64298 The World Bank Group 2008 Partnership and Trust Fund Annual Report Year ended June 30, 2008 Global Partnership and Trust Fund Operations Department Concessional Finance and Global Partnerships The World Bank 1818 H Street N.W., Washington DC 20433, USA The World Bank Group ______________________________ International Bank for Reconstruction and Development (IBRD)ª International Development Association (IDA)ª International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Center for Settlement of Investment Disputes (ICSID) _____________________________ ªIBRD and IDA are collectively known as The World Bank or The Bank Abbreviations and Acronyms International Bank for Reconstruction AAA Analytic and advisory activities IBRD and Development International Centre for Settlement of ACBF Africa Capacity Building Foundation ICSID Investment Disputes ADB Asian Development Bank IDA International Development Association AfDB African Development Bank IDF Institutional Development Fund AHI Avian and Human Influenza IFC International Finance Corporation International Finance Facility for ARTF Afghanistan Reconstruction Trust Fund IFFIm Immunization Multilateral Investment Guarantee ASEM The Asia-Europe Meeting MIGA Agency BE Bank-Executed MDTF Multi-Donor Trust Fund BETF Bank-Executed Trust Fund OP/BP Operational Policy/Bank Procedure Bank – Netherlands Partnership BNPP Program OPCS Operations Policy and Country Services Policy and Human Resources CAS Country Assistance Strategy PHRD Development Fund Concessional Finance and Global CFP Partnerships PN Promissory Note Public-Private Infrastructure Advisory CGAP Consultative Group to Assist the Poor PPIAF Facility Global Partnership and Trust Fund DGF Development Grant Facility PTO Operations EFA-FTI Education for All Fast Track Initiative QAG Quality Assurance Group EFO Externally Funded Output RE Recipient-Executed Energy Sector Management Assistance ESMAP Programme RETF Recipient-Executed Trust Fund ESW Economic and Sector Work SDN Sustainable Development Network FIF Financial Intermediary Fund TFMF Trust Fund Monitoring Framework FY Fiscal Year TLAP Trust Fund Learning & Accreditation Global Alliance for Vaccines and GAVI Immunization UNAIDS United Nations Program on HIV/AIDS United Nations Development GDN Global Development Network UNDP Programme United Nations Environment GEF Global Environment Facility UNEP Programme GEFSEC Global Environment Facility Secretariat UNFPA United Nations Population Fund GFA GAVI Fund Affiliate UNICEF United Nations Children’s Fund Global Fund to Fight AIDS, GFATM Tuberculosis, and Malaria VPU Vice Presidential Unit GFRP Global Food Crisis Response Program WBG The World Bank Group Global and Regional Partnership GRPP Programs WBI World Bank Institute Global Partnership on Output-based GPOBA Aid WHO World Health Organization HDN Human Development Network WSP Water and Sanitation Program Heavily Indebted Poor Countries HIPC Initiative IADB Inter-American Development Bank The World Bank Group 2008 Partnership and Trust Funds Annual Report Contents Foreword ......................................................................................................................................................................1 Section 1. FY08 Overall Highlights and Trends .................................................................................................2 Overall Highlights................................................................................................................................................2 Number of Trust Funds and Trust Fund Donors ..................................................................................................4 Cash Contributions...............................................................................................................................................6 Disbursements......................................................................................................................................................9 Funds Held in Cash, Investments, and Promissory Notes..................................................................................10 Section 2. FY08 Trust Fund Portfolio Composition and Analysis ..................................................................13 Composition by Region and Country.................................................................................................................13 Composition by Sector.......................................................................................................................................14 Composition by Type of Fund ...........................................................................................................................15 Programmatic versus Non-Programmatic Approach..........................................................................................18 Issues of Fragmentation .....................................................................................................................................19 Section 3. Trust Fund Results ............................................................................................................................24 Section 4. Implementation of the Trust Fund Management Framework.......................................................28 Annex A ......................................................................................................................................................................30 Trust Fund Operations Financial Information Summary ...................................................................................30 Annex B ......................................................................................................................................................................43 Trust Fund Glossary...........................................................................................................................................43 The World Bank Group 2008 Partnership and Trust Funds Annual Report Section 1 FY08 Overall Highlights and Trends Section 1. FY08 Overall Highlights and Trends Overall Highlights 1.1 The World Bank Group (WBG), comprising the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), is involved in a broad range of strategic partnerships1 in which it collaborates with one or more entities toward achieving common development objectives under agreed-upon shared/joint responsibilities. Not only do these partnerships augment the WBG’s own development initiatives, they also facilitate harmonization of efforts between donors, recipient countries, and various other stakeholders at global, regional, and country levels. As donor and/or trustee, the WBG provides three main types of support to these partnerships: (i) financial support, in the form of Development Grant Facility (DGF) 2 as well as through trust funds, which in many cases also leverages funding from major WBG partners; (ii) operational support, in the form of appraisal and supervision of country-level activities, analytical work, technical assistance, secretariat support, and other forms of collaboration; and (iii) financial intermediary services including treasury and accounting services, management of donor contributions and fund transfers. This report focuses on trust funds as the primary funding instrument of WBG-supported partnerships. It does not cover DGF funds, which are reported separately to the Bank’s Board through the Annual DGF Budget and Review of Global Programs Reports. 1.2 In support of these partnerships, trust funds receive contributions from one or more donors. Trust funds can be country specific, regional, or global in geographic scope; project or program specific. Donors include sovereign agencies from many Bank member countries, as well as non-sovereign agencies such as multilaterals, private sector agencies, foundations, and nongovernmental organizations. The WBG also contributes some of its own surplus resources to selected trust funds. 1.3 WBG-administered trust funds serve as an important vehicle for channeling concessional finance. Other multilateral agencies also channel trust-funds including, among others, the United Nations Development Programme (UNDP), United Nations Children’s Fund (UNICEF), Asian Development Bank (ADB), African Development Bank (AfDB), United Nations Population Fund (UNFPA), and Inter-American Development Bank (IADB). Chart 1.1 shows comparative data on cash contributions to trust funds excluding those made to Financial Intermediary Funds (FIFs) as agencies other than the World Bank do not manage such type of accounts. 1 A select group of these partnerships are described separately in the 2009 Directory of Partnership Programs Supported by Trust Funds. 2 The DGF was established in 1997 as the Bank’s grant-making facility that is an integral part of the Bank's development work and an important complement to its lending and advisory services. 2 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends Chart 1.1. Cash Contributions to Trust Funds Administered by Multilateral Agencies in 2007 Contributions in million USD 4,046 3,759 1,907 752.3 295.1 467.85 167.8 WBG UNDP UNICEF UNFPA AfDB IADB ADB (FY08) Source: WBG trust fund database, UNDP website and respective 2007 Annual Reports other agencies; WBG cash contributions exclude those made to Financial Intermediary Funds (FIFs) 1.4 In FY08, total donor contributions to WBG-administered trust funds reached US$10.48 billion. Of this total, US$6.43 billion were for FIFs and US$4.05 billion for the rest of the portfolio. Overall contributions in the form of cash and promissory notes3 (excluding encashments) were down from those received in FY07 (US$12.38 billion) owing to a 50 percent decrease in promissory notes to FIFs (i.e., IFFIm and carbon funds). However, excluding FIFs, total donor contributions in FY08 were up from the US$3.66 billion received in FY07. 1.5 Overall trust fund disbursements amounted to $6.72 billion, an increase of 16 percent over FY07. This is a slower increase compared to the 21 percent average annual growth rate recorded during FY04-07. This reflected slower disbursements from FIFs, while disbursements from the rest of the portfolio continued to grow strongly (by 21 percent) in FY08. 1.6 As of end FY08, total trust fund assets held by the WBG amounted to $26.31 billion, of which US$18.68 billion (or 71 percent) represented FIFs. Cash and investments amounted to US$16.94 billion and promissory notes to US$9.37 billion. 