46145 public disclosure authorized - world bankdocuments.worldbank.org/curated/en/... · it also...

FEBRUARY I S 9 2008 (MAIN REPORT)

QUALITY ASSURANCE GROUP

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GiaffEVIATlQNS AND ACRONYMS

AAA ACS ADB AFR

AfDB APL ARPP ARDE BB

BW C-AAA CAE CAS CASCR CEM CFAA CMU CODE CPAR CPIA CPPR CSR

DGF DO DPL DPO DPR DRL EAP ECA ECO EMT ENV EP ERL ESW EXT FEU FIL FPD

FSE

Analytic and Advisory Activities Activity Completion Summary Asian Development Bank Africa Region

African Development Bank Adaptable Program Loan Annual Report on Portfolio Performance Annual Report on Development Effectiveness Bank Budget

Business Warehouse Country Analytic and Advisory Activities Country Assistance Evaluation Country Assistance Strategy CAS Completion Report Country Economic Memorandum Country Financial Accountability Assessment Country Management Unit Committee on Development Effectiveness Country Procurement Assessment Review Country Policy and Institutional Assessment Country Portfolio Performance Review Controller’s, Strategy and Resource Management Development Grant Facility Development Objectives Development Policy Lending Development Policy Operations Development Policy Review Debt Service Reduction Loan East Asia and Pacific Region Europe and Central Asia Region Expanded Co-Financing Operation Energy and Mining Environment Economic Policy Emergency Recovery Loan Economic and Sector Work External Affairs Department Finance, Economics and Urban Department Financial Intermediary Loan Finance and Private Sector Development++

Finance Network++

FY GEF GPP GRAAA

HD HDN HNP HR IBRD

ICR IDA IDB IEG IFA IG IP ISR INF INV LICUS LCR LIL

M&E MDGs MIC MNA MP MUV NLTA oc ODA OPCS PA PAD PDO PER PN PRC PPAR PREM

PSDN

Fiscal Year Global Environment Facility Global Programs and Partnership Global and Regional Analytic and Advisory Activities Human Development Human Development Network Health, Nutrition and Population Human Resources International Bank for Reconstruction and Development Implementation Completion Report International Development Association Inter-American Development Bank Independent Evaluation Group (formerly OED) Integrated Fiduciary Assessment Investment Grade Implementation Progress Implementation Status and Results Report Infrastructure Investment Operations Low-Income Countries Under Stress Latin America and the Caribbean Region Lending and Innovation Loans

Monitoring and Evaluation Millennium Development Goals Middle-Income Countries Middle East and North Africa Region Montreal Protocol Manufacturers Unit Value Non-Lending Technical Assistance Operations Committee Official Development Assistance Operations Policy and Country Services Poverty Assessment Project Appraisal Document Project Development Objective Public Expenditure Review Policy Note Poverty Reduction Support Credit Project Performance Assessment Report Poverty Reduction and Economic Management Network Private Sector Development Network++

++ In FY08, FSE and PSDN networks merged into FPD.

PSG PSL QAG QEA QER QSA RDV RETF RIL ROC S A L SAP

SAR S D N

Public Sector Governance Programmatic Structural Adjustment Loan Quality Assurance Group Quality-at-Entry Assessment Quality Enhancement Review Quality o f Supervision Assessment Rural Development Recipient Executed Trust Fund Rehabilitation Loan Regional Operations Committee Sector Adjustment Loan Systems Application and Products in Data Processing South Asia Region Sustainable Development Network

SDV SIL S I M SF S M U SND SP SSL SWAP TA TAL TF

TTL URB

Social Development Specific Investment Loan Sector Investment & Maintenance Loan Special Financing Sector Management Unit Sub-National Department Social Protection Special Structural Adjustment Lending Sector Wide Approach Technical Assistance Technical Assistance Loan Trust Fund

Task Team Leader Urban

ANNUAL REPORT ON PORTFOLIO PERFBRIWIGNCE FISCAL YEAR 2007

CONTENTS

EXECUTIVE SUMMARY .......................................................................................................................... i

I . I1 .

I11 .

Iv .

V .

V I .

Introduction .................................................................................................................................... 1

Approvals and Portfolio Size and Composition .......................................................................... 2 A . Aggregate Trends ................................................................................................................... 3 B . Focus o f Lending ................................................................................................................... 9 C . IDA and Fragile States ......................................................................................................... 11 D . IBRD .................................................................................................................................... 12 E . Innovations in Lending ........................................................................................................ 13 F . Infrastructure ........................................................................................................................ 14 G . Recommendations ................................................................................................................ 15

Portfolio Performance ................................................................................................................. 16 A . Development Outcomes o f Projects ..................................................................................... 17 B . Portfolio Perfomance and Measurement ............................................................................ 26 C . Recommendations ................................................................................................................ 33

Analytic and Advisory Activities ................................................................................................ 34 A . Trends in Expenditures and Deliveries ................................................................................ 35 B . Quality o f AAA .................................................................................................................... 41 C . Recommendations ................................................................................................................ 46

Development Outcomes of Country Programs ......................................................................... 47 A . Trends in Program and Project Outcomes ........................................................................... 47 B . Factors Contributing to Low Program Outcomes ................................................................ 50 C . Divergence between Program and Project Outcomes .......................................................... 52 D . Recommendations ................................................................................................................ 55

Recommendations ........................................................................................................................ 56

BOX 2.1: The Portfolio Dynamics ............................................................................................................ 4

F I G U R E S Figure 2.1: Figure 2.2: Figure 2.3: Figure 2.4: Figure 2.5: Figure 2.6: Figure 2.7: Figure 3.1 :

Trends in Approvals. Disbursements. and Portfolio (FY00-07) ............................................ 3 Approval Trends in Multilateral Development Banks (2000-07) .......................................... 4 Portfolio Concentration (FY02 vs . FY07) ............................................................................. 5 Preparation Time and Cost per Investment Lending Operation ............................................. 7 Preparation Time and Cost per Development Policy Operation ............................................ 8 Approvals for Fragile States (FY03-07) .............................................................................. 12 IBRD Approvals by Client Segment (3-Year Moving Average in Real Terms) ................. 13 Proportion of Operations with Satisfactory Outcomes ........................................................ 18

Figure 3.2: Figure 3.3: Figure 3.4: Figure 3.5: Figure 3.6: Figure 4.1 : Figure 4.2: Figure 4.3: Figure 4.4: Figure 4.5: Figure 5.1: Figure 5.2: Figure 5.3:

TABLES Table 2.1 : Table 2.2: Table 2.3: Table 3.1: Table 3.2: Table 3.3: Table 3.4: Table 3.5: Table 4.1 : Table 4.2: Table 4.3: Table 4.4: Table 4.5: Table 5.1 : Table 6.1 : Table 6.2:

ANNEXES Annex 1 Annex 2

Project Outcomes by Region ............................................................................................... 19 Major Improvers by Sector Board ....................................................................................... 20 Major Decliners by Sector Board ......................................................................................... 21 Proportion o f Operations with Satisfactory Outcomes (IBRD vs . IDA) ............................. 24 QEA8 Results by Quality Dimension .................................................................................. 31 Share o f Country Services Expenditures (FY02 vs . FY07) ................................................. 35 Unit Cost in Real Terms of Dropped AAA Tasks (FY03-07) ............................................. 37 Preparation T ime o f AAA Deliveries (FY03-07) ................................................................ 38 Quality o f E S W Product Types ............................................................................................ 43 Total Cost in Real Terms o f Dropped AAA Tasks (FY03-07) ............................................ 44 Performance o f Country Programs and Related Projects ..................................................... 48 Factors Contributing to Unsatisfactory CAEs ..................................................................... 50 Sector and Aggregate Project Ratings (FYO1-07 CAEs) ..................................................... 53

Gross and Net Disbursements (FY05-07) .............................................................................. 6 Approvals by Theme (FY00-07) .......................................................................................... 10 Approvals by Sector (FYOO-07) ........................................................................................... 15 IEG Evaluations for Afr ica and Other Regions (FY04-07) ................................................. 19 Results o f QAG Assessments for HNP ................................................................................ 22 FY04-07 IBRD and IDA Performance Gap by Sector Board .............................................. 25 FY07 Risk Ratings . QAG Review vs . ISR ........................................................................ 27 Reported Problem Projects vs . Actual Unsatisfactory Projects ........................................... 28 AAA Programs by Number and Cost (FY03-07) ................................................................ 36 Core Diagnostic Reports Coverage (FY04 vs . FY07) ......................................................... 38 Number and Unit Cost o f E S W Deliveries by Output Type ................................................ 39 Quality o f Country Programs ..................................................................................... 42 Status o f Recommendations f rom AAA Assessments ........................................................ 45 Country Program vs . Project Portfolio Performance ........................................................... 49 Status o f FY02-06 ARPP Recommendations ...................................................................... 56 Consolidated ARPP Recommendations ............................................................................... 57

The Portfolio . An Overview Table .................................................................................... 59 Basic Portfolio Definitions and Data Sources ...................................................................... 60

STATISTICAL APPENDIX

ACKNOWLEDGMENTS Th is report was prepared by Albert Martinez with inputs from Amnon Golan. Marc Blanc. Inder

Sud. Jose Sokol. Vinay Bhargava. Roger Grawe. h a Hartmann. Fred Swartzendruber. Eugene McCarthy. Peter Ludwig. Brad Herbert. Irfan Aleem. Rema Balasundaram. and Melvin Vaz . Helpful advice was received from the Advisory Panel composed o f Alain Barbu. Gisu Mohadjer. Sally Zeijlon. Richard Scobey. Raja Iyer. Hoveida Nobakht. Joel Maweni. Brigitte Duces and Tawhid Nawaz . Administrative support was provided by Conchita Castillo. Josephine Onwuemene. and Amelia Laya .

Prem Garg. Director. and Xavier Legrain. Acting Director. Quality Assurance Group. guided the overall effort .

Annual ReDort on Portfolio Performance FY07 i

EXECUTIVE SUMMARY

1. The Annual Report on Portfolio Performance (ARPP) provides the Board and Management with a strategic overview o f the size, composition, and quality o f the Bank’s lending portfolio and Analytic and Advisory Activities (AAA) program. I t also provides Senior Management with real t ime information to assess what i s working well, or less well, together with recommendations on measures to sustain and improve quality and effectiveness o f the portfolio and o f the AAA program - two key vehicles for delivering results to clients.

TRENDS IN APPROVALS AND PORTFOLIO

2. The Bank’s portfolio at end-FY07 consisted of 1,485 operations with net commitments of $100.4 billion representing a decline in real terms compared to five years ago. Investment operations accounted for 95 percent o f the portfolio since most Development Policy Operations (DPOs) close within one year o f approval. There was a decrease in portfolio concentration; the ten largest borrowers accounted for ha l f the portfolio in terms o f commitments in FY07 compared to about 60 percent five years ago.

3. There are five trends and characteristics of Bank lending operations and portfolio worth noting. First, Bank efforts have maintained IBRD lending levels in real terms during the past five years despite a contraction in demand for sovereign external financing. Within the IBRD client group, Blend countries experienced increases in approvals. However, lending in real terms to core IBRD countries, which accounted for ha l f o f IBRD lending, has been stagnant with underutilized lending envelopes. It i s recommended that Management explore opportunities to increase financial and non-financial assistance and services to the core IBRD countries.

4. Second, resource transfers to Fragile States increased significantly in FY07, the highest level since FY02. Fragile States accounted for about a fifth o f IDA FY07 approvals, with post conflict countries receiving about a third o f resource transfers to Fragile States. In addition, about 40 percent o f Recipient Executed Trust Fund project approvals in FY07 went to Fragile States. However, only 61 percent o f Fragile States projects exiting the portfolio during FY04-07’ were rated by IEG as satisfactory. In addition, QSA7 found weaknesses in project design and readiness for implementation in Fragile States projects included in the sample.

5. Third, the infrastructure sectors have been the main source of growth in lending during the past five years. This reflects the large financing needs in infrastructure and the importance o f infrastructure in improving access to services especially by the poor. The growth in lending is a successful response to the 2003 Infastructure Action Plan which sought to reverse the decline at that time in the Bank’s infrastructure lending. Almost ha l f o f the Bank’s current portfolio i s composed o f infrastructure projects, with Transport accounting for ha l f o f the infrastructure portfolio. The challenges facing infkastructure lending include managing the interface with other sectors and responding to cross-border issues. The recent merger o f the

’ About half o f FY07 exits have been evaluated by IEG.

Annual Renort on Portfolio Performance FY07 11

Infrastructure and Environmentally and Socially Sustainable (ESSD) networks is part o f the response to these challenges.

6. Fourth, though simple and repeater operations have increased, Bank operations include many new approaches and innovations. The Bank’s work in Middle Income Countries has been responsive to demand f i o m sophisticated clients for new products and services as wel l as increased efficiency o f delivery. Multi-country and regional programs and projects are increasing in recognition o f the need for collective action to address cross-border issues and improve synergies o f individual country programs. The Sub-National Development Program was created in 2006 to address the lack o f Bank instruments to support an important and growing client segment. There has been rapid growth o f Additional Financing operations in investment lending and a major shift to programmatic approaches in Development Policy Operations. Carbon Finance operations have been growing, with Operations Policy and Country Services (OPCS) issuing guidelines in October 2007 to improve design and risk assessment and mitigation. The quality assurance processes wil l have to keep pace with the introduction o f new products and approaches.

7. Fifth, aggregate trends in lending during the past five years reflect how the Regions implemented the Bank strategy’ introduced in F Y O 1 . Thematically, about a quarter o f lending went to private sector development, a quarter went to human and social development, a fifth to public sector governance, and the remainder roughly equally divided among urban and rural development and environment. There has been a stronger emphasis in IDA countries on human and social development to support poverty reduction and Mil lennium Development Goals (MDG) implementation, while IBRD operations focused more on economic growth. I t is recommended that Management review whether there should be a shift in focus o f IBRD and IDA lending towards more emphasis on addressing inequality and environment in IBRD countries and more lending in sectors such as infrastructure in IDA countries as argued by some Bank papers.

8. As the Bank moves towards new strategic directions, there will be a shift in emphasis of existing programs and introduction of new approaches. Perhaps the major challenge will be operationalizing the global public goods initiative, though much can be learned fi-om the current work on multi-country approaches. Global Programs and Partnerships (GPPs) are important instruments for supporting global initiatives - an FY07 QAG review found improvement in quality-at-entry and oversight o f Window Two programs compared to the FY06 assessment results, though Regions indicated room for greater integration o f GPPs in Regional Strategies. Future ARPPs could review progress in lending, AAA, and other Bank programs towards the new strategic directions.

BANK PERFORMANCE

9. Development outcomes of operations exiting the Bank portfolio continued to improve through FY06, though IEG evaluation of half of FY07 exits shows lower outcomes

Strategic Framework Paper, January 2001.

... Annual ReDort on Portfolio Performance FY07 111

in terms of number of operations. On the basis o f a three year moving average, about 80 percent by number o f projects, and 87 percent by disbursement, o f FY06 exits were rated by IEG as satisfactory. T h i s represents sustained improvement in performance since FY90 when one o f three projects was unsatisfactory. The aggregate project performance meets the 80 percent goal set by Management a decade ago. However, Management wil l have to continue to monitor recent performance.

10. There was deterioration in aggregate outcomes o f AFR projects from 83 percent in FY04 to 65 percent in FY06. The FY07 performance thus far i s slightly lower than that o f FY06 based on evaluation o f about ha l f the FY07 exits. Within IDA, AFR performance i s lower than the rest o f the Bank. The performance o f Fragile States projects in AFR is significantly worse than that in other Regions. However, QEA8 rated FY06-07 AFR approvals as satisfactory. The next QSA should include an assessment o f the quality o f older projects in the AFR portfolio to determine the trajectory o f outcomes during the next few years.

11. Among Sector Boards, there were declines in project performance in Health, Nutrition and Population, Private Sector Development, and Public Sector Governance during FYO4-07 compared to FY01-03. A review o f the IEG evaluations revealed that project design flaws were the main factors contributing to unsatisfactory outcomes in these Sector Boards. In a significant number o f cases, the projects were approved with lack o f government commitment. In many cases, the design flaws were rooted in unrealistic assumptions o f absorptive capacity o f the Borrower, and project supervision was not able to successfully address weaknesses in quality-at-entry. The Regions and relevant Sector Boards should review the current portfolio to correct design flaws in existing projects and ensure more rigorous quality assurance o f new projects, focusing on government commitment and capacity. The next QSA should also assess the portfolio o f the above Sector Boards and recommend appropriate courses o f action.

12. The results o f QEA8 indicate a greater than 90 percent satisfactory quality-at-entry of projects approved in FYO6-07. There i s also a convergence o f performance by Regions compared to previous years. Historically, QEA ratings are about 10 percentage points higher than actual project outcomes. Based o n QEA results since FYOO, as wel l as satisfactory QSA outcomes, Bank performance should continue to be at above 80 percent satisfactory.

13. With respect to supervision, QAG reviews had some findings of significance. First, the Proactivity Index indicates that teams have been addressing in a satisfactory manner the underlying issues o f problem projects. A Q A G review found that the Index understates actual proactivity, but recommended no changes at this time to the measurement after assessing the cost-benefit o f such a move. Second, the number o f projects with delayed effectiveness has been increasing mainly due to lengthy client approval processes and the number o f effectiveness conditions. Several Regions are now addressing the factors contributing to delayed effectiveness. Third, QSA7 found no significant difference in quality o f supervision o f HQ vs. field based TTLs - both showed satisfactory efforts overall. However, more could be done to complement local presence with appropriate use o f HQ staff with global experience.

Annual Report on Portfolio Performance FY07 iv

14. Notwithstanding the satisfactory overall results from QAG assessments, there are several areas with scope for improvement. Moving to a higher level o f performance in quality-at-entry requires the strengthening o f three aspects: (a) more realistic results framework and objectives; (b) better risk assessment and mitigation; and (c) improved implementation readiness. Further improvements in the quality o f supervision would require: (a) more effective management attention; (b) timely identification and action on threats to development objectives; and (c) stronger skills mix. Various QAG assessments have identified effectiveness o f managerial oversight as a critical factor that differentiated fully or highly satisfactory from moderately satisfactory project performance. Some Regions have begun to address the issue o f overextended sector managers.

15. Measuring and tracking portfolio performance have been ineffective due to the lack of candor in project reporting. The Realism Index continues to show significant under- reporting o f project risks, a problem that has been recognized for some time but has not been effectively addressed. A recent QAG review o f quality o f reporting covering the FY07 portfolio estimated the share o f problem projects in the portfolio to be twice that reported in ISRs. The finding i s the same as that o f QSA7, which covered the FY06 portfolio. The realism problem i s acute in IDA countries, in particular in Fragile States. The usefulness o f the current system o f portfolio reporting as a management tool is dependent on improving candor in reporting project performance and risks. OPCS will monitor the impact o f the new Realism Index to see whether any further action on portfolio reporting was necessary.

16. One way forward towards improving portfolio performance measurement and reporting i s to establish a stronger link between risks identified at entry and the reporting of project performance. The current system rates projects entering the portfolio at zero risk, and flags project risk only when problems begin to surface. The revision o f the measurement and monitoring o f project risk during implementation should build on the reforms initiated in July 2007 to ensure a more systematic and comprehensive assessment o f risks at appraisal. It i s recommended that OPCS and Q A G work towards reviewing and recommending appropriate changes to the current system o f portfolio risk measurement and reporting.

ANALYTIC AND ADVISORY ACTIVITIES

17. The importance of M A as an instrument of Bank support has been growing. T h i s i s reflected in the increasing share o f AAA expenditures in the country services envelope - AAA expenditures in FY07 were higher than that o f lending preparation and almost as high as that o f supervision. The use o f AAA - as measured by i t s share in country services expenditures - has grown in Investment Grade IBRD countries, Blend countries, and Fragile States. This growth i s consistent with the various strategies on improving Bank relevance in IBRD countries and the recommendations from the 2002 LICUS Task Force Report. The increased use o f Trust Funds was a major factor contributing to AAA growth.

18. Several trends in the size and composition of AAA are worth noting. First, there has been a major shift in AAA towards Non-Lending Technical Assistance (NLTA) both in terms o f number as well as value o f tasks. In part, this i s due to an increasing number o f large NLTA

Annual Reuort on Portfolio Performance FY07 V

activities costing more than $0.5 mi l l ion each in the Afr ica Region and the Social Development Sector Board with a large part o f the financing coming from Trust Funds. Second, within ESW, there is a shift from core diagnostic reports to other types o f reports. These developments reflect decisions at the country level on the appropriate mix o f AAA instruments as envisioned in the AAA reforms in 2003. Third, multi-country AAA is a fast growing segment, mainly in AFR where there have also been an increasing number o f multi-country lending operations. Fourth, while post delivery expenditures have been increasing, the Country AAA (C-AAA) assessment found that Dialogue and Dissemination continues to be a weak aspect o f AAA. Finally, unit cost o f ESW tasks increased by 45 percent in real terms during the past f ive years, mainly in Country Economic Memorandums and Country Advisory Reports.

19. QAG also conducted two assessments of AAA programs during lWO3-07 covering a total of 53 countries. The combined findings from the assessments show a mixed picture. O n the positive side, the overall quality o f AAA programs was rated as satisfactory with strong aspects in Internal Quality as wel l as Scope and Strategic Relevance. But several weaknesses were identified; the l o w rating for L ikely Impact i s a major concern-the Bank may be producing good quality tasks which, when viewed in the overall strategic country context, may not be addressing the most critical developmental constraints. Coherence and Integration o f country AAA programs was the weakest aspect and with Dialogue and Dissemination contributed to lower ratings for L ike ly Impact. These are in turn explained by inadequate management attention to quality.

20. In response to the increase in the costs of dropped AAA tasks highlighted in last year’s ARPP, QAG carried out a review of dropped AAA tasks as a basis for identifying systemic recommendations. Two key findings emerged from the review. First, Value for Money - effective use of resources in relation to benefits - was found to be good overall. Indeed, a large majority o f the tasks in the sample were judged to have produced satisfactory results. Second, Quality of Process was found to be poor, often reflecting inadequate institutional processes that hamper monitoring and tracking of AAA. About a third o f the tasks assessed by Q A G were misclassified. The process problems were particularly acute for AAA tasks that are programmatic, multi-sectoral or global/regional in nature.

COUNTRY PROGRAM PERFORMANCE

21. There i s a disconnect between aggregate performance of lending and AAA projects and the performance of country programs, which are rated below 60 percent satisfactory based on completed Country Assistance Evaluations (CAEs) during the past ten years. A QAG review o f CAEs with unsatisfactory ratings found that two factors stand out as primary contributors to l ow outcomes: (a) weak design o f country programs; and (b) ineffective country dialogue. Country program design issues included significant omissions, lack o f coherence, and failure to take into account borrower commitment and capacity. Individual project outcomes could be satisfactory but poor program design and ineffective country dialogue would cause the country program to be rated unsatisfactory.

Annual ReDort on Portfolio Performance FY07 vi

22. The 2006 Annual Report on Development Effectiveness (ARDE) found major deviations between sector and project outcomes mainly in Private Sector Development, Public Sector Development, and Rura l Development - the deviations are important because CAS objectives are articulated in terms of sector or thematic outcomes. The QAG review identified three main reasons for the divergence between sector and project outcomes. First, many projects were undertaken which did not address the key development constraints in the sector or had questionable priorities. Second, poor coordination led to l o w outcomes in sectors where cross sector inputs from other Bank projects and donors were critical. Finally, the results frameworks o f both projects and CASs did not have strong linkages among project, sector, and CAS outcomes.

23. The above findings point towards a two track approach to improving program outcomes. First, the CAS design, i.e., quality-at-entry, should be improved by ensuring that the country program addresses key development constraints, i s focused and coherent, and takes into account Borrower commitment and capacity. The introduction o f the results based CASs beginning 2005 should help address the weaknesses in CAS design through the introduction o f a more rigorous results framework. A planned retrospective on the experience with results based CASs would assess progress to date towards improving CAS design. Second, quality assurance should focus on quality o f implementation o f CASs not only at the task level but also at the program level to ensure that the timing and choice o f design o f interventions as wel l as their implementation maximize impact o n CAS outcomes. It i s recommended that OPCS review as part o f the CAS Retrospective the adequacy and effectiveness o f current instruments in ensuring quality o f CAS implementation.

RECOMMENDATIONS

24. A review of recommendations in FYO2-06 ARPPs found that a majority of the recommendations have been completed, but there was less than satisfactory progress in three areas: (a) actions to address structural and incentive issues that constrain Sector Managers from effectively performing their quality assurance responsibilities; (b) actions to address staff and managerial incentives to improve realism in portfolio reporting; and (c) actions to improve management o f AAA. The status o f these recommendations is summarized in Table 1 below. The recommendations which consolidate the findings from the FY07 ARPP and the uncompleted actions from previous ARPPs are shown in Table 2.

Annual ReDort on Portfolio Performance FY07 vii

Recommendations Status

Strengthening Lend

There were 10 recommendations on improving AAA management. These include improving reporting, addressing delays in delivery, improving dialogue and dissemination and improving management oversight. Ha l f o f the recommendations have been implemented.

Business Processes and Portfolio Reporting: There were 12 recommendations on improving processes and portfolio measurement and reporting. These included introducing several guidelines, reforming the PSR system, revising the Realism Index, and strengthening the review and quality assurance processes.

Several recommendations dealing with management oversight and dialogue and dissemination have not yet resulted in satisfactory outcomes based on the latest C- AAA Assessment. Rating: Moderately Unsatisfactory

Staff and Management Incentives and Capacities: There were 4 recommendations: address impediments to Sector Management in ensuring quality; address issues in staf f and management incentives to improve candor in portfolio reporting; upgrading training; and improving support to management.

There were 8 recommendations on the results framework.

Other Quality Issues: There were 10 recommendations relating to other quality issues including those targeting certain groups such as Sector Boards and certain aspects such as adequacy o f resources.

The follow-up to these recommendations will be reported in the upcoming OPCS Results Paper. Rating: Not Rated

P and Portfolio Management

Most o f the recommendations have been implemented. One recommendation - integrating RETF in portfolio - is currently under implementation. Rating: Satisfactory

Some Regions have begun to address the issue o f impediments to sector management in ensuring quality. However, there i s lack o f systemic response to the issue o f candor in project performance reporting, with the Realism Index continuing to be below target. Rating: Moderately Unsatisfactory

Most o f the recommendations have been implemented with satisfactory results. There are lagging areas, such as outcomes o f HNF' and Fragile States projects. Rating: Moderately Satisfactory

Overall Rating for Follow-up to Previous ARPP Recommendations: Moderately Satisfactory

... Annual ReDort on Portfolio Performance FY07 V l l l

Recommendation

Table 2: Consolidated ARPP Recommendations

Intermediate Actions Results

Regions to work wi th HNP, PSD, and PSG Sector Boards to address relatively low project outcomes focusing on improving project design at entry and restructuring problem projects in current portfolio.

AFR to sustain efforts to improve project outcomes, focusing on older projects and projects in Fragile States, HDN, PREM, and ESSD.

0 Sector Boards and Regions to agree on role o f Sector Boards in the quality assurance process at entry and to review current portfolio and address threats to satisfactory outcomes. Next QSA and QEA to report on performance o f HNF', PSD and PSG Sector Board projects.

Lending and Portfolio Quality AFR with relevant Sector Boards to review current portfolio and address threats to satisfactory outcomes. Next QSA to report on progress in AFR with respect to targeted portfolio segments.

0

measurement and reporting o f project r i sks by linking risk assessments at entry to risk management during implementation. OPCS to review Regional efforts to address impediments to managerial effectiveness in quality enhancement and lack o f candor in reporting project performance.

changes to the current system o f project risk measurement and monitoring.

OPCS w i l l monitor the impact o f the new Realism Index to see whether any further action on portfolio monitoring was necessary.

Portfolio Measurement and Monitoring I OPCS and QAG to review and recommend OPCS and QAG to reform

OPCS to restructure AAA definitions, guidelines and systems to improve results orientation, results measurement, and governance arrangements. These initiatives would help address recurring issues o f lack o f adequate management oversight and weak dialogue and dissemination.

AAA OPCS to review AAA definitions, guidelines and systems to improve monitoring, measurement, results orientation and governance arrangements to address recurring issues o f lack o f management oversight.

Narrowing o f performance gaps between AFR and rest o f the Bank with respect to outcomes o f projects in Fragile States, HDN, PREM, and ESSD. Specific targets and timetable to be determined by Management based on outcomes o f reviews and QSA. Improved outcomes for projects in the HNF', PSD, and PSG Sector Boards towards convergence with Bank-wide performance. Targets to be determined by Management based on outcomes o f reviews.

More accurate reporting o f portfolio risk starting FY09 to be tracked by QAG.

Attainment o f 80 percent Realism Index by FY09.

Next QAG AAA Assessment to determine whether progress has been made in addressing areas for improvement.

Annual Reuort on Portfolio Performance FY07 ix

Recommendation Intermediate Actions Results

Regions to improve country program design and ensure that results fkameworks o f projects and AAA are strongly linked to sector and CAS outcomes.

Country Programs OPCS to complete the CAS Retrospective. OPCS to review as part o f the CAS Retrospective the adequacy o f current instruments that track implementation o f CAS programs. OPCS to define, as part o f the CAS Retrospective, the criteria for quality o f M I C programs.

Results w i l l be measured by improved IEG ratings o f country programs. OPCS to define indicators and instruments for tracking effectiveness o f implementation o f CAS programs.

Annual Revort on Portfolio Performance FY07 1

I. INTRODUCTION

OBJECTIVES AND APPROACH

1.1 The Annual Report on Portfolio Performance provides the Board and Senior Management with a strategic overview o f the size, composition and quality o f the Bank’s portfolio and the Analytic and Advisory Activities (AAA) pr~gram.~ It also provides Senior Management with real time information to assess what i s working well, or less well, together with recommendations on measures to sustain or improve the quality and effectiveness o f the lending portfolio and o f the AAA program--two key vehicles for delivering results to our clients.

1.2 The FY07 ARPP draws on materials that are prepared as part o f regular portfolio monitoring fimctions carried out by the Regions and Networks, supplemented by projectlportfolio data in the Bank’s management information systems. I t also draws on various Q A G assessments. In preparing the ARPP, extensive consultations were held with managers and staff from around the Bank.

STRUCTURE AND COVERAGE

1.3 The report i s organized into six Chapters. Chapter 2 reviews the recent trends in size and composition o f the lending portfolio. I t analyzes trends by Regions, Networks, Client Segments, Instrument, Sectors, and Themes. Chapter 3 assesses overall portfolio performance results as wel l as issues associated with measuring and reporting the r isks o f the portfolio o f lending operations not achieving their development objectives. Chapter 4 takes stock o f the Analytic and Advisory Activities. It focuses particularly on trends in the program size, deliveries, and quality o f AAA, drawing on selected recent QAG assessments. Chapter 5 reviews the outcomes o f country programs based on IEG Country Assistance Evaluations. I t focuses on the factors contributing to the relatively l o w program outcomes compared to project results. Chapter 6 examines progress in implementing recommendations o f the FY02-05 ARPPs, and presents a consolidated set o f recommendations covering the findings from this year’s ARPP as wel l as uncompleted recommendations from previous ARPPs. The Statistical Appendix contains a detailed set o f supporting statistical material. As agreed with CODE, and in order to avoid duplication, this ARPP does not address directly the Results agenda, which i s to be the subject o f a separate report by OPCS.

AAA product l ines discussed in this report are ESW and TA. ESW and TA include fee-based and reimbursable tasks. Other AAA product lines not covered here include Donor and Aid Coordination, Research Services, World Development Report and Impact Evaluation.

Annual Reuort on Portfolio Performance FY07 2

11. APPROVALS AND PORTFOLIO SIZE AND COMPOSITION

2.1 T h i s chapter focuses o n trends in lending and changes in the portfolio. In analyzing longer term trends, this chapter uses FYOO as the starting point due to the relatively high lending levels in the late 1990s in response to the crises during that period. Due to significant year to year volatility, lending i s analyzed by aggregating approvals during FY05-07 and FY02-04 and where appropriate, FY00-01. Section A describes aggregate trends and issues, while the succeeding Sections discuss specific topics. The last Section summarizes the recommendations from this Chapter.

2.2 There are five main messages from this Chapter:

0 Aggregate trends in Bank operations during the past f ive years reflect implementation o f the 2001 Strategic Framework Paper. There has been a stronger emphasis in IDA countries on human and social development to support poverty reduction and MDG implementation, while IBRD operations focused more on economic growth. Some Bank papers4 argue for a shift in sectoral emphasis in IDA lending and a strengthening o f IBRD engagement in the areas o f inequality, governance, and environment.

