- de inversión, ofrecerá una buena résultats dans les pays où les poli- ical results chain and verifiable oportuniclad de incorporar esas tiques et les institutions laissent à performance indicators- mejoras. désirer, en privilégiant une assis- Country Assistance Strategies El Banco està dedicando reno- tance hors-prêt. Elle a mis en and Sector Strategy Papers. vada atenciôn a lograr mejores place un groupe de travail de Finally, since evaluation find- resultados en los paises con haut niveau ayant pour mandat ings testify to the importance entornos normativos e institucio- d'améliorer la qualité de son of instrument selection and nales poco adecuados, y actual- action en faveur des pays à faible sequencing for development mente insiste en los instrumentos revenu peu performants. L'Exa- effectiveness, country, sector, no crediticios. Ha establecido un men de cette année présente les and thematic evaluations grupo de trabajo de alto nivel conclusions de l'évaluation se should address more systemati- cuya finalidac es mejorar el rapportant à cette tâche difficile. Il cally whether the right instru- apoyo del Banco a los paises de est important, dans un premier ments were used for the devel- ingreso bajo y con resultados temps, de constater les écarts opment goals selected, and poco satisfactorios. En este Exa- significatifs qui existent entre la whether the complementarity men se presentan las conclusio- performance des différents instru- of instruments was exploited nes de la evaluaciôn relacionadas ments. Par ailleurs, opter pour des judiciously. Similarly, project- con esta difícil tarea. El reconoci- projets trop complexes lorsque le level evaluation should capture miento de la importante diferen- pays a des capacités limitées synergies from complementary cia de resultados entre los introduit des risques excessifs. Un or sequenced instruments (for distintos instrumentos es un pri- plus grand souci d'adaptation des example, adjustment loans mer paso importante. Además, instruments utilisés et des parte- and stand-alone technical unos proyectos demasiado com- nariats à la situation du pays assistance). plejos cuando la capacidad del devrait conduire à des améliora- pais es limitada generan excesivos tions fructueuses de l'efficacité du riesgos. Una adaptaciôn más développement dans les contextes consciente de los instrumentos y opérationnels difficiles. Il faut asociaciones a la situaciôn del encourager des opérations dont le pais deberia permitir valiosas financement est subordonné à mejoras de la eficacia en términos l'obtention de résultats, ainsi que de desarrollo en condiciones rea- des partenariats novateurs avec le les dificiles. Deberian alentarse la secteur privé et les organismes du experimentaciôn con las opera- secteur associatif. Enfin, dans les ciones basadas en los resultados y pays peu performants, il faut las asociaciones renovadoras con consacrer des efforts particuliers à Xxiv Executve Sumrnary organizaciones del sector des activités autres que privado y el voluntariado. financiéres qui peuvent - Finalmente, merece espe- jouer un róle important, cial atención la función de méme lorsque les pays las actividades no financie- clients ne sont pas des ras en los países con des- emprunteurs actifs. empeño poco satisfactorio, La mise en œuvre de aun cuando los clientes no i stratégies sectorielles natio- sean prestatarios activos. nales exige que les objectifs de La aplicación de estrategias cléveloppement du pays soient sectoriales en todos los países clairs, et la situation Cu pays et du requiere claridad acerca de los secteur bien connue. Les préts a objetivos de desarrollo del país y l'ajustement, appuyés en tant que una comprensión adecuada de las de besoin par une aide au renfor- condiciones nacionales y sectoria- cement des capacités, sont plus les. El préstamo para fines de efficaces lorsque le pays est véri- ajuste, respaldado en la medida tablement aux commandes et que necesaria con ayuda para el forta- les réformes sectorielles recueil- lecimiento de la capacidad, es lent l'achésion de la population, más eficaz cuando el protago- en mérne temps que des disposi- nismo nacional y el consenso tions de suivi et d'évaluation ont sobre las reformas sectoriales son été mises en place. Dans les sec- sólidos y cuando se han instau- teurs où ces concitions préalables rado mecanismos de seguimiento ne sont pas réunies, par exemple, y evaluación. En los sectores en ceux de léducation et de la santé los que no se dan esos requisitos dans certains pays, ul peut être -por ejemplo, la educación y la préférable de recourir à des préts salud, en algunos países- quizás d'investissement programmati- sea más adecuado el préstamo ques, confortés le cas échéant par para inversiones programáticas, des Préts au développement des respaldado cuando convenga con connaissances et á linnovation préstamos para el aprendizaje y la (LIL) et par un renforcement ciblé innovación y actividades selecti- des capacités. L'engagement en vas de fortalecimiento de la capa- faveur des objectifs thématiques cidad. El apoyo a los objetivos pluridisciplinaires qu'a adoptés la transversales y temáticos del Banque est davantage fonction Banco no depende tanto de la uti- d'une véritable prise en compte lización de instrumentos específi- de ces priorités opérationnelles cos de financiamiento cuanto de clans le cadre de lutilisation de una auténtica incorporación de tous les instruments et de l'appli- esos enfoques operacionales en cation stratégique de politiques de los distintos instrumentos y de la sauvegarde et de la formation de aplicación estratégica de salva- partenariats que de lutilisation de guardias y asociaciones. tel ou tel instrument de prét. Las conclusiones de este Exa- Les conclusions du présent Exa- men tienen repercusiones para la men ont des conséquences pour evaluación: lévaluation des opérations : • Las actividades no financieras • Les activités autres que financié- son cada vez más importantes. res continuent de se cévelop- xxv 2001 Annual Review of Development Effectiveness Un sólido marco de per. Il faut les doter d'un evaluación es condición cadre d'évaluation solide necesaria para conseguir pour préserver leur effi- una eficacia continuada, cacité, en s'appuyant sur nbasada enevaluaciones les évaluations de leur actuales del Grupo de qualité á l'entrée garantía de calidad qu'effectue actuellement acerca del nivel de le Groupe d'assurance calidad inicial --que amplía la de la qualité - il s'agit d'élargir garantía de calidad a todos los l'assurance de la qualité á tous servicios del Banco de les services assurés par la Ban- conocimientos. que du Savoir. • La calidad de los documentos • L'efficacité de l'action de la de estrategia de lucha contra la Banque en faveur du dévelop- pobreza (DELP) es fundamen- pement repose sur la qualité tal para la eficacia del Banco des Documents de Stratégie en términos de desarrollo, ya pour la Réduction de la Pau- que ofrecen el marco para un vreté (DSRP), car ceux-ci per- planteamiento integrado de la mettent d'aborder l'appropria- identificación con las activida- tion par le pays de ses des, las relaciones de asocia- objectifs de développement, ción y la orientación hacia los les partenariats et la mise en resultados. Los DELP hacen ya avant de l'obtention de résul- hincapié en la supervisión de tats dans une perspective glo- los progresos con respecto a bale. Les DRSP mettent d'ores algunos indicadores selecciona- et déjá l'accent sur le suivi de dos; ello debería completarse certains indicateurs ; il faut ahora con una atención com- maintenant porter la méme parable al fortalecimiento de la attention aux renforcement des capacidad para la evaluación capacités en vue d'une évalua- programática y sistemática de tion de programme systémati- las intervenciones y de sus que des interventions et de resultados. leurs résultats. • Las estrategias relativas a los • Dresser un bilan plus objectif países y sectores se pueden et transparent des résultats reforzar mediante un registro antérieurs contribue á renforcer más transparente y objetivo del les stratégies nationales et sec- rendimiento anterior. Se puede torielles. Une mise en corres- conseguir una atención mayor, pondance plus étroite des independiente y basada en la apports avec les résultats, á autoevaluación mediante una laide d'un enchainement logi- armonización más estrecha que des résultats et d'inclica- entre los insumos y los resulta- teurs de performance vérifia- dos, utilizando una cadena de bles (fournis par les Stratégies resultados lógicos e indicado- d'aide-pays et les Docurments res de desempeño verificables: de stratégie sectorielle) facilite- estrategias de asistencia a los rait un renforcement de lauto- países y documentos de estra- évaluation et de l'évaluation tegia sectorial. inclépendante. xxVi Executive Summary Finalmente, como los • Enfin, puisque les resultados de la evalua- conclusions de lévalua- ción acreditan la impor- tion attestent cíe Pimpor- tancia de la selección y tance dlu choix des ordenación cronológica instruments et de léche- cíe los instrumentos para lonnement des interven- la eficacia en términos tions pour llefficacité dlu cte desarrollo, las eva- Céveloppement, les éva- luaciones nacionales, sectoria- luations nationales, sectorielles les y temáticas deberían consi- et thématiques devraient étu- derar de forma más sistemática dier plus systématiquement si si se utilizaron los instrumentos lion a utilisé les instruments adecuados para los objetivos adaptés aux objectifs retenus et de desarrollo seleccionados, y si Fon a exploité comme il si se aprovechó sensatamente convenait la complémentarité la complementariedad de los cíes instruments. De méme, instrumentos. De la misma lévaluation c'un projet devrait manera, la evaluación de los analyser les synergies qui nais- proyectos debería aprovechar sent de l'utilisation échelonnée las sinergias entre instrumentos ou complémentaire de civers complementarios o debida- instruments (par ex., préts a mente escalonados (por ejem- l'ajustement et assistance tech- plo, préstamos para fines de nique autonome). ajuste y asistencia técnica independiente). xxvii ABBREVIATIONS AND ACRONYMS AFR Africa Region APL Adaptable Program Loan APPI Aggregate Project Performance Index ARDE Annual Review of Development Effectiveness AROE Annual Report on Operations Evaluation BP Bank procedures CAE Country Assistance Evaluation CAS Country Assistance Strategy CDF Comprehensive Development Framework CEM Country Economic Memorandum CFA Communaute Financiere Africaine CFAA Country Financial Accountability Assessment CODE Committee on Development Effectiveness CPAR Country Procurement Assessment Report CPFA Country Profile of Financial Accountability CPIA Country Policy and Institutional Assessment DDO Deferred Drawdown Option DRL Debt Reduction Loan EAP East Asia and Pacific Region ECA Europe and Central Asia Region ERL Emergency Recovery Loan ESW Economic and sector work FIL Financial Intermediary Loan FRM Resource Mobilization Department FSAP Financial Sector Assessment Program GEF Global Environmental Facility HNP Health, nutrition, and population IBRD International Bank for Reconstruction and Development (World Bank) ICR Implementation Completion Report ID Institutional development IDA International Development Association IFC International Finance Corporation IGR Institutional Governance Review IMF International Monetary Fund LCR Latin America and the Caribbean Region LIL Learning and Innovation Loan MIGA Multilateral Investment Guarantee Agency MNA Middle East and North Africa Region MT Montreal Protocol Fund NGO Nongovernmental organization NSSI National Social Security Institute OED Operations Evaluation Department OP Operational Policy OPCS Operations Policy and Country Services PA Poverty Assessment PBA Performance-based allocation xxix 2001 Annual Review of Development Effectiveness PER Public Expenditure Review PPAR Project Performance Assessment Report PRSC Poverty Reduction Support Credit PRSI Poverty Reduction Strategy Initiative PRSP Poverty Reduction Strategy Paper PSAL Programmatic Structural Adjustment Loan PSM Public sector management QAE Quality at entry QAG Quality Assurance Group RIL Rehabilitation Import Loan SAL Structural Adjustment Loan SAR South Asia Region SECAL Sector Adjustment Loan SF Special Financing Grants SIL Specific Investment Loan SIM Sector Investment and Maintenance Loan SNAL Sub-National Adjustment Loan SSAL Special Structural Adjustment Loan SSP Sector Strategy Paper SSR Social and Structural Review SWAP Sectorwide approach TAL Technical Assistance Loan UNDP United Nations Development Program WID Women in Development XXX Making Development Choices he challenge of development, never straightforward, has become even more complex as the number of actors has grown and the de- sire for demonstrable results has intensified. In seeking to implement its poverty reduction mission, the World Bank has to match over 100 client countries tackling innumerable development issues with a financial product line ranging from small grants to large loans, a diverse line of nonfinancial products, and a growing cast of public, private, and civil society partners. If the Bank is to continue improving its development effectiveness, it will have to make the right choices about how, when, and with whom to engage (and disengage). Making the right choices with client countries and other devel- opment partners-what is often called selectivity-is the theme of this Review. Some of the emerging challenges emanate 2001, have exacerbated a global economic slow- from the development community. Donors are down, pushing hundreds of thousands of peo- under rising pressure to satisfy taxpayers that aid ple below the poverty line. Concern is rising that achieves results. Donors and recipients alike demands for urgent liquidity and humanitarian are impatient with the high transaction cost of assistance to directly affected countries may aid and seek to eliminate overlap and "aid bom- sideline or supplant longer-term efforts toward bardment," especially in small countries. The social and structural development in these and Millennium Development Goals-with their spot- other low-income countries. light on measurable outcomes-set daunting Against these challenges, the World Bank has benchmarks. Progress (or lack of progress) to- learned from experience, amassed a store of ward the goals will be plain for all to see. Mean- knowledge, and diversified its toolkit. These as- while, the operating environment has become sets have been enhanced in three significant subject to new threats-the AIDS pandemic, il- ways. First, research has demonstrated that poli- legal drugs, terrorism, armed conflicts, and failed cies, institutions, and governance are critical to states-that intensify the underlying structural development success. These factors are now causes of poverty. The attacks of September 11, squarely "on the table" in the allocation of aid 2001 Annual Review of Development Effectiveness resources. Second, attention to quality assur- set and that the CDF principle of partnership im- ance and evaluation-as noted by OED's plies that the Bank should "let go" of areas 2000-2001 Annual Report on Operations Eval- where it does not have a comparative advantage. uation'-has helped lending and nonlending The ARDE for 2000, From Strategy to Results, ex- products to deliver improvements in perform- plored how the Bank's strategies translate into ance. Third, new development paradigms and results on the ground. It demonstrated that de- aid processes (such as the Comprehensive De- velopment interventions are more successful velopment Framework [CDF], the Poverty Re- when they are judiciously selected so as to duction Strategy process, and sectorwide match country circumstances and leverage the approaches) have been created to address prob- comparative advantage of the Bank and its part- lems collaboratively-at the country, regional, ners. Selectivity does not necessarily mean doing and global levels. less. Instead, it implies making informed choices OED's Annual Review of Development Eftc- about the right kind and number of activities to tiveness (ARDE) tracks the Bank's imprint on this increase development effectiveness. In this year's complex landscape. Over the past few years, ARDE, Making Choices, with a special focus on evaluations at the project, country, sector, and instrument selection, selectivity takes center global levels-as synthesized in successive stage as a privileged driver of development ARDEs-have pointed to selectivity as a vital effectiveness. tool for achieving development results, and as The Bank exercises selectivity through the a continuing area of challenge for the Bank. Most choices it makes in three dimensions, as mod- recently, the 1999 ARDE, Toward a Compre- eled in figure 1.1: its corporate goals, strategies hensive Development Strategy, showed that the for countries, and specific activities or instru- CDF means that a "one-size-fits-all" mentality ments.2 Selectivity at each level contributes to de- needs to be replaced by a "customization" mind- velopment effectiveness. Figure 1.1 - - F - I io, Corpdraite ,~ * CDF/PRSI processes * Effective mix and * PRSP/CDF support * Corporate goals sequence of financial * Country Assistance * Sector strategies and nonfinancial Strategies (CASs) (SSPs) instruments * Partnerships and aid * Corporate constraints * Instruments/Policy coordination (e.g., PBA, exposure, framework budget) 2 Making Development Choices Today's corporate goals are more clearly Bank clients have gained access to a spectrum articulated and understood than ever before. of alternative financing sources-some involv- The overarching mission-to reduce poverty ing transaction costs lower than the Bank's. through a focus on results-has been translated Second, for poor and highly aid dependent bor- into corporate