3 For the purpose of this report, promissory notes also include other binding and irrevocable payment obligations linked to IFFIm/GFA. 3 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends Table 1.1: Five-Year Aggregate Trust Fund Financials (US$ million except where noted) FY04-07 FY08 Avg. FY04 FY05 FY06 FY07 FY08 Annual Annual growth Growth Number of active Trust Funds 903 839 928 1,014 1,020 4% 1% of which, FIFs 79 82 90 94 103 Donor Contributions 4,932 6,993 5,506 12,384 10,479 36% -15% of which, FIFs 2,994 4,906 3,059 8,719 6,433 Cash contributions received 4,932 4,738 4,014 6,980 7,964 12% 14% of which, FIFs 2,994 2,651 1,567 3,316 3,918 Promissory notes received (all FIFs) - 2,255 1,492 5,404 2,515 n/a -53% Less: Disbursements 3,270 4,120 4,363 5,793 6,724 21% 16% of which, FIFs 1,792 2,250 2,487 3,144 3,511 Add: Adjustments** 38 103 409 1,693 1,157 Year-end Funds Held in Trust, o/w 8,587 11,563 13,115 21,399 26,311 36% 23% of which, FIFs 5,374 7,930 8,580 15,280 18,682 Cash & Investments 8,587 9,308 10,554 13,768 16,944 17% 23% of which, FIFs 5,374 5,675 6,019 7,649 9,315 Promissory notes on hand (all FIFs) - 2,255 2,561 7,631 9,367 n/a 23% Source: WBG trust fund database; Number of trust funds, contributions and disbursements exclude ICSID; Funds held in trust include ICSID ** Includes adjustments due to investment income and other items. 1.7 Almost US$10 billion in new commitments were made by donors during FY08 through signed legal agreements. This was about half the amount recorded in FY07. Number of Trust Funds and Trust Fund Donors 1.8 The total number of active trust funds 4 rose from 1,014 at the end of FY07 to 1,020 at the end of FY08. Of these, 80 percent (821 funds) were managed by the IBRD/IDA, 19 percent (194 funds) by IFC, and the remaining 1 percent (5 funds) by MIGA. 4 A single TF account can have multiple program windows and disbursing accounts created under it for Bank administration purposes. 4 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends Chart 1.2. Number of WBG-Administered TFs at end FY08 MIGA, 5 IFC, 194 World Bank (IBRD/IDA), 821 Source: WBG trust fund database. 1.9 In FY08, a total of 224 donor agencies contributed to WBG-administered trust funds, of which 118 were sovereign and 106 were non-sovereign. The total number of donor agencies has increased substantially since FY04 mostly as a result of a doubling in the number of non-sovereign donors; this is largely attributed to the increased participation of private corporations in various carbon funds. Table 1.2. Number of Donors Contributing to WBG-Administered Trust Funds in FY04-08 Donor category FY04 FY05 FY06 FY07 FY08 Sovereign Number of countries 55 50 52 58 57 Number of agencies 105 104 114 125 118 Non-sovereign Multilaterals 8 5 6 5 9 Funds, foundations, agencies, etc. 49 60 59 100 97 57 65 65 105 106 Total number of contributing agencies 162 169 179 230 224 Source: WBG trust fund database 5 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends Cash Contributions 1.10 Total cash contribution received in FY08 was US$8.74 billion consisting of US$7.96 billion in cash and US$780 million from encashment of promissory notes. The subsequent paragraphs refer to total cash contributions including cash and encashment of promissory notes. Chart 1.3. Cash Contributions to WBG-Administered TFs FY04-08 FY08 8,743 FY07 7,314 FY06 5,200 FY05 4,738 FY04 4,932 0 2,000 4,000 6,000 8,000 10,000 $ million Source: WBG trust fund database; Includes cash and PN encashments; FY08 contributions exclude ICSID 1.11 The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) continued to receive the largest amount of cash contributions accounting for US$3.07 billion, or 35 percent of all FY08 cash contributions. The next-highest recipient programs were: the Global Environment Facility (GEF), receiving US$788 million, or 9 percent; the Afghanistan Reconstruction Trust Fund (ARTF) receiving US$745 million, or 8.5 percent; and the Education For All Fast Track Initiative (EFA-FTI) receiving US$420 million or 5 percent. Together, these top four programs received about US$5 billion, or 57 percent of all FY08 cash contributions. 1.12 As in previous years, FY08 cash contributions were largely from sovereign sources. Compared to the previous fiscal year, cash contributions from sovereign sources were about US$1.56 billion higher. Cash contributions from private for-profit organizations and intergovernmental organizations 5 were, respectively, US$88 million and US$7 million more than those in the previous fiscal year. In contrast, cash contributions from the WBG and private non- profit entities declined by US$124 million and US$103 million, respectively. 5 Intergovernmental organizations include the European Commission, UN bodies, multinational and regional development banks, and international financial institutions. 6 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends Table 1.3: FY07-08 Breakdown of Cash Contributions by Donor Type Cash contribution (US$ million) Donor group 2007 2008 Sovereign governments 5,790 7,350 Intergovernmental institutions 790 797 World Bank Group 408 284 Private non-profit entities 250 147 Private for-profit organizations 77 165 Grand total 7,314 8,743 Source: WBG trust fund database. 1.13 Cash contributions from the WBG continued to decrease in FY08, to US$284 million, shifting the WBG from the seventh-largest donor in FY07 to the twelfth-largest in FY08. Cash contributions from IBRD in FY08 totaled US$167 million, a 32 percent decrease compared to FY07; that from IFC US$113 million, a 31 percent drop; and that from MIGA US$4 million, up from zero in FY07. Chart 1.4. TF Cash Contributions from WBG FY2008 284 FY2007 408 FY2006 421 FY2005 562 FY2004 465 0 100 200 300 400 500 600 US$ million Source:WBG trust fund database 1.14 In FY08, the bulk of cash contributions from the IBRD went to the Global Food Crisis Response Program (GFRP). Fifty-one percent of the cash received from IBRD (US$85 million) went to the GFRP 6 , while 33 percent (US$55 million) went to the West Bank and Gaza Trust Fund, and about 10 percent (US$16 million) to the Institutional Development Fund (IDF). The remainder of IBRD cash contributions were split between the Post Conflict Fund (US$7 million), the Onchocerciasis Control Program (US$2 million), the Foreign Investment Advisory Service (FIAS, US$2 million), and the Consultative Group to Assist the Poor (CGAP, US$1 million). 6 An additional US$115 went to the GFRP in FY09. 7 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends 1.15 As in previous years, cash contributions from the IFC were primarily channeled to technical assistance and advisory services managed by the IFC. Seventy-six percent (US$86 million) went to various IFC-managed trust funds for technical assistance and advisory services, 23 percent (US$25 million) to the Global Partnership for Output-Based Aid (GPOBA), and 1 percent (US$1 million) to the Public-Private Infrastructure Advisory Facility (PPIAF). 1.16 In terms of cash contributions, the United Kingdom continued to be the top donor to WBG-administered trust funds, with US$1.08 billion of contributions. While the U.K. kept the top spot, its contributions were US$115 million (10 percent) less than in FY07. The Gates Foundation, which in FY07 was the top donor under the category of “Other Donors,� also retained that position in 2008 but reduced its cash contributions by US$124 million in FY08, a 45 percent decline from FY07. (See Annex A, Section 6 for a detailed list of cash contributions by donor). 1.17 In terms of cumulative cash contributions over the past five fiscal years, the United Kingdom is also the top donor to WBG-administered trust funds, with a total of almost US$4 billion, followed by the United States with US$3.47 billion, the European Community with US$2.81 billion, the Netherlands with US$2.7 billion, and Japan with US$2.22 billion. Chart 1.5. Donor Cumulative Cash Contributions FY2004-08 4500 3,995 4000 3,468 3500 3000 2,812 2,700 2500 2,220 2,135 $ million 2000 1,798 1,786 1,421 1,419 1500 1000 500 0 UK USA EC Netherlands Japan WBG France Canada Germany Italy Source: WBG trust fund database. 8 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends Disbursements 1.18 Overall disbursements from WBG-administered trust funds grew during FY08, albeit at a slower rate than the average over FY04-07. Trust fund disbursements during FY08 amounted to US$6.72 billion, an increase of 16 percent compared to the previous fiscal year. This rate of growth, however, was substantially lower than the annualized rate of 21 percent over FY04-07. Of the total FY08 trust fund disbursements, around US$3.5 billion were from FIFs for which the Bank provides mainly financial intermediary services. Chart 1.6. Disbursements by TF Type (US$ million) 7,000 6,000 5,000 3,511 3,144 4,000 2,250 2,487 3,000 1,792 2,000 2,580 2,093 1,150 1,477 1,445 1,000 273 282 330 376 235 93 120 149 225 257 0 FY04 FY05 FY06 FY07 FY08 IFC & MIGA TFs Bank-Executed Recipient-Executed Financial Intermediary Source: WBG trust fund database. 1.19 Trust fund disbursements in FY08 accounted for an increasing share of total WBG support to IDA and IBRD countries. Trust fund disbursements as a proportion of combined IDA, IBRD, and trust fund disbursements grew from 16 percent in FY04 to 25 percent in FY08. This increase was largely attributable to the continued growth of global funds, such as the GFATM, GEF, and the IFFIm/GAVI Fund Affiliate. Excluding financial intermediary funds, the relative share of trust fund disbursements was 8 percent in FY04 and 14 percent in FY08. 9 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends Chart 1.7. Total IBRD, IDA and TF Disbursements (US$ million) 30,000 TFs 25,000 4,363 5,793 6,724 4,120 20,000 3,270 IDA 8,910 8,579 9,160 15,000 6,936 8,950 IBRD 10,000 11,833 11,055 10,109 9,722 10,490 5,000 0 FY04 FY05 FY06 FY07 FY08 Source: WBG trust fund database and The World Bank Annual Report 2008. Funds Held in Cash, Investments, and Promissory Notes 1.20 At the end of FY08, the WBG held a total stock of US$26.31 billion in trust fund assets, of which US$16.94 billion was in the form of cash and investments. Ninety-six percent (US$16.24 billion) of cash and investments held at the end of FY08 was for the IBRD/IDA- administered portfolio, 4 percent (US$658 million) for the IFC-administered portfolio, and less 0.5 percent (US$43 million) for the MIGA-administered portfolio. Chart 1.8. Funds Held in Cash, Investments and PNs FY08 16,944 9,367 FY07 13,768 7,631 FY06 10,554 2,561 FY05 9,308 2,255 FY04 8,587 0 5,000 10,000 15,000 20,000 25,000 30,000 $ million Cash & Investments Promissory Notes Source: WBG trust fund database. 10 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends About 48 percent (US$8.1 billion) of all funds held in cash and investments belonged to the three largest FIFs: GFATM (US$4.48 billion), GEF (US$2.76 billion), and t he HIPC Debt Initiative (US$863 million). 1.21 Promissory notes have become an increasingly important form of trust fund assets since FY05 7 . In certain programs, contributions pledged by donors are settled through deposit of demand notes or other forms of financial instruments. These are recorded as promissory notes when received and then encashed and recorded as cash contributions, based on a schedule agreed with the donor(s). Contributions by donors through promissory notes tripled during FY07 alone. Promissory notes held at the end of FY08 amounted to US$9.37 billion, up by 23 percent from the end of FY07 (Chart 1.8). About 94 percent of all promissory notes held belonged to three programs: IFFIm/GFA (US$5.58 billion), Carbon Fund (US$1.87 billion), and GEF (US$1.32 billion). 