Highlights

The World Bank Group’s reengagement with Somalia was enabled by the New Deal Compact for Somalia of 2013, the availability of development partner funding through the Multi-Partner Fund, and partnerships with other international financial institutions.

The two subsequent Bank Group strategies—an Interim Strategy Note (FY 2014–16) and a Country Partnership Framework (FY19–23)—were relevant and appropriate to Somalia’s development under the fragility, conflict, and violence environment. A focus on statebuilding was consistent with the priorities of development partners, the government’s objectives, and the Bank Group’s own analytic work and comparative advantage.

The World Bank delivered financing totaling $2.54 billion during FY13–23. Although initially focused on public sector governance projects, it shifted to citizen-centric projects during the Country Partnership Framework period. Annual lending volume was scaled up significantly after the clearance of International Development Association arrears in 2020.

The Bank Group made critical contributions to the arrears clearance and helped Somalia regularize its relationships with international financial institutions and attain International Development Association eligibility while closely collaborating with the International Monetary Fund and other partners. Reaching the Heavily Indebted Poor Countries Completion Point in 2023 enabled Somalia to rejoin the global financial system after more than 30 years.

The Bank Group’s strategies performed well in achieving statebuilding and institution-building objectives, helping to build country systems and capacity, and supporting the building of a social safety net. The strategies, however, have so far had few tangible results in promoting private sector–led growth and opportunities.

This chapter discusses the evolution, relevance, and performance of the Bank Group’s approach and strategies to support Somalia (figure 2.1) and the operationalization of those strategies during the evaluation period FY13–23 (figure 2.2).

Evolution of the World Bank Group’s Strategies and Core Diagnostics

Between 2006 and 2012, the Bank Group gradually began to reengage with Somalia. After a prolonged absence due to civil war and the collapse of state institutions, the World Bank approved 10 small lending operations and 27 nonlending activities between those years, supported by trust funds and focused on emergency or disaster response.1

The adoption of the New Deal Compact for Somalia in 2013 was a turning point for relations with the international community (figure 2.1). The compact created a new development framework for cooperation among the international community, the internationally recognized Federal Government of Somalia, and Somali society.2 It paved the way for coordinated engagement by the international community and international financial institutions (IFIs), including the Bank Group, the African Development Bank, and the United Nations (UN). The compact recognized that traditional approaches to development assistance had failed to build public trust in domestic government institutions, which undermined their ability to increase the capacity of these institutions to deliver services (Diop 2013; Hearn and Zimmerman 2014). The compact’s five Peacebuilding and Statebuilding Goals covered legitimate and inclusive politics, security, justice, economic foundations, and revenue and services.3

Figure 2.1. Timeline of Events in Somalia

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Figure 2.1. Timeline of Events in Somalia

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Source: Independent Evaluation Group.

Note: CPF = Country Partnership Framework; HIPC = Heavily Indebted Poor Countries; IDA = International Development Association; OP = Operational Policy.

Figure 2.2. Evolution of the World Bank Group Modalities of Engagement in Somalia

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Figure 2.2. Evolution of the World Bank Group Modalities of Engagement in Somalia

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Source: Adapted from Aleph Strategies 2019, supported by the World Bank Group.

Note: FMS = federal member states; HIPC = Heavily Indebted Poor Countries; IDA = International Development Association.

The Bank Group mobilized development partner resources in support of the New Deal Compact through the establishment of the Multi-Partner Fund. The World Bank–administered Multi-Partner Fund was set up in 2013 to support government-led statebuilding, economic growth, and urban development, and was supported by Denmark, the European Union, Finland, Germany, Italy, Norway, Sweden, Switzerland, the United Kingdom, the United States, and the previously established (in 2008) State and Peacebuilding Fund, which involved many of the same donors.4 The use of government systems was a core component of the compact, and the Multi-Partner Fund provided a channel for the donor partners to deliver aid through the government’s budget while building and testing core government systems with important guardrails in place. The fund was also designed to coordinate development resources and policy dialogue to ensure consistency and coherence of support from IFIs. The advisory engagements of the International Finance Corporation (IFC) were supported by a Private Sector Development Trust Fund for Somalia, established in 2017–22 to address barriers to private sector investment.