processes (e.g., Sector Strategy Pa- rowers, there is a continuing drive to enhance pers, new budget priorities). The Bank has also the impact of development assistance on poverty taken on a broad range of institutional initiatives and growth. Third, most borrowers can access in support of its core goals. At the country level, global knowledge-whether through the Inter- exposure limits and the administrative budget net or through local knowledge networks- have served to define the overall financial en- more readily than in the past, thereby raising the velopes for what the Bank can take on. Selec- bar for the value added of the Bank's knowledge tivity at the corporate level, based on an products. Finally, it has become increasingly appreciation of the Bank's unique knowledge clear (see 2000 ARDE, AidandReform in Africa) and partnership assets, is an important tool to that development outcomes depend on country help ensure that corporate initiatives enrich, but policies and capacities, making a correct un- do not overcrowd, the institutional agenda. derstanding of the country context critical to the However, the Bank's adoption of a country choice of instruments and their development ef- focus and of a comprehensive development fectiveness. Accordingly, this year's ARDE focuses perspective means that operational selectivity is on effective choice of activities and instruments essentially a country-level challenge. to implement poverty reduction strategies. Country Assistance Strategies are expected This Review describes the Bank's toolkit and to reflect the Bank's corporate goals, while at the its evolution (Chapter 2), tracks the performance same time matching the needs and comparative of Bank instruments and operations (Chapter 3), advantages of partners in particular settings, as examines the use of instruments at the country provided for under the Bank's business model.3 level (Chapter 4), provides a sector/thematic This involves the resolution of inevitable tensions perspective (Chapter 5), and summarizes the between client ownership and corporate prior- findings and implications of the analysis (Chap- ities as well as between responsiveness and ter 6). In addition to sources outside OED and budget limits. As the 2000 ARDE demonstrated, the World Bank, it draws upon OED evaluation it is therefore critical to understand what strate- findings from: gies succeed in different country circumstances * Project performance assessment reports (for- and to fully exploit the potential of partnerships merly audit reports) and evaluation sum- in shaping and delineating the Bank's own role. maries for 348 projects evaluated since the last Even with the right strategies in place, results Review. In addition, over 5,000 previously on the ground depend on the effectiveness of evaluated projects in OED's database allow the instruments available within the Bank's assessment of long-term trends. toolkit. Over the past decade, the Bank has de- * Country Assistance Evaluations of 50 bor- voted effort and creativity to adapting its finan- rowing countries, especially the 15 completed cial and nonfinancial services to meet a wide most recently. variety of client needs and to implement cor- * Studies of sectors and thematic areas, a study porate initiatives. New instruments have been of the IDA10 through 12 replenishment created, others phased out. What has stimu- periods, and the Annual Report on Operations lated this attention to instruments? First, many Evaluation. 3 Instruments of Bank Assistance Development effectiveness depends on selecting the right instruments and deploying them in appropriate sequence and combination, in light of country and sector characteristics. This chapter sets the stage for later discussions of performance, by providing an overview of the Bank's instrument toolkit and analyzing recent instrument choices. Innovations have been introduced over the 1990s, in both the financial and nonfinancial areas. To leverage these improvements, effective instrument selection in di- verse environments requires clear operational guidance in a comprehensive and consistent framework. The Bank's development effectiveness de- facilitative rather than restrictive, promoting the pends on the judicious choice of instruments use of funds for productive purposes while high- from its diversified toolkit. At the broadest level, lighting that Bank funds must be used only for Bank assistance is either financial or nonfinan- the purposes intended. They are sufficiently cial (figure 2.1). Traditionally the Bank has fo- broad and flexible to permit a wicle range of lend- cusedl on the former. More recently attention has ing instruments to have evolved over time as cir- been paid to the role of nonfinancial assistance, cumstances have changed and understanding especially in poorly performing countries. of the development process has improved. This Greater differentiation is being introduced be- flexibility allowed the introduction of adjustment tween diagnostic services and client-driven ad- lending in the early 1980s, and the subsequent visory services, and within diagnostic services classification of Bank lending into two basic clearer standards and structure of core products types of instruments: investment and adjustment. are emerging. Specific instruments reflect variations within these broad groups. The specific policies and Financial Services guidance governing the instruments used and their design are left to the Board and manage- Investment, Adjustment, and Other Instruments ment to elaborate as needed. The use of financial services is prescribed in the Over the past 10-12 years, the Bank's menu Bank's Articles of Agreement. These Articles are of financial instruments has changed in response 5 2001 Annual Review of Development Effectiveness Figure 2.1 Investment Adjustment" Other. 'iasti C Advisory SSAL, DUO si?rocure. Assmis DRL Der Dagiistic Reports Note: Abbreviations and acronyms for specific investment and adjustment lending instruments are defined in Annex A. to an increasingly complex economic and social Asia crisis, has always constituted the largest environment. As figure 2.2 shows, investment share of Bank lending activities. lending remains the Bank's lending workhorse, Innovations in specific investment lend- and, with the exception of the period of the East ing instruments. Within the broad investment category of investment lending, several specific instruments have been developed. Sector In- Figure 2.2 vestment and Maintenance Loans (SIMs) made ..up about a quarter of investment lending until Other Inv $1 billion the 1990s. During the 1990s their share dropped to less than 10 percent of total lending as they _ APL $4 billion were partially replaced by new adaptable lend- ERL $6 billion ing such as Adaptable Program Loans (APLs) and SECAL $28 billion FIL $8 billion Learning and Innovation Loans (LILs), intro- SIM $18 billion duced by the Bank in 1998. The main motiva- tion for introducing APLs and LILs was to SAL $40 billion increase the Bank's flexibility, to reduce risks to borrowers and the Bank when operating in areas of uncertainty, and to facilitate exit from Oh in floundering operations. The APL supports long- term development programs with a phased ap- TAL $5 billion proach, which is more easily adapted to changes SIL $143 billion in the country environment. This allows subse- quent phases to leverage lessons learned and build necessary capacity or consensus in early Note: Abbreviations and acronyms are defined in Annex A. phases. The purpose of LILs is to pilot innova- tions, build consensus, and learn in order to scale 6 Instruments of Bank Assistance up and apply promising models to other re- portant transactions, but also improved the fi- gions in the country. These new instruments now nancial viability of transactions, and helped account for a quarter of active investment op- client countries to access or re-enter financial erations, or 10 percent by dollar volume, with markets, establish a track record, and build mar- annual commitments of about US$1 billion for ket confidence. Another review of the IDA par- APLs and US$100 million for LILs. The volume tial risk guarantees program prepared for FRM for LILs is lower than expected. An effort is in the context of the IDA13 replenishment in Oc- under way to reduce processing requirements, tober 2001 points to similar conclusions. To preparation time, and costs for LILs, which have clarify the relation of the IDA/IBRD guarantee been greater than originally anticipated. with IFC and MIGA instruments, the December Experience on completed APLs and LILs is 2000 Board report included a matrix that set out limited, with only a few APLs having completed the role of the various World Bank Group guar- their first phase, including projects in India antee instruments. The Board called for greater power, Philippines urban water, and Tunisia collaboration among the Bank, IFC, and MIGA transport. One of these, the Haryana Power to ensure that guarantees and other Bank ser- Project in India, was discontinued after it failed vices are used in a synergistic fashion. to meet trigger requirements, an illustration of the automatic exit feature of APLs. Recent Lending Choices Innovations in specific adjustment lend- Instrument choice is influenced by many factors, ing instruments. The broad instrument cate- including the riskiness of the country's imple- gory of adjustment lending has been dominated menting environment and internal considera- by use of the StructuralAdjustment Loan (SAL), tions such as corporate priorities and budget covering more than half of the adjustment lend- implications. The following section examines ing projects approved between FY98 and FY00. lending instrument choice along these related SALs and Sector Adjustment Loans (SECALs) dimensions. constitute the Bank's "traditional" adjustment As part of its risk management procedures, the lending instrument set, to which, in the early Bank takes into account the country's risk envi- 1990s, the Bank added two new instruments- ronment in deciding whether and how much to the Debt Reduction Loan (DRL) and the Reha- lend and with what instrument. Lending alloca- bilitation Import Loan (RIL). The use of these tions to countries with low Country Policy and instruments has been modest given the recent Institutional Assessment (CPIA) ratings have to introduction of new programmatic lending in- balance the possible rewards against the risks. struments-the Special Structural Adjustment Where the policy environment is weak, non- Loan (SSAL), the Sub-National Adfustment Loan lending services are often a more appropriate op- (SNAL), the Programmatic StructuralAdjustment tion. The Bank is also proactive in seeking to Loan (PSAL) and its specific derivative for IDA achieve policy reform through lending. Among countries, the Poverty Reduction Support Credit the 44 IBRD borrowers rated by Standard and (PRSC). The focus of the PSAL is on medium- Poor's, it is those with the lowest sovereign rat- term policy and institution building, while the ings that received the majority of recent Bank PRSC supports the implementation of poverty commitments. For higher-rated countries, which reduction strategies. have better access to international capital mar- Guarantees. The Bank's 14 approved guar- kets, Bank commitments have been limited. As antees represent roughly US$2 billion in con- figure 2.3 shows, the amount of adjustment lend- tingent liabilities. Ten of the 14 are accompanied ing in low CPIA performers has been larger than by Bank loans, and most of these are targeted for investment, even though outcomes for ad- to the power sector. A review of the guarantee justment lending interventions in low CPIA coun- program prepared for the Board in December tries have been particularly weak (Chapter 3). 2000 suggested that the Bank guarantees have Costs difjrby specific lending instrunments. Fig- not only helped catalyze private finance to im- ure 2.4 provides a breakdown of the total costs 7 2001 Annual Review of Development Effectiveness Figure 2 .3 * *Risks, by CPIA and Credit (PY 9 6-01 A,pp roav aIs) 134 IBRD & IDA Countries 45 IBRD Countries 70 D Adjustment 70 D Adjustment 60 Investment 60 _ Investment 50 50 W 40 _ 40 30 - 30 - E a 20 - 20 10 - .10 - /7 OZ 0 Low Medium High BBB+ or BB+ to BBB BB or Lower (41 Countries) (69 Countries) (24 Countries) Better (14 Countries) (24 Countries) (7 Countries) CPIA Standard & Poor's Sovereign Ratings (preparation and supervision) by lending in- dollar amount disbursed. These cost differences struments per projects approved as well as per are highly relevant to country managers facing choices among instruments and relatively rigid budget ceilings. Per project, SILs, SIMs, and Fig ure 2 . 4 CO 0 t S SECALs have the highest lending costs. LILs D i f e r b " have the highest costs per dollar disbursed, en d i g, whereas SALs, given their large size, had the low- FY96-0 1 est costs. As mentioned earlier, the LILs' higher- - 2than-expected costs and preparation time have 900 resulted in a more modest roll-out of LILs than 800 - .-- - Sim expected. SIL A noteworthy application of adjustment lend- SECAL * APL 1 700 --- - - ------ ing has been in response to major financial cri- 600 sis. During the 1990s, developing countries in .4D SAL TAL Asia and Latin America experienced economic F 500- *ERL and financial crises that halted their economic 400 - -- __---_---___----- growth and severely threatened the gains from 300 - - -previous reforms. The Bank responded to IBRD LIL borrowers' demands for quick disbursing lend- 200 - ing with adjustment operations. Overall the 100 - Bank approved 15 "crisis lending" operations.' 0 - I I I I I All were to IBRD borrowers and involved large 0 10 20 30 40 50 60 70 80 90 resource transfers. Commitments, totaling US$17 Total Costs Per US$1 Million billion, were fully disbursed. The objectives of Lent ($000s) these operations were to supply balance of pay- ments support, weather short-term risks, 8 Instruments of Bank Assistance strengthen social safety nets, and induce struc- Beginning in the early 1990s, economic and tural improvements in the policy framework. sector work became increasingly influenced by corporate mandates and priorities. As table 2.1 Nonfinancial Services shows, there has been a surge in the production Formal nonfinancial services encompass knowl- of poverty and environmental assessments in di- edge services of two main types: diagnostic and rect response to the priority given by the IDA advisory, as categorized in figure 2.1.2 The di- donors, the Board, and Management to the agnostic reports refer to the standardized non- broadening of the Bank's development agenda. financial products that have their own toolkits and The number of PERs tripled between the 1980s quality assurance arrangements, and are divided and 1990s, reflecting concerns about growing at the specific instrument level into five core di- emphasis on reviewing a country's overall pub- agnostic products which underpin the analysis lic expenditure allocations and expenditure man- for the CAS and the Bank's overall policy dia- agement, rather than tracking specific loan logue, and other diagnostic reports that address proceeds. Gender assessments have likewise sector-specific or thematic issues of high prior- shown a large jump following the issuance of ity and provide upstream analysis to support fu- operational directives and increased attention by ture lending opportunities.3 The advisory reports Bank stakeholders to issues of gender inequal- are customized to provide advice on special top- ity. During FY98-01, there has been a significant ics, and include sector and special studies. change in the allocation of ESW expenditures; the share of core diagnostics reports has in- ESW Reflecting Corporate Priorities creased, while the shares of other diagnostic and Through the 1980s, most economic and sector advisory reports have declined. work (ESW) was advisory in nature; the type and Poverty Reduction Strategy Papers, although number of ESW products were driven by the produced by the borrower authorities, typically need to support the lending program and by bor- require extensive Bank support. The source- rowers' particular needs for technical advice. books and other materials that underpin PRSPs Table 2.1 -D( R ,W Fiscal year FY80-89 FY90-99 FY00 FYO1 (est) Core Diagnostics: Poverty Assessments 1 112 11 14 Public Expenditure Reviews 29 89 14 14 Country Profile of Financial Accountability - 40 4 0 Country Financial Accountability Assessments - 15 1 11 Country Procurement Assessment Reports - - 15 15 Other Diagnostics: Environmental Assessments 10 87 3 3 Private Sector Assessments 40 55 1 2 Gender Assessments 1 30 5 8 Financial Sector Assessment Programs - - 12 20 Social and Structural Reviews - - 4 2 1-PRSP/PRSP - - 9 32 Note:Gender assessments for FY90-00 exclude regional gender action plans and country gender profiles and are likely to be undercounts, as many reports never reached the final stage. Source: OPCS. 9 2001 Annual Review of Development Effectiveness have helped to provide a poverty-focused frame- The current guidance on instruments could be work for much of the ESW program. Table 2.1 strengthened along three main dimensions. First, also reveals the quick ramp-up of CFAAs and the distinctions among the different instruments- CPARs, two core fiduciary diagnostic products currently linked mainly to different internal pro- which, along with an integrative, crosscutting as- cessing procedures-should instead be anchored sessment of a country's social, structural, and key in their differing development objectives. In- sectoral development policies, are expected to vestment and adjustment instruments should be underpin the development of Poverty Reduction covered within a common policy framework, so Support Credits. Finally, the FSAP is an ESW