73652 IDA16 Mid-Term Review Implementation and Results Progress Report IDA Resource Mobilization Department Concessional Finance and Global Partnerships November 2012 ACRONYMS AND ABBREVIATIONS AAA Analytical and Advisory Activities IMF International Monetary Fund AC Aid Coordination IoC Instrument of Commitment AFR Sub-Saharan Africa Region IRM Immediate Response Mechanism AIDS Acquired Immune Deficiency Syndrome ISN Interim Strategy Note ARD Agriculture and Rural Development ISR Implementation Status and Results Report BP Bank Procedures IT Information Technology BW Business Warehouse LCR Latin America and Caribbean Region CAS Country Assistance Strategy MDB Multilateral Development Bank CASCR Country Assistance Strategy Completion Report MDG Millennium Development Goal CASPR Country Assistance Strategy Progress Report MDRI Multilateral Debt Relief Initiative CDD Community Driven Development MMR Maternal Mortality Ratio CEM Country Economic Memorandum MNA Middle East and North Africa Region CIF Climate Investment Fund MSME Micro, Small and Medium Enterprises CO2 Carbon Dioxide MTR Mid-Term Review CPI Consumer Price Index NSDS National Strategy for the Development of CPIA Country Policy and Institutional Assessment Statistics CPS Country Partnership Strategy ODA Official Development Assistance CRO Chief Risk Officer OECD-DAC Organization for Economic Cooperation and CRW Crisis Response Window Development -Development Assistance CSO Civil Society Organization Committee CTF Clean Technology Fund OP Operational Policy DaLA Damage and Loss Assessment PBA Performance Based Allocation DIME Development Impact Evaluation Initiative PBG Policy-Based Guarantee DPL Development Policy Lending PCD Post Crises Directions DPO Development Policy Operation PCPI Post-Conflict Performance Indicators DSA Debt Sustainability Analysis PD Program Document DSF Debt Sustainability Framework PDNA Post Disaster Needs Assessment EACC Economics of Adaptation to Climate Change PFM Public Financial Management EAP East Asia and Pacific Region PforR Program for Results ECA Europe and Central Asia Region PPP Purchasing Power Parity EITI Extractive Industry Transparency Initiative PREM Poverty Reduction and Economic Management ESW Economic and Sector Work PRSP Poverty Reduction Strategy Paper FCC Fragile and Conflict-affected Country PSD Private Sector Development FDI Foreign Direct Investment PSIA Poverty and Social Impact Assessment FSWG Financial Sustainability Working Group QALP Quality Assessment of Lending Portfolio FY Fiscal Year RBCAS Results Based Country Assistance Strategy GAC Governance and Anti-Corruption RBF Results Based Funding GAP Gender Action Plan REWG Results and Effectiveness Working Group GDP Gross Domestic Product RHAP Reproductive Health Action Plan GHG Greenhouse Gas RMS Results Measurement System GMR Global Monitoring Report SAR South Asia Region HIPC Heavily Indebted Poor Country SCB Statistical Capacity Building HIV Human Immunodeficiency Virus SDR Special Drawing Rights HLF4 Fourth High Level Forum SFR Statistics for Results Trust Fund Facility HRITF Health Results Innovation Trust Fund STATCAP Statistical Capacity Building Program IAD Internal Audit Vice Presidency TA Technical Assistance IBRD International Bank for Reconstruction and TF Trust Fund Development TFR Total Fertility Rate ICR Implementation Completion and Results Report TFSCB Trust Fund for Statistical Capacity Building IDA International Development Association UN United Nations IEG Independent Evaluation Group WBG World Bank Group IFC International Finance Corporation WDR World Development Report IL Investment Lending TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................................................ I I. INTRODUCTION ......................................................................................................................................... 1 II. IDA FINANCIAL ASSISTANCE ...................................................................................................................... 1 A. COMMITMENTS AND DISBURSEMENTS .......................................................................................................................1 B. IDA’S PERFORMANCE-BASED ALLOCATION SYSTEM .....................................................................................................4 C. IDA’S COUNTRY-BASED MODEL...............................................................................................................................5 III. DELIVERING DEVELOPMENT RESULTS........................................................................................................ 6 A. TIER 1: IDA COUNTRIES PROGRESS ...........................................................................................................................7 B. TIER 2: IDA-SUPPORTED DEVELOPMENT RESULTS .....................................................................................................11 C. TIER 3: IDA OPERATIONAL EFFECTIVENESS ...............................................................................................................15 D. TIER 4: IDA ORGANIZATIONAL EFFECTIVENESS ..........................................................................................................19 E. IDA’S ROLE IN THE INTERNATIONAL COMMUNITY ......................................................................................................22 F. IDA’S INTERNAL CONTROLS ...................................................................................................................................24 IV. MANAGING IDA’S FINANCIAL RESOURCES .............................................................................................. 25 A. IDA16 COMMITMENT AUTHORITY .........................................................................................................................25 B. DEBT RELIEF UNDER HIPC AND MDRI ....................................................................................................................27 C. TERMS OF IDA ASSISTANCE ...................................................................................................................................27 IV. CONCLUSION AND ISSUES FOR DISCUSSION ............................................................................................ 28 List of Boxes Box 1: Improving Portfolio Quality and Performance…………………………………………………………………….……..……….14 Box 2: Supporting Improved Public Financial Management Systems……………………………………………………………18 List of Figures Figure 1: FY12 Commitments by Region and Sector. .................................................................................... 3 Figure 2: FY12 Disbursements by Region and Sector ................................................................................... 3 List of Tables Table 1: IDA Countries Progress (Tier 1)…………………………………………………………………………………………………..9 Table 2: IDA-Supported Development Results (Tier 2)…………………………………………………………………………..12 Table 3: IDA Operational Effectiveness (Tier 3)………………………………………………….…….…………………………….16 Table 4: IDA Organizational Effectiveness (Tier 4)……………………………….…………………………………………………19 Table 5: IDA16 Commitment Authority Status……………………………………………………………….……………………...26 List of Annexes Annex 1: Status of Monitorable Actions for IDA16………………………………………………………………………………29 Annex 2: Examples of Statistical Capacity Strengthening in IDA Countries………………………………..………..38 Annex 3: Examples of Use of Impact Evaluations………………………………………………………………………………..40 Annex 4: IDA’s Financial Resources Summaries…………………………………………………………………..………………43 Annex 5: Progress Report on IDA Internal Controls………………………………………………………….………………...45 EXECUTIVE SUMMARY i. This paper provides a summary of the status of IDA 16 implementation, with a focus on results-related IDA 16 commitments. In line with IDA16’s overarching theme of “delivery results�, IDA16 implementation is off to a good start, building on the momentum of the IDA15 period and stepping up support for IDA countries to make progress toward the Millennium Development Goals (MDGs). The paper is organized in three sections: (i) the financial assistance provided by IDA so far in the IDA16 period; (ii) the four tiers of the IDA16 Results Monitoring System; and (iii) IDA’s financial resources. Annex 1 provides a detailed update of all monitorable actions for IDA16. In-depth information on progress on the four IDA16 special themes (crisis response, gender, climate change and fragile and conflict-affected countries) has been provided in four separate papers on these respective themes. ii. The IDA16 replenishment achieved a record level of SDR32.8 billion (equivalent to US$49.3 billion). Compared with IDA15, this was an increase of 20 percent in SDR terms (18 percent in US dollar terms). The robust replenishment level recognized the substantial needs of IDA countries as they aim to reach the MDGs while recovering from the recent food, fuel and financial crises and the slow global economic recovery. With the overarching theme of “delivering development results� for IDA 16, IDA has stepped up efforts to improve its effectiveness, efficiency and results orientation. iii. IDA16 is off to a strong start with commitments amounting to SDR12.8 billion (US$20 billion) as of October 15, 2012. This includes commitments of SDR9.4 billion (US$14.8 billion) in FY12 and an additional SDR3.4 billion (US$5.2 billion) in FY13 as of mid- October 2012. The Africa region accounts for close to half of the commitments. Disbursements have continued to increase with US$11.1 billion disbursed in FY12, an increase from the annual average of US$10.3 billion during IDA15. For FY13, as of mid-October 2012 US$2.1 billion have been disbursed. A total of 347 knowledge products were delivered in FY12 to support policy reform and institutional capacity building. They included 145 economic and sector work (ESW) products and 202 technical assistance (TA) products. iv. During IDA 16, the bulk of IDA resources (72 percent) continued to be allocated through its performance-based allocation (PBA) system. Specific exceptions to the PBA were implemented as agreed during the IDA16 Replenishment negotiations, notably to support post-conflict and re-engaging countries, countries affected by severe shocks under the Crisis Response Window and for selected regional integration projects. IDA also continues to provide grants based on countries’ risk of debt distress. Based on this framework, IDA grants represented about 16 percent of total IDA commitments in FY12. IDA resources are being provided as per IDA’s country-based development model, with support customized and aligned to national development priorities through Country Assistance Strategies (CASs) and efforts ongoing to strengthen the quality of CAS products. v. Delivering development results is the overarching theme for IDA16. Accordingly, IDA 16 has placed stronger focus on measuring, monitoring and communicating the outcomes and results of IDA supported programs. In particular, IDA has significantly enhanced its Results Measurement System (RMS), by including two additional tiers to track IDA’s operational and organizational effectiveness. The RMS’s four-tier structure has provided the basis for the development of the Bank’s Corporate Scorecard. vi. Overall, IDA’s performance against the RMS indicators has been good, although there are some areas which will require additional attention, as follows: • Tier 1. Indicators of progress in country outcomes show overall improvement though progress varies across IDA countries. The average per capita Gross Domestic Product (GDP) for IDA countries increased despite the recent crises thanks to continued growth. The percentage of people living on less than US$1.25 and US$2 a day declined between 2005 and 2008 (the latest year of data availability). However, the number of absolute poor in IDA countries remained at about one billion in 2008 and the cumulative impacts of the recent crises are expected to have reversed some of these gains. There has been progress in improving the investment climate, but the average score on public financial management has declined slightly. Performance on access to key infrastructure has been good. There has also been progress on the education and other human development MDGs, however, most IDA countries are lagging behind the health-related MDGs. Despite progress made in statistical capacity and results monitoring in IDA countries, significant gaps remain, highlighting the need for IDA to step up efforts in these areas. • Tier 2. In terms of number of projects (based on a partial sample of projects exiting in FY09-FY11), development outcomes for IDA operations in fragile situations met the IDA16 performance standard (70 percent), while those in all IDA countries fell short of the IDA16 performance standard (69 percent versus 75 percent). On a commitment basis, however, development outcomes were rated satisfactory or better in 75 percent of all IDA operations (81 percent in FCCs). Also, the ratings for CASs improved but were still below the IDA16 performance standard. To ensure the quality of operations and development outcomes and that IDA16 performance standards are met, Management has put in place new quality assurance measures to address identified challenges. At the same time, there has been impressive progress on the achievement of sectoral outputs and outcomes with significant contributions made to the health and welfare of women and children. In addition, Management has expanded core sector indicators for use in results frameworks. • Tier 3. Measures of IDA’s operational effectiveness show improvements in several areas. On portfolio performance, the quality of project design has improved from 69 to 81 percent of operations assessed. The disbursement ratio for investment projects in fragile and conflict-affected countries (FCCs) is 25 percent, thus meeting the IDA16 performance standard; although for non-FCCs it is 22 percent. On monitoring and evaluation, 100 percent of IDA investment operations have appropriate results frameworks and key results are reported in implementation status reports and completion reports. IDA has also increased the use of impact evaluations and is on track to meet the IDA16 performance standard of an average of 17 impact evaluations per year. IDA scores strongly on use of country systems as well as on mainstreaming IDA16 special themes of gender and climate change, which are now discussed in all IDA16 CASs. - ii - • Tier 4. IDA has also made progress on organizational effectiveness indicators. Indicators on the speed and cost of IDA projects have for the most part improved, and IDA16 performance standards on decentralization have been broadly met. Beyond the specific indicators, comprehensive modernization reforms to increase IDA and the World Bank’s overall organizational effectiveness are continuing. Cross support and staff mobility through strategic staffing are being enhanced. Improvements in the Bank’s information management technology and policies are strengthening staff response to clients. The five elements of the investment lending (IL) 2009 reform package (i.e., a risk-based approach, enhanced implementation support, rationalization of financing options, a better enabling environment and reform of the IL policy framework) have been delivered and implementation is underway. The last element of this package, reform of the IL policy framework, was approved by the Board on October 25, 2012. In addition, a new instrument, the Program-for-Results instrument, was approved on January 24, 2012 and is already operational (with two IDA operations already approved). vii. Management has taken additional steps to monitor, report and communicate results. These include the Bank’s Access to Information Policy, 1 Open Data Initiative, 2 Open Knowledge Repository, results stories and geo-mapping of projects. Through these initiatives the Bank has continued to make information on its projects, programs and development data publicly available and more accessible than ever before. In addition to the specific IDA16 results commitments, Management continues to explore and implement innovate approaches to capture beneficiary and client feedback, measure IDA’s contribution to institution strengthening and capacity building, and linking results measurement to geographical location. viii. IDA continues to play a leading role in advancing the principles of the Paris Declaration. IDA is strengthening donor coordination at global, regional and local levels. It helped to coordinate the Fourth High Level Forum on aid Effectiveness in Busan, Korea and is supporting efforts to identify and disseminate good practices on aid effectiveness. Initiatives are also underway to enhance the use of country systems, especially for financial management and procurement. ix. IDA has continued its efforts to implement the recommendations of the IDA Controls Review. All five corrective actions pending out of the twenty-two corrective actions under the Five Point Action Plan (FPAP) are in place with implementation underway in the areas of: procurement policy update, Analytical and Advisory Activities reviews and controls, accountability review, the new operational document storage and retrieval system, and investment lending policy consolidation. x. To ensure a sustainable IDA financing framework, Management continues to manage IDA commitments in line with available resources, including from donors. IDA16 reached effectiveness on November 30, 2011 when donors provided Instruments of Commitment (IoCs) covering at least 60 percent of total donor contributions pledged (SDR10.4 billion). As of October 15, 2012, IDA had received IoCs from 44 donors totaling about 92 percent of the total expected amount. Full delivery of all remaining donor pledges (SDR1.4 billion for IDA16 and 1 The World Bank Policy on Access to Information, World Bank, July 2010. 2 See http://data.worldbank.org/. - iii - SDR0.8 billion for donor contributions to IDA15 and earlier replenishments) and additional funding to eliminate the MDRI financing gap (SDR1.32 billion) will be necessary to avoid corresponding cuts to the IDA16 commitment authority framework in FY14. - iv - I. INTRODUCTION 1. The IDA16 implementation period (FY12-14) comes at a critical time. IDA countries are striving to recover from the recent food, fuel and financial crises and the slow global economic recovery, at the same time as they are working to address challenges in meeting the Millennium Development Goals and confronting new and emerging issues such as climate change. Despite fiscal challenges, donors sustained their commitment to IDA countries through a strong IDA16 replenishment, in recognition of the need to support the recovery effort and reduce poverty for millions of people in IDA countries. Total commitment authority for IDA16 is a record SDR32.8 billion (US$49.3 billion), compared to commitments of SDR28.8 billion (US$44.4 billion) in IDA15. 2. The IDA16 overarching theme is “delivering development results�. Through its financing, policy advice and knowledge services, IDA is supporting IDA countries to deliver results including by providing a platform for effective delivery of aid from other development partners. For IDA 16, IDA has strengthened its results focus through enhancements to the Results Measurement System. In addition, IDA is strengthening its effectiveness and efficiency as part of comprehensive modernization reforms, including a new results-focused programmatic lending instrument (PforR), investment lending reforms, and strengthening information technology systems. 