Outcome Ratings Increase Across Entire World Bank Group
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While the RAP 2021 presents encouraging results, as the impact of the pandemic continues to permeate Bank Group operations and outcome measurement systems, outcome ratings may decline in future reviews of the World Bank Group's development effectiveness.While the RAP 2021 presents encouraging results, as the impact of the pandemic continues to permeate Bank Group operations and outcome measurement systems, outcome ratings may decline in future reviews of the World Bank Group's development effectiveness.
Measuring Results in Global Development
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We are less than a decade from delivering on the Sustainable Development Goals (SDGs). The SDGs touch on some of the most profound challenges facing humanity, such as ending poverty and reducing inequality. What does it mean to assess results on this massive agenda? Senior evaluator Estelle Raimondo and host Brenda Barbour talk about what they’ve learned about results measurement in global Show More
We are less than a decade from delivering on the Sustainable Development Goals (SDGs). The SDGs touch on some of the most profound challenges facing humanity, such as ending poverty and reducing inequality. What does it mean to assess results on this massive agenda? Senior evaluator Estelle Raimondo and host Brenda Barbour talk about what they’ve learned about results measurement in global development. How do we rethink Results Based Management to better support countries achieve their development outcomes? And what can the COVID-19 pandemic tell us about current results measurement practices?
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Results and Performance of the World Bank Group 2021
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This report, also known as the RAP, is the 2021 annual review of World Bank Group’s development effectiveness. The report assesses the Bank Group’s performance by analyzing the achievement of project and program objectives through validated ratings and presenting an in-depth analysis of possible drivers.
This report, also known as the RAP, is the 2021 annual review of World Bank Group’s development effectiveness. The report assesses the Bank Group’s performance by analyzing the achievement of project and program objectives through validated ratings and presenting an in-depth analysis of possible drivers.
World Bank Group Engagement with Morocco 2011–21 (Approach Paper)
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This Country Program Evaluation aims to assess the World Bank Group’s contribution to Morocco’s development trajectory over the past decade (fiscal years 2011–21) and is timed to inform the next Country Partnership Framework and future Bank Group engagements in the country. The Country Program Evaluation will use a range of methods to assess how the Bank Group has supported Morocco’s efforts to Show MoreThis Country Program Evaluation aims to assess the World Bank Group’s contribution to Morocco’s development trajectory over the past decade (fiscal years 2011–21) and is timed to inform the next Country Partnership Framework and future Bank Group engagements in the country. The Country Program Evaluation will use a range of methods to assess how the Bank Group has supported Morocco’s efforts to tackle major constraints to achieving its objective of reaching upper-middle-income-country status. The evaluation will focus on three outcome areas: (i) fostering private sector–led growth that absorbs a growing labor force; (ii) strengthening inclusive human capital formation and addressing the obstacles to women and youth labor force participation; and (iii) reducing climate risks and natural resource depletion and addressing their combined effects on the most vulnerable people, especially in rural areas.
Kyrgyz Republic Country Program Evaluation (Approach Paper)
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The Country Program Evaluation (CPE) for the Kyrgyz Republic seeks to assess the World Bank Group’s efforts to help the Kyrgyz Republic address its main development challenges. The evaluation will cover fiscal years (FY)14–21 and is timed to inform the next Country Partnership Framework (CPF) between the Kyrgyz Republic and the Bank Group. The evaluation will assess (i) how relevant was the Bank Show MoreThe Country Program Evaluation (CPE) for the Kyrgyz Republic seeks to assess the World Bank Group’s efforts to help the Kyrgyz Republic address its main development challenges. The evaluation will cover fiscal years (FY)14–21 and is timed to inform the next Country Partnership Framework (CPF) between the Kyrgyz Republic and the Bank Group. The evaluation will assess (i) how relevant was the Bank Group’s strategy and how it evolved over time, given changes in the country context and lessons from experience; (ii) the extent to which Bank Group support helped the Kyrgyz Republic foster increased private sector–led growth to reduce economic vulnerability; (iii) the extent to which Bank Group support helped improve central government governance and institutional capacity; and (vi) the extent to which Bank Group support improved local governance and the quality of, and access to, local public services.
Reducing child undernutrition: lessons from international development
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Réduire la sous-nutrition chez l'enfant: les leçons du développement international
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Will the World Bank's Sustainable Development Finance Policy lower the risk of debt distress?
