Report No. 26541 Poverty Reduction and The World Bank: Progress in 2002 May 16, 2003 Poverty Reduction Group/Poverty Reduction Board Poverty Reduction and Economic Management Network Document of the World Bank Document of The World Bank ReportNumber: 26541 Poverty Reductionand The World Bank: Progress in2002 M a y 16,2003 Poverty Reduction Group/Poverty ReductionBoard Poverty Reduction and Economic Management Network .. 11 CONTENTS Acknowledgements..................................................................................................................... iv Abbreviations and Acronyms ...................................................................................................... v Executive Summary................................................................................................................... v11 .. Chapter 1: Progress inPoverty Reduction.................................................................................. 1 The MillenniumDevelopmentGoals...................................................................................... 1 Are we reaching the goals?..................................................................................................... 3 Goal 2. Achieve universal primary education................................................................. Goal 1.Eradicate extreme poverty andhunger............................................................... 46 Goal 3. Promote gender equality and empower women ................................................. 7 Goal 4. Reduce childmortality ....................................................................................... 8 9 10 Goal 7 Goal 6. Combatenvironmental Goal 5. Improve maternal health .................................................................................... .Ensure HIV/AIDS,malaria, and other diseases ............................................. sustainability ................................................................ 11 12 What will it take to achieve the MDGs?............................................................................... Goal 8. Develop a global partnership for development................................................ 13 Chapter 2: Better Management and Measurement for Poverty ReductionResults ..................16 Helpingdeveloping countries to achieve results .................................................................. 16 Poverty reduction strategies.......................................................................................... 17 Support to low-income countries .............................................................................. 17 Knowledge and capacity building................................................................................. Support to middle-income countries ......................................................................... 23 Understanding the linkages betweenpublic actions andpoverty outcomes ............- 2 5 25 Strengthening monitoring and evaluation systems for poverty analysis ..................31 Operationalizingnew tools to assess multiple dimensions of poverty..................... Increasingthe results orientation o f World Bank support for poverty reduction................. 37 Internationalpartnerships to improve development outcomes ................................. 32 34 37 Developing sector strategies with greater focus on poverty ......................................... Buildingpoverty-focused country assistance strategies ............................................... Better measurement andmonitoring o fresults of lendingoperations .......................... 41 43 Strengthening the poverty focus o f analytical work ..................................................... 45 Chapter 3: Challenges Ahead ................................................................................................... 47 47 Operationalizing the Bank's results orientation for poverty reduction................................. Supporting progress towards the MDGs............................................................................... 48 ... 111 BOXES. FIGURES.TABLES AND ANNEXES Boxes: Box 1: MillenniumDevelopment Goals and Targets................................................... 2 Box 2: 20 Examples o fBank involvement inmiddle-income countries ......................... The Attacking Poverty Program ..................................................................... Box 3: Box 4: Poverty and social impact analysis o fthe cotton sector reform in Chad........24 27 Box 5: Increasingthe effectiveness o f expenditures inUganda with PETS ..............29 Box 6: Improving understanding o f the links betweenpublic actions andpoverty 30 High-Level Forumon Harmonization ............................................................ outcomes ......................................................................................................... Box 7: 34 Box 8: 35 Aligningthe CAS to the PRSP -the case ofVietnam ................................... Global public goods........................................................................................ Box 9: 38 Box 10: Lessons learned fkom Country Assistance Evaluations inEl Salvador, Box 11: Sector strategies inFY02 andpoverty reduction............................................ Vietnam and Haiti........................................................................................... 39 41 Box 12: Evaluation o f the impact o f social funds on poverty ...................................... 44 Figures: Figure 1: Percentage o fpeople living on lessthan$1a day indeveloping countries ....4 Figure 3: Ratio o f girls to boys inprimary and secondary schools. inpercent...............7 Figure 2: Percent literacy o f 15-24 year-olds ................................................................. 7 Figure 5: Percent o fbirths attended by skilled health staff ............................................ Figure4: Under 5 mortality rate ..................................................................................... 8 9 12 Figure 7: Map o f PRSP countries ................................................................................. Figure 6: Percentage o f populationwith improved access to safe water ...................... 18 Tables: Table 1: People living on less than $1 and $2 per day by region ................................... 4 Annexes: Annex B: MillenniumDevelopment Goals: Regional Data........................................ Annex A: List o fMillenniumDevelopment Goals. Targets and Indicators ................54 56 Annex C: Summaries o f CompletedPoverty Assessments. Fiscal Years 2000 and Annex D: Number o fPoverty Assessments Completed, Fiscal 1989-2002.................59 2001.............................................................................................................. 60 Annex E: List o f Completed Poverty Assessments, Fiscal 1982-2002........................ 61 65 Annex G: List o f CompletedPRSPA-PRSP/JSA BoardPresentations byRegion ......68 Annex F: Annual Lendingto Selected Sectors, Fiscal 1985-2002.............................. Annex H: LinkingLendingto Performance ................................................................. 71 Annex I: Countries with On-going or PlannedBank and Other Donor-Supported PSIA Activities ............................................................................................ 74 iv ACKNOWLEDGEMENTS The report was preparedby Louise Cord, Aline Coudouel, Stefano Patemostro, and Giovanna Prennushi, under the direction o f John Page, Director, PovertyReduction Group, Poverty Reduction and Economic Management Network, andwith the overall guidance o f Gobind Nankani, Vice-president, Poverty Reduction and Economic Management Network. Assistance was provided byAlexander Arenas, Simone Cecchini, Esteban Hernandez, Vidhya Muthuram, and Radha Seshagiri. The report benefited from input and comments by RichardAdams, Rosa Alonso ITerme, Amar Bhattacharya, Peter Bocock, Shaohua Chen, RuiCoutinho, Ellen Goldstein, Amy Heyman, Aliya Husain, Jacob Kolster, MartinRavallion, Joanne Salop, Sudhir Shetty, Parita Suebsaeng, Eric Swanson, and SharonWhite. Comments received from a Bank- wide review that was heldon October 24, 2002 are also gratefully acknowledged. The report also incorporates feedback received from the World Bank's Committee on Development Effectiveness (CODE) on December 4,2002 and from the Board o f Executive Directors on December 17,2002. V ABBREVIATIONSAND ACRONYMS ADEA Association for Development o f Education inAfrica AREC Annual Report on Evaluation CapacityDevelopment ARPP Annual Report on Portfolio Performance BP Business Procedure CAE Country Assistance Evaluation CAS Country Assistance Strategy CASCR Country Assistance Strategy Completion Report CDF Comprehensive DevelopmentFramework CFAA Country Financial Accountability Assessment CGA Country Gender Assessment CGIAR Consultative Group on Intemational Agricultural Research CODE Committee on Development Effectiveness CPAR Country Procurement Assessment Review CPIA Country Policy andInstitutional Assessment CPRGS Comprehensive Poverty Reduction and Growth Strategy (Vietnam) cso Civil Society Organization D A C Development Assistance Committee DflD Department for International Development (UK) ECD Evaluation Capacity Development EDUCO Community Managed Schools Program (El Salvador) EU EuropeanUnion GDDS General DataDissemination System GDP Gross Domestic Product GEF Global Environmental Facility GLDN Global Development Learning Network GNI Gross National Income GPG Global Public Good GtZ Deutsche Gesellschaft fur Technische Zusammenarbeit HIPC Heavily IndebtedPoor Country ICLEI Intemational Council for Environmental Initiatives ICT Information and Communication Technologies IDA IntemationalDevelopment Association IEA InternationalEducation Assessment IFMIS IntegratedFinancial Management Information Systems IMF IntemationalMonetary Fund I T Information Technology KfW Kreditanstalt fur Wiederaufbau LDC Least-Developed Country LIC Low-Income Countries LICUS Low-Income Countries Under Stress M A P Multi-country AIDS Program vi MDB Multilateral Development Ban c MDG MillenniumDevelopment Goal M I C Middle-Income Country NEPAD New Partnership for Africa's Development NPV