3. This paper provides a summary of progress in IDA 16 implementation, with a focus on results-related commitments. It includes information on (i) the financial assistance provided by IDA so far in the IDA16 period (Section II); (ii) the four tiers of the IDA16 Results Monitoring System (Section III); and (iii) IDA’s financial resources (Section IV). Section V provides a summary of key conclusions and presents issues for discussion. Annex 1 provides a detailed update of all monitorable actions for IDA16. In-depth information on progress on the four IDA16 special themes (crisis response, gender, climate change and fragile and conflict- affected countries) has been provided in four separate papers on these respective themes. In addition, updates on the implementation of IDA’s regional program and on the experience with the implementation of the netting of foregone debt relief under the Multilateral Debt Relief Initiative (MDRI) are also addressed in separate papers. II. IDA FINANCIAL ASSISTANCE A. Commitments and Disbursements 4. Performance on commitments and disbursements in the period leading up the IDA16 Mid-Term Review has been strong. In the first year of IDA16 (FY12), commitments reached SDR9.4 billion (US$14.8 billion). 3 New operations totaled 158 (129 investment lending operations and 29 development policy operations – DPOs) in FY12, compared to 230 in FY11. At the end of FY12, there were a total of 833 active IDA projects under implementation. 3 Includes IDA guarantees of SDR290 million (US$448 million). Commitments to IDA-only countries constituted 61 percent of total commitments while blend countries accounted for 39 percent. 5. By region, the Sub-Saharan Africa (AFR) region received 49 percent of total IDA commitments in FY12. The top ten recipients of IDA commitments in the AFR region were: Nigeria, Ethiopia, Kenya, Ghana, Tanzania, Côte D’Ivoire, Mozambique, Burkina Faso, Rwanda and Cameroon. The South Asia (SAR) region had the second largest share of commitments (37 percent) with India, Pakistan and Bangladesh accounting for a total of US$4.9 billion in commitments. The East Asia and Pacific (EAP) region accounted for 8 percent; the Europe and Central Asia (ECA) region for 3 percent; the Latin America and Caribbean (LCR) region for 3 percent; and the Middle East and North Africa (MNA) region for 1 percent. 6. By lending instrument, 87 percent was committed through investment operations and 13 percent through Development Policy Operations (DPOs). This compares to a share of DPOs of 13 percent in FY11, and 17 percent in the IDA15 period. Most of DPOs in FY12 were for economic policy and poverty reduction (75 percent). 7. With respect to financing terms, 84 percent was committed on credit terms and 16 percent on grant terms in FY12 (compared to 17 percent in FY11 and 18 percent for the IDA15 period). The AFR region accounted for 70 percent of the grants, compared to 69 percent in FY11. 8. By sector, commitments to infrastructure (comprising transport, water, sanitation and flood protection, energy and mining, and information and communications) remained strong in FY12, constituting 32 percent of total commitments. With 24 percent of total commitments, the social sectors (education, health and social services) were the second largest. The support for public administration and law amounted to 23 percent of total IDA commitments. Sectors that directly or indirectly support private sector growth, including industry and trade and finance, accounted for about 6 percent of IDA commitments, while lending for agriculture, fishing and forestry accounted for 14 percent. 9. Commitments for regional projects have been very strong, with SDR0.9 billion of the SDR1.5 billion set aside for IDA16 already committed. Demand for regional projects exceeds available resources and it is expected that the remainder will be committed before the end of the current fiscal year. There is currently an unfunded pipeline of projects amounting to over US$2 billion that could be approved during IDA16 if additional resources were available. 4 10. IDA has responded to crises with commitments from the IDA16 Crisis Response Window (CRW). Of the SDR329 million made available to Haiti for post-earthquake reconstruction, SDR194 million has been committed. Furthermore, CRW funding of SDR121.5 million has been committed as part of a US$1.88 billion plan to respond to the needs of countries affected by the drought in the Horn of Africa. 5 4 For a more detailed discussion see IDA16 Mid-Term Review paper “IDA Regional Program: Progress Update and Review of the Provision of Grants to Regional Organizations�, October 2012. 5 For a more detailed discussion see IDA16 Mid-Term Review paper “Enhancing IDA’s Capacity to Respond to Crises�, October 2012. -2- 11. Commitments in FY13 are off to a strong start. A total of SDR3.4 billion (US$5.2 billion equivalent) has been committed by mid-October, 2012. Total commitments for the IDA16 period (FY12 and FY13Q1) thus amount to US$20 billion. Figure 1: FY12 Commitments by Region and Sector MNA, Water/sanit LRC, 3% Agriculture, ECA, 3% /fld prot, 14% 1% 13% Transportati on, 7% Education, 12% AFR, 49% Public SAR, 37% Energy/ admin, Law, mining, 12% 23% Finance, 2% Info & EAP, communica Health/ 8% tion, 0% Industry social serv, 12% and trade, 4% 12. Annual disbursements have continued to increase with US$11.1 billion disbursed in FY12. This follows the upward trend in the last two IDA replenishment implementation periods. During IDA15, total annual disbursements averaged US$10.3 billion, compared with total average annual IDA14 disbursements of US$8.9 billion. The AFR (US$5.8 billion) and SAR (US$2.9 billion) regions accounted for the largest share of disbursements in FY12. The distribution of disbursements during FY12 shows continued strong support for infrastructure (30 percent) and the social sectors (28 percent), law and public administration (24 percent) and agriculture, fishing and forestry (9 percent). Figure 2: FY12 Disbursements by Region and Sector MNA LCR Industry Agriculture ECA Water/sanit and trade 9% 4% 1% 3% /flood prot. 5% 9% Transportati Public SAR on Admin. and 26% 12% Law AFR 24% 52% Energy & Health & EAP mining social serv Education Info & 14% 9% 13% 15% communica tion Finance 1% 3% -3- 13. IDA has continued to provide knowledge services during IDA16. The provision of advisory and analytical activities (AAA) was an important part of IDA’s support to client countries in FY12, with a total of 347 knowledge products delivered. They included 145 economic and sector work (ESW) products and 202 technical assistance products. The largest share of the AAA products (64 percent) was delivered in IDA only countries with the balance in IDA blend countries. Knowledge products complement IDA’s lending program and are aligned with CAS priorities. The FY12 AAA products covered a wide range of regional and country specific themes. Lessons from the Knowledge for Development Review conducted in 2011 are helping to strengthen AAA products. They include: ensuring that AAA products are of strategic relevance; inform policy decisions; are timely; have results-frameworks; engage a wide range of clients and are conducted in collaboration with other donors at country level. Within the Bank, corporate review processes for quality assurance have been strengthened, and system improvements support the Bank’s Open Development agenda with knowledge products being publicly disclosed according to the Access to Information policy. 14. IDA has also continued to provide support for debt relief in the context of the Heavily Indebted Poor Country (HIPC) and Multilateral Debt Relief Initiative (MDRI). In FY12, two countries (Côte d’Ivoire and Guinea) reached the HIPC completion point and qualified for irrevocable HIPC and MDRI debt relief. Comoros is expected to reach the completion point in FY13, which would bring the total number of countries having completed the HIPC process to 35 out of 39 potentially eligible countries. B. IDA’s Performance-Based Allocation System 15. The bulk of IDA16 resources (72 percent) has been allocated through the Performance-Based Allocation (PBA) system. 6 Specific exceptions to the PBA were implemented as agreed during the IDA16 Replenishment negotiations: • Exceptional support to post-conflict and re-engaging countries. South Sudan has been deemed eligible for an exceptional post-conflict allocation. Myanmar has been deemed eligible for an exceptional re-engaging country allocation and it is expected that the country will clear arrears in the third quarter of FY13. In addition, a US$80 million equivalent pre-arrears clearance grant for a National Community Driven Development Project for Myanmar has been submitted to the IDA Board for approval. • Extension of the phase out period for post-conflict and re-engaging countries on a case-by-case basis. Three post-conflict countries (Afghanistan, Burundi and the Democratic Republic of Congo) and two re-engaging countries (Central Africa Republic and Togo) have benefited from the extension for the IDA16 period. • SDR400 million has been set aside to support the clearance of arrears of potentially eligible inactive IDA countries. 7 6 The PBA system takes into account country performance (measured by the Country Policy and Institutional Assessment ratings) and needs (based on population size and Gross National Income). See Annex 2 of the IDA16 Report (2011) “Additions to IDA Resources: Sixteenth Replenishment.� 7 For country eligibility see IDA (2007) “Further Elaboration of a Systematic Approach to Arrears Clearance�. -4- • SDR1.3 billion has been set aside to finance expenditures under a dedicated Crisis Response Window (CRW). The CRW was established to provide additional resources to countries following a major natural disaster or a severe economic shock. To date, SDR316 million of CRW resources have been committed in support of post-earthquake reconstruction in Haiti and to address the impact of the drought in the Horn of Africa. 8 • SDR500 million per year has been allocated for topping up IDA resources for selected regional integration projects. These resources are used to finance two-thirds of a country’s share of the costs of a regional project, with the remaining one-third contribution from the country’s IDA allocation. As in IDA15, a 20 percent ceiling continues to be placed on country contributions to regional projects. Furthermore, the minimum three-country requirement for IDA regional projects has been relaxed to allow two countries if at least one IDA fragile and conflict-affected country participates. The regional program continues to provide grants to qualified regional institutions in support of regional integration. 16. IDA continues to provide grants based on a country’s risk of debt distress assessed through the forward-loading debt sustainability framework (DSF) for low-income countries. 9 Based on this framework, 37 countries were eligible to receive all or a portion of their allocation on grant terms in FY12 while 36 countries are eligible for grants in FY13. In FY12, IDA grants were committed for a total of US$2.2 billion, or about 16 percent of total IDA commitments; the AFR region received US$1.6 billion or about 70 percent of the total grant commitments. C. IDA’s Country-Based Model 17. IDA’s country-based model for aid delivery remains the cornerstone of its support to countries during the IDA16 implementation period. It supports nationally-owned development strategies (Poverty Reduction Strategy Papers, PRSPs, or similar national development strategies); donor alignment to country priorities, with increased use of country systems wherever feasible and efforts to increase aid predictability principles (Paris Declaration/Accra Agenda for Action); and mutual accountability by donors and recipient countries. 18. CAS products are the basis for IDA’s country-based programs and, ultimately, for assessing the impact of its assistance. The 2009 CAS Retrospective 10 concluded that the current CAS architecture is appropriate, sufficiently flexible and robust to accommodate programming for an increasingly diverse set of Bank clients. The CAS Retrospective identified areas for improvements including: strengthening results frameworks in CASs (especially in middle-income and fragile/conflict-affected countries); 11 focusing collaboration with donors with 8 See IDA16 Mid-Term Review paper “Enhancing IDA’s Capacity to Respond to Crises�. 9 The DSF contains two pillars: (i) a “static� one – a matrix of policy-dependent external debt burden thresholds; and (ii) a “dynamic� one – an assessment of debt distress risk based on a forward-looking debt sustainability assessment. 10 OPCS (2009), “Country Assistance Strategies: Retrospective and Future Directions�, October 2009. 11 It was also recommended that CAS Progress Reports be prepared in time to inform new CASs. -5- more emphasis on joint country strategy development and less on producing joint documents which entail high transactions costs; and continuing efforts to strengthen country-level collaboration within the World Bank Group based on the experience of joint Bank-IFC CAS pilots. The 2012 IEG Review of the World Bank’s Matrix found that the country-based model is responsive to client demands, particularly within a three to four year CAS cycle. The evaluation noted that longer-term sectoral and corporate priorities need to be adequately taken into account in CASs, ensuring that countries can benefit fully from the global perspective of the Bank. 19. Efforts are underway to further strengthen the quality of CAS products. During FY12, 27 CAS products (12 CASs, 6 Interim Strategy Notes and 9 CAS Progress Reports) were prepared for IDA countries. The Corporate Review Process for CASs has been simplified. All CAS products are now subject to only one single corporate review by the Regional Operations Committee (ROC) or the Operations Committee (OC) as appropriate. The preparation of the Country Assistance Strategy Completion Report (CASCR) is also in the process of simplification. The CAS Results Frameworks review has been institutionalized as part of the corporate review process. CASs are regularly subject to self-evaluations which are validated by the Independent Evaluation Group (IEG). Efforts are also ongoing to increase selectivity in CASs with country-appropriate sectoral interventions and attention to alignment of complementary financing to country priorities and strengthening of country systems. III. DELIVERING DEVELOPMENT RESULTS 20. IDA uses a unique set of principles and strengths that enables it to support development results effectively and efficiently. Using an allocation model that balances performance and need, IDA is able to support country development priorities and circumstances, engage in long term partnerships to develop institutions and capacity, and address multi-sectoral challenges and support global priorities. Its strong local presence in nearly all IDA countries, and its combination of financial and knowledge services enable IDA to serve as a strong platform for governments and development partners to manage aid more effectively. Through its Results Measurement System IDA is able to track its contribution to development results, and to monitor its operational and organizational effectiveness. IDA has a strong track record in delivering results, including by playing a platform role for other donors. 21. Managing for development results is at the core of IDA’s focus and underpins the IDA16 RMS. The IDA16 RMS is organized in a four-tier structure. 12 Tier 1 provides a snapshot of IDA-eligible country progress on key development outcomes, and Tier 2 includes selected indicators of IDA’s products outcomes and of country development outputs and outcomes supported by IDA operations. Tiers 3 and 4 form the IDA Report Card, which tracks progress on selected indicators of IDA’s operational and organizational effectiveness. 22. IDA is further improving its effectiveness and efficiency through comprehensive modernization reforms. These include inter alia (i) the launch of the new Program-for-Results 12 The IDA16 RMS is described in Section II.B of the IDA16 Report, with tables of indicators by tier included in Annex 1. -6- (PforR) instrument to support client programs and link disbursements to the achievement of results; (ii) the reform of investment lending to increase the speed of delivery, improve risk management and implementation support, and better align services with government priorities and the efforts of development partners; and (iii) the strengthening of information technology systems to further support knowledge sharing and connectivity to country offices. 23. The Bank is leading the transparency agenda through the launch of a second phase of the Access to Information Policy, the Open Data initiative and the Open Knowledge Repository system which make data on development publicly available. IDA is leading the way in the ongoing geo-coding and mapping for results: all IDA-financed operations are now geo-coded and mapped. Transparency and social accountability are also being strengthened by enabling citizen beneficiary feedback on IDA-financed operations. A. Tier 1: IDA Countries Progress 24. Tier 1 of the IDA16 RMS provides a snapshot of IDA-eligible country progress on key development outcomes. It measures key development indicators on growth and poverty reduction; governance; private sector development (PSD); infrastructure; gender and human development; and climate change. 25. The most recent available data show overall improvement on Tier 1 indicators, though progress varies across countries (see Table 1). Country-specific factors, including policy frameworks and the quality of institutions, underlie divergent progress in the achievement of the MDGs. The per capita Gross Domestic Product (GDP) of IDA countries increased from US$618 (in constant 2000 US$) in 2009 to US$678 in 2011. Although IDA countries were affected by the recent crises, this increase reflected a positive growth performance in several IDA countries in the context of improved policies and macroeconomic management, and strong primary commodity prices. The absolute poverty headcount in IDA countries fell from 42.7 percent in 2005 to 38.8 percent in 2008 (the year with the latest available data across countries) although there is regional variation, with Sub-Saharan Africa reporting the highest poverty rate of 47 percent. Also, the percentage of people in IDA countries living on less than US$2 a day declined from 71.4 to 65.2 percent during the same period. However, the number of the absolute poor in IDA countries remained at about one billion during 2005-2008 largely due to population growth. Furthermore, the food price spike of 2007–08 is estimated to have raised the poverty headcount by 105 million and that of 2010–11 by another 48.6 million, with urban poor and female-headed households being hit the hardest. 13 Also, food insecurity has emerged as the foremost ongoing impact of the global economic downturn. Even prior to the 2008 food crisis, progress in reducing the proportion of poor people suffering from hunger was unsatisfactory in 34 countries. Since then, another 15 countries have gone off-track, prompting increasing global attention to the negative impacts of high food prices on human development. 26. There has been some progress in improving the investment climate, but the average score on public financial management has declined slightly. The time required to start a business in IDA countries dropped from 35 days in 2009 to 32 days in 2011. The trade logistics 13 Global Monitoring Report 2012. -7- performance index has not changed significantly since 2009, while the average number of mobile and fixed lines telephone subscribers in IDA countries has increased dramatically from 37 to 60 per 100 people between 2008 and 2010. Since most of this improvement has come from the increase in mobile telephones, Management proposes that the indicator be replaced in the IDA16 RMS with “Mobile cellular telephone subscriptions (per 100 people)�. 14 The average score for the Country Performance and Institutional Assessment for quality of budgetary and financial management has declined slightly from 3.36 to 3.27 between 2008 and 2011. 