DEVELOPMENT POLICY LOANS
– A LOWER STANDARD?
HANA HEINEKEN
GLOBAL WITNESS
WORLD BANK ANNUAL MEETING
OCTOBER 2013
OUTLINE
1. Profile of DPLs in the WBG portfolio
2. DPL Policy Framework
3. Key concerns
4. Recommendations
5. DPLs in the Safeguard Review
DPLs vs Total World Bank Lending
DPL share of total Bank Commitments, FY 95-12
Source: 2012 DPL Retrospective
DPL POLICY FRAMEWORK
OP 8.60
Para. 3. Lending Criteria and Selectivity.
The Bank considers borrower’s
- Policy and institutional framework
- commitment to and ownership of the DPL program;
- institutional capacity and ability to implement.
Para. 9 - Analytical Underpinnings
“A development policy operation draws on relevant analytic
work on the country undertaken by the Bank, the country,
and third parties….”
DPL POLICY FRAMEWORK
Para. 10 & 11: Social & Environmental Impacts
The Bank must:
1. Assess whether specific country policies supported
by the operation are likely to cause
1. significant poverty and social consequences; or
2. significant effects on the country’s environment,
forests, and other natural resources;
2. Assess the borrower’s systems for reducing such
adverse effects and enhancing positive effects;
3. Describe in PD how to address analytical gaps or
shortcomings in borrow systems before or during
program implementation.
DPLs and Governance Risks
CPIA “Cluster D” Criteria –
Public Sector management and
Institutions
• Property Rights and Rulebased Governance
• Quality of Budgetary and
Financial Management
• Efficiency of Revenue
Mobilization
• Quality of Public
Administration
• Transparency, Accountability,
and Corruption in the Public
Sector
Source: 2012 DPL Retrospective
DPL POLICY FRAMEWORK
Para. 8 - Development Objectives
“The program design includes measurable indicators for
monitoring progress during implementation and evaluating
outcomes on completion.”
Para. 16 - Implementation Monitoring & Evaluation
- Borrower responsibility: Implementation and M&E
- Bank responsibility: assessing and monitoring adequacy
of country’s M&E arrangements
REASONS FOR CONCERN
Reason # 1: Inadequate Risk Assessment
Case Study: DRC Forest Sector DPL (TSERO)
-
$90 million DPL approved in 2005
-
15% of program for reforming logging concession system
-
Bank’s risk assessment: “no significant social or environmental
effects”
Inspection Panel concluded:
-
“the system for determining whether there will be significant
effects on the environment and natural resources is flawed.”
-
analysis of DRC’s systems for reducing adverse effects would
have found such systems “were non-existent or extremely
debilitated and ineffective.”
REASONS FOR CONCERN
Reason #2: No requirement to consult; little
opportunity for accountability
- OP 8.60 para. 6 – Consultation and Participation
“The Bank advises borrowing countries to consult with and
engage participation of key stakeholders in the country in
the process of formulating the country’s development
strategies…”
 No explicit requirement to consult on the DPL itself.
- Accountability
Limited by 1) Fast disbursing characteristic; 2) potential for
long term, indirect impacts.
REASONS FOR CONCERN
Reason # 3: Potential for far reaching, long-term
impacts but inadequate monitoring of negative
impacts:
Example: forest sector DPLs
““[a]ny concession policy that the World Bank supports will
have an asset transformation effect—that transforms the value
of forests assets and the access that forest-dependent people will
have to them. But development policy operations do not require
the same level of risk assessment or mitigation systems as
investment operations do under the Bank‘s safeguard system.”
Source: IEG 2013 Evaluation of World Bank Forest Strategy
RECOMMENDATIONS
1) Base the DPL on a CAS that has been properly assessed
for risk (i.e. using a SESA)
2) Better risk assessment categorizing risk based on:
1) Distribution of costs and benefits
2) Implementation capacity
3) Association with Cat. A sub-projects
4) Existence of environmental or social conflict
3) Enhanced, formalized scrutiny of High-risk DPLs based
on Envt’l and Social Assessments prior to appraisal,
consultation akin to OP 4.01, and a SESA for prior actions
4) More robust M&E, including in the long-term
5) More effective grievance response mechanisms
WHY DPLS BELONG IN THE
SAFEGUARD REVIEW
a. So far no thorough
review and evaluation of
DPL policy:
Retrospective is not the
answer
- Desk-based review
- Example: Indonesian
infrastructure DPL
WHY DPLS BELONG IN THE
SAFEGUARD REVIEW
b.
Opportunity to assess the policy based on
comprehensive consultations, cost -effectively.
c.
Consistent with aim of Safeguard review of
enhancing development outcomes –helps to ensure
coherence in outcomes.
d.
Precedence exists with other IFIs
e.
Civil society is asking for it
THANK YOU!
CONTACT:
HANA HEINEKEN
HHEINEKEN@GLOBALWITNESS.ORG