Highlights

The fragility, conflict, and violence strategy supports operational flexibility in countries classified as fragile and conflict-affected situations (FCS) through the adaptation of World Bank policies, procedures, and practices. As a result, project preparation times in FCS are similar to those in non-FCS, despite higher context complexity.

Operational Policy 7.30, on dealing with de facto governments, has helped the World Bank navigate its engagement during irregular power transfers in borrowing countries, but application of the policy is perceived as inconsistent. More clarity about the legal requirements for Operational Policy 7.30, transparent technical guidelines for World Bank staff and management, and better knowledge sharing with stakeholders could strengthen the application of the policy.

In countries undergoing recurring or extended political instability, the World Bank identified alternative successful strategies to remain engaged, including more flexible applications of third-party implementation.

The FCV strategy envisioned enhancing operational flexibilities in FCS to ensure that policies, processes, and practices are fit for purpose, streamlined, and flexible for FCV settings. However, while the FCV strategy generally supports operational flexibility in FCS, beyond revising OP 2.30, no specific measures adapting Bank Group procedures and practices were proposed or rolled out. As such, this evaluation focused on traditional outcome measures of operational flexibility—that is, the use of waivers and project preparation times in FCS compared with non-FCS. It also assessed the implementation of a key policy governing the World Bank engagement in FCS—OP 7.30 on dealing with de facto governments.

Operational Flexibility in Countries Classified as FCS

Preparation timelines for World Bank operations in FCS are similar to the Bank Group averages. FCS projects have on average slightly shorter project preparation times than the World Bank–wide average despite being designed in higher-risk and lower-capacity FCS (figure 5.1).1 This difference in timelines is partly driven by the share of TPI projects (chapter 6), as these have particularly short implementation times. The relatively short preparation time for TPI projects may be partially related to successful efforts by the Legal department and Operations Policy and Country Services (OPCS) to streamline the process for seeking recurrent waivers for several UN agencies and the International Committee of the Red Cross as of August 2024.

FCS projects use exceptions, and especially waivers, more frequently than non-FCS projects. Exceptions include retroactive financing, additional financing preparation, and extension of closing date. Similarly, waivers cover issues related to anticorruption guidelines, safeguards, and IDA eligibility and commitment charges. These operational flexibilities under the investment project financing policy for projects in situations of urgent need of assistance or capacity constraints are used often in FCS. IEG analyzed the existing data on the use of waivers and exceptions by projects in the FY19–25 period, in which 504 operations used waivers or exceptions. Of projects in FCS, 22 percent used waivers or exceptions, compared with a 17 percent World Bank–wide average. On average in this period, on a yearly basis, 10 percent of projects in FCS used an exception and 50 percent used a waiver. The use of waivers in FCV projects has been declining since FY21.

Figure 5.1. Project Preparation Times for Investment Financing Operations, FY18–24

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Figure 5.1. Project Preparation Times for Investment Financing Operations, FY18–24

Source: Independent Evaluation Group.

Note: FCV = fragility, conflict, and violence; TPI = third-party implementation.

Operational Policy 7.30 and Its Application in Practice

FCS are more likely to experience higher political instability and irregular transitions of power, which could put the World Bank’s engagement at risk. In situations where a de facto government is in place, or if there is a dispute over who is in government, there is a risk of the country not honoring its payment obligations to the World Bank. If the country discontinues servicing its debt payments, arrears could arise. One mitigation measure is to pause new disbursements and lending approvals.

The World Bank’s approach to situations where a de facto government comes into power or remains in power by means not provided for in the country’s constitution is governed by OP 7.30 on dealing with de facto governments; practices among other multilateral institutions vary widely. OP 7.30 is applied when a de facto government comes into power or remains in power by means not provided for in the country’s constitution, such as a coup d’état, revolution, or suspension of the constitution, or when no government is in place (World Bank Group 2013). Over the past 10 years (2015–24), there have been 19 coups d’état in FCS, with their frequency increasing during this period.2 Among multilateral development banks, the World Bank is one of the few institutions that have a formalized policy on dealing with de facto governments. IFC and MIGA are not governed by OP 7.30. Multilateral agencies differ in their approaches in response to irregular transfers of power. While the International Monetary Fund does not have an OP 7.30 equivalent policy, at least one multilateral development bank follows an informal procedure for pausing and reviewing its engagements after irregular transfers of power.

