2003 WB/IMF Spring Meetings

Meeting on World Bank Group
Harmonization/Procurement/Safeguards
Wednesday, April 9, 2003
9:45am – 11:30am, U11-422

Meeting Notes

This session provided an update on World Bank initiatives related to the harmonization process, safeguards policies and structural adjustment policies for representatives of Civil Society Organizations (CSOs). Approximately 30 international CSO representatives participated in the meeting (see participants list attached), as well as staff from the IBRD/IDA (Bank). The session was chaired by John Garrison, Civil Society Specialist with the WBG Civil Society Team. 

John Garrison (WB) opened the meeting welcoming all participants and introducing the four speakers from the Bank: Jim Adams (Vice President/OPCS), Stephen Lintner (Senior Advisor/QACU), Colin Bruce (Senior Manager/OPCS), and Stefan Koeberle (Advisor/OPCPG).

Harmonization

James Adams: At the Rome Forum on Harmonization in February 2003, all elements of the international development community came together on the multilateral and bilateral side, along with participants from many countries.  There was recognition at the meeting that the donor harmonization commitments reached at the Monterrey Consensus must be implemented by increasing attention on how donors actually work in countries.  Building government capacity is a high priority, but the nature of the system makes this difficult.  The current work of the Development Assistance Committee (DAC) emphasizes doing more on harmonization on the donor side and this is important for increasing the impact of assistance and for building capacity. 

The issue of harmonization is now very much on the agenda of multilateral and multilateral donors and the Bank is engaging in discussions at the international level, strengthening the effectiveness of its work with donors and governments at the institutional level, and working with country teams and directors to establish how the harmonization agenda can be promoted and facilitated in terms of the Bank’s work in countries.

Question: Could you address how capacity building plays into the harmonization agenda? Does this involve an increased focus on budget support for countries?

Question:  In the Monterrey Consensus document, there was a harmonization agenda commitment to working at the highest standards. How is that mechanism in place?

Question: How will the process take into account standards and safeguards under international law, such as biodiversity for example?

James Adams (WB):  In response to the first question, there is not a direct link between capacity building and budget support. The Bank’s message on budget support is two-fold. First, that through the budget support agenda, donors should support the development of stronger budget systems.  Second, is the recognition that some donors are more comfortable providing budget support than others.  On capacity building, the first important issue is to work jointly with other agencies to avoid a set of disconnected recommendations. The Bank is moving its response from bilateral and international agencies to the country level, to promote increased national/recipient involvement. The second important issue relates to ownership of technical assistance, which is largely outside the capacity of governments.  Regarding highest standards, there is some debate over what exactly these are; some agencies work at the project level; some are moving strongly towards budget support; the Bank is working at the sector level, particularly with governments. The Rome meeting, the High Level Meeting of the DAC and others, have called for quality control and best practices, among other things.

Stephen Lintner (WB): The Rome meeting looked at the macro questions of financial management, procurement, environmental impact assessment, and focused on pushing countries to reform their systems to ensure they recognize international conventions - on the environment, for example. The Bank is working with governments to achieve this.  With regard to highest standards, harmonization does not equal standardization.  The Bank is looking at countries and sectors to help donors find practical ways to improve their environmental and social performance. Donors, whether bilateral or multilateral, have very different mandates, relationships and responsibilities.  Harmonization will be an ongoing process, but, for now, there has been a focus on  clarification of good practices.  There is no  expectation within the World Bank that the harmonization process will lead to a lowering of safeguard standards.  The World Bank will continue to work with others in the development community, and with borrowers, to realize these objectives in a cost effective manner.

Colin Bruce (WB): There are two additional elements to standards.  First, the notion of standards has been interpreted as good practices - the emphasis is actually on both ‘good’ and ‘practices’.  Second, there must be a process in place to ensure that discussions and decisions are informed by interested parties. For example, work on financial issues should be done in consultation with professional bodies, such as the International Federation of Accountants or Council of Supreme Auditors.  All the work is being done very openly; standards are available on the web and are under review and surveillance.