1.22 The stock of funds held in cash and investments was invested in accordance with the Bank’s investment guidelines. At the end of FY08, the fair market value of the trust fund cash and investments portfolio stood at US$16.94 billion, an increase of US$3.2 billion (23 percent) compared with US$13.77 billion at the end of FY07 (Chart 1.9). Fifty-five percent (US$9.38 billion) of the portfolio was invested in money-market and cash instruments, 16 percent (US$2.76 billion) in domestic government bonds, 13 percent (US$2.24 billion) in mortgage- backed securities, 11 percent (US$1.93 billion) in asset-backed securities, 4 percent (US$642 million) in agency bonds. The income earned from such investments is credited to trust fund accounts based on arrangements agreed with donors. 7 For the purpose of this report, promissory notes also include other binding and irrevocable payment obligations linked to IFFIm/GFA. 11 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 1 FY08 Overall Highlights and Trends Chart 1.9. Trust Fund Investment Portfolio 100% 642 1,768 90% 1,933 80% 2,238 2,395 70% 2,756 1,473 60% 50% 3,171 40% 30% 9,375 20% 4,961 10% 0% FY2008 $16,944million FY2007 $13,768million Agency Bonds, Agency, Corp and Sovereign/Gov't Guarantees Asset Backed Securities(ABS) Mortgage backed Securities(MBS) Domestic Govt Bonds Money Market and Cash Source: WBG trust fund database. 1.23 The rate of return on the cash and investments portfolio continued to improve in FY08. Based on the market value of the portfolio, the return on cash and investments portfolio was 6.60 percent for FY08, up from 5.48 percent for FY07. The average return for the three years ended FY08 was 4.80 percent, and 3.53 percent for the five years ended FY08. 12 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis Section 2. FY08 Trust Fund Portfolio Composition and Analysis Composition by Region and Country 2.1 In FY08, as in recent years, the largest share of disbursements under World Bank- administered trust funds went to countries in Africa. By region, nearly one-third of disbursements were made to Africa (32 percent), followed by East Asia and Pacific (14 percent), South Asia (13 percent), Middle East and North Africa (6 percent), Europe and Central Asia (6 percent), and Latin America and the Caribbean (5 percent) (Chart 2.1). Remaining disbursements were made under global initiatives (24 percent). Chart 2.1. FY08 TF Disbursements Breakdown Global, 24% AFR, 32% SAR, 13% MNA, 6% EAP, 14% LCR, 5% ECA, 6% Source: WBG trust fund database; the disbursements for GFATM and carbon funds are accounted under various regions. 2.2 IDA-eligible countries received the lion’s share of trust fund disbursements, followed by non-country-specific programs, and then IBRD countries. More than half of disbursements were made to IDA-eligible countries (51 percent) in FY08, followed by non- country specific programs—i.e., some global/regional activities, secretariat costs, etc.—(32 percent), and IBRD countries (17 percent). IDA-eligible countries in Africa received more than half of FY08 IDA trust fund disbursements (53 percent), followed by those in South Asia (26 percent), East Asia and Pacific (12 percent), Europe and Central Asia (5 percent), Latin America and the Caribbean (4 percent), and Middle East and North Africa (1 percent) (Table 2.1). Among IBRD countries, those in East Asia and Pacific received the bulk trust fund disbursements (41 percent), followed by Europe and Central Asia (18 percent), followed by 13 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis Latin America and the Caribbean (15 percent), Middle East and North Africa (15 percent), and Africa (11 percent). Table 2.1. FY2008 TF Disbursements by Region and Country Context (US$ million) Global/ IDA/Blend IBRD Regional Total US$ US$ US$ US$ Region million % million % million % million % AFR 1,816 53% 126 11% 203 9% 2,145 32% EAP 412 12% 461 41% 37 2% 910 14% ECA 162 5% 205 18% 36 2% 404 6% LCR 127 4% 164 15% 47 2% 338 5% MNA 34 1% 163 15% 239 11% 435 6% SAR 887 26% - 0% 8 0.4% 894 13% Global - 0% - 0% 1,598 74% 1,598 24% Grand Total 3,438 100% 1,119 100% 2,168 100% 6,724 100% As % of grand total 51% 17% 32% 100% Source: World Bank trust fund database; the disbursements for GFATM and carbon funds are accounted under various regions. Composition by Sector 2.3 In terms of sectoral distribution, almost half of trust fund disbursements went to health and social services programs in FY08. The focus on health programs, to which 41 percent of trust funds were disbursed, is explained by the recent exponential growth in vertical funds such as the GFATM 8 and IFFIm/GAVI Fund Affiliate. The second-largest sectoral recipient was public administration and law (14 percent), followed by agriculture (7 percent), education (5 percent), industry and trade (5 percent), water and sanitation (3 percent), finance (3 percent), energy and mining (3 percent), and transportation (1 percent) (Chart 2.2). 8 In the case of GFATM, the funds are disbursed to and implemented by external agencies. 14 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis Chart 2.2. FY08 TF Disbursements by Sector Water /Sanitation Others Agriculture Education & Flood Protection 18% 7% 5% 3% Energy & Mining 3% Transportation 1% Finance 3% Public Administration & Law Health & Social Services 14% Industry & Trade 41% Info & 5% Communication 0% Source: WBG trust fund database. Composition by Type of Fund 2.4 As described under the Trust Fund Management Framework endorsed by the Board in late 2007, IBRD/IDA-administered trust fund portfolio consists of three broad categories of funds, based on the type of services provided and the execution role assumed by the Bank 9 : (i) Bank-executed trust funds (BETFs) are those for which the Bank has spending authority, (ii) Recipient-executed trust funds (RETFs) are those the Bank passes on to a third- party recipient, and (iii) financial intermediary funds (FIFs), 10 which comprise a heterogeneous mix of trust funds not covered by either BETFs or RETFs, e.g., funds involving financial engineering and complex financial schemes and arrangements under which the Bank provides specific administrative or financial services with a limited fiduciary or operational role. FIFs typically encompass multidonor initiatives designed to implement international agreements in support of global partnerships and programs. 2.5 By value of disbursements, FIFs represent the largest category of trust funds, with 52 percent of total disbursements in FY08. RETFs are the second-largest category, with 38 percent of total disbursements, while BETFs account for the smallest portion of disbursements, with 6 percent (Table 2.2). In FY08, disbursements grew rapidly across all three trust fund categories, with RETFs leading at 23 percent growth, followed by BETFs at 14 percent and FIFs at 12 percent. FIFs, however, displayed a decelerating trend in terms of value, wherein the growth in FY08 growth was lower than the FY04-07 average annualized growth rate of 21 9 Trust funds typically contain fund, program, and activity/grant-level disbursing accounts. It is important to note that while most trust funds fall within one of the three main categories, some were hybrids supporting combinations of RETF and BETF activity/grants. 10 Major FIFs include the HIPC, GEF, GFATM, Carbon Funds, and IFFIm. 15 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis percent. The decrease is attributed to IFFIm/GAVI Fund Affiliate and Carbon Fund transactions, for which disbursements decreased substantially in FY08. Respectively, these programs disbursed US$735 million and US$421 million in FY07, figures that declined to US$237 million and US$172 million in FY08. Table 2.2: Activity/Grant-Level Disbursements by Trust Fund Category (US$ million) FY04-07 FY08 average % of FY08 annual FY04 FY05 FY06 FY07 FY08 annual total growth growth disbursements (%) (%) Bank-executed trust funds 235 273 282 330 376 12 14 6 Recipient-executed trust funds 1,150 1,477 1,445 2,093 2,580 22 23 38 Bank-financed (IBRD/IDA) project 282 466 484 940 1,082 49 15 16 Debt service (non-IBRD/IDA) 41 0 0 0 59 -85 n.a. 1 Implementing agency arrangement, e.g., GEF 127 159 174 179 241 12 35 4 Stand-alone RE projects 356 462 534 781 959 30 23 14 Other recipient-executed projects 344 389 252 193 240 -18 24 4 Financial intermediary funds 1,792 2,250 2,487 3,144 3,511 21 12 52 Limited fiduciary arrangements 784 1,318 1,589 2,051 2,688 38 31 40 IBRD/IDA debt service (IBRD/IDA transfer) 965 889 782 284 384 -33 35 6 Other financing vehicles 43 42 117 809 439 166 -46 7 Other World Bank Group organizations 93 120 149 225 257 34 14 4 IFC 92 119 148 222 255 34 15 4 MIGA 1 2 1 3 1 52 -44 0 Grand Total 3,270 4,120 4,363 5,793 6,724 21 16 100 Source: WBG trust fund database. 2.6 Annual disbursements from BETFs rose by 60 percent between FY04 and FY08, from US$235 million to US$376 million. In FY08, BETFs included US$32 million from the Water and Sanitation Program (WSP), US$24 million from the reformed Bank Netherlands Partnership Program (BNPP), US$17 million from the Consultative Group to Assist the Poorest (CGAP), US$16 million from the Public-Private Infrastructure Advisory Facility (PPIAF), and US$12 million from the Energy Sector Management Assistance Program (ESMAP). The growth in BETFs is attributed to the increase in trust fund program-related administration and secretariat costs, which grew by almost 50 percent during FY08 alone. Overall, BETFs accounted for 52 percent of Bank spending on technical assistance and 26 percent of spending on economic and sector work (ESW), thereby playing a key role in supporting the Bank’s operational work in low- and middle-income countries. 16 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis 2.7 Disbursements channeled through RETFs more than doubled, from US$1.15 billion to US$2.58 billion, between FY04 and FY08. The increase indicates broad reinforcement of IBRD/IDA lending patterns across sectors and thematic areas at the country level. Forty-two percent of RETF disbursements in FY08 went toward preparation and cofinancing of IBRD/IDA investment projects and 37 percent to stand-alone investment projects outside of IBRD/IDA. At the same time, a significant portion of stand-alone RETF disbursements in FY08 (US$672 million, or 70 percent) was devoted to post-crisis reconstruction programs, 11 and the remainder to various country-level efforts in support of global/regional priorities. 