Frequently Asked Questions

This document responds to questions which have been raised inside and outside the World Bank about the Comprehensive Development Framework (CDF). The implementation of the CDF has been tracked for two years in twelve pilots, and during this period new questions have been posed, and original answers have been either confirmed or revised in the light of experience. Tracking of experience with CDF is now been expanded to take in countries developing Poverty Reduction Strategy Papers also.

It is important to point out that the CDF principles have been widely endorsed, as reflected for example in the communiqués from the Development Committee meetings, of Ministers representing both industrialized and developing countries, in Spring 1999 and Fall 2000, the G-7 Statement from Okinawa, July 21, 2000, the EU-ACP Cotonou Agreement and Development 1999: Development Co-operation Report prepared by the Development Assistance Committee of the Organization for Economic Cooperation. As implementation experience continues to accumulate new questions are likely to arise, and we will seek to reflect them in future revisions of this Q&A.

Contents:

A. Background and Origins
1. What Is The CDF?
2. What Is The Origin of The CDF?
3. How Does CDF Relate to the International Development Goals?
4. Why Is This Approach Needed?
5. What Is The Value-Added Of The CDF?

B. The Principles
1. What is a Long-term, Holistic Vision?
2. What is Meant by Country Ownership?
3. What is Meant by Country-led Partnership?
4. Why is it Important to Focus on Development Results?

C. Issues to Which CDF Relates
1. Is Macroeconomics Still Important?
2. What is Meant by Structural and Institutional Issues ?
3. What is Capacity Building? Why Does it Matter?
4. Does CDF Take Account of Trade Issues?
5. Where Do Labor Market Issues Fit In?
6. How Does CDF Address Gender Issues?
7. How Do Global and Regional Issues Fit In?

D. Roles under the CDF
1. What Does Government Have To Do?
2. Are Parliament and Other Democratic Institutions Involved?
3. Do Poor and Minority Groups Have a Say?
4. What Role is There for Civil Society (including NGOs)?
5. What Role is There for the Private Sector?
6. What is the Position of The International Development Community?
7. How Are Bilateral Donors Involved?
8. What is the Role of The Regional Development Banks?
9. What is the Role of The International Monetary Fund (IMF)?
10. What is the Role of The United Nations System?

E. Policy and Strategy Processes to Which CDF Relates
1. What is The Relationship Between These Processes? *
2. Where Does the Poverty Reduction Strategy Paper (PRSP) Fit In? *
3. What About the CDF in Middle Income Countries? *
4. How Do The Bank's Country Assistance Strategy (CAS) and other Development Agencies' Plans, including Integrated Trade Strategies, Relate to National Strategies? *
5. How Do the International Development Association (IDA) Goals and Objectives Relate?
6. How Do National Strategies for Sustainable Development Relate to CDF?
7. How Do the United Nations Common Country Assessment and Development Assistance Framework Relate?

F. Implementation
1. How is the CDF Being Implemented ?
2. How Can the CDF Matrix Help With Implementation? What Does it Contain? How Does It Relate to the Global Gateway?
3. Does CDF Allow for Individual Country Circumstances?
4. How is Progress under the CDF Being Assessed?
5. What Progress Was Made in the Pilot Period (March 1999-July 2000)?
6. What are the Emerging Issues? *
7. What is the Way Forward?

G. CDF and the World Bank
1. Will the Bank's Policies and Procedures Change under the CDF?
2. What are the Resource Implications of the CDF?
3. What are the Implications of Implementing the CDF for the Way the Bank and Other Development Agencies Work?
4. What is the Role of the Bank's CDF Secretariat?

A. Background and Origins

1. What Is The CDF?

Fundamentally, the CDF is a means of achieving greater effectiveness in reducing poverty. It puts forward a holistic approach to development, which seeks a better balance in policymaking and implementation by highlighting the interdependence of all elements of development–social, structural, human, governance, environmental, macroeconomic, and financial. This approach requires a transition from donor-led development assistance strategies to the development of a country strategy led by a country itself, with vigorous participation of government at all levels, including representative institutions, civil society and the private sector, and with the support of multilateral and bilateral organizations.

The CDF is based on the principles of:

• A long-term holistic vision of needs and solutions
• Ownership by the country
• Country-led Partnership among internal and external actors
• A focus on Development Results

These principles themselves are interdependent and must be approached holistically. They are discussed in Section B below. The Poverty Reduction Strategy Paper (PRSP), which is prepared in accordance with the CDF principles, is discussed in Answer E.2 below.

The CDF is meant to provide a compass–not a blueprint. A key element of the approach is to ensure the principles are put into practice, moving beyond the simple recognition of their relevance. How the principles are put into practice will vary from country to country, depending on economic and social needs and the priorities of the stakeholders involved. An increasing number of development agencies, including the Bank, are already organizing themselves to support the holistic approach in promoting development.

2. What Is The Origin of The CDF?

The ideas in the CDF reflect direct observations of development experience, well documented in evaluations from across the World Bank and the broader development community. They stem from evidence that the pursuit of economic growth may too often have been at the expense of social development, and that open, transparent, participatory processes, together with a long-term vision, focusing on concrete development results, are important for sustainable development. These are ideas around which there has been a convergence among developing country governments, NGOs, the UN, members of the Development Assistance Committee (DAC) of the OECD, and others in the development community — as reflected for example in On Common Ground. The CDF aims to bring many of these ideas together in a single place.

The CDF also involves a commitment to expanded partnership, transparency, and accountability under the leadership of the government. The CDF recognizes that there is no substitute for national leadership or national consensus for development.

The CDF approach was foreshadowed in President Wolfensohn's 1997 and 1998 Annual Meetings Speeches, in the Bank's 1998 Partnership Strategy, and in external consultations.

3. How Does CDF Relate to the International Development Goals?

The central purpose of CDF is achieving faster, sustainable reductions in poverty. The International Development Goals, most recently endorsed by the UN Millennium Summit in September 2000, represent the international consensus about how, at the global level, progress to that end can be achieved, and how to measure it. The goals have also be placed at the heart of the World Bank's approach to reducing poverty, as set out in its 2001 Strategic Framework Paper. They are therefore indispensable, under CDF, informing the choices which a country makes in setting out its long-term vision and medium-term strategies for reducing poverty.

4. Why Is This Approach Needed?

Achieving faster, sustainable development for poverty reduction–the goal towards which CDF contributes–is about much more than the balance of payments, or reserves or trade figures or GDP growth. It must recognize that poverty has multiple facets, of which income or wealth are only an element: others include physical security, environmental sustainability, and the ability of poor people to confront their future with confidence, as discussed in WDR 2000/01. Development is therefore about transforming whole societies. Experience shows that unless we look at both sides of a country's balance sheet–macroeconomic and financial aspects on the one side and structural, social, and human considerations on the other–we run a grave risk of misjudging a country's performance, as well as inadequately supporting its future development.