0 Concerted Bank efforts resulted in a slight increase in IBRD lending in real terms during FY05-07 compared to FY02-04 despite a contraction in demand for sovereign external financing. Within the IBRD client group, Investment Grade and Blend countries experienced increases in approvals. However, lending to core IBRD countr ie~,~ which accounted for ha l f o f IBRD lending during FY02-07, declined in real terms with underutilized lending envelopes.

0 Approvals o f projects for Fragile States increased significantly in FY07, the highest level since FY02. In addition, about 40 percent o f Recipient Executed Trust Funds (RETF) in FY07 went to Fragile States. However, only 65 percent o f Fragile States projects exiting the portfolio during FY04-07 were rated by IEG as satisfactory. In addition, QSA7 found weaknesses in project design and readiness for implementation in Fragile States projects included in the sample.

0 Though simple and repeater operations have increased, Bank operations include many new approaches and innovations. The Bank’s work in Middle Income Countries has been responsive to demand from sophisticated clients for new products and services as well as increased efficiency o f delivery. The number o f multi-country and regional programs and projects i s increasing in recognition o f the need for collective action to address cross-border issues and improve synergies o f individual country programs.

The Demand for IDAIS Resources and the Strategy for Their Effective Use, FRM (2007) and Development Results in Middle-Income Countries: An Evaluation of World Bank’s Support, IEG (2007). Defined as IBRD clients that are neither Investment Grade nor Blend countries.

Annual ReDort on Portfolio Performance FY07 3

The Sub-National Development Program was created in 2006 to address the lack o f Bank instruments to support an important and growing client segment.

0 The infrastructure sectors have been the main source o f growth in lending during the past five years. The growth in lending i s a successful response to the 2003 Infrastructure Action Plan which sought to reverse the decline at that time in the Bank’s infrastructure lending. Almost half o f the Bank’s portfolio at end-FY07 is composed o f infrastructure projects, with Transport accounting for ha l f o f the infrastructure portfolio.

A. AGGREGATE TRENDS

Approvals

2.3 Bank lending increased by four percent in FY07 driven by strong IDA performance, notably in A F R and SAR. IBRD approvals declined by ten percent in FY07, though this was mainly due to the moving forward o f many operations in L C R to FY06 in anticipation o f elections in large borrower countries such as Mexico and Brazil. From a longer-term perspective, Bank lending approvals in real terms have been increasing over the past f ive years (see Figure 2.1) despite a constrained lending environment in the Middle Income Countries (MICs). The Bank-wide lending trend since FYOO also compares favorably with those o f other Multilateral Development Banks (see Figure 2.2). The medium-term prospects for lending indicate that Bank lending wil l continue to be at about the same level as during FY05-07, with annual project approvals projected at the $22 to 26 bi l l ion range during FY08-10.

Figure 2.1: Trends in Approvals, Disbursements, and Portfolio (WOO-07) (In Real Terms)

8

- 60 I

[ +Approvals in FY

FYOO FYOI FY02 FY03 FY04 FY05 FY06 FY07 -@-Net Commitments at End FY I +Disbursements in FY


Figure 2.2: Approval Trends in Multilateral Development Banks (2000-07) (In Real Dollar Terms)

h 180

11 140

0 0 7

0 0 0

3 100 % ’EI C - 60

2000 2001 2002 2003 2004 2005 2006 2007 [ +AfDB +ADB +IDB +WB 1

Sources: Annual Reports of AfDB, ADB, and IDB; Bank BW. WB approvals are by fiscal year while others are by calendar year.

Box 2.1: THE PORTFOLIO DYNAMICS

The portfolio as defined in the ARPP is a “stock” concept. Lending b y contrast i s a “flow.” The Bank portfolio consists o f the IBRD loans, IDA credits and grants, GEF grants, Montreal Protocol, and Special Financing operations (financed in part out o f the Bank’s net income). I t only includes operations that are active at the end o f the fiscal year. I t excludes operations which are closed or fully disbursed during the year. I t is recorded as the sum o f individual operations’ commitments, net o f cancellations, if any. The chart below illustrates those relationships for FY07 based on the Business Warehouse (BW) data.

Opening Balance $95.2B Closing

Balance* (1,468 $100.4B

Operations) o f which $15.4B (1,485 Exits during Operations)

FY07

$0.3B (266 -$18.8B Operations) >6 etroactive Extension

* Closing balance o f FY07 includes approximately $0.3 billion in projects closed in previous years, which were reopened in FY07.


Portfolio

2.4 The Bank portfolio mainly captures investment lending. As o f end-FY07, the Bank portfolio consisted o f 1,485 operations with net commitments o f $100.4 bi l l ionY6 about 80 percent o f end-FY02 portfolio in real terms. Investment lending in terms o f commitments accounted for about 95 percent o f the portfolio and 75 percent o f approvals in FY07. Development Policy Operations (DPOs) are not commensurately represented in the portfolio because these are mainly quick disbursing loans/credits with an average project l i fe o f less than one year. The growth in quick disbursing DPOs i s the major factor explaining the decline in the portfolio.

2.5 Theportfolio is less concentrated compared tofive years ago (see Figure 2.3). The end- FY07 portfolio included operations in 133 countries, with the ten borrowers accounting for about ha l f the portfolio, compared to about 60 percent five years ago. Nigeria and Pakistan replaced the Russian Federation and Bangladesh in the top ten countries in the Bank’s portfolio in FY07. About 80 percent o f the smallest borrowers accounted for 10 percent o f the portfolio in FY07, roughly the same proportion as in FY02.

Figure 2.3: Portfolio Concentration (FY02 vs. FY07) 100 ,

5 10 15 20 25 No. of Largest Borrowers

FY02 E FY07

Disbursements

2.6 Gross disbursements fell slightly in FY07 mainly due to a decline in approvals of quick disbursing DPOs. However, FY07 disbursements f fom investment loans were at the same level as in FY06 and higher than in FY04-05. Disbursement ratios for investment loans have been improving over the past five years.

2.7 Net disbursements declined from $5.0 billion in FYO6 to $0.5 billion in FY07 due to large prepayments in LCR (see Table 2.1). In FY07, LCR, EAP and E C A had negative net disbursements; however, before prepayments, only EAP had negative net disbursements. The main net resource transfers were occurring in AFR and SAR. For IBRD, gross disbursements

The Bank Portfolio is composed o f IBRD loans, IDA credits and grants, and grant finds fiom the Global Environment Facility (GEF), Montreal Protocol (MP), and Special Financing (SF). A description o f portfolio dynamics i s provided in Box 2.1.


were almost equal to scheduled repayments in FY06 and FY07; about $2.0 bi l l ion in prepayments in FY06 and $6.4 bi l l ion in prepayments in FY07 resulted in negative net disbursements. IDA had positive net disbursements o f $6.8 bi l l ion in FY07, almost unchanged from FY06. Projected Bank-wide net disbursements in FY08 range from $2 bi l l ion to $5 billion, with IBRD at negative $1.2 bi l l ion to negative $3.3 billion.

Table 2.1: Gross and Net Disbursements (FY05-07) (US$ Million)

FY05 FY06 FY07 IBRD IDA Bank IBRD IDA Bank IBRD IDA Bank

Gross Disbursements 9,722 8,950 18,672 11,833 8,910 20,743 11,055 8,579 19,635 Scheduled Repayments 12,107 2,008 14,116 11,507 2,134 13,641 10,852 1,891 12,743 Disbursements less Repayments -2,385 6,942 4,557 326 6,776 7,102 203 6,688 6,892 Prepayments 2,676 0 2,676 2,068 0 2,068 6,354 0 6,354 Net Disbursements -5,062 6,942 1,880 -1,742 6,776 5,033 -6,151 6,688 538

Investment Lending

2.8 Investment loans, accounting for about 75percent of FY07 approvals, remain the main instrument for deliveringJinancia1 and knowledge services to clients. There was a decline in approvals o f Emergency Recovery Loans (ERLs) in FY07 compared to the previous two years. Stand-alone Technical Assistance Loans (TALs) were also utilized less in the face o f declining demand in IBRD countries, increased utilization o f Non-lending Technical Assistance (NLTA) and Recipient Executed Trust Fund (RETF) capacity building projects, and integration o f TA components in other investment loans. However, the share o f simple and repeater projects has increased to about 25 percent o f number o f approvals in FY07, compared to about ten percent in FY04.

2.9 Based on exits during FY05-07, the average investment project had a life of 6.7 years, about the same as during FY02-04. The average age of active investment loans in the FY07 portfolio was 3.5 years, slightly lower than five years ago. However, the number o f project exits has been declining, mainly in AFR. The decline in exits i s partly explained by the increase in Additional Financing operations in FY07, which contributed to some increase in project extensions (see Para 2.32). Management would need to pay close attention to extensions o f closing dates.

2.10 There has been a continuing decline in average preparation cost but a slight increase in the preparation time7 for investment loandcredits in FY07 (see Figure 2.4). Preparation cost per project has declined in real terms by about 25 percent since FY03, consistent with the increase in simple and repeater projects as well as Additional Financing operations. AFR was the only region with a preparation cost per project in excess o f $400k in FY07, due mainly to a growing number o f multi-country projects. The increase in average Bank-wide preparation time for investment lending in FY07 i s partly explained by the increasing number o f multi-country projects.

This i s measured as elapsed time from Project Concept Review to Board Approval.


2.1 1 OPCS is currently reviewing the Policy Framework for Investment Lending. The proposed approach i s to modernize and streamline the pol icy framework towards: (a) creating a single principles based Investment Lending umbrella policy; (b) embedding a risk based model on internal controls governing Investment Lending; (c) rebalancing attention and resources between preparation, approval, and implementation stages; and (d) strengthening alignment with the current development and business model, borrower needs, and strategic directions.

Figure 2.4: Preparation Time and Cost per Investment Lending Operation (In Real Terms)

I

= 450

lft 400 ’ 350

0 0

v)

2003 2004 2005 2006 2007 Approval FY

I 1 +Ave. Preparation Cost +A*. Elapsed Time (Concept to Board) 1

- 20 0

- 19;

- 173;

- ISZ *

w , - I S $

U - 15

Development Policy Operations

2.12 Development Policy Operations accounted for about a quarter of approvals in FY07. As part o f the operational pol icy change in 2004, the 25 percent ceiling o n policy-based lending was removed, although Management committed to report annually to the Board o n the anticipated share o f policy based commitments. The projected level and share o f DPOs for next year will be higher than in FY07 and closer to the average level o f about one-third o f total approvals during the past five years. In addition, as part o f IDA 14 commitments, Management would seek guidance from IDA Executive Directors in the event the projected share o f IDA DPO commitments was to exceed 30 percent. The share o f DPOs in IDA lending in FY08 is projected to be below 30 percent.

2.13 IBRD accounted for two-thirds of DPO approvals in terms of lending commitments during thepastfive years. IBRD used DPOs to deliver 35 percent o f its lending during the past five years, compared to about 25 percent for IDA. L C R processed almost ha l f o f DPOs during the past five years in terms o f commitments, reflecting large demand o f Middle Income Countries in L C R for utilization o f th is instrument to support second generation reform programs in a wide range o f sectors and themes. AFR, ECA, and SAR have roughly the same share o f DPO approvals by amount in their lending activities at about 15 percent each over the past f ive years. In terms o f number, AFR delivered the most DPOs, mainly providing recurring support for the implementation o f poverty reduction strategies. T h e amount o f D P O approvals in SAR doubled since FY03, with increased use o f this instrument in India, Pakistan, and Bangladesh.


- 550 u) s 500 ' f 450

a f 300

1 6 v ~3 400 E -

350

2.14 Since their introduction in 1999, programmatic DPOs have become a widespread approach. They accounted for 90 percent o f DPOs in terms o f number and 85 percent in terms o f commitments in FY07. Under programmatic operations, the Bank supports the implementation by borrowing countries o f a medium-term program through a phased series o f typically single tranche loans, each o f which i s disbursed on the basis o f completed actions. The programmatic design i s wel l suited for supporting complex institutional reforms requiring a flexible step-by-step approach. DPOs are increasingly rapid disbursing instruments--the average project l i fe has declined to less than one year based on exits in FY05-07, compared to almost two years in FY02. IEG evaluates programmatic DPOs after the closing o f the last DPO in a series, and to date there has not been a sufficient number o f evaluations to assess the effectiveness o f the programmatic approach.

10 a,

+ - 9 .E

8 3 2 7 s Q ' 5 a

W E

6 $

2.15 Programmatic lending and the use of less complex designs reduced DPO preparation time and cost in FYU7 (see Figure 2.5). Average preparation cost in real terms has been declining since FY05, though the FY07 level i s s t i l l about 10 percent higher compared to FY03. Average preparation time has declined to about seven months in FY07, compared to 8.8 months in FY06 and 8.1 months in FY03. In FY05, there was a restructuring o f policies and processes guiding DPOs, including fast disbursing and programmatic operations, contributing to improved efficiency.

2003 2004 2005 2006 2007 Approval PI +Am. Elapsed Time (Concept to Board) 1 1 +Ave. Preparation Cost

Guarantees

2.16 Because of their unique characteristics, the Guarantee amounts are not included in the Portfoliofigures. The Bank's Portfolio o f 33 Guarantees i s spread through a l l Regions, with the highest Bank exposure concentrated in E M and ECA. The Energy and Mining Sector accounted for 60 percent o f Guarantee operations, followed by the Financial Sector with 16 percent. There are 15 new operations currently under preparation. Given the growing volume o f Guarantees, and in response to Senior Management request, QAG carried out an assessment o f Quality-at-Entry o f Guarantees approved in FY05/06.


2.17 The QAG assessment of Quality-at-Entry of Guarantees in FY06 found the quality to be less than that of other Bank operations. The weaknesses identified were: (a) an unsatisfactory underlying pol icy and regulatory framework o f the Borrower that had not been adequately addressed through credible actions; (b) generally no assessment o f the risk o f the guarantee being called; and (c) inadequate readiness for implementation. The Anchor Unit (FEU) i s fol lowing up the QAG recommendations and has introduced simplification to the implementation processes. While Regions have full ownership o f the Guarantee operations, FEU has clarified i t s role in the quality assurance process.

Trust Funds

2.18 The FY06 ARPP recommended that Recipient Executed Trust Funds (RETFs) be recorded in the Bank’s Portfolio. In June 2006, the RETF product l ine was introduced as a f i rs t step towards a better recording o f deliverables and cost relating to recipient executed projects carried out without any IBRDADA financing. Most o f the entries in RETFs were converted from other product lines that had varying oversight; the result was that RETFs inherited some problems o f data quality and consistency, which are now being addressed. All projects o f $5 mil l ion or more, classified as RETF, wil l become part o f the Bank’s Portfolio definition during FY08.

2.19 QAG review of RETF projects found weaker quality-at-entry than other Bank operations. RETF projects that were linked to ongoing or past operations were assessed as generally satisfactory - most o f these RETF initiatives funded capacity building and had focused objectives with wel l targeted interventions. O n the other hand, stand-alone RETF projects, especially in conflict countries, tended to have unrealistic objectives and designs that were not consistent with implementation capacity. The QAG review recommended: (a) greater realism in objectives and results framework; (b) more attention to institutional and implementation arrangements; (c) subjecting RETF projects to regular Bank processes and quality assurance mechanisms; and (d) ensuring adequate preparation and supervision budgets.

B. FOCUS OF LENDING

2.20 A breakdown of lending ap rovals by themes gives an indication of how the Bank implemented the two-pillar strategy during FY02-07 (see Table 2.2). About a quarter o f the lending went to finance and private sector development, mainly in infrastructure, regulation and competition, and enterprise and banking restructuring. Slightly more than a quarter o f lending went to human and social development, mainly in education and health. Slightly less than a fifth o f the lending supported public sector governance, mainly in public expenditure and civ i l service reforms. The remaining 30 percent o f the lending addressed rural development, urban development, and environment with each theme having roughly equal shares.

f

The two-pillar strategy was introduced in 2001. The two pillars are: (a) building the climate for investment, jobs, and sustainable growth; and (b) empowering poor people to participate in development and investing in them.


Table 2.2: Approvals by Theme (FYOO-07)

I FYOO-01 M02-04 FYO5-07 Major Theme % o f % o f % o f Bank- % o f %of %of Bank- % o f %of %of Bank-

IBRD IDA wide IBRD IDA wide IBRD IDA wide Economic Management 7.6 2.3 5.1 5.7 2.8 4.4 1.7 1.2 1.5 Public Sector Governance 14.5 16.3 15.1 20.5 18.2 19.4 14.4 18.2 16.0 Finance and Private Sector Development 30.4 22.4 26.7 27.8 20.3 24.2 30.2 20.9 25.6 Social Development 14.5 23.2 17.9 13.0 18.4 15.4 12.1 15.6 13.6 Human Development 5.0 10.9 7.1 12.7 16.0 14.0 10.0 18.6 13.6 Urban Development 8.0 6.5 7.6 8.5 6.3 7.6 11.4 5.9 9.0 Rural Development 7.9 13.3 9.9 6.3 12.0 8.7 8.9 15.2 11.5 Environment 12.1 5.0 10.4 5.5 6.1 6.3 11.3 4.4 9.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 "

*' Finance and Private Sector Development include Trade and Integration. 3' Social Development includes Social Protection and Risk Management.

Public Sector Governance includes Rule o f Law.

2.21 Economic growth has been a prominent theme in IBRD lending. In terms o f themes, the largest share o f IBRD lending approvals--about 30 percent--during the period FY05-07 went to Finance and Private Sector Development mainly to the infrastructure sectors; this share i s more than twice as high as those o f other themes. Nonetheless, IBRD lending has focused on countries where poverty remains prevalent - two-thirds o f IBRD lending went to non-Investment Grade countries. However, a recent IEG Evaluation' found less progress in three important issues included in many IBRD CASs: (a) addressing inequality; (b) fighting corruption; and (c) meeting environment challenges.

2.22 The distribution of IDA lending reflects a stronger emphasis than in IBRD on human and social development. Thematically, about one-third o f IDA lending during FY05-07 went to human and social development," compared to a fifth in IBRD. Lending for human development support empowerment and MDGs. Finance and Private Sector Development" (FPD) accounted for about a fifth o f IDA lending, compared to about one-third in IBRD. A main component o f FPD thematic lending was support for infrastructure investments, which have high financing requirements and are critical to improving access to markets and services. Public sector governance also accounted for a fifth o f lending, slightly higher than IBRD. Rural Development had a share o f 15 percent in IDA, double that o f IBRD. Urban and Environment together represented about 10 percent o f IDA lending, half o f the share in IBRD lending. A recent paper for IDA1512 has raised the issue o f appropriateness o f sectoral allocation o f lending, suggesting that lending patterns should focus more on sectors (i.e., infrastructure) with decreasing shares in ODA than on those (ie., social sectors) where shares in ODA are increasing.

2.23 The planned OPCS Results Paper is an opportunity to systematically review whether the lending patterns are appropriate. While overall lending is the aggregation o f decisions at

Development Results in Middle-Income Countries: An Evaluation of the World Bank's Support, IEG 2007. This i s the aggregation o f the following themes: (a) human development; (b) social development, gender, and inclusion; and (c) social protection and risk management. The trade and integration theme was included in this classification. The Demand for IDAIS Resources and the Strategy for their Effective Use, FFW 2007.

lo

l1 l2

Annual Revort on Portfolio Performance FY07 11

the country level, the relatively l o w effectiveness o f country programs as measured by the CAEs raises the issue o f whether the lending programs are addressing the key development constraints and priorities (see Chapter 5). In addition, with new strategic directions for the Bank, a robust results framework could be developed that would provide benchmarks for evaluating whether future lending and portfolio trends are moving in the right direction. Future ARPPs would utilize this results framework as a basis for evaluating lending trends.

C. IDA AND FRAGILE STATES

2.24 FY07 I D A approvals of $11.7 billion were at an all time high, representing an almost 25 percent increase over the previous year. Average annual commitments in nominal terms increased from $6.4 bi l l ion under IDA12 and $8.3 bi l l ion under IDA13 to $10.6 bi l l ion thus far under IDA14. IDA approvals have grown faster than IBRD since FYOO. The IDA Portfolio o f $43.8 bi l l ion in FY07 was also at a historic high, now accounting for 44 percent o f the Portfolio compared to 36 percent five years ago. Average annual disbursements also showed an upward trend, increasing from $5.6 bi l l ion during IDA12 to $7.8 bi l l ion in IDA13 and $8.9 bi l l ion during the f irst year o f IDA14.

2.25 Lending to Fragile States increased by about 60 percent over FY06 to $2.1 billion in FY07 (see Figure 2.6). The share o f Fragile States in total IDA approvals was 18 percent in FY07. In addition, about 40 percent o f FY07 RETF approvals were in Fragile States. The Bank’s strategy uses a segmentation o f Fragile States into four groups based on client environment: deterioration, prolonged crisis or impasse, post conflict or political transition, and gradual improvement. A large share o f the lending during FY04-07 went to post conflict or political transition states. The risks o f lending to Fragile States are relatively high - about 40 percent o f the projects exiting the portfolio during FY04-07 were unsatisfactory (see discussion in Chapter 3). QSA7 found both design and supervision issues that would have to be addressed to improve project outcomes.

2.26 The IDA Results Management System ( M S ) established in IDA13 has been enhanced considerably in IDA14. The Rh4S has become an integral part o f the Bank’s effort to enhance results orientation. The Rh4S indicates uneven progress across IDA countries, with Fragile States lagging. Several key human development indicators remain a cause o f concern. The Bank i s further refining the IDA15 R M S indicators and related signaling mechanisms to reinforce the focus on results.

Annual ReDort o n Portfolio Performance F Y 0 7 12

Figure 2.6: Approvals for Fragile States (FYO3-07)" (US$ Million in Real Terms)

2 2,500 0 E 2,000 E tft 1,500 to

e

.-

2 1,000 L

a 500

FY03 FY04 FY05 FY06 FY07 1 L T o t a l Lending +Lending to Post-conflict Countries I

* Includes countries in the Fragile States Category during FY05-08

D. IBRD

2.27 The Bank has been systematically adapting to the changing environment in IBRD client countries. Over the past few years, IBRD lending has been facing a constrained environment with a contraction o f real demand for sovereign external financing. There have been general client concerns, especially from MICs, about the attractiveness o f traditional IBRD loans relative to alternatives from other sources, including financial markets. There has been an evolution in the way the Bank supports IBRD clients in meeting their development needs, with the latest paper-Strengthening the World Bank's Engagement with IBRD Countries-defining the focus areas. In September 2007, the Bank simplified and reduced loan charges to IBRD clients.

2.28 Bank efforts resulted in maintaining IBRD lending levels in real terms since FY02 (see Figure 2.7). Without the efforts to remain relevant with sophisticated clients that have wider financing options, IBRD lending might have fallen. Nonetheless, IBRD net commitments o f $54.0 bi l l ion accounted for 54 percent o f the FY07 Portfolio, compared to 65 percent five years ago, though part o f the portfolio decline i s attributed to increased use o f quick disbursing DPLs. SAR and EAP were the only regions that posted increases in IBRD approvals in FY07.

2.29 The ability to respond to client demand will be critical to lending to MICs. Many clients with ample foreign resources such as China and Brazi l continue to borrow mainly for the embedded knowledge and learning services where the Bank i s seen to have a comparative advantage. In a recent Client Survey o f M ICs carried out by IEG in the context o f i t s paper on MICs, some 80 percent o f the respondents reported that their country's development goals in the coming five years could be best serviced with Bank lending remaining the same or increasing.

Annual ReDort o n Portfolio Performance F Y 0 7 13

Figure 2.7: IBRD Approvals by Client Segment (3-Year Moving Average in Real Terms)

.25.0 - I

m

woo M o l n o 2 FY03 FY04 FY05 FY06 FY07 +Investment Grade +Core IBRD +BLEND (IBRD portion) +Total IBRD

Note: IBRD Investment Grade Countries include China, and Blend Countries include India.

2.30 Lending to coreI3 IBRD clients has been stagnant (see Figure 2.7). These countries do not have the same access to financial markets as the Investment Grade countries. In many cases, the core IBRD countries are those that need both financial and knowledge services from the Bank, hence there i s an expectation that there would be more lending to th i s set o f countries. Based on SFR analysis, about 75 percent o f the CASs in core IBRD countries have programs that on average are 55 percent below the lending envelope, indicating substantial space for lending growth. Four out o f 27 core IBRD countries accounted for about 70 percent o f the lending - the challenge is how to expand engagement. It i s recommended that Management explore opportunities to increase financial and non-financial assistance and services to core IBRD countries.

E. INNOVATIONS IN LENDING

2.31 While scaling up and the use of simple and repeater projects have been increasing, lending has also been characterized by innovations in approaches and instruments. In MICs, new services are being provided in response to demand from sophisticated clients, including the use o f fee based delivery o f services. Programmatic approaches have become widespread in DPOs and are also being utilized in investment lending through APLs and SWAps. Carbon Finance operations are growing,14 and due diligence and processing guidelines were issued in October 2007 to ensure appropriate methodology for assessing design and risks. In addition, the lending growth in the following areas i s noteworthy.

2.32 The main growth area in investment lending has been the use of Additional Financing operations following the introduction of guidelines in June 2005. Approvals for additional financing amounted to $1.8 bi l l ion in FY07, doubling that o f the previous year. LCR and AFR accounted for more than ha l f o f Additional Financing in terms o f amount; among networks, INF accounted for about half. Additional Financing approvals result in an increase in commitments

l3 l4

This is defined as IBRD clients that are neither Investment Grade nor B lend countries. The Bank currently manages 11 Carbon Funds and Facilities worth more than $2 bi l l ion.


in existing projects, which typically involve extending the closing dates o f projects. QEA8 found no differences in quality-at-entry o f Additional Financing projects compared to other investment projects.

2.33 Regional projects and programs are growing as cross border dimensions of environment, health, infrastructure, and trade facilitation take on greater importance. About $1.9 bi l l ion o f regional projects are recorded in the portfolio, though based o n feedback from the Regions; the amount i s understated and is closer to $3 billion.” Regional projects in the portfolio are concentrated in AFR. QEA8 included a sample o f regional projects and found several aspects which could be improved. QEA8 recommends: (a) improving efficiency and reducing the cost o f preparing regional projects by addressing duplication o f work in Bank processes, such as the mult ipl ici ty o f fiduciary arrangements and staff involved with a regional program; and (b) ensuring adequacy o f supervision budgets in light o f the nature o f regional programs. In addition, there should be a review o f lending instruments for multi-country programs.

2.34 To respond to the unique requirements of sub-national borrowing for Infrastructure, the WB and IFC Boards approved the pilot Sub-National Development Program in 2006. The program addresses the lack o f Bank instruments to best support the growing sub-national client segment; the Bank’s Articles o f Agreement prevent the Bank from lending directly to sub- national entities without a sovereign guarantee. A joint IBRD-IFC Sub-National Department (SND) was created in November 2006 to implement the program. In FY07, four transactions under the program were approved for a total exposure o f $156 mil l ion. SND has developed a pipeline o f over 20 projects representing an investment value o f over $500 million. The goals o f the program extend beyond providing finance, to include improving the ability o f sub-national governments to access financial markets more widely. To this end, SND helped create, in July 2007, a multi-donor technical assistance facility (a window within the Public-Private Infrastructure Advisory Facility) that helps sub-national entities improve their institutional capacity and creditworthiness.

F. INFRASTRUCTURE

2.35 Infrastructure lending has increased during FY05-07 in response to the Infrastructure Action Plan (see Table 2.3). The share o f infrastructure in Bank-wide lending increased from 28 percent during FY02-04 to 35 percent during FY05-07, close to the share during FY00-01. Infrastructure accounted for almost 40 percent o f IBRD lending, and about 30 percent o f IDA approvals during FY05-07. Transportation accounted for half o f infrastructure lending in FY07, with Water, Sanitation and Flood Protection having a one-third share.

2.36 Project outcomes have been generally satisfactory. Transport Sector projects have been consistently high performers, with more than 90 percent satisfactory outcomes during FY04-0716 in both IBRD as wel l as IDA countries. Performance o f Water Supply and Sanitation Sector

l 5 l6

Many regional or multi-country projects are classified in the portfolio as country level operations. IEG has completed the evaluation o f about hal f o f FY07 exits.


projects has improved considerably during FY04-07 to 88 percent satisfactory compared to FYO1-03 exits when performance was below 70 percent. In IBRD countries, the performance o f Urban Development Sector projects improved from 55 percent satisfactory during FYO1-03 to 99 percent during FY04-07.

2.37 The challenges facing infrastructure lending include improving the interface with other sectors and responding to cross-border issues. This would introduce greater complexity to designing and supervising infrastructure operations. The integration o f the INF and ESSD networks provides an organizational response to these challenges by enabling better cross sectoral coordination. The quality assurance process should keep pace with changes in focus and introduction o f new approaches in infrastructure lending to ensure continued satisfactory performance o f project outcomes.

Table 2.3: Approvals by Sector (FYOO-07) woo-01 M02-04 FYO5-07 Major Sector % of Bank-wide

Agriculture, Fishing and Forestry 4.9 6.9 7.9 Public Administration, Law and Justice 25.7 24.6 24.1 Infrastructure 32.7 28.3 34.7 Human Development 18.0 24.4 18.5 Finance, and Industry and Trade 18.7 15.9 14.8 Bank-wide 100.0 100.0 100.0

Notes: l' Infrastructure includes Energy and Mining, Transportation and Water, Sanitation and Flood Protection.

3' Finance, Industry, and Trade includes Information and Communications. Human Development includes Education and Health and other social services.

G. RECOMMENDATIONS

0 OPCS Results Paper to develop framework for assessing aggregate lending and portfolio trends in the context o f new strategic directions; and

0 Management to explore opportunities to increase financial and non-financial assistance and services to core IBRD countries.


111. PORTFOLIO PERFORMANCE

3.1 This Chapter reports on portfolio performance by reviewing IEG evaluations o f latest exits and analyzing the existing portfolio based on risk indicators and QAG assessments. The analysis uses aggregate outcomes o f exits covering three year periods except for the period FY04-07, which includes partial IEG evaluations o f FY07 exits. The main messages from the Chapter are:

0 Development outcomes o f operations exiting the Bank portfolio through FY06 continued to improve. On the basis o f three year moving average, about 80 percent in terms o f number o f projects, and 87 percent weighted by disbursement, o f projects exiting the portfolio in FY06 had satisfactory development outcomes. However, Management wil l have to monitor recent performance which indicates a decline in terms o f number o f projects based on IEG evaluations o f about half o f the FY07 exits thus far.

0 There was deterioration in performance o f AFR projects with outcomes o f FY06 exits at 65 percent satisfactory compared to 78 percent in FY05 and 83 percent in FY04. AFR had 61 percent satisfactory performance in FY07 based on about ha l f o f FY07 exits evaluated to date.

0 Among Sector Boards,17 there were declines in project performance in Health, Nutr i t ion and Population, Private Sector Development, and Public Sector Governance during FY04-07 compared to FYO1-03. A review o f the IEG evaluations o f projects in these Sector Boards revealed that project design flaws were the main factors contributing to unsatisfactory outcomes.

The results o f QEA8 indicate a greater than 90 percent satisfactory quality-at-entry o f projects approved in FY06-07. There i s also a convergence o f performance by Regions compared to previous years. Historically, QEA ratings are about 10 percentage points higher than actual project outcomes. QAG i s tightening i t s QEA methodology to reduce the disconnect between QEA ratings and project outcomes.

0 With respect to supervision, there are three developments worth noting. First, the Proactivity Index indicates that teams have been addressing in a satisfactory manner the underlying issues o f problem projects. Second, the number o f projects with delayed effectiveness has been increasing, mainly due to lengthy client approval processes and, for some Regions, the relatively high number o f effectiveness conditions. Third, QSA7 results show no significant difference in supervision quality o f projects based on the location o f TTL; however, panels find that more could be

l7 The FY07 Sector Board classification was used for purposes o f the analysis in this chapter. The Finance and Private Sector Development Boards were merged in FY08.


done to complement local presence with appropriate use o f HQ staff with global experience .

0 Lack o f candor in project reporting has diminished the effectiveness o f the current system o f measuring and reporting portfolio performance. The Realism Index continues to show significant under-reporting o f project risks, a problem that has been recognized for some time but has not been effectively addressed. A recent review o f quality o f reporting covering FY07 projects estimated the share o f problem projects in the portfolio to be twice that reported in ISRs. The usefulness o f the current system o f portfolio reporting as a management tool i s dependent on improving candor in reporting project performance and risks.