2.8 RETFs continue to serve as a versatile instrument of Bank support in diverse country settings. For instance, RETFs support post-conflict assistance and blended grant and IBRD financing of global public goods in middle-income countries. RETF disbursements to fragile states (especially post-conflict countries) nearly doubled from US$532 million in FY04 to US$1 billion in FY08. 12 Meanwhile, RETF flows to IBRD-eligible countries rose from US$190 million in FY04 to US$393 million in FY08, a significant, albeit slowing, share of overall RETF disbursements (16 percent in FY04 to 15 percent in FY08). By sector, programs in law, justice, and public administration represented the largest portion of RETF disbursements in FY08, with 34 percent of the total (Table 2.3). Table 2.3: Sector Breakdown: IBRD/IDA Lending vs. RETF Disbursements % of RETF Sector % of IBRD/IDA Lending Disbursements Law, justice, and public administration 24 34 Health and social services 11 15 Education 8 13 Agriculture 8 8 Industry and trade 7 7 Water, sanitation, and flood protection 9 6 Finance 6 6 Energy and mining 10 6 Transportation 17 3 Total 100 100 Source: WBG database. 2.9 Africa region is the largest recipient of RETF disbursements, at 31 percent of total RETF disbursements, followed by South Asia (26 percent), East Asia and the Pacific (15 percent), Middle East and North Africa (14 percent), Latin America and the Caribbean (6 percent) and Europe and Central Asia (1 percent). 11 These include the Afghanistan Reconstruction, Palestinian Recovery and Development Plan, North and South Sudan, Iraq Reconstruction, and West Bank and Gaza trust funds. 12 Cumulative RETF disbursements for activities related to fragile states totaled US$3.71 billion over the FY04-08 period. Of this, 50 percent went to Afghanistan. 17 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis Table 2.4: RETF Disbursements by Recipient Region Region US$ million % Africa 798 31% South Asia 673 26% East Asia and the Pacific 390 15% Middle East and North Africa 367 14% Latin America and the Caribbean 178 7% Europe and Central Asia 146 6% Global 30 1% 2,580 100% 2.10 Annual FIF disbursements grew by 96 percent between FY04-08, from US$1.79 billion to US$3.51 billion. 13 The increase reflects the increased importance of vertical funds in the Bank’s trust fund portfolio. About 61 percent (US$2.13 billion) of FIF disbursements in FY08 were made under the GFATM. GEF, with US$444 million, accounted for 13 percent of total FY08 FIF disbursements, HIPC for 8 percent, IFFIm/GAVI Fund Affiliate for 7 percent, and other programs for 11 percent (Table 2.5). Table 2.5: FY08 FIF Disbursements % of US$ million disbursements GFATM 2,134 61 GEF 444 13 HIPC 277 8 IFFIm/GFA 236 7 Others 14 419 11 Total 3,511 100 Source: WBG trust fund database. Programmatic versus Non-Programmatic Approach 2.11 The majority of total trust fund disbursements in FY08 (US$5.75 billion, or 86 percent) were made through a programmatic approach, while the remainder (US$972 13 FIF disbursements include fiscal transfers made under hybrid trust funds. 14 The top five programs under “Others� are the Carbon Funds, CGIAR, debt service trust funds, the Multidonor Trust Fund for Aceh and Nias, and the Onchocerciasis Control Program. 18 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis million, or 14 percent) were through a non-programmatic, freestanding approach. Under the programmatic approach, trust funds are disbursed following a two-stage funding allocation mechanism. In the first stage, the Bank and donor(s) commit funds and agree to a broad framework designed to support a program of activities over multiple years. In the second stage, funding is approved for specific activities in accordance with agreed criteria and governance arrangements. Funding may be approved by the World Bank, the donor, or a special committee that may include representatives of the Bank, the donor(s), and/or other entities. Such a programmatic approach usually allows for more flexibility and longer-term financing of activities, as well as for strategic participation of stakeholders, e.g., the Bank, donors, recipient countries and civil society. Non-programmatic funds, on the other hand, typically finance a specific activity or set of activities identified and agreed upon upfront between the Bank and donor(s). Chart 2.4. Programmatic and Non-Programmatic TF Disbursements (US$ million) Non- Programmatic TFs, $972m , 14% Programmatic TFs, $5,752m , 86% Source: WBG trust fund database. Issues of Fragmentation 2.12 The growing number of trust funds supporting initiatives that are similar in sectoral context is indicative of aid fragmentation. Donors’ funds are targeted, through separate trust fund instruments, toward activities with similar sectoral objectives, resulting in a piecemeal approach. For instance, within the Bank’s two largest trust fund-disbursing network VPUs that manage global programs -- the Human Development Network (HDN) and Sustainable Development Network (SDN) VPUs – the number of different funds, along with trust fund disbursements, grew steadily over the past five fiscal years. By the end of FY08, HDN managed a total of 27 trust funds for health and education initiatives, and disbursed about US$185 million (Chart 2.5). The numbers are much higher in SDN, which managed 169 trust funds related to 19 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis environment, infrastructure, agriculture and social development; and disbursed about US$755 million (Chart 2.6). 2.13 In the regional context, while disbursements continued to grow, the number of trust funds declined in South Asia and remained relatively unchanged in Africa. By end of FY08, South Asia managed a total of 31 trust funds and disbursed more than US$661 million (Chart 2.7), while Africa managed 115 trust funds and disbursed about US$627 million (Chart 2.8). The average disbursements per trust fund in South Asia more than doubled from FY04 to FY08, whereas that in Africa more than tripled during the same period. The decline in the number of funds, along with the increased average disbursements per trust fund, are the result of coordination and collaboration between different donors at the country level, for instance under the Afghanistan Reconstruction Trust Fund (ARTF). Charts 2.5-2.8. Bank Network and Regional VPUs - Number of TFs and TF Disbursements Chart 2.5. Human Development Network VPU Chart 2.6. Africa Regional VPU 30 200 140 700 29 180 28 TF Disbursements (USD million)) TF Disbursements (USD million) 120 600 27 160 26 Number of TFs 100 500 Number of TFs 140 25 24 120 80 400 23 100 22 21 80 60 300 20 60 40 200 19 18 40 17 20 100 20 16 15 0 0 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Fiscal Year Fiscal Year Total TF Disbursements Total Number of TFs Total TF Disbursements Total Number of TFs Chart 2.8. Sustainable Development Network VPU Chart 2.7. South Asia Regional VPU 180 800 40 700 39 160 TF Disbursements (USD million) 700 38 600 TF Disbursements (USD million)) 37 140 36 600 35 Number of TFs 500 120 Number of TFs 34 33 500 32 100 31 400 400 30 80 29 300 28 300 27 60 26 200 25 200 40 24 23 100 100 22 20 21 20 0 0 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Fiscal Year Fiscal Year Total TF Disbursements Total Number of TFs Total TF Disbursements Total Number of TFs Source: WBG trust fund database 20 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis 2.14 Past experience shows that multidonor trust funds help reduce the adverse impact of fragmentation. Multidonor trust funds provide a mechanism that combines the contributions of multiple donors, generally for a program of activities over a number of years. ARTF, for instance, was developed as the main multidonor funding mechanism for both recurrent costs of the Government of Afghanistan’s budget and priority investment programs across the country. The ARTF was established in response to the government’s request for a single, predictable and accountable source of funding, which helped ensure effective mobilization of funds and reducing fragmentation. According to the independent evaluation of the ARTF in 2005, the program is a good example of a trust-funded program that is in many areas in line with the Paris Declaration’s definition of best-practice approaches and is in accordance with the Paris Declaration’s good partnership principles. 2.15 The Bank has worked with donor partners to manage the risks of fragmentation and to promote harmonization by encouraging a move towards multidonor trust funds and joint dialogue with donors. Within FY08, HDN disbursed almost US$158 million (86 percent of its total trust fund disbursements) through 11 multidonor trust funds (Chart 2.9). SDN, which has sought to improve coordination and joint dialogue among donors that support similar initiatives, disbursed more than US$672 million (89 percent of its total trust fund disbursements) through 68 multidonor trust funds (Chart 2.10). Although the number of multidonor trust funds declined to three in South Asia, overall disbursements from these funds accounted for 93 per cent of total trust fund disbursements (Chart 2.11). This was attributable to the fact that the ARTF accounted for 75 percent of South Asia’s total disbursements. Africa experienced a slight decline in multidonor trust fund disbursements, to US$541 million (or 86 percent of its total disbursements), yet the number of multidonor trust funds increased substantially, to 51 (Chart 2.12). 21 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis Charts 2.9-2.12. Bank Network and Regional VPUs - Number of MDTFs and MDTF Disbursements Chart 2.9. Human Development Network VPU - MDTFs Chart 2.10. Sustainable Development Network VPU - MDTFs 15 180 70 800 14 65 160 700 MDTF Disbursements (USD million) MDTF Disbursements (USD million) 13 60 12 140 Number of MDTFs 55 600 11 Number of MDTFs 120 10 50 500 9 100 45 400 8 80 40 7 300 35 60 6 30 200 5 40 25 4 20 100 3 20 2 0 15 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Fiscal Year Fiscal Year MDTF Disbursements # of MDTFs MDTF Disbursements # of MDTFs Chart 2.11. South Asia Regional VPU - MDTFs Chart 2.12. Africa Regional VPU - MDTFs 15 700 70 600 14 65 MDTF Disbursements (USD million) MDTF Disbursements (USD million) 13 600 60 500 12 Number of MDTFs Number of MDTFs 500 55 11 400 10 50 400 9 45 300 8 40 300 7 35 200 6 200 30 5 25 100 4 100 3 20 2 0 15 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Fiscal Year Fiscal Year MDTF Disbursements # of MDTFs MDTF Disbursements # of MDTFs Source: WBG trust fund database. 2.16 The move toward pooling donor resources through multidonor trust funds is part of a larger trend across the Bank. Over the FY04-08, the number of multidonor trust funds increased from 143 to 325. Disbursements from these funds amounted to US$18.6 billion, or 76 percent of total trust fund disbursements over the period (Chart 2.13). Multidonor trust funds disbursements under FIFs amounted to US$11.3 billion and under RETFs to US$6.3 billion. Notably, the proportion of RETF disbursements made via multidonor or pooled arrangements was 72 percent in FY04-08, 15 up from 66 percent during the previous five-year period. As the Bank and donors continue to move increasingly toward multidonor trust fund arrangements, there will be further need to standardize and streamline processes for administering such funds. 