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Designing World Bank Projects

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The findings, interpretations, and conclusions expressed on this Web page are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the information included here and accepts no responsibility for any consequence of its use.

Structure of World Bank Lending Activities

The Bank has two basic types of lending instruments: investment loans and adjustment loans. Investment loans have a long-term focus (5 to 10 years), and finance goods, works, and services in support of economic and social development projects in a broad range of sectors. Adjustment loans have a short-term focus (1 to 3 years), and provide quick-disbursing assistance to countries with external financing needs, to support structural reforms in a sector or the economy as a whole. They support the policy and institutional changes needed to create an environment conducive to sustained and equitable growth.

Types of Lending
 
programmatic
non-programmatic
investment
  • Adaptable Program Loans
  • Specific Investment Loans
  • Sector Investment and Maintenance Loans
  • Learning and Innovation Loans
  • Technical Assistance Loans
adjustment
  • Programmatic Structural Adjustment Loans
  • Poverty Reduction Support Credits
  • Structural and Sector Adjustment Loans
  • Special Structural Adjustment Loans
  • Structural Adjustment Loans

Loans can be arranged programmatically, so that a series of operations supports a medium term government program of policy reforms and institution building. Programmatic Structural Adjustment Loans (PSALs) are the Bank's primary instrument in programmatic adjustment lending, although the new Poverty Reduction Support Credits will be largely programmatic. These are used when the country needs incremental policy changes over several years, focusing on step-by-step capacity building. Each individual adjustment loan under a PSAL typically supports a one-year program tied to a specific target measure. Adaptable Program Loans (APLs) are the Bank instrument for programmatic investment lending. There are used when sustained changes are key, and usually support a phased program of sector restructuring. Progress in each phase of the program is reviewed and evaluated before the subsequent phase is initiated.

What does the Bank do in administrative and civil service reform?

Civil Service Reform (CSR) in World Bank operations usually refers to interventions that affect the organization, employment conditions, and/or performance of employees supported by the central government budget. Professional health personnel (i.e. medical and paramedical staff including nurses, and midwives, and laboratory technicians employed in government hospitals and other government health institutions) and primary and secondary public school teachers are generally excluded from these operations. However, administrative employees of the Ministries of Health or Education and other school administrators are generally included. The armed forces are excluded from CSR. Likewise, by tradition, CSR generally does not refer to interventions aimed at employees paid from the budgets of subnational governments. CSR can include interventions that affect SOE employees if the intervention is primarily focused on the organization, employment conditions, and/or performance of those SOE employees. Click here for more details of employment categories within the public sector.

A recent review of trends in World Bank lending for Civil Service Reform during FY99 and FY00 found that:

  • There were 45 projects that had a CSR component. Most CSR interventions were designed as components of larger operations. Only 3 projects out of 45 could be classified as stand-alone and these were all investment loans.
  • The largest proportion of new loans was committed to AFR countries (16 projects), with ECA region being the second largest recipient (8 projects). SAR continued to host the lowest percentage of CSR-related operations. However, the proportion of CSR projects in Africa has dropped from 74% in 1987-93, to 36% in 1999-2000, and the proportion of CSR in other regions has increased significantly, very particularly in ECA.
  • During 1999-2000, the objectives of CSR projects in LAC were different from those in other regions: fiscal imbalances and CS pay and structures were highlighted in LAC projects, while accountability and service delivery were emphasized elsewhere.
  • The proportion of investment loans was higher than that found by the 1999 OED review. If representative, this shift towards civil service investment loans might indicate that more intensive technical support and closer scrutiny of reform implementation is being provided alongside some moves towards programmatic operations.
  • Downsizing is more frequent in adjustment operations than in investment operations, but is usually accompanied by improvements in accountability and service delivery and pay and career structures for civil servants.
  • The profile of investment operations during FY99 and FY00 indicates that the emphasis is on accountability and service delivery, but always in tandem with other structural reforms, and that management training and provision of IT and other office equipment is rarely undertaken unless it is supporting a larger structural reform.
  • All programmatic loans with CSR components had interventions targeted at improving accountability and service delivery.

This study of CSR operations looked only at employment arrangements for the staffs of central and state governments. Therefore, it does not capture the full extent of World Bank activity in reforming public employment arrangements, particularly in the social sectors, in local or district governments, and in state-owned enterprises. Click here to view the complete report.

Some historically mixed results                                         

The following text draws heavily from the Public Sector Board (World Bank) Strategy Paper, "Reforming Public Institutions and Strengthening Governance," May 2000.

Throughout the 1990s Operations Evaluation Department (OED) and other Bank reports have consistently shown that projects, technical assistance, and adjustment loans that focused directly on public sector management (e.g., administrative and civil service reform, public expenditure management, tax administration, public enterprise reform, and legal and judicial reform) have performed worse than the average for Bank interventions, although this gap has narrowed somewhat since 1996 (OED 1997).

