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Investment Operations

The World Bank has a robust financial management (FM) policy framework and risk-based operating model for investment loans outlined in (1) FM Policies and Procedures, as set out in Operational Policies OP 10.02 and Bank Procedures BP 10.02; and (2) FM Practices Manual.

FM in investment operations supports the sector's twin objectives of providing acceptable assurance on the use of Bank lending proceeds and improving client country FM performance. 

OP 10.02 defines FM arrangements as the budgeting, accounting, internal control, funds flow, financial reporting, and auditing arrangements of the entity or entities responsible for implementing Bank-supported activities. Operations supported by World Bank lending are required to maintain FM arrangements acceptable to the World Bank. Where feasible, the Bank expects these FM arrangements to be integral to existing borrower institutions and to enhance institutional sustainability. Therefore, the use of country FM systems (PDF, 3.5 Mb) is actively encouraged, where the World Bank has assessed these systems to be adequate.

World Bank Project CycleFM support is provided throughout the World Bank's project cycle.

  • During project preparation, FM staff review and advise on the proposed FM arrangements of the implementing entity or entities to which World Bank resources will be transferred. The scope of the review is adapted to the nature of each operation, and may therefore focus on national, subnational, sector, or individual entities. The review informs judgments on the risks to the use of loan proceeds, and the design of measures to mitigate these risks.

    FM staff also agree with the borrower on the financial reporting and auditing arrangements. The World Bank requires borrowers to provide periodic interim and annual financial reports that facilitate comparison of financial and physical progress in implementing individual lending operations, with format, content, periodicity, and due date acceptable to the World Bank. It also requires borrowers to provide audited financial statements, normally annually, that reflect the activities of the operation supported by the loan.
  • During project implementation, FM staff monitor the continuing adequacy of the FM arrangements, review interim and annual audited financial reports and follow up on the findings of the external auditors, making recommendations for improvements and actions to be taken. They also conduct site visits, undertake transaction tests as appropriate in the light of updated risk assessments, and provide advice on FM matters.

The World Bank may rely on FM arrangements of UN Organizations and other global organizations when those comply with the minimum requirements of the Bank's policies.

For further information on FM in investment lending, contact Hisham Waly,, tel. +1-202-458-0226

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