15 In FY08, 70 percent (218) of 313 RETFs were supported by single donors but accounted for only 20 percent of total RETF disbursements. The remaining 95 multidonor RETFs accounted for the bulk of the volume growth. 22 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 2 FY08 Trust Fund Portfolio Composition and Analysis Chart 2.13. TF Cumulative Disbursements FY2004-08 (US$ million) 15,000 Multidonor TFs Single Donor TFs 12,000 9,000 11,339 6,000 6,297 3,000 421 2,448 1,845 1,076 500 344 0 Bank-executed Recipient-executed Financial Other WBG Intermediary Source: WBG trust fund database. 23 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 3 Trust Fund Results Section 3. Trust Fund Results 3.1 As trust funds continue to be mainstreamed into the Bank’s main operations, progress has been made in documenting the results of trust-funded activities during recent years, particularly in how these activities contribute to the attainment of actual outcomes and impact. This is in line with the progress made in advancing the Bank’s broader results agenda—i.e., in countries, within the World Bank, and across development agencies.16 Box 3.1 provides a sample of trust fund results, as reported by Bank task managers during FY08. Overall, it indicates that trust funds broadly reinforce the Bank’s development initiatives in various settings. Box 3.1: Sample Trust Fund Results Reported by Bank Task Managers during FY08 AAA and technical assistance 1. The Trust Fund for Strategic Poverty Partnership for Indonesia financed various analytical and operational products that were effectively used for Indonesia’s strategic approach towards poverty and social protection. The design and implementation of products such as a conditional cash transfer program, a national community empowerment program, poverty assessment guidelines and participatory multistakeholder forums, have helped the Government of Indonesia in mitigating the impacts of its decision to end fuel subsidies. A significant number of poor people have benefitted from the trust fund, with the cash transfer program in particular covering about 34,000 villages with at least 35 million beneficiaries. 2. A Multilateral Donor Trust Fund for Debt Service supported the Government of Burundi in meeting its obligations to multilateral creditors, leading to achievement of the enhanced HIPC decision point and increased donor assistance flows. By helping clear the accumulation of arrears to Burundi’s foreign creditors, the trust fund helped facilitate the government’s efforts to reconstruct and transition from post-conflict to longer- term development. 3. The multidonor financing of the Public Private Infrastructure Advisory Facility (PPIAF)’s technical assistance and knowledge activities has helped facilitate private-sector involvement in infrastructure. Despite the small size of PPIAF grants, and their relatively upstream nature, the trust fund has helped facilitate transactions, laws and regulations, institutional strengthening, strategy formulation, and knowledge activities, all of which promote private-sector involvement in infrastructure in developing countries. 4. The Asia-Europe Meeting (ASEM) Financial Crisis Response Trust Fund II made major contributions toward financial and corporate sector reform and increased the effectiveness of poverty reduction efforts in five Asian countries—China, Indonesia, the Philippines, Thailand, and Vietnam. With strong local ownership and close alignment with national priorities, the trust fund resulted in enhanced country capacity for poverty analysis, substantial financial sector reforms, enterprise restructuring and transformation, public-sector capacity improvements, and more effective delivery of social services. 16 Progress in advancing the Bank’s broader results agenda include Bank support to governments in strengthening the results focus in national strategies, use of results-based country assistance strategy (RBCAs), establishment of the IDA Results Measurement System, and promotion of a global partnership on managing results across development agencies. 24 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 3 Trust Fund Results Cofinancing and project preparation trust funds supporting larger IBRD/IDA projects 1. A series of Poverty Reduction Support Operations supported Vietnam’s structural development and sustained economic growth. Aligned closely with the country’s Comprehensive Poverty Reduction and Growth Strategy, the operations proved effective in supporting the development of policy, legal and institutional frameworks, with implementation left to the government. Overall, these contributed to the generalization of market mechanisms, massive creation of wage employment, and strengthened delivery of public services. 2. The Irrigation Rehabilitation and Restructuring Project in the Former Yugoslav Republic of Macedonia supported the rehabilitation of the deteriorated existing irrigation infrastructure, restructuring of water management organizations, and promotion of participatory irrigation management. As the result, private farmers were enabled to fully regain the potential of the irrigated agriculture sector and to enhance the sustainability and efficiency of the irrigation systems. 3. A Policy and Human Resources Development Trust Fund helped prepare a Mineral Resources Management Capacity Building Project in Mozambique that contributed significantly to the improvement of the investment climate and the Ministry of Mineral Resources’ capacity to promote and manage investment and growth in Mozambique’s mineral sector. 3.2 Independent evaluations of significant trust-funded programs also demonstrate that trust funds continued to add value to Bank initiatives and yield positive impacts on growth and poverty reduction. Evaluations and reviews conducted by independent consultants hired by the programs indicate that trust funds contributed significantly to achievement of broader, higher-level sector and country strategic objectives. Box 3.2 provides a sample of trust fund results as reported through independent evaluations or reviews during FY08. Box 3.2: Sample Summaries of Independent Evaluation Findings Reported during FY08 1. Japan Policy and Human Resources Development (PHRD) Technical Assistance Program. The PHRD program was originally launched in 1990 as a strategic programmatic trust fund instrument for providing technical assistance to assist in formulating and implementing Bank-supported projects, programs, and activities. The PHRD technical assistance program is aimed at providing technical support to grant recipients, who are also borrowing members of the Bank, to improve the quality and impact of associated development operations that are financed by their own resources as well as those of the World Bank. Covering the project preparation, climate change and implementation grants, the evaluation found that overall the program remains a unique strategic instrument for providing technical assistance to improve the quality of projects. The program’s focus on upstream project preparation, as well as the requirements that grants be untied and implemented by recipient governments, are highly valued and have been key to its continued high relevance and effectiveness in strengthening development assistance across many sectors and all developing regions. 25 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 3 Trust Fund Results 2. Global Development Network (GDN). The GDN is a worldwide association of research and policy institutes with the goal of creating, sharing, and applying policy and social science knowledge for the purpose of development. The program’s objectives are threefold: (i) to generate knowledge and build research capacity through research competitions and commissioned research; (ii) to share knowledge and strengthen networking through GDNet and face-to-face contacts; and (iii) to apply the results of local research to local policy issues based on a specially- designed program of research and training. The evaluation found qualified evidence of capacity building and knowledge creation from GDN-funded activities. GDNet and the annual conference, in particular, are seen as potential vehicles for providing additional public goods for its targeted beneficiaries. However, given insufficient funding and a relatively brief period in which to generate broad-ranging long-term impacts, the evidence suggests broader impacts only in regions where GDN’s efforts accompany those of other actors with similar goals. 3. The Bank-Netherlands Partnership Program (BNPP). BNPP was established in 1998 between the Netherlands Ministry of Foreign Affairs and the World Bank to better coordinate and prioritize trust fund investments made by the Netherlands. BNPP provides financing for a wide range of knowledge development and advisory services with a cross-country, regional or global scope and has an exclusive focus on the world’s poorest countries. A recent review found that in broad terms, BNPP is achieving significant results that are informing policy instruments, influencing Bank operations, and providing inputs that, if effectively used by policy makers, have the potential to inform the ongoing policy debate on important issues. BNPP is a unique instrument that is highly valued by the Bank for providing flexible funding to test development hypothesis, build supporting evidence and generate knowledge on particular development issues. Strategic and innovative in its design, the programmatic focus on cross-country, regional, and global activities sets it apart from other Bank-administered trust fund programs. The program’s comparative advantage lies in its catalytic and innovative nature, i.e., providing funding for Bank TTLs to test hypotheses and generate a knowledge base that could influence current thinking on particular development issues and approaches. 