1
Comments on Concept Note:
A New Instrument to Advance Development Effectiveness: Program for Results Lending
By Alan Gelb and William D. Savedoff, Center for Global Development
April 7, 2011
The World Bank has not revised its classes of lending instruments since 1980, when Adjustment Lending
was introduced. The P4R instrument proposed in the Concept Note could therefore represent a
significant change. As set out in the note, it responds to several developments, including a greater focus
on results and a shift towards programmatic operations of which Bank financing is often only a modest
part. The note makes clear that P4R is intended to finance certain types of operations, those of a
programmatic nature and that involve service delivery rather than major, one-off, physical investments.
We support the objective of making disbursements more responsive to tangible results, especially of an
outcome nature. This is in line with much recent work on aid effectiveness, including that done at CGD.
We also support the objective of moving the focus of fiduciary, social and environmental safeguards
away from Bank systems with an exclusive concern for the uses and impact of Bank funds and towards a
wider focus on country systems and overall achievements.
Both approaches are long overdue. The latter will also reduce transactions costs for clients, in line with
the objectives of the Paris Declaration.
We also strongly endorse the strong emphasis on M&E capacity (Annex B para 12), as well as the
principle of independent third-party monitoring as set out in para 42, and the enhanced use of citizen
feedback mechanisms. Independent review should be embedded in all operations, starting off from the
initial concept review and the monitoring and results framework. As confirmed by IEG data, having a
strong and monitorable results framework contributes to project effectiveness.
The paper is also correct in pointing out the risks and costs of continuing to “muddle along” (para 84)
with the current set of instruments. Neither IL nor DPL is well-adapted for ongoing support to programs
for service delivery.
This being the case, it is disappointing that the structure of this concept note does not make a clear
break with the IL approach and propose a distinct P4R modality that follows the logic of results-based
disbursements. Rather it seems to codify the existing hybridized version of ILs that disburses against
results. The proposed P4R goes farther than the hybrid ILs, but has a heavy emphasis on systems and
safeguards, some of which may be less critical if the results-based logic were to be fully embraced. The
instrument set out in the paper may well be a pragmatic approach to introducing results-based
disbursement, given the constraints under which the Bank works: at the same time it has less focus on
the elements that are most essential for a credible and effective results-based instrument. In particular,
2
it gives only a broad indication of appropriate disbursement-linked indicators and fails to require
independent verification as the rule rather than the exception.
Our first concern relates to the risk that the focus on safeguards renders the focus on results secondary.
It seems problematic that safeguards take up a greater part of the paper than the discussion of results,
which are dealt with in a relatively abbreviated way.
The paper takes a particular view of what is meant by “results”. The examples in Box 1 and para 37
make clear that results can be outcomes (reduction in infant mortality) or improvement in systems
(improved system of managing procurement). Para 39 also notes that the performance indicators must
be “tangible, transparent, *and+ verifiable”. Para 23 notes that P4R countries “must meet…a
substantive standard in the area of fiduciary and environmental and social aspects no less than
investment lending” and that the benchmark is the Bank’s standards adapted to the more programmatic
and results-driven form of engagement presented by P4R (which is different from equivalence to Bank
standards).
This raises several questions:

How many countries, especially LICs, are close to meeting the standards as envisaged by P4R?
Would Pakistan (Box 1) comply for example? On WBI Control of Corruption it ranks only at the
13th percentile. Is it practical to apply this instrument to the many low-income and fragile
countries which most need the encouragement of results-driven disbursements to improve
their sector policies? It could be noted that the Bank now provides funds for non-earmarked
general budget support through DPLs to countries which may fall short of even adapted Bank
standards, and that some of these (hopefully) go to finance sector programs.

How are the country systems to be assessed and rated relative to the Bank’s standards? Are
there clear and recognized indicators (such as the PEFA indicators for public financial
management)? Annex B sets out a range of useful questions to underpin systems assessments,
but are there examples where these have been used to benchmark countries? Para 64 refers
to the need to use realism and pragmatism in the assessment of the acceptability or adequacy
of government systems, but this discretionary approach, necessary though it may be, does not
automatically square with para 39.

How does P4R balance out the focus on outcomes with the concern on systems? Is
disbursement intended to be pro-rata across objectives? What happens if a country performs
admirably in terms of outcomes but fails on its implementation on the systems side, such as
public financial procedures?
There may not be clear a priori answers to these questions; much will depend on how the P4R approach
is implemented. But as set out in the concept paper, it is only a partial step towards a results-driven
approach. It runs a risk that the focus on safeguards overshadows the emphasis on outcome results,
and that the instrument will not be available to poor and low-performing countries where the results
3
incentive is arguably more useful and effective for encouraging good outcomes than in middle-income
countries that are already well-performing.
In the results context there is a difference between fiduciary safeguards on the one hand and social and
environmental safeguards on the other. True results-focused operations will create a demand for better
financial management, since more effective spending will be needed for good results. From this
perspective, tracking the results can be seen as a substitute for tracking the money, though some base
level of financial management needs to be in place for a credible program. This complementarity does
not necessarily apply to social and environmental safeguards, and even though P4R will be restricted to
less risky operations there will need to be some due diligence process that would make serious
environmental and human rights violations grounds for rescinding the contract. But this should be the
secondary focus, not the centerpiece of an operation that focuses on outcome results.
Our second concern is that the P4R proposed here gives only a broad indication of appropriate
disbursement-linked indicators and fails to require independent verification as the rule rather than the
exception. Para. 42 introduces the notion of verifying indicators for the first time and does so only after
noting the need for M&E along the “results chain.” In principle, a true results-based operation does not
require monitoring intermediate activities. Certainly, the primary attention should be on getting valid
and accurate measures of the desired results, with a decision to collect intermediate information being
conditional on whether they would be useful or not. In paras. 13-15 of Annex B, the concept note
discusses program milestones selected as the operation’s DLIs. This language suggests an understanding
of DLIs as “completed program activities” rather than “results”. In fact, the term “disbursement linked
indicators,” itself, sounds like an effort to blur the distinction between indicators that are explicitly
results indicators with those that are related to completing inputs and activities. Wouldn’t it be clearer
to call them “results indicators?” The logic of a true results-based operation would not even require the
elaboration of program milestones because it would focus attention on measuring the results against
which payments are disbursed.
This is related to the lack of emphasis on independent verification. While it is perfectly fine to rely on
governments to report on their results, it generates a huge risk to rely on governments to verify their
own results. Verification should, except in rare circumstances, be conducted independently by agents
contracted by the Bank. However, para 20 of Annex B explicitly opens the door to this conflict of interest
by stating that the verification entity “may be an agency of the government” and implies that
independent verification will only be required in a subset of operations (“In some cases, verification may
depend on a credible external or third-party entity”). The appropriate policy should be exactly the
reverse. Independent verification should be a requirement of any P4R operation and government
agencies should only be allowed to verify results if they can demonstrate adequate capacity and
independence, a circumstance which is probably rare.