27. Performance on expansion of key infrastructure has been good. Access to an improved water source increased from 77.4 percent in 2008 to 80 percent in 2010; while this achievement puts IDA countries on track to achieve the MDG, the risk of reversal due to a lack of maintenance is high. Access to improved sanitation increased slightly from 37.2 percent in 2008 to 38 percent in 2010 – although this falls below the necessary level to meet the MDG. Recent data on access to an all-season road data is unavailable, and Management proposes that the indicator be replaced in the IDA16 RMS with a more robust indicator on “Paved roads (percentage of total roads)�. 15 28. Despite important recent gains, IDA countries are lagging in achieving some of the MDGs related to health. Many IDA countries have made considerable progress towards the human development MDGs but given that the initial conditions were much worse than for non- IDA countries, a significant distance needs to be covered before these MDGs will be achieved. Of particular concern are the MDGs on maternal and child mortality (MDG 4 and 5). The maternal mortality rate declined from 430 per 100,000 live births in 2008 to 340 in 2010 supported by the improvement in the rate of births attended by skilled health staff as a percentage of total births, which increased from 45.5 percent to 54 percent between 2007 and 2010, while the adolescent fertility rate increased from 76.3 percent in 2009 to 81 percent in 2010. Between 2008 and 2010, the under-five child mortality rate declined in IDA countries from 104 to 89 per 1,000 live births, and malnutrition prevalence decreased from 33 percent to 27 percent of children under five between 2008 and 2010. Despite this progress, more than half of IDA countries are currently off track for achieving the health-related MDGs. Over 80 percent of IDA countries are off track to achieve the MDG on reducing the under-5 mortality by two-thirds by 2015, while more than 70 percent of IDA countries are also off target to reduce maternal mortality by three quarters. 29. Substantial progress has been made on the education MDGs. The primary school completion rate increased from 80.4 percent in 2008 to 82 percent by 2010. Gender parity in education reached 93 percent in 2010, up from 91 percent in 2008. The adult HIV/AIDS prevalence rate appears to have stabilized in IDA countries at about 1.2 percent of the adult population of 15-49 years. The female to male labor force participation increased slightly from 57 percent in 2009 to 58 percent in 2010. It should be noted that, in response to the recent food, fuel and financial crises, many IDA countries have created new or have strengthened existing social safety nets since 2008, particularly through the use of conditional cash transfer programs. 14 The number of mobile cellular subscriptions (per 100 people) was 64 in 2011. 15 The percent of paved roads was 21 in 2009. -8- Table 1: IDA Countries Progress (Tier 1) Indicator Baseline Baseline IDA16 Current Current 2015 MD Target Value Year Report Value Year * Growth and Poverty Reduction GDP per capita (constant 2000 US$) 506 2005 618 678 2011 Percent of population below US$1.25 a day 42.7 2005 42.4 38.8 2008 Halve between 1990 and 2015 Governance Quality of budgetary and financial 3.24 2005 3.36 3.27 2011 management (average rating: 1=low to 6=high for IDA countries) Private Sector Development Trade Logistics Performance Index 2.3 2007 2.5 2.4 2012 (average rating: 1=low to 5=high for IDA countries) Time required for business start-up 54 2005 35 32 2011 (average number of days) Fixed line and mobile phone subscribers 11 2005 37 60 2010 (average number per 100 people) Infrastructure Access to an improved water source (% of 76 2005 77.4 80 2010 Halve between population) 1990 and 2015 Access to improved sanitation (% of 35 2005 37.2 38 2010 Halve between population) 1990 and 2015 Access to an all-season road (% of the rural 61 2000 61 61 2000 population) Household electrification rate (% of 57 2005 61.5 61 2008 households) Gender and Human Development Under 5 mortality rate (per 1,000 live births) 101 2005 104 89 2010 Reduce by two- Prevalence of HIV/AIDS (% of population 1.3 2005 1.4 1.2 2009 thirds between aged 15-49) 1990 and 2015 Births attended by skilled health staff (% of 44 2005 45.5 54 2010 Halt by 2015 and total births) begin to reverse Primary completion rate (% of children of 74 2005 80.4 82 2010 primary school age) Girls 69 2005 74.8 79 2010 100% Boys 78 2005 81.4 83 2010 Ratio of girls to boys in primary and 89 2005 90.7 93 2010 secondary education (%) Ratio of female to male labor force 61 2005 56.9 58 2010 100% participation Adolescent fertility rate (births per 1,000 91 2005 76.3 81 2010 women ages 15-19) Maternal mortality ratio (modeled estimate, 430 2005 430 340 2010 per 100,000 live births) Malnutrition prevalence, weight for age (% 31 2005 33.2 27 2010 Reduce by three of children under 5) quarters between 1990 and 2015 Climate Change CO2 emissions, metric tons per capita 0.9 2005 1.0 1.0 2008 * Reflects latest data available as of December 2010 (see Annex 1 of the IDA16 Report). 30. Lags in data availability for Tier 1 indicators make it difficult to capture recent developments, including the impact of the recent global crises in IDA countries. This is due -9- in large part to the limitations of data availability and the significant statistical capacity gap in IDA countries. IDA continues to work to strengthen statistical capacity building in borrowing countries in line with the recommendations and activities of the 2004 Marrakech Action Plan for Statistics. IDA also continues to support poverty data collection and analysis in partner countries, including developing novel approaches to generate real-time statistics on emerging poverty impacts of crises. The quality of statistics in IDA countries, as measured by the World Bank’s statistical capacity indicator, has improved from its benchmark level of 49 in 1999 to 62 in 2011. The availability of data for monitoring the MDGs has improved: in 2003 only four developing countries had two data points for 16 or more of 22 principal MDG indicators; by 2009 this had improved to 118 countries. 16 Statistics in other key sectors have also seen improvements in coverage and quality. Of 81 IDA countries, only three do not have a national strategy for the development of statistics (NSDS) and only one of them is not planning to prepare one. Implementing these strategies is well underway in many countries. After the 2010 census round concludes in 2014, 98 percent of the world’s population will have been counted. There has also been notable progress in strengthening collection of sex-disaggregated and gender- relevant statistics. 31. Despite progress made, significant gaps remain in statistical capacity and results monitoring in IDA countries: • Only 17 Sub-Saharan African countries have collected data to measure changes in poverty in the past decade and 47 percent of the countries have not carried out a household income or expenditure survey in more than five years. • Policies and programs to improve gender equality and increase women’s empowerment remain constrained by inadequate data. Between 2005 and 2009, 71 (out of 145) countries did not report data on the share of women in non-agricultural wage work, an MDG3 indicator. Indicators of female entrepreneurship remain under-developed. • According to the Food and Agriculture Organization, the quantity and quality of agricultural statistics from national statistical offices have declined since the early 1980s, particularly in Africa. • In 2009, the births of 50 million children and the death of 40 million people went unrecorded. In South Asia, only 1 percent of the population is covered by complete vital registration records, and only 2 percent in Sub-Saharan Africa (UN, Population and Vital Statistics Report, 2011). Without registration systems, countries rely on infrequent and expensive surveys to estimate the vital statistics. • There are also challenges in funding of statistical capacity building (SCB) and donor coordination. 17 Funding for SCB will most likely decline as OECD governments experience fiscal consolidation. Furthermore, funding for SCB at the country level is 16 See PARIS21 at Ten: Improvements in statistical capacity since 1999, OECD, October 2009 (at http://www.paris21.org/sites/default/files/P21-at-10.pdf ). 17 Independent Evaluation Group (2011) Global Program Review Marrakech Action Plan for Statistics, Partnership in Statistics for Development in the 21st Century and Trust Fund for Statistical Capacity Building http://siteresources.worldbank.org/SCBEXTERNAL/Resources/STATS-GPR2011.pdf - 10 - heavily concentrated – 45 percent of total global commitments are destined for 15 countries 18 and funding is fragmented. 32. During FY12, IDA continued to provide financial and technical assistance to improve national strategies for better statistics, including through trust funds. Going forward, the Statistics for Results Trust Fund Facility (SRF) will extend larger-scale support to additional IDA countries including the Democratic Republic of Congo, Ethiopia, Senegal and the Lao People's Democratic Republic. Existing IDA operations will continue to provide support such as in Tanzania (preparation for the 2012 Population Census and revisions to the National Accounts). The Trust Fund for Statistical Capacity Building (TFSCB) is expected to support developing strategies to improve statistics in Comoros, Madagascar, Chad, Benin, and Togo. The Accelerated Data Program (ADP) will encompass a number of IDA countries each year for the rest of the IDA16 period. Also, IDA countries in the Commonwealth of Independent States will identify projects that can benefit from a Bank-managed Statistical Capacity Building Program funded by the Russian Federation. Steps are underway to help a number of IDA countries improve their gender statistics in two areas – women’s economic opportunities and women’s voice and agency. Finally, the World Bank and PARIS21 launched the five-point Busan Action Plan for Statistics (BAPS) at the Fourth High Level Forum on Aid Effectiveness (Busan, Korea, December 2011). 19 The BAPS aims to support national statistics strategies and innovations in data collection, availability, accessibility and dissemination for evidence-based decision-making and accountability. Going forward, IDA will need to step up its support for statistical capacity building and improved quality of results frameworks. Frontier issues of priority for IDA include improving data coverage and frequency, notably in SSA; generating real-time statistics on emerging poverty impacts of crises; beneficiary feedback; tightening the impact evaluation feedback loop to inform policy making; and improving the comparability of national surveys to better identify poverty trends. B. Tier 2: IDA-Supported Development Results 33. Tier 2 indicators track IDA’s performance in supporting country development results (see table 2 below). First, it tracks indicators that measure the overall outcomes of IDA’s CASs, operations and analytical and advisory activities. Second, it tracks aggregate project output and outcome indicators in sectors for which core sector indicators have been developed. While the share of CASs with satisfactory ratings has increased, it is still below the IDA16 performance standard. At the project level, ratings (based on a partial sample of projects approved in past replenishments) for operations in all IDA countries deteriorated and were below the performance standard, while those for operations in fragile situations were slightly up and met the IDA16 performance standard. At the same time, there has been impressive progress on the delivery of sectoral outputs relative to projections made for IDA 16. 18 India, Rwanda, Indonesia, Tanzania, Bolivia, Afghanistan, Uganda, Nigeria, Kenya, Mozambique, Ukraine, China, Pakistan, Albania, and Haiti. 19 Busan Partnership for Effective Development Co-operation. Accessed at para 18.c of http://www.aideffectiveness.org/busanhlf4/images/stories/hlf4/OUTCOME_DOCUMENT_-_FINAL_EN.pdf - 11 - Table 2: IDA-Supported Development Results (Tier 2) Indicator Results as per Current IDA16 Performance 2010 Deputies’ Standards Report A. Satisfactory Achievement of Development Outcomes (percentage) Country Assistance Strategies Completion Reports 44 48 66 (IEG ratings) Operations in all IDA countries (IEG ratings) 74 69 75 Operations in IDA countries in fragile situations 69 70 70 (IEG ratings) Analytical and Advisory Activities (ESW and non- 68 67 75 lending TA) B. Sectoral Outputs Projected Outputs by 2015 Educating children Teachers recruited and/or trained 0.9 million 0.9 million 1.0-1.2 million Protecting and saving lives Children immunized 85 million 135 million 99-116 million Pregnant women receiving antenatal care during 0.7 million 50 million 0.8-1.0 million a visit to a health provider 13 million 19 million 15-18 million People with access to a basic package of health, nutrition or population services Building and accessing vital infrastructure Roads constructed or rehabilitated (km) 32 thousand 34 thousand 37-44 thousand People with access to improved water sources 31 million 33 million 36-42 million People with access to improved sanitation 1.6 million 2.5 million 1.8-2.2 million facilities 34. The most recent data from IEG show that as of July 2012 about 48 percent of CAS Completion Reports (FY09-12) achieved their development outcomes. This is an improvement over the results at the time of the IDA16 Report, but still below the IDA16 performance standard. IEG reviews note that in many IDA countries, the process of formulation of national poverty reduction strategies has been inclusive and over time resulted in broadening ownership among a more diverse set of stakeholders. This is reflected in better results on ownership and responsiveness for IDA countries in the CASCR reviews, a finding that has been broadly corroborated by feedback from recent Client Surveys. IEG reviews also note that, while country ownership appears to have improved, selectivity and realism of results frameworks still needed improvement. Lack of realism is sometimes evident in country program objectives and sub-objectives that can only be achieved under a very optimistic set of assumptions. While Management recognizes the need to strengthen realism and quality of results frameworks for country programs, IEG and Management have been working jointly on the criteria and methodology to use in evaluating CAS Completion Reports. 35. Based on IEG evaluations of a partial sample of operations approved in earlier replenishments, 69 percent of IDA operations in all IDA countries which exited the portfolio between FY09-11 are rated as moderately satisfactory or better, below the performance standard - 12 - of 75 percent. For IDA operations in FCCs, 70 percent of IDA operations which exited the portfolio between FY09-11 are rated as moderately satisfactory or better, meeting the performance standard of 70 percent. Measured on the basis of commitments, the numbers improve: 75 percent of the commitments of IDA operations in all IDA countries (81 percent for FCCs) were rated as moderately satisfactory or better. Outcome ratings for development policy operations in IDA15 were significantly higher (78 and 81 percent on a commitment and operation number basis, respectively) than for investment projects. As discussed in the IDA15 Retrospective, newer operations - approved with resources from IDA14 and IDA15 that have exited the portfolio - show higher ratings than for previous IDA periods. It should be noted that IEG is still in the process of evaluating operations for FY10 and FY11 (in particular, the number of FY11 projects exits evaluated so far is only 42). The outcome ratings consequently reflect the number of operations evaluated by IEG to date rather than the total number of operations closed, providing a yet incomplete picture of actual performance over the Replenishment period; the ratings will change as more evaluations become available. Furthermore, averages in the quality of IDA operations mask fluctuations and differences in performance across countries, regions and sectors. 20 36. Based on self-evaluations by task teams, sixty-seven percent of analytical and advisory products (which include both economic and sector work and non-lending technical assistance) achieved their objectives in FY09-11. ESW tasks that focused on stimulating public debate and informing lending had a higher percentage of activities rated fully or largely achieved. For TA, tasks for facilitating knowledge exchange and assisting client in policy and program formulation showed strong performance. Results frameworks for ESW and TA now incorporate systematic consideration of success factors, including strategic relevance and ownership, timeliness, and client engagement, in addition to technical quality. IDA has also developed better online systems and processes to facilitate increased management oversight of AAA, especially for quality assurance and to better focus on results. Finally, system improvements also support the Bank’s Open Development agenda by ensuring that final ESW and TA outputs are saved and disclosed, according to the Access to Information policy. 37. Management is taking a number of measures to ensure the quality of operations and development outcomes, including by putting in place new quality assurance measures to address identified challenges. The IDA15 Retrospective Review presents detailed analysis of portfolio quality trends and challenges 21 and Box 1 details the new quality assurance measures being implemented by Management to improve quality oversight and portfolio performance. 20 For details, see IDA (2012), Managing Crisis and Building Resilience: A Retrospective Review of IDA's Fifteenth Replenishment, Annex 7. 21 IDA (2012), Managing Crisis and Building Resilience: A Retrospective Review of IDA’s Fifteenth Replenishment, pages 34-41. - 13 - Box 1: Improving Portfolio Quality and Performance A range of actions are being implemented to improve quality oversight and portfolio performance. These include: (i) oversight of the delivery and quality of operations and AAA through monthly review meetings chaired by the Managing Director for regions; (ii) enhanced cooperation and dialogue between regional staff and sector staff on quality of the portfolio through regular joint portfolio reviews; (iii) enhanced focus on improving the quality of ISRs through “Learning Reviews� and more regular Country Portfolio Performance Reviews to focus management attention on quality issues and facilitate timely action, including restructuring as needed; (iv) increasing staff presence at the country level to engage closely with implementing agencies for more regular support; (v) expanded support to strengthen the absorptive capacity of borrowers, including provision of more training on procurement and financial management; and (vi) development of strategic plans to improve disbursements by identifying and addressing bottlenecks in cooperation with borrowers. In addition, as part of the modernization agenda launched in 2010, management is taking a number of steps to improve the institutional capacity to deliver results. These include measures to ensure the quality of operations and development outcomes, such as: (i) the introduction of the Operational Risk Assessment Framework (ORAF), a risk assessment tool for individual operations to help Bank staff and clients better balance risks and results; (ii) the introduction of the Program for Results financing instrument; (iii) the modernization and consolidation of investment lending policies, which will lead to a much clearer, leaner and actionable investment lending policy, Bank procedures and processes; and (iv) the launch of the Bank Operational Core Curriculum training program, providing comprehensive and readily available training to staff on the front lines. Management is also working to clarify accountabilities and harmonize quality assurance processes for operations. Specific measures include clarification and harmonization of quality processing and practices across regions (e.g., project mid-term reviews, country portfolio performance reviews), developing stronger peer review processes and making sector knowledge easily retrievable, strengthening quality enhancement reviews, and addressing issues including the span of control of managers; a thorough review and realignment of the quality assurance function, decision making and incentives is also ongoing. Management has also allocated an additional US$10 million for FY13 to regions targeted at operations (including 137 IDA operations) that require additional staff and management attention for quality improvements. 