1. Farmers’ organizations, policies and markets Implications of the Performance Base Allocation System for Countries and Projects

2. Farmers’ organizations, policies and markets PBAS: Foundations of the System Builds on similar systems from other international financial institutions (International Development Association [IDA], African Development Bank [AfDB], Asian Development Bank [AsDB], Islamic Development Bank [IsDB], but taking the specific terms of IFAD’s mandate into account a system stimulating establishment of the national- and local- level conditions needed for a sustainable reduction in rural poverty a tool for political dialogue

3. Farmers’ organizations, policies and markets PBAS: Objectives To increase the effectiveness of IFAD’s development aid by establishing the distribution of IFAD loans on a coherent and transparent basis Encouraging the establishment of the national- and local-level conditions needed to reduce poverty initiating a periodic review of countries’ progress in establishing an institutional and political environment favourable to poverty reduction

4. Farmers’ organizations, policies and markets PBAS: Criterion for calculating country allocation 1.the country’s performance: performance of the project and programme portfolio (35%) country’s rating in establishing a political and institutional environment favourable to a reduction in rural poverty (45%) general development framework (20%) 2.the country’s needs: population national per capita income

5. Farmers’ organizations, policies and markets PBAS - Modalities the system applies to all borrowing countries the system is applied in accordance with regional allocations approved by IFAD’s Governing Council the allocation process is set within a three-year planning cycle (first cycle 2005-2007) allocations are re-examined each year the minimum allocation is USD 1 million per year special treatment for countries in a post-conflict or other crisis situations, in particular in the case of natural disasters

6. Farmers’ organizations, policies and markets PBAS : Main implications for countries IFAD allocations are based on performance resource planning covers three years special attention is paid to the institutional and political environment with a view to reducing rural poverty authorities are involved in monitoring and improving the performance of IFAD projects and programmes in the country

7. Farmers’ organizations, policies and markets PBAS: Main implications for projects The performance of each project has a positive or negative influence on the rating and allocation of each country : improvement in project implementation and supervision improvement in monitoring and evaluation in order to take corrective measures more quickly establishment of the Results and Impact Management System (RIMS) to measure the impact of projects on rural poverty close monitoring of performance in project management, including that of key staff

8. Farmers’ organizations, policies and markets Implications for projects: indicators for monitoring project performance IFAD’s 11 early warning flags Execution indicators: compliance with loan covenants project management performance compliance with procurement procedures availability of counterpart funds quality and timeliness of audits disbursement rate performance of M&E system

9. Farmers’ organizations, policies and markets 11 Early warning flags (continued) Impact indicators: beneficiary participation gender focus in implementation poverty focus in implementation responsiveness of service providers Two general performance indicators: progress of implementation achievement of development objectives

10. Farmers’ organizations, policies and markets PBAS: A System in Evolution The PBAS will be finalized in the light of experience gained during its implementation weight of the population in the allocation formula treatment of countries emerging from conflict or affected by crises, natural disasters level of allocations (floor/ceiling) management of allocations in a multi-annual context maintenance of regional