46144 ANNUAL IXEPQRTON PORTFOLIOPEIEEIFOMANCE FISCALYEAR2006 FEBRUARY2007 13, (MAIN REPORT) QUALITY ASSURANCE GROUP ACRONYMSANDABBREVIATIONS AAA Analytic andAdvisory Activities IP ImplementationProgress AFR Africa Region ISR ImplementationStatus and ResultsReport APL Adaptable ProgramLoan KPI Key PerformanceIndicators ARD Agriculture andRuralDevelopment Sector Board LCR Latin America andthe CaribbeanRegion ARPP Annual ReportonPortfolio Performance LICUS Low-IncomeCountries Under Stress CAS CountryAssistance Strategy MDGs Millennium DevelopmentGoals CAAA CountryAnalytic andAdvisory Activities M&E Monitoring andEvaluation CFAA CountryFinancialAccountabilityAssessment MIC Middle-IncomeCountries CEM CountryEconomicMemorandum MNA Middle East andNorth Africa Region CMU CountryManagementUnit MP MontrealProtocol CODE CommitteeonDevelopmentEffectiveness NLTA Non-LendingTechnicalAssistance CPAR CountryProcurementAssessment Review OESW Other Economicand Sector Work CPIA CountryPolicy andInstitutionalAssessment OPCS OperationsPolicy andCountry Services Network CPPR CountryPortfolio PerformanceReview PCR ProjectCompletionReport CSR Controller's, StrategyandResourceManagement PER PublicExpenditureReview DO DevelopmentObjectives PIP Portfolio ImprovementProgram DPL DevelopmentPolicy Lending PN PolicyNotes EAP East Asia andPacificRegion PPAR ProjectPerformanceAssessment Report ECA Europe and CentralAsia Region PREM PovertyReductionandEconomicManagementNetwork ED EducationSector Board PRSC PovertyReductionSupport Credit EMT Energy andMining Sector Board PSG Public Sector GovernanceBoard ENV EnvironmentSector Board PSDN PrivateSector DevelopmentNetwork EP Economic Policy Sector Board QAG Quality AssuranceGroup ERL EmergencyRecovery Loan QEA Quality-at-EntryAssessment ESSD Environmentallyand Socially SustainableDevelopment QER Quality EnhancementReview Network ESW Economicand Sector Work QSA Quality of SupervisionAssessment FSE FinanceNetwork RTA ReimbursableTechnicalAssistance FY FiscalYear SAP Systems, Applications, andProducts GEF GlobalEnvironmentFacility S A R SouthAsia Region GRAAA GlobalandRegionalAnalytic andAdvisory Activities SDV SocialDevelopment Sector Board HDN HumanDevelopmentNetwork SF SpecialFinancing HNP Health, Nutrition andPopulation SFR Strategy, FinanceandRisk Management HR HumanResources SP SocialProtectionSectorBoard IBRD InternationalBankfor ReconstructionandDevelopment TA TechnicalAssistance ICR ImplementationCompletionReport TF Trust Fund ICRR ICRReview TR Transport SectorBoard IDA InternationalDevelopment Association TTL Task Team Leader IEG IndependentEvaluationGroup (formerly OED) UD UrbanDevelopment Sector Board IG Investment Grade VPU Vice PresidentialUnit INF InfrastructureNetwork ws Water Supplyand SanitationSector Board(formerly WSS) INV Investment Operations ANNUALREPORTONPORTFOLIOPERFORMANCE FISCALYEAR 2006 CONTENTS EXECUTIVESUMMARY.............................................................................................. i-iv I. Introduction...................................................................................................................... 1 I1. PortfolioSize and Composition ....................................................................................... 2 I11. PortfolioPerformance .................................................................................................... 17 IV 32 V .. Analytic andAdvisory Activities Recommendations .......................................................................................................... ................................................................................... 45 BOXES Box2.1: The PortfolioDynamics .......................................................................................... 3 Box 2.2: Quality-at-Entryof IBRD/IDA Guarantees ............................................................ 5 Box 2.3: Implementingthe InfrastructureAction Plan:Supportingthe Energy Communityof SouthEasternEurope(ECSEE) ..................................................... 8 Box2.4: ProgrammaticSupport for Long-termChange: Civil Service Reform inTanzania .............................................................................................................. 9 Box 2.5: CustomizedCountryPartnership:The Case ofKazakhstan .......................................................................................................... ................................. 10 Box 3.1: RatingScale 17 Box 3.2 Africa RegionHIV/AIDSPortfolio ...................................................................... 21 Box 3.3: EvolutionofPPARCoverage by IEG ................................................................... Box 3.4: StrengtheningSupervisionofProblemProjects:The Africa Approach ...............23 29 Box 4.1: SelectedCountryAAA Programswith HighLikely Impacts ............................... 39 Box .4.2: Shocks and Social ProtectioninCentralAmerica: Lessons fromthe Coffee Crisis ......................................................................................................... 41 Box4.3: Costs of compliance with InternationalAgro-Food Standards: A GlobalPerspective ....................................................................................... 42 FIGURES Figure2.1: Key Trends . .............................................................................................................. 4 Figure2.2A: InvestmentApprovals Figure2.2B: DevelopmentPolicyLendingApprovals................................................................ ............................................................................................. 6 Figure3.1: DevelopmentOutcomes ....................................................................................... 7 18 Figure3.2: FY05-06Outcomes for Some Selected Clients ................................................... 20 Figure3.3A: Qualityof Supervisionby Dimension,QSA6 and QSA7 Figure3.3B: Qualityof Supervisionby Dimension,QSA7 Figure3.4: NetDisconnectbetweenIEGOutcomesandISRRatingsduringFY04-06.........25 ....................................................... ..................................... 25 28 Annual Report on Portfolio Performance FY06 i EXECUTIVESUMMARY 1. The Annual Report on Portfolio Performance provides the Board and Senior Management with a strategic overview o f the size, composition and quality o f the Bank's lending portfolio and the Analytic and Advisory Activities (AAA) program. It also provides Senior Management real time information to assess what i s working well, or less well, together with recommendations on measures to sustain or improve the quality and effectiveness o f the lending portfolio and o f the AAA program -- two key vehicles for delivering results to our clients. LENDING PORTFOLIOSIZE AND COMPOSITION 2. The Bank's FY06 portfolio (1,468 operations with $95.2 billion o f net commitments) shows relative stability by comparison with FY05, along with continued strength inIDA and INF approvals and improved resource transfer. However, net commitments remain about 12 percent lower than at the end o f FYO1. Notwithstanding the shrinkage in net commitments, disbursements in FY06 were 21 percent higher than the FYOl level due to the shift towards quick-disbursing DPLs (Development Policy Lending) as well as the improved disbursement performance for investment operations. IBRD net commitments account for 56 percent of the total (as against 64 percent in FYO1) with IDA'Sshare increasing to 42 percent from about one- thirdfive years ago. 3. Annual approvals inFY06 reached $23.9 billion, continuing the upward movement o f the previous two years. The significantly higher level o f IBRD investment approvals achieved in FY05 was increased further in FY06. For IDA, the FY06 approvals were the highest level ever, and consistent with the agreed Bank priorities; one-half o f them were in the Africa Region. Overall, however, the increased approvals in FY06 were offset by increased exits-mostly due to unusual bunching inclosure o f several large DPLs inLCR. 4. At a more disaggregated level, over the past five years, there have been several noteworthy shifts among Regions and Networks. AFR's share o f total net commitments grew from 13 percent to 20 percent while both LCR and EAP shrank significantly-reflecting a general shift towards the poorer clients and in the case o f LCR, greater use o f fast-disbursing, single-tranche operations. Among the Networks, net commitments over the last five years declined for HDNand ESSD. However, with some investments inrural and social infrastructure now being financed as part o f multi-sectoral projects managed by other Networks, the actual reductions in net commitments are not quite as large as they may appear. Finally, data for the past two years show positive results from the Middle-Income Countries (MIC) and Infrastructure initiatives, as well as from recent measures to modernize, streamline, and simplify Bank processes. These efforts have helped stem the decline in IBRD net commitments while increasing the relevance o f Bank support and providing a stronger basis for increased investment lending and faster disbursements. LENDINGPORTFOLIO PERFORMANCE 5. Project-level IEG evaluations continued the positive trend o f the past decade and the share o f satisfactory outcomes now hovers around 80 percent. Development outcomes for IDA Annual Report on PortfolioPerformanceFY06 11 projects achieved a 77 percent satisfactory rating, which, although still below the 85 percent outcome for IBRD operations, are an improvement over previous years. Bank management has recently taken active measures to enhance the Bank's performance and organizational response to Fragile states whose 56 percent satisfactory outcome level remains o f concern. 6. Considerable variations exist in development outcomes between Regions and Sectors. Two regions, AFR and MNA, continue to trail the Bank's average based on number o f projects, though the difference i s smaller in terms o f net commitments. Among the Sectors, Transport with over 90 percent satisfactory outcomes is the best performer overall. Finance, Social Protection and Water Supply and Sanitation also show significantly above-average performance. At the other end, the outcomes for the Environment, Public Sector Governance, Health and Private Sector Development remain a matter o f concern, especially because progress in these areas is at the heart o f the MDG agenda. Among lending instruments, Development Policy Lending (DPLs) at 83 percent satisfactory performed better than Investment operations (INV) which were at 77 percent in terms o f numbers but the two are virtually identical in terms of lending volumes. BANK PERFORMANCE 7. Evaluation data suggest that while country factors are the strongest predictors o f project outcomes, Bank performance i s also a major contributory factor. Satisfactory Bank performance during preparation and appraisal leads to better project designs, adapting global knowledge to country circumstances. Timely risk identification and mitigation duringproject supervision also contributes to better outcomes. 8. Resultsfrom the latest Quality-at-Entry and Quality o f Supervision assessments indicate continued solid performance with major deficiencies limited to no more than five to ten percent o f the total samples. However, in about a third o f the cases the Bank's performance i s only Moderately Satisfactory, suggesting significant missed opportunities. Areas for improvement vis-&vis Quality-at-Entry include: (i)lowering project complexity to match it better with the country's institutional capacity; (ii)better risk assessment and mitigation; (iii)introducing a workable results framework; and (iv) ensuring readiness for implementation at entry. For improving supervision performance, the focus needs to be on: (a) timely identification and assessment o f threats to the development outcomes; (b) paying more attention to institutional capacity building; (c) making effective use o f performance indicators; (d) having managers devote more time to guiding staff on supervision issues; and (e) greater candor in rating the quality o f project implementation. MANAGING PORTFOLIO PERFORMANCE 9. Effective management o f the portfolio performance depends critically on a sound system for tracking portfolio status and for timely identification o f risks. Despite long-standing efforts to improve the quality o f portfolio reporting (most recently through the reform o f the ISR system in early 2005), under-reporting o f risks remains a problem. Findings from the recently completed assessment o f Supervision Quality suggest that in FY06, less than half o f the problematic projects were so identified by staff and managers in the ISRs. QSA findings also point to Annual Reuort on Portfolio Performance FY06 iii frequent failures in the ISRs to trigger risk flags (e.g., Project Management problems, Financial Management problems or weak M&Esystems) to facilitate early resolution o f these problems. 10. Extrapolating the findings from the latest Supervision Assessment, a more realistic estimate o f the current Project-at-Risk is likely to be about 25 percent, significantly higher than the 14 percent level reported inthe ISRs. One major consequence is that portfolio performance indicators derived from the ISR database--Projects-at-Risk, the Realism Index, and the Proactivity Index--have now become less reliable and meaningful concepts for tracking and managing the portfolio performance. They do not provide "early warning" o f risks that threaten the achievement o f project development objectives thereby undermining the Bank's ability to adopt appropriate corrective measures. The most problematic in this respect i s the Realism Index. 11. Based on a specially commissioned review o f the experience with the current Project-at- Risk System as well as evaluation findings from the IEG, the ARPP recommends revising the current Realism Index to make it a more meaningful measure o f the quality o f portfolio reporting. The proposed change would link it directly to actual recent outcomes reported by IEG, lowering the end FY06 index from an 80 percent level under the current systemto about 50 percent. EAP and MNA among Regions, and Environment and Urban Development among Sectors, would experience the greatest change. In contrast, the change for LCR, Transport and Social Protection i s likely to be quite minimal. The target for the RevisedRealism Index would be retained at the 70+ percent level. Depending upon the impact o f this change, the other portfolio indicators may also need to be revisited inthe coming year. 12. Beyond systems and measures, the main issue at the core o f project performance ratings i s the inadequate accountability o f those using and signing off on performance and risks in project implementation. Senior Management needs to ensure that the incentives to and accountabilities o f staff and managers are re-balanced to support a more robust risk management system during supervision. ANALYTIC AND ADVISORY ACTIVITIES 13. Analytic and Advisory Activities (AAA) are a key component o f the Bank's toolkit for promoting economic development and reducing poverty among its clients. They provide the basis for the Bank's policy dialogue with clients, the development o f country assistance strategies and the designo f effective lendingprograms. They are also an important instrument for building institutional capacity and promoting aid coordination and harmonization among the donor community. DuringFY06, the Bank spent a total o f $222 million on AAA--almost 30 percent o f the total expenditure on country services. 14. AAA expenditures have grown from $143 million in FY02 to $222 million in FY06, reflecting a Bank strategy to bolster its AAA program. This period was characterized by a sharp increase in expenditures and deliveries between FY02 and FY03 and a modest decline between FY05 and FY06. The increased focus on AAA resulted in a rise inthe share o f country services allocated to AAA (Le., the "Country AAA intensity") from 24 percent in FY02 to 29 percent in FY06. Consistent with the agreed LICUS initiative, there has been a rapid increase in AAA expenditures in the LICUS countries with the "AAA intensity" increasing from 18 percent in Annual Report on PortfolioPerformanceFY06 iv FY02to 30 percent inFY06. With the progress made inreducingthe backlogo f Core Diagnostic Reports, the AAA focus has been shifting towards demand-driven tasks in support o f the Infrastructure Initiative and the MDG agenda. Expenditures for Global and Regional tasks are also becoming a more important part o f the AAA program. 15. Various quality assessments suggest steady improvement in AAA relevance and likely impact with 90+ percent o f the AAA work now rated satisfactory. However, there i s scope for greater impact through more attention to dialogue and dissemination aspects. 16. Over the past few years, QAG assessments have pointed to numerous errors in task coding and reporting in the Bank's information systems. This report has identified additional weaknesses that affect data reliability and diminish the value o f trend analysis. Despite major efforts over the past few years in strengthening the planning, tracking and management oversight o f the AAA program, these areas remain a cause for concern with potential for significant further gains. RECOMMENDATIONS 17. A stocktaking o f the ARPP follow-up to the recommendations o f the last ARPP suggests only modest progress, reflecting in part the relatively long lead times needed for results in some o f the areas. Inparticular, the realism o f portfolio risk ratings and the management o f the AAA program continue to be problematic with significant scope for improvement. Most recommendations made last year still remain valid. Taking into account the carry over agenda from the last ARPP and the findings from this ARPP, the key recommendations' are as follows: Address the areas o f weaknesses and missed opportunities during project appraisal and supervision focusing; 0 Strengthen accountabilities o f teams and managers and examine how to achieve greater realism inportfolio reporting; Modify the current Realism Index, basing it on recent IEG evaluations, to make it more robust and less susceptible to under-reporting o f risk; and Strengthen managerial oversight to improve tracking and management o f the AAA program. ' The full list ofrecommendationscanbefound inChapter V. Annual Reporton Portfolio PerformanceFY06 1 I. INTRODUCTION OBJECTIVESAND APPROACH 1.1 The Annual Report on Portfolio Performance provides the Board and Senior Management with a strategic overview o f the size, composition and quality o f the Bank's portfolio and the Analytic and Advisory Activities (AAA) program2. It also provides Senior Management real time informationto assess what i s working well, or less well, together with recommendations on measures to sustain or improve the quality and effectiveness o f the lending portfolio and o f the AAA program-- two key vehicles for delivering results to our clients. 1.2 The FY06 ARPP draws on materials that are prepared as part of regular portfolio monitoring functions carried out by the Regions and Networks, supplemented by project/portfolio data in the Bank's management information systems. It also draws on assessments and data commissioned from several special studies. Consistent with past ARPPs, the report uses a five-year timeframe (FYO1- 06) to examine medium-term trends inthe portfolio. Inpreparing the ARPP, extensive consultations were heldwith managers and staff from aroundthe Bank. STRUCTUREAND COVERAGE 1.3 The report is organized into five Chapters. Chapter I1reviews the recent trends in size and composition o f the lending portfolio. It analyzes trends by source o f financing, instrument, Regions, grouping o f countries, Networks, Sectors and Themes. Chapter I11 assesses overall portfolio performance results as well as issues associated with measuring and reporting the risks o f the portfolio o f lendingoperations not achieving their development objectives. It discusses measurement o f reported outcomes and outlines some suggestions for improving the assessment o f development outcomes for the Bank portfolio. It also discusses changes in the Realism Index to make it a more meaninghl measure o f the quality o f portfolio reporting. Chapter IV takes stock o f the Analytic and Advisory Activities. It focuses particularly on trends in the program size, deliveries, and quality o f AAA, drawing on selected recent QAG assessments. Chapter V examines progress in implementing recommendations o f the FY05 ARPP, and summarizes this year's key recommendations. The Statistical Appendix contains a detailed set o f supporting statistical material. As agreed with CODE, and in order to avoid duplication, this ARPP does not address directly the Results agenda, which i s to be the subject o f a separate report by the Results Secretariat. AAA product lines discussedinthis report are ESWandTA. ESW and TA includefee-basedandreimbursable tasks. Other AAA product lines not covered here include Donor and Aid Coordination, Research Services, WorldDevelopmentReportand ImpactEvaluation. Annual Report on Portfolio PerformanceFY06 2 11. PORTFOLIO SIZE AND COMPOSITION 2.1 The Bank's portfolio remained relatively steady in FY06, arresting the declining trend of several years until FY04. IBRD and IDA approvals in FY06 increased strongly but this was offset by exits o f a similar amount. The upward trend o f increased share o f the Africa Region inthe total portfolio also continued. Amongst Networks, INF and ESSD are the only large Networks that increased their portfolio. FY06 IDA approvals were the highest ever, and one-half o f them were in the Africa Region. Measures implemented under the modernization and simplification agenda have resulted in a strong portfolio o f Simple and Repeater operations and in Additional Financing operations with lower processing time and costs. Portfolio composition has continued to shift from higher to lower income level countries. Disbursements in FY06 also registered a strong increase from FYOl and FY05. PORTFOLIO SIZE AND TRENDS 2.2 The Bank's portfolio consists of 1,468 operations with net commitments o f $95.2 billion3in FY06 (Box 2.1). Net commitments have been relatively stable in real terms4 for the past three years but are some 25 percent below its peak level inFY99 (Figure 2.1). Continuingthe healthy recovery o f the past few years, approvals in FY06 reached $23.9 billion and were eight percent higher than FY05 and 23 percent above the level 10 years ago. Disbursements in real terms this year were some 11 percent higher than in FY05, reflecting the expansion in new approvals over the past three years. The current disbursements ($20.9 billion) are at about the same level as ten years ago (the disbursement levels reached in FY98-99 were an anomaly reflecting the Bank's response to the East Asia and Russian Financial Crises). The commendable disbursement performance reflects an increase in fast-disbursing Development Policy Lending (DPL), and an increase in the disbursement ratio for investment operations to 24 percent from 20 percent 10 years ago. 2.3 The portfolio size inthe futurewill depend largely on the level of IDA replenishment, and on the level of Bank engagement with IBRD partner countries, in particular through successful implementation o f the modernization and simplificationagenda to reduce the costs o f doing business. Based on current plans, annual approvals during FY07-09 are expected to be in the $22-25 billion range, and the portfolio is expectedto stabilize around the current level. Portfolio and approval figures do not include guarantees. A more detailed definition of the portfolio i s in Annex 2, and a description ofportfolio dynamics is provided inBox 2.1, Trendlines inFigure 2.1 are inreal terms. All other financial data inthis chapter are innominalterms. Annual Report on Portfolio Performance FY06 3 Box2.1: THEPORTFOLIODYNAMICS The portfolio as defined in the ARPP is a "stock" concept. Lending by contrast is a "flow." The Bank portfolio consists o f the IBRD loans, IDA credits and grants, GEF grants, Montreal Protocol, and Special Financing operations (financed in part out o f the Bank's net income). It only includes operations that are active at the end o f the fiscal year. It excludes operations which are closed or fully disbursed during the year. It is recorded as the sum o f individual operations' commitments, net o f cancellations, if any. The chart below illustrates those relationships for FY06based on the Business Warehouse (BW) data. +$23.9B (301 Operations) o fwhich: 33 Single Tranche Operations 1 Opening Balance $95.5B Closing L Balance* (1,451 $95.2B Operations) of which $19.7B (1,468 Exits during Operations) t (290 Operations) etroactive Extension * Closing balance of FY06 includes approximately $0.7 billion (6 projects) in projects closed inprevious years, which were reopened in FY06. Annual Report on Portfolio PerformanceFY06 4 FIGURE KEYTRENDS(FY97=100) 2.1: I 160 , 1 140 120 - 100 al > al 80 60 FY96 FY97 FY98 FY99 WOO FYOl FY02 FY03 FY04 N O 5 FY06 -a- Approvals inFY -+-Disbursements -0- NetCommitments 2.4 End-year portfolio figures do not capture quick-disbursing operations that enter and exit the portfolio during the same fiscal year because o f their single tranche design (see Box 2.1). In FY06, there were 33 such operations for a total o f $4.1 billion incommitments, accounting for 17 percent o f total approvals (Table 2.1); these figures represent a quadrupling in number and more than doubling in dollar terms over FYOl levels. A contributing factor to this trend was the increasing use o f programmatic Development Policy Lending (DPL) in a series o f operations, phased to support countries in achieving their reform programs within an integrated framework, with triggers for moving from one operation to the next. While this trend first began in LCR, which continues to be a very large user o f DPLs, it i s now also significant inall other regions except MNA. Not surprisingly, the processing cost o f these operations (Bank average preparatiodappraisal and supervision costs o f $358,000 and $31,000, respectively) compare very favorably with those o f all other operations ($489,000 and $321,000, respectively). However, the impact o f these single tranche DPLs on longer term institutional reforms remains to be assessed. TABLE2.1: SINGLE TRANCHE LOANS/CREDITS BY REGION (us$ MILLION) FYOl FY05 FY06 Region No. of $ No. of $ No. of $ Projects Amount Projects Amount Projects Amount AFR 1 47 11 900 10 950 EAP 0 0 2 305 2 401 ECA 2 25 4 225 6 561 LCR 3 1,237 6 1,103 7 1,433 MNA 1 120 1 100 0 0 SAR 1 350 6 1,105 8 785 Bank-wide 8 1,779 30 3,737 33 4,129 GUARANTEES 2.5 Guarantees are available to all countries eligible for borrowing from IBRD or IDA to mobilize private sector participation, help catalyze debt with extended maturities, and lower financing costs. Such guarantees aim to reduce risks o f private transactions in emerging markets, Annual Report on Portfolio Performance FY06 5 mitigate risks that are beyond the control o f the private sector, open new markets and improve project sustainability. By end FY06, 31 Guarantee operations ($2.5 billion) for 29 projects had been approved, with an estimated $10.2 billion o f private capital mobilized. Approvals include eight partial credit, 21 partial risk, and two policy-based Guarantees. The majority o f approvals since inception o f the Guarantee program have been for infrastructure projects, with AFR accounting for most o f the recent approvals and potential guarantee operations. Partial Risk Guarantee covering debt service default on loans to private sector projects caused by government failures to meet contractual obligations to private investors i s the most common type o f guarantee used in recent years. InFY06, three Guarantees for a total o f $64 millionwere approved for two projects. BOX 2.2: QUALITY-AT-ENTRY IBRDDDAGUARANTEES OF The QAG assessment covered all nine IBRD and IDA Guarantees approved in FY05/06. Six Guarantees are inAfrica, and one each inEAP, ECA, and LCR. The review concludes that: The Guarantee instrument i s useful for supporting private sector investments in infrastructure, particularly in Afiica. The use o f the Guarantees to support privatizatiodconcessioning o f existing assets i s a creative extension o f the Guarantee program. It offers potential for replication in other countries; The use o f Guarantee as the instrument o f choice for Bank/IDA support was assessed to be generally appropriate; There has been good cooperation among the Bank, MIGA and IFC staff; Overall the Quality-at-Entry o f Guarantees was rated 78 percent Satisfactory. While three are rated Highly Satisfactory, two were ratedUnsatisfactory; Understanding o f the Guarantee instrument is still inadequate among staff, especially the basic macroeconomic and sector policy requirements that should underpin a Guarantee. The risk o f the Guarantee being called, which should be at the heart o f risk assessment for Guarantees, was rarely assessed; Inadequate readiness for implementation was the most common weaknesses for guarantees rated Moderately Satisfactory or less. As a result, several Guarantees have encountered significant delays in reaching fmancial closure; Attempts to wholesale Guarantees through intermediaries show certain issues o f policy and practice that must be resolved ifthe Bank i s to pursue this type o f Guarantees; and The internal review process for Guarantees has been weak and was insufficiently focused on technical design aspects. There is a need for both simplifyingand strengtheningthe process. Follow up to some o f these findings and recommendations are already underway. I I 2.6 Because o f their unique characteristics, the Guarantee amounts are not included in the portfolio figures discussed in this chapter. The Bank's portfolio o f 31 Guarantees i s spread through six regions, with AFR and EAP leading with nine and seven operations respectively followed by ECA with four operations. The highest Bank exposure is however concentrated inthe EAP and ECA regions. The Power Sector accounts for 60 percent o f Guarantee operations, followed by the Financial Sector with 10 percent. There are 19 new operations currently under preparation. Given the growing volume o f Guarantees, and in response to senior management request, Q A G carried out an assessment o f Quality-at-Entry o f Guarantees approved in FY05/06 and preliminary findings are Annual Report on Portfolio PerformanceFY06 6 summarized in Box 2.2. [Note: Findingsare preliminary because the assessment report is yet to be finalized]. IBRD PORTFOLIO 2.7 The Bank portfolio is composed of IBRD loans, IDA credits, Global Environment Facility (GEF)/Montreal Protocol(MP), and Special Financing(SF) grant funds. IBRD net commitments of althoughthis share has declined from 64 percent inFYOl. InFY06, IBRD net commitmentsshrank $53.1billion account for the largestpart (56percent) ofthe Bank's net commitmentsof $95.2billion, by about two percent, because of exits exceeding approvals, mostly inLCRwhose net commitments shrank by $2.2 billion despite an increase of $1billion in approvals. Net commitmentsin LCR and EAPare 64 percent and 59 percent, respectively, o fthe levels inFYO1. 