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The International Development Association's Sustainable Development Finance Policy

Report to the Board from the Committee on Development Effectiveness

The committee appreciated learning that management had begun addressing many areas for improvement regarding the SDFP design and implementation, including updating staff guidance and templates to ensure a more consistent understanding of critical tools for sustainability, even-handedness, and transparency. Members were also pleased to hear that, overall, the SDFP is an improvement over its predecessor, the Non-Concessional Borrowing Policy; that it provides a mechanism for articulating PPAs and incentives to address country-specific drivers of debt stress; and that in the first year of its implementation, the majority of adopted PPAs responded to key drivers of debt vulnerabilities and were likely to make positive contributions.

While acknowledging that it was too early to evaluate the Program of Creditor Outreach (PCO) and that the SDFP might not be the right tool to bring all creditors to the table, members emphasized the importance of the PCO and expressed concern regarding the PCO’s achieved progress. They encouraged management to more clearly define the PCO ambition and objective and asked management to explain how it assesses the capacity of low-income countries to report on debt data accurately in the environment of the growing borrowings from nontraditional creditors. Because it is one of the two pillars of the SDFP, they also stressed that the PCO should be given higher importance and urged management to be more proactive and, together with the International Monetary Fund, use their role as mediators to facilitate progress in this field.