that their costs, synergies, and complementarities product stimulated by the corporate response to are clear. Instrument choices should be driven by the East Asia crisis. It is a collaborative Bank/ IMF development considerations, without regard to the instrument that attempts to identify vulnerable varying applicability of safeguards or other pro- countries and to recommend remedial meas- cedures. Second, each instrument should be as- ures to reduce their vulnerability to financial sociated with the sector and country conditions crises. Initially funded with exceptional re- to which it has proven suitable or successful. It sources, its continuation and coverage will de- is important for staff and borrowers to receive pend on the future availability of resources from guidance which draws on available experience Bank budgets and trust funds. of the effectiveness of instrument variations in dif- ferent country circumstances. Third, the rules, Clear Instrument Guidance Is Key procedures, and guidance concerning different in- For financial instruments, the policy framework, struments, which are now set out in a non- as it has evolved, gives considerable discretion uniform variety of OPs, BPs, memos, and to Bank managers in the selection of instru- websites, should be consolidated and clarified. ments. Optimal selection of instruments requires For nonfinancial instruments, budget and clear guidance on the appropriateness of each strategic considerations are important. In an in- instrument to specific objectives and conditions, dividual country program, the core diagnostic as well as consistent coverage of all instruments products such as poverty assessments, CEMs, and (investment and adjustment) in an explicit frame- PERs produce important baselines for monitor- work. Functionally driven choices require clear ing progress on the outcomes of assistance on operational guidance. basic objectives. At the corporate level, the over- TCountry Coverage of Fiduciary Table 2.2 Diagnostic ESW (FY97-01) By Lending Volume: Largest Adjustment Borrowers 10 30% 50% La(rqp,I iERDi Po:rw,,ar:11 O,: l L rqp .t 04A uurrvvv, r 0 80 ".. By Policy Environment: Lc ..1, ,:iuni A Crir.:0 . . Note: It is generally recommended to update fiduciary diagnostics every five years. Largest adjustment borrowers are based on total net commitment value of adjustment operation approvals in FYO-01. Largest IDA/IBRD borrowers are based on net commitments values in the FY01 ARPP. CPIA breakdown excludes small countries or borrowers under suspension or those with net commitments below US$50 million as of June 30, 2001. Source: OPCS. 10 Instruments of Bank Assistance all coverage of core diagnostics has increased in While increased production of CPARs and FY01. Attention is needed to ensure these cli- CFAAs is underway and considerable effort has agnostics cover country programs involving the been devoted to establishing the standards and greatest fiduciary risk and the largest vulnerability scope of diagnostic instruments, it is paradoxi- to governance dysfunctions. As shown in table cal that those completed to date have not been 2.2, in terms of volume of lending, fewer than focused on poor policy environments. Of the 22 half of the 10 largest IDA and IBRD borrowers CFAAs carried out between FY98 and FY01, have been subject to a CFAA. Only 4 percent of only one was conCLucted in a poor policy envi- the Bank's active borrowers with low CPIA ronment (borrowers with a low CPIA score).? Of scores have had a CFAA, compared with 28-31 the 49 CPARs conducted by end FY01, 10 (20 per- percent by higher-scoring borrowers. In the cent) were undertaken in borrowers with low Africa Region, only 16 percent of borrowers CPIA scores; the corresponding figure for the 45 have a current CFAA.4 Among large IBRD bor- PERs is 10 (22 percent). With the figures in table rowers, Brazil has the least coverage among 2.2, this suggests that fiduciary diagnostics may core ESW products-it does not have an updated need to be better aimed at countries where the PER, CPAR, or CFAA. All such gaps for active bor- potential vulnerability to development risks is the rowers are expected to be addressed in FYO2-04. greatest. Performance at the Instrument Level The Strategic Compact targets of 75 percent satisfactory outcomes for lending and 85 percent satisfactory quality for nonlending have been met. The latest project evaluation data confirm a significant improve- ment in the Bank's lending performance, especially for FY00 exiting projects. The upward trend continues into FY01. The first half of FY01 exiting proj- ects evaluated by OED have 82 percent satisfactory outcome ratings. There are solid improvements in sustainability and institutional development impact as well. Recent evaluations also show strong performance from the Africa Region following its internal portfolio improvement drive. Self-evaluation results for nonlending instruments show a broad improvement in quality, with par- ticular gains in the likely impact of economic and sector work as it becomes more participatory, client-oriented, and result-focused. There remains room for improvement in the poverty focus of these instruments, as well as in the quality of fiduciary reviews and of ESW in poorly performing countries. Bank lending has a mature evaluation sys- Performance of Lending Assistance tem, grounded in self-evaluation and incle- Since last year's ARDE, OED has evaluated 348 pendent desk review by OED of every closed projects covering US$33.8 billion in non- IDA/IBRD operation, as well as OED field inal commitments and US$29.5 billion in nom- performance assessments for one in four oper- inal disbursements. The evaluations, most of ations. The evaluation results produced by which cover projects exiting the Bank's portfolio this system provide the basis for the first during FY00 and FY01, comprise 279 ICR reviews section on lending performance. The section of completed projects and performance assess- on nonlending performance relies on self- ments of 69 completed projects. This evaluated evaluation evidence as well as selected OED cohort includes the first closed APL as well as studies on public expenditure reviews and the second-ever-evaluated LIL. The majority of poverty assessments. the recently evaluated adjustment operations 13 2001 Annual Review of Development Effectiveness were approved in the past three years, as shown to achieve roughly 80 percent satisfactory in figure 3.1, while most of the investment proj- outcomes. ects were approved during the mid-1990s. Since achieving a peak of 84 percent satis- This section is divided into two parts. The factory for FY99 exits, satisfactory outcomes first part describes the trends of the Bank's weighted by disbursements have been lower for main performance dimensions-outcome, sus- the FYOO-01 period. Strong performance from tainability, and institutional development (ID) the second half of FY00 exits, as forecast in last impact-for the projects that exited during year's Review, brought satisfactory outcomes the FY96-01 period. The second, focusing on for the FY00 exiting portfolio to 80 percent. Sat- Determinants of Success, discusses the fac- isfactory outcomes for the preliminary FY01 tors contributing to the lending performance disbursement-weighted portfolio continue to trends. fall below the project-weighted portfolio, at 78 percent satisfactory, as shown in figure 3.2. Performance Trends The overall results weighted by disburse- ments confirm the portfolio's sensitivity to the Outcome Trends effects of jumbo loans. The outcome of a US$1 The Strategic Compact target of 75 percent sat- billion operation can make a difference of up to isfactory outcomes has been met. Of the projects 4 percentage points in the disbursement that exited the portfolio in FY00, 76 percent weighted aggregate outcome. The unsatisfactory had satisfactory outcomes, meeting the Strategic performance of two Russia adjustment opera- Compact target outcome rate of 75 percent. As tions, as assessed by the Region and validated figure 3.2 shows, the upward trend continues into by OED's independent review, has depressed the FY01.' Of the first half of FY01 exits evaluated aggregates not only for ECA but also for adjust- by OED, 82 percent had satisfactory outcomes. ment lending and for the economic policy and Results for the entire FYO1 exiting portfolio will social protection sectors.' This volatility is likely be available by the end of FY02 and are expected to continue given the number of large adjustment Years f Recently . Figure 3. 1 r oje c,t s 70 Adjustment 60 ----- - -- D Investment 50 ----------- - m 40 30 I 0 Pre-1990 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Approval FY 14 Performance at the Instrument Level Figure 3.2 =re ie t 90 80 - 70 -- - - - CA t 50 ------ By Project 40 -- -- - 40 Weighted by Disbursements 30 - - - -- - - 2 0 II I l l I l l 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001* Exit FY *Preliminary; see chapter 3 endnote 1. loans in the active portfolio. As risk management organizational capacity. All lending instruments in the Bank receives more attention, it may be addressed both aspects of institutional devel- useful to consider adding special quality assur- opment-strengthening organizations and ance arrangements for very large projects. reforming the institutional environment. This suggests that appropriate use of instruments is Institutional Development Impact being maide from an institutional development One of evety two projects evaluated during the perspective. FYOO-01 exit cohort had substantial or betterID impact. Improvement in the ability of the bor- Sustainability rower to make more efficient, equitable, and sus- Sustainability continues to improve for the tainable use of its resources is fundamental to FYOO-01 exit cohort. Seventy-one percent of move further toward full borrower ownership of projects exiting during the FY00-01 period were lending operations. As figure 3.3 shows, 52 per- rated to have likely or highly likely resilience to cent of projects that exited the portfolio during future risks, using a recently introduced 4-point the FYOO-01 period had substantial or better insti- rating scale.3 This represents continued tutional development ratings, an increase of 15 improvement since the mid-1990s, though the percentage points over the FY96-99 period aver- higher risks of the operating environment and age. The results for the first half of FY01 exits the partial sample of FY01 exits raise concerns are the highest on record, weighted by projects about the durability of those gains, as figure 3.4 and by disbursements. shows. Similar results are found when weighted Analysis of institutional development objec- by disbursements. tives by lending instrument shows that adjust- ment operations in general have given more Aggregate Project Performance Index (APPI) emphasis to reform of policies and the institu- The APPI combines ratings of outcome, SuS- tional environment, whereas investment opera- tainability, and ID impact into a "bottom line" tions have tended to address skills formation and for development effectiveness of lending. 15 2001 Annual Review of Development Effectiveness Trnd in nst i tut i onal Figure 3.3 D evlop eel Impa ct 0 80 - By Project 7-- Weighted by Disbursements 87% sat) Bulgaria (1f998-01) Burkina Faso (1989-99) Indnesia (199- Upper Middle -0 (75-87% sat) Egypt (1990-DO) Lesotho i)99 ) Mexico (1989-99) Lower Middle India (1990-00) (62-74% sat) ...ana 99500) Cameroon (1996-00) Ugna(18-9 Tanzania (1996-00) Moro 1cco 997-0) Cameroon (1982-95) Low i Papua NG (1989-00) (< 62% sat) U.Paraguay (1990-00) Haiti (1986-01) Note: Portfolio performance quartiles are based on Bank-wide country averages of OED evaluated project performance for projects exiting FY90-01 weighted by disbursements. Country program outcome ratings are taken from the relevant CAEs. All CAEs have been disclosed with the exception of Bulgaria, which is expected to be disclosed by March 2002. Source: OED. 34 Country Strategies, Instruments, and Outcomes the relevance of Bank assistance strategies. Non- strategy underwent a major change in an effort lending was rated "supply driven" in 8 of the 15 to link lending to improved governance. Lend- countries programs reviewed. In most cases ing pressures, however, were a significant fac- CAE task managers cited a lack of borrower tor in undermining the strategy (box 4.2). preference and inadequate consultation by the Bank as reasons for the supply-driven services. Country Strategies in the Absence of a Lending There is considerable scope for the Bank to Program increase borrowers' awareness of its menu of There are at least 30 countries in which the Bank nonlending instruments. Recent evaluative evi- is not providing lending support for a wide range dence offers examples of the way synergy of reasons. This situation poses special chal- between nonlending and lending programs con- lenges for country strategy formulation. OED's tributes to satisfactory outcomes. For example, recent country evaluations yield lessons for box 4.1 illustrates how lending to the Lesotho enhancing the Bank's assistance strategy in three education sector had a highly satisfactory out- scenarios under which lending is constrained. come based on relevant and timely nonlending First time or renewed borrowers. An initial services. period of nonlending before lending to new or CAEs found instances where gaps in ESW "renewed" borrowers can help develop both coverage reduced the relevance and effective- good relations with the government and other ness of Bank lending. Lending in spite of poor, partners and a sound basis for lending. In Viet- outdated, or insufficient knowledge was a fea- nam, the Bank carried out substantial ESW from ture of assistance programs to a number of new FY88 until it resumed lending in FY94. Antici- and "renewed" Bank borrowers. In Kazakhstan pating that lending would eventually resume, the and the Kyrgyz Republic, for example, insuffi- Bank conducted work in sectors where Bank cient analytic work in some areas prevented credits were later approved (health, finance, clear diagnoses, although ESW was notably and energy). The recent CAE found this ESW to effective in others (such as pension reform). have been very effective in its impact on both Reductions in resources devoted to nonlencling the selection and the design of Bank credits as posed special problems in transition economies, well as the country dialogue by helping to win where limited experience with reforms meant the confidence of Vietnamese officials. If the that changes needed quickly to be captured. The lapse in lending is protracted, the payoff from need to update and maintain a substantial knowl- continued nonlending engagement may take a edge base is a priority also in countries that have long time to materialize. The Bank has sus- experienced long interruptions in Bank lending, pended lending to Haiti twice in the past 10 because they lack a network of officials farmil- years, from 1991 to 1994 and from 1997 to the iar with Bank policies. For its part, the Bank may present, but carried out nonlending activities need to update staff knowledge of current coun- both times. During the first hiatus, ESW was part try contexts. In Kenya, the Bank's assistance of a multi-donor effort to examine development tnd f jeoBankanalytical services in the education sector were hil overnmitd CAS objective s. The FY90 report Improving Ouality and Efficiency in Educationihelped to estblisha coherent policy framework for education reform in the 1990s. This alleviated past problems with prioritizing goals and coordinating donor activities in the sector. Strong analytic work also provided a platform for subsequent Bank lending, leading to satisfactory outcomes in education, despite,the weaker quality of the rest of the country-lending pro- gram. It also led to a strong and sustained relationship with the Ministry,even through a time of political turmoil. 