3.3 Nonetheless, ensuring the results-focus of trust-funded activities remains a challenge. While trust funds are generally seen as reinforcing the Bank’s development initiatives, the methodology for attributing trust funds’ contribution to broader country-level or regional or global impact is often fraught with difficulty. Further, the process of mainstreaming trust funds into Bank’s main operations and development of relevant results frameworks are still ongoing. In FY08, a quality-at-entry assessment of RETF projects over $5 million performed by the Bank’s Quality Assurance Group (QAG) found weaker results than other Bank operations. RETF projects that were linked to ongoing or past operations were assessed as generally satisfactory – most of these RETF initiatives funded capacity building and had focused objectives with well-targeted interventions. In contrast, stand-alone RETF projects, especially in conflict countries, tended to have unrealistic objectives and designs that were not consistent with implementation capacity. The following recommendations were made by QAG: (a) greater realism in objectives and results framework; (b) more attention to institutional and implementation arrangements; and (c) ensuring adequate preparation and supervision budgets. Starting in end FY08, the RETF projects over $5 million are subject to the same Bank processes as for regular loans and are reported as part of the Bank’s portfolio. While the impact of this change is yet to be assessed, it is expected that the results-focus of the RETF projects would be enhanced. 26 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 3 Trust Fund Results 3.4 The Bank continues to take steps to strengthen the results focus of its trust-funded activities. The 2007 Trust Fund Management Framework emphasized the need for ensuring systematic monitoring and reporting of trust-funded activities. Towards this end, the Bank is developing a framework to strengthen the results focus of trust funded activities, which is expected to be established within FY10. Measures to strengthen TF results will be aligned with applicable Bank policies and procedures. The trust fund results framework is envisioned to encompass the following three pillars: (i) Strategic planning: identifying possible approaches for results measurement and proper formulation of TF objectives, results chains and indicators; (ii) Performance measurement: establishment of a performance monitoring system to regularly collect data on actual TF results, and ensure that the data is reviewed, analyzed, and used in real time to adjust activities for higher quality outputs and intermediate outcomes; and (iii) Performance management: development of consistent performance information system to be used for: (a) internal management, decision making, learning, and accountability; and (b) external performance reporting to stakeholders and partners. 27 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 4 Implementation of the Trust Fund Management Framework Section 4. Implementation of the Trust Fund Management Framework 4.1 As part of Management’s efforts toward mainstreaming trust funds into the Bank’s strategies and processes, and applying a risk-based approach to managing the rapidly growing and highly diverse trust funds portfolio, a Trust Fund Management Framework (TFMF) was finalized and endorsed by the Board in late 2007. The Framework rests upon the following three pillars comprised of a series of reform actions and policy proposals: (i) enhanced strategic focus and selectivity, (ii) strengthened risk and results management, and (iii) enhanced operational efficiency and sustainability. Substantial progress has been made in implementation of the Framework from January 2008 to date. The following key actions have been completed or are underway: The new cost recovery fee structure and revised minimum threshold of US$1 million were made effective on January 1, 2008. Improved processes for cost estimation and capturing of trust fund administration costs have since been introduced. A new instrument for accepting smaller contributions from donors to the Bank’s work program, Externally Funded Output (EFO), was introduced in January 1, 2008. As of December 2008, 63 EFOs of an aggregate value of US$17 million were in effect. Bank-executed trust funds, which support the World Bank’s own work program, are now discussed and incorporated in the Bank’s budget planning processes. A revised Operational Policy and Bank Procedure (OP/BP) 14.40 on trust funds was issued on July 1, 2008. An updated Trust Fund Handbook, which elucidates on how the policies are reflected in the business processes, was issued in December 2008. The mandatory Trust Fund Learning and Accreditation Program (TLAP) was updated in September 2008 to reflect the latest policies on trust funds. The TLAP aims to promote accountability, transparency, and effectiveness in the use of trust funds among Bank staff. The first Trust Fund Financial Compendium was issued in January 2009. The Compendium is intended to serve as reference on financial aspects of trust fund management for the trust fund community within the World Bank. A Senior Management Review mechanism was established for the corporate review of major new global partnerships and trust funds involving high-risk or complex financial or operational products and/or partnership decision structures. Guidelines were issued by CFP in January 2009. 28 The World Bank Group 2008 Partnership and Trust Fund Annual Report Section 4 Implementation of the Trust Fund Management Framework At the Vice Presidential Unit (VPU) level, Trust Fund Management Plans were completed in early December 2008. The plans outline definitive actions to be adopted by VPUs to mainstream the trust fund management process. At the country level, systematic integration of trust funds into the Country Assistance Strategy (CAS) process is underway. A guidance note was issued jointly by Concessional Finance and Partnership (CFP) and Operations Policy and Country Services (OPCS) VPUs on July 30, 2008. Upstream reviews of CASs that started in May 2008 ensure that TFs are integrated, as deemed appropriate, into CAS documents going to the Board in FY09 Q3 and Q4 (pilot phase). To streamline the review and clearance of trust fund proposals, CFP introduced a new organizational structure involving the integration of two departments into the new Global Partnership and Trust Fund Operations Department (PTO). The decentralization of trust fund review and clearance processes to operational VPUs, which is being piloted by CFP with EAP, commenced in February 2009. With a view to streamlining, in FY09 Q4, the World Bank Office of the Deputy Controller will integrate the review and clearance of trust fund proposals and administration agreements and the activation of recipient-executed grants into a one-stop shop. 4.2 Management is expected to report back to the Board on TFMF progress following two full years of implementation efforts, i.e., by January 2010. 29 The World Bank Group 2008 Partnership and Trust Fund Annual Report Annex A Annex A The World Bank Group Trust Fund Operations Financial Information Summary Year Ended June 30, 2008 This report is produced by the Trust Funds Division (ACTTF), Controller’s and Strategy Resource Management, Vice Presidency An electronic copy of this report can be accessed at http://tf via the link “Resources and Reports� 30 The World Bank Group 2008 Partnership and Trust Fund Annual Report Annex A Table of Contents 1. Introduction 32 2. Trust Fund Operations – Financial Highlights 33 3. Funds Held in Trust 35 4. Cash and Investments 36 5. Promissory Notes 37 6. Contributions and Disbursements by Program 39 7. Contributions by Donor 40 8. Disbursements by Managing Unit 41 9. Disbursements by Category 42 31 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A 1. Introduction This report provides unaudited aggregate financial information on the trust fund operations administered individually or jointly by the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) in this report collectively referred to as the “Bank�. Trust Funds are financial and administrative arrangements between external donors and the Bank that provide grant funds to address diverse development needs, including project preparation, technical assistance, advisory services, debt relief, post conflict transition and the co-financing of investment projects. Trust Funds contribute to the Bank’s poverty reduction mission by supporting innovative approaches to the design and implementation of development projects. Audit requirements for Trust Funds are contained in the Bank’s Operational Policy (OP 14.40), Bank Procedures (BP 14.40), and Trust Fund Hand Book. Trust Funds administered by the Bank are subject to the annual “single audit�, formally known as Management’s Assertion Regarding Effectiveness of Internal Control over Financial Reporting of Trust Fund Activities, which provides reasonable assurance that the Bank’s overall internal control framework surrounding Trust Funds provides accurate and reliable cash-based financial reports. Additional information regarding individual Trust Funds and programs can be obtained at http://tf. Comparative Information Previous year numbers have been regrouped to make them comparable with current presentation. This report is for general use and is not intended to represent the combined financial position of Trust Funds and programs administered by the Bank. Questions or comments on the report should be addressed to Mr. Brian Quinn, Division Manager, Trust Funds Division, at bquinn@worldbank.org. 32 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A 2. Trust Fund Operations – Financial Highlights Total assets held in trust at June 30, 2008 amounted to US$26.31 billion, up by 23% from US$21.40 billion at June 30, 2007. These assets held in trust comprise: (in million of U.S. dollars) Asset June 30, 2008 June 30, 2007 Cash and Investments 16,944 13,768 Promissory notes 9,367 7,631 Total Assets Held in Trust 26,311 21,399 At June 30, 2008 and June 30, 2007, assets held in trust belonging to International Finance Facility for Immunisation (IFFIm) and its disbursing arm, GAVI Fund Affiliate (GFA) – IFFIm/GFA, Global Fund to Fight AIDS, Tuberculosis and Malaria - GFATM; Global Environment Facility – GEF and Carbon Finance accounted for 66% and 65%, respectively, of the total assets held, with the details as shown below: June 2008 June 2007 IFFIm/GFA IFFIm/GFA 23% 21% Others Others 33% 34% GFATM GFATM 17% Carbon 19% GEF GEF Finance Carbon 16% 18% 9% Finance 10% Contributions received in cash during the fiscal year ended June 30, 2008 were $8.74 billion, compared to $7.32 billion received during the fiscal year ended June 30, 2007, an increase of 19%. The top five external donors during the fiscal year ended June 30, 2008 were United Kingdom ($1,075 million), United States ($760 million), Italy ($749 million), France ($736 million) and European Commission ($685 million). The major programs, which accounted for 49% of all cash contributions received during the fiscal year ended June 30, 2008, were GFATM (35%), GEF (9%), HIPC (3%) and IFFIm/GFA (2%). Further details concerning contributions by donor can be found in Section 7. 