Experience also shows the need to identify and plan development projects and programs within a holistic approach. Otherwise, the projects and programs may not match the greatest needs, they may lead to duplication of efforts, and their prospects for success will be weakened considerably by a lack of parallel development of other supportive programs. Also, in a world of constrained overseas assistance and limited human resources to meet the global development challenge, we must be ready to contribute to constructive partnerships that bring together government, multilaterals and bilaterals, civil society, and the private sector, in a transparent and interactive process–with agreed long-term goals and the right cooperative spirit to achieve them.

The purpose of Mr. Wolfensohn's CDF proposal was to provoke discussion, experimentation, and action toward these objectives. In the last two years the development community has paid close attention to progress in the CDF pilots, and as a result there is today much greater convergence of views on the merits of implementing the CDF principles (see Answer F.5 below).

5. What Is The Value-Added Of The CDF?

While the term CDF can be viewed as "new", the principles which make it up can be seen as a natural evolution of the development community's role and broader development thinking. For example, as the Bank has moved beyond simply financing projects–and even beyond supporting only discrete policy reforms, such as trade liberalization–to addressing broader issues (such as human and social development, governance, and institutions) the need for a CDF framework has become apparent. The key is to transform the theory into actual practice.

In terms of value-added, the broader framework of the CDF can allow the participants of a country's development to think more strategically about the sequencing of policies, programs, and projects and about the better pacing of reforms. It can encourage a better balance between sectors and greater transparency in complementarities and tradeoffs between, macroeconomic and social needs. Further, the better alignment of strategies and greater selectivity for each player in the development effort–which the CDF can promote–will mean that there is greater policy consistency and that more can be done with available resources. The net result will to enable a country to have a more robust and sustainable approach to reducing poverty.

 B. The Principles

1. What is a Long-term, Holistic Vision?

Addressing a country's development priorities requires an overall conceptual framework, or vision, that provides the direction, consistency, and focus essential to sustain any long-term process. Experience from tracking CDF implementation shows that such a vision must have regard to all the CDF principles and must be country-specific.

To establish such a vision, the following elements are needed:

• A basic understanding of the nature of the opportunities and problems facing the country, together with knowledge of and experience about the constraints they face, including the government's capacity limits.
• A simple shared vision statement that sets out the country's aspirations over the next ten to fifteen years. This vision is about capturing the aspirations of the people. While realism and concreteness are desirable, it is more important that the vision authentically reflect the broad aspirations of the country.

The vision needs to be complemented by a strategy covering (say) three to five years, that sets out how the country intends to make progress towards its vision. This strategy needs to be realistic, and framed in terms of concrete time-bound actions geared to delivering specific development results. Partly because of this specificity, strategies cannot be projected as far ahead as visions, and will need to be reviewed periodically as circumstances change. The vision and strategy should be extensively disseminated to ensure widespread commitment and support.

2. What is Meant by Country Ownership?

The government needs both to exercise leadership and to have the capacity to analyze development opportunities and problems and plan and implement solutions (see Answer C.3 below for more on capacity building).

The requirements of leadership are best captured through four criteria set out by the Bank's Operations Evaluation Department:

• the locus of initiative must be in the government;
• key policy makers must be intellectually convinced;
• there must be evidence of public support from the top political leadership; and,
• there must be broad-based stakeholder participation.

The Government, therefore, needs to consult widely and build consensus internally–drawing on democratic structures as appropriate–with other parts of society, including civil society, the private sector and the country's external partners. The purpose of such consultation is to draw out ideas, knowledge and opinions and to promote consensus on the strategy expressed in the long-term, holistic vision.

3. What is Meant by Country-led Partnership?

Enabling the country to be in the driver's seat requires strong partnership among Government, at all levels, including representative institutions, civil society, the private sector, donors, international agencies and other development actors. Such partnership should:

• Bring together, within a single framework, under Government leadership, analytical and diagnostic work;
• Align donor actions to the national strategy and promote selectivity to avoid duplication;
• Reduce wasteful competition;
• Encourage common procedures and practices amongst all development partners; and,
• Support the government's lead in managing aid coordination.

4. Why is it Important to Focus on Development Results?

A country's national vision needs to link its overall aims to concrete development results, in a way which enables movement towards the aims of that vision to be assessed, through progress on the tangible, development results. These development results will necessarily be derived from the particular challenges that the country faces. However, since a key aim of the CDF is more effective and sustainable poverty reduction, they are likely to be in the same areas as the International Development Goals which emerged, mostly from agreements in UN conferences, during the 1990s, and reaffirmed at the UN Millennium Summit in September 2000.

C. Issues to Which CDF Relates

1. Is Macroeconomics Still Important?

The CDF proposal noted that:

"An appropriate macroeconomic framework is essential for our work, but…We cannot adopt a system in which the macroeconomic and financial is considered apart from the structural, social and human aspects, and vice versa. Integration of each of these subjects is imperative at the national level and among global players".

The CDF facilitates the integration of macroeconomic and financial issues with structural and social policies through its emphasis on country ownership, broad sectoral coverage, a medium- to long-term horizon, and its focus on development results. The CDF will strengthen the Bank's focus on questions such as: What are the sources of growth and what are its prospects? What are the linkages between growth processes and poverty reduction? How do policies, institutions, social, structural, sectoral and environmental conditions interact to affect growth? How are the benefits of growth distributed? How can the quality of growth be enhanced to maximize benefits for the poor? The holistic, long-run approach of the CDF naturally highlights these complex but critical questions.

The CDF also draws attention to other important macroeconomic and sector policy issues, such as ensuring the long-run fiscal sustainability of the country's development strategy; evaluating the medium-term external financing needs generated by the country's development strategy; and addressing the tough economic management issues faced by countries that are subject to repeated shocks such as droughts or large commodity price swings. Reflecting the approach of the CDF, discussions of policy in recent Bank analytical work increasingly focus on these kinds of long-run issues.

The World Bank works closely with national governments and other development partners, such as the IMF, to help countries better integrate macroeconomic, structural and social policies in country programs to achieve reductions in poverty, sustainable growth and development.

2. What is Meant by Structural and Institutional Issues ?

It is well established that institutions are at the core of sustainable development. Institutions which provide predictability and work reliably provide the foundation to make effective long-term decisions. At the country level, institutional structures which promote such reassurance include those which promote:

• Good and Clean Government, including financial management and procurement systems;
• An Effective Legal and Justice System;
• A Well-Organized and Supervised Financial System; and
• A Social Safety Net and Social Programs.

The CDF principles place a particular emphasis both on the need to develop or strengthen these institutions and support their development.

