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Topic:Development Policy Financing (DPF)
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Boosting Market Confidence to Support Key Development Efforts: Three Lessons from Indonesia

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Boosting Market Confidence to Support Key Development Efforts
This brief captures the lessons from evaluating the World Bank’s Public Expenditure Support Facility (DPL-DDO) in Indonesia. This brief captures the lessons from evaluating the World Bank’s Public Expenditure Support Facility (DPL-DDO) in Indonesia.

Seychelles CLR Review FY12-16

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The World Bank Group's (WBG) Country Partnership Strategy (CPS) for Seychelles covers the period, FY12-FY15. The CPS was extended by one year to FY16 at the Country Partnership Strategy Progress Report (CPSPR) in FY15. This Review covers both the CPS and CPSPR period, FY12-16.WBG's support for Seychelles was in line with the country's draft Seychelles Medium-Term National Development Strategy Show MoreThe World Bank Group's (WBG) Country Partnership Strategy (CPS) for Seychelles covers the period, FY12-FY15. The CPS was extended by one year to FY16 at the Country Partnership Strategy Progress Report (CPSPR) in FY15. This Review covers both the CPS and CPSPR period, FY12-16.WBG's support for Seychelles was in line with the country's draft Seychelles Medium-Term National Development Strategy 2013–17 (MTNDS), later approved in 2015, which presented the vision and goals for the country. The core aim of the MTNDS was to reduce Seychelles' vulnerability and to provide the basis for long term sustainable development. Specifically, the objective of the MTNDS was to reduce vulnerability, increase resilience, and provide the basis fora sustainable development. The WBG supported the government in reducing vulnerability and building long-term sustainability with a program centered on two pillars: (i) increasing competitiveness and employment and (ii) reducing vulnerability and enhancing resilience, and one cross-cutting foundation, governance and public-sector capacity. The CPS built on the previous Interim Strategy and aimed to deepen and broaden structural reforms via programmatic support using Development Policy Lending (DPL) operations, complemented with Analytical and Advisory Services (ASA), including technical assistance and reimbursable advisory services (RAS).The IEG concurs with key lessons in the CLR: (i) development policy operations can be mobilized quickly and achieve strong results when complemented by sound analysis and technical assistance but it requires commitment and ownership, (ii) deeper understanding and assessment of political economy would help explain the successes and failures of specific reform efforts and identify factors that might otherwise be missed, and (iii) well-designed and updated results framework prove useful for Bank and Government monitoring of program implementation and results.

Maximizing the Impact of Development Policy Financing in IDA Countries: A Stocktaking of Success Factors and Risks - An IEG Meso Evaluation

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Development policy financing (DPF) has evolved from supporting structural adjustment programs in the 1980s and 1990s to supporting the achievement of the Millennium Development Goals (MDGs) in the 2000s. It has been considered by multilateral and bilateral donors as one of the instruments that would best enable the realization of the Paris Declaration on Aid Effectiveness. However, the use of Show MoreDevelopment policy financing (DPF) has evolved from supporting structural adjustment programs in the 1980s and 1990s to supporting the achievement of the Millennium Development Goals (MDGs) in the 2000s. It has been considered by multilateral and bilateral donors as one of the instruments that would best enable the realization of the Paris Declaration on Aid Effectiveness. However, the use of budget support as a preferred aid modality has been diminishing, especially among European member states. This evaluation is expected to inform decisions on the use of Development Policy Financing (DPF) in IDA countries by providing evaluative insights into drivers of success and risks. This is pertinent in the context of the record replenishment for IDA18 in the face of a declining share of DPF in IDA commitments during the last three IDA cycles. In this context, it is worthwhile to examine the factors that have driven DPF success in the past so as to inform decisions on the role of this development financing instrument in IDA countries going forward.