Net Present Value ODA OfficialDevelopment Assistance OECD Organization for Economic Co-operation andDevelopment OED Operations EvaluationDepartment PARIS21 Partnerships InStatistics for Development inthe 21StCentury PBA Performance-Based Allocation PCF Prototype CarbonFund P E M Public ExpenditureManagement PER Public ExpenditureReview PETS Public Expenditure Tracking Surveys PPG Pro-Poor Growth PRS Poverty Reduction Strategy PRSP Poverty Reduction Strategy Paper PSIA Poverty and Social Impact Analysis PTI Program of Targeted Interventions QAG Quality Assurance Group QSDS Quantitative Service Delivery Surveys RBM Roll Back Malaria RVA Riskand Vulnerability Assessment SSP Sector Strategy Paper S A M Social Accounting Matrix SSRLJ Social Sector RehabilitationLoan SWAP Sector Wide Approach TFSCB Trust Fundfor Statistical Capacity Building UN UnitedNations UNCTAD UnitedNations Commissionon Trade andDevelopment UNDG UnitedNations Development Group UNDP UnitedNations Development Programme UNFPA UnitedNations PopulationFund UNICEF UnitedNations Children's Fund WDR World Development Report WHO World Health Organization WTO World Trade Organization vii EXECUTIVE SUMMARY 1. It has beenten years since the first poverty progress report was issued. That report summarized trends inpoverty andcountry policies for povertyreduction, andreviewed actions taken by the Bank to support countries inimplementingthe findings o f the World Development Report (WDR) 1990.' Since then, there have been six more poverty progress reports that have sought to look at trends inincome poverty and analyze the poverty focus o f the Bank's activities, and to the extent possible, their impact on poverty. These reports synthesize materials from a broadrange o f Bank documents that address the poverty focus and content o f the Bank's work and have been useful for sharing with the international community the Bank's overall strategy and contribution to poverty reduction. 2. Over the last decade, there has been a change inhow the intemational community defines andmeasures povertyreduction. The Bank's World Development Report (WDR) 2000/20012 articulated an intellectual framework for poverty reduction that had evolved through the 1990s.It introduced a broader definition o fpoverty reduction built around the three dimensions o f opportunity, empowerment and security. This broader concept became the basis for the Bank's Strategic F r a m e ~ o r k .The MillenniumDevelopment Goals (MDGs), adopted at the 2000 ~ UnitedNations MillenniumSummit, provide quantifiable goals for the global community to measure progress towards an important set o f income and non-income aspects o fpoverty, reflecting the emphasis on achieving concrete measurable results. 3. This year's report incorporates this broader definition o fpoverty andreflects the growing emphasis on achieving measurable development results. It pays more attention to income and non-income poverty outcomes and the Bank's results orientation than previous reports. In particular, it examines how in2002 the Bank helped developing countries to achieve results on the ground and how it strengthened the results orientation o f its own products and activities. 4. To set the stage for the discussion, Chapter 1places Bank support for poverty reduction within the broader context o fthe overall international development agenda, as defined by the income and non-income MDGs and the intemational partnership that has emerged to support progress towards these goals. Chapter 2 discusses key aspects o fthe Bank's framework for better managing for and measuringresults. Inparticular, the chapter addresseswhat the Bank i s doing to support results basedmanagement for poverty reduction indeveloping countries and within the institutionitself. The final chapter summarizes key challenges for the institution as it moves towards increasing its results orientation and impact on poverty outcomes. viii Key messages of this year's report 5. There are five key messages inthe report: (1) There has been importantprogress towards achieving the MDGs, although it has been uneven across the different goals and regions. But, given current trends extraordinary efforts at the country and global levels will be needed to meet all of the targets. We are on track to achieve the income poverty goal at a global level, although there are many countries, or groups within countries, that are not likely to meet this target at current trends without a concerted effort by the countries themselves and the international community. The situation i s most dramatic inSub-Saharan Africa, which i s beset by highpopulation growth rates, declining per capita incomes, and limitedprogress to date inreducing poverty compared to other large regions. There has also been important progress on the non-income MDGs,but advances have been more uneven, calling into question the achievement o fmost o fthem at current trends (with the exception o f access to safe water) without intensified actions at the country and global levels. Broadly speaking, many o f the countries o f EastemEurope, Latin America and the Caribbean, and East Asia are on