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Adaptable Tools: Investment & Development Policy Lending

Adaptable Tools: Investment & Development Policy Lending. Modernization of Investment Lending. IL Simplification—Why?. Respond to Borrowers’ demands for simpler, faster, more responsive IL Make life easier for Borrower & Bank staff Cut costs and time Restore IL as an important product line.

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Adaptable Tools: Investment & Development Policy Lending

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  1. Adaptable Tools: Investment & Development Policy Lending

  2. Modernization of Investment Lending

  3. IL Simplification—Why? • Respond to Borrowers’ demands for simpler, faster, more responsive IL • Make life easier for Borrower & Bank staff • Cut costs and time • Restore IL as an important product line

  4. Faster project processing and better documentation Issue: IL processing too slow; reviews and documents not strategic Actions: • February 2003: Faster processes for simple and repeater projects • July 2003: New Project Concept Note, streamlined Project Appraisal Document, and associated new procedures (QER) • October 2003: Guidance on streamlined procedures for fiduciary and safeguard reviews and clearances • December 2004: PCN/PAD Review to assess how it works

  5. More effective, adaptable, and results-oriented project supervision Issue: Lack of agility to adapt to changed circumstances; insufficient focus on outcomes in implementation Actions: • FY04/05: Reform of project supervision report (ISR) • FY05: Package of initiatives for easier project restructuring and rework • FY05: New policy on additional financing to allow for faster scaling up • FY05: OED Harmonization ISR-ICR-OED exit

  6. Ability to finance wider range of expenditures Issue: Disconnect between expenditures that borrowers need to incur and those eligible for Bank financing Action: FY04: New policies and procedures approved for expanded eligibility of expenditures and country/sector treatment of cost sharing Fiduciary and Safeguard policies applied with capacity-building focus Issue: Application of Bank’s fiduciary and safeguard policies doesn’t build sufficient Borrower capacity Action: FY05/07: Pilot operations to use and strengthen borrowers’ fiduciary and safeguard systems

  7. Efficient, user-friendly policy framework for IL Issue: Policy framework for IL is outdated, overly complex,fragmented, and too rigid Actions: • FY05: Revise policy on emergency lending to better align with borrowers’ emergency needs and facilitate more efficient implementation • FY05/07: Create a consolidated IL policy framework and procedures for IL that would be: • limited to core policy principles and requirements for project appraisal and supervision • eliminate redundant and outdated requirements and prescriptive details

  8. Modernized investment lending instrument Issue: Current array of IL instruments is confusing, rigid, and not well adapted to today’s needs Actions: • Nov. 2002: Fiduciary guidelines for pooled funding • FY05: Proposal for consolidated IL instrument 

  9. Closing Remarks: To help investment lending further, three parallel tracks of reform need to be followed during the FY05-FY07 period: • Completion of IL Simplification Agenda • Serious reduction in Bank-internal “churning” during preparation and supervision of IL operations • Overcoming lack of investment lending incentives and slots in country/regions’ programs

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