Poland CLR Review FY14-17

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Poland is a high-income country (HIC) with a GNI per capita of $12,680 in 2016. Poland’s annual economic growth accelerated to 3.3 percent during the CPS period (2014-2016) from 2.9 percent over the previous four years, 2010-13. The consistency of the country’s macro and structural policies has been the key driver behind the economy’s growth and helped its transition to HIC status in less than 15 Show MorePoland is a high-income country (HIC) with a GNI per capita of $12,680 in 2016. Poland’s annual economic growth accelerated to 3.3 percent during the CPS period (2014-2016) from 2.9 percent over the previous four years, 2010-13. The consistency of the country’s macro and structural policies has been the key driver behind the economy’s growth and helped its transition to HIC status in less than 15 years. Poland’s economic growth has been inclusive in the past decade, as evidenced by growing employment and earnings for all income groups, which led to a substantial reduction in poverty and stronger-than-average growth of the bottom 40 percent of the distribution. Between 2005 and 2014, Poland’s Gini coefficient fell from 0.351 to 0.343. The poverty rate measured at $5.00/day 2005 PPP stood at 4.4 percent in 2015. Poland’s strong economic growth is expected to continue in the near term; however, the longer- term prospects could be subdued by demographic and structural challenges – including a rapidly aging population, slowdown in total factor productivity, infrastructure gaps, low domestic private investment and regional disparities -- if left unaddressed.

Building Resilience through Disaster Risk Management-3 Lessons from Colombia

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Colombian family whose home floods every year creating hazardous living conditions.
This brief captures the lessons learned from evaluating the World Bank’s Bank’s Colombia Disaster Risk Management Development Policy Loan.This brief captures the lessons learned from evaluating the World Bank’s Bank’s Colombia Disaster Risk Management Development Policy Loan.

Colombia: Disaster Risk Management Development Policy Loan (PPAR)

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This Project Performance Assessment Report (PPAR) evaluates the Colombia Disaster Risk Management Development Policy Loan with a catastrophe deferred drawdown option (CAT DDO). The loan of $150 million was approved on December 18, 2008, became effective on June 25, 2009, and closed on January 31, 2012. The PPAR reviews the performance of the operation based on Independent Evaluation Group (IEG) Show MoreThis Project Performance Assessment Report (PPAR) evaluates the Colombia Disaster Risk Management Development Policy Loan with a catastrophe deferred drawdown option (CAT DDO). The loan of $150 million was approved on December 18, 2008, became effective on June 25, 2009, and closed on January 31, 2012. The PPAR reviews the performance of the operation based on Independent Evaluation Group (IEG) and Operations Policy and Country Services guidelines on program evaluations. The loan sought to strengthen the government’s program for reducing risks resulting from adverse natural events. Ratings for the Disaster Risk Management Development Policy Loan project were as follows: outcome was satisfactory, risk to development outcome was negligible to low, Bank performance was moderately satisfactory, and Borrower performance was satisfactory. Lessons include (i) The CAT DDO can help advance the DRM reform agenda and strengthen the clients’ system to respond to disaster risks. (ii) The CAT DDO can complement other World Bank instruments for supporting DRM reforms. (iii) The design and implementation of the CAT DDO in Colombia raised some issues that deserve further clarification.

Ghana: Agriculture Development Policy Operation, Phase I–IV (Project Performance Assessment Report)

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This Project Performance Assessment Report (PPAR) assesses the outcome and sustainability of two consecutive World Bank–financed programmatic series of DPOs in the agriculture sector in Ghana with a total disbursement of US$ 157 million. Objectives of these two projects include: (i) to increase the contribution of agriculture to growth and poverty reduction; (ii) to improve the management of soil Show MoreThis Project Performance Assessment Report (PPAR) assesses the outcome and sustainability of two consecutive World Bank–financed programmatic series of DPOs in the agriculture sector in Ghana with a total disbursement of US$ 157 million. Objectives of these two projects include: (i) to increase the contribution of agriculture to growth and poverty reduction; (ii) to improve the management of soil and water resources; (iii) to enhance productivity and market access among farmers; and (ii) to improve agriculture sector management. Ratings for the First Agriculture Development Policy Operation Series were as follows: outcome was moderately unsatisfactory, risk to development outcome was significant, World Bank performance was moderately unsatisfactory, and borrower performance was moderately unsatisfactory. These ratings differ from the ICR in all four areas. Ratings for the Second Agriculture Development Policy Operation Series were: outcome was moderately unsatisfactory, risk to development outcome was significant, World Bank performance was moderately unsatisfactory, and borrower performance was moderately unsatisfactory. All ratings except for risk to development are different from the ICR. Lessons include: (i) In a sector such as agriculture, in which responsibilities are fragmented across many different directorates and agencies, impact could be heightened by broadening engagement beyond key counterparts in the leading ministry to other directorates charged with delivering program results. (ii) Rigorous assessment of government commitment and ownership is needed not only at the design stage but throughout implementation. (iii) Potential synergies between sector and general budget support operations could be enhanced by more effective coordination and monitoring and feedback between the two. (iv) Defining DPO series objectives in concrete and measurable terms and scaling ambition down to what the actions in the operations can realistically be expected to influence can improve the demonstration of impact and enhance attribution.