In the first phase from the endorsement of the New Deal Compact, the World Bank’s engagement and program design was guided by an ISN (FY14–16). During FY14–19, the World Bank was unable to use its own resources to support Somalia because of the large-scale arrears to itself, the International Monetary Fund (IMF), and other external creditors. During this phase, support was financed by the State and Peacebuilding Fund,5 the Somalia Multi-Partner Fund,6 and International Development Association (IDA) Pre-Arrears Clearance Grants (PACGs). Inspired by the World Development Report 2011 on conflict, security, and development (World Bank 2011), the ISN emphasized strengthening core institutional capacity and legitimacy, renewing the social contract, and supporting private sector development as key to supporting the country’s transition out of fragility. It had two priorities: strengthening core economic institutions and expanding economic opportunity (figure 2.3).

In line with the ISN, during FY14–19, the World Bank delivered a limited portfolio with the help of trust funds. Financing came from $19.5 million committed under the State and Peacebuilding Fund and IDA PACGs, with additional resources mobilized from international partners through the Multi-Partner Fund. In this phase, financing primarily focused on governance, public financial management (PFM), and institutional capacity building, starting in 2014 with the Somalia PFM Capacity Strengthening Project, the Recurrent Cost and Reform Financing project, and the Somalia Capacity Injection Project.

Figure 2.3. Alignment of the World Bank Group’s ISN, SCD, and CPF with the Somalia New Deal Compact’s Peacebuilding and Statebuilding Goals

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Figure 2.3. Alignment of the World Bank Group’s ISN, SCD, and CPF with the Somalia New Deal Compact’s Peacebuilding and Statebuilding Goals

Source: Independent Evaluation Group based on analysis of World Bank 2013c, 2018a, and 2018b.

Note: CPF = Country Partnership Framework; ISN = Interim Strategy Note; PSG = Peacebuilding and Statebuilding Goal; SCD = Systematic Country Diagnostic; > = consistency of PSG issues or constraints with Bank Group SCD and strategies; / = PSGs not covered in Bank Group SCD and strategies.

The World Bank also delivered core analytic activities, including a 2018 fragility assessment. The 2018 assessment, which informed the 2018 Systematic Country Diagnostic (SCD; World Bank 2018b), identified weak domestic revenues and vulnerability to environmental degradation and climate change as key drivers of fragility that exacerbated the federal government’s inability to provide basic services and contributed to Somali citizens’ mistrust of the state. A subsequent 2023 assessment (described in World Bank 2024g) added the failure to establish a stable political settlement between central and subnational elites and deep-seated intercommunal divisions to the list of fragility drivers (box 2.1).

In a second phase, by 2019, the Bank Group had transitioned to a full CPF. Reflecting improved country circumstances, a growing country program, and available data and analytics, the Bank Group prepared a CPF for FY19–23 (World Bank 2018a). The CPF emphasized institution building and maintained the ISN’s focus on generating economic opportunities. The CPF had two focus areas: building institutions to deliver services and restoring economic resilience and opportunities. The FY23 Performance and Learning Review (PLR) realigned these into three focus areas: strengthening institutions and financing for social service delivery; enabling inclusive, private sector–led growth; and strengthening resilience (World Bank 2022c).

The Bank Group’s strategies were relevant and appropriate to Somalia’s development and fragility challenges and allowed engagement under the severe constraints of the FCV environment. Both the ISN and CPF sought to focus on some of the key development challenges. They were relevant in that they carefully selected focus areas, adjusted them to the severe FCV challenges facing the country, and based them on the Bank Group’s knowledge about engaging in FCV situations as reflected in the World Development Report 2011 and Pathways for Peace (World Bank 2011; UN and World Bank 2018).7 They consistently emphasized institution building for economic governance and service delivery, as well as economic opportunities and resilience.

The strategies were informed by diagnostic work including the 2018 fragility assessment and the SCD. The SCD homed in on weak domestic revenues as a key driver of fragility and structured its priority areas around that driver. The CPF was aligned with the three SCD Priority Areas of governance, opportunities, and resilience (figure 2.3). The CPF was informed by the SCD and addressed several drivers of FCV by focusing on institutional capacity, facilitating and promoting dialogue between the federal government and the subnational governments of the federal member states, and addressing social exclusion with an emphasis on women (World Bank 2024f).

The strategies were also consistent with the Peacebuilding and Statebuilding Goals agreed by development partners in 2013. Engagement focused on three of five of the Peacebuilding and Statebuilding Goals agreed among international donors in 2013 when donor partners reengaged with Somalia (see figure 2.1). The Bank Group appropriately engaged in the three areas in which it had a deep expertise: inclusive politics, economic foundations, and revenue and services. The strategies also appropriately supported work in the security and justice sectors linked to public expenditure.