2.8 Compared with an average of $7.2 billion in annual IBRD investmentlendingduring FY02- 06, the $9.2 billion in FY06 was an improvementthat built upon, and sustained the expansion o f almost 40 percent of lendingachieved in FY05 (Figure 2.2A). Among the Regions, the increase of $1.2 billion in LCR, mainly in Brazil and Argentina, was able to offset the decline in investment approvals inSAR andECA. FIGURE2.2A: INVESTMENT APPROVALS 1 2 - z0 c iz 1 0 - 9 a - v) 6 - : C 4 - 4 2 - E 0-l 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 I +lBRD +IDA 1 2.9 New IBRD lending commitments for Development Policy Lending in FY06 were at $4.9 billion, close to the average for the last five years, and mostly concentrated in LCR and ECA, which together accounted for 90 percent of total approvals (Figure 2.2B). The IBRD DevelopmentPolicy Lendingnet commitments of $5.8 billion in FY06 are one third less than its level of $8.7 billion in FYO1(StatisticalAppendix, Table 2.4), largelybecause ofthe shifttoward single tranche operations. Annual ReDorton Portfolio PerformanceFY06 7 FIGURE2.2B: DEVELOPMENT POLICY LENDING APPROVALS 7 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 1 +lBRD +IDA I 2.10 The higher levelof IBRD investmentlendingachieved inthe last two years is the cumulative result of several recent initiativesand their consolidation:scaling-upof the Bank's support for more effective responses to the specializedneeds of Middle-Income Countries through the MIC Action Plan (paras. 2.13 and 2.14); modernizationand simplification of internal Bank processes to meet Borrowers' needs in a more timely and flexible manner (para. 2.15); and the InfrastructureAction Plan to revitalize lending and help clients to address unmet infrastructure investment needs and broader development goals. Box 2.3 providesan example of how these initiativeshaveplayedout in practice to increase the relevance of Bank support and provided a stronger basis for increased investmentlending. IDA AND TRUST FUND PORTFOLIOS 2.11 IDA approvals at around $9.4 billion in FY06 were at a historic high, and represent a 10 percent increase from FY05 (Statistical Appendix, Table 2.17). At the same time, the current IDA net commitmentsof $39.8 billion are seven percent larger than in FYO1. IDA net commitments in Africa recorded a 12 percent increase in FY06, and now account for 46 percent of total IDA net commitmentscomparedwith 38 percent inFYOl (StatisticalAppendix, Table 2.1). The HDNsectors experienced a significant decline in FY06 in their IDA net commitments because exits exceeded approvals, butthis was offset by increases in INF and ESSD net commitments. The increase in INF net commitmentsis due inpartto an increase innew approvals resultingfrom the implementationof the InfrastructureActionPlan. When viewedinterms of FY06 IDA approvals, Africa experienced a 24 percent increase over FY05, while approvals in South Asia declined by 11 percent. Together these two Regions accounted, respectively, for 50 percent and 27 percent of IDA approvals inFY06. Among the Networks, ESSD approvals increased by 142 percent over FY05, while in the other Networks approvals either declined or remained approximately unchanged. Three-fourths of IDA approvals were for investment lending and the remainder for DPLs, which accounted for about one quarter of the total during the past five years. Given the need for a longer-term perspective to strengthen institutional capacity and policy frameworks, AFR has increasinglyused programmatic lending for both investment and development policy support. Box 2.4 provides insights from the recently completed Quality of Supervision Assessment (QSA7) of operations for public sector management and civil service reform, on how a coordinatedapproach involvingintegration of staff skills, borrowerownership,andpartnershipwith donors canhelp improveIDA'Simpact. Annual Report on PortfolioPerformanceFY06 8 BOX 2.3: IMPLEMENTINGTHE INFRASTRUCTUREACTION PLAN SUPPORTINGTHE ENERGY COMMUNITY OF SOUTHEASTERNEUROPE (ECSEE) This $1billionAdaptableLendingProgramto supportthe developmentofthe EnergyCommunity was approved by the Board in FY05, and $418 million has been committed to date. Bank financing is being provided on a regionalbasis to support sevencountries; as well as Kosovo under a closely relatedTA project. It is tailored to the needs of individual countries to meet their commitments under the regional Treaty which formally establishedthe Energy Community. The first-phase loan to Romania under the program was approved by the Board in January 2005, while seven subsequent operations have since been approved by the Bank's Management. South EasternEurope faces the need for very large addition to generationcapacity and matching transmission and distribution system requirements, if severe power shortages and supply interruptions are to be avoided. Financingrequirements are about $3040 billion, calling for significant private sector participation. Through the Energy Community, an EU-compatibleregionalmarket is being developed, representinga much larger and moreattractive destinationfor prospectiveinvestors. The Bank's support for analytical work has beena vital element in helpingto focus on a least-costbasis across nationalboundaries.Througha GenerationInvestmentStudy, the Bank helped, inpartnershipwith other donors, build institutionalcapacity for rational energy planning, develop databases, andpromote a shared understanding by policymakersandenergy planners. Inadditionto the AAA support,the Bankalso facilitated the designandimplementationthroughthe choiceofan APL that sets reachable,yet meaningful goals, many of which have beenreached inmost countries, such as the signing andratificationof the Treaty, andhavingan electricityregulator and a transmissionoperator established andoperational. QAG panels reviewing the Quality-at-Entry of the APL program and o f the analytic work highlighted the following strongaspects for this cross-country initiative:synergistic links to the EUefforts inthe energy sector; effective institutionalarrangements; responsiveness to the clients' needs; andthe introductionof an elaborate set of informationinterchange and coordinationbodies.Panelistsalso notedthat the APL has repositionedthe Bank to lend inareas from which it had previouslywithdrawn and contributedto an effective and timely response to clients' needs. 2.12 Operations financed by Trust Funds (GEFMontreal Protocol) and Special Financing operations, financed in part out of the Bank's net income, had net commitments in FY06 o f about $2.3 billion, the same level as in FY05 but about 42 percent more than in FYO1.New commitments o f about $0.3 billion were approved with Trust Fund financing in FY06. Although not included in the portfolio,recipient-executedTrust Funds, includingMulti-DonorTrust Fundsfor country specific and regionalemergency operations are beingincreasinglyset up by the Bank and other donors. TFO has sponsoredthe creationof a new product line for recipient-executedactivities where the Bank has a fiduciary responsibility. A total o f 16 large, country-specific Multi-Donor Trust Funds are currentlybeingmanagedby the Bank.These Funds have a total commitmentof over $4 billion and a net fund balance inFY06ofover $2.2billi~n.~Newcontributions inFY06to majorprograms such as the AfghanistanReconstructionTrust Fund, Multi Donor Trust Fund for IndonesiaAceh and Niah, Multi-Donor Trust Funds for Sudan, Iraq ReconstructionTrust Fund, and the Trust Fund for East Timor, were about $879 million, and disbursements about $544 million. Giventhe growingvolume See FY06 TrustFundPortfolioReview, Moving to Accountability for Results,November 10,2006 (Table 1.4). Annual ReDort on Portfolio Performance FY06 9 o f recipient-executed Trust Funds, including Multi-Donor Trust Funds, and reputational risks they pose for the Bank, it i s recommended that they be recorded inthe Bank's portfolio, and subjected to regular Bank processes and quality assurance mechanisms for tracking and managing the health o f the portfolio. BOX 2.4: PROGRAMMATIC SUPPORT FORLONG-TERM CHANGE CIVIL SERVICE REFORM TANZANIA IN The Tanzania Civil Service Reform Program provides the evidence o f implementation over several years of the programmatic approach in helping clients. By definition, the scope o f the reforms is broad, so as to address linkages between issues o f incentives and policy change, modernization o f systems and processes, and reinforcement o f capacity. The challenge in design was to set a series o f goals ambitious enough over a reasonable timeframe to effect tangible differences in accountability, performance, and delivery o f public services, while ensuring ownership o f borrower implementing staff and local agencies. The QAG Panel that assessed quality of the Bank's supervision o f this operation noted several areas of excellence. These provide insights into how some of the Bank's changes in recent years through decentralization, support for programmatic rather than project lending, and partnership with clients and other donors have played out for results. Inparticular, the Panel noted that the combination o f staff skills inthe field, o f sector specialists and fiduciary staff, permitted attention to both policy reform and problem solving. Borrower ownership was thus consolidated by real-timejoint interventions o fthe client, along with other donors and the Bank in addressing issues or moving to the next stage o f reform. Supervision i s joint, considerable resources are leveraged through other donors, and the latter have delegated responsibility for follow-up on procurement and financial management to the Bankbecause o f demonstrated credibility. According to the panel, the supervision effort was appropriately focused on the following key development issues: (i)rationalizing public sector pay and linkage with performance; (ii) an M&E system launched getting after initial delays and failed efforts; and (iii)modernizing the payroll and HR management system. The project's results to date show delay as against initial expectations, but the latter were clearly over-optimistic. Implementation was filly integrated into the country dialogue, taking into account macroeconomic and fiscal constraints. A main conclusion o f the project team and the Panel is that the Bank needs to be more realistic in the time expected for a comprehensive program of public service transformation and for building capacity at various levels. IMPLEMENTATIONOF MICAGENDA 2.13 The FY05 ARPP reported on the implementation of the MIC agenda. Since the MIC task force presented its recommendations four years ago, the Bank has continued to make progress on improving its responsiveness to clients' demands. Examples include the expanded menu o f financing and risk management products, reducing non-financial costs o f doing business with the Bank, broadening its freestanding delivery o f knowledge services, and offering treasury management services on the basis o f cost recovery. MICs are looking for more customized financial and advisory services from the IBRD, although traditional bundled lending and knowledge management products remain important for many MICs. Box 2.5 presents an interesting example o f a customized Bank- country partnership. Annual ReportonPortfolioPerformanceFY06 10 Box2.5: CUSTOMIZEDCOUNTRYPARTNERSHIP: THE CASE OF KAZAKHSTAN Kazakhstanis at the fi-ont end of a major oil boom and by 2001 the World Bank had lost its place at the policy table, faced a small and shrinkingportfolio,and a supply-drivenanalytical work programthat was of poor quality. But there were good reasons for the Bank to stay engaged. Despite plentiful resources and rapid economic growth, the quality of education and health services were under threat, and much of the infrastructureout of date, expensiveor ofpoor quality. To stay engaged, the Bank neededto work inpartnershipwith the client, providetop-qualityexpertise, and improveits internalprocesses.Relevantmeasuresadoptedbythe regionresultedinthe following: Partnership. Agreement was reached on a Country Partnership Strategy that has no end date, no projector AAA lists, butanannuallynegotiatedbusinessplan. Knowledge. This turned out to be a key driver of the improvedrelationship. The Joint Economic ResearchProgram(JERP) has driventhe re-engagement.Unlikepay-for-servicearrangements, this engagedbothsides for its funding, andmadebothaccountablefor relevanceandquality. Bank Processes. A Central Asia Operational Team was established to process pipeline and portfolio better. It also engaged the Government in a discussion on how it could speed up and improvethe Borrowerpartofthe projectcycle. The evidence shows a major turn-around. While the Bank delivered an average o f $0.6 million for AAA per year between2000 and 2003, the figure increasedto $2.2 million between2004 and 2006. Similarly, after a period of flat lending ($28 million on average between 2001 and 2004), approvals subsequently increasedto an annualaverage of about $100 million. The average preparationtime for investmentlending declinedfrom 29 monthsduringFY97-FY03, to 17monthsinthe lastthree years. 2.14 Lending to M I C clients in FY06 was $16.7 billion, an increase o f six percent over FY05 and 40 percent over FYOl, Extensive consultations with representatives from M I C countries and development partners were held in the course o f preparing a new paper, "Strengthening the World Bank's Engagement with IBRD Partner Countries." This culminated inan updated M I C agenda that calls for: 0 Accelerating actions for better and more flexible country-partnership strategies; 0 Reducing the non-financial cost o f doing businesswith the Bank by streamlining internal Bank procedures, and supporting the use o f country systems where those systems meet mutually agreed and verifiable indicators; 0 Simplifying loanpricing and preparing options to ensure competitiveness o f IBRD loans; 0 Mainstreaming IBRDparticipation in originating and administering public-sector lendingat the sub-national level; and 0 Providing fee-based expert services, unbundledfrom lendingand on a larger scale, where the Bank has comparative advantage. While it is too early to project the likely impact o f the above actions on the portfolio, the Bank has committed itselfto streamline its processes inthe above areas, and to report on progress at the next Annual Meeting. Annual Report on Portfolio Performance FY06 11 MODERNIZATION AND SIMPLIFICATION AGENDA 2.15 The FY05 ARPP also reported on the implementation of the Modernization and Simplification agenda. Simplified internal processes for simple and repeater operations have continuedto impactpositivelyonthe Bank's portfolio. The quality ofthese operationswas reviewed by QEA7 and found to be satisfactory. During FY06, 58 Simple and Repeater operations were approved for an amount of $3.3 billion compared to 31 operations in FY05 for an amount of $2.3 billion. Preparationtime under this program averaged less than 12 months per operation, which is about 25 percent less than the average for investment operations, and at an average cost of about $250,000 compared to $380,000 for investmentoperations.In addition, since June 1, 2005, a total of $1.1 billion in net commitments have been approved under the new Additional Financingpolicy for operations. Another encouraging sign of efficiency gains is the reduction in elapsed time between project concept and Board approval for all investment operations from 18 months in FY03 to 15.5 months inFY06. Giventhe growingvolume of additionalfinancing, the next assessment of Quality- at-Entryproposesto payparticularattentionto these operations. REGIONS AND COUNTRIES 2.16 Regional Trends. Three regions(AFR, ECA, and MNA) experienced an increase this year in their net commitments, while the other three regions experienced a decline. Over the last five years, AFR's share of total net commitments grew to 20 percent from 13 percent in FYOl (Table 2.2). While net commitments in MNA grew modestly over the past five years and remained steady inECA and SAR, they declinedsharply inEAPand LCRby 32 and 34 percent, respectively. Africa i s the only region with substantially larger net commitments in FY06 than in FYOI, showing an increase of $4.1 billion. The decline in SAR net commitments inFY06over FY05 was in majorpart due to lower than anticipated lending in India, mainly in the HNP sector. MNA's increase in net commitments in FY06 over FY05 was helped by a $500 million Financial Sector Policy Loan to Egypt. An analysis o f disbursements over the past five years shows that LCR increased resource transfers to client countries by nine percent in FY06 over FYO1, and by 48 percent over FY05, in major part due to doubling of disbursements for DPLs from $1.7 billion in FY05 to $3.3 billion in FY06. LCR accounted for 28 percent ofBank-widedisbursements inFY06. DisbursementsinAFR and SAR in FY06were also higher by 74 percentand 65 percent over FYOl, but declinedinEAPby 24 percentover the past five years. Annual Report on Portfolio PerformanceFY06 12 TABLE 2.2: PORTFOLIO DISTRIBUTION AND DISBURSEMENTSBY REGION (US$ BILLION) Region Commitments Disbursements FYOl FY05 FY06 FYOl FY05 FY06 AFR 14.5 16.6 18.6 2.3 4.0 4.0 EAP 28.8 20.2 19.5 3.4 2.6 2.6 ECA 16.1 15.9 16.5 2.8 3.4 3.0 LCR 25.2 19.0 16.6 5.4 4.0 5.9 MNA 5.9 5.6 6.6 0.8 0.7 1.o SAR 17.7 18.2 17.4 2.6 4.1 4.3 Bank-wide 108.3 95.5 95.2 17.3 18.8 20.9 2.17 Portfolio Concentration. The FY06 portfolio includes operations in 124 countries, with a heavy concentrationin ten countries,whichtogether account for about one half ofnet commitments; by comparison, half the commitments in FYOl were accounted for by just seven countriesS6The decline inthe level of concentrationis evidenced by the share intotal net commitmentsof the seven countries that were both on the FYOl and FY06 list declining, respectively,from 52 percent ($55.4 billion) to 43 percent ($41 billion). The largest decline in net commitments during this five-year period occurred in China ($6.7 billion), Mexico ($3.2 billion), Argentina ($3.1 billion), India ($2.2 billion), and Indonesia ($2 billion). On the other hand, during the same period the combined net commitments in Vietnam, Bangladesh, and Ethiopia increased from $6.7 billion to $8 billion. In comparison, this year about 70 of the smallest borrowers account for only five percent of net commitments. Interms of number of projects, however, there is much less of a disparity between the group of ten largest borrowers and the group of 70 smallest borrowers, which account, respectively, for about 26 and 21 percent of the portfolio. These numbers illustratethe adaptability o f the Bank lending program to the diverse needs, interests and absorptive capacities o f different borrowers. 2.18 Portfolio Trend by Country Grouping. The net commitments with the largest decline (41%) over the past five years concerns the IBRD Investment Grade (IG) grouping o f countries (Table 2.3). The IGand IBRD Only net commitments, however,held steady inFY06 due to a large increase in lendingover FY05, by almost 40 percent to IGcountries and nine percent to IBRD Only countries, but this was offset by an increase in the volume of exits. China and India have the two largest single country portfolios.Similar to IG country net commitments, China's net commitments have declined by 39 percent during the period FYO1-FY06, and by 11 percent in FY06. Although lendingto China increased inFY06 by 37 percentto $1.5 billion, exits exceeded approvals. Declines in India's net commitments in FY06 are mainly due to lower lending by almost $1.5 billion and a largevolume of exits. Problems inlendingto India's healthsector have now beenresolvedandthere are encouraging signs for stronglendinginFY07. The ten largestborrowers in FY06were India, China, Turkey, Brazil, Vietnam, Argentina, Mexico, Indonesia, Bangladesh, and Ethiopia, which had a combined population of close to 3.4 billion or 62 percent of the total population of Low and Middle-Income Countries. The seven largest borrowingcountries inFYO1 were China, India, Mexico, Brazil, Argentina, Indonesiaand Turkey. AnnualReDorton Portfolio PerformanceFY06 13 TABLE 2.3: PORTFOLIOBY CLIENT GROUPING (US$ BILLION) Commitment FYOl FY05 FY06 % Change FYOl-06 IBRD Investment Grade 18.4 10.9 10.8 -41 China 17.5 12.0 10.7 -39 IBRD Only (Others) 27.3 25.7 25.5 -6 India 13.5 12.8 11.3 -16 Blend 7.3 5.6 6.1 -16 IDA Only 21.4 23.5 25.2 18 LICUS 2.9 4.4 4.4 53 Multi-Countrv 0.1 0.7 1.2 799 Bank-wide 108.3 95.5 95.2 -12 2.19 Fragile states or LICUS countries represent a critical challenge for the Bank and make up a significant segment o f IDA'S portfolio (Statistical Appendix, Table 2.8). Two regions, AFR and EAP account for two-thirds o f the LICUS portfolio by number o f projects and AFR accounts for about two-thirds o f LICUS net commitments (Table 2.4). The increase in the portfolio size o f the LICUS countries duringthe past five years i s in major part due to high levels o f lending to Afghanistan and Democratic Republic o f the Congo. TABLE 2.4: PORTFOLIO INFRAGILE STATES (LICUS) BYREGION Portfolio Size (FY06) Region No. of Projects Net Commitments $ M o/. EAP 24 254 ECA 12 271 LCR 5 70 MNA 8 83 SAR 17 873 20 *Bank-widedo nottally due to rounding. 122 4,397 1oo* Figures 2.20 N e t commitments for multi-country or regional projects have increased from an insignificant level in FYOl to $1.2 billion in FY06, with most o f the increase in the Africa Region. The multi- country portfolio i s mainly focused on regional infrastructure (e.g., power and gas grids), export promotion through trade facilitation, transport corridors and financial sector integration. Given the impetus provided under IDA 14, and challenges o f such multi-country projects, it i s recommended that the upcoming assessment o f Quality-at-Entry pay particular attention to the quality o f these operations. NETWORKS, SECTORSAND THEMES 2.21 The Networks with the largest portfolio remain INF, HDN and ESSD, and together they account for 87 percent o f total net commitments (Table 2.5). The INF portfolio i s the largest, with net commitments representing 46 percent o f the total. The HDN Network has seen its portfolio continuing to decline. The decline o f the PREM Network portfolio has to be seen in the context o f Annual ReDorton Portfolio PerformanceFY06 14 increases in single tranche DPLs, which are approved and disbursedinthe same year, and, therefore, do not show up in the stock o f the end-year portfolio. Despite increased lending in FY06, PREM's portfolio declined because exits exceeded approvals. Approvals in FY06 for PREM, PSDNand FSE have increased by $1.4 billion, $0.8 billion and $0.5 billion, respectively, over FY05, but approvals for HDN, ESSD and INF have declined. For the first time in the past five years, new portfolio entries have been larger than portfolio exits resulting in a small increase in the portfolio in terms o f numbero fprojects. TABLE 2.5: PORTFOLIODISTRIBUTIONBY NETWORK (US%BILLION) Network Net Commitments FYOl FY05 FY06 ESSD 22.4 19.3 19.9 FSE 4.2 3.3 3.5 HDN 24.5 22.3 19.8 INF 43.9 42.5 43.6 PREM 10.4 5.8 5.0 PSDN 2.8 2.2 3.3 Bank-wide 108.3 95.5 95.2 2.22 The five largest sectors in the Bank's portfolio are Transportation; Public Administration, Law and Justice; Health and Other Social Services; Water and Sanitation; and Energy and Mining, together accounting for 72 percent o f total net commitments (Table 2.6). Transportation has remained the largest sector in the Bank's portfolio, with net commitments at about $20 billion in FY06 and FYOl. The Energyand Miningsector shows the largest variation among all sectors, with a decline in net commitments from $14.2 billion in FYOl to $10.1 billion in FY06, with most o f the decline occurring in electric power. Inthis context, recent initiatives (see Box 2.3) should help position the Bank strategically for greater relevance to meeting clients' needs for competitive and economic electric power supply. Net commitments for all other sectors have either declined significantly or remained only slightly below the levels inFYOl (Statistical Appendix, Table 2.7). 