1. The Bank assesses a program proposed by the borrower2 for Program-for-Results Bank financing3 (hereinafter the “Program”) and, upon Program-for-Results financing approval, provides implementation support to the borrower in accordance with the requirements set forth in OP 9.00 and this BP.
A. Preparation of the Program Operation
2. The preparation phase includes identification, assessment, and appraisal of the Program, and various interim processing and decision steps such as concept review, decision meeting, negotiations, Board presentation, signing, and effectiveness.
Identification to Concept Review
3. At the identification stage, the Bank consults with the borrower on the borrower’s development program and goals, and seeks to identify the Program’s overall parameters, objectives, financing requirements, possible level of Program-for-Results financing, and other general information. After the Bank and borrower have reached preliminary understanding on the Program concept and parameters, Bank budget is made available for further Program preparation, and a task team is formed, led by a team leader and comprising relevant specialists.
4. The task team preliminarily, and in consultation with the borrower:
(a) defines the Program and assesses its development objectives, strategic relevance, rationale, and relation to the relevant Country Assistance Strategy (CAS), Country Partnership Strategy (CPS), or similar instrument;
(b) identifies the results to be achieved under the Program;
(c) identifies the overall Program expenditures, nature of activities and implementation arrangements;
(d) estimates the possible scope of Program-for-Results financing;
(e) considers whether the Program systems4 in the fiduciary, environmental and social, and governance5 areas are broadly adequate;
(f) when the proposed Program is a part of an ongoing program, considers that program’s performance to date and, if applicable, lessons learned from similar programs in the country; and
(g) considers the risks to achieving the Program’s objectives and results.
5. In accordance with paragraph 9 of OP 9.00, the task team preliminarily assesses whether the proposed Program may involve activities that: (a) are judged to be likely to have a significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or affected people; or (b) involve procurement of goods, works, and services under high-value contracts. For the purposes of this BP, “high-value contracts” means contracts with estimated values exceeding the monetary amounts, as may be amended from time to time, that require mandatory review by the Bank’s Operations Procurement Review Committee (OPRC).6 Such activities are not eligible for Program-for-Results financing, and are excluded from the Program.
6. The Bank coordinates its preparatory work with development partners and other parties that may cofinance the Program or be otherwise involved in Program-related activities.
7. After the Program concept is developed, but before further preparation takes place, the task team prepares a Program Concept Note (PCN) that describes the proposed Program, including the information under paragraphs 4 and 5 above. The task team also prepares an initial Program Information Document (PID) that summarizes the main elements of the Program and the proposed Bank financing. The PCN and the PID are submitted for the Concept Review. The Concept Review decides, among other things: (a) whether the Bank should proceed with the preparation of the Program-for-Results financing; (b) the overall parameters of the assessments to be carried out; (c) the level of subsequent Bank review(s);7 and (d) the timetable and resources for Program preparation.
8. Upon receiving authorization to continue with the preparation of the operation, the task team submits the PID for public disclosure.
Assessment and Appraisal
9. The Bank continues to carry out the Program technical, fiduciary systems, environmental and social systems, and integrated risk assessments (described in Part III of this BP), taking into account the country-, sector-, and Program-specific circumstances, the scope for improvements before and during implementation, the risks to achieving Program objectives and results, and associated risk mitigation measures. The integrated risk assessment is an ongoing process that requires periodic consultations between the task team and Management, and between the Bank and the borrower.
10. After the assessments have been carried out and most design and assessment issues have been resolved, the task team submits for Management’s Decision Review Meeting the draft Program Appraisal Document (PAD), an updated draft PID, and the draft legal agreements.8 The Decision Review Meeting decides on, among other things, the following matters:
(a) the ability to achieve Program results and the adequacy of the disbursement-linked indicators (DLIs), and their verification protocols;
(b) the adequacy of the recommendations from the assessments, as well as the Program action plan (if required) for enhancing the Program systems and mitigating risks;
(c) the overall Program risk assessment;
(d) the exclusion from the Program of activities referred to in paragraph 5 of this BP;
(e) Program-for-Results financing conditions, including conditions of appraisal, negotiations, and Board presentation, and legal conditions;
(f) the proposed implementation support arrangements; and
(g) whether the task team should proceed with Program appraisal or whether the Program can be considered already appraised.
