Development Policy Lending Retrospective Customization, Flexibility, and Results OPCS, Country Economics

2 Outline of the Presentation Main Features Recent Trends Focus of DPOs Results Orientation and Emerging Issues Messages from In-Country Consultations

3 Share of DPOs in Total Lending Has Increased in FY09

4 Declining Number of Prior Actions per Operation

5 More Focus on Social Sector and Public Financial Management Reforms

6 More Focus on Development Results Use of monitoring indicators with baselines, targets, and expected results But Room for Improvements Quality of results frameworks Choice of results indicators Emerging Issues Disbursing against outcomes Maintained focus in harmonized environments

7 Examples of Country Results Influenced by DPO-Supported Programs Bangladesh Education Sector DPC Series supported a successful means tested stipend program Rwanda PRSC Series focused on the legal framework for health and education, performance- based contracting Gross Enrollment in Secondary Education: 40% (2003); 57% (2007); Gender Parity: 36% (2003); 41% (2007) Immunization Coverage: 83% (2003); 95% (2006) Primary Completion Rate: 33% (2003); 52% (2006)

8 Results in Public Sector Governance Lao PDR: Creation of centralized treasury and revenue functions and establishment of Procurement Management Office. Rwanda: Medium Term Expenditure Framework with output-oriented MTEFs for education, health, water and energy sectors. Madagascar: Strengthened budget management with improvements in revenue forecasting, streamlined expenditure management procedures, and better cashflow management and commitment control. Burkina Faso: Procurement was strengthened with adoption of new legal and institutional framework, procurement audits, and a manual of procedures and standard bidding documents Georgia: Better Treasury Management with establishment of a Treasury Single Account tha is now fully operational across central government

9 Challenges with Outcome-Based Budget Support Critical to strengthen the results-orientation of DPOs Governments value support in the “how to” instead of “what” to do How to separate the contribution of government actions from the effects of exogenous factors

10 DPOs in Harmonized Environments Substantial progress on collaboration and coordination in budget support How to ensure that we maintain focus and flexibility:  analysis indicates that PAFs have a proliferation of indicators  crisis response raises concerns about rigidity of PAFs

11 Operations Processed in Line with Good Practice Principles on Conditionality  Reinforce Ownership  Alignment and Harmonization  Criticality  Customization  Full disclosure of prior actions and program documents; predictable budget financing

12 Feedback from Consultations Areas of Progress: Continued Progress on Good Practice Principles Favorable influence on pace of reforms (Armenia, Benin) Culture of performance- based management (Armenia, Senegal) Raised the profile of reforms (Colombia) More Attention To: Further alignment (Tanzania) Further harmonization (Benin and Burkna Faso) More flexibility to assess program performance (Benin, Vietnam) Integrate CSO views at the design stage Greater use of local expertise in analytic work Further decentralization

In Summary Positive Features Shift in focus Fewer prior actions Increased country ownership Increased flexibility Improved results- orientation Improvements Needed Quality of results frameworks Analytic underpinnings Poverty and distributional impacts Description of country consultations Macro assessments in subnational and sectoral DPOs 13

14 Thank You