1 IDA17 Scale-up Facility (SUF) Retrospective IDA Resource Mobilization Department (DFIRM) Development Finance (DFI) December 29, 2017 2 ACRONYMS AND ABBREVIATIONS ABCDQ Actions on Bunching, Commitments, Disbursements, and Quality AFR Africa Region BRT Bus Rapid Transit CCSA Cross-Cutting Solution Area CPF Country Partnership Framework CPS Country Partnership Strategy DeMPA Debt Management Performance Assessment DFI Development Finance Vice Presidency DFIRM Development Finance IDA Resource Mobilization DLP Debt Limits Policy DPF Development Policy Financing DSA Debt Sustainability Analysis DSF Debt Sustainability Framework EIB European Investment Bank FCS Fragile and Conflict-Affected Situation GBP Great British Pound GNI Gross National Income GP Global Practice IBRD International Bank for Reconstruction and Development IDA International Development Association IEG Independent Evaluation Group IMF International Monetary Fund IPF Investment Project Financing JPY Japanese yen LIC-DSF Low-Income Country Debt Sustainability Framework MAC DSA Market Access Country Debt Sustainability Assessment MDB Multilateral Development Bank MDRI Multilateral Debt Relief Initiative MENA Middle East and North Africa MFM Macroeconomics and Fiscal Management Global Practice MSME Micro, small and medium enterprise MTR Mid-Term Review NCBP Non-Concessional Borrowing Policy NDC Nationally-Determined Contribution OPCS Operations Policy and Country Services Vice Presidency PBA Performance-Based Allocation PCN Project Concept Note PDO Project Development Objective PforR Program-for-Results SAR South Asia Region SCD Systematic Country Diagnostic SCL Single-Currency Lending SDR Special Drawing Rights 3 SENELEC National Electricity Utility of Senegal SORT Systematic Operational Risk Tool SUF Scale-up Facility TRE World Bank Treasury USD United States dollar WBG World Bank Group 4 Table of Contents I. Introduction ........................................................................................................................................... 1 II. IDA17 SUF Implementation: Facts and Findings ................................................................................. 3 A. IDA17 SUF Commitments – Alignment with Prioritization Criteria ....................................... 3 Advancing WBG goals and IDA17 priorities...........................................................4 Consistency with debt sustainability ........................................................................6 Prioritization across countries, including capacity .................................................8 B. Implementation and Operational Arrangements ..................................................................... 10 Regional prioritization of SUF projects ................................................................11 Prioritized demand.................................................................................................12 Corporate review and Bank-wide SUF allocations ...............................................12 Operational implementation ..................................................................................13 III. Lessons Learned and Adjustments made in IDA18 ............................................................................ 14 A. Prioritization Criteria .............................................................................................................. 14 B. Blend versus IDA-only Considerations .................................................................................. 15 C. Debt Priority and Attention ..................................................................................................... 15 D. Building toward a more efficient process ............................................................................... 17 Annexes Annex 1. IDA17 SUF-Financed Operations and Project Development Objectives ..................................... 18 Boxes Box 1. IDA17 Scale-up Facility and IDA18 Scale-up Facility: Key Changes .................................................... 2 Box 2. IDA17 Scale-up Facility Commitments across Countries and Sectors ................................................ 5 Tables Table 1. IDA17 Scale-Up Facility: Notional Regional Allocations ................................................................ 11 Table 2. IDA17 Scale-Up Facility Regional Allocations ................................................................................ 12 Table 3. Average Time from Project Concept Stage (PCN) to Aproval ....................................................... 14 Table 4. Status of Approved Operations as of end-October 2017 .............................................................. 14 Figures Figure 1. Concessional IDA Commitments vs IDA17 SUF Commitments, sectoral breakdown .................... 6 Figure 2. IDA17 SUF Commitments, by risk of debt distress ........................................................................ 7 Figure 3. IDA17 SUF Commitments, by client type ....................................................................................... 9 Figure 4. IDA17 SUF: Composition of commitments, by country (% of core IDA allocation) ..................... 10 5 Figure 5. IDA17 Scale-up Facility: Implementation Arrangements ............................................................. 11 I. Introduction 1. During IDA17, the World Bank Group (WBG) actively explored options to enhance its ability to respond to the ambition of the 2030 agenda for sustainable development. In this context, Management and shareholders initiated a “Forward Look� exercise to examine the three interrelated challenges of the changes in the external environment, the WBG’s ability to adapt to these changes, and the WBG’s financial capacity. At the time, recent developments pointed to a gap between a large demand and a constrained supply of resources during the remainder of the IDA17 period.1 On the non-concessional financing front, constrained access to Multilateral Development Bank (MDB) funding presented IDA clients trying to finance large infrastructure gaps with difficult choices, such as drawing down limited concessional resources or seeking more expensive private commercial borrowing. At the IDA17 Mid-Term Review Meeting (MTR), IDA Deputies endorsed the creation of a non-concessional financing facility for the remainder of IDA17. This was enabled by a change in IDA’s liquidity framework that allowed for a one- time increase in IDA’s commitment authority through a more efficient and prudent use of IDA’s liquidity, helping address immediate financing pressures without need for additional donor contributions while maintaining a robust coverage of IDA’s liquidity needs and preserving IDA’s financial sustainability. 2. In line with guidance and endorsement from IDA Deputies, in March 2016, the Board approved an increase in IDA17 commitment authority by US$3.9 billion to establish an IDA17 Scale-Up Facility (SUF or Facility).2 Under the SUF, resources were then made available to IDA countries on non- concessional terms (similar to International Bank for Reconstruction and Development (IBRD) terms). The resources were in addition to the regular concessional resources countries received in IDA17, with the Facility also seen to: (i) provide additional financing for high quality projects with strong development impact (e.g., interventions that help clients remove critical constraints to development and that are economically, financially, and environmentally sustainable); (ii) afford Regional teams and beneficiaries the opportunity to gather experience with a non-concessional product from IDA vehicle; and (iii) inform the design of a potential IDA18 non-concessional financing mechanism. During SUF implementation, an updated list of IDA operations prioritized for SUF financing was periodically shared with the Board for information and each project financed with the Facility’s resources was sent to the Executive Directors for approval. In addition, a Technical Briefing was held in May 2017 to update the Board on early SUF implementation experience.3 This paper responds to the commitment made to Executive Directors at the time of SUF approval that Management would report on IDA17 SUF implementation experience shortly after the conclusion of the IDA17 period. Its findings will also be featured in the upcoming IDA17 retrospective. 3. Structure of the paper. The remainder of this paper is structured as follows. Section II presents the outcome of IDA17 SUF commitments along key country and sectoral dimensions and reviews operational aspects of the Facility underpinning the allocation of SUF resources, including eligibility and allocation criteria, prioritization criteria, and review and oversight modalities. As illustrated in Box 1, some aspects of the Facility differ from those characterizing the US$6.2 billion IDA18 Scale-up Facility. Section 1 On the demand side, client demand for IDA financing was stronger than ever: FY15 IDA commitments reached over US$19 billion – a record for a first year of a replenishment. On the supply side, less than 60 percent of core IDA17 resources remained for FY16 and FY17, several set-asides, such as the Crisis Response Window and Regional Program, were under severe pressure and strong US dollar appreciation vis-à-vis the SDR basket had reduced IDA’s notional US dollar equivalent commitment authority for IDA17. 2 See “Enhancing IDA’s Financial Support in IDA17 (Revised)� (IDA/R2016-0019/1), March 2, 2016. 3 See, “IDA Scale up Facility (PowerPoint presentation)� (OM2017-0037), Technical Briefing, May 25, 2017. 2 III presents lessons learned during implementation of the IDA17 SUF and outlines adjustments made to enhance the impact of IDA18 SUF resources. Box 1: IDA17 Scale-up Facility and IDA18 Scale-up Facility: Key Changes Based on early implementation experience with the IDA17 SUF, as well as on feedback from IDA Deputies during IDA18 Replenishment discussions, several adjustments were made to the architecture of the non- concessional financing window for IDA18. As reflected below, key changes centered on IDA18 SUF eligibility criteria, allocation modalities and prioritization criteria. Category Sub-category IDA17 SUF IDA18 SUF Recipients IDA-eligible client countries No change IDA-eligible countries at low- or moderate risk Risk of debt distress No change of debt distress Eligibility and pricing Operation type IPF, including guarantees, DPF and P4R No change Similar to IBRD. Key features included ability IBRD pricing. Key features include option to fully fix to fully fix rate at time of commitment, three rate at time of disbursement (rather than at average maturity buckets, maximum final commitment), six average repayment buckets, Pricing maturity of 30 years, straight-line maximum final maturity of 35 years, including grace amortization and an SDR fixed-rate option. No period, and customizable amortization profiles. No loan conversion options were available. SDR option, but some loan conversion options Indicative SUF envelope equivalent to regional share of PBA, with prior expectation that Regional resources will be re-allocated across regions No change due to superior strength of pipeline in subset of regions Allocations Access capped as a percentage of a country’s core IDA allocation, with greater flexibility for No change small countries given their relatively small core IDA allocation Country No explicit focus on IDA-only versus blend Resources to be appropriately balanced between IDA- country access only and blend countries Debt sustainability, capacity and ability to Main criteria advance WBG twin goals and IDA17 priorities No change through potentially transformational projects Attention to explicit subset of IDA18 priorities, Project including ability of operations to crowd in resources, prioritization support resilience building, deliver benefits beyond or across borders, and/or drive economic Soft filters No explicit focus on subset of IDA17 priorities transformation. Added focus on promoting integration within a regional grouping by supporting modern economic infrastructure in line with low carbon development. 