11. The task team appraises the Program-for-Results financing to confirm any relevant Program- and financing-related information and resolve any outstanding legal, design, and implementation issues, and then finalizes the draft PAD and draft legal documents. The updated PID is disclosed before the Program appraisal is completed.
12. Generally, the following information is finalized following the appraisal:
(a) the Program’s definition, development objective, rationale, and scope, taking into account the provisions of paragraph 9 of OP 9.00 and paragraph 5 of this BP, planned expenditures, financing requirements, and implementation and funds flow arrangements;
(b) the technical, fiduciary, environmental and social systems, and integrated risk assessments carried out and the conclusions of those assessments, and, as necessary, the relevant risk management and other actions undertaken or to be undertaken during the preparation of the Program operation, and/or during Program implementation, to enhance Program systems and performance;
(c) the main legal terms and conditions, DLI verification protocols, and/or the Program action plan, as applicable;
(d) the results framework and the monitoring and evaluation arrangements, and, as appropriate, baseline references to be used in monitoring implementation and Program systems performance and assessing the development effectiveness of the Program at completion;
(e) the DLIs and their credible verification protocols,9 and other disbursement-related provisions;
(f) cofinancing or other collaboration arrangements with other development partners and stakeholders;
(g) any proposed exceptions to or waivers from Bank policies or procedures; and
(h) implementation support arrangements.
13. DLIs and Disbursement. The DLIs are specific, measurable, and verifiable indicators related to and/or derived from the Program development objectives and the results framework.10
14. Subject to the other requirements of OP 9.00 and this BP, the Bank may agree to disburse up to 25 percent of Program-for-Results financing proceeds (unless a higher percentage is approved by Management) on account of the DLIs met by the borrower between the date of the Program Concept Review and the date of the legal agreement for Program-for-Results financing.
15. To provide a borrower with resources to allow the Program to start or to facilitate the achievement of one or more DLIs, the Bank may agree to make an advance payment (following the effectiveness of the Program-for-Results financing legal agreement) of up to 25 percent of Program-for-Results financing (unless a higher percentage is approved by Management) for one or more DLIs that have not yet been met (“advance”). When the DLI(s) for which an advance has been disbursed are achieved, the amount of the advance is deducted (recovered) from the amount due to be disbursed under such DLI(s). The advance amount recovered by the Bank is then available for additional advances (“revolving advance”). The Bank requires that the borrower refund any advances (or portion of advances) if the DLIs have not been met (or have been only partially met) by the Program closing date.
16. The combined amount of financing referred to in paragraph 14 and paragraph 15 of this BP 9.00 may not exceed 30 percent of the Program-for-Results financing (unless a higher percentage is approved by Management).
Negotiations and Board Presentation
17. Following the appraisal, the task team submits for Management approval a request, supported by the relevant documents, to negotiate the Program-for-Results financing. After negotiations have been authorized, the Bank and borrower and any other Program-related parties conduct the negotiations and seek to finalize agreement on the relevant issues and documents. If new substantive issues or significant changes in the design of the Program or Program-for-Results financing are raised during the negotiations, the task team consults with Management. If the negotiations are successfully completed, and there are no Board conditions, the task team finalizes the relevant draft Program-for-Results documents for submission to the Board. If any information in the PAD raises issues of confidentiality or sensitivity, or may adversely affect relations between the Bank and the borrower, and this information is deemed to be relevant to the Executive Directors in their decision-making process, the task team, in consultation with Management, removes this information from the PAD and incorporates it in the draft MOP.