When OP 7.30 is applied, the World Bank pauses disbursements for projects under implementation and does not approve new operations until it is assured that the country’s obligations to the World Bank will be honored. Although the World Bank is not obligated to notify the government about a pause, it does so in practice (World Bank Group 2013). The pause of disbursements for existing operations lasts until the World Bank can determine that the de facto government (i) is in effective control of the country, (ii) recognizes the country’s past international obligations, (iii) states that it is willing and able to assume all of its predecessors’ obligations to the World Bank, (iv) is able to ensure the continued implementation of the relevant project or program, and (v) authorizes a representative for the purpose of requesting withdrawals (World Bank Group 2013).

Assurance that leads to a lifting of OP 7.30 is determined through an assessment that is launched by the respective World Bank country director and that can be a desk review or an in-country mission (World Bank Group 2013). For the World Bank to extend new loans, the World Bank will weigh (i) whether that would expose the World Bank to legal or political risks; (ii) whether the government is in effective control of the country and enjoys a reasonable degree of stability and public acceptance; (iii) whether the government generally recognizes the country’s past international obligations; (iv) the number of countries (particularly neighboring ones) that have recognized the government; and (v) the position of other international organizations toward the government (World Bank Group 2013). As stated in the policy, a positive assessment “does not in any sense constitute Bank ‘approval’ of the government, nor does refusal indicate ‘disapproval’” (World Bank Group 2013, 2). The assessment is thus not an endorsement of the legitimacy of a regime or recognition under international law (World Bank Group 2013).

OP 7.30 is intended to be applied pragmatically and not override the World Bank’s development mandate; the policy does not mandate complete disengagement. The policy focuses on the risks associated with a de facto government’s noncompliance with financial or project implementation obligations under existing and future financing to the member country’s government. OP 7.30 does not apply to other aspects of country engagement, including policy dialogue, ASA (except reimbursable advisory services to the government), diagnostics, and the like. The policy also does not apply to financing (IDA or trust fund) to third parties (such as the UN or international NGOs), meaning third parties can continue to implement projects with World Bank funds (World Bank Group 2013). Additionally, OP 7.30 exempts from the pause disbursements for two types of payments: (i) payments against special commitments issued before the date of the event giving rise to the pause, and (ii) direct payments to suppliers, contractors, and consultants against withdrawal applications received by the World Bank before the change in government. These exemptions allow the World Bank to remain engaged even during OP 7.30 periods.

In practice, there are significant differences in the duration of OP 7.30 periods. From 2020 and until 2025, OP 7.30 was applied 15 times in 11 countries (as of January 2025).3 Five countries are still under OP 7.30—Afghanistan, Libya, Myanmar, Sudan, and the Republic of Yemen—indicating that the criteria for lifting OP 7.30, as described earlier, have not yet been met. The duration of OP 7.30 applications varies from months to years, with a median duration of six months (figure 5.2).

Figure 5.2. Timeline of Operational Policy 7.30 Periods

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Figure 5.2. Timeline of Operational Policy 7.30 Periods

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Source: Independent Evaluation Group.

Note: OP = Operational Policy. Orange dashes show the fiscal year of OP 7.30 period for each country. The OP 7.30 status for the Syrian Arab Republic ended in 2025.

The application of OP 7.30 can have a significant impact on individual operations and country programs. The pause of disbursements can contribute to significant delays at the project level. In Guinea in 2021, after six months of OP 7.30, “delays in project implementation increased significantly, halting some projects that had just been approved, launched, or had barely begun implementation” (World Bank Group 2023, 55). This was despite the continuation of some activities, as project implementation units were authorized to use resources already in their accounts to cover their operating costs and carry out critical activities (World Bank Group 2023).4 Similar impacts were documented in Sudan in 2019 and in Madagascar in 2009 (World Bank 2021c). In Madagascar, which is heavily dependent on international support, OP 7.30 was in effect for five years. The disengagement of the World Bank and other development partners contributed to a marked deterioration in economic and human development outcomes. According to World Bank analysis, over the course of the political crisis (2009–13), the poverty rate increased by 10 percentage points, the number of out-of-school children soared by 600,000, child malnutrition increased in some areas by 50 percent, and several health care centers closed due to a lack of funding (World Bank 2021d; World Bank Group 2017).

