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To: Executive Directors of AfDB, AsDB, EBRD, IaDB and WB
It was with great pleasure that we joined OECD-DAC and the UN to
co-sponsor the High Level Forum on Harmonization, Alignment and
Results, in Paris last month, an important follow-up to the Rome
Harmonization Forum and the Marrakech Roundtable on Results. But,
while the Paris conference further strengthened the move toward
alignment around country led development, much more needs to be
done if the international community is to fulfill its promise of
achieving the millennium development goals. Global Action
This year - 2005 - is pivotal and important decisions need to be
made to increase the chances for reaching the millennium
development goals. We encourage the international community to take
decisive steps on three important issues: financing for
development; harmonization, alignment and development results; and
trade.
First, by the time world leaders meet in New York for the
Millennium Summit, decisions
should be made to fulfill the Monterrey commitments on
sufficient financing for development to achieve the MDGs. Second,
the development community should take firm steps to increase
development effectiveness, including turning the alignment and
harmonization commitments in the Paris Declaration into decisions
on monitorable indicators of action on the ground. Third, by the
December meeting of WTO in Hong Kong, the Doha round should
conclude with a trade agreement that substantially addresses the
needs of poorer countries for market access and lower subsidies in
richer countries. We offer the full support and effort of the MDB
system to make sure 2005 does not end without good progress on
financing for development, alignment and harmonization, and trade.
As we reconfirm the millennium development goals as the pre-eminent
focus for development cooperation, we underline the importance of
private sector development to create the growth that is absolutely
necessary to achieve them. To help sustain equitable private sector
development, we call on the international community to support
initiatives for good governance, transparency and capacity
building. A notable initiative is the Extractive Industries
Transparency Initiative.
We also encourage bold action to address the challenges of
reaching the non-income MDGs in health, education, gender equality
and sustainable environment, many of which are increasingly
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addressed through global programs, and we emphasize the need for
full alignment of global approaches with country led development,
as stated in the Paris Declaration. MDB Cooperation
Cooperation among MDBs has made major strides in recent years,
with focus on coherence and collective action, and has reached a
stage where major strategic initiatives of the MDB system, or
individual banks, are either common or done on the basis of MDB
wide consultations. Jointly, we have played an important role in
global efforts to improve development effectiveness, particularly
through our work on harmonization, alignment and managing for
development results, where MDB working groups did much of the early
work. Consequently, the MDB system now forms a critical foundation
of development and transition cooperation, producing synergies at
the country, regional and global level.
The attached report, "MDB Cooperation Update", which is the
fifth joint report from the MDBs, gives a brief overview of joint
activities and coordination that takes place on a regular basis. We
believe it shows the central role of the MDBs in development
architecture, and the need to give them strong support if we are
serious about poverty reduction and other millennium development
goals. While MDB cooperation covers all major areas of our
operations, at this time we want to highlight three areas:
Growth and investment climate: Much of our lending and
analytical work is aimed at stimulating growth and fostering an
investment climate conducive to growth. To better align our work
and leverage cooperation for effectiveness and lower transaction
costs, we set up a working group on infrastructure, to do joint
work in analysis and advice and look for opportunities for joint
operations. Joint infrastructure studies, aimed at common financing
needs assessments and future lending, are being done on a regional
basis. We are seeing a renewed interest in MDB co-financing
operations in infrastructure. Financial sector work is increasingly
done jointly or through an agreed division of labor. And most
recently, we decided to make the very useful and highly regarded
Business Environment and Enterprise Performance Surveys
(BEEPS)/Investment Climate Surveys a joint MDB activity to be
conducted globally over the next three years.
Development effectiveness: More effective use of development
resources and reduction of transaction costs in development
operations have been at the heart of MDB cooperation. Early efforts
focused on institutional harmonization of policies and procedures
and produced significant results, including common bidding
documents for much of our lending, harmonized environmental
assessment guidelines and common good practice documents for
important activities, such as pollution prevention and abatement,
and common good practice papers on evaluations of public and
private sector projects, to name a few examples. Going forward, we
will give particular attention to alignment with country systems
and processes, thereby helping strengthen country ownership and
improve development effectiveness.
Recently, we have broadened the scope of alignment. For example,
our working group on managing for development results continues to
do excellent work on good practices and indicators, including a
source book on managing for results, which was presented at the
Paris conference. Similarly, the MDBs with concessional windows
have deepened cooperation on the system for allocating resources
and the country assessments that provide the input for the
allocation. In the upcoming country assessment round, we will in
essence use the same questionnaire and pilot joint
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assessments in a few countries. And finally, we are now engaged
in close consultations on how the MDBs can do a better job of
serving our middle-income country group of clients.
