To respond to borrowing countries’ changing development needs, the Bank has introduced a new financing instrument – Program-for-Results (PforR) financing. Under PforR, Bank financing will help recipients implement their own development programs. The instrument will focus on development results by linking disbursements to results, which can be outputs, outcomes, or other actions/results that are tangible, transparent, and verifiable. PforR will work directly with the program’s institutions and systems and will seek, when necessary, to strengthen those institutions’ governance, capacities, and systems over time. By supporting such programs, the new instrument provides an opportunity for the Bank to extend its impact beyond its financing to the entire program and its systems and institutions. Finally, PforR will be an instrument for strengthening partnerships with recipients and development partners, allowing the Bank to effectively support larger programs and co-finance in pooled funding arrangements.
PforR provides an opportunity for the Bank to expand how it helps recipients to fight fraud and corruption. Linking Bank financing to verifiable results is itself one of the indicators that funds are used appropriately. In addition, the Bank supports the recipient in managing the risk of fraud and corruption as one element of the recipient’s overall responsibility for program implementation. The focus is on how the recipient manages all program resources, not only those provided by the Bank. The Bank reviews the systems and processes by which program implementing agencies do this. The results of this review inform the Bank’s overall program risk rating and the plan of actions it agrees with the recipient to respond to those risks.
Anticorruption Guidelines for P4R. P4R programs are subject to new Anticorruption Guidelines (ACG for P4R), based on the Anticorruption Guidelines for Investment Lending (ACG for IL) with appropriate adaptation to the characteristics of the new instrument. The ACG for P4R takes account of the fact that, in the context of these operations, the Bank will not be funding specific transactions – that is, Bank funds will not be linked to specific expenditures within a program. The main differences between the ACG for P4R and the ACG for IL are as follows:
Under the new ACG for P4R, allegations of possible fraud and corruption that are brought to the attention of the government or the Bank will normally be communicated to the other party, leading to consultation on appropriate follow-up action. The findings by the responsible investigative unit and proposed actions are shared with the Bank, and as appropriate, the parties will consult on the corrective actions warranted.
- No scope of application provisions, because ACGs for P4R apply to the entire Program, not only to ‘recipients of loan proceeds’.
- Principle-level undertakings by the recipient to ensure compliance with the ACGs and Bank access to books and records, instead of inclusion specific provisions in downstream contracts.
- Obligation to follow up on allegations, consistent with expectations that the recipient will play a proactive role in dealing with fraud and corruption.
- Obligation to ensure debarments are applied in the absence of Procurement and Consultant Guidelines to govern eligibility for award of contracts.
- Specific undertakings by the Bank to inform the recipient of allegations and to share results of investigations, consistent with expectation of proactive recipient role in dealing with fraud and corruption.
The Bank’s debarment list applies to P4R operations, and the ACG will also provide that the recipient will ensure that entities debarred and suspended by the Bank do not participate in contracts awarded during implementation of the operation during their periods of debarment or suspension. When issues of fraud and corruption are not being satisfactory addressed, the Bank has recourse to its contractual remedies under the General Conditions.
The Bank retains the right to carry out investigations that it judges necessary to fulfill its fiduciary duty under the Articles, and to sanction entities that are found to have engaged in fraud or corruption.
The ACGs are written in general terms to accommodate a variety of scenarios. The modalities for implementing the provisions of the ACGs need to be worked out during project preparation. In appropriate cases, the ACGs may be complemented by a written protocol detailing these modalities. The protocol may be incorporated into the minutes of negotiations, set out in an exchange of notes, a separate MOU or other document or otherwise memorialized, as deemed appropriate, on a case-by-case basis.
The country lawyer plays a key role in assuring compliance with the ACGs during project preparation and loan negotiations. Among other things, the lawyer:
- Confirms that the recipient and other relevant stakeholders are aware of the ACGs and understand their obligations thereunder, including the ways in which the ACGs for P4R differ from those for IL.
- Liaises with the task team to confirm that the modalities for implementing the ACGs are being thoroughly explored with the recipient during project preparation and that those modalities are sufficiently clear. The key implementation issues include: (1) the mechanism for applying Bank sanctions to P4R operations, (2) the modalities for information sharing (including the frequency of recipient reporting on investigation and follow up actions), and (3) modalities for Bank exercise of its right to investigate, including how the recipient will ensure Bank access to books and records.
- Reviews the Memorandum of the President (MOP) and the Project Appraisal Document (PAD) to ensure that the application of the ACGs and the relevant modalities (and, in particular, any departures from the standard terms of the ACGs) are clearly and transparently described.
- Advises on the best way to set memorialize the detailed arrangements for ACG implementation and assist, as appropriate, in the drafting of any protocol between the Bank and the recipient setting out those arrangements.