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OP 9.00 - Program-for-Results Financing


These policies were prepared for use by World Bank staff and are not necessarily a complete treatment of the subject.
OP 9.00
February, 2012
 
Bank-financed Program-for-Results operations are governed by this OP 9.00, the related BP 9.00, and the following OPs/BPs, as appropriate (including any relevant Operational Memoranda:
 
OP 1.00, Poverty Reduction; BP 2.11, Country Assistance Strategies; OP/BP 2.30, Development Cooperation and Conflict; OP/BP 3.10, Financial Terms and Conditions of IBRD Loans, IBRD Hedging Products, and IDA Credits; OP 4.07, Water Resource Management; OP 4.76, Tobacco; OP/BP 4.20, Gender and Development; OP/BP 7.00, Lending Operations: Choice of Borrower and Contractual Arrangements; OP 7.20, Security Arrangements; OP 7.30, Dealing with De Facto Governments; OP/BP 7.40, Disputes Over Defaults on External Debt, Expropriation, and Breach of Contract; OP/BP 7.50, Projects on International Waterways; OP/BP 7.60, Projects in Disputed Areas; OP/BP 8.45, Grants; OP/BP 10.20, Global Environmental Facility Operations; OP/BP 13.00, Signing of Legal Documents and Effectiveness of Loans and Credits; OP/BP 13.16, Country Portfolio Performance Reviews; OP/BP 13.30, Closing Dates; OP/BP 13.40, Suspension of Disbursements; OP/BP 13.50, Cancellations; OP/BP 14.10, External Debt Reporting; OP/BP 14.20, Cofinancing; OP/BP 14.40, Trust Funds; BP 17.30, Communications with Executive Directors; and BP 17.55, Inspection Panel. 

Questions related to this OP and BP 9.00 may be addressed to PforRhelp@worldbank.org.

 
 

1. Program-for-Results Bank financing1 aims to promote sustainable development and improve the efficiency and effectiveness of expenditures by:
(a) financing the expenditures of specific borrower development programs;
 
(b) disbursing on the basis of the achievement of key results (including prior results) under such programs;
 
(c) using and, as appropriate, strengthening the program systems to provide assurance that program funds are used appropriately and that environmental and social impacts are adequately addressed by such programs; and
 
(d) strengthening, where appropriate, the institutional capacity necessary for such programs to achieve their intended results.

2. Programs supported by Program-for-Results financing (hereinafter “Programs”) have expenditures, activities, and defined results, and promote sustainable development.  The Programs may be: (a) new or already under implementation; (b) national, subnational, multisectoral, sectoral, or sub-sectoral in scope; (c) part of broader, longer-term, or geographically larger programs; and/or (d) carried out by governmental and/or nongovernmental parties. 

 

3. Subject to the other applicable requirements of this OP, Program-for-Results financing may be extended to any type of expenditures, provided the Program is productive and Program oversight arrangements, including the fiduciary arrangements, provide reasonable assurance that financing proceeds will be used for the purposes for which the financing is granted, with due consideration of economy and efficiency.  The amount of Program-for-Results financing should be equal to or less than the total Program expenditures.  If by the end of the Program, the amount of Program-for-Results financing disbursed exceeds the total amount of expenditures under the Program, taking into account contributions from other financing sources, the borrower is required to refund the difference to the Bank.

 

4. Subject to the other applicable provisions of this OP, financing proceeds are disbursed upon the achievement of verified results specified as disbursement-linked indicators (DLIs).  Such disbursements are not dependent upon or attributable to individual transactions or expenditures.  Under appropriate circumstances, such as to provide the borrower with resources to allow the Program to start or to facilitate the achievement of one or more DLIs, the Bank may agree to disburse a portion of loan proceeds as an advance for DLIs that have not yet been achieved.

 

Considerations for Program-for-Results Financing 
 
5. The Bank's assessment of a proposed Program is based on various country and Program-specific strategic, technical, and risk considerations.  These include the Program’s strategic relevance, technical soundness, expenditure analysis, economic rationale, results framework, fiduciary and environmental and social systems2 and risks, including governance arrangements.3 The assessments evaluate the relevant risks and the scope for improvements and managing such risks, including proposed institution strengthening activities to be undertaken before, if deemed appropriate, and during Program implementation.