33 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A Trust Fund Operations – Financial Highlights (Continued) Disbursements made in cash for projects during the fiscal year ended June 30, 2008 totaled $6.73 billion, a 16% increase from $5.79 billion during the fiscal year ended June 30, 2007. The major programs, which accounted for 49% of all disbursements made during the fiscal year ended June 30, 2008, were GFATM – $2,134 million (32%), GEF - $702 million (10%), HIPC - $277 million (4%) and IFFIm/ GFA - $236 million (3%). Further details concerning disbursements by program can be found in Section 6. Trust Fund Programs1 There were 1,021 and 1,015 active Trust Funds as of June 30, 2008 and June 30, 2007, respectively. The major Trust Funds activated during the fiscal year ended June 30, 2008, based on expected donor contributions were: Food Price Crisis Response Trust Fund – Bank Surplus: This fund was set-up with the objective of reducing the negative impact of high food prices on the lives of the poor with an initial commitment of US$ 200 million from IBRD. Of this commitment, US$ 85 million had been received as of June 30, 2008. Water Supply and Sanitation project in Ethiopia: This multi-donor fund was established with the objective of increasing access to sustainable water supplies and sanitation services with the initial commitment of US$ 141 million. Of this commitment, USD 17.5 million had been received as of June 30, 2008. Investment Climate Facility for Africa: This fund was set-up with an initial commitment of US$ 120 million funded by the Investment Climate Facility Ltd (UK). Of this commitment, US$ 18 million had been received as of June 30, 2008. 1 The number of trust-funds and global partnership initiatives is smaller, since many accounts are created to accommodate varying financial and budgetary requirements, time periods, and areas of focus of different donors, and to provide a reporting structure through which donors’ contributions can be tracked in ways that meet their parliamentary or other requirements. 34 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A Funds Held in Trust Cash contributions received from donors and proceeds received through issuance of IFFIm bonds, but not yet disbursed, are held and accounted for as cash and investments. (in million of U.S. dollars) June 30, 2008 June 30, 2007 Major Trust fund Programs Global Funds to Fight AIDS, Tuberculosis and Malaria 4,475 3,249 Global Environment Facility 2,762 2,497 Heavily Indebted Poor Countries 863 851 IFFIm/GFA 413 324 Other Trust fund Programs Greater than $30 million Single Purpose and Programmatic Funds 1,328 1,101 Free-Standing Grants2 1,011 725 Education for All - Fast Track Initiative 711 415 Afghanistan Reconstruction Trust Fund 582 318 International Finance Corporation Funds 530 480 Carbon Finance 440 365 Donor Balance Accounts and Holding Funds 403 202 Iraq Reconstruction Fund 384 392 Debt Service and Debt Reduction Funds 360 472 Trust Fund for Government of South Sudan 274 174 Africa Catalytic growth Fund 220 176 West Bank and Gaza 192 207 Funds for Aceh, Indonesia 179 160 Trust Fund for North Sudan 155 116 Least Developed Countries Trust Fund for Climate Change 91 50 Global Food Crisis Response Program 85 - Avian and Human Influenza Trust Funds 85 40 Institutional Development Fund 80 75 Montreal Protocol/Ozone Funds 78 138 Nile Basin Initiative Trust Fund 77 71 Special Climate Change Fund 77 54 African Capacity Building Foundation 60 120 Lebanon Trust Fund 57 70 EFA FTI Education Program Development 51 41 Public-Private Infrastructure Advisory Facility 47 42 Consultative Group to Assist the Poorest 42 38 Water and Sanitation Program 41 42 Low Income Countries under Stress 38 58 Java Reconstruction Program 36 23 Financial Sector Reform and Strength 31 35 Other Trust Fund Programs Less than $30 million 670 632 Funds held in escrow on behalf of ICSID 16 15 Total Funds Held in Trust on behalf of Donors3 16,944 13,768 2 Non-programmatic funds that support a specified activity or set of activities in a specific country, region or globally. 3 Total funds held on behalf of donors exclude interim advances from IBRD resources which totaled $5 million at June 30, 2008 and $4 million at June 30, 2007. 35 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A 3. Cash and Investments Cash contributions received from donors for funds administered by the Bank, proceeds received through issue of IFFIm bonds and administration fees recovered from funds are managed by the IBRD’s Treasury Department, which maintains a single investment portfolio for all the funds that are administered by the World Bank Group. Donor funds are held separately from the assets of the IBRD/IDA, IFC, and MIGA. The Bank invests donor funds pending their disbursement in liquid instruments such as money market instruments, government and agency obligations, mortgage backed securities and other high grade bonds. The aggregation of such investments is herein referred to as the “Pool�. The Pool is managed on a commingled basis considering investment horizons and cash flow profiles of different programs. U.S. dollar balances and Euro balances in funds with shorter investment horizons (up to one year) are invested in a shorter duration sub portfolio (Tranche 1) within the Pool with a higher proportion of short-term, cash-like investments. U.S. dollar balances in funds with longer investment horizon and a minimum size (currently consisting of major programs) participate in a longer duration sub portfolio (Tranche 2) with a larger proportion of longer term investments. In November 2006, Tranche 3 was established for IFFIm with interest rate sensitivity matching the liabilities funding the IFFIm portfolio. In April 2008, the operational cash portfolios of Tranches 1 and 2 were transferred to Tranche 0. Tranche 0 will have investment characteristics similar to cash. Non-USD/Euro balances are currently passively managed against money market type benchmarks. Average U.S. dollar returns based on the market value of investments for the fiscal year ended June 30, 2008, were 0.63% for Tranche 0 (for 3 months only), 5.84% for Tranche 1, 7.99% for Tranche 2, 4.36% for Tranche 3 and average EUR return for fiscal year ended June 30, 2008 was 3.58%. Similarly, average U.S. dollar returns for the fiscal year ended June 30, 2007, were 5.43% for Tranche 1, 5.64% for Tranche 2 and 3.54% for Tranche 3 (for 8 months only). Average return for aggregate non-U.S. dollar/Euro currency balances was 5.08% for the fiscal year ended June 30, 2008 and average return for aggregate non-U.S. dollar currency balances was 4.56% for year ended June 30, 2007. Investment returns subsequent to the reporting period - Average U.S. dollar returns (non-annualized) for three months ended September 30, 2008, were 0.65% for Tranche 0, 0.76% for Tranche 1, 1.26% for Tranche 2, 0.28% for Tranche 3 and average EUR return (non-annualized) for three months ended September 30, 2008 was 2.00%. Average return (non-annualized) for aggregate non-U.S. dollar/Euro currency balances was 1.12% for the three months ended September 30, 2008. 36 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A Cash and Investments (continued) The following table shows the composition of investments as June 30, 2008 and June 30, 2007. Investment portfolio June 30, 2008 June 30, 2007 Tranche Tranche Tranche Tranche Tranche Tranche Tranche (in million of U.S. dollars) 0 1 2 3 Total 1 2 3 Total U.S. dollar portfolio Money Market/Cash 1,292 4,418 2,172 255 8,137 48% 3,407 501 209 4,117 30% Domestic Government Bonds - 1,044 1,378 - 2,422 14% 1,371 1,532 - 2,903 21% Asset Backed Securities - 980 925 28 1,933 11% 1,255 1,097 43 2,395 17% Mortgage Backed Securities - - 2,238 - 2,238 13% - 1,473 - 1,473 11% Agency Bonds - 227 300 - 527 3% 1,115 589 49 1,753 13% Sovereign/Government Guarantees - 12 16 - 28 - - - - - - Subtotal 1,292 6,681 7,029 283 15,285 90% 7,148 5,192 301 12,641 92% EUR portfolio Money Market/Cash 363 347 - - 710 4% 584 - - 584 4% Domestic Government Bonds - 334 - - 334 2% 268 - - 268 2% Agency, Corporate and Sovereign/Government Guarantees - 87 - - 87 1% 15 - - 15 - Subtotal 363 768 - - 1,131 7% 867 - - 867 6% Non-U.S. dollar/EUR portfolio Money Market/Cash - - - - 528 3% - - - 260 2% Total 1,655 7,449 7,029 283 16,944 100% 8,015 5,192 301 13,768 100% June 30, 2007 June 30, 2008 Others 13% MM and ABS Others 3% ABS Cash 11% 17% 52% MBS 13% MM and MBS Cash 8% Domestic 53% Domestic Govt Bonds Govt 16% Bonds 37 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A Promissory Notes In certain programs, contributions pledged by donors are settled through deposit of demand notes or they otherwise meet the definition of a financial instrument. These are recorded as promissory notes when received and they are encashed based on schedules agreed with the donors and are recorded as cash contributions upon encashment. Promissory notes held at June 30, 2008 amounted to $9.36 billion, up by 23% from $7.63 billion at June 30, 2007. The significant increase in promissory notes is mainly due to legally binding and irrevocable payment obligations for IFFIm/GFA. (in million of U.S. dollars) June 30, 2008 June 30, 2007 IFFIm/GFA4 5,580 4,161 Carbon Finance 1,872 1,688 Global Environment Facility 1,322 1,263 Global Funds to Fight AIDS, Tuberculosis and Malaria 474 397 Heavily Indebted Poor Countries 105 118 Other Programs 14 4 Total 9,367 7,631 June 30, 2008 June 30, 2007 Carbon Carbon Others Others Finance Finance 1% 2% 20% 22% GEF IFFIm/GF IFFIm/GFA 14% GEF A 54% 17% GFATM GFATM 60% 5% 5% 4 IFFIm/GFA’s legally binding and irrevocable payment obligations are used as security to borrow US$ 1 billion and ZAR 1.7 billion equivalent of US$ 223 million from international capital markets through issue of bonds. The proceeds from the bonds are used to disburse funds for immunization and health programs before collecting funds from donors. 