Global programs: Global issues and global programs have become
important in development and transition cooperation. MDBs are
frequently asked to participate in global programs, whether as
partners helping to focus attention on an issue or as implementing
agencies at the country level. We are concerned about the
challenges of linking global approaches and programs to country
level operations, which is where we, as lending institutions, have
our strength. Three years ago, we began to address this issue
within the MDB system, with a joint policy note on 'MDB role in the
provision of global public goods’. Going forward, we will cooperate
on important global governance and transparency issues, such as the
extractive industries transparency initiative, efforts to fight
communicable diseases, protect the environmental commons and
provide safe water. We will push for full integration of global
issues and programs in development architecture, and will take on
emerging global issues, particularly migration and remittances, and
the link between peace and security and development.
We are sharing the attached report with the G-20 and G-7 groups
of shareholders that are
currently reviewing the role of multilateral institutions.
Much has been achieved through our cooperation in recent years,
but much more is still to be done. We look forward to your support
as the MDBs address the challenges of development and
transition.
Omar Kabbaj Haruhiko Kuroda Jean Lemierre
President President President African Development Bank Asian
Development Bank European Bank for Reconstruction
and Development
Enrique Iglesias James D. Wolfensohn
President President Inter-American Development Bank World
Bank
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Update on Cooperation Among Multilateral Development Banks
African Development Bank Asian Development Bank
European Bank for Reconstruction and Development Inter-American
Development Bank
World Bank
April 2005
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ii
Table of Contents
Page I. Introduction 1 11. Strategic Coherence 2 111. Thematic
Cooperation – Working Groups 3 IV. Country and Regional Cooperation
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1
Update on Cooperation among Multilateral Development Banks
Introduction 1. This note provides an update on cooperation among
Multilateral Development Banks (MDBs) since the last review which
was completed in March 2004. It is the fifth joint report on MDB
cooperation, part of what is by now an annual exercise, reflecting
the growing institutionalization of cooperation at all levels
between the MDBs. 2. This note highlights areas where progress has
been made or work is ongoing at a strategic, thematic, and
regional/country level. As in the case of previous updates,
remaining challenges will also be discussed. The main issues
highlighted include: • The MDB system has been transformed, with
focus on coherence and collective
action, and now plays an important role in global development
and transition architecture—as seen in the role of the MDBs in work
leading to the Paris 2nd High Level Forum on Harmonization, and
before that the Rome Forum and Marrakech Roundtable. The MDB system
- now working more closely with OECD-DAC - is increasingly able to
play a coordinated role in articulating and addressing major
international development challenges. The MDB system now should
take further steps toward coordination with the broader
multilateral community to scale up development and transition
efforts, particularly on the millennium development goals.
• With global and regional initiatives playing a growing role in
development architecture (Global funds/ issue specific initiatives)
the MDBs have started to address those issues, and will increase
their cooperation, including consultations with shareholders, on
how to manage global initiatives in the aid architecture and link
global programs better to MDB core operations, for increased
development impact.
• Through years of work in several technical and thematic
working groups, major achievements have been made in aligning and
harmonizing operational policies, procedures and practices, to the
point where a major part of them has been substantially aligned.
Differences related to different shareholders and mandates still
persist and the application of aligned policies is not always
consistent. Within the parameters of different mandates, the MDBs
are committed to further progress in institutional harmonization
and country implementation, including the use of country systems
and managing for development results. External limitations on
further harmonization will be taken up at the level of
shareholders.
• Country and regional cooperation, guided by MoUs, has
increased greatly, including growing coordination of country
support strategies (and joint strategies, in a few cases), joint
analytical work and increased co-financing. Good practice examples
are, however, not yet consistently applied across countries.
Scaling-up good practice, promoting cross-country,
cross-institutional learning and strengthening MDB interaction in
support of country-led processes will be high on the agenda.
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Strategic Coherence 3. Acting as a group, the MDBs play a very
important role in development cooperation. Through their work on
country level alignment, harmonization of operational policies
procedures and practices, and their leadership in developing and
implementing an agenda on managing for development results, they
are often at the center of international efforts to strengthen
coherence in development cooperation. Using their joint convening
power to build support for the common approach and broaden its
practical application, MDBs are increasingly reaching out to other
development partners. 4. Cooperation among MDBs has been
transformed in recent years, from ad-hoc consultation to the
creation of a coherent system built on cooperation across a broad
field of issues. Leading the strategy setting and coherence
building, the MDB Heads have articulated and published joint
positions on most major global development challenges, including
through joint support for and hosting of global conferences and by
issuing joint statements outlining common positions on agreed
themes. The MDB system has become a leading force for improvements
in the delivery of support to low and middle income countries, best
exemplified by the leadership on alignment and harmonization. The
structure of an MDB system for cooperation is firmly in place and
strategic decisions are increasingly being turned into action on
the ground. 5. Following the Rome harmonization forum, the MDB
Heads placed emphasis on the “managing for results” agenda and
co-sponsored the Marrakech roundtable on managing for development
results in 2004. This has resulted in a very considerable joint MDB
work on the broad results agenda (see working group report).