35 2001 Annual Review of Development Effectiveness Box 4.2 Bank assistance to Kenya over the last two decades has been increased lending in the absence of real and sustained progress characterized by weak government compliance and poor per- implementing conditions set out in the Bank strategy. Lending formance in the context of dismal economic governance. The out- further increased with the approval of emergency operations come of Bank assistance deteriorated in recent years to one of which moved Kenya to a high case lending scenario that, the lowest levels in the Bank, and in 1998 lending to the country according to the CAS, should have been triggered by substantial was halted. A complete re-evaluation of Bank assistance to reforms. Kenya resulted in a landmark assistance strategy in the September Action plans are no substitute for action in countries with 1998 CAS. It proposed a primarily nonlending strategy, with lend- weak or inconsistent track records of reform. Further, experience ing linked to improvements in economic governance. This move in Kenya highlights the need for greater discussion of Bank pol- to nonlending and the focus on governance was highly relevant, icy on emergency lending to poor performers. The need for particularly as past Bank strategies had continued to push lend- emergency lending stemmed in part from weak enforcement ing in spite of poor portfolio results and under-funded analytic and implementation of past Bank projects in Kenya. In the long and advisory services. While the focus on economic governance run, emergency lending may undermine the effectiveness of to trigger lending levels was a firstin Bank history, the Kenya CAS Bank conditionality and may not fit well with institutional devel- illustrates a more general trend of strengthened links between opment in poor performers. At a minimum, all unenvisaged country policy performance and Bank lending. lending to poor performers should be accompanied by a one-year This highly relevant and innovative strategy was not fully CAS or country progress report, to anchor it within overall Bank implemented. Initial steps toward reform were rewarded with strategy. and assistance needs. In the more recent period, fully ready to pick up its part of the dialogue. The the Bank focused on social sector issues in the experience in Bulgaria suggests that the Bank hope that they would have some impact on should find instruments to continue dialogue policies and with the expectation that lending and promote reforms when not lending. There will some day be resumed. The recent CAE con- is, in fact, considerable room for innovation of sidered these activities to have had negligible nonlending assistance. For example, the Bank direct impact on policy dialogue thus far, as might usefully systematize its engagement with would be expected in light of the extremely client countries to ensure a stable and reliable unstable country context. Benefits could be two-way channel between decision-makers that expected to accrue upon resumption of lending, would, if warranted, prepare countries to borrow. in addition to the more immediate donor coor- No clear intent to lend. In some cases, the dination benefits. Nonlending, properly designed, Bank engaged in substantial nonlencling where should be viewed as a long-term investment in it did not have a clear expectation of lending. such cases, requiring regular maintenance. In West Bank and Gaza, effective nonlending Stop-and-go-reformers. Maintaining ESW dur- assistance resulted in a coordinated program of ing breaks in lending enables the Bank to financial assistance to the territory. The result- respond quickly to changes in political commit- ing consultations enabled the Bank to demon- ment or economic environments. Bulgaria fol- strate its political neutrality and created a network lowed a "stop-and-go" pattern of policy for further dialogue in the territory. Greater implementation from the onset of its transition resort to this option might be considered in in 1989 to mid-1997. The Bank reduced its ana- countries with poor policy environments and lytic work and policy dialogue when conditions weak institutions. In addition, clients may only in Bulgaria deteriorated and Bank lending want ideas. The Bank should continue to sup- declined. This meant that when a new reformist port countries where knowledge, rather than government took over in 1997, the Bank was not financing, is required. 36 Country Strategies, Instruments, and Outcomes Risk Management Through Gradual client countries no longer continuously or heav- Engagement/Disengagement ily dependent on IBRD financing. Country evaluations find that a modulated response to engagement may increase the rel- How Instruments Contribute to Country evance and effectiveness of Bank assistance. Outcomes Early and extensive pre-lencling engagement Even though country contexts vary dramatically, provides a sound basis for lending, while the recent evaluative evidence identifies country phased graduation of countries through con- capacity and borrower commitment as key driv- tinuec nonlending and innovative lending ers of instrument effectiveness. The evidence sug- arrangements allows progress and sustainability gests that the Bank can do more to tailor its to be assessed on a timely basis. The highly sat- assistance within the context of these two vari- isfactory outcome of the lending program in El ables. Three specific tools are recommended to Salvador was based to a large extent on a grad- improve instrument performance in all contexts. uatec engagement strategy. The Bank pro- Enhancing the effectiveness of country strategies posed a strategy of progressive involvement in in poorly performing environments is discussed order to deal with the risks inherent in a post- in box 4.3. conflict setting following 10 years of dlisen- gagement. An extensive period of nonlending Country Capacity during the peace process was followed by Simplerprojectdesign. Several recent CAEs make lending for adjustment and social programs. similar recommendations to improve Bank lend- The recent CAE for El Salvador notes that this ing effectiveness. Projects should have simple approach allowed the Bank to gauge the designs even when addressing complex prob- government's commitment to peace and reform lems. Time frames should be less ambitious and and provided a coherent framework for the gov- the Bank should make more realistic assess- ernment and the Bank to establish priorities. ments of implementation capacity. This is par- Grounding the CAS in recently conducted ESW ticularly important for new borrowers, transition resulted in good project quality at entry, and economies, capacity constrained countries, and contributed to a highly satisfactory program. poor performers. In the Kyrgyz Republic and Recent country evaluations (and recent events) Lesotho, Bank assistance was less well calibrated. emphasize that the Bank also needs to refrain The initial Bank strategy in Kyrgyz emphasized from abrupt disengagement. There is consider- a flexible learning-by-doing approach, but indi- able demand for Bank involvement in countries vidual operations overestimated the govern- even after a lending program winds down (e.g., ment's implementation capacity and comnitment. Chile). The Chile CAE recommends gradual with- A series of large, ambitious, and complex proj- drawal from Bank assistance and, given the ects was approved in an uncertain economic country's susceptibility to external shocks, the environment. This led to only a moderately sat- maintenance of a nonlending program to mon- isfactory country outcome. Bank assistance to itor and to assist the country. The recently Lesotho was also delivered in the context of approved IBRD Deferred Drawdown Option economic and political uncertainty. While the (DDO) provides one mechanism by which coun- assistance program was based on a correct cliag- tries can extend their financial engagement with nosis of the country's problems, the outcome was the Bank. Available to both IBRD and blend also moderately satisfactory over the 1990 to countries to whom the Bank makes a single- 2001 period, largely as a result of over-ambitious tranche adjustment loan, the DDO gives bor- objectives which stressed weak government own- rowers access to long-term IBRD resources to ership and stretched implementation capacity. manage ongoing structural programs if market Most projects with unsatisfactory outcomes had borrowing becomes difficult and unforeseen designs that were too complex in relation to financing needs materialize. The DDO expands local capacity and failed to involve beneficiaries the menu of risk management tools available to early in the process. 37 2001 Annual Review of Development Effectiveness gi FZ ) LI iW Ii ~3~ Gu -? U- U~ LOe'" U11irn1f. l j Box 4.3 - . Strengthening the Bank's assistance in poorly performing coun- interventions providing better results than a single complex tries hinges on looking at what has and has not worked well. undertaking. Pilot programs also provide a valuable instrument Both lending and nonlending instruments are undermined in for the Bank to test uncertain environments and to build capac- poor policy and institutional environments. For lending, project ity. The success of pilot initiatives suggests considerable scope outcomes are closely tied to country policy and institutional for their expanded use in poor performers. environments, as measured by the CPIA ratings. CAEs also sug- In terms of nonlending instruments, diagnostics are critical gest the quality and impact of nonlending are lower in poor pol- in poor performers for the assessment of ownership and risks. icy environments. These results underscore the need for more However, the balance between core diagnostic versus advisory strategic selection of instruments in poorly performing countries, work should be related to country conditions. Coverage of diag- Stand-alone Technical Assistance Loans (TALs) fared better nostic exercises should be aimed at countries where potential in low CPIA countries than any other form of lending, due largely vulnerability is the greatest. There is also a need for greater to recent evaluations in ECA, suggesting that the Bank should focus on the nonlending process and product. Remaining engaged continue focusing on capacity and institution building, a criti- in poor policy environments requires, not prescriptive ESW, but cal objective for low-capacity countries. Operational results a focus on knowledge services that encourage debate and engage confirm that major policy reforms supported by adjustment lend- stakeholders. Another important lesson is the need to leverage ing had a particularly weak success rate in countries with analytic work conducted by partners. This is particularly impor- poorly committed governments. While true generally for all tant in Bank budgetary environments constrained by poor per- lending, adjustment lending results are relatively more sensi- formance. Drawing on analytic work conducted by partners tive to country conditions as proxied by CPIA results. Recent CAEs allows the Bank to strategically direct its resources to maximize identify more general enhancements across instruments to raise impact. Finally, new forms of enclave assistance focused on out- effectiveness in poor performers. For example, instrument design comes may be experimented with, tapping the expertise of pri- should be tailored to capacity levels, with a series of simpler vate companies and nongovernmental organizations. Tailor nonlending to country characteris- nerships should involve particular attention to tics. Nonlending activities, like lending, have helping build quality "home-grown" analysis. more impact when adapted to country charac- The recent Chile CAE offers a model for sup- teristics. In Lesotho and Kyrgyz, the analytic porting countries where knowledge, not financ- capacity in government has in the past been so ing, is needed. It recommends using short limited that the impact of Bank country reports policy notes that inform and guide the decision was restricted to a few officials and scholars. of the moment, and more detailed sector work The impact of the Bank's nonlending activities only if lending operations require it. While is dampened in countries with ample domes- cost recovery is an option, the full cost pricing tic capacity. In India, Bank recommendations policy of the Bank has proven to be a signifi- were often lost among competing domestic cant obstacle. When charged for, Bank advice analyses of comparable quality. The Mexico must be of extremely high standards in order CAE recommends that the Bank put into per- to satisfy demand, and it should be limited to spective the relative weight of its financial and areas where the knowledge market has failed advisory services in countries where advanced and the Bank has a unique capacity to help its in-country analytic capacity exists. This suggests member countries. a need to be far more selective as recom- mended by the Task Force on Middle-Income Borrower Commitment and Policy Environment Countries, which emphasized the need to work Borrower commitment is the second strong as much as possible in collaboration with clients determinant of country outcomes. In Bulgaria, and other partners. In weak institutional envi- the Bank took appropriate action in the face of ronments, on the other hand, nonlending part- weak government commitment. A key element 38 Country Strategies, Instruments, and Outcomes of the Bank's assistance program was a Finan- engage stakeholders. Innovation in nonlending cial and Enterprise Sector Adjustment Loan approaches and partnerships should be a key (FESAL). When it became clear that the gov- feature of risk management with respect to poor ernment would not deliver on its commitment performers and a powerful antidote to unwar- to follow through with reforms the Bank took ranted risk aversion. a prudent stance and delayed the FESAL. The Bank then focused on supporting institutional Directions for Effective Instrument Use in changes and specific sectoral needs through Country Strategies investment lending. The FESAL was put on hold Diagnostics and due diligence. The Bank's move for five years until a more appropriate environ- toward a country-based approach and increased ment existed for the reforms. The Bulgaria CAE programmatic lending is being supported by a notes that in hindsight, the move to delay FESAL movement to standardize analytic coverage in was highly relevant and the project outcome was each client country. Project-level fiduciary con- rated satisfactory by OED. In Mexico, the Bank trols are being complemented with country-level approved two single-tranche SALs for pension diagnostics and capacity-building initiatives. In reform. Policy actions were agreed upon and FY01, management further enhanced the role of taken in advance of the approval of each loan. fiduciary assessments in its operational work by Use of simple single-tranche loans allowed the including Country Financial Accountability Assess- Bank to maintain an appropriately low profile ments (CFAAs), Country Procurement Assess- on politically charged issues. ment Reports (CPARs), and the Public Expenditure 7he efectiveness ofnonlending varies by coun- Review (PERs), together with Poverty Assess- try policy environment. There is a strong con- ments (PAs) and Country Economic Memoranda nection between nonlending effectiveness and (CEMs) as part of core diagnostic reports. the quality of country policy environments. As The Bank could do more to clarify the table 4.2 illustrates, ESW carried out in countries intended impact and consequences of its core with lower average CPIA ratings had less impact assessments. The guidelines for the CPAR, CFAA, on Bank products and on country dialogue than and PER suggest that findings and recommen- it did in countries with medium and high CPIA dations are to be fed into the CAS process, but ratings. However, the returns of ESW which do not elaborate on how the instruments are lead to policy turnarounds are so high that a expected to achieve this linkage. There is no con- lower rate of success may be acceptable provided sensus in the Bank on the minimum fiduciary the activity is carried out with the clear objec- standards for borrowing countries. More impor- tive of nurturing reform and capacity building. tantly, the consequences of the fiduciary assess- Remaining engaged in poor policy environ- ment findings for Bank assistance programs are ments also requires a focus on activities beyond unclear. The Bank's policy currently does not prescriptive ESW. The Bank must use the full require fiduciary assessments to be carried out range of its ESW toolkit to encourage debate and in all borrower countries, and coverage to date Table 4.2 CPIA ratings Relevance Impact on Bank products iliact on country dialogue Low 4.9 3.7 2.9 Medium 4.5 4.2 39 High 5.4 5.2 5.1 Average rating 4.7 4.3 3.9 Note: The analysis is on a scale of 1-6, with above 3.5 representing overall satisfactory rating Ratings based on a review of ESW quality in 50 countries with CAEs. 2001 Annual Review of Development Effectiveness appears to be based on demand from country teams that adopted intensive policy dialogue teams, the budget, or available skills. Current and pilot projects improved the relevance of their guidelines do not provide criteria for selecting interventions and achieved better quality at and prioritizing across countries; in particular the entry. Positive experience with pilot investment volume of adjustment loans in countries does not lending has resulted in an expanded scope for appear to be an explicit criterion, the application of LILs. Piloting projects allows uncertain environ- Dissemination and outreach. Recent CAEs ments to be tested. Evidence in the most recent show a mixed quality of dissemination of ESW country evaluations suggests that on the whole, as a weakness in many Bank programs. The pilot projects contributed greatly to the effec- modest impact of earlier Bank reports in Mex- tiveness of lending, by building institutional ico and India was influenced by government capacity or convincing stakeholders of the ben- reticence over the dissemination of external efit to reform. In Chile, positive results from analysis and recommendations. Conversely, pilots in health care stimulated public debate and the payoff from wide dissemination and out- helped to launch institutional reforms in the reach is substantial. In Vietnam, the earliest sector more generally. In the Kyrgyz Republic, economic and sector reports were translated limited Bank experience in the country ham- into Vietnamese and sold in street kiosks. Since pered the relevance and effectiveness of the the introduction of the CDF in 1999, analytic early lending program. The Kyrgyz CAE notes work has been produced in closer partnership that piloting new approaches through LILs might with many stakeholders and dissemination has have resulted in more realistic perceptions of been extended through workshops and con- government capacity, simpler project designs, ferences. The FY97 Morocco CAE noted that the and more effective lending. OED evaluations for large amount of good-quality ESW produced did India also reinforce the need for a better under- not have an impact, largely because the efforts standing of capacity constraints and the context excluded building a constituency for the analy- of reforms before project preparation. Recom- sis and recommendations. But recently there has mendations include using small-scale pilots to been a successful change of approach, and provide insight into the current policy and insti- the FY01 CAE notes that Bank efforts to dis- tutional framework and to test reforms and inno- seminate studies have contributed to the pub- vations. OED findings in India suggest that Bank lic policy debate. 