18. After all requirements for Board presentation have been met, the Executive Directors consider the proposed Program-for-Results financing at a Board meeting, following streamlined or regular procedures.11 The final PAD is disclosed in accordance with the Bank’s Access to Information Policy.
B. Program Assessments
19. The technical assessment is carried out in accordance with the provisions set out in paragraph 6 of OP 9.00 and paragraph 9 of this BP, and addresses the following matters:
20. Strategic relevance, technical soundness, and institutional arrangements. The task team assesses whether:
(a) there is a clear rationale for the Program, with the Program addressing an important development goal, and whether there is potential to significantly improve Program performance;
(b) the Program is consistent with the Bank’s overall assistance strategy for the member country in question (as expressed in the CAS, CPS, or similar instrument);
(c) the technical approach proposed by the borrower under the Program, and the Program’s structure and implementation arrangements (including governance arrangements), are adequate;
(d) the borrower’s institutional capacity is adequate; and
(e) the general legal, regulatory, and institutional environment within which the Program will operate is adequate for Program implementation.
21. Expenditure Framework. The task team assesses the level, efficiency, transparency, and effectiveness of the expenditures included in the Program. This includes consideration of whether the planned expenditures are adequate to achieve the Program results, whether the medium-term budget is sustainable, and whether there are major discrepancies between budget allocations, releases, and actual expenditures.
22. Results Framework and DLIs. The task team assesses the Program’s: (a) results framework, which may include outcomes, outputs, intermediate outcomes or outputs, including the degree to which the Program aims to achieve these results; (b) monitoring and evaluation framework; and (c) DLIs and the related verification protocols.
23. Economic Evaluation. The task team undertakes an economic evaluation providing the rationale for the public provision of the Program, where appropriate, as well as its expected impact, describing, among other things, the expected added value of Bank support. Evaluation methods range from narrative comparisons of scenarios to quantitative methods.
Fiduciary Systems and Environmental and Social Systems Assessments
24. The task team carries out the fiduciary and the environmental and social systems assessments in accordance with paragraphs 7 and 8 of OP 9.00. The assessments consider whether the Program institutions have the capacity to carry out adequate planning, decision making, execution, reporting, monitoring and evaluation, auditing and information disclosure under the Program. The assessments include: (a) a review of the existing systems; (b) identification of areas in which the implementing entities should improve procedures and performance (which may be expressed through the Program’s action plan, as necessary); and (c) inputs to the integrated risk assessment.
25. Fiduciary Systems Assessment. The assessment is carried out in accordance with paragraph 7 of OP 9.00. The task team evaluates the Program fiduciary systems to determine whether they provide reasonable assurance that the Program expenditures will be used appropriately to achieve their intended purpose. The fiduciary systems assessments consider the degree to which:
(a) from a procurement perspective there is/are reasonable: (i) arrangements for planning and budgeting; (ii) procurement rules and such rules are easily accessible to the public; (iii) capacity for contract management and administration; (iv) complaint mechanisms, including clarity on how they are utilized; (v) systems for Program oversight and control; and
(b) from a financial management perspective: (i) the budgeted expenditures are realistic, prepared with due regard to relevant policies, and executed in an orderly and predictable manner; (ii) reasonable records are maintained and financial reports produced and disseminated for decision-making, management, and reporting; (iii) adequate funds are available to finance the Program; (iv) there are reasonable controls over Program funds; and (v) independent audit arrangements are in place.
26. As part of the assessments, and taking into account the requirements of the Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing (February 1, 2012) (ACGs), the Bank also assesses the degree to which Program systems handle the risk of fraud and corruption, including complaint mechanisms, and how such risks are managed and mitigated. The Bank and the borrower will, where required, agree on a Program-specific protocol describing the operational arrangements to handle allegations, information, and investigations related to fraud and corruption.12
27. The fiduciary systems assessment provides a reference that is used to monitor fiduciary systems performance during Program implementation and identifies actions, as needed, to enhance the fiduciary systems during Program preparation and implementation (the latter are included in the Program’s action plan). The fiduciary risks and proposed mitigation measures are inputs to the integrated risk assessment.