One way forward towards improving portfolio performance measurement and reporting i s to establish a stronger link between risks identified at entry and the reporting o f project performance. The current system rates projects entering the portfolio at zero risk, and flags project risk only when problems begin to surface. The revision o f the measurement and monitoring o f project r isk during implementation should build on the reforms initiated on July 1, 2007 to ensure a more systematic and comprehensive assessment o f r isks at appraisal. It is recommended that OPCS and QAG work towards reviewing and recommending appropriate changes to the current system o f portfolio r isk measurement and reporting.

A. DEVELOPMENT OUTCOMES OF PROJECTS

3.2 The Development Outcomes’’ of operations exiting the Bank’s Portfolio continued to improve through FY06 (see Figure 3.1). Satisfactory development outcomes based o n FY06 exitsIg were 82 percent by number o f projects and 89 percent when weighted by disbursement. Because o f significant year-to-year volatility, the development outcome trends are best analyzed using three year moving averages. On this basis, about 80 percent in terms o f number o f projects, and 87 percent weighted by disbursement, o f operations exiting the portfolio in FY06 had satisfactory development outcomes. This performance represents sustained improvement since FY90. I t also meets the 80 percent goal set by management a decade ago. However, this performance wil l have to be tempered by the following developments:

0 IEG project assessments covering about ha l f o f FY07 exits thus far show lower outcomes Bank-wide in terms o f number o f projects compared to the FY06 exits.20

’* IEG uses a six-point scale in rating project outcomes. The f r s t three ratings - Highly Satisfactory, Satisfactory, and Moderately Satisfactory - indicate a satisfactory outcome while the other three ratings - Moderately Unsatisfactory, Unsatisfactory, and Highly Unsatisfactory - indicate an unsatisfactory outcome. Unless specified otherwise, the terms “satisfactory’ and “unsatisfactory” used in this chapter follow the above definitions. About 85 percent o f FY06 exits have been evaluated by IEG. With about half o f the FY07 exits evaluated, the satisfactory performance o f FY07 exits in terms o f number o f projects is 75 percent compared to 82 percent for FY06 exits. There is no significant change thus far in the performance o f FY07 exits compared to FY06 exits in terms o f disbursement.

l 9

2o


Development outcomes for FY07 are projected to be lower than 80 percent by number o f projects, which would reverse the upward trend since FY04. SAR, LCR, EAP, and AFR are projected to show declines.

0 The Bank performance reported above i s measured on the basis o f projects that were evaluated by IEG to be Moderately Satisfactory or better. The number o f projects with Moderately Satisfactory ratings during FY04-07 accounted for about 25 percent o f total, indicating opportunities for further improvements in project quality.

0 IEG evaluations o f CAEs completed in FY97-07 show that aggregate performance o f country programs is less than 60 percent satisfactory. This indicates that while outcomes o f individual projects may be improving, the projects may not be addressing the key development constraints or priorities at the sector or country level (see Chapter 5).

Figure 3.1: Proportion of Operations with Satisfactory Outcomes* (Based on Year of Project Exit)

50 , l / I I I , I I l I I / / i I I I I i I I / / I I I

FY80 FY83 FY86 FY89 FY92 FY95 FY98 FYO1 FY04 FY07*

+ 3 Year Moving Avg. (By No. of Projects) +3 Year Moving Avg. (Weighted by Disbursement)

* FY07 Outcomes based on QAG Projections.

Regional Performance

3.3 Aggregate project outcomes improved in all Regions during FY04-07 compared to previous periods, with a growing convergence of performance among four Regions. SAR and AFR performance lagged the other Regions in FY04-07, with SAR showing l i t t le improvement over FY01-03 compared to the rest o f the Bank. However, SAR performance improved significantly in FY06 to 91 percent; the challenge i s to maintain this level. On the other hand, AFR performance has been deteriorating from 83 percent in FY04 to 78 percent in FY05 and 65 percent in FY06, in part due to l ow ratings o f f i rs t generation Multi-Country H IV-A IDS Program (MAP) projects. IEG evaluations o f about half o f AFR FY07 exits indicate a slightly lower performance compared to FY06 exits. Figure 3.2 presents the percentage o f satisfactory project outcomes by Region, weighted by disbursement, for FY04-07 compared to FY01-03 and FY98-00.


Figure 3.2: Project Outcomes by Region

EAP LCR

C MNA ECA P

p! SAR AFR

Ban k-w ide

0 .-

0 20 40 60 80 100 %Satisfactory Outcome by Disbursement (IEG Rating)

1 FY98-00 FYOI-03 UFY04-07 1

3.4 Further improvement in the performance of A F R projects is key to improving overall Bankperformance. There are several areas where the performance gap between AFR and the rest o f the Bank i s significant. Within IDA, aggregate satisfactory AFR project outcomes during FY04-07 were lower than those o f non-AFR projects. This i s mainly due to the lower outcomes o f projects in Fragile States in AFR compared to other Regions. Among networksY2l AFR performance i s lower than non-AFR in HDN, PREM, and SDN. A comparison within the FPD network was not included due to the relatively small number o f IEG evaluations for AFR during FY04-07. Please see Table 3.1 for comparative performance between AFR and other Regions.

Table 3.1: IEG Evaluations for Africa and Other Regions (FYO4-07) (Percent Satisfactory Outcome)

AFR Other Regions Ban k-wide By No. of BY By No. of BY By No. of BY Projects Disbursement Projects Disbursement Projects Disbursement

IDA 68 73 82 86 76 80 Fragile States 52 49 72 89 61 61 HDN 61 65 82 85 77 82 PREM 66 74 76 91 73 86 SDN 77 75 87 92 85 90 ESSD 73 77 85 92 83 90 INF 79 74 90 92 87 89

3.5 QEAS rated the overall quality-at-entry of AFR projects approved in FY06-07 as satisfactory. In addition, AFR recently completed a review o f FY07 projects and found no significant issues with respect to readiness for implementation. The AFR review also found that 75 percent o f the operations approved in FY07 had satisfactory M&E arrangements using the IDA14 criteria. Nonetheless, AFR should review its portfolio focusing on older projects, i.e., those exiting during the next two years, and make a realistic assessment o f the trajectory o f project performance during the coming years. The next QSA should also provide Management with an assessment o f performance o f the AFR portfolio segmented by project age and network.

21 For analysis purposes, SDN i s divided into INF and ESSD.


3.6 A F R has been doing an extensive review of quality assurance to improve performance of projects in the Region. The Region has also completed separate reviews o f the results frameworks and M&E arrangements o f earlier projects, focusing on Transport, Education, Health and Social Protection sectors. The reviews found the results frameworks to be satisfactory in majority o f the projects, with some weaknesses in clarity and realism o f PDOs and specificity o f outcome indicators which are being addressed. To further strengthen the results focus in operational work, the Region has launched the Afr ica Results Monitoring System that was developed and piloted in FY07. Finally, there i s a continuing effort to strengthen staff capacity.

Sector Board Performance

3.7 There was significant variation in development outcomes among Sector Boards based on IEG evaluation of project exits. Several Sector Boards had improved outcomes during FY04-07 compared to FYOl-03, notably Environment, Economic Policy and Urban Development, which had increases o f more than 30 percentage points. Three Sector Boards - HNP, PSG, and PSD - were below Bank-wide average during FY04-07 and showed declines from previous periods. Figures 3.3 and 3.4 show the major improvers and decliners in performance among Sector Boards.

Figure 3.3: M a j o r Improvers by Sector Board

*icull :ure

Urban Development Social Protection

Water and Rural Development

Economic Policy Environment

Ban k-w ide

0 20 40 60 80 100 120 %Satisfactory Outcome by Disbursement (IEG Rating)

1 I3 W98-00 WOI-03 OWO4-07 1


Figure 3.4: M a j o r Decliners by Sector B o a r d

Public Sector Governance

2 Private Sector Development

?i

Q I I I I ......................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L

$ Health, Nutrition and Population

0 20 40 60 80 100

%Satisfactory Outcome by Disbursement (IEG Rating) I I [ DFY98-00 ID FYOI-03 OFyO4-07 1

Health, Nutrition and Population

Since FYOl, HNP project outcomes have been lower than Bank-wide average.22 3.8 To identify the main factors that contributed to the lower performance o f HNP Sector Board projects, QAG performed a review o f the 75 HNP projects that exited during FY04-07 focusing on 25 projects that were rated by IEG as unsatisfactory. The review found that generally, the set o f Project Development Objectives were appropriate and relevant, had good Borrower ownership, and were linked to national priorities and the CAS. However, almost 70 percent o f the unsatisfactory projects had weak designs that eventually resulted in unsatisfactory outcomes. In addition, about ha l f o f the projects had implementation problems that contributed to unsatisfactory project performance.

3.9 The main design flaws in unsatisfactory HNP projects were rooted in unrealistic assumptions of absorptive capacity of the Borrower, resulting in projects that were not consistent with implementation capacity. In addition, the results frameworks were inadequate with ambiguous outcome indicators, absence o f baseline data, and inadequate monitoring and evaluation systems. The review found that many o f the projects did not have adequate sector work and were appraised and brought to the Board prematurely. Design flaws o f HNP projects were not adequately addressed during implementation. During supervision, corrective actions to address quality-at-entry issues were either not undertaken or not effective in about ha l f o f the cases. The three major factors that underpin poor implementation and supervision performance were: (a) lack o f Management attention; (b) inadequate reporting due to weak M&E systems; and (c) poor Borrower performance.

3.10 A review of the combined HNP results in QEA6-8 and QSA7-8 showed the same weaknesses as those identified by the review of unsatisfactory exits (see Table 3.2). T h i s means that unless these weaknesses in the current HNP portfolio are corrected, HNP performance would continue to lag Bank-wide performance. The pressing challenge to HNP i s to effectively

22 HNP project outcomes during FY04-07 were 63 percent satisfactory by number o f projects and 70 percent by disbursement, compared to Bank-wide outcomes o f 80 percent by number o f projects and 87 percent by disbursement.

Annual ReDort o n Portfolio Performance FY07 22

address design issues in projects in the current portfolio, in addition to ensuring quality o f new projects. While the end-FY07 H N P commitments at r isk show improvement f rom the previous year, from 23 percent to 16 percent, this should be viewed in the context o f very l o w realism numbers for HNP.

Table 3.2: Results o f QAG Assessments for HNP Selected Questions

(Percent Moderately Satisfactory o r Better) I HNP Bank-wide Quality at Entry (combined QEA6-8) Appropriateness of project approach and complexity? 75 92

Adequacy of arrangements for mitigating adverse environmental impacts? 77 92 Capacity to implement the project? 68 88 Capacity to implement the project's poverty and social development agenda? 61 92 Prospects for completing the project within the prescribed time-frame? 71 82 Adequacy of arrangements for monitoring and evaluation 64 88 Appropriateness of arrangements for evaluating impact and measuring outcomes, using relevant national, sectoral or project-level data? 64 84 Appropriateness of arrangements for monitoring poverty and social aspects? 68 83

Value added from Management (Sector Management) 67 88 Quality of Supervision (combined QSA6-7)

Quality of PADS results framework (including intermediate performance indicators) and readiness of implementation arrangements for M&E 53 65

Extent to which there are adequate arrangements linking project results framework to the borrower's monitoring and evaluation system 50 74 Quality of baseline data 36 66 Performance monitoring 63 78 Adequacy and speed of management attention and actions 78 89 Quality of timeliness of data (including the intermediate outcome indicators) to support the key performance indicators 68 79

Note: Combining the HNP results in QEA6-8 and QSA6-7 results in a robust sample with statistical significance o f 90 percent and confidence interval o f +I- 10 percent.

Adequacy of attention to social development issues? 70 91

Quality of design to mitigatelmanage risks? 65 91

3.1 1 There is recognition in the HNP Sector Board and HD Network of a need to do more to address quality issues. The recent HNP Strategy Paper called for seeking the right balance between the Regions' responsibility for portfolio management and quality control, and the responsibility o f the HNP Anchor and Sector Board for monitoring and assisting the Regions. HDN i s awaiting the results o f an ongoing IEG review o f the HNP sector which will be an input to a program for quality improvement. Nonetheless, the QAG review recommends the fol lowing actions:

Regions and HD Council to immediately commission a special review o f projects for which appraisals have been completed but which have not yet gone to the Board;

Annual Report on Portfolio Performance FY07 23

0 Over the next few months, Regions and H N P Sector Board to review projects in the portfolio rated M S for DO or IP to look into the appropriateness o f actions being undertaken to address project issues;

0 HNP Sector Board to agree with Regions on how to provide support to Regional teams in the design o f projects, including the use o f quality enhancement reviews; and

0 In the medium term, the HD Council will commission a review that will address critical strategic issues related to the H N P Strategy and the appropriateness o f the operations in meeting the objectives o f the Strategy.

Private Sector Development and Public Sector Governance

3.12 Performance of PSD projects in FY04-07 was about 75 percent satisfactory in terms of disbursement and about 60 percent in terms of number of projects. Weaknesses in design dominate as the main factor for the unsatisfactory rating o f FY04-07 PSD exits.23 Design i s one- and-a-half times as frequently cited by IEG as the second most important factor, namely weaknesses in supervision. The two main reasons, cited by IEG, as underlying weaknesses in design that have contributed to unsatisfactory outcomes were: (a) weak government commitment or ownership; and (b) lack o f relevance to, or misalignment with, country or local conditions.

3.13 The review of unsatisfactory PSG projectg4 found the same weaknesses as in PSD projects. The three factors most frequently cited in IEG’s evaluation underlying operations with unsatisfactory outcomes were: (a) poor project design; (b) inadequate M&E (either at entry or during implementation); and (c) gaps in Bank supervision. Weakness in design was the main factor for 88 percent o f the operations classified as unsatisfactory. Lack o f government commitment, overambitious objectives, and failure to address key constraints were factors that contributed to weak design.

3.14 The abovefindings for PSD and PSGprojects suggest two areas of improvement. First, there is need to have a better understanding o f country conditions, political economy o f reforms, and counterpart capacity to implement projects. This could be achieved through stronger analytical work and improved dialogue with the government and other stakeholders ut i l iz ing ESW as the main instrument. Second, the Bank i s missing important opportunities to correct design and other flaws during the course o f supervision; more effort needs to be made to enhance the quality o f supervision. An effective M&E system would provide the appropriate feedback in identifylng threats to the achievement o f development objectives. In addition, as discussed in Chapter 5, PSD and PSG projects have the highest disconnect between project and sector outcomes which suggests a wider set o f issues linked to the strategic approach to these sectors and the design or scope o f the operations. The PSD and PSG Sector Boards may want to review the issues in the implementation o f the sector strategies.

23

24 The review covered 19 unsatisfactory operations out o f 46 exits evaluated by IEG. The review covered 25 unsatisfactory operations out o f 75 exits evaluated by IEG. While the performance in terms o f number o f projects was about 65 percent, performance in terms o f disbursement was about 80 percent.


Client Segments

IBRD

3.15 Performance of IBRD projects improved significantly during the period FY04-07 with a 91 percent satisfactory rating compared to 77percent during FYOl-03 (see Figure 3.5). O f 17 Sector Boards whose IBRD projects were evaluated by IEG, 11 had satisfactory p e r f ~ r m a n c e ~ ~ o f 90 percent or better during FY04-07; o f these, five achieved improvements o f 30 percentage points or more compared to FYO1-03. The Education, Finance, and Transport Sector Boards have been consistently high performers during the past ten years. The Sector Boards that were below IBRD average were: Health, Nutrition, and Population; Private Sector Development; Energy and Mining; and Public Sector Governance. In terms o f instrument, IBRD DPLs had a 95 percent satisfactory performance with Investment Loans at 89 percent.

Figure 3.5: Proportion of Operations with Satisfactory Outcomes (IBRD vs. IDA) (3 Year Moving Average Weighted by Disbursement)

100

90

80

2 70

60

M 9 0 M 9 2 FY94 FY96 FY98 FYOO FY02 M 0 4 FY06 - IBRD +IDA

3.16 In a client survey conducted aspart of the IEG review of MICs, more than 80 percent of the respondents viewed the Bank’s programs and services as moderately effective or better. About 45 percent o f the respondents viewed the Bank as more effective than other multilateral development banks and bilateral programs; 21 percent o f the respondents rated the Bank as less effective. Whi le government officials had a positive view o f the Bank’s performance, c iv i l society representatives were not as positive. The relevance and quality o f the Bank’s work were rated higher than responsiveness and ease o f access.

IDA

3.17 There is scope for improving performance of IDA projects. IDA performance was lower than that o f IBRD during FY04-07, though this gap may be partly explained by the higher risk faced by IDA projects due to generally weaker institutions in IDA countries. Nonetheless, there are areas where IDA performance could improve. Among Sector Boards, HNP and PSD IDA projects were at 70 percent or lower whether in terms o f number or projects or

2* Weighted by disbursement.


disbursement; RDV IDA projects had a 77 percent satisfactory rating in terms o f disbursement which is much lower than the 98 percent performance o f RDV in IBRD. Narrowing the performance gap o f IDA and IBRD projects in these Sector Boards would help improve overall IDA performance. Table 3.3 shows the Sector Boards where there was a performance gap greater than 10 percentage points between IBRD and IDA projects based on exits during FY04-07.

Table 3.3: FYO4-07 IBRD and IDA Performance Gap by Sector Board (Percent Satisfactory Outcome)

IBRD IDA

Projects Disbursement Projects Disbursement By No. of BY By No. of BY

Agriculture and Rural Development 91 98 83 77 Education 89 92 79 81 Energy and Mining 82 82 68 69 Economic Policy 92 98 78 81 Health, Nutrition and Population 70 79 58 64 Public Sector Governance 75 84 57 78 Urban DeveloDment 94 99 80 80

3.18 Based on the FY06 Bank Client Suweg6 conducted by EXK stakeholders from IDA countries found Bank relevance to be high and had positive perceptions of the Bank’s mission. IDA stakeholders also regarded poverty reduction as the most important priority in their countries, with agricultural development as the best way to achieve this goal - improving the outcomes o f RDV is therefore critical. They considered the provision o f financial resources to be the most important contribution o f the Bank, in contrast to IBRD respondents who considered knowledge services to be the main value added o f the Bank.

3.19 I n Fragile States, the sizeable performance gap between A F R and the other regions indicates significant room for improving outcomes of Bank operations. Development effectiveness o f operations in Fragile States exiting the portfolio during FY04-07 was 61 percent satisfactory, weighted by disbursement, compared to 67 percent during FYO1-03 and 59 percent during FY98-00. During FY04-07, non-AFR operations in Fragile States had 89 percent satisfactory rating, weighted by disbursement, compared to 49 percent for AFR operations in Fragile States.

3.20 QSA 7 found weaknesses in project design (66percent moderately satisfactory or better) and readiness for implementation at approval (63 percent moderately satisfactory or better)27 in Fragile States projects. Panels recommended that supervision improvements emphasize the following areas: (a) focus on sustainability, especially on institution building; (b) performance monitoring; (c) Management guidance; and (d) realism o f reporting project performance. Improving Bank institution building capacity has become more critical with the expansion o f the focus o f Bank work in Fragile States to the more ambitious and complex objective o f State

26 27

Client Survey 2006 Review, The W o r l d Bank, 1997. These were part o f the Context Section o f the QSA7 Questionnaire.


building, which requires even more sophisticated skil ls. A recent IEG review o f Fragile States also flagged the issue o f inadequate managerial attention.

3.21 There are ongoing efforts to strengthen internal Bank support for Fragile States. A recent IEG report2* recommended: (a) ensuring adequate incentives for staff with relevant sk i l ls to work in these countries; and (b) streamlining the organizational structure for Fragile States and Conflict work. The streamlining has been implemented with the merger o f the Fragile States Group and the Conflict Prevention and Reconstruction Unit in July 2007. The restructuring o f staff incentives was addressed in the March 2007 paper Strengthening the Organization Response to Fragile States and will be included in the forthcoming StafJing Strategy Paper.

B. PORTFOLIO PERFORMANCE AND MEASUREMENT

Realism of Reporting Risks

3.22 Lack of candor in reporting project risks has diminished the effectiveness of the current system of indicators in tracking portfolio performance. In FY07, the measurement o f the Realism Index was revised to make it a more meaningful measure o f quality o f portfolio reporting and to make i t more robust. While the Realism Index shows improvement from 46 percent to 56 percent during FY07 using the revised measurement system, the measure st i l l shows significant under-reporting o f risks. This makes the current reported measures o f portfolio risk unreliable.

3.23 A recent QAG review concluded that under-reporting of risks continues to be significant in FY07- the conclusion is consistent with the QSA 7findings which covered the end-FY06portfolio. A sample o f 125 projects in the FY07 portfolio was reviewed by panelists focusing on the candor o f risk reporting and the quality o f explanation o f the ratings. The review was conducted with the Quality Units o f the Regions which nominated staff to review questionnaires where the findings o f Q A G panelists deviated significantly fiom the ISR. The review estimated the share o f problem projects in the FY07 portfolio to be twice that reported in the ISRs. In addition, panelists found significant under-reporting o f risks in the fiduciary, M&E, and project management areas. Table 3.4 gives the ISR and Panel ratings for DO, IP and risk factors.

28 Engaging with Fragile States: World Bank Support to Low Income Countries Under Stress, IEG, 2006.


Table 3.4: FW07 Risk Ratings - QAG Review vs. ISR FY07 Portfolio (N=1,479) DO, IP, and Risk Factors

ISRs % Unsat. QAG Panels % Unsat. % Diff. Development Objectives 7 15 8 Implementation Progress 11 26 15 Legal Covenant 7 14 7 Safeguard 2 8 6 M & E 5 17 12 Financial Management 5 12 7 Procurement 8 20 12 Project Management 8 23 15 Actual Problem Projects 12 27 15 Potential Problem Projects 4 8 4

3.24 The review found that there was a reluctance to downgrade project ratings until the problems became prolonged. There was also a tendency to upgrade project ratings prematurely, based on expectations o f improvement rather than concrete results. Ratings for project management often did not reflect the shortcomings described in the ISR or in other documents such as the Aide Memoire or letters to government. The review suggested some reasons for the under-reporting: (a) many teams shared ISR ratings with the government; (b) managers were not consistent in identifylng rating inconsistencies with reports; and (c) teams perceived a link between project ratings and team performance.

3.25 reporting project performance:

The QAG review identiped several actions that would help improve realism in

0 Regions to ensure that ISRs (text and ratings) are kept internal as intended, to ensure the candor o f Bank reporting;

0 Regions and OPCS to develop short checklists to aid TTLs in determining ratings for discretionary ratings, especially project management, procurement and M&E, which showed the highest levels o f disconnect;

0 OPCS and Regions to provide more training on ISR standards, especially for newly- appointed TTLs; and

0 Regions to clarify responsibilities for ISR quality and oversight between SMUs, CMUs and Quality Teams, and reinforce incentives for candid reporting.

Portfolio Risk

3.26 The results of the latest 1000 IEG evaluations provide a more reliable measure of portfolio risk than existing estimates. Table 3.5 below gives the percentage o f projects at r isk by number o f projects and commitments categorized by client group using IEG evaluations which covered project exits during the past 3-4 years. The results show that portfolio risk measured by number o f projects i s substantially higher than risk measured in terms o f commitments indicating


that many o f the smaller projects may not be receiving appropriate attention during preparation and supervision. Fragile States and core IDA countries are the segments with the highest risk and with the biggest disparity between reported problem projects and actual performance. I t should be noted, however, that using IEG results as a basis for measuring may not sufficiently take into account improvements taking place recently in some countries.

Table 3.5: Reported Problem Projects vs. Actual Unsatisfactory Projects As of November 15,2007

ISR Latest 1,000 Evaluations % Unsatisfactory % Realism

Index Client Group % Problem Projects % Problem Projects % Unsatisfactory Projects by

bv Number bv Commitments Proiects bv Number Commitments IBRD 13 IDA 11

Core IDA 10 Fragile States 13

Bank-wide 12

13 10 10 9

11

16 24 22 37

21

11 83 20 46 20 45 38 36

14 57

3.27 The current portfolio monitoring system rates projects entering the portfolio at zero risk, though the project documents provide an assessment of project risk at appraisal. The current portfolio monitoring system flags project risk only when performance indicators show that problems are surfacing. There is merit to reporting riskiness o f projects when these enter the portfolio to ensure that supervision strategies are appropriate to the nature o f risks. T h i s would focus both management and team attention on high r isk projects even before problems arise. There is a case for a review o f how risk i s defined and reported in the context o f monitoring project implementation.

3.28 On July 1, 2007, the Guidance Note on Management Review of Investment Lending established new arrangements to foster a more systematic and comprehensive assessment of risks. The Note creates three management review tracks to ensure that the level o f management review i s aligned with the level o f r isks involved so that decisions are taken at an appropriate level. Improvements in the risk assessment tools are expected to have a positive impact on project design. However, this should be sustained by appropriate Management oversight o f risks during implementation to eventually have an impact on project outcomes.

3.29 A standard risk identipcation worksheet facilitates the risk review process. The worksheet includes a checklist o f risk categories to be considered, a description o f the risks, the mitigation measures, and the ratings o f risks before and after mitigation. The individual risks fa l l under two categories - country/sector level and operation-specific - with an overall risk rating based on relative importance o f individual risks. The Project Concept Note Meeting decides whether a Risk Assessment Review prior to the Decision Meeting for Appraisal Authorization is required. Investment operations with substantial and high risk characteristics wi l l be subject to ROC or OC review for Decision Meeting.

3.30 The measurement and monitoring of portfolio risks should be revised by building on the changes made in the risk assessment matrk at appraisal, First, the current practice o f


classifylng projects as zero risk at the beginning o f the supervision period should be discontinued. Second, the portfolio monitoring system should track the r isks identified at appraisal, with risk ratings to be changed only when mitigation measures are implemented or events occur that impact the project’s risk profile. Finally, there should be a process for systematic review o f changes in risk ratings.

Proactivity

3.31 The Bank-wide Proactivity Index of 79 percent’ indicates that teams have been addressing in a satisfactory manner the underlying issues of reported problem projects. Among Regions, S A R and EAP had proactivity ratings o f below 70 percent in FY07. Among Sector Boards, Financial Sector, Social Protection, and Transport had lower than 70 percent proactivity ratings. Among client groupings, only Fragile States at 66 percent was below Bank- wide average. Focusing o n supervision o f projects in the above segments would improve overall proactivity.

3.32 A QAG review found that even in cases ofproblem projects not classified as proactive, a majority of teams were adequately addressing the issues underlying the problem status of projects. QAG conducted a review o f al l problem projects which were not considered “proactive” during FY07 based on the current definition o f what constitutes proactivity. The review found that, in about 60 percent o f the cases, the teams were in fact exerting the appropriate efforts to address issues faced by the projects but these efforts were not captured in the Proactivity Index. If the Index were to capture al l proactive actions, the Index would show 91 percent proactivity. However, these actions are diverse and not easily measurable and monitorable, though they are expected to eventually lead to one o f defined proactivity actions.

3.33 Though the reporting of problem projects showed instances of premature upgrading, teams had been exerting the appropriate efforts. The Realism Review described earlier included a sample o f problem projects at end-FY06 that were upgraded during FY07. The review found that in about 70 percent o f cases, the upgrading was appropriate. In 30 percent o f cases, the upgrading was premature, such as when the upgrading i s based on agreements to implement action plans but no concrete actions have yet been taken by the Borrower. Nonetheless, even in cases o f premature upgrading, appropriate efforts were being expended to address problems, and at some point, the upgrading would be appropriate. What i s critical i s that problem projects be identified as early as possible to enable teams to address underlying problems and for Management to provide adequate attention and resources in a timely manner.

3.34 At this stage, the value added of making changes to the Proactivity Index does not seem to justih the cost. Several options were considered to improve the precision o f the Proactivity Index, including adding to the list o f proactive actions and extending the proactivity period from 12 to 18 months. The feedback from the Regions was that the gains f rom a change in the measurement did not just i f l the possible added complexity as well as the r isk o f certain perverse behavior arising from extending the proactivity period. The overarching conclusion from the

29 The management target i s Proactivity Index at 80 percent.


reviews was that projects rated as problems in the ISRs are l ikely to receive adequate attention, resources and efforts towards addressing the underlying issues. The focus should be on ensuring that teams identify problem projects in a timely manner and report these in the ISR, i.e., improving the Realism Index.

Effectiveness Delays

3.35 As of end-FYO7, 41 projects were awaiting effectiveness beyond the benchmark number of months from Board appr~val.~' This number i s double that o f a year ago. QAG performed a desk review o f the 41 projects to identify the reasons behind the effectiveness delays. The review classified the reasons into three groups: (a) delays in country approvals, by both the Government as wel l Parliament; (b) number o f special effectiveness conditions; and (c) country conditions beyond the control o f Borrower and the Bank. About 60 percent o f the delays were attributed to client approval delays, and about 16 percent each to number o f effectiveness conditions and to country conditions. The average number o f special effectiveness conditions was about two, although this varied by region with the AFR sample having 3.4 and L C R having less than one.

3.36 Two actions could help reduce Delayed Effectiveness. First, the number o f special conditions o f effectiveness could be reduced by only taking operations to the Board for approval when they are ready for implementation; some Regions, such as LCR, are already doing this as a matter o f practice. Second, Regions--with the help o f Legal--could find ways o f addressing the problem o f lengthy Parliamentary ratifications. MNA has had some success in the case o f Egypt. L C R i s currently doing a review to identify ways to accelerate Client approvals.

Quality-at-Entry

3.37 The results of QEAS show that Quality-at-Entry of Bank projects approved in FY06 and FY07 meets the 90 percent benchmark T h i s represents sustained performance over a ten year period. The QEA8 results continue to show convergence o f overall regional and network performance. The analysis o f the S+ ratings point to three dimensions where there i s scope for improvement (see Figure 3.6): (a) Implementation Arrangements, specifically readiness for implementation and M&E arrangements; (b) Risk Assessment, especially quality o f r isk mitigation measures; and (c) Bank Inputs and Processes, focusing on management oversight and peer review process.

3.38 QEAS results indicate that generally operations paid attention to governance and accountability issues. QEA8 rated governance and accountability at 98 percent Moderately Satisfactory or better. These results indicate a good start to the implementation o f the Bank's Governance and Anti-corruption Strategy. However, a quarter o f the sample had scope for improvement, especially on mitigation measures to address identified governance risks, pointing towards scope for further improvement. In addition, supervision should pay close attention to governance risks.

30 The benchmarks are three months for Ems, s i x months for DPLs, and nine months for Investment Loans.


Figure 3.6: QEA8 Results by Quality Dimension Rl

RI=Strategic Relevance and Approach R2 =Technical, Financial and Economic Aspects R3 = Poverty, Gender and Social Development R4 = Environmental Aspects R5= FiduciaryAspects R6 =Policyand Institutional Aspects R7= knplementation Arrangements R8 = Risk Assessment R9 = Bank Inputs and Processes

0 % Moderately Satisfactory or Better 0 %Satisfactory or Better

3.39 QAGperformed a study to determine the predictive value of QEA results with respect to eventual project outcomes. The review found that when QEA had rated a project satisfactory at entry, i t s chances o f being unsatisfactory at outcome had been on average about 20 percent, compared to twice or 40 percent for a project rated by QEA as unsatisfactory at entry.

3.40 QAG is tightening current QEA methodology to reduce the disconnect between QAG ratings andproject outcomes. A recent QAG review found two main reasons for the disconnect. First, there was an underestimation o f risks by the panels. T h i s was partly ascribed to the absence, until lately, o f internal Bank standards in the area o f risk management. Second, there were some inconsistencies between written comments and ratings in specific questions. In addition, there was lack o f clarity as to how different aspects o f quality affect overall ratings. The review recommended sharpening the focus o f the QEA process on whether development objectives would be achieved and strengthening several aspects o f the questionnaire including in the areas o f risk assessment, results fkamework, and realism o f objectives.

3.41 Most of the 31 recommendations from QEA4-7 have been acted upon. The specific recommendations with unambiguous accountability for action were generally implemented in a satisfactory manner. OPCS related actions have focused on clarifying and improving processes, policies, and systems including revisions to the PAD format, guidelines for emergency operations, and clarifying DPO policies. QAG actions were mainly modifications to assessment methodologies, such as refining questionnaire for DPOs. Where the QEAs identified Region- specific actions such as the QEA6 recommendation to L C R on improving quality o f adjustment loans, Regions have responded favorably. The same i s true for Sector Boards--the more targeted the recommendation, the greater probability o f action being undertaken.

