Mainstreaming Governance and AntiCorruption in the CAS and Operations:
A Guide for Country Teams with
Country Applications
By: Vinay Bhargava
Senior Advisor, PRMPS and EXT
Presentation at the Core Course
on Public Sector Governance and Anti-corruption
April 23-27, 2007
The World Bank
2/16/2006
Vinay Bhargava
1
Outline of presentation



2/16/2006
GAC practices in CASs: A retrospective
(FY99-06)
What will be done differently in CASs:
Expectations under the new strategy
How To Mainstream GAC in CASs: A
Suggested Five Step Approach
Vinay Bhargava
2
FY99-06: Main Findings and Conclusions

Explicit discussion of GAC issues in CASs , as required
under the guidelines, has become mainstream.

Increasingly the discussion of GAC issues in CASs is
grounded in the Bank’s AAA.

Helping countries with governance and anticorruption
has become a regular feature of the Bank’s assistance.
About 90% CASs (FY99-06)

GAC related triggers used in about 80 % of the CASs.

Increasingly CASs are discussing risks from corruption
to the Bank financed projects.

Coordination with other donors in GAC has become a
regular feature of CASs.
2/16/2006
Vinay Bhargava
3
FY06 CASs: Current Practices and Areas
for Improvement

FY06 CASs were better than earlier years.

Several potential areas for lifting the game.

DIAGNOSIS: In FY06 CASs CFAA,CPAR and PER main
sources. Rare to see

See Governance assessment/survey as the source

See Relationship between GAC and growth discussed

Find non-government checks and balances institutions discussed

See an explicit connection between diagnosis and prescription
2/16/2006
Vinay Bhargava
4
FY06 CASs: Current Practices and
Areas for Improvement ( Continued)

Entry Points:
 Building capable and accountable states dominates


Half the CASs supported demand side of governance
(transparency, CSOs , private sector)
Assessment and Mitigations of Risks:
 Only half of the CASs assessed risks to Bank
operations
and only 30% discussed reputational risks.


Majority did not assess risk of deterioration but 75%
specified GAC related triggers
Main mitigation strategy: Fiduciary controls and social
accountability mechanisms
2/16/2006
Vinay Bhargava
5
Moving Forward:
What Will the World Bank do Differently?
Scale up governance
work where it matters
most for development
– alleviate governance
constraints to poverty
reduction
Systematically integrate
governance in sectoral
projects & programs –
in extractive industries,
infrastructure, forestry,
health, education
2/16/2006
Scale up multistakeholder
engagement – with civil
society, media,
parliaments, local
communities in policy
making & service delivery
Systematically scale up
engagement with private
sector & industrialized
countries – to tackle the
supply side of corruption
Vinay Bhargava
Strengthen country systems
while enhancing
anticorruption measures in
WB operations –
a/c action plans; enhanced
disclosure, participation &
monitoring
Work with donors & other
int’l actors to ensure a
harmonized approach &
collective action –
based on respective
mandates & comparative
advantage
6
What will be done differently in CASs ?
Expectations under the new GAC strategy.

Explicit consideration of (based on improved diagnostics):




Stay engaged but tailor each CAS to Country Circumstances:




GAC challenges and adequacy of government’s program
Risks posed by GAC challenges to the development and the Bank
Ways to involve private sector and accountability mechanisms
Weak governance but strong government GAC program
Weak governance but uneven government commitment
Most poorly governed settings
Course corrections during the CAS implementation with the Board’s
involvement.
Source: guiding principles 3-6 and pages 11-17 of the GAC Strategy.
2/16/2006
Vinay Bhargava
7
How To Mainstream GAC in CASs?
A Suggested Five Step Approach
1.
Take stock of GAC landscape and legacy including the
constraints GAC poses to growth and poverty reduction.
2.
Formulate C-GAC strategy and entry points suitable for
the country GAC challenges and government commitment.
3.
Assess and mitigate risks (fiduciary and reputational) to
the Bank’s proposed engagement.
4.
Formulate partnership (including coalitions), consultations
and communication plan.
5.
Develop results framework including the M and E
arrangements and GAC related triggers (as applicable).
2/16/2006
Vinay Bhargava
8
Step 1: Stock taking: Objectives

Determine adequacy of diagnostics (commission more?)





