Participation in Development Policy Lending (adjustment lending)

Adjustment loans 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. Over the past two decades, adjustment lending has accounted, on average, for 20 to 25 percent of total Bank lending. The Bank is currently undertaking the process of updating its policy - the fundamental aim of the planned policy update is to make the Bank a more effective development partner and the Bank's policy-based lending a better instrument for supporting countries' own strategies for poverty reduction. The proposed updatedraws attention to the need for for borrowing countries to consult with and engage the participation of key stakeholders in the process of formulating the country's development strategies.

In the context of policy based lending, stakeholders can include the central government (particularly line ministries) and parliament, but also implementing agencies, sub-national and local governments, parliaments, business sector representatives, academic institutions, citizens and civil society organizations.

Two general principles guide Bank support for stakeholder participation in the context of policy-based lending.

• Country ownership: The decision to initiate a participatory process and the responsibility for defining its scope and carrying it out rest with the borrower; the process should not be imposed or led by the Bank. The Bank's role is to facilitate, providing support and technical advice in the engagement between the government and the stakeholders of the policy reform.
• Country specificity: The modality and extent of participation depend on the country and reform contexts (legislative framework, institutional arrangements, range of stakeholders). Not all policy reforms benefit in the same degree from participation. Appropriate participation may range from dissemination of public information to create awareness about proposed reforms, to specific consultation on design or implementation arrangements, to involvement of selected stakeholders in monitoring and evaluation.