Moreover, the strategies were consistent with the Bank Group’s comparative advantage. The Bank Group identified its comparative advantage primarily in institution building. By channeling funds through government systems using the Multi-Partner Fund, it helped strengthen ownership, accountability, and capacity and restore institutions. The CPF aimed to ensure these institutions were visible in delivering for citizens, by focusing on establishing service delivery mechanisms and creating economic opportunities.

Stakeholder feedback confirmed that the Bank Group focused on the most urgent development constraints in statebuilding and service delivery, while also noting a lack of focus on productive sectors and jobs. Counterparts and in-country stakeholders appreciated the World Bank’s leading role among development partners in the statebuilding agenda, its focus on strengthening country systems, and support for service delivery—all in line with Somalia’s eighth and ninth National Development Plans. However, stakeholders noted that engagement with the private sector was limited, despite the vibrancy of this sector in Somalia and the need to support productive sectors on a larger scale to help create economic opportunities and jobs for a rapidly growing population and to reduce poverty. A 2021 World Bank Opinion Survey comprising 162 respondents echoed this perception, identifying job creation and employment (23 percent), public sector governance and reform (22 percent), and education (15 percent) as the most important development priorities in Somalia—even ahead of security and stabilization and anticorruption efforts (World Bank 2022h).

The CPF was designed to be flexible and evolved during implementation. The CPF appropriately programmed only the first two CPF years (FY19–20), leveraging funding from the Multi-Partner Fund and IDA PACGs, pending normalization of Somalia’s relationship with IFIs by reaching the Heavily Indebted Poor Countries (HIPC) Initiative Decision Point and clearing IDA arrears. The portfolio remained largely focused on projects supporting institution building, governance, PFM, and core state functions. The CPF anticipated an increase in Bank Group assistance if Somalia normalized IDA relations, pointing to opportunities in trade, transport, and energy. The CPF also allowed flexibility to respond to a series of crises (World Bank 2024f).

The World Bank and IMF supported debt relief and normalization of the relationship with IFIs. Clearance of IDA arrears and compliance with an IMF Staff Monitored Program allowed Somalia to reach the HIPC Decision Point in 2020. The Bank Group program included actions supporting Somalia’s normalization with IFIs (discussed in the Debt Relief and Normalization of Relations with International Development Association and International Financial Institutions section).

Operationalization of the World Bank Group Strategies

During FY13–23, the World Bank approved 53 financing operations totaling $2.54 billion, relying on trust funds in the initial phase of engagement. Of these, 23 projects, mostly approved in FY13–19, were fully supported by trust funds, accounting for $342.7 million in financing support (69 percent of the total).8 The 53 operations include 38 new commitments and 15 additional financings. Without the availability of the trust funds, reengaging in the country would have not been possible (figure 2.4).

Figure 2.4. Evolution of World Bank Lending and Nonlending, FY13–23

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Figure 2.4. Evolution of World Bank Lending and Nonlending, FY13–23

Source: Independent Evaluation Group staff analysis using World Bank operations data.

Note: The majority of the loan amount of the 2020 development policy operation (US$359 million) financed the repayment of a bridge loan supplied to Somalia by the government of Norway. CPF = Country Partnership Framework; DPF = development policy financing; ISN = Interim Strategy Note.

Since clearing its arrears in 2020, Somalia has seen a significant increase in World Bank financing driven by access to IDA funds. Transitioning from smaller trust-funded operations, commitments increased substantially after FY20. This includes the $420 million Somalia Reengagement and Reform Support development policy operation (DPO) approved in FY20, which enabled Somalia to repay a bridge loan to the government of Norway. This DPO, together with its $55 million supplemental operation, accounted for 19 percent of all financing received by Somalia in FY13–23. Overall, financing support averaged $81 million per year pre-arrears clearance (FY14–19) and $424 million per year thereafter (FY20–23, excluding the amount to repay the bridge loan to the government of Norway). The World Bank made available $1.9 billion during FY20–22 from the IDA18 Turnaround Regime, the IDA19 Turnaround Allocation, and the IDA Regional Integration and Crisis Response Windows.9