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When asked how he went bankrupt, a character in one of Ernest Hemingway’s novels offered the now famous explanation: “Gradually, and then all of a sudden.” It could be said that the rise of debt stress in low-income countries has followed a similar pattern. For countries eligible for IDA, the World Bank’s fund for the poorest countries, the number deemed at high risk of, or in, debt distress more Show MoreWhen asked how he went bankrupt, a character in one of Ernest Hemingway’s novels offered the now famous explanation: “Gradually, and then all of a sudden.” It could be said that the rise of debt stress in low-income countries has followed a similar pattern. For countries eligible for IDA, the World Bank’s fund for the poorest countries, the number deemed at high risk of, or in, debt distress more than doubled (from 19 to 40) over the past decade. One third of these countries experienced a two-level deterioration (either from low to high risk, or moderate to in debt distress) in less than three years. On July 1, 2020, as part of its efforts to help change the trajectory on debt distress in IDA-eligible countries, the World Bank launched the Sustainable Development Finance Policy (SDFP.)
Sustainable public borrowing has an important role to play in low-income countries, including to finance investments for economic growth and poverty alleviation. It is also critical for countercyclical public spending during economic downturns, such as the current downturn caused by the pandemic. Servicing growing levels of debt, however, can crowd out spending on core public services like education, health, and basic infrastructure, and choke off access to affordable finance. The SDFP aims to create incentives for both IDA borrowers and their creditors to manage debt accumulation in a sustainable and transparent manner.
In view of the importance of effective debt management both to the recovery from the pandemic and to keep development agendas on track, the World Bank Board's Committee on Development Effectiveness asked the Independent Evaluation Group (IEG) to conduct an "early stage" assessment of the SDFP to identify opportunities to strengthen the policy's effectiveness.
What was learned from the first year's implementation?
In many ways, the SDFP is an improvement over the Non-Concessional Borrowing Policy (NCBP) that it replaced. Crucially, it takes a broader view of the types of countries at risk of debt distress, and the potential sources of debt.
The NCBP applied to IDA-only countries, not IDA "blend" or "gap" countries (countries which meet some conditions for non-concessional IBRD borrowing but also some for IDA), despite the fact that a third of the IDA-eligible countries at high risk of or in debt distress by 2020 were blend or gap countries. The SDFP expands coverage to include all IDA-eligible countries.
The SDFP also broadens the coverage of public debt to include domestic borrowing, which played a significant role in the rapid rise in debt stress over the past decade. Beyond broadening scope, the SDFP provides a new mechanism for dealing with the drivers of debt stress. As part of one of the policy's pillars --the Debt Sustainability Enhancement Program (DSEP) -- at risk IDA-eligible countries are required to implement performance and policy actions, known as PPAs, to correct factors contributing to debt distress risks.
In one critical aspect, however, the policy has not heeded the warning from Hemmingway’s famous character of how quickly things can go from bad to worse. The screening process the SDFP uses for excluding countries from undertaking PPAs – based on being assessed at "low risk" according to the World Bank–IMF Debt Sustainability Framework, or DSF – potentially excludes countries with significant underlying vulnerabilities. With evidence that the transition to debt stress occurs more sudden than gradual, a review of the criteria for excluding countries from PPAs is warranted.
As they are at the core of the policy, for the SDFP to be successful, it is also essential that the PPAs are actually relevant – that they address the underlying country-specific drivers of debt stress. IEG undertook case studies to assess PPA relevance over the first year, and from those found that about two thirds of PPAs responded to the main sources of debt stress in their respective country. The remaining third did not. For example, non-concessional borrowing ceilings were included as PPAs across the board for high-risk countries, even where ceilings already existed or where non-concessional borrowing did not contribute to the country's rising risk of debt distress.
Much like the old policy, the new one also focuses on creditors as well as debtors. The Program of Creditor Outreach (PCO), the second pillar of the SDFP, aims to use the World Bank's role as convener to promote information sharing and collective action at the creditor level, including with nontraditional creditors, to reduce debt related risks to IDA-eligible countries.
While the PCO represents a well-intentioned effort to engage the broader community of creditors, a review of the NCBP found that previous efforts at creditor coordination by the World Bank have had a positive but limited impact on lending decisions, and little was achieved with respect to coordination with non–Paris Club and private creditors.
It is too early to assess whether the PCO will incentivize creditor coordination, but a fundamental question from past experience is whether the World Bank is best placed, on its own, to convene non-Paris Club and private creditors, both of which are key to tackling mounting debt stress.
The debt build-up over the decade highlighted clear deficiencies in the previous policy meant to ensure debt sustainability among IDA-eligible countries. The SDFP is a positive step toward shifting the trajectory of debt distress risks downwards. At the same time, IEG’s early-stage evaluation finds there is scope for improvement and provides a number of recommendations for increasing the effectiveness of the new policy.
Read: IDA's Sustainable Development Finance Policy - An Early-Stage Evaluation
The International Development Association's Sustainable Development Finance Policy
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This evaluation provides an early-stage assessment of IDA's Sustainable Development Finance Policy (SDFP), which went into effect July 1, 2020.
