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London, September 24th, 2010

IEG INDEPENDENT EVALUATION GROUP. World Bank Budget Support to IDA Countries Anjali Kumar Independent Evaluation Group, World Bank Presentation to the UK Department for International Development. London, September 24th, 2010. IEG INDEPENDENT EVALUATION GROUP. World Bank

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London, September 24th, 2010

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  1. IEGINDEPENDENT EVALUATION GROUP World Bank Budget Support to IDA Countries Anjali Kumar Independent Evaluation Group, World Bank Presentation to the UK Department for International Development London, September 24th, 2010

  2. IEGINDEPENDENT EVALUATION GROUP World Bank Budget Support to IDA Countries Anjali Kumar Independent Evaluation Group, World Bank Presentation to the Swiss Development Corporation Bern, September 27th, 2010

  3. PRSCs reflected the Bank’s response to shift s in the aid paradigm Anchored in country-owned development strategies Implementation through country systems Responsible fiduciary environments Explicit poverty-oriented growth Pro-poor service delivery 3

  4. From 2001 to September 2009, 99 PRSC operations were approved From 2001-09, 99 PRSC operations were approved …worth $8 billion, in 27 countries • 20 more operations ($1.7billion) under preparation (for FY10) • One-fourth of Bank policy lending but 30-40% of disbursements to PRSC countries • But PRSC share of country budgets is declining (7 % in 2001; 1.5% in 2008) Countries with ongoing PRSCs New PRSCs approved

  5. Introduced under Interim Guidelines in 2001 …PRSCs were not a separate instrument after 2004, but the PRSC label retains many distinguishing features: Built around credible poverty reduction strategies Broad-based programmatic support For better-performing IDA countries Oriented toward poverty-reducing growth 5

  6. 1. PRSCs improved aid processes Enhanced country ownership Eased conditionality Better predictability More pro-poor service delivery 2. Growth and poverty outcomes are unclear Weak Results frameworks Partial Support to Sectors 3. Other Policy Based Lending converged to a similar design Three Key Findings

  7. Evaluation Results Chain • Inputs • Predictable medium term resources • Aligned with country needs • Outputs • Implementation of PRSP • Improved accountability • Enhanced donor harmonization • Outcomes • Effective public administration • Improved climate for growth • Better pro-poor service delivery • Impact • Sustained growth • Reduction of poverty 7

  8. PRSCs improved the aid process

  9. PRSCs were expected to ease aid processes • Eased conditionality • Increased flexibility • Greater predictability in volume and frequency • Better alignment with client budget cycles • Improved vehicle for donor harmonization 9

  10. Eased conditionality - …conditionality declined in all policy lending Non-PRSC legal conditions PRSC legal conditions

  11. Eased conditionality - Non-PRSC program benchmarks PRSC program benchmarks …conditionality declined in all policy lending

  12. More flexibility in interpreting conditionality… • PRSCs introduced ‘triggers’ -- indicative prior actions in place of legally binding tranche release conditions • Triggers between FY01 and FY08: • 59% met • 15% downgraded • 9% amended • 8% dropped • 9% replaced/postponed • Sometimes new prior actions were included 12

  13. More lending for social services and public sector management… as did other DPLs 13

  14. More predictable resources … A steady volume of disbursements, in the same quarter per series… Burkina Faso is a good example…

  15. Budget support through PRSCs complemented sector lending… • …Replacement was rare • Many tried to channel sector lending through the PRSC: • Of 15 CASs in health and education, only 2 achieved sustained results • Of 6 CASs in nutrition, water supply, agriculture or environmental management, 1 on a sustained basis

  16. Weak but improving results frameworks Need for: Clearly defined indicators Baseline data Consistent over time Intermediate milestones Shortcomings due to: Weak upstream PRSPs/ CASs Multi-donor process differences Modest M&E frameworks, often reflecting weak country statistical capacity

  17. PRSCs improved donor harmonization • Sometimes as a focal point for donors • Often as member of a multi-donor group • Harmonized common donor matrices and alignment with the national plans • Reduced transaction costs for recipients • Provided Bank expertise to recipients and other donors • Bank harmonized more missions than other donors in PRSC as well as non-PRSC countries, especially weaker IDA countries

  18. Donor harmonization challenges remain Limited integration of PRS reviews with the joint matrix (PAF) Initial perception of increased conditionality Increased transaction costs for Bank (e.g. Mozambique, Ghana) Some loss in Bank relevance alongside undue influence of small donors 18

  19. PRSC Outcomes – Public Financial ManagementEasier objectives accomplished

  20. Most PRSCs achieved their PFMP reform objectives, with minor shortcomings Reforms well grounded in diagnostics led to well sequenced strategy agreed with donors Program achievements were in easier areas (e.g., budget classification reform) More difficult reforms show less success (e.g. bringing extra-budgetary funds and donor funds on budget; timely resource transfer to sector ministries)

  21. PRSC Outcomes in Growth and Poverty Alleviation… are difficult to establish

  22. PRSC countries grew faster in the PRSC period… but so did other countries Attribution to the PRSC is difficult 22

  23. PRSC countries had more income poverty reduction… but the decline began before the PRSC was introduced 23

  24. PRSC Countries had greater progress with Millennium Development Goals… …and progress was faster than before the PRSC period …and faster than all IDA countries in the PRSC period 24

  25. Poverty rates declined in PRSC countries although attribution is difficult Income poverty rates fell faster in PRSC countries, in the PRSC period, but also fell faster prior to the PRSC In non-income measures of poverty PRSC countries did better, and improvement in the PRSC period was faster Yet most PRSC programs do not trace links between actions and poverty outcomes Parallel sector projects increase the difficulty of attribution 25

  26. Evaluation Recommendations • Underpin PRSCs/DPLs with comprehensive pro-poor growth diagnostics • Strengthen results frameworks, link with underlying PRS; increase poverty focus • Focus sector content on high-level or crosscutting issues • Further simplify the language of conditionality and eliminate the term ‘triggers’ • Synchronize Bank’s internal processing with country and donor processes to enable greater ‘voice’ for Bank in multi-donor budget framework • Phase out PRSC “brand name” or clarify when it is to be used 26

  27. IEGINDEPENDENT EVALUATION GROUP Thank You! • www.worldbank.org/ieg/prsc

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