DPR, ICA, IGR, GAC diagnostic surveys, Doing business
PEFA, PER, CPAR, CFAA, ROSC, Country GAC Assessment
DFID Driver of Change, TI- National Integrity Surveys, TIGlobal Corruption Barometer, Global Integrity country report,
OECD-DAC-MDB Joint survey, External intelligence sources
Determine GAC as constraint to growth and poverty
reduction
Assess country circumstances faced.



2/16/2006
Weak governance but strong government GAC program
Weak governance but uneven government commitment
Most poorly governed country setting.
Vinay Bhargava
9
Step 1–Stock Taking : A check list

Aggregate and disaggregate governance indicators (e.g., KKZ, CPIA, TI,
Global Integrity, Doing Business, ICA, Country client survey)

Political economy of GAC reforms and degrees of freedom for action

GAC as constraint to growth and poverty reduction: Summary findings of
diagnostics and evaluations (AAA),

Government strategy and commitment—current and historical

Inventory and efficacy of key check and balances institutions in the
government (executive/non-executive branches) and NGOs.

Key anti-corruption champions/partners (in and out of government)

Legacy issues: donor assistance; media monitoring; corruption scandals

On-going and recent Bank anti-corruption activities (last CAS)

Relatively high risk ministries/public enterprises
2/16/2006
Vinay Bhargava
10
GAC As Constraint on Economic
Growth and Poverty Reduction
Ratings (%)
Inadequate
Indicator
Adequate
Not
at all
Low/
Some
Middle/
adequate
High
1. Discuss the relationship between weak
governance and corruption, and poverty
reduction and economic growth.
25
38
31
6
2. Assess weaknesses concentrated in certain
sectors or institutions.
25
25
50
0
3. Assess the government’s commitment to
strengthening governance and tackling
corruption.
6
25
56
13
4. Discuss the government’s track record of
progress with strengthening governance.
13
31
50
6
How well does the CAS
2/16/2006
Vinay Bhargava
11
Main Sources of Governance Diagnostics in 16 FY06 CASs*
Diagnostic Sources/Instruments
Frequency
Country Financial Accountability Assessment (CFAA)
9
Public Expenditure Review (PER)
7
Country Policy and Institutional Assessment (CPIA)
7
Doing Business Report
6
Country Procurement Assessment Report (CPAR)
6
Investment Climate Assessment (ICA)
5
Implementation Review (by INT)
4
Report on Standards and Codes (ROSC)
4
Country Economic Memorandum (CEM)
4
Public Expenditure Financial Accountability (PEFA)
2
Governance and Anticorruption Diagnostic Survey
1
* Table 2 shows the number of CASs supporting their governance and corruption diagnostics by referring to AAAs. AAAs used in
other contexts than governance and corruption diagnostics
will not
be included in the table.
2/16/2006
Vinay
Bhargava
12
Step 2: Formulate Country specific GAC strategy, entry
points and assistance instruments
A typical C-GAC program should include the following
elements:

Objectives and approach to assistance

Proposed entry points

Proposed mix of lending and non-lending instruments

Risk assessment and mitigation

Results framework and triggers
2/16/2006
Vinay Bhargava
13
Step 2-Objectives and Assistance Approach:
Key Trade-Offs depending upon situation





Supporting development vs. managing risks to the
Bank
Balancing help to executive branch with help to nongovernment institutions of accountability
Selectivity in entry points for results and credibility vs.
comprehensive ( cover the water front) approaches
Balancing lending vs. non-lending mix and sequence of
assistance.
Prerequisites and Selectivity in When, Where, How and
How Much to lend in high risk situations
2/16/2006
Vinay Bhargava
14
Step 2: Practical tips for choosing entry points
Whether and how effectively the proposed entry point is
likely to:

Reduce opportunities for corruption

Increase risk of exposure and punishment

Increase severity of punishment

Reduce incentives for corruption

Increase public demand/pressure for reducing
corruption

Strengthen accountability of public sector programs

Be feasible under the political landscape, institutional
setting, and administrative capacity
2/16/2006
Vinay Bhargava
15
Step 2: Helping Countries- Various
‘Entry-Points’
Private Sector
Public
Management
Civil Society, Media
& Oversight
Institutions
Competitive
investment climate
Responsible private
sector
Public financial
management &
procurement,
monitored by PEFA
Administrative & civil
service reform
State oversight institutions
(parliament, judiciary, SAI)
Transparency & participation
(FOI, asset declaration, user
participation & oversight)
Civil society & media
Local Governance
Governance in Sectors
Community-driven development
Local government transparency
Downward accountability
Transparency & participation
Competition in service provision
Sector-level corruption issues (EITI, forestry)
2/16/2006
Vinay Bhargava
16
Step 2: Involve institutions to limit corruption

Judiciary

Legislature

Decentralization with accountability

Constitutionally independent accountability institutions
 Anti-corruption agency
 Election Commission
 Ombudsman
 Supreme audit institutions
 Media
 NGOs
2/16/2006
Vinay Bhargava
17
Beware: Sectors and Institutions Most
Affected By Corruption
4
Political Parties
3.7
Parliament/Legislature
3.6
Police
3.5
Legal system/Judiciary
Business/Private sector
3.4
Tax revenue
3.4
3.3
Customs
Media
3.2
Medial services
3.2
Utilities
3
Education system
3
Military
2.9
Registry and permit services
2.9
2.8
NGOs
2.6
Religious bodies
Source:2/16/2006
Transparency International Global Corruption Barometer 2005,
Vinay
http://www.transparency.org/policy_and_research/surveys_indices/gcb/2005
Bhargava
18
Step 2: Choosing the mix of assistance
instruments for an entry point






Undertaking and disseminating ESW
Grants for institutional capacity building
WBI capacity building programs
Sponsoring in-country dialogue events
Fitting lending operations with anticorruption plans
Free standing lending/TA operations in
support of governance improvement
2/16/2006
Vinay Bhargava
19
Step 2: How to be selective in entry points/
assistance instruments
Whether and how effectively the CAS interventions
in the selected entry points likely to :

Reduce opportunities for corruption

Increase risk of exposure and punishment

Increase severity of punishment

Reduce incentives for corruption

Increase public demand/pressure for reducing
corruption

Strengthen accountability of public sector programs
2/16/2006
Vinay Bhargava
20
Entry Points and Modalities of FY06 CAS Interventions
Number of Modalities of CAS Interventions
Entry Point Categories
AAA
TA
LEN
1. Capable and Accountable States.
9
5
14
2. Increasing Transparency.
5
2
8
3. Participation and Oversight by Civil
Society, Media, Communities.
4
2
8
4. Competitive and Responsible
Private Sectors.
11
2
8
5. Financial Sector Governance.
15
4
5
6. Supporting Champions and Leaders
of Reform.
1
1
3
2/16/2006
Vinay Bhargava
21
FY06 CASs: Checks and Balances Institutions
Indicator
Discuss
Support
Freedom of information
31
13
Media
38
0
Civic Society Organizations
44
25
Competitive Private Sector
75
69
Community Participation
56
44
Supreme Audit Institution
63
38
Chambers of Commerce
13
0
Judiciary
50
31
Legislature
50
50
Anti-corruption agencies
38
25
0
0
B. Does the CAS discuss any of the following checks and
balances institution
2/16/2006
Ombudsman
Vinay Bhargava
22
Step 3: Risk assessment and mitigation



Bank shareholders, partners, and other stakeholders
expect highest standard of integrity and accountability.
INT investigations show that the Bank needs to do more to
ensure the proper use of funds.
New GAC strategy calls for:




2/16/2006
Regular risk reviews of project pipeline and lending portfolio
to identify the subset most at risk.
Elevate review of riskier projects to senior levels and focus
resources on them.
Supporting actions by government’s investigation and
prosecution systems/institutions.
Use of special risk mitigation tools for high risk environments
Vinay Bhargava
23
Step 3 : Risk Analysis and Mitigation


