Q1: What is the rationale for proposing the new Program-for-Results instrument?

The development landscape has changed. Bank clients are increasingly implementing their own programs for development and poverty reduction and are asking development partners for finance and expertise to improve such programs’ effectiveness and efficiency in achieving results. Management believes that the Bank should provide lending instruments that respond to three broad demands: policy support; project support; and program support. The first two are addressed by Development Policy Lending and Investment Lending respectively. Program-for-Results would fill the gap that currently exists and offer program support and would place more direct emphasis on results by making them the basis for disbursement. It would focus the Bank’s technical and financial support more strongly on institutional development, particularly capacity to monitor results and strengthen the public expenditure systems of a country. It would also enable the Bank to leverage its own financing and collaborate with other development partners through pooling resources and focusing efforts on supporting government programs.

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Q2: How will Program-for-Results work in different country contexts?

Access to Program-for-Results by any country will depend on a careful assessment of program systems in terms of performance, capacity and risks and the potential for improvements. In contexts where the existing systems are strong, the Bank may support very wide ranging and ambitious programs. In countries with weaker systems and capacity, it is likely that the scope of a Program-for-Results operation may be adjusted to strike the right balance between benefits and risks. Accordingly, how Program-for-Results is used will vary from country to country as well as from sector to sector; but the flexibility of the instrument should enable it to be used in a very wide range of country and sectoral situations.

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Q3: How will the Bank determine the suitability of a program for Program-for-Results support?

Programs to be considered for Program-for-Results will be typically identified through engagement with client countries as part of the country assistance strategy process and policy dialogue. However, if a country requests Program-for-Results program support, the Bank will appraise several aspects of the program including: (a) technical assessment that focuses on the technical soundness of the program, the expenditure framework, and the results framework; (b) systems assessment that includes fiduciary and environmental and social impacts and risks of the program;(c) and an overall risk assessment. The Bank will also assess capacity to implement and performance and the accompanying systems and discuss with government counterparts how the program could be strengthened. Following these assessments, a program may or may not be considered suitable for Program-for-Results, or actions may be agreed upon to enhance the program’s system and performance, as needed, and identified and included as part of implementation.

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Q4: How will the results be defined, measured and verified?

As noted above, the results are those of the program supported by Program-for-Results. A specific set of results will be selected for the program, defined in relation to the specific objectives of the program and the expected timelines for achieving those objectives. Indicators will be established for measuring those results. The necessary data collection systems for those indicators will be strengthened or put in place to facilitate timely and accurate reporting. Results will be verified by the agency responsible for program implementation as well as by other parts of the government or, as appropriate, by other bodies independent of the government. As part of the overall assessment process, the Bank will assess the M&E capacity of participating institutions to identify gaps and capacity building activities. The M&E plan will include various ways in which data will be collected. A verification protocol will also be developed for each disbursement-linked indicator (DLI).

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Q5: What happens if agreed DLIs are not achieved?

Disbursements will occur when results are achieved and verified. Program-for-Results also includes the concept of scalability—that is, partial disbursements if some DLIs are partially met – as well as the possibility for disbursements against prior results, if countries request it. If DLIs are not achieved, there will be no disbursements unless there are unexpected developments that justify a restructuring of the operation and, in that context, some adjustment of the DLIs.

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Q6: How will Program-for-Results ensure that the environment and social aspects are protected?

The Bank is committed to addressing social and environmental concerns and will make an upfront assessment of these issues prior to determining whether to proceed with a Program-for-Results operation to adapt the scope of the program to be supported. As necessary, the Bank will also agree with the government on measures to strengthen the arrangements for managing the environmental and social effects of particular programs – measures that may be introduced prior to or as part of the implementation of a Program-for-Results operation. In addition, activities with potentially significant, irreversible adverse impacts on the environment and affected people would be excluded from Program-for-Results. The paper describes how such exclusions will be managed.

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Q7: How will fraud and corruption be addressed in Program-for-Results supported operations?

The Bank is committed to the highest standards of integrity and transparency and to addressing fraud and corruption. The operational policy for Program-for-Results will set out how issues of fraud and corruption will be addressed. New anti-corruption guidelines for Program-for-Results are being developed. There will be a strong focus in Program-for-Results operations on good governance including provisions for how to handle cases of fraud and corruption. In some Program-for-Results operations, it is expected that progress in fighting corruption and improving procurement will be among the results needed to release Bank disbursements (i.e. they would be part of the Program-for-Results disbursement-linked indicators).The Bank will reserve the right to launch an investigation as needed; however, the preferred approach will be for government systems to carry out initial investigations.

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Q8: Does Program-for-Results assume that adequate capacity is already in place?

A key feature of Program-for-Results is institutional and capacity building. Program-for-Results does not assume that adequate capacity is already in place. As part of the process of preparing a Program-for-Results operation, the Bank will undertake a rigorous and detailed assessment of client capacity. If adequate arrangements are not yet in place or capacity is weak, the Bank will discuss with the government what measures could be taken prior to and/or as part of implementation to address such weaknesses and enhance capacity. Only if it is not possible to reach an understanding or the risks to implementation remain too high, would the Bank decide that the program is not be ready for Program-for-Results. Indeed because capacity building is an integral feature of Program-for-Results, it is expected that it will be used in many cases to help countries strengthen existing institutions and capacity.

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Q9: What will be the Bank’s role in the preparation, appraisal and implementation of Program-for-Results supported operations?

The Bank will be responsible for assessing the quality of the government program to be supported by a Program-for-Results operation and its associated systems. It will also agree with the government, in the context of appraisal, on any necessary improvement measures and on the Bank’s role in supporting the implementation of those measures. There will be a strengthened focus on implementation support. The Bank s will be responsible for providing close and frequent implementation support to government teams implementing Program-for-Results. Work with other development partners will also be critical for implementation support as noted above.

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Q10: What will be the role of the Bank’s oversight units?

Program-for-Results will be subject to the same oversight functions as other lending instruments. The independent corporate oversight units—Inspection Panel (IPN), Institutional Integrity (INT), the Internal Audit Department (IAD), and the Independent Evaluation Group (IEG)—will oversee Program-for-Results operations. The new OP for Program-for-Results will discuss the specific role of each of the units, as appropriate. The Bank (INT) will reserve the right to conduct its own investigations and would exercise this right as the circumstances require (e.g. the nature of the case, lack of action or the capacity of the government). The Bank would also be able to impose sanctions against firms and individuals in accordance with its sanctions policies and procedure.

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