3 II. IDA17 SUF: Implementation Facts and Findings 4. The Facility aimed to provide non-concessional financing to eligible countries for high quality projects with strong, potentially transformative development impact. Implementation arrangements were designed to respond to client demand, address the risks associated with providing non-concessional funding in the heterogeneous context of IDA countries and ensure that the resources were used as efficiently as possible to advance WBG goals and IDA17 priorities. 5. During the last 13 months of IDA17, IDA committed a total of US$3.802 billion4 of SUF resources to support thirty-one (31) operations in fifteen (15) different countries.5 Operations which received SUF financing were prioritized based on three key criteria: the extent to which proposed projects would advance the WBG goals and IDA17 policy priorities, debt sustainability and country capacity. • Advancing the WBG goals and IDA17 policy priorities: This criterion called for regions to prioritize projects with expected high development impact and strong potential for progressing WBG goals and best promoting the IDA17 policy priorities in a manner consistent with the existing country diagnostics and strategy, e.g., as defined in the SCD and CPF. • Debt sustainability: Low risk countries were given the highest priority and moderate risk countries the next priority, all else equal. Regions also considered the consistency of a country’s SUF financing request with IDA’s Non-Concessional Borrowing Policy (NCBP) and the IMF Debt Limits Policy (DLP).6 • Capacity: An additional prioritization criterion was the level of a country’s absorptive and implementation capacity.7 This aimed to ensure recipients of SUF financing were characterized by appropriate levels of basic implementation and absorptive capacity, while also helping align the Facility with the performance-based nature of core IDA resources. 6. This section reviews the selection of programs under the IDA17 SUF against these criteria, as well as the operational arrangements for the IDA17 SUF. A. IDA17 SUF Commitments – Alignment with prioritization criteria 7. This section focuses on alignment of SUF operations with the Facility’s prioritization criteria as proxy for the expected impact of the facility, given that many SUF projects were approved late FY17 and it is too early to draw conclusions on the results achieved. 4 Notwithstanding significant excess demand for SUF financing at the Bank-wide level, US$98 million of IDA17 SUF resources was not committed owing to “lumpiness� of individual project financing needs. 5 A complete list of Board-approved IDA operations that were financed utilizing IDA17 SUF resources, along with a brief description of each project, is contained in Annex 1. 6 Countries eligible for the Facility and subject to the NCBP included IDA-only non-gap countries at moderate risk of debt distress, as well as post-MDRI countries at low risk. 7 Capacity was assessed based on Country Policy and Institutional Assessment scores and portfolio performance. 4 Advancing WBG goals and IDA17 priorities 8. Client demand was driven by different motivating factors but, consistent with the Facility’s project prioritization criteria, SUF operations contributed significantly to advancing WBG goals and IDA17 priorities, with potentially transformational development impact (see Box 2 and Annex 1). The scope of SUF project development objectives (PDO) include those ranging from targeting increased access to electricity in several countries – including 500,000 potential beneficiaries in Côte d’Ivoire – to those seeking to improve water supply and sanitation (e.g., to benefit up to 3.4 million Ethiopians residing in Addis Ababa and 22 secondary cities), to others aimed at enhancing urban mobility to promote job opportunities, such as efforts to develop viable public transportation for 320,000 passengers per day in Senegal. In regard to strategic factors underpinning utilization of SUF resources: • Some clients sought to take on non-concessional IDA financing for revenue-generating projects. For example, mass transit corridor development in Senegal has been identified in the country’s NDC as a major potential contribution of the transport sector to reduce greenhouse gas emissions. The Dakar Bus Rapid Transit Pilot (BRT) IPF sought SUF financing to support development of a first bus rapid transit line connecting some of the major traffic generators. The BRT buses will carry up to 320,000 riders per day and the project is expected to deliver an economic internal rate of return of 13.4 percent. • Others which faced more expensive terms on capital markets sought SUF financing to support high impact projects while reducing their overall cost of debt and helping improve their public debt profiles (e.g., Pakistan, Sri Lanka and Zambia). For example, Pakistan – a country with a Long-Term Foreign Currency Issuer Rating of “B� by Fitch rating agency that recently issued short-term US dollar-denominated bonds with a 5.5 percent coupon – sought to tap long-term SUF financing at a 3.2% fixed rate of interest to help finance the National Social Protection Program-for-Results (PforR) project. The operation will help strengthen the flagship national social safety net systems for the poor – including the improvement of beneficiaries’ access to complementary services with the goal of providing the poor with opportunities to achieve self-sufficiency over the long run. • Another client segment indicated a preference to blend concessional IDA resources with SUF resources to soften overall financing terms for projects. For example, Bangladesh coupled US$100 million of SUF resources with US$257 million of regular IDA credits to finance the Second Investment Promotion and Financing Facility IPF, an operation expected to help address the country’s infrastructure gap – a key constraint to achieving the country’s growth target – by crowding in more market resources through innovative financing instruments. The project is expected to have a broader impact by creating a wider market for long-term financing for private sector-led infrastructure, which will lead to further private sector development and job creation. • Yet other clients utilized SUF to allow them to fully finance individual operations significantly larger than their core IDA envelope (e.g., Côte d’Ivoire and Zambia). In Côte d’Ivoire, SUF resources were tapped to support the US$325 million Electricity Transmission and Access IPF that will remove electricity supply constraints for productive industries, as well as provide access to electricity to about 500,000 additional people – mostly from poor rural families. 5 Box 2: IDA17 Scale-up Facility Commitments across Countries and Sectors In terms of strategic utilization, SUF resources: ➢ Facilitated large projects despite constrained national IDA envelopes, freeing up concessional IDA resources to support other high-priority interventions ➢ Scaled up already planned projects, e.g., the case of Nicaragua Rural and Urban Access Improvement IPF ➢ Provided Additional Financing for successful on-going interventions, e.g., in Senegal (Electricity Sector Support IPF), Ethiopia (Second Urban Water Supply and Sanitation IPF) and Vietnam (Da Nang Sustainable City and Medium Cities Development IPFs) ➢ Offered benefits and options for diverse clients: Some eager to take on non- For those facing more Some preferred to blend concessional SUF credits for expensive terms on capital concessional IDA with SUF, revenue-generating projects markets, SUF resources helped which helped soften overall like the Senegal – Dakar Bus improve clients’ public debt financing terms for projects in Rapid Transit IPF (first-ever profiles (e.g., Pakistan, Sri socially important sectors (e.g., public-private partnership Lanka and Zambia) Vietnam Social Protection PforR project in urban transport in project) Francophone Africa) The largest percentage of projects were in infrastructure, including the transport and energy sectors: ➢ Increasing access (Côte d’Ivoire Electricity Transmission and Access and Tanzania Rural Electrification Expansion) ➢ Improving efficiency (Dar es Salaam Maritime Gateway) ➢ Improving reliability (Benin Energy Service Improvement and Senegal Energy Sector Support) ➢ Scaling up renewable energy sources (Tanzania Rural Electrification Expansion) Other SUF-financed interventions targeted key IDA17 priorities such as inclusive growth (e.g., Pakistan Neighborhood 9.KarachiConsistent Improvement with Project). demand assessments presented prior to approving the facility, IDA17 SUF resources enabled IDA to support investments with a bias towards infrastructure (see Figure 1 and Box 2): (a) in critical infrastructure, such as to support urban and inter-urban transport, and energy transmission and distribution (e.g., in Bangladesh, Bolivia, Côte d’Ivoire – a country on the Harmonized List of Fragile Situations in the IDA 17 period, Ethiopia, Nicaragua, Rwanda, Senegal, Tajikistan, Tanzania and Zambia); and (b) targeting access to Water Supply and Sanitation (e.g., in Tanzania, Ethiopia, Kenya). This contrasted with the utilization of regular IDA resources, which were mainly targeted toward support of interventions in social sectors. 10. There is a strong focus of SUF operations on advancing IDA17 priorities, including both IDA17 overarching and special themes. For example, in Bangladesh, the Second Investment Promotion and Financing Facility project is expected to help leverage both public and private resources. Several projects, such as the Sri Lanka Competitiveness, Transparency and Fiscal Sustainability DPF and the Pakistan Karachi Neighborhood Improvement project, aim to promote enhanced and more inclusive growth through investments or reforms that will facilitate private sector growth with special attention to the vulnerable and poor. The Vietnam Da Nang Sustainable City Development project pays special attention to gender issues (e.g., the Bus Rapid Transit component’s focus on women and communication activities will seek to increase the awareness of women about the project and its potential benefits to them). Similarly, the Vietnam Scaling up Urban Upgrading project includes concrete actions to mainstream gender in all phases of the project. The Pakistan Sindh Resilience project, which aims to directly benefit 6 more than 5 million people, is the first ex-ante risk reduction project through which the World Bank will address disaster risks in selected areas of the province and build disaster and climate resilience. Figure 1. Concessional IDA Commitments vs IDA17 Scale-up Facility Commitments, sectoral breakdown (as % of respective totals) 40 IDA17 SUF commitments Concessional FY17 IDA commitments 35 30 25 20 15 10 5 0 Transportation Water, Sanitation Energy and Financial Sector Social Sectors Other* and Waste Extractives Consistency with debt sustainability 11. All IDA countries assessed to be at either low or moderate risk of debt distress were notionally eligible to receive SUF financing.8 When the IDA17 SUF was launched, 52 IDA-eligible countries were assessed to be at low or moderate risk of debt distress (thus eligible to receive SUF financing) while 25 countries were assessed to be at high risk,9 and consequently not eligible to receive SUF financing. The Facility also aimed to reflect due consideration of individual countries’ debt situation in a manner consistent with IDA’s NCBP and the IMF’s DLP. 12. In keeping with this emphasis on debt sustainability, the share of resources committed to IDA- only countries at low and moderate risk of debt distress per their Low-Income Country Debt Sustainability Assessment (LIC-DSA) ratings was 66% and 34%, respectively (Figure 1). 10 Of the fifteen 8 Given ex ante indications of significant demand, the limited volume of financing from the Facility, and IDA’s own policies on debt sustainability, all IDA countries assessed to be at either low or moderate risk of debt distress were eligible to receive SUF financing. 9 As of April 2016, countries at high risk of debt distress under the Low-Income Country Debt Sustainability Framework (LIC-DSF) were Afghanistan, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Djibouti, Dominica, Eritrea, FS Micronesia, Ghana, Grenada, Kiribati, Maldives, Marshall Islands, Mauritania, Mongolia, Mozambique, Sao Tome and Principe, St. Lucia, Somalia, Sudan, Tuvalu, Yemen and Zimbabwe. 