1st march – beginning of electronic consulations, and country consultations continuing into May.

Alan Gelb, Center for Global Development

• First change in suite of bank instruments since 1980
• Unlike project finance or policy-focussed lending, this is results focussed
• Three key trends: (1) Increasing stress on linkages between development financing and results; (2) tangible development improvements on the ground have been other efforts; (3) results-based tranches in EC budget support
• Bank has some experience of results based lending – India roads for example highlighted in concept note
• Bank’s work has a long way to go both in terms of results-based approaches and monitoring and evaluation – IEG review of monitoring highlighted this problem and also pointed to the fact that improved monitoring also meant improved projects
• Incentives in bank need to be rebalanced away from Bank procedures
• Development financing is not so much adjustment policy operations – increasingly shifting to longer term programmes focussed on delivery of services.
• Also programme lending trying to shift to these kind of systems, but hard to have a sector dialogue within a macro instrument
• Aid flows and Bank flows are only a part of a wider array of development financing. Bank financing often a small amount, but it still plays a major role in sector dialogue
• Harmonisation and coordination problems quite serious – Paris review showed this.
• This instrument is very long overdue – principle is supported strongly by CGD
• 3 sets of questions: (1) Actual focus on results – what kind of results? How to track and report? how far down the output chain? Independent Verification?; (2) Implication of shift from Bank processes to country systems and processes. relationship with Bank standards?; (3)Balance between these two sides – results/ outcomes and strengthening systems. Will countries still have room for experimentation?
• Problem with monitoring and evaluation is incentives not capacity – has no impact at all on the flow of money to a country.

Paul Birmingham, Director of OPCS, World Bank

• Instrument is getting intense scrutiny in all kinds of countries and from all kinds of constituencies
• Not doing this to move more money or to move money quickly, it’s about increasing Bank’s footprint through leveraging through programmes not projects
• Will uphold the same standards of investment lending – will just need different procedures.
• Accept that can’t give comfort on this until procedures published – will do this and take comments
• Results are difficult – it will take us time to get it right
• Expect that in the first year the total number of projects won’t be more than 20 – will report publically on this.
• Accept that the detail is not yet out for comment – will be made available

World bank presentation

Why a new instrument?

1. response to client demand – want Bank to help improve their own programmes and get better value for their money
2. Results – stronger link between disbursement and results – fits with increased emphasis on results in bank and development world
3. Institutions – strengthening these will have a longer term impact. Complex issue.
4. partnerships – with clients and other development agencies.

What kinds of results?

• Performance actions to help improve system and programme performance, ideally they would be outcomes and outputs – but can be tricky in some sectors
  Could be intermediate or process indicators needed for reform
• If linked to disbursements, need to be tangible, transparent and subject to verification
• Monitoring and evaluation becomes key – this will force this centre stage

Examples of disbursement linked indicators

• Procurement indicator
• Percentage of women receiving antenatal care
• Time to start a business
• Varied selection – will need to fit with the government disbursement cycle.
• Capacity building through results – working through and improving the internal incentives of the programme
• Other issues important – instrument alone won’t be able to solve every problem.

Key features of P4R

• Flexible definition of programme – single sector, multisectoral, one province or whole country
• Disburses against results and performance
• Helps build institutions

What does it mean for other instruments?

• It’s a choice for governments. Lending is constrained – no extra money
• Project lending (Investment Lending)
• Policy Lending (Development Policy Lending)
• Programme lending (P4R) – somewhere in between the other two

Will be writing a new Operational Policy – including all aspects

• P4R subject to oversight functions like other operations

Use of P4R

• Natural for programmes with small and diverse activities – e.g. social sectors
• Have excluded Category A – where significant irreversible social or environmental impacts, have excluded very large contracts

Appraisal of P4R operations

• Will focus on technical soundness – strategic context, fit with government programme and CAS,is implementation capacity in place?; results framework
• Transparency, accountability, social and environmental aspects
• Risks associated with each – decide what is the acceptable scope of the programme
• Implementation support – includes regular review of progress and results as well as action plans, outcome of audits. Is the system continuing to perform?

Comments and questions

• Need to present P4R in terms of what is being done now and what will change in P4R
• Safeguards need to be thought through before it is introduced – can’t be developed during implementation
• What kind of results? How easy will it be? Risks of doing this in the social sector
• Scope is much broader than we were initially led to believe.
• Country systems has been through a long pilot, being revised now – why can’t it be done under this?

Bank response

• Can do the before and after – to set out the differences between P4R and investment lending
• Safeguards – how can you compare and contrast? It’s not investment lending versus P4R but country systems framework vs P4R. Firmly committed to addressing environmental and social issues.
• Need to pin some things down, but also need an iterative process, with early phase review and discussion with board information made available.
• This is a dynamic process – opportunity to extend the footprint of good practices
• Indicators – won’t be one answer that fits every programme
• Demand comes from reform-minded Ministers
• Fund is likely to be small proportion of overall programme
• Fraud and corruption – have had interesting discussions with INT – see an opportunity to do a bigger and better job in fighting corruption. most of INT’s investigation is into procurement – yet this is not the majority of expenditure: this will widen INT’s perspective. Debarrment list will contune to apply to any part of the programme – increasing the reach.
• Difficult pilot in country systems for procurement – got it wrong. Now pressing the reset button.

Comments and questions

• Who does the project planning? defines the project results? how does it help ownership if decision on type of instrument is made in the Bank? How does it relate to the aid effectiveness agenda?
• Gender impacts – gender policy has been extremely weak – doesn’t have the legs of the safeguard policies. How will P4R do better?
• Monitoring and evaluation – numerous IEG reports have pointed out how weak this is in the Bank. Results can be hugely problematic – potentially new forms of conditionality if trying to drive institutional change + lack of predictability

Bank response

• Most difficult part is results and institution building
• Conditionality and predictability – raised by developing countries. Goes back to incentives – align with incentives already developed by the governments. Root it in the development programmes of the country and their incentives.
• Predictability – frank with governments that they shouldn’t rely on this for core funding. The instrument is for improving the results of a programme that you’re already running.
• Know that the Bank doesn’t do as well in gender and monitoring and evaluation. these need to be improved anyway.Want to make sure it doesn’t exacerbate any existing probelms.
• 5 Inspection agencies will look at this instrument.

Comments and questions

• How to ensure that you get real country ownership – including civil society, not just government ownership
• Don’t understand why there are no pilot projects? Will you take into account levels of corruption?
• Concept note says there would be no restrictions on sectors -worrying.
• Problems of falsification of records in many countries. Reliance on country processes for investigating corruptions is very worrying. Will it block donors from doing their own due diligence? Process is very important – not just results. Is there an exclusion list or exceptions?

Bank response

• Will be putting out a matrix of comments that have been made, showing which have been incorporated, which haven’t and why.
• Countries will have to go through rigorous assessment process to see if suitable for P4R
• Have to make sure Bank is supporting country institutions to fight corruption – doesn’t mean we give up right to investigate.
• Will respond to written comments and publish this.