Similarly, the MDBs played a central role as co-sponsors of the 2nd
High Level Forum on Harmonization, Alignment and Results, held in
Paris in March 2005, and as organizers of regional workshops held
in preparation for the Forum. Also, the close cooperation in
preparation for the May 2004 Shanghai conference continues with
work towards the September 2005 UN Summit. 6. In Marrakech, the
Heads decided on new initiatives in infrastructure analysis and
financing; the approach to engagement with middle income countries
– including funding, local currency lending and lending to
sub-sovereign entities; and capacity building and governance.
Substantive work has since been done in all these areas. 7. This
year, in Paris, the Heads decided to transform the EBRD-WB
cooperation on investment climate and business environment, known
as the BEEPs initiative, and related investment climate surveys in
other regions, into a global MDB sponsored work. They also decided
to go forward with joint work on the middle income country
engagement. In the low income countries AfDB, AsDB, IDB and WB
inter-agency cooperation around performance based allocations and
country performance assessments is being intensified and a formal
working group around this issue has been established. Finally, with
global initiatives and funds growing in number, size and influence,
the MDB group has begun to engage jointly but will now broaden
cooperation between MDBs and with shareholders on global programs
and global public goods, seeking a coherent framework and approach
in engaging global initiatives and funds.
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Thematic Cooperation – MDB Working Groups 8. Thematic
cooperation, often pursued through technical working groups,
endorsed by the MDB Heads, has been a core part of the coherence
building efforts of the MDB system in recent years. Importantly,
while post-Rome country implementation has become the main focus in
harmonization work, MDBs also continued work on unfinished
institutional harmonization and looked to add further important
issues to this agenda: 9. Operational Policy Roundtable. The
roundtable is a coordinating forum that gives guidance and promotes
the harmonization efforts. It has been the main vehicle for MDB
cooperation in the work leading up to the Rome, Marrakech and Paris
forums on harmonization and managing for results. Its latest
meeting, in Manila in June 2004, focused on setting the agenda for
implementing the Rome commitments as well as setting the course for
preparatory work for Paris. Preparations for regional workshops,
hosted by the RDBs, were discussed in the roundtable meeting. The
next meeting, in spring 2005, hosted by EBRD, will focus on
follow-up to the Paris conference and new initiatives in MDB
cooperation. 10. Procurement. The ongoing harmonization effort of
the Heads of Procurement (HOP) of MDBs and other international
financial institutions (IFIs) has resulted in significant progress
towards harmonization of MDB/IFI-financed procurement policies and
documents. Policies and bidding documents, based on harmonization
agreements, e.g., on goods and works, and consulting services, have
now been adopted in the MDB system. In the area of electronic
government (e-GP), the MDBs have achieved a high degree of
harmonization through the working group, including a joint website
(www.mdbegp.org), and an IDB, AsDB, World Bank organized conference
on e-GP in Manila, at which 25 countries were represented.
Continued harmonization of procurement policies and
practices—policy convergence—has resulted in the conclusion that
MDBs and other IFIs have advanced significantly in being
“substantially harmonized”. That effort also highlighted that the
remaining differences require decisions from other stakeholders
such as the MDBs’ owners on, for example, eligibility of suppliers,
consultants and other contractors to participate in procurement
that cannot be reconciled by HOP efforts. 11. The most recent
meeting of the group took place in Helsinki, hosted by the Nordic
Development Fund in October 2004, where the draft master bidding
document for civil works was approved and is expected to be issued
and used as a base for each MDB to issue its own standard bidding
documents. The group has continued to work on master documents for
procurement of plant and equipment, which is expected to be
completed in 2005. It has also produced joint country procurement
assessment reports in several countries The HOP has initiated two
new areas of activity: (a) a joint effort with OECD/DAC and other
bilateral donors and several borrowing countries on a capacity
building effort to encourage reforms in countries procurement
systems; and (b) starting discussions on a technical basis for
future assessment and possible use of country procurement systems
in operations funded by IFIs. 12. Financial Management. The MDB
Financial Management Working Group (FMWG) comprises the five MDBs
and the Islamic Development Bank (IsDB). The Working Group’s main
objective is to seek to achieve harmonization in financial
management policies and procedures in support of broader donor
harmonization and
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alignment objectives. Meetings have been held twice a year with
the two most recent meetings held in March 2004, hosted by IADB in
Washington D.C. and another one in October 2004, hosted by AfDB in
Tunis. Recent activities of the WG include: • Joint diagnostics.