38. IDA-supported operations have made significant contributions to country outputs and outcomes in key sectors and have improved the health and welfare of women and children. Three-year moving averages based on data from closed and active operations approved under IDA12 to IDA16 show that with the support of IDA operations, countries: recruited and/or trained 0.9 million teachers; immunized 135 million children; provided antenatal care to 50 million pregnant women during a visit to a health provider; provided 19 million people with access to a basic package of health, nutrition, or population services; constructed or rehabilitated 34,000 kilometers of roads; provided 33 million people with access to improved water sources and 2.5 million people with access to improved sanitation facilities. In several of these indicators (such as number of children immunized or pregnant women receiving antenatal care during a visit to a health provider) the data show the impact of large successful operations in countries with large populations. 39. During IDA16, Management expanded the availability of core sector indicators for use in project results frameworks from 4 22 to 24 sectors/themes 23, with the intention of 22 Education, Health, Water Supply and Road Transport. 23 With the addition of Access to Urban Services for the Poor, Information and Communications Technology, Micro, Small and Medium Size Enterprise Finance, Agriculture Research and Extension, Biodiversity, Conflict Prevention and Post-Conflict Reconstruction, Forestry, Hydropower, Irrigation and Drainage, Land Administration and Management, Other Renewable Energy, Participation and Civic Engagement, Pollution - 14 - adding indicators from 3 sectors/themes to the IDA16 RMS at the Mid-Term Review. Based on data availability and experience with challenges of data, Management proposes to expand reporting by adding indicators in the RMS in the following 3 sectors/themes: (i) in urban services for the poor, “number of people in urban areas provided with access to improved urban services�; 24 (ii) in agriculture, “area provided with irrigation and drainage services (hectares)�; 25 (iii) in energy “transmission and distribution lines constructed or rehabilitated (kilometers)�. 26 C. Tier 3: IDA Operational Effectiveness 40. Tier 3 indicators track the operational effectiveness of IDA products. Key indicators include overall quality of design, the results orientation of its operations (including through the use of impact evaluations), the strengthening and use of country systems, the performance of IDA’s portfolio, and focus on special themes (see table 3). 41. IDA’s portfolio performance is steady. The quality of design of IDA operations improved from 69 percent in the assessment carried out in 2009 to 81 percent in the assessment carried out in 2011, surpassing the 75 percent IDA16 performance standard. The disbursement ratio for investment lending operations declined from the high levels during the global crisis to 22 percent for operations in all IDA countries and was 25 percent for operations in fragile and conflict-affected countries. The aid predictability indicator is at 51 percent in 2010, below the 71 percent IDA performance standard. Regarding this indicator, it is based on the Paris Declaration Monitoring Survey which includes both IBRD and IDA countries, and it should be noted that the surveyed countries changed between the two surveys. The revision of this indicator is being discussed under the post-Busan monitoring framework. 42. The results focus of IDA operations has improved. All investment lending projects have appropriate results frameworks, allowing country and IDA task teams to monitor the achievement of the Program Development Objectives (PDOs). Further aiding in this results- focused monitoring, 91 percent of operations have filed a first Implementation Status and Results Report (ISR) with adequate baseline data for at least one key outcome indicator. To improve learning, 95 percent of IDA Implementation Completion and Results Reports (ICR) report on data directly related to the achievement of the PDO. While the latter two indicators are slightly below the IDA16 performance standard, their high levels indicate the successful mainstreaming of a results focus in IDA operations. Management and Environmental Health, Sanitation, Social Inclusion, Social Protection, Thermal Power Generation, Transmission and Distribution of Electricity, Wastewater Collection and Transportation, Wastewater Treatment and Disposal. 24 The number of people in urban areas provided with access to improved urban services: 32 million beneficiaries supported by operations approved under IDA12 to IDA16. 25 Area provided with irrigation and drainage services (hectares): 2.8 million hectares supported by operations approved under IDA12 to IDA16. 26 Transmission and distribution lines constructed or rehabilitated (kilometers): 43 thousand kilometers supported by operations approved under IDA12 to IDA16. - 15 - Table 3: IDA Operational Effectiveness (Tier 3) Indicator Performance as Current IDA16 per 2010 Performance Performance Deputies’ Standards Report Portfolio Performance Quality of design (%) 69 81 75 Disbursement ratio for investment lending projects (%) 25 22 25 Disbursement ratio for investment lending projects in 27 25 25 FCCs(%) Aid predictability (%)* 65 51 71 Monitoring and Evaluation Investment lending projects that have appropriate results 99 100 100 frameworks (%) First Implementation Status and Results Reports with 91 91 95 adequate baselines for at least one key outcome indicator (%) IDA Implementation Completion and Results Reports 92 95 100 (ICRs) that report on key results (%) Impact evaluations (#) 14 16 (23 in FY12) 17 Use of Country Systems Use of country Monitoring and Evaluation systems (%) 73 72 75 Use of country systems for Financial Management (%)* 62 71 65 Use of country systems for Procurement (%)* 52 55 55 Collaborative Analytical and Advisory Activities (%)* 59 59 66 Implementation of IDA16 Special Themes Proportion of IDA CASs drawing on and discussing the NA 100 Full findings of gender assessments implementation of Policy Proportion of IDA projects that are gender-informed (%) 46 76** (86 in 60 FY12) Proportion of IDA CASs that discuss climate change NA 100 100 vulnerabilities (%) *Paris Declaration Monitoring Survey Data, covers both IDA and IBRD **New Methodology 43. IDA is increasing the use of impact evaluation (IE). Based on the recommendations of a panel of external experts, Management has established a strategic framework 27,28 for selecting IDA projects for impact evaluation. The new framework has been deployed in selecting FY12- 13 projects for impact evaluation and has resulted in a balanced sample of operations across regions and sectors for IE. Bank management has also outlined the major monitoring and 27 For a detailed discussion of the findings of the panel of external experts and the design of the strategic framework for selecting IDA projects for IE, see World Bank Group Impact Evaluations: Relevance and Effectiveness Draft Management Response (CODE2012-0018), IEG, May 18, 2012. 28 The strategic selection process has four steps: (i) launch of a selection process - a Bank wide group proposes a target number of IDA operations by priority areas across sectors and regions; (ii) identification/pre-selection of projects by regional sector managers; (iii) review and validation of projects by the relevant sector boards, network vice presidents and council; and (iv) confirmation of projects in a final corporate review by OPCS and CFP. - 16 - evaluation tools and techniques for each category of IDA projects. 29 Management has increased the number of IEs directly associated with IDA operations from an average of 14 per year over the FY09-11 period to an average of 16 per year over the FY10-12 period, with 23 in FY12, and is on track to meet the IDA16 performance standard of an average of 17 IEs per year for FY12- 14. IEs are being used to improve operational design and implementation of IDA-financed operations and inform policy dialogue and institutional strategies (see Annex 3 for examples of IEs). Despite expanded efforts on impact evaluation and examples showing that IEs have influenced aspects of development practice, there remains scope for IEs to yield greater benefit. In this respect, IDA is enhancing the feedback loop between IEs and project design and learning as part of the overall strengthening of operational quality assurance. 44. IDA continues to strengthen country-level collaboration with other development partners. All IDA 16 CASs include donor mapping that help identify funding gaps which IDA can fill. IDA also plays an important role in aid coordination at the country level through a variety of mechanisms. A recent study on the Bank’s role in aid coordination in 52 IDA countries confirmed this substantial role. 30 Basic data was gathered on three types of aid coordination fora – general country level, budget support, and sector-level. The responses suggest that IDA is heavily engaged in aid coordination fora, participating in 542 of the 638 reported (or 87 percent). The Bank has a leadership role in aid coordination at the country-level (24 percent), which is typically undertaken together with the government, which is higher than both the overall average and average for the sector-level aid coordination (of which 14 percent are chaired by the Bank). IDA’s leading role is highest in budget support coordination: it either leads 42 percent of these fora or substantially participates in almost all others. 45. Trust funds are being integrated into CAS products. In April, 2012 the Bank updated its CAS guidelines to include revised guidance to strengthen the integration of Trust Funds (TFs) in CAS products. The revised guidelines require that all categories of TFs (Bank-executed, Recipient-executed), including Network-managed TFs, be aligned with CAS development objectives. 31 In addition, the CAS Completion Reports, to the extent possible, need to integrate TF activities into the evaluation of the previous CAS program, the performance of the Bank in delivering the program, and lessons learned. 46. IDA has continued to deepen the use of country systems. To support and strengthen country monitoring and evaluation systems, 72 percent of IDA operations use data from existing country systems for indicators in the results framework. On public financial management 29 They include: monitoring of project/program performance and results; cost-benefit and cost-effectiveness analysis; outcome evaluation; and impact evaluation. These tools are complementary to one another and can all include participatory approaches (see The World Bank Group Impact Evaluations: Relevance and Effectiveness Draft Management Response: May 18, 2012). 30 Aid Coordination in IDA Countries: Role of the World Bank, April 2011, OPCAE. 31 Providing: (i) a clear indication of expected contributions of trust-funded activities to achieve specific CAS results; (ii) the management framework of the TF in the country; institutional and implementation arrangements; fiduciary and safeguards issues; and explicit risks specific to the TF portfolio; and (iii) a discussion of the role of TFs in the Bank’s partnership with other development partners of the country. In countries where trust-funded contributions to the country program and their likely impact are significant (as a general rule, where the ratio of TF to IDA/IBRD disbursement ≥ 15%), it is now recommended to include a brief overview of the main trust funds in an annex. - 17 - (PFM), at the global level, the Bank partners with global accounting and auditing organizations to establish standards and promote capacity, and it co-chairs the OECD-DAC Task Team which formulated the 2011 Manila consensus on PFM and technical tools and guidelines for countries. The Bank has also taken the lead along with the European Union in the multi-donor Public Expenditure and Financial Accountability (PEFA) joint assessments. More than 250 such assessments have been completed. At regional and country levels, financial management staff has developed customized products. At the country level, 71 percent of IDA/IBRD operations currently use country systems for financial management. 47. The Bank uses a variety of instruments and interventions to help countries build capacity in procurement and financial management. 32 The AFR Region has led capacity- building initiatives and supported the development of PFM programs in partner countries (see Box 2) using a flexible approach to suit the PFM environments in each country. Box 2: Supporting Improved Public Financial Management Systems Nigeria. The Lagos Metropolitan Development and Governance Project has contributed to strengthening cash management functions at the federal level, led to new legislation and budget preparation processes in several states as well as updates to external audit manuals. Zimbabwe. Technical assistance on PFM has helped revive the Government’s use of the SAP software. The SAP system is now functional, it captures all transactions, and the Accountant General uses it to produce monthly expenditure reports as required in the PFM Act. Uganda. Under a PFM Reform Strategy for the Financial Management and Accountability Program, the Government of Uganda is working with donors to remove impediments to service delivery and improve accountability to local governments. 48. An area of particular challenge is the use of country procurement systems. IDA has continued to implement reforms to enhance the use of country procurement systems, and currently 55 percent of IDA/IBRD operations use such systems. IDA continues to support implementation of the OECD-DAC assessment tool (2007) used for developing country-led procurement action plans. Reforms aim to mainstream public procurement for public sector management involving key stakeholders and focusing on performance and compliance. First generation reforms aim to create the requisite legal and institutional framework while second generation reforms include work with a broader group of stakeholders to improve the efficiency and integrity of public procurement systems. The Bank has supported procurement capacity building through Institutional Development Funds (IDF) grants and components of IDA financed public sector management projects (and, exceptionally, through entire projects – for example, the Bangladesh Public Procurement Reform Project or the Bhutan Institutional Capacity Building Project for Procurement). Several DPOs have also included covenants and triggers on procurement. There have also been challenges: a series of country pilots (2008-2009) to extend the use of country systems to international competitive bidding under Bank financed projects did not succeed in identifying projects in the country pilots that could use country systems. 32 Diagnostics, IL components, DPL operations, Institutional Development Fund grants, special studies, economic and sector work, formal training (more than 7,000 client and donor staff attended Bank-provided training in FY11), special programs, quality assurance, implementation support missions, monitoring of key PFM indicators and in-depth reviews of projects with fraud and corruption issues. - 18 - 49. Furthermore, the Bank is reviewing its operational procurement policies in response to the changing global operating context, the diverse and evolving needs of clients and the Bank’s instruments. In February 2012, the Board of Executive Directors endorsed a review of the Bank’s operational procurement policies starting in March 2012. The first phase will lay out the framework for the development of policies and guiding principles. It will be informed by advice of international experts, consultations with stakeholders and benchmarking with other organizations. The second phase will recommend changes to policies and procedures. The Board’s consideration is planned for late 2013/early 2014. 50. The IDA16 Special Themes on gender and climate change have been integrated into IDA products. Progress in the integration of gender in lending operations has been significant. Using the new methodology on gender-informed design, 76 percent of IDA operations approved in FY10-12 (and 86 percent in FY12) are gender-informed. All IDA CASs have drawn on and discussed the findings of gender assessments, and all IDA CASs have discussed climate change vulnerabilities. 33 D. Tier 4: IDA Organizational Effectiveness 51. Tier 4 measures IDA’s organizational effectiveness in terms of speed and cost, decentralization, and mapping for results (see table 4 below). These indicators reflect areas of internal reforms that the Bank is undertaking to further enhance efficiency, effectiveness and value for money in achieving development results in IDA countries. Table 4: IDA Organizational Effectiveness (Tier 4) Performance Current IDA16 Indicator as per 2010 Performance Performance Deputies’ Report Standards Speed and Cost Time from project concept note to approval for investment 15.1 12.9 12 lending (months) Time from project concept note to approval for investment 12.6 10.2 12 lending in FCCs (months) Problem projects restored to “satisfactory� status within 12 70 70 80 months (%) Average project preparation costs ($ ‘000) 332 316 325 Average project implementation support costs ($ ‘000) 131 142 135 Decentralization Decentralization of higher level staff to the field (%) 27 33 30 Decentralization of task management to staff in the field working on (%) Fragile situations 30 37 35 Non-fragile situations 38 43 45 Mapping for Results IDA projects that are geo-coded (%) 45 100 100 33 For a more detailed discussion, see IDA16 Mid-Term Review papers “Achieving Climate Resilient Development - Progress Report� and “Report on Accelerating Progress on Gender Mainstreaming and Gender Related MDGs�. - 19 - 52. IDA has made progress on client responsiveness, both in terms of speed and cost of operational delivery. Project preparation times for IDA countries and for fragile and conflict- affected countries have decreased to 12.9 months and 10.2 months, respectively, against an IDA16 performance standard of 12 months. Average project preparation costs for IDA-financed operations decreased to US$316,000, while average project implementation support costs increased to US$142,000, in both cases moving in the direction anticipated by the IDA16 performance standards. 53. The process of decentralization in IDA countries has advanced and the IDA16 performance standards related to decentralization have broadly been met. To date, 33 percent of all higher level staff is decentralized in the field, and 37 percent of tasks in fragile situations and 43 percent of tasks in non-fragile situations are managed in the field. The Bank is taking a “variable geometry� approach to decentralization, adjusting its presence in the field to the business needs. Also as part of the IDA16 commitments on decentralization, the Bank has increased the number of country directors located in the AFR region from 11 to 15, moved sector management closer to decentralized staff and opened two hubs in Nairobi and Singapore. The Global Center on Conflict, Security and Development in Nairobi is establishing a stronger community of practice and knowledge-sharing on development issues confronting FCCs, as well as improved support to FCC country teams. 