10 For countries where official external financing on concessional terms is a key source of public external financing, DSAs are typically undertaken by the World Bank and IMF using the LIC-DSF. For other countries, DSAs are undertaken by Fund staff using the Market Access Country DSA (MAC DSA) tool, which focuses more on overall public debt sustainability and yields a very different set of outputs to the LIC-DSF. 7 countries which received SUF resources, six were IDA-only countries assessed to be at low risk of debt distress under the Low-Income Country Debt Sustainability Framework (LIC-DSF) when they were endorsed for SUF financing (Bangladesh, Bolivia, Kenya, Rwanda, Senegal and Tanzania). Six IDA-only countries were assessed to be at moderate risk of debt distress under the LIC-DSF (Benin, Côte d’Ivoire, Ethiopia, Nicaragua, Tajikistan and Zambia), while three blend countries (Pakistan, Sri Lanka and Vietnam) were considered to be at moderate risk of external debt distress based on a review of debt sustainability assessments conducted using the Market-Access Country DSA (MAC DSA) tool.11 Figure 2. IDA17 SUF Commitments, by risk of debt distress (% of total) a/ 70 60 50 40 30 20 10 0 Low risk Moderate risk High risk Share of IDA17 SUF commitments Share of FY17 PBA resources a/ Commitments to IDA countries with risk of debt distress ratings determined under the LIC-DSF. 13. In many cases, SUF resources were utilized either as a substitute for more expensive alternative financing (as in the cases of Pakistan, Sri Lanka and Zambia referenced in paragraph 8) or combined with regular IDA resources to soften project financing terms. For example, Zambia utilized SUF resources to fully-finance the Improved Rural Connectivity project at a fixed 4.5 percent interest rate over 30 years – terms which compare favorably to the roughly 9 percent coupon rate of interest the sovereign was required to pay on recently-issued (2015) 12-year international bonds. Countries subject to the NCBP were encouraged to provide IDA-only clients with a mix of SUF and regular IDA resources so that terms of the overall integrated financing package for a SUF-financed operation would be concessional or semi- concessional. Ultimately, countries such as Bangladesh, Ethiopia and Tajikistan combined regular IDA and SUF resources in proportions that resulted in the grant element of project financing for SUF operations near or exceeding the 35 percent grant element concessionality threshold under the NCBP. 14. Options for non-concessional terms were tailored to the needs and constraints of IDA clients, aiming to keep the terms simple but flexible, when appropriate. SUF credits were offered at fully fixed 11 Under the MAC DSA, countries are not assigned a specific rating on risk of debt distress; instead, judgment on the extent of debt vulnerabilities is informed by a set of tools provided within its framework which differ from those utilized when applying the LIC-DSF. These tools, a combination of charts, benchmarks and signals help assess: (i) the realism of the baseline scenario; (ii) vulnerability of the debt profile (financing structure); (iii) sensitivity of projected debt burden indicators to macro-fiscal shocks; and (iv) potential risks from the realization of contingent liabilities. 8 rates at commitment to all countries. At the time of SUF Board approval, some Executive Directors indicated a preference to allow all borrowers to have access to floating rate loans given the then-prevailing price differential between floating and fixed interest rates; however, only Blend countries, which had experience with IBRD’s variable lending products, were ultimately endorsed by the Board as eligible for variable rates. Loans in Special Drawing Rights (SDR) were available for the fixed rate loan option only, while single currency loans in the constituent currencies of the SDR – i.e., USD, Euro, GBP, and JPY – were available for the fixed rate and floating rate loan options. Three options for repayment terms were available: 24 years, with 5 years grace; 27 years, with 8 years grace; and 30 years, with 9 years grace.12 15. Negotiated SUF Financing Agreements reflected a strong client preference for fixed interest rates, USD-denominated repayments and longer maturities: • Fixed interest rates: While IDA-only countries were offered only a fixed-rate option, Blend countries, which had the additional option of taking on floating-rate SUF credits, also opted for a fully-fixed interest rate on all but one SUF credit. • US dollar-denominated repayments: Roughly 70 percent of SUF credits by number (22 out of 31) were denominated in USD, with the remainder Euro-denominated obligations. In terms of commitment volume, US dollar-denominated SUF commitments totaled US$2.45 billion (65 percent of total SUF commitments) while Euro-denominated SUF commitments amounted to US$1.35 billion (35 percent of commitments). • Longer maturities: About 60 percent of SUF credits by number (18 of 31) and 69 percent by volume (US$2.61 billion) were contracted at a 30-year maturity (the maximum maturity available) with 9 years grace compared with 35 percent of credits by number (11 of 31) and 28 percent of credits by volume (US$1.06 billion) contracted at the shortest maturity (24 years with 5 years grace). Prioritization across countries, including capacity 16. In terms of equity, from the perspective of client type, IDA17 SUF commitment volume was largely in line with client groups’ share of core IDA resources (see Figure 3) – an outcome which turned out to be in keeping with the IDA Deputies’ desire that the prospective IDA18 SUF appropriately balance resources between IDA-only and blend countries and achieve a distribution of resources to groups of countries that broadly conforms to those groups’ overall shares of allocations under the Performance- Based Allocation (PBA) framework. 12 The Banking Products team in the World Bank Treasury (TRE) Vice-Presidency conducted intensive outreach to clients to explain the credit terms and how they differed from standard IDA terms as well as to aid them in completing the Credit Choice Worksheet prior to negotiations (similar to the support provided by TRE for IBRD loans). TRE also delivered a series of webinars to Bank staff to support implementation of the IDA17 SUF. A benefit of engagement with clients on SUF implementation was that it also allowed for a comprehensive dialogue with country authorities around sovereign debt management and IDA financing options, including the availability of IDA Single-Currency Loans (SCL). 9 Figure 3. IDA17 SUF Commitments, by client type (% of total) 70 60 50 40 30 20 10 0 Blend IDA-only, gap IDA-only, non- FCS gap Share of IDA17 SUF commitments Share of FY17 PBA resources 17. On a regional basis, two-thirds of SUF resources (by volume) were committed to support clients in the Africa Region (AFR), with the South Asia Region (SAR) also significantly tapping the Facility. At the regional level, SUF resources were committed to: • Eight countries in AFR (Benin, Côte d’Ivoire, Ethiopia, Kenya, Rwanda, Senegal, Tanzania and The Gambia), which received total financing of US$2.51 billion; • Three countries in the SAR (Bangladesh, Pakistan and Sri Lanka), which received total financing of US$895 million; • Two countries in the Latin America & Caribbean Region (Bolivia and Nicaragua) that received total financing of US$80 million; • One country in East Asia & Pacific (Vietnam) that received US$213 million; and • One country in Europe & Central Asia Region (Tajikistan) that received US$100 million. 18. Nearly half of SUF operations delivered combined SUF resources with regular IDA credit financing (see Figure 4). This allowed IDA to scale up engagements for greater impact – especially in countries with relatively small IDA allocations, such as Nicaragua and Tajikistan, where limited regular IDA resources are more likely to constrain the ability to finance critical large operations. In other cases, SUF resources were utilized to finance operations on a stand-alone basis – including some requiring significantly more resources than the country’s core IDA envelope owing to lack of project scalability (e.g., in Côte d’Ivoire and Zambia) – enabling countries to finance operations they otherwise may not have been able to undertake. 10 Figure 4. IDA17 SUF: Composition of commitments, by country (% of FY17 core IDA allocation) 400 350 300 250 200 150 100 50 0 Regular IDA used to co-finance SUF operations SUF FY17 core IDA allocation Note: In Figure 4, instances in which a country’s regular IDA financing exceeds 100 percent of its FY17 core IDA allocation (e.g., Tajikistan) reflect that the country benefited from either an intra- or inter-regional reallocation of resources from another country (or countries). B. Implementation and Operational Arrangements 19. In allocating SUF resources, implementation arrangements sought to strike a balance between rules and flexibility to ensure the optimal use of resources from the Facility. In doing so, the Bank’s approach was to build on IDA’s country-driven model to ensure a developmental and debt sustainability perspective, with review processes embedded in the WBG’s existing operational procedures and due diligence. Specific implementation arrangements for the Facility included: (i) determination of notional regional allocations; (ii) regional prioritization of projects; and (iii) endorsement of a Bank-wide prioritized project list (Figure 5). 11 Figure 5. IDA17 Scale-Up Facility: Implementation Arrangements 20. Allocation decisions for the SUF built on the PBA system to ensure consistency with its performance and poverty orientation. Each Bank region was initially provided a notional SUF allocation determined by the Development Finance Vice Presidency (DFI). Given expressions of very strong early demand across regions, and in line with ensuring equity in the allocation of resources available under the Facility, notional regional allocations were set equal to each region’s share of core IDA in FY16 for countries eligible to utilize SUF resources (Table 1). Table 1. IDA17 Scale-Up Facility: Notional Regional Allocation (US$ billion) IDA17 SUF allocation Region (based on FY16 core IDA share) Africa 2.19 East Asia and Pacific 0.57 Europe and Central Asia 0.13 Latin America and Caribbean 0.08 Middle East and North Africa 0.05 South Asia 0.88 Total 3.90 Regional prioritization of SUF projects 21. In prioritizing projects to receive SUF financing, Management first sought each Bank region’s proposal of operations it viewed as potentially transformational and thus best suited to utilize SUF resources. Regions, in consultation with the Global Practices (GP) and Cross-Cutting Solutions Areas (CCSA) to maximize use of country knowledge and linkages, prioritized projects based on the key SUF criteria: debt sustainability, country capacity, and the extent to which proposed high development impact projects would advance the WBG goals and IDA17 policy priorities.13 13 An IDA17 SUF Guidance Note was concurrently circulated to staff to assist teams in prioritizing projects. 12 22. Following vetting at the regional level, each region submitted to DFI and the Operations Policy and Country Services Vice Presidency (OPCS) the list of operations it sought to have prioritized at the Bank-wide level. Proposals were supported by a description of each project or program’s development objectives and how they met the SUF prioritization criteria. Prioritized demand 23. Initial regional demand for SUF financing far exceeded the available volume of resources. Requested SUF financing for operations initially proposed by regions amounted to nearly US$5.6 billion – roughly 40 percent more than the US$3.9 billion to be allocated under the SUF – with prioritized interventions largely targeting areas consistent with expected demand for non-concessional resources, i.e., with a primary focus on infrastructure. Corporate review and Bank-wide SUF allocations 24. An upstream corporate review meeting chaired by Senior Management and including representatives of DFI, OPCS, GPs, CCSAs and Regional units, provided a forum in which to prioritize projects at the Bank-wide level. Regional prioritized project lists were aggregated and then narrowed down to a single, Bank-wide prioritized SUF list with regional allocations correspondingly adjusted (see Table 2). At this stage, prioritization at the corporate level was based on application of the SUF prioritization criteria in the context of assessing the merit of individual operations across regions as opposed to within regions.14 Table 2. IDA17 Scale-up Facility Regional Allocations (in US$ billion) Indicative allocation April 2016 SUF April 2016 SUF Final SUF Region (based on FY16 financing % of total allocationb/ % of total allocationc/ % of total PBA shares) requesta/ AFR 2.190 56% 3.31 2.220 57% 2.565 66% EAP 0.570 15% 0.68 0.580 15% 0.260 7% ECA 0.130 3% 0.16 0.125 3% 0.100 3% LCR 0.080 2% 0.39 0.080 2% 0.080 2% MNA* 0.050 1% 0.00 0.000 0% 0.000 0% SAR 0.880 23% 1.06 0.895 23% 0.895 23% Total 3.900 100% 5.59 3.900 100% 3.900 100% * IDA-el i gi bl e countri es i n MNA (Dji bouti a nd Yemen) were ei ther a t, or expected to be a t, hi gh ri s k of debt di s tres s i n FY17. a/ Apri l 2016 SUF fi na nci ng reques ts ba s ed on pri ori tiza tion of projects a t regi ona l l evel . b/ Ini tia l SUF regi ona l a l l oca tions refl ecting outcome of corpora te pri ori tiza tion proces s . c/ Fi na l SUF a l l oca tions a s of end FY17 refl ecting i nter-regi ona l rea l l oca tions . 