3.42 results.

Actions on three recommendations from QEA4-7 have not yet produced satisfactory

0 QEA5 suggested a review o f impediments to the ability o f Sector Managers to assume a greater role in quality enhancement. QEA8 rated the follow-up to this recommendation as Moderately Satisfactory.


0 QEA6 asked Senior Management to address managerial effectiveness and incentives to ensure greater realism in setting Development Objectives and greater candor in assessing project risks. QEA8 rated progress in the area concerning greater candor in assessing project risks as Unsatisfactory.

0 QEA5 recommended that Management address the issue o f lack o f adequate implementation readiness o f IDA projects. Both QEA8 (see Para 3.37) and QSA73' found implementation readiness to be a continuing issue.

Quality o f Supervision

3.43 Quality of Bank supervision has been sustained at 90 percent satisfactory or better since FYOO. Unlike in previous QSAs when there were differences in performance among Regions and Networks, the QSA7 results showed a convergence o f performance. Nonetheless, about 20 percent o f the QSA7 sample had an unsatisfactory rating in at least one o f the four dimensions, mainly in Candor and Quality of ISR. In addition, there was a significant increase in the Moderately Satisfactory category compared to QSA6, indicative o f growing missed opportunities. Finally, about 20 percent o f the sample were rated as having inadequate supervision budgets.

3.44 QSA7 found that generally, adequate resources were provided for supervision but found that there may be scope for improved allocation. Reported problem projects receive about 30 percent more resources than Bank-wide average. Nonetheless, there may be scope for improving the allocation mechanisms to ensure that potential problem and risky projects receive appropriate funding. There are different practices among Regions in the allocation o f supervision resources. AFR sets aside escrow funding for supervision and restructuring o f problem operations as reported in the ISRs, with funds disbursed based on an agreed set o f actions to be implemented. L C R has a Risk Review process which identifies the projects at risk, and based on this review, additional resources are provided to the Country Unit. Other Regions leave the allocation decision to the Country Units. I t i s unclear which practice achieves the best results.

3.45 There was no significant difference in supervision quality between projects managed from HQ and those managed from the field - both were rated highly. Panels noted the need for better integration o f decentralized or field-based fiduciary staff in supervision teams. They also indicated that more could be done to complement field-based TTLs with appropriate use o f HQ staff with global experience. Finally, there are challenges to Management oversight where the Sector Manager i s in HQ and the TTL i s in the field.

3.46 OPCS, Regions, and Sector Boards have been acting on specific recommendations in QSA4-7. The OPCS actions were in the areas o f facilitating project restructuring, building staff capacity for M&E, and training on results framework and general project supervision. QAG

QSA7 rated Readiness for Implementation at Approval at 70 percent MS+ and 37 percent S+, much lower than the overall QSA7 rating o f 95 percent MS+ and 52 percent S+.

31


restructured the Realism Index and tightened the QEA8 methodology to give greater importance to certain quality at entry issues such as results framework and readiness for implementation. Regional action has generally been satisfactory. The relevant Sector Boards have implemented recommendations to improve fiduciary and safeguard compliance.

3.47 Improving candor of reporting was a recurring recommendation in QSA4-7 and has yet to yield satisfactory results. Candor o f reporting was the weakest dimension in QSA5-7 though there was a slight improvement in QSA7. Realism o f project performance ratings continues to be poor. The underlying problems o f lack o f candor in reporting have not been addressed in a way that produces results.

C. RECOMMENDATIONS

0 AFR to sustain efforts to improve project outcomes, focusing on projects in Fragile States and in the HD, PREM and ESSD Networks. A review o f older projects in the portfolio would provide a realistic assessment o f the projected outcomes o f exits during the next two to three years. The next QSA should assess the quality o f AFR portfolio segmented by project age and network.

0 HNP, PSD, and PSG Sector Boards, in coordination with the Regions, to address relatively lower project outcomes focusing o n improving project design and addressing development effectiveness issues in a timely manner during supervision. Future QAG assessments should also focus on these three Sector Boards to review progress.

0 QAG and OPCS to review framework for measuring and monitoring risk in the portfolio by establishing a stronger link with risk assessment at appraisal. Portfolio monitoring should report on projects at risk both in terms o f number o f projects and commitments.

0 Management to address: (a) impediments to greater effectiveness o f Sector Managers in quality enhancement; (b) issue o f continued lack o f realism in reporting project performance; and (c) inadequate implementation readiness o f projects.


IV. ANALYTIC AND ADVISORY ACTIVITIES

4.1 Analytic and Advisory Activities (AAA) include both Economic and Sector Work (ESW)32 and Non-lending Technical Assistance (NLTA) and are a key component o f the Bank’s tool kit for promoting economic development and reducing poverty among i t s client countries. ESW underpins the Bank’s pol icy dialogue with clients, the development o f country assistance strategies, and the design o f lending programs. NLTA is an important instrument for helping clients implement reforms and strengthen institutions. T h i s Chapter reports on the trends in the Bank’s AAA work and the quality o f both AAA tasks and country AAA programs, and makes recommendations for further improvement. I t also draws from the key findings o f two recently completed QAG assessments: Quality o f Country AAA and Managing AAA Droppage. The main messages from this Chapter are:

The importance o f AAA as an instrument o f Bank support has been growing. T h i s i s reflected in the increasing share o f AAA expenditures in the country services envelope - AAA expenditures in FY07 were 25 percent higher than that o f lending preparation and about 95 percent o f supervision costs.

0 Several trends in the size and composition o f AAA are worth noting. First, there has been a major shift in AAA towards NLTA both in terms o f number as wel l as value o f tasks. Second, within ESW, there i s a shift from core diagnostic reports to other types o f reports. Third, multi-country AAA i s a growing segment; AFR and LCR accounted for more than hal f o f regional AAA delivered in terms o f cost in FY07.

There has been deterioration in the efficiency o f delivery o f AAA tasks. Average preparation cost in real terms and preparation time for ESW tasks have increased by 45 and 35 percent, respectively, during the past five years. For NLTA, the increases in average preparation cost and time have been due mainly to the growing number o f multi-country tasks; the efficiency o f delivery o f country level tasks has been stable over the past five years.

0 QAG also conducted two assessments o f AAA programs during FY03-07 covering a total o f 53 countries. The combined findings from the assessments show a mixed picture. On the positive side, the overall quality o f AAA programs was rated as satisfactory with strong aspects in Internal Quality as well as Scope and Strategic Relevance. But several weaknesses were identified. In particular, the l o w rating for L ike ly Impact is a major concern - the Bank may be producing good quality tasks which, when viewed in the overall strategic country context, may not be generating sufficient value added. In addition, management oversight was found to be a critical factor that distinguished high and low quality AAA products.

32 ESW is defined as an activity that: (a) involves analytic effort; (b) is undertaken with the intent o f influencing an external client’s policies andor programs; and (c) i s ‘‘owned’’ by a specific Bank unit. OPCS provided in July 2004 a decision tree to help task managers in determining whether a task meets the ESW criteria and in properly coding and recording ESW.


MO2 Roject

QAG carried out a review o f dropped AAA tasks as a basis for identifying systemic recommendations. Two key findings emerged from the review. First, institutional mechanisms for planning, monitoring, and tracking AAA tasks remain problematic with many dropped tasks suffering from classification errors and lack of managerial attention. The process problems are particularly acute for AAA tasks that are programmatic, multi-sectoral or globalhegional in nature. Second, the fact that a task was not “delivered to the client does not mean that it had no valued added - either in itselfor indirectly for other tasks orprojects. Indeed, a large majority o f the tasks in the sample appear to have produced acceptable results. There were, however, missed opportunities; with better management o f such tasks, the outcomes could have been significantly better.

FY07

A. TRENDS IN EXPENDITURES AND DELIVERIES

Growth of AAA

1 I ,

4.3 There has been a major shijl in the composition of A M towards NTLA activities (see Table 4.1). Whether viewed in terms o f number o f tasks delivered, cost o f tasks delivered, annual expenditures, or number and cost o f tasks in progress, the share o f NLTA in total AAA has been increasing over the past five years as country units increased their support to clients in the areas o f pol icy implementation and capacity building. In FY07, the share o f NLTA in AAA

Annual Report o n Portfolio Performance FY07 36

expenditures and cost o f tasks delivered was about 45 percent, up from 35 percent in FY03. The share o f NLTA in cost o f tasks in progress was about 60 percent at end-FY07 indicating continued growth o f NLTA activities in FY08.

Table 4.1: AAA Programs by Number and Cost (FYO3-07) AAA Program By No. of Tasks (Bank-wide)

FY03 FY04 FY05 FY06 FY07 ESW TA Total ESW TA Total ESW TA Total ESW TA Total ESW TA Total

627 426 1,053 780 463 1,243 751 456 1,207 631 438 1,069 563 478 1,041 A. Tasks in Progress at the Begining of the Year B. Tasks Initiated in FY 993 407 1,400 934 408 1,342 737 440 1,177 640 445 1,085 577 509 1,08E C. Tasks Delivered in FY 726 339 1,065 734 303 1,037 694 351 1,045 601 307 908 531 430 961

780 463 1,243 751 456 1,207 631 438 1,069 563 478 1,041 583 528 1,111 D. Tasks in Progress at the I End of the Year (A+B-C)

AAA Program By Cost (Bank-wide) (US$ Million in Real Terms)

FY03 FY04 FY05 FY06 FY07 ESW TA Total ESW TA Total ESW TA Total ESW TA Total ESW TA Total

72 85 156 79 89 168 93 94 187 80 104 184 81 114 195 A. Tasks in Progress at the Begining of the Year B. Total Expenses in FY 117 68 185 136 59 195 136 70 206 136 88 223 132 101 233 C. Tasks Delivered in FY 93 49 142 102 42 I 44 126 45 172 115 50 166 118 94 211

6 5 12 10 5 15 10 4 14 13 6 19 14 7 22 D.ExpensesofTasks Delivered in Previous FYs E. Tasks in Progress at the End I of the Year (A+B-C-D) 85 95 179 93 94 187 82 106 187 83 115 198 80 112 192

I Note: Cost o f tasks delivered includes previous years’ expenditures.

Efficiency

4.4 Unit cost of ESW delivered has increased by about 45 percent in real terms over the past fzve years (see Figure 4.2). One explanation i s the consolidation o f certain tasks, though this was mainly happening with respect to fiduciary assessments with the integration o f the CFAA and CPAR into the IFA; there have been efficiency gains in the delivery o f fiduciary assessments. However, unit cost o f non-fiduciary ESW has been increasing; in particular, unit costs o f Country Economic Memorandums (CEM) and Country Advisory Reports have increased by more than 60 percent in real terms during the past f ive years. With respect to NLTA, unit cost o f tasks has increased by about 33 percent in real terms during the past f ive years. This i s explained by the increases in multi-country TA programs in AFR and large SDV initiatives in Indonesia.


Figure 4.2: Unit Cost in Real Terms of Dropped AAA Tasks (FyO3-07) 3 250 P 0

tt)

U

U .- C 3

I"" , FY03 FY04 FY05 FY06 FY07

I +ESW +TA +Total I

4.5 As percent of cost of task delivered, post delivery expenditures increased from 8percent to 10 percent during the pastfive years. In the case o f ESW, the increase was from 7 percent to 12 percent. Post delivery expenditures find various activities occurring after the delivery o f a task to client, e.g., output finalization, translation o f documents, dissemination o f findings, and in some instances, field visits. In part, the increases in post delivery expenditures are in response to the recommendations o f various Q A G assessments for improved dialogue and dissemination. Nonetheless, given the growing size o f post delivery expenditures, there needs to be better monitoring o f their uses as wel l as evaluation o f l ikely impact and effectiveness.

4.6 Preparation time for AAA tasks increased during the pastfive years (see Figure 4.3). In the case o f ESW, preparation time increased from 12 months to 18 months during the past f ive years. About a quarter o f the ESW tasks delivered in FY07 took more than two years to prepare, compared to five percent in FY03. In the case o f NLTA, preparation time saw a major increase in FY07, during which a quarter o f tasks delivered had at least two years o f preparation time. This i s mainly explained by the rising number o f multi-country and other large NLTA tasks that required longer preparation time. Eighty-five tasks delivered with per unit cost above $300k took between 30-48 months to complete; these tasks accounted for about a fifth o f FY07 deliveries. Increases in preparation time for both ESW and NLTA require greater management attention.

Annual Report o n Portfolio Performance FY07 38

20 E i= l a s - -2 c 2 16 m s k g 14 2 -

12 Q 2 1 0 - 2

Figure 4.3: Preparation T ime of AAA Deliveries (FYO3-07)

Instruments

ESW

4.7 I n FYOl, the Bank launched a major effort to increase coverage of core diagnostics with a target of full coverage33 of active clients. By end-FY04, most Bank clients had up-to- date core diagnostic products, with full coverage in all Regions except AFR (due to gaps in PAS and CEMs in Fragile States) and MNA (due to gaps mainly in Fiduciary Assessments). Starting FY05, frequency o f diagnostic reports is programmed on a country by country basis, depending on the types and level o f Bank engagement and partner country priorities and circumstances, and the availability of relevant knowledge from development partners. As o f end-FY07, core diagnostic coverage has improved further, especially with respect to CEMs and PAS (see Table 4.2).

Table 4.2: Core Diagnostic Reports Coverage ( N O 4 vs. FY07) (Number of Countries)

CEMlDPR Fiduciary PER PA Total FY04 FY07 FY04 FY07 FY04 FY07 FY04 FY07 FY04 FY07

AFR 19 28 31 34 24 28 5 24 79 114

Region

EAP 10 6 10 10 10 4 9 8 39 28 ECA 17 19 21 19 23 19 18 20 79 77 LCR 16 21 19 21 16 20 12 15 63 77 M NA 8 8 7 9 4 8 6 6 25 31 SAR 1 5 3 5 1 1 1 2 6 13 Bank-wide 71 a7 91 9a 7a a0 51 75 291 340

CEM= Country Economic Memorandum; DPR=Development Pol icy Review; PER=Public Expenditure Review; PA= Poverty Assessment.

4.8 The number of Core Diagnostic deliveries has been declining in recent years, from 122 in FY04 to 68 in FY07 (see Table 4.3). The number o f CEMs delivered in FY07 i s less than ha l f o f average annual deliveries during FY03-06 and is now at the same level as during FY01-02.

33 A country is classified as f i l ly covered if a l l core diagnostic products are f ive years o l d o r less.


T h i s development i s expected from the FY04 ESW reforms which left to country management the determination o f the number and frequency o f core diagnostics. In addition, there has been a consolidation o f CFAA and CPAR instruments into a single Integrated Fiduciary Assessment (IFA) - 14 IFAs were delivered in FY07 with only four CFAAs and CPARs completed. In the case o f PAS and PERs, the number o f tasks delivered has remained at about the same level for the past five years.

Table 4.3: Number and Unit Cost o f ESW Deliveries by Output Type Unit Cost (US$ '000)

Deliveries (#) A M Deliveries (In Real Terms)

FY03 FY04 FY05 FY06 FY07 FY03 FY04 FY05 FY06 FY07

Core Diagnostic Reports 119 122 90 81 68 237 208 258 278 370 PA CEMIDPR PER C F M CPAR I FA

14 19 19 21 15 357 373 238 346 433 27 26 23 23 10 320 262 462 338 524 22 29 22 19 25 334 212 244 189 387 30 23 IO 8 2 131 112 82 63 164 25 24 14 1 2 113 95 105 85 119 1 1 2 9 14 484 453 199 361 228

INon-core Diagnostic Reports 101 123 140 123 94 161 156 168 214 197 Advisory Reports Policy Notes

223 242 271 268 249 144 170 204 215 237 153 152 193 129 120 101 106 191 160 137

lAll ESW Products 596 639 694 601 531 154 159 200 212 224

4.9 The combined share of Non-core Diagnostic Reports and Country Advisory Reports has been increasing during the pastfive years and now accounts for 65percent in number and cost of ESW deliveries. Unit cost o f delivering country advisory reports has been increasing and is now higher than that o f non-core diagnostic reports. Further analysis i s needed to determine why this is so. During the recently completed C - A A A Assessment, Non-core Diagnostic Reports and Country Advisory Reports scored much lower than Core Diagnostic Reports. QAG is preparing a special review o f Non-core Diagnostic Reports and Country Advisory Reports to understand better the reasons for the lower quality ratings for these two product lines.

4.10 while the number and unit cost in real terms of Policy Notes have declined since FY05, preparation time has increased. Policy Notes are meant to be quick response, focused, and short pieces. The number o f Policy Notes delivered more than doubled from 75 in FYOO to a high o f 193 in FY05. During this period, preparation time and cost increased and became comparable with those o f Non-core Diagnostic Reports and Country Advisory Reports, hence negating the intent o f Policy Notes to provide just-in-time advice. Since FY05, there has been a decline in the number and per unit cost in real terms o f Policy Notes delivered, though per unit cost in FY07 was about 35 percent higher in real terms than five years ago. However, preparation time has lengthened from 12 months in FY05 to 15 months in FY07. There may be need to review the efficiency and impact that Policy Notes have had on client countries.


Non-Len ding Technical Assistance

4.1 1 FY07 NLTA deliveries were at an all time high in terms of cost, almost doubling the level in FY06. About 45 percent o f the cost o f FY07 NLTA deliveries were for multi-country or regional initiatives. Trust Fund spending doubled in FY07, mainly to deliver high cost NLTA. For example, an AFR regional transport NLTA cost almost $14 million, o f which $1 1 million were from Trust Funds. In Indonesia, the total cost o f tasks delivered increased from $1.2 mi l l ion in FY06 to over $13 mi l l ion in FY07 mainly due to large SDV tasks financed from Trust Funds.

4.12 The recent QAG Country AAA Assessment found good value for money in cases where NTLA resources were used to implement ESW recommendations. T o further improve effectiveness o f NTLA, the assessment recommends: (a) budgetary support for NLTA and staff flexibility should become a standard feature o f the future structure o f AAA programs in order to help follow-through ESW recommendations; and (b) expert assistance in short-term technical cooperation for just-in-time advice should be elevated to the status o f ESW in terms o f staff incentives.

Global Programs and Partnerships

4.13 Global Programs and Partnerships (GPPs) are now a prominent part of the Bank’s work The Development Grant Facility (DGF), the Bank’s primary source o f financial support to GPPs, i s a key instrument for the Bank to engage partners on high priority initiatives that complement Bank country programs. In FY07, the Bank was involved in about 170 GPPs to varying degrees-56 were funded out o f a DGF budget o f $172 million. DGF disbursements have been at about $170 mi l l ion per year since FY04. The two window funding approach was introduced in FY02 to distinguish between programs tackling long term development challenges (Window One) and those meriting support for up to three years (Window Two). In FY07, there were 17 programs under Window One and 35 under Window

4.14 A QAG review (GPP-2) of six out of eight new Window Two programs approved for FY07 indicates improved quality-at-entry compared to the results of the review of FY06 Window Two programs (GPP-I). GPP-2 found the FY07 initiatives to be highly relevant, reflecting international consensus with strong alignment with the Bank’s mission and sector strategies. The Bank utilized i t s convening power, knowledge base, and country experience to bring together partners and stakeholders to own and participate in programs and partnerships that promote collective actions on important issues. Advocacy and dissemination o f best practices were major activities o f the GPPs reviewed. The GPPs evaluated supported directly or indirectly the MDGs, and contributed to global public goods.

4.15 GPP-2 identi$ed results framework, risk assessment, disengagement stratem, and linkage to regional strategies as areas to be strengthened. Most o f the programs reviewed

34 These do not include the Special Programs (Partnership for African Capacity Building) and the Institutional Grant Programs (Post Conflict Program, Small Grants Program, and Institutional Development Fund) which are also financed from DGF.


lacked an acceptable results framework including appropriate M&E arrangements. T h i s has led to overly ambitious objectives for the GPPs. Panels noted that GPPs generally took on risks that could not be undertaken by typical Bank lending operations, such as pi lot ing innovative approaches - this was viewed to be a major value added o f GPPs. However, panels recommended a more systematic assessment o f r isks and rewards, including the establishment o f clear criteria for evaluating risks. The quality o f assessment o f the impact o n sustainability o f the GPPs o f completion o f Bank funding was uneven. Finally, better alignment with regional strategies would help maximize the benefits o f GPPs.

B. QUALITYOFAAA

C-AAA Assessment

4.16 Since FY03, QAG has been utilizing a country approach in AAA assessments where both the country AAA program and a sample of tasks within the country program are assessed. The Country AAA assessments in FY05 and FY07 covered a total o f 53 countries, 36 in Phase I and 17 in Phase 11. The two assessments combined covered 485 sampled tasks -- representative from al l six regions, IBRD and IDA borrowers, and different country settings. The analysis o f the combined sample i s statistically robust.

4.17 The combined analysis from the two phases presents a decidedly mixed picture of quality of AAA. On the positive side, although only 83 percent o f C - A A A programs are rated Moderately Satisfactory or better, the weighted average by expenditure is 88 percent, which i s close to the Bank goal o f 90 percent. All this provides reassurance that the Bank i s doing satisfactory quality work under the C-AAA programs for most o f the expenditures.

4.18 But there are also significant issues and weaknesses. One in six countries reviewed has an unsatisfactory performance. Bank-wide averages for quality fa l l short o f goals in 3 out o f 6 quality dimensions: Dialogue and Dissemination, Coherence and Integration, and Bank Inputs and Processes. Lower ratings for Dialogue and Dissemination reflect that planning and provision for broader AAA dialogue and dissemination are too often neglected and AAA i s not generally disseminated beyond Bank counterparts. A shortfall in Coherence and Integration arises because Country Teams are not pursuing adequately inter-linkages among tasks and seeking to take advantage o f synergies that may arise. Lower ratings for Bank Inputs and Processes reflect insufficient managerial attention to quality, inadequate monitoring and evaluation, and poor quality o f information in BW, SAP, and ACS. Weak ratings in these three quality dimensions are contributory factors to the l o w ratings o f the Likely Impact dimension.

4.19 There are also variations in quality in both Regions and Networks35 (see Table 4.4). There are considerable regional variations around the average ratings - performance in AFR and MNA are o f particular concern. Both regions also have relatively lower ratings on the three quality dimensions that are l o w Bank-wide. There are also some variations at the network level

35 The definition o f network was based on the structure at the time the assessments were performed.


with FSD, INF, OPCS, and PREM above the Bank’s goal and HDN, ESSD, and PSDN at the lower end, with the last three networks having relatively lower ratings o n Likely Impact.

Table 4.4: Quality of Country AAA Programs (Percent Moderately Satisfactory or Better)

Total Countries OA R1 R2 R3 R4 R5 R6

AFR 18 78 94 100 72 76 67 72 EAP 5 100 100 100 80 75 100 100 ECA 12 75 75 92 75 67 75 75 LCR 9 89 78 100 78 78 89 100 MNA 5 80 80 100 40 60 60 40 SAR 4 100 100 100 75 50 75 75 Bank-wide 53 83 87 98 72 71 75 77 OA=Overall Assessment; R1= Strategic Relevance; ==Internal Quality; IU=Dialogue and Dissemination; R4=Coherence and Integration; RS=Likely Impact; R6=Bank Inputs and Processes.

Region

4.20 Many programs may not be generating sufficient value added. A major concern from the C - A A A assessment i s the l ow rating - 75 percent MS+ - for L ike ly Impact, which falls wel l short o f the Bank’s goal. Thirteen o f the 53 programs are assessed to have Likely Impact rated Moderately Unsatisfactorily or below. Lower ratings for Dialogue and Dissemination and Coherence and Integration are closely linked to lower ratings for L ike ly Impact on the client and are in turn explained largely by inadequate management attention to quality as captured by Bank Inputs and Processes. Apparently, the Bank is producing “good products” that are not necessarily finding resonance in client countries, raising questions about the value o f a significant part o f the program. The inclusion o f a clear results framework for AAA tasks and programs would help define outcomes and impact expected from AAA.

4.21 Strong management oversight from program inception through completion is the single most important distinguishing factor between C-AAA programs rated high and those rated low or average quality. This finding i s consistent throughout al l assessments o f Phases I and 11. Management oversight i s weak in regions rated lower in quality. L o w CPIA countries appear to also fare poorly in management oversight. Management oversight i s better at entry and lower during implementation.

4.22 Generally low quality of information and weak Bank institutional memory exacerbate managerialproblems. In particular, the quality o f information in BW, SAP, and ACS i s low. Recording st i l l leaves much to be desired. Despite significant cumulative investment in AAA in virtually al l countries, a significant number o f country teams do not consider country knowledge to be adequate.

4.23 The combined Phase I and 11 C-AAA Assessment identified Dialogue and Dissemination as the other key area that needs the most improvement. Ratings for Dialogue and Dissemination, which reflect the effectiveness o f the effort by the Bank to reach consensus around the recommendations o f AAA work, are also l o w for most o f the regions. The key


weaknesses identified in country program rated below the l ine were a lack o f a wel l articulated strategy for broad dissemination and insufficient dissemination efforts o f the findings, a less than clear formulation o f conclusions and recommendations, inadequate consultation with the government and particularly with other stakeholders, and not having the documents translated into local languages. As noted earlier, quality o f Dialogue and Dissemination has a direct bearing on the Likely Impact o f the tasWprogram.

4.24 Within ESW, there were some quality differences among outputs (see Figure 4.4). Core diagnostic reports (CEM, DPR, CFAA, CPAR, IFA, PA, PER) were on the whole rated higher than other tasks. Policy Notes, Non-core Diagnostic Reports, and Advisory Reports were rated lower than Core Diagnostic Reports. Advisory Reports, in particular, were rated lower both in Overall Quality and Like ly Impact.

Figure 4.4: Quality of ESW Product Types (Percent Moderately Satisfactory or Better)

C o r e Consultations1 Pol icy N o t e s Other Advisory Tota l ESW Diagnost ic Country Diagnost ic Repor ts

Repor ts Dialogue Repor ts

4.25 The overall quality of NLTA at 95 percent MS+ was rated higher than ESW. NLTA scored above the Bank’s goal in al l quality dimensions, including 100 percent in Dialogue and Dissemination. These results follow the findings o f an FY04 Q A G assessment o f NLTA which found that 99 percent were Satisfactory with a high number o f Highly Satisfactory ratings. The report found that close client involvement and solid technical inputs resulted in both high quality content generation and significant knowledge transfer.

4.26 specifically:

The C-AAA Assessment found significant scope for improving quality of AAA,

0 Ensuring that the various tasks add up to a coherent strategic agenda for the country and requiring stocktaking o f previous work by the Bank and others as a first step in any Bank task;

0 Providing greater receptivity to clients’ views on priority issues at the time o f AAA program formulation, together with encouraging greater client participation at the Concept Note and implementation stages;


Having a wel l articulated dissemination strategy up-fkont, with a specific budget allocation for this purpose in the context o f broader dissemination beyond government circles; the strategy should include improving ex-ante incentives for more effective dissemination and building coalitions for change through effective dissemination;

Holding Country Directors accountable for making strategic AAA choices and Sector DirectorslManagers for task implementation;

0 Conducting annual C - A A A “portfolio reviews”, which may be done as part o f the CPPR process, with a view to making mid-course corrections and increasing attention to AAA in l o w CPIA countries; and

0 Strengthening the current information systems for improved recording and reporting o f AAA tasks.

Review of Dropped Tasks

4.27 Cost of dropped tasks increased compared tofive years ago (Figure 4.5). In FY07, there was a clean-up o f AAA tasks which resulted in a large number o f inactive tasks being dropped during the fiscal year. About 80 percent o f cost o f dropped tasks in FY07 were for inactive tasks where the last expenditure was incurred prior to FY07.

Figure 4.5: Total Cost in Real Terms of Dropped AAA Tasks (FYO3-07)

FYO 3 FY04 FYO 5 PI0 6 FY07

I +TA +EsW +Total 1

4.28 I n response to the increase in the costs of dropped AAA tasks highlighted in last year’s ARPP, QAG carried out a review as a basis for identihing systemic recommendations. The review covered 60 dropped AAA tasks from the FY06-07 cohort and focused on Value for Money and the Quality o f Process. Two key findings emerged from the review. First, Value for Money - effective use of resources in relation to benefits - was found to be good overall. Indeed, a large majority o f the tasks in the sample are judged to have produced satisfactory results. Second, Quality of Process was found to be poor, often reflecting inadequate institutional processes that hamper monitoring and tracking of AAA. About a third o f the tasks assessed by


Recommendations 1. Program Management AAA Monitoring and Evaluation

Avoid task under-funding.

Improve AAA guidelines.

Reduce miscoding o f AAA tasks.

QAG were misclassified. The process problems are particularly acute for AAA tasks that are programmatic, multi-sectoral or global/regional in nature.

Implementation Progress Rating MU U

S

MS

AAA data quality remains poor and S A P , ACS, and

Substantial progress has been made by Regions and BW oversight continue to require increased attention.

Networks. Issued new guidelines for coding certain tasks; launched user-friendly ESW and TA portals; simplified the presentation o f the ESW and TA decision tree; However, overall architecture i s s t i l l too complex and not user fhendly.

Initial steps have been taken. Unit coordinators are appointed in Regions and Networks to monitor coding. However, coding problems seem to have continued. Coding for Global AAA remains particularly problematic.

MU

4.29 Performance among Regions and Networks was found to be uneven. AFR and S D N were at the higher end in terms o f Quality o f Process. Regions and Networks need to give priority attention to Quality o f Process, particularly with regard to the management o f AAA at initiation, implementation, and droppage o f tasks. The highest scores in Value for Money were recorded for EAP, SAR and AFR; the lowest ones by E C A and LCR. The highest scores for Value for Money in Networks were recorded by SDN and HDN; the lowest one by FPD. Regions and Networks need to also give priority attention to increasing the value added o f such tasks.

4.30 First, assign a high priority to improving the current state o f AAA documentation. Second, provide adequate monitoring to ensure that AAA tasks that are no longer needed would be dropped without delay. Third, review and modify the current AAA architecture, including the Bank’s data system, to accommodate the changes that are needed, and formulate guidelines to systematically address the issues identified in dropped tasks.

The review makes three main recommendations.

Retrospective o f Previous AAA Assessment Recommendations

4.3 1 In recent years, three reports have been issued by QAG dealing with the quality o f AAA: the 2006 Report on the Assessment o f Global and Regional AAA (GRAAA), 2005 Assessment o f Quality o f C-AAA, and 2005 Assessment o f Quality o f Non-Lending Technical Assistance. Table 4.5 examines and summarizes progress so far in implementing the key recommendations o f al l three reports. These key recommendations are grouped under two major headings: (a) program management; and (b) dialogue and dissemination.

Table 4.5: Status o f Recommendations f r o m AAA Assessments


Recommendations Adoption o f CPPR-like process to improve planning and monitoring o f AAA program.

Implementation Progress Rating AAA portfolio reviews only introduced in S A R so far. MU

2. Dissemination Plan and fimd dissemination as an integral part o f AAA.

M S MU Funding for dissemination has increased i t s impact, but

remains uncertain.

C. RECOMMENDATIONS

Make available reports in local languages. Engage in broader country consultation and dissemination.

Use o f in-country expertise. Overall

4.32 I t i s recommended that OPCS review AAA definitions, guidelines and systems to improve monitoring, measurement, results orientation and governance arrangements to address recurring issues o f lack o f adequate management oversight.

Some, but not al l reports going to the client are translated into local languages. Receiving increased Managerial attention, but progress i s constrained by in-country political sensitivities.

MS

MU

Good progress achieved by Regions and Networks. S MU


V. DEVELOPMENT OUTCOMES OF COUNTRY PROGRAMS

5.1 Notwithstanding gains in aggregate project outcomes and generally satisfactory quality o f AAA tasks, the performance o f country programs based on completed CAEs during the past ten years i s below 60 percent satisfactory. There is an expectation that improving quality o f Bank performance during project preparation and supervision and in AAA would result in successful country program outcomes. This chapter analyzes the factors contributing to the relatively l ow country program outcomes and identifies areas o f improvement. The main messages from this Chapter are:

A Q A G review o f CAEs with unsatisfactory ratings found that two factors stand out as primary contributors to l o w outcomes: (a) weak design o f country programs, including poor quality o f lending programs; and (b) ineffective country dialogue. Country program design issues include significant omissions, lack o f coherence, and failure to take into account borrower commitment and capacity.