40 Sector and Thematic Strategies, Instruments, and Outcomes he evolution of the Bank's corporate priorities is reflected in the recent expansion of lending for social protection, economic policy, public sector management, and finance, and in a stronger focus on institu- tional reform. Declines in lending for rural development and education, by contrast, seem inconsistent with defined priorities and highlight the need for updated operational strategies in these sectors. Specific investment loans continue to be the predominant lending instrument, and the use of new programmatic lending instruments is growing. Innovations in lending arrangements aiming to support corporate priorities include sectorwide approaches and social funds. The Bank's crosscutting thematic objectives, such as environmental sustainability and gender, can best be achieved through complementary use of both lending and nonlending tools. This chapter reviews recent trends in the ment, security, and social inclusion; the investment lending among sectors in relation to corporate climate; public sector governance; education; and priorities and addresses the following questions: health. Recent shifts in the structure of lending are * How is corporate selectivity reflected in sec- broadly consistent with these priorities, and with toral strategies and lending commitments? the defined "core competencies" of the organi- * How effective have been the choice, combi- zation. The biggest sectoral shifts over the last nation, and deployment of instruments decade, as measured by the Bank's own sector between sectors? classification, are highlighted in figure 5.1. * What instruments are used to support the Between FY90-92 and FY99-01, lending for eco- Bank's crosscutting thematic strategies and nomic policy quadrupled, growing to a full one- with what results? fifth of total lending. Social protection and public sector management were other fast-growing sec- Selectivity Across Sectors tors. Meanwhile, lending for agriculture shrank to The Bank's Strategic Directions give emphasis to just 9 percent, and lending for electric power five priorities for corporate advocacy: empower- and energy was at one-quarter the earlier level. 41 2001 Annual Review of Development Effectiveness Figure 5.1 14 - FY90-92 12 - FY99-01 10- 02-4 I I I E 2 0 Agriculture Energy Social PSM Finance Economic Protection Policy The declines in agricultural and infrastructure governance and anti-corruption issues. Lend- lending represent a reaction to policy shifts since ing in the finance sector increased in the latter the late 1980s in response to the disappointing half of the 1990s, supporting the priority of record of public agencies in agricultural market- improving the investment climate. Within lend- ing and extension and in support of private ing for finance, the balance has shifted from sup- investment in several sectors, particularly electric porting the development of individual financial power and energy, oil and gas, industry, and institutions and markets to encouraging the telecommunications. Together, these four sectors reform of financial systems. Rapid growth in accounted for 20 percent of lending in FY90-92 the volume and share of lending for economic but only 4 percent in FY99-01. In the case of policy is also consistent with the Bank's "core power and energy, the decline represents a delib- competencies" in economic management and erate shift by the Bank toward nonlending activ- financial systems, and with the corporate advo- ity designed to create new regulatory and policy cacy priority of the investment climate (although environments. Lending for transportation, which the levels of lending for both economic policy continues to depend more heavily on public and finance also reflect the Bank's role in emer- investment,2 was maintained at 11-14 percent gency lending to countries in crisis). throughout the period, with a shift in the focus of Lending to two of the sectors identified as cor- lending from purely infrastructure investment to porate advocacy priorities-health and educa- reform of the institutional framework for better tion-has not grown. The health portfolio service delivery and sustainability of investments. remained at about 5 percent of total commit- The expansion of lending for social protec- ments from FY90 to FY01, while lending for eclu- tion, from 1 percent of commitments in FY90-92 cation fell to only 5 percent in FY99-01: annual to 9 percent in FY99-01, matches the priority education sector commitments dropped sharply now given by the Bank to social safety. Similarly, in the last two years to less than half their aver- the priority of public sector governance is age for FY90-99. This measure does not reflect reflected in the doubling of lending for public the inclusion of health or education compo- sector management (PSM) to 10 percent of the nents in multi-sectoral investment or adjustment Bank's portfolio, with increasing attention to operations. The share of policy conditions 42 Sector and Thematic Strategies, Instruments, and Outcomes applied in adjustment lending to the social sec- staff resources combined with skill shortages. tors expanded rapidly in the 1990s to 18 percent OED's rural poverty review identifies additional in FY98-00, with human development account- factors: reduced demand from borrowers who ing for 15 percent of tranche conditions. give higher priority to social sectors when food The sharp fall in lending for agriculture also supplies appear secure; changing incentives for appears inconsistent with corporate priorities, country directors faced with pressure to lend at considering that rural development is one of the low cost; and a lack of analytical methodologies crosscutting themes within the Bank's defined within the Bank to adequately demonstrate core competencies and is critical to poverty poverty impact and social returns to rural and reduction in many client countries. A decrease agriculture investment.3 in some traditional lending areas-such as large- scale irrigation and drainage and agricultural Instrument Choice and Performance credit to large borrowers-accounts for part of the decline. Even though a growing share of Instrument Choice Among Sectors lending for agricultural operations has been The recent expansion of adjustment lending in assigned to other categories such as environment, the Bank's portfolio has occurred primarily in there is a real decline, given also the relatively four sectors-economic policy, finance, public small share of lending directed to rural devel- sector management, and social protection. Fig- opment as a whole. A portfolio review of all sec- ure 5.2 shows the distribution of investment tors/categories of lending for FY99-00 reports and adjustment commitments in each sector in a decline in rural lending in most regions in FY96-01. Adjustment operations have been used FY00, from the average for FY98-99, attributed only on a limited scale in agriculture and on a to a fall of 50 percent in expenditure on ESW very small scale in education, health, energy, and relative to lending costs, the high-risk and high- transportation. While most investment projects cost image of rural operations, and a decline in incorporate technical assistance, significant use Figure 5.2 100srm n G 80- E 40_ m20- = 0 1. - . - -- - - - Urban Water Trans. Energy Oil & Edu. Env. HNP Agr. Soc PSD Mult. Finance PSM Econ Gas Prot. Pol Investment 0 Adjustment F Investment (TAL) 43 2001 Annual Review of Development Effectiveness of stand-alone Technical Assistance Loans has opment, environment, and water projects-SILs occurred in parallel with adjustment lending. are the predominant instrument. Where policy Within investment lending, SILs remain the reform or fiscal management is the goal, adjust- dominant instrument in all sectors. Some sectors, ment lending dominates. And when institutional though, have made significant changes in their development combined with policy reform is an use of instruments over the 1990s, as sector important objective, both investment and adjust- strategies have been enhanced and the new ment instruments are used. Adjustment loans, adaptable lending instruments introduced. The often supported by Technical Assistance Loans, use of FILs, predominantly in finance and on a have been particularly effective when the ID smaller scale in agriculture, urban development, focus is on policy and regulatory reform, whereas and other sectors, has dropped sharply. The investment operations appear to offer advantages use of SIMs has also declined in all the sectors when sector conditions require substantial con- where their use had been significant, primarily sultation and consensus building among multi- in transport, education, agriculture, and health- ple stakeholder groups and institutions, and the same sectors that have made most use of when piloting, monitoring, and evaluation activ- APLs since their introduction in 1998. Social ities warrant high priority. protection has taken the lead in the use of LILs, In the finance sector, the move from invest- which accounted for more than 20 percent of ment to adjustment lending (figure 5.3) has projects and commitments in the sector in matched the concurrent shift in the Bank's objec- FY98-01, followed closely by education. tives, from expanding access to investment finance through individual financial institutions Sector-Specific Issues in Instrument Choice to the reform of financial systems. Financial The following section looks at selected sectors Intermediary Loans (FILs) performed poorly of Bank operation and how the different instru- because of weaknesses in the policy and insti- ments perform in achieving sectoral goals. Where tutional environment, shifting attention to over- physical assets are a significant intermediate coming these weaknesses. Financial adjustment objective-as in many transport, urban devel- loans (denoted as FSALs and including SECALs The Move to Adjustment Lending Figure 5.3 Un Finance (FY9 0 - 1,200 FSAL A 1,000 - 8 0 0 - - - --- cm 600 - L3 S 400- FILs 0 i l l lI I I 1 1 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Note: Time trends reflect three-year moving averages, and exclude several outlier jumbo loans that were in response to severe financial crises. 44 Sector and Thematic Strategies, Instruments, and Outcomes or finance-focused SALs) have proven more latter accounting for about one in four operations) effective than FILs to support wide-ranging have performed above the Bank average. The reforms in the financial sector, and their per- Bank's strategy for the sector envisages a signif- formance has improved (to more than 85 per- icant complementary role for programmatic cent satisfactory for projects exiting FY96-01) investment and adjustment lending in supporting since OED's review of the sector in 1998. Still, public sector reform.7 Long-term institutional con- FSALs have been more successful in removing cerns do not fit easily in a traditional investment distortions and improving financial infrastructure project with limited scope and the need to dis- than in restructuring institutions or improving burse against actual project expenditures. APLs competition, and their effectiveness in support- have been approved or are under consideration ing the difficult financial restructuring needed for Ghana, Bolivia, Tanzania, and Zambia, to after a crisis is over is still uncertain. To address facilitate a longer-term focus on institution build- these longer-term issues, the Bank's financial sec- ing and to link disbursements more closely with tor strategy proposes that loans should be fre- governments' needs and with improvements in quently monitored (as recommended by OED),' monitorable indicators. Traditional adjustment and that vehicles such as technical assistance lending, on the other hand, may focus on systemic components, adaptable program lending, and institutional concerns, but its typically short time partnerships with other donors should be used frame and irregular disbursement pattern are not to maintain continuing dialogue. well-suited to sustained efforts at institution build- In the social protection sector, adjustment ing. The new programmatic adjustment loans are loans account for more than half of all commit- expected to overcome some of these limitations ments for the 59 evaluated projects exiting in by encouraging a longer-term and more system- FY97-01. Ninety-two percent of the adjustment atic approach to public sector reform through a operations had satisfactory outcome ratings, medium-term program of annual single-tranche compared with 84 percent for investment oper- operations. ations in the sector. The recent movement of the In the agriculture sector, a significant change Bank's clients toward "multi-pillar" reforms cre- in instrument use has been the decline in the use ated the opportunity to focus adjustment loans of FILs, from 15 percent of projects exiting in directly on pension reform.5 Client countries FY94 to none in FYOO-01. Adjustment lending have called on the Bank to finance the initial continues to play a role, accounting for 14 per- expenditures involved in honoring existing pen- cent of commitments for projects exiting in sion commitments, allowing them to divert con- FY97-01, with 16 of the 19 operations rated sat- tribution revenue from the public pay-as-you-go isfactory on exit-stronger performance on aver- system to new funded schemes. When well- age than for investment lending in the sector. designed, the reform results in reduced costs to OED's 1997 review of agriculture SECALs' found the government in the future, providing the that performance had improved in loans resources to repay the loan. The first adjustment approved from the early 1990s (when the Bank's loan based purely on pension reform took place policies for the sector shifted from the public- in December 1996 to Argentina, quickly fol- production-and-control model to liberalization lowed by operations in Mexico, Peru, Uruguay, and competitive marketing), with more attention and Kazakhstan. The Mexican loan helped given to borrower ownership and the time finance transition costs and improve the regu- needed to implement reforms, but that further latory framework for the funded pillar. The proj- measures were needed to match the Bank's ect in Uruguay fostered increased efficiency adjustment lending instrument to the long-term among the second pillar pension fund admin- needs of institutional reform. These measures istrators and promoted the development of the included frontloading of policy reforms, and private securities market.6 systematic nurturing of borrower commitment In the public sector management sector, through nonlending services and participation both investment projects and adjustment loans (the prior to lending. Investment loans were found 45 2001 Annual Review of Development Effectiveness to have been effective in reform of public expen- tions. OED's review of the sector recommends diture in the agriculture sector but had rarely cov- greater use of adaptable lending instruments and ered such comprehensive policy reform the development of new, cost-effective, programs. The Bank's strategy for rural and agri- performance-based approaches in deploying cultural development in the ECA Region envis- these instruments.12 Since 1989, Bank strategy ages little future use of Sector Adjustment Loans, has focused on facilitating the privatization process despite their relatively good outcome ratings: the in water supply and sanitation. For this purpose, bulk of lending for policy reform will be through lending operations have been increasingly sup- structural adjustment operations, with agricultural ported by other instruments, leveraging the Bank's and rural reform components, while much cross-country experience, relationships and capac- greater weight will be given to investment lend- ity to connect clients with additional sources of ing with particular concern for community-based finance, technical expertise, and partnerships. development and poverty reduction.9 The cost dimension of sectoral operations. At Adjustment loans have rarely been used in the the sectoral level, country conditions influence health and education sectors despite the pol- both the performance and the costs of lending icy constraints often present in these sectors. operations. Figure 5.4 illustrates costs and out- The mixed performance of a few education comes at the sectoral level for selected adjustment SECALs in the 1990s (five of the nine operations and investment instruments under different coun- were rated unsatisfactory at completion) has try conditions. The figure demonstrates that costs been an inhibiting factor: the instrument has not for investment lending are considerably higher been used for an education project exiting since across all sectors in low CPIA countries. The 1997. The education sector strategy paper envis- health, nutrition, and population (HNP) sector ages greater use of the new investment lending demonstrates considerable movement in terms instruments because of the importance in this sec- of cost of lending and outcome between coun- tor of process-driven goals that involve many try contexts. HNP investment lending in low stakeholders and institutions.'o APLs and LILs CPIA countries has among the highest costs and are permitting more open-ended lending, based lowest outcomes, but cost is halved and outcome on specific objectives and a long-term develop- ranks among the highest when undertaken in ment strategy, and allowing for piloting and medium/high CPIA countries. Investment lend- innovation over a shorter time frame." Of the two ing in the education sector exhibits an equally health SECALs exiting in the 1990s, one was strong movement, with lending costs decreasing rated satisfactory. When Bank investments rep- dramatically from low to medium/high CPIA and resent only a small share of health sector spend- outcomes improving with country conditions. ing, their impact depends on leveraging wider The costs associated with sectoral interventions changes in the sector. In this respect, adjust- using adjustment lending are not as sensitive to ment operations may help focus attention on pol- country environment. Figure 5.4 shows that for icy dialogue, but they are not good vehicles for all sectors the cost of lending for SALs/SECALs testing new approaches through piloting, for rig- only modestly decreases between low and higher orous monitoring and evaluation to provide evi- CPIA countries. Country environment does, how- dence on what works, or for helping to scale up ever, have a strong positive impact on outcome successful approaches. Nevertheless, there is for adjustment lending in all sectors. The agri- room for them, and the Bank's strategy envisages culture sector is the only exception, with costs a more significant role for SECALs in health and for adjustment lending increasing in medium/high education in some regions in the future. CPIA countries, though this is also accompanied Traditional specific investment lending con- by higher outcome ratings. tinues to dominate Bank operations in the water sector. SIMs and APLs have not been used on a Combining and Sequencing Instruments significant scale, although activities in the sector Few Bank-ftnded projects stand alone. Many have included complex programmatic opera- are one of a sequence of similar loans and/or are 46 Sector and Thematic Strategies, Instruments, and Outcomes IF igu rer 5.4 Investment-SILs 50,000 - L Low-CPIA Countries N Medium/High-CPIA Countries 40,000- - ----------------- HNP El Educ 30,000 -_-7--- -Agr - QAI S 20,00l Urban Energy U HNP Agr E Trans o 10,000 - 0-- - - - Urban *Adu C.)