Question:  Regarding transparency at the Rome meeting, the World Bank was happy for other stakeholders to be observers, but the Italian government would not grant us access to the meeting. We agree that this is a technical matter, but it is also a political matter and should thus be transparent. Why can’t this process be open to all stakeholders?  On another point, the WBG does have adequate standards, yet when there are violations the Bank does not impose its standards as the final standards.  If other bodies are weakening the Bank’s position, are they willing to take a political position? 

Question: What is the relationship between the MDGs and harmonization?

Question: Regarding transparency, are all technical working papers released?

Colin Bruce (WB): Yes, everything is made public and available on the WB’s Harmonization web site.

James Adams (WB):  In response to the first question about transparency, the Rome meeting was largely made up of government and donor agency representatives, that is why organizers decided to limit participation of other actors.  There were also space limitations to deal with.  The UN faces a similar set of challenges regarding harmonization as the World Bank, but the issue is easier for the Bank due to its government structure. The United Nations Development Group (UNDG) is struggling with this issue and the World Bank is active in the dialogue. The Rome outcomes are technical, but not low level.    Part of the framework of agreement came out of the DAC context, but they do not want to blame the Rome outcomes on multilateral development Banks.  There must be interaction between agencies in a transparent and open way.

Stephen Lintner (WB): In the case of the Multilateral Financial Institutions Working Group on Environment, there is a paper on common principles for environmental impact assessment (EIA) in English and French that was issued in Rome and is on the harmonization website.  There needs to be a common approach taken for preparation of environmental impact assessments since each financial institution and government has its own environmental policies.  The challenge is finding how to work with multi and bilateral institutions and governments to realize these objectives on the ground.  In Rome we looked at the example of Vietnam.  Where the Vietnamese government’s environmental impact assessment process and the requirements of the major donors were reviewed and a document prepared that provides a common approach for EIAs. This work was undertaken by the Government in cooperation with the Asian Development Bank, Japan Bank for International Cooperation and the World Bank.  The World Bank is looking in a number of countries at what obstacles exist to conducting EIAs, finding ways to overcome these constraints and supporting action for their procedures to be implemented. The World Bank is working with our development partners to do this work in  selected countries under the rubric of harmonization by improving levels of transparency, getting the issues on the table and implementing environmental procedures on the ground.

James Adams (WB):  Regarding the MDGs, there is some similarity.  The political issues governments are being asked to deal with are comparable, but they are set out in different documents, which is a challenge to ensure harmonization.  Whether it is the World Bank that makes changes or others, greater cooperation is needed as the Bank cannot drive this alone.

Revision of Structural Adjustment Policies

Stefan Koeberle (WB): The Bank has been engaged in a procees of assessing its experiences with adjustment lending and updating its operational policy on adjustment lending for about two years. The process has involved a retrospective of adjustment lending, looking at internal and external perceptions and experiences, focusing on the lessons learned and implications for good practice and operational policy.  Last year, CODE discussed an issues paper that sets out the key topics central to the update of the policy.  The paper includes a matrix, which sets out current policy and proposes revisions. 

The issues paper framed the basis of consultations, both online and in the form of global consultations meetings in all of the Bank’s Regions ( London, Washington, Amman, Daresalam, Dhakar, Seoul, Islamabad, and Warsaw.  The Bank’s team was pleasantly surprised at the level of interest and the diverse level of civil society representation of the meetings.  CSOs, governments, WBG country offices, and others within the development community participated.  The Bank’s was pleased by the feedback received during these meetings  and detailed comments from the meetings were summarized and put on the web.  On the substance side, about half of the statements made related to general observations on World Bank structural adjustment lending with many country specific instances of what were considered both good and bad country experiences.  Much of the discussion went back to the 1980s, particularly on adjustment lending experiences in Africa.  About a third of the comments related to specific questions on how the Bank operates, with the others accounting for specific questions and suggestions on the operational policy proposals in the issues paper.