2.23 In terms o f themes that typically cut across sectoral boundaries, the current portfolio for Financial and Private Sector Development i s the largest at 18 percent o f total commitments, slightly below the level in FYOl (Table 2.6). The share o f the portfolio for Human Development, Public Sector Governance, and Trade and Integration has grown duringthe period FYO1-06, while the share o f Environment and Natural Resource Management has experienced the largest decline from 16 percent in FYOl to 12 percent in FY06. It i s worth noting that because the statistics collected and reported in the SAP are based on operations mapped to sectors, it i s difficult to track and assess cross-cutting themes such as gender because there are currently no operations mapped to gender. A related issue i s the frequent failure by TTLs to select gender as a theme even when the operation may have gender implications or components. Annual Report on Portfolio PerformanceFY06 15 TABLE2.6: PORTFOLIOBY SECTOROFFOCUSAND THEME (YoSHARE INCOMMITMENTS) Sectormheme FYOI FY06 Sector Agriculture, fishing, and forestry 9 9 Education 9 9 Energy and mining 13 11 Finance 6 5 Health and other social services 13 12 Industry and trade 5 5 Information and communications 1 1 Public Administration, Law, and Justice 16 17 Transportation 19 21 Water, sanitation and flood protection 10 11 Total* 100 100 Theme Economic management 2 1 Environment and natural resources management 16 12 Financial and private sector development 19 18 Human development 11 13 Public sector governance 8 9 Rule of law 2 2 Rural development 14 14 Social devlgender/inclusion 7 8 Social protection and risk management 6 7 Trade and integration 3 5 Urban development 13 12 Total* 100 100 * Figuresdo not tally dueto rounding. 2.24 Net commitments for the Financial and Private Sector Development (FSE and PSDN) increased from $5.5 billion in FY05 to $6.8 billion or seven percent o f the total net commitments in FY06 (Statistical Appendix, Table 2.3). However, since this theme is frequently included as a component or objective inmulti-sectoral operations, its share o f total net commitments at 18 percent i s much higher. A QAG review o f compliance with the Bank's Operational Policy 8.30 for Financial Sector Operations managed by non-FSE units has raised several compliance issues. Additional reviews were carried out to assess the performance o f the following non-dedicated components (Le., the relevantcomponents are included inoperationsbeingmanagedby another sector unit):Transport, Water Supply and Sanitation, and Information and Communication Technology. Findings from these reviews raise concerns about the quality o f Bank performance in preparing and supervising non- dedicated components in multi-sector operations, as compared with single sector operations. These assessments recommend greater inputs from sector specialists and allocating additional budgets for the supervision o f these non-dedicated components. Annual ReDort on Portfolio PerformanceFY06 16 CONCLUSIONSAND RECOMMENDATIONS 2.25 The earlier declines inthe portfolio have been stabilized, and both IBRD and IDA approvals and disbursements continued the upward trend o f the past two years. Recommendations aimed at better tracking and monitoring changes and trends inportfolio composition include: 0 Given the increasing volume o f recipient-executed Trust Funds and reputational risks theypose for the Bank, it is recommendedthat they berecordedinthe Bank's portfolio, and subjected to regular Bank processes and quality assurance mechanisms for tracking and managing the health of the portfolio; and 0 In view of the growing volume of: (i)Additional Financing operations; (ii)multi- country or regional projects; and (iii)multi-sector operations, it i s recommended that they should be given special attention in the upcoming assessment o f Quality-at-Entry o f operations approved inFY06 and FY07. Annual Report on Portfolio Performance FY06 17 111. PORTFOLIOPERFORMANCE 3.1 The improving trend in development outcomes of completed projects financed by the Bank continued in FY06 with satisfactory outcomes now surpassing the agreed target o f 80 percent. There are, however, substantial differences inperformance by the type o f client, Region and Sector Board, suggesting opportunities for further improvements. While country capacity is a key determinant o f success, Bank performance on quality-at-entry and the quality o f supervision are also important in ensuringthat problems are identifiedearly and issues addressedappropriately. 3.2 The recently completed Quality o f Supervision assessment suggests that while overall supervision performance remains commendable, some aspects, particularly monitoring and evaluation and reporting o f portfolio risks continue to be problematic. QSA panels found that over half o f risky and problemprojects are not being identifiedas such by staff and managers. One major consequence o f this i s that portfolio performance indicators (e.g., Projects-at-Risk, Realism Index, and Proactivity Index) derived from staff ratings, have become less reliable for tracking portfolio performance, undermining the Bank's ability to adopt corrective measures in a timely fashion. Based on analysis done as a part o f this ARPP, modifications are proposed to the "Realism Index" to make it a more meaningful measure of the quality o f portfolio reporting. The overarching issue in this respect is o f managerial accountabilities and incentives for the quality o f portfolio reporting. Depending on the progress made on this in the coming years, further systemic changes may be necessary. EVOLUTIONOF DEVELOPMENTOUTCOMES 3.3 The development outcomes o f operations exiting the Bank's portfolio rated satisfactory by IEG (Box 3.1) have continued the recovery that started in the mid-1990s. In FY06, BOX 3.1: RATING SCALE satisfactory development outcomes are estimated to be 81 percent by number o f As part of the harmonization effort, IEG, OPCS and QAG have agreed to use the same six-point scale for rating projects, and 91 percent when weighted by purposes. disbursement. Because o f significant year- to-year volatility, the development outcome The first three ratings (Highly Satisfactory, Satisfactory trends are best analyzed using three-year and Moderately Satisfactory) indicate a satisfactory moving averages (Figure 3.1). On that basis, outcome (Le,, above the line) while the last three ratings ten years ago, one out o f three operations (Moderately Unsatisfactov, Unsatisfactoryand Highly exited the portfolio with unsatisfactory Unsatisfactory) indicate an unsatisfactory outcome (Le., outcomes accounting for a quarter o f the below the line). Unless specified otherwise, the terms disbursements. Now, only one out o f five "satisfactory" or "unsatisfactory," when used in this operations, i s unsatisfactory, accounting for chauter, follow the above definitions. about 12 percent o f disbursements. Annual ReDort on Portfolio Performance FY06 18 FIGURE3.1: DEVELOPMENTOUTCOMES(FY80-06) +3-Year MovingAvg. (by number of projects) +3-Year MovingAvg. (weighted by disbursement) Source: IEG except for FY06* which is a QAG projection. 3.4 Development Outcomes by Region. A breakdown o f satisfactory development outcomes for FY03-06by number o f operations shows significant variations across Regions (Table 3.1). EAP, ECA, LCR and SAR have satisfactory outcome ratings in the 80 percent plus range, while AFR and MNA's satisfactory outcomes are in the low 70 percent range. Satisfactory outcomes, weighted by disbursements, are slightly better for most regions. EAP and ECA regions have disbursement weighted satisfactory development outcome ratings in the 85-90 percent range, and SAR, MNA are also in 80 percent plus range. AFR and LCR have disbursement weighted satisfactory outcomes slightly below the 80 percent plus level o f other regions. LCR's low satisfactory outcomes rating at 78 percent, weighted by lending amounts, is mainly due to relatively poorer performance o f DPLs at 75 percent than for investment operations at 81 percent). TABLE 3.1: OUTCOMESBY REGIONAND LENDINGINSTRUMENT (FY03-06) DPL INVESTMENT ALL OPERATIONS Outcome Outcome Outcome Region Outcome by by Dollar Outcome by by Dollar Outcome by by Dollar Number Amount Number Amount Number Amount % Sat. % Sat. % Sat. % Sat. % Sat. % Sat. AFR 75 78 68 78 70 78 EAP 88 98 82 90 83 91 ECA 91 98 81 79 83 87 LCR 80 75 83 81 82 78 MNA 100 100 69 76 72 82 SAR 86 90 79 79 80 82 Bank-wide 83 82 77 83 78 82 3.5 The low satisfactory outcomes in AFR reflect both "country" and "Bank" factors. AFR i s home to the ten poorest countries receiving Bank assistance and these countries account for 28 percent o f the region's total net commitments. Completed projects in Fragile states (LICUS Annual ReDort on PortfolioPerformanceFY06 19 countries) inthe Africa region (Table 3.2) have satisfactory outcomes o f 48 percent. These countries have difficult environments, with weaknesses in governance, institutions and policies, all outside the Bank's control, which explain a good part o f the lower outcome ratings. However, lower Quality-at- Entry and Quality o f Supervision in these countries, which are fully within the Bank's control, are also contributing factors. Satisfactory development outcomes in AFR improved to 70 percent in FY03-06 from 64 percent in FY00-02, and when weighted by disbursement, to 78 percent from 65 percent. The low satisfactory development outcome in MNA at 72 percent during FY03-06, compared to 82 percent in FY00-02, i s similarly due to the problems in Fragile states, which have satisfactory development outcomes o f only 43 percent. Year to year data on LICUS outcomes i s also presented in Statistical Appendix, Table 3.18. 3.6 Fragile States or LICUS countries represent critical challenges for the Bank and in particular make up a significant segment o f the IDA portfolio (Table 3.2). There i s large scope for improvement in Quality-at-Entry and Quality o f Supervision, both o f which are aspects under the Bank's control. The Bank has introduced the LICUS initiative since 2002 and an IEG review o f the initiative was completed in FY06.7 The review's main conclusion was that, "the initiative has increased Bank attention to LICUS, but it i s too early to assess outcomes." However, the review identifiedorganizational capacity as a major constraint to implementation ina LICUS context. Bank management i s taking a number o f actions to enhance the Bank's organizational response through a three-tier strategy focused on: (i)the increased field presence in Fragile states; (ii)the establishment o f a stand-by capacity o f experienced sector and operational staff to support Bank teams in emergency and crisis situations; and (iii) provision o f stronger institutional back up to emergency the and fragile situations through additional guidance, cross-country sharing o f lessons, and rapid response teams in central and regional units. Furthermore, the enhanced organizational response and a new OP/BP on Rapid Response to Emergencies will shortly be presented to the Board. These measures should improve Bank performance and also help improve the quality o f operations in Fragile states. TABLE3.2: OUTCOMESINFRAGILESTATES(LICUS) BYREGION Region No. of Projects IEG % Satisfactory (FYO3-06) AFR 42 48 EAP 14 64 ECA 13 77 LCR 0 NA MNA 14 43 SAR 3 100 Bank-wide 86 56 * Figuresdo not tally due to rounding. 3.7 High satisfactory outcomes, however, are possible even in countries with low income and lower institutional capacities. Clients with especially highor low satisfactory outcomes are shown in Figure3.2. The highperforminggroup includes clients from most Regions. ' EngagingFragile States, IEG, 2006. Annual Reporton Portfolio PerformanceFY06 20 FIGURE3.2: FY03-06 OUTCOMESFORSOME SELECTEDCLIENTS OUTCOMESOREPITERMAN 85'hSAllSFACTORY OUTCOMES LESS M A N 65%SAllSFACTORY io0 so * 80 [ 70 60 60 Bosnia- Colombia Tanzania, Armenia Kosovo, China Bazil West Bank and Bolivia Ghana Russian krzegovina. Tunisia Nicaraoua c3aza Federation Romania, Vietnam 3.8 Development Outcomes by Sector Boards. A detailed analysis o f development outcomes by major Sector Boards (Table 3.3) shows that their relative performance varies significantly when measured based on the number o f projects and when weighted by disbursement. The Transport sector continues to outperform other sectors in satisfactory development outcomes in terms of number o f projects, while four sectors (Environment, Public Sector Governance, Health, Nutrition and Population, and Private Sector Development) have satisfactory development outcomes below the Bank's average o f 78 percent. When weighted by disbursement, only three Sector Boards (HNP, Economic Policy, and Environment) have satisfactory development outcomes that are below the Bank's average o f 83 percent. It should also be noted that Network affiliation does not seem to have much impact on development outcomes as both higher performing and lower performing sector boards are found in each Network; e.g. Rural and Environment in ESSD, and Education and HNP in HDN. These results underscore the need for more cross-fertilization betweenSector Boards in the same Network. TABLE3.3: OUTCOMESBY SECTOR BOARD (yo SATISFACTORY, FYO3-06) Sector Board `' % SATISFACTORY % SATISFACTORY (by no. of Projects) (Weighted by Disbursement) Transport 91 91 Rural 84 86 Financial 84 96 Education 83 84 Water & Sanitation 83 93 Economic Policy 81 65 b' Social Protection 81 94 Urban Development 79 84 Energy, Mining & Telecom 78 85 Environment 71 73 Public Sector Governance 69 87 Health, Nutrition, Population 64 64 Private Sector Development 61 83 Bank-wide 78 83 a/ For Sector Boardswith 15 or more evaluations. b/ Satisfactory development outcomes for the Economic Policy Sector on a weighted disbursement basis are low mainly becauseof one large DPL operation that exited in FY03. Excluding this one DPL, satisfactoryoutcomes, weighted by disbursement,for EP would have been92 percent. AnnualReport onPortfolioPerformanceFY06 21 3.9 With development outcomes at 64 percent satisfactory by number o f projects, the HNP sector faces performance problems, particularly in low CPIA countries. Improved performance o f HNP, including the HIV/AIDS portfolio, especially inthe AFR region (Box 3.2), i s critical for progress in achieving the MDGs. Project designs need to be better adapted to a country's implementation capacity. Also needed are proactive supervision efforts with a focus on the use o f performance indicators to assess progress on results, and candid and timely recognition of, and prompt actions to resolve, implementation problems. InEnvironment, excessive project complexity, weak institutional capacity, inadequate implementation readiness, and failure to restructure problematic projects are the main problems. A new HNP strategy i s at an advance stage o f preparation. It discusses issues o f poor sector performance and proposes to sharpen Bank focus on results on the ground and on concentrating future Bank efforts on its comparative advantages, particularly in health system strengthening, health financing and economics. It also proposes to support government leadership and international community programs to achieve these results and to exercise greater selectivity in engaging with global partners. BOX 3.2: AFRICA REGIONHIV/AIDS PORTFOLIO The Multi-CountryHIV/AIDS Program(MAP) was launchedin2000 as a multi-sectoral, emergency response to the epidemic, focusing on advocacy, capacitybuilding, and adopting"exceptional" measuresto combatthe disease, especially through community engagement. Twenty-nine country and four regional projects were approvedwith credits and grants totaling $1.32 billion, of which roughly two-thirdshas been disbursed. A self-evaluationby the Regionof the MAP Programfound that, inadditionto increasingaccess and significant service delivery in prevention, care and treatment, the MAP Program has been catalytic in bringing development partners together to pursue harmonized procurement, supply chain management procedures, M&E systems and the development of unified national AIDS strategies. The final outcome of these operations, however, is a cause for concern. According to IEG ratings, more than half of the completed HIV/AIDS projects inthe Regionhave unsatisfactoryoutcomes. QSA7 Panelists notedthe overly ambitious Development Objectives of these projects and under-estimationof difficultiesduring implementation. Other areas for improvement included: M&E, procurement, and project management and coordination. Based on better epidemiological knowledge and information, and lessons from experience, the Region is addressing these shortcomingsthrough: restructuring ofthe projectsby revisingtheir developmentobjectives, and strengtheningofthe results scorecard; heightenedfocus on capacity building, particularlywith regardto fiduciaryaspects andM&E; and providingextra support for project supervisionandportfoliomonitoring. The Regionhas also introducedan early warningsystemto identifypotentialproblems. Some early success has beenachievedinimprovingthe supervisiono fHIV/AIDsprojects inAfrica andthe supervisionofGuinea HIV/AIDsProjectwasjudgedto be "Highly Satisfactory." This effort needsto be continuedto improvethe resultsfrom the rest ofthe portfolio. 3.10 QSA data suggests significant missed opportunities due to lack o f candor inthe Public Sector Governance sector. Low development outcomes by number o f projects inthis sector are o f particular concern because o f the Bank's increased focus on improved public financial management, public administration, legal and judicial reform, and governance. Main problems with completed projects include: complex project designs, weak institutional arrangements, lack o f correct appreciation o f AnnualReport on Portfolio PerformanceFY06 22 government commitment to reform actions, inadequate attention to political economy issues of proposed reforms, inadequate risk management, and limited use o f performance indicators to assess progress. 3.11 Gender. Although the quality o f supervision of gender issues shows a slight improvement in QSA7 compared to the QSA6 level, it continues to be low. Panels noted that, while many Task Teams readily acknowledged the relevance o f gender issues, there was a sense that they lacked support and guidance indealing with these issues during supervision. 3.12 DevelopmentOutcomesby Source of Funding. IDA operations had a satisfactory outcome rate o f 77 percent in FY06 compared to 72 percent in FY03 on a three-year moving average, while IBRD operations had a satisfactory outcome rate of 85 percent in FY06 with a similar improving trend. Despite this overall improvement, however, outcomes in LICUS countries remain generally low (para. 3.6). Incontrast, according to IEG, M I C operations that exitedthe portfolio duringFY03- FY06 have achieved satisfactory development outcomes o f 82 percent. 3.13 Development Policy Lending Operations (DPLs). As shown in Table 3.1, DPLs have similar disbursement weighted satisfactory outcome levels (82%) to those o f investment operations (83 percent). However, the performance o f investment operations by numbers is somewhat lower because o f the impact o f smaller countries, especially those with lower income. 3.14 Single Tranche DPLs. This category (para. 2.4) includes an increasing share o f all DPLs and comprises operations that are approved and fully disbursed in the same year. Satisfactory development outcomes for single tranche DPLs were inthe 90 percent plus range inFY06 on a three- year moving average. While nine o f these operations were unsatisfactory (four in AFR, three in LCR, and two in SAR), none o f them rated the Development Objectives (DO) in the ISRs, in part because these DPLs are approved on the strength o f up-front actions. TRACKING OF DEVELOPMENT OUTCOMES 3.15 The Bank has been a pioneer in evaluating and reporting development outcomes o f projects and programs it supports. Currently, all projects at completion are subject to Implementation Completion Reports (ICRs) by staff with independent validation o f their findings and lessons by the IEG through desk-based ICR Reviews (ICRRs). Additionally, IEG prepares more in-depth Project Performance Assessment Reports (PPARs) for about 25 percent o f completed projects (Box 3.3). PPAR ratings override IEG's earlier ICRR ratings, so that the portfolio-wide results reported by IEG are a combination o f those inthe PPARs (for about a quarter) and the ICRRs (for the remainder). As explained in Box 3.3, IEG does not select projects for PPARs based on a random or representative sample; accordingly, it is not possible to extrapolate the PPAR findings to the entire portfolio. Annual Reporton Portfolio PerformanceFY06 23 BOX 3.3: EVOLUTIONOF PPARCOVERAGE BY IEG Untilthe early 1980s, IEG preparedProject Performance Audits on all projects about one year after exit to analyze the extent to which project objectives had been attained and reasons for deviation. The main factor for 100percent coverage of completedprojects for independentaudits was drivenby the Board's concerns for accountabilityof BankManagement. In 1983-84,the audit coverage was reducedto 50 percent of completed projects because of the budgetary and staffingreality of IEG's growing portfolio and studies program. The audit ratio was fkrther reducedto 40 percent in 1986and againto 25 percent in 1997to generatethe resources neededto allow IEGto focus on evaluations at a Country, Sector andThematic levels. The audit ratio remains at 25 percenttoday. The PPAR has evolved into an in-depthproject evaluation based on field work, and is prepared by IEG on average within three years after project completion. Projects for PPARs are selected along a number of criteria, including the potential to learn lessons fiom innovative projects, usefulness as building blocks for IEG's Sector, Thematic, and Country Assistance Evaluations, and lack of informationinthe ICRor difference of opinionbetweenIEGandthe Regionon ratings betweenthe ICRandICRReviews. 3.16 Tracking o f development outcomes is important to improve the effectiveness of the Bank's operational work, to strengthen institutional accountability, and to help reduce reputational risks to the Bank. Several important steps are already underway to strengthen the Bank`s outcome tracking system including strengtheningof Project-levelM&E systems to provide better underpinningfor evaluations and refinements of the ICWICRR process to resolve methodological issues. Inpartnership with DEC, IEG is also considering detailed statistical analysis of the PPAR data to look for further insights into the historicaltrends. BANK'S PERFORMANCE DURING PROJECTPREPARATIONAND SUPERVISION 3.17 IEG evaluation data suggest that while country factors are the strongest predictors o f project outcomes, the Bank's performance i s also a major contributory factor. Satisfactory Bank performance during preparation and appraisal leads to better project design adapted to country situation. Improved risk identification and mitigation during implementation, and project restructuringto adjust to changing country circumstances, also contribute to successful outcomes. 3.18 Quality-at-Entry. Since FY97, QAGhas carried out seven assessments of Quality-at-Entry, and the results were reported in the last ARPP. The last Quality-at-Entry assessment o f projects approved in FY04-05 (QEA7) shows that overall satisfactory quality is about 90 percenta8 A breakdown o f the findings o f QEA7, however, shows that 28 percent o f projects are in the moderately satisfactory category, indicating missed opportunities during preparation for corrective actions to enhance development i m p a ~ t . ~Shortcomings in Quality-at-Entry can be addressed by paying more attention to the following four main factors that have been shown in IEG evaluations and QAG assessments to contribute to successful outcomes: * Projects in LICUS have lower Quality-at-Entryat 80 percent satisfactory. MIC operations, on the other hand, havehigherQuality-at-Entryat 97 percent satisfactory. 9 Starting with QSA6 and QEA7, QAG shifted the assessment fiom a four to a six-point scale of Highly Satisfactory (HS), Satisfactory (S), Moderately Satisfactory (MS), Moderately Unsatisfactory (MU), Unsatisfactory(U) andHighly Unsatisfactory(HU). AnnualReporton Portfolio PerformanceFY06 24 0 Lower project complexity that better matches the design with a country's institutional capacity; Comprehensive assessment o f the risks and feedback into project design; Operationally relevant results framework and baseline data at entry; and 0 Greater project readiness for implementation at entry. 3.19 Quality of Supervision. The recently completed Seventh Quality o f Supervision (QSA7) assessment o f the Bank's performance during supervision in FY05-06 shows overall satisfactory quality at 95 percent compared to 90 percent in QSA6 (Table 3.4). The share o f the portfolio in the moderately satisfactory category, however, has increased to 43 percent from 25 percent in FY03-04. Inaddition, supervision quality inthe satisfactory or better category has declined from 65 percent in FY03-04 to 52 percent in FY05-06, across all quality dimensions (Figures 3.3A and 3.3B). These results are a cause o f concern and indicate missed opportunities as well as substantial room for improvement. At the regional level, ECA, AFR, MNA and SAR have improved their performance in QSA7, while EAP and LCR have shown a slight decline. TABLE 3.4: QUALITY OFPROJECT SUPERVISION QSA6 (FY03-04) andQSA7 (FY05-06) of which % Satisfactory % Moderately Satisfactory QSAG QSA7 QSAG QSA7 Region AFR 85 97 32 36 EAP 96 92 17 49 ECA 90 98 10 34 LCR 100 94 31 47 MNA 75 93 33 55 SAR 80 93 28 52 Network ESSD 86 94 32 44 FSE 100 100 32 53 HDN 91 90 35 41 INF 94 100 22 47 PREM 91 91 10 46 PSDN 77 92 0 8 Source of Funds IBRD 94 94 25 50 IDA 88 97 25 41 LICUS I' 88 52 Bank-wide 'QSA6assessmentwas 90 95 25 43 not stratifiedby LICUS group of countries. Annual Report on Portfolio PerformanceFY06 25 3.20 Quality o f supervision in LICUS countries at 52 percent moderately satisfactory and 88 percent satisfactory i s below the Bank's averages. Major issues are: (i)lack o f focus on development effectiveness, including efforts to build capacity and approach to building institutions; (ii)lack o f management guidance on and responsiveness to supervision issues; and (iii)poor quality o f project performance ratings. LICUS operations also have very low ratings on sustainability. With extremely weak institutions in LICUS, more focus on institution buildingand the intensity and quality o f Bank supervision could have a major impact on project outcomes. The Bank needs to assign more experienced staff and managers to supervise projects in these countries, as research has shown that supervision can have a highpay off interms o f improvingoutcomes. FIGURE -QUALITY OFSUPERVISIONBYDIMENSION 3.3 FIG.3.3(A) lo FIG. 3.3(B)11 QSA6 and QSA7 (YOS+) QSA7 (YOMS+ and S+) R1 R1 R4 R2 : Focuson DevelopmentEffectiveness : Supervisionof FiduciarylSafeguardAspec R3 R3: Adequacy of Supervision Inputs and Processes R3 R4: Candor and Quality of ISR 0 QSM, %S+ O%MS+ 0 QSA7,%S+ El%S+ 3.21 A detailed analysis of QSA7 shows the following main weaknesses: 0 Failure to correct ina timely manner quality-at-entry problems related to weaknesses in project design, poor quality o f results framework in the PAD, lack o f readiness for implementation at approval, and inadequate risk assessment; Lack o f timely identification and assessment o f threats to achievement o f development outcomes; lo S+ only includestwo of the three ratingsthat are above the line (Le., Highly Satisfactoryand Satisfactory). MS+includesthe three ratingsthat are abovethe line (Le., Highly Satisfactory, SatisfactoryandModerately Satisfactory). Annual Report on Portfolio Performance FY06 26 0 Inadequate management attention and actions. Supervision efforts by, and the skill mix o f task teams, are areas where more effective guidance and support from both country and sector management could have made a difference; Inadequate budget resources inabout a fifth o f the sample; and Poor performance reporting o f QSA7 projects resulting in understatement o f the riskiness o f the portfolio as reported to management. The ISRs continue to suffer from lack o f candor and there are problems with the quality and timeliness o f data to support performance indicators. Compared with the ISRs, panelists identified twice as many problemprojects and three times as many risk flags inboth FY05 and FY06. 