The Program-for-Results (PforR)

Fadia SAADAH
Manager, Operations, Policy and Country Services,  The World Bank

As Manager for Investment Policy and Program for Results Financing in the World Bank’s Operations Policy and Country Services (OPCS) department, Fadia has spearheaded some of the World Bank’s most significant modernization and reform efforts.  She led the team that conceptualized, developed, and rolled out the Program-for-Results, the first new financing instrument the World Bank has introduced in over 30 years.  

She also led a comprehensive effort to modernize and reform the investment lending instrument, the World Bank’s core service to clients, and she managed the development of the groundbreaking new Access to Information Policy.  Previously, as Manager of the Health, Nutrition and Population Sector in the World Bank’s East Asia and Pacific Region, Dr. Saadah led the development of a strategy for the health sector and for HIV/AIDS work in that region, and coordinated the World Bank’s initial response to avian influenza. Fadia earned her Bachelor and Master of Science degrees from the American University of Beirut, Lebanon, and Master of Health Sciences and PhD degrees from Johns Hopkins University, Baltimore, USA.


 

Connecting Voices Middle East and North Africa (CV MENA): What was the rationale to introduce the new Program-for-Results (PforR) instrument in January 2012?

Fadia Saadah (FS): The development landscape has changed. Bank clients are increasingly implementing their own programs for development and poverty reduction and are asking development partners for finance and expertise to improve such programs’ effectiveness and efficiency in achieving results. Management believes that the Bank should provide lending instruments that respond to three broad demands: policy support; project support; and program support. The first two are addressed by Development Policy Lending and Investment Lending respectively. The Program-for-Results fills the gap that existed and offers program support.  It places more direct emphasis on results by making them the basis for disbursement. It focuses the Bank’s technical and financial support more strongly on institutional development, particularly capacity to monitor results and strengthen the public expenditure systems of a country. It also enables the Bank to leverage its own financing and collaborate with other development partners through the pooling of resources and focusing efforts on supporting government programs.

CV MENA: Over the past two years, what were the major challenges in the design and implementation of the PforR?

FS: Introducing the new instrument was a challenge in itself. We asked Bank staff and clients to start thinking differently about Bank-funded projects. It was even harder to differentiate the new instrument's identity from other Bank financing instruments, such as investment project financing. The introduction of a new financing instrument required work on many fronts, including training staff and management, and communicating with clients about the development of tools and systems to support it. I should add that these are reflections about the overall experience. Indeed, each PforR operations offered important lessons that we will reflect on and take into account as we move forward.

CV MENA: How does PforR work in different country contexts?

FS: Access to Program-for-Results by any country depends on a careful assessment of program systems in terms of performance, capacity and risks and the potential for improvements. In contexts where the existing systems are strong, the Bank may support very wide ranging and ambitious programs. In countries with weaker systems and capacity, it is likely that the scope of a Program-for-Results operation may be adjusted to strike the right balance between benefits and risks. Accordingly, how PforR is used will vary from country to country as well as from sector to sector; but the flexibility of the instrument will enable it to be used in a very wide range of country and sectoral situations.                 

CV MENA: How many PforR operations have been approved to date?

FS: As of December 2013, 10 PforR operations have been approved by the Board, totaling $1.8 billion in Bank financing in support of $4.4 billion of government programs. Another 17 operations are under preparation, for an estimated $2.5 billion in Bank financing. Operations approved to date are in five different regions along a range of country typologies (from fragile states to middle-income countries). The breakdown by sector is also diverse, with operations in transport, human and social development, urban and so forth.

CV MENA: To date, has any client country pursued more than one PforR operation?

FS: Yes, Morocco, Tanzania, Vietnam and Ethiopia are countries with one PforR operation under implementation, and one or more PforR operations under preparation.

CV MENA: How is fraud and corruption addressed in PforR supported operations?

FS: The Bank is committed to the highest standards of integrity and transparency and to addressing fraud and corruption. The operational policy for Program-for-Results sets out how issues of fraud and corruption are addressed. Anti-corruption guidelines for Program-for-Results have been developed. There is a strong focus in Program-for-Results operations on good governance including provisions for how to handle cases of fraud and corruption. In some Program-for-Results operations, it is expected that progress in fighting corruption and improving procurement will be among the results needed to release Bank disbursements (i.e. they would be part of the Program-for-Results disbursement-linked indicators (DLI)). The Bank reserves the right to launch an investigation as needed; however, the preferred approach is for government systems to carry out initial investigations.

CV MENA: Does PforR assume that adequate capacity is already in place?

FS: A key feature of Program-for-Results is institutional and capacity building. Program-for-Results does not assume that adequate capacity is already in place. As part of the process of preparing a Program-for-Results operation, the Bank undertakes a rigorous and detailed assessment of client capacity. If adequate arrangements are not yet in place or capacity is weak, the Bank discusses with the government what measures could be taken prior to and/or as part of implementation to address such weaknesses and enhance capacity. Only if it is not possible to reach an understanding or the risks to implementation remain too high, does the Bank decide that the program is not ready for Program-for-Results. Indeed because capacity building is an integral feature of Program-for-Results, it is expected that it will be used in many cases to help countries strengthen existing institutions and capacity.

CV MENA: What is the Bank’s role in the preparation, appraisal and implementation of PforR supported operations?

FS: The Bank is responsible for assessing the quality of the government program to be supported by a Program-for-Results operation and its associated systems. It also agrees with the government, in the context of appraisal, on any necessary improvement measures and on the Bank’s role in supporting the implementation of those measures. There is a strengthened focus on implementation support. The Bank is responsible for providing close and frequent implementation support to government teams implementing Program-for-Results. Work with other development partners is also critical for implementation support as noted above.

CV MENA: Do you find the PforR a suitable instrument for public sector and governance reform-related programs?

FS: PforR is an instrument designed to improve institutional performance as well as the efficiency and effectiveness of public expenditures. Look at the key features of P for R: financing based on implementation of results, not inputs or only policy actions; alignment with country programs; and country system- based. Also, PforR provides an opportunity for both the Bank task team and the client to implement operations in an environment that provides the space to adapt to circumstances as they evolve during program implementation. All of these elements fit well with reform program support, especially institutional reforms. Hence, it is a very good choice for public sector reform programs. To date, we have two public sector operations approved and a third under preparation. In addition, many of the sectoral PforR operations include public sector enhancements in their design. At the same time, the initial experience in using the instrument for public sector operations points to the need to realize that public sector operations are different from "traditional" sectors, and tend to apply to large segments of government. This is not an issue of policy, but rather one of guidance. In this context, we will be revising the guidance notes to reflect these experiences in the coming months with the aim of helping the instrument fulfill its potential in supporting public sector reforms.

CV MENA: I understand that the two-year review of the instrument is currently being conducted. Could you please tell us something about this process?

FS: The two-year review is an important milestone for the instrument. At the time of instrument approval, the Board of Executive Directors and management agreed to adopt a learning approach and limit the share of the instrument to 5 percent of International Development Association/ International Bank for Reconstruction and Development (IDA/IBRD) lending in the initial two-year period. The review, which is currently underway, will look at all aspects of the instrument from policy to guidance and implementation. It uses a number of approaches including surveys, interviews and consultations. Staff as well as clients, development partners and civil society organizations (CSOs) will engage in the process. The review will be guided by two advisory bodies: an internal one comprised of a number of Directors who are involved with the instrument; and an external body comprised of senior-level technical specialists. The team will have preliminary results available in April/ May 2014, and hope to have the initial draft of the report in June 2014. For more information, please visit our website as we will be posting information as it becomes available.