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World Bank Budget Support to IDA Countries Anjali Kumar Independent Evaluation Group, World Bank Presentation to the Overseas Development Institute London, 24 September 2010 . PRSCs were introduced in2001, to improve aid effectiveness, and….

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Presentation Transcript
slide1

World Bank

Budget Support to

IDA Countries

Anjali Kumar

Independent Evaluation Group, World Bank

Presentation to the Overseas Development Institute

London, 24 September 2010

slide2

PRSCs were introduced in2001, to improve aid effectiveness, and…

  • Promote country ownership (Killick 1996, Collier et al. 1997, Killick et al. 1998, Dollar and Pritchard 1998, Dollar and Svensson 2000)
  • Ease conditionality (Gilbert, Powell, Vines 1999)
  • Increase predictability to permit incorporation in domestic budgets (Koeberle 2003)
  • Support domestic governance/institutions (Barro and Sala-i-Martin 1997; Barro 1998; Mauro 1995)
  • Increase efficiency through the fungibility of budget support aid (Devarajan, Swaroop, and Zou 1999)
  • But concerns remain – Crowding out local initiative (Moyo 2009); potential for leakage (Collier 2007, 2009); or waste (Calderisi 2006)

2

from 2001 09 99 prsc operations were approved

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

3

slide4

Objectives of Budget Support

through the PRSC:

  • Help strong performing IDA countries with responsible fiduciary environments to implement domestically owned Poverty Reduction Strategies
  • Support poverty-oriented growth and emphasize pro-poor service delivery
  • Strengthen domestic planning and budgeting with predictable medium-term aid commitments
  • Provide a framework for aid harmonization
  • Strengthen the institutional framework for budget and public financial management
  • Focus on the achievement of results, in a clearly articulated Results framework

4

slide5

Evaluation Objective and Scope

  • Assess the extent to which PRSCs were able to meet their core objectives
  • Examine their relevance and effectiveness as a vehicle to support growth, improve social conditions, and help alleviate poverty
  • Scope: All PRSC operations from their introduction in 2001 until end June 2008

5

slide6

Building Blocks: Data Sources

  • Sources of information:
      • Desk review: objectives, design, effectiveness, results framework of 88 PRSC projects
      • Field evaluations: 7 country case studies covering 31 PRSC operations, 8 completed PRSC series, 4 four ongoing series, and 33 percent of PRSC disbursements over FY01-FY08. Available at the IEG website.
      • Surveys: Task team leaders, Sector specialists, Government stakeholders
      • Relevant databases, including:
      • WB evaluative data, ALCID, POVCAL, CPIA, ROSCs,
      • OECD Aid Aggregates, Monitoring of Paris Declaration, IMF IFS
  • Extensive literature including other case studies
  • Quality control: 3 internal peer reviewers; three external experts

6

slide7

Evaluation Methods

  • Triangulate data to establish plausible causality
      • Establish a Results chain
      • Account for other determinants
  • Compare ‘before and after’ changes in performance of PRSC beneficiaries
      • But: ‘before’ and ‘after’ comparisons of outcomes are limited by problems of identification due to the endogeneity of policy responses within each country
  • Therefore, also compare changes in PRSC countries to changes experienced by IDA countries that have not benefited from PRSCs
      • “Difference in difference” approach
      • Add controls for ‘better performing’ IDA countries

7

slide8

Evaluation Questions and Results Chain

  • Appropriate program design and analytical underpinning
  • Aligning resource flow with domestic processes and timetable
  • Enhancing donor collaboration
  • Inputs
  • Implementation of a strategic subset of the PRSP
  • More predictable resource flows and resource use aligned with PRS
  • Harmonization of donor programs
  • Improved domestic accountability
  • Outputs
  • Outcomes
  • Improved climate for growth and improved pro-poor service delivery
  • More effective public administration
  • Sustained growth
  • Reduction of income and non-income poverty
  • Impact