25. Following corporate endorsement of a Bank-wide SUF prioritized project list, the upstream list of projects was shared with Executive Directors. In the first quarter of FY17, and periodically as needed, 14 DFI, OPCS and MFM also reviewed proposed SUF financing volumes for each country to confirm consistency of the request with the DLP and the NCBP and to ensure that access to the Facility was appropriate in view of each country’s FY16 allocation of core IDA. This process took country size into account, with greater flexibility afforded small countries owing to their relatively small core IDA allocations and their greater vulnerability to climate change risks. Ultimately, the allocation of SUF resources at the country level was limited in a few cases primarily to safeguard the concessionality of the country’s overall IDA envelope. 13 senior management – in conjunction with DFI and OPCS – subsequently took stock of progress of all pending projects, and their likelihood of being presented to the Executive Directors in FY17. 26. Active pipeline management sought to ensure that SUF resources would be utilized effectively. The initial SUF prioritized list (as well as subsequently revised lists) contained projects whose aggregate financing volume exceeded available IDA17 SUF resources, ensuring a strong pipeline of SUF-financed projects going forward. 27. During SUF implementation, Bank regions provided Management with regular updates on SUF pipeline developments. Twelve new projects were endorsed by Senior Management for inclusion on the SUF prioritized project list, while nine projects on the initial SUF list were ultimately dropped. In five instances, operations were removed from the list owing to unexpected delays in project preparation which required slippage of anticipated Board dates to FY18. In these cases, Regions indicated that they planned to deliver the operations utilizing either core IDA18 allocations or, potentially, IDA18 SUF resources. Three projects on the initial IDA17 SUF list were delivered in FY17 using only concessional IDA resources. In one case, the originally envisioned SUF project was dropped. Based on ongoing pipeline developments, the prioritized project list was adjusted as necessary, with Executive Directors kept apprised of the changes through periodic updates from Management to the Board included in monthly Steering Committee packages. Operational implementation 28. SUF financing was utilized mainly to support delivery of IPF, which accounted for 88 percent of commitments, compared with 8 percent for PforR financing and 4 percent for DPF. 29. The operational risk profile of IDA17 SUF operations was broadly similar to that of regular IDA operations, when factoring in the debt sustainability eligibility threshold and infrastructure-intensive focus of SUF operations. Of the 31 IDA17 SUF operations, 25 (81 percent) were rated as “Substantial� risk operations under the Systematic Operational Risk Tool (SORT) – mainly in the Africa Region – and 6 (19 percent) were rated as “Moderate� risk. This compares to a risk profile of non-SUF IDA17 projects assessed to be 19 percent “High� risk, 66 percent “Substantial� risk, 15 percent “Moderate� risk and 1 percent “Low� risk. In general, macro-related risks were lower for SUF-financed operations (in line with the targeted financing of resources toward countries at low or moderate risk of debt distress), while environmental and social risks were skewed higher, as is the case for infrastructure operations in general. 30. In terms of project processing, SUF-financed operations were delivered on a timetable somewhat faster than for other IDA-financed operations (Table 3). This was likely due to the short implementation period for the Facility, coupled with a slightly higher share of Additional Financing operations utilizing SUF resources than that characterizing regular IDA lending. 14 Table 3. Average Time from Project Concept Note (PCN) Stage to Approval Total IDA Of which SUF Average time Project type Number of Commitments financed PCN to approval projects (US$b) (US$b) (months) SUF regular project financing 27 5.06 3.49 11.8 SUF Additional Financing 4 0.33 0.31 10.1 Total 31 5.39 3.80 11.6 Memo item: All IDA17 non-SUF IDA operations 578 49.22 - 12.7* * Excludes additional financing operations and operations that do not require a PCN. 31. While implementation of these 31 projects is barely starting, implementation progress is assessed to be on track, with six projects accounting for 15 percent of SUF resources disbursing by end- October 2017 (see Table 4). This is consistent with the fact that roughly 75 percent of operations financed under the IDA17 SUF (23 in total) were approved by the Board in the March 2017 to June 2017 period. Operations not yet disbursing appear to be following an expected path in line with the nature of each operation and the timing of Board approval. Table 4. Status of Approved Operations as of end-October 2017 Total IDA Of which SUF Status of operation Number of Commitments financed operations (US$m) (US$m) Not yet signed 11 2,129 1,262 Signed, but not yet effective 6 1,115 922 Effective, but not yet disbursing 8 1,042 1,042 Disbursing 5 998 475 Closed 1 100 100 Total 31 5,384 3,802 III. Lessons Learned and Adjustments made in IDA18 A. Prioritization criteria 32. When implementing the IDA17 SUF, Management recognized that there is no single policy prescription to catalyze transformational change – a conclusion consistent with findings of the Independent Evaluation Group (IEG) that transformational projects vary in form, size and the development challenges they address and are difficult to identify on an ex ante basis.15 In seeking to prioritize projects for SUF financing, Management consequently sought to identify projects that could achieve deep, systemic and sustainable change with large-scale impact. 15 See “World Bank Group Support to Transformational Engagements: An IEG Category II Learning Product,� December 8, 2015. 15 33. At the same time, Management has responded to Deputies’ requests for additional prioritization criteria to help improve the targeting of SUF resources to support the kind of interventions that advance IDA priorities. Under the IDA18 SUF, additional prioritization criteria in the form of “soft filters� will be used to more systematically assess the ability of SUF-supported operations to achieve key IDA objectives.16 B. Blend versus IDA-only country considerations 34. IDA17 SUF commitment volumes were largely in line with client groups’ share of core IDA resources, but there was no concerted effort on the part of Bank Regions or Management to achieve this result. Going forward, Management recognizes the desirability of providing Blend countries access to IDA non-concessional resources – as well as the benefit of providing IDA-only countries with limited market access the ability to top up regular IDA resources for potentially transformational projects. To equitably allocate SUF resources among IDA clients under the IDA18 SUF, Management will seek to achieve a distribution of non-concessional SUF resources to groups of eligible IDA-only countries and Blend countries that broadly conforms to those groups of countries’ overall shares of the PBA. C. Debt priority and attention 35. Implementation of the Facility requires on-going attention to debt sustainability considerations. Reversing a highly positive post-Multilateral Debt Relief Initiative (MDRI) trend, debt risk ratings under the LIC-DSF deteriorated between 2014 and 2017 in 17 IDA countries17 (23 percent of IDA recipients). Among the countries whose risk rating deteriorated was one initially endorsed to receive IDA17 SUF financing while at moderate risk of debt distress, but later assessed to be at high risk of debt distress during IDA17 SUF implementation (Republic of Congo). The proposed SUF project in Republic of Congo was subsequently removed from the SUF prioritized project list. At the same time, two countries which received IDA17 SUF resources when they were assessed to be at moderate risk of debt distress (Tajikistan and Zambia) subsequently saw their risk of debt distress shift to “high� in FY18. In the latter cases, given the strong desire of country authorities to undertake the projects financed under the Facility, it is likely that access to SUF financing at a rate well below alternative sources of financing available to the countries helped mitigate a further deterioration in the countries’ debt profiles – although the beneficial impact was likely marginal, given the limited volume of SUF resources compared to the countries’ overall debt burdens. 36. When seeking to target SUF resources to countries at low and/or moderate risk of debt distress under the IDA18 SUF, Management expects to benefit from adjustments to the LIC-DSF methodology.18 16 As detailed in Box 1, the prioritization of projects to be financed under the IDA18 Scale-up Facility will focus attention on the ability of an operation to crowd in resources, support resilience building, deliver benefits beyond or across borders, and/or drive economic transformation. Priority will be also given to promoting integration within a regional grouping by supporting modern economic infrastructure in line with low carbon development. 17 Countries in which LIC DSA ratings deteriorated were Benin, Cameroon, Congo, Rep., Ethiopia, The Gambia, Lao PDR, Liberia, Madagascar, Mauritania, Mozambique, Nigeria, Papua New Guinea, Tajikistan, Tonga, Vanuatu, Yemen, Zambia. It should be noted that if a larger number of countries are characterized by a shift in their risk of debt distress ratings from “low� or “moderate� to “high� than vice -versa, the result will be a smaller pool of SUF-eligible countries and the need for continuing vigilance in assessing issues around the concentration of SUF financing. 18 See “Review of the Debt Sustainability Framework for Low Income Countries: Proposed Reforms,� International Development Association and International Monetary Fund, August 22, 2017. 16 Changes to the LIC-DSF recently-endorsed by the respective Boards of the Bank and Fund include several aimed to improve the accuracy of the framework, including by better identifying debt distress episodes, enhancing the statistical accuracy of predicting debt distress and the introduction of tools to help assess both the realism of any projected fiscal adjustment and the projected impact of public investment and fiscal adjustment on growth. Moreover, the approach to determining the “debt carrying capacity� of a country incorporates more country-specific information to underpin the assessment. The revised LIC-DSF will also distinguish among countries with moderate risk those with limited space to absorb shocks and those with substantial space – a potentially useful concept for assessing debt-related risks for countries at moderate risk of debt distress. In sum, owing to enhancements to the LIC-DSF, DSAs produced under the new framework should provide Management and staff with a more accurate indication of the possibility that risks to debt sustainability may increase. 