One of key issues is what the coverage of the new policy should entail. The current policy OD8.60 from 1992 is in the old style of operational directives, reflecting what was then perceived as the ‘Washington consensus’ and ‘Bank wisdom’ relating to key policy areas such as financial sector reform and privatization.  Recognizing the importance of country ownership and the fact that countries are well-advised to develop their own specific development strategy, it is proposed to refrain from including any such guidance ion the new operational policy, which should instead just focus on the nuts and bolts of how, when and where of adjustment lending.  The Bank would  reflect research findings and new thinking on lessons learned on specific topics as part of its knowledge management, .  There was broad endorsement of this approach during the consultations, as very few felt there should be a distillation of Bank doctrine of appropriate country policies—although some people had a sense of suspicion that Bank staff would still be given clandestine instructions on what to do, a notion that is difficult to dispel. The consultation meetings also generally concurred with the proposal to introduce a uniform policy for adjustment lending and to do away with different variations subject to different policies such as SECALs and SALs.  Participants strongly endorsed the Bank’s emphasis on country ownership and recognized the importance of medium-term development.

Participants of the consultations had varying degrees of familiarity with the technicalities of Bank operations and adjustment lending.  In several cases, participants were not aware of Bank guidelines. However, there was overwhelming support for the suggestion to replace the current guideline on the share of adjustment lending with a regular monitoring (notwithstanding a few voices from those who said adjustment lending in general was a bad idea).  Another issue raised during the consultation meetings was whether the World Bank would maintain its current policy of requiring an adequate macroeconomic framework a as a precondition for adjustment lending.  The Bank proposes maintaining that particular requirement.  Many participants reacted strongly to an explicit role of the IMF in the World Bank’s assessment of the adequacy of the macroeconomic framework and wanted clarification on the nature of the relationship between the two bodies.

Another set of issues raised included poverty, social and environmental impacts, and fiduciary aspects. The policy proposes a two-pronged approach: first, it will rely on up-front country wide analysis of poverty, social, environmental and fiduciary issues, institutions and capacity; and second, screen operations to determine if there is a significant positive or negative impact, which would call for appropriate mitigation or enhancement measures.  There is broad support for this approach.

Discussions also highlighted the key issue of participation. CSOs feel in the past there has not always been sufficient opportunity to participate and there remained a perception that adjustment programs have often been agreed to in a back room between World Bank  and government officials. Recognizing the importance of participation the Bank is  for the first time intrudicing this an issue in the operational policy.
Next steps include collating comments into a matrix report which will document the feedback given by CSOs and how the Bank is responding to them.  The team will then go to Bank’s Board with a draft of policy proposals. There will be an opportunity for people outside the Bank to comment on this final draft before it goes back to the Board for final approval   

Question: What is the timeline of the adjustment policy review – when will a draft be ready?

Stefan Koeberle (WB):  It is hard to say and this is subject to internal discussions. But, the final draft will probably be completed sometime during the summer of 2003.

Question:  How do the streamlining efforts relate to the IMF?  There is concern that while the IMF is reducing their role in imposing conditionalities in structural adjustment loans, the Bank seems to increasing its role?

James Adams (WB):  The World Bank put the same emphasis on reducing conditionalities as the IMF, even if we are different institutions. The Bank also wants less conditionality.

Question:  You say the Bank favors fewer conditionalities, but where has this been put in writing?  Regarding the timeline of the draft, how long will external stakeholders have to submit comments and in what language will the draft be disseminated?  Finally, if the policy focuses more on best practice, won’t accountability and monitoring be more difficult to ensure?

Question:  The current policy links to the IMF in stating that a sound economic environment is necessary, which typically involves an IMF program being in place. The language of the policy should be changed to explicitly say that Bank lending takes place where a country develops a strong macroeconomic framework. Second, if the World Bank has to wait for the IMF to give its seal of approval in order to catalyze its involvement, the donor community has to be creative and come up with other ways of doing this.

Question:   It has been indicated that only “significant” environmental and social impacts will be reviewed trough the Operational Policy on Forestry.  How does the Bank review  these if the operational requirements are not there? 
Stefan Koeberle (WB): In response to the question about the timeline of the draft and time allotted for stakeholders to make comments, the Bank’s Board takes a strong view on seeing the results from consultations and the draft policy before encouraging broader outside comments on the draft of the new OP/BP8.60.  There have been ample opportunities for discussion of the draft policy review as the draft was translated into 5 languages and has been on the web for discussion.