54. Efforts are also ongoing to strengthen cross support and mobility through strategic staffing. The Bank is developing new mobility policies to provide more options and tools to recruit and rotate staff. Over the past year, investments in enhanced mobility and relocation included on-the-ground support of staff and families on field assignments. Additional relocation specialists will support countries with significant inflow of international staff. In parallel, online information was made available to support relocating staff and families, including over 100 country profiles, relocation field guides and cultural and work permit resources. 55. Improvements in the Bank’s information management technology and policies are ensuring that Bank staff is more responsive to clients. In FY12, the Country Office Improvement Program was launched to provide improved IT connectivity, services, application response times and support to decentralized operations with potential for improvements of 35 percent to 60 percent for selected web applications. A metrics baseline for application performance will monitor response time for major applications in country offices and reporting on this new metric began in Q3 of FY12. 56. During IDA16 Management has intensified efforts to enhance monitoring, measurement and communication on results. IDA has continued to complement its quantitative reporting through results stories. Over 500 results country briefs, sector and project stories illustrate the “human face� of development efforts. The briefs and stories are presented in several languages, using the Web, multimedia, and social media tools. Through the Mapping for Results platform, 100 percent of IDA supported operations have been geo-coded and mapped. The tool overlays project maps with poverty and MDG data. Stakeholders can now access Bank project data, locate project sites and track progress towards the MDGs in their countries. On a pilot basis, Mapping for Results has started mapping social data such as photos and stories of - 20 - project locations to better demonstrate results. Under the Open Development and Technology Alliance, the Bank is using interactive-mapping, mobile phones, and social media to foster social accountability. Regions are currently building on existing efforts to develop seven to eight successful pilots using both “low-tech� and “high tech� methods to gather beneficiary feedback. These pilots will be embedded in country systems with feedback to governments for use in improving service delivery. In addition to the specific IDA16 results commitments, Management continues to explore and implement innovate approaches to capture beneficiary and client feedback, measure IDA’s contribution to institution strengthening and capacity building, and linking results measurement to geographical location. 57. The Bank launched the Program for Results (PforR) lending instrument in January 2012. The PforR instrument links disbursements to the achievement of agreed outcomes in a country program supported by the project. Strong national PFM and procurement systems and risk management measures are a key requirement for PforR financing. This approach is expected to accelerate the use and strengthening of country institutions, including in the fiduciary area. The first PforR IDA operation, the Nepal Results-Based Improvement and Maintenance Project, was approved in June 2012. The second operation, the Tanzania Urban Local Government Strengthening Program, was approved in October 2012. There are currently seven additional PforR operations 34 under preparation for a total IDA commitment of US$1.1 billion. 58. Progress has continued on investment lending (IL) reform. This is part of the Bank’s broader modernization agenda started in 2009 to simplify its services and processes and to strengthen the focus on institutional performance, results, openness and accountability. 35 The five elements of the 2009 package of investment lending reform (including a risk-based approach, enhanced implementation support, rationalization of financing options, a better enabling environment and reform of IL policy framework) are all under implementation. 59. Modernizing the investment lending policy framework, which was approved by the Board on October 25, 2012, includes a number of important and urgent policy changes to consolidate Operational Policy (OP) and Bank Procedure (BP) statements for investment lending. They respond to the need identified by IEG as well as the IDA14 Internal Controls Review which noted that the 35 policies that apply to IL, with their gaps, overlaps, inconsistencies, and sheer volume, affect the efficiency and effectiveness of clients and Bank staff in the delivery of investment lending. The IDA Internal Controls Review, in particular, identified this as a source of significant operational risk. 34 These include the Ethiopia Health MDG Support Project, the Kenya National Integrated Safety Net Program, the Mauritania Local Government Development Project, the Mozambique Public Financial Management for Results Program, the Uganda Support to Municipal Infrastructure Development, the Vietnam Results-Based Rural Water and Sanitation Under the National Target Program Project and the Pakistan Punjab Governance and Service Delivery Project. 35 The Board discussed the IL Reform concept note on February 12, 2009; the first IL Reform Progress Report went to the Board on October 22, 2009. IL Reform began in November 2009. The roll out of the risk-based approach began in selected countries in FY10 and was mandated for all new investment operations beginning FY11. - 21 - 60. The Bank’s 2012 Retrospective on Development Policy Lending 36 notes that DPOs continue to be prepared in line with the Bank’s good practice principles for the application of conditionality. It found that DPOs serve to reinforce country ownership and alignment with national priorities, and support harmonization, customization, criticality, and transparency and predictability. 37 Consistent with the Bank’s commitments on aid effectiveness, disbursement conditions for Bank DPOs are based on national development strategies (often PRSPs) and agreed with the government. By making all Bank program documents and ICRs on DPOs publicly available, the Bank has pushed the envelope on transparency of conditionality. DPOs also contain results frameworks that are explicit and monitorable. The Bank’s database of conditionality has been publically available since 2009. Feedback from consultations carried out as part of the 2012 DPL Retrospective stressed that Bank DPOs have been successful in reinforcing the ownership of reform programs and that the Bank has made good progress on harmonization, transparency, and predictability of conditionality. E. IDA’s Role in the International Community 61. IDA plays a leading role among MDBs and other development partners as a platform for the effective delivery of aid. This is important given the increasingly complex aid architecture. It is also recognized for its developing and disseminating policies and practices for aid effectiveness and its efforts in aid transparency, aid predictability, and aid on budget. 62. Five years after the Paris Declaration (PD), the Bank supported the organization of the Fourth High Level Forum on Aid Effectiveness in Busan, Korea (HLF4). The Forum was an opportune time to revisit the aid effectiveness agenda and resituate it in today’s development landscape. The priorities coming out of Busan include: supporting country leadership and ownership through the development of sustainable, effective institutions; broadening development partnerships; furthering transparency, accountability, and results through demand-side governance; and promoting knowledge and evidence-based development solutions. 63. The Bank has made great strides in aid transparency with its Access to Information Policy, 38 Open Data Initiative, 39 and its Open Knowledge Repository which make information on the Bank, its projects, programs and development data publicly available and more accessible than ever before. The Mapping for Results platform geo-codes all Bank project locations in interactive, online maps. 40 The Bank is at the forefront globally in implementing the International Aid Transparency Initiative (IATI), which has established a common standard for all development partners to share aid data in a format that can be used by diverse stakeholders. The Bank was one of the first development partners to publish its aid data in accordance with the IATI standard, and it continues to serve as a member of IATI’s steering and technical committees. Independent evaluations of development partner organizations’ transparency 36 2012 Development Policy Retrospective: Results, Risks and Reforms, World Bank. 37 Good Practice Note for Development Policy Operations: Designing Development Policy Operations, The World Bank, January 2011. 38 The World Bank Policy on Access to Information, World Bank, July 2010. 39 See http://data.worldbank.org/. 40 See http://maps.worldbank.org/. - 22 - practices confirm good performance in this area: both Publish What You Fund’s Transparency Assessment and the Brookings Institution’s Transparency Index put IDA at or near the top of their global rankings. 64. Technology is transforming demand-side governance. The near-universal reach of mobile communications combined with interactive mapping and social media is empowering citizens to communicate directly with governments and service providers. The Bank is at the forefront of this movement, developing and implementing tools for citizen accountability. For example, the Bank is piloting the E-ISR+ initiative (external implementation status and results report), which informs citizens about Bank projects and solicits feedback on project implementation, in several African countries. Similarly, the Mapping for Results platform is expected to be expanded to allow for real-time feedback on IDA projects from beneficiaries on the ground. This transparency is helping to improve the reliability and predictability of development assistance. 65. These transparency initiatives have inspired other programs. For instance, the Global Facility for Disaster Reduction and Recovery (GFDRR) has developed Open Data for Resilience, which aims to reduce the impact of disasters by empowering decision-makers with better information and tools to support their decisions. 41 External reviews of the Bank such as the 2011 United Kingdom Multilateral Aid Review and the 2012 Australia Multilateral Assessment (AMA) acknowledge the progress in this area. For example, the AMA rated IDA’s ‘transparency and accountability’ as very strong and noted that Bank’s systems and processes also help to promote the transparency and accountability of partners. 66. Bank systems provide good quality data. The Bank has centralized systems and processes to capture good quality data on commitments, disbursements and other aid information, and key instruments such as CASs to present forward-looking medium-term resource frameworks. Led by the Bank, the Working Party on Aid Effectiveness and Donor practices (WP EFF) task team made significant progress in identifying and disseminating good practices for partner countries, donors, and the interface between the two. A synthesis of Aid Predictability Findings and Good Practices produced under the auspices of the WP EFF task team can be accessed on the Bank’s external website. 42 Internally, the Bank’s country dialogue, CAS products, and lending instruments provide a solid foundation for partner countries’ short- and medium-term programming. CASs provide a firm allocation for the current year and indicative figures for the following three to five years for programs in IDA-eligible countries (as determined annually by the PBA system). 67. The Bank is stepping up efforts to make its funding more predictable to support development of country capacity to enable them to better integrate aid management with budget management. This includes expanding the use of country budget systems to deliver aid in Bank supported operations, and encouraging greater budget transparency to improve accountability of the use of public funds that include aid disbursements. The Bank has recently launched a study on ‘Promoting Aid-on-Budget, Use of Country Systems, and Aid Effectiveness’. The study provides a review of the Bank’s internal practices in communicating 41 See http://www.gfdrr.org/gfdrr/opendri. 42 http://intresources.worldbank.org/INTOPCS/Resources/Predictability_VolI_Synthesis-October2011a.pdf - 23 - commitments and disbursing resources which would better enable partner countries to include aid in their national budgets. 68. Following the HLF4, the Bank, continues to leverage new forms of technology to improve the effectiveness and efficiency of its support. It is fostering global, regional and country-level knowledge platforms for joint learning (North-South, South-South, and triangular); and it has expanded its knowledge generation and dissemination approaches to include blogs, open data, and other multimedia. It is promoting solutions to development challenges based on increasingly robust results measurement, impact evaluations, and other assessments. Capacity development and the building of effective institutions remain significant long-term challenges – the Bank through IDA is helping move the conversation from narrowly defined technical assistance to broader institutional capacity development, and is working on developing empirical measures of long-term capacity development. F. IDA’s Internal Controls 69. Management accords high priority to the strengthening of IDA’s internal controls. Management has built on the recommendations of Management’s FY09 self assessment, a review by the Internal Auditing Department (IAD) and an evaluation by the Bank Group’s Independent Evaluation Group (IEG). Only five corrective actions were pending from the full set of 22 corrective actions in Management’s “Five Point Action Plan� (FPAP) as of October 2010 when management provided an update during the IDA16 Replenishment discussions. These five corrective actions are now in place with implementation underway in the areas of: procurement policy update, Analytical and Advisory Activities reviews and controls, accountability review, the new operational document storage and retrieval system, and investment lending policy consolidation. The last pending corrective action (investment lending policy consolidation) was approved by the Board on October 25, 2012. In addition to Management’s continued efforts to complete and implement all the corrective actions, IAD is testing the operational effectiveness of the controls that have been put in place in response to the IDA Internal Controls Review. For a detailed review of progress on IDA’s Internal Controls, please refer to Annex 5. 70. Beyond the IDA Controls Review, Management has strengthened Risk Management through a number of efforts. They include, among others, the appointment of a World Bank Group Chief Risk Officer; the issuance, in April 2012, of the Integrated Risk Management Report; the launch of the policy reviews for Procurement and Safeguards; the work on results- based, programmatic AAA; and the work on a World Bank Group Framework for Policies and Procedures. 43 43 In response to an IAD audit, the World Bank Group is developing a protocol for the preparation and design, processing, adoption, and changing of policies and procedures. - 24 - IV. MANAGING IDA’S FINANCIAL RESOURCES A. IDA16 Commitment Authority 71. The IDA16 replenishment concluded in December 2010 with a record-level financing framework of SDR32.8 billion (US$49.3 billion), an increase of 20 percent in SDR terms (18 percent in US$ terms) over the original IDA15 level. 44 This amount included SDR17.6 billion (US$26.4 billion) in new donor resources, SDR3.5 billion (US$5.3 billion) of donor compensation for MDRI, SDR2.0 billion (US$3.0 billion) from IBRD and IFC transfers and SDR9.7 billion (US$14.6 billion) from internal resources (including resources from voluntary and contractual acceleration of credit repayments, and differentiation of lending terms to reflect the economic development of recipients). This outcome reflected a global coalition of strong support from IDA’s traditional donors and increased efforts by emerging development partners, IDA graduates and IDA blend countries. 72. The IDA16 financing framework has subsequently been revised to SDR33.9 billion (US$50.9 billion) (see Table 5). This reflects additional donor contributions; the adjustments for hedging of national currencies; the use of internal resources from IDA16 to cover a donor funding shortfall in IDA15; and carried forward balances from IDA15 for donor contributions pending the receipt of unqualified funding commitments (SDR1.1 billion) and the cancellation of an IDA15 project (SDR0.8 billion). 45 73. Donor contributions amount to SDR17.6 billion (US$26.4 billion), including additional donor contributions and adjustments for hedging of national currencies. A total of 51 countries have now made pledges to IDA16, the highest number of donors in IDA’s history. Seven countries – Argentina, the Bahamas, Chile, the Islamic Republic of Iran, Kazakhstan, Peru, and the Philippines – pledged to become IDA donors. 46 Also, donor contributions of SDR3.5 billion (US$5.3 billion) were pledged to cover IDA’s debt relief costs due to the MDRI up to the end of the IDA16 disbursement period (FY22). 74. Revised IDA16 internal resources amount to SDR8.9 billion (US$13.4 billion). This reflects a reduction from the agreed framework due to the use of SDR0.7 billion of internal resources from IDA16 to cover a temporary funding gap at the end of the IDA15 period. 47 Internal resources include: (i) accelerating credit repayments through exercising the contractual acceleration clause in qualifying IDA credits (SDR1.2 billion or US$1.8 billion); (ii) voluntary prepayments from China and Thailand (SDR0.6 billion or US$0.9 billion); and (iii) front loading the use of reflows from hardening the lending terms of IDA’s blend and gap borrowers (SDR1.3 billion or US$2.0 billion). 44 US$ equivalent numbers are calculated using the US$/SDR reference exchange rates of 1.50233 and 1.52448 for IDA16 and IDA15, respectively. 45 The Padma Bridge project for Bangladesh. 46 Chile and the Philippines have joined China, Egypt, Korea and Turkey as donors that were recipients of IDA’s assistance in the past. 47 Approved by the Board of Executive Directors in May 2011. - 25 - 75. Revised World Bank Group transfers amount to SDR1.9 billion (US$2.8 billion) with the change due to foreign exchange rate adjustments after hedging the US dollar transfers. IBRD and IFC are projected to contribute US$1.7 billion 48 and US$1.0 billion to IDA16, respectively. When adding projected investment income generated by acceleration of payments, and taking into consideration the foreign currency adjustments after hedging of these transfers into SDRs, the resulting total contribution is SDR1.9 billion (US$2.8 billion equivalent). Transfers are subject to availability of net income and annual approvals by the Executive Directors of IBRD and IFC. 49 Table 5: IDA16 Commitment Authority Status (SDR billion, as of June 30, 2012) Sources of Funds Agreed Revised Framework Framework New Donor Contributions Regular and supplemental contributions 15.6 15.6 Acceleration of donor encashment schedules a/ 0.2 0.2 Compensation for HIPC 1.3 1.3 Financing of Arrears Clearance and grant principal forgone 0.4 0.4 Donor compensation for grant principal forgone 0.1 0.1 Total New Donor Contributions 17.6 17.6 Reflows Donor Compensation for MDRI Debt Forgiveness 3.5 3.5 Internal Resources of IDA 9.7 8.9 Internal Reflows 6.6 5.8 Voluntary prepayment 0.6 0.6 Hardening of lending terms 1.3 1.3 Accelerated Repayments 1.2 1.2 Total Reflows 13.2 12.4 Transfers b/ IBRD Net Income Transfer 1.3 1.2 IFC Grant 0.7 0.7 Total World Bank Group Transfers 2.0 1.9 Other Carryover Funds from prior replenishments/other funds c/ 2.0 Total IDA16 Commitment Authority 32.8 33.9 Notes: Amounts may not add up due to rounding. All amounts with the exception of reflows and MDRI compensation are valued using hedge rates. a/ Represents the investment income generated by using an encashment profile of nine years. b/ Represents the SDR equivalent of US$1.8 billion and US$1.0 billion for IBRD income allocations and IFC grants, respectively, plus additional investment income generated by acceleration of payment. c/ This consists of unpaid donor contributions to IDA15 and earlier replenishments (SDR0.8 billion), carry-over funds from prior replenishments that were paid (SDR0.3 billion), and IDA15project cancellations (SDR0.8 billion). 