8

slide9

Challenges and Caveats

  • Parallel changes affecting all World Bank Development Policy Lending occurred over the period of analysis
      • New Bank guidelines in August 2004 for all DPLs;
      • PRSC Interim Guidelines were not formalized though PRSC operations continued
      • Analysis adds a filter for two sub-periods, 2001 to 2004 and 2005 to 2008
  • PRSC is usually one part of a larger basket of donor funded general budget support
  • Both the Bank and other donor partners use a range of instruments to support country development programs.
      • Account for role of other donors and other instruments

9

slide11

Evaluating Conditionality

  • Did conditionality ease with PRSCs? Was conditionality more flexibly applied?
      • Compare numbers of prior actions (legally binding) and program benchmarks (not legally binding) in PRSCs compared to non-PRSC policy based loans
      • during FY80-00 period – prior adjustment lending
      • during the PRSC period FY01-08
      • during PRSC subperiods FY01-04 and FY05-08
  • Triangulate with Client Perceptions of Conditionality
      • Nature and numbers of Conditions
      • Program Implementation and Political Change
      • Recognition of Implementation Constraints

11

slide12

Eased conditionality -

…conditionality declined in all policy lending

Non-PRSC legal conditions

PRSC legal conditions

slide13

Non-PRSC program benchmarks

Eased conditionality -

PRSC program benchmarks

…conditionality declined in all policy lending

slide14

Evaluating Flexibility– Modification of Conditions

  • Numbers of adjustments made to proposed future prior actions (triggers):
        • Modifying content
        • Modifying timing or
        • Dropping conditions if they proved unrealistic.
  • Comparisons with numbers of waivers of tranche release conditionalities across pre-PRSC adjustment operations
  • Triangulation: survey of task team leaders; government stakeholders

14

slide15

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

15

slide16

Evaluating the Predictability of PRSCs

  • Predictability measured by:
        • Likelihood, based on past frequencies, of a PRSC recipient country receiving a PRSC in a given year, compared to previous adjustment loans.
        • Likelihood, based on observed past frequencies, of a PRSC country receiving any policy-based budget support, compared to previous adjustment lending.
        • Stability of volumes of budget support received via PRSCs compared to previous adjustment lending, in absolute terms and as a proportion of total IDA/IBRD flows received
    • Comparison of PRSC lending projections envisaged in country strategy documents vs. actual disbursements
  • Other studies measured predictability by comparing:
        • Actual budget vs. predicted budget support disbursements
        • Commitments vs. disbursements

16

slide17

Evaluating the regularity and timing of PRSC disbursements

  • Alignment of budget support relative to the budget needs:
        • Timing of disbursements relative to country budget year:
        • Percentage of operations that disbursed in last quarter of the preceding fiscal year
        • Or in the first quarter of the current fiscal year
  • Regularity of disbursements measured by:
        • Percentage of operations in a series that disbursed in the same quarter, in each successive year

17

slide18

More predictable resources …

A steady volume of disbursements, in the same quarter per series…

Burkina Faso is a good example…

slide19

Evaluating Alignment, Ownership and Operationalization of National Plans

  • Country Case Studies and Client and Team leader interviews were the main instruments. They suggest that:
        • PRSCs are well aligned with national development strategies and enjoy greater ownership than preceding adjustment lending, at least in core ministries
        • PRSC countries improved their operationalization of national development strategies better than other IDA-eligible countries
        • PRSC countries have been more successful at operationalizing national development strategies, but gap is closing
        • PRSCs are effective in raising the importance of the budget as a tool for policy formulation
        • Inter-ministerial dialogue improved, but the quality of sector dialogue may have lost some depth

19

slide20

Evaluating sector support through PRSCs: Increased spending on education, health, PFM

as in other DPLs

20

slide21

Evaluating Budget support through PRSCs compared to sector lending…

  • PRSCs were initially perceived a potential vehicle for all lending, including sector lending
  • But ultimately, PRSC support complemented sector lending; replacement was rare
  • IEG’s comparison of PRSC operations with the Country Assistance Strategies for PRSC countries shows that:
        • Many countries tried to channel sector lending through the PRSC:
      • Of 15 CASs in health & education, only 2 achieved sustained results
      • Of 6 CASs in nutrition, water supply, agriculture or environmental management, 1 on a sustained basis
slide22