3. What is Capacity Building? Why Does it Matter?

Governments need relatively well-developed organizational capacity to be able to own and manage the development process. That is, they need organizations which are adequately managed and staffed to define development problems, consult with multiple stakeholders, identify appropriate strategic responses and orchestrate the actions needed for their implementation. This kind of capacity takes time to develop and in many countries there are difficult structural and institutional issues needing to be addressed simultaneously. Governments must be ready to manage the potential tension between capacity constraints and the need for structural reforms, and between the formulation of domestic policy choices and external policy advice.

Implementing the CDF approach is a promising way of addressing institutional and structural reforms, on one hand, and organizational capacity, on the other. Both these sets of issues must be integral to the country strategy process. The Bank is ready to support capacity building under the CDF, and indeed sees it as a necessary ingredient, and it will look to individual governments to take the lead in defining the scope and pace of their development.

Where the country does not have adequate capacity, the international community should support and help the authorities to establish, own, and implement programs that fill the gaps. This will include efforts better to define the capacity needed, for example, through country-level, procurement or financial management assessments. At the same time, capacity building activities themselves provide increasing opportunities for more effective donor coordination and for scaling up their impact. The positive news is that, in all countries where CDF implementation has been tracked, efforts are under way to strengthen capacity. However, in most cases, these efforts still are inadequate and special attention to capacity-building and knowledge transfer should continue.

4. Does CDF Take Account of Trade Issues?

An appreciation of the impact of trade policies is an important element in the comprehensive, cross-sectoral and long term approach to development fostered by the CDF. Trade policies can have a significant effect on the level and distribution of income, how resources (labor, capital, etc.) are allocated among different sectors of the economy, what techniques of production are used, access to foreign technology, capital equipment and investment, and rate of economic growth in the long run. The partnership dimension of the CDF can also facilitate a dialogue on mutuality in trade relations.

Over the past two decades, many developing and transition countries have dramatically liberalized their trade policies by removing or reducing trade barriers such as quantitative restrictions on trade, tariffs and foreign exchange controls. There is increasing recognition that, for countries to draw the fullest benefit from integration with the world economy, they also need to move beyond reducing "traditional" trade barriers to more difficult institutional reforms. These issues include, for example, the efficiency of customs, ports and other logistical facilities, the quality of domestic competition policies, performance and competition in services industries (especially in vital intermediate services such as telecommunications and financial services), government procurement practices and the role of product standards and regulations. A comprehensive framework for development facilitates this integrated view of trade policy and development strategy, as set out in Mr. Wolfensohn's speech to UNCTAD X in Bangkok, and in the communiqué from the Development Committee meeting on April 17, 2000.

5. Where Do Labor Market Issues Fit In?

Labor markets are critical to development, and have wide-ranging effects on economies and the lives of people. As the CDF provides a holistic approach to development, and labor accounts for the bulk of personal incomes, labor issues are vital in the CDF. The Bank is working in partnership with other institutions such as the International Labour Organization (ILO), the World Congress of Labor and the International Confederation of Free Trade Unions, on these labor issues.

Well functioning labor markets can contribute to economic growth and poverty reduction. This is especially important to the poor in developing countries, as many have labor as their only asset. Productive employment can bring about social development not only through income generation and poverty reduction, but by creating a sense of dignity and self-worth to the individual and, at the aggregate level, contributing to social harmony. These benefits also depend on the quality of employment provided. The World Bank recognizes and supports the ILO's emphasis on Decent Work as an important component of social development. In the absence of a smooth functioning labor market, economic deprivation and social exclusion may result, which tends adversely to affect minorities, women and children in particular. Further, there is widespread recognition that labor-intensive growth is key to reducing poverty. Creating the conditions for achieving labor-intensive growth remains a challenge especially in low-income countries. The broad approach of the CDF is likely to be of assistance in addressing the complex, multi-dimensional issues raised by this challenge, and the participatory nature of CDF increases opportunities for labor to be consulted and heard.

6. How Does CDF Address Gender Issues?

Gender disparities exist in every country of the world. The evidence suggests that eliminating these disparities would reduce poverty and enhance economic growth. Gender issues therefore need to be part of the consultation process with all partners on the CDF, and for all topics.

When discussing the various prerequisites for development, it is therefore important to identify gender issues that are inhibiting development in that area–and ask how problematic gender disparities can be eliminated. For example, when discussing governance issues, it is important to ask whether women have an effective voice in government policy making. This is important given the evidence that the inclusion of women in governance reduces corruption. Similarly, with regard to the legal and judicial systems, it is important to ask whether existing laws and their enforcement treat women and men equitably, since inequitable treatment often underlies the inability of women to make a full contribution to economic productivity. With regard to safety nets and social programs, a critical question is whether such programs adequately recognize the vulnerability of women to demographic and economic shocks, caused by their dependency on male family members for income transfers. In areas such as agriculture and water and sanitation, the important questions include whether women's distinctive roles in the sector have been adequately addressed in the design of sectoral programs.

The CDF process provides an opportunity to ensure that all interests are fully reflected in determining government priorities. Thus most of the countries where CDF implementation has been tracked explicitly highlight gender issues in their strategies, both specifically, and as a cross cutting theme. Examples include Bolivia, where they have established indicators of progress which, especially for the Equity Pillar, focus on improving the welfare of women and children. The Dominican Republic now aims to promote equitable access to justice for women and men. Eritrea's strategy recognizes that much needs to be done if women are to be fully empowered–and sets out specific measures to address this aim. In Morocco, a National Action Plan for the integration of women in development is part of the National Development Plan for 2000-2005. Romania's new strategy specifically covers, among other things, increasing the number of women in key positions in the public and private sectors, strengthening the legal framework on violence against women, and the provision of workplace child care.

7. How Do Global and Regional Issues Fit In?

Global and Regional issues are of increasing importance in dealing with the challenges of development. From the environment (climate change, deforestation, water use and flood control) to health (vaccines, aids) to trade (market access, labor standards), issues that transcend the nation-state are now near the top of the development agenda.

The holistic nature of CDF, and the active dialogue between domestic and international partners, should assist developing country governments and donors formulate coherent responses to regional and global challenges–in particular, addressing how to anchor these responses in a local reality.

Opening avenues for partnership by developing countries in regional or global initiatives (such as the Strategic Partnership with Africa (SPA) and the Global Alliance for Vaccines and Immunization (GAVI)) remains a challenge for the international community. An important element is information access and knowledge sharing. The Global Development Gateway, being promoted by the World Bank and a network of partners, is an important initiative, that supports CDF at the country level and has the potential to strengthen regional and global collaboration.

D. Roles under the CDF

1. What Does Government Have To Do?

Government's role, as leader of the CDF process at country level, necessarily includes work to initiate a vision, including a stronger focus on development results, and to strengthen ownership and partnership. In all these areas, government will need to draw on all interested parties to the extent feasible. The means of involving such interests will vary from country to country, partly depending on the maturity of the country's governance processes and institutions. It is very important that this process build as far as possible on the existing democratic institutions at local and national level. A central aspect of implementing the CDF in a country, however, will be support for government efforts to draw out the views of different stakeholders, for example, through:

The emphasis on promoting broad ownership that includes civil society, agencies and the private sector, and the focus on key, long-term development priorities, means implementation of the CDF approach should aim to transcend government changes and strengthen the sustainability of development efforts.