Upstream-assess risks to the Bank
 CPIA ,governance indicators, country knowledge assessment,
red flags tools
 Country team self assessment validated by selected external
interviews
Commonly used mitigation measures to reduce risks to the
World Bank:
 Fiduciary controls (procurement and financial) and INT review
 Integrating social accounting mechanisms
 Integrating strong results monitoring framework
 Screening of new projects for corruption risks; preventive
measures
 Increasing transparency (disclosure, hotline)
 Strategic communications and partnerships
 Proactive sanctions enforcement
2/16/2006
Vinay Bhargava
24
FY06 CASs: Assessing and Mitigating Risks
Ratings (%)
Inadequate
Adequate
Indicator
Not at
all
Low/
Some
Middle/
adequate
High
1. Assess the reputational risk to the World
Bank
87
0
13
0
2. Discussed the risk that the governance
environment will deteriorate during the
CAS period
13
69
19
0
3. Assess the risk of fraud and corruption in
Bank-financed projects
31
25
31
13
4. Include a result based framework suitable
for independent monitoring
6
38
50
6
A. How well does the CAS
2/16/2006
Vinay Bhargava
25
Risk Mitigation Measures proposed
in 16 FY06 CASs
Detection and deterrence
SAM
Use of CSOs
Communication
Corruption risks as part of CPR
Staffing
Anti-corruption plans for projects
Screen Len
Disclosure and transparency
Fiduciary
control
#of CASs
2/16/2006
0
2
Vinay Bhargava
4
6
8
10
26
Step 4 : Develop partnership, consultation
and communication plan



Expectation for cooperation among donors
Partnerships and Coalitions effective tools for
improving governance
Instruments: joint or parallel (coordinated) activities
with domestic and/or external partners for:
**Studies
**Joint statements
**Coordination group
**Mass communications

**Funding
**TA projects
**Public dialogue events
**Dialogues with gov’t.
Regular consultations and communication with and
for results
2/16/2006
Vinay Bhargava
27
Step 5: Monitor progress and
evaluate results

Set clear and monitorable results and set up M and E
systems

Push beyond Disclosure Policy to supply information
to public that make activities transparent

Set reporting and independent auditing systems

Put in place social accountability mechanisms

Encourage beneficiary participation in
planning/evaluation

Propose GAC related triggers for lending scenarios.
2/16/2006
Vinay Bhargava
28
Step 5: Course Corrections During
CAS Implementation


In more volatile country settings be prepared for mid-course
corrections adjusting program in response to improvements or
deterioration during implementation.
In case of new information (e.g. from INT) about confirmed
instances of corruption in Bank-financed projects the appropriate
response may be to:





curtail operations and agree on risk mitigation measures
switch scenarios within the existing CAS
propose a revision in the CAS Progress Report, or move to an ISN.
In the event of demonstrated improvements in governance and
anticorruption be prepared to scale assistance.
If changes in country circumstances warrant a shift in the WBG’s
approach, an appropriate document will be presented to the Board
for discussion.
2/16/2006
Vinay Bhargava
29
Indonesia
Diagnosis: Chapter on the Special problem of corruption. Money politics. Risks: very high both
to the Bank and country. Political will risk. High risk to the Bank’s credibility/reputation.
Country Vision: part of government’s package of policy actions. Weak program .
CAS Objective: Address the key issue of governance improvement thru all CAS
activities- set standard for the Bank to address corruption and governance issues.
Public Sector Management
Institutional Checks & Balances
Judiciary and legal reforms
Anti-corruption institutions
Disclosure by public officials
Corruption perception survey
Civil Society Voice & Participation
Public participation and monitoring
Full collaboration to promote governance
Finance and procurement reforms
Tax, customs. Public expenditures reforms
Effective Implementation of Decentralization
Local government governance improvement
Entry
points
Competitive Private Sector
*Corporate governance *Anti money laundering
Assistance Approach: Four principles applied to promote good governance thru all activities.
Lending Instruments: CDD programs; tax, customs, financial; media/CSOs components; loans to districts
AAA Instruments: Investment climate surveys; WBI; expenditure tracking; governance surveys; TA grants
for judiciary; parliament . Results and Performance Indicators: Many -See Hand Out.
Partnerships: Joint AAA and funding; CDF; Partnership for Governance Reform
Triggers: To Stay in the Base Case: Improvements in government fiduciary management and anticorruption institutions. To Move to the High Case: Improvements in fiscal accountability,
governance in the justice sector, and fiduciary management.
2/16/2006
Vinay Bhargava
30
That is all – Thank You Very
much for your attention.
2/16/2006
Vinay Bhargava
31