76. IDA16 reached effectiveness on November 30, 2011 when donors provided Instruments of Commitment (IoCs) 50 covering at least 60 percent of total donor contributions pledged (SDR10.4 billion). As of October 15, 2012, IDA had received IoCs from 44 donors totaling 48 Excludes IBRD’s contribution to the South Sudan Trust fund of US$75 million. See “Establishment of a South Sudan Transition Trust Fund (SSTTF) and the Proposed Transfer of IBRD Surplus to the SSTTF�, IDA/R2011- 0195, May 25, 2011. 49 IBRD and IFC transfers are based upon evaluations of the institutions’ financial capacities and subject to availability of net income and annual approvals by the IBRD and IFC Boards. As of end August 2012, IBRD had provided US$520 million and IFC US$330 million in net transfers to the IDA16 replenishment. 50 The legally binding commitment to pay a pledged contribution to IDA. - 26 - about 92 percent of the total expected amount. Full delivery of all remaining donor pledges (SDR1.4 billion for IDA16 and SDR0.8 billion for donor contributions to IDA15 and earlier replenishments) and additional funding to eliminate the MDRI financing gap (SDR1.32 billion) will be necessary to avoid corresponding cuts to the IDA16 commitment authority in FY14. B. Debt Relief under HIPC and MDRI 77. IDA is currently estimated to provide a total of SDR34.1 billion (US$51.3 billion) in debt relief under both the HIPC Initiative and the MDRI. Donors have committed to finance IDA’s debt relief costs so as to ensure the financial additionality of debt relief at the recipient country level. As of June 30, 2012, irrevocable debt relief of SDR31.9 billion (US$48 billion) had been provided by IDA to the countries that had by then reached the completion point under the HIPC Initiative. 51 The amount represents 94 percent of the total debt relief estimated to be provided by IDA under the HIPC and MDRI initiatives. 78. To finance IDA’s forgone credit reflows due to debt relief donors established the separate MDRI replenishment spanning four decades (FY07-44) and pledged to compensate IDA on a ‘dollar-for-dollar’ basis. The financing required to compensate IDA for foregone reflows due to the implementation of the MDRI up to the end of the IDA16 disbursement period (FY07-22) is SDR9.5 billion. Of this amount, SDR3.5 billion would be available for commitment authority in IDA16 after taking into account donor financing released under previous replenishments (SDR2.8 billion under IDA14 and SDR3.2 billion under IDA15). As of June 30, 2102, unqualified donor financing commitments for MDRI debt relief represent 59 percent (SDR5.6 billion) of the amounts required. An additional SDR3.9 billion of firm donor commitments is needed to achieve full compensation over this period. This includes a financing gap of SDR0.7 billion (US$1.1 billion). A number of donors have scaled-up their MDRI contributions to reduce the financing gap to the current 8 percent level. However, additional donor compensation will be required to fully eliminate this financing gap (see table 2 in Annex 4). C. Terms of IDA Assistance 79. IDA’s lending terms were adjusted in July 2011 to reflect the economic capabilities of IDA’s clients. First, the lending terms offered to IDA’s more economically advanced recipients (blend and gap countries) were hardened to reflect their stronger financial capacity. The new terms combine the old blend terms (35 year maturities) for blend countries and hardened term credits (20 year maturities) for gap countries into a new blend credit with 25-year maturity, 5-year grace period and 1.25 percent interest rate (in addition to the standard service and commitment charges). Second, IDA shortened the maturity of its hard term credits from 35 years to 25 years, with a 5-year grace period, and expanded eligibility to include all blend countries. Finally, all small islands are now eligible to receive assistance on regular credit terms. 52 Table 3 in Annex 4 summarizes IDA’s current lending terms, including these changes. 51 The figures do not include Guinea, which reached completion point in September 2012. 52 Previously, some small states received assistance from IDA on the old blend terms (35-year maturity) including: Cape Verde, Dominica, Grenada, St. Lucia, and St. Vincent and the Grenadines. - 27 - IV. CONCLUSION AND ISSUES FOR DISCUSSION 80. The IDA16 implementation period is off to a strong start, building on the momentum of the IDA15 period which saw stepped up support for IDA countries to enable them to sustain their medium term development goals while mitigating the impacts of the global crises. While many IDA countries have experienced positive economic growth and poverty reduction, many are still struggling to meet several of the MDGs. IDA will continue to support countries with a focus on delivering results, including with the establishment of statistical systems for monitoring progress, while strengthening its own organizational effectiveness. 81. As part of the IDA16 Mid-Term Review, Deputies are asked to consider the proposed changes in the RMS as indicated below: • In Tier 1 replacing the indicator “Access to an all-season road� with “Paved roads (percentage of total roads)� and the indicator “Fixed line and mobile subscribers (average number per 100 people) with “Mobile cellular telephone subscriptions (per 100 people)�. • In Tier 2: o in urban services for the poor adding an aggregate indicator on “Number of people in urban areas provided with access to improved urban services�. o in agriculture, adding “Area provided with irrigation and drainage services (hectares)�. o in energy, adding “Transmission and distribution lines constructed or rehabilitated (kilometers)�. - 28 - Annex 1: Status of Monitorable Actions for IDA16 Objectives Recommendations/Actions Product Target Date Action Taken/Remarks DELIVERING DEVELOPMENT RESULTS • IDA’S FOCUS ON RESULTS IDA RMS and • Implement the new IDA RMS framework and • RMS Report • IDA16 MTR • The new IDA RMS is being implemented and Results report on indicators. • IDA16 and at Management is reporting on indicators. Retrospective completion of IDA16 period. • Annual updates of all indicators (as available) on IDA website • Develop country program self-assessment • Methodology and • Report on • The country program self-assessment methodology methodology and report on findings. Assessment progress at was piloted in a number of countries. Based on the IDA16 MTR experience, Management has taken the decision to use country surveys instead. • Propose for Board approval a Results Based • Board paper • End FY11 • The Results Based lending instrument, the “Program Lending (RBL) instrument. for Results� (P4R) was launched in January 2012 and is in use. • Expand reporting on core indicators from four • Ongoing • IDA16 MTR • Management expanded the availability of core sector to seven sectors and include selected indicators available for use in project results indicators in Tier 2b. frameworks from four to twenty-four sectors/themes. Based on data availability, Management proposes to expand reporting by adding in the RMS indicators on urban services for the poor, agriculture and energy. • Map evaluation tools appropriate for different • CODE paper • CODE, end • A Management note was distributed to the Board in IDA operations. FY11 July 2012 to provide an overview of the major tools currently in use by the Bank to address a variety of questions related to the results and benefits of an intervention or project. The main tools include: monitoring of project/program performance and results; cost-benefit and cost-effectiveness analysis; outcome evaluation; and impact evaluation. These tools complement one another. • Convene panel of experts to make • Panel established • Report at • Management convened a panel of external experts in recommendations on how to strengthen the IDA16 MTR April 2011. It issued its report 53 in July 2011 and its Bank’s program of impact evaluation. recommendations have informed the design of a 53 Impact Evaluation of IDA-Financed Projects: An Operational Framework for Project Selection. The Panel expert members included: Costas Meghir, Professor of Economics, University College of London; Franck Wiebe, Chief Economist, Millennium Challenge Corporation; Gonzalo Hernandez, Executive Secretary, National Council of Social Development Policy (CONEVAL), Mexico; Jere Behrman, Professor of Economics, University of Pennsylvania; and Santosh Mehrotra, Director-General, Planning Commission, India. - 29 - Objectives Recommendations/Actions Product Target Date Action Taken/Remarks strategic framework for selecting IDA projects for impact evaluation. The new framework has been deployed in selecting FY12-13 projects for impact evaluation and has resulted in a balanced sample of operations across regions and sectors for IE. Country statistical • Continue efforts to support country statistical • Background note • IDA16 MTR • Ongoing. Support provided for country statistical capacity to capacity via lending, TA, Statistics for Results capacity building via lending, TA, Statistics for measure results Facility, Trust Fund for Statistical Capacity Results Facility, Trust Fund for Statistical Capacity Building and South-South networks and Building and South-South networks. The progress report on progress. made to date on statistical capacity demonstrates the effectiveness of a global partnership to improve statistics, with the World Bank and the donor community working together – with the partner country leading the process and determining priorities. Communicating • Update IDA results stories and briefs on the • Web material • Ongoing • IDA results stories and briefs were updated on the on Results web. • IDA16 MTR web. To date, over 500 results stories and briefs at the • Update on progress made in the utilization of project, country and sector level, in multiple geo-coding techniques. languages, using the Web, multimedia, and social media tools show the “human face� of development. • All IDA projects have been geo-coded. • IDA’S ROLE IN THE INTERNATIONAL COMMUNITY Global • Support preparation and implementation of • Ongoing • IDA supported preparation of the Fourth High Level Leadership the Fourth High Level Forum on Aid Forum on Aid Effectiveness. A number of IDA Effectiveness (HLF-4). papers were presented at the forum. • Ensure that the World Bank publishes good • Publicly • Ongoing • The Bank has made great strides in the area of aid quality data in a format that is easily accessible transparency with its Access to Information Policy, accessible by various stakeholders and data/information Open Data Initiative, and its Open Knowledge continue to support international initiatives Repository all of which make more information on the which promote aid transparency. Bank and its projects, programs, and development data publicly available and accessible than ever before. The Mapping for Results platform geo-codes all Bank project locations in interactive, online maps. The Bank is at the forefront globally in implementing the International Aid Transparency Initiative (IATI), which has established a common standard for all development partners to share aid data and make it available in a format that can be used by diverse stakeholders. • Collect and disseminate good practices on aid • Material • November 2011 • The Bank has led the WP EFF task team which has predictability from both donors and partner presented at identified and disseminated good practice on aid countries, contributing to the aid predictability HLF-4 predictability including the synthesis of aid - 30 - Objectives Recommendations/Actions Product Target Date Action Taken/Remarks agenda globally. predictability, findings and good practice which can be accessed from the Bank’s website. • Identify and make systematic good practices • Dissemination of • Ongoing • Ongoing. Bank is supporting efforts of integrating aid for Aid on Budget. good practice. management with budget management. The Bank has recently launched a study, “Promoting Aid-on-budget, Use of Country Systems, and Aid Effectiveness�. Country-Level Country Assistance Strategy Collaboration • Dissemination of • Ongoing • Ongoing. All IDA16 CASs have included mapping • Improve the mapping of donor activities in good practice. of donor activities. CASs. • Improved TF • Ongoing • CAS guidelines revised to include guidelines on data provided to integrating Trust Funds in CAS Products. • Better integration of activities financed clients and through trust funds into CASs. country management teams. Aid Coordination • Dissemination of • Ongoing • New study conducted, Aid Coordination in IDA examples and process Countries: Role of the World Bank, April 2011. Examine IDA’s role in aid coordination findings. processes at the country-level. • ENHANCING IDA’S EFFECTIVENESS Investment • Mainstream new processes, procedures and • New processes, • IDA16 MTR • Under implementation. Investment lending reform Lending policies for implementing Investment procedures and carried out as part of Bank modernization agenda. All Lending. policies. five elements are in place: risk-based approach, enhanced implementation support, rationalized menu of financing options, better enabling environment and reform of the investment lending policy framework. The final element, reform of the investment lending policy framework, was approved by the Board on October 25, 2012. • Deepen use of country PFM and procurement • RMS Report. • IDA16 MTR • Ongoing. Use of PFM and procurement being systems as systems and capacity are regularly monitored in the RMS. strengthened, and monitor IDA’s performance as part of RMS. Other Instruments • Facilitate use of IDA Guarantees • Revised IDA16 MTR • A Board paper (with revised OP/BP) revising Operational operational policy for guarantees will be presented to Policy for CODE in December 2012 and to Board in Q4 FY13. Guarantees by IDA16 MTR • Assess effectiveness of DPOs in supporting • DPL IDA16 MTR • DPL Retrospective was completed in 2012. Use of - 31 - Objectives Recommendations/Actions Product Target Date Action Taken/Remarks countries’ own programs that deliver results; Retrospective PSIA’s being monitored. monitor the use of PSIA; and ensure Report to be continued adherence to the principle of completed by country ownership. IDA16 MTR Decentralization • Near-term measures to strengthen presence • RMS Report • IDA16 MTR • Directors in Africa: 15. and move decision making authority to the • Decentralized sector managers: 10.9 percent as of field, especially in fragile and conflict June 30, 2012. affected countries, by (i) increasing the • 43 percent of task managers in the field including 37 number of country directors in Africa (from percent in FCCs. 11 to 15); (ii) moving more task management • Two regional hubs established in Nairobi and to country offices; (iii) moving sector Singapore. management closer to decentralized staff; and (iv) establishing at least one sub-regional hub in Africa to serve fragile states. • In the medium term, implement any measures • RMS Report • IDA16 MTR • Bank’s information management technology to ensure agreed with Board to further decentralization. Bank staff responsiveness to clients in all regions; new mobility policies to increase options and tools to recruit and rotate staff; and relocation of specialists to the hubs. IDA Controls • Complete implementation of the remaining • Update on status • IDA16 MTR • All five areas are completed: Procurement Policy corrective actions in Management’s Five of pending Update; AAA Review and Controls; Accountability Point Action Plan. Corrective Review; New Operational Document Storage and Actions. Retrieval System; and Investment Lending Policy Consolidation. The last pending corrective action (Investment Lending Policy Consolidation) was approved by the Board on October 25, 2012. • Revert to normal monitoring and evaluation of • Integrated Risk • Ongoing • Ongoing. Appointment of the Chief Risk Officer to IDA Controls, including through the new Management serve as focal point for risk issues. First risk Integrated Risk Management Report, and Report, and management report issued in April 2012. IAD is now regular IDA reviews and IEG evaluations. regular IDA testing the operating effectiveness of the systems and reviews and IEG processes put in place following the review. evaluations. Management efforts have progressed beyond the targets of the review, in the context of the Modernization and Risk Management programs. SPECIAL THEME 1: ENHANCING IDA’S CAPACITY TO RESPOND TO CRISES Strengthen • Establish a dedicated Crisis Response • July 1, 2011 • A dedicated Crisis Response Window has been support to IDA Window within the IDA framework to address established and it has been used to provide support to countries affected the impact of exceptionally severe economic Haiti and the Horn of Africa. by severe crises and natural disasters. exogenous • Provide a full review of the implementation of • CRW paper • IDA16 MTR • A combined review of the implementation of the economic crises the IDA15 Pilot Crisis Response Window. IDA15 Pilot CRW and the dedicated CRW indicating - 32 - Objectives Recommendations/Actions Product Target Date Action Taken/Remarks and natural plans for possible reallocation of the unused disasters resources during the last year of IDA16 has been • Provide an update on implementation of the • CRW paper • IDA16 MTR prepared for the IDA16 MTR. Crisis Response Window during the IDA16 period, including plans for the reallocation of any unused resources during the last year of the IDA16 period. SPECIAL THEME 2: ACCELERATING PROGRESS ON GENDER MAINSTREAMING AND GENDER RELATED MDGS Intensify support • Implement and review progress on the Action • A report • IDA16 MTR • Progress report prepared for IDA16 MTR. for the efforts Plan on Gender Mainstreaming and Gender- • Annual Gender • All CASs in IDA16 so far have been gender-informed. IDA countries are Related MDGs, including: Monitoring • Guidance note issued to staff and training is making to o 100 percent of IDA CASs will draw on Reports underway. promote gender and discuss the findings of a gender • Gender-informed investments have increased to 86% equality assessment, which would be supported in FY12. RMS tracking progress. through the issuance of a guidance note • Two regions (EAP and LAC) have completed on the World Bank gender policy, preparation of Regional Gender Action Plans while training for staff on how to mainstream the other regions are on track to finalize their gender issues in CASs, and more robust strategies by end of calendar 2012. corporate review of gender analysis of • Three indicators to measure IDA’s support to gender- CASs by the PREM network. based country outcomes are being tracked. o increase gender-informed IDA • The Reproductive Health Action Plan is under investments and monitor progress. implementation. o continue to track three indicators to • The Education sector strategy was launched in August