track to meet many o fthe MDGtargets, while few Sub- Saharan African countries are likely to meet them inlight o f current trajectories. Wide disparities are also evident withinregions that have shown progress; inSouth Asia, for example, several countries are still far from achieving many o f the MDGs. (2) TheBank, the developing countries, and their developmentpartners recognize the magnitude of the challenge and haveput intoplace a development architecturefor acceleratedprogress towards the MDGs. Actions at the global level are critical, and need to focus especially on promoting market access for developing country exports, increasing aid flows, and accelerating the pace o f debt relief. Inthe final analysis, however, the policies and institutions o f the developing countries, including their ability to accelerate broadly shared growth, remain the most important determinants o fprogress. Stimulating private sector growth through improvements inthe investment climate will bekey inpromoting growth. (3) TheMDGsprovide an international basisfor setting goals, but it is at the country level, through the development of nationally-ownedpoverty reduction strategies-Poverty Reduction StrategiesPapers (PRSPs) in IDA countries and other national strategies in middle-income countries (MICs) --that the results will be achieved. The Monterrey Consensus underlinedthe centrality o f nationally-owned poverty reduction strategies while recognizing the need to allow countries to adapt the MDGsto individual circumstances, andto identify,prioritize and implement the country- specific policies and institutional arrangements necessary for achieving their national goals. The PRSP approach has beencentral to poverty reduction efforts inlow- income countries since late 1999. Based on the Comprehensive Development Framework (CDF) principles, PRSPs are country-owned, holistic poverty reduction strategies, developed on thebasis o fbroadly participatory processes, with a focus onresults and accountability, andan emphasis onpartnerships. To date, countries have completed28 FullPRSPs, 46 Interim PRSPs, and 8 PRSP Progress Reports on the implementation o f their strategies. Unlikelow-income countries, MICsdo not have a single common strategic framework, ix such as the PRSP, for settingout or gauging their objectives andresults focus. Nonetheless, many countries publishtheir own national strategies and some are beginning to use results-based approaches to development policy and to the management o fpublic expenditures. (4) TheBank, together with its developmentpartners, is actively involved in supporting countries to design and implement good nationalpoverty reduction strategies both through supportfor knowledge generation and through increasing the resultsfocus of its own activities. With respect to knowledge generation, the Bank i s seeking to: understand more deeplythe linkages between public actions, growth and poverty outcomes; improve country statistical capabilities; and develop more effective tools to assess the non-income dimensions o fpoverty. The Bank i s also strengtheningits ability to link its country support to the implementation o f national poverty reduction strategies and to increase the results orientation and poverty focus o f its Country Assistance Strategies (CASs), projects, analytical and advisory services, and sector strategies. While progress has been made indeveloping methodologies to assess the poverty focus o f these instruments, there are still methodological issues that limit the comparability o f the results across countries and sectors and over time. (5) As the Bank movesforward itfaces two key challenges. The first is how best to support the global effort to accelerate progress towards the MDGs, particularly with respect to pro-poor growth, deepeningcountry capacity for data collection and analysis, and helping low-income countries design and implement country-ownedpoverty reduction strategies. The second challenge relates to how the Bank will move forward in strengthening its own results orientation with respect to sustained growth andpoverty reduction. Meeting this challenge will take time and effort, but good progress has already beenmade andwill accelerate as we move into the new millennium. 1 CHAPTER1: PROGRESSINPOVERTYREDUCTION 1. This report i s about results inachievingpoverty reduction. It focuses inparticular how the Bank is helping developingcountries to achieve tangible results for their peoples, andhow it i s strengtheningthe results orientation o f its own products and activities. To set the stage for this discussion, this chapter places the Bank's support for poverty reduction within the broader context o fthe overall agenda definedby the MDGs, and the intemational partnershipthat has emerged to support progress towards these goals. Three key messages arise from the analysis. First,while we are on track to achieve the income poverty goal, many countries or groups within countries will need extraordinary efforts both at the country and global levels to meet this target based on current trends. Second, there has also beenimportant progress on the non-income