0 The QAG review identified three main reasons for the divergence between sector and project outcomes. First, many projects were undertaken which did not address the key development constraints or priorities in the sector. Second, poor coordination led to l ow outcomes in sectors where cross sector inputs from other Bank projects and donors were critical. Finally, the results frameworks o f both projects and CASs did not have strong linkages among project, sector, and CAS outcomes.

0 The above findings point towards a two track approach to improving program outcomes. First, the CAS design, i.e., quality-at-entry, should be improved by ensuring that the program addresses key development constraints, i s focused and coherent, and takes into account Borrower commitment and capacity. Second, quality assurance should focus o n quality o f implementation o f CASs not only at the task level but also at the program level to ensure that the timing and choice o f interventions maximize impact on CAS outcomes.

A. TRENDS IN PROGRAM AND PROJECT OUTCOMES

5.2 The development outcomes at the country program level do not match the results at the project level discussed in Chapter 3. Based on sixty-three C A E S ~ ~ completed during FY97-07, IEG rated 35 percent o f the Bank country assistance programs unsatisfactory for the entire evaluation period and rated another 20 percent o f the programs unsatisfactory for part o f the evaluation period. The CAEs covered 62 countries37 representing 75 percent o f the end-FY07 portfolio; they also included the top 25 borrowers.

36

37

There were several Country Assistance Notes and Country Assistance Reviews completed, mainly pr ior t o FY97, but these did no t have ratings. These were excluded f rom the discussion in this chapter. One country had two CAEs.


5.3 The CAE outcome ratings deviate from the aggregate ofproject outcomes (Figure 5.1). Aggregate project performance is measured using the IEG ratings o f project exits in countries covered by CAEs during the evaluation period. Modifying the measurement to include outcomes o f projects which were active during the evaluation period3* does not change the overall result.

Figure 5.1 : Performance of Country Programs and Related Projects (3 Year Moving Average)

P - - - E! 90 J! 80

70 E 60 2 50

0

v)

v)

Q)

.- A

a l

FY90 FY92 FY94 FY96 FY98 FYOO FY02 FY04 FY06 1 +Country Level Evaluation +Project Level Evaluation I

Note: To compute the country level outcome by fiscal year, the appropriate CAE and CASCR ratings were applied to each year covered by the evaluations. The project level outcomes were based on exits o f projects during the CAE evaluation period in the countries covered by the CAEs.

5.4 The C-AAA Assessment rated country AAA programs lower than the aggregate of individual tasks ratings. As discussed in Chapter 4, the quality o f individual tasks was found to be satisfactory but Coherence and Integration o f country AAA programs was rated l o w at 72 percent MS+ and 43 percent S+. There may be a similar relationship between lending projects and country lending programs. Unlike in the case o f AAA, QAG does not fol low the country approach to assessments o f lending operations.

5.5 Half of the CAEs with unsatisfactory ratings had aggregate project performance of 70 percent satisfactory or better (see Table 5.1).39 The divergence also goes the other direction - about 20 percent o f satisfactory CAEs had aggregate project performance o f less than 70 percent satisfactory. Overall, about one o f three CAEs had a divergence between country program and aggregate project performance using 70 percent or better as the norm for satisfactory project performance.

38

39

IEG evaluations o f projects that were active during the evaluation period were used if these projects have exited; otherwise, the latest DO ratings o f the ISRs in FY07 were used to measure outcomes. The ARDE 2006 used aggregate project performance o f 50 percent or better as the comparator in analyzing divergence o f programs and project performance. About 80 percent o f CAEs with unsatisfactory ratings had aggregate project performance o f 50 percent or better.


Project Portfolio

(Aggregate Portfolio Rating)

90% or better

80-89%

8049% (Cont’d) 7O-79%

6049%

5049%

Less than 50%

+ Less

Mongolia (91-01)

Table 5.1: Country Program vs. Project Portfolio Performance CAE Ratin 7- 1

HS S

El Salvador (89-00) China (93-02) Uruguay (87-99) Vietnam (88-01) Chile (85-00) Armenia (93-02)

Bosnia (96-03) Maldives (80-98)+ Romania (00-04)** Argentina (91-00) Tunisia (90-03) Bulgaria (98-01)** Mexico (97-OO)** Brazil (90-02) Croatia (02-03)+** Peru (90-96)** Lithuania (91-02) Ethiopia (90-00) Guatemala (90-0 1)** Mexico (89-91)** Y~TI~II (96-98)**

Ghana (95-99) Russia (99-01)** Uganda (87-99)

WBG (93-00)

than 10 projects evaluated by IEG.

Albania (98-04) Mexico (92-94)** Eritrea (92-OO)+ Kazakhstan (90-99)

Senegal (94-04) Madagascar (94-06) Turkey (93 -04) Pakistan (94-03)

Yemen (99-05) Bhutan (93-03)+ Burkina Faso (89-99)

Indonesia (90-98)

Mexico (95-96)** Dom. Republic (85-02) Bolivia (98-04) Sri Lanka (89-98) Yemen (90-95)** Bolivia (85-96) Lesotho (90-99)

Egypt (91-00)

KyrgyZ (93-00)

Morocco (97-00) Pacific Islands (92-02)

Cameroon (95-OO)** Rwanda (95-01)**

Costa Rica (90-00) 1 Ecuador (94-98) Moldova (93-03) Peru (97-00)** Ukraine (93-98)

Croatia (94-01)** Zimbabwe (90-02) Mauritania (92-03)

Russia (92-98)+** Zambia (96-01)

Paraguay (90-00) Guatemala (85-89)+**

Hait i (86-01) Papua NG (90-99)

5.6 Effective January I, 2005, all CAS’S are required to be results based and to submit a CAS Completion Report (CASCR) to be reviewed by IEG. The central innovation o f the results based CAS i s the design o f a framework that specifies explicit linkages between the Bank’s interventions and long-term development goals. Such a framework would enable better selectivity and design o f Bank activities with a strong focus on results on the ground. The framework would also help Management monitor progress, evaluate success or failure, and make corresponding adjustments in the Bank’s lending and non-lending programs. Results based CASs include measurable indicators to monitor program implementation that could capture concrete progress toward the country’s and the Bank’s core development objectives.


5.7 IEG desk reviews of 43 CAS Completion Reports (CASCR) during the period FY02-07 indicate some improvement, IEG rated about 60 percent o f program outcomes in the CASCRs as Moderately Satisfactory or better. The impact o f the CASCR ratings i s an improvement in the country program outcomes starting FY03 as shown in Figure 5.1 - both the CAE and CASCR ratings were included in estimating country level performance. It is unclear whether future CAEs reviewing new CASs would result in a different rating than CASCRs review.40

5.8 QAG commissioned a review focusing on 40 CAEs that included all of the 32 CAEs with unsatisfactory ratings for all or part of the evaluation periods. The objective of the review was to identify the factors that contributed to the relatively l o w ratings o f CAEs. In cases where there was a divergence between country program and project outcomes, the review examined the reasons for such divergence. The findings are discussed below.

B. FACTORS CONTRIBUTING TO LOW PROGRAM OUTCOMES

5.9 Two factors stood out as primary reasons for the unsatisfactory ratings of the country programs: weak design of country programs including poor quality of lending programs, and lack of effectiveness of country dialogue (Figure 5.2). These are al l factors that are within the Bank's control. Other factors-- relevance o f the CAS, quality o f AAA, quality o f donor harmonization and coordination, and impact o f exogenous events - did not stand out as major reasons for the unsatisfactory ratings o f country programs.

Figure 5.2: Factors Contributing to Unsatisfactory CAEs 100

o) 0 80 c 6

E 40 $jg 0 0 $ 0

C 0

u) m I+

m 60 .-

E 20 2 ; 0 Z L

Quality of Approp. of Bfec. of Relev. of Quality of Impact of Quality of f!

8 Lending Country Country CAS AAAProg. B o g . Donor a Prog. Prog. Dialogue Objectives Events Harmonir. S

P 0

8 Coord. 0 Importance Factor Rating

Weak Design of Country Program

5.10 There were several weaknesses in the design of country programs in the unsatisfactory CAEs. First, the programs failed to take into account borrower commitment and capacity- this occurred in almost all cases. As a result, the program had unrealistic objectives. For the

40 In the case o f IEG project evaluations, Project Performance Assessment Report (PPARs) conducted with field missions about three years after project closing result in lower ratings than Evaluation Summaries based on desk reviews within six months from project closing.


most part, both lack o f commitment and poor capacity were present, though there were cases where there was Government commitment but the program was not aligned with Borrower capacity. Several CAEs concluded that the amount o f lending was not justified by the level and commitment to reforms. The roots o f the problem were the poor quality o f the assessment o f political economy o f reform and the overestimation o f Borrower capacity.

5.1 1 Second, in about half of the unsatisfactory CAEs, there were significant omissions in the program. Several CAEs pointed out that while the CAS objectives were relevant, the program failed to focus on the key development constraints. For example, the Yemen C A E criticized the Bank program during FY90-98 for neglecting issues relating to gender, water resource management, and g ~ v e r n a n c e . ~ ~ In some cases, the omission was the lack o f emphasis on AAA, especially in countries where reform commitment was weak and lending was constrained. This was the main reason for the unsatisfactory rating o f the Russia (1992-98) and Bulgaria (1 991 -97) programs during the initial years o f the period covered by the CAEs.

5.12 Third, lack of coherence and focus of country programs contributed to the unsatisfactory ratings. The Honduras program (1 995-2005), for example, covered a large number o f sectors; greater depth o f involvement in critical sectors would have been more appropriate and effective. In the case o f Guatemala (1985-89), the program had l imited relevance and weak l inks to the assistance strategy. The C A E found that the Rwanda program (1 990-94) was not selective.

5.13 Fourth, many lending programs suffered from weak analytical underpinning and lack of a coherent strategy. This has resulted in project choices that failed to address key development constraints in the sector, and contributed to the lack o f sustainability o f projects undertaken. In the case o f Romania (1 991 -99), Private Sector Development was one o f the three pillars in the CAS to be supported by significant lending. However, the lending strategy failed to tackle the problem o f financial discipline caused by state owned enterprises which the C A E identified as a critical element to enterprise reform. In the case o f Ecuador (1994-98), the societal risks o f vested interests and opposition from Congress were underestimated in designing the lending program.

5.14 Fifth, some lending programs failed to establish strong linkages among different projects, and to ensure that projects were undertaken with the appropriate policy framework. T h i s contributed to weak sector outcomes and poor links to CAS objectives (see discussion o n sector outcomes below). Lending in the Transport Sector in Croatia during 1994-2001 was criticized for moving forward despite policy distortions, with the C A E concluding that Bank lending in the sector exacerbated the already difficult fiscal and external debt problem. A major lesson from several o f the satisfactory CAEs reviewed by QAG i s the need for strong complementarity among different interventions, such as the appropriate mix o f pol icy based and investment loans in Bulgaria during the period 1998-2001.

4' The FY03-05 Yemen CAS addressed these issues.


5.15 Sixth, the design of many individual projects - especially those with major impact on the CAS objectives - was unsatisfactory. For example, in Madagascar (1994-06), the flagship PRSCs were problematic and encountered numerous delays due to weak ministries. In most cases, the main problem with project design was the lack o f consistency with Borrower capacity. The Angola C A E (1991-06) noted that the projects were overly complex and failed to address institutional weaknesses, though the CAE also noted that supervision did a creditable j ob o f addressing many o f these design problems. The Lesotho C A E (1990-99) found that while the projects in some sectors4* had the correct diagnosis and relevant objectives, the project designs overestimated Borrower capacity and failed to take into account political conditions.

Effectiveness of Country Dialogue

5.16 Based on the unsatisfactory CAEs reviewed, QA G panelists rated effectiveness of country dialogue unsatisfactory in 80 percent of the cases. There were cases where Bank dialogue was strong in some areas but not in others resulting in uneven performance. For example, in Lesotho (1990-99), the Government was a constructive partner in Bank efforts to improve macroeconomic policy and the formulation o f post-apartheid economic strategies and programs. However, there were bitter differences on critical agricultural reforms with l i t t le progress in rural development and employment creation in the sector.

5.17 Several CAEs noted that effectiveness of country dialogue could have been improved by expanding outreach beyond a limited number of people in government. In Ecuador (1 994- 98), country dialogue focused on and was effective with a small elite surrounding each president, but dialogue with the broader c iv i l society was insufficient and this turned out to be an important omission. In Zimbabwe (1 990-02), the Bank had generally good rapport with technocrats but not with politicians and decision makers; only late in the period did the Bank increase its emphasis on engaging a broader group o f stakeholders.

5.18 High quality ESW and an empowered field office were factors that would have contributed to effective dialogue. The Russia CAE argued that the Bank should have emphasized ESW in i t s FY92-98 program, and found that only a small number o f Government officials had a good grasp o f the Bank’s views on reform. In Nepal (1990-99), country dialogue improved and Bank program became more aligned with Borrower commitment and capacity when a Country Director was placed in the field. In Yemen, country dialogue improved significantly after the opening o f the Bank’s Country Office.

c. DIVERGENCE BETWEEN PROGRAM AND PROJECT OUTCOMES

Sector Outcomes

5.19 Poor sector outcomes explain some of the divergence between program and project outcomes. The overall impact o f the Bank’s lending program is achieved through individual interventions in various sectors, and these interventions should result in improvements in these

42 The Education sector, whose projects performed well, was a notable exception.

Annual Reoort on Portfolio Performance FY07 53

sectors which in turn contribute to the outcomes articulated in the CASs. To achieve the program outcomes which are typically articulated in the CASs in terms o f sector or thematic results, there should be a strong link between project and sector outcomes.

5.20 Figure 5.3 provides the sector ratings based on CAEs completed during FYOl-07, and compares these with the aggregate project ratings based on exits during the same period. The sector ratings for FY01-06 are based on IEG studies and the FY07 ratings are based on the QAG review o f C A E S ~ ~ . The results show that the lowest sector outcomes were in Private Sector Development, Public Sector Governance, and Rural Development. These are also the sectors with the greatest divergence between sector and project outcomes.

Figure 5.3: Sector and Aggregate Project Ratings (FY01-07 CAEs)

0 c g 80

r;i 5 60

5: 40

w- v) .- m z c)

t o 20

i2 0 '0

s ED INF FSE HDN PSD PSG RDV Sector

Q Sector Rating Aggregate Project Rating

5.21 There are several reasons for the divergence between sector and aggregate project outcomes in these three sectors. First, as mentioned earlier, many projects did not address the key development constraints in the sector, e.g., the agricultural projects in Yemen. There i s a wide range o f choices for Bank intervention in these sectors, which makes selectivity not only important but also difficult. Improving the choice o f projects and ensuring appropriate design require a strong analytical underpinning to identify key constraints and understand political economy o f reforms. T h i s should lead to a clear sector assistance strategy that identifies where the Bank would have maximum impact.

5.22 Second, the above sectors require a high degree of cross sectoral inputs from other Bank projects and coordination with donors. Private sector development and public sector governance are viewed to be two sides o f the same coin--Bank efforts in these two areas need to be coordinated, e.g., effective regulatory systems to support enhanced competition. The Governance and Anti-Corruption Agenda acknowledges the need to work with donors towards a harmonized approach and effective coordination based on the respective mandates and strengths o f different institutions. Rural development has linkages with almost all sectors in the Bank, especially infrastructure and environment.

43 There were five CAEs completed in FY07; a l l o f them were unsatisfactory.


5.23 Third, many of the CASs covered by the CAEs reviewed by QAG had a weak results chain linking country and sector outcomes with Bank operations. This weakness has resulted in several CASs adopting unrealistic objectives, but more important i t has failed to provide a framework for optimal choice o f intervention and project design. The current CASs are required to articulate the results chain linking Bank interventions and donor activities with intermediate outcomes and development impact. I t i s unclear whether the project reviews and quality assurance perform a rigorous analysis o f the project-sector-country causal chain and address the question o f whether the project and i t s design choices maximize contribution to sector outcomes. In the case o f MICs, successful projects may not add up to broad sectoral impact attributable to the Bank - the appropriate definition o f quality at the program level in MICs may require a fresh look.

Methodology as Source of Divergence

5.24 Some divergence between the results of evaluations of country programs and projects is expected since the evaluation methodologies have significant differences. These methodological differences that partly explain the divergence include:

Timeframe: project evaluations are based o n results at a point in time while the C A E covers a longer period. In several o f the CAEs reviewed, projects that were originally evaluated by IEG as satisfactory could not sustain the project outcomes over a longer time period.

0 Coverage: a C A E reviews the coherence o f al l aspects o f Bank work, including lending, AAA, country dialogue, and donor coordination; project evaluation has a much narrower coverage.

0 Omissions: there may be major gaps in the country assistance strategy and program resulting in an unsatisfactory C A E rating (see discussion above); in most cases, these omissions are beyond the control o f project management.

5.25 Nonetheless, the results-based CASs create the expectation of a narrowing of divergence between project and program outcomes. Two things need to happen for this to occur: (a) improvements in the CAS design; and (b) strengthening the project-sector-country outcome links. The CAS reforms over the past few years have been addressing the weaknesses o f the CAS design by introducing a results framework linking Bank and donor inputs to outcomes. Separately, there have also been initiatives to improve the results framework o f projects. The current challenge i s to harmonize the two initiatives by ensuring that results frameworks o f projects are linked to those o f CASs where outcomes are articulated at the thematic or sectoral level.


D. RECOMMENDATIONS

0 OPCS to review as part o f the CAS Retrospective the experience to date with results based CASs focusing on realism o f CAS objectives and quality o f program design, and the adequacy or effectiveness o f current instruments to track implementation o f CAS programs.

0 PSD, PSG, and RDV Sector Boards to address the divergence between sector and project outcomes.

0 Regions to review whether CPPRs are being utilized to monitor consistency between the portfolio and CAS objectives.

0 OPCS to define, as part o f the CAS Retrospective, the criteria for quality o f M I C programs.


Business Processes and Portfolio Reporting: There were 12 recommendations on improving processes and portfolio measurement and reporting. These included introducing several guidelines, reforming the PSR system, revising the Realism Index, and strengthening the review and quality assurance processes.

VI. RECOMMENDATIONS

Most o f the recommendations have been implemented. One recommendation - integrating RETF in portfolio - i s currently under implementation. Rating: Satisfactory

6.1 This chapter reviews the QAG recommendations during the past f ive years in the ARPPs to determine progress in implementing these recommendations. This chapter wil l identify the actions that are o f a longer term nature which wil l be monitored in future ARPPs.

Stafland Management Incentives and Capacities: There were 4 recommendations: address impediments to Sector Management in ensuring quality; address issues in staff and management incentives to improve candor in portfolio reporting; upgrading training; and improving support to management.

6.2 The FY02-06 ARPPs contain 44 recommendations, most of which have been implemented There were 26 recommendations o n strengthening lending and portfolio managements, ten recommendations to improve AAA, and eight recommendations relating to results. Table 6.1 gives the status o f these recommendations as wel l as performance ratings. As agreed with OPCS, the recommendations on results will be included in the upcoming Results Paper.

Some Regions have begun to address the issue o f impediments to sector management in ensuring quality. However, there i s lack o f systemic response to the issue o f candor in project performance reporting, wi th the Realism Index continuing to be below target. Rating: Moderately Unsatisfactory

Table 6.1: Status of FYO2-06 ARPP Recommendations

Other Quality Issues: There were 10 recommendations relating to other quality issues including those targeting certain groups such as Sector Boards and certain aspects such as adequacy o f resources.

Recommendations I Status

Most o f the recommendations have been implemented with satisfactory results. There are lagging areas, such as outcomes o f HNP and Fragile States projects. Rating: Moderately Satisfactory

There were 10 recommendations on improving AAA management. These include improving reporting, addressing delays in delivery, improving dialogue and dissemination and improving management oversight. Ha l f o f the recommendations have been implemented.

Several recommendations dealing wi th management oversight and dialogue and dissemination have not yet resulted in satisfactory outcomes based on the latest C- AAA Assessment. Rating: Moderately Unsatisfactory


Recommendation

Table 6.1: Status of FYO2-06 ARPP Recommendations (Cont'd)

Intermediate Actions Results

I Recommendations I Status I Improving the Results Framework

I

There were 8 recommendations on the results framework.

The follow-up to these recommendations will be reported in the upcoming OPCS Results Paper. Rating: Not Rated

Overall Rating for Follow-up to Previous ARPP Recommendations: Moderately Satisfactory

6.3 The recommendations from the FY07 ARPP and the uncompleted actions from previous A M P s are consolidated in Table 6.2 below. The pending actions addressing AAA issues are rolled into the FY07 ARPP recommendation o n AAA. QAG should provide Senior Management with an interim status o f these recommendations in July 2008, and report on actions taken and progress towards results in the FY08 ARPP.

AFR to sustain efforts to improve project outcomes, focusing on older projects and projects in Fragile States, HDN, PREM, and ESSD.

Regions to work with HNP, PSD, and PSG Sector Boards to address relatively low project outcomes focusing on improving project design at entry and restructuring problem projects in current portfolio.

OPCS and QAG to reform measurement and reporting o f project r i s k s by linking r isk assessments at entry to r isk management during implementation.

Lending and Portfolio Quality AFR with relevant Sector Boards to review current portfolio and address threats to satisfactory outcomes. Next QSA to report on progress in AFR with respect to targeted portfolio segments.

0

0 Sector Boards and Regions to agree on role o f Sector Boards in the quality assurance process at entry and to review current portfolio and address threats to satisfactory outcomes. Next QSA and QEA to report on performance o f HNP, PSD and PSG Sector Board projects.

0

'ortfolio Measurement and Monitoring OPCS and QAG to review and recommend changes to the current system o f project risk measurement and monitoring.

Narrowing o f performance gaps between AFR and rest o f the Bank with respect to outcomes o f projects in Fragile States, HDN, PREM, and ESSD. Specific targets and timetable to be determined by Management based on outcomes o f reviews and QSA. Improved outcomes for projects in the HNP, PSD, and PSG Sector Boards towards convergence with Bank-wide performance. Targets to be determined by Management based on outcomes o f reviews.

More accurate reporting o f portfolio risk starting FY09 to be tracked by QAG.

Annual Reoort on Portfolio Performance FY07 58

Recommendation Intermediate Actions Results

Regions to improve country program design and ensure that results frameworks o f projects and AAA are strongly linked to sector and CAS outcomes.

OPCS to review Regional efforts to address impediments to managerial effectiveness in quality enhancement and lack o f candor in reporting project performance.

Country Programs OPCS to complete the CAS Retrospective. OPCS to review as part o f the CAS Retrospective the adequacy o f current instruments that track implementation o f CAS programs. OPCS to defme, as part o f the CAS Retrospective, the criteria for quality o f M I C programs.

OPCS wi l l monitor the impact o f the new Realism Index to see whether any further action on portfolio monitoring was necessary.

Attainment o f 80 percent Realism Index by FY09.

Results w i l l be measured by improved IEG ratings o f country programs. OPCS to define indicators and instruments for tracking effectiveness o f implementation o f CAS programs.

OPCS to restructure AAA definitions, guidelines and systems to improve results orientation, results measurement, and governance arrangements. These initiatives would help address recurring issues o f lack o f adequate management oversight and weak dialogue and dissemination.

OPCS to review AAA definitions, guidelines and systems to improve monitoring, measurement, results orientation and governance arrangements to address recurring issues o f lack o f management oversight.

Next QAG AAA Assessment to determine whether progress has been made in addressing areas for improvement.


Annex 1

THE PORTFOLIO - AN OVERVIEW TABLE

Fiscal Year

lpening Balance IBRD IDA TF

pprovals in FY IBRD IDA TF

:ancellations in FY IBRD IDA TF

xits IBRD IDA TF

rrors in reconciliation b1

ORTFOLIO: end-year balance !ea/ c/

lpenlng Balance IBRD dl

IDA TF

pprovals in FY IBRD d'

IDA TF

xits IBRD dl

IDA TF

rrors in reconciliation

nd-Year Balance ''

FY02 FY03 FY04 FYO5 FY06 FY07 Net Commitments ($ M)

100,261 104,577 96,930 94,703 95,479 95,194 69,295 64,741 57,336 52,791 54,309 53,111 37,346 37,860 37,436 39,763 38,902 39,778 1,620 1,976 2,157 2,149 2,267 2,305

19,789 18,729 20,353 22,221 23,904 24,874 11,452 11,231 11,045 13,334 14,135 12,784 8,068 7,283 9,035 8,559 9,446 11,752 270 216 273 328 322 339

1,881 3,258 1,792 2,092 1,132 1,211 1,557 2,890 1,437 1,588 917 1,015 323 368 355 504 215 195 0 0 0 0 0 0

21,682 24,242 20,721 20,081 23,827 18,813 14,302 16,499 14,056 10,734 14,419 10,979 7,252 7,532 6,333 9,021 9,194 7,676 129 212 332 325 214 159

90 1,124 -67 727 769 31 3

104,577 96,930 94,703 95,479 95,194 100,357 124,050 106,957 97,758 98,559 96,717 100,357

Number of Projects 1,561 1,543 1,516 1,466 1,451 1,460 718 680 642 582 567 554 739 748 753 764 765 79 1 104 115 121 120 119 123

252 258 265 303 309 323 96 99 87 116 113 111 133 141 158 163 173 188 23 18 20 24 23 24

275 289 320 31 7 290 266 133 138 149 133 125 110 125 139 147 160 147 142 17 12 24 24 18 14

5 4 5 -1 -2 -40

1,543 1,516 1,466 1,451 1,468 1,485

Cancellations represent partial reduction in commitments but do not include commitments for projects that exit They therefore reduce commitment amounts but not the number o f projects in the portfolio.

errors between systems. Real term figures are based on Manufacturer Unit Value (MW) Index.

' End-year balance may not equal Opening balance plus approvals minus cancellations and exits due to synchronization

' The Number o f Projects in Business Warehouse for IBRD Source o f Funds includes Blend operations.


Annex 2

BASIC PORTFOLIO DEFINITIONS AND DATA SOURCES

PORTFOLIO DEFINITIONS

1. The portfolio covered by the FY07 ARPP includes al l IBRD, IDA, GEF, Montreal Protocol, and Special Financing operations approved through FY07, and excludes those that were completely cancelled and/or closed during the fiscal year. All dollar figures are in nominal terms unless otherwise stated. Manufacturer Unit Value (MUV) Index varied by 19 percent between FY02 and FY07. Terms used in reference to the portfolio include:

0 Portfolio. All loans approved through FY07 excluding those which were closed or completely cancelled prior to the end o f the fiscal year. The portfolio includes GEF, IBRD, IDA, Montreal Protocol, and Special Financing operations. The portfolio only includes operations that are active at the end o f the fiscal year;

0 Actual Problem Projects. Projects for which Implementation Progress i s rated unsatisfactory and/or the Development Objectives are rated as unsatisfactory;

0 Country Client Groupings. Countries are grouped according to the level o f their income, size, risk and performance for purposes o f portfolio trend analysis. IBRD Investment Grade Countries include countries that have high credit ratings. There are presently 27 countries in this group. The Fragile States country group includes 34 countries with l o w CPIA ratings. China and India, with populations over one b i l l ion each, are in individual categories because o f their size. The other three groups are core IBRD, core IDA, and Blend. They are categorized according to IDMIBRD eligibility criteria. Country groupings are mutually exclusive. Therefore, the core IBRD group excludes Investment Grade countries and China. The Blend group excludes India, and the core IDA group excludes Fragile States;

Commitments at Risk Commitments at risk o f not meeting their development objectives. T h i s includes commitments associated with both actual and potential problem projects;

0 Country Policy and Institutional Assessment (CPIA). The Country Policy and Institutional Assessment i s an annual exercise in which country teams provide input to OPCS in order to assess the quality o f each borrower's policies and institutions in the areas generally considered to be relevant to economic growth and poverty reduction and effective aid use;

0 Deflator. Where so indicated nominal net commitments have been converted to real terms by using Manufacturers Unit Value (MUV) Index Deflator converted to 2007


U S $ by using an index o f 0.84 for FY02, 0.91 for FY03, 0.97 for FY04, 0.97 for FY05, and 0.98 for FY06;

0 Development Objectives (DO). The rating o f an operation’s DO i s based on the likelihood o f attaining the development objectives set in the Project Appraisal Document or as formally revised during Implementation. This rating may be satisfactory or unsatisfactory and i s the responsibility o f the Task Team Leader, who must report on it, at least annually, in the Implementation Status and Results Report. The DO rating takes into account not only implementation progress, but also other factors such as inappropriate design, unforeseeable adverse economic and financial developments, price fluctuations o f project outputs, and changes in government policy;

0 Disbursement Ratio. The ratio o f disbursements during the fiscal year to the undisbursed balance at the beginning o f the fiscal year, investment operations only;

0 Implementation Progress (IP). The IP rating i s based on an overall judgment o f implementation performance in relation to the benchmarks in the Project Appraisal Document or as formally revised during implementation. The rating i s the responsibility o f the Task Team Leader, who reports i t generally at least once a year in the ISR;

0 Net Commitments. Total commitments net o f cancellations for al l projects in the portfolio;

0 Net Disconnect. The difference between the percentage o f projects rated as unsatisfactory by IEG and the percentage rated by the Regions in the final ISR as unsatisfactory for achieving their development objectives;

0 Potential Problem Projects. Projects which are rated satisfactory o n IP and DO but have other risk factors historically associated with unsatisfactory outcomes. The criteria to consider projects as potential problem projects are described below in the Section on “Measuring Portfolio Performance;”

Proactivity Index. The proportion o f projects rated as actual problem projects 12 months earlier that have been upgraded, restructured, suspended, closed, or partially (20% plus o f commitments) or fully canceled;

0 Projects-at-Risk. Projects at risk o f not meeting their development objectives. Projects at risk i s the sum o f actual problem projects and potential problem projects;

0 Quality-at-Entry Assessment (QEA). A periodic exercise conducted by QAG to measure the Quality-at-Entry o f projects shortly after they are approved by the Board. Quality-at-Entry i s a prime determinant o f successful development outcomes, and


deficiencies in design are difficult to correct during Implementation. The foundations o f a project are laid during Preparation, before it enters the portfolio. QEAS i s the most recent Quality-at-Entry exercise and covered al l projects approved by the Board in FY06-FY07;

Quality of Supervision Assessment (QSA). A periodic exercise conducted by QAG to measure the quality o f supervision for projects, during a specific period. The Quality o f Supervision Assessments are real time reviews o f overall supervision performance for the previous two years. The assessment focuses on the quality o f the supervision o f Bank projects and not on the quality o f the projects per se. The last QSA7 exercise, covered the end-FY07 portfolio; and

Realism Index The ratio o f the percentage o f Actual Problem Projects in the Portfolio and the percentage o f Unsatisfactory IEG Outcomes for the most recent project completions (1,000 evaluations), on a rol l ing basis.

MEASUFUNG PORTFOLIO PERFORMANCE

2. Experience shows that IP and DO ratings have tended to be over-optimistic when compared to the outcomes ratings that projects are given by IEG upon completion. To address this deficiency, the FY96 ARPP introduced the concept o f projects at r isk as the basic measure o f portfolio performance.

3. Projects at risk include both actual and potential problem projects. Potential problem projects are those that, although rated as satisfactory for both IP and DO, are affected by factors l ikely to bring about an eventual unsatisfactory outcome. These projects are identified by criteria (“flags”) that take into account not only various aspects o f actual implementation experience, but also other relevant factors such as economic management and past portfolio performance in the country. Specifically, potential problem projects are identified as projects exhibiting three or more o f the following twelve r i sk “flags” for investment projects:

Legal Covenants. Any o f the Critical Legal Covenants rated “Not Complied with” in the last ISR;

Safeguards. Ratings o f MU, U or HU on any Applicable Safeguard Policy in the last ISR;

Counterpart Funds. Counterpart Funding rated MU, U or HU in the last ISR (formerly the Financial Performance Flag);

0 Monitoring and Evaluation (M&E). Monitoring and Evaluation rated MU, U or HU in the last ISR;

0 Financial Management. Financial Management rated MU, U or HU in the last ISR;


0 Procurement. Procurement rated MU, U or HU in the last ISR;

0 Project Management. Project Management rated MU, U or HU in the last ISR;

0 Long-Term Risk Project with IP or DO rated MU, U or HU for any 24 months cumulative during the l i fe o f the project. This flag i s removed when the project has been rated MS, S, or H S for IP and DO for the previous 24 months;

Effectiveness Delay. Elapsed time between Board approval and effectiveness o f more than nine months for investment and more than three months for emergency operations. T h i s flag i s turned o f f three years after Board approval;

Disbursement Delay. Disbursement delay o f 24 months or more for investment and 6 months or more for emergency operations. Delay is calculated based on the init ial or formally revised disbursement schedule for the project;

0 Country Environment. Located in a country with weak economic management (CPIA rating o f less than 3.0 o n a scale o f 1 to 6). Once "flagged," the CPIA rating must exceed 3.5 for the flag to be removed. This flag also includes countries which are in a conflict or post-conflict environment; and

Country Record. Located in a country with a net disconnect o f 20 percent or more, or where net commitments associated with unsatisfactory projects (as rated by IEG) represent more than 40 percent o f commitments for completed projects over the previous five years. In cases where the sample o f IEG evaluations i s too small, ICR data, data on mature projects, and experience o f other donors i s used to arrive at a robust conclusion. T h i s flag also captures countries with less than Moderately Satisfactory Country Assistance Evaluation (CAE) ratings by IEG in previous f ive fiscal years.

