an evaluation of poverty reduction support credits: world bank budget support to ida countries
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An Evaluation of Poverty Reduction Support Credits: World Bank Budget Support to IDA Countries Anjali Kumar Independent Evaluation Group, World Bank Presentation to the American Evaluation Association November 11 th 2010 www.worldbank.org/ieg/prsc. A Budget Support Lending Instrument . - PowerPoint PPT PresentationTRANSCRIPT
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An Evaluation of Poverty Reduction Support Credits:
World BankBudget Support toIDA CountriesAnjali KumarIndependent Evaluation Group, World Bank
Presentation to the American Evaluation Association
November 11th 2010www.worldbank.org/ieg/prsc
A Budget Support Lending Instrument
► Mode of aid that disburses directly into a country’s budget – in contrast to project aid
► PRSCs were intended to help responsible IDA countries to implement their Poverty Reduction Strategies, in a results-based framework
► Provide harmonized, predictable aid commitments
► Strengthen budget processes and public finance
Evaluation Objectives: ► Assess the extent to which PRSCs were
able to meet their core objectives► Examine their relevance and
effectiveness in supporting growth and alleviating poverty
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From 2001 to 2009, there were 99 PRSCs in 27 countries worth $8 billion. PRSCs were intended to…
Building Blocks: Data Sources
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► Sources of information:• Desk review: objectives, design, effectiveness, results
framework of 88 PRSC projects• Field evaluations: 7 country case studies covering 31
PRSC operations, 8 completed PRSC series, 4 four ongoing series, and 33 percent of PRSC disbursements over FY01-FY08. Available at the IEG website.
• Surveys: Task team leaders, Sector specialists, Government stakeholders
• Relevant databases, including: WB evaluative data, ALCID, POVCAL, CPIA,
ROSCs, OECD Aid Aggregates, Monitoring of Paris
Declaration, IMF IFS► Extensive literature including other case studies
Evaluation Methods
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► Triangulate data to establish plausible causality• Establish a Results chain• Account for other determinants
► Compare ‘before and after’ changes in performance of PRSC beneficiaries • But: ‘before’ and ‘after’ comparisons of
outcomes are limited by problems of identification due to the endogeneity of policy responses within each country
► Compare changes in PRSC countries to changes experienced by IDA countries that have not benefited from PRSCs • “Difference in difference” approach• Add controls for ‘better performing’ IDA
countries
Evaluation Questions and Results Chain
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Inputs
• Appropriate program design and analytical underpinning
• Aligning resource flow with domestic processes and timetable
• Enhancing donor collaboration
Outputs
• Implementation of a strategic subset of the PRSP• More predictable resource flows and resource use
aligned with PRS • Harmonization of donor programs• Improved domestic accountability
Outcomes
• Improved climate for growth and improved pro-poor service delivery
• More effective public administration
Impact
• Sustained growth• Reduction of income and non-income poverty
Challenges and Caveats
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► Parallel changes affecting all World Bank Development Policy Lending occurred over the period of analysis• New Bank guidelines in August 2004 for all
DPLs; • PRSC Interim Guidelines were not formalized
though PRSC operations continued • Analysis adds a filter for two sub-periods,
2001 to 2004 and 2005 to 2008 ► PRSC is usually one part of a larger basket of
donor funded general budget support ► Both the Bank and other donor partners use a
range of instruments to support country development programs. • Account for role of other donors and other
instruments
1. PRSCs improved aid processes• Eased, flexible,
conditionality• Better predictability -
volume, frequency and budget alignment
• Enhanced country ownership
• More pro-poor service delivery
2. Growth and poverty outcomes are unclear
• Weak Results frameworks• Partial Support to Sectors
3. Other Policy Based Lending converged to a similar design
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Evaluation Findings - Three Key Messages
Evaluating Conditionality
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► Did conditionality ease with PRSCs? Was conditionality more flexibly applied? • Compare numbers of prior actions (legally
binding) and program benchmarks (not legally binding) in PRSCs compared to non-PRSC policy based loans during FY80-00 period – prior adjustment
lending during the PRSC period FY01-08 during PRSC subperiods FY01-04 and FY05-08
► Triangulate with Client Perceptions of Conditionality• Nature and numbers of Conditions• Program Implementation and Political Change• Recognition of Implementation Constraints
1219
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
080
10
20
30
40
50
Conditions in Bank adjustment loans, FY1980 -- FY2008
Ave
rage
# o
f con
ditio
ns p
er o
pera
tion
28 383336303842 3228 23483629292727 323032322931 23161699 144
2 1916171072 15
PRSC legal conditions
Non-PRSC legal conditions
…but conditionality declined in all policy lending
Eased conditionality -
Evaluating the Predictability of PRSCs
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► Predictability measured by:• Likelihood, based on past frequencies, of a PRSC
recipient country receiving a PRSC in a given year, compared to previous adjustment loans.
• Likelihood, based on observed past frequencies, of a PRSC country receiving any policy-based budget support, compared to previous adjustment lending.