37. Applicability of the SUF risk-of-debt-distress eligibility criterion is straightforward for countries assessed under the LIC-DSF; however, further analysis needs to be undertaken to determine the most appropriate way in which to interpret MAC DSA outputs for blend countries. Currently, MAC DSA outputs are not designed to be systematically translated into LIC DSA risk categories (low, moderate or high) owing to differing methodologies and debt data coverage under the two approaches, different forward-looking time horizons (10 years under the revised LIC-DSF versus 5 years for the MAC DSA) and lack of an overlapping focus on similar debt sustainability indicators. Going forward, DFI, OPCS and MFM19 are exploring ways in which to best interpret MAC DSA outputs as relevant to SUF debt-related eligibility criteria, bearing in mind that Blend countries are, by definition, credit-worthy to receive WBG financing on IBRD terms. 38. Going forward, owing to the change in IDA’s financing framework in IDA18, SUF resources will be offered only on IBRD (floating rate) terms to minimize IDA’s asset and liability management risks. At the same time, as in IBRD, IDA clients will be able to fix rates at the time of disbursements and benefit from additional financing options now available to them, such as the option of customizing the amortization profile of SUF credits and the potential for financing in local currency. These new features emphasize the continuing need to ensure clients have adequate debt management capacity – in particular, to develop and implement a robust debt management strategy, including with respect to management of floating rate loans and non-concessional resources. This implies the need for enhanced outreach to clients taking on IBRD terms – especially those accessing the SUF for the first time.20 To this end, TRE and MFM will continue client outreach efforts, drawing both from experience gained during initial dialogue with clients around the IDA17 SUF and from the prior introduction of new IBRD loan terms and products. The Bank will also need to make use of the tools at its disposal, such as debt sustainability analyses, medium-term debt management capacity tool-kit, and country capacity assessments (including through the Debt Management Performance Assessment (DeMPA) tool), to ensure that the burden of concessional and non-concessional debt remains within appropriate limits for each country. D. Building toward a more efficient process 39. Following establishment of an upstream SUF prioritized project list, there were several requests from Regions for Senior Management to endorse additions to the list. The consideration of ad hoc 19 As of January 1, 2018, the Macroeconomics and Fiscal Management Global Practice (MFM) will become part of the Macroeconomics, Trade and Investment Global Practice (MTI). 20 For example, during preparation of SUF projects, it will be important to engage clients early on to clarify terms and options available under the SUF to ensure clients make informed decisions. 17 proposals for SUF financing was not unexpected given the pilot nature of the Facility and the varying pace at which clients gained understanding of their eligibility for, and access to SUF resources. With a full year of experience with the Facility, Management intends to follow a more structured approach in managing the allocation of IDA18 SUF resources through quarterly updates to the notional, prioritized SUF list. 40. IDA has developed internal systems to improve monitoring and reporting on the SUF pipeline. Owing to the introduction of the IDA17 SUF at mid-cycle, some management information systems were not able to fully capture a full range of IDA17 SUF pipeline data; this was instead obtained, as necessary, through a manual filtering process. A new tool now available in the Bank’s Operations Portal will allow both operational teams and Bank Management to easily capture and track planned IDA18 SUF operations, thereby facilitating future monitoring and reporting on the status of SUF implementation. Annex 1. IDA SUF-Financed Operations and Project Development Objectives Country Project Name Board Document # and link Sectors % Bangladesh Second Investment Promotion and IDA/R2017-0070/1 Financial Sector – 100% Financing Facility Project (P159429) Link (US$356.7m, of which US$100m SUF) Description: The PDO is to increase long-term financing for infrastructure and to build capacity of the local financial institutions for promoting private sector-led infrastructure financing in Bangladesh. One of the key constraints to achieving the country’s growth target is the infrastructure gap—both in the quality and quantity of infrastructure. Investment in infrastructure, especially private sector�led infrastructure, is severely constrained by a shallow market for intermediation of long�term financing. Operating inefficiencies, weak institutional and governance arrangements, and low maturity transformation limit the ability of financial institutions in Bangladesh to deliver long�term financing, vital for promoting investments in sectors such as energy, transport, and logistics. Lack of a vibrant long�term financing market has inhibited long�term investments by households and the ability of firms to upgrade capital and technology, expand, and grow businesses and jobs at a faster pace. Developing a long�term sustainable financing market will also require well�functioning insurance, pension, and bond markets. The Second Investment Promotion and Financing Facility Project (IPFF II) will help continue the momentum generated through IPFF I in promoting private sector investments in infrastructure, by crowding in more private sector resources in the form of equity and long-term debts. In addition to leveraging IDA and Government of Bangladesh resources through direct financing, IPFF II will support crowding in more market resources through innovative financing instruments. As such, IPFF II is expected to have a broader impact by creating a wider market for long�term financing for private sector�led infrastructure, which will lead to further private sector development and job creation across a range of industrial sectors, including textile and apparel, the two key competitive sectors in Bangladesh. The ultimate economic benefits of IPFF II will be derived from higher growth resulting from increased investment and business activities, which will be induced by more broadly available infrastructure and, consequently, new jobs created out of the incremental economic activities. Bangladesh Power System Reliability and IDA/R2017-0090/1 Energy and Extractives – 82% Efficiency Improvement Project Link Information and Communications Technologies – 18% (P159807) (US$59m) Description: The PDO is to ‘improve the reliability and efficiency of the power system in Bangladesh through optimization of dispatch operation. The supply of power has not been able to keep pace with the rapid growth of electricity demand in Bangladesh, resulting in frequent outages and load shedding. This has major effects on the economy as most manufacturing and service firms in Bangladesh identify that absence of reliable electricity supply is the most important constraint to smooth operation and expansion of their businesses. The country is planning to double its generation capacity in the next five years. As the system increases in size it will also become increasingly susceptible to cascading outages, resulting in significant economic losses. There is consequently a need to mitigate such vulnerabilities to meet the level of quality as well as the reliability and the efficiency of Country Project Name Board Document # and link Sectors % service required by the different players in the economy. The proposed project will support the progressive implementation of primary/secondary frequency controls as well as the needed investments on participating generators and transmission bottleneck removals and the institutionalization of merit order dispatch. The use of SUF resources to finance the current project is convincing given the fact that it is an economically viable operation which will generate quickly significant savings in operating expenditures (mainly fuels) as well as additional revenues with the reduction of unserved energy. Benin (US$60m) Energy Service Improvement IDA/R2017-0211/1 Agriculture, Fishing and Forestry – 4% Project (P161015) Link Energy and Extractives – 96% Description: The PDOs are to: (i) improve Benin Power Utility’s operational performance; (ii) expand electricity access in targeted areas; and (iii) promote community-based management of forest resources. The project is expected to reduce losses in the electricity distribution business, provide improved electricity service in rehabilitated network areas, and empower rural communities to better manage forest resources. The envisioned enhancements in the power distribution sector and electricity access expansion are aligned with the objectives of the World Bank’s Energy Directions Paper, which advocates helping client countries secure affordable, reliable, and sustainable energy supply needed to meet the twin goals of poverty reduction and shared prosperity. Bolivia Santa Cruz Road Corridor IDA/R2016-0304/3; Transportation – 100% Connector Project (P152281) R2016-0259/3 (US$30m) Link Description: The PDO is to improve transport accessibility along the road corridor between San Ignacio de Velasco and San Jose de Chiquitos. The road sector is strategically relevant to Bolivia’s economic development. Bolivia is a landlocked country that is challenged by its geography and topography. The primary road network, instrumental in providing efficient transport services, comprises Bolivia’s corridors for trade and economic activity and provides socially importan t integration between Bolivia’s regions. The road corridor between San Ignacio de Velasco and San Jose de Chiquitos in Santa Cruz Department was selected for this project because of its strategic importance for economic development and poverty alleviation at the national and regional levels. Over the long term, the project will contribute to improved connectivity of the Corredor Bioceánico with widespread economic development effects, including diversification and expansion of production, trade, and services in the adjacent areas. Higher levels of business activities will generate employment and thus increase household incomes and consumption. By removing barriers related to distance, decreasing transport costs, and enabling the integration of markets, the proposed Project will help mitigate long existing spatial inequalities in this mostly rural and lagging region. Côte d'Ivoire Electricity Transmission and Access IDA/R2017-0061/1 Energy and Extractives – 100% Project (P157055) (US$325m) Link Country Project Name Board Document # and link Sectors % Description: The PDOs are: (i) to contribute to the improvement of the efficiency and reliability of electricity supply, and (ii) increased access to electricity in Côte d'Ivoire. The project will remove electricity supply constraints for productive industries, as well as lay the foundation for improving household electricity access and the development of income generating activities. The proposed project is anchored in the World Bank’s twin goals of ending extreme poverty and boosting shared prosperity. Timely investments to reduce load shedding, expand low-cost generation, improve sector governance, reduce transmission losses, and foster economic growth are foundational to the achievement of the twin goals. It is also consistent with the World Bank’s Energy Sector Directions Paper, as about 500,000 additional people, mostly from poor rural families, would gain access to electricity with support of the project. Results of the economic analysis show that the overall project is economically viable with a net present value (NPV) of US$145.9 million (at 6 percent discount rate) and an economic internal rate of return of 10.8 percent. Côte d'Ivoire Infrastructure for Urban IDA/R2017-0137/1 Public Administration – 26% Development and Competitiveness Link Transportation – 37% of Secondary Cities (P151324) Industry, Trade and Services – 37% (US$120m) Description: The PDO is to complement existing World Bank Group and donor support with targeted interventions focused on improving the competitiveness of two secondary cities in Côte d’Ivoire. Investing