28. Environmental and Social Systems Assessment. The task team assesses the Program systems for managing environmental and social effects, taking into account, among other things, the capacity to plan, implement, monitor, and report on the environmental and social mitigation measures, the scope for improvements, and the risks and related mitigation measures.
29. The assessment, carried out in accordance with paragraph 8 of OP 9.00, considers, as may be applicable or relevant under particular country, sector, or Program circumstances, to what degree the Program systems:
(a) operate within an adequate legal and regulatory framework to guide environmental and social impact assessments at the Program level;
(b) incorporate recognized elements of environmental and social assessment good practice, including: (i) early screening of potential impacts; (ii) consideration of strategic, technical, and site alternatives (including the “no action” alternative); (iii) explicit assessment of potential induced, cumulative, and transboundary impacts; (iv) identification of measures to mitigate adverse environmental or social impacts that cannot be otherwise avoided or minimized; (v) clear articulation of institutional responsibilities and resources to support implementation of plans; and (vi) responsiveness and accountability through stakeholder consultation, timely dissemination of Program information, and responsive grievance redress measures;
(c) include appropriate measures for the early identification and screening of potentially important biodiversity and cultural resource areas;
(d) support and promote the protection, conservation, maintenance, and rehabilitation of natural habitats; avoid the significant conversion or degradation of critical natural habitats; and if avoiding the significant conversion of natural habitats is not technically feasible, include measures to mitigate or offset the adverse impacts of Program activities;
(e) take into account potential adverse effects on physical cultural property and provide adequate measures to avoid, minimize, or mitigate such effects;
(f) promote adequate community, individual, and worker safety through the safe design, construction, operation, and maintenance of physical infrastructure; or, in carrying out activities that may be dependent on such infrastructure, incorporate safety measures, inspections, or remedial works as appropriate;
(g) promote the use of recognized good practice in the production, management, storage, transport, and disposal of hazardous materials generated under the Program; promote the use of integrated pest management practices to manage or reduce pests or disease vectors; and provide training for workers involved in the production, procurement, storage, transport, use, and disposal of hazardous chemicals in accordance with the relevant international guidelines and conventions;
(h) include adequate measures to avoid, minimize, or mitigate community, individual, and worker risks when Program activities are located in areas prone to natural hazards such as floods, hurricanes, earthquakes, or other severe weather or climate events;
(i) avoid or minimize land acquisition and related adverse impacts; identify and address economic and social impacts caused by land acquisition or loss of access to natural resources, including those affecting people lacking full legal rights to resources they use or occupy; provide compensation sufficient to purchase replacement assets of equivalent value and to meet any necessary transitional expenses, paid before taking land or restricting access; provide supplemental livelihood improvement or restoration measures if taking of land causes loss of income-generating opportunity (e.g., loss of crop production or employment); and restore or replace public infrastructure and community services that may be adversely affected by the Program;
(j) undertake free, prior, and informed consultations if the Indigenous Peoples are potentially affected (positively or negatively), to determine whether there is broad community support for the Program activities;
(k) ensure that the Indigenous Peoples can participate in devising opportunities to benefit from exploitation of customary resources or indigenous knowledge, the latter (indigenous knowledge) to include the consent of the Indigenous Peoples;
(l) give attention to groups vulnerable to hardship or disadvantage, including as relevant the poor, the disabled, women and children, the elderly, or marginalized ethnic groups; and, if necessary, take special measures to promote equitable access to Program benefits; and
(m) consider conflict risks, including distributional equity and cultural sensitivities
30. The environmental and social systems assessment provides a reference that is used to monitor environmental and social systems performance during Program implementation, and identifies actions, as needed, to enhance the systems during Program preparation and implementation (the latter are included in the Program’s action plan). The environmental and social risks, and proposed mitigation measures, as appropriate, are inputs to the integrated risk assessment. The assessment includes a review of the arrangements by which Program activities that affect communities will be disclosed, consulted upon, and subject to a grievance redress process. Measures to address consultation, disclosure and grievance should be appropriate to the activities to be supported under the Program.