38 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A 4. Contributions and Disbursements by Program (in USD million) Contributions Disbursements Year ended June 30, Year ended June 30, 2008 2007 2008 2007 Major Trust fund Programs Global Fund to Fight AIDS, Tuberculosis and Malaria 3,065 2,060 2,134 1,607 Global Environment Facility 788 831 702 544 Heavily Indebted Poor Countries 239 165 277 224 IFFIm/GFA 147 72 236 735 Other Trust fund Programs Free-Standing Grants 1,134 1,001 882 820 Afghanistan Reconstruction Trust Fund 745 463 496 428 Single Purpose and Programmatic Funds 506 310 340 300 Education for All - Fast Track Initiative 420 345 146 74 International Finance Corporation Funds 233 299 240 188 Carbon Finance 204 134 173 41 Donor Balance Accounts and Holding Funds 164 23 - - Trust Fund for Government of South Sudan 138 86 53 79 Trust Fund for North Sudan 101 61 70 19 Consultative Group on International Agricultural Research 94 89 101 94 Global Food Crisis Response Program 85 - - - West Bank and Gaza 80 119 108 45 Funds for Aceh, Indonesia 70 156 61 104 Avian and Human Influenza Trust Funds 54 45 8 3 Africa Catalytic growth Fund 49 175 16 1 Java Reconstruction Program 43 40 33 18 Montreal Protocol/Ozone Funds 39 123 102 83 Least Developed Countries Trust Fund for Climate Change 38 25 - 1 Iraq Reconstruction Fund 34 4 67 44 Water and Sanitation Program 32 46 33 25 Nile Basin Initiative Trust Fund 28 28 30 23 Consultative Group to Assist the Poorest 22 15 21 17 EFA FTI Education Program Development 21 28 15 9 Special Climate Change Fund 21 22 2 2 Public-Private Infrastructure Advisory Facility 19 25 16 18 Environmentally & Social Sustainable Development 19 15 11 11 Institutional Development Fund 16 16 16 16 Energy Sector Management Assistance 14 7 13 7 Onchocerciasis/Tropical Diseases Research 14 8 13 16 Statistical Capacity Building Program 14 5 3 2 Development Grant facility 10 8 4 5 African Capacity Building Foundation 10 55 49 45 Financial Sector Reform and Strength 8 11 14 13 Debt Service and Debt Reduction Funds 3 269 167 43 Low Income Countries under Stress 1 32 20 11 Others 22 99 53 78 Total5 8,744 7,315 6,725 5,793 5 Cash contributions are reported in the program which first receives the fund and cash disbursements are reported in the program from which they are paid. 39 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A 5. Contributions by Donor (in million of U.S. dollars) Fiscal Year Ended June 30, 2008 2007 Sovereign Countries and the European Community United Kingdom 1,075 1,190 United States 760 747 Italy 749 97 France 736 288 European Commission 685 652 Netherlands 677 766 Canada 516 533 Germany 505 332 Norway 443 209 Japan 402 412 Spain 321 203 Sweden 258 230 Australia 227 81 Denmark 114 95 Ireland 108 45 Russia 102 17 Switzerland 75 56 Belgium 50 78 Finland 48 52 Austria 32 24 Luxembourg 25 14 New Zealand 12 11 Korea 11 2 Others 59 304 Subtotal 7,990 6,438 World Bank Group International Bank for Reconstruction and Development (IBRD) 167 245 International Finance Corporation (IFC) 113 162 Multilateral Investment Guarantee Agency (MIGA) 4 - Subtotal 284 407 Other Donors Gates Foundation 125 229 GFATM Secretariat 52 12 United Nations Environment Program (UNEP) 39 123 The World Health Organization (WHO) 39 - Others 215 106 Subtotal 470 470 Total Cash Contributions 8,744 7,315 40 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A 6. Disbursements by Managing Unit (in million of U.S. dollars) Fiscal year ended June 30, Financial Bank- Recipient- Intermediary IBRD/IDA executed6 executed7 Funds8 Total Regions 2008 2007 2008 2007 2008 2007 2008 2007 Africa 64 51 747 653 64 64 875 768 South Asia 22 14 671 552 - - 693 566 East Asia and Pacific 48 43 387 440 30 30 465 513 Latin America and the Caribbean 7 6 170 97 - - 177 103 Europe and Central Asia 6 7 144 107 93 40 243 154 Middle East and North Africa 12 13 366 130 - - 378 143 Subtotal 159 134 2,485 1,979 187 134 2,831 2,247 Other Managing Units Resource Mobilization and Co financing 12 25 1 - 3,100 2,900 3,113 2,925 Sustainable Development Network 105 86 27 34 270 134 402 254 Private Sector Development 8 5 6 - 20 28 34 33 World Bank Institute 20 20 1 1 3 2 24 23 Human Development 18 14 2 24 - - 20 38 Development Economics / Chief Economist 10 13 2 2 - - 12 15 Human Resource 9 - - - - - 9 - Poverty Reduction and Economic Management 8 7 - - - - 8 7 Others 10 9 6 8 - 8 16 25 Subtotal 200 179 45 69 3,393 3,072 3,638 3,320 Other World Bank Group Organizations IFC9 218 164 37 59 - - 255 223 MIGA 1 3 - - - - 1 3 Subtotal 219 167 37 59 - - 256 226 Total Cash Disbursements 578 480 2,567 2,107 3,580 3,206 6,725 5,793 6 Bank-executed Trust Funds are funds that support the Bank’s work program. 7 Recipient-executed Trust Funds are funds that the Bank passes on to a third party and for which the Bank plays an operational role--that is, the Bank normally appraises and supervises activities financed by these funds. 8 Financial intermediary funds are funds that involve financial engineering or complex finance schemes, or funds for which the Bank provides a specified set of administrative, financial, or operational services. 9 Recipient executed disbursement for IFC represents Development grant for Bank executed projects. 41 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex A 7. Disbursements by Category 17 (in million of U.S. dollars) Fiscal Year ended June 30, 2008 2007 IBRD/IDA Bank Executed (BE) AAA Client Support 101 108 Standard Product line 98 90 Secretariat and TF/Grant Admin 63 32 Transfers 57 40 Lending Appraisal & Supervision 40 43 Subtotal 359 313 Recipient Executed (RE) Bank financed (IBRD/IDA) project 1,082 940 Stand alone Projects 908 737 Implementing agency arrangement 241 179 Other recipient executed project 233 172 Debt service (non IBRD/IDA) 59 - Development grants 7 20 Subtotal 2,530 2,048 Financial Intermediary Funds Limited Fiduciary Arrangements 2,754 2,109 Financing Vehicles 409 776 IBRD/IDA Debt service 384 284 Transfer to other Grant making organization 17 29 Secretariat and TF Admin for Financial Intermediary programs 16 8 Subtotal 3,580 3,206 Other Bank Group IFC 255 223 MIGA 1 3 Subtotal 256 226 Total Cash Disbursements 6,725 5,793 June 30, 2008 June 30, 2007 Other Other IBRD/ID WBG IBRD/IDA WBG A - BE group - BE group 5% 4% 5% 4% IBRD/IDA IBRD/ID - RE A - RE IBRD/IDA 35% IBRD/ID 38% A - FA - FA 53% 56% 17 The disbursements by category reported in the table above may not appear consistent with those in other sections of this Partnership and Trust Fund Annual Report. This is because the categorization of disbursements in the table above is based on the nature of trust fund agreement with donors at the overall project level, whereas the categorization of disbursements in other sections is based on the nature of execution arrangement at the disbursing project level. 42 Trust Fund Operations: Financial Information Summary Year ended June 30, 2008 Annex B Annex B Trust Fund Glossary Term Definition Administration Agreement between the Bank and a donor specifying a trust fund’s Agreement purposes and scope of activities. It also defines the nature of the Bank’s relationship with the donor and spells out, among others, the arrangements governing the use of funds, progress and financial reporting, cost recovery fee, auditing and disclosure of information. Bank-Executed Trust Funds for which the Bank has spending authority, in support of its own Funds program, including analytical and advisory activities, project-related activities, partnership secretariats and TF administration activities. Cash Contributions Amount received in cash by the World Bank from donors during any fiscal year. Cofinancing An arrangement under which funds are provided by third parties for a specific project also financed by a loan, credit or grant from the Bank. Debt Service and Funds established to assist recipients in servicing or reducing their Debt Reduction Trust external obligations or debt to IBRD, IDA or other creditors. Fund Disbursements Payments made from a trust fund account to eligible recipients, not including transfers from one trust fund to another. Donor Any entity that makes funds available to be held in trust by the World Bank, including governments, international and private organizations. In addition, the World Bank contributes to some Trust Funds from its net income. Financial Funds that are not covered by either Bank-Executed Trust Funds or Intermediary Funds Recipient-Executed Trust Funds. These include funds involving financial engineering and complex financial schemes, or arrangements in which the Bank provides specific administrative or financial services with a limited fiduciary or operational role (previously referred to as fiscal agent). Free-Standing Trust Non-programmatic funds established to finance a specific activity or set Funds of activities as specified in the administration agreement for the trust fund. Grant Funds provided from a trust fund to an external recipient for implementation of the trust fund activities that carry no repayment obligation when utilized for the agreed activities. The recipient agrees to implement the grant activities by signing a grant agreement. 43 Annex B Grant Agreement Agreement between the Bank and an external recipient of a trust fund which governs the use of the donor’s grant. It spells out the respective responsibilities of the Bank and the recipient. Multi-donor Trust A mechanism which combines the contributions of multiple donors, Fund generally for a program of activities over a number of years. This arrangement includes essentially standard legal agreements with all donors, which specify governance procedures covering management, operational and financial reporting, and uses of the funds. Programmatic Trust Funds that finance multiple grants, under a two-stage funding Funds mechanism. In the first stage, one or more donors agree to a broad framework designed to support a program of activities over multiple years and commit the funds. In the second stage, the grants are approved for specific activities in accordance with agreed criteria. Grants may be approved by the World Bank, the donor, or a special committee which may include representatives of the Bank, the donor(s), and/or other entities. Promissory Notes Irrevocable and legally binding contributions pledged by donors through signed administration agreements and settled through deposit of a demand note. The demand note is recorded as promissory note when received, encashed based on schedules agreed with the donor and recorded as cash contribution upon encashment. Recipient Any entity that receives trust fund monies, including governmental, quasi governmental, nongovernmental, or private institutions. The World Bank itself may be the recipient of a trust fund in support of Bank activities. Recipient-Executed Funds that the Bank passes on to a third party recipient for development Trust Funds activities, typically financing the investment and recurrent needs of service delivery, capacity building and technical assistance. The Bank normally plays an operational role for these funds, including appraisal and supervision of funded activities. Technical Activities directly supporting technical assistance and capacity building Assistance/Advisory needs of recipient countries and/or the World Bank's own operational Services work program in the areas of analytical and advisory activities, knowledge sharing, lending development, capacity building, or research. Trust Fund A fund established to be administered by the World Bank with contributions from one or more donors to support development-related activities or programs. A trust fund can be country-specific, regional, or global in scope. It can finance recipient activities, Bank activities, partnership activities, or a combination of these. It can be set up as a programmatic fund to cover a series of activities, or on a free-standing, single-purpose basis. A trust fund may be executed by either a recipient agency external to the Bank, or by the Bank itself. 44 Copyright© 2006 The International Bank for Reconstruction and Development /The World Bank 1818 H Street NW Washington DC 20433 USA Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Executive Directors of the International Bank for Reconstruction and Development / The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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