1 2009 Development Policy Lending Retrospective Customization, Flexibility, and Results OPCS, Country Economics.

1

2009 Development Policy Lending Retrospective

Customization, Flexibility, and Results

2009 Development Policy Lending Retrospective

Customization, Flexibility, and Results

OPCS, Country EconomicsOPCS, Country Economics

2

Outline of the Presentation

Main Features

Recent Trends

Focus of DPOs

Results Orientation and Emerging Issues

Messages from In-Country Consultations

3

Share of DPOs in Total Lending Has Increased in FY09

4

Declining Number of Prior Actions per Operation

Number of Prior Actions in DPOs - FY95-FY09 (through Q3)

35

38

33

26

35

28

33

27

19

1211

31 32

2118

32

2022

17

12 12 1189

1011

19

9

1216

0

5

10

15

20

25

30

35

40

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009(Q3)

IBRDIDA

5

More Focus on Social Sector and Public Financial Management Reforms

1980-94

Social Sectors

8%

Public Sector Governance

24%

Trade and Economiv Manag.

24%

Environm., Rural, and

Urban Develop.

18%

Financial and Private Sector

Develop.26%

2005-09

Social Sectors

15%Public Sector Governance

43%

Environment, Rural, and

Urban Develop.

16%

Financial and Private Sector

Develop.18%

Trade and Economic

Manag.8%

6

More Focus on Development Results

Use of monitoring indicators with baselines, targets, and expected results

But Room for Improvements

Quality of results frameworksChoice of results indicators

Emerging Issues

Disbursing against outcomesMaintained focus in harmonized environments

7

Examples of Country Results Influenced by DPO-Supported Programs

Bangladesh Education Sector DPC Series supported a successful means tested stipend program

Rwanda PRSC Series focused on the legal framework for health and education, performance-based contracting

Gross Enrollment in Secondary Education: 40% (2003); 57% (2007);

Gender Parity: 36% (2003); 41% (2007)

Immunization Coverage: 83% (2003); 95% (2006)

Primary Completion Rate: 33% (2003); 52% (2006)

8

Results in Public Sector Governance

Lao PDR: Creation of centralized treasury and revenue functions and establishment of Procurement Management Office.

Rwanda: Medium Term Expenditure Framework with output-oriented MTEFs for education, health, water and energy sectors.

Madagascar: Strengthened budget management with improvements in revenue forecasting, streamlined expenditure management procedures, and better cashflow management and commitment control.

Burkina Faso: Procurement was strengthened with adoption of new legal and institutional framework, procurement audits, and a manual of procedures and standard bidding documents

Georgia: Better Treasury Management with establishment of a Treasury Single Account tha is now fully operational across central government

9

Challenges with Outcome-Based Budget Support

Critical to strengthen the results-orientation of DPOs

Governments value support in the “how to” instead of “what” to do

How to separate the contribution of government actions from the effects of exogenous factors

10

DPOs in Harmonized Environments

Substantial progress on collaboration and coordination in budget support

How to ensure that we maintain focus and flexibility:

analysis indicates that PAFs have a proliferation of indicators

crisis response raises concerns about rigidity of PAFs

11

Operations Processed in Line with Good Practice Principles on Conditionality

Reinforce Ownership Alignment and Harmonization Criticality Customization Full disclosure of prior actions and program

documents; predictable budget financing

12

Feedback from Consultations

Areas of Progress:

Continued Progress on Good Practice Principles

Favorable influence on pace of reforms (Armenia, Benin)

Culture of performance-based management (Armenia, Senegal)

Raised the profile of reforms (Colombia)

More Attention To:

Further alignment (Tanzania)Further harmonization (Benin and Burkna Faso)More flexibility to assess program performance (Benin, Vietnam)Integrate CSO views at the design stageGreater use of local expertise in analytic workFurther decentralization

In Summary

Positive Features

Shift in focusFewer prior actionsIncreased country ownershipIncreased flexibilityImproved results-orientation

Improvements Needed

Quality of results frameworksAnalytic underpinningsPoverty and distributional impactsDescription of country consultationsMacro assessments in subnational and sectoral DPOs

13

14

Thank You