1. Purpose. This Operational Memorandum clarifies the transition arrangements for the six policy changes approved by the Executive Directors (EDs) on October 25, 2012,1 and reflected in the new OP/BP 10.00, Investment Project Financing, dated April 8, 2013 (hereinafter referred to as OP/BP 10.00), applicable to projects financed through Investment Project Financing (IPF).2
2. General Considerations. Effective April 8, 2013, OP/BP10.00 applies to all IPF projects, including any Preparation Advances.3 While the previous OP/BP 10.00, Investment Lending, are replaced and other related OPs/BPs are retired as of April 8, 2013, the substance and scope of the new OP/BP 10.00 is largely consistent with the previous investment lending policies and procedures. The memorandum continues with an elaboration of the transition arrangements for the six policy changes for project documents with reference to the following dispositions:
(a) Have not been circulated for the concept decision;4
(b) Have been circulated for the concept decision but have not been circulated to the EDs5 (or to Management) for approval; or
(c) Have been circulated to the EDs (or to Management) for approval.
Projects referred to under subparagraph 2(a) above follow the new OP/BP 10.00. For projects referenced in paragraphs 2(b) and 2(c) above the new OP/BP 10.00 do not require significant changes in project preparation or implementation support, unless an action is required or sought under one or more areas covered by the six policy changes, as described below.
3. Special Policy Considerations for: (i) natural or man-made disaster; (ii) conflict; (iii) fragile states; (iv) small states; and (v) other situations of fragility. Special policy considerations previously available to projects under OP/BP 8.00, Rapid Response to Crises and Emergencies, are now available in the situations listed above.6 For any project referred to under subparagraph 2(b) above, Management may decide to authorize the use of these special considerations.7 For any project referred to under subparagraph 2(c) above, a decision to use these special considerations would require a project restructuring.
4. Economic Analysis. New policy and procedure requirements for economic analysis for IPF operations have been approved.8 For projects referred to under subparagraph 2(b) above, the following decisions will apply:
(a) If the project documents have been circulated for the concept decision prior to April 8, 2013, task teams are not required to retrofit the concept note to add a section on economic analysis; task teams should proceed and complete the economic analysis in accordance with OP/BP 10.00.
(b) If project appraisal was completed prior to April 8, 2013, and if the economic analysis in the Project Appraisal Document does not fully follow the outline of the new policy on economic analysis, teams do not have to retrofit the annex on economic analysis in accordance with OP/BP 10.00 for the next decision point.
Moreover, for any project referred to under subparagraph 2(c) above, no action is required.
5. Series of Projects. Triggers are no longer required for subsequent projects in an IPF series.9 For the first project in a series and referred to under subparagraph 2(b) above, the Bank and the borrower do not need to specify triggers in the PAD(s) for subsequent project(s) in the series, unless explicitly agreed to between the borrower and the Bank. For any subsequent project in a series, the task team (a) as required under OP/BP 10.00, provides a justification, based on the performance of the preceding projects in the series, for continuing with the proposed project; and (b) may report on achievement of the trigger(s) if any were specified in the preceding project.
6. Additional Financing (AF). Additional Financing is no longer required to close within three years after the closing date of the original financing.10 For AF arrangements referred to under subparagraph 2(b) above, the Bank and the borrower may agree to the provisions available under the new policy, in which case the project document justifies the length of the AF implementation period. For AF arrangements referred to under subparagraph 2(c) above, the Bank and the borrower may agree to extend the AF closing date under the new policy, in which case the extension is processed as a project restructuring. When a new AF request is expected to result in an overall project implementation period that would exceed ten years, an Implementation Completion and Results Report (ICR) of the project’s performance up to that point is required before Management’s decision on the AF appraisal and negotiations.
7. Timing of Audit Reports. While annual audit reports continue to be generally required within six months following the borrower’s financial year, alternative time limits are allowed.11 For projects referred to under subparagraph 2(b) above, the Bank and the borrower may agree on alternative time limits for presentation of annual audit reports, and such limits are reflected in the project documents. Similar changes may be made for projects under subparagraph 2(c) above through project restructuring.
8. Preparation Advance Limits. If a borrower requests to increase the amount of a Preparation Advance, as reflected in the new policy,12 task teams may either modify the current request if not yet approved, or prepare an additional request as applicable.
9. Implementation Completion and Results Reports (ICR). When preparing an ICR, the project evaluation is carried out on the basis of policies and procedures in effect at the time the project activities took place.
The policy changes are set out in the paper entitled Investment Lending Reform: Modernizing and Consolidating Operational Policies and Procedures (R2012-0204 [IDA/R2012-0248]). In case of recipient-executed grants financed from trust funds administered by the Bank, the project design and financing arrangements will also have to comply with the terms and conditions of the relevant Administration Agreement(s) between the Bank and the donor(s), or the relevant Board resolution(s), as the case may be. See the pedigree box of OP/BP 10.00. When a concept decision is not required, equivalent points of project processing are to be used, specifically in the case of (a) a Preparation Advance, the documents have not been circulated by the team leader for clearance; (b) Additional Financing, the Concept Memorandum has not been issued; (c) the Notification to Process under Rapid Response to Crises and Emergencies (OP/BP 8.00) has not been issued. By circulating project documents to the Corporate Secretariat Policy and Operations Unit (SECPO). Task teams adjust the project documents to include the relevant justifications and seek Management’s authorization for the proposed change, at the next decision point. If the project is already beyond the last decision point before financing approval, whoever made the last decision authorizes the proposed change, after the required advice, clearances and concurrences have been obtained. The requirements are reflected in paragraph 5 of OP 10.00, and paragraphs 5(e) and 17 of BP 10.00.