2. Are Parliament and Other Democratic Institutions Involved?

The process of building a national consensus and ownership of a country's development strategy is vital to the CDF. It is essential that Parliaments and other democratic institutions in the country are fully involved in this process. In Bolivia, members of Parliament discussed and approved the National Action Plan. In Ghana, its national strategy, Vision 2020, originated as a report to Parliament, which provides a focus for policy debate. In Uganda, the Parliament is becoming increasingly involved in discussing development issues.

3. Do Poor and Minority Groups Have a Say?

One of the most important principles in the CDF is that of country ownership of the development agenda. In this process of national consensus building, it is vital that ownership be expanded as broadly as possible, so that the poor and minority groups are fully involved, and are not disenfranchised. This emphasis, on giving a voice to the poor, will make it more likely that resources go where they are most needed–and that the benefits can be sustained. This presents a major challenge and may require special efforts, including, where necessary, strengthening the capacity of civil society groups, to ensure that the consultative processes with the poor and minority groups are meaningful exercises.

4. What Role is There for Civil Society (including NGOs)?

Civil society involvement is central to the partnerships approach and consensus building essential for the success of the CDF. Civil society includes NGOs, Academia, Faiths and Labor organizations. The involvement of civil society in defining the national strategy and its priorities, represents a major shift in promoting development. It is also a key aspect of country ownership of the policy agenda, as distinct from government alone defining the strategy. Increasingly, civil society (including NGOs) plays a crucial role in promoting development at the grass roots level and is an important vehicle for giving voice to the poor and marginalized. Nevertheless, civil society is not a homogeneous group and engaging its representatives in the policy debate must be defined by country-specific circumstances and not be a substitute for, or undermine, local democratic institutions.

Even the choice of who should speak on behalf of civil society can pose certain challenges. In Ghana, Bolivia, Uganda and several other countries, conscious efforts to include civil society in policy discussions, as well as in policy implementation, have revealed the need to build both capacity and organizational structures that would allow for constructive engagement in the policy debate.

In principle, civil society can also be an important player in carrying out analytical work jointly with the country's government and other partners, where the capacity is available. Although this remains largely a potential at present, it holds promise for the future.

5. What Role is There for the Private Sector?

A significant change in the approach to promoting development is the increasingly important role of the private sector as a primary vehicle of sustainable growth–and with other complementary measures–of poverty reduction. The domestic private sector and in particular the rural traders, contractors and other entrepreneurs, often not formally recognized, are too often forgotten, despite their crucial role as key actors in rural areas where the great majority of the poor live. The CDF recognizes this role and advocates the full participation of the private sector in the policy debate, consistent with the need for inclusiveness. There is growing evidence both from the CDF pilots and other sources, that the private sector is now increasingly included in the policy debate: For instance, Consultative Group (CG) meetings now involve private sector participation either directly by way of a seat at the table, or indirectly through separate meetings.

As an example in Vietnam, the private sector was involved for the first time in a CG in 1999, and a Private Sector Forum has been established with the aim of identifying constraints to the more rapid expansion of its role. This has resulted in new legislation removing many of the bottlenecks and creating a better business environment for both foreign and local companies. With more CGs held in the field, the scope for private sector participation is becoming much larger. It is expected also that improved governance and judicial reform, both important aspects of the CDF, will provide a more suitable environment for private sector activity. However since, in many countries, the private sector is not well organized, if at all, innovative approaches are needed to secure the inclusion of the private sector as a whole, including the rural, informal and ethnic minority elements which in many countries play a dominant role.

6. What is the Position of The International Development Community?

"The key point about the CDF is that it's a basis for bringing people together–not necessarily under World Bank leadership. In some cases the Bank will lead, in some cases it will follow, and in some cases it will not be there at all."

–J. D. Wolfensohn

The principles underlying the CDF reflect the principles espoused by the World Bank/IMF Development Committee, the Development Assistance Committee of OECD, the EU, the UN, and bilateral donors. This convergence is reflected in a recent paper by the OECD's Development Assistance Committee (DAC) entitled On Common Ground.

The CDF aims to give all the actors involved in a country's development the information that provides a basis for each to contribute according to their comparative advantage. The actual arrangements for inter-agency coordination and division of labor will be unique to each country following the CDF principles. It will be important to ensure that these arrangements do not undermine the country's ownership and decision-making power and that they facilitate the participation of all major stakeholders. Each agency will remain individually accountable for carrying out its agreed contributions. However, effective partnerships, essential for the success of the CDF approach, require active nurturing of mutual trust and confidence among the players. Equally, the CDF will also mean changes in the culture and attitudes of all partners.

7. How Are Bilateral Donors Involved?

Experience in the past, and from some of the CDF countries, shows that bilateral donors are prepared, and in many cases very keen, to move toward greater cooperation to avoid duplication of analytical work, and to harmonize their processes for appraisal, monitoring, and evaluation–thus increasing their efficiency and reducing the workload for countries. Many have also welcomed the focus on development results, and are prepared to help countries measure and monitor key indicators more effectively. Recent policy statements have re-emphasized this commitment, for example the EU, both in the text of the Cotonou Convention, and specifically in the statement on the European Community's development policy, requires the Community to "also encourage the partner country in its leading role in coordinating the collective efforts of all the donors under initiatives such as the Comprehensive Development Framework.". Another recent example is the British Government White Paper on globalization and the poor.

Uganda's experience shows how various donor initiatives can be brought together. The Consultative Group meetings held in Kampala, in December 1998 and March 2000, drew broad representation from the private sector, civil society, the donor community, and the government, with full participation of the President, parliament, and the cabinet. These meetings are also part of a broader process of discussion on macro and sectoral issues, which has improved government interaction with donors, and helped better to define the sorts of programs that are needed.

8. What is the Role of The Regional Development Banks?

The regional development banks are key actors in all the CDF countries, bringing a regional perspective that complements well the World Bank's global perspective. From the outset there have been regular consultations with the main regional development banks (African, Asian, Inter-American, European) on how to collaborate in support of countries piloting CDF. These processes have been strengthened by the extension of the CDF principles to PRSP countries. There are regular meetings between World Bank and regional bank operational managers in several of the pilot countries ( Côte d'Ivoire, Ghana, Ethiopia, Uganda, Vietnam, Kyrgyz Republic, Bolivia). They also seek to identify synergies and resolve issues of potential duplication of interests at the country level. Joint team–building seminars, involving World Bank and regional bank staff, have taken place in some of the pilot countries.