MDGs,but advances havebeenmore uneven, calling into questionthe achievement o fmost o f them (with the exception o faccessto safe water) at the global level without an intensifiedeffort. Third, the Bank and the international community, includingthe developing countries, recognize the magnitude o fthe challenge andhave put into place a development architecture for accelerated progress towards the MDGs, involving actions byboth the developing and developed countries. The MillenniumDevelopmentGoals 2. InSeptember 2000, Heads o fState gathered at the UnitedNations Millennium Summit inNewYork and agreedto commit to a set ofclearly defineddevelopment objectives andto track progress towards them. The MillenniumDevelopment Goals (MDGs) that emerged comprise a set o f income and non-income targets and indicators. They serve as a call to action for the international community, help to promote greater mutual accountability for development results, and provide a framework to help governments formulate strategies andprioritize public actions. 3. The MDGsestablish quantified and time-bound targets for operationalizingthe development objectives o f the UnitedNations Millennium Declaration, based on the goals and targets agreed at global conferences and summits heldinthe last decade. The MDGs comprise a set o f eight goals, 18 numerical targets and nearly 50 quantifiable indicators to assess progress (see Box 1for the goals and targets and Annex A for a complete list of indicators). The first seven goals are directed at reducing poverty inmany o f its income andnon-income dimensions. The eighthgoalproposes key elements o f a global partnership for development, designedto help to support the first seven goals. While each goal i s important inits own right, their strength also lies inthe coherent overall framework they offer for addressing poverty inmany o f its dimensions. 2 Box 1: MillenniumDevelopmentGoals and Targets Goals Targets 1. Eradicate extreme poverty J Halve, between 1990 and2015, the proportion ofpeople whose and hunger income i s less than one dollar a day. J Halve, between 1990and2015, the proportion ofpeople who suffer from hunger. 2. Achieve universal primary J Ensure that, by 2015, children everywhere, boys and girls alike, education willbe able to complete a full course o fprimary schooling. 3. Promote gender equality and J Eliminate gender disparity inprimary and secondary education, empower women preferably by 2005 and inall levels o f education no later than 2015. 4. Reduce child mortality J Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate. 5. Improve maternal health J Reduce bythree-quarters, between 1990 and2015, the maternal mortality ratio. 6. Combat HIV/AIDS, malaria J Havehaltedby2015, andbegunto reverse, the spread of and other diseases HIV/AIDS. J Havehaltedby2015, andbegunto reverse, the incidence ofmalaria and other major diseases. 7. Ensure environmental J Integrate the principles o f sustainable development into country sustainability policies andprograms and reverse the loss o f environmental resources. J Halve, by 2015, the proportiono fpeople without sustainable access to safe drinlung water. J Haveacheved, by2020, a significant improvementinthe lives of at least 100 million slum dwellers. 8. Develop a global partnershipJ Develop further an open, rule-based, predictable, nondiscriminatory for development trading and financial system. J Address the special needs o fthe least developed countries. J Address the special needs o f landlocked countries and small island developing states. J Deal comprehensively with the debt problems o f developing countries through national and international measures inorder to make debt sustainable inthe long term. J Incooperationwith developing countries, develop andimplement strategies for decent and productive work for youth; J Incooperation withpharmaceutical companies, provide access to affordable, essential drugs indeveloping countries; J Incooperationwiththe private sector, make available the benefits o f new technologies, especially information and communications. 3 4. The MDGsrepresent an important step forward inrecognizingnon-income as well as income dimensions o fpoverty and inmobilizing both developing anddeveloped countries in support o f a well-defined set o f quantified development goals. However, the MDGinitiative also presents some risks. Perhaps most importantly, the emphasis on non-income targets could distract attention from the absolutely critical role that economic growth plays inreducing income and non-income poverty, particularly inmany low-income countries where sustained growth has been difficult to achieve. It will be important for developing countries andtheir international supporters to strengthenfurther their understanding o fthe key drivers o fbroadly shared growth - particularly inthe poorest countries -to ensure progress towards both the income and non- income dimensions of the MDGs. Another risk i s that the MDGs could leadto a fi-agmented approach to development, as they are not inthemselves a strategy for achieving broadly-shared growth and poverty reduction, but rather a set o f benchmarks towards these goals. It is the country strategy process-as defined by the Comprehensive Development Framework (CDF)4 andexpressed inPRSPs or other national development strategies-that identifies the crucial national public actions and appropriate outcome indicators that will ultimately contribute to achieving nationally relevant targets. It will be important to support the integration o f the MDGs into the national strategies. Finally, by not includingtargets and indicators for empowerment andsecurity, theMDGsrisk underplayingthe importance o fthese keydimensions o fpoverty. Work i s currently underwayto define global and national indicators that can best capture progress on these cross cutting aspects ofpoverty. Are we reachingthe goals? 