The World Bank shifted the sector composition of its portfolio from a focus on public sector reform to citizen-centric service delivery. In terms of sectoral distribution, the largest number of operations were in governance, which accounted for 12 projects representing $509 million in commitments, excluding the three development policy loans. This was followed by urban, resilience, and land, with 10 operations totaling $382 million, and social protection and jobs, with five projects committing $433 million. All social protection commitments ($433 million) have been approved since FY20 as part of IDA’s Somalia Crisis Recovery Project and the Shock Responsive Safety Net for Human Capital Project. Development policy financing (DPF) accounted for $575 million (22.7 percent of total financing) and investment policy financing for $1,963 million (77.3 percent; figure 2.5). The share of governance in the World Bank’s financing amounted to 65 percent in FY14–19 compared with 10 percent in FY20–23. After IDA normalization, the Bank Group increased its assistance in support of human capital (especially social protection).

The World Bank had an active portfolio of ASA, which aligned with the focus on governance and institution building (figure 2.5). The World Bank delivered 65 ASA activities covering a broad range of issues during the CPE period (FY13–23), with 38 completed in FY13–19 and 27 in FY20–23. Among these were core diagnostics such as the 2018 and 2023 fragility assessments, 2018 SCD, 2023 SCD Update, and the 2024 Country Private Sector Diagnostic. Equitable Growth, Finance, and Institutions was the Practice Group with the most activities (34), representing over half of all initiatives in Somalia. Governance and Macroeconomics, Trade, and Investment Global Practices accounted for 35 percent of the ASA, and ASA supporting public sector administration accounted for about half. Among the knowledge gaps addressed were PFM (16 ASA activities), human capital development (11), infrastructure (8), and private sector development (7), which broadly aligned with the areas of World Bank engagement in statebuilding.

The IFC portfolio in Somalia was mostly limited to advisory services. IFC conducted 12 advisory services and upstream activities, most of them approved during FY19–21. The majority of advisory engagements focused on addressing the investment climate reforms and capacity building for related institutions, such as supporting the development of the Company Law, a company registry, and the regulatory framework for public-private partnerships. IFC also conducted three upstream activities to support client preparation in microfinance, information and communication technology, and energy. In FY23, IFC committed an equity investment in the West Indian Ocean Cable Company Holding to fund their regional expansion of operations in Africa. As a result of this equity investment, IFC expects Somalia to benefit from connectivity investments. The Multilateral Investment Guarantee Agency supported a small solar power project, Kube Energy Somalia, with a $5.7 million guarantee. This project, which primarily provides renewable energy to a UN compound, benefited from risk-sharing with the IDA Private Sector Window and Multilateral Investment Guarantee Agency’s Renewable Energy Catalyst Trust Fund via a first loss facility.

Figure 2.5. Distribution of World Bank Financing in Somalia by Global Practice (percent)

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Figure 2.5. Distribution of World Bank Financing in Somalia by Global Practice (percent)

Source: World Bank operations data.

Performance of the World Bank Group Strategies

IEG’s analysis of the performance of the Bank Group strategies was based on two sources: the validation of the Country Learning Review prepared for the FY19–23 CPF, and the results of closed projects supported during the evaluation period as assessed by their Implementation Completion and Results Report Reviews.

The strategies have performed well in achieving their statebuilding and institution-building objectives, helping to build country systems and capacity. Few tangible results were achieved in promoting private sector–led growth and economic opportunities. The FY19–23 country strategy (CPF) had moderately satisfactory results as assessed by the Completion and Learning Review Validation (table 2.1).10 In terms of the three focal areas of the FY23 PLR, the Bank Group’s work in the first area, Strengthening Institutions and Financing for Social Services Delivery, was rated moderately satisfactory, and its two objectives were rated mostly achieved by the Completion and Learning Review Validation (World Bank 2024f). Although there was progress on strengthening government capacity and systems and on intergovernmental (federal versus regional) fiscal relationships, capacity remains weak and fragile. Spending on social services and social assistance increased, especially through the social safety net program (Baxnaano). However, there was limited progress on developing and implementing new revenue instruments or on teachers’ training as enrollment rates for primary school remained dismal.

The Bank Group’s performance in the second focus area, enabling inclusive private sector–led growth, was rated moderately unsatisfactory, and its two objectives were rated partially achieved. While the World Bank and IFC focused their support on regulatory reform, business environment, and infrastructure and connectivity, limited progress was made on financial and digital inclusion (including medium, small, and micro enterprises) and on increasing private sector investment. The ongoing Somalia Capacity Enhancement and Livelihoods and Entrepreneurship, through Digital Uplift Program (SCALED-UP) sought to increase access to basic digital financial and government services targeting entrepreneurship and employment. World Bank projects including the Somalia Core Economic Institutions and Opportunities Program (SCORE) and DPF helped develop and adopt key legislation and regulatory frameworks (such as the Company Law). Two projects sought to expand access to electricity (World Bank 2024f).