Recently the World Bank has entered into specific agreements with the African and Asian Development Banks to foster closer collaboration at the country level, reflecting the principles of CDF. The World Bank and some of the regional banks have a different level of country presence in the CDF pilot countries, which requires closer collaboration than ever before. The regional banks are in turn expanding and strengthening their field presence.

At the institutional level, the MDBs (World Bank and regional banks) have established working groups to harmonize various operational policies and procedures, that have an impact on the effectiveness of implementation of programs and projects at the country level (procurement, evaluations, environmental assessments). Through harmonization it is anticipated that scarce resources in client countries can be freed up for more productive work, and also reduce the transaction costs of aid delivery. The MDBs also are actively engaged in efforts to build coherence in analytical work and advice given to governments, addressing for example issues such as financial sector reform, governance and private provision of infrastructure.

The MDBs and IMF jointly prepared a report on combating poverty, for the G8 meeting in Okinawa in July 2000, which said that "…Multilateral Development Banks and the International Monetary Fund have a central role to play at the country level, where they provide policy advice and financial and technical support for long-term, country driven programs..". They have also jointly established a protocol on how to work together in support of governments preparing PRSPs, which commits them to "…supporting the development of country-owned development strategies, focused on poverty reduction through sustainable growth and direct public action.". Meeting in Washington DC in February 2001, MDB Presidents jointly committed all MDBs to a statement supporting the CDF principles of country ownership, a comprehensive approach, partnership and a focus on results.

9. What is the Role of The International Monetary Fund (IMF)?

The World Bank and the IMF have a long-standing partnership in assisting member governments achieve sustainable growth and development. This partnership recognizes the primary responsibility of the Fund for macroeconomic stabilization and surveillance, and the primary responsibility of the Bank for structural and social issues. The CDF approach does not presume any changes in the mandates and responsibilities of the two institutions. However, the CDF and PRSP have enhanced the development impact of this partnership because it further emphasizes country ownership; broadens and deepens sectoral coverage; places strategies and policies in a longer-term horizon; stresses that to be effective, economic programs need to be comprehensive and holistic; and require the support of a broad-based international partnership extending beyond the Bank and the IMF. (see also Answer E.2. below on Poverty Reduction Strategy Papers (PRSP)).

The strength of this partnership was demonstrated by the joint statement of September 5, 2000 from the Managing Director of the IMF and the President of the World Bank on an Enhanced Partnership For Sustainable Growth And Poverty Reduction. This statement sets out their joint vision for the roles of their institutions and their enhanced partnership in the new century. They stressed that the work of the Fund and the Bank has become even more essential in helping to promote financial stability, sustainable growth and poverty reduction. They see the Fund and Bank being guided by the same set of principles, derived from five decades of experience:

• A comprehensive approach is required to address the multidimensional nature of sustainable growth and poverty reduction: macroeconomic stability, open markets and a vibrant private sector; investment in people, especially through basic health and education; good governance and sound institutions, free of corruption; protecting the environment and nurturing the natural resource base; respecting and preserving cultural heritage and diversity; an attractive climate for both domestic and foreign investors; and going beyond the income dimensions of poverty to address issues of empowerment and security.

• For growth and development to be truly effective and lasting, it must be equitable. Barriers related to gender, ethnicity or social status need to be overcome. The benefits of development must be accessible to all.

• Country ownership is paramount, with nations accepting responsibility for their own development, and with strategies tailored to country circumstances and involving broad-based participation;

• Support should be linked to levels of performance;

• Transparency is important to ensure clarity and accountability around roles, responsibilities and outcomes.

10. What is the Role of The United Nations System?

Today, there is consensus between the UN, the World Bank and its major development partners regarding the links between social development and a sound macroeconomic and structural policy environment and, an agreement on the need for close cooperation and partnership. This approach has been endorsed by the heads of all the UN Funds and Programs. The UN Development Group leads on this work, at the request of the UN Deputy Secretary General.

Work is under way to better integrate frameworks such as the UN Development Assistance Framework (UNDAF) and the UN Common Country Assessment (CCA) with the CDF and PRSP, in the common interest of creating a coherent, integrated approach that supports a country-led national development strategy. UN Resident Coordinators have been encouraged to engage with the CDF based on the comparative advantages of the various UN agencies working locally. (See also Answer E.7 below.)

UN agencies have also designated CDF Focal Points to provide useful feedback on pilot activities and as a way of identifying how to strengthen partnership with other players involved at the country level. These focal points–including from the World Bank–meet regularly to review progress.

E. Policy and Strategy Processes to Which CDF Relates

1. What is The Relationship Between These Processes?

There are a variety of processes intended to support the efforts of developing countries to reduce poverty, which include, but are not limited to, those set out in subsequent answers. The CDF aims to be holistic by providing a framework through which all these processes can be related together in a coherent way which avoids wasteful competition. The CDF principles set out elements for the long-term, and an overall approach to making progress sustainably in reducing poverty. These elements may be in place, whether or not they are formally acknowledged as CDF principles or not. For example, in some countries similar ideas have been strengthened through the development of a national strategy for sustainable development. The essential is the substance of what happens rather than the label. Within that overall approach, Governments still need to set out their concrete plans for making progress in the short or medium term: such plans might typically be captured in a three to five year country strategy and in the medium-term expenditure framework. In turn, there needs to be a clear link between the country strategy and the specific activities pursued by each internal and external partner pursuing poverty reduction in that country. That link is typically captured in a country business plan for that partner. The aggregation of such business plans should in turn contribute to that partner's overall aims for poverty reduction, and the achievement of other relevant agreed international development goals.

These relationships can also be set out graphically as in the DF process diagram.

2. Where Does the Poverty Reduction Strategy Paper (PRSP) Fit In?

Development Committee Ministers decided at their September 1999 meeting, that the PRSP is to be prepared in accordance with the CDF principles. It integrates poverty reduction policies with a coherent, growth-oriented macroeconomic framework. As with the CDF, national governments are responsible for the preparation of PRSPs, with the participation of domestic and external partners. External partners are encouraged to assist governments in preparing PRSPs, and to link their development efforts to them. A PRSP must be broadly endorsed by the Bank and the Fund Boards to provide a basis for both institutions' concessional programs in low-income countries, and for countries to obtain debt relief under the HIPC initiative. It provides a medium-term (typically three-year) framework, which will require periodic up-dating in the light of events and experience. Thus, the PRSP is an operational vehicle–which can be a specific output of processes based on CDF-principles–that is intended to translate a country's poverty reduction strategy into a focused and time-bounded action plan. Indeed, countries using the CDF (such as Ghana, Uganda, and Bolivia) have been at the forefront of those successfully preparing PRSPs.

The CDF and the PRSP should be mutually reinforcing. The PRSP process will focus the attention of a larger number of governments on CDF principles. It will also ensure more effective collaboration between the Bank and the Fund in supporting countries, as specifically requested by their major shareholders.