4. projects with two or more o f the following seven flags (at least one project specific):

For Development Policy Lending operations, potential problem projects are identified as

0 Monitoring and Evaluation. Monitoring and Evaluation rated MU, U or HU in the last ISR;

0 Project Management. Project Management rated MU, U or HU in the last ISR;

Long-term Risk Project with IP or DO rated MU, U or HU for any 24 months cumulative during the l i fe o f the project. T h i s flag is removed when the project has been rated MS, S or, H S for IP and DO for the previous 24 months;


0 Effectiveness Delay. Elapsed time between Board approval and effectiveness o f more than six months for policy-based lending. This flag i s turned o f f three years after Board approval;

Disbursement Delay. Disbursement delay o f 6 months or more for policy-based lending. Delay i s calculated based on the initial or formally revised disbursement schedule for the project;

Country Environment. Located in a country with weak economic management (CPIA rating o f less than 3.0 o n a scale o f 1 to 6). Once “flagged”, the CPIA must exceed 3.5 for the flag to be removed. This flag also includes countries which are in a conflict or post-conflict environment; and

0 Country Record. Located in a country with a net disconnect o f 20 percent or more, or where net commitments associated with unsatisfactory projects (as rated by IEG) represent more than 40 percent o f commitments for completed projects over the previous five years. In cases where the sample o f IEG evaluations i s too small, I C R data, data on mature projects and experience o f other donors i s used to arrive at a robust conclusion. This flag also captures countries with less than Moderately Satisfactory C A E ratings by IEG in previous five fiscal years.

5. The at-risk ratings provide a better picture o f the current state o f the portfolio than IP/DO ratings taken in isolation, because they are more comprehensive and provide an early warning o f potential failures and their causes.

6. Golden Flag. The projects at risk concept, however, i s not perfect. I t has been noted that some operations that get flagged as “risky” are subsequently evaluated as Satisfactory because risks have been addressed, and others that are evaluated as unsatisfactory were not captured by the system. To correct for this, the Regions can override the at-risk rating with a thirteenth flag first introduced in FY97--the “Golden Flag.” In each o f the fiscal years FY02, FY03, FY04 and FY06, approximately one percent o f the portfolio had the golden flag. A Golden Flag for a project is turned o f f if the project becomes unsatisfactory for IP or DO, or the total number o f at risk flags for that project goes below three for investment and below two for policy-based lending operations. If the project subsequently gets three or more at-risk flags for investment and two or more for policy-based lending operations, a new request and justification for a Golden Flag i s required.

DATA SOURCES

7. Data for the ARPP Report and Statistical Tables are taken from the Bank’s Business Warehouse. The ISR ratings used in the ARPP were “frozen” by ISG as o f June 30, 2007. The IEG evaluation ratings from the Bank’s Business Warehouse are provided as o f January 22, 2008. Other data sources include the Loan Accounting System for data on disbursements and cancellations.


8. Blend operations include both IDA and IBRD. In the ARPP Statistical Tables, number o f projects, portfolio status indicators, IEG outcomes and net disconnect for blend operations are included under IBRD. Commitment amounts, however, are included under IDA and IBRD, respectively.

9. Budget (BB) and Trust Fund (TF).

All costs related to AAA in the ARPP Report and Statistical Tables include both Bank

10. l i s t o f Fragile States countries as o f July 30,2007 from Fragile States Web site.

Fragile States country category in the ARPP Report and Statistical Tables i s based on the

Portfolio classification

11. and lending instrument.44

The portfolio i s classified in the ARPP by region, networkhector board, sector, theme

12. only those projects that are rated by IEG.

The “Projects (No.)” column in the Statistical Appendix, Tables 3.11 to 3.18 includes

44 These classifications are assigned by Task Team Leaders during project preparation. While the classification by Regions is reliable, there are ambiguities and overlaps in the classification by sectors and lending instruments, e.g., projects which belong to the Urban Development sector board may be misclassified by the task team to other sector boards.

ANNUAL REPORT ON PORTFOLIO PERFORMANCE

Fiscal Year 2007

February 15,2008 (STATISTICAL APPENDIX)

QUALITY ASSURANCE GROUP

FY07 ARPP: STATISTICAL ANNEX Contents

PORTFOLIO SIZE AND COMPOSITION ...................................................................... 4 - 2 ~ Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 2.8 Table 2.9 Table 2.10 Approvals by Region Table 2.11 Table 2.12 Approvals by Instrument Table 2.13 Approvals by Theme Table 2.14 Approvals by Sector Table 2.15 Table 2.16 Table 2.17 Table 2.18 Table 2.19 Table 2.20 Table 2.21 Table 2.22 Table 2.23

Portfolio Distribution by Region Portfolio Distribution by RegionlCountry Portfolio Distribution by NetwoMSedor Board Portfolio Distribution by Instrument Portfolio Distribution by Source of Funds Portfolio Distribution by Theme Portfolio Distribution by Sector Portfolio Distribution by Country Category Grouping Portfolio Concentration by Country (FY07)

Approvals by NetworWSector Board

Approvals by Country Category Grouping Entries and Exits by Region Entries and Exits by Source of Funds Entries and Exits by NetworWSector Board Entries and Exits by Instrument Entries and Exits by Theme Entries and Exits by Sector Entries and Exits by Country Category Grouping Number of Overage Projects by RegionlNetwork

PORTFOLIO PERFORMANCE...............................................................................30-87 Table 3.1 Table 3.2 Table 3.3 Table 3.4 Table 3.5 Table 3.6 Table 3.7 Table 3.8 Table 3.9 Table 3.10 Table 3.11 Table 3.12 Table 3.13 Table 3.14 Table 3.15 Table 3.16 Table 3.17 Table 3.18 Table 3.19 (a) Table 3.19 (b) Table 3.20 Table 3.21 Table 3.22

Portfolio Status Indicators by Region Portfolio Status Indicators by NetwoMSector Board Portfolio Status Indicators by Sector Portfolio Status indicators by Theme Portfolio Status Indicators by Instrument Portfolio Status Indicators by Source of Funds Portfolio Status Indicators and IEG Outcomes by Region for IDA Projects Portfolio Status Indicators by Country Category Grouping Portfolio Risk Status Ordered by Country (FY07) Performance of Projects Exiting the Portfolio by Region Net Disconnect by RegionlCountry Net Disconnect by Instrument Net Disconnect by Source of Funds Net Disconnect by RegionlExit Year Net Disconnect by NetworklExit Year Net Disconnect by ThemdExit Year Net Disconnect by SectorlExit Year Net Disconnect by Country Category Grouping/Exit Year Changes in Outcomes Ratings between ICRR and PPAR by Exit Year (FY90-05) Summary of Changes in Outcomes Ratings between ICRR and PPAR Changes in Outcomes Ratings between ICRR and PPAR by Region (FY90-05) Changes in Outcomes Ratings between ICRR and PPAR by Network (FY90-05) Changes in Outcomes Ratings between ICRR and PPAR by Source of Funds (FY90-05)

PORTFOLIO PERFORMANCE (Cont'd)

Table 3.23 Table 3.24 Table 3.25 Table 3.28 Table 3.27 Table 3.28 Table 3.29 Table 3.30 Table 3.31 Table 3.32 Table 3.33 Table 3.34 Table 3.35 Table 3.36 Table 3.37 Table 3.38 Table 3.39

Net Changes in Outcomes Ratings between ICRR and PPAR by Elapsed Time between iCRR and PPAR (FY90-05) Net Change in Outcomes Ratings between ICRR and PPAR by ICR Quality Portfolio Risk Factors Portfolio Risk Factors by Region Disbursement Ratio by Region and Country Category Grouping Cancellations by RegionlCountry Cancellations by NetworWSector Board Quality at Entry by Region Quality at Entry by Network Quality at Entry by Country Category Grouping Quality at Entry by Source of Funds Quality at Entry by Giobal & Regional, Additional Financing and MultiSector Quality at Entry For Guarantees Quality of Global Programs and Partnerships Trends in Quality of AAA Quality of AAA by Region Quality of AAA by Network

AAA ........................................................................................................................... 68-83 Table 4.1 Table 4.2 Table 4.3 Table 4.4 Table 4.5 Table 4.8 Table 4.7 Table 4.8 Table 4.9 Table 4.10 Table 4.1 1 Table 4.12 Table 4.13 Table 4.14

AAA Deliveries and Costs by RegionlCountry AAA Deliveries and Costs by NetworWSector Board AAA Deliveries and Costs by Country Category Grouping AAA Deliveries (NO. OF TASKS) by Region and NetworWSector Board, FY03-07 AAA Deliveries (US$ '000) by Region and NetworWSector Board, FY03-07 AAA Concentration: Top Ten Countries by Number of Deliveries, FY03-07 AAA Concentration: Top Ten Countries by Cost of Deliveries, FY03-07 AAA Deliveries and Costs by Output Type ESW Deliveries and Costs by Report Type AAA Size Variations by Cost RangdMajor Output Type Timeliness of AAA Reports by Region and by NetworklSector Timeliness of AAA Deliveries by Output Type Country AAA Intensity by RegionlBorrower AAA Products by Major Sector and Theme

m co 0 *-

TABLE 2.2: PORTFOLIO DISTRIBUTION BY REGlONlCOUNTRY

Projects (No.) Net Commitments (US$ M illion) FY02 FY06 FY07 FY02 FY06 FY07 RegionlCountry

AFR Africa 4 20 28 Anaola 2 5 6

20 1019 1770 38 176 278

I

Benin 9 8 9 Burkina Faso 10 16 15 Burundi 6 7 8 Cameroon w Cape Verde 8 5 4 Central African Republic 3 0 3 Chad 8 7 7 Comoros 6 1 1 - - - _ _ Congo, Democratic Republic of 2 8 10 Congo, Republic of 3 6 5 Cote d'lvoire 12 0 0 E ritrea 8 7 6 Ethiooia 19 22 21 Gabon 2 2 2 Gambia, The 6 5 4 Ghana 22 17 15 Guinea 7 9 9 Guinea-Bissau 4 5 5 Kenya 13 13 16 Lesotho 8 7 8 Liberia 0 1 6 Madagascar 18 13 17 Malawi 10 10 11 Mali 14 13 14 Mauritania 13 9 10 Mauritius 3 1 0 Mozambique 16 18 15 Namibia 0 2 3 Niger 9 9 9 Nigeria 9 20 24 Rwanda 8 11 11

Senegal 21 15 17 Sierra Leone 7 8 9 South Africa 2 4 5 Swaziland I 0 0 Tanzania 22 26 23 Toao 4 0 0

Sao Tome and Principe 2 2 2

I-

Uganda 23 21 18 Western Africa 1 0 0 Zambia 12 9 9

155 233 290 344 61 1 54 1 116 272 31 7 434 260 264 98 68 55 45 0 117 244 273 166 45 13 18 500 1407 1737 52 157 122

758 0 0 337 254 214 1712 2017 1995 15 42 50 99 73 51

1225 1096 825 21 I 192 201 77 72 72 712 599 906 132 119 114 0 30 77

796 882 1016 294 317 372 546 547 667 _ . ..

294 277 295 18 12 0

953 873 763 0 12 20

300 299 30 I 682 1843 2592 186 295 307 10 12 12 _ -

855 64 1 742 185 202 245 37 37 43 29 0 0

1243 1912 1904 107 0 0 890 1134 1313 9 0 0

463 291 324 Zimbabwe 1 0 0 65 0 0 Sub Total 367 371 393 15,331 18,569 21,093

5 Of 83


Projects (No.) Net Commitments (US$ Milli on) FY02 FY06 FY07 FY02 FY06 FY07 RegionlCountry

EAP Cambodia China East Asia and Pacific Indonesia Kiribati Korea. Keoubllc at Lao People's Democratic Republic Malaysia Mongolia Pacific Islands Papua New Guinea Philippines

Solomon Islands Thailand Timor-Leste Tonga Vanuatu Vietnam Sub Total

14 12 11 30 I 265 235 101 79 74 16108 10724 9908 I 4 4 11 37 37

47 26 26 3572 2344 2786 n A ,-. A

U 4 L - YS 0 0 12 13 13 249 178 170 2 1 I 264 25 25 9 12 14 158 163 203 0 0 1 0 0 9 6 3 2 107 72 103

21 23 23 1303 1435 1281 2 4 3 I 9 27 30 I I 0 4 4 0

11 2 2 850 129 129 10 7 8 75 54 41

ECA Albania 25 17 18 342 26 I 272 Aral Sea 1 0 0 12 0 0 Armenia 17 18 17 307 275 287 Azerbaijan 15 18 16 368 578 773 Belarus 1 2 2 23 73 73 Bosnia and Herzegovina 19 17 16 364 345 30 1 Bulgaria 9 7 9 246 223 418 Central Asia 1 1 I 10 25 25 Croatia 12 15 18 523 592 1109 Estonia I 0 0 25 0 0 Europe and Central Asia I 1 I 4 6 5 Georgia 18 19 19 339 303 320 Hungary 1 2 2 32 46 44 Kazakhstan 9 10 10 542 653 568 Kosovo 9 7 6 47 33 39 Kyrgyz Republic 14 17 20 255 232 268 Latvia 7 1 0 84 2 0 Lithuania 8 4 2 155 88 42 Macedonia, former Yugoslav Republic of 13 10 12 238 122 182 Moldova 8 15 15 118 181 180

Poland 12 10 8 1097 1184 767 Romania 22 22 21 1093 1486 1760 Russian Federation 30 22 20 2577 1951 1771 Serbia 8 19 10 130 293 398 Slovak Republic 2 6 3 201 92 23 Slovenia 2 0 0 25 0 0 Tajikistan 10 14 14 151 169 179 Turkey 20 24 24 591 3 6057 5675 Turkmenistan 2 0 0 45 0 0 Ukraine 10 12 I 1 467 1009 924 Uzbekistan 8 5 6 287 237 252 Sub Total 315 315 306 16,021 16,514 16,687

Montenegro - 0 0 34

6 of 83

TABLE 2.2: PORTFOLIO 1 DISTRIBUTION BY REGlONlCOUNTRY

RegionlCountry LCR

Argentina Barbados Belize Bolivia Bra7il Caribbean Central America Chile Colombia Costa Rica Dominica Dominican Republic Ecuador El Salvador Grenada Guatemala Guyana Haiti Honduras Jamaica Latin America Mexico Nicaragua OECS Countries Panama Paraguay Peru St. Kitts and Nevis

St. Vincent and the Grenadines Trinidad and Tobago Uruguay Venezuela, Republica Bolivariana de Sub Total

MNA Algeria Djibouti tgypt, Arab Kepublic of Iran, Islamic Kepublic of Iraq Jordan Lebanon Morocco Red Sea and Gulf of Aden

West Bank and Gaza Yemen. ReDublic of Sub Total

Prolects (No.) Net Commitments (US$ M illionl FY02 FY06 FY07 FY02 FY06 FY07

38 29 29 6,280 3,492 3,927 I 1 1 0 1 5 1.5 2 0 0

18 6 5 58 53 52 0 2 3 1 4 3 6 9 8

24 20 20 5 4 3 2 0 1

10 8 7 13 9 9 7 8 4 2 4 4

14 12 9 3 4 3 - . - 0 5 10

12 18 16 3 5 5 1 3 3

28 23 22 16 13 11 2 2 3

11 3 4 5 6 4 - - 9 17 19 3 2 2 5 5 6 2 2 2 2 2 1 8 8 10

10 2 1 321 289 280

21 0 0 659 266 190

6,225 4,490 4,386 n l A

345 304 292 405 299 31 0 419 448 19.5

9 13 13 62 31 20 382 359 375 368 35 17

24,652 16,628 16,875

13 7 3 699 84 45 6 6 6 71 70 72

18 16 15 1,012 1,795 1,322 2 9 9 232 1,355 1,355 0 2 4 0 235 399 9 8 9 260 278 270

13 6 9 518 297 333 19 13 14 606 824 801 1 0 6 0 0

19 17 17 1,109 854 695 18 8 11 238 83 113 19 18 19 606 748 712 ...

137 110 116 5,356 6,621 6,118

7 Of 83


Projects (No.) Net Commitments (US$ Mill ion) FY02 FY06 FY07 FY02 FY06 FY07 RegionlCountty

SAR

OTH 1 3 1 25 32 3 Sub Total 1 3 1 25 32 3

Total 1,543 1,468 1,485 104,577 95,194 100,357

a of a3

m co L

2

c

4

TABLE 2.5: PORTFOLIO DISTRIBUTION BY SOURCE OF FUNDS

Projects (No.) Net Commitments (US$ Billion) Source Of Funds FY02 FY06 FY07 FY02 FY06 FY07 IBRD 680 554 544 64.7 53.1 54.0 IDA 748 791 803 37.9 39.8 43.8 GEF 55 91 100 0.8 1.2 1.4 MONT 18 17 15 0.8 0.9 0.9 SPF 42 15 23 0.4 0.1 0.2 Total 1,543 1,468 1,485 104.6 95.2 100.4

GEF Global Environment Facility MONT Montreal Protocol SPF Special Fund

TABLE 2.6: PORTFOLIO DISTRIBUTION BY THEME

Net Commitments (US$ Milllon) FY02 FY06 FY07

Projects (No.) FY02 FY06 FY07 Theme

Economlc management Macroeconomic management 6 3 2 Sub Total 22 16 12

Environment and natural resources management Environmental policies and institutions 49 41 42 Pollution management and environmental health 68 59 63 Water resource management 42 39 41 Sub Total 237 227 232

Financial and private sector development Infrastructure services for private sector development 64 71 78

Regulation and competition policy 51 45 44 State enterprise/bank restructuring and privatization 46 27 22

Other financial and private sector development 56 34 31

Sub Total 253 210 209

Human development Education for all 43 46 46

Sub Total 181 218 219 Health system performance 36 38 37

Public sector governance Administrative and civil service reform 34 46 53 Decentralization 38 36 32 Sub Total 128 151 159

Rule of law

Rural development Rural services and infrastructure 122 115 114 Sub Total 198 192 197

Soclal developmentlgender/lncluslon Participation and civic engagement 94 78 73 Sub Total 166 135 129

Social protection and risk management Improving labor markets 32 20 I 9 Sub Total 97 07 88

Trade and integration Export development and competitiveness 22 17 17 Sub Total 55 60 65

Urban development Access to urban services and housing ' 58 54 58 Municipal governance and institution building 35 27 27 Other urban development 44 35 40 Sub Total 147 124 133

Total 1.m 1.m l.AE5

780 21 1 46 1,810 768 567

2 321 1535 1 783 _,__ ,___ ~ - - 5,360 4,015 4,314 3,360 2,545 3,038 15,419 11,428 12,177

4,717 6,959 8,071 4,748 2,207 1,812 4,642 3,199 2,686 3,851 2,075 1,982

20,329 16,878 17,015

3,151 2,749 2,476 2,680 1,985 1,925 11,022 12,598 13,396

1,994 2,541 2,967 2,680 2,197 1,993 9,249 8,194 8,967

712 685 251 1,877 1,948 1,580

9,810 8,608 8,957 14,454 13,010 14,232

4,139 3,991 3,977 8,249 7,656 7,616

1,939 1,374 1,424 6,284 6,795 6,867

943 1,359 1,450 2,914 4,799 5,616

A 5?d A 5n7 5 167 3 M R 2 483 2.364 4,230 3,547 4,274 12,971 11,121 12,324

Notes: 1. This table shows subthemes where the no. of projects or commitments exceeds 2.5% of the portfolio, or the largest sub-theme

if no sub-theme exceeds 2.5%. 2. The number of projects or commitments in a theme is the sum of the individual fractional parts attributed to each theme within a project.

12 of 83

TABLE 2.7 PORTFOLIO DISTRIBUTION BY SECTOR

Projects (No.) Commltments (US$ Million) FY02 FY06 FY07 FY02 FY06 FY07 Sector

Agrlculture, fishing, and forestry General agnculture. fishing and forestry sector Irrigation and drainage

45 60 59 42 44 45 151 167 166

46 44 41 152 133 127

68 73 70 Ill 126 125

2,830 2,210 2,232 3,663 3,630 4,147 9,673 8,845 9,386 Sub Total

Educatlon Primary education Sub Total

Energy and mining Power

3,401 3,061 2,652 9,283 8,222 7,875

9,465 6,924 6,573 12,380 10,080 9,509 Sub Total

Finance Banking 22 21 20

72 69 80 3,347 1,567 1,725 8,536 4,374 4,462

Health and other social services Health Other social services Sub Total

,420 6,128

Industry and trade General industry and trade sector Sub Tatal

34 18 19 91 67 69

1,911 1,150 1,240 5,815 4,870 4,803

lnformatlon and co--llni-+i-- Telecomr Sub Tota

lnformatlon and communications Telecommunications Sub Total

64 1 257 31 1 822 493 502

13 12 11 19 22 19

Public Administratlon, Law, and Justice Central government administration 270 232 237

ti8 73 A 2 11,031 8,377 8,532 3,450 4,554 5,372 17,060 16,354 17,334

Sub-national government administration Sub Total

Transportation General transportation sector Roads and highways Sub Total

-- . - -- 386 369 386

2.099 2.5IA 3.010 21 22 24 129 119 126 180 163 175

_._ - _.___ -.- 15,140 15,276 16,769 19,683 20,175 22,584

Water, sanltation and flood protection Sewerage Water supply Sub Tatal

28 26 31 61 60 64 153 146 165

2,463 2,683 3,110 3,427 3,857 4,376 10,029 10,307 12,377

_(Hirtoric)Environment (Historic)Other environment Sub Total

1 n n " ,l /l L U v 2 0 0 1 0 0

. -.... 1,543 1,468 1,485 104,577 95,194 100,357

Notes: 1. This table shows sub-sectors where the no. of projects or commitments exceeds 2.5% of the portfolio, or the largest sub-sector

exceeds 2.5%. 2. The number of projects or commitments in a sector is the sum of the individual fractional parts attributed to each sector within a project.

13 of 83

TABLE 2.8: PORTFOLIO DISTRIBUTION BY COUNTRY CATEGORY GROUPING

Country Category Grouping Total Projects (No.) FY02 FY06 FY07

IBRD Investment Grade 216 1 a2 171 China 101 79 74

India 69 56 67 Blend 155 133 124

IBRD Only (Others) 356 307 308

IDA Only 456 492 493 Licus 175 179 200 Multi-Country 15 40 48

Total 1,543 I ,468 1,485

Commltments (US$ Billion) IBRD Investment Grade 15.4 11.6 11.0 China 16.1 10.7 9.9 IBRD Only (Others) 28.2 24.8 25.0 India 13.0 11.3 14.3 Blend 6.7 6.0 6.9 IDA Only 20.0 22.5 22.8 Licus 5.1 7.1 8.6 Multi-Country 0.1 1.2 1.9

Total 104.6 95.2 100.4

TABLE 2.9: PORTFOLIO CONCENTRATION BY COUNTRY (FY07)

Arranged by Countries with Largest Number of Projects

Commitments Cummuiatlve Country Projects Yo of Total Projects

China 74 9,908 5 India 67 14.267 9 _ _ -_ Brazil 52 4,386 13 Vietnam 3a 3,957 16 Argentina 29 3,927 18 Africa 28 1,770 19 Indonesia 26 2,786 21 Bangladesh 24 1,975 23 Nigena 24 2,592 24 Turkey 24 5,675 26 Philippines 23 1,281 28 Tanzania 23 1,904 29 Mexico 22 2,322 31 Afghanistan 21 1,014 32 Ethiopia 21 1,995 33 Romania 21 1,760 35 Colombia 20 1,935 36

Kyrgyz Republic 20 268 38 Pakistan 20 2,047 39 Russian Federation 20 1.771 40 Georgia 19 320 41 Peru 19 909 43 Yemen, Republic of 19 712 44 Albania i a 272 45 Croatia l a 1,109 46 Uganda 18 1,313 48 Armenia 17 287 49 Madagascar 17 1,016 50 Senegal 17 742 51 Tunisia 17 695 52 Azerbaijan 16 773 53 Bosnia and Herzegovina 16 30 1 54 Honduras 16 l i f i l 55 Kenya 16 906 57 Riirkina Facn I 5 5 A I 5 A

~ ~~ ~

Egypt, Arab Republic of 15 1,322 59 Ghana 15 825 60 Moldova 15 180 61 Mozambique 15 763 62 Morocco 14 a0 1 63 Mali 14 667 64 Mongolia 14 203 64 Tajikistan 14 179 65 Lao People's Democratic Republic 13 170 66 Sri Lanka 13 786 67 Nepal 13 470 68 Macedonia, former Yugoslav Republic of 12 1 a2 69 West Bank and Gaza 11 113 70 - - - - _ - - _-_ Cambodia 11 235 70 -Malawi 11 372 71 Nicaragua 11 215 72 Rwanda I 1 307 73 Ukraine 11 924 73 Haiti 10 138 74 Kazakhstan 10 568 75 Mauritania 10 295 75 Uruouav 10 375 76 _ . - - - - - I

Serbia 10 398 77 Republic of 10 1,737 77 Bulgaria 9 418 78 Benin 9 290 79

Arranged by Countries with Largest Commltments Cummulative

Yo of Projects Commitments Country (US$ Million) commitments

India 67 14,267 14 China 74 9.908 24 . ... .- . . ..... ~

Turkey 24 5,675 30 Brazil 52 4,386 34 Vietnam 38 3,957 38 Argentina 29 3,927 42 Indonesia 26 2,786 45 Nigeria 24 2,592 47 Mexico 22 2,322 50 Pakistan 20 2,047 52 Ethiopia 21 1,995 54 Bangladesh 24 1,975 56 Colombia 20 1,935 58 Tanzania 23 1,904 59 Russian Federation 20 1,771 61 Africa 28 1,770 63 Romania 21 1,760 65 Congo, Democratic Reoublic of 10 1.737 66 .. _r-_ _ _ . - Iran. Islamic Republic of 9 1,355 68 Egypt, Arab Republic of 15 1,322 69 Uganda 18 1,313 70 Philippines 23 1,281 72 Croatia 18 1.109 73 . - - - _ _ - Madagascar 17 1,016 74 Afghanistan 21 1,014 75 Ukraine 11 924 76 PeN 19 909 77 Kenva 16 906 78 - - _ _ _ Ghana 15 825 78

14 80 1 79 Morocco Sri Lanka 13 786 80 Azerbaijan 16 773 81 Poland ?. 767 82 - - - _- Mozambique 15 763 a2 Senegal 17 742 83 YemeyRepublic of ~ 19 712 a4 Tunisia 17 695 84 - - - _ _ _ Mali 14 667 a5 Kazakhstan 10 568 86 Burkina Faso 15 54 1 86 Nepal 13 470 87 Bulgaria 9 418 87 Iraq 4 399 a7

Serbia 10 398 88 _. _ - ... ..

Guatemala 9 385 aa Uruguay 10 375 89

Malawi 11 372 89 Honduras 16 36 1 89 - _- -_ _. ..

Lebanon 9 335 90 Zambia 9 324 90 Georgia 19 320 90 Burundi 8 317 91 Ecuador 9 310 91 Rwanda 11 307 91 - -- _ _ Bosnia and Herzegovina 16 30 1 92 Niger 9 30 1 92 Mauntania 10 295 92 Dominican Republic 7 292 92 Benin 9 290 93 Armenia 17 287 93 Angola 6 278 93

15 of 83

TABLE 2.9: PORTFOLIO CONCENTRATION BY COUNTRY (FYO7)

Arranged by Countrles wlth Largest Number of Projects Arranged by Countries with Largest Commitments Cummulatlve Commitments % of Total Country Projects W S Million) Pro,ects

Ecuador 9 310 79 Guinea 9 201 80 Guatemala 9 385 80 Iran. Islamic Republic of 9 1,355 81 Jordan 9 270 82 Lebanon 9 335 82 Nioer 9 301 a3 _ _ "- Sierra Leone 9 245 83 Zambia 9 324 84 Burundi 8 31 7 85 Chile 8 215 85 Cameroon 8 264 86 Lesotho 8 114 86 Poland 8 767 87

Timor-Leste 8 41 87 Dominican Republic 7 292 88 Chad 7 166 88

Angola 6 278 89 Bhutan 6 69 89 Djibouti 6 72 89 Eritrea 6 214 90 St Lucia 6 42 90 - _ _ _ - - _ _ Liberia 6 77 91 Uzbekistan 6 252 91 Kosovo 6 39 91 Bolivia 5 190 92 Congo, Republic of 5 122 92 Guinea-Bissau 5 72 92 Jamaica 5 107 93 South Africa 5 43 93 'Montenegro 5 34 93 East Asia and Pacific 4 37 94 Cape Verde 4 55 94 Grenada 4 28 94 Gambia, The 4 51 94 8 Ira 399 95 Panama 4 145 95 Paraguay 4 129 95 El Salvador 4 195 96 Central America 3 24 96 Latin America 3 24 96 OECS Countries 3 21 96 Caribbean 3 16 96 Central African Republic 3 117 97 Costa Rica 3 84 97 Aloeria 3 45 97 "- - Guyana 3 26 97 Namibia 3 20 97 Slovak Republic 3 23 98 Samoa 3 30 98 Belarus 2 73 98 - -. -. - - - . - _ _ Gabon 2 50 98 Hungary 2 44 98 St. Kitts and Nevis 2 9 98 Lithuania 2 42 98 'Maldives 2 25 99 Papua New Guinea 2 103 99 Sao Tome and Principe 2 12 99 Thailand 2 129 99 Tonga 2 12 99 St. Vincent and the 2 13 99 World 1 3 99 Pacific islands 1 9 99

Cummulatlve % of Projects Commitments Country

(USS Miliion) commitments Albania 18 272 0 Jordan 9 270 94 Kyrgyz Republic 20 268 94 Cameroon 8 264 94 Uzbekistan 6 252 95 Sierra Leone 9 245 95 Cambodia 11 235 95 Chile 8 215 95 Nicaragua 11 215 96 Eritrea 6 214 96 Mongolia 14 203 96 Guinea 9 201 96 El Salvador 4 195 96 Rnlivia 5 i qn 97 Macedonia, former

Moldova 15 180 97

Lao People's Democratic

Yugoslav Republic of 12 182 97

Tajikistan 14 179 97

Republic 13 170 97 Chad 7 166 97 Panama 4 145 98 Haiti 10 138 98 Thailand 2 129 98 Paraguay 4 129 98 Congo, Republic of 5 122 98 Central African Republic 3 117 98 Lesotho 8 114 98 West Bank and Gaza 11 113 98 Jamaica 5 107 99 Papua New Guinea 2 103 99 Costa Rica 3 84 99 -Liberia 6 77 99 Belarus 2 73 99 Diihoiiti 6 72 99 - ._

Guinea-Bissau 5 72 99 Bhutan 6 69 99 Cape Verde 4 55 99 Gambia, The 4 51 99 Oabnn 7 Fin 99 Algeria 3 45 99 Hungary 2 44 99 South Africa 5 43 99 _ _ _ ._

Lithuania 2 42 99 St Lucia 6 42 99 Timor-Leste 8 41 99 Kosovo 6 39 100 East Asia and Pacific 4 37 100 Montenegro 5 34 100 Samoa 3 30 100 Grenada 4 28 100 Guyana 3 26 100 Maldives 2 25 100 Central Asia 1 25 100 Malaysia 1 25 100 Central America 3 24 100 Latin America 3 24 100 -Slovak Republic 3 23 100 OECS Countries 3 21 100 Trinidad and Tobago 1 20 100 Namibia 3 20 100 Comoros 1 18 100 'Venezuela. Republica 1 17 100 Caribbean 3 16 100 Barbados 1 15 100

16 of 83

TABLE 2.9: PORTFOLIO CONCENTRATION BY COUNTRY (FYO7)

Arranged by Countries with Largest Number of Projects Arranged by Countries with Largest Commltments