measure IDA’s support to gender-based 2011. It has focuses on education and equity. country outcomes in: (i) percentage of safety nets projects designed to mitigate risk and vulnerability for women and girls; (ii) percentage of agriculture and rural development operations that target women; and (iii) percentage of health projects that address high fertility and maternal mortality. o the preparation of Regional Gender Action Plans. o implementation of the Reproductive Health Action Plan with a focus on 52 priority countries with high maternal mortality and total fertility rates, including 25 countries in the Africa Region. - 33 - Objectives Recommendations/Actions Product Target Date Action Taken/Remarks o the completion of the forthcoming Education Sector Strategy and the subsequent implementation of a program of action targeting gender issues in high priority countries. • Complete World Development Report for 2012 • WDR 2012 • IDA16 MTR • The WDR 2012 was completed and launched in focused on gender. September 2011 and has been widely disseminated, including launches in 27 countries (12 IDA countries). SPECIAL THEME 3: ACHIEVING CLIMATE RESILIENT DEVELOPMENT Support climate • Address climate change by: • Progress report • IDA16 MTR • Progress report prepared for IDA16 MTR. resilience in IDA o discussing in 100 percent of IDA CASs countries climate change vulnerabilities as part of • Ongoing. Twelve CASs and six ISNs were completed the discussion of the country’s in FY12; all discussed climate change vulnerabilities. development challenges and priorities and including activities in climate change mitigation and adaptation areas when requested by the recipient country; • Ongoing. During FY12 27 country specific ESW and o scaling up IDA Analytic and Advisory Non-lending TA were completed. In addition, IDA Activities on adaptation and mitigation; • Additional AAA completed 41 multiple country ESW and non-lending o analyzing in all projects in climate technical assistance activities. change sensitive sectors the potential climate impact of project activities to • Ongoing ensure that they are consistent with the climate change mitigation and adaptation strategies of the country; and o establishing coding system to measure • Done. Coding system has been adopted and • Coding system the share of IDA investments that retroactive tracking was undertaken for FY11 and benchmark provide climate adaptation and (baseline) and FY12. mitigation co-benefits, and reporting on the number of projects that aim at climate change co-benefits in their design (e.g., percent of IDA investments that have climate change co-benefits) by Mid-Term Review. • Continue dialogue with OECD/DAC on Rio- • Quantifiable Rio- • IDA16 MTR • Ongoing. The coding system to track climate related Markers with the objective of developing and Markers financing was developed in consultation with other agreeing quantitative measures of global development partners. Dialogue will continue to be financing for climate change adaptation and undertaken regularly. mitigation. - 34 - Objectives Recommendations/Actions Product Target Date Action Taken/Remarks SPECIAL THEME 4: SUPPORTING FRAGILE AND CONFLICT AFFECTED COUNTRIES Strengthen • Examine the operational implications of the • FCC Paper • IDA16 MTR • Paper prepared for IDA16 MTR. support to fragile 2011 WDR, including with respect to the and conflict- heterogeneity of fragility and conflict, affected countries approaches to fragile situations and for conflict prevention, volatility of IDA allocations, etc. Based on these findings, develop, by the IDA16 MTR, proposals including to simplify and adjust the framework for allocating resources to FCCs. • Develop plans for enhanced implementation • FCC Paper • 2013 • Partnership has deepened between the UN and the of UN-World Bank Partnership Agreements Bank. The UN-World Bank Partnership Trust Fund in a few pilot countries. has facilitated dialogue, joint work and operational collaboration in Central African Republic, Democratic Republic of Congo, Liberia and Guinea-Bissau. • Complete evaluation of IDA’s work in fragile • IEG evaluation • 2013 • IEG has prepared an Approach Paper following and conflict-affected countries during 2012- consultations with Management which will be 2013. discussed by CODE members in Q2 of FY13. IEG is expected to complete the evaluation by September 2013. • Revise the World Bank’s Operational Policy • Board paper • End-2011 • Review of Operational Policy on Development on Development Cooperation and Conflict Cooperation and Conflict (OP/BP 2.30) has been (OP/BP 2.30) by the end of 2011, and include folded into the broader operational manual and partnership agreements. investment lending reform to facilitate a more effective engagement in the FCCs context. • Strengthen collaboration with partners on FCC Paper • IDA16 MTR • The Bank has undertaken a series of evaluations of MDTFs administered by the World Bank, trust funds and of reforms based on the Bank’s 2007 develop a reform plan in response to the Trust Fund Management Framework and lessons MDTF evaluations, and report on progress at learned from the World Bank’s experience with the IDA16 MTR. MDTFs in FCCs. Efforts are also underway to ensure collaboration with partners on country specific MDTFs (for example for Pakistan and Afghanistan). • The Bank is also improving the alignment of Trust Fund mandates with country strategies. • Conflict/context sensitivity is also being addressed through improved MDTF design, most notably in the five country level MDTFs that have been created since the preparation and launch of IDA16. • Provide a review of procurement, fiduciary FCC Paper • IDA16 MTR • The ongoing review of the Bank’s approach to and legal inputs in FCCs to speed up procurement includes FCCs. A guidance note on - 35 - Objectives Recommendations/Actions Product Target Date Action Taken/Remarks implementation in FCCs. procurement and financial management in FCCs has been issued. • Complete the revision and testing of the PCPI • FCC Paper • June 2011 • New PCPI framework and criteria have been finalized criteria, and publicly disclose the country and used in the FY11 and FY12 PCPI exercises. scores in June 2011 before the start of IDA16. These are now disclosed on the Bank’s website. Develop specific mechanisms to monitor efforts in the broader set of fragile and conflict-affected countries in cooperation with other agencies and bilateral partners. • Strengthen efforts to integrate a gender • FCC Paper • IDA16 MTR • All ISNs presented to the Board in FY12 address perspective in IDA’s support to FCCs. gender issues. Also, between FY10 and FY12, the share of gender-informed operations in FCCs rose from 68 percent to 83 percent. • Monitoring is done through the RMS and at project level. ADJUSTMENTS TO THE VOLUMES AND TERMS OF IDA ASSISTANCE Allocate IDA • Implement IDA’s Performance Based • Ongoing resources based Allocation (PBA) system as set out in Annex on performance 2, including the following changes: o introduction of a flexible and a case- • Case-by-case extensions have been granted to 5 by-case approach to extending the countries: Afghanistan, Burundi, Congo DR; Central phase-out for post-conflict and re- Africa Republic and Togo. engaging countries; o modification of the requirements for • The two country requirement when at least one IDA IDA’s regional program to allow fragile and conflict-affected country participates has projects with only two countries when already been included in the updated IDA regional at least one is fragile and conflict project guideline and is under implementation. affected country; o elimination of the maximum per capita • The maximum per capita allocation cap has been allocation ceiling for small states and eliminated raising of all base allocations to SDR 3.0 million per year from the current • The minimum country allocation of SDR 3 million per SDR 1.5 million per year. year was implemented since the FY12 allocation. • Capping the amount deducted as foregone • A Report • IDA16 MTR • The 30 percent capping has been implemented since debt service from an eligible country’s gross FY11; and a paper that reviews the implementation annual PBA allocation at 30 percent of such experience was prepared for the IDA16 MTR. gross PBA allocation. Provide a review of implementation experience at the time of the IDA16 MTR. Adjustment to the • Adjust lending terms of IDA’s blend, gap and • Implementation • Revised OP • IDA’s lending terms adjusted effective July 1, 2011. terms of IDA small island exception countries as follows: to start July 1, - 36 - Objectives Recommendations/Actions Product Target Date Action Taken/Remarks assistance o Harmonize IDA’s blend credits and 2011 hardened term credits into one instrument with a final credit maturity of 25 years with a 5-year grace period, and carrying a 1.25 percent per annum interest rate. o Harmonize hard term credits with a maturity of 25 years and a 5-year grace period and continue to feature an interest rate based on the IBRD fixed rate equivalent minus 200 basis points. Provide access to hard term credits to all blend countries in proportion to their performance-based allocation. o Change terms for the small island country exception from blend credit terms to regular credit terms. • Implement any agreement to exercise the • Subject to Board • Implemented for eight eligible countries (Albania, acceleration clause included in the legal approval, Azerbaijan, China, Egypt, Equatorial Guinea, agreements for regular and blend credits since implementation Indonesia, Macedonia, FYR, and St. Kitts and Nevis). 1987. would start in July 2011 • Allocate grants to regional organizations on a • Management • IDA16 MTR • The regional grant pilot continues to be implemented pilot basis. report during IDA16. Paper on the IDA regional integration program, including a review of the provision of grants to regional organizations, presented during IDA16 MTR. • Review of IDA’s graduation policy. • Discussion paper • IDA16 MTR • Review completed. Paper on IDA’s graduation policy presented during IDA16 MTR. - 37 - Annex 2: Examples of Statistical Capacity Strengthening in IDA Countries The Development of a National Statistical System for Tanzania Project (US$30 million), approved in 2011 and funded through the Statistical Capacity Building Program (STATCAP) 54, introduced improvements to the management of the country’s statistical system, updated the ten- year survey calendar and is due to publish a detailed annual release calendar, which outlines to users upcoming statistical activities and planned publications and is used for monitoring performance of the national statistical service. Tanzania also undertook a legal and institutional structure reform. A STATCAP project in Mongolia (US$2 million) made progress in improving the efficiency and effectiveness of the country’s national statistical system. It supported the preparation of a National Strategy for Development of Statistics (NSDS) 2011 – 2015, approved by Parliament in December 2011, and the amendment of the Law on Statistics which stipulates regular implementation of agricultural censuses and household surveys. It also supported training of enumerators and researchers for more effective implementation of the socioeconomic and labor force surveys. Through technical assistance, annual GDP at constant prices by expenditure since 2005 and the first ever seasonally adjusted quarterly GDP were produced and disseminated. A STATCAP project in Bolivia (US$50 million) provided quality information to support: systems for planning, designing, monitoring and evaluating public programs; updating of the multi-purpose cartography; and the implementation of the National Agricultural Census, the National Population and Housing Census, and the Continuous Household Survey. In Ghana, a 5-year project jointly financed by IDA (US$30 million) and the Statistics for Results Trust Fund Facility (SRF - US$10 million) is supporting the modernizing and streamlining of the national statistical system to enhance the monitoring of policy, the institutional framework, human resources, infrastructure and equipment. It aims to improve the monitoring and evaluation of development programs and help attract professional statisticians. In Rwanda, a US$10 million SRF grant supports the National Strategy for Development of Statistics (NSDS), jointly with other donor funding (DFID, European Union, UNFPA, UNDP, UNICEF, African Development Bank). It supports the implementation of the NSDS with emphasis on data development, coordination of the national statistical system, and capacity strengthening of statistical staff of the National Institute of Statistics and other statistical units. A SRF project in Nigeria (US$10 million), approved in 2011, supports implementation of the NSDS in six states. Achievements include: improved institutional framework and communication among key producers of statistics; enhancement of IT equipment; training of cartographers in GIS and training of trainers in demographic techniques at a local university; publication of a release calendar on the NBS website; and dissemination of the Consumer Price 54 STATCAP is a multi-country Statistical Capacity Building Program designed to make it easier for clients to access World Bank financing for improving statistical capacity. STATCAP projects are prepared and appraised following regular provisions for investment lending, and normally financed either through IBRD or IDA as specific investment credits or loans. - 38 - Index. Also, official statistics are increasingly covered in the media, with editorials in the largest national newspaper having covered poverty data, GDP, unemployment and inflation. Activities under the Trust Fund for Statistical Capacity Building (TFSCB), a multi-donor trust fund set up to improve the effectiveness and efficiency of national statistical systems in developing countries, were ongoing in many IDA countries during FY12: • The second Armenian National Population Census has become a reality thanks to the technical and financial support provided by development partners. The TFSCB project played an important role in making methodological improvements, such as mapping and questionnaire design, and providing training of field and data processing staff, as well as galvanizing fund-raising activities. • In Nicaragua, the laws to create an integrated national vital statistical system have been drafted; IT development for modernization of the vital registration system and training of doctors in the proper use of the vital registration has taken place and more than 10,000 records of neonatal mortality included in the vital national registry. • Support for the preparation of a national strategy for the development of statistics in IDA countries, including Bangladesh, Kyrgyz Republic, Tajikistan, and the East African Community. • Support for the preparation of the NSDS and capacity building efforts in Niger. The Accelerated Data Program (ADP), supported by the World Bank Marrakesh Action Plan for Statistics (MAPS) Development Grant Facility, provides technical tools and assistance to countries to enhance management of surveys and census data. As a result, a number of IDA countries have improved their practice to document, archive, disseminate and make these tools accessible. - 39 - Annex 3: Examples of Use of Impact Evaluations 55 The Development IMpact Evaluation (DIME) Initiative is a World Bank-wide program to generate knowledge on the effectiveness of development policies. Working across 18 thematic areas, DIME collaborates with 300 agencies in 72 countries to improve the effectiveness of policies and programs and strengthen country capacity for real-time evidence-based policy-making. Results from impact evaluations have proven crucial to scale up successful programs and innovations. Transfer of promising practices across countries and into global programs is an important element of the IEs and the overall knowledge agenda. Examples of IEs supported by DIME include the following. Incentivizing service delivery for healthier children in Rwanda. Pay for Performance (P4P) programs are designed to provide financial rewards for providers who improve the quantity and quality of care. An impact evaluation of P4P in maternal and child health services in Rwanda showed a large and significant positive impact on institutional deliveries and preventive care visits by young children, as well as improved quality of prenatal care. A recent IE compared P4P with non-financial incentives in Zambia and found an even larger effect on performance by health community workers (measured in sales of condoms). DIME applied this result to test public recognition against monetary incentives for (1) peer farmers in Mozambique to increase technology adoption, and (2) teachers in Guinea to increase learning achievements of students. Making water safe in Kenya, a low-cost solution to a big problem. Every year two million children die of diarrheal diseases worldwide. Diarrhea also contributes to malnutrition, stunting and cognitive impairment. In Kenya, IDA and the Spanish Trust Fund for Impact Evaluation (SIEF) jointly funded an impact evaluation testing different strategies to find effective low cost solutions to improve water safety. It found that chlorine dispensers at community water collection points raised the number of households with detectable levels of chlorine in their drinking water from 5 to 60 percent, compared to communities that had to rely on store-bought chlorine for purification. The IE thus provided evidence that chlorine dispensers are effective and cheap and have the potential to save millions of lives. DIME plans to support Vietnam incorporate lessons from the IE into a recently approved IDA project and other future IEs. A randomized trial in Zambia found that sealing packages at the central store for each clinic reduces stock-outs of malaria medication at the clinics to almost zero. It tested alternative drug supply chains across health districts. The IE results compellingly made the case to roll out a streamlined approach where facilities are in charge of placing orders and receiving deliveries. The Government is scaling up the successful supply chain system to the whole country. Through the effective distribution of malaria drugs alone, this can cure 300,000 people a year and save an estimated 17,000 children under five over a period of four years. Based on the IE findings, the Nigerian National Primary Health Care Development Agency is designing an additional impact evaluation to understand how vaccines can be more reliably distributed to primary-level health facilities across the country. 