in key economic infrastructure, and improving institutions, regulations, and urban management, specifically operationalizing urban master plans and providing more efficient administrative services, in a coordinated manner, will create an enabling environment for the growth of local enterprises and make the cities more attractive to investors and workers. Coupled with direct support to small and medium enterprises, these interventions are expected to provide the building blocks for investment growth and job creation in the medium to long term. The project is consistent with the World Bank Group’s twin goals, in particular the goal of ending extreme poverty, by creating economic opportunities in the cities outside the capital where development is lagging and where the poverty rate is significantly higher. Eastern Africa Lake Victoria Transport Program IDA/R2017-0139/1 Transportation – 100% (Rwanda) Project (LVTP) – SOP1 (P160488) Link (US$81m) Description: The PDO is to facilitate the sustainable movement of goods and people in the Lake Victoria region, whilst strengthening the institutional framework for transport safety. The LVTP supports the World Bank’s twin goals of reducing extreme poverty and enhancing shared prosperity, as it facilitates economic growth, trade facilitation and access to jobs, in the hinterland of Lake Victoria. Trade facilitation is especially important in the context of the focus countries, which are fragile, conflict and violence- affected states, because it allows such countries to reconnect with the world and to trade in goods and services that are critical for their economic and social development. The revitalization of intermodal transport on and around Lake Victoria in a sustainable Country Project Name Board Document # and link Sectors % manner will help to reduce transport costs and improve access. In addition, the project will help to create short-term employment opportunities and attract new development and investment. Ethiopia Second Ethiopia Urban Water IDA/R2017-0065/1 Water, Sanitation and Waste Management – 100% Supply and Sanitation Project Link (P156433) (US$445m, of which US$125m SUF) Description: The PDO is to increase access to enhanced water supply and sanitation services in an operationally efficient manner in Addis Ababa and selected Secondary Cities. Against the national MDG target of 57 percent, Ethiopia achieved only 28 percent sanitation coverage. Without improved services, cities are becoming increasingly polluted, which affects the quality of life, and could ultimately jeopardize economic growth. Responding to these challenges requires large-scale sanitation and water infrastructure investment, as well as systemic policy and institutional transformation. The main project beneficiaries are expected to be 3.38 million people (50 percent of them women) residing in Addis Ababa and the selected 22 secondary cities – most of which will benefit from improved sanitation facilities. The project is expected to improve the customer and revenue base of Addis Ababa Water and Sewerage Authority and participating secondary cities and, by the end of the project, utilities’ financial status is expected to improve and enable them to use up to 25 percent of their revenue for replacement and expansion of their service and be on track for a gradual move toward full cost recovery. Kenya Water and Sanitation Development IDA/R2017-0096/1 Water, Sanitation and Waste Management – 100% Project (P156634) (US300m, of Link which US$263m SUF) Description: The PDO is to improve water supply and sanitation services in select coastal and northeastern regions in Kenya. Economic growth, urbanization, and ongoing droughts are placing increasing pressure on Kenya’s limited water resources. Achieving the Sustainable Development Goal of universal access to water and sanitation will require strong institutions, huge investments, tapping different sources of financing, including commercial financing, much improved operational efficiencies, and innovative technologies. The project supports the three strategic results areas of the World Bank Kenya’s CPS, including ongoing sector reforms and a focus on increasing the equitable access and sustainability of water supply and sanitation services. It helps to enhance the competitiveness of one of Kenya’s most important cities, Mombasa, by eliminating water shortages and addressing the problems with the discharge of untreated septic sludge and sewage, both of which discourage investment and tourism. It will also: improve the competitiveness of other cities by helping them meet their needs for adequate water supplies; assist in bringing water supply and sanitation services to the residents of the underserved northeastern counties, including women and children who bear most of the cost of water scarcity; and help foster consistency and equity by helping counties develop the capacity to manage their new responsibilities for delivering water and sanitation services. Country Project Name Board Document # and link Sectors % Nicaragua Rural and Urban Access IDA/R2017-0026/1 Transportation – 100% Improvement Project (P160359) Link (US$96.8m, of which US$50m SUF) Description: The PDOs are to: (a) improve safe and sustainable access to markets and services in targeted rural and urban areas of the Recipient; and (b) in the event of an Eligible Emergency, provide immediate and effective response to said Eligible Emergency. The proposed Project contributes to the goals of both the National Human Development Plan and the National Transport Plan of Nicaragua, aimed at developing productive zones and improving the quality of life of the population living in the targeted areas. The proposed improvement of key urban access routes to Managua through La Garita – Tipitapaand Ciudad Sandino – Mateare will facilitate the movement of people and goods, thus enabling access to jobs and markets in Managua and reducing transportation costs and travel time, as well as alleviating physical barriers to trade at both local and national levels. This in turn is expected to have positive effects on the cost of imports and exports, thus increasing Nicaragua’s competitiveness an d improving people’s purchasing power. Moreover, use of MCA in upgrading rural roads will be essential for reducing poverty and enhancing shared prosperity in areas with high levels of poverty. Pakistan Financial Inclusion and IDA/R2017-0189/1 Financial Sector – 84% Infrastructure Project (P159428) Link Information and Communications Technologies – 16% (US$137m, of which US$100m SUF) Description: The PDO is to contribute to increasing access and usage of digital payments and other financial services for households and businesses in Pakistan. Financial markets in Pakistan are stable but remain shallow and narrow, thus playing a limited role in sustainable and inclusive growth. Stable, deep, diversified, efficient, and inclusive financial systems are essential for poverty reduction, job creation, and economic growth. The Government of Pakistan has requested for a project that will support the NFIS’s holistic approach. The project will focus on the development of market infrastructure and the ecosystem that will facilitate access and usage of digital payments and financial services. Access to credit for micro, small, and medium enterprises will be supported by a line of credit and an RSF that will catalyze private sector financing and focused interventions, including technical assistance. The proposed project will support the authorities’ efforts to move toward universal financial access as envisaged in the NFIS, with a focus on financial inclusion for women and on women entrepreneurs’ access to finance. Pakistan Sindh Resilience Project (P155350) IDA/R2016-0134/1 Public Administration – 12% (US$100m) Link Transportation – 12% Water, Sanitation and Waste Management – 76% Description: The PDOs are (i) to mitigate flood and drought risks in selected areas; and (ii) to strengthen Sindh's capacity to manage natural disasters. The Sindh operation is the first ex-ante risk reduction project through which the World Bank will address disaster risks in selected areas of the province and build disaster and climate resilience – essential to supporting the World Bank’s twin goals of Country Project Name Board Document # and link Sectors % ending extreme poverty and promoting shared prosperity. The overall present value (PV) of benefits ranges from USD 407.23 Million to USD 944.59 Million with an average of USD 675.91 Million. These values are well above the proposed capital cost of the project; therefore, the NPV of the project is positive. The magnitude of economic benefits and savings outweighs the capital and recurring costs of the project, and the benefit-cost ratio ranges between 2.52 to 5.85 with an average of 4.19. Pakistan Karachi Neighborhood IDA/R2017-0187/1 Transportation – 82% Improvement Project (P161980) Link Public Administration – 12% (US$86m) Industry, Trade and Services – 6% Description: The PDO is to enhance public spaces in targeted neighborhoods of Karachi, and improve the city’s capacity to provide selected administrative services. Karachi dominates the economic and demographic landscape of Sindh Province and it is the economic hub of the country, contributing around 15 percent to the national Gross Domestic Product; however, the city is one of the least livable cities in the world, performing poorly on all indicators of municipal services and dimensions of livability, health, environment, safety, and education. In view of the depth and scale of the city’s challenges (in term of policy reforms, institutional governance, and infrastructure needs) and the Bank’s renewed involvement in Karachi, a dual -track approach for Bank engagement has been discussed and agreed with the relevant Government tiers. The proposed project serves as a strategic entry point for reengagement by the Bank and a building block for a long�term partnership in Karachi. First, the project aims to demonstrate the importance and validity of an inclusive process for neighborhood improvements, by financing highly visible but low�cost public space enhancements through a collaborative process. Second, it will support improvements to selected administrative services, and lay the foundation for better city management. Finally, it will facilitate the high�level policy dialogue needed to address the complex policy reforms and large investment needs in a comprehensive and coordinated manner. The project supports the WB’s twin goals of reducing poverty and increasin g shared prosperity. It will contribute to local economic and social development by improving accessibility to jobs and markets, utilization of urban spaces by businesses and citizens, and access to administrative services, with special attention to vulnerable groups and poor neighborhoods. Pakistan Finance for Growth Development IDA/R2017-0028/1 Banking Institutions – 90% Policy Credit (P161136) Link Insurance and Pension – 10% (US$301.6m, of which US$50m SUF) Description: The PDO is to support Government of Pakistan efforts in promoting an inclusive and transparent financial sector that is able to better intermediate resources including for long term finance. This will be achieved by: (i) Improving access to finance and enhancing financial inclusion; (ii) Fostering long�term finance; and (iii) Enhancing transparency of the financial sector. The operation contributes to the Government’s strategy for acc elerating economic growth through better access to credit and longer� term finance, improving the investment climate through a more robust Companies Bill, promoting financial inclusion and Country Project Name Board Document # and link Sectors % increasing financial sector transparency. It supports an agenda that builds on recent reform efforts supported by development policy lending and complements other financial sector engagements. The operation contributes directly to WBG’s twin goals: greater financial inclusion can bring the poor and vulnerable into the financial mainstream, with positive effects on reducing poverty, while removing the obstacles to private sector credit and growth contributes to promoting shared prosperity in a sustainable manner. Pakistan National Social Protection IDA/R2017-0032/1 Social Protection – 89% Program-for-Results Project