Programme-for-Results Financing

This programme is designed to support countries, sectors and programmes and help the WB balance its financial sources more effectively and collaborate with other development organisations to support country programmes.

 

The new instrument will complement two existing lending methods of the WB: Development Policy (supporting policy actions to achieve a country’s overall development objectives) and Investment Lending (supporting projects, with disbursement against specific expenditures and transactions.)

 

The new financing instrument, P4R, focuses more directly on efficiency by taking results as the base for disbursement.

 

This new approach will direct the WB’s technical and financial assistance to national institution development in borrowing countries in a more robust way. Especially, it focuses on result monitoring capacity and enhancement of national expenditure system.

 

Accordingly, the WB will finance and help strengthen development programmes with clearly defined results. Disbursements are only made upon achievement of results and performance indicators, not inputs. It will focus on strengthening the institutional governance, capacity, and systems that are essential to ensure that the programmes achieve their expected results and can be sustained. It will provide assurance that the WB’s financing is used appropriately and that the environmental and social impacts of the programme are adequately addressed.

 

P4R will gradually transfer the active rights to implement, manage and monitor from the lenders to the government and local authorities. Thus, the WB will be able to improve institutional system capacity as well as enhance accountability, transparency and effectiveness of project implementation.

 

Two projects recommended to apply P4R in Vietnam are the “School Readiness Promotion” project for pre-primary students and “Rural Water Supply and Sanitation Operation” project.

 

The WB is collecting feedbacks on the newly proposed instrument from external parties, borrowing countries and civil institutions. Final details of the new scheme are expected to be put forth to the WB Management Board for discussion and approval at the end of the fiscal year 2011.

 

Dr Cao Viet Sinh, Deputy Minister of Planning and Investment, said: The pilot research on this new financing method is important to enhance financing effectiveness.

 

However, according to Mr Sinh, the expense for project construction, monitoring and evaluation will undoubtedly increase. Besides, if disbursement is only made upon the achievement of results, the progress of disbursement may be interrupted. The introduction of this new method also needs to have practical performances, learn and share on experiences to enhance the speed of implementation of and disbursement for each project, etc.

 

He recommended a careful study, meticulous calculation of opportunity costs and initial narrow scope of implementation. According to him, local authorities need to be improved their capabilities to take on the project, not have their capabilities improved after the project is carried out. Importantly, it is necessary to have a concerted coordination of capital sources among WB financing sources or different sources

 

Victoria Kwakwa affirmed that in the process of transferring the responsibility of implementation and supervision from the lenders to the government and local authorities, the WB will not reduce its responsibility. The implementation is based on two-side coordination to attain final results while costs are minimised and the time for completing procedures is shortened.