IFC’s engagement remained limited compared with expectations (World Bank 2024f). It focused on business environment constraints through advisory services, which supported the Company Law, a company registry, and regulatory frameworks including for public-private partnerships, with staff noting collaboration among World Bank, IFC, and Multilateral Investment Guarantee Agency teams. Despite these achievements, available self-assessments of IFC’s advisory engagements point to a mixed picture due to Somalia’s challenging operating environment.11 IFC’s upstream engagements have not yet led to investment opportunities. A Country Private Sector Diagnostic (World Bank 2024a) provided further analysis on constraints and opportunities for private sector solutions in Somalia. Overall, support for the private sector pillar of the CPF showed some progress on strengthening regulatory frameworks and institutions but had limited traction on improving the business environment and contributing to enabling an inclusive private sector–led growth during the evaluation period (World Bank 2024f).

Finally, performance in the third focus area, Strengthening Resilience, was rated satisfactory, and its two objectives were rated achieved. There were improvements in urban roads and water infrastructure, as well as greater and improved access to water in rural areas for domestic, livestock, and horticultural use. More people in rural areas benefited from improved flood risk management and from greater access to livelihood support in response to major shocks due to floods, drought, or locusts (table 2.1; World Bank 2024f).

At the project level, validated World Bank financing operations in Somalia performed well, with all projects rated moderately successful or better in achieving their objectives (table 2.2).12 Of the 53 financing projects since FY13, 13 have closed and their results have been validated. Achievement of project development outcome—which captures achievement of the projects’ intended development objectives—has been rated moderately satisfactory or better for all. IEG also rated the World Bank’s performance as moderately satisfactory or better, pointing to good quality and adaptation of the portfolio in Somalia. However, half of IEG’s project validations explicitly noted that the risks to the achieved development objectives were significant or substantial, indicating that the sustainability of project results, including reforms supported by the projects, is at risk. The projects identified several risks to sustainability and overall project implementation, including political instability in the country and ongoing conflict (8 projects); domestic economy (7); project sustainability after end of funding (4); government capacity (11); institutional capacity (7); security (6); and climate change (3).

Source: World Bank 2024f.

Note: CLR = Completion and Learning Review; CLRV = Completion and Learning Review Validation; IEG = Independent Evaluation Group.

Adaptations in approaches, realism in design and objectives, effective implementation modalities, and flexibility during project implementation contributed to strong project performance. Most projects identified realistic objectives with a recognition of what could be achieved given the fragility and low-capacity environment in the country. However, many results were framed at the level of outputs, rather than outcomes. For example, several projects noted the adoption or enactment of laws but provided no information on actual implementation and application. Moreover, results frameworks did not link outputs to FCV-specific indicators and achievement of higher-level statebuilding or resilience objectives, or disaggregated results for specific vulnerable groups (other than by gender).

Source: Independent Evaluation Group.

Note: Based on 13 ICRRs. ICRR = Implementation Completion and Results Report Review.

Most projects referred to specific adaptations in design and implementation, including through piloting approaches and scaling up support, supported by additional resources. Seven of the 12 validated projects involved piloting an approach and scaling it up, and at least two of those were a part of a project series. Among the adaptations identified were providing increased budgets for supervision and monitoring, including because of security expenses (Recurrent Cost and Reform Financing, Capacity Injection Project), and the importance of linking reforms to arrears clearance and to counteract local power dynamics (CPF, Recurrent Cost and Reform Financing). Across the validated projects, the cost for project management and implementation varied, but reached 20 percent of project commitments on average, which indicates the allocation of significant resources during project implementation. The share of cost was highest in Somali Urban Investment Planning (P150374) with 38 percent, reflecting a project that was spread over a high number of sites and with significant Environmental and Social Framework (ESF) requirements. Project restructurings and extensions were frequent. Nine of the 12 projects were restructured, on average about four times. Seven projects were extended, on average by 13 months, with one project, the Capacity Injection Project, extended by 30 months.