The preparation of a PRSP inevitably brings with it some challenges:

• First, time is needed to allow for the development of a fully country-owned and participatory process, while not unduly delaying the delivery of debt relief or development assistance.
• Second, there is a need to ensure that all development partners are given an opportunity to be included fully and early in the process.

3. What About the CDF in Middle Income Countries?

The World Bank established a Task Force on the World Bank Group and the Middle-Income Countries in September 2000 to explore how the Bank Group can best help middle-income countries (MICs)–defined by the Task Force's terms of reference as the countries that are eligible for IBRD funding. That task force found that the MICs share a number of development challenges: persistent poverty; social, structural, and sectoral constraints; the need to improve the investment climate; and varying access to international markets and private capital flows. Having significantly improved their basic microeconomic and macroeconomic policies and institutions, many MICs now find that the principal constraints to faster sustained growth and poverty reduction lie in their strengthening social, structural, and sectoral policies and institutions. In addition, a large proportion of the world's poor people live in MICs, so helping these countries meet their development challenges is central to the Bank Group's overarching mission of tackling global poverty. On this basis, the CDF principles–a long-term, holistic vision, country ownership, partnership and a focus on results–are equally applicable to MICs as to low income countries.

4. How Do The Bank's Country Assistance Strategy (CAS) and other Development Agencies' Plans, including Integrated Trade Strategies, Relate to National Strategies?

CDF covers the totality of a country's long-term development strategy, and is especially useful in helping countries to design, sequence, and coordinate their overall development programs. With the central importance it attaches to country ownership of such national development strategies, CDF can help marshal wider support for addressing a well-recognized problem–the proliferation of CAS-type documents among bilateral and multilateral donors, including the WTO-led integrated trade strategies–which is increasingly burdening clients. A country-owned CDF-based vision provides the basis for a medium-term development strategy, around which all the country's external partners should be ready to organize their support, and on which they can focus their individual business plans.

The CDF and the Bank's CAS are therefore fully complementary. As set out in the Bank's 1999 CAS II Retrospective, the CDF provides the national-level umbrella under which each partner can prepare its own CAS or business plan. In this context, the CDF provides a basis for continued CAS reform, by enabling further unpacking of the CAS assistance services from loans, and so that the CAS can be refocused more sharply on the World Bank Group's program, within the broader context of the CDF, together with any medium term plan for taking CDF principles forward. An example of this approach is the latest Ghana CAS which is in two parts: the first part is a medium-term strategy for Ghana, written by the Ghanaian Government, and presented by them (via a video-link) to the World Bank's Board. The second part focuses specifically on the Bank's plans for supporting that Government strategy. As lessons are learned in the CDF pilots, they are being reflected in Bank CASs, programs, and operations.

5. How Do the International Development Association (IDA) Goals and Objectives Relate?

The CDF is fully consistent with IDA goals and objectives:

6. How Do National Strategies for Sustainable Development Relate to CDF?

The 1992 UN Conference on Environment and Development, in Rio de Janeiro, mandated countries to develop National Strategies for Sustainable Development (NSSD). This mandate was picked up in the international development goals, one of which requires that "There should be a current national strategy for sustainable development, in the process of implementation, in every country by 2005, so as to ensure that the current trends in the loss of environmental resources are effectively reversed at both global and national levels by 2015."

As CDF, and particularly the development of PRSPs, have moved forward, the potential for overlap and duplication between this approach and National Strategies for Sustainable Development has become very evident. However, such incoherences are avoidable. Both approaches emphasize the importance of substance rather than format, both stress country ownership and leadership, so the key is that countries need to have robust strategy making and implementing mechanisms, which address the key objectives of CDF and the Rio Conference–which also overlap extensively. Provide such robust processes exist, their outputs should easily meet the requirements of both initiatives, whatever name the strategy may have. In this way, at country level, the government can ensure the two initiatives converge into a single process.

7. How Do the United Nations Common Country Assessment and Development Assistance Framework Relate?

The UN Common Country Assessment (CCA) and UN Development Assistance Framework (UNDAF) are both instruments intended to improve coordination at country level among the UN agencies, and the effectiveness of their support to Government. As such they are entirely consistent with the CDF, albeit within a more specific context. In developing a national vision, a government will be expected to draw on the widest possible sources of analysis and advice. It is therefore to be expected that the UN's assessment of their economic problems and prospects, as captured in the CCA, will make an important contribution in the formulation of country strategies. Equally, in assembling a better picture of the range of interventions contributing to the country's development, the UNDAF will helpfully articulate the UN's role. See also Answer D.10 above on the UN System.

F. Implementation

1. How is the CDF Being Implemented ?

Mr. Wolfensohn's proposal for a ‘Comprehensive Development Framework' was launched on January 21, 1999. It was endorsed by the Development Committee of World Bank Governors at the 1999 Spring Meetings. As promised, Mr. Wolfensohn reported on progress to the World Bank Annual Meeting in September 2000 in Prague.

The CDF was originally tracked in the West Bank and Gaza and in the following eleven countries: Bolivia, Côte d'Ivoire, the Dominican Republic, Eritrea, Ethiopia, Ghana, Kyrgyz Republic, Morocco, Romania, Uganda, and Vietnam. which expressed an interest in taking part. In addition, progress with implementing CDF principles is being tracked for all countries which have developed PRSPs or interim PRSPs The diversity emphasizes that the CDF approach is relevant to a broad range of countries and that there are no set criteria, other than that the government embrace the concept. Country ownership is at the core of the selection criteria. Significantly, a growing number of "non-pilot" countries are implementing elements of the CDF approach. Over time, this practice will embrace even more "non-pilot" countries.

2. How Can the CDF Matrix Help With Implementation? What Does it Contain? How Does It Relate to the Global Gateway?

The CDF matrixis intended as a management tool, to provide all players involved in a country's development, especially the national governments including parliamentary bodies, a shared framework of information, around which to coordinate efforts. The matrix can also be used for examining the roles of different stakeholders and for identifying inter-sectoral linkages and information gaps.

The way the matrix is used will vary from country to country depending on individual circumstances and country-specific priorities. It aims to provide a rational starting point for defining each nation's development essentials in relation to issues such as:

Each country will have its own unique priorities that should be included and become the focus of the matrix, as it evolves over time. Attention to fiscal issues, trade and regulatory issues, the labor market and employment conditions, and the role of the private sector, for example, will depend on the characteristics of the country and the results of the national dialogue about priorities and programs needed to address them. In some cases, the CDF matrix will also provide a basis for discussing the impact of external global and regional issues in a given country as well as risks and vulnerabilities, such as natural disasters. In sum, the CDF approach–and therefore the matrix also–focuses on each country's development essentials, including economic, social and human development and good governance.

The individual country concerned designs and "owns" the matrix, and several have already developed preliminary web sites. But, it takes time to build a consensus in countries and among the development agencies supporting them. What is crucial is to set up and nurture a mechanism and process by which a version of the matrix appropriate to the country can be agreed upon when the time is right.