The framework paper on diagnostics (February 2003) has
facilitated joint diagnostics with these now being routinely
undertaken. For example the Africa sub-group (AfDB, IsDB, and WB)
reports that 11 have been undertaken jointly to date, with 8 more
planned for FY05, while the Asia sub-group (AsDB, IsDB, and WB) has
facilitated joint diagnostics in Indonesia and Pakistan. IDB and WB
have carried out 12, with 3 more currently in preparation.
• Information Sharing. Where policy changes with a financial
management impact are underway at any MDB the WG is briefed and the
implications for the other MDBs considered. Participants take back
key messages to their own institutions on what needs to be done to
“catch up”. For example, in IDB-WB cooperation on Reports on
Standards and Codes and Quality Control Review of Independent
Auditors in several countries in Latin America.
• Joint Learning. As a matter of routine, MDBs participate in
each other’s training activities. Almost all the MDBs participated
in the WB’s Fiduciary Forum held in Washington in March 2004; WB
participated in an AsDB week long training session held in Delhi in
July 2004 and AfDB participated in WB’s Africa Region Fiduciary
week in Addis in February 2005.
• Country Level Activities. Facilitated by the framework paper
on financial reporting and auditing, WG members have supported
operational staff either at the country level—such as in Ethiopia
where AfDB and WB are joining the government in an effort to agree
to common reporting and auditing arrangements that would apply to
all donor financed activities and that are based on the county’s
own systems, or at an operation specific level—such as in the
Bangladesh Education SWAP, which has AsDB in the lead with WB being
one of a number of other participating donors.
• Disbursements. A sub-group on disbursements meets concurrently
with the Financial Management group. This group was recently
established to seek opportunities for harmonization in disbursement
policies and procedures. An inventory of comparative disbursement
policies and procedures has been completed. At its meeting in Tunis
in October 2004, the sub-group identified five priority areas and
divided work on each of them among the banks, with a deadline for
reporting back before the middle of 2005.
13. Managing for Results. The MDB Working Group on Managing for
Development Results has become a key inter-agency mechanism for
fostering a global partnership on managing for development results.
The Working Group has constituted itself as a standing forum to
share information and experiences in developing strategies,
processes, systems, procedures, practices and tools to better
manage for results—to use information to improve decision making
and steer country-led development processes toward clearly defined
goals. The WG also pursues specific initiatives jointly with
bilateral development agencies within the framework of the
MDB-OECD/DAC Joint Venture on Managing for Development Results.
Highlights from the WG include:
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• Regional workshops. The MDBs coordinated their efforts in the
preparation of four regional workshops aiming at engaging
developing countries in the global partnership on managing for
development results.
• Draft Sourcebook on emerging good practice in managing for
development results. (http://www.mfdr.org/sourcebook.html) All MDBs
contributed examples of good practices in managing for development
results for the preparation of the draft, led by the World Bank
under the direction of a Review Panel composed of representatives
of IDB and bilateral donors.
• Harmonization around results. The World Bank and AfDB have
undertaken four pilots on harmonization and alignment around
results and results reporting. AfDB, jointly with DFID, co-leads
the work on agency performance assessment.
• Agency performance assessment. AfDB, jointly with DfID,
co-leads the work of the joint venture on agency performance
assessments.
At the Paris Forum, MDBs – and bilateral donors – committed to
support regional
communities of practice, including a focused learning process in
selected partner countries. Among the MDBs, a priority action is
the adoption of a common framework for self-evaluation of MDB
performance and results measurement. 14. Evaluation Cooperation
Group. The ECG, consisting of the AfDB, AsDB, EBRD, EIB, IDB, IMF
and WB, contributes in furthering the harmonization and results
agendas in the area of evaluation. Recent work has built on efforts
initiated a few years ago, including: • Harmonization of Good
Practice Standards. A 2002 benchmarking exercise on
private sector standards was updated in 2004.1 The major
findings were that although significant progress has been made in
most institutions, no member is yet fully compliant with the good
practice standards. In view of the endorsement by the Presidents of
the call in 1996 by the Development Committee Task Force that the
MDBs should harmonize their evaluation methodologies, performance
indicators and criteria, it is important to note that the MDB
evaluators feel they are reaching a stage in which it is more
difficult for their evaluation units to harmonize until there is
greater policy harmonization among the MDBs at the operational
level. In respect of comparability of the results among the
institutions it should be clear that only those performance
categories can be compared which most of the MDBs have in common.
The focus of the group will remain on harmonization, but in the
future the group will emphasize more on cooperation and exchange of
ideas and lessons learned. Members will benchmark their performance
against public sector standards beginning in 2005.
