Program for Results Financing The European Social Fund Committee Brussels, 8th February 2018 The European Social Fund Committee Andrea Liverani Sustainable Development Program Leader for EU Member States World Bank Group aliverani@worldbank.org

A new instrument for changing needs… Earmarked activities Investment Project Financing (IPF) Proof of specific expenditures Proof of reforms (laws, decrees, regulations) Non-earmarked general budget support Development Policy Financing (DPF) Programmatic expenditures PforR Financing Results

Preparation is key to good results financing Identification of Government program (national/ subnational, sectoral/ cross-sectoral, existing/ new); and Definition of Program supported by the PfoR operation (Program boundaries: geographic, diachronic, sectoral, etc.); Assessments Technical: Program’s Rationale; Key results, Results Frameworks, Disbursement Linked Indicators, Verification arrangements, Economic Analysis; Cost Effectiveness; Fiduciary: financial management, procurement, corruption E&S management Focus is on A) Identifiy gaps/risks requiring attention; B) Building Capacity and Country Systems

intermediate outcomes Illustration of phased DLIs along results chain Program to fight long term unemployment actions outputs intermediate outcomes outcomes DLI 1 DLI 2 DLI 3 Adoption of government program Adoption of program implementation plan Period 1: EUR 5 million New profiling system rolled out across x labor offices Training providers selected Training program launched Period 2: EUR 5 million X beneficiaries trained Y trained beneficiaries certified Period 3: EUR 15 million Employability of long term unemployed improved Program-for-Results Financing Overview

intermediate outcomes Illustration of phased DLIs along results chain Raise capacity of public employment services to fight long term unemployment actions outputs intermediate outcomes outcomes DLI 1 DLI 2 DLI 3 Adoption of implementation plan for government reform program New quality standards for training adopted Period 1: EUR 5m New profiling system rolled out across x labor offices New training practices rolled out across x labor offices Counselor-beneficiary ratio improved Period 2: EUR 5m X beneficiaries trained and certified Y beneficiaries placed in jobs Period 3: EUR 15m Reduction of long term unemployment Program-for-Results Financing Overview

Intermediate Outcomes Defining Disbursement Linked Indicators: An Example from a Municipal Support Program Key Issues Degraded social cohesion Youth unemployment Stagnating growth Activities/Actions Outputs Intermediate Outcomes Outcomes Advisory services for PPP transactions # of urban mobility investment PPP contracts signed Amount of commercial financing mobilized through PPPs for urban mobility investments Inclusion of commercial financing options in urban investment plan Increased Municipal Investment Capacity Citizen engagement E-Gov platforms Fiscal administration reorganization % increase in municipal revenues Tax database and real estate census Enhanced basic service delivery Integrated traffic management system # of additional neighborhoods with access to WSS and electricity services # of households living in disadvantaged neighborhoods provided with improved access to basic services Allocation for Water supply, sanitation and electrification investments Transfer of responsibilities for road network upgrading to municipal company Kms of urban road network upgraded Improved business environment Digitization of key procedures for commercial authorization, building permits and property transfers Consolidation of institutional mandates for Doing Business procedures # days needed to deliver commercial authorizations, building permits & property transfers Digitization contract signed = Disbursement-Linked Indicator One stop shop network instituted

Conditions for success Efficiency Transparency Simplification Accountability Equity Mutually Reinforcing Results Shared Ownership Build a « Results Coalition » DLIs used as ‘financial carrots/sticks’ To provide incentives to all Program stakeholders Reliable Verification Systems Substantial investments needed in strengthening monitoring and evaluation systems Focus on institutional quality and capacity Critical importance of continued implementation support (Resources for Bank ISP)

But most important condition of success: a shift in institutional outlook From identifying specific expenditures to appraising “programs of expenditures” From ex post approval of actual expenditures to ex ante validation of categories of expenditures; From seeking compliance to ensuring gradual capacity strengthening From “supervision” to “implementation support”  Behavior change

What do clients like? Use of own systems Increased choice in Bank financing instruments (IPF, DPF, PforR) suited to different needs on the ground. Shift in dialogue from inputs and compliance to results Verification of results is institutionalized Use of own systems Reduced Bank transaction processes Simplification Focus on capacity building and system improvements

A growing, global, cross sectoral portfolio… Since its inception in 2012, PforR has been applied in: 75 operations approved for a total of US$ 17 Billion in WB financing, supporting US$72 Billion of Government Programs. 69 Operations in the pipeline, for a total of $19 Billion of Bank Financing.

Thank you! Some additional resources: An early stage evaluation of PforR implementation (2016) http://ieg.worldbankgroup.org/sites/default/files/Data/Evaluation/files/program-for-results-full.pdf PforR Two Year Review ( 2015) http://documents.worldbank.org/curated/en/624411468140040506/pdf/951230BR0R2015020Box385454B00OUO090.pdf WBG PforR Policy, Directive, Guidance Notes: http://www.worldbank.org/en/programs/program-for-results-financing#3