31. Before Program-for-Results appraisal, and as part of the environmental and social system assessment, the task team makes the draft assessment publicly available. The task team subsequently consults with Program stakeholders on the draft assessment. The Bank makes the final assessment publicly available. In addition, the PID, which is made publically available at the concept and appraisal stages, includes information about the environmental and social issues related to the Program.
Integrated Risk Assessment
32. At different points during the preparation of the Program-for-Results financing and subsequently during Program implementation, the Bank prepares, with the borrower’s inputs, an integrated risk assessment to identify the major risks that the Program will not achieve its results. The Bank determines appropriate mitigation measures, and monitors the evolution of risks, the implementation of mitigation measures, and their impact, making adjustments as appropriate.
C. Implementation Support and Program Completion
33. Borrower’s Role. The borrower is responsible for implementing the Program, monitoring its progress, evaluating results on completion, and meeting the relevant contractual obligations (including the Program action plan) set out or referred to in the legal agreements with the Bank. These responsibilities include the requirement to maintain agreed fiduciary, environmental and social, and risk management systems, and to deal in a timely and effective manner with failures (individual or systemic) in these areas.
34. Bank’s Role. In providing implementation support to the borrower in accordance with paragraph 13 of OP 9.00, the task team pays particular attention to reviewing the monitoring and verification of the Program’s results and DLIs, and the borrower’s compliance with its contractual undertakings in the fiduciary, environmental and social, and risk management areas, including those related to the Program’s action plan. The task team regularly assesses the Program, taking into account the integrated risk assessment developed during the preparation stage, uses the risk assessment to respond to and assist the borrower to respond to pre-identified and new risks, and recommends adjustments to the risk assessment, as may be appropriate. The task team undertakes field visits, liaises as necessary with relevant partners, provides appropriate support to the borrower, and reviews Program audit reports and progress reports prepared by the borrower. The task team regularly reports to Management on Program implementation by sharing the aide-mémoires that reflect review of documents, discussions with the borrower and relevant partners, and visits to Program sites and facilities.
35. Program Financial Statements Audits. The borrower is required to submit annual audited Program financial statements after the close of the borrower’s financial year. Audits need to be carried out by auditors with independence, experience, and capacity acceptable to the Bank, and under terms of reference acceptable to the Bank. The Bank and borrower agree on, and confirm in the legal agreement, the period for receipt of the annual audit reports.
36. Additional Reviews. Depending on the nature of the Program and the findings of the assessments, the Program’s annual financial statements audit may need to be complemented by other reviews to address certain risks or to strengthen the Program’s audit/inspection arrangements.
37. Restructuring. If, as part of Program implementation support, the task team identifies, normally with the borrower’s input, a need to restructure the Program, the restructuring takes place in accordance with paragraph 16 of OP 9.00.
38. Additional Financing. Additional Program-for-Results financing may be provided by the Bank in accordance with paragraph 17 of OP 9.00. Approved additional Program-for-Results financing is formalized through a separate legal agreement or, if appropriate, through amendments to the original legal agreement(s).
39. Fraud and Corruption. Program-for-Results financing is subject to the ACGs. In providing Program-for-Results financing, the Bank has the right to investigate allegations of fraud and corruption in the Program and to sanction parties engaged in sanctionable practices under the Program.