Commitments Cummulative Country Projects (US$ Mllllon) ;:i 2;'

Central Asia 1 25 99 Europe and Central Asia 1 5 100 Barbados 1 15 I00 Dominica I 1 inn - _ _ _ -- Kiribati I 2 I00 Comoros I 18 100 Malaysia 1 25 100 Trinidad and Tobago 1 20 100 Bolivariana de I 17 1 nn

Cummulatlve % of

M1lllon) Commitments

Projects Commltments Country

St. Vincent and the Grenadines 2 13 I00 Tonga 2 12 100 Sao Tome and Principe 2 12 100 Pacific Islands I 9 I00 _ _ - - _ _ _ ._

St Kitts and Nevis 2 9 100 Europe and Central Asia I 5 100 World 1 3 I00 Kiribati I 2 I00 Dnminira 1 1 100

Latvia 0 0 100 Latvia 0 0 100 Total 1,485 100,357 100 Total 1,485 100,357 100

17 of 83

TABLE 2.10: APPROVALS BY REGION

Region

AFR EAP FCA LCR MNA SAR OTH Total

TABLE 2.11: APPROVALS BY NETWORKSECTOR BOARD

NetworWSector Board

FPD

Projects (No.) FY03 FY04 FY05 FY06 FY07

FSE Financial Sector FSE Total

10 9 14 11 6 10 9 l A 11 6

PSD Private Sector Development PSD Total

FPD Total

Education Health, Nutrition and Population Social Protection HDN Total

Financial Management OPCS Total

SDV ESSD

Environment Rural Sector Social Development ESSD Total

Energy and Mining Global InformationlCommunications

INF

Transport Urban Development Water Supply and Sanitation INF Total

SDV Total

12 11 12 10 9 12 I 1 12 10 9 22 20 26 21 15

1,214 1,279 1,195 1,734 1,112 1,214 1,279 1,195 1,734 1,112

486 1,227 606 1,441 797 486 1,227 606 1,441 797

1,700 2,506 1,802 3,175 1,909

26 21 27 25 28 30 25 23 23 20 13 22 17 10 14 69 68 67 58 62

2,158 1,534 1,288 1,810 2,032

I 3413 I min 7 114 mi 807 1,193 1,761 1,011 1,015 1,918 . , - . - . , - - - - , . . . - - . 4,699 4,955 4,414 3,816 4,756

0 0 0 0 1 0 0 0 0 1

0 0 0 0 33 n n n n I

13 11 20 23 25 5 7 52 8 1R - .- 29 25 22 25 17 47 43 51 56 58

1,185 1,760 1,495 2,894 1,923 451 546 745 488 1,601

2,299 1,446 1,118 1,368 686 3,935 3,752 3,358 4,749 4,210

20 19 29 28 25

2 1 3 2 2 17 31 17 26 43 16 9 24 18 20 10 14 21 11 29 65 74 94 85 119 120 134 159 174 187

477 319 954 825 419 1,930 2,009 2,679 2,752 3,101 470 219 483 192 278

2,877 2,547 4,116 3,768 3,799

808 1,055 1,636 2,788 1,405

Total 258 265 303 309 323 18,729 20,353 22,221 23,904 24,874

Page 18 of 83

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Region

AFR EAP ECA LCR MNA SAR OTH Total

Region

AFR EAP ECA LCR MNA SAR OTH Total

Projects Approved (No.) FY05 FY06 FY07

Projects Exiting (No.) FYOS FY06 FY07

Approvals - Exits (No.) FY05-07

80 84 98 40 43 39 67 fir; fi3

61 70 59 19 16 22 36 30 43 0 I 0

303 309 323

Projects Approved (US$ Million) FYO5 FY06 FY07 3,849 4,838 5,745 2,926 3,462 4,085 4,071 4,071 3,781 5,002 6,024 4,629 1,339 1,701 997 5,033 3,805 5,637

0 3 0 22,221 23,904 24,074

79 62 58 47 42 41 74 A7 fiA 8 7 7. "7

57 83 61 31 15 17 29 41 24 0 0 1

31 7 290 266

Projects Exiting (US$ Million) FY05 FY06 FY07 3,999 3,158 3,197

0 0 25 20,081 23,027 18,013

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A n7R .,-.- -I P7R . ,_. - 2,873 -1,101 1,236 3,192 -22

0,279

TABLE2.17: ENTRIES AND EXITS BY SOURCE OF FUNDS

Source Projects Approved (No.) Projects Exitlng (No.) Approvals - Exits (No.) ofFunds FY05 FY06 FY07 FY05 FY06 FY07 FY05-07 IBRD 116 113 Ill I RR 175 i i n -28 - _ . -- -- -- IDA 163 173 188 160 147 142 75 TF 24 23 24 24 18 14 15 Total 303 309 323 31 7 290 266 62

Source Projects Approved (US$ Million) Projects Exltlng (US$ Mlllion) Approvals - Exits (US$ Million) ofFunds FYO5 FY06 FY07 FY05 FY06 FY07 FY05-07 IBRD 13,334 14,135 12,784 10,734 14,419 10,979 4,121 IDA 8,559 9,446 I 1,752 9,021 9,194 7,676 3,867 TF 328 322 339 325 214 159 291 Total 22,221 23,904 24,874 20,081 23,027 18,813 8,279

23 of 83

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TABLE 3.1: PORTFOLIO STATUS INDICATORS BY REGION

Active Projects (No.) FY02 FY06 FY07

AFR 367 37 1 393 EAP 267 229 223 ECA 31 5 315 306 LCR 321 289 280 MNA 137 110 116 SAR 135 151 166

Region

OTH 1 3 1 Total 1,543 1,468 1,485

Actual Problem Projects (No.) FY02 FY06 FY07 Region

AFR 58 56 49 EAP 23 13 20

15.3 18.6 21.1 25.9 19.5 18.9 16.0 16.5 16.7 ..

24.7 16.6 16.9 5.4 6.6 6.1 17.3 17.4 20.7 0.0 0.0 0.0

104.6 95.2 100.4

Potential Problem Projects (No.) FYOZ FY06 FY07

35 22 34 12 1 4 - _ -.

ECA 32 28 25 29 3 2 LCR 28 38 39 27 9 22 MNA 19 10 19 12 0 5 SAR 11 15 20 OTH 0 0 0 Total 171 160 172

Projects at Risk (No.) FY02 FY06 FY07 Region

AFR 93 78 83 EAP 35 14 24 - _ -

ECA 61 31 27 LCR 55 47 61 MNA 31 10 24 ~

SAR 14 19 24 OTH n 0 0 Total 289 199 243

%at Risk FY02 FY06 FY07 Region

AFR 25 21 21 - _ - - EAP 13 6 11 ECA 19 10 9 LCR 17 16 22

3 4 4 0 0 0

118 39 71

Commitments at Risk (US$ Billion) FYOZ FY06 FY07 4.1 3.3 3.9 2.3 0.8 1.6 3.4 1.2 1.7 4.9 2.6 3.6 1.3 0.3 1.1 1.5 2.9 3.4 0.0 0.0 0.0 17.5 11.0 15.4

% Commitments at Risk FY02 FY06 FY07

27 18 I 9 -

9 4 9 21 7 10 20 16 21 --

MNA 23 9 21 24 4 19 SAR 10 13 14 9 16 16 OTH 0 0 0 0 0 0 Total 19 14 16

YO Realism FY02 FY06 FY07 Region

AFR 38 52 40 EAP 43 26 57 ECA 57 58 48 LCR 39 70 90 MNA 57 33 62 SAR 32 44 64

17 12 15

YO Proactivity FY02 FY06 FY07

78 80 80 95 83 69 83 89 82 86 82 84 81 75 78 93 76 67

OTH NA NA NA Total 41 49 56 - . -. . -

NA NA NA Ad a i 79

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TABLE 3.5: PORTFOLIO STATUS INDICATORS BY INSTRUMENT

instrument % Projects at Risk %Commitments at Risk % Realism % Proactivity

Dev. Policy DPL PRC PSL SAD SAL Sub Total

investment APL ERL FIL LIL SIL SIM TAL Sub Total

FYOZ FY06 FY07 FYOZ FY06 FY07 FY02 FY06 FY07 FYOZ FY06 FY07

0 10 13 0 4 23 NA NA NA NA NA 100 0 NA 0 0 NA 0 NA NA NA NA NA NA 0 50 0 0 55 0 NA NA NA NA 100 100 20 20 0 10 19 0 100 NA NA 100 100 100 32 29 0 29 5 0 97 NA NA 33 100 100 26 i a i o 19 12 i a 100 100 31 67 100 100

22 11 19 21 9 16 NA 56 67 71 79 89 23 22 35 15 21 44 100 I00 100 100 67 50 14 6 5 13 8 4 16 NA NA 100 100 100

NA 80 NA 86 100 83 21 32 13 23 29 15 17 13 15 16 11 13 36 42 54 84 79 77 21 13 23 22 15 32 55 32 70 100 100 75 20 16 18 20 14 18 52 56 45 75 73 78 i a 13 17 16 11 15 3a 45 55 a5 a0 7a

Total 19 14 16 17 12 15 41 49 56 a4 a i 79

Investment Dev. Policy APL Adaptable Program Loan DPL Development Policy Lending ERL Emergency Recovery Loan ECO Expanded Cofinancing Operation FIL Financial Intermediary Loan PRC Poverty Reduction Support Credit LiL Learning and Innovation Loan PSL Programmatic Structural Adjustment Loan SIL Specific Investment Loan SAD Sector Adjustment SiM Sectoral investment and Maintenance SAL Structural Adjustment Lending TAL Technical Assistance Loan

TABLE 3.6 PORTFOLIO STATUS INDICATORS BY SOURCE OF FUNDS

Source of % Projects at Risk % Commitments at Risk % Realism % Proactivlty Funds FY02 FY06 FY07 FYOZ FY06 FY07 FY02 FY06 FY07 FY02 FY06 FY07

85 83 84 IBRD 19 12 16 16 9 15 48 53 75 IDA 20 15 17 18 16 17 36 50 49 84 81 77 GEF 7 8 11 7 9 8 32 29 39 75 86 80 MONT 0 0 0 0 0 0 NA NA NA NA NA NA SPF 31 27 35 26 32 28 NA NA 46 75 0 75 Total 19 14 16 17 12 15 41 49 56 a4 a i 79


33 of 83

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% at Risk FY02 FY06 FY07

Country Category Grouping

IBRD Investment Grade 13 8 10 China 5 1 4 IBRD Only (Others) 24 17 22 India 7 11 12 Blend 19 13 11 IDA Only 19 12 13 Licus 27 28 30 Multi-Country 0 8 13 Total 19 14 16


IBRD Investment Grade China IBRD Only (Others)

Yo Commitments at Risk FY02 FY06 FY07

14 9 10

24 10 19 7 15 I R India

Blend IDA Only 19 14 13 Licus 31 27 31

Total 17 12 15 Multi-Country 0 3 19

YO Realism FY02 FY06 FY07


IBRD Investment Grade 45 55 74 China 45 13 38 IBRD Only (Others) 63 62 83 India 15 58 86 Blend 50 51 42

Licus 23 50 41 Multi-Country NA NA NA Total 41 49 56

IDA Only 39 40 44

YO Proactivity FY02 FY06 FY07


IBRD Investment Grade 90 90 83 China 80 100 100 IBRD Only (Others) 82 81 81 India 83 89 80 Blend 93 81 82 IDA Only 81 81 81 Licus 85 78 66 Multi-Country 100 67 100 Total 84 81 79

37 of 83

TABLE 3.9: PORTFOLIO RISK STATUS ORDERED BY COUNTRY (FY07) ~~ ~ ~-

Net % Commitments Commitments at Risk fUSS Million)

Country ,- -

Congo, Democratic Republic of 67 1,737

Iran, Islamic Republic of 26 1,355 Brazil 28 4,386

Romania 26 1,760 Banoladesh 23 1.975 Argentina 21 3,927 Africa 21 1,770 India 18 14,267 Vietnam 17 3,957 Nigeria 16 2,592 Uganda 12 1,313 Mexico 12 2,322 Indonesia 11 2,786 Egypt, Arab Republic of 11 1,322 Mad Turk F

- - iagascar 8 1,Ul ti rey 8 5,675

1,281 ,. 'hilippines 7 Ethiaoia 0 _ _ - - Pakistan 5 2,047 China 4 9,908 Afghanistan 3 1,014 Tanzania 2 1,904 Colombia 0 1,935 Russian Federation 0 1,771 Croatia 0 1,109

YO Projects No. of Country at Risk Projects

Honduras 50 16 Argentina 41 29 Peru 32 19 Nigeria 29 24 Bangladesh 25 24 Senegal 24 17 Africa 21 28 Mozambique 20 15 Kenya 19 16 Brazil 15 52 Indonesia 15 26 Rnrnania 14 21 . ._ . . . - . . .- ~

Egypt, Arab Republic of 13 15 Ghana 13 15 Philippines 13 23 Azerbaijan 13 16 India 12 67 Madagascar 12 17 Albania 11 18 Uganda 11 18 Vietnam 11 38 Yemen, Republic of 11 19 Kyrgyz Republic 10 20 Afghanistan 10 21 Ethiopia 10 21 Mexico 9 22 Turkey 8 24 Burkina Faso 7 15 Bosnia and Herzegovina 6 16 Georgia 5 19 Pakistan 5 20 Tanzania 4 23 China 4 74 Colombia 0 20 Russian-Federation 0 20 Croatia 0 18 Armenia 0 17 Tunisia 0 17 Moldova 0 15

Note: Only countries representing 1% or more of Bank commitments or projects are shown.

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TABLE 3.11: NET DISCONNECT BY REGIONICOUNTRY

~ ~ 0 n . n ~ FYnAn7 RegionlCountry

AFR Africa Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Chad Comoros Congo, Democrat Congo, Republic Cote d'lvoire Djibouti Eastern Africa Equatorial Guin Eritrnn Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenva Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Niger Nigeria Rwanda Sao Tome and Pr Senegal Seychelles Sierra Leone Somalia South Africa Sudan Swaziland Tanzania Togo Uganda Western Africa Zambia Zimbabwe Sub Total

. .-- -. Projects % Unsat % Unsat %Net

(No.) DO Outcome Disc

5 0 40 40

35 3 26 23 11 i a 36 i a _ _ _ _ -_ 6 17 33 17 32 13 16 3 28 36 39 4 28 36 64 29 15 n 7 7 17 71 a2 12 29 21 31 10

34 65 aa 24 9 22 a9 67

41 24 44 20 4 25 25 0 I 0 100 100 a 63 75 13 a 0 13 13

42 21 33 12

17 41 47 6 a2 12 33 21 41 29 41 12 i a 22 33 11 57 35 61 26 i a 28 39 11 1 100 100 0

50 17 33 17

12 42 50 a

a 13 50 38

- . -- 47 6 47 40 A I i n 17 37 . . ... -. -. 31 26 29 3 16 25 25 0 39 R 15 R -- - .- 33 33 42 9 56 32 54 21 27 41 56 15 - _ _ 10 20 50 30 51 i a 22 4 3 0 33 33 19 32 47 16 i n 80 RO n 2 0 0 0 19 16 42 26 2 0 0 0

6A I 1 i a 7

_ . _ _ -- -- 59 7 32 25 3 0 33 33

41 17 54 37 22 14 27 14

1,270 23 40 i a

. .-- -. Projects % Unsat % Unsat % Net


2 0 50 50 1 n n n " - - 6 0 33 33 0 NA NA NA 7 I d I A n . . . . 3 33 0 -33 A n n n - - 4 0 25 25 1 100 100 0 6 33 67 33 3 33 33 0 3 0 67 67 3 99 i no 67 -- _. 6 a3 a3 0 0 NA NA NA 0 NA NA NA 0 NA NA NA 5 0 20 20 13 a 31 23 2 0 50 50 4 50 50 0 14 7 36 29 4 75 75 0 2 50 50 0 a 38 63 25 6 33 33 0 0 NA NA NA 7 14 29 14 9 0 11 11 9 22 22 0 7 29 29 0 n A - L U U U i n n i n i n . - . - . - 5 0 60 60 3 67 33 -33 0 n n n L U U U

2 50 50 0 I A I A I A n . . . . . . 0 NA NA NA 5 20 20 0 n NA NA NA 2 0 0 0 0 NA NA NA 1 0 0 0

i a 0 6 6 n NA NA NA .... .... .... 10 0 30 30 0 NA NA NA 10 10 50 40 0 NA NA NA

223 17 31 15

Page 40 of 83

TABLE 3.11: NET DISCONNECT BY REGlONlCOUNTRY

FYQO-07 FY04-07 RegionlCountry

. -. Projects YO Unsat YO Unrat % Net


16 13 25 13 204 3 9 A

. _. Projects %Unrat %Unsat #Net

(No.) DO Outcome DISC

10 20 30 10 A 5 n 4 4

EAP Cambodia China --

0 NA NA NA 29 14 28 14

4 n n n

4 0 0 0 175 13 27 14 42 0 10 10 24 13 25 13 30 0 7 7

14 14 36 21 21 19 52 33 ea 12 2a 16 7 14 n -14

12 0 a a

U U " 6 0 17 17 1 n n 0 4 0 0 0 0 NA NA NA 2 0 0 0 9 11 11 0 2 0 0 0 I 0 100 100 A n n n

. . . . 6 17 67 50

AA Q I d 6 . . - . . ., 14 0 57 57 2 0 50 50 3 33 67 33

9 0 67 67 0 NA NA NA n NA NA NA -- -. --

26 0 0 0 112 8 20 12

14 0 0 0 149 5 15 10

=CIA Alhnnin A5 11 I 6 A 17 12 i a 6

0 NA NA NA i n n n n

. . 1 0 100 100

15 13 33 20 25 0 a a

Aral Sea Armenia Azerbaijan Belarus Bosnia and Hem Bulgaria Central Asia Croatia Cyprus Czech Republic Estonia Georgia Hungary Kazakhstan Kosovo Kyrgyz Republic Latvia Lithuania Macedonia, form Moldova Montenegro Poland Portugal Romania Russian Federat

I " ., ., 9 0 22 22 0 NA NA NA I 3 A 1.5 A

_ _ _ _ 5 20 40 20

A I 7 17 i n . . - .- . - 2a 11 l a 7 1 0 100 100 I 9 n 32 32

6 17 17 0 1 0 100 100 7 n 29 29 _ _ _ _

a 0 13 13 6 n n n

-_ _ _ 0 NA NA NA 0 NA NA NA

a 0 0 0

3a 13 11 -3 19 21 16 -5 15 7 7 0 19 11 21 11 16 0 0 0 15 7 20 13 26 0 19 19 17 A 74 1A

22 5 23 i a 1 0 0 0 7 0 29 29 0 NA NA NA 4 25 0 -25 10 10 10 0 6 17 17 0 f. n n n " " ., " 4 25 25 0 9 0 11 11 7 n I A l A

1 0 0 0

a 50 50 0 34 3 9 6 44 i a 41 23

39 10 i a a

14 n n n

1 0 0 0 10 0 10 10 0 NA NA NA 17 0 0 0 l a 22 2a 6 12 0 0 0 2 0 0 0 7 n n n

1 0 0 0 14 21 21 0 67 19 30 i n

1 0 0 0 7 29 14 -14 i n 211 20 n Turkey

Turkmenistan Ukraine

- . . _ _ _ . _ 3 100 100 0

22 18 i a 0 a 13 3a 25 11 9 77 I n

. - -- -- 1 100 100 0 7 7Q 79 n 5 20 40 20 0 NA NA NA

21 1 10 15 6 , . ., -. I"

669 10 20 10

Page 41 of a3

TABLE 3.11: NET DISCONNECT BY REGlONlCOUNTRY

M90-07 M04-07 Projects % Unsat % Unsat % Net Projects % Unsat % Unsat % Net

(No.) DO Outcome Disc (No.) DO Outcome Disc

a2 13 22 9 22 l a 14 -5 2 0 50 50 0 NA NA NA 6 17 33 17 0 NA NA NA a 13 25 13 I 0 0 0 54 11 30 19 16 31 44 13 146 a 17 9 30 0 3 3

* 6 50 50 0 0 NA NA NA 1 0 0 0 1 0 0 0

33 6 9 3 4 0 0 0 69 9 26 17 20 5 15 10 9 0 0 0 3 0 0 0 6 33 17 -1 7 2 0 0 0 16 25 19 -6 6 33 17 -1 7 40 10 20 10 6 17 33 17 13 0 0 0 4 0 0 0 4 0 0 0 2 0 0 0 20 15 35 20 6 17 50 33 16 19 31 13 4 0 25 25 17 35 65 29 1 0 0 0 29 7 28 21 6 17 0 -1 7 29 14 38 24 0 NA NA NA 106 6 15 9 20 5 10 5 25 4 a 4 I 1 9 9 0 2 0 0 0 1 0 0 0 11 9 l a 9 6 17 33 17 15 13 53 40 6 17 50 33 34 12 i a 6 11 9 i a 9 3 33 33 0 2 0 0 0 6 17 33 17 3 0 0 0 4 0 0 0 2 0 0 0 a 13 50 38 1 0 100 100 28 4 4 0 a 0 0 0 26 27 58 31 7 29 57 29 074 11 23 12 21 2 10 17 7

RegionlCountry

LCR Argentina Bahamas, The Barbados Belize Bolivia Brazil Caribbean Central America Chile Colombia Costa Rica Dominica Dominican Repub Ecuador El Salvador Grenada Guatemala Guyana Haiti Honduras Jamaica Mexico Nicaragua OECS Countries Panama Paraguay Peru St. Kitts and N St. Lucia St. Vincent and Trinidad and To Uruguay Venezuela, Repu Sub Total

MNA

Lebanon Morocco

46 35 48 13 10 20 20 0 6 33 50 17 4 0 25 25 43 19 2a 9 a 13 13 0 7 14 14 0 0 NA NA NA

41 2 7 5 4 n n n - 11 27 45 i a 7 14 29 14 75 12 32 20 12 a 17 a 5 0 0 0 0 NA NA NA 1 0 0 0 I 0 0 0

7 17 i n 7n i n

SAR -. - - Afghanistan 5 0 0 0 5 0 0 0 Bangladesh a i 15 26 11 12 17 25 a Bhutan 10 0 20 20 3 0 33 33 India 202 12 26 13 41 10 15 5 Maldives 6 0 0 0 I 0 0 0 Nepal 43 19 30 12 6 17 17 0 Pakistan 99 13 29 16 12 a a 0 Sri Lanka 49 12 37 24 10 10 50 40 Sub Total 495 13 27 14 90 10 19 9

Total 4,410 14 20 14 963 11 20 9

Page 42 of 83

TABLE 3.12: NET DISCONNECT BY INSTRUMENT

FY90-07 Instrument Projects YO Unsat YO Unsat YO Net

(No.) DO Outcome Disc Dev. Policy

DPL DRL PRC

19 5 26 21 11 0 9 9 28 0 11 11

PSL 44 0 7 7 RIL 21 14 24 10 SAD 219 8 22 14 SAL 286 8 30 22 SSL 2 0 0 0 Sub Total 630 7 24 17

Investment APL ERL FIL LIL SIL SIM TAL Sub Total

Total

85 15 24 8 123 2 8 6 205 22 45 23 88 15 26 11

2,486 15 28 12 445 18 30 12 348 16 33 18

3,780 16 29 13 4,410 14 28 14

FY04-07 Projects % Unsat % Unsat YO Net


19 5 26 21 0 NA NA NA 20 0 10 10 19 0 5 5 1 n n n " " - 19 5 5 0 54 9 28 19 2 0 0 0

134 5 18 13

73 11 22 11 41 2 7 5 12 8 25 17 66 15 23 8 539 12 19 8 26 23 23 0 72 14 32 18 829 12 21 9 963 I 1 20 9

Investment APL ERL FIL LIL SIL SIM TAL

Dev. Policy Adaptable Program Loan DPL Development Policy Lending Emergency Recovery Loan DRL Debt and Debt Service Reduction Loan Financial Intermediary Loan PRC Poverty Reduction Support Credit Learning and Innovation Loan PSL Programmatic Structural Adjustment Loan Specific Investment Loan RiL Rehabilitation Loan Sectoral Investment and Maintenance SAD Sector Adjustment Technical Assistance Loan SAL Structural Adjustment Lending

SSL Special Structural Adjustment Lending

TABLE3.13: NET DISCONNECT BY SOURCE OF FUNDS

FY90-07 FY04-07 Projects YO Unsat YO Unsat ~o Net Disc Projects % Unsat % Unsat % Net Disc

DO Outcome (No.) DO Outcome

Source of Funds (No.)

IBRD 2,192 12 25 13 423 10 15 6 IDA 2,071 17 32 15 472 12 24 12 GEF 78 8 18 10 31 10 16 6 MONT 10 0 0 0 4 0 0 0 SPF 59 8 25 17 33 15 33 18 Total 4,410 14 28 14 963 11 20 9


43 of 83

TABLE 3.15: NET DISCONNECT BY NETWOWEXIT YEAR

no4 MO5 M W

NetworklExlt Year

Environment Rural Sector Social Development Sub Total

Financial and Private Sector Development Sub Total

Education Health, Nutrition and Population

FPD

HDN

Social Protection Sub Total

Energy and Mining Global InfwmatiodCommunications

INF

~

Transport Urban Development Water Supply and Sanitation Sub Total

PREM Economic Policy Gender and Development Poverty Reduction Public Sector Governance Sub Total

Tnkl

Project8 K Unsat 'h Unsat 'h Net Project8 K Unaat K Unaat 'h Net Project8 K Unsat K Unaat K Net (No.) DO Outcome Disc (No.) DO Outcome Disc (No.) DO Outcome Disc

18 25 44 19 I 9 11 11 0 18 6 17 11 46 4 9 4 45 9 13 4 31 10 16 6 5 20 40 20 4 25 25 0 6 17 33 17 87 I O 19 9 88 10 13 3 55 9 18 9

27 26 37 11 35 14 23 9 14 14 21 7 27 26 37 11 35 14 23 9 14 14 21 7

23 15 38 8 17 8 25 12 8 - 4 2 6 8 25 20 28 8 25 28 48 20 20 5 20 15

13 6 26 8 23 15 13 0 8 8 18 8 87 11 22 10 83 18 24 8 62 8 19 13

16 19 19 0 14 14 21 7 14 21 29 7 ? n n n 1 n n n 7 n n n 23 9 4 - 4 25 12 16 4 0 0 29 0 12 17 17 0 24 6 13 4 15 7 13 7 I C 4 7 I 7 n + a c1 a n 4, 9c .)E. n I" I" I" I" I& L- &.. 69 13 12 -1 80 10 14 4 72 10 13 3

12 0 25 25 18 11 22 11 14 7 7 0 I n n n

3 0 0 0 5 0 20 20 4 0 0 0 31 13 35 23 31 16 35 19 18 19 31 13 62 12 29 17 50 12 28 14 33 9 24 15

302 13 22 9 298 12 19 7 236 9 18 9

pl07 Total

Project8 K Unsat K Unsat K Net Projectl K Unsat Ye Unsat 41 Net (No.) DO Outcome DISC (No.) DO Outcome DISC

NetworklCloslng Year

ESSD Environment 5 0 20 20 58 12 22 10 Rural Sector 13 0 23 23 135 7 13 7 Soclal Development 3 0 0 0 16 17 28 11 Sub Total 21 0 19 19 211 9 17 8

Financial and Pnvate Sector Development 12 6 42 33 88 17 30 13 Sub Total 12 8 42 33 88 17 30 13

Education 17 6 24 16 104 9 17 9 Health. Nutntion and Population 18 25 58 31 86 20 37 17 Social Protection 6 0 0 0 83 5 14 10 Sub Total 41 12 32 20 263 11 23 12

FPD

HDN

,.IC IRr

Energy and Mining Global InfwmationICommunicatims Transport Urban Development Water Supply and Sanitation Sub Total

Economic Policy Gender and Development Poverty Reduction Public Sectw Governance Sub Total

PREM

Tn-I

13 6 15 8 57 16 21 5 7 n n n A n n n

7 1 1" c

4 25 25 0 48 8 19 10 I " n n

1 0 0 0 13 0 8 8 10 10 40 30 88 15 35 20 I S 13 33 20 150 11 27 I 6

129 8 26 17 963 11 20 D

45 of 83

P p! e c tn

U K m m C E l2 2-

2

a a c - 0 .- L

m c E E U C m %

F u

v ) Q )

s s

Z Q )

U Q O z .Y $ 0

a

t

C m

~3 B Q: yc

0 P) N

m W 0 b d

c 0 :

0 %

0 2

w a

U m a

a: F: v:

'1;

n

z b

z z

O W

518

00 r

0 W 0 co d

c

h

'm

g N O - n ??*.

0

I a r m - r r , 0

2

8 c 0 Q, P

TABLE 3.23: NET CHANGES IN OUTCOMES RATINGS BETWEEN ICRR AND PPAR BY ELAPSED TIME BETWEEN ICRR AND PPAR (FY90-05)

Elapsed Time between ICRR and corresponding PPAR No. of IEG Evaluations No. of Net Changes % Net Change <=2 Year 'a 565 37 6.5 >2 & c= 5 Years 368 44 12.0 >5 Years 71 11 15.5 Total 1,004 92 9.2

a! About 38 projects with PPAR evaluation date less than their corresponding ICRR evaluation date in the system have been eliminated from the above analysis.

51 of 83

N r

2 2 m co 0 cv v)

L

TABLE 3.25: PORTFOLIO RISK FACTORS (As a Percentage of the Active Portfolio)

Risk Factor FY06 FY07 Country Environment* 20 20 Country Record* 29 30 Counterpart Funds 4 4 Effectiveness Delay* 7 10 Financial Management 5 7 Legal Covenants 6 7 Long Term Risk* 4 4 Project Management* 6 7 Monitoring & Evaluation' 6 7 Procurement Problems 6 8 Safeguards 3 3 Slow Disbursing* 11 10 Golden Flag 1 0

* Risk-flags applicable to Development Policy operations as well.

53 of 83

I-

0

a

0

C

C

C

C

C

r

r

C

C

Is:

C

C

C

v

TABLE 3.27: DISBURSEMENT RATIO' BY REGION AND COUNTRY CATEGORY GROUPING (In Percent)

Region FY02 FY06 FY07

20 AFR ~

24 EAP 22 19 20 ECA 20 17 19 LCR 19 33 27 MNA 14 18 23 OTH 0 57 75 SAR 23 28 25 Total 21 24 23

Country Category Grouping FY02 FY06 FY07

IBRD Investment Grade 20 24 22 China 23 21 24 IBRD Only (Others) 17 23 23 India 20 25 22 Blend 28 33 24 IDA Only 20 23 23 Licus 22 27 26 Multi-Country 22 9 12

~ _ _ _ _ -

IDA Only 20 23 23 Licus 22 27 26 Multi-Country 22 9 12 Total 21 24 23

' Disbursement Ratio is the ratio between "IBRD/IDA Disbursements in the Fiscal Year" and "Opening Undisbursed Amount at the beginning of the Fiscal Year," and is restricted only to Investment projects.

55 of 83

TABLE 3.28: CANCELLATIONS BY REGlONlCOUNTRY (US$ Million, IBRDllDA and SPF Only)

RegionlCountry FY03 FY04 FY05 FY06 FY07 AFR

Cote d'lvoire Kenya Niaeria Tanzania Zimbabwe Sub Total

EAP China Indonesia Vietnam Sub Total

ECA Bosnia and Hetzegovina Kazakhstan Poland Russian Federation Turkev Ukraine Sub Total

LCR Argentina Brazil Colombia Mexico El Salvador Uruguay Sub Total

MNA Algeria Egypt, Arab Republic of Tunisia Sub Total

SAR Bangladesh India Sub Total

11 152 0 28 0 20 61 10 0 53 8 0 0 41 0 3 2 0 1 4 58 0 7 0 0 290 338 59 81 162

436 370 168 54 267 189 55 172 23 47 25 33 3 16 90 788 525 409 152 41 5

0 1 1 3 95 41 1 1 9 4 12 0 79 10 51 131 180 15 45 I 974 176 10 40 251 30 0 42 29 79

1,266 485 272 193 494

30 2 24 239 13 196 288 173 112 -26 29 85 2 19 104 358 122 596 1 0 6 2 1 I 106 0 0 76 0 62

746 549 941 453 329

110 79 44 179 12 154 35 18 22 5 4 67 32 12 3

344 246 172 242 42

152 2 1 171 1 280 198 632 104 164 495 233 650 283 172

Total 3,928 2,377 2,503 1,405 1,615

Notes: I. The table includes projects that are either partially or fully cancelled, while Annex 2 includes partial

cancellations for projects that are either active or have exited the pottfolio. 2. The table shows individual countries with cancellations exceeding 2.5% of the Bank-wide total.