5. There has been important progress towards achieving the MDGs, although it has been unevenacross the different goals andregion~The goals for eradicating extreme income . ~ poverty and improving access to safe water are likely to bemet, at least at the global level. In contrast, for many o fthe other goals-notably including universal primary education, promoting gender equality, andreducingchildmortality-current rates o fprogress have not beensufficient to suggest that the 2015 targets would be met. Regional trends so far have also been mixed. Broadly speaking, many o f the countries o f Eastern Europe, Latin America and the Caribbean, and East Asia are on track to achieve many o f the MDGtargets, while few Sub-Saharan African countries are likely to meet them on current trends. Wide disparities are also evident within regions that have shown progress, as in South Asia where several countries are still far from achieving many o f the MDGs, unless there i s an intensified effort undertakenby the countries and the international community. 6. While significant efforts have beenmade to compile the data presentedbelow, tracking progress toward the attainment o f the MDGsremains a difficult task, particularly inlight o f the unevenquality and availability o fthe relevant information. Moreover, the data presented here are derived from available country averages, which mask important within-country variations. Carehl country level analysis will be required inorder to assess how the poor within each country, including middle-income countries, are faring inachieving progress toward the MDGs. 4 Goal 1.Eradicate extremepoverty and hunger 0 Halve, between 1990 and 2015, the proportion o fpeople whose income i s less than $1 a day. 7. On the basis o f current trends, this goal will likely be achieved at the global level, with the estimated incidence falling from 29.6 percent in 1990 to 13.3 percent in2015 (Table 1and Figure 1). This corresponds to a decrease inthe numbero fpoor by483 million (from 1,292 million to 809 million). At the regional level, estimates indicate that East Asia and South Asia are on track for achieving this goal, with an estimated incidence o f one dollar a day poverty falling to 3.9 percent and 15.7 percent in2015 respectively (compared to 30.5 percent and 45.0 percent in 1990, respectively). However, progress inSouth Asia is much less evident when a $2 a day poverty line i s considered, as the poverty rate drops only from 89.8 percent in 1990 to 68.0 percent in2015. The Latin America and Caribbean region i s also expected to make good progress, although not enough to meet the MDGgoal, as the incidence o f one dollar a day poverty i s projectedto fall by only one third, from 11.0 percent in 1990 to 7.5 percent in2015. 8. Onthe other hand, estimates show that very little progress is expected inEurope and Central Asia, the Middle East and NorthAfrica, and Sub-Saharan Africa on the basis o f current trends. InEurope and Central Asia, the incidence o fone dollar a day poverty is projectedto remain constant between 1990 and 2015 (although it has declined since its peak in 1999). Using the higher poverty line of $2 a day, povertyrates are actually expected to increase between 1990 and 2015, from 6.8 percent to 9.3 percent (translating into an additional 13.6 millionpoor). But, the situation is the most severe inSub-SaharanAfrica, where the already very highincidenceof one dollar a day poverty is likely to remain virtually unchanged, on the basis o f current trends (47.4 percent in 1990 and 46.0 percent in2015). This translates into a large increase inthe number o fpoor, giventhe expected increase inthe region's population, from 241 million in 1990 to 404 million in2015. Because o fthe lack o fprogress inSub-Saharan Africa, and the relative success o f other large regions inreducingpoverty, Africa will account for 50 percent of the world's poor in2015, compared to 19 percent in 1990. Table 1: People living on less than $1 and $2 per day by region6 POVERTY & HUNGER Percent of people living below $1 Percentof peopleliving below $2 per day per day 1990 1999 2015 1990 1999 2015 East Asia and the Pacific 30.5 15.6 3.9 II 69.7 50.1 16.6 (excluding China) 24.2 10.6 1.1 64.9 50.2 18.4 Europe and Central Asia 1.4 5.1 1.4 6.8 20.3 9.3 LatinAmerica andthe Caribbean 11.0 11.1 7.5 27.6 26.0 18.9 Middle East andNorth Africa 2.1 2