The 2009 Development Policy Lending Retrospective reviews the main features of development policy operations (DPOs) approved by the Board between FY06 and FY09. Consultations in seven countries with a history of engagement with the Bank through DPOs (Armenia, Benin, Burkina Faso, Colombia, Senegal, Tanzania, and Vietnam), as well as with development partners and international civil society organizations (CSOs) in Europe, informed the retrospective. The report confirms the overall robustness of development policy lending as a flexible and effective instrument to provide financing and policy advice that support a country’s medium-term development goals. It also finds that DPOs generally continue to be prepared according to Bank operational policy requirements and in line with the good practice principles on conditionality. It has three main messages.
Flexibility. The flexibility embedded in DPOs has proved to be a valuable feature, including in times of crisis. DPOs have supported country-owned reforms aimed at achieving specific development results in a broad range of countries with different needs—from middle-income countries to fragile states emerging from conflict. DPOs have been provided in the form of grants, credits, or loans, and have supported borrowers in designing and implementing their medium-term development programs or have provided emergency financing to meet crises or exogenous shocks. Their increasingly programmatic nature has enabled the Bank to respond more flexibly to changing country circumstances and government priorities and stay aligned with country processes, , thereby strengthening country ownership of reforms supported by the Bank.
Customization. DPOs have supported borrowing countries with both the “what” and the “how” of development. They have provided financing and policy advice in areas where country authorities required expertise and technical knowledge. IBRD countries, for example, have demanded DPOs that focus on single sectors or themes requiring specialized Bank knowledge—such as housing, energy, and climate change. In IDA countries, DPOs have served as a useful platform for dialogue, harmonization, and alignment around the key policy and institutional reforms to achieve country goals. In both IBRD and IDA countries, the majority of the operations have supported public sector governance reforms. To help governments respond to crises and external shocks, DPOs offer a range of financing options tailored to client needs: the catastrophe DPL with a deferred drawdown option (CAT DDO), improved features for the DPL with a deferred drawdown option (DPL DDO), streamlined processing in a crisis situation, and supplemental financing to support programs affected by unanticipated shocks.
Results. DPOs remain focused on results. All Bank DPOs include a results framework that lays out the country goals, the objectives of the operation, and the expected results of the program supported by the Bank. The DPL Retrospective found that support through DPOs has led to positive results and outcomes in the delivery of social services in health and education, for example, and in public financial management (PFM). Results frameworks have facilitated the evaluation of DPOs, but their quality has varied. The Bank will be looking at better ways to define the appropriate causality between the actions supported by the operation and their expected results, and selecting appropriate, measurable indicators.