6. The technical assessment considers, among other things, the Program’s rationale and its development objectives (taking into account consistency with the Bank’s overall assistance strategy for the member country in question); the borrower’s commitment; relevant institutional and implementation arrangements, including governance; the Program’s activities and expenditures framework; the degree to which the Program aims to achieve specific, measurable, and verifiable results; the monitoring and evaluation arrangements; and the general policy, legal, regulatory, and institutional frameworks relevant to the Program. 

 

7. The fiduciary systems assessment considers whether Program systems provide reasonable assurance that the financing proceeds will be used for intended purposes, with due attention to the principles of economy, efficiency, effectiveness, transparency, and accountability.  The Program procurement systems are assessed as to the degree to which the planning, bidding, evaluation, contract award, and contract administration arrangements and practices provide reasonable assurance that the Program will achieve intended results through its procurement processes and procedures.  The financial management systems are assessed as to the degree to which the relevant planning, budgeting, accounting, internal controls, funds flow, financial reporting, and auditing arrangements provide reasonable assurance on the appropriate use of Program funds and safeguarding of its assets.  The fiduciary assessment also considers how Program systems handle the risks of fraud and corruption, including by providing complaint mechanisms, and how such risks are managed and/or mitigated.

 

8. The environmental and social systems assessment considers, as may be applicable or relevant in a particular country, sector, or Program circumstances, to what degree the Program systems:

(a) promote environmental and social sustainability in the Program design; avoid, minimize, or mitigate adverse impacts, and promote informed decision-making relating to the Program’s environmental and social impacts;

 

(b) avoid, minimize, or mitigate adverse impacts on natural habitats and physical cultural resources resulting from the Program;

 

(c)  protect public and worker safety against the potential risks associated with: (i) construction and/or operations of facilities or other operational practices under the Program; (ii) exposure to toxic chemicals, hazardous wastes, and other dangerous materials under the Program; and (iii) reconstruction or rehabilitation of infrastructure located in areas prone to natural hazards;

 

(d) manage land acquisition and loss of access to natural resources in a way that avoids or minimizes displacement, and assist the affected people in improving, or at the minimum restoring, their livelihoods and living standards;

 

(e) give due consideration to the cultural appropriateness of, and equitable access to, Program benefits, giving special attention to the rights and interests of the Indigenous Peoples and to the needs or concerns of vulnerable groups; and

 

(f) avoid exacerbating social conflict, especially in fragile states, post-conflict areas, or areas subject to territorial disputes.

9. Activities that are judged to be likely to have significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or affected people, and activities that involve procurement of works, goods, and services under contracts whose estimated value exceeds specified monetary amounts (high-value contracts)4 are not eligible for Program-for-Results financing, and are excluded from the Program.  

 

10. The Program integrated risk assessment considers key risks to achieving the Program’s results and development objectives.  The integrated risk assessment is informed by the results of the technical, fiduciary, and environmental and social systems assessments and provides a key input into the Bank’s decision to provide Program-for-Results financing.  This decision takes into account country/sector/multisector-specific circumstances, potential benefits of the Program, the needs and capacity of the borrower,5 and the degree to which the Program-for-Results financing and implementation support will contribute to the overall Program objectives and results.  

 

Borrower and Bank Roles and Responsibilities in Program Preparation and Implementation
 
11. The borrower is responsible for preparing and implementing the Program.  The Program’s scope and objectives and the borrower’s contractual obligations to the Bank are set out in the legal agreements with the Bank.  These obligations include the requirement to maintain appropriate monitoring and evaluation arrangements (including credible DLI verification protocols), fiduciary and environmental and social Program systems, and governance arrangements, and to deal in a timely and effective manner with actual or alleged problems or violations (individual or systemic) in these areas.