56 of 83

TABLE 3.29: CANCELLATIONS BY NETWORWSECTOR BOARD (US$ Million, IBRDllDA and SPF Only)

NetworWSector Board FY03 FY04 FY05 FY06 FY07 FPn . . -

FSE Financial Sector FSE Total

PSD Private Sector Development PSD Total

FPD Total

Education Health, Nutrition and Population Social Protection

1,004 121 21 9 21 1,004 121 21 9 21

47 215 66 49 35 47 21 5 66 49 35

1,052 336 87 58 56

193 190 193 200 191 324 185 175 72 140 126 81 18 45 89

HDN Total 642 456 387 317 420

PREM Economic Policy Public Sector Governance PREM Total

SDV

Environment Rural Sector ESSD Total

Energy and Mining Transport Urban Development Water Supply and Sanitation INF Total

INF

SDV Total

7 39 37 0 19 77 154 75 253 52 84 193 Ill 258 71

294 91 214 27 36 41 9 32 1 91 7 180 188 728 41 9 1,154 209 229

507 307 216 87 1 74 377 270 189 277 158 250 243 229 124 312 275 117 128 65 188

1,423 973 763 563 839 2,150 1,393 I ,917 771 1,068

Total 3,928 2,377 2,503 1,405 1,615

Notes: 1. The table includes projects that are either partially or fully cancelled, while Annex 2 includes partial

cancellations for projects that are either active or have exited the portfolio. 2. The table shows individual Sector Boards with cancellations exceeding 2.5% of the Bank-wide total.

Page 57 of 83

m a)

0 0 (D

c

TABLE 3.35: QUALITY AT ENTRY FOR GUARANTEES

Rated (No.) S+ MS+ OA Overall Rating 9 44 78

R2 Technical, Financial and Economical Aspects 9 67 78 R3 Compliance with Safeguard Policies 9 67 78 R4 Implementation Readiness and Arrangements 9 56 67 R5 Risk Assessment and Mitigation 9 44 67 R6 Bank Inputs and Processes to Approval 9 44 78

R1 Strategic Relevance and Approach 9 67 100

63 of 83

-0 C ([I b 0

t C .-

.- 5 3

cr) Q3

0 In (0

c

TABLE3.38: QUALITY OF AAA BY REGION (YO Moderately Satisfactory or Better)

No. of Tasks OA R1 R2 Region FY98-99 FYO5-06 FY98-99 FY05-06 FY98-99 FYO5-06 FY98-99 FY05-06

AF R 24 41 50 80 63 95 43 83 EAP 15 13 87 100 87 100 87 92 ECA 25 27 80 89 92 100 80 89 _ _ LCR 16 19 75 95 94 100 81 95 MNA 9 15 89 100 100 100 89 93 SAR 11 28 91 100 100 100 91 93 O T H ~ 0 21 NA 86 NA 95 NA 95 Total 100 164 75 91 86 98 75 90

No. of Tasks R3 R4 R5 Region FY98-99 FYO5-06 FY98-99 R3 FY98-99 FYO5-06 FY98-99 FY05-06

AFR 24 41 64 88 42 78 29 73 EAP 15 13 80 100 80 100 87 85 ECA 25 27 84 96 72 89 76 85 LCR 16 19 81 100 63 95 63 95 .

MNA 9 15 100 80 89 80 78 87 SAR 11 28 82 100 64 100 73 100 O T H ~ 0 21 NA 86 NA 86 NA 86 Total 100 164 80 93 65 88 64 86

’ Includes two Active tasks with Client Delivery in FY07 and FY08. Tasks denote Global tasks.

OA = Overall Assessment R1 = Strategic Relevance R2 = Internal Quality R3 = Dialogue and Dissemination R4 = Likely Impact R5 = Bank Inputs and Processes

66 of 83

TABLE3.39: QUALITY OF M A BY NETWORK (% Moderately Satisfactory or Better)

OA R I No. of Tasks Network FY98-99 FY05-06 ’

R2 FY98-99 FY05-06

._.

FY98-99 FY05-06 FY98-99 FYO5-06 FPD

FSE 7 15 71 87 100 93 100 91 100 I00

86 93 I00 91 91 92

PSD 4 11 FPD Total 11 26

.. .. ..

82 88 100 96 HDN 11 25 OPCS 0 10

73 100 82 100 NA 90 NA 100

64 92 NA 90

PREM 47 54 SDV

ESSD 20 24 INF 11 23 SDV Total 31 47

uzz 0 2

74 89 85 100 72 91

75 88 85 96 73 96 82 96

79 83 73 96

74 91 84 96 NA 50 NA 100

77 89 NA 50

~

Total 100 164 75 91 86 98 75 90

Network R3 R4 R5 FY98-99 FY05-06 FY98-99 FYO5-06 FY98-99 FYO5-06

FPD FSE PSD FPD Total

HDN OPCS PREM SDV

ESSD INF SDV Total

uzz

71 87 57 80 57 87 4 11 11 26

100 91 100 91 100 82 82 88 73 85 73 85 64 96 64 100 55 92 NA 100 NA 80 NA 90 83 93 62 87 66 85

11 25 0 10

47 54

20 24 79 96 65 88 60 79 11 23 31 47

82 87 73 91 64 91 80 91 68 89 61 85 NA 100 NA 50 NA 50 0 2

Total 100 164 80 93 65 88 64 86

’ Includes two Active tasks with Client Delivery in FY07 and FY08. *Tasks that have not been assigned a Sector Board.

OA = Overall Assessment R1 = Strategic Relevance R2 = Internal Quality R3 = Dialogue and Dissemination R4 = Likely Impact R5 = Bank Inputs and Processes

Page 67 of 83

TABLE 4.1: M A DELIVERIES AND COSTS BY REGIONCOUNTRY

Deliveries (No.) Initiation to Completion Costs (US$ '000) RegiodCountry FYOS FY04 FYOS FY08 FY07 FY03 FY04 FYOS FYO8 FY07

A=m

Africa Eastern Africa Southern Africa Central Africa Western Africa Angola Burkina Faso

73 68 45 57 53 0 0 0 2 0 0 0 0 1 0 0 0 0 1 0 1 0 0 2 0

Benin Botswana Central African kepublic Congo, Republic of Cote d'lvoire Cameroon Cape Verde Eritrea Ethiopia Gabon Ghana Gambia, The Guinea Equatorial Guinea Guinea-Bissau Kenya Comoros Liberia Lesotho Madagascar Mali Mauritania Mauritius .. . . Malawi Mozambique Namihia Niger Nigeria Rwanda Seychelles Sudan Sierra Leone Senegal Somalia Sao Tome and Principe Swaziland Chad Togo Tanzania Uganda Sniiih Afrira

1 3 8 2 1 0 0 2 3 4 1 0 1 0 4

2 2 2 1 2 2 4 2 5 2 1 4 1 4 2 3 2 0 1 1 6 12 14 12 9 1 n n 3 3

5 7 9 7 2

1 5 5 1 3 0 0 0 0 1 0 2 0 2 2 11 9 8 9 8 2 0 0 2 0 0 0 0 0 3 2 5 2 2 2 8 3 9 7 3 5 8 6 4 3 5 3 4 4 3 7 3 1 4 4 4 8 6 3 8 R 1 17 A i n 0 1 2 3 2 2 5 5 3 2 8 20 13 12 10 6 3 4 3 2 1 1 0 3 0 2 2 7 4 9 4 3 2 5 3 i n A R a 1 0 1 1 3 4 4 1 1 1 1

1 3 3 4 1 2 4 2 3 2 10 11 12 8 6 6 10 13 4 8 A A a i n 17

Zambia Congo, Democratic Republic of Zimbabwe Sub Total

9 8 5 8 8

3 1 2 1 1 231 256 247 241 218

8,647 15,027 20,988 15,711 30,573 0 0 0 359 0 n n n v v v 0 0 0 130 0

111 0 0 402 0 505 1,431 408 1,081 216 74 776 418 352 706 0 778 143 488 161 4 510 1,293 81 61 0 0 392 382 607

n I n f i A 0 RRO

259 0 483 146 805 228 479 66 168 845 483 470 180 905 118 41 133 147 21 1 44 37 154 0 28 272 713 1,382 2,081 2,979 957 218 0 0 487 110 485 955 990 782 847 172 482 96 39 353 93 612 49 22 885 0 0 0 0 118 0 187 0 274 238

1,267 1,894 841 1,744 728 7n n n AQ n 0 0 0 0 142

797 852 248 458 39 1 536 1.802 1,348 424 707

418 392 694 348 633 457 461 30 1 712 255 478 169 0 1,167 551

847 1207 1,244 205 1,314 649 1,033

n 443 ?n a? 7R

765 1,144 829

I_- "" - .- . - 50 652 504 269 353

1,791 2.183 2,231 1,734 2,176 806 40 453 70 1 927 132 110 0 260 0 710 271 3,829 595 2,842 257 522 40 1,314 335

1,278 513 765 448 107 0 173 532 189 1.848

506 29 25 335 356 0 174 488 672 84

226 297 75 1 514 163 168 314 535 470 102

1,020 1,107 2,004 1.542 274 436 1,166 1,479 593 2,772 159 951 858 1,998 1,459

1,381 1,079 1,356 898 537 724 910 955 358 231 282 23 820 39 37

28,585 30,871 51,502 45,801 58,645

68 of 83

TABLE4.1: AAA DELIVERIES AND COSTS BY REGlONlCOUNTRY

Deikerles (No.) initiation to Completion Costa (US$ '000) RegionlCountry FY03 FY04 FY05 FY06 FY07 FY03 FY04 FY05 FY06 FY07

EAP East Asia and Pacific Mekong Pacific Islands Aiirtralia

Fiji China. Hong Kong SAR Indonesia Japan Cambodia Korea, Republic of Lao People's Democratic Republic Mongolia Malaysia Papua New Guinea Philippines Palau Solomon Islands Singapore Thailand

Timor-Leste Vietnam Vanuatu Samoa Sub Total

ECA EU Accession Countries South Eastern Europe and Balkans Central Asia Europe and Central Asia Caucasus Albania Armenia Aiirtria

Azerbaijan Bosnia and Herzegovina Bulgaria BelaNS

Czech Republic Estonia United Kingdom Georgia Croatia Hungary

CYPNS

Italy Kyrgyz Republic Kazakhstan

Moldova Montenegro Macedonia, former Yugoslav Republic of Poland Romania Russian Federation Slovenia Slovak Republic Tajikistan Turkmenistan Turkey Ukraine Uzbekistan

Serbia Sub Total

21 16 15 8 15 4,432 3,041 4,185 3,979 6,767 0 0 1 2 4 0 0 162 906 345 3 1 1 7 1 297 61 251 1,679 490 n n n 1 n n n R1 n - .

24 33 32 36 28 4,506 4,372 5,257 6,543 11,262 0 3 1 1 2 0 105 129 109 360 2 0 0 0 0 67 0 0 0 0 34 26 29 21 39 5,946 6,706 7.348 3.488 18,422 1 0 0 0 0 35 0 0 0 0 8 7 10 5 12 1,160 1,082 1,837 681 1,038 A 1 n n n AAA 7 A n n n

1- . . - 2 4 4 8 9 118 404 361 2,293 1,350 13 5 5 12 4 824 867 269 1,559 1,067 0 2 5 5 3 0 489 220 513 108 5 3 0 2 2 803 934 0 1,202 402 19 9 20 8 11 2,193 1,346 3,336 2,819 1.985 0 1 0 0 1 0 64 0 0 50 0 1 2 2 4 0 440 134 89 1,310 0 1 0 0 0 11 9 13 10 21 I n I 1 n 5 6 3 4 9

26 15 16 13 18 0 0 0 1 0 0 1 2 0 0

179 t44 160 147 183

0 118 0 0 0 2,873 979 1,841 929 2,271

41 0 95 355 0 1,112 522 300 440 1,196 2,271 2,230 1,935 1,864 2,644

0 0 0 297 0 0 16 66 0 0

27,162 23,854 27,728 29,805 51,066

3 3 7 1 1 36 24 23 18 23 0 3 1 0 3 5 2 7 4 9 5 7 5 ? ?

0 127 129 1,928 1,805 213 1,362 180 153 1,239 212 301 761 33 165

7,512 2,900 6,394 3,560 6,200 0 74 32 0 339

461 395 706 471 1,420 A 5 1 Q7A A5R ?n 1 5A5

0 1 0 0 0 9 6 12 5 3

11 9 4 2 8 2 2 4 1 2 0 1 0 1 0 6 5 5 3 1 0 2 0 0 0

0 36 0 0 0 1,399 1,248 983 560 817 588 796 393 1,209 377 763 708 361 653 922 396 298 678 86 207

0 166 0 328 0 277 234 359 193 18 n I n R n n n

11 6 3 5 5 8 2 3 3 5 4 3 4 0 1 0 0 0 1 0 7 A 3 5 A - 4 9 13 9 14 5 8 5 0 3 5 7 5 1 5 7 9 3 7 5 0 0 0 2 4 5 3 5 2 4 6 7 8 7 2 A 7 a 1 5 17 24 20 18 16 1 5 1 0 1 6 4 5 2 4 4 5 6 3 5 3 0 0 0 1 17 R a 7 11

13 7 4 10 9

10 9 7 12 4 231 219 193 162 I99

1,215 422 560 702 608 1,333 205 238 576 464 176 195 438 0 31 0 0 0 70 0

1,394 996 488 858 1,186 227 1,514 2,766 2,239 2,056 473 483 484 0 340 237 768 429 136 1,030 506 1,160 784 884 1,117

0 0 0 228 384 35 1 447 653 269 619 658 1,172 573 1,230 138 938 1,221 509 537 572

2,763 4,931 2,845 3,106 5,260 48 339 45 0 43 79 1 111 806 100 423 423 1,603 1,401 922 1,067 298 0 0 0 19

1,478 838 1,889 1,435 3,571 2,044 1.268 681 1,651 1,276 1,689 833 229 0 1,495 445 39 1 700 32 1 773

1,622 1,332 839 1,404 598 31,639 29,908 29,193 26,144 37,124

6g of 83

TABLE 4.1: AAA DELIVERIES AND COSTS BY REGlONlCOUNTRY

Deliverlea (No.) Initiation to Completion Costs (US$ '000) RegIonlCountry FY03 FY04 FYO5 M O B FY07 FY03 FY04 FYOS M08 FY07 . --

Argentina Barbados Bolivia Brazil Chile Colombia Costa Rica Dominica Dominican Republic Ecuador Grenada Guatemala Guyana Honduras

2 2 1 3 0 5 1 7 2 0

21 22 13 ',4 l2 .. . n

1 2 1 1 3 0 0 1 0 0 9 8 2 4 8 1 0 0 0 0 4 5 2 4 3 26 13 17 11 17 4 7 3 4 1 15 11 R 9 5

153 94 109 137 0 352 305 2,293 476 0

1,883 2,410 2,702 3,801 3.985 125 288 234 0 350 n aQ 77a 179 M 7

0 0 95 0 0 1,508 251 724 1,618 1,477

22 0 0 0 0 826 667 175 533 440

3,888 1,453 2,324 2,451 3,675 847 1,381 181 1,041 135 i ins i QRA t ma I AAn QRO

2 2 2 4 0 . . .-

- - 5 6 5 3 3 0 1 0 0 0 0 1 3 4 1 3 0 1 2 0 A 5 1 7 5

625 268 435 242 0 167 1,136 605 524 378 0 25 0 0 0 0 235 495 542 23

491 0 28 384 0 445 287 21 296 823

0 0 359 310 591 38 1 186 224 452 0 Jamaica

St. Kitts and Nevis St. Lucia Mexico Nicaragua Panama Pan1 . Paraguay El Salvador Trinidad and Tobago Uruguay St. Vincent and the Grenadines Venezuela, Republica Boiivariana de

. SUB TOMI

MNA Gulf Cooperation Council Middle East and North Africa United Arab Emirates Bahrain Djibouti Algeria Egypt. Arab Republic of West Bank and Gaza Iraq Iran. Islamic Republic of Jordan Kuwait Lebamn Libya Morneeo Malta

0 0 1 0 0 7 9 8 7 8 5 4 1 0 3 0 2 0 3 1 2 9 7 8 4 6 3 3 2 3

0 0 58 0 0 1,525 1,801 1,816 1,735 1.656 338 323 10 0 708 0 90 0 726 148

51 9 728 1,295 3,143 823 388 331 718 371 373 9 A 7 776 I I A *RA 1

0 3 3 4 4 0 0 1 0 0 0 2 1 1 1

126 119 110 109 66

0 301 983 804 491 0 0 144 0 0 0 184 341 21 29 1

18,443 15,930 16,533 22,564 17,767

1 0 0 0 0 18 11 13 15 5 0 3 2 0 1 2 1 3 2 3 2 4 3 2 0 13 5 8 4 5 I l l a q 10 i R 9 7 R 7 R - 0 14 26 5 8 6 12 7 5 5

4 4 9 5

7 10 8 2 5 4 6 4 4 5 2 0 1 0 0

20 9 12 11 18

11

4 0 0 1 0

Yemen, Republic of Saudi Arabia Syrian Arab Republic Tunisia Sub Total

5 10 13 10 9 14 13 18 18 23 1 4 3 1 1 8 7 5 7 6

139 134 142 114 127

57 0 0 0 0 3,643 3,138 2,381 2,378 2,311

0 133 1,125 0 127 467 402 528 132 264 45 384 290 548 0

1,275 488 888 44 1 919 845 669 1,411 2,693 2,435 914 396 1,327 1,228 1,595

0 1,840 4,053 775 786 1,243 1,435 948 1,223 788 449 1,563 857 255 897

2,907 1,304 159 1,025 423 253 692 408 525 329 81 0 331 0 0

2,075 1,235 1,709 2,036 2,434 701 0 0 113 0 314 117 214 181 205

0 0 396 235 595 793 1,090 1,044 1,671 1,246

2.280 2,337 3,501 1,581 3,328 45 166 614 134 31 3

1,228 604 759 1,594 797 19,594 17,969 22,716 16,729 19,790

70 of 83

TABLE4.1: A M DELNERIES AND COSTS BY REGlONlCOUNTRY

Delivrrles (No.) lnltlatlon to Completion Costs (US$ '000) ReglonlCountry FY03 FY04 FY05 M O O FY07 M 0 3 M 0 4 FYO5 FY06 FYO7

C A D --. South Asia 7 7 12 9 13 847 995 979 1,197 2,444 Afghanistan 4 12 10 9 10 811 1,779 3,444 1,277 1,034 Bangladesh 18 7 15 7 15 1,830 896 1,958 1.891 3,260 Bhutan 2 2 3 4 6 319 123 294 21 1 281 India 38 35 39 38 28 8,574 8,449 8,338 10,761 8,839 Srl Lanka 7 10 8 10 5 728 1,222 598 2,184 987 Maldives 2 1 4 4 3 39 17 208 547 329 Nepal 5 6 9 3 8 573 1,145 1,507 597 1,584 Pakistan 11 12 10 12 11 1,402 2,010 2,178 3,205 2,752 Sub Total 94 92 I08 S6 99 13,123 16,636 19,498 21,871 19,510

OTH - ... World 63 73 85 38 47 4,989 10,158 14,254 5,970 8,016 Asia 0 0 0 1 0 0 0 0 22 0 Sub Total 63 73 85 39 47 4,989 10,156 14,254 5,992 8,016

Total 1,065 1,037 1,045 SO8 S61 141,536 154,144 183,425 170,925 211,939

Notes: 1. The table includes ESW Reports, Other ESW and TA products. 2. The Deliveries (No.) and the Initiation to Completion Costs (US$ '000) includes supplemental deliveries. 3. ERective July 1,2004, "ConsuItationsCountry Dialogue" and "ConferenceNorkshop" output types are no longer valid for the ESW product line 4. Initiation to Completion Costs include postdelivery costs.

71 of83

TABLE42 A M DELIVERIES AND COSTS BY NETWORWSECTOR BOARD

NetworklSector Board Deliveries (No.) lnltlation to Completlon Costs (US$ '000)

ACS Administrative and Client Support Sub Tats1

ESSD Environment Rural Sector Social Development Sub Total

FSE Financial Sector Sub Total

HDN Education Health, Nutrition and Population Social Protection Sub Total

INF Energy and Mining Global Information/ Communications Tech nology Transport Urban Development Water Supply and Sanitation Sub Total

ISN Professional Development Sub Total

OPCS Financial Management Operational Services Procurement Sub Total

PREM Economic Policy Gender and Development Poverty Reduction Public Sector Governance Sub Total

PSD Private Sector Development Sub Tntal

RMN - Resource Management Sub Total

FY03 FY04 FY05 FY06 FYO7 FY03 FY04 FY05 FY06 FY07

0 1 0 1 0 0 83 0 2,243 0 0 I 0 I 0 0 83 0 2,243 0

~~ ~ ~~ ~ ~ ~~

51 47 70 38 57 6,607 6,403 12,840 9,645 11,877 55 64 77 70 69 7,330 9,018 15,483 17,137 12,278 32 34 43 31 53 6,267 8.070 8.742 4,613 20,785 138 145 I90 139 179 20,205 23,491 37,064 31,595 44,940

129 139 108 90 76 16,755 16,288 13,196 14,458 11,350 129 139 108 90 76 16,755 16,288 13,196 14,458 11,350

41 52 48 47 43 3,774 9,159 8,580 9,010 9,836 31 45 66 38 41 3,005 5,927 10,281 9,562 11,275 45 48 55 47 53 5,991 5,747 6,243 9.284 10,956 117 145 169 132 137 12,770 20,833 25,103 27,856 31,866

58 48 27 36 64 5,525 9,649 4,890 6,996 8,738

11 19 11 13 22 571 1,702 890 2,641 1,917 41 24 33 21 29 3,035 3,445 4,236 2,612 17,831 39 34 44 41 48 4,004 5,241 8,155 8.194 8,754 16 16 31 18 12 1,094 1,522 5,579 3,604 2,407

165 141 I46 129 175 14,230 21,560 23,752 24,050 39,646

3 0 0 0 0 367 0 0 0 0 3 0 0 0 0 367 0 0 0 0

50 47 36 40 32 5.487 4,122 4.485 3,604 3,697 14 8 4 2 4 423 665 583 150 489 28 30 19 8 16 2,877 2,851 1,601 456 1,120 92 85 59 50 52 8,787 7,658 6,869 4,209 5,306

140 121 119 135 139 24,021 19,102 29.803 26.489 29,669 10 18 14 10 7 541 1,661 1,295 1,012 1,182 43 50 53 55 49 8,167 11,574 7,806 14,242 17,413 76 57 72 67 74 12,640 11,053 12,847 11,273 17,142

269 246 258 267 269 45,366 43,390 51,750 53,016 65,406

142 122 106 97 72 22,671 19,435 23,961 13,027 13,298 142 122 106 97 72 22,671 19,435 23,961 13,027 13,298

0 2 0 0 1 0 203 0 0 126 0 2 0 0 I 0 203 0 0 126

Sector Board not Applicable Sub Total

Told

10 11 9 3 0 382 1,203 1,728 471 0 10 11 9 3 0 382 1,203 1,728 471 0

._I. 1,065 1,037 1,045 908 961 141,536 154,144 183,425 170,925 211,939

Notes: 1. The table includes ESW Reports, Other ESW and TA products. 2. The Deliveries (No.) and the Initiatbn to Completion Costs (US$ '000) includes supplemental deliveries. 3. Effective July 1,2004, "ConsuitatbndCountty Dialogue" and "ConferenceNVorkshop" output types are no longer valid for the ESW

product line. 4. Initiation to Cornpletbn Costs include postdelivery costs.

72 of 83

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TABLE 4.6: AAA CONCENTRATION: Top Ten Countries by Number of Deliveries, FY03-07

Region

SAR EAP EAP ECA EAP

LCR MNA MNA

EAP EAP

Sub Total

Total

Initiation to Completion Costs (US$ '000) BB TF Total

India 176 28,944 12,016 40,959 China 153 18,661 13,279 31,940 Indonesia 149 14,524 27,386 41,910 Russian Federatlon 95 14,540 4,366 18,906 Vietnam 88 7,088 3,856 10,944 Brazil 84 12,410 1,181 13,591 Saudl Arabia 84 13,005 13,005 Morocco 68 8.852 638 9,490 Phlllppines 67 7,030 4,649 11,679 Thailand 64 5,964 2,929 8,893

Country Delieveries (No.)

1,030 131,018 70,300 201,318

5,016 618,488 243,481 861,969

%of Total 21% 21% 29% 23%

Notes: 1. The table includes ESW Reports, Other ESW and TA products. 2. The Deliveries (No.) and the Initiation to Completion Costs (US$ '000) includes supplemental deliveries. 3. Effective July 1, 2004, "Consultations/Country Dialogue" and "ConferencelWorkshop" output types are no longer

4. initiation to Completion Costs includes post-delivery costs. * Expenditures from the BB budget are reimbursed by governments of Saudi Arabia under the reimbursable technical

valid for the ESW product line.

assistance program.

TABLE 4.7: AAA CONCENTRATION: Top Ten Countries by Cost of Deliveries, FY03-07

Region Country Delleveries (No.)

EAP SAR

Indonesia 149 lndla i 7a

EAP ECA LCR

China 153

Russlan Federation 95 Brazil a4

MUA

EAP EAP SAR

AFR

Sub Total

Total

Saudi Arabla 84

Philippines 67

Paklstan 56

Vietnam 88

Initiation to Completion Costs (US$ '000) BB TF Total

14,524 27,386 41,910 28,944 12,016 40,959 18,661 13,279 31,940 14,540 4,366 18,906 12,410 1,181 13,591 13,005 13,005 7,030 4,649 11,679 10,363 1,185 11,548 7.088 3.856 10,944

Nlgerla 63

1,017

5.016

7-71 1 2,403 10,114

134,276 70,321 204,597

618,488 243,481 861,969

% of Total 20% 22% 29% 24%

Notes: 1, The table includes ESW Reports, Other ESW and TA products. 2. The Deliveries (No.) and the Initiation to Completion Costs (US$ '000) includes supplemental deliveries. 3. Effective July 1,2004, "ConsultationdCountry Dialogue" and "ConferencelWorkshop" output types are no longer

4. initiation to Completion Costs includes post-deiivery costs. * Expenditures from the BB budget are reimbursed by governments of Saudi Arabia under the reimbursable technical

valid for the ESW product line.

assistance program.

76 of 83

TABLE4.8: AAA DELIVERIES AND COSTS BY OUTPUT TYPE

Inbtlon to ComolsUon Cosla lUSS 'OOO1 Dellvwler (No.) FYOS FY04 M O S FYOS M O T Rope-

ESW Reports 443 487 501 472 411 Core Dlagnostlc Reports 119 122 90 81 88

PA 14 19 19 21 15 CEM/DPR 27 26 23 23 10

C F M 30 23 10 6 2 CPAR 25 24 14 1 2 I FA 1 1 2 9 14

Other Dlagnostlc Reporb 101 123 140 123 94

~~ ~

Other 74 103 126 105 60 Advisory Reports 223 242 271 288 249

ESW Pollcy NoWOther Product8 283 247 I93 129 120 Palicy Note 153 152 193 129 120 ConferencelWorkshop 65 37 NA NA NA CcmsultationslCountry Dialogue 65 58 NA NA NA

All ESW Producta 728 734 894 601 631

TA Output Typea Client Dccument Review 27 22 21 21 33 lnstitutimal Development Plan 63 92 90 70 64 Knowledge-Shanng Fwum 76 102 132 77 97 ModeUSurvey 22 13 13 11 13 "HOW-TO" Guidance 129 74 95 126 203

All TA Products 339 303 351 307 450

FYOS FY04 FYOS FYO8 FY07 89,532 8 2 , W 98,712 104,817 102,540 25,557 24,557 22,483 22,132 25,178 4,524 6,666 4,379 7,161 6,500 7,819 6,602 10,290 7,649 5,241 6,653 5,961 5,199 3,543 9,679 3,551 2,488 790 496 326 2,571 2,211 1,419 64 239 439 439 366 3,199 3,192

14,896 18,542 22,729 25,932 18,659 7,152 4,637 3,201 4,449 3,446 7.544 13,906 19,527 21,463 15,092

29.079 39,839 55,520 56,753 58,929

22,819 27,451 36,894 20,332 18,489 13,973 15,555 35,694 20,332 16,469 5,429 6,196 NA NA NA 3,217 5,700 NA NA NA

01,950 110,400 134,408 125,149 119,135

5,052 2,993 2,955 2,276 7,119 14,343 16,669 13,679 12,753 16,269 11,936 13,645 19,290 13,022 17,863 2,177 1,564 1,695 1,667 3,074 16,076 6,672 11,201 16.058 46,459

49,585 43,744 49,019 46,778 92,804

All AAA Product. 1,065 1,037 1,045 908 981 141,538 154,144 183,421 170,925 211,939

Notes: 1. The table includes ESW Reports. Other ESW and TA products. 2. The Deliveries (No.) and the Initiation to Completion Costs (US$ '000) includes supplemental deliveries. 3. Effective July 1, 2004. "Consultations/Country Dialogue" and "CcmferencelWorkshop" output types are no longer valid fw the ESW product line 4. Initiation to Completion Cmts includes postdelivery costs.

77 of 03

TABLE4.9: ESW DEWERIES AND COSTS BY REPORT TYPE

DellveMrles (No.) lnlatlon to Completion Costs (US$ '000) FYOJ FYO4 FY05 FYO6 FY07 FY03 FYM FYO5 FY06 FY07 Report Type

Core Dlagnostlc Reports A C D

E4P ECA LCR MNA SAR

37 44 30 27 22 6,299 7,234 9,117 6,868 9,622 1 5 8 7 7 9 3,251 1,614 993 2.128 8.053 30 25 17 14 21 8,295 8,819 4,624 4,365 5,404 22 29 25 19 8 3,779 4,116 5,276 5,107 1.985 6 1 4 8 9 5 1,512 2,226 1,773 1,351 1.781 9 2 3 5 3 2,421 557 680 2.292 339

MULTl 0 0 0 0 0 0 0 0 0 0 Total Core Dlagnostlc Reports 119 122 SO 81 68 25,557 24,567 22,463 22.132 25.185

AFR EAP ECA LCR MNA

SAR MULTI

Total Other Diagnostic Reports

Advlrory Reports AFR EAP

M N A

MULTl Total Advlaory Reportr

All ESW Reaam

17 31 43 37 29 2,463 3,809 5.586 6,122 4.138 12 9 17 12 15 1,531 2,530 3,959 3,092 4.897 28 36 31 20 15 4,199 4,611 4,323 3.378 3896 19 21 25 30 15 3,418 2,054 3,299 6,105 2,252 14 16 7 6 11 2,000 2,796 1,695 2,236 2,419 4 10 14 9 3 574 2,742 3,626 2.680 393 7 0 3 7 6 51 4 0 261 319 555

101 123 140 123 94 14,896 18,542 22,729 25,932 18.549

51 55 56 70 49 5.200 6,423 9,455 13.834 10,733 25 33 24 49 42 4,193 8.406 5,474 12,529 12,491 49 46 46 42 47 7,445 4.893 8,696 7,302 8,904 26 34 36 34 36 3,125 6.186 7,922 7.847 8.144 17 16 19 16 15 3.018 2.928 3,175 4,303 4,016 17 24 24 29 34 3,332 5,822 7,135 7,484 10,415 38 34 66 28 26 2,765 5,183 11,663 3,621 4,226

223 242 271 268 249 29,079 39,PS 53,520 58,919 50,929

. I. _ _ . . . .- -. - AFR 105 130 129 134 100 13,962 17,466 24,138 28,824 24,493 EAP 52 50 48 68 66 8.975 12,550 10,426 17,749 23,441 ECA 107 107 94 78 83 19,939 18,322 17,643 15,086 18.205 LCR 67 84 86 83 59 10,320 12,355 16,497 19,058 12.381 MNA 37 46 34 33 31 6,530 7,951 6.642 7,890 8.216 SAR 30 36 41 43 40 6,327 9,121 11,441 12.458 11,147 MULTI 45 34 69 35 32 3,279 5,183 11,924 3,940 4.780

Total All ESW Reportr 443 487 501 472 411 69,332 82,946 98,712 101,983 102,663

Notes: 1. The table includes ESW Repcits only. 2. The Deliveries (No.) and the Initiation to Completion Cmts ($000) includes supplemental deliveries.

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