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Investment, Development Policy and Program-for-Results Operations

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The World Bank funds three basic types of operations: investment operations, development policy operations, and Program-for-Results operations. Investment operations provide funding (in the form of IBRD loans or IDA credits and grants) to governments to cover specific expenditures related to economic and social development projects in a broad range of sectors. Development Policy operations provide untied, direct budget support to governments for policy and institutional reforms aimed at achieving a set of specific development results. Program-for-Results operations support the performance of government programs by strengthening institutions and building capacity. The instrument links the disbursement of funds directly to the delivery of defined results.

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Investment Operations | Development Policy Operations
Program-for-Results Operations

Investment loans, credits and grants provide financing for a wide range of activities aimed at creating the physical and social infrastructure necessary to reduce poverty and create sustainable development. Over the past two decades, investment operations have, on average, accounted for 75 to 80 percent of the Bank's portfolio.

The nature of investment operations has changed over time. Originally focused on hardware, engineering services, and bricks and mortar, investment lending and grants have come to focus more on institution building, social development, and improving the public policy infrastructure needed to strengthen private sector activity.

A major effort is currently underway to reform the Bank’s investment lending model - the Investment Lending Reform Concept Note was discussed at the Bank's Board in February 2009 - so that it responds better to borrowers’ needs and the changing global environment. Investment Lending reform will provide clients more flexible instruments, a faster response time and better development outcomes.

Eligibility. Investment operations are available to International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) borrowers who are not in arrears with the Bank Group.

Disbursement. Funds are disbursed against specific foreign or local expenditures related to the investment project, including pre-identified equipment, materials, civil works, technical and consulting services, studies, and incremental recurrent costs. Procurement of these goods, works, and services is an important aspect of project implementation. To ensure satisfactory performance, the loan or credit agreement may include conditions of disbursement for specific project components.

Policy. Investment lending operations are governed by more than 30 operational policies covering various aspects of the instrument. In response to the recommendations of IDA controls and an IEG evaluation, an effort is underway, as part of Investment Lending Reform, to consolidate some of these policies.


Development Policy operations provide rapid financial assistance to allow countries to deal with actual or anticipated development financing requirements of domestic or external origins. They typically support the achievement of a set of development results through a medium-term program of policy and institutional actions consistent with a country's economic and sectoral policies.

In Fiscal Year 2008, IDA and IBRD development policy operations accounted for 27 percent of total Bank commitments; in Fiscal Year 2009 they were at 40 percent as the Bank supported countries in their response to the financial crisis.

Development Policy operations can be stand-alone operations or more frequently be part of a programmatic series of operations. In programmatic operations, the Bank supports the implementation of a medium-term program of policy reforms through a series of annual operations, each of which is disbursed against a mutually agreed set of policy and institutional actions. In low-income countries where a national poverty reduction strategy (PRS) has been officially adopted by the government and where a Development Policy series supports PRS implementation, Development Policy operations may also be called Poverty Reduction Support Credits (PRSCs). They typically consist of a programmatic series of three annual operations.

Eligibility. Eligibility for a development policy operation requires agreement on monitorable policy and institutional reform actions, and maintenance of a sound macroeconomic policy framework. Low-income IDA-only countries with heightened risks of debt distress are eligible for development policy operations in the form of grants See Debt Sustainability and Grants.

Terms: Development policy operations are available to IBRD and IDA borrowers not in arrears to the Bank Group. They can also be extended from other sources of funding, such as trust-funds.

Disbursement. Funds are disbursed in one or more stages (tranches). Tranches are released upon a satisfactory assessment of performance against a set of indicators in the form of institutional or policy reform measures that reflect progress in implementing a country-owned reform program.

Instruments. The Bank's policy for Development Policy Lending, OP / BP 8.60, updated in February 2012. The update summarizes the relevant provisions from: Proposal to Enhance the IBRD Deferred Drawdown Option (DDO) and to Introduce a DDO Option for Catastrophic Risk, January 29, 2008; World Bank Response to Financial Crisis: The Special Development Policy Lending Option, July 29, 2009, Development Policy Lending to Political Subdivisions, March 11, 2011; and The World Bank Policy on Access to Information (2010), which replaced the The World Bank Policy on Disclosure of Information (2002).


By directly supporting government programs, Program-for-Results (PforR) operations help countries strengthen institutions, build capacity, and enhance partnerships with stakeholders to achieve lasting impact. The instrument links disbursements to the achievement of results that are tangible, transparent, and verifiable. PforR also provides an opportunity to improve coordination among development partners in governmentprograms and pool Bank resources with governments and other development partners.

PforR can support government programs in a diverse range of countries and sectors. In some countries, PforR could help deliver and improve the coverage of antenatal care for mothers and newborns or increase immunization coverage for children. In others, PforR could help provide sustainable water supply and sanitation services; strengthen the coverage and quality of early childhood and primary education; or contribute to a government program to reduce the number of rural households living below the poverty line.

Eligibility. Program-for-Results operations are available to International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) borrowers who are not in arrears with the Bank Group. It can be used by a broad range of countries, sectors, and programs. Category A activities – defined in Investment Lending as having potentially significant, irreversible adverse impacts on the environment and affected people – are excluded from Program-for-Results financing. In addition, all high-value contracts (above OPRC thresholds) are excluded.

Disbursement. Disbursements are determined by the achievement of verified results. Results indicators are defined together with the borrower for every operation and each one is required to have a credible verification protocol. Together with funds from other sources, Bank disbursements finance the borrower’s expenditure program rather than being linked to individual transactions.

Policy. The Bank’s policy for Program-for-Results, OP / BP 9.00, was approved on January 24, 2012.

Last updated: 2012-04-18

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