1. 1 Proposed Results Management Framework for 2010-2012 K. Cleaver, AP/PMD for CRMT, 7 April 2009 Policies and Criteria for IFAD Financing Informal Board Seminar 14 September 2010

2. 2 Revision of the Lending Policies and Criteria In its resolution 154/XXXII on the Eighth Replenishment of IFAD’s resources, the Governing Council decided as follows: Upon proposal of the President, the Executive Board shall submit to the thirty-third session of the Governing Council proposals for amendments to the lending Policies and Criteria in order to further differentiate between the various levels of concessionality of Fund financing and strengthen the partnership relations between the Fund and the Member States that use its resources.

3. 3 2009 Informal Seminar Proposed revisions were discussed by the EB at an informal seminar in September 2009 At the informal seminar, EB members expressed their concern that the Lending Policies and Criteria, adopted in 1978 and most recently amended in 1998, had lost much of their relevance to IFAD’s work. The members concluded that the Lending Policies and Criteria should be updated to reflect the current role of the Fund, and that the document should be made more concise and grant greater authority to the Executive Board. The EB therefore decided in December 2009 to submit a resolution to the GC postponing the revision and emphasizing that the revised document should be substantially simplified.

4. 4 2010 Governing Council The 2010 session of the Governing Council decided as follows (Resolution 158/XXXIII): Upon the proposal of the President, the Executive Board shall submit to the thirty-fourth session of the Governing Council in 2011 revised Lending Policies and Criteria that shall take into account all developments since the last revision of the Lending Policies and Criteria in 1998 and express concisely and clearly the broad policies and criteria applicable to financing by the Fund

5. 5 Lending Policies and Criteria – Legal Status The Lending Policies and Criteria were originally adopted by the Governing Council in 1978 They are adopted by the GC in accordance with Article 7, Section 1(e) of the Agreement Establishing IFAD, which states: “Subject to the provisions of this Agreement, financing by the Fund shall be governed by broad policies, criteria and regulations laid down, from time to time, by the Governing Council by a two- thirds majority of the total number of votes”

6. 6 Why should the document be updated? Policies adopted by the EB now cover many of the areas addressed in the old LP&C The EB is better able to consider changes to policies than the GC Member states expect more flexibility in the financing terms

7. 7 The proposed new Policies and Criteria for IFAD Financing Take account of the policies adopted by the EB: Targeting Knowledge management Innovation Rural enterprise Rural finance Climate change Engagement with indigenous peoples Improving access to land and tenure security Sector-wide approaches for agriculture and rural development Crisis prevention and recovery Private-sector development and partnership strategy Gender Anti-corruption Evaluation Give the EB authority to adopt new policies

8. 8 The proposed new Policies and Criteria for IFAD Financing Two categories of loans: highly concessional and concessional Highly concessional loans – interest free, may be subject to service charge Concessional loans - provided on terms (interest rate, maturity period, fees, etc.) which are more favourable than the terms the borrowing Member State could obtain for loans from the private sector for agricultural development projects or programmes. Concessional category would include current ordinary, intermediate and hardened terms.

9. 9 The proposed new Policies and Criteria for IFAD Financing There may be several types of loans offered in each of the two categories. The Executive Board has the authority to determine (a) the types of loans offered in each category, and (b) the interest rate, fees, charges and maturity and grace periods applicable to each type of loan. Within each category, the Executive Board shall determine the eligibility criteria applicable to a particular type of loan.

10. 10 Policy on concessionality The level of concessionality applicable to each Member State shall generally follow the approach used by the World Bank, taking into account the Fund’s special mandate. Member States eligible to receive loans from the International Development Association shall generally be eligible for loans provided on highly concessional terms from the Fund. Member States eligible to receive loans from the International Bank for Reconstruction and Development (IBRD) shall generally be eligible for loans provided on concessional terms from the Fund. Developing Member States which are not eligible for loans from the IBRD may be eligible to receive loans provided on concessional terms for projects and programmes which are in conformity with the objectives and priorities set out in the Agreement, subject to the availability of funds.

11. 11 Next Steps EB Members are invited to provide their comments on the draft paper. Revised draft will be submitted to December 2010 session of Executive Board for approval. If approved, Policies and Criteria for IFAD Financing will be submitted to February 2011 Governing Council for approval.