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(Archived July, 2008) Note: OP and BP 14.40 replace OD 14.40, Trust Funds and Reimbursable Programs, and the following Operational Memoranda: OMS 4.40, "Trust Funds," 5/5/89, and OD 14.40: Trust Funds and Reimbursable Programs, 6/26/91; they also draw on the Operational Memoranda Technical Assistance Grant Programs for the Environment, 5/26/89, and Management of Externally Funded Programs, 1/7/92. These statements do not cover reimbursable arrangements, arrangements under which the Bank provides administrative services but does not receive funds in trust, trust funds funded by IBRD from its budget or net income, or the IDA-11 Interim Trust Fund and IDA Debt Reduction Facility. Questions should be addressed to the Manager, Official Cofinancing and Trust Funds Division, CAP. |
1. A trust fund (TF) is a fund administered by the Bank 1in accordance with the terms of an agreement with a donor.2 In mobilizing TF resources, the Bank aims to assist its member countries by increasing the flow of resources for development, and to support its own operational and research programs. 2. The Bank administers several types of TFs, including the following: (a) Global and regional trust funds, which may support a variety of activities, including specific investments, sector policy development, research, and technical assistance (TA) activities;3 (b) TFs associated with operations, which may be (i) cofinancing TFs that mobilize external funds and cofinance Bank-assisted projects4and programs; or (ii) debt and debt service reduction TFs that help recipients service their external obligations or reduce their debt to the Bank or other creditors; (c) TFs that support specific recipient activities such as preinvestment or feasibility studies, project preparation, capacity building, sector studies, or training;5or (d) TFs that support specific Bank activities such as operational work, research, policy and program analysis, economic and sector studies, and training; these activities include most consultant trust fund (CTF) activities6and secondments.
3. In addition, the Bank administers TFs that may from time to time otherwise contribute to the achievement of the Bank's policy, program, or institutional objectives.
Acceptance Requirements 4. The Bank accepts only TFs that support activities not traditionally financed under the administrative budget.7 The Bank does not accept TFs that may present a conflict of interest. Activities under TFs are part of a unit's work program and complement, expand, and enhance Bank policies and programs, including nonlending services. 5. The Bank accepts only TFs that it can administer under cost-effective arrangements: TFs must (a) be of a minimum size, the amount of which is determined from time to time;8(b) provide untied funds (except for TFs described in para. 2 (d));9and (c) in the case of CTFs, provide the Bank discretionary authority to approve suballocations under a specified limit per activity, to be determined from time to time. 6. The Bank may accept a TF from the private sector, provided that (a) the Bank retains decision-making authority over the use of the funds; (b) the funds advance recipient country interests and the Bank's policy and institutional objectives; and (c) no special advantages or benefits accrue to the donor.10 Administration 7. Each TF is governed by a Trust Fund Administration Agreement between the Bank and the donor. In addition, TFs described in para. 2 (b)(i) and (c) (and, occasionally, debt service TFs) are governed by a TF Grant Agreement between the Bank and the recipient.11 8. Under the TF Administration Agreement, the Bank recovers its costs to manage and administer the TF, taking into account the direct benefits to the Bank from such funding.12 9. The Bank exercises the same care in the discharge of its functions under the TF Administration Agreement as it exercises with respect to its own affairs and has no further liability to the donor. The Bank ensures that the funds are used only for the purposes specified in the TF Administration Agreement.
10. TFs are administered under applicable Bank policies and procedures. Accordingly, Bank policies and procedures govern the procurement of goods, works,13and services14(subject to arrangements for administering tied TFs). 11. The Bank requires that recipients execute cofinancing TFs and other TFs involving the procurement of goods and works.15 Recipients also execute country-specific TFs for TA activities (see para. 2 (c)), although the Bank may, at the request of the recipient, waive this requirement in exceptional circumstances--for example, if the recipient is a new member country or inactive borrower, or its administrative capacity has been adversely affected by civil strife. If a country-specific TF for TA activities is to finance separate tasks and if the funds can be clearly separated, the Bank may execute some of these tasks and the recipient others. However, the Bank does not engage consultants under a TF to carry out project implementation activities.16 12. The Bank executes activities financed by TFs described in para. 2 (d).
13. The Bank monitors and evaluates TF activities to identify problems in implementation and learn lessons from completed TF activities.
Policy Formulation and Review
14. From time to time, the Bank reviews TF policies and procedures to ensure their continued effectiveness in contributing to the Bank's development objectives.
____________ "Bank" includes IBRD and IDA, and "loans" includes IDA credits and IDA grants. Such donors include countries, multinational agencies, nongovernmental organizations, foundations, and other private organizations or individuals. Some TFs involve multiple donors. Examples are TFs associated with the Consulative Group on International Agricultural Research (CGIAR), the Global Environmental Facility (see OD 9.01), and the Montreal Protocol (see OP 10.21). See OPand BP14.20, Cofinancing. TFs that support recipient activities include, for example, grants from Japan's Policy and Human Resources Development Fund (PHRD). Consultant Trust Funds and their special features are described in the CTFwebsite as internal guidance to staff. CTFs are an exception. Exceptions may also be made for other TFs described in para. 2(d). The minimum TF size is fixed at $200,000 at present. The Bank may, at its discretion, accept TFs described in para. 2 (d) even though the donor chooses to restrict the nationality of consultants or seconded staff to be financed. However, the Bank attempts to persuade donors to untie some or all of such funds. For example, the TF does not directly benefit donor business interests, extend a privilege, or provide exclusive information to the donor In some cases, such as the Special Program of Assistance in Africa, a TF Grant Agreement that is acceptable to the Bank may be made directly between the donor and the recipient country; the Bank administers the grant. For example, CTFs and debt service TFs are exempt from cost recovery in view of the benefits from such funding to the Bank. That is, the recipient prepares terms of reference or specifications, hires consultants or consulting firms, procures goods, negotiates contracts, makes payments, submits progress and audited financial reports to the Bank, and performs other project implementation activities just as under a Bank loan. To help ensure the borrower's ownership of the project and responsibility for carrying it out, the Bank does not accept any responsibility related to project implementation. For the purposes of this statement, the term "project implementation" is applied more broadly than is usually understood in the context of the Bank's project cycle. It includes, for example, detailed engineering, final design, exploratory drilling for petroleum and water resources, aerial photography, and procurement implementation (e.g., preparation of bidding documents, bid evaluation), regardless of the stage of the Bank's project cycle in which they are carried out.
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