3.22 Quality o f supervision can be improved by more attention to the following: Ensuringthat neededtechnical expertise ispresent insupervisionteams; Strengthen incentives and accountabilities to improve the quality o f supervision reporting; 0 Address factors that impede timely management attention and actions on supervision issues; Address supervision skillmix issues by ensuringthat decentralized staffs have adequate access to specialized and global skills; 0 Provide guidance and training to task teams in the area o f improving the results framework, includingdisseminating best practice examples across regions; and Ensure that procurement and financial management specialists are better integrated with supervision teams. PORTFOLIO RISKSAND REALISM OFRATINGS 3.23 The effectiveness o f the system to measure portfolio performance and status (Projects-at- Risk flag system, Realism Index, and Proactivity Index) depends on the quality o f the ISRs (Annex 2). However, if risks are under-reported inthe ISRs, management's ability to focus timely attention on problems i s compromised. As reported in previous ARPPs, candor and realism o f portfolio reporting are long standing problems. In response to proposals in previous ARPPs, some actions have been initiated: In early 2005, revisions to ISR system placed greater emphasis on results and made them more issues and action oriented; Some regions, particularly AFR, are strengthening supervision effort for problem projects, and this i s encouraging more candid reporting by TTLs and sector managers (Box 3.4); and Intensified attention from senior managers, as in the case o f Net Disconnect between IEGratings and the ratings inlast ISR, has provided increased incentive for managerial attention. Nevertheless, the overall situation remains problematic. Annual Reporton Portfolio PerformanceFY06 21 3.24 Based on the FY06 ratings in the ISRs, only ten percent o f the portfolio was classified as having serious problems and a further four percent acknowledged as having potential problems. Based on this, other related indicators (realism and proactivity) are currently beingreported and used (Statistical Appendix, Tables 3.1 and 3.2). However, QAG's analysis shows that the following three factors raise questions about the reliability o fthe current portfolio risk system: 0 Excessive optimism in the ratings means that many risky and problematic projects are not being identified as such by staff and managers, and, therefore, do not generally receive the resources and attention they require. Validation o f the ISR ratings by the QSA7 Panels shows that 14 percent o f the FY06 portfolio is at risk o f not meeting its development objectives (DOs) and an additional 11 percent o f the portfolio i s having implementation problems and require intensive attention (IP unsatisfactory), for a total o f 25 percent o f the portfolio facing serious issues; The Net Disconnect (the gap between the ratings for DO inthe last ISR before closing and IEG's outcomes ratings at exit), which declined from 15 percent in FY03 to seven percent in FY04-06, may be sending a false signal o f improved candor in reporting (Figure 3.4). Analysis shows that the lower level i s too often due to downgrading o f the DO ratings in the last ISR before project closing (through so called "death-bed conversions"). When measured based on ISR ratings one year prior to closing, the Net Disconnect duringFY04-06 was about 13 percent. While such late downgrading o f the DO ratings in the ISRs reduces the Net Disconnect (which is monitored by senior Management), it i s more important to recognize problems early on to permit timely corrective actions; and Inaddition to serving as an "early warning" risk system for Management on the health o f the portfolio, the Projects-at-Risk rating i s used in the formula for allocation o f IDA resources. This may distort incentives for candid reporting. 3.25 QSA reviews point to frequent failures in the ISRs to trigger discretionary risk flags. Validation o f risk flags by QSA7 Panels shows that the ratings for M&E, Project Management, and Financial Management, which are good predictors o f project development outcomes, should have been rated unsatisfactory in 39, 28 and 16 percent o f the FY06 ISRs, respectively, compared to the five-six percent range assigned by regional staff and managers (Statistical Appendix, Table 3.25). 3.26 A review o f IEG's outcomes ratings shows that whenever an ISR assigns a Moderately Satisfactory (MS) rating to the Development Objectives (DOs), there i s a higher likelihood o f the outcome being rated Unsatisfactory by IEG (31% o f the instances) than in instances where DOs in the ISRare rated Satisfactory (7%). The MS ratings are, therefore, useful to guide attention to areas where there is a needfor more focused attentionto improve project performance. 3.27 A reviewofthe ISRsbythe ECA region carried out inmid-FY06 found that 70 percent o fthe ISRs were satisfactory for realism o f the key ratings. About 40 percent o f the ISRs were satisfactory on the realism o f the key ratings, and also on results framework. While results orientation was satisfactory for 75 percent o f the ISRs reviewed by ECA, it was concluded that there is room for reducing the number o f cases where the links between indicators and ratings were perceived as weak. Insome cases, the ECA review found excessive focus on implementationand disbursements to gauge progress instead o f paying more attention to progress towards meeting development objectives. Therefore, the ECA review emphasized the need for using results as the main source for justifying ratings, includingcases where rating upgrades were undertaken. Annual Report on Portfolio PerformanceFY06 28 FIGURE NETDISCONNECT BETWEEN1% OUTCOMESAND ISRRATINGSDURINGFY04-06 3.4: 18 16 14 CC 12 0 2 10 nQ) 8 6 4 2 0 W04 FY05 WO4-06 1lil%NetDisc.(IEG-DO(ISR)) 0 %Net Disc.(IEGDO(ISR-1)) I 3.28 The ISR sign off system by Sector Managers has not so far assured candid reporting o f potential risks and there is a continuing perception that a Task Team Leader o f a problem project i s himself or herself a problem. The FY06 COSO Report" noted that Sector Staff and Country Management Units feel that both formal and informal incentives were primarily focused on getting projects to the Board, with quality, safeguards and supervision being secondary. Additionally, the COSO Report noted that despite the behavioral references inthe annual staff performance evaluation process to teamwork, staff continue to believe that their performance i s being measured on individual rather than team achievement. Moreover, a problem project or a project that moves into the At-Risk category comes under Management scrutiny and the TTL i s asked to fix the problem quickly, in many instances without adequate Management guidance and/or resources. Box 3.4 provides details o f an innovative process introduced inFY06by the Africa Region to address this concern. 3.29 One major consequence o f the excessive optimism in the ISRs' risk ratings i s that portfolio performance indicators derived from the ISR database-Projects-at-Risk, the Realism Index that measures the degree o f unreportedproblems, and the Proactivity Indexthat measures actions taken to resolve identified problems--have now become less reliable. They do not provide "early warning" o f risks that threaten the achievement o f project development objectives. This weakness compromises the ability ofmanagers to devote ina timely manner resources and attentionto the more riskyportion o f the portfolio. l2 IBRDandIDAFY06 COSOYear-endReport(No. AC2006-0093), October 13,2006 (paras. 68-69). Annual ReDort on Portfolio PerformanceFY06 29 BOX3.4: STRENGTHENINGSUPERVISIONOFPROBLEMPROJECTS: THEAFRICA APPROACH InFY06, the RVP of the Afiica Region encouraged staff to be more candid and responsive to implementation problems. The Region provided additional funding for intensive supervision of problem projects from an escrow fund of $1.1 million on a demand basis. Thirty-seven problem projects received funding and results havebeenpromising. About one-half oftheseprojects have beenupgradedandor restructured. Lessonslearned indicate the needto agree up-front on a strategyto address systemic issues, establishclose links between finding and the proposed actions and expectedresults, and to complete corrective actions during the fiscal year. The Region is continuing to provide additional finding for supervisionofprojects indifficulty inFY07. Task Teams have beenencouragedto access the funds early inthe Fiscal Year. Sector Units will prepare quarterly progress reports onthe proposedactions. AFR's average supervisionbudget inFY06 for bothproblem ($136,000) andnon-problem ($105,000) projects is the highest among all regions. Average supervision budget Bank-wide in FY06 is $112,000 and $90,000 for problem and non-problem projects, respectively, showing less differentiation in supervision effort between the two categories. More modest increases in budgets for problem projects can also be found in SAR, EAP and ECA. Recently-approved project restructuring procedures will further improve incentives, lower procedural constraints, and encouragemore flexibility duringimplementation. 3.30 Based on QSA findings and IEG's exit ratings, a more realistic estimate o f Projects-at-Risk i s likely to be about 25 percent, significantly higher than the 14 percent level reported in FY06. This level i s consistent with the reported unsatisfactory outcomes o f 22 percent in FY03-06. The current Projects-at-Risk system, therefore, needs recalibration so that it can provide a more realistic estimate o f the share o fthe portfolio that is at risk o f not achieving the development objectives. 3.31 Mindful o f the increased distortions in the measurement of portfolio performance, QAG commissioned a special review o f the projects at-risk system, and subsequently undertook further analysis to evaluate the impact o f changes in the methodology for estimating portfolio riskiness and realism o f project ratings.13 The review recognized that the existing Projects-at-Risk system is not producing realistic results in the absence o f adequate incentives for more candid reporting and increasedmanagerial attention. 3.32 Revise the Realism Index. Further strengthening o f efforts to inculcate greater candor in performance ratings could be achieved by intensifying Senior Management attention to this issue; and improving incentives for recognizing implementation risks and increasing candor in the ISR ratings. Based on the findings from the latest review, the ARPP recommends revising the current Realism Index to make it a more meaningful measure o f the quality o fportfolio reporting, to simplify its calculation and to make it more robust. The revised Realism IndexI4will link it directly to actual recent outcomes reported by IEG thereby making it more dependent on actual outcomes. It will be calculated as the ratio o f the number o f problem projects recognized by staff and managers to the level o f IEG's outcomes that are below the line in the most recent three years (equivalent to about 1,000 evaluations), on a rolling basis. While there is remarkable persistence in IEG's ratings on a country and sector basis, it i s recognized that in some cases rapid improvement in outcomes can 13 "Review of the Risk Flag System," by Marc Blanc, Nidhi Khattri, Joshua Wimpey, and IrinaTratch, July 2006; and "Improving Portfolio Management, Proposed Changes in the At-Risk Flag System," QAG, August 27, 2006. 14 Currently, the Realism Index is calculatedas aratio of actual problem projectsto total number ofprojects at risk (sum ofactualproblemprojects andpotential problemprojects) (see Annex 2). Annual Report on Portfolio Performance FY06 30 occur. Accordingly, if regions provide sufficient justification, OPCS can agree to override historic performance data and to introduce an alternative expected risk measure (e.g., by relying on the last year's IEG ratings rather than the three year average). Applying the proposed modification will result in an initial lowering o f the end FY06 index from 80 percent to 50 percent as shown in Table 3.5. EAP and MNA among the Regions, and Environment and Urban Development among Sectors would experience the greatest change. In contrast, the change for LCR, Transport, and Social Protection is likely to be quite minimal. The target for the Realism Index would be retainedat the 70+ percent level. Inorder to improve the index Bank-wide, some 70 additional projects (or about 5% o f the portfolio) would have to be classified as Problem Projects. Depending on the impact o f this change, other portfolio indicators may also needto be revisited inthe coming year. TABLE 3.5: COMPARISON OF CURRENTAND PROPOSEDREALISMINDEX (AS OF JULY1,2006) Active Portfolio Latest 1,000 IEG Evaluations % Realism Index No. of Projects % Problem No. of % Unsat. Current Proposed (A) Projects (B) Evaluations (C) Outcomes (D) (E) [(B/D)VOO] REGION AFR 371 15 253 30 72 50 EAP 229 6 144 22 93 26 ECA 315 9 220 15 90 59 LCR 209 13 200 19 61 71 MNA 110 9 96 24 100 30 SAR 151 10 07 21 79 40 OTH 3 0 0 NA NA NA NETWORK ESSD Environment 130 6 50 29 67 21 Rural Sector 247 9 155 17 85 51 Social Development 20 16 10 30 71 60 SubTotal 405 9 223 21 70 41 FSE 53 0 42 17 80 45 HDN Education 136 9 90 17 67 51 HNP 152 18 74 35 82 52 Social Protection 67 16 71 21 92 70 Sub Total 355 14 243 24 80 60 INF Energy and Mining 133 11 64 25 94 45 Global InformationlComm.Tech. 12 17 6 0 100 NA Transport 152 9 80 11 01 75 Urban Development 77 5 57 19 57 27 Water Supply & Santn 99 14 46 22 08 65 Sub Total 473 10 263 10 04 57 PREM Economic Policy 19 26 60 19 83 100 Poverty Reduction 6 0 11 0 NA NA Public Sector Gov 97 11 93 27 85 42 SubTotal 122 13 172 22 84 59 PSDN 60 10 57 39 67 26 TOTAL 1,468 11 1,000 22 80 50 Annual Report on Portfolio PerformanceFY06 31 CONCLUSIONSAND RECOMMENDATIONS 3.33 The conclusions and recommendations are: Quality at Entry and Supervision. Address the areas o f weakness and missed opportunities duringproject appraisal and supervision; Realism Index. Modify the current Realism Index, basing it on recent IEG evaluations, to make it more robust and less susceptible to under reporting o f risk. In case the regions feel that major changes in country conditions require exceptions, they can be agreed to following a review by OPCS; and Strengthening accountabilities o f teams and managers and examining how to achieve greater realism inportfolio reporting. Annual Report on Portfolio Performance FY06 32 IV. ANALYTIC AND ADVISORY ACTIVITIES 4.1 Analytic and Advisory Activities (AAA) are a key component o f the Bank's tool-kit for promoting economic development and reducing poverty among its clients. They provide the basis for the Bank's policy dialogue with clients, the development o f country assistance strategies, and the design o f effective lendingprograms. They are also important for buildinginstitutional capacity and promotingaid coordination and harmonization among the donor community. DuringFY06, the Bank spent (both from its own budget and TFs) a total of $222 million on AAA, with almost 30 percent of the Regional country services budgets beingdevoted to these activities. 4.2 AAA expenditures have risen over the past five years resulting in a significant increase in outputs delivered to the clients, reflecting a conscious management decision to strengthenand deepen the AAA program. Various assessments of AAA quality also suggest steady improvement in their relevance and likely impact with over 90 percent o f the AAA work now rated Satisfactory. However, there i s scope for greater likely impact through more attention to dialogue and dissemination. Despite major efforts over the past few years in strengtheningthe planning, tracking and managing o f the AAA program, these areas remain a cause for concern with potential for significant further gains in efficiency and effectiveness o f resources used for AAA. This Chapter presents a stock taking o f AAA activities in terms o f expenditures and deliveries, and a review o f activities by client and Networks/Sector Boards. The Chapter concludes with a discussion o f key issues and related recommendations. TRENDS AAA EXPENDITURES DELIVERIES IN AND 4.3 Overall Expenditures and Deliveries. As shown in Table 4.1(A), overall AAA expenditures have grown from $143 million in FY02 to $222 million in FY06--an increase o f 55 percent in nominal terms and 31 percent in real terms. Seen in the context o f a stable Bank budget overall for the past few years, the trend in AAA expenditures i s indicative o f the increasing importance o f "knowledge" activities in the Bank's assistance programs. During this period, expenditures and deliveries o f AAA products experienced a sharp increase between FY02 and FY03 and a modest decline between FY05 and FY06. Two factors contributed to the initial increase. First, responding to perceived gaps in the availability o f basic building blocks o f analytical work, special priority was attached by Management to increasing the stock o f ESW reports, especially diagnostic work. These products account for slightly more than halfthe increase in deliveries and even a greater percentage o f the increase in expenditures. Second, starting inFY03, Network anchor deliveries were formally brought under the AAA governance framework, adding about 120 deliveries for that year. Annual ReDort on Portfolio PerformanceFY06 33 TABLE 4.1A: AAA PROGRAMBY COST ($M)(BANK-WIDE) FY02 FY03 FY04 FY05 FY06 A. Tasks in Progress at the Begining of the Year 108 142 163 183 184 (100%) (131%) (151%) (169%) (170%) B. Total Expenses in FY 143 168 189 200 222 (100%) (117%) (132%) (140%) (155%) C. Tasks Delivered in FY 92 129 139 166 163 (100%) (140%) (152%) (180%) (177%) D. Tasks Dropped in FY a' 7 7 16 18 24 (100%) (96%) (212%) (251%) (327%) E. Expenses of Tasks Delivered in Previous FYs 10 11 14 14 19 (100%) (108%) (144%) (141%) (194%) F. Tasks in Progress at the End of the Year (A+B-C-D-E) 142 163 183 184 200 (100%) (115%) (129%) (130%) (141%) TABLE 4.1 B: AAA PROGRAMBY NO. OF TASKS (BANK-WIDE) FY02 FY03 FY04 FY05 FY06 A. Tasks in Progress at the Begining of the Year 787 1,065 1,256 1,222 1,087 (100%) (135%) (160%) (155%) (138%) B. Tasks Initiated in FY 1,164 1,399 1,340 1,179 1,087 (100%) (120%) (115%) (101%) (93%) C. Tasks Delivered in FY 725 1,065 1,037 1,045 908 (100%) (147%) (143%) (144%) (125%) D. Tasks Dropped in FY a' 161 143 337 269 193 (100%) (89%) (209%) (167%) (120%) E. Tasks in Progress at the End of the Year (A+B-C-D) 1,065 1,256 1,222 1,087 1,073 (100%) (118%) (115%) (102%) (101%) Dropped AAA tasks that were dropped inFY07 are treated as Dropped inthe fiscal year inwhich the last expense took place. Data as of January 17, 2007 represents partial cleanup of AAA program. The figures in brackets denote trends in AAA using FY02=100%. FY02 is used as base year since this is the first year for which comparable data is available for such analysis. Costs include both BB and TF. 4.4 Three factors account for the decline in deliveries between FY05 and FY06. The more important one (accounting for more than half the decline) reflects the Regions' drive to adopt a more programmatic approach by consolidating tasks to optimize resources, improve Management oversight, and prevent fragmentation o f nonlending activities. These efforts, inturn, help explain the more modest decline in expenditures for delivered tasks. Reduction in the number o f diagnostic reports (para. 4.12) i s the second factor contributing to the decline. The third factor was tighter Annual ReDort on Portfolio Performance FY06 34 management o f the task codes through the introduction o f the TA governance framework." These figures need to be treated with care, however, since as indicated in para. 4.24, some o f the changes are simply due to inappropriate coding16or reporting o f AAA activities. 4.5 Along with the increase in AAA expenditures, there has also been a modest rise in average unit cost, which at about $186,000 per delivered task is now about 10 percent higher in (real terms) than in FY02 (Statistical Appendix, Table 4.10). This increase may reflect the added cost linkedto the increasingly participatory nature o f AAA work and to greater efforts at the consolidation o f tasks noted above, at coordination with other partners, and more attention to dissemination. Three other noteworthy trends are the increase in post delivery expenditures (Le., those associated with tasks delivered inthe previous year), the increase in the number o f and expenditures for dropped tasks, and the leveling o f the number o ftasks inprogress. These aspects are discussed below. 4.6 Post Delivery Expenditures. These expenditures fund various activities occurring after delivery o f a task to the client (e.g., output finalization, translation o f documents, dissemination o f findings, and in some instances, further field visits). Expenditures for dissemination (for the purpose o f this analysis, they are equated with those for post delivery) are currently $19 million, or nearly double the FY02 level. This increased focus on dissemination i s a welcome development and response to earlier ARPP recommendation. However, the data should be interpretedwith caution. Some dissemination activities occur prior to task delivery (i.e., they appear under the line item for tasks delivered in the fiscal year); large expenditures have been entered in the system several years after task client delivery, raising doubts as to whether they were dissemination activities; and some tasks may have required further work for completion, thus overstating the resources going into dissemination. Given that post delivery expenditures are now a significant share o f AAA expenditures, and the data reliability issues, better monitoring o f these expenditures, as well as o f their likely impact and effectiveness i s recommended. Future AAA assessments should include a review o f post delivery expenditures. Dissemination aspects are further discussed in paragraphs 4.18, 4.24 and 4.26. 4.7 Dropped Tasks. The Bank has generally encouraged the dropping or cancellation o f activities (ESW, TA or lending) if they encounter insurmountable difficulties which would prevent them from achieving the desired results. As shown in Table 4.1(A), the cost of dropped AAA activities increased from $7 million inFY02 to $24 million inFY06. Over the past three years, some 800 tasks (about a quarter o f all AAA tasks initiated) with an aggregate cost o f about $60 million have been reported as dropped. Disaggregation of the data on dropped tasks suggests the problem to be more acute in AFR, for Global and Regional AAA, and for TA. Contrary to good management practices, many dropped tasks also seem to carry a high price tag (average o f $125,000 in FY06) suggestingthat they are beingdropped too late inthe task cycle. 15 Starting in FY05, certain ESW and TA output types (e.g., Consultations/Country Dialogue and ConferencesIWorkshops) were reclassified into T A while other ESW and TA activities were reclassified into product lines outside the AAA umbrella. 16 The word "coding" refers to the selection of a product line. Inappropriate coding or miscoding refers to the selection o f an inappropriate product line for a particular activity (e.g., an ESW task i s created and thenusedto fknda project appraisal or supervision activity; a TA task is created to conduct an internal knowledge activity, etc.). Annual Reporton Portfolio Performance FY06 35 4.8 Caution i s needed in interpreting the above findings because o f the data quality. It would seem, however, that about one quarter o f the costs associated with dropped tasks could be attributed to changes in the Bank's classification o f activities as well as the reclassification o f AAA activities into other product lines, which means that the expenditures were not totally lost (though the conversion distorts the true cost o f activities in the new product lines). Another 20 percent o f the costs associated with dropped activities are due to factors such as changes in the CAS or client priorities. The balance or roughly half, which represents 5 percent o f AAA expenditures, reflect probably inadequate Management oversight over the initiation, implementation and completion o f AAA activities. A priority for the comingyear should, therefore, be better management ofthe AAA programto bring down the volume and cost o f dropped tasks. This also points to the need for regular monitoring and for future AAA assessments to review o f dropped tasks. 