 

12. The Bank assesses and appraises the Program in accordance with this OP, BP 9.00, and other applicable policy, technical, operational, and procedural requirements.  In relation to the environmental and social systems assessment, the Bank consults with Program stakeholders and discloses the results and recommendations of its assessment.  As appropriate, the Bank agrees with the borrower on specific actions to be taken and arrangements to be maintained during the period of the Program, including measures to address identified weaknesses and risks and to strengthen institutional capacity. 

 

13. The Bank provides implementation support to the borrower by reviewing implementation progress, achievement of the Program results and DLIs, and associated Program risks.  The Bank monitors the borrower’s compliance with its contractual obligations, including actions to strengthen institutional capacity. 

Recourse, Remedies, and Sanctions
 
14. If the borrower does not comply with its contractual obligations, the Bank consults with the borrower, and requires the borrower to take timely and appropriate corrective measures.  The Bank’s legal remedies are specified in the relevant legal agreements and include the right to suspend disbursement and to cancel Program-for-Results financing.  The Bank exercises such remedies when warranted and as it deems appropriate, taking into account, among other things, country-, sector-, and Program-specific circumstances, the extent of and possible harm caused by circumstances giving rise to the remedy, and the borrower’s commitment and actions to address the identified problems.

 

15. The borrower is responsible, among other things, for taking appropriate measures to prevent, detect, and respond to fraud and corruption or allegations of fraud and corruption in the Program.  The Bank has the right to investigate allegations of fraud and corruption in the Program and to sanction parties that engage in sanctionable practices.

 

Restructuring

 

16. During the implementation of the Program, and as part of Bank implementation support, the Program may, with the agreement of the Bank and the borrower, be restructured to strengthen its development impact, modify its development objectives or DLIs, improve Program performance, address risks and problems that have arisen during implementation, make appropriate use of undisbursed financing, extend the financing closing date, or otherwise respond to changed circumstances.  A restructuring involving a modification of the original Program objectives is referred to as a Level One restructuring and is submitted for approval by the Executive Directors under absence-of-objection procedures.  A restructuring involving any other modification of the Program is referred to as a Level Two restructuring.  The authority to approve Level Two restructuring is delegated by the Executive Directors to Management. Management periodically informs the Executive Directors of Level Two restructurings.

 

Additional Program-for-Results Financing

 

17. The Bank may agree to provide additional Program-for-Results financing to an ongoing Program to meet: (a) unanticipated significant changes to expenditures parameters required to achieve the original Program results or DLIs; or (b) new or modified results, to be reflected in new or modified DLIs, that aim to scale up the impact or development effectiveness of the original Program.  The Bank provides additional Program-for-Results financing if it is satisfied with the overall implementation of the original (or restructured) Program.  The Bank considers the proposed additional Program-for-Results financing on the basis of, as necessary, updated or additional technical, fiduciary, environmental and social impacts, and integrated risk assessments.  Additional Program-for-Results financing is separate and distinct from the original Program-for-Results financing and is submitted for approval by the Executive Directors. 

 

Disclosure of Information

 

18. During Program preparation and implementation support, the Bank discloses Program-related information in accordance with the Bank’s Access to Information Policy. 

 

 



  1.  Program-for-Results Bank financing refers to the provision of loans, credits, or grants financed by the Bank (including IBRD and IDA) from its resources or from trust funds financed by other donors and administered by the Bank, or a combination of these (hereinafter “Program-for-Results financing”).
  2.  In this OP, the term “systems” or “Program systems” refers to the systems of the institutions responsible for Program implementation, including the relevant rules, procedures, controls, risk identification and mitigation arrangements, and, when applicable, past implementation experience and record.
  3.  In this OP, references to the Program governance arrangements and risks refer to: (a) good governance principles (transparency, integrity, accountability and effectiveness); (b) handling the risks of fraud, corruption, coercion, collusion, and similar activities (hereinafter “fraud and corruption”), and how such risks are managed and/or mitigated; and (c) compliance with the requirements set out in the Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing (February 1, 2012), as such guidelines may be amended from time to time. 
  4. See paragraph 5 of BP 9.00. 
  5. In this OP, unless the context requires otherwise, references to the “borrower” include the borrower of record and any other entities involved in Program implementation.



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