Peru: Fiscal Management and Competitiveness Programmatic Development Policy Loans (Project Performance Assessment Report)

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This PPAR evaluates the programmatic series of Peru FMCDPL I–IV and supplemental financing to FMCDPL II. The FMCDPL series aimed to support the government’s reform program to improve the functioning of Peru’s public sector institutions and business environment. The support program rested on two pillars: (i) improve the efficiency and quality of fiscal management and (ii) enhance competitiveness. Show MoreThis PPAR evaluates the programmatic series of Peru FMCDPL I–IV and supplemental financing to FMCDPL II. The FMCDPL series aimed to support the government’s reform program to improve the functioning of Peru’s public sector institutions and business environment. The support program rested on two pillars: (i) improve the efficiency and quality of fiscal management and (ii) enhance competitiveness. Under these, the FMCDPL program supported nine specific policy objectives: Efficiency and quality of fiscal management: (i) increase sustainability and transparency of fiscal policy, (ii) make tax system more neutral and stable, (iii) strengthen budget reporting and planning, (iv) increase equity in intergovernmental transfers, and (v) improve efficiency and impact of public spending. Competitiveness: (vi) make public sector processes more transparent, accessible, and agile; (vii) expand and deepen international trade; (viii) reduce transaction costs for the private sector to enter, operate in, and exit markets; and (ix) promote sustainable financial deepening. The overall outcome is rated moderately satisfactory, reflecting substantial relevance of the objectives and the design and partial achievement of most objectives under the two pillars. Key lessons include: (i) When strong ownership of the client is demonstrated, a programmatic series of operations can offer the World Bank and its client win-win solutions. (ii) For the World Bank, a multiyear program of support gives it a chance to pursue an extended and coherent analytical agenda that may not be feasible in multiple one-off operations. (iii) To the client, the programmatic series offers a real-time opportunity to learn about the reforms (including both the costs and benefits) and to build on the momentum of initial success. (iv) In the case of Peru, despite all the positive steps the government has taken to enhance efficiency in the allocation of fiscal resources, a pressing need to rationalize the fiduciary and regulatory norms and the multiplicity of control and auditing instances remains. (v) The application of the DDO in this context to the second loan and its supplement illustrated the World Bank’s willingness and ability to support Peru at a time of considerable market uncertainty and, arguably, to help limit contagion.

Development Policy Financing (DPF)

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Development Policy Operations (DPOs)
World Bank assistance to its clients can be provided in the form of a Development Policy Financing (DPF). This could be a loan, grant or credit which provides rapidly-disbursing financing to help a borrower address the actual or anticipated development financing requirements and promote policy reform.World Bank assistance to its clients can be provided in the form of a Development Policy Financing (DPF). This could be a loan, grant or credit which provides rapidly-disbursing financing to help a borrower address the actual or anticipated development financing requirements and promote policy reform.

What Lessons Can We Draw from the World Bank's Environmental Policy Lending Experience?

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environmental dpo lessons, ieg whatworks blog on policy lending
Given the increasing reliance on policy lending to drive environmental goals, it is important to understand in what contexts this type of intervention works best, and what factors to consider when designing and implementing environmental policy loans. Given the increasing reliance on policy lending to drive environmental goals, it is important to understand in what contexts this type of intervention works best, and what factors to consider when designing and implementing environmental policy loans.