*All Energy Trans 0 -I I I I 0 20 40 60 80 100 Percent Satisfactory Outcome (Weighted by Disbursement) Adjustment-SALs/SECALs 10,000 - El Low-CPIA Countries U Medium/High-CPIA Countries 8,0000 - 0 PSM El multi Agr 6,000 - - - - - - - --All- 0 Ecn Ii] g Multi U sm S 4,000Al Econ g 2,000 -- - Ca 0- II II 0 20 40 60 80 100 Percent Satisfactory Outcome (Weighted by Disbursement) supported by concurrent or overlapping opera- to ensure continuity in policy dialogue and the tions with similar or related objectives. The necessary analytical work over a long period, sequencing of operations, and the synergies together with support to piloting and imple- between different operations, may be particularly mentation (box 5.1). This was demonstrated important when project objectives include corn- effectively, for example, in Armenia's education plex institutional reforms, and when the course sector. The Bank supported the government's far- of these reforms cannot be clearly predicted. reaching reform program from 1996 through two Successful adjustment lending in these conditions kinds of instruments-a SIL and two SALs-nei- requires the use of complementary instruments ther of which could have been fully effective on 47 2001 Annual Review of Development Effectiveness Box 5.1 Two examples from the ECA Region illustrate effective combi- were technically sound and publicly acceptable, allowing quick nation of investment and adjustment lending for sectoral reform passage through parliament of the legislation needed to support objectives. restructuring of the system. Reform of social protection system in Bulgaria. The Bulgaria Restructuring of the mining sector in Ukraine. The Ukraine Social Protection Adjustment Loan (SPAL), in 1999, supported an Coal Pilot Project, rated highly satisfactory, played a crucial role ambitious and comprehensive program to establish the legal in setting in motion a major restructuring program, in combina- basis for reform of the pension system, labor markets, and social tion with the (almost) parallel Coal SECAL Although the launch- assistance. Although the full scope of the program proved unre- ing of the SECAL did not wait for the results of the pilot project, alistic and not all the measures were accomplished,the progress the SECAL was restructured to incorporate lessons from the made on pension reform was strong. The success of the SPAL pilot. The achievement of the pilot in demonstrating a feasible in its objectives on reform-of the pensionsystem can be attrib- process for closure of mines was sufficientto trigger an accel- uted in large part to the support provided through an invest- erated mine closure program and thus substantially reduce the ment project, the Social Insurance Administration Project (SIAP), drain on the national budget for operation of uneconomical effective two years prior to the SPAL, at a time when the gov- mines. Taking a flexible approach (the project was amended ernment was committed to reform but consensus'was lacking three times to reallocate resources as priorities changed) in on specific policies. Contrary to us6al Bank practice in the adverse institutional conditions, the investment project focused region, this project included no policy conditionality. Itfocused on the technical, political, and social issues for mine closure, solely on building technical and administrative capacity in the building understanding and consensus on the need for mine country-in the National Social Security Institute (NSSI)-for closures through consultation, information sharing, and social pension policy development and implementation. With the ben- assessments, and by demonstrating approaches that were tech- efit of high-quality technical assistance through the project, nically, financially, environmentally, and socially viable. The the NSSI was instrumental in developing policy proposals that SECAL facilitated acceleration and a scaling-up of the program. its own. Policy conclitionalities in the SALs sup- logue have been instrumental in gaining gov- ported the necessary legal and regulatory errinent commitment and improving policies for changes, as well as crucial provisions in the edu- the environment in a number of countries, cation budget needed to finance the reforms including China, Mozambique, Costa Rica, India, and encourage public support. The SIL, mean- and Vietnam. The importance of diagnostic ana- while, supported the Ministry of Education's lytical work is further enhanced by the CDF capacity for analysis and policy making, decen- framework, which calls for coordination of tralized school management, and textbook donor support on the basis of comparative production. advantage within a country-owned develop- Even though most sector strategies focus on ment strategy. Yet, OED's rural poverty study the use of lending to achieve sector objectives, notes the modest and declining spending on nonlending instruments also play a critical role. rural ESW, while the environment review finds Most directly, sector analytical work drives the a decline from the 1990s in both the number of effectiveness of lending assistance. OED's sec- studies and budgetary allocations. tor reviews confirm the role of economic and sector work in gaining government commit- Innovative Approaches to Sector Assistance: ment and producing good results in lending SWAPs and Social Funds operations. In the water sector, for example, The design of Bank interventions is not limited recent economic and sector work has had a sub- to the choice of lending instruments. The avail- stantial positive impact on the design of Bank able instruments can be applied to a wide vari- water projects. Good analysis and policy clia- ety of approaches designed to match specific 48 Sector and Thematic Strategies, instruments, and Outcomes development needs. Sectorwide approaches capital and recurrent spending. Reviews of the (SWAPs) and social funds are two approaches that Ghana health program have documented have assumed growing significance in the Bank's progress in program transparency, in repro- lending. They provide mechanisms to coorcli- cluctive health services, and in the quality of hasic nate the use of donor resources in support, health care. Still, no SWAP has yet resulted in all respectively, of sectorwide reforms and small-scale external funding being supported through a sin- conmUnity-level investments. Table 5.1 outlines gle unified donor-coordinated lending instru- the objectives and core features of each approach. ment. Moreover, challenges remain in building SWAPs aim to achieve long-term improvement in country ownership and capacity beyond central sector performance. The prerequisites for suc- government, establishing baseline data and cessful use of a SWAP3 include macroeconomic sta- agreed indicators for monitoring program per- bility in the recipient country and country formance and progress, and getting significant leadership of a sound sector strategy and expen- harmonization of donor procedures. diture framework. Success also depends critically Social funds are multi-sectoral and usually on donor willingness to align and coordinate have broad, cross-sectoral objectives such as assistance in support of the government pro- alleviating poverty and strengthening community gram, using a joint annual review process. Build- organization. Bank lending to social funds began ing the consensus necessary to set up a SWAP is in 1989 and has expanded rapidly to some 58 time-consuming, and the anticipated benefits are countries. Social fund projects create autonomous long-term. Social funds, in contrast, can be estab- implementing agencies to finance small projects lished to produce visible results rapidly in adverse in several sectors, based on proposals submit- economic and institutional conditions. They may ted by local groups. Most social funds were set be appropriate when action is needed urgently up as temporary mechanisms to channel to address small-scale infrastructure and other resources to needy communities at a time of cri- needs at the community level and existing agen- sis, but virtually all are still in operation, sup- cies lack the capacity to respond. But they offer ported by successive Bank SILs and grants from limited long-term impact on sector performance multiple donors, and have assumed longer-term or wider institutional development and they can objectives. OED's social funds review13 finds be misused to undermine budget discipline and that the approach has been effective in respond- sector policy standards. ing rapidly in emergency situations, mobilizing SWAPs signify a process-not a program or nongovernment resources, and delivering small- specific financial instrument. Bank support to scale infrastructure in poor communities, SWAPs, in some 20 countries, has taken the although performance has varied across sec- form of SILs, SIMs, and increasingly, APLs. The tors. Projects have been less successful in achiev- approach was introduced in the early 1990s in ing consistent improvements in development response to the proliferation of poorly coorcli- or welfare indicators, or in facilitating institutional nated donor-supported projects, weak govern- development. ment commitment to programs and reforms, SWAPs and social funds can be used to meet and failure to budget adequately for recurrent complementary sector objectives at national and costs. The approach has the potential both to grassroots levels although some tension exists reduce aid transaction costs and to strengthen between the two approaches. A social fund oper- countries' management and accountability struc- ating on a significant scale in a given sector is tures. In practice, SWAPs have had some success normally channeling funds outside the in introducing common implementation arrange- expenditure framework that is at the core of a ments and pooled donor funding, greater coher- sectorwidle reform program, and risks under- ence in sector policy and planning, enhanced mining this program-even when steps are taken country ownership of a long-term strategy and to promote coordination. In Zambia, for exam- priority programs, improved allocation of pub- ple, the Bank has been supporting a social fund lic resources, and elimination of imbalances in which has allocated some 70 percent of its expen- 49 2001 Annual Review of Development Effectiveness Table 5.1 c yc? 1 W,12'p G g) ODAF 003 ) flm Q OD Feature Storwide Approaches Social Funds Sectoral scope Single sector or subsector Multi-sectoral Primary sectors of operation Healthroads education, wateragriculture Education, health, water, roads Sectoral objectives Improve efficiency and quality through Increase access to and quality of basic services, ,sectorwidereforms, correct balance of capita primarily through improvement of small-scale and recurrent expenditures, and build public infrastructure 'sector capacity Institutional development ".Central and provincial/regional government Local governments or community-based focus organizations Institutional design Integrafion of management of doior resources in Enclave-semi-autonomous implementing governrent systms agency manages funds of multiple donors Common implementation arrangements Joint according to each donor's requirements and annual review procedures, although mostly using a common Operational Manual Mechanism for determining Sector strategy and sectorwide epediture' Community proposals resource allocation framework Strengths Government ownership and accountability Quick visible results PubicsectorID impact. lncreased cohesion in Rapid implementation of small infrastructure sector policy with improved allocation of projects in difficult conditions expenditure Mobilization of nongovernment resources and Reduction in aid transactions costs capacity Limitations I.Requires Difficulty in meeting technical and institutional -overnment ownership of sound sectoral requirements in multiple sectors reform program , Difficulties of coordination and accountability vis- macroeconomic stability a-vis government agencies agreement among major donors I Limited ID impact at central level -time and resources to reach agreement Reliant on resource management capacity of public agencies and/or communities for financing I of recurrent costs Lending instrument choice SILs/ SIMs/ APLs/ SECALs Series of SILs diture to schools, while at the same time using helping to coordinate activities at the local level. a SWAP in the education sector to coordinate And it has been training district-level education funding from different sources within a strategic officers in community development and self- framework for improving the quality and effi- help techniques, under the auspices of the SWAP. ciency of basic education. Zambia's Social Invest- As a "temporary" institution, it has effectively com- ment Fund has proved effective in construction pensated for some of the weaknesses of public and rehabilitation of school buildings and in sector reform. But, in substituting for some func- 50 Sector and Thematic Strategies, Instruments, and Outcomes tions of central and local officials, it has tended Policies and Actions in Support of to inhibit development of the permanent insti- Thematic Strategies' tutional capacity and accountability structures The Bank has enunciated strategies in a num- needed for sustainable sectorwide improvements. ber of crosscutting thematic areas. These thematic OED's social funds review recommends strong areas are not "sectors" in the traditional sense, country team coordination to ensure consistency but represent dimensions that enhance the qual- of social fund activities with a country's sector ity and equity of the development process across reform strategies, as well as the Bank's sectoral sectors. To implement these strategies, the Bank policies and technical standards. It also cautions seeks to mainstream the operational emphases against allowing lending through social funds to they imply at the sector and country levels by displace sector policy-intensive initiatives in drawing on a wide range of tools. OED has which the Bank has comparative advantage. recently reviewed four such thematic strate- Optimally, exit strategies for social fund pro- gies-environment, gender, culture, and partic- grans can be facilitated by SWAPs. ipation.11 These reviews have documented the The sectoral focus of SWAPs can be comple- institutional constraints to mainstreaming and the mented and enhanced by the new PRSCs' focus difficulties (often underestimated) of using lend- on cross-sectoral challenges of poverty reduction ing, corporate nonlending activities, and coun- and institutional development. In this context, try-level nonlending activities individually and SWAPs provide a means of advancing the sector together to achieve thematic objectives. Table 5.2 reforms and addressing the capacity constraints summarizes the specific combinations used in for implementing poverty reduction strategies. each of the four areas, in which ")X" denotes The interface between SWAPs and PRSCs needs strong use of the activities, "X' denotes some use, careful design in the context of a country's and blank indicates no or negligible use. poverty reduction strategy. The implications need Of the four strategies reviewed by OED, envi- to be drawn as the Bank's new business model ronmental sustainability has exploited the widest for low-income countries is refined. range of actions and instruments. Direct lend- Table 5.2 ,.V @ Wr '& oic U Environment Gender Culture Participation Targeted lending Dedicated investment projects XX X X Investment project components XX X Adjustment lending components X Corporate nonlending activities "Do no harm" policies (incl. safeguards) XX "Do good" policies XX X X X Monitoring and structures for consistent compliance with policies/guidelines XX X Staff training and capacity building XX X X X Global/regional partnerships XX X X Country-level nonlending activities CAS/PRSP X X X X Economic and sector work (ESW) XX X X Country-level partnerships X_X X X 51 2001 Annual Review of