55 For more information about DIME see http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDEVIMPEVAINI/0,,menuPK:3998281~pagePK:64168427 ~piPK:64168435~theSitePK:3998212,00.html - 40 - An impact evaluation of health center report card interventions in Uganda. Information was collected on health centers and communities and then shared with both in ways that allowed communities to hold providers accountable—showed health care utilization, as well as large impacts on outcomes such as child mortality and child weight. In Liberia, an IE used an Early Grade Reading Assessment (EGRA) tool to diagnose grade 3 student reading skills, and trained teachers on use of the information to provide tailored instruction. The program also disseminated results to parents to promote their participation. The impacts were large—with reading assessment scores increasing substantially. In addition, the IE measured positive spillover impacts on math scores—suggesting important complementarities. Based on the findings, the Liberia’s Ministry of Education plans to roll out interventions to more than 2,000 schools in 10 out of 15 of Liberia’s counties with USAID support. Community Driven Development (CDD) is perceived as an effective approach to restore social cohesion in post-conflict situations, yet recent research shows that, in many cases, CDD programs have failed to meet expectations. A recently completed IE of the Sudan Community Development Fund (CDF) found that social capital in communities targeted by the CDF has not increased. This IE adds to a nascent literature on the mechanisms through which CDD programs may produce (or fail to produce) their intended outcomes. DIME is replicating similar work in Burkina Faso and Cambodia. Do Public Health Interventions Crowd out Private Health Investments? Evidence from Eritrea. The provision of public goods can lead to sub-optimal individual investment. In the context of malaria control, indoor residual spraying (IRS) in areas with high coverage of mosquito bed nets could, therefore, discourage net ownership/use (assuming the two interventions are substitutes). A randomized IE of an IRS campaign in Eritrea, however, found the opposite to be true: IRS encouraged net ownership and use. Results suggest that the IRS treatment increased knowledge that malaria is transmitted by mosquitoes by about 3 percent, and awareness that children are especially at risk from malaria by almost 7 percent. This translated to increased net ownership and use in treatment villages. It should be noted, however, that due to extremely low rates of malaria in the study area, positive impacts on knowledge and behavior did not translate into a reduced incidence of malaria. The IE shows that, in a low-transmission setting such as Eritrea, IRS and bed nets are not necessarily substitutes, and both will likely be needed as governments move from controlling malaria towards its elimination. Food Security – Pre-Commitment Savings. A new class of saving products—commitment savings—is needed to help farmers save more to earn more. DIME has been working to introduce research findings into World Bank projects to test and take these effective innovations to scale. In western Kenya, researchers worked with a local NGO to give farmers the opportunity to buy a voucher for fertilizer at harvest time for the next planting season—pre- commit their harvest income to using fertilizers in the future. The impact of the unsubsidized early offer on fertilizer use was almost as large as the offer of a 50% price subsidy on the fertilizer at planting time. In Malawi, a randomized control trial found a large, positive impact of promoting commitment savings on the amount of land under cultivation and the use of inputs for the next planting season, as well as higher crop production and consumption after harvest. Based - 41 - on the experience from Kenya and Malawi, Rwanda is working with DIME to incorporate and test commitment savings accounts as part of its agricultural development program. Gender and agriculture. The Bank works with governments to design and rigorously test gender-tailored innovations to develop a set of policies that are proven to reduce the gender gap. This portfolio now counts 34 projects in 20 countries—a large coalition of policymakers and researchers working together globally. All of these projects are collecting gender-disaggregated data, and 74 percent of these projects are testing gender innovations. These include: • In Malawi, extension services do not reach farmers effectively, and women are disproportionately excluded. The government set gender targets and worked with the IE team to test ways of extending service delivery without increasing the Ministry’s fiscal burden. A large-scale randomized control trial (RCT) showed that, when given seeds and fertilizer, women lead farmers are as effective as their male counterparts in getting men and women to adopt technology. Absent the incentive, however, women lead farmers performed significantly worse. This work helped the Ministry meet its targets for gender in extension services and to scale up the role of gender in agriculture. Mozambique tested a similar intervention, and results are forthcoming. • In Ethiopia, a baseline household survey was conducted as part of an impact evaluation for the Rural Capacity Building Project (RCBP). Combined with qualitative work, these data showed that women were not as likely as men to visit the extension officer and participate in extension training courses. The evaluation team thus identified factors associated with the gender gaps in access to extension. This was discussed with donors and the Ministry of Agriculture and Rural Development which worked with the evaluation team to rigorously test new modes of extension service delivery within the project as well as in the next generation of agriculture projects. IE results of the an apprenticeship training in Malawi supports the case that educational or vocational training interventions can also have significant effects on sexual and reproductive health (SRH) outcomes. While female participants were less likely to be married, the percent of female participants that had given birth was halved compared to the control group from 12 to 5 percent. The impact of the program on SRH outcomes can be considered positive as early sexual experience, marriage and childbirth are some of the main constraints for female schooling and empowerment. Financial education as a driver of economic growth. The largest randomized pilot of a school- based financial literacy program provides evidence that the program increased learning, changed attitudes and affected behavior in Brazil. Students' financial knowledge increased by 7 percentage points and savings increased by 1 percentage point. Based on the results from Brazil’s financial literacy program, Uganda requested South-to-South support to develop its financial literacy program. The Latin American financial regulators and the federation of banks also requested Brazil to share its experience to develop a regional agenda for investor education and financial education across LAC. The lessons from Brazil are feeding into IEs on financial education in IDA countries that are now testing if entertainment can be used as an effective medium for teaching financial concepts (Nigeria, Kenya and South Africa) and whether similar effects can be found for SMEs to spur private sector-led growth (Malawi). - 42 - Annex 4: IDA’s Financial Resources Summaries Table 1. Estimated Total Debt Relief by IDA (FY1996-2044) (SDR billion equivalents, as of June 30, 2012) Total HIPC Debt Relief MDRI Debt Relief HIPC + MDRI Costs Delivered To be To be To be financed by Debt Relief Total pre-July Delivered post Delivered post Donors by IDA HIPC 2005 July 1, 2005 July 1, 2005 Post July 1, 2005 (A+B+C) (A+B) (A) (B) (C) (B+C) Completion Point Countries (33) 31.9 9.8 2.2 7.6 22.1 29.7 Decision Point Countries (3) 1.3 0.3 0.1 0.2 1.0 1.2 Pre-Decision Point Countries (3) 0.9 0.4 0.0 0.4 0.5 0.9 Total (39) 34.1 10.5 2.3 8.2 23.6 31.8 Notes: - Foreign exchange rates based on applicable IDA14, MDRI, IDA15 and IDA16 exchange rates. - Totals may not add up due to rounding. - HIPC debt relief provided by IDA prior to July 1, 2005, of SDR2.3 billion (US$3.4 billion) was financed primarily through IBRD net income transfers to the HIPC Trust Fund complemented by some bilateral donor financing. Table 2. Status of MDRI Financing (SDR billion equivalents, as of June 30, 2012) Financing Received from FY07-22 FY23-44 Total FY07-44 IDA Donors SDRbn in% SDRbn in% SDRbn in% Unqualified Financing 5.6 59% 0.7 5% 6.2 26% Qualified Financing 3.1 32% 11.5 81% 14.6 62% Sub-Total IOCs Received 8.6 91% 12.2 86% 20.8 88% To be committed 0.1 1% 0.9 6% 1.0 4% Structural Gap 0.7 8% 1.1 8% 1.9 8% Sub-Total To Be Committed 0.9 9% 2.0 14% 2.8 12% Total 9.5 100% 14.2 100% 23.7 100% Notes: Note 1: Amounts exclude surplus resulting from financing received higher than donor's target contributions under the current cost structure. Based on IDA16 MDRI cost estimates as of June 30, 2010. - 43 - Table 3. FY13 IDA Lending Terms by Product Type FY11 With Servic Principal Commitment Acce 3/ e Gran Repayments Fee Gra ler- Charg t ce Year Year ation Credi Gra e for Inter Elem Product Maturi Peri 11 - 21 - Clau ts nts Credit est ent 1/ 2/ 4/ 13/ Type ty od 20 40 se s rate Grants NA NA NA NA NA NA NA NA NA 100 5/ % Regula 40 10 2.0 4.0 Yes 0.00 0.0 0.75 NA 62% 6/ r % % % 0% % Blend 25 5 3.3 6.7 Yes 0.00 0.0 0.75 1.25 35% 7/ 8/ 9/ % % % 0% % % Hard 25 5 3.3 6.7 Yes 0.00 0.0 0.75 1.5% 32% 8/ 9/ 11/ Term % % % 0% % Partial NA NA NA NA NA 0.00 0.0 0.75 NA NA 12/ 10/ Risk % 0% % Guara ntee Notes: 1/ The maturity of all IDA credits approved by the Board through June 30, 1987, is 50 years. The maturity of IDA credits approved by the Board between June 30, 1987 and June 30, 2011 are 35 or 40 years. The maturity of credits approved from July 1, 2011are 25 or 40 years. 2/ IDA credits include an acceleration clause, providing for doubling of principal payments from creditworthy borrowers where per capita income remains above eligibility thresholds. 3/ IDA's commitment charge is a variable charge set within a range of 0 - 0.5 percent of the undisbursed balance of IDA's credits and grants. Executive Directors review and approve the level of the commitment charge annually. 4/ The service charge is 0.75 percent of the disbursed and outstanding credit balance. 5/ Countries with a high risk of debt distress ('red-light countries') receive 100 percent of their allocation in the form of grants and those with a medium risk of debt distress ('yellow-light countries') receive 50 percent in the form of grants. 6/ An exception to the GNI per capita operational cutoff for IDA eligibility has been made for some small island economies on the basis of their vulnerability. 7/ Blend terms apply to blend countries and gap countries, with GNI per capita above the operational cutoff for more than two consecutive years. 8/ Year 6-15. 9/ Year 16-25. 10/ The guarantee fee is applied on disbursed and outstanding amounts of a guaranteed financing, in the same way service charges on IDA credits are applied. The guarantee fee is currently fixed at 0.75 percent per annum, equal to the fixed level of service charges on IDA credits. 11/ Blend countries (excluding small island states with a population of less than 1.5 million that receive regular IDA credit terms) are eligible for hard-term IDA credits. Standard IDA service and commitment charges apply plus a fixed interest charge for the life of each credit. IDA sets the interest rate for hard-term credits on an annual basis as the fixed rate equivalent of IBRD interest rates less 2 percent. 12/ This fee is applied to the undisbursed balance of the guaranteed financing and is analogous to the commitment charge on IDA credits. The standby fee is currently set at zero. In addition, guarantees are subject to an initiation fee of 15 bps or US$100,000 (whichever is higher) and a processing fee of up to 50 bps of the principal amount of the guarantee for all private sector borrowers. The processing fee is assessed on a case by case basis and can either be waived or increased in exceptional cases. 13/ The grant element is calculated using 6 percent discount rate and zero commitment charge. - 44 - Annex 5: Progress Report on IDA Internal Controls 1. IDA Internal Controls Review: Background In FY09, Bank Management completed a comprehensive assessment of internal controls over IDA operations, using the rigorous framework of the Committee of Sponsoring Organizations of the Treadway Commission, COSO. Management’s self-assessment was followed by a review by the Internal Auditing Department (IAD) and evaluated by the Bank Group’s Independent Evaluation Group (IEG). All three parties agreed that IDA’s internal controls framework operated to a high standard overall. There were a number of areas for further improvement— including what IEG considered a material weakness with regard to the potential risk of fraud and corruption—which were decisively addressed by Management by means of a “Five Point Action Plan� (FPAP). In FY10, Management self-assessment of progress in delivering on the FPAP was reviewed by IAD and evaluated by IEG. IEG stated that the Management remediation plan had been well designed and had been substantially implemented. The outcomes of the reviews by Management, IAD and IEG were presented to the IDA Deputies during the discussion of the IDA16 Replenishment in October 2010. At that point, IEG concluded that its focused evaluation work on IDA controls had come to an end. As stated in the Report to the Board of Governors on the Sixteenth Replenishment, IDA 16: Delivering Development Results, after the completion of the integrated IDA Internal Controls Review exercise in October 2010, Management continues to monitor the implementation of corrective actions, enforcing the controls through regular management processes. IAD remains engaged through a well-defined set of follow-up audits as part of its regular work program. 2. Completion of Pending Corrective Actions From the full set of 22 corrective actions in the FPAP, only five corrective actions were pending as of October 2010. The design of these five pending actions is now in place: • Procurement Policy Update: Updated Procurement Guidelines were approved by the Board in January 2011, and the associated operational policy and procedure statements for staff were made effective on February 1, 2011. These updates, among other improvements, strengthened the treatment of fraud and corruption issues. • AAA Review and Controls: Product processing, control points, and online forms for Discrete and Just-in-Time Economic and Sector Work and non-lending Technical Assistance products have been available to teams since early FY12. Dissemination, staff training and implementation are now proceeding. • Accountability Review: A cross-regional review of accountability for quality assurance was completed in FY11; an action plan to strengthen accountability for quality support and assurance processes has been designed and endorsed by senior management, and will be rolled out in FY13. Regional and Network Anchor accountabilities have been further clarified and are now reflected in Memoranda of Understanding established annually between the Vice Presidents and the Managing Directors. Management endorsed the new Accountability and Decision Making Framework in May 2012, and an action plan for its application to operational, human resources and IT processes is being developed. - 45 - • New Operational Document Storage and Retrieval System: By the end of FY12, migration of the IRIS4 collections to WBDocs, the new document repository system, was successfully completed. This process covered over 8 million documents and all Operational, Finance, Administrative, and Corporate units, both in Washington and Country Offices. The project involved extensive client engagement, requirement analysis, change management and customization to respond to specific unit needs, deployment of many new components, data migration, and user training and support. As envisaged by the IDA Internal Controls Review, this new repository system, now fully operational, would facilitate safe storage and user-friendly retrieval of Bank documentation, with attributes that fully support the new Bank policy on Access to Information. • Investment Lending Policy Consolidation: A single draft operational policy (OP) and Bank procedure (BP) statement, which updates and pulls together the material covered in 48 fragmented statements and memoranda and incorporates the principles of the new Accountability and Decision Making Framework, was discussed by CODE on June 6, 2012 and approved by the Board on October 25, 2012. 3. Follow-up Audits to Test Operational Effectiveness of the Controls In addition to Management’s continued efforts to complete and implement all the corrective actions, IAD is testing the operational effectiveness of the controls that have been put in place in response to the IDA Internal Controls Review. Two follow-up audits were completed in FY12: • Quality Assurance Process for Investment Lending Operations. The audit found that the Bank has a multi-layer quality review process to provide project task teams with timely feedback on the quality of Investment Lending projects. However, there remain some control weaknesses in the areas of governance, operational quality measurement, implementation support, and technical peer reviews. In response to the audit findings, a Bankwide working group, instituted by Management, has proposed measures to enhance operational quality, which are scheduled to be rolled out during FY13. • Management of Procurement Risk in Bank-Funded Projects. The audit found that procurement reviews of contracts for individual projects are systematically carried out, but it also recommended improvement in the use of the risk management tools designed to address the control weaknesses identified during the IDA Internal Controls Review, integration of procurement-related information systems, and institutional guidance on the conduct of independent procurement reviews. In response to the audit, Management has agreed to continue to strengthen procurement systems and applications, including the risk management tools; integrate procurement-related information systems across the broader control framework of the Bank; and issue additional guidance on independent procurement reviews. These improvements will be prioritized and sequenced to meet the constraints associated with the flat budget environment, while adequately managing risks through existing mechanisms. - 46 - In addition to the above, eight follow-up audits are already in process or planned to be carried out and completed in FY13: • Resource Allocation for Project Implementation Support • Bank’s Management of Rapid Response Operations • Bank’s Fiduciary Monitoring of Bank-Funded Projects through External Financial Audits • Bank’s Operational Framework for Using INT Investigation Results in Bank Funded Projects • Records Management • Management of the Operational Risk Assessment Process in Investment Lending • Financial Management Risk Assessment and Monitoring in Bank-funded Projects • Management of Operational Waivers in Bank-Funded Projects 4. Beyond the IDA Controls Review: Improved Risk Management Progress beyond the recommendations of the IDA Internal Controls Review include, among others, the appointment of a World Bank Group Chief Risk Officer and the issuance, in April 2012, of the Integrated Risk Management Report; the launch of the policy reviews for Procurement and Safeguards; the work on results-based, programmatic AAA; and the work on a World Bank Group Framework for Policies and Procedures. Over the past few years, the World Bank Group has made progress in improving its risk management practices. Notably, in February 2011 the World Bank Group Chief Risk Officer (CRO) was appointed, with an aim to: (i) coordinate with and leverage the risk management resources of the operating institutions via a “federated� model, and (ii) utilize its own staff resources to coordinate and compile Group-wide information and to perform analyses that can be usefully considered from a Group-wide vantage point. The CRO also serves as the focal point for examining all risk issues within the Group, and in this capacity has an advisory and quality control role to play across the operating institutions with regard to all risk issues. In order to facilitate this dialogue and approach, a Risk Council (RC) was launched in 2011 as a platform to bring together senior risk management staff on a bimonthly basis. The CRO issued the Integrated Risk Management Report III in April 2012, which focused on risk management issues across the World Bank, IFC and MIGA and highlighted common risk management activities such as scenario stress testing, model risk management, and the development of risk appetites and tolerances. Gradually, these efforts would aim to move the discussion away from risk “mitigation� and toward risk management that takes more integrally into consideration the World Bank Group’s support to its client countries’ development results. - 47 -