Perceptions of the Application of Operational Policy 7.30

What qualifies as an irregular change in government can vary. OP 7.30 is initially being applied as soon as a country’s existing government is ousted from power or remains in power by unconstitutional means (World Bank Group 2013). However, what qualifies as such an irregular event is open to interpretation. The Cline Center identifies 33 successful coups across 24 countries in the 2010–23 period (Peyton et al. 2024). In almost half of these cases (15 out of 33; 45 percent), the World Bank applied OP 7.30 or the affected country was already under OP 7.30. Of the 18 Cline Center–identified takeovers that did not trigger an OP 7.30 episode, 5 (28 percent) took place in a country without ongoing lending operations.5 , 6 In determining whether a takeover is unconstitutional, the World Bank assesses the facts against the country’s constitutional framework and considers particularly important the determinations made by the country’s relevant legal bodies, such as the Supreme Court of the country.

Some criteria for reengagement leave room for interpretation. Not all criteria for resuming disbursements under OP 7.30, such as the effective control of the country, are defined, leaving them open to interpretation and judgment. This is particularly the case for the criteria for the extension of new loans, which include whether an extension would expose the World Bank to legal or political risks, whether there is a reasonable degree of stability, and how many countries (particularly neighboring) have recognized the government. This wording allows the World Bank a degree of discretion and flexibility to respond to different scenarios.

However, different perceptions of effective control, reputational risks, and a reasonable degree of stability can lead to perceptions of inconsistent application. For example, the Republic of Yemen is under OP 7.30 because its government does not have effective control of the country, while the Federal Republic of Somalia is not under OP 7.30, as “effective control” is assessed only when OP 7.30 applies, and that is not the case in the Federal Republic of Somalia at present.

More clarity over the legal requirements, transparent technical guidelines for World Bank staff and management, and better knowledge sharing with stakeholders could strengthen the application of OP 7.30. For the cases of OP 7.30 reviewed by the evaluation, interviews with members of the Board of Executive Directors, Bank Group staff, and managers indicate that there is the perception of considerable variation in the application of OP 7.30 because not every coup d’état or other irregular transfer of power amounts to an unconstitutional change leading to the application of OP 7.30. The perception of the inconsistent application of OP 7.30 could be reduced by clarifying the criteria, offering guidance for their interpretation, and elaborating on how situations are assessed. As the World Bank exerts significant influence and affects development outcomes when it applies OP 7.30, a more transparent process and more predictable technical guidelines for OP 7.30 would benefit Bank Group operations and recipient countries.

Alternatives to the Traditional Application of Operational Policy 7.30

The World Bank has applied OP 7.30 in several cases more flexibly while remaining engaged and avoiding a full suspension of operations. Notable examples include Niger in 2009, Mali in 2012, Guinea in 2021, and the Federal Republic of Somalia in 2021–22 (box 5.1; World Bank 2012; IDA, IFC, and MIGA 2013).

In situations of extended conflict or instability, the World Bank can maintain its engagement through TPI. In countries that experience protracted political uncertainty after an unconstitutional change in government, the World Bank has implemented alternate strategies to remain engaged while pausing disbursements as required under OP 7.30. If there is no government in power, for example, assistance may be provided for the country’s benefit at the international community’s request (World Bank Group 2013). In several countries currently under OP 7.30—Afghanistan, Sudan, and the Republic of Yemen—the World Bank has chosen to remain engaged through TPI (box 5.2).

Policy on Development Cooperation and Fragility, Conflict, and Violence

OP 2.30 on development cooperation and conflict was revised in line with the FCV strategy’s commitment in August 2021. The first six operational measures identified under the policies pillar of the FCV strategy relate to articulating how the Bank Group will operate in humanitarian crises, in refugee and forced displacement situations, and when dealing with security and military actors. In line with this, OP 2.30 was revised significantly in 2021 to align it with more recent practice and client demands. It became the Policy on Development Cooperation and Fragility, Conflict, and Violence (FCV Policy) and included new provisions on engagements with security sector agencies and military actors, nonstate actors, forced displacement, multilateral sanctions, and humanitarian crises, providing a clearer authorizing environment for the World Bank’s engagement on these topics. Staff guidance was also developed on engagements with security and military agencies, nonstate actors, and forced displacement. Given the recent nature of the update, this evaluation could not assess the impact of this revision on Bank Group operations.