• Higher level evaluation and capacity development. The ECG
continued discussions on Country Program/Assistance Evaluation
methodology to share approaches and to develop a Good Practice
Paper. Discussions of issues of comparative governance among MDBs
led to the creation of a governance template to assess
organizational and behavioral independence of the evaluation
function, its protection from outside interference and its
mechanisms to avoid conflicts of interest. A revision of the
template was completed recently. Given
1 The ECG began by completing two studies, Good Practice
Standards for Evaluation of Private Sector Investment Operations
(2001) and Good Practice Standards for the Evaluation of MDB
Supported Public Sector Operations (2002). This was followed by the
formulation of an ECG Public-Private Sector Good Practice Standards
Comparison Document, which would help facilitate further
harmonization of standards.
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the importance of Policy-Based Lending in most member
institutions, the ECG did a stocktaking exercise of evaluation
practices being used to evaluate policy based lending operations.
The final report was completed by the AsDB in September 2004. Based
on the findings from this report, an addendum “Good Practices for
the Evaluation of Policy-Based Lending” was published in December
2004. Independence of the evaluation departments has increased as
many ECG members now report directly to their Boards of Directors
and have more independent budget processes.
• Joint evaluation. Members have conducted joint evaluations on
country programs for Peru, Lesotho and Rwanda, while joint sector
evaluation was conducted through a sector study of the transport
sector in Ghana. The emphasis has been on joint processes more than
on joint products, and on reducing evaluation costs to client
countries.
15. Performance Based Allocations and Country Performance
Assessments. Further steps to harmonize the performance based
allocation (PBA) approaches of the MDBs are now firmly on the
common agenda. A January 2005 workshop, organized by the AsDB in
Manila and attended by some 20 participants from multilateral and
bilateral agencies identified a number of specific PBA
implementation issues of common interest: • Ratings Disclosure. The
upcoming “full disclosure” of MDB country ratings
brings the challenge to make sure they are aligned. AfDF, AsDF
and IDA will in essence, use the same questionnaire (criteria plus
level definitions). IDB also discloses PBA scores and
allocations.
• Joint Client Workshops. The AsDB has invited the World Bank to
participate in two regional client PBA workshops to enhance client
understanding and ownership of the PBA system. The workshops will
be held in April: one for the Pacific Islands in Fiji, and another
for other AsDB countries in Bangkok. Similar cooperation is being
considered in Africa.
• Next Steps. A joint paper is being prepared for the Boards of
AfDB, AsDB, and WB on PBA harmonization. This paper will, among
other things, highlight the potential merits and possible conduct
of joint assessments (World Bank and the relevant regional MDB) in
the regions. The paper will also include an Annex with comparative
matrices summarizing the respective agencies' PBA system features
and their differences. Also, a meeting is planned for January 2006
in time for joint planning of the full CPIA disclosure.
16. Environment. The MFI-Working Group on Environment (MFI-WGE)
has continued to work in a sustained manner on the harmonization
agenda and has taken a number of actions to support dissemination
and implementation of the Rome Declaration issued at the HLF-I and
is undertaking actions linked with the HLF-II held in Paris. Key
current activities of the MFI-WGE include: • Preparation of “A
Common Framework for Environmental Assessment: A Good
Practice Note (January 2005– English and French)” distributed at
HLF-II; • Joint preparation of an Updated Version of the Pollution
Prevention and
Abatement Sourcebook; • Joint preparation of Indigenous Peoples
Policy Handbook Guidebook; • Development of a new joint training
work program for environmental and social
review of Intermediate Credit Operations;
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• Preparation of Environmental Guidelines for Small and Medium
Scale Infrastructure for MFIs and Bilateral Donors; and
• Development of a joint work program for Use of Country
Systems. • Periodic meetings to share experiences on environmental
mainstreaming and the
application of country environmental analysis. At the last
meeting, participating agencies presented specific cases and
discussed methodologies and ways to harmonize procedures, including
joint efforts.
17. Gender. The MDB/IMF Working Group on Gender (WGG) consists
of two sub-groups, one that addresses gender issues in operations
(gender and development), and one that addresses institutional
gender issues within the member organizations. The sub-groups meet
separately to work on issues of shared concern, and together to
develop common approaches. Activities and concerns include: • The
operations sub-group has promoted increased collaboration at the
regional
and country levels in the process of mainstreaming gender in
policies and operations. It also advocates for the need to maintain
technical staff to support gender mainstreaming in the respective
institutions.
• Several country gender assessments (CGAs) have been undertaken
jointly, e.g., Cambodia (multi-donor CGA) and Mongolia CGA
(ADB/WB). More are being planned.