Development Effectiveness ing has been particularly effective in improving ments and foundations, with the objective of natural resource management. Lending is com- mainstreaming culture in development. plementect by a strong implementation of cor- All the thematic strategies have effectively porate policies, especially "do no harm" used analytical work to support thematic objec- safeguard policies. Provisions for monitoring tives. Gender assessments at the country level and supporting the implementation of environ- have increasingly involved local consultants and mental safeguards were introduced in fiscal partners and in some cases (as in Ghana, 2001, through creation of the Quality Assurance Ethiopia, and Yemen) have relied on participa- and Compliance Unit. The environment strategy tory assessments. These assessments are not is also supported by country-level nonlencling mandatory. Where they have been carried out, instruments, including National Environmental they have contributed substantially to integration Action Plans, as well as diagnostic work on spe- of Women in Development (WID) and gender cific issues. This not only supports direct Bank issues in the Bank's CAS and lending portfolio- lending, but also serves to integrate awareness as in India. In the absence of a timely gender of environmental issues into national programs. assessment, these issues can be neglected in the In Morocco, for example, the Bank's involvement CAS. This issue is acknowledged in the recently led to mainstreaming of environmental issues in completed Gender Mainstreaming SSP, which line ministries. Country environmental assess- envisages that all countries with an active Bank ments are increasingly being prepared with the program will be covered by a gender assessment participation of local experts and through in- within the next three years.15 country partnerships with other donors. The gender strategy has been less effective Leveraging regional and global partner- than the environment strategy in linking cor- ships has been a key element of the Bank's porate nonlending activities with lending and strategy for the environment. The Bank has nonlending operations. The significant efforts used its advisory services and convening power made in the past to establish internal struc- to raise awareness of global environmental con- tures, notably the Gender Sector Board and cerns among members, and it supports multi- Thematic Groups, were not accompanied by a country partnerships for sustainable water clear implementation strategy. Policy on gender resource development, forest issues, and envi- was scattered among several different docu- ronment conservation. One example is the ments, leaving the operating environment unclear CEOs' Forum on Forests, launched by President and subject to different interpretations. Although Wolfensohn in 1997, to forge a working part- the Bank has sponsored sectoral training and nership between international forest industries, knowledge services through its WBI and Gen- environmental and social development organ- der Sector Board-including specific training izations, and the Bank. Beyond its own lend- (such as integrating gender considerations in ing, the Bank is a major implementing agency micro-level economic activities), conferences for the Montreal Protocol and the Global Envi- and publications-no systematic training on ronment Facility which help the institution fur- Bank gender policy and implementation strat- ther its environment agenda at the local as well egy is available to staff. In fact, a recent exter- as the global level. nal evaluation found the World Bank to be the Partnerships have also been used with par- "least developed" among multilateral organiza- ticularly good results in cultural heritage. The tions in mainstreaming gender goals. 16 The new Bank has done a limited amount of lending for Gender Mainstreaming Strategy Paper focuses preservation of cultural heritage sites, but the sharply on addressing these weaknesses and strategy for culture has focused mainly on coor- aims to clarify accountabilities, costing, funding dinating efforts with other multilateral and bilat- mechanisms, and M&E arrangements for imple- eral donors, and through the Culture Assets for mentation across the Bank. An interim Opera- Poverty Reduction Group, on fostering partner- tional Memo has already been made available ships with technical agencies, NGOs, govern- to staff. 52 Sector and Thematic Strategies, Instruments, and Outcomes Participation is a strategy that has exploited The challenge for the Bank's "do no harm" poli- only a limited range of instruments, with the cies is to strike the right balance between com- result that the quantity of participation by primary pliance and results, with serious and independent stakeholders has increased substantially in Bank- oversight to ensure that safeguards meet accept- assisted projects and CAS and PRSP processes, able international standards combined with rea- but without a corresponding increase in quality. sonable adaptation to national conditions and OED's participation review notes that the main priorities so as to avoid the creation of a risk- activity has been building staff capacity, averse mentality among Bank managers and through the Sourcebook and Learning Group, and staff. OED's water review notes, for example, that draws attention to the need for a more system- some countries (including Nepal) have found the atic and strategic approach to participation. Par- Bank's "do no harm" policies too lemanding and ticipation, unlike environment and gender, has have turned to alternative sources of finance. The been viewed as a means of improving the qual- OED forestry review finds that the Bank's strat- ity and effectiveness of the Bank's own opera- egy fostered an "overly cautious approach" that tions rather than a development objective in was ineffective in slowing the global rate of itself. Some attention has been given to policies tropical forest destruction. A pilot program to har- as a means to advance participation, but on- monize the country's enabling regulatory envi- going work has not been strategically coordinated ronment with the Bank's safeguard policy or reviewed for quality. Relevant safeguard poli- framework has been proposed for Vietnam. cies are limited to the issues for indigenous peo- ples and involuntary resettlement, through High-Potential Approaches for environmental assessments. Implementation Two directions for future work emerge from To pursue its sector objectives, the Bank's basic OED's evaluations of thematic initiatives. First, business model is lending based on sector successful mainstreaming requires the strategic knowledge. New approaches have emerged for use of a set of instruments as well as clearer financing. To implement its thematic strategies, Regional accountability and greater network on the other hand, the Bank draws on a wider authority to achieve results. As the participation range of activities, including country and global study showed, staff guidelines and training are partnerships. The following broad lessons not sufficient. Even in the Bank's most "mature" emerge for both sector and thematic strategies. thematic strategy, the policy framework is far Selecting lending instruments to support clearer for the "do no harm" than the "do good" institutional development. All the Bank's aspects of the strategy. For example, the corpo- instruments can be effectively used to help build rate goal of environmental sustainability remains institutional capacity and support reform. Mak- to be translated into comprehensive operational ing the right choice, though, requires clarity guidance and monitorable performance goals. To about the operation's objectives and good under- more fully mainstream its thematic goals, the standing of country and sector conditions. Bank should give more attention to monitoring Adjustment lending, supported as necessary by outcomes; clarifying accountability for promotion/ technical assistance, can be effective when performance on a particular thematic strategy; and national ownership and consensus on sector creating processes, operating environments, and reforms is strong. Programmatic investment lend- incentives that promote internal compliance with ing may be the preferred approach, supported thematic strategies. if relevant by LILs, when the range of stake- A second challenge going forward concerns holders and institutions involved is large, and the application of safeguard policies, as an when there are challenges for consultation, con- important instrument in promoting crosscutting, sensus building, piloting, monitoring, and eval- thematic objectives throughout Bank operations. uation. More work is needed to assess the Issues for the future of these policies are being effectiveness of multi-sectoral adjustment instru- addressed by the Bank in a forthcoming paper. ments in addressing sector-specific issues, espe- 53 2001 Annual Review of Development Effectiveness cially considering the growing significance of framework for gender, thereby reducing the PRSCs. In this context, potential complementarity overall effectiveness of its assistance at the coun- and synergy between PRSCs and SWAPs should try level. The participation review notes that be exploited. Finally, a combination of adjust- lack of follow-up was one of the weakest aspects ment lending (supporting relevant budgetary of participation in CAS preparation. Follow-up and regulatory changes) and investment lend- and dissemination of gender assessments have ing (supporting piloting and implementation of been variable. The Gambia, Cote d'Ivoire, and sector reforms) may be the best prescription. Zambia WID assessments remained internal doc- Importance of partnerships. The Bank's uments and, in Poland, even women's NGOs partnerships-at the global, regional, and coun- were unaware of the in-depth treatment of gen- try levels-have played an increasingly signifi- der issues in the Poverty Assessment. In contrast, cant role, both in building understanding and the process of preparing gender and WID assess- consensus on sector strategies within the devel- ments in Yemen and Ecuador, with the govern- opment community and in setting the pace and ment in the lead and substantial stakeholder direction of reform in client countries. The Bank participation, resulted in increased gender aware- has used its convening power and knowledge ness and capacity in the country, enhanced the base to advance dialogue and joint initiatives in relevance of the reports for the clients, and support of thematic objectives. The Bank's part- ensured timely dissemination. The environment nerships with international and national stake- review cites China, Mozambique, and Costa Rica holders have helped the institution to improve as examples where substantial progress has the relevance of its policies and to build a broad been achieved in gaining government commit- consensus around some of its thematic priorities. ment and improving the design and application Over the years, the Bank has also built internal of a country's own environmental policies capacity to manage sectoral knowledge and through high-quality analytical work combined support these priorities. At the country level, part- with sustained policy dialogue. nerships have a crucial role in setting the pace Participation in lending and nonlending and direction of reform, particularly in large operations. The effectiveness of lending oper- countries where selectivity is essential to lever- ations for sector and thematic objectives is influ- aging the Bank's relatively small share in exter- enced by the extent and quality of stakeholder nal assistance. This has been demonstrated in the participation. This has been particularly evident water sector, for example, in China, India, Mex- in the environment and water sectors, where ico, and Brazil. While such partnerships are improved results have been closely associated clearly an essential and valuable instrument of with participation. Participation has also helped the Bank in promoting sector and thematic in the design and implementation of culture objectives, the transaction costs in some cases projects and has been a key element in a num- can be high and more strategic attention may be ber of social fund projects, as well as commu- needed in the future to cost effectiveness and nity-based sector projects. It has played an selectivity in the use of partnerships. important role in the Bank's gender objectives. Better ESW. The value of economic and sec- In Morocco, for example, where the CAS called tor work in support of sector and thematic objec- for a strategy note on gender issues to be devel- tives can be greatly enhanced through attention oped through a participatory process, the Bank to three aspects: timing; institutional assessment; played a catalytic role by funding consultants and and follow-up through dissemination, consul- workshops that brought together government tation, and policy dialogue. The timing of diag- institutions and women's associations in public nostic studies is crucial to ensure that sector and meetings. Much of the participation, however, thematic priorities are reflected in the CAS, as has been too limited or rushed to make a dif- highlighted in OED's gender review. This Review ference. OED's audit on Nepal forestry, for also finds that the Bank has been weak in assess- example, found that lack of sufficient time for ing and improving the borrower's institutional building the spirit of community forestry at the 54 Sector and Thematic Strategies, Instruments, and Outcomes grassroots level negatively affected community building approach to participation, as recom- forestry in the country. OED's social funds study mended in the Participation Review, would take found that the nature of community participa- more time and resources for consultation, train- tion was sufficient for executing subprojects but ing, and technical assistance, and greater depend- not for building significant community capacity. ence on local partners who have appropriate A shift by the Bank toward a long-term capacity- expertise. 55 Findings and Implications A s the Bank works with partners to tackle the increasingly complex challenge of development, selectivity has become more important. In the continuing drive to enhance the impact of development assis- tance on poverty and growth, this Review has highlighted areas in which the Bank can further increase its development effectiveness-by making the right choices in line with country performance and potential, corporate priorities, and comparative advantage. Continued Gains in Performance cial instruments is an encouraging sign of the Given the adverse operating environment and payoff from heightened attention in the Bank the increased external risks associated with the to quality and results, supported by strengthened current global economic decline, it is fortunate evaluation. that the internal constraints to development effectiveness are being overcome. The Strategic Implications for Policy Compact targets of 75 percent satisfactory out- As the quality of individual operations improves, comes for lending and 85 percent satisfactory judicious selectivity can further leverage these quality for nonlending have been met. The lat- gains into country-level development impact. est project evaluations point to further quality This Review identifies three broad areas where gains for lending instruments beyond these tar- better selectivity can produce even better results. gets. There are also solid improvements in the sustainability of project achievements and their Corporate Selectivity institutional development impact. Recent eval- Corporate selectivity defines the institution's uations show encouraging improvements in the goals and priorities, in the context of support- Africa Region following its internal drive for port- ing overall client country priorities, and reflects folio improvement. Nonlending instruments the institution's core competencies and areas of also show a broad improvement in quality, as comparative advantage. The transmission of ESW becomes more participatory, client- these goals and priorities to individual country oriented, and result-focused. The improved programs occurs through the CDF and corporate craftsmanship of both financial and nonfinan- resource allocation, and through the PRSPs for 57 2001 Annual Review of Development Effectiveness low-income countries. These processes are work- Partne?ships can be better leveraged. To enhance ing well, but can be fully leveraged using the the effectiveness of country strategies, the Bank PRSP platform for harmonizing country-specific needs to address selectivity of programs in con- goals and CAS business plan objectives. Track- sultation with borrowers and other assistance ing the results will require improved capacities partners. The CDF pilot countries have broken new for monitoring and evaluation both in countries ground in this area, but continued focus on busi- and within the Bank. nesslike partnerships is needed, laying out more The broad framework governing instruments explicitly shared objectives, distinct accountabil- has proven flexible, allowing innovations to ities, and reciprocal obligations among partners. meet new challenges. Within the framework of Better strategies in poorly performing countries. the broad instrument groups of investment and The Bank is devoting renewed attention to adjustment lending, sharper operational guidance achieving better results in countries with poor for specific instruments would help country policy and institutional environments, with a assistance strategies choose instruments appro- current focus on nonlending support. This priate to specific objectives and to sector and Review presents evaluation findings that are country conditions. Instead of the current vari- germane