4.9 Tasks in Progress. As shown inTable 4.1(B), the stock o ftasks inprogress at the end o f the fiscal year, which had risen sharply inFY03, appears to be stabilizing. There were 1,073 AAA tasks in progress at the end of FY06 with total expenditures of about $200 million. Between FY02 and FY06, there has been a modest increase in the number o f tasks in progress, while expenditures increased by about $60 million. Among the Regions, AFR had the highest number o f AAA tasks in progress (288 tasks), representing 26 percent o f the total, and together with EAP these two regions accounted for about 46 percent o f AAA tasks in progress. End FY06 work in progress can also be divided into Global and Regional AAA (256 tasks costing $81 million) and Country AAA (817 tasks costing $119 million). The relatively high cost already incurred for GRAAA tasks in progress (averaging $315,000 compared to $146,000 for Country AAA) i s worrisome, suggestingthe need for further scrutiny. AAA DELIVERIES BY OUTPUT TYPE 4.10 Duringthe past couple of years there have been several major changes in the delivery o f AAA activities along output types. The most noteworthy changes between FY05 and FY06 were the decline in the delivery o f core diagnostic reports, other diagnostic reports, policy notes, and TA products. These changes are discussed inthe following paragraphs. Annual ReDort on Portfolio PerformanceFY06 36 4.11 Delivery o f Core Diagnostic R e p ~ r t s , 'which are a sub-set o f ESW, declined from 122 in ~ FY04 to 81 in FY06. This was in line with the Bank's decision in 2004 that once gaps in country coverage by core diagnostic products (including CPAR, CFAAA, PER, POR and CEMDPR) were eliminated, the frequency o f such reports would be programmed on a country-by-country basis, depending on the types and level o f the Bank engagement and partner country priorities and circumstances, and the availability o f relevant knowledge from development partners. Another factor contributing to this decline i s the shift toward Integrative Fiduciary Assessments, which integrate in a single activity the work otherwise carried out under stand-alone PERs, CPARs, and CFAAs. This shift may also have contributedto the small increase inunit costs. TABLE4.2: MAJOR PRODUCTS AAA (FY02-FY06) AAA Products Deliveries (#) Initiation to Completion Costs (US$ Million) b' FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06 ESW Reports 253 443 487 501 472 41 69 82 96 98 Core Diagnostic Reports 87 119 122 90 81 17 26 24 22 21 Other DiagnosticReports 43 101 123 140 123 6 15 18 22 25 Advisory Reports 123 223 242 271 268 18 2a 39 52 52 ESW Policy Noteslother Products 206 283 247 193 129 18 23 27 36 19 Policy Note 115 153 152 193 129 10 14 16 36 19 Other 91 130 95 NA NA a 9 12 NA NA All ESW Products 459 726 734 694 601 59 92 109 132 117 TA Output Types Client Document Review 17 27 22 21 21 2 5 3 3 2 Institutional Development Plan 61 83 92 90 70 16 15 17 13 17 Knowledge-Sharing Forum 46 7a 102 132 77 5 12 14 21 15 ModelISurvey 26 22 13 13 11 5 2 2 2 2 "HOW-TO"Guidance 115 129 74 95 128 18 16 9 11 15 All TA Products 265 339 303 351 307 45 50 43 49 52 All AAA Products 724 1,065 1,037 1,045 908 103 141 153 181 168 a/ Delivery meansdeliveryto the client. b/ Initiation to Completioncosts includepost-deliverycosts. Costs includebothBB andTF. c/ In FY05, most Other ESW output types (e.g., ConferencedWorkshops and ConsultatiordCountry Dialogue) were reclassifiedas TA. 17 Core diagnostic reports include Poverty Assessments (PORs), CEMs/Development Policy Reviews (DPRs), Public Expenditure Reviews (PERs), Country Procurement Assessment Reports (CPARs), Country Financial Accountability Assessments (CFAAs), and Integrative Fiduciary Assessments (PFPs). Annual ReuortonPortfolioPerformanceFY06 37 4.12 A recent review18covering a more restricted universe o f diagnostic studies found that at the end of FY06: 54 percent o f active IDA-eligible countrie~'~had five up-to-date core diagnostic products, compared to only 13 percent at the end o f FY03, with about 85 percent o f active IDA-eligible countries having up-to-date PERs, CFAAs, and CPARs at the end o f FY06; and There has been a growing tendency, particularly in AFR, to integrate PERs, CFAAs, and CPARs in one task. Looking forward, for the next several years it is unlikely that there will be major changes in the number of core diagnostic reports preparedby the Regions. 4.13 Other Diagnostic and Advisory Reports.20 These two ESW report type categories primarily seek to lay the foundation for sector dialogue and for Bank lending. There has been a slight decline in the number o f Other Diagnostic Reports delivered in FY06 and a leveling off in the number o f Advisory reports delivered. However, expenditures on these two report types have either remained constant or increased showing a continuation o f the earlier trend towards more effort on these customized reports that respond to client demand and less towards core diagnostic reports. This is a welcome development that confirms that customized diagnostic work is not being crowded out by core diagnostic work. This should also limit the risk of gaps in the Bank's sector and macroeconomic knowledge inindividual countries. 4.14 Policy Notes. Within ESW, a noteworthy change in FY06 was the sharp decline in the number of Policy Notes delivered to the client, which after peaking in FY05, declined by about a third, while expenditures declined bynearly 50 percent. As a result, the share o fPolicyNotes intotal AAA expenditures dropped from 20 percent in FY05 to 11 percent in FY06. The average cost o f Policy Notes has increased from $88,000 in FY02 to $148,000 in FY06 and appears high given that they are meant to be quick-response, short, focused pieces. By output type (Statistical Appendix, Table 4.12), Policy Notes are among the outputs showing the largest increase in preparation time (four months) compared to FY02. Short, effective Policy Notes o f the type initially conceptualized are still beingprepared but in some instances there appears to be a clustering o f related policy notes into a larger piece, which partly explains the decline in delivery numbers as well as the increase in average cost and preparation time. 4.15 Technical Assistance. There was a modest increase in TA deliveries during the period FY02-FY06 with a small increase starting in FY05 following the reclassification o f most Other ESW output types as TA. Nevertheless, Table 4.2 shows relative stability in TA delivery duringthe review '* WorldBank, IDA 14Mid-TermReview:ESW Progress, October 2006. ' l9 IDA-eligiblecountriesinclude bothIDA andBlendcountries. 20 Other Diagnostic reports and Advisory reports are more customized to client demand and provide macroeconomic and sector knowledge. Other Diagnostic reports include Accounting and Auditing Assessments, Corporate Governance Assessments, Country Environmental Analysis, Country Gender Assessments andEducationSector Reviewto name a few. Advisory reports cover topics such as Commodities, DebtandCreditworthiness,ForeignTrade, Law andJustice, Energy,Infkastructure etc. Annual ReDortonPortfolioPerformanceFY06 38 period. The most recent Q A G assessments o f the quality o f Technical Assistance2' found its quality to be strong and often superior to that o f ESW. In particular, the assessments noted that TA was a very valuable knowledge transfer tool that had been used quite effectively by the Bank. The clearer focus and articulation o f results o f TA was generally found instrumental in making TA effective in achieving its objectives. The assessments found that the strength o f TA activities was their strategic relevance in support o f the client's development agenda and the quality o f dialogue and dissemination associated with them. However, as one assessment found that these tasks were affected by coding issues, several actions have been initiated to improve performance, including the launch o f the TA governance framework inFY05. AAA BY CLIENT 4.16 Country AAA. The increased focus on "knowledge" activities has meant a rise inthe share o f country services allocated to AAA (Le., the "Country AAA intensity")22from 24 percent in FY02 to 29 percent in FY06 (Statistical Appendix, Table 4.13). As i s to be expected, the intensity varies considerably among Regions and countries. Over the five-year period, MNA has had the highest intensity (34%), inpart due to the large Program o f Reimbursable TA inthe Gulf countries. At only 18 percent, the AAA intensity in LCR is the lowest reflecting stronger capacity for analytical work within the Region but also perhaps a tighter budget envelope for the LCR Region. The AAA intensity was lower for IDA countries (22%) than for the IBRD borrowers (28%) due to the greater perceived priority o f lending in the former. Consistent with the agreed LICUS initiative, there has been a rapid increase in AAA expenditures in the LICUS countries with the AAA intensity increasingfrom 18 percent inFY02 to 30 percent inFY06. 4.17 The AAA program retained a high degree o f concentration during the FY02-06 period, with 10 countries accounting for 21 percent o f total deliveries and a quarter o f all expenditure^.^^ Seven o f these countries (India, China, Indonesia, Brazil, Vietnam, Pakistan and Philippines) are also countries with large lending portfolios suggesting considerable synergies between the lending and AAA activities. The list also includes, however, two countries (Russia and Thailand) with little or no lendingbut where AAA is at the heart o f the country partnership strategy. Saudi Arabia, with a filly reimbursable TA program, i s the remaining country on the list. 4.18 Preliminary results from Phase I1 o f the Country AAA Assessment, currently underway, confirm the Phase Ifindings reported in the last ARPP and suggest continuing strong performance in terms o f analytical quality as well as closer alignment with client development frameworks and CAS objectives. Although the Stage I1Country AAA assessment shows some early signs o f progress in this area, dissemination continues to need more attention. It needs to be planned and funded as an integral part o f task design and management. All too often the Bank i s missing opportunities to integrate and disseminate AAA o f potential interest to clients. This reduces the potential o f the Bank to contribute to development as an agent o f change, particularly in the more open political environments that now characterize many clients. More progress is also needed in improving 21 Assessment of the quality of NonlendingTechnicalAssistancedeliveredto the client inFY04 and the Country AAA assessmentofNonlendingTechnicalAssistancedeliveredto the client duringthe periodFY02-04. 22 The country intensity is a measure of the relative effort devotedto CountryAAA. It is obtainedby dividing all AAA expendituresfor a given country by all expendituresfor country servicesfor that country. 23 StatisticalAppendix, Tables4.6 and4.7. Annual ReDort on Portfolio Performance FY06 39 coherence o f Country AAA programs and integrating them better with related work by other donors and by the clients themselves. The likely impact at the individual task level i s strong, particularly when the Bank facilitates and supports, rather than leads and dominates the policy-making process. However, there i s some scope to further improve likely impact through greater management attention, particularly during the task preparation and dissemination stages. Phase I1 Assessment covering a total o f 17 country programs i s expected to be completed in April 2007 and full results and recommendations should be available by end FY07. 4.19 Assessing AAA impact i s difficult given attribution issues. As part o f its AAA assessments Q A G assesses the likely impact o f each task or country AAA program. The Country AAA assessments identified several AAA programs, whose likely impact was rated highly satisfactory. From the Bank's perspective the common features o f these successful AAA programs include: i) strong managerial attention at-entry and duringimplementation; ii)continuity and quality o f staff; iii) strong dialogue and participatory approach to promote government ownership; and iv) adequate budgetary resources. Box 4.1 discusses several such AAA programs. In light o f the sizeable Bank resources devoted to AAA, IEGhas launched an evaluation that will assess the extent to which AAA has met its stated objectives, and derive findings on how to improve the effectiveness with which AAA products meet their objectives. The evaluation will review the extent to which ESW/TA informs lending, policy, builds analytical capacity, informs/stimulates public debate and influences other donor activities. However, given the enormous difficulties related to attribution, IEG does not intend to evaluate AAA's impact on the development outcomes related to the Millennium Development goals. Box 4.1: Selected Country AAA Programs with High Likely Impacts The likely impact o f the Vietnam AAA program was found extremely high in particular because it helped improve Vietnamese understanding o fthe broad requirements o f moving towards and managing a market economy. The panel assessing the quality o f this AAA program also felt that it is likely to continue to play a significant role inthe reform process. The panel noted that the Bank facilitated and supported, rather than led or dominatedthe policy making process. The panelassessingthe quality of Chile's AAA program found that its likely impact on the client was highly satisfactory. The panel noted that authorities have taken maximum advantage o f the Bank's ESW work in all areas of the AAA program to improve policy implementation. As a result the program has had a significant impact in terms o f likely revisions to incentive arrangements for regional development and SME development, the establishment o f innovative regimes for new initiatives (social protection and rural infrastructure services) and improvements in existing national systems for financial management, procurement and financial supervision. The Panel found that managerial attention had been particularly impressive both at entry and during implementation and that highly qualified staff and consultants had beenselected. The El Salvador AAA program's likely impact was rated highly satisfactory based on actions already taken by the government and the prospect for future actions. The panel felt that this program has made a substantial intellectual contribution to the government's approach to reform and poverty reduction, as well as to the quality o f the debate at the level o f government ministries and in civil society at large. Key Salvadorian counterparts openly acknowledged this contribution and they and foundations and think-tanks emphasized the need for continued engagement with the Bank. The Panel noted the strong involvement o f the Country and PREM teams. Annual Reporton Portfolio PerformanceFY06 40 4.20 The MNA Region has had Reimbursable Technical Assistance (RTA) programs in five Gulf countries (Bahrain, Kuwait, Oman, Qatar, and UAE) since 2002 and inthe Kingdom o f Saudi Arabia since 1975. Both programs are intended to be totally "paid for" and largely demand-driven; are not guidedby country assistance or partnership strategies, and were managed ineach case by a dedicated unit outsidethe country-sector organization. 4.21 At the MNA Region's request, QAG undertook separate Quality Enhancement Reviews (QERs) o f these programs in FY06, adopting an approach similar to Country AAA assessments. The main findings o f the QERs were that the Programs have been subject to ad hoc programming, and corresponding unpredictability and uncertainty because o f the absence o f a longer-term framework that defines priorities for undertaking AAA--factors that have contributed to weak internal incentives. The QERs found a measure o f ambivalence on the part o f Bank Management about the appropriate role for the Bank, the modality o f its engagement, the evolution o f that engagement over time similar to that o f a paid consulting firm. The QERs also noted that the limited contribution o f the Programs to capacity development and the growing reservations by the clients about the Programs also contributed to this ambivalence. 4.22 Against this backdrop, the Q A G Panel outlined three options for the hture o f the RTA program--continue along the present lines, scale back the Program, or recast the relationship with the recipient countries to that o f a sustained, strategic partner and policy advisor (as with any other client country) versus a "paid, ad-hoc consulting firm." Following discussions o f options within the Bank and with clients, the Region i s inthe process o f implementing the third option. 4.23 Regional AAA. While AAA has traditionally been directed to the country level, a growing share o f AAA output i s Regional in scope. Since FY02, the cost o f Regional deliveries has tripled (from $14 million to $39 million) compared to a 60 percent (nominal) increase in Country AAA deliveries. In FY06, Regional AAA deliveries amounted to close to one-fifth o f the total AAA delivered to the clients interms o f number o f tasks and close to a quarter o f the total delivery cost. 4.24 Given the growing importance o f Regional AAA in the Bank's work, QAG assessed a sample o f such tasks delivered during July 2004 to December 31, 2005. The assessment found the quality o f Regional AAA comparable to that o f Country AAA. In particular, the likely impact o f these tasks was found to be high, above 90 percent. However, the assessment noted some missed opportunities for greater likely impact due to insufficient attention to dialogue and dissemination aspects. In particular, panels found that dissemination strategies at entry were often vague, imprecise, incomplete and that actual dissemination arrangements were often ad hoc and opportunistic, reflecting both a lack o f resources and well thought out strategy. Also, opportunities for greater impact were missed as a result o f the insufficient engagement o f key stakeholders. Panelists identified 13 good practice tasks, including the Shocks & Social Protection in Central America ESW task (Box 4.2) which was rated highly satisfactory. The assessment found that quality was good in ECA, LCR, EAP but was lagging in AFR. Another area in need o f improvement is the quality o f trust fundedtasks where weaknesses were attributed to failure to follow the Bank's quality assurance mechanisms. The assessment also found that improper coding and reporting o f tasks remains an issue, resulting in inflated numbers o f Regional AAA tasks and playing a large role inthe apparent significant increase inRegional AAA expenditures duringthe period FY02-06. Annual ReDort on Portfolio Performance FY06 41 BOX 4.2: SHOCKS AND SOCIALPROTECTIONINCENTRALAMERICA LESSONSFROMTHE COFFEE CRISIS The Shocks and Social Protection study is part o fan ongoing engagement between the Bank and its counterparts in Central America on social protection, comprising both policy dialogue and operational support to governments to extend basic services to their poorest inhabitants and to protect the most vulnerable fiom the impacts o f shocks. This $260,000 Economic and Sector work was undertaken in response to requests fiom several Central American governments for support inunderstanding the welfare impacts o f the coffee crisis--an unprecedented decline inworld coffee prices between 1997/98 and 2001/02--and its broader lessons for public policy. The quality o fthis task was ratedHighly Satisfactory overall. Its strategic relevance was found particularly high given that its objectives were highly supportive o fthe Bank's advocacy role, o fthe policy dialogue and provided a strong underpinning to strategy development. Quintessentially demand-driven, it was designed to go beyond a short-term response to a particular crisis and seek to improve the effectiveness o f social safety nets indealing with any kind o f shock. The Panel also noted that the quality of the analysis was first rate, the findings persuasively presented, and the quality of the written output excellent. The Panel rated the task's likely impact as Highly Satisfactory since substantial results had already been achieved less than six months after completion o f the task. InNicaragua, a pilot safety net program embodying the main fmdings ofthe work has already beeninitiated. InElSalvador, a conditional cashtransfer program had been launched as the first phase o f development o f a safety net. The Panel also noted that prospects for achieving further results were good in Honduras and, even though not part o f this task, in Panama and possibly Colombia as well. 4.25 Global AAA. Since FY02, the cost of reported Global AAA deliveries has tripled (from $2 million to $6 million) compared to a 60 percent (nominal) increase in the Country AAA. However, inFY06, GlobalAAA remaineda small share oftotal AAA. 4.26 QAG assessed a sample of suchtasks delivered during July 2004 to December 31,2005. The assessment found the quality o f Global AAA inferior to that o f Country AAA but recommended treating this finding with caution as it may be caused by issues with the current classification o f Global activities under the ESW and T A product lines. OPCS has since agreed to review the appropriateness o f the classification of Global activities under the AAA line o f products. The assessment found that some of these global tasks had significant likely impact including the Costs o f Compliance with International Agro-Food Standards ESW task (Box 4.3). However, similarly to regional AAA, the assessment found missed opportunities for greater likely impact, due to insufficient attention to dissemination aspects. The assessment found that quality was good in HDNbut was lagging in INF. As noted for regional AAA (para. 4.24) above, the quality of trust fundedtasks was also found to be weaker. Annual ReDorton PortfolioPerformanceFY06 42 BOX 4.3: COSTS OF COMPLIANCEWITH INTERNATIONAL AGRO-FOOD STANDARDS - A GLOBAL PERSPECTIVE This global task was to better define the nature of the agro-food standardchallengefacing developingcountries in internationalmarkets for high-value agricultural products in order to bringabout an attitudinaland strategic shift in relation to agro-food standards and trade. Since much of the conventional wisdom heldthat emerging standards were barriersto trade, andthat developingcountrieshadfew options to respond,this ESW was to alter this paradigmby instilling or strengtheningthe notions that developingcountries do have roomfor maneuver in designing policies and strategies to ensure compliance with the standards-and hence, continued international market access andcompetitiveness. The Panel concludedthat this $320K task had been Highly Satisfactory overall. Inparticular, it notedthat the strategicrelevanceofthe task was very highbecauseits objectives were highly consistentwith the Bank's sector strategiesinbothruraldevelopmentandtrade. Task timeliness was foundvery goodinthe contextofthe stalled DohaRoundoftradenegotiations andthe increasingrecognitionbythree ofthe existing world standards making bodies that they did not have the economic competence needed to complement their technical expertise. The quality of the written report was found outstanding, with an excellent summary and well presented recommendations. Actual dissemination arrangements were found exemplary, including an impressive E-learning program with MI,a dedicatedTrust Fundfor mainstreaming,a well-designedandcomprehensivewebsite andfrequent presentationsbythe mainauthorsto diverse audiences. Finally, likely impactwas also ratedHighly Satisfactorybecausethe task has already hada substantial impact on governments(who haverequestedBank assistance indevelopingstrategic visions for usingstandards to improve national agro-food trade competitiveness or have incorporated strategic analyses related to standards as components in export competitiveness and trade studies), the wider development community, as well as the Bank. I AAA BY NETWORK NETWORKS/SECTORBOARDS 4.27 There were considerable differences in the number and cost of AAA deliveries by Networks/Sector Boards (Statistical Appendix, Table 4.2 ) and summarized below: 0 Infrastructure. After peaking in FY03, deliveries in this Network experienced a decline though expenditures continued to grow and the cost per task this year ($216,000) is more than double the cost in FY02 ($105,000). The rapid increase in expenditures o f nearly three-fold between FY02 and FY06 was partly inresponse to the Bank's Infrastructure Initiative aimed at reversing the decline in lending in the Infrastructure sectors. There are sharp year-to-year fluctuations in expenditures for AAA activities among the sectors in this Network but when considered over the last five years, the Urban Sector received the largest share o f resources (46%) followed by Energy (23%), WSS (13%), Transport Sectors (9%) and GIC (9%). The data need to be interpreted with care, however, as some o f the trends highlightedare possibly driven by the coding practices of INF's Global Programs and Partnerships(GPPs). Some GPP products that had earlier been coded as Knowledge Products are now coded as AAA and City Alliance tends to code their tasks as Bank outputs whereas some GPPs do not. PREM. Expenditures inthis Networkhave increased gradually over the past five years but with the rate o f increase beingslower than inother Networks. As a result, although Annual Report on Portfolio PerformanceFY06 43 PREM still has the largest share o f AAA deliveries, this percentage has declined from 33 percent o f the total inFY02 to 29 percent inFY06. PREM still leads inthe delivery o f AAA products though the Network's share declined slightly over the period. Economic Policy accounts for nearly half the expenditures in the Network. Poverty Reduction, in line with the Bank's continued emphasis on poverty, saw an increase in expenditures o f nearly 50 percent between FY02 and FY06. There was also a sharp increase in expenditures per task to $247,000, largely reflecting the undertaking o f more substantive poverty assessments. ESSD. Bothexpenditures and deliveries declined from the FY05 record level. Declines were especially pronounced in the Environment and Social Development sectors, while the Rural Sector registered an increase for the fourth year ina row. Other Networks. The Financial and Private Sector Development Networks experienced a sharp decline in the number o f deliveries though these themes were also addressed in many AAA activities managed by other Networks. As for Human Development, the slight increase in Education and the more pronounced increase in Social Protection more than offset the decline in Health, though it was noted that Health issues (e.g., HIV/AIDS) were frequently taken up in work conducted by other sectors. KEY ISSUESINAAA MANAGEMENT 4.28 Zero Cost Deliveries. Bank data show that a number o f tasks are reported every year as delivered to the client with a zero cost. There are close to 300 such tasks duringthe review period, o f which 32 in FY06. A quick review of the 32 FY06 zero cost deliveries shows that they are overwhelmingly located inthe Africa Region (23 out o f 32). All Activity Initiation Summaries (AIS) for these tasks were approved by managers although most did not include an estimated task budget. Several AIS indicate that work was indeed carried out and an output delivered to the client although no expenditure was recorded. These anomalies affect data reliability and can be directly traced to poor managerial oversight and weak monitoringo f AAA activities. 4.29 Tracking AAA Programs. Over the past few years, Q A G assessments (most recently o f GRAAA) o f AAA Quality pointed to numerous errors in task coding and reporting in the Bank's information system. Despite major efforts and significant improvements over the past few years, quality o f the data remains a major constraint to effective management and oversight o f the Bank AAA programs. Key problems inthe management of the AAA information system, which is based on inputs and updates provided by the Task Teams, include: Inadequate incentives for accurate reporting including end-of-the year pressures for inflating deliveries and reluctance to report unviable (dropped) tasks in a timely fashion; Incomplete monitoring tools to provide management with meaningful summary information in a timely fashion. While the current monitoring system monitors AAA deliveries it does not focus on upstream monitoring o f AAA activities (Le,, monitoring entries o f new tasks into Bank systems as well as monitoring the implementation o f tasks inprogress) and cannot identify anomalies insystem entries ina timely fashion; Annual Report on Portfolio PerformanceFY06 44 Poor quality o f task level data with reporting responsibilities often assigned to junior staff with limited familiarity o f the underlying concepts and without adequate supervision by the TTLs; and While progress has been made in defining the ESW and TA product lines, other product lines have not yet been fully defined. This leads to frequent miscoding o f activities both within AAA and with other product lines. 