The Global Gateway is being developed by the World Bank and other partners, as a way to make use of information and communication technologies for the benefit of developing countries. It will be used as a tool to provide access to knowledge about development, both that which is available globally, and that which can support coordination among development partners at the country or project level. To that end, some countries may choose to link their CDF Matrix into the Global Gateway, where they find that helpful.

3. Does CDF Allow for Individual Country Circumstances?

The original CDF pilots aimed to put into practice a critical mass of the CDF principles, as also, increasingly, do the PRSP countries. But in each one, the approach taken and the timing of progress has and will depend on country circumstances, including the interaction between the government and internal and external stakeholders. In some countries steps towards implementing the CDF principles preceded the CDF proposal. The pilots used the CDF to craft their own programs and experiment with different ways of working–for example, greater partnership and stronger ownership. Different areas of initial emphasis clearly reflected different country circumstances, and different baselines. In addition, disasters, such as floods in some cases and droughts in others, economic setbacks such as changes in commodity prices, and political events, have also had an impact on country ability to focus on a longer term, holistic development agenda. So there has been and will be no single model for the CDF.

The CDF principles emphasize country ownership and leadership. Whether or not it is part of any wider process, any country which wishes to adopt part or all of the CDF approach, is free to do so. In many cases, the move towards adopting CDF principles in particular countries has started at a sectoral or regional level. Such a step-by-step approach may be particularly helpful in some cases. The Bank is also looking for signs that in addition to governments, other agencies and stakeholders are ready to start joining in–taking into account its own knowledge of the country concerned. It has also been possible for some Bank country teams to support exploration of elements of the CDF approach, particularly in the context of Bank Country Assistance Strategies.

4. How is Progress under the CDF Being Assessed?

Since Spring 1999, the Bank has followed the efforts of pilots with interest, and elicited inputs and guidance from all our partners on the CDF concept and its operational feasibility–with participation and shared learning that are as broad as possible (for details see Answers F.5 and F.6 below). As progress in implementation of the CDF has been tracked, the emphasis has not been on isolating the influence of the CDF proposal, but on capturing the implementation of the CDF principles, in whatever form. Having said that, the initial time frame for tracking the CDF (March 1999-July 2000) was clearly too short for a definitive assessment of the developmental impact of the CDF. However, it has been long enough to show that countries, together with major stakeholder groups, can put into practice the CDF principles and the kind of consultation and consensus-building processes needed for the CDF to work. A first progress report was published in September 1999, and a second in June 2000. A report on the full pilot period was submitted to the Annual Meetings 2000 in Prague.

Since that report was published, the scope for tracking the implementation of CDF principles has steadily broadened, as an increasing number of countries put in place full or interim PRSPs, reflecting CDF principles. Experience in these further countries is progressively being captured in the overall CDF tracking mechanism, in addition to the original pilots. As CDF implementation spreads more widely among Middle Income Countries, coverage in those countries will expand similarly.

Governments and partners now need to track indicators depending on the goals they have agreed at the outset. The choice of specific indicators, and of how they will be monitored, will depend on the government and its development partners, both external and internal. In most of the countries undertaking the CDF, the discussion of indicators is still in its early stages. In Bolivia, for example, discussion has focused on long-term, internationally agreed development goals and on what needs to be done to achieve them.

The Bank's Operations Evaluation Department and Development Economics Department are jointly consulting with the DAC's Working Party on Evaluation about a planned three-year research evaluation of the CDF, which is expected to shed more conclusive light on the impact of the new approach. That evaluation is also expected to consider the costs and benefits of implementing the CDF.

5. What Progress Was Made in the Pilot Period (March 1999-July 2000)?

CDF principles have been widely accepted, and underscore the growing convergence of views in the international community, on a sustainable approach to poverty reduction. As the latest report sets out in detail, there has been progress across all the twelve pilots being tracked in implementing the principles, although the situation varies. Indeed, in some pilots, unforeseen events or external shocks have affected the pace of progress. In terms of the overall principles, those elements that have worked well include:

• Some concrete steps have been taken to formulate long-term national development frameworks, drawing on broad-based participation and generally complemented by medium-term strategies with clearly defined priorities and monitorable development goals. Some existing visions that predate the CDF are being reviewed. Most of the countries have well-articulated medium-term strategies linked to the visions.
• Countries are now giving greater attention to balancing macroeconomic with structural, human, and physical requirements. Correspondingly, they are making more efforts to identify the tradeoffs entailed in balancing priorities.
• All countries where CDF implementation has been tracked have, to varying degrees, begun a process of national consultations for formulating development strategy or medium-term action plans, though mechanisms and progress vary considerably across countries.
• Governments are starting to assert ownership by taking the lead in aid coordination activities, including chairing in-country meetings with donors on a regular basis.
• Experience shows that holding the main consultative group (CG) meeting in the country's own capital is a valuable way to nurture and broaden country ownership, and does not adversely affect the debate or the level of participation from donor capitals–as some donors had feared. An inceasing number of countries have had successful in-country CG meetings.
• Where civil society and the private sector have emerged as key forces for change, this has helped sustain the CDF approach through a change in government. The inclusive approach, now reinforced by the Poverty Reduction Strategy Process (PRSP) where applicable, should further deepen the involvement of domestic stakeholders in the policy debate.
• Stronger partnership is emerging in varying degrees in all pilot countries, both among assistance agencies and between these agencies and the countries.
• Sector and thematic groups comprising both government and donor representatives are now operational in several countries and meet regularly to exchange information and facilitate learning.
• In several countries, donor assistance strategies are increasingly better aligned to the national medium-term development strategy.
• Donors are gradually becoming more selective in their interventions, following their comparative advantage.
• There is a much greater sense of urgency for harmonizing donor policies and procedures to reduce the burden on clients and make the aid delivery process more effective.
• Governments increasingly recognize the need to take a more strategic approach to the gathering and dissemination of information regarding the CDF and a number of country-specific websites are already operational.
• Progress is being made in some pilot countries to develop a CDF matrix, or one like it, setting out details of individual stakeholders' activity sector by sector.