to this difficult task, and may be of use ety of OPs, BPs, memos, and websites, a uniform to the Task Force on World Bank Assistance to treatment covering each instrument's role, design, Low-Income Countries Under Stress. Effective- and lessons from past performance could con- ness of both lending and nonlending activities structively inform instrument choice for country is undermined in poor policy and institutional and sector managers as well as borrowers. The environments. However, some instruments per- current update and conversion process under form better than others in poorly performing way for the operational policy and guidance on countries. For example, there are cases where adjustment lending, to be followed by investment technical assistance lending geared to the devel- lending, will offer a good opportunity to incor- opment of domestic capacities has been effec- porate these improvements. tive. On the other hand, adjustment lending may be particularly ill-suited for these countries Enhancing Country Strategies until they have demonstrated the consensus and More strategic treatment of instruments in CAS. the conviction to reform based on concrete The CAS is a strong strategic vehicle whose upfront actions. In addition, over-complexity of potential for achieving selectivity has not yet projects when country capacity is limited leads been fully tapped. CASs should deal with selec- to excessive risks. More conscious tailoring of tion of instruments more directly and transpar- instruments and partnerships to country con- ently. A logical framework should be used (and ditions should bring precious gains in these results chains specified) to link specific instru- difficult environments. Experimentation with ments with country objectives and the Millen- outcome-based operations and innovative part- nium Development Goals as adapted to country nerships with private and voluntary sector organ- conditions and taking full account of past per- izations should be encouraged. formance. Unanticipated changes to country The role of nonfinancial activities in poorly programs should be captured in timely CAS performing countries deserves special attention. updates and progress reports to provide an Diagnostic work is especially needed in poor per- agreed-upon strategic context for Bank activities. formers for the assessment of ownership and The CAS needs to leverage catalytic and scaling- risks, thus; in general, coverage of diagnostic up effects among instruments as well. Interac- exercises should be aimed at countries where tions between investment and adjustment, for potential vulnerability is the greatest. The bal- instance, can greatly enhance the potential ance between core diagnostic and advisory work impact of individual interventions. The forth- should be related to country conditions. Further, coming CAS retrospective may offer insight on coordination of fiduciary products should be how to approach these tasks. improved and more targeted country diagnos- 58 Findings and Implications tics toward countries likely to benefit from adjust- gradual implementation of sector reforms) may ment lending would help the Bank improve its be the best prescription. This might be pre- risk management. ceded by LILs or other small-scale interventions Nonlending activities should be strategically in collaboration with partners to ensure that chosen. The amount and type of nonlencling adequate knowledge and commitment are in assistance should be carefully calibrated to place upstream of large-scale lending. enhance Bank lending and improve the relevance of Bank assistance strategies. Resource allocation Implications for Evaluation to ESW should not be exclusively linked to a This Annual Review has confirmed the impor- country's lending program because an up-to- tance of nonfinancial activities. ESW has been date knowledge base is a prerequisite to good a key driver of performance improvements in lending even for new or renewed borrowers. lending over recent years, as well as being crit- ically important for effective country programs. Instrument Selection in Support of Sector A strong evaluative framework is needed to Strategies ensure the continued effectiveness of these Different instruments perform differently in dif- instruments, building on the current practice by ferent sectors. This should be a consideration for QAG to assess their quality at entry. instrument choice and deliberate experimenta- PRSPs are critical to the Bank's country strate- tion with new instruments and partnerships. gies and development effectiveness because Sector strategies must be based on reliable they lay out the pace of achievements of clevel- knowledge about what works and what does opment outcomes. Monitoring progress on not, to inform choices at the country level. selected indicators is already a strong emphasis Selecting lending instruments to support sec- in PRSPs. This should be complemented by tor refbrns. With appropriate product design, comparable attention to systematic program most Bank instruments can be used to help evaluation of PRSP interventions and their results, build institutional capacity and support sector for example in the upcoming Bank/IMF com- reform. Making the right choice, though, requires prehensive review of the PRSP approach. clarity about the operation's objectives and a As business models, CASs and SSPs can be good understanding of country and sector con- strengthened through a more transparent and ditions. Adjustment lending, supported as nec- objective record of past performance. A stronger essary by capacity-building assistance, can be independent and self-evaluation focus would be more effective when national ownership and facilitated by a closer alignment of inputs to consensus on sector reforms are strong, when results, using a logical results chain and verifi- the range of stakeholders and institutions able performance indicators. involved, is relatively small, and when monitor- Finally, the Review has presented project ing and evaluation arrangements are in place. In evaluation findings supporting the importance sectors where these conditions are largely absent, of instrument selection for development effec- such as in education and health in some coun- tiveness, and potential gains to development tries, programmatic investment lending may be impact from leveraging synergies among instru- the preferred approach, supported where rele- ments and their sequencing. Accordingly, coun- vant by LILs and targeted capacity building. The try, sector, and thematic evaluations should multi-sectoral approach has had limited success address more systematically whether the right in addressing sector-specific issues, and this instruments were used for the development should be factored into the use of PRSCs. In this goals selected, and also whether the comple- context, potential complementarity and synergy mentarity of instruments was exploited judi- between PRSCs and SWAPs should be exploited. ciously. In addition, project-level evaluation Finally, a combination of adjustment lending should capture synergies from complementary (to support relevant budgetary and regulatory or sequenced instruments (e.g., adjustment loans changes) and investment lending (to support and stand-alone technical assistance). 59 ANNEXES ANNEX A: THE BANK'S LENDING INSTRUMENTS This annex describes the various types of lend- types of lending facilitated by the Bank: Invest- ing used by the World Bank. There are two ment Lending and Adjustment Lending. Investment Lending r / 111.1 Specific Inlrstime Loansi t .Iseries Sector I nvesmenr r r.1 Lriparc Lo,(SiL ) nirri e r - iC . 'sp r AdaptakrI: ror rri to . F' Ir~~irr _`'j R- na iia i L) creatin, rei ir:. tation antintenance of eco- Lea ni andj UIviojjnr Loan sS~ noi,o socilm,iiand-intitutioal iSinfrsrcue eann n noatd1ionp' Lo.n (LIL)supr Technical ,, IL :a L rin T oua serice s imalin pot inv e d c(apia Financial iieiintaiiin _o3ing prgas buidi pro tht,if sc Ernergeril L113r~, i N A7r. 7ZI Pcen 121p cr,111r ~ (FRA-1C 7ei re --V,c* I1.111 ) at~J3icol 13 rfi int, :ar lrA INVESTMENT LENDING They involve a series Of loans that build On the lessons learned from the previous loan(s) in Specific Investment Loans the series. Specific Investment Loans (SILs) Support the creation, rehabilitation, and maintenance of eco- Learning and Innovation Loans nomic, social, and institutional infrastructure. Learning and Innovation Loans (LILs) support In addition, SILs may finance consultant services small pilot-type investent and capacity- and management and training programs. building projects that, if Successful, Could lead to larger projects that would mainstream the Sector Investment and Maintenance Loans learning and results of the LIL. Sector Investment and Maintenance Loans (SIMs) focus on public expenditure programs in partic- Technical Assistance Loans ular sectors. They aimr to bring sector expenditures, The Technical Assistance Loan (TAL) is used to policies, and performance in line with a country's build institutional capacity in the borrower count- development priorities by helping to create an try. It may focus on organizational arrange- appropriate balance among new capital invest- ments, staffing methods, and technical, physical, ments, rehabilitation, reconstruction, and main- or financial resources in key agencies. tenance. They also help the borrower dievelop the institutional capacity to plan, implement, and Financial Intermediary Loans monitor an expenditure or investment program. Financial Intermediary Loans (FILs) provide long-term resources to local financial inlStitLu- Adaptable Program Loans tions to finance real sector investment needs. The Adaptable Program Loans (APLs) provide phased financial institutions assume credit risk on each support for long-term development programs. subproject. 61 2001 Annual Review of Development Effectiveness Emergency Recovery Loans structure and'productive facilities. The focus is Emergency Recovery Loans (ERLs) support the on key short-term macroeconomic and sector restoration of assets and production levels imme- policy reforms needed to reverse declines in diately after an extraordinary event-such as infrastructure capacity and productive assets. war, civil disturbance, or natural disaster-that seriously disrupts a borrower's economy. They Debt Reduction Loans are also used to strengthen the management The Debt Reduction Loan (DRL) supports gov- and implementation of reconstruction efforts, and ernment policy reform programs aimed at cre- to develop disaster-resilient technology and early ating an environment conducive to private sector warning systems to prevent or mitigate the investment, where foreign exchange is required impact of future emergencies. for urgent rehabilitation of key infrastructure and productive facilities. The focus is on key ADJUSTMENT LENDING short-term macroeconomic and sector policy reforms needed to reverse declines in infra- Structural Adjustment Loans structure capacity and productive assets. The Structural Adjustment Loan (SAL) supports reforms that promote growth, efficient use of Poverty Reduction Support Credit resources, and sustainable balance of payments The Poverty Reduction Support Credit (PRSC) over the medium and long term. program is expected to consist of a series of oper- ations, typically two or three, which together sup- Sector Adjustment Loans port IDA countries' medium-term policy and The Sector Adjustment Loan (SECAL) supports institutional reform programs to help implement policy changes and institutional reforms in a their poverty reduction strategies. Its specific specific sector. structure depends on country circumstances, including the objectives and nature of the coun- Programmatic Structural Adjustment Loans try's reform program that it supports and the tim- The Programmatic Structural Adjustment Loan ing of the requirement for assistance. (PSAL) is provided in the context of a multi-year framework of phased support for a medium-term Deferred Drawdown Option government program of policy reforms and insti- The Deferred Drawdown Option (DDO) is avail- tution building. able to both IBRD and Blend countries to whom the Bank makes a single-tranche adjustment Special Structural Adjustment Loans loan. The DDO gives borrowers access to long- The Special Structural Adjustment Loan (SSAL) term IBRD resources to manage ongoing supports structural and social reforms by cred- structural programs if market borrowing becomes itworthy borrowers approaching a possible cri- difficult and unforeseen financing needs sis, or already in crisis, and with exceptional materialize. external financing needs. These loans help coun- tries to prevent a crisis or, if one occurs, to mit- Sub-National Adjustment Loans igate its adverse economic and social impacts. The Sub-National Adjustment Loan (SNAL) sup- ports reforms that promote growth, efficient use Rehabilitation Import Loans of resources, and sustainable balance of pay- The Rehabilitation Import Loan (RIL) supports ments at a sub-national level. government policy reform programs aimed at creating an environment conducive to private * Drawn from World Bank Lending Instruments: sector investment, where foreign exchange is Resources for Development Impact, OPCS, July required for urgent rehabilitation of key infra- 2000. 62 ANNEX B: A LIST OF DISCLOSED OED COUNTRY ASSISTANCE EVALUATIONS Region Countr Evaluation FY Af rica (AFR) Ghana 1995,2000 Zambia 1996 Cote d'1voire 1998 Mozambique 1998 44 1998 Togo 1998 Kenya 1998, Malawi 1998 Ethiopia 1999 Burkina Faso 2000 Tanzania 2000 Cameroon 4 2000 Uganda A 2000 Botswana 2001 Lesotho 2002 East Asia and Pacific (EAP) Philippines 1998 Thailand 1998 Indonesia 1999 Cambodia 1999 Papua New Guinea " 2000 Vietnam 2002 South Asia (SAR) Bangladesh 1998 Sri Lanka 1999 Nepal 1999 Maldives 1999 India 2001 Europe and Central Asia (ECA) Poland 1997 Albania 1998 Ukraine 1999 Azerbaijan 1999 Kazakhstan 2001 Kyrgyz 2001 Bulgaria , 2002 63 2001 Annual Review of Development Effectiveness Region Gontr Evaluation FY Middle East and North Africa (MNA) Mor 1997, 2001 1999 2000 Latin America and the Caribbean (LCR) rgnT - 1996, 2000 1998 jamaia 1999 ..ud.r1999 2000 Posta Rica 2000 Parayga 2001 2001 2001 E-l Salv ador2001 2002 2002 64 Table C.1 Exit FY96-99 Exit FY0-01* Actve Portfolio Sust % 1Sust % ID Impact Sust % likely or ID Impact % Projects Share Outcomo e ikely on % sub or Projects Share Outcome likely or better % sub or Proiects Share Projects - % at better better A P # % % Sat better (Old ScaleV better APPI ot a Risk C Sector Group Agriculture 206 20 6i 4 38 6 3 1 69 4 43 6.5 31 Economic Policy83 8 77 56 28 67 - 15 4 87 93 80 47 7.3 36 2 86 Education 90 9 74 44 28 66 34 9 82 75 53 47 7.2 160 1 6 Electric Power & Other Energy 7 7 '64 47 38, 64 31 8 58 57 51 52 6.5 80 6 85 Environment "24 2 71 54 42 7 13 3 69 69 67 46 68 1 9 7 8 Finance 66 7 67 56 44 7 67 15 4 80 87 63 67 73 59 4 98 Health Nutrition & Population 9 63 49 31 63 26 4 73 56 44 46 6.7 144 10 8 Mining 9 78 67 78 73 i 3 1 100 67 67 67 83 14 1 100 Multisector 15 1 73 33 7 6.2 5 1 100 75 67 33 7.8 19 1 95 Oil & Gas .22 2 73 64 36 6:8 13 3 62 58 50 38 6.5 18 1 89 PSD/Industry 45' 4 58 55 36 62 20 5 58 63 50 42 6.6 63 4 81 Public Sector Management 56 6 84 65 45 7.0 33 9 82 84 79 55 7.2 89 6 85 Social Protection 48 5 83 35 42 6.8 25 7 92 86 63 52 7.7 98 7 92 Telecommunications & Informatics 18 2 78 72 56 74 6 2 100 100 100 83 8.8 12 1 100 Transportation 90 9 85 61 53 7 1 48 13 93 87 79 76 8.0 165 1185 Urban Development 55 5 74 44 31 6 21 5 90 71 61 48 70 a'76 '5 897.5 WaterSupply&Sanitation 4 .5 55 6 58 13 3 69 75 50 46 6.78784 Network Environmentally & Socially Sustainable Development 228 23' 68 6 3876 20 69 53 47 43 6.6 328 23 89 Finance, Private Sector & Infrastructure 14 41 2 41 6 6 7 .168 44 78 75 64 58 7.2 5 8 Human Development 19 73 43 31 65 85 22 82 72 53 48 7.2 37 87 1 Poverty Reduction & Economic Mgmt. 171 17 79 59 33 68 55 14 82 84 76 50 7.2 128 9 86 Lending Type Adjustment 181 16 82 63 38 70 39 10 79 84 73 56 72 51 4 Investment 846 84 69 8 65 345 90 78 70 59 51 7.1 1397 96 87 Lending Source IBRD 48 75 58 41 68 172 45 78 80 68 58 7 3 648 45 87 IDA/blend 519 52 68 43 34 64 212 55 78 64 54 47 69 800 55 87 Region - Africa 304 30 57 34 31 60 111 29 66 51 46 41 6.4 357 25 85 EastAsiaandPacific 1 153 15 81 59 43 1 57 15 80 71 66 61 7.2 260 18 91 Europe and Central Asia 130 13 82 65 45 71 90 23 81 81 69 53 7.3 289 20 88 Latin America and Caribbean 215 21 81 60 44 71 62 16 81 79 66 53 7.3 289 20 88 Middle East and North Africa 78 8 71 44 29 6 3 26 7 88 92 58 60 7.6 115 8 83 SouthAsia 127 13 8 51 - 32 6 38 10 89 81 61 63 7.7 '138 10 9 Income Group High '11 70 90 50 70 1 0 100 100 100 100 8.3 2 0 00 Upper middle 92 85 71 3 63 16 80 86 68 58 7.6 231 16 "84 Lower middle 301 30 74 56 38 67 123 32 85 84 74 61 7 5 510 35 90 lower 503 50 64 38 32 6.2 197 51 72 58 49 44 6.7 705 49 86 Cr Notes- Exi FY denotes the year in which the project leaves the World Bank's active portfolio, normally at the end of disbursements. Percentages exclude projects not raled. Sector designations are taken from the World Bank's Common Data Stores as of end FY01. incorm groups designations are taken from the World Development Indicators 2001. Active Portfolio data reflect projects active as of July 1 200 1, and is provided by te Quality Assurance Group (GAGi. For detais on tAG's "rojects at Fisk" indicator please refer to the FYD1 Annual Review on Portfol Performance 1. See endnote number 14 of the ARDE Report for differences between the old and the current sustainability scale. * The data for FY01 exits represent a partial IBRD/IDA lending sample (131 out of 275) and reflect all 0ED project evaluations through October 15. 2001 The processing of the temander uf the FY01 exits is ongoing, expected to be completed by spring 2002. ®~e®co ffi .0o ri @PMG 00rkD owiaec @a L~ Table C .2 1g1f