4.30 The data deficiencies have meant a need for periodic "clean up" efforts to resolve problems accumulated over a period o f time, which are expensive in terms o f staff time and efforts and also make it difficult to analyze trends over time. Eliminating the need for such periodic clean ups calls for tighter oversight o f the AAA process (e.g., work inprogress, slippage, delays in delivering policy notes, coding, reporting and dropped projects) by Regional and Network managers. There i s also scope for OPCS, CSR, and ISG to work together with the operations staff to resolve the underlying problems for a more sustainable systemic improvement. RECOMMENDATIONS 4.31 Considering the short period between approval o f the FY05 ARPP recommendations (strengtheningmanagement oversight, eliminatingdelays in AAA delivery, ensuringaccurate coding and reporting and better dissemination o f results), and the preparation o f the present report, the limited progress to-date is understandable. These recommendations, especially the first three, still remain valid. More specifically, given the issues identified inthis ARPP, it i s recommended that: Strengthen managerial oversight and monitoring o f the AAA program. The RegionshJetworks should clearly define the preferred arrangement for AAA oversight. Specifically, the responsibilities o f the Chief Administrative Officer, Chief Economist, and Quality Directors should be clearly defined; CSR, in cooperation with Regions/Network Anchors, other concerned units (including Q A G as appropriate) and OPCS should identify a set o f indicators that would enable effective monitoring and reporting on ESW and TA activities from task initiation through task completion; and Future AAA assessmentsto review dropped tasks as well as post delivery expenditures. Annual ReDortonPortfolio PerformanceFY06 45 V. RECOMMENDATIONS A. STATUSOFFY05ARPP RECOMMENDATIONS TABLE 5.1: IMPLEMENTATION STATUS RECOMMENDATION STATUS I. STRENGTHEP NGLENDINGANDPORTFOLIOMANAGEMENT Improving the Quality-at-Entryof Not Rated operations inlow CPIA countries. QEA8 (covering lendingduring FY06/07)to assess progress. Results to be reportedinthe next ARPP. Improving Candor and Realismof ModeratelyUnsatisfactory portfolio performanceratings. Commendableactions have beentakento put inplace a system for identifying high risk operationsex-ante. However, QSA findings indicatethat candor inportfolio reporting remains a serious issue. ImprovingDevelopmentOutcomes Not Rated inlaggingsectors (Environment, Too early tojudge; preliminary results point to limited Health, Private Sector Development progress. and Public Sector). Identifying potentialweaknesses in Satisfactory current FiduciaryPoliciesand 0 A strategy paper for StrengtheningBank Group propose remedialmeasures. Engagement on Governance and Anticorruption was issued and its implementationis underway; 0 Measures to strengthen the Bank's Public Financial Managementwork are inplace; and 0 The INT Departmentintroduceda Voluntary Disclosure Program. ,LYTIC AND ADVISORY ACTIVITIES Improving ManagementOversight ModeratelySatisfactory of M A . Quality and relevanceofAAA activities is high but concerns remainabout effectivemonitoring and use of AAA resources. Inparticular, AAA monitoring and oversightbetweentask initiation and delivery is weak and does not permit the identification of anomalies (work inprogress, slippage, delays indelivery, coding, andreporting)beforeformal delivery. StrengtheningA M Dissemination. ModeratelySatisfactory Attention to disseminationhas improvedand additional resources are beingprovidedbut the likely impact of these efforts remains uncertain. Controlling Delays in A M Delivery. ModeratelySatisfactory While AAA delivery overall remainswithin acceptable limits, slippage (the difference betweenplannedand actual delivery) continuesto grow andhas now reachedabout eight months. AnnualReporton Portfolio Performance FY06 46 Trainingstaffon managingfor Not rated. To be reportedon separately by the Results results. Secretariat. QSA7 results indicate abouthalfthe portfolio still lacks a sound results framework. Implementing the ResultsReporting 1 System. Monitoring of CAS implementation. OVERALL ModeratelySatisfactory B. FY06ARPP RECOMMENDATIONS As summarized above, there has been only modest progress in follow-up to the recommendations o f the last ARPP, reflecting in part the relatively long lead times needed for results in some o f the areas. The realism o f portfolio risk ratings and the management o f the AAA programs, inparticular continue to be problematic with significant scope for improvement. Most recommendations made last year still remain valid. The FY06 ARPP includes the following recommendations: Include recipient-executed Trust Funds in the Bank's portfolio, and subject them to regular Bank processes and quality assurance mechanisms for tracking and managing the health ofthe portfolio; Give special attention to Repeater and Additional Financing operations, multi-country or regional projects and multi-sector operations inthe upcomingassessment o f Quality- at-Entry; Address the areas of weakness and missed opportunities during project appraisal and supervision; Modify the current realism index to make it more robust and less susceptible to under- reporting o frisk; Strengthenaccountabilities ofteams and managersand examine how to achieve greater realism inportfolio reporting; Strengthen managerial oversight to improve tracking and management o f the AAA program. The Regions/Networks should clearly define the preferred arrangement for AAA oversight. Specifically, the responsibilities o f the Chief Administrative Officer, ChiefEconomist, and Quality Directors should be clearly defined; CSR, in cooperation with Regions/Network Anchors, other concerned units (including QAG as appropriate) and OPCS should identify a set o f indicators that AnnualReDort on Portfolio Performance FY06 47 would enable effective monitoring and reporting on ESW and TA activities from task initiationthroughtask completion; and Future AAA assessments to review dropped tasks as well as post-delivery expenditures. Annual Reporton Portfolio PerformanceFY06 48 Annex 1 THEPORTFOLIO-AN OVERVIEWTABLE Fiscal Year FYOl FY02 FY03 FY04 FY05 FY06 Net Commitments ($ M) 3pening Balance 117,589 108,261 104,577 96,930 94,703 95,479 IBRD 79,761 69,295 64,741 57,336 52,791 54,309 IDA 36,403 37,346 37.860 37,436 39,763 38,902 TF 1,426 1,620 1,976 2,157 2,149 2,267 4pprovals in FY 17,508 19,789 18,729 20,353 22,215 23,904 IBRD 10,487 11,452 11,231 11,045 13,334 14,135 IDA 6,764 8,068 7,283 9,035 8,559 9,446 TF 257 270 216 273 322 322 Cancellations in FY 4,652 1,881 3,258 1,792 2,092 1,132 IBRD 4,410 1,557 2,890 1,437 1,588 917 IDA 242 323 366 355 504 215 TF 0 0 0 0 0 0 Exits 22,050 21,682 24,242 20,716 20,081 23,827 IBRD 16,340 14,302 16,499 14,056 10,734 14,419 IDA 5,598 7,252 7,532 6,333 9,021 9,194 TF 112 129 212 327 325 214 Errors in reconciliationb' -134 90 1,124 -72 733 769 PORTFOLIO: end-year balance 108,261 104,577 96,930 94,703 95,479 95,194 Real 126,781 124,019 106,930 97,734 98,534 95,194 Number of Projects Opening Balance 1,593 1,561 1,543 1,516 1,466 1,451 IBRD 768 718 680 642 582 567 IDA 737 739 748 753 764 765 TF 88 104 115 121 120 119 Approvals in FY 256 252 258 265 297 301 IBRD' 91 96 99 87 116 112 IDA 134 133 141 158 158 167 TF 31 23 18 20 23 22 Exits 284 275 289 319 317 290 IBRD' 141 133 138 149 133 125 IDA 133 125 139 147 160 147 TF 10 17 12 23 24 18 Errors in reconciliation -4 5 4 4 5 6 End-Year Balance b' 1,561 1,543 1,516 1,466 1,451 1,468 a/ Cancellations representpartial reductionin commitmentsbut do not include commitments for projectsthat exit in the fiscal year. They therefore reduce commitment amounts but not the number ofprojectsinthe portfolio. b/ End-year balancemay not equal openingbalanceplus approvals minus cancellations and exits due to synchronizationerrors betweensystems. c/ FY06prices, basedonManufacturers UnitValue (MW)Index. d/ The Number of Projects in Business Warehouse for IBRD Source of Funds includes Blend operations. Annual Report on Portfolio Performance FY06 49 Annex 2 BASICPORTFOLIO DEFINITIONSAND DATA SOURCES PORTFOLIODEFINITIONS 1. The portfolio covered by the FY06 ARPP includes all IBRD, IDA, GEF, Montreal Protocol, and Special Financing operations approved through FY06 and 'excludes those that were completely cancelled and/or closed during the fiscal year. All dollar figures are in nominal terms unless otherwise stated. IBRD/IDA commitment deflators varied by 17 percent between FYOl and FY06. Terms used inreference to the portfolio include: e Portfolio. All loans approved through FY06 excluding those which were closed or completely cancelled prior to the end o f the fiscal year. The portfolio includes GEF, IBRD, IDA,MontrealProtocol, and Special Financing operations. The portfolio only includes operations that are active at the end o f the fiscal year; e Actual Problem Projects. Projects for which Implementation Progress is rated unsatisfactory and/or the Development Objectives are rated as unsatisfactory; e Country Client Groupings. Countries are grouped according to the level o f their income, size, risk and performance for purposes o f portfolio trend analysis. IBRD Investment Grade Countries include countries that have highcredit ratings. There are presently 29 countries in this group. The LICUS country group (severe and core only) includes 26 countries with low CPIA ratings. China and India, with populations over one billion each, are in individual categories because o f their size. The other three groups are IBRD Only, IDA Only, and Blend. They are categorized according to IDA/IBRD eligibility criteria. Country groupings are mutually exclusive. Therefore, the IBRD Only group excludes Investment Grade countries and China. The Blend group excludes India, and the IDA only group excludes LICUS; e Commitments at Risk. Commitments at risk o f not meeting their development objectives. This includes commitments associated with both actual and potential problem projects; e Country Policy and Institutional Assessment (CPIA). The Country Policy and Institutional Assessment i s an annual exercise in which country teams provide input to OPCS in order to assess the quality o f each borrower's policies and institutions in the areas generally considered to be relevant to economic growth and poverty reduction and effective aid use; e Deflator. Where so indicated nominal net commitments have been converted to real terms by usingManufacturers Unit Value (MUV) Index Deflator converted to 2006 $ by using an index o f 1.17 for FYO1, 1.19 for FY02, 1.10 for FY03, 1.03 for FY04, and 1.03 for FY05; Annual ReDort on Portfolio PerformanceFY06 50 Development Objectives (DO). The rating o f an operation's DO is based on the likelihood o f attaining the development objectives set in the Project Appraisal Document or as formally revised during Implementation. This rating may be satisfactory or unsatisfactory and is the responsibility o f the Task Team Leader, who must report on it, at least, annually inthe ImplementationStatus and Results Report. The DO rating takes into account not only implementation progress, but also other factors such as inappropriate design, unforeseeable adverse economic and financial developments, price fluctuations o f project outputs, and changes in government policy; Disbursement Ratio. The ratio o f disbursements during the fiscal year to the undisbursed balance at the beginningo f the fiscal year, investment operations only; Implementation Progress (IP). The IP rating is based on an overall judgment o f implementation performance in relation to the benchmarks in the Project Appraisal Document or as formally revised during implementation. The rating is the responsibility o f the Task Team Leader, who reports it generally at least once a year inthe ISR; Net Commitments. Total commitments net o f cancellations for all projects in the portfolio; Net Disconnect. The difference between the percentage o f projects rated as unsatisfactory by IEG and the percentage rated by the Regions in the final ISR as unsatisfactory for achieving their development objectives; Portfolio Improvement Program (PIP) Country. A country designated for intensive portfolio monitoring and supervision. Normally, PIP countries are those with 50 percent plus o f projects and/or 35 percent plus o f commitments at risk, with more than eight active projects and/or $250 million in commitments. Once designated for intensive monitoring, graduation to normal status requires evidence o f robust and sustainable improvement; Portfolio Improvement Program (PIP) Project. A project with more than $200 million incommitment at risk; Potential Problem Projects. Projects which are rated satisfactory on IP and DO but have other risk factors historically associated with unsatisfactory outcomes. The criteria to consider projects as potential problem projects are described below in the Section on "Measuring Portfolio Performance;" Proactivity Index The proportion o f projects rated as actual problem projects 12 months earlier that have been upgraded, restructured, suspended, closed, or partially (20% plus) or fully canceled; Projects-&Risk. Projects at risk o f not meeting their development objectives. Projects at risk i s the sum o f actual problemprojects and potential problem projects; Annual ReDort on Portfolio PerformanceFY06 5 1 0 Quality-at-Entry Assessment (QEA). A periodic exercise conducted by QAG to measure the Quality-at-Entry o f projects shortly after they are approved by the Board. Quality-at-Entry i s a prime determinant o f successhl development outcomes, and deficiencies in designare difficult to correct duringImplementation. The foundations o f a project are laid during Preparation, before it enters the portfolio. QEA7 was the last Quality-at-Entry exercise and covered all projects approved by the Board in FY04-FY 05; 0 Quality of SupervisionAssessment (QSA). A periodic exercise conducted by QAG to measure the quality o f supervision for projects, during a specific period. The Quality o f Supervision Assessments are real time reviews o f overall supervision performance for the previous two years. The assessment focuses on the quality o f the supervision o f Bank projects and not on the quality o f the projects per se. The most recent exercise, QSA7, covered FY05-FY06; and 0 Realism Index The ratio o f actualproblem projects to total projects at risk. MEASURINGPORTFOLIO PERFORMANCE 2. Experience shows that IP and DO ratings have tended to be over-optimistic when compared to the outcomes ratings that projects are given by IEGupon completion. To address this deficiency, the FY96 ARPP introduced the concept of projects at risk as the basic measure of portfolio performance. 3. Projects at risk include both actual and potential problemprojects. Potential problem projects are those that, although rated as satisfactory for both IP and DO, are affected by factors likely to bring about an eventual unsatisfactory outcome. These projects are identified by criteria ("flags") that take into account not only various aspects o f actual implementation experience, but also other relevant factors such as economic management and past portfolio performance in the country. Specifically, potential problem projects are identified as projects exhibiting three or more o f the following twelve risk "flags" for investmentprojects: e Legal Covenants. Any o f the Critical Legal Covenants rated "Not Compliedwith" in the last ISR; 0 Safeguards. Ratings o f MU, Uor HUon any Applicable Safeguard Policy in the last ISR; 0 Counterpart Funds. Counterpart Funding rated MU, U or HU in the last ISR (formerly the Financial Performance Flag); 0 Monitoring and Evaluation (M&E). Monitoring and Evaluation rated MU, Uor HU inthe last ISR; 0 Financial Management. Financial Management ratedMU,Uor HUinthe last ISR; 0 Procurement. Procurement rated MU, Uor HUinthe last ISR; Annual ReDort on Portfolio Performance FY06 52 0 Project Management. Project Management ratedMU, Uor HUinthe last ISR; 0 Long-Term Risk. Project with IP or D O rated MU, U or HU for any 24 months cumulative duringthe life o f the project. This flag i s removed when the project has been rated MS, S, or HS for IP and DO for the previous 24 months; 0 Effectiveness Delay. Elapsed time between Board approval and effectiveness o f more than nine months for investment and more than three months for emergency operations. This flag i s turned offthree years after Board approval; 0 DisbursementDelay. Disbursement delay o f 24 months or more for investment and 6 months or more for emergency operations. Delay i s calculated based on the initial or formally revised disbursement schedule for the project; 0 Country Environment. Located in a country with weak economic management (CPIA rating o f less than 3.0 on a scale o f 1to 6). Once "flagged," the CPIA rating must exceed 3.5 for the flag to be removed. This flag also includes countries which are ina conflict or post-conflict environment; and 0 Country Record. Located in a country with a net disconnect o f 20 percent or more, or where net commitments associated with unsatisfactory projects (as rated by IEG) represent more than 40 percent o f commitments for completed projects over the previous five years. In cases where the sample o f IEG evaluations is too small, ICR data, data on mature projects, and experience o f other donors i s used to arrive at a robust conclusion. This flag also captures countries with less than Moderately Satisfactory Country Assistance Evaluation (CAE) ratings by IEG in previous five fiscal years. 4. For Development Policy Lending operations, potential problem projects are identified as projects with two or more o f the following seven flags (at least one project specific): 8 Monitoring and Evaluation. Monitoring and Evaluation rated MU, U or HU in the last ISR; 0 Project Management. Project Management rated MU, Uor HUinthe last ISR; 0 Long-term Risk. Project with IP or DO rated MU, U or HU for any 24 months cumulative duringthe life o f the project. This flag i s removed when the project has been rated MS, S or, H S for IP and DO for the previous 24 months; 0 Effectiveness Delay. Elapsed time between Board approval and effectiveness o f more than six months for policy-based lending. This flag i s turned off three years after Board approval; 0 Disbursement Delay. Disbursement delay o f 6 months or more for policy-based lending. Delay i s calculated based on the initial or formally revised disbursement schedule for the project; Annual ReDort on Portfolio Performance FY06 53 Country Environment. Located in a country with weak economic management (CPIA rating o f less than 3.0 on a scale o f 1 to 6). Once "flagged", the CPIA must exceed 3.5 for the flag to be removed. This flag also includes countries which are in a conflict or post-conflict environment; and Country Record. Located in a country with a net disconnect o f 20 percent or more, or where net commitments associated with unsatisfactory projects (as rated by IEG) represent more than 40 percent o f commitments for completed projects over the previous five years. In cases where the sample o f IEG evaluations is too small, ICR data, data on mature projects and experience o f other donors i s used to arrive at a robust conclusion. This flag also captures countries with less than Moderately Satisfactory CAE ratings by IEGinprevious five fiscal years. 5. The at-risk ratings provide a better picture o f the current state o f the portfolio than IPDO ratings taken in isolation, because they are more comprehensive and provide an early warning o f potential failures and their causes. 6. Golden Flag. The projects at risk concept, however, is not perfect. It has been noted that some operations that get flagged as "risky" are subsequently evaluated as Satisfactory because risks have been addressed, and others that are evaluated as unsatisfactory were not captured by the system. To correct for this, the Regions can override the at-risk rating with a thirteenth flag first introduced in FY97--the "Golden Flag." Ineach o fthe fiscal years from FY03-06, approximately one percent o f the portfolio had the golden flag. A Golden Flag for a project is turned off if the project becomes unsatisfactory for IP or DO, or the total number o f at risk flags for that project goes below three for investment and below two for policy-based lendingoperations. Ifthe project subsequentlygets three or more at-risk flags for investment and two or more for policy-based lending operations, a new request andjustification for a Golden Flag is required. DATA SOURCES 7. Data for the ARPP Report and Statistical Tables are taken from the Bank's Business Warehouse. The ISR ratings used in the ARPP were "frozen" by ISG as o f June 30, 2006. Other data sources include the Loan Accounting System for data on disbursements and cancellations. 8. Blend operations include both IDA and IBRD. In the ARPP Statistical Tables, number o f projects, portfolio status indicators, IEG outcomes and net disconnect for blend operations are included under IBRD. Commitment amounts, however, are included under IDA and IBRD, respectively. 9. All costs related to AAA in the ARPP Report and Statistical Tables include both Bank Budget (BB) and Trust Fund(TF). 10. LICUS country category in the ARPP Report and Statistical Tables is based on the ist o f LICUS countries as o f July 7,2006 from LICUS Web site. Annual ReDort on Portfolio Performance FY06 54 PORTFOLIO CLASSIFICATION 11. The portfolio is classified in the ARPP by region, networkhector board, sector, theme and lending i n ~ t r u m e n t . ~ ~ 12. The "Projects (No.)" column in the Statistical Appendix, Tables 3.11 to 3.18 includes only those projects that are rated by IEG. 24 These classifications are assigned by Task Team Leaders during project preparation. While the classification by Regions is reliable, there are ambiguities and overlaps in the classification by sectors and lending instruments, e.g., projects which belong to the Urban Development sector board may be misclassified by the task team to other sector boards. Annual ReDorton Portfolio Performance FY06 56 COUNTRYCLIENT GROUPINGS Country Client Groupings Country Country Cltent Groupings Country BRD Investment Grade (IG) Aruba 3RD (Continued) Ecuador Bahamas, The Egypt Barbados Equatorial Guinea Botswana Fiji Bulgaria Finland Chile France Croatia ' Gabon Cyprus Germany Czech Republic Greece El Salvador Guatemala Estonia Iceland Hungary Iran Kazakhstan Iraq Korea, Republic of Ireland Latvia Israel Lithuania Italy Malaysia Jamaica Mauritius Japan Mexico Jordan Namibia Kuwait Poland Lebanon Romania Libya Russian Federation Luxembourg Slovak Republic Macedonia, FYR of Slovenia Malta South Africa Marshall Islands Thailand Micronesia, Federated States of Trinidad and Tobago Morocco Tunisia Netherlands :HINA China New Zealand BRD Algeria Norway Antigua and Barbuda Oman Argentina Palau Australia Panama Austria Paraguay Bahrain Peru Belarus Philippines Belgium Portugal Belize Qatar Brazil San Marino Brunei Darussalam Saudi Arabia Canada Seychelles Colombia Singapore Costa Rica Spain Denmark St. Kitts and Nevis Dominican Republic Suriname Swaziland Sweden Annual ReDorton Portfolio Performance FY06 58 Annex 3 FY07PIPCOUNTRIESAND PIPPROJECTS PIPCOUNTRIES Net Commitment Projects Commitment Fyo6 Region Country No. of Projects Commitment at Risk ($ at Risk at Risk (%) Country ($ Million) Million) (%I AFR Chad 7 273 Ia6 71 68 Y AFR Eritrea 7 254 164 71 65 Y AFR Guinea 9 192 127 33 66 N AFR Malawi 10 317 a3 30 26 Y AFR Niger 9 299 a2 33 2a Y AFR Nigeria 20 I,a43 489 40 27 Y ECA Ukraine 12 1,009 260 25 26 Y ECA Uzbekistan 5 237 141 60 60 Y LCR Argentina 29 3,492 1,330 4a 3a Y LCR Bolivia 6 266 105 33 40 N LCR Dominican Republic a 304 212 50 70 Y MNA Lebanon 6 297 20 17 7 Y MNA West Bank and Gaza a a3 43 50 52 N SAR Bangladesh 24 2,052 782 29 3a N Total 160 10,918 4,027 41 37 Bank-wide Portfolio 1,468 95,194 11,000 14 12 % Share of PIP Countries 11 11 37 PIPPROJECTS Region Country Project Name Network Commitment at Risk FY06 PIP ($ Million) Project LCR Argentina AR Economic Recovery Support SAL FSE 500 Y LCR Argentina AR NationalHighway Asset Management INF 200 Y LCR Mexico MX: 111 Basic Health Care Project HDN 350 Y SAR Bangladesh BD Private Sector InfrastructureDev INF 199 Y SAR Bangladesh HNP Sector Program HDN 300 N SAR India TN Roads INF 348 N SAR India Mumbai Urban Transport Project INF 542 N SAR India IndiaTsunami ERC INF 465 N Total 2,904 Bank-wide Portfolio 11,000 % Share of PIP Projects 26 ANNUAL REPORT ONPORTFOLIOPERFORMANCE FiscalYear 2006 February 13,2007 (STATISTICAL APPENDIX) QUALITY ASSURANCE GROUP PORTFOLIO SIZE AND COMPOSITION ...................................................................... 4-29 Table 2.1 PortfolioDistributionby Region Table 2.2 PortfolioDistributionby Region/Country Table 2.3 PortfolioDistributionby NetworklSectorBoard Table 2.4 PortfolioDistributionby Instrument Table 2.5 PortfolioDistributionby Sourceof Funds Table 2.6 PortfolioDistributionbyTheme Table 2.7 PortfolioDistributionby Sector Table 2.8 PortfolioDistributionby Country CategoryGrouping Table 2.9 PortfolioConcentrationby Country (FY06) Table 2.10 Approvalsby Region Table 2.11 Approvalsby NetworklSectorBoard Table 2.12 Approvalsby Instrument Table 2.13 Approvalsby Theme Table 2.14 ApprovalsbySector Table 2.15 Approvalsby CountryCategory Grouping Table 2.16 Entriesand Exits by Region Table 2.17 Entriesand ExitsbySourceof Funds Table 2.18 Entriesand Exitsby NetworWSectorBoard Table 2.19 Entriesand Exitsby Instrument Table 2.20 Entriesand ExitsbyTheme Table 2.21 Entriesand ExitsbySector Table 2.22 Entriesand Exitsby Country CategoryGrouping Table 2.23 Numberof OverageProjectsby RegionlNetwork PORTFOLIO PERFORMANCE ............................................................................. 