Link Primary Education – 11% (P158643) (US$100m) Description: The PDO is to strengthen the national social safety net systems for the poor to enhance their human capital and access to complementary services. Over the last nine years, Pakistan has taken significant strides to develop modern national safety net systems for the poor. This policy commitment was operationalized in 2008 with the launch of the Benazir Income Support Programme (BISP) as the flagship national social safety net program. The expansion of BISP was accompanied by development of building blocks of a robust safety net system. This includes the National Socio-Economic Registry (NSER). In 2012, the Government introduced Waseela-e-Taleem, a Co-responsibility Cash Transfer program for incentivizing primary education of BISP beneficiaries’ children. The Program is fully aligned with the World Bank Group’s CPS for FY2015–FY2019, and will further strengthen safety net systems which, in turn, will: (a) consolidate achievements and ensure effective delivery of basic income support as well as cash transfers linked to education co-responsibilities, which have collectively demonstrated impacts on promoting the human capital development of children by reducing short term malnutrition and improving enrollment and attendance in basic education; and (b) improve beneficiaries’ access to complementary services with the ultimate goal of providing the poor with opportunities to achieve self-sufficiency over the longer run. The systems enhancements supported by the Program will improve efficiency, reduce costs for beneficiaries, and enhance BISP impacts. The NSER update will maintain and enhance targeting efficiency, including increased coverage of the poor and reduced inclusion errors. The scale-up of the CCT is expected to increase primary school enrollment of children in beneficiary households. The evaluation of Waseela-e-Taleem reveals that the program has a positive and significant impact of 9 percentage points on the proportion of children enrolled in primary school, with a similar impact for girls and boys. The results of a cost-benefit analysis suggest that the schooling benefits expected from its scale-up yield high returns, with an internal rate of return ranging from 19 percent to 22 percent. Pakistan Punjab Tourism for Economic IDA/R2017-0033/1 Industry, Trade and Services – 73% Growth (158099) (US$50m) Link Transportation – 27% Description: The PDO is to strengthen institutional capacity, increase private sector participation and improve infrastructure services in support of the tourism sector in the Province of Punjab. Tourism is a large, growing and untapped market that Pakistan could better use to create more and better jobs, with a key challenge to development of tourism being international perceptions of insecurity. Hotel Country Project Name Board Document # and link Sectors % developers and tour operators also argue that federal and provincial government�owned companies and agencies crowd out private investment, while investors in the tourism sector are concerned about site specific infrastructure, availability of skills and the implementation of rules and regulations in the sector. The project would help strengthen the governance and institutional capacity of the province to promote and leverage private participation to realize the economic potential of the sites for the benefit of local populations and, in the long�term, the project is expected to have a positive eff ect on job creation and overall economic growth in Punjab. Senegal Dakar Bus Rapid Transit Pilot IDA/R2017-0142/1 Transportation – 100% Project (P156186) (US$300m, of Link which US$270m SUF) Description: The PDO is to enhance urban mobility between Dakar and Guédiawaye through the development of a Bus Rapid Transit (BRT) corridor. Despite the low quality of services, public transport accounts for 80 percent of all motorized daily trips, highlighting the importance of this mode of transport and about 320,000 passengers are expected to board the BRT per day with 27,300 at peak hours. This line is the first step of a comprehensive plan for mass transit corridors development and is identified in the Nationally Determined Contribution of Senegal as a major potential contribution of the transport sector to reduce greenhouse gas emissions. The proposed project will contribute to the World Bank Group ’s twin goals of ending extreme poverty and promoting shared prosperity by providing the poor with improved access to job opportunities and markets through a cost-effective and efficient mass transit transport. The proposed project will contribute to five out of the 17 sustainable development goals. Senegal Electricity Sector Support Project: IDA/R2016-0184/1 Energy and Extractives – 100% additional financing (P158655) Link (US$70m) The PDOs are to contribute to (i) reducing SENELEC’s (National Electricity Utility of Senegal) technical and commercial losses; and (ii) improving the reliability of electricity services in selected areas focusing primarily on Greater Dakar. The high cost of electricity in Senegal impedes the competitiveness of industry and affordability of energy for households. The proposed Additional Financing comes at a critical time to support the Government of Senegal in implementing its energy sector reform package and the financing will help attract parallel co-financing from the EIB. The Additional Financing will support key policy actions and invest in measures to scale up infrastructure to improve overall system efficiency, reduce technical and nontechnical losses, and improve bill collection. Implementation of the Additional Financing activities is expected to bring in revenue of more than CFAF 3.5 billion (about US$6 million) per year to SENELEC through reduced losses and increased bill collection. The project is strategically aligned with the World Bank Group’s twin goals of reducing extreme poverty and promoting shared prosperity, Senegal’s Second Poverty Reduction Strategy Paper, the Government’s priorities as outlined in the Emerging Senegal Plan and Letter of Energy Sector Development Policy, and the World Bank’s FY13–17 CPS for Senegal. Country Project Name Board Document # and link Sectors % Sri Lanka Social Safety Nets Project IDA/R2016-0268/1 Social Protection – 100% (P156056) (US$75m) Link Description: The PDO is to contribute to the improved equity, efficiency and transparency of Sri Lanka's social safety net programs for the benefit of the poor and vulnerable. The primary development impact of the project will be achieved through more equitable and transparent targeting of safety net programs, which will directly improve the welfare of the poor and vulnerable. A secondary development impact will be improved accountability of the programs, stemming from: (a) the ability of central program management to monitor and evaluate program performance in more detail; (b) removal of discretion in selection and payment from the control of local officials; and (c) the increased transparency of program targeting and grievance redressal, which will raise the credibility of the programs in the public eye and help ensure their political and financial sustainability. By improving information management and identification systems, the project is also likely to achieve considerable cost efficiencies and improve transparency. Sri Lanka Competitiveness, Transparency and IDA/R2016-0181/1 Central Government (Central Agencies) – 62% Fiscal Sustainability Development Link Trade – 25% Policy Financing (P157804) Banking Institutions – 13% (US$100m) Description: The objective of the DPF is to support the long�term development of the Sri Lankan economy through a renewed engagement on reforms to eliminate obstacles to private sector competitiveness, enhance transparency and public sector management, and improve fiscal sustainability. The actions supported under the operation represent a package of reforms that is unprecedented in recent years, and address significant well�identified obstacles to the country’s competitiveness, transparency, and fiscal sustainability. They reflect immediate priority actions pursued by the Government as a starting point for structural transformation. The DPF is aligned with the WBG’s strat egy, as the SCD highlighted the fact that poverty reduction and enhanced prosperity in Sri Lanka has been closely linked with labor�related income. The proposed operation supports actions to enable the growth of the private sector (and thus its ability to create more and better jobs), while enhancing transparency and fiscal sustainability – necessary conditions for lasting prosperity. Sri Lanka Sri Lanka Financial Sector IDA/R2017-0072/1 Financial Sector – 61% Modernization (P159303) Link Information and Communications Technologies – 39% (US$75m) Description: The PDO is to contribute to increasing financial market efficiency and use of financial services among MSMEs and individuals. The project, aligns with the ongoing policy dialogue on sector reform priorities, addresses some of the main constraints in the financial sector and is also key in generating a demonstration effect for deeper engagement on high-level financial sector reforms. Overall, the comprehensive approach of the project via modernizing financial infrastructure, upgrading the legal and regulatory framework Country Project Name Board Document # and link Sectors % in line with good international standards, and strengthening institutional capacity of regulators will contribute to greater financial inclusion. To sustain the expected gains in poverty reduction and shared prosperity, the project will also help enhance the financial soundness of financial firms and thus contribute to overall financial and macroeconomic stability. Tajikistan First Phase of Nurek Hydropower IDA/R2017-0104/1 Energy and Extractives – 100% Rehabilitation Project (P150816) Link (US$225.7m, of which US$100m SUF) Description: The PDOs are to (i) rehabilitate and restore the generating capacity of three power generating units of Nurek hydropower plant (HPP); (ii) improve their efficiency; and (iii) strengthen the safety of the Nurek dam. The power sector of Tajikistan is dominated by hydropower plants. The Nurek HPP, with a seasonal reservoir, is the largest generating plant. Only 77 percent of Nurek’s installed capacity is operational due to dilapidation and obsolescence of power plant equipment and key infrastructural components and its rehabilitation will reduce the amount of un-met electricity demand in winter, thereby reducing the amount of foregone economic revenue due to power outages and contributing to private sector led economic growth. The project contributes to the key strategic outcomes outlines in the Country Partnership Strategy for FY2015-18 and supports the World Bank’s twin objectives of reducing poverty and promoting shared prosperity by: (i) Avoiding an increase in poverty due to a substantial increase of electricity tariffs, which would have been needed to replace generation from Nurek HPP; and (ii) Increasing electricity exports with positive welfare impacts on entire population. The project is also aligned with the World Bank Group ’s Energy Sector Directions Paper and the Sustainable Development Goal No. 7 (Ensuring access to affordable, reliable, sustainable, and modern energy for all). Tanzania Rural Electrification IDA/R2016-0138/1 Renewable Energy Solar – 100% Expansion Program – Program for Link Results (P153781) (US$200m) Description: The PDOs are: (a) to increase access to electricity in rural areas; and (b) to scale up the supply of renewable energy in rural areas while strengthening sector institutional capacity. Increasing access to and reliability of power supply and sustainable management of natural gas reserves and mining resources are at the center of the country’s competitiveness and job creation. The PforR operation is aligned with the World Bank’s Energy Directions Paper, designed to help partner countries secure affordable, reliable, and sustainable energy supply needed to meet the twin goals of reducing poverty and boosting shared prosperity. Sector institutions are expected to benefit from the Program’s capacity strengthening activities, which will improve efficiency, transparency, and accountability of the sector; improve the institutions’ performance; and