• The organizational sub-group has provided a relevant pool of
comparators for benchmarking statistics and practices. Comparative
data on women in key professional positions and management/senior
technical positions were presented for the first time in the 2003
report; the sub-group is working on a 10-year trend analysis.
• The group drafted a joint statement which the MDB Heads
released on International Women’s Day (March 8), reaffirming their
agencies’ commitment to implementing the Beijing Platform for
Action, coinciding with the special session of the UN Commission of
the Status of Women to mark the 10-year follow-up to the UN Fourth
World Conference on Women (“Beijing +10”).
• An issue of concern to both sub-groups is how to maintain the
momentum of gains over the past decade, which seems to be slowing
due to some evidence of fatigue with gender mainstreaming
issues.
18. HIPC and Debt Sustainability. The MDBs have continued their
cooperation, with other IFIs, on the debt relief and sustainability
issues, which have taken on new dimensions with some MDBs preparing
to allocate grants and credits based on debt sustainability
considerations, and with the announcements by G7 and others of
interest in further debt relief. The HIPC group meets regularly to
take stock of debt relief progress and has broadened its remit to
also address other key issues. The most recent meeting was in Tunis
in December and the theme was debt sustainability and shocks. RDB
collaboration on low-income country debt sustainability analysis,
using the new WB-IMF debt sustainability framework, will be
explored to ensure, to the extent possible, a common basis for
judgment on the allocation of grants to low-income countries. New
shareholder pronouncements on further multilateral debt relief only
highlight the importance of continued MDB engagement on this issue.
19. Capacity Building, Governance, and Anticorruption. The working
group was reconstituted in Marrakech to push for harmonization in
the field of capacity development, which was increasingly seen as
important to improve aid effectiveness.
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While some MDBs opted not to participate fully in the capacity
development related activities of the Harmonization Working Group,
the group met twice (once in Manila in June 2004 and once in Tunis
in December 2004) and made substantive progress on developing their
individual organization's capacity development agendas in a
coordinated way and agreeing on a joint MDB agenda. The emerging
agreements and suggestions for future MDB collaboration on capacity
development are reflected in the Group's synthesis paper which was
prepared for the High Level Forum Meeting in Paris. The
recommendations of the synthesis paper will be reviewed in light of
the Paris Declaration. In particular, a coordinated approach to
preparing, implementing and monitoring capacity development
strategies at country level will be developed.
20. Beyond capacity development, there is a need for better
donor harmonization in the field of anticorruption, an area which
should play an increasingly important role in the medium-term work
plan of the Group. The recent and ongoing OECD/DAC GovNet work on
Anti-Corruption will be used as a starting point in this regard.
21. Trust Funds and Co-financing. Alignment work on Trust Fund
policies and operations and on co-financing has recently become
part of the cooperation agenda and can be expected to grow in
importance. The heads of trust fund and co-financing departments
now meet regularly, twice in the last year, most recently in Tunis,
to discuss alignment of polices and mobilization efforts. The next
meeting in late April, will, among other issues, discuss harmonized
mobilization for joint MDB efforts that produce global or regional
public goods. 22. Other Themes. Several senior MDB managers
maintain a regular form of consultation and information sharing,
including regular meetings such as the Controllers Forum and the
Chief Financial Officers Forum. Members of the revived
Infrastructure Group have had consultations and exchanged views,
with a meeting scheduled for spring 2005. The Banks are currently
engaged in collaboration, including participating in joint
workshops with bilateral agencies, in engagement and modalities for
cooperation with middle-income countries. Finally, it has been
agreed that cooperation on business environment and enterprise
performance studies (BEEPS program) piloted by EBRD and WB, and
similar investment climate studies in other regions, will now
become a global MDB activity and an MDB working group has been
formed around this issue. Stronger Cooperation at the Country and
Regional Level 23. Cooperation among MDBs in country and regional
operations, joint analytical work and various activities to support
harmonized and aligned approaches, has deepened considerably in the
last few years. Typically, two MDBs (occasionally three) are
engaged in each of these activities, but increasingly pulling in
other MFIs, sub-regional and bilateral institutions. 24. Memoranda
of Understanding underpin much of this cooperation. All RDBs have
such agreements with the World Bank. AsDB also has agreements with
EBRD and with IDB. While the MoUs themselves are general, they are
normally accompanied by action oriented annexes that spell out a
joint work program for the MDBs involved.