• Stability of volumes of budget support received via PRSCs compared to previous adjustment lending, in absolute terms and as a proportion of total IDA/IBRD flows received
► Comparison of PRSC lending projections envisaged in country strategy documents vs. actual disbursements
► Other studies measured predictability by comparing:• Actual budget vs. predicted budget support
disbursements• Commitments vs. disbursements
Evaluating the regularity and timing of PRSC disbursements
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► Alignment of budget support relative to the budget needs: • Timing of disbursements
relative to country budget year: • Percentage of operations that
disbursed in last quarter of the preceding fiscal year
• Or in the first quarter of the current fiscal year
► Regularity of disbursements measured by:• Percentage of operations in a
series that disbursed in the same quarter, in each successive year
Burkina Faso is a good example…
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1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
90000000
100000000
Q4
Q3
Q2
Q1
PRSC 1
PRSC 2
PRSC 3
PRSC 4
PRSC 7
PRSC 6
PRSC 5
PRSC 1
PRSC 2
PRSC 3
PRSC 4
PRSC 7
PRSC 6
PRSC 5
PRSC 1
PRSC 2
PRSC 3
PRSC 4
PRSC 7
PRSC 6
PRSC 5
PRSC 1
PRSC 2
PRSC 3
PRSC 4
PRSC 7
PRSC 6
PRSC 5
PRSC 1
PRSC 2
PRSC 3
PRSC 4
PRSC 7
PRSC 6
PRSC 5
PRSC 1
PRSC 2
PRSC 3
PRSC 4
PRSC 7
PRSC 6
PRSC 5
PRSC 1
PRSC 2
PRSC 3
PRSC 4
PRSC 7
PRSC 6
PRSC 5
PRSC 1
PRSC 2
PRSC 3
PRSC 4
PRSC 7
PRSC 6
PRSC 5
A steady volume of disbursements, in the same quarter per series…
More predictable resources …
20as in other DPLs
Education
Finance
Health
Ind. & Trade
Public sector
0% 10% 20% 30% 40% 50% 60% 70%
non-PRSC PBL (IDA) FY95-00 - 92 projects
Education
Finance
Health
Ind. & Trade
Public sector
0% 10% 20% 30% 40% 50% 60% 70%
PRSC (01-08) 87 Operations
Education
Finance
Health
Ind. & Trade
Public sector
0% 10% 20% 30% 40% 50% 60% 70%non-PRSC PBL (IDA) FY05-08 - 57 projects
Evaluating sector support through PRSCs: Increased spending on education, health, PFM
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► PRSCs were initially perceived as a potential vehicle for all lending, including sector lending
► But ultimately, PRSC support complemented sector lending; replacement was rare
► IEG’s comparison of PRSC operations with the Country Assistance Strategies for PRSC countries shows that:• Many countries tried to channel sector lending
through the PRSC: Of 15 CASs in health & education, only 2
achieved sustained results Of 6 CASs in nutrition, water supply,
agriculture or environmental management, 1 on a sustained basis
Evaluating Budget support through PRSCs compared to sector lending…
Achievements► Did the PRSC process help to
harmonize donor matrices? Yes, PRSCs played a supporting role
► Were transaction costs for recipients reduced? Yes, to some extent
► Did other donors benefit? Yes, Bank expertise was made available to recipients and other donors
► But – there were initial perception of increased conditionality
► And increased transaction costs for the Bank (e.g. Mozambique, Ghana)
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Evaluating Donor harmonizationAchievements and Challenges
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Methodology of PFMP Evaluation of PRSCsDiagnostics• Were diagnostics comprehensive?• Extend of coverage• Treatment of fiduciary risk
• Were weaknesses addressed by PRSC program?• Was PRSC reform program consistent with action plans from
diagnostics?Design & Implementation• How well designed was results framework for PFMP?• Integrated action plan supported by key donors?• Significant delays in reforms?• Extent and quality of capacity building
Results• Before/After reform improvement in PFMP performance
where PRSC reforms focused• Achievement of PFMP objectives in PRSCs• General improvement in PFMP systems (CPIA etc.)
► Reforms well grounded in diagnostics led to well sequenced strategy agreed with donors
► Program achievements were in easier areas (e.g., budget classification reform)
► More difficult reforms show less success (e.g. bringing extra-budgetary funds and donor funds on budget; timely resource transfer to sector ministries)
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Most PRSCs achieved their PFMP reform objectives, with minor shortcomings
1985-1999 2000-2007
Per Capita GDP growth
PRSC countries 0.8 4.2
Better Performing Non-PRSC 0.5 3.3
All IDA countries 0.2 3.0
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Attribution to the PRSC is difficult
PRSC countries grew faster in the PRSC period…but so did other
countries
Poverty Rates for PRSC and Non-PRSC Countries (% of population below $38 per month)
PRSC countries
(20)
Better performing non-PRSC
(24)*
Non-PRSC counties
(36)
All IDA countries
(56)
% change (1984-99) -16.2 -12.6 -2.1 -7.8
% change (1999-2005)
-19.3 -13.0 -10.8 -14.1
but the decline began before the PRSC was introduced
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PRSC countries had more income poverty reduction…
PRSC Countries had greater progress with Millennium Development Goals…
PRSC and Other Countries: Millennium Development Goal Achievement
Difference (%)(% of population) (1990/1–2000/1) (2001–06)Primary enrollment, net PRSC 9.7 14.8 All IDA countries 11.6 9.1Infant mortality (per 1000) PRSC -19.0 -13.3 All IDA countries -14.5 -9.6Access to safe water PRSC 20.2 7.3 All IDA countries 12.6 4.8
…and progress was faster than before the PRSC period
…and faster than all IDA countries in the PRSC period
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Poverty rates declined in PRSC countries although attribution is
difficultIncome poverty rates fell faster in
PRSC countries, in the PRSC period, but also fell faster prior to the PRSC
In non-income measures of poverty PRSC countries did better, and improvement in the PRSC period was faster
Yet most PRSC programs do not trace links between actions and poverty outcomes
Parallel sector projects increase the difficulty of attribution
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IEG INDEPENDENT EVALUATION GROUP
Thank youwww.worldbank.org/ieg/prsc