enhance their image and credibility with shareholders and electricity customers alike, gaining support for sustained operations. Country Project Name Board Document # and link Sectors % Tanzania Dar es Salaam Maritime Gateway IDA/R2017-0230/1 Transportation – 90% Project (P150496) (US$345m) Link Industry, Trade and Services – 10% Description: The PDO is to improve the effectiveness and efficiency of the Port of Dar es Salaam, for the benefit of public and private stakeholders. Improving the regional transport network is important to meet the twin goals of eliminating extreme poverty and boosting shared prosperity both nationally and regionally. Since approximately 90 percent of Tanzania’s international transactions transit through the port of Dar es Salaam, and 35 percent of the total throughput of the port is intended for the landlocked countries of the interior, improving the efficiency of the key maritime gateway is a key element for the regional transport network. An integrated approach to the development of the key regional corridors is seen as having the potential to dramatically change the economic structure of the region. The proposed Dar es Salaam Maritime Gateway Project (DSMGP) will be contributing to improvements in different areas, and acting as the foundation for a series of potentially transformative interventions on the main corridors. Investment in the port will bring down trade and intermediary costs for all other businesses, strengthening the competitiveness of the entire region. Results of the project’s financial analysis reveal a financia l internal rate of return of 19.6 percent, and a Net Present Value of US$ 261 million, using a 12 percent discount rate. This confirms the DSMGP program is financially viable. Tanzania Second Water Sector Support IDA/R2016-0314/1 Water, Sanitation and Waste Management – 100% Project (P150361) (US$225m, of Link which US$125m SUF) Description: The PDOs are to: (a) strengthen the capacity for integrated water resources planning and management in Tanzania, and (b) improve access to water supply and sanitation services in an operationally efficient manner in Dar es Salaam. Dar es Salaam accounts for 40 percent of the urban population and is expected to continue to absorb the bulk of new urban residents. Given its role as the engine of the economy, and the locus of key industries, commerce, the port, the rail and road transport services, it will continue to draw more resources, including water. Keeping up with the demand for provision of sustainable infrastructure, including water supply and sanitation, is therefore a critical challenge for the city, while improving water resources management and increasing access to safe water and sanitation are key to improving livelihoods and the health of most Tanzanians – particularly the 28 percent who fall below the basic poverty line. The project will support the Government’s efforts to manage water resources sustainability to address the country’s growing demand on water for development, protect this vital resource from further degradation and advance efforts to ensure integrated and climate resilient investment planning in all nine basins by improving stakeholder involvement, institutional coordination, and capacity building for water resources and land use management. The project will support three interlinked objectives: promoting shared prosperity through support for economic growth; increasing sustainability by protecting the natural resources base on which these goals depend; and ending extreme poverty through support for improved resilience within the basins and improved access to water supply and sanitation services. Country Project Name Board Document # and link Sectors % Tanzania Tanzania Strategic Cities Project: IDA/R2017-0017/2 Transportation – 44% additional financing (P159489) Link Water, Sanitation and Waste Management – 44% (US$130m) Public Administration – 12% Description: The PDO is to improve the quality of and access to basic urban services in participating Local Government Authorities (LGAs). Given the transformative nature of the on-going investments in the project LGAs, the Second Additional Financing would scale-up these critical infrastructure sub-projects to maximize the development impacts and sustainability of this well-performing project. These include urban roads, streetlights, drainage, public parks, bus/lorry stands/terminals, market and additional sanitary landfills. The ptroject’s activities are anticipated to balance regional growth, increase access and quality of urban services, improve quality of life and local economic development, strengthen municipal finances and urban management and ultimately, support participating LGAs’ and Tanzania’s urbanization and economic development agenda. Tanzania Dar Es Salaam Urban Transport IDA/R2017-0029/1 Transportation – 100% Improvement Project (P150937) Link (US$425m, of which US$200m SUF) Description: The PDO is to improve transport mobility, accessibility, safety, and quality of transport service delivery along the selected corridors in Dar es Salaam. Public transport is dominant, but traditionally not of high quality, and the establishment of a BRT system in Dar es Salaam City is an important element toward implementing the National Transport Policy. The project is addressing the traffic congestion through scale-up of the BRT system, and improved accessibility plays a central role in reshaping the growth of the rapidly sprawling city by influencing mixed land use of high density along the BRT corridors. While the primary project beneficiaries are the public transport users as well as cyclists and pedestrians along the BRT trunk corridors, the urban poor—defined as citizens below the food poverty line—will benefit from the project through the pilot transport subsidy that will help link a sample group to opportunities. Vietnam Da Nang Sustainable City IDA/R2017-0145/1 Water, Sanitation and Waste Management – 57% Development Project (DSCDP): Link Transportation – 43% additional financing (P159049) (US$72.5m) Description: The PDO is to expand access of city residents to improved drainage, wastewater collection and treatment services, the arterial road network, and public transport in selected areas of Da Nang City. Additional Financing will be used to significantly enhance the achievement of the PDO by scaling up the original activities: (i) Component 1. Development of a separate sewer/house connection system in the coastal tourism area of My An – My Khe and additional drainage works to minimize the risk of polluting residential areas and the beach; (ii) Component 2. Use of integrated fare collection and ITS for public transport to enhance the consolidated scheduling service, as well as fleet management and traffic control of the BRT system financed under the Project and the five new Country Project Name Board Document # and link Sectors % local bus routes being implemented by the city; (iii) Component 3. Expansion of the DH2 Road to divert local urban traffic from the Da Nang – Quang Ngai and Da Nang Bypass Expressways. Both DSCDP and the proposed Additional Financing directly support all three pillars of the World Bank Group’s Vietnam C PS for FY2012-2016 and its cross-cutting themes, thus contributing to the Bank’s twin goals: (i) strengthening Vietnam’s competitiveness in the regional and global economy; (ii) increasing the sustainability of its development; (iii) broadening access to opportunity, through improvements in the quality of and access to urban infrastructure; (iv) strengthening governance; (v) supporting gender equality in the target sectors, especially transport; and (vi) improving resilience in the face of natural disasters. Vietnam Additional Financing of The IDA/R2017-0174/1 Water, Sanitation and Waste Management – 62% Medium Cities Development Link Transportation – 25% Project (MCDP) (P159426) Energy and Extractives – 9% (US$53m, of which US$40m SUF) Public Administration – 4% Description: The PDO is to increase access to improved urban infrastructure services in selected medium-sized cities in Vietnam. AF will continue to be aligned with the World Bank’s twin goals of ending extreme poverty and boosting shared prosperity. Investments financed by both the parent project and the AF explicitly target wards where the bottom 40% of the population are concentrated to reduce the poverty gap within the cities. The proposed scaled-up activities are aligned with MCDP’s existing components, and will enhance the provision of basic urban services (including water and wastewater infrastructure, as well as new and rehabilitated roads) in the cities of Lao Cai and Phu Ly. The Additional Financing has two expected impacts on the continued economic justification of MCDP. First, the AF would help secure the economic benefits of subprojects that could not be completed (or completed in full) because of the financing gap arising from earlier exchange rate losses (see project documentation for further elaboration). Second, the AF would increase the total economic benefits of the project, as the new sub-projects would generate net economic benefits in their own right and enhance the benefits of MCDP sub-projects to which they are linked. Vietnam Scaling up Urban Upgrading Project Link Water, Sanitation and Waste Management – 35% (P159397) (US$240m, of which IDA/R2017-0152/1 Transportation – 35% US$100m SUF) Social Protection – 21% Energy and Extractives – 6% Public Administration – 3% Description: The PDO is to improve access to infrastructure in priority city areas and improve urban planning in the participating cities. A network of secondary cities with adequate infrastructure is critical to sustainably continue Vietnam’s rural�urban transformation. However, access to basic services remains low in secondary cities as compared to large cities, as does the pace of poverty reduction. The proposed project, which is closely aligned with the Bank’s Twin Goals of eliminating extreme poverty and boosting shared prosperity through economic growth among the bottom two quintiles, is designed to enable the Government of Vietnam Country Project Name Board Document # and link Sectors % to take advantage of the limited window of opportunity to ensure climate and disaster risk�informed urban development within the seven selected provincial capitals of the Mekong Delta Region (MDR), given their early stages of urbanization. The project is part of the World Bank’s long�term engagement in urban upgrading pr ograms within the MDR , with the current iteration of urban upgrading building on past achievements while introducing measures to better target integrated urban planning, risk�informed design, and green infrastructure. Zambia Improved Rural Connectivity IDA/R2017-0112/1 Transportation – 100% Project (P159330) (US$200m) Link The PDOs are to: (i) improve the Recipient’s rural road accessibility for communities in selected areas; (ii) strengthen institutional capacity for sustainable management of rural roads; and (iii) respond promptly and effectively to an Eligible Crisis or Emergency. Agriculture is the most prominent economic activity in rural Zambia, and the effects of reduced transport costs on agricultural prices—both input and output prices—which in themselves are a main channel to benefiting farmers, is a primary contributor towards reducing poverty. Additionally, non-road infrastructure in support of community needs is expected to improve rural development opportunities. The combination of improved connectivity and the proposed community amenities is expected to spur parallel developments including new rural businesses, which can in turn create new jobs in the local communities. Improved accessibility is also expected to contribute towards development of tourism and manufacturing, the other two economic sectors targeted in the diversification agenda. Achieving the aspirations of the twin goals in Zambia was a compelling consideration in the choice of the project and its prioritized coverage. Provision of the missing links between rural communities and higher order road network, and the policy dialogue to improve funding for the rural roads are expected to be transformational. Furthermore, the operation targets the rural poor as primary beneficiaries, which is a contribution toward promotion of the shared growth objective.