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Program-for-Results: An Innovative New Financing Instrument of the World Bank

Paul Bermingham's picture

Paul Bermingham, Director of the Bank department that is developing Program-for-Results, talks about the World Bank’s proposal to introduce a new financing instrument for its client countries—its first in 30 years.

A new focus on achieving results was launched a decade ago when the international community adopted the Millennium Development Goals as targets to advance development and reduce poverty. Since then, all of us in the development community—countries, financing institutions, taxpayers, civil society, and others—have been wrestling with issues such as how to define development results, how to achieve them, how to create incentives for results, and how to measure them.

In the World Bank, for example, we began thinking of new ways to help developing countries—our members and clients—achieve the results they were looking for. We modified our approaches and our documents to make clearer which results we were aiming to achieve, through what steps we expected to achieve them, and how we would know when we had achieved them. 

Now we’re taking this focus one step further, developing a new financing instrument, Program-for-Results, that links disbursement of funds directly to the achievement of results—tangible, verifiable results. Once approved, countries of all sizes and levels of development will be able to use this new instrument to finance programs designed to achieve a set of specific results—perhaps reduce infant mortality or increase literacy.

We expect that this approach will have many advantages. For example, client countries’ development programs are usually much larger in size than the World Bank’s financing; under Program-for-Results, we will help countries strengthen their ability to manage all the funds in a program, not just the funds the World Bank provides. By the end of the program, the country will have not only the results the program was designed to produce, but also, we expect, stronger institutions to maintain and build on these results.

Some people have concerns—in particular, that the proposed instrument represents a dilution of the Bank’s commitment to some of its core values, such as protecting people, the environment, and the money in the programs it supports. Our commitment to these values remains firm, whatever instrument we use. In fact, we believe that under Program-for-Results we will be better able to help our client countries adopt these core values and apply them to all of their programs.

Program-for-Results is innovative; although it is based on many years of experience, it is an entirely new approach to development financing. At the same time, we acknowledge that new approaches need to be tested. For this reason, should the instrument be approved, we plan to implement it cautiously. At first, we will limit the amount of lending under Program-for-Results, and we will exclude activities that pose the highest environmental and social risks as well as high-value procurement contracts. And, of course, Program-for-Results operations, like all operations the Bank funds, will be subject to all of the Bank’s independent oversight agencies.

We have designed Program-for-Results to be complementary to the Bank’s other instruments—it will not replace investment lending (which supports specific projects and disburses against specific expenditures and transactions) or development policy lending (which supports policy and institutional reforms and provides general budget support). Some countries are excited about this new instrument, some will not wish to use it, and some will wait to see how it evolves.

Getting results and building institutions is difficult, and there will inevitably be a learning process. Yet after years of experience with the Bank’s existing tools, and the more than two years we have spent in developing and consulting on this instrument, we are confident that the time has come to try this innovative approach. We look forward to being able to use this new tool for our most challenging yet ultimately rewarding priority—helping our client countries achieve sustainable results.

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Submitted by deliah davis on
Wow!

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