James Adams (WB): Regarding links to the IMF, one acceptable test of macroeconomic stability is the existence of an IMF program; but when there is no IMF program, the Bank makes its own assessment on the adequacy of the macroeconomic framework after consulting with the Fund.  Every time the World Bank proceeds in the absence of IMF agreement, it has to provide the rationale.  In fact, the Bank is always accountable to the Bank’s Board.  Regarding the Operational Policy on Forestry, how do you meet “significant” with respect to forestry?  The process is still in place and it will be a Bank judgment, linking into issues of participation and generating broader discussion.  In that context we are trying to deal with the issue, but the pilot will be a good source of information. 

Question: When we talk of “significant” impacts, are we talking about the level of operations or making a judgment about whether we will carry out a PSIA? I thought I heard at the September 30 consultation that there would be mandatory assessment done at the level of operations, but this is not addressed in the issues paper. Second, regarding the PSIA approach of the Bank - some are very interesting, but they often complex and technical.  Is there a methodological way to do upfront screening and then move into a more-in-depth technical study if warranted? On the question of ownership, there is concern that the Bank will foist too much responsibility on governments for adjustment lending evaluations and PSIAs, and that perhaps the Bank is abrogating some of its own responsibilities. Governments are then the ones to blame when things go wrong.

Question: If SECALs get pulled, does that mean 4.01 has to be redone?

Stephen Lintner (WB): No, we do not plan to redo OP 4.01 on environmental assessment. , We would request the Board to approve the proposed change in OP 4.001 as part of their decision to approve the updating of  OP 8.60 on adjustment lending.

Stefan Koeberle (WB): The acronym PSIA is misleading as it implies a product that follows a one size fits all approach to poverty analysis.  Instead, PSIA is an approach that has to be customised to fit the country. The key point is that there has to be better understanding of the social impacts of selected key country policies aiming at poverty reduction. There is little disagreement on what policies need analyzing and which are “significant”.

James Adams (WB):  We are concerned at the assumption that you can undertake a PSIA for US$50k.  If someone could come up with a simple analytic approach, it would be preferable.  But based on real experience, the cost of PSIA assessment is going up and this simply pushes the Bank in the opposite direction.

Question: Could you give an example of a PSIA that hasn’t been useful?

Question: I am surprised at the pessimistic tone.  PSIAs were able to significantly influence real-time policy making.  We want to hear more positive assessment about PSIAs.

James Adams (WB):   We are being cautious about what we have seen in the Bank in terms of the broader work that has been done on PSIAs.  PSIAs are quite important but we want to make sure that we get them right.  I would like to make a comment about the review process of the Bank’s procurement and contracting guidelines which is currently underway, but which had not yet been mentioned today.  Revisions to the guidelines have been modest and have been heavily driven by transparency and corruption issues. We have agreed to hold off sending the revised draft to the Bank’s Board so CSOs can have time to review the proposed changes.  

Safeguards

Stephen Lintner (WB): gave comments on the Bank’s ongoing work to improve development effectiveness and country ownership of safeguard policies.  In summary, this process is called ‘Safeguard Vision’ and is focused on how the Bank can shape safeguards to promote greater development effectiveness. This is not about the Bank transferring its oversight responsibilities to cooperating countries, but about how to get countries more involved in implementing their policies and procedures and having governments internalize those procedures in practice.

It is an incremental process with no radical changes.  It maintains existing policies while improving implementation and strengthening the capacity of the World Bank and its borrowing countries. However, the World Bank and our borrowers need opportunities to test new approaches and undertake innovations to more effectively address issues covered by the safeguard policies.  These tests of new approaches, called “safeguard pilots,” would be undertaken using a  transparent process and would be subject to the  oversight of the Inspection Panel.

The focus on improving implementation requires modernization of the safeguard policies.  For example,  providing updated handbooks on key topics and disseminating good practices, not just in English, but in other languages.  The safeguard vision process takes into account harmonization, which means working with development partners, countries and other parties to come up with  good practices, while not lowering standards.  Through the safeguard vision process, we will be looking at how the World Bank can more effectively apply safeguards to new lending instruments, such as community driven development.  We are undertaking reviews comparing client systems with the approach of the World Bank, such as those for environmental impact assessments, to see where there are inconsistencies.  This includes looking at the requirements and procedures for consultation and disclosure where there may be differences.