Consistent messages emerge from OED and Quality Assurance Group reviews, seconded by the "common wisdom" gained over the past decade by Bank operational staff. First, projects are not likely to be successful when they fail to take fully into account the complex political and institutional realities on the ground – and thus the real incentives for implementation. The Bank (not unlike other donors) in the past has often taken a rather narrow and "technocratic" supply-side view on public sector management and technical assistance, working exclusively with government interlocutors, and funding consulting services, computers, and other inputs in the absence of a deep and sustainable demand for institutional reform on the part of the borrower. In some cases, the Bank has failed to consult with key stakeholders whose support is critical and/or who could help mobilize pressure for change. Often a few reformers in the central ministries want reform, but they cannot mobilize support from broader groups in society to push it through. Furthermore, in some cases the Bank has tried to provide technocratic solutions within government when changing the role and scope of government activities (e.g., though contracting out or decentralizing public service delivery) might have led to more fundamental institutional change.

Second, the Bank has often relied on models of "best practice" that may not be feasible in the particular country setting. Bank staff, enthused by some new "best practice" breakthrough in one country, sometimes rush to recommend it in an entirely different setting, with little attention to the impact of these country differences on the prospects for success. While comparative knowledge and broad principles can help illuminate options for reform in any situation, they are no substitute for in-depth country knowledge. That "the perfect is the enemy of the good" is often true in this complex area of work. For example, the recent OED report on civil service reform concludes that, "the Bank has relied on small groups of interlocutors within core ministries to design and implement one-size-fits-all civil service reform blueprints in diverse country settings."

Third, in addition to the shortfalls of a narrow technocratic and/or one-size-fits-all approach, public sector management interventions have been hampered in the past by shortcomings in traditional lending instruments, which have made it difficult to address systemic problems in the public sector over the medium-term time horizon needed for institutional change.

These lessons of experience are being heeded by practitioners in the Bank.                                                                           

In the past the Bank often took too narrow a view of institutional reform, focusing heavily on capacity-building in traditional public organizations and under-emphasizing the need for competition and voice and participation. This approach is changing. In addition, the importance of understanding and taking into account the complex realities on the ground – and the danger of relying primarily on "best practice" detached from the specifics of the situation – is increasingly applied to sectoral interventions as much as to interventions in core government institutions.

Still, it is important to maintain realistic expectations.       

Reforming core institutions of government and addressing governance and anticorruption concerns are extremely difficult challenges, in part because of social and political dimensions. Given the nature of the task, many attempts at reform will fail to meet their full objectives. Some may fail entirely despite the Bank’s best efforts, and others may be judged as failures even though our interventions resulted in substantial gains relative to the earlier status quo. In the area of anticorruption, for example, Bank interventions are unlikely ever to eliminate corruption, and even making a significant dent in the problem may be difficult in certain countries no matter how well the Bank performs. Defining a standard for success is particularly tricky in such a situation. Rather than aim for the same percentage and standard of success in all types of projects the Bank undertakes, success should be measured in part against the difficulty of the challenges addressed, and if possible against what would have been in place without the intervention. Furthermore, a mere yes-no (successful/unsuccessful) indicator will not properly capture the outcome. Not all successes have equal benefits, and the benefits of successful interventions may be particularly high in core areas of public sector reform. A lower success rate may be offset by higher benefits in the cases that do succeed.           

Building on the lessons from our past experience and the themes of 1997 World Development Report, the Public Sector Board strategy is predicated on four broad objectives:

Approach: to continue to broaden the range of reform mechanisms we support, maintaining our efforts to strengthen internal rules and restraints within government while expanding our complementary emphases on competition and voice and participation – and to focus our efforts where a country’s overall commitment is strong and in ways that put a country’s citizens in the driver’s seat,

Analytic Work: to work with clients and other partners to strengthen our tools for institutional analysis and for knowledge transfer to underpin both projects and country programs,

Lending Approaches: to advance longer-term institutionally-oriented programmatic approaches where appropriate, and

Internal Capacity and Partnerships: to strengthen our internal capacity to assist countries in public sector reform through continued improvements in staff skills, organization, incentives, and relations with partners.

Project Appraisal Documents (PADs) of innovative public sector reform projects                                                                          

Administrative reform in Poverty Reduction Strategy papers             

Poverty Reduction Strategy Papers (PRSP) are prepared by the member country in collaboration with the staffs of the World Bank and the International Monetary Fund (IMF) as well as civil society and development partners. These documents describe the country's macroeconomic, structural and social policies and programs to promote growth and reduce poverty, as well as associated external financing needs and major sources of financing. The country documents are being made available on the World Bank website by agreement with the member country as a service to users of the World Bank website. For an overview of the treatment of Administrative and Civil Service Reform in the preparation of Poverty Reduction Strategy Papers, please go to: http://poverty.worldbank.org/prsp/

Recommended readings                                               

  • Nunberg, Barbara.  Rethinking Civil Service Reform: An Agenda for Smart Government.  Washington DC, Poverty and Social Policy Department, The World Bank: June 30, 1997

  • OED. "1997 Annual Review of Development Effectiveness." World Bank.

  • Public Sector Board (The World Bank). 2000. "Reforming Public Institutions and Strengthening Governance: A World Bank Strategy." May 2000.

This page was revised by Nick Manning and Jeffrey Rinne on 14 January 2002.

 




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