This evaluation provides an early-stage assessment of IDA's Sustainable Development Finance Policy (SDFP), which went into effect July 1, 2020.
COP26 pledges: Can the private sector come through for climate action in emerging economies?
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The first week of COP26 ended with a loud and clear response from world leaders to the call for greater ambition and urgent climate action. Regardless of whether this enthusiasm is to be received with hope or with skepticism, it is important not to lose focus on the pressing theme of private capital mobilization (PCM) for climate action, without which it will be impossible to meet the Paris Show MoreThe first week of COP26 ended with a loud and clear response from world leaders to the call for greater ambition and urgent climate action. Regardless of whether this enthusiasm is to be received with hope or with skepticism, it is important not to lose focus on the pressing theme of private capital mobilization (PCM) for climate action, without which it will be impossible to meet the Paris Agreement.
As US Treasury Secretary, Janet Yellen, noted in her remarks “… as big as the public sector effort is across all our countries, the $100-trillion plus price tag to address climate change globally is far bigger… and the private sector needs to play a bigger role”. In fact, developed economies have not been able to meet the $100 billion a year commitment to finance climate needs in emerging economies.
A major announcement at COP26 was the pledge of the Glasgow Financial Alliance for Net Zero (GFANZ) – a global coalition of over 450 finance firms across 45 countries, jointly managing $130 trillion - to align their financing activities to achieve net-zero emissions by 2050. Leaving aside fair questions as to whether it is enough or realistic, this pledge is indicative of the scale and ambition needed..
A similar pledge came earlier this year from the Climate Finance Partnership (CFP), a partnership between BlackRock and the governments of France, Germany, and Japan, as well as a number of leading U.S. impact investing organizations, to align resources towards net-zero emissions.
Just as GFANZ and CFP, private sector players are making bolder commitments representing important opportunities. But how much of this financing will reach emerging economies? What can the World Bank Group (WBG) and partner organizations do to facilitate the flow of private capital to developing countries? IEG recently published an evaluation on the WBG’s approach to capital mobilization which includes lessons that could shed some light on these questions.
Coalitions such as GFANZ and CFP seek bankable projects, mostly in the infrastructure and energy sectors, requiring emerging economies to strengthen their policy and regulatory frameworks and raise industry standards in key sectors to attract investors. The WBG can continue to play a major role in addressing institutional barriers to private investment flows at the country level. Examples from Jordan and Ghana illustrate how WBG-supported policy and institutional reforms catalyzed private capital mobilization in the energy sector.
In Jordan, the Bank Group’s technical assistance and its support to public sector management reforms strengthened the power utility financially, boosted the development of the wind power market, and facilitated private investments in renewable energy. In Ghana, the WBG supported reforms to strengthen the financial sustainability of the state off-taker in the power sector and promoted the introduction of the Extractive Industries Transparency Initiative standards, which facilitated private investments.
With the release of its 2021-25 Climate Change Action Plan (CCAP), the WBG put forward strong commitments to mobilize more private capital for climate action and prioritize adaptation efforts, recognizing that developing countries are bearing the brunt of climate change effects. Avenues to mobilize private capital streams into adaptation are not near as wide and clear as they are for mitigation. In fact, only 2% of tracked adaptation finance comes from the private sector. Turning this around will require a great deal of innovation from the WBG and all other Development Finance Institutions (DFIs) to structure instruments and platforms that yield PCM deals for adaptation in emerging economies.
Through its CCAP, the WBG is committing to linking climate and development goals and integrating climate objectives into all its work. Similarly, the Bank Group -and other DFIs – should seek to structurally expand PCM efforts across all sectors and regions by creating more incentives for teams to increase their financial structuring expertise and use of PCM mechanisms, even in sectors where financing is typically done through direct lending.
The WBG, and other DFIs, have thus a critical role in ensuring pledges like that of the GFANZ and the CFP represent opportunities for emerging economies. Greater innovation is required to ensure valuable financial structuring expertise is mainstreamed and geared towards all sectors, including those associated with adaptation efforts.
As the global development community moves forward with its efforts to mobilize private investment towards climate and development objectives, clarity regarding the standards and taxonomy surrounding climate finance should also be achieved. Avoiding confusion regarding the differences between climate finance, green finance, transformational finance, etc., can prevent these terminologies from becoming another obstacle for the flow of private capital to where its most needed.
IEG is committed to building a strong body of evaluation evidence and gathering lessons, identifying what works and what doesn’t, as the WBG advances private capital mobilization towards achieving its green, resilient, and inclusive development objectives.
Read: The World Bank Group’s Approach to the Mobilization of Private Capital for Development | An IEG Evaluation