3 0 - ~ Table 3.1 PortfolioStatus Indicatorsby Region Table 3.2 PortfolioStatus Indicatorsby NetworklSectorBoard Table 3.3 PortfolioStatus IndicatorsbySector Table 3.4 PortfolioStatus IndicatorsbyTheme Table 3.5 PortfolioStatus IndicatorsbyInstrument Table 3.6 PortfolioStatus Indicatorsby Sourceof Funds Table 3.7 PortfolioStatus Indicatorsand IEG Outcomes by Regionfor IDA Projects Table 3.8 PortfolioStatus Indicatorsby CountryCategoryGrouping Table 3.9 PortfolioRiskStatus Ordered by Country(FY06) Table 3.10 Performance of Projects Exitingthe Portfolio by Region Table 3.11 Net Disconnect by RegionlCountry Table 3.12 Net Disconnectby instrument Table 3.13 Net Disconnectby Sourceof Funds Table 3.14 Net Disconnect by RegionlExitYear Table 3.15 Net Disconnect by NetworWExitYear Table 3.16 Net Disconnect byThemelExitYear Table 3.17 Net Disconnect by Sector/ExitYear Table 3.18 Net Disconnectby Country CategoryGroupinglExitYear Table 3.19(a) Changes in Outcomes Ratingsbetween ICRRand PPAR by ExitYear (FY90-05) Table 3.19 (b) Summaryof Changesin Outcomes Ratingsbetween ICRR and PPAR Table 3.20 Changesin Outcomes Ratings between ICRRand PPAR by Region(FY90-05) Table 3.21 Changesin Outcomes RatingsbetweenICRRand PPARby Network (FY90-05) Table 3.22 Changes in OutcomesRatings between ICRR and PPAR by Source of Funds(FY90-05) PORTFOLIO PERFORMANCE (cont'd) Table 3.23 Net Changesin Outcomes Ratingsbetween ICRR and PPAR by ElapsedTime between ICRR and PPAR(FY90-05) Table 3.24 Net Changein OutcomesRatingsbetween ICRR and PPAR by ICR Quality Table 3.25 PortfolioRisk Factors Table 3.26 PortfolioRisk Factorsby Region Table 3.27 DisbursementRatio by Regionand Country CategoryGrouping Table 3.28 Cancellationsby Region/Country Table 3.29 Cancellationsby NetworWSectorBoard Table 3.30 Qualityof Supervisionby Region Table 3.31 Qualityof Supervisionby Network Table 3.32 Qualityof Supervisionby Country CategoryGrouping Table 3.33 Quality of Supervisionby Source of Funds Table 3.34 Quality of Supervisionby LlCUSand Non-LICUS Table 3.35 Quality of Supervisionby Non-DedicatedMulti-Sectors Table 3.36 Qualityof Transport, Water Supplyand Sanitationand ICT in Multi-SectoralProjects Table 3.37 Trends in Qualityof AAA Table 3.38 Qualityof AAA by Region Table 3.39 Qualityof AAA by Network A M . ..........................................................................................................................65-80 Table 4.1 AAA Deliveriesand Costs by Region/Country Table 4.2 AAA Deliveriesand Costs by Network/SectorBoard Table 4.3 AAA Deliveriesand Costs by CountryCategory Grouping Table 4.4 AAA Deliveries(NO. OF TASKS) by Region and Network/Sector Board, FYO2-06 Table 4.5 AAA Deliveries(US$ '000) by Regionand NetworklSectorBoard, FYO2-06 Table 4.6 AAA Concentration:Top Ten Countriesby Number of Deliveries,FYO2-06 Table 4.7 AAA Concentration:Top Ten Countriesby Cost of Deliveries,FYO2-06 Table 4.8 AAA Deliveriesand Costs by OutputType Table 4.9 ESW Deliveriesand Costs by ReportType Table 4.10 AAA SizeVariations by Cost RangelMajorOutput Type Table 4.11 Timelinessof AAA Reportsby Regionand by NetwoMSector Table 4.12 Timelinessof AAA Deliveriesby Output Type Table 4.13 CountryAAA Intensityby RegionlBorrower Table 4.14 AAA Productsby MajorSector and Theme 1 hi 9 1 a hi c C O co L 0 d - m U I-0 TABLE 2.2: PORTFOLIO DISTRIBUTION BY REGlONlCOUNTRY RegionlCountry Proiects(No.) Net Commitments(US$ Million) FYOI FY05 FY06 FYOI FY05 FY06 AFR Africa 5 14 20 20 495 1,019 Angola 4 5 5 105 176 176 Benin 12 7 8 194 203 233 BurkinaFaso 9 13 16 323 469 611 ~ Burundi 5 10 7 116 352 272 Cameroon 9 7 9 429 193 260 Cape Verde 6 4 5 74 58 68 CentralAfrican Republic 2 1 0 28 17 0 Chad 9 8 7 250 303 273 Comoros 6 1 1 45 13 13 Congo, DemocraticRepublicof 0 8 8 0 1,332 1,407 Congo,Republicof 0 6 6 0 157 157 Cote d'lvoire 12 0 0 563 0 0 Eritrea 8 8 7 295 294 254 Ethiopia 17 22 22 1,814 1,615 2,017 Gabon 3 0 2 38 0 42 Gambia,The 4 4 5 68 65 73 Ghana 23 17 17 1,055 1,041 1,096 Guinea 10 7 9 194 225 192 Guinea-Bissau 3 4 5 51 57 72 Kenya 15 13 13 822 635 599 Lesotho 7 6 7 141 112 119 Liberia 0 0 1 0 0 30 Madagascar 17 14 13 785 857 882 Malawi 12 13 10 399 376 317 - - - Mozambique 15 17 18 766 924 873 Namibia I 2 n 7 12 Niger 9 9 9 240 264 299 Nigeria 5 17 20 254 1,511 1,843 Rwanda 10 10 11 292 276 295 ~~ ~ ~ Sao Tome and Principe 2 2 2 10 12 12 Seneaal 21 15 15 953 642 _ - 641 I - .__ Sierra Leone 7 9 8 151 217 202 SouthAfrica 2 4 4 37 37 37 Swaziland 1 0 0 29 0 0 Tanzania 18 21 26 917 1,340 1,912 Toao - 5 0 0 137 0 0 Uganda 24 20 21 1,223 1,064 1,134 WesternAfrica 1 1 0 9 40 0 Zambia 16 12 9 780 502 291 Zimbabwe 5 0 0 211 0 0 Sub Total 369 351 371 14,536 16,605 18,569 5 of 80 TABLE 2.2: PORTFOLIO DISTRIBUTION BY REGlONlCOUNTRY RegionlCountry Proiects(No.) Net CommitmentsIUS$ Million) FYOI FY05 FY06 FYOI FY05 FY06 EAP Cambodia 12 13 12 270 279 265 China 108 85 79 17,461 11,951 10,724 East Asia and Pacific 1 _2 4 11 __ 22 37 - Indonesia 52 30 26 4,345 2,621 2,344 Kiribati 0 0 0 0 0 4 Korea, Rewblic of 4 0 0 283 0 0 Lao People's Democratic Republic 10 11 13 234 167 178 Malaysia 3 1 1 266 25 25 Mongolia 8 9 12 195 137 163 Papua New Guinea 8 4 3 197 82 72 Philippines 22 22 23 1,374 1,144 1,435 Samoa _7 4 4 19 .- 27 _. _. 27 Solomon Islands 2 1 1 21 4 4 Thailand 14 2 2 1,478 129 129 Timor-Leste 8 - 7 7 54 - . 48 .- 54 - . 0 3 3 0 18 18 Vanuatu 1 0 0 4 0 0 Vietnam 25 35 39 2,557 3,539 3,975 Sub Total 280 229 229 28,769 20,193 19,453 ECA Albania 20 15 17 254 234 261 Aral Sea 1 0 0 12.2 0 0 Armenia 13 16 18 268 256 275 Azerbaijan 13 18 18 288 426 578 Belarus 2 1 2 56 23 73 Bosnia-Herzegovina 18 17 17 352 358 345 Bulgaria 12 10 7 441 395 223 Central Asia 1 2 1 10 35 25 Croatia 12 13 15 516 443 592 Estonia 2 0 0 40 0 0 Europe and Central Asia 1 1 1 4 6 6 Georgia 19 18 19 353 341 303 Hungary 3 1 2 107 32 46 Kazakhstan 13 8 10 696 518 653 Kosovo 9 7 7 33 29 33 Kyrgyz Republic 15 16 17 262 244 232 Latvia 9 1 1 155 2 2 -.I ithiiania ... ..- 8 - 4 4 228 88 88 Macedonia,former Yugoslav Republic of 13 10 10 236 84 122 Moldova 9 11 15 133 149 181 Poland 15 11 10 1,414 1,244 1,184 Romania 22 22 22 1,113 1,424 1,486 Russian Federation 34 22 22 3,854 1,977 1,951 Serbia and Montenegro 2 18 19 0 270 293 Slovak Republic 0 5 6 n 111 97 Slovenia 2 0 0 Tajikistan 9 10 14 130 148 169 Turkey 19 21 24 4,317 5,965 6,057 Turkmenistan 2 0 0 45 0 0 Ukraine 8 12 12 480 796 1,009 Uzbekistan 7 7 5 277 285 237 Sub Total 313 297 315 16,103 15,883 16,514 6 Of 80 TABLE2.2: PORTFOLIO DISTRIBUTION BY REGIONKOUNTRY RegionlCountry Proiects(No.) Net Commitments(US$ Million) FYOI FY05 FY06 FYOI FY05 FY06 LCR Argentina 40 33 29 6,635 4,624 3,492 Barbados 1 1 1 15 15 15 Belize 2 1 0 21 13 0 Bolivia 17 12 6 581 478 266 Brazil 57 54 53 5,582 5,023 4,490 Caribbean 1 2 2 6 14 14 Central America 1 3 4 0 23 36 Chile 5 7 9 287 199 229 Colombia 22 20 20 1,370 1,375 1,359 Costa Rica 4 4 4 86 95 125 Dominica 2 0 0 11 0 0 Dominican Republic 10 9 8 345 383 304 Ecuador 11 10 9 350 307 299 El Salvador 8 8 8 352 481 448 Grenada 2 5 4 18 38 28 Guatemala 12 11 12 406 503 550 Guyana 4 2 4 49 15 36 Haiti 2 3 5 47 75 70 Honduras 13 18 18 565 461 416 Jamaica 3 4 5 77 110 107 Latin America 0 3 3 0 24 24 Mexico 28 23 23 5,912 2,841 2,703 Nicaragua 16 14 13 466 380 361 OECS Countries 2 2 2 30 6 6 Panama 10 3 3 279 93 101 Paraguay 6 7 6 218 151 118 Peru 9 15 17 516 451 549 St. Kitts and Nevis 1 3 2 9 13 9 St. Lucia 2 6 5 9 43 36 St. Vincent and the Grenadines 0 4 2 0 22 13 Trinidad and Tobago 2 2 2 62 31 31 Uruguay 9 11 8 383 630 359 Venezuela 12 3 2 510 74 35 Sub Total 314 303 289 25,197 18,991 16,628 MNA Algeria 10 9 7 668 337 84 Djibouti 5 4 6 49 53 70 Egypt,Arab Republic of 19 14 16 1,088 1,085 1,795 Iran, Islamic Republic of 3 9 9 373 1,355 1,355 Iraq 0 0 2 0 0 235 Jordan 11 8 8 298 278 278 Lebanon 13 7 6 729 322 297 Morocco 20 11 13 749 446 824 Red Sea and Gulf of Aden 1 0 0 6 0 0 Tunisia 21 17 17 1,094 846 854 West Bank and Gaza 17 13 8 207 154 83 Yemen, Republic of 20 17 18 636 687 748 Sub Total 140 109 110 5,898 5,563 6,621 7 of 80 TABLE2.2: PORTFOLIO DISTRIBUTION BY REGlONlCOUNTRY RegionlCountry Proiects(No.) Net Commitments(US$ Million) FYOI FY05 FY06 FYOI FY05 FY06 SAR Afghanistan 0 17 17 0 726 873 Bangladesh 26 26 24 2,367 2,326 2,052 Bhutan 4 6 4 41 80 51 India 76 64 56 13,458 12,778 11,269 Maldives 1 2 3 18 20 42 Nepal 8 12 12 221 424 422 Pakistan 16 16 19 1,215 990 1,853 Sri Lanka 13 18 16 415 875 815 Sub Total 144 161 151 17,735 18,220 17,376 OTH 1 1 3 25 25 32 Sub Total 1 1 3 25 25 32 Total 1,561 1,451 1,468 108,261 95,479 95,194 8 Of 80 8 m s z c U 6 o c 0 s - U 0 m s r r F m 1- a m m v) E o c C W o o c C W In r o c C 6 r x Z C (5 s b o z S C U E VI .- r N C 0 m W r N w c 0 m P r f.Y IC.-0 i% W Y N - 0 zLL s O O h C r a r c O N U $ t C r N h r a 2 C o o c r n C O O C r n C r o c C c r o o c * a CIO N C v: a C O N - a a a O O N lr: a t 0 0 -z IC C 0 0 -z n r TABLE 2.5: PORTFOLIO DISTRIBUTION BY SOURCE OF FUNDS Source of Funds Projects(No.) Net Commitments(US$ Billion) FYOl FY05 FY06 FYOl FY05 FY06 IBRD 718 567 554 69.3 54.3 53.1 IDA 739 765 791 37.3 38.9 39.8 GEF 49 81 91 0.8 1.I 1.2 MONT 19 17 17 0.6 0.9 0.9 SPF 36 21 15 0.3 0.2 0.1 Total 1,561 1,451 1,468 108.3 95.5 95.2 GEF Global Environment Facility MONT Montreal Protocol SPF Special Fund 11of80 TABLE 2.6: PORTFOLIO DISTRIBUTION BY THEME Theme Proiects (No.) Net Commitments (US$ Million) FYOI FY05 FY06 FYOI FY05 FY06 Economic management Macroeconomicmanagement 7 5 3 1,340 405 211 Sub Total 21 19 16 2,161 1,272 768 Environment and natural resources management Environmentalpoliciesand institutions 54 39 41 2,581 1,557 1,535 Pollutionmanagementand environmental health 75 58 59 5,906 4,343 4,015 Water resource management 45 41 39 3,743 3,000 2,545 Sub Total 254 222 227 16,832 12,439 11,428 Financial and private sector development Infrastructureservices for private sector development 62 65 71 5,053 5,794 6,959 Otherfinancial and private sector development 52 37 34 4,837 2,709 2,207 Regulationand competition policy 51 45 45 4,556 2,829 3,199 State enterpriselbank restructuringand privatization 46 31 27 4,408 2,385 2,075 245 209 210 21,018 16,008 16,878 Human development Educationfor all 45 47 46 3,138 3,005 2,749 Healthsystem performance 44 36 38 3,202 2,187 1,985 Sub Total 192 212 218 11,846 12,986 12,598 Public sector governance Administrative and civil service reform 36 .. 39 _ _ 46 Decentralization 39 37 36 Sub Total 122 137 151 Rule of law Law reform 20 14 14 640 589 685 Sub Total 58 50 48 1,742 1,797 1,948 Rural development Rural services and infrastructure 126 109 115 10,206 8,702 8,608 Sub Total 206 183 192 14,995 13,257 13,010 Social developmentlgenderlinclusion Participationand civic engagement 86 83 78 3,859 4,143 3,991 Sub Total 156 147 135 7,985 8,082 7,656 Social protection and risk management Improvinglabor markets 32 23 20 1,872 1,801 1,374 Sub Total 94 93 87 6,525 7,142 6,795 Trade and integration Exponoeveopment and compettiveness 23 19 17 I , U l O I,LJJ 1,535 Sub Total 56 59 60 3,260 4,027 4,799 Urban development Access to urban services and housing 60 56 54 Municipalgovernance and institution building 37 28 27 Other urban development 50 32 35 Sub Total 157 122 124 1,561 1,451 1,468 108,261 95,479 95194 1. This table shows sub-themeswhere the no. of projects or commitmentsexceeds 2.5% of the portfolio, or the largest sub-theme if no sub-theme exceeds 2.5%. 2. The numberof projectsor commitments in a theme is the sum of the individualfractional parts attributed to each theme within a project. 12 of 80 TABLE 2.7: PORTFOLIO DISTRIBUTION BY SECTOR Sector Projects (No.) Commitments (US$ Million) FYOI FY05 FY06 FYOI FY05 FY06 Agriculture, fishing, and forestry General agriculture, fishing and forestry sector 41 55 60 2,733 2,193 2,210 Irrigationand drainage 44 43 44 3,783 3,775 3,630 Sub Total 155 154 167 9,781 8,588 8,645 Primaryeducation 52 46 44 4,006 3,397 3,061 Sub Total 162 140 133 9,941 8,564 8,222 Energy and mining Power 72 67 73 10,419 6,442 6,924 Sub Total 120 113 126 14,246 9,001 10,080 ....-..-- Finance Banking 19 23 21 2,489 1,838 1,567 Sub Total 66 69 69 6,026 4,790 4,374 Health and other social services Health 141 124 119 9,461 7,319 6,128 Other social services 86 97 88 4,481 5,628 5,547 Sub Total 227 221 208 13,943 12,947 11,675 Industry and trade General industry and trade sector 33 19 18 1,864 1,055 1,150 Sub Total 91 65 67 5,231 4,679 4,870 Information and communications Telecommunications 10 13 12 801 315 257 Sub Total 15 23 22 1,000 54.4 493 Public Administration, Law, and Justice Central government administration 272 232 232 10,958 8,864 8,377 Sub-national government administration 56 67 73 3,330 3,892 4,554 Sub Total 383 360 369 17,060 16,195 16,354 Transportation General transportation sector 23 22 22 2,279 2,337 2,514 Roadsand highways 133 119 119 15,237 15.918 15,276 Sub Total 184 164 163 20,075 20,536 20,175 Water, sanitation and flood protection Generalwater, sanitation and flood protectionsector 40 27 29 Sewerage 29 27 26 Water supply 63 58 60 Sub Total 158 141 146 (Historic)Environment (Histor1c)Otherenvironment 1 0 0 Sub Total 1 0 0 Total 1,561 1,451 1,468 108,261 95,479 95,194 1. This table shows sub-sectorswhere the no. of projects or commitmentsexceeds 2.5% of the portfolio. or the largest sub-sector exceeds 2.5%. 2. The number of projectsor commitmentsin a sector is the sum of the individual fractional parts attributed to each sector within a project. 13of 80 TABLE2.8: PORTFOLIO DISTRIBUTION BY COUNTRY CATEGORY GROUPING Countrv CateaorvGrouDina Total Projects(No.) FYOI FY05 FY06 ~~ IBRD InvestmentGrade 224 164 169 China 108 85 79 IBRD Onlv (Others) 354 312 312 India 76 64 56 Blend 152 145 136 IDAOnlv 507 523 554 Licus 124 127 122 ~~ ~ Multi-Country 16 31 40 Total 1,561 1,451 1,468 Commitments(US$ Billion) ~~ IBRD InvestmentGrade 18.4 10.9 10.8 China 17.5 12.0 10.7 IBRDOnlv (Others) 27.3 25.7 25.5 India 13.5 12.8 11.3 Blend 7.3 5.6 6.1 IDA Onlv 21.4 23.5 25.2 Licus 2.9 4.4 4.4 MuIti-Country 0.1 0.7 1.2 Total 108.3 95.5 95.2 14of 80 TABLE 2.9: PORTFOLIO CONCENTRATION BY COUNTRY (FY06) Arranged by Countries with Largest Number of Projects Arranged by Countries with Largest Commitments Country Projects Commitments Cummulative Commitments Cummulative% (US$ Million) t:ij:::: Country Projects (us$ Million) Commitments of China 79 10,724 5 India 56 11,269 12 India 56 11,269 9 China 79 10,724 23 Brazil 53 4,490 13 Turkey 24 6,057 29 Vietnam 39 3,975 15 Brazil 53 4,490 34 Argentina 29 3,492 17 Vietnam 39 3,975 38 Indonesia 26 2,344 19 Argentina 29 3,492 42 Tanzania 26 1,912 21 Mexico 23 2,703 45 Turkey 24 6,057 23 Indonesia 26 2,344 47 Bangladesh 24 2,052 24 Bangladesh 24 2,052 49 Mexico 23 2,703 26 Ethiopia 22 2,017 52 Philippines 23 1,435 27 Russian Federation 22 1,951 54 Ethiopia 22 2,017 29 Tanzania 26 1,912 56 RussianFederation 22 1,951 30 Pakistan 19 1,853 58 Romania 22 1,486 32 Nigeria 20 1,843 60 Uganda 21 1,134 33 Egypt, Arab Republicof 16 1,795 61 Nigeria 20 1,843 35 Romania 22 1,486 63 Colombia 20 1,359 36 Philippines 23 1,435 64 Congo, Democratic Africa 20 1,019 37 Republicof 8 1,407 66 Pakistan 19 1,853 39 Colombia 20 1,359 67 Georgia 19 303 40 Iran, IslamicRepublicof 9 1,355 69 Serbiaand Montenegro 19 293 41 Poland 10 1,184 70 Mozambique 18 873 43 Uganda 21 1,134 71 Yemen, Republic of 18 748 44 Ghana 17 1,096 72 Azerbaijan 18 578 45 Africa 20 1,019 73 Honduras 18 416 46 Ukraine 12 1,009 75 Armenia 18 275 47 Madagascar 13 882 75 Ghana 17 1,096 49 Afghanistan 17 873 76 Afghanistan 17 873 50 Mozambique 18 873 77 Tunisia 17 854 51 Tunisia 17 854 78 Peru 17 549 52 Morocco 13 824 79 Bosnia-Herzegovina 17 345 53 Sri Lanka 16 815 80 Albania 17 261 54 Yemen, Republic of 18 748 81 Kyrgyz Republic 17 232 56 Kazakhstan 10 653 81 Egypt, Arab Republicof 16 1,795 57 Senegal 15 841 82 Sri Lanka 16 815 58 Burkina Faso 16 611 83 BurkinaFaso 16 611 59 Kenya 13 599 83 Senegal 15 641 60 Croatia 15 592 84 Croatia 15 592 61 Azerbaijan 18 578 85 Moldova 15 181 62 Guatemala 12 550 85 Tajikistan 14 169 63 Peru 17 549 86 Madagascar 13 882 64 Mali 13 547 86 Morocco 13 824 65 El Salvador 8 448 87 Kenya 13 599 65 Nepal 12 422 87 Mali 13 547 66 Honduras 18 416 88 Nicaragua 13 361 67 Nicaragua 13 361 88 Lao People'sDemocratic Republic 13 178 68 UNguay 8 359 88 Ukraine 12 1,009 69 Bosnia-Herzegovina 17 345 89 Guatemala 12 550 70 Malawi 10 317 89 Nepal 12 422 71 DominicanRepublic 8 304 89 Cambodia 12 265 11 Georgia 19 303 90 Mongolia 12 163 72 Ecuador 9 299 90 Rwanda 11 295 73 Niger 9 299 90 Poland 10 1,184 74 Lebanon 6 297 91 Kazakhstan 10 653 74 Rwanda 11 295 91 Malawi 10 317 75 Serbia and Montenegro 19 293 91 Macedonia,former Yugoslav Republicof 10 122 76 Zambia 9 291 92 Iran, Islamic Republicof 9 1,355 76 Jordan 8 278 92 Ecuador 9 299 77 Mauritania 9 277 92 Niger 9 299 78 Armenia 18 275 92 Zambia 9 291 78 Chad 7 273 93 Mauritania 9 277 79 Burundi 7 272 93 15 of 80 TABLE 2.9: PORTFOLIO CONCENTRATION BY COUNTRY(FY06) Arranged by Countries with Largest Number of Projects Arranged by Countries with Largest Commitments Country Projects Commitments Cummulative ProJects Commitments Cummulative % (US$ Million) :,ti:::' Country (us$ Million) commitments of Cameroon 9 260 79 Bolivia 6 266 93 Chile 9 229 80 Cambodia 12 265 94 Guinea 9 192 81 Albania 17 261 94 Congo, Democratic Republic of 8 1,407 81 Cameroon 9 260 94 El Salvador 448 82 Eritrea 7 254 94 Uruauav .,, a8 359 82 Uzbekistan 5 ~. 237 95 ~~ .~ .~_. .. Dominican Republic 8 304 83 Iraq 2 235 95 Jordan 8 278 83 -_ Benin R _2.13_ _ 95 _ _ Benin 8 233 84 Kygyz Republic 17 232 95 Sierra Leone 8 202 84 Chile 9 229 96 West Bank and Gaza 8 83 85 Bulgaria 7 223 96 Chad 7 273 85 Sierra Leone 8 202 96 Burundi 7 272 86 Guinea 9 192 96 Eritrea 7 254 86 Moldova 15 181 96 Lao People'sDemocratic Bulgaria 7 223 87 Republic 13 178 97 Lesotho 7 119 87 Angola 5 176 97 Algeria 7 84 88 Tajikistan 14 169 97 Timor-Leste 7 54 88 Mongolia 12 163 97 Kosovo 7 33 89 Congo, Republicof 6 157 97 Lebanon 6 297 89 Thailand _ _ - - 2 129 -_ 97 Bolivia 6 266 90 Costa Rica 4 125 98 Macedonia,former Congo, Republic of 6 157 90 Yugoslav Republicof 10 122 98 Paraguay 6 118 90 Lesotho 7 119 98 Slovak Republic 6 92 91 Paraguay 6 118 98 Djibouti 6 70 91 Jamaica 5 107 98 Uzbekistan 5 237 92 Panama 3 101 98 Angola 5 176 92 Slovak Republic 6 92 98 Jamaica .__._ ti I07 97 _ _ Iithiiania 4 RR 98 Gambia, The 5 73 93 Algeria 7 84 99 Guinea-Bissau 5 72 93 West Bank and Gaza 8 83 99 Haiti 5 7n 93 Gambia, The 5 13 99 Cape Verde 5 68 94 Belarus 2 73 99 St. Lucia 5 36 94 Papua New Guinea 3 72 99 Costa Rica 4 125 94 Guinea-Bissau 5 72 99 Lithuania 4 88 94 Djibouti 6 70 99 _Bhutan 4 51 95 _ _ Haiti -. 5 717 99 _ _ South Africa 4 37 95 Cape Verde 5 68 99 East Asia and Pacific 4 37 95 Timor-Leste 7 54 99 Central America 4 36 96 Bhutan 4 51 99 Guyana 4 36 96 Hungary 2 46 99 Grenada 4 28 96 Maldives 3 42 99 Samoa 4 27 96 Gabon 2 42 99 Panama 3 101 97 SouthAfrica 4 37 99 Papua New Guinea 3 72 97 EastAsia and Pacific 4 37 99 Maldives 3 42 97 St. Lucia 5 36 99 World 3 32 97 CentralAmerica 4 36 100 'atin America 3 24 97 Girvana A 36 inn Venezuela 2 35 100 Kosovo 7 33 100 Inaiiana L 1LY YU Worid 3 32 100 Rrlanic 7 71 CIR Trinidadand Tobago 2 31 100 Hungary 2 46 98 Liberia 1 30 100 Gabon 2 42 98 Grenada 4 28 100 Venezuela 2 35 98 Samoa A 77 inn Trinidadand Tobago 2 31 99 CentralAsia 1 25 100 Caribbean 2 14 99 'Malaysia 1 25 100 St. Vincentand the Grenadines 2 13 99 LatinAmerica 3 24 100 Namibia 2 12 99 Tonga 3 18 100 Sao Tome and Pnncipe 2 12 99 Barbados 1 15 100 St. Kittsand Nevis 2 9 99 Caribbean 2 14 100 OECS Countries 2 6 99 Comoros 1 13 100 16 of 80 TABLE 2.9: PORTFOLIO CONCENTRATION BY COUNTRY (FY06) Arranged by Countries with Largest Number of Projects Arranged by Countries with Largest Commitments Commitments Cummulative Commitments Cummulative % Country (US$ Million) ~ ~ ~ Country. ~Projects ~(us$ Million) ~ commitments 'of St. Vincent and the Liberia 1 30 99 Grenadines 2 13 100 CentralAsia 1 25 100 Mauritius 1 12 100 Malaysia 1 25 100 Namibia 2 12 100 Barbados 1 15 100 Sao Tome and Principe 2 12 100 Comoros 1 13 100 St. Kitts and Nevis 2 9 100 Mauritius 1 12 100 OECS Countries 2 6 100 Europe and CentralAsia 1 6 100 Europe and CentralAsia 1 6 100 Solomon Islands 1 4 100 Kiribati 0 4 100 Latvia 1 7 ino Solomon Islands 1 4 100 Kiribati 0 4 100 Latvia 1 2 100 CentralAfrican Republic 0 0 100 Central African Republic 0 0 100 Total I.468 95.194 I00 Total 1.468 95.194 I00 17of 80 TABLE 2.10: APPROVALS BY REGION Region Projects (No.) Commitment Amount (US$ Million) FYOZ FY03 FY04 FY05 FY06 FYOZ FY03 FY04 FY05 FY06 AFR 69 63 74 79 81 3.836 3,762 4,188 3,843 4,838 F A D 31 28 33 40 42 1,842 2,344 2,647 2,926 3,462 ECA 56 58 54 63 65 5,580 2,697 3,594 4,071 4,071 LCR 57 58 55 61 68 4,411 5,896 5,352 5,002 6,024 MNA 17 20 14 19 16 596 1,111 1,149 1,339 1,701 SAR 22 31 35 35 28 3,525 2,919 3,423 5,033 3,805 OTH 0 0 0 0 1 0 0 0 0 3 Tntal 252 258 265 297 301 19,789 18,729 20,353 22,215 23,904 TABLE 2.11: APPROVALS BY NETWORWSECTORBOARD Network/Sector Board Projects (No.) Commitment Amount (US$ Million) _ESSD_ _ _ FYOZ FY03 FY04 FY05 FY06 FYOZ FY03 FY04 FY05 FY06 Environment 17 16 15 21 28 158 477 319 954 825 RuralSector 31 31 38 36 55 2,263 1,930 2,009 2,679 2,752 Social Development a 8 7 5 2 114 470 219 483 192 Sub Total 56 55 60 62 85 2,536 2,817 2,547 4,116 3,768 FSE FinancialSector 16 10 9 14 11 3,812 1,214 1,279 1,195 1,734 Sub Total 16 10 9 14 11 3,812 1,214 1,279 1,195 1,134 HnN Education 22 26 21 27 25 1,228 2,158 1,534 1.288 1,810 Health, Nutritionand Population 22 30 25 22 22 986 1,193 1,761 1,011 1,015 Social Protection 16 13 22 16 10 868 1,348 ~~1,660 2,108 991 Sub Total 60 69 68 65 51 3,081 4,699 4,955 4,408 3,816 INF Energyand Mining 15 20 19 29 28 1,664 808 1,055 1,636 2,788 Global InformationIComrnunications 2 2 1 3 2 37 14 22 69 15 TransDort 19 17 31 17 25 2,379 2,827 3,691 2,513 2,865 Urban Development 1" I" u L" I " 898 1,231 721 2,748 2,023 Water Supply and Sanitation 10 14 21 11 430 639 1,105 1,565 705 - ='10 == 74 93 82 5,408 5,519 6,594 8,532 8,396 PREM EconomicPolicy 20 13 11 20 23 2,884 1,185 1,760 1,495 2,894 Poverty Reduction n - 6 7 a A " 0 451 546 745 488 PublicSector Governance 26 29 25 22 25 1,744 2,299 1,446 1,118 1,368 Sub Total 46 47 43 51 56 4,628 3,935 3,752 3,358 4,749 PSDN PrivateSector Development 13 12 11 12 10 324 486 1,227 606 1,441 Sub Total 13 12 11 12 I O 326 686 1.227 606 1.641 Total 252 258 265 291 301 19,189 18,729 20,353 22,215 23,904 18 of 80 0 m N * (0 m b m (D m 0 t E v) ? z0 - w 8- L2 o t0 E(Y 4 LL 0 co y. 0 0 N 0 0 m 0 0 N co 03 0 cD m z 0 co \c 0 N N TABLE2.16: ENTRIES AND EXITS BY REGION Region ProjectsApproved(No.) Projects Exiting (No.) Approvals - Exits(No.) FY04 FY05 FY06 FY04 FY05 FY06 FYO4-06 AFR 74 79 81 80 79 62 13 EAP 33 40 42 49 47 42 -23 ECA 54 63 65 64 74 47 -3 LCR 55 61 68 73 57 83 -29 MNA 14 19 16 25 31 15 -22 SAR 35 35 28 28 29 41 0 OTH 0 0 1 0 0 0 1 Total 265 297 301 319 317 290 -63 Region ProjectsApproved(US$ Million) Projects Exiting (US$ Million) Approvals- Exits(US$ Million) FY04 FY05 NO6 FY04 FY05 FY06 FYO4-06 AFR 4,188 3,843 4,838 3,302 3,999 3,158 2,410 EAP 2,647 2,926 3,462 4,265 4,082 4,104 -3,416 ECA 3,594 4,071 4,071 3,685 2,595 3,278 2,179 LCR 5,352 5,002 6,024 5,487 4,557 7,969 -1,634 MNA 1,149 1,339 1,701 811 877 433 2,067 SAR 3,423 5,033 3,805 3,165 3,970 4,885 240 n-ru 0 0 3 0 0 0 3 Total 20,353 22,215 23,904 20,716 20,081 23,827 1,849 TABLE2.17: ENTRIES AND EXITS BY SOURCE OF FUNDS Source ProjectsApproved (No.) Projects Existing (No.) Approvals Exits (No.) - ofFunds FY04 FY05 FY06 FY04 FY05 NO6 FYO4-06 IBRD 87 116 112 149 133 125 -92 IDA 158 158 167 147 160 147 29 TF 20 23 22 23 24 18 0 Total 265 297 301 319 317 290 -63 Source ProjectsApproved(US$ Million) Projects Exiting (US$ Million) Approvals- Exits(US$ Million) ofFunds FY04 FY05 FY06 FY04 FY05 FY06 FYO4-06 IBRD 11,045 13,334 14,135 14,056 10,734 14,419 -695 IDA 9,035 8,559 9,446 6,333 9,021 9,194 2,492 TF 273 322 322 327 325 214 52 Total 20,353 22,215 23,904 20,716 20,081 23,827 1,849 23 of 80 P 0. mP 5 mA WN 7 0) W zE wv)5 n EEii z E I v) WzI- y3 *c 8 Nv) L8 E VI E (D k a LL ? VI E (D w 8 E .-0 E m E 2 a a, I d m IC IC (D W >C .-e E a, C c U m C m s: rn I F - ?2 w 2 2 E m a, I m d ii .-C m 0C m - m UC b .- m a, -b 4- 8 0 '0 >a, a, 0 - 5 a, C c 2 E .-0 B 0 3 L 0 0 ? E m C 8 d 0 d d d b W C 0 m a, C c d N 0) m m m N 2 W s ee.- k a k 0 VI k 0 (D k g k 0 VI k .- 0 >C E E 2 al C m .- E UC C m c 3 F - 2 0v) 5 b E mC 0E a, c N (0 0 L CO0 $ E E :w ,-Q)0c k s v)2 g !! 5 U 0 7 L ,- E P) 0 v) 4- w X c rn 5 0 ? ,-E 2 g > m -v) X c 5 0 ? v) 0C b L k I VI t 0 In VI k 0 In k 0 0 3 d k0 d k0 VI E In 1: 2 E VI E In f 4 In z W d N d Q) "! - n! m c3 N 0 n! - I U Q,ms mC 05bIn 0 0 m .- - 'E I 0 0) In 3 N d (D 3 m b 2 6 I N b c CO 0 0 nE.- - Q 0 v) .- .- E k - c) w X C P 0? 2 E P v) w .- z I X Cv) 0 cc r n t- r IC r r r IC N (D v) N m b m 0 7 m 7 m m 7 b N m 0 t'; gs 4% W c;: cc z ci m (0 Q) N co 0Lco 0 5 mJ Wx m..zf mW K8 0s s 0 Wr L2 W 0 F v) z Ks P2FFW K Y 3%na rr Q)r Nr om rC hlc rc wv) v) 0 orc ooc 7-v mod NON 0-d hl Q,0c 0 co TABLE 3.1: PORTFOLIO STATUS INDICATORS BY REGION Region Net Commitments (US$ Billion) FYOI FY05 FY06 AFR 14.5 16.6 18.6 EAP 28.8 20.2 19.5 ECA 16.1 15.9 16.5 LCR 25.2 19.0 16.6 MNA 5.9 5.6 6.6 SAR 144 161 151 17.7 18.2 17.4 OTH 1 1 3 0.0 .. 0.0 .. 0.0 Total 1,561 1,451 1,468 108.3 95.5 95.2 Region Actual Problem Projects(No.) PotentialProblemProjects(No.) FYOI FY05 FY06 FYOI FY05 FY06 AFR 45 71 56 9 28 22 EAP 20 12 13 6 2 1 ECA 24 19 28 13 7 3 ~ ~. LCR 29 51 38 7 11 9 MNA 21 12 10 3 1 0 ~ SAR 14 17 I S 1 2 4 OTH 0 0 0 0 0 0 Total 153 182 160 39 51 39 Region Projectsat Risk (No.) Commitments at Risk(US$ Billion) FYOI FY05 FY06 FYOI FY05 FY06 AFR 54 99 78 2.5 4.4 3.3 EAP 26 14 14 2.0 0.8 0.8 ECA 37 26 31 2.5 1.4 1.2 LCR 36 62 47 3.0 3.9 2.6 MNA 24 13 10 1.I 0.4 0.3 SAR 15 19 19 1.6 1.8 2.9 OTH 0 0 0 0.0 0.0 0.0 Total 192 233 199 12.7 12.7 11.0 Region % at Risk YoCommitments at Risk FYOI FY05 FY06 FYOI FY05 FY06 AFR 15 28 21 17 26 18 EAP 9 6 6 7 4 4 ECA 12 9 10 16 9 7 LCR 11 20 16 12 20 16 MNA 17 12 9 19 8 4 SAR 10 12 13 9 10 16 OTH 0 0 0 0 0 0 Total 12 16 14 12 13 12 Region % Realism YoProactivity FYOI FY05 FY06 FYOI FY05 FY06 AFR 83 72 72 88 78 80 EAP 77 86 93 92 80 83 ECA 65 73 90 90 94 89 LCR 81 82 81 83 76 82 MNA 88 92 100 89 75 75 SAR 93 89 79 100 89 76 OTH NA NA NA NA NA NA Total 80 78 80 90 82 81 30 of 80 m m cow r a 0 0 $ ? 0 0 cow c u C -? :0 r 0 co rc Q cy 0 r l- N 0 c1 C a, E O m C 2 x .-v) L U C m O C 0 m J= 0 I a, - 2 0 s 3 0 TABLE 3.5: PORTFOLIO STATUS INDICATORS BY INSTRUMENT % Projectsat Risk % Commitmentsat Risk % Realism % Proactivity FYOI FY05 FY06 FYOI FY05 FY06 FYOI FY05 FY06 FYOI FY05 FY06 Dev. Policy DPL NA 0 10 NA 0 4 NA NA 100 NA NA NA ECO 0 NA NA 0 NA NA NA NA NA NA NA NA PRC 0 0 NA 0 0 NA NA NA NA NA NA NA PSL 0 17 50 0 6 55 NA 100 100 NA NA 100 SAD 17 38 20 7 21 19 100 83 100 67 50 100 SAL 10 36 29 3 49 5 100 100 100 100 50 100 SubTotal 11 24 18 4 19 12 100 92 100 86 50 100 Investment APL 7 23 11 14 21 9 100 68 90 100 87 79 ERL 11 25 22 9 18 21 50 46 54 100 67 67 FIL 17 6 6 13 6 8 100 100 100 100 100 100 LtL 11 19 32 12 20 29 78 78 67 100 79 100 SIL 13 14 13 12 11 11 78 83 80 89 82 79 SIM 22 22 13 19 16 15 100 88 80 86 83 100 TAL 11 15 16 11 18 14 62 75 86 86 93 73 SubTotal 12 16 13 13 13 11 79 77 80 90 84 80 Total 12 16 14 12 13 12 80 78 80 90 82 81 Investment Dev.Policy APL Adaptable Program Loan DPL DevelopmentPolicy Lending ERL EmergencyRecoveryLoan ECO ExpandedCofinancing Operation FIL FinancialIntermediaryLoan PRC PovertyReductionSupportCredit LIL Learningand InnovationLoan PSL ProgrammaticStructuralAdjustment Loan SIL Specific InvestmentLoan SAD SectorAdjustment SIM Sectoral investmentand Maintenance SAL StructuralAdjustment Lending TAL TechnicalAssistance Loan TABLE 3.6: PORTFOLIO STATUS INDICATORS BY SOURCE OF FUNDS Source of % Projectsat Risk YOCommitmentsat Risk % Realism % Proactivity Funds FYOI FY05 FY06 FYOI FY05 FY06 FYOI FY05 FY06 FYOI FY05 FY06 IBRD 12 15 12 11 11 9 76 84 85 91 81 83 IDA 13 18 15 13 17 16 81 74 7% 8% 85 81 GEF 8 10 8 8 12 9 100 88 71 100 71 86 MONT 0 0 0 0 0 0 NA NA NA 100 NA NA SPF 11 5 27 1% 5 32 100 100 100 NA 100 0 Total 12 16 14 12 13 12 80 78 80 90 82 81 GEF Global EnvironmentFacility MONT Montreal Protocol SPF Special Fund 33 of 80 3 z 0 3 2 C 0 C r C 0 b In (DIz 3 2 m m c - 0 C C 0 5 z 0 0 0 0 ? 0 0 co *- 9 0 n v: b 0 r z 3 3 to In m dm a, 0) a KJ 2 C d d d 3 3 7 0 7 In b v: -37 P IC r N r n R -? U b m N 7 (D v: D m N m 7 .-V .-C ; V m sci B W 5 i- 0 m J P 0) 0 2 0 Z I 2 F; z 1 9 2 s 2 1 9 m 0 N N IC 3 0 in 0 Lo - b I z0 03 II IC 0 0 0 0 7 I z IF z 0 0 z 0 a z I z 0 I I z I 03 r N b C 0 0 h r- 0 07 N 0 0 0 7 N m In 7 I N N m 0 0 0 m 03 N 0 0 0 r- b m m 0 0 m m IC r- 4 m m N m N 2 (D N z N m N N r K m 0 3 2 2 d r m IC aJ (0 z (D >m 8D E $ *m - .-m TI s .--m0 C s E m n 0 m nm I- n E P c U E n 980 0 N KJ rn E 0 8 v) rn Y 2W o cs f v)r N r v) W a z0 o ca z r F % x 3 sz 0 W o ca z r m .r f $1 r 0 t W 7 70 U co s cz C 8 4 n U 2 (c: (c: U n IC h7 I- cE 0\ Wx.-C k c VI a VI c (0 c c -J(Dc 0 m ;E s= = 3: m v) m C.- II m .-0C m C U 0 0U P a c .I- 0 0 C .- 7-Wfr NN UJW 7r ruJ cn m 0 0 r m N N 0) N Eo m 2 r W W ;E $7 v) m c m .-I c.-0 C m C U c= 0 0 U P a .I- .I- 0 0 C .- m b m 7N b m CY 03 r r r CY (CI r In 0 0 0 r m N N m d co 0 c 0 co 2 m J W x 0 0 9 z (3 W fn E 0 3 c 8 IWfn i P fn m Ew W z 0 K K f P n d K G K s 0 z 6 z In i C x s A F 9 n Lo F a Y n 2 m -1 W x r 0 I (3 W a z In z 0 3 c 8 Iwfn g (3 fn m EW w z 0 K f cl n d K z z w f K Y k - Q)z In A 3 n 3 U u d d . ! C Y $ n F 9 B Lo F a Y n 2 m W x N 0 9 W fn E 0 3 I-8 z W fn 5 (3 fn m EW W z 0 K K n n2 G fn 0 3 K 0 W k Y 3 P fn z b f H v) n 1: 3 u - 2 .r: n n U r - . r 5: ln 0 c CO 0 0 TABLE 3.23: NET CHANGES IN OUTCOMES RATINGS BETWEEN ICRR AND PPAR BY ELAPSED TIME BETWEEN ICRR AND PPAR (FY90-05) ElapsedTime betweenICRR and correspondingPPAR No. of IEG Evaluations No. of Net Changes % Net Change c=2 Year 'a 551 38 6.9 >2 & e= 5 Years 354 42 11.9 >5 Years 66 9 13.6 Total 971 89 9.2 a/ About 38 projects with PPAR evaluation date less than their corresponding ICRR evaluation date in the system have been eliminated from the above analysis. 