6. What are the Emerging Issues?

Pilot experience has identified the following as key issues needing to be addressed:

• Institutionalizing national consultation processes is proving to be politically sensitive; clearly, the pace cannot be faster than the capacity of existing democratic institutions permits.
• Focusing on the long term can be very difficult where a country faces a crisis. Some of the countries in which CDF implementation has been tracked either do not yet have a long-term vision or have only recently begun work towards one, while others do not yet have adequate medium-term strategies.
• Focusing on all the four key CDF principles simultaneously–which is an important lesson emerging from the country experience–remains a challenge particularly for some countries.
• The Bank and development partners generally need to show more confidence in country ownership, by allowing the time and space needed for ownership to be expressed, and being prepared to let go.
• The attainment of full country ownership will require more strategic support for capacity building, including supporting understanding about what capacity is required, and changes in the policies, practices, and procedures of the wider development community to nurture what is often a delicate process.
• Countries, in collaboration with their external partners, should consider defining additional concrete steps for making progress in supporting government leadership, e.g. through stronger country involvement in upstream joint analytical work–before policies and programs are formulated.
• Governments generally prefer domestic stakeholders to be engaged in the policy dialogue through established or strengthened democratic institutions, including parliaments, rather than through ad hoc consultation mechanisms. Some governments still question the need to involve domestic stakeholders in policy discussions, since , from their point of view, it is unclear to whom these stakeholders are accountable and since these governments are the elected representatives of the people.
• Concrete progress in harmonizing donor practices and procedures remains limited both at the institutional level and at the country level, reflecting long-standing ways of doing business as well as constraints in donor capitals.
• The need for donors to demonstrate their individual contributions reduces aid effectiveness in almost all pilot countries. Where it dominates, it preempts more effective government leadership.
• Achieving greater selectivity and reducing duplication of effort and wasteful competition will require much better upstream coordination of analytical work among partners.
• Development of institutional capacity in partner countries needs strategic–not project by project–attention to allow for more effective partnership.
• As can be seen from the reactions at the WTO meeting in Seattle, and the April and September 2000 World Bank/IMF meetings, much suspicion still exists on the part of certain well-organized members of civil society.
• Progress in developing the CDF matrix has been slower than originally anticipated. There are still barriers to the disclosure of information.
• While country-specific indicators of performance are available for a few pilots, most have not yet completed their preparation.
• Much work is still to be done on building monitoring and evaluation capacity in-country.

7. What is the Way Forward?

The CDF has implications for how the Bank works and for the larger development community. With a significant number of PRSPs already under way, application of the CDF principles well beyond the original pilots is gaining momentum. At the sub-national level, this is happening in both low- and middle-income countries, for example through the City Development Strategy initiative, which applies CDF principles and objectives at the city level.

As the CDF process evolves, the Bank needs to pursue a number of actions. External partners and the countries themselves may wish also to draw out the implications from their own perspectives. These actions are identified in the Executive Summary of the CDF Report on Country Experience.

G. CDF and the World Bank

1. Will the Bank's Policies and Procedures Change under the CDF?

The ways in which Bank country teams have supported the CDF pilots have complied with the pre-existing Bank's Board-approved policies and procedures–including the environmental and social safeguards, fiduciary policies (including those for procurement), contractual and legal procedures, and disclosure policy. At the same time, country teams working on CDF and PRSP have flexibility to experiment with internal non-policy-related procedures, such as those for project documents and internal processing. Any recommendations for changes in Board-approved policies and procedures will be presented to the Board for consideration.

2. What are the Resource Implications of the CDF?

The CDF is designed to yield better results, and to increase overall efficiency by reducing the duplication of efforts–thus it should, over time, help all actors to lower costs. At the same time, it has to be recognized that participatory approaches–an integral part of the CDF–may take more time and resources than do more top-down approaches to development. Again, however, these are also expected to produce substantial long-run efficiency gains and savings.

World Bank country teams recognize that implementing the CDF should be budget-neutral, over time. Indeed, budget neutrality is a key concept underlying the CDF, and one which underscores the need for selectivity. This issue is being dealt with through the adoption of multi-year budget approaches, and making trade-offs, including in some cases shifting from projects to sectors. Some pilots have incurred up-front costs which are being financed through redeployment of resources, or in some cases through additional contributions of partners in the implementation effort.

The Bank will fund any additional costs from supporting CDF implementation by reallocating resources away from other activities–within current operational budget envelopes. The reallocation likely to be needed is judged to be within the range of the normal reallocations made in Bank programs in the course of a year.

3. What are the Implications of Implementing the CDF for the Way the Bank and Other Development Agencies Work?

The CDF requires a fundamental change in the way the Bank's and other agencies' country teams approach their tasks, so that they take a broad, strategic view of their support, rather than concentrating just on individual projects. An area where this change is beginning to happen is financial management and procurement systems. Bank staff are supporting a shift in emphasis away from examining these systems only on a project by project basis (although project level assurance remains necessary), towards country-level assessments, developed in partnership with the Government, which identify the issues facing national systems, and how they can be tackled. Another implication of implementing CDF is the need to strengthen working relations between country and sector staff.

Staff involved in supporting CDF implementation have internalized and incorporated the CDF principles into their ways of thinking and relating to clients, partners, and each other. In its collaboration with the governments in these countries, the Bank has increasingly acted as convenor, capacity builder, coach, and change facilitator. Experience shows that when carried out well, these roles have helped to strengthen relationships with other stakeholders in the development process.

But, creating an enabling environment for the CDF among Bank staff beyond the pilots, requires further changes in leadership behavior at all levels, in the organizational environment, in the skills mix of staff and in the approach to learning and training. Specifically, the Bank should further develop action learning, together with clients and partners, as used in some of the pilots; promote skills that support working in a partnership mode; and create a community of CDF change agents who support one another in nurturing the CDF approach. These changes need to be pursued in a phased and tailored manner, concentrating on those cases where both the country and the Bank are ready to adopt this way of working, building on the accumulated experience. The Bank also recognizes the need to ensure recruitment practices and the incentive structure for assessing performance and promotion are designed to support CDF implementation, by lending more weight for example to partnership-related competencies.

4. What is the Role of the Bank's CDF Secretariat?

The Bank has established a small CDF Secretariat, as a central focal point for CDF matters, to provide support in the implementation of CDF principles. This Secretariat is located administratively within the World Bank Vice-Presidency dealing with core operational strategies and country services. This placement ensures the closest possible read across from CDF to issues such as Country Assistance Strategies, Economic and Sector work, fiduciary, financial and safeguard procedures.

As part of the emphasis on partnership, the Secretariat is staffed partly by the World Bank and partly through secondments from other external partners. The Secretariat is an active participant in CDF-related workshops and conferences and the informal networks of CDF focal points in bilateral aid agencies, multilateral institutions, and the UN family. These focal points provide for useful sharing of information, distilling lessons, identifying synergies and finding solutions to bottlenecks that occur in the implementation of the CDF. The Secretariat organizes the CDF Learning Group meetings–meetings between the World Bank's President and the country directors working on CDF pilots and PRSP, at which they exchange experiences. Sometimes Executive Directors also attend. It also has responsibility for keeping senior management and the Bank's Executive Board and staff fully briefed on progress, in ways that are complemented by the specific quarterly reporting to the Boards of the World Bank and International Monetary Fund on progress in developing PRSPs. The Secretariat has a tracking mechanism to monitor progress in the original CDF pilots, and in countries which have developed an interim or full PRSP. The mechanism is updated on a quarterly basis and provides the information required for briefing the Board, senior management and staff, as well as CDF focal points, and other reporting.

---