The World Bank is working to reinforce national safeguard systems and put them to use. We  are looking at other countries and systems to get ideas, for example recent developments in the European Union associated with the accession process for countries in Central and Eastern Europe.  The Bank is not reneging on its commitments or leaving our responsibilities to borrowing government institutions.  The safeguard pilots for  selected World Bank projects would be undertaken in a controlled and transparent way The Bank would like to  win the confidence of CSOs, practitioner groups, governments and other donor agencies concerning our efforts to improve the development effectiveness of safeguard policies.

On the question of third party verification, the Bank is looking at this as an innovation and are assessing whether it is appropriate to test in some carefully selected projects.  The Bank is also continues to enhance  its approach to social issues. There  is a proposed social analysis policy and they are starting to implement a poverty and social impact analysis (PSIA) approach that provides a new tool to look at the issues in a broad manner.

Question: To what extent has the Bank consulted with other institutions in the review process of the safeguard and adjustment policies? What conventions will be listed as benchmarks for social assessments (e.g. labor laws), as with requirements for environmental assessment?

Stephen Lintner (WB):  The question of social analysis has been the subject of a lengthy discussion process, both internally and externally. The details of this process need to be presented and discussed in another session by the specialists who are leading this work at the World Bank. The Safeguard Vision process is benefiting from interactions with others parties at the international level.   We have been in contact with the International Association for Impact Assessment (IAIA) and are taking an active role in planning for the  Marrakech Meeting to be held in June 2003. We have also been involved in discussions with the Dutch on the International Commission for Impact Assessment and their own national commission on EIA.

Question: Will there be an Oversight Panel for adjustment lending aspects of the Forests Policy?  If so, who will take part and how will it be established?

Question: I had a feeling you were acknowledging the civil society approach, but the revision process is completely decoupled from the vision.  CSOs want more.  In terms of the format, civil society is very disappointed with the Bank’s role in the World Commission on Dams. Millions are being invested in capacity building and UN agencies and other donors are investing in this.  How can the World Bank take on board existing processes? CSOs want ownership, country by country, and region by region.  There are a mass of infrastructure projects, such as in the area of environment, where companies sign agreements that override national laws, and refer to industry standards instead. Standards are being imported to countries and they are superceding national legislation.  What sort of leverage has the Bank got in this approach, before they make changes?

Stephen Lintner (WB):  World Bank safeguard policies are demanding,  rigorous in their requirements and mandated for use on projects we support. Yet these standards can also be a double edged sword. We have many cases where the Bank requires the use of procedures that exceed those covered under national legislation. There are also situations where existing government procedures are not workable in reality, even if outstanding on paper.  The Bank therefore needs to focus its efforts when working with governments on how to formulate national level environmental and social safeguard procedures that areimplementable at the country level.  If a country’s procedures do not meet high enough standards, the Bank works with governments to adapt their systems to meet  our standards for issues such as EIA or involuntary resettlement when undertaking projects with our financial support.

We need to work with our development partners under the harmonization process to support strengthening of national safeguard systems and capacity building so that cooperating governments can focus on implementation of their own laws, policies and procedures rather than the diverse requirements of the donor community.  In some countries  government officials spend over half their time dealing with the requirements of external donors rather than  be able to focus their efforts on implementing their own procedures. To make the Bank’s  safeguard policies easier to use by borrowing countries and more accessible by the public we are having more translations done in a greater number of languages.

In terms of  the new Forests Strategy and the effectiveness of the new Forests Policy to support its implementation, the World Bank is in the process of establishing an External Advisory Group that will be convened by Ian Johnson the Vice President for Environmentally and Socially Sustainable Development. It is anticipated that this Group would become operational over the course of the summer.
Question: Could we see a schedule for the dialogues on safeguards?

Stephen Lintner (WB):  We have listened to earlier feedback from CSOs and understand that people would like a longer lead time before meetings and would like the documentation translated.  The Safeguard Vision paper has been translated into six major languages..  The meetings will be dialogues rather than consultations and will focus on how to increase the development effectiveness and country ownership of safeguard policies. We will advise CSOs when the schedule for the dialogue sessions has been prepared. We anticipate that the dialogue sessions will be undertaken  in the fall of 2003.

John Garrison (WB) closed the meeting, thanking the speakers and participants for their comments.