• Policy-based lending: Provision of untied donor resources directly through the government’s budget, using the government’s own financial management, procurement, auditing, and implementation processes and systems. This lending is based on a set of policy or institutional reforms (termed conditionality when set out ex-ante in a multi-tranche operation, or prior actions when identified ex post in a single tranche operation). The Bank’s term for policy-based lending is Development Policy Lending (DPL).
• Budget support: A programmatic form of policy-based lending—that is, predictable, annual, medium-term disbursement of untied resources to the budget. Budget support is typically based on an agreed set of performance indicators in the form of institutional or policy reform measures, or output or outcome indicators. It is increasingly aligned with national strategies, such as the PRSP and its annual cycle of performance review, and with domestic planning and budgeting processes.
• Poverty Reduction Support Credit (PRSC): A form of budget support used by the World Bank in low income countries that is closely tied to the PRSP and typically consists of a series of three or four single tranche operations.
• Program-based approach (PBA): A general term that refers to coordinated donor support to implement a comprehensive program (e.g., PRSP) or a specific sector/thematic strategy (e.g., in education, environment) that is country-led and relies on a single budget framework and domestic processes. PBAs include budget support and SWAps.
• Sector-wide approach (SWAp): An approach that involves financing of a specific sector through various financing modalities, including budget support and investment financing.