Evaluating PRSC Results Frameworks: Evaluative questions - examples

  • How well defined were PRSC results frameworks, in particular regarding the definition of measurable end-of-series, intermediate, and baseline targets and indicators?
  • Was the PRSC results framework well adapted to the implementation of the PRSC?
  • How consistent was the reporting of results?
  • To what extent did the PRSC draw on national M&E systems used for domestic accountability outside the framework of aid flows?
  • Was capacity building for developing national M&E addressed?
slide23

On average PRSC countries score better than others on results frameworks, but this is not obviously linked to the PRSC

Need for:

More clearly defined indicators

Better baseline data, intermediate and end-of-series indicators, milestones

Consistency over time

Shortcomings due to:

Weak upstream PRSPs/ CASs

Multi-donor process differences

Modest M&E frameworks, often reflecting weak country statistical capacity

Results Frameworks – Findings: Weak but improving

evaluating prsc s role in improving donor harmonization
Evaluating PRSC’s role in improving donor harmonization
  • Did PRSCs serve as a focal point? Sometimes
  • e.g., Vietnam, where the Bank-led PRSC matrix was adopted by the government
  • Often as member of a multi-donor group
  • e.g., in many countries in Africa, notably Mozambique and Ghana, via a joint ‘PAF’
slide25

Donor harmonization through PRSCs had notable achievements…

Achievements

  • Did the PRSC process help to harmonize donor matrices and align them with the national plans? Yes, PRSCs played a supporting role
  • Were transaction costs for recipients reduced? Yes, to some extent
  • Did other donors benefit? Yes, Bank expertise was made available to recipients and other donors
  • Based on OECD data, the Bank harmonized more missions than other donors - in PRSC as well as non-PRSC countries, especially in weaker IDA countries

25

slide26

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

26

slide28

Diagnostics

    • Were diagnostics comprehensive?
      • Extend of coverage
      • Treatment of fiduciary risk
    • Were weaknesses addressed by PRSC program?
    • Was PRSC reform program consistent with action plans from diagnostics?

Methodology of PFMP Evaluation of PRSCs

  • Design & Implementation
    • How well designed was results framework for PFMP?
    • Integrated action plan supported by key donors?
    • Significant delays in reforms?
    • Extent and quality of capacity building
  • Results
    • Before/After reform improvement in PFMP performance where PRSC reforms focused
    • Achievement of PFMP objectives in PRSCs
    • General improvement in PFMP systems (CPIA etc.)
slide29

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)

Most PRSCs achieved their PFMP reform objectives, with minor shortcomings

slide31

PRSC countries grew faster in the

PRSC period…

but so did other countries

Attribution to the PRSC is difficult

31

slide32

PRSC countries had more income

poverty reduction…

but the decline began before the PRSC was introduced

33

slide33

PRSC Countries had greater progress with Millennium Development Goals…

…and progress was faster than before the PRSC period

…and faster than all other IDA countries in the PRSC period

34

slide34

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

Most PRSC programs do not trace links between actions and poverty outcomes

Parallel sector projects increase the difficulty of attribution

Attribution of declining poverty rates to the PRSC remains difficult

32

slide35

1. PRSCs improved aid processes

Enhanced country ownership

Eased, flexible, conditionality

Better predictability - volume, frequency and budget alignment

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

Evaluation Findings - Three Key Messages

slide36

Evaluation Recommendations

  • 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
  • Underpin PRSCs/DPLs with comprehensive pro-poor growth diagnostics
  • Phase out PRSC “brand name” or clarify when it is to be used
  • a

36

ieg independent evaluation group
IEGINDEPENDENT EVALUATION GROUP

Thank you

www.worldbank.org/ieg/prsc