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25. These MoUs are updated periodically. For example, the
AfDB-WB MoU was reviewed in 2002-2003. The review resulted in a
considerable sharpening of the focus of collaboration and a
decision to consolidate the cooperation. After the consolidation
the MoU focuses on cooperation in 10 priority countries and the
following thematic areas: capacity building, governance,
harmonization, HIV/Aids, infrastructure, NEPAD, regional
integration, water and staff development. Similarly, the IDB-WB MoU
was updated in 2003- 2004 and, similarly, the outcome was an
emphasis on focus and consolidation of joint activities, with a
particular focus on procurement and financial management. The
AsDB-WB memorandum, which focuses on country specific cooperation,
institutional strengthening and capacity building, is under review.
The AsDB-IDB Partnership Agreement is being renewed through 2009,
focusing on knowledge exchanges between the two regions, funded by
the Japan Program, administered by IDB. EBRD and WB are, together
with EC and other European MFIs, signatories of two MoUs. The
first, on cooperation in the EU candidate countries, will be
expanded this summer to also include cooperation in the Western
Balkans. The second is on cooperation in the CIS countries. 26.
High-level consultations, involving senior operational management
teams from the World Bank and each RDB, respectively, play an
important role in bringing the intentions of the MoUs to action at
the regional and country level. Consultations at the level of VP
normally take place once a year, with more frequent consultations
at Director level. For example, the next AfDB –WB and AsDB-WB high
level consultations are planned for the spring of 2005. 27.
Coordinated country strategies have been on the cooperation agenda
for several years. Progress has been slow but is picking up. Recent
examples include Honduras, Ecuador, Cambodia, Timor-Leste, Uganda.
28. Co-financing is an important part of MDB cooperation, with
benefits including lower transaction costs and opportunities for
coordination, and inter-MDB co-financing makes up the majority of
development co-financing. While, in recent years, co-financing has
become better coordinated and strategic, it is probably still an
under managed part of MDB cooperation. Among examples of MDB
co-financing: • In Algeria, AfDB followed a WB technical assistance
project on telecom and
postal reforms with a loan to strengthen as part of the project.
In Morocco all adjustment programs have been co-financed since
1998, and were prepared, appraised and supervised jointly. In
Ethiopia they work together in a multi-donor effort to coordinate
budget support to the government.
• In Bangladesh, AsDB and WB work together –and with others -in
the primary education development program (AsDB in the lead), in a
new and innovative effort to align all partners behind a single
government program.
• In Peru and Ecuador, IDB and WB co-financed four projects, as
part of a regional co-financing volume of a dozen projects to an
amount of close to $ 7 billion. In Honduras and Nicaragua they are
working together in SWAPs, for example in education in
Honduras.
29. Alignment and harmonization, has moved from technical
working groups (originally MDB groups) to supporting implementation
at the country level. MDBs have played an important role in efforts
this far:
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• In Vietnam, AsDB and WB are supporting the government’s
harmonization action plan, with a focus on operational processes in
fiduciary work, project preparation, environmental safeguards and
portfolio management. In Bangladesh they work with others in a SWAP
with harmonized implementation and procurement rules.
• AfDB and WB are working together in the NEPAD and SPA to
support harmonization pilots in several African countries,
including Ethiopia and Tanzania. In Tunisia, education teams work
closely to harmonize their operations with the government’s overall
reform program.
• IDB and WB are cooperating on harmonization of procurement and
financial management in several Latin American countries, selected
as part of the Rome Forum process (Bolivia, Jamaica, Nicaragua and
Honduras). Furthermore, World Bank/IDB joint CPARs were prepared in
Honduras, El Salvador and the Dominican Republic. Additionally,
CPARs are under joint preparation in Guatemala, Costa Rica, Peru,
Jamaica, Ecuador, Colombia and Uruguay. Joint analytical work is
also being carried out in Mexico. Audit requirements, policies for
loan disbursements and legal documents are being harmonized and
simplified. Cooperation on Reports on Standards and Codes and on
International Accounting Standards continues in several countries,
including Chile, Uruguay, Jamaica, Mexico, Dominican Republic and
Peru. Similarly information sharing has been put in place for IDBs
quality control review on independent auditors. In financial
management, joint work includes country financial accountability
assessments in Bolivia, Peru, El Salvador, Guatemala and Costa
Rica. Audit requirements, policies for loan disbursements and legal
documents are being harmonized and simplified.
• The RDBs hosted regional workshops, and the World Bank
participated, to prepare for the Paris High Level Forum on
Harmonization – in Tanzania, Thailand, Kyrgyz Republic and
Nicaragua.
30. Regional and global issues are increasingly part of MDB
cooperation, where the RDB typically has a leading role in
providing a regional perspective, and the World Bank complements
that with a cross-regional one: • AsDB, JBIC and WB are conducting
a regional infrastructure study that will
underpin future operations of all institutions involved. Both
are partners in the regional Mekong river partnership.
• IDB and WB are consolidating country-specific analytical work
into a jointly financed and conducted regional diagnosis for the
infrastructure sectors in Latin America and the Caribbean.