40. The ACGs require the borrower to report complaints and undertake follow-up actions. When allegations of fraud and corruption under the Program are brought to the attention of the borrower or the Bank, the Bank’s Integrity Vice Presidency (INT) informs and consults with as many relevant parties as is appropriate given the nature of the allegations and the impact that such discussions would have on any related investigations. Task team members report suspected or reported cases of possible fraud and corruption to INT. Fraud and corruption investigations may be launched by INT in response to complaints received by the Bank directly or through the reporting on complaints received by the borrower. When the borrower carries out its own investigation into complaints under the Program, the findings by the responsible investigative agency and proposed actions are shared with INT and, as appropriate, other partners. The Bank monitors the progress in the borrower’s investigation.
41. When allegations of fraud and corruption are substantiated by the borrower or the Bank, INT may seek administrative sanctions under the Bank’s sanctions procedures against the individual(s) and/or entity(ies) involved, which may result in: (a) temporary suspension or early temporary suspension in connection with an ongoing sanctions proceeding: (b) debarment or other sanctions: (c) cross-debarment as agreed with other international financial institutions, including multilateral development banks: and (d) debarment by the World Bank Group’s General Services Department. Based on its own findings or those provided by the borrower, INT makes referrals to relevant stakeholders in accordance with its policies and practices.
42. The borrower must undertake not to allow parties on the Bank’s debarment or suspension lists to be awarded contracts under, or otherwise initiate participation in, the Program during their debarment/suspension period.
43. Remedies. The Bank’s legal remedies are specified in the relevant legal agreements. If the task team identifies breaches in the borrower’s compliance with its contractual obligations, including undertakings in the fiduciary, environmental and social, and risk management areas, including those related to the Program’s action plan, the task team informs Management and makes appropriate recommendations. Management determines whether to exercise legal remedies in accordance with paragraph 14 of OP 9.00. Normally, before exercising its remedies, the Bank provides the borrower with an opportunity to take timely and appropriate corrective measures agreed with the Bank.
44. Program Completion Report. On completion of the Program, the task team prepares an Implementation Completion and Results report (ICR). This covers, among other things, the degree to which the Program objectives and results have been achieved and the overall Program performance, including the achievement of the DLIs. The ICR incorporates the borrower’s evaluation of the Program and Program-for-Results financing, as well as of its own performance and the performance of the Bank. Program implementation support and monitoring carried out by the Bank during the implementation period end at completion of the Program.
- BP 9.00 is derived from and accompanies OP 9.00, and may be further supplemented by guidance and instructions issued from time to time by Management.
- In this BP, unless the context requires otherwise, references to the “borrower” include the borrower of record and any other entities involved in Program implementation.
- 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”).
- In this BP, 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.
- In this BP, 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.
- See OPRC Thresholds.
- When significant Program design or other legally relevant issues remain partially unresolved, the draft legal documents may be excluded from the documents submitted for the decision meeting.
- The credibility of verification protocols is finally assessed and confirmed at appraisal, and described in the Program documents, as appropriate. Depending on the nature of the specific DLIs and the overall context of the Program and country circumstances, the verification of DLIs can be carried out in various forms and by various parties, which could include but not be limited to government agencies, semi-autonomous entities, statistical or audit entities, and third-party entities such as nongovernmental organizations and representatives of civil society. For disbursement purposes, the Bank retains the right to make the final decision whether DLIs have been achieved.
- DLIs may be expressed as outcomes, outputs, intermediate outcomes or outputs, process indicators, or financing indicators. DLIs may also be defined as actions or process results deemed critical for strengthening performance under the Program (this could include actions for improving fiduciary, social and environmental issues and/or monitoring and evaluation), or as indicators of key institutional changes.
- For more details, see the OPCS Processing Steps Guidelines and SECPO guidance detailing eSubmission of Board documents .
- Such a protocol may be formulated in various forms, for example as a covenant in the legal agreement between the Bank and borrower, letter or memorandum of understanding, or as part of the minutes of negotiations.
- Such reviews may involve the following: procurement performance measures/indicators; physical inspection assessing the quality of goods, works and services; verification of DLIs; the efficiency and effectiveness of administrative activities; reviews of fraud and corruption “red flags” and complaint handling mechanisms.