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Implications of the Performance Base Allocation System for Countries and Projects

This article explores the foundations and objectives of the Performance-Based Allocation System (PBAS) implemented by IFAD. It analyzes the criteria for calculating country allocations and discusses the main implications for countries and projects. The article also highlights the indicators used to monitor project performance and examines the evolution of the PBAS.

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Implications of the Performance Base Allocation System for Countries and Projects

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  1. Implications of the Performance Base Allocation System for Countries and Projects

  2. PBAS: Foundations of the System • Builds on similar systems from other international financial institutions (International Development Association [IDA], African Development Bank [AfDB], Asian Development Bank [AsDB], Islamic Development Bank [IsDB], but taking the specific terms of IFAD’s mandate into account • a system stimulating establishment of the national- and local-level conditions needed for a sustainable reduction in rural poverty • a tool for political dialogue

  3. PBAS: Objectives To increase the effectiveness of IFAD’s development aid by • establishing the distribution of IFAD loans on a coherent and transparent basis • Encouraging the establishment of the national- and local-level conditions needed to reduce poverty • initiating a periodic review of countries’ progress in establishing an institutional and political environment favourable to poverty reduction

  4. PBAS: Criterion for calculating country allocation • the country’s performance: • performance of the project and programme portfolio (35%) • country’s rating in establishing a political and institutional environment favourable to a reduction in rural poverty (45%) • general development framework (20%) • the country’s needs: • population • national per capita income

  5. PBAS - Modalities • the system applies to all borrowing countries • the system is applied in accordance with regional allocations approved by IFAD’s Governing Council • the allocation process is set within a three-year planning cycle (first cycle 2005-2007) • allocations are re-examined each year • the minimum allocation is USD 1 million per year • special treatment for countries in a post-conflict or other crisis situations, in particular in the case of natural disasters

  6. PBAS : Main implications for countries • IFAD allocations are based on performance • resource planning covers three years • special attention is paid to the institutional and political environment with a view to reducing rural poverty • authorities are involved in monitoring and improving the performance of IFAD projects and programmes in the country

  7. PBAS: Main implications for projects The performance of each project has a positive or negative influence on the rating and allocation of each country: • improvement in project implementation and supervision • improvement in monitoring and evaluation in order to take corrective measures more quickly • establishment of the Results and Impact Management System (RIMS) to measure the impact of projects on rural poverty • close monitoring of performance in project management, including that of key staff

  8. Implications for projects: indicators for monitoring project performance • IFAD’s 11 early warning flags • Execution indicators: • compliance with loan covenants • project management performance • compliance with procurement procedures • availability of counterpart funds • quality and timeliness of audits • disbursement rate • performance of M&E system

  9. 11 Early warning flags (continued) • Impact indicators: • beneficiary participation • gender focus in implementation • poverty focus in implementation • responsiveness of service providers • Two general performance indicators: • progress of implementation • achievement of development objectives

  10. PBAS: A System in Evolution The PBAS will be finalized in the light of experience gained during its implementation • weight of the population in the allocation formula • treatment of countries emerging from conflict or affected by crises, natural disasters • level of allocations (floor/ceiling) • management of allocations in a multi-annual context • maintenance of regional

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