• IDB, AsDB and JBIC hosted a Forum (also attended by WB) on
regional public goods.
• AfDB and WB are working on a joint regional water sector
study, and also cooperating in the Nile River Basin management
efforts.
• EBRD and WB are jointly conducting business environment and
enterprise performance studies in their common countries – an
effort that is now being suggested for a broader MDB
cooperation.
• AsDB and WB have, similarly, conducted investment climate
studies in Philippines, Indonesia and Sri Lanka, with one under way
in Lao PDR.
31. Special challenges typically call for close cooperation
between MDBs. The LICUS / difficult partnership countries have
become more prominent on the MDB
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agenda. Responding to regional economic crisis tends to bring
MDBs closely together in cooperation, be it in Argentina, Haiti,
Russia, East Asia or Cote d’Ivoire. Humanitarian disasters and
conflicts also call for well aligned MDB responses, particularly in
helping to arrange the transition from immediate response to a
longer term reconstruction. Two current examples: • In responding
to the recent Tsunami disaster, UN, AsDB and WB have worked
closely with governments of affected countries and with other
partners (including EIB and IsDB) since the first days after the
disaster. Needs assessments have been done jointly and have also
included representatives of bilateral donors.
• In Sudan, AfDB and WB are cooperating in helping to create
conditions for reconstruction following the peace agreement between
the government and the southern rebels, while also supporting
efforts to end the tragedy of Darfur.
Going Forward 32 MDBs, individually and as a multilateral
system, are the central pillars of global development and
transition architecture. Importantly, therefore, the current status
of MDB cooperation indicates that the MDB system is at the
forefront of coherence and partnership building in development and
transition cooperation. But, while much of the structure is now in
place and serves our clients well, more needs to be done to broaden
coordination with other important players and turn agreements into
practice. In particular, we need to engage with MDB shareholders to
maintain support for a multilateral approach to development
cooperation, making the case that the MDBs are among the best
vehicles available for operations and analysis. Going forward we
will particularly strengthen MDB cooperation in the following
areas: • Building on the MDB coordination at the strategic level,
and the increasingly
strong partnership with OECD-DAC, MDBs will make further efforts
to include the broader multilateral community in such core tasks as
alignment behind country owned strategies (PRS, etc.),
harmonization and simplification of policies and procedures, the
use of country systems whenever reasonably possible, focusing on
development results and other implementation issues emanating from
the Paris declaration.
• In low-income countries, the cooperation that has started
around the policy frameworks for IDA, IDB’ FSO, AsDF and AfDF will
be further built on in terms of issues and partners, including
performance based allocations and country performance assessments.
In middle-income countries the recently started consultations on
approaches and frameworks for engagement will be deepened and new
areas for cooperation explored.
• We are doing a better job of aligning and coordinating our
strategies and operational work. We have promising examples and we
will move ahead with a more consistent implementation of the
commitment to coordinate these strategies. Similarly, there are
many excellent examples of joint analytical work, and we will
further increase consistency in applying the principle of joint
work. Obviously, more needs to be done to consistently implement
our commitments. Doing that will be prominent on our agenda as we
go forward, including through the implementation of the specific
MoUs, all of which include the above issues.
• We have different shareholders and they assign different
mandates to each MDB. These different institutional mandates and
shareholder preferences are
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increasingly setting the boundaries for further institutional
harmonization. While we acknowledge these differences, we are
committed to aligning MDB policies and processes as much as
possible and may ask our shareholders for increased flexibility to
take that agenda forward. In that spirit, all MDB working groups
are encouraged to make as much progress as possible on
institutional issues and to take the country implementation agenda
forward at all possible speed. Work on aligned approaches to
capacity building and governance, while admittedly very
challenging, is particularly encouraged. We look forward to seeing
progress with new initiatives, such as turning the Business
Environment and Enterprise Performance Surveys into a global MDB
activity.
• Global initiatives and global programs are an increasing
feature in development and transition cooperation. With the global
and regional mandates of the MDB system, we are frequently being
called on to help implement global initiatives. We will strengthen
our interaction with shareholders to bring coherence to the
establishment and operations of global initiatives and funds, to
achieve potential complementarities between global and country
focused approaches. We will, particularly, advocate maximizing the
use of existing delivery channels, such as MDB concessional
windows, and that global initiatives which deliver goods at the
country level be fully integrated into country based planning
processes, such as PRSs. Building on the initial work of
formulating joint MDB posture on global public goods two years ago,
MDBs will now give greater priority to developing coherent common
positions on interaction with global initiatives.
I. IntroductionII. Strategic CoherenceIII. Thematic Cooperation
– Working GroupIV. Country and Regional Cooperation