Debt Relief and Normalization of Relations with International Development Association and International Financial Institutions

The World Bank made critical contributions to arrears clearance and normalizing Somalia’s relationships with IFIs and IDA eligibility. Reengagement with IFIs and debt relief was a key objective of the government of Somalia. In 2020, with the help of a $366 million bridge loan from the government of Norway and other support from IDA, Somalia was able to clear its arrears, thus normalizing its financial relationship with the Bank Group (World Bank 2020d). The clearance gave Somalia access to resources from IDA and, alongside a period of compliance with designated reforms under an IMF Staff Monitored Program, paved the way to receive debt relief under the HIPC and Multilateral Debt Relief Initiatives.

World Bank financing support from a DPO was critical for arrears clearance. The World Bank supported arrears clearance through the fiscal 2020 Somalia Reengagement and Reform DPF (P171570).13 The DPF was thus highly relevant and timely. The project documents show that DPF prior actions and results indicators were based on sound and rigorous analysis relevant to the country context, underpinned by knowledge from the fragility assessments, SCD, and Financial Governance Reports published by the Financial Governance Committee supported jointly by IMF, the Bank Group, and the European Union, in addition to an extensive range of relevant thematic ASA activities.

The World Bank’s support has emphasized HIPC triggers to help progress toward HIPC completion, which involved strong collaboration with IMF. The IMF–Bank Group partnership was able to leverage the coordination arrangements, relationships, and trust established through the aid architecture for the benefit of the HIPC process (World Bank 2022c). There was frequent engagement at the country manager and country economist level and joint meetings during IMF missions (World Bank 2020f). This helped create the gradual and sequenced program related to HIPC reengagement, which complemented budget support operations from the World Bank, IMF, and the European Union, and performance innovations in World Bank–supported projects (World Bank 2022c). Reaching the HIPC Decision Point required sustained commitment to the implementation of economic and financial reforms, which Somalia demonstrated for four consecutive IMF Staff Monitored Programs in the lead-up to the HIPC Decision Point. Many of the benchmarks and targets in the Staff Monitored Programs were directly supported by investment project financing under the Multi-Partner Fund and reforms supported by IDA’s PACGs and DPF operations and IMF’s Extended Credit Facility (World Bank 2024f).

Somalia reached the HIPC Decision Point in March 2020 and the Completion Point in December 2023. It qualified for the HIPC Decision Point after reaching several preconditions, such as a satisfactory record of robust policy performance under programs supported by IMF and the World Bank, clearance of arrears to IMF and the World Bank, and preparing a satisfactory Poverty Reduction Strategy (World Bank and IMF 2020). Total debt relief amounted to $4.5 billion, and the HIPC initiative reduced Somalia’s external debt from 65 percent of GDP to about 6 percent. This was a major milestone for Somalia, which rejoined the global financial system after more than 30 years (Pilling 2023; World Bank and IMF 2020).

Even so, the HIPC process was unable to fully resolve key challenges of statebuilding in Somalia. Although the Decision Point document notes that many triggers directly supported elements of the fiscal federalism framework Somalia was developing as part of its constitutional and political framework, some stakeholders questioned whether the HIPC process could have provided incentives for the federal government and the federal member states to find agreement on the more challenging underlying constitutional issues related to fiscal federalism (for instance, a more sustainable and accepted formula on sharing of revenues). Indeed, the sustainability of the resource-sharing agreement between the government and the federal member states is at risk given tensions in 2023 and disagreement between the government and the federal member states, amid a perception that World Bank support has been centralized and is being channeled through the federal government. Subnational government representatives noted that the HIPC process had affected the dynamics between the government and the federal member states.

Although normalization of relations with IFIs was an important milestone, reaching the HIPC Completion Point also created challenges for the post-HIPC period. The biggest challenge is for the Bank Group to manage appropriately the portfolio and lending volumes in the post-HIPC environment, given absorptive capacity limitations, and with sensitivity to political dynamics and awareness of adverse impacts on underlying drivers of fragility and conflict. At the same time, it is important to retain the momentum and incentives for difficult policy reforms and address the constitutional issues that might impede further progress on statebuilding. Several government stakeholders, although appreciative of the World Bank’s leading role in supporting HIPC, noted a perceived lack of strategy and planning for the post-HIPC period. Subnational entities were more critical of the HIPC process, with some stating that constitutional issues should have been resolved before HIPC completion. World Bank staff also echoed some risks and the need to deploy similar tools to Recurrent Cost and Reform Financing, PFM, and others, both to sustain reform momentum and as incentives for challenging reforms on federalism.