51 of 80 3 3 3 0 0 0 0 Q) c 0 cv m N 0 w 5 I- 4 TABLE 3.25: PORTFOLIO RISK FACTORS (As a Percentage of the Active Portfolio) Risk Factor FY05 FY06 Country Environment* 21 20 Country Record* 32 29 CounterpartFunds 5 4 EffectivenessDelay* 7 7 Financial Management 4 5 Legal Covenants 7 6 Long Term Risk* 4 4 Project Management* 6 6 Monitoring& Evaluation* 7 6 Procurement Problems 7 6 Safeauards 2 3 Slow Disbursing* 11 11 Golden Flaa 0 1 * Risk-flagsapplicableto DevelopmentPolicyoperationsas well. 53 of 80 0 m c o b 0 0 b m mcv d-c c o r bIC I-* 0 cvd C 0 W L+ 0 d 0 0 C m - c o b cs v) m z a v) r .-c0E .I- al d r C a 0 - .-1. 0 w m C a 0 c C a a b C - E 0 E> a c 0 a a - .-0 m Q m Q 0 v) m G m m E c a L sP av) c TABLE 3.27: DISBURSEMENT RATIO' BY REGION AND COUNTRY CATEGORY GROUPING (In Percent) Region F Y O1 FY05 FY06 AFR 23 25 26 EAP 20 20 19 ECA 18 24 17 LCR 23 25 33 MNA 15 16 18 OTH 10 57 57 SAR 22 26 28 Total 21 23 24 Country Category Grouping F Y O1 FY05 FY06 IBRD InvestmentGrade 19 26 24 China 18 22 21 IBRD Only (Others) 20 20 23 India 21 24 25 Blend 29 28 33 IDA Only 22 24 23 Licus 22 28 28 Multi-Country 18 11 9 Total 21 23 24 'DisbursementRatiois the ratio between "IBRDADA Disbursementsin the Fiscal Year" and "Opening UndisbursedAmount at the beginning of the Fiscal Year," and is restricted only to Investment projects. 55 of 80 TABLE 3.28: CANCELLATIONS BY REGlONlCOUNTRY (US$ Million,IBRDllDAand SPF Only) RegionlCountry FY02 FY03 FY04 FY05 FY06 AFR Cote d'lvoire 1 11 152 0 28 Nigeria 0 8 0 0 41 Tanzania 73 3 2 0 1 Zimbabwe 103 58 0 7 0 Sub Total 343 290 338 59 81 EAP China 261 436 370 168 54 Indonesia 97 189 55 172 23 Sub Total 451 788 525 409 152 ECA Kazakhstan 156 41 1 1 9 Poland 26 12 0 79 10 Russian Federation 207 131 180 15 45 Turkey 442 974 176 10 40 Sub Total 928 1,266 485 272 193 LCR Argentina 76 30 2 24 239 Brazil 69 196 288 173 112 Colombia 9 29 85 2 19 Mexico 139 358 122 596 1 Uruguay 5 0 0 76 0 Sub Total 377 746 549 941 453 MNA Algeria 7 110 79 44 179 Egypt,Arab Republicof 4 154 35 18 22 Tunisia 40 4 67 32 12 Sub Total 139 344 246 172 242 SAR Bangladesh 45 152 2 1 171 India 232 280 198 632 104 Sub Total 336 495 233 650 283 Total 2,573 3,928 2,377 2,503 1,405 Notes: 1. The table includes projects that are either partiallyor fully cancelled,while Annex 2 includes partial cancellationsfor projects that are either active or have exited the portfolio. 2. The table shows individual countrieswith cancellations exceeding 2.5% of the Bankwide total. 56 of 80 TABLE 3.29: CANCELLATIONS BY NETWORWSECTOR BOARD (US$ Million, IBRD/IDA and SPF Only) NetworkEector Board FY02 FY03 FY04 FYo5 FY06 Environment 198 294 91 214 27 Rural Sector 201 419 321 917 180 SubTotal 399 728 419 1,154 209 FSE Financial Sector 489 1,004 121 21 9 Sub Total 489 1,004 121 21 9 HDN Education 189 193 190 193 200 Health, Nutrition and Population 95 324 185 175 72 Social Protection 120 126 81 18 45 Sub Total 405 642 456 387 317 INF Energy and Mining 432 507 307 216 87 Transport 397 377 270 189 277 Urban Development 30 250 243 229 124 Water Supply and Sanitation 78 275 117 128 65 Sub Total 968 1,423 973 763 563 PREM Economic Policy 68 7 39 37 0 Public Sector Governance 62 77 154 75 253 Sub Total 130 84 193 111 258 PSDN Private Sector Development 182 47 215 66 49 Sub Total 182 47 215 66 49 Total 2,573 3,928 2,377 2,503 1,405 Notes: 1. The table includes projects that are either partially or fully cancelled, while Annex 2 includes partial cancellationsfor projects that are either active or have exited the portfolio. 2. The table shows individual Sector Boardswith cancellations exceeding 2.5% of the Bankwide total. 57 of 80 W 0 t d!4 d 8ot r-- h W 0 $ & (0 m U C Q 5 t s5 % c m I. cc IC VI (0 W VI 0 W m a r - n oc Q m VI dt a VI 0 B w a a m u C m 0 5t % 0 m m Eu * E m h (0 W 0 0 m z 0 m 0 3 co 0 7 3 CQ VI 7 b co z 0 N m " W In 0 0" N I- m I- N N co 0 In In t-0 In b (D 0 F (D 7 m z 0 N 0 0 0) 0 (D r 3 7 m N m (9 b co N QI (D m CQ -" 0 co 0 (D m r VI In (D0 (D h 0 (D .-m E n 86m J JP 3 c) E J 0 0 m E 5 TABLE3.33: QUALITY OF SUPERVISION BY SOURCE OF FUNDS (% ModeratelySatisfactoryor Better) Source of No. of Funds Projects OA R1 R2 R3 R4 IBRD 41 94 97 96 94 83 IDA 74 97 97 94 98 87 GEF 10 93 93 93 93 83 MONT 2 100 100 100 100 100 SPF 3 29 64 100 66 29 Bankwide 130 95 96 95 96 85 TABLE 3.34: QUALITY OF SUPERVISION BY LlCUS AND NON-LICUS (% ModeratelySatisfactoryor Better) No. of LICUS Projects OA R1 R2 R3 R4 Yes 33 88 91 91 91 76 No 97 96 97 95 97 86 Bankwide 130 95 96 95 96 85 TABLE 3.35: QUALITY OF SUPERVISION BY NON-DEDICATED MULTI-SECTORS (% ModeratelySatisfactoryor Better) Non- Dedicated No. of Multi-Sectors Projects OA R I R2 R3 R4 Yes 21 100 100 91 100 91 No 109 94 96 95 95 83 Bankwide 130 95 96 95 96 85 OA = Overall Assessment R1 = Focus on Development Effectiveness R2 = Supervision of FiduciaryEafeguard Aspects R3 = Adequacy of Supervision Inputs and Processes R4 = Quality and Realism of Reporting 60 of 80 TABLE 3.36: QUALITY OF TRANSPORT, WATER SUPPLY AND SANITATION AND ICT IN MULTI-SECTORAL PROJECTS Table 3.36(a): Quality of Transport (TR) in Non-dedicated Multi-sectoral Projects No. of % Mopderately % Satisfactory ?4Moderately Projects Satisfactory or p,.u,... or Better Satisfactory Y S L . S I OA OverallAssessment 16 75 25 50 R1 StrategicRelevanceand Approach 16 a i 44 37 R2 Technical,Financial,Economicand SafeguardAspects 16 75 19 56 R3 Policyand institutionalAspects and ImplementationArrangements 16 69 25 44 R4 Risk Assessment 16 50 38 12 R5 Focus on DevelopmentEffectivenessduring Supervision 14 79 57 22 R6 Bank Inputsand Processes 16 75 31 44 R6A DuringProject Preparationand Appraisal 16 75 31 44 R6B DuringSupervision 11 73 45 2a Table 3.36(b): Quality of Water Supply and Sanitation (WSS) in Non-dedicated Multi-sectoral Projects OA OverallAssessment R1 StrategicRelevanceand Approach 2a a2 61 21 R2 Technical,Financial,Economicand SafeguardAspects 29 76 52 24 R3 InstitutionalAspectsand ImplementationArrangements 29 79 45 34 R4 Risk Assessment 2a 64 54 10 R5 SupervisionFocuson DevelopmentEffectiveness 17 94 76 i a R6 Bank inputsand Processes 29 a3 4a 35 R6A During Preparation 29 a3 52 31 R6B DuringSupervision 17 aa 76 12 Table 3.36(c): Quality of Information and Communication Technology (ICT) INo. of t:g::$: % Satisfactory % Moderately *:-%tory Piv,rrra Projects Better or Y,.ier Better Satisfactory OA OverallAssessment 24 sa 42 16 R1 StrategicRelevanceandApproach -- 77 73 . - 45 .- 28 -_ R2 Technical, Financial,Economicand SafeguardAspects 22 59 36 23 R3 Policyand institutionalAspects -- 77 91 64 -77 R4 ImplementationArrangements 22 68 23 45 R4 Risk Assessment 23 57 22 35 R6 ImplementationOversight 22 77 55 22 R7 Bank inputsand Processes 23 43 35 a 61 of 80 In co co co m d co co a co 2 0 m a a 0 co a a b (D b 0 N (D m m Q, Q, a d 2 7 7 z m TABLE3.38: QUALITY OF AAA BY REGION (% ModeratelySatisfactoryor Better) Region No.of Tasks OA R1 R2 FY98-99 FY05-06 " FY98-99 FYO5-06 FY98-99 FYO5-06 FY98-99 FYO5-06 .AFR. .. . 24 30 50 80 63 93 43 83 EAP 15 7 87 100 87 100 87 86 ECA 25 24 80 96 92 100 80 96 LCR 16 11 75 91 94 100 81 91 MNA 9 16 89 94 100 100 89 93 SAR 11 28 91 100 100 100 91 93 O T H ~ 0 21 NA 86 NA 95 NA 95 Total 100 137 75 91 86 98 75 91 Region No. of Tasks R3 R4 R5 FY98-99 FYO5-06 I' FY98-99 FYO5-06 FY98-99 FYO5-06 FY98-99 FYO5-06 AFR 24 30 64 87 42 80 29 70 EAP 15 7 80 100 80 100 87 71 ECA 25 24 84 96 72 92 76 92 LCR 16 11 81 100 63 100 63 91 MNA 9 16 100 73 89 80 78 81 SAR 11 28 82 100 64 96 73 96 OTH~ 0 21 NA 86 NA 86 NA 86 Total 100 137 80 91 65 89 64 85 ' Includes one Active task with a Client Delivery in FY08. * Tasks denote Global tasks. OA = Overall Assessment R1 = Strategic Relevance R2 = Internal Quality R3 = Dialogue and Dissemination R4 = Likely Impact R5 = Bank Inputs and Processes 63 of 80 TABLE3.39: QUALITY OF AAA BY NETWORK (%ModeratelySatisfactoryor Better) Network No. of Tasks OA R1 R2 FY98-99 FYO5-06' I FY98-99 FYO5-06 FY98-99 FYO5-06 FY98-99 FYO5-06 ESSD 20 23 75 87 85 96 79 83 FSF 7 11 71 82 100 91 86 91 HDN 11 23 73 100 82 100 64 91 INF .... 11 21 73 95 82 95 73 95 ~ OPCS 0 7 NA 86 NA 100 NA 86 PREM 47 43 74 88 85 100 72 93 . PSDN 4 8 100 100 100 100 100 100 zZz2 0 1 NA 100 NA 100 NA 100 Total 100 137 75 91 86 98 75 91 Network No. of Tasks R3 R4 R5 FY98-99 FYO5-06 ' I FY98-99 FYO5-06 FY98-99 FYO5-06 FY98-99 FYO5-06 ESSD 20 23 79 96 65 87 60 78 FSE 7 11 71 82 57 73 57 82 HDN 11 23 64 96 64 100 55 91 INF 11 21 82 86 73 90 64 90 OPCS 0 7 NA 100 NA 86 NA 86 PREM 47 43 83 88 62 86 66 81 PSDN . 4 8 100 100 100 100 100 88 zZz2 0 1 NA 100 NA 100 NA 100 Total 100 137 80 91 65 89 64 85 ' Includes one Active task with a Client Delivery in FY08. Tasks that have not been assigned a Sector Board. OA = Overall Assessment R1 = Strategic Relevance R2 = Internal Quality R3 = Dialogue and Dissemination R4 = Likely Impact R5 = Bank Inputs and Processes 64 of 80 TABLE 4.1: AAA DELIVERIES AND COSTS BY REGlONlCOUNTRY RegionlCountry Deliveries (#) initiation to Completion Costs (US$ '000) FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06 AFR Africa 40 73 68 45 57 3,076 8,810 15,281 22,638 15,190 Angola 1 2 4 2 7 82 505 1,431 408 556 Benin 6 1 3 6 2 269 4 510 1,016 80 Botswana 0 0 0 2 3 0 0 0 392 374 BurkinaFaso 3 1 5 5 2 116 74 776 423 341 Burundi 2 0 6 2 4 52 0 555 143 450 Cameroon 3 2 4 2 5 77 537 403 180 867 CapeVerde 0 1 4 1 4 0 41 133 147 207 CentralAfrica 0 0 0 0 1 0 0 0 0 111 CentralAfrican Republic 0 1 0 1 0 0 30 0 549 0 Chad 1 1 3 3 4 0 236 297 483 507 Comoros 2 2 0 0 2 55 70 0 0 49 Congo, DemocraticRepublicof 1 4 6 6 1 0 736 912 789 357 Congo, Republicof I 3 0 2 2 119 259 0 483 146 Coted'lvoire 2 2 2 2 1 48 226 479 66 119 EasternAfrica 0 0 0 0 2 0 0 0 0 350 Eritrea 4 3 2 0 1 523 37 154 0 28 Ethiopia 9 6 12 14 12 687 422 1,382 2,213 2,767 Gabon 0 1 0 0 2 0 230 0 0 387 Gambia,The 2 2 2 5 1 19 172 482 96 39 Ghana 1 5 7 9 7 12 486 930 1,060 740 Guinea 1 1 5 5 1 65 93 388 49 22 Guinea-Bissau 0 0 2 0 2 0 0 187 0 274 Kenya 3 11 9 8 9 669 1,267 1,894 800 1,666 Lesotho 0 2 5 2 2 0 589 870 248 427 Madagascar 3 6 3 9 7 128 707 536 1,699 1,186 Malawi 1 4 8 6 3 131 925 829 763 830 Mali 0 5 8 6 4 0 418 392 550 322 Mauritania 6 5 3 4 4 108 457 461 271 642 Mauritius 2 7 3 1 4 344 467 169 0 1,121 Mozambique 5 8 1 12 4 665 1,249 205 1,809 649 Namibia 2 0 1 2 3 502 0 442 62 522 Niger 2 2 5 5 3 263 50 652 505 252 Nigeria 10 8 20 13 12 921 1,790 2,183 2,219 1,643 Rwanda 1 6 3 4 3 864 806 42 453 451 SaoTome and Principe 0 4 1 1 1 0 512 29 11 174 Senegal 4 10 4 9 6 745 1,021 513 765 436 Seychelles 0 1 1 0 3 0 132 110 0 260 Sierra Leone 1 4 3 2 5 69 257 562 40 950 Somalia 0 0 1 1 3 0 0 173 548 189 South Africa 7 4 4 6 10 1,191 159 953 655 2,022 SouthernAfrica 0 0 0 0 1 0 0 0 0 0 Sudan 2 2 2 7 4 45 710 269 3,829 548 Swaziland 0 0 2 3 3 0 0 174 480 641 Tanzania 5 10 11 12 8 728 1,032 1,107 1,724 1.384 Togo 2 2 4 2 3 67 168 324 480 436 Uganda 6 6 10 13 4 295 447 1,166 1,468 279 Western Africa 2 1 0 0 2 31 111 0 0 372 Zambia 3 9 8 5 6 1,608 1,384 1,079 1,145 814 Zimbabwe 1 3 1 2 1 30 308 23 600 39 Sub Total 147 231 256 247 241 14,605 27,934 39,459 52,257 42,216 65 of 80 TABLE 4.1: AAA DELIVERIES AND COSTS BY REGlONlCOUNTRY RegionlCountry Deliveries (#) Initiation to Completion Costs (US$ '000) FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06 EAP Australia 0 0 0 0 1 0 0 0 0 43 Cambodia 5 8 7 10 5 812 1,163 1,047 1,843 657 China 19 24 33 32 36 3,161 4,498 4,272 5,256 6,124 China, Hong KongSAR 0 2 0 0 0 0 61 0 0 0 EastAsia and Pacific 15 21 16 15 8 2,786 4,628 2,901 4,211 3,945 Fiji 0 0 3 1 1 0 0 105 129 109 Indonesia 36 34 26 29 21 8,230 6,176 6,491 5,868 3,258 Japan 0 1 0 0 0 0 35 0 0 0 Korea, Republicof 4 4 1 0 0 1,537 485 78 0 0 Lao People'sDemocraticRepublic 3 2 4 4 8 397 118 406 335 1,948 Malaysia 2 0 2 5 5 371 0 489 220 422 Mekong 0 0 0 1 2 0 0 0 162 904 Mongolia 4 13 5 5 12 626 826 866 259 1,514 Pacific Islands 4 3 1 1 7 497 297 61 251 1,613 Palau 0 0 1 0 0 0 0 64 0 0 PapuaNew Guinea 3 5 3 0 2 227 803 945 0 978 Philippines 21 19 9 20 8 2,437 2,204 1,346 3,284 2,635 Samoa 0 0 1 2 0 0 0 16 68 0 Singapore 0 0 1 0 0 0 0 118 0 0 Solomon Islands 0 0 1 2 2 0 0 440 134 89 Thailand 19 11 9 13 10 7,532 2,929 979 1,824 881 Timor-Leste 8 5 6 3 4 796 1,123 522 301 435 Tonga 0 1 0 1 1 0 41 0 95 193 Vanuatu 0 0 0 0 1 0 0 0 0 145 Vietnam 12 26 15 16 13 1,849 2,298 2,092 1,850 1,781 Sub Total 157 179 144 160 147 31,258 27,683 23,237 26,oaa 27,676 ECA Albania 4 5 2 7 4 408 461 395 706 461 Armenia 5 5 7 5 3 1,605 668 928 857 301 Austna 0 0 1 0 0 0 0 36 0 0 Azerbaijan 4 9 6 12 5 377 1,413 1,248 981 559 Belarus 4 2 2 4 1 597 396 298 678 86 Bosnia-Herzegovina 6 4 8 2 8 1,018 598 799 393 1,197 Bulgaria 5 11 9 4 2 831 763 708 361 653 Caucasus 1 0 3 1 0 43 0 74 32 0 CentralAsia 1 3 3 7 1 161 511 302 761 33 Croatia 2 8 2 3 3 183 1,342 205 238 548 Cyprus 0 0 1 0 1 0 0 166 0 -2 CzechRepublic 2 6 5 5 3 432 277 234 359 193 EUAccessionCountries 0 0 2 2 13 0 0 127 129 1,923 Estonia 0 0 2 0 0 0 0 106 0 0 Europeand CentralAsia 23 36 24 23 16 2,459 7,534 2,900 6,380 3,809 Georgia 3 11 6 3 5 441 1,237 429 560 702 Hungary 2 4 3 4 0 137 176 195 438 0 Italy 0 0 0 0 1 0 0 0 0 55 Kazakhstan 7 4 9 13 9 386 227 1,518 2,779 2,204 Kosovo 3 6 3 4 5 874 445 391 700 311 KyrgyzRepublic 3 7 8 2 5 156 1,394 1,003 488 825 Latvia 0 5 7 5 1 0 237 775 429 130 Lithuania 3 5 8 5 0 655 473 483 484 0 Macedonia,former Yugoslav Republicof 5 5 3 5 2 884 351 447 653 255 Moldova 7 7 9 3 7 907 506 1,160 775 684 Montenegro 0 0 0 0 2 0 0 0 0 224 Poland 4 6 7 8 7 669 658 1,172 573 1,218 Romania 6 8 7 9 1 1,014 938 1,215 509 530 RussianFederation 18 17 24 20 18 4,517 2,579 4,942 2.840 3,172 Serbia 9 10 9 7 12 715 1,627 1,337 839 1,313 Slovak Republic 6 6 4 5 2 874 791 111 806 98 Slovenia 0 1 5 1 0 0 48 339 45 0 South EasternEuropeand Balkans 4 3 6 3 3 699 216 1,385 180 153 Tajikistan 0 4 5 6 3 0 423 1,603 1,358 922 Turkey 11 12 8 9 7 1,635 1,489 838 1,889 1,373 Turkmenistan 2 3 0 0 0 40 306 0 0 0 Ukratne 9 13 7 4 10 708 2,059 1,284 681 1,693 United Kingdom 0 1 0 0 0 0 77 0 0 0 Uzbekistan 1 4 4 2 0 135 1,685 833 229 0 Sub Total 160 231 219 193 162 23,559 31,905 29,987 29,132 25,621 66 of 80 TABLE 4.1: AAA DELIVERIES AND COSTS BY REGlONlCOUNTRY RegionlCountry Deliveries(#) Initiationto Completion Costs (US$ '000) FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06 LCR Andean Countries 0 2 2 1 3 0 153 94 109 137 Antigua and Barbuda 0 0 0 1 0 0 0 0 95 0 Argentina 7 9 6 2 4 1,293 1,525 265 724 1,464 Barbados 0 22 0 0 0 2 4 5 2 4 330 830 667 175 530 19 26 13 17 11 3,443 3,749 1,452 2,323 7,415 Caribbean 5 1 2 1 1 759 0 89 338 172 Central America 406 413 305 1,809 430 1 4 7 3 4 0 847 1,379 181 983 Colombia 8 15 11 6 9 886 1,117 1,969 1,258 1,412 Costa Rica 1 2 2 2 4 139 271 89 148 749 Dominica 0 2 2 0 0 0 74 327 0 0 Dominican Republic 1 3 3 4 2 32 627 268 428 242 Ecuador 3 5 6 5 3 363 167 1,136 605 496 El Salvador 2 2 5 3 2 182 243 736 96 546 Grenada 0 0 1 0 0 0 0 25 0 0 Guatemala 3 0 3 4 1,100 0 235 495 540 Guyana I J "1 I L 108 494 0 28 384 Haiti 0 0 0 1 3 0 0 0 359 304 Honduras 3 4 5 1 3 525 449 287 21 296 Jamaica 0 2 1 2 3 0 363 168 200 406 LatinAmenca 13 14 12 21 22 1,593 1,883 2,404 2,852 3,690 Mexico I 1 7 9 R 7 902 1,533 1,841 1,706 1,738 Nicaragua 9 5 A I n 235 338 323 10 0 OECS Countnes n 0 2 7 3 2 I 1 n 0 0 125 288 234 0 .Pa"lml -. ,.- 0 0 2 0 3 0 0 90 0 709 Paraguay 5 6 3 3 2 652 368 331 713 355 Peru 9 2 9 7 6 771 523 725 1,295 2,982 St. Kitts and Nevis n I n n n n AR7 n n n St. Lucia 0 0 0 56 0 St. Vincent and the Grenadines n n n IAd n Trinidad and Tobago 0 1 0 1 0 n AR n 1n7 --. n T 1 Uruguay 1 0 3 3 4 142 0 301 983 781 Venezuela, Republica Bolivariana de 0 0 2 1 1 0 0 190 341 21 Sub Total 97 128 119 110 109 13,839 16,628 15,985 18,033 26,782 MNA Algeria 3 13 5 8 4 401 1,279 486 668 425 Bahrain 3 2 1 3 2 578 409 402 526 132 Djibouti 1 2 4 3 2 32 45 384 290 548 Egypt,Arab Republic of 5 10 8 9 10 1,880 845 633 1,398 2,350 Gulf CooperationCouncil 0 1 0 0 0 0 57 0 0 0 Iran, isiamic Republic of 1 6 12 7 5 246 1,273 1,435 925 1,204 0 0 14 26 5 0 0 1,840 4,053 769 Jordan 3 7 11 4 4 292 449 1,563 858 247 Kuwait 1 10 8 2 5 183 2,501 1,307 159 1,078 .Libya Lebanon .. 4 4 6 4 4 397 253 892 406 516 0 2 0 1 0 0 61 0 331 0 Malta 0 4 0 0 1 0 599 0 0 113 Middle East and NorthAfrica 13 18 11 13 15 1,152 3,680 3,138 2,380 4,849 Morocco 11 20 9 12 11 1,170 2,086 1,235 1,704 1,872 Oman 1 3 1 2 2 53 314 117 214 162 uatar 0 0 0 1 3 0 0 0 396 235 SaLd Arabia 10 14 13 18 16 998 2,194 2,074 3,378 1,527 -Syran Arab RepJOIC 2 1 4 3 1 130 45 165 614 134 Tunisia 5 8 7 5 7 608 1,228 596 759 1,502 h t e d Arab Emorates 0 0 3 2 0 0 0 133 1,125 0 West Bank and Gaza 3 9 7 8 7 408 914 396 1,329 1,161 Yemen RepJb IC of 8 5 10 13 10 517 527 1,090 1,034 1,517 Sub Total - - 74 139 134 142 114 9,044 18,740 17,685 22,546 20,340 67 of 80 TABLE 4.1: AAA DELIVERIES AND COSTS BY REGlONlCOUNTRY RegionlCountry Deliveries (#) Initiationto Completion Costs (US$ '000) FY02 FY03 FY04 FY05 FY06 FYO2 FY03 FY04 FY05 FY06 SAR Afghanistan 5 4 12 10 9 376 811 1,779 3,371 1,257 Bangladesh 13 18 7 15 7 1,159 1,840 896 1,935 1,646 Bhutan 2 2 2 3 4 155 320 123 294 198 India 31 38 35 39 38 4,475 6,619 8,479 8,313 10,119 Maldives 1 2 1 4 4 180 39 17 206 529 Nepal 4 5 6 9 3 277 336 1,145 987 543 Pakistan 9 11 12 10 12 1,580 1,420 1,909 1,910 2,951 SouthAsia 3 7 7 12 9 93 851 930 979 1,069 Sri Lanka 7 7 10 6 10 935 741 1,222 593 1,858 Sub Total 75 94 92 108 96 9,230 12,976 16,500 18,589 20,169 OTH Asia 0 0 0 0 1 0 0 0 0 16 World 14 63 73 85 38 1,889 5,414 10,018 14,069 5,671 Sub Total 14 63 73 85 39 1,889 5,414 10,018 14,069 5,687 Total 724 1,065 1,037 1,045 908 103,425 141,280 152,871 180,715 168,490 Notes: 1. The table includesESW Reports,Other ESW and TA products. 2. The Deliveries(#) and the Initiationto CompletionCosts (US$ '000) includessupplementaldeliveries. 3. EffectiveJuly 1, 2004, '"ConsultationslCountryDialogue" and "ConferenceMrorkshop"output types are no longer valid for the ESW product line. 4. Initiationto CompletionCosts include post-deliverycosts. 68 of 80 TABLE4.2: AAA DELIVERIES AND COSTS BY NETWORWSECTOR BOARD NetworWSector Board Deliveries (#) Initiationto Completion Costs (US$ '000) FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06 ACS Administrativeand ClientSupport 0 0 1 0 1 0 0 83 0 2,416 Sub Total 0 0 1 0 I 0 0 83 0 2,416 Fssn ---- Environment 30 51 47 70 38 3,850 6,757 6,378 12,175 9,509 RuralSector 37 55 64 77 70 5,586 7,641 9,064 14,893 18,987 Social Development 28 32 34 44 32 2,297 6,226 7,775 8,005 4,105 Sub Total 95 138 145 191 140 11,733 20,624 23,218 35,074 32,601 FinancialSector 54 129 139 108 90 12,305 16,834 16,274 13,013 13,910 SubTotal 54 129 139 108 90 12,305 16,834 16,274 13,013 13,910 HDN - Education 36 41 52 48 48 3,500 3,793 9,223 7,807 8,313 Health,Nuttition and Population 36 31 45 66 37 3,771 3,003 5,904 10,154 8,800 Social Protection 32 45 48 54 47 4,518 6,072 5,773 6,139 8,635 Sub Total 104 117 145 168 132 11,788 12,868 20,900 24,099 25,748 INF Energyand Mining 40 5a 48 27 38 3,548 5,561 9,562 4,866 6,351 GlobalInformation1Communications Technology 3 11 19 11 13 35 571 1,672 890 2,615 Transport 15 41 24 33 21 1,588 3,056 3,239 4,224 2,450 Urban Development 29 39 34 44 41 2,718 4,457 5,267 9,131 12,928 Water Suppiy and Sanitation 11 16 16 31 18 2,364 1,104 1,536 7,116 3,556 Sub Total 98 165 141 146 129 10,254 14,749 21,275 26,227 27,900 IO,. ProfessionalDevelopment 2 3 0 0 0 403 367 0 0 0 Sub Total 2 3 0 0 0 403 367 0 0 0 narr "rho FinancialManagement 32 50 47 36 40 6,451 5,560 4,095 4,372 3,461 OperationalServtces 2 14 8 4 2 60 423 529 583 150 Procurement 17 28 30 19 8 1,171 ~~ 2,877 2,829 1,775 453 Sub Total 51 92 85 59 50 7,682 8,861 7,453 6,729 4,064 DDEU EconomicPolicy 99 140 121 119 135 10,284 23,083 18,309 28,157 23,848 Gender and Development 7 i,"n 1R ." ?, A. .rn .- 1,604 546 1,661 1,276 959 Poverty Reduction 44 43 50 53 54 9,009 8,211 11,600 7,743 13,355 Public Sector Governance 73 76 57 72 67 13,320 12,634 11,191 12,613 10,914 Sub Total 223 269 246 258 266 34,218 44,475 42,762 49,789 49,076 .--.. DCnN PrivateSector Development 95 142 122 106 97 14,790 22,121 19,501 24,090 12,301 Sub Total 95 142 122 106 97 14,790 22,121 19,501 24,090 12,301 PSI Project Financeand Guarantees 2 0 0 0 0 252 0 0 0 0 SubTotal 2 0 0 0 0 252 0 0 0 0 -Resource RMN Management 0 0 2 0 0 0 0 203 0 0 Sub Total 0 0 2 0 0 0 0 203 0 0 Sector Board notApplicable 0 10 11 9 3 0 382 1,203 1,693 474 Sub Total 0 10 I 1 9 3 0 382 1,203 1,693 474 Total 724 1,065 1,037 1,045 908 103,425 141,280 152,871 180,715 168,490 Notes: 1. The table includes ESW Reports.Other ESW and TA products. 2. The Deliveries(#) and the Initiationto CompletionCosts (US$ '000)includessupplementaldeliveries. 3. EffectiveJuly 1,2004, "ConsultationslCountryDialogue"and "ConferenceNVorkshop"outputtypes are no longervalid for the ESW product line. 4. Initiation to Completion Costs include post-delivery costs. 69 of 80 l? 0'cm 0 P0 0 E .- 2 c 0 m TABLE 4.6: AAA CONCENTRATION: Top Ten Countries by Number of Deliveries, FYO2-06 Region Country Delieveries (#) Initiationto Completion Costs (US$'000) BB TF Total SAR India 181 28,142 9,864 38,006 EAP Indonesia 148 16,294 13,728 30,022 EAP China 144 15,225 8,085 23,310 ECA Russian Federation 97 15,828 2,221 18,050 LCR Brazil 86 12,484 5,898 18,382 EAP Vietnam 82 6,939 2,931 9,870 EAP Philippines 77 7,692 4,214 11,906 MNA Saudi Arabia 71 10,169 0 10,169 AFR Nigeria 63 6,345 2,411 8,756 MNA Morocco 63 7,892 176 8,068 Sub Total 1,012 127,010 49,528 176,538 Total 4,779 557,108 189,674 746,781 % of Total 21% 23% 26% 24% Notes: 1.The table includesESW Reports, Other ESW and TA products. 2. The Deliveries(#) and the Initiationto CompletionCosts (US$ '000) includessupplementaldeliveries. 3. EffectiveJuly 1, 2004, "ConsultationslCountryDialogue"and "ConferencehVorkshop"output types are no longer valid for the ESW productline. 4. Initiationto CompletionCosts includespostdellverycosts. * Expendituresfrom the BB budgetare reimbursedby governments of SaudiArabia underthe reimbursabletechnical assistanceprogram. TABLE 4.7: AAA CONCENTRATION: Top Ten Countries by Cost of Deliveries, FYO2-06 Region Country Delieveries (#) Initiationto Completion Costs (US$ '000) BB TF Total SAR India 181 28,142 9,864 38,006 EAP Indonesia 148 16,294 13,728 30,022 EAP China 144 15,225 8,085 23,310 LCR Brazil 86 12,484 5,898 18,382 ECA Russian Federation 97 15,828 2,221 18,050 EAP Thailand 62 9,176 4,969 14,145 EAP Philippines 77 7,692 4,214 11,906 MNA Saudi Arabia 71 10,169 0 10,169 EAP Vietnam 82 6,939 2,931 9,870 SAR Pakistan 54 8,591 1,179 9,770 Sub Total 1,002 130,540 53,089 183,629 Total 4,779 557,108 189,674 746,781 % of Total 21% 23% 28% 25% Notes: 1. The table includes ESW Reports, Other ESW and TA products. 2. The Deliveries(#) and the Initiationto CompletionCosts (US$ '000) includessuppiementaldeliveries. 3. EffectiveJuly 1, 2004, "ConsultationslCountryDialogue"and "ConferenceiWorkshop"output types are no longer validfor the ESW productline. 4. Initiationto CompletionCosts includespost-deliverycosts. * Expendituresfrom the BB budgetare reimbursedby governments of SaudiArabia underthe reimbursabletechnical assistanceprogram. 73 of 80 TABLE4.8: AAA DELIVERIES AND COSTS BY OUTPUT TYPE Reports Deliveries(#) Initiationto CompletionCosts (US$ '000) FY02 FY03 FY04 FY05 FY06 FY02 FY03 FYO4 FY05 M06 ESW Reports 253 443 487 501 472 40,558 68,679 81,960 95,825 97,829 Core DiagnosticReports 87 119 122 90 81 16,584 25,746 24,484 22,074 20,743 PA 12 14 19 19 21 4,374 4,578 6,893 4,312 6,588 CEWOPR 13 27 26 23 23 2,293 7,892 6.518 10,000 7,123 PER 25 22 29 22 19 6,988 6,700 5,967 5,196 3,373 CFAA 22 30 23 10 8 1,554 3,567 2,457 766 477 CPAR 14 25 24 14 1 872 2,572 2,211 1,415 84 PFP 1 1 1 2 9 504 439 439 386 3,099 Other DiagnosticRepotts 43 101 123 140 123 6,063 14,699 18,390 22,075 24,784 FSAP 10 27 20 14 18 1,727 7,164 4,635 3,201 4,353 Other 33 74 103 126 105 4,336 7,535 13,755 18,874 20,431 Advisory Reports 123 223 242 271 268 17,911 28,234 39,085 51,676 52,301 ESW Policy Notedother Products 206 283 247 193 129 18,225 22,887 27,472 35,678 19,137 PolicyNote 115 153 152 193 129 10,161 14,022 15,522 35,678 19,137 ConferenceNVorkshop 38 65 37 NA NA 2,373 5,635 6,109 NA NA ConsultationsICounty Dialogue 53 65 58 NA NA 5,691 3,229 5,841 NA NA All ESW Products 459 726 734 694 601 58,783 91,566 109,432 131,503 116,966 TA Output Types Client DocumentReview 17 27 22 21 21 1,701 5,072 2,999 2.882 1,975 InstitutionalDevelopmentPian 61 83 92 90 70 15,866 14,588 16,654 13,103 17,152 Knowledge-ShanngForum 46 78 102 132 77 4.586 11,675 13.581 20,807 14,913 ModeliSuwey 26 22 13 13 11 4,711 2,206 1,565 1,687 2,104 "HOW-TO" Guidance 115 129 74 95 128 17,778 16,172 8,640 10,732 15,380 All TA Products 265 339 303 351 307 44,643 49,714 43,439 49,212 51,524 Ail AAA Products 724 1,065 1,037 1,045 908 103,425 141,280 152,871 180,715 168.490 Notes: 1 Thetable includesESW Repads,Other ESW and TA products 2 The Delivenes(#)andfie Initiationto Completion Cmts (US$'WO)includessupplemental deliveries. 3. EffectiveJuly 1,2004,"ConsultationdCoun~ Dialogue"and "ConferenceNVorkshop"outputtypes are no longervalid for the ESW productline. 4. Initiationto Completion Costs includespostdeliverymsts 74 of 80 TABLE4.9: ESW DELIVERIES AND COSTS BY REPORT TYPE Report Type Dellverles (#) initiation to Completion Costs (US$ '000) FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06 Core Diagnostic Reports AFR 17 37 44 30 27 2,356 6,308 7,167 9,029 6,416 EAP 17 15 8 7 7 2,853 3,285 1,607 987 2.086 ECA 22 30 25 17 14 4,767 8,339 8,835 4,624 3,955 LCR 18 22 29 25 19 3,452 3,657 4,121 5,252 4,920 MNA 6 6 1 4 8 9 1,129 1,536 2,196 1,765 1,299 7 9 2 3 5 2,027 2,421 557 417 2,068 MULTl 0 0 0 0 0 0 0 0 0 0 Total Core Dlagnostlc Reports 87 119 122 90 81 16.584 25,746 24,484 22,074 20,743 Other Dlagnostlc Reports AFR 982 2,475 3,851 5,499 7,653 EAP 1,072 1,523 2,334 3,951 2,937 ECA 1,470 4,204 4,627 4,323 3,343 LCR 1,237 3,416 2,050 3,269 5,880 MNA 599 1,994 2,786 1,695 2,153 SAR 665 574 2,742 3,078 2,531 MULTI 1 7 0 3 7 38 514 0 261 287 Total Other Dlagnostlc Reports 43 101 123 140 123 6,063 14,699 18,390 22,075 24,784 Advlsory Reports AFR 24 51 55 56 70 1,925 4,303 5,997 8,225 11,837 EAP 15 25 33 24 49 1,667 4,217 8,219 5,468 11,673 ECA 31 49 46 46 42 5,879 7,468 4,888 8,630 7,041 LCR 31 26 34 36 34 4,544 3,204 6,238 7,587 7,638 MNA 9 17 16 19 16 1,913 2,760 2,928 3,155 3,893 SAR 12 17 24 24 29 1,966 3,119 5,751 7,104 6,893 MULTI 1 38 34 66 28 15 3,163 5,065 11,506 3,327 Total Advisory Reports 123 223 242 271 268 17,911 28,234 39,085 51,676 52,301 All ESW Reports AFR 53 105 130 129 134 5,264 13.085 17,015 22,753 25,906 VIP 38 52 50 48 68 5,593 9,024 12,160 10,407 16,696 ECA 61 107 107 94 76 12,116 20,011 18,349 17,577 14,339 LCR 57 67 84 86 83 9.234 10,477 12,410 16,108 18,438 MNA 19 37 46 34 33 3,640 6,290 7,910 6,614 7,345 SAR 23 30 36 41 43 4,658 6,114 9,050 10,598 11,492 MULTl 2 45 34 69 35 54 3,677 5,065 11,767 3,614 Total All ESW Reports 253 443 487 501 472 40,558 68,679 81,960 95,825 97,829 Notes: 1. The table includes ESW Reportsonly. 2. The Deliveries (#) and the initiationto CompletionCosts (S'OOO) Includessupplementaldeliveries 75 of 80 r iI: : n z U br U a . r r r 3 r 4 9 n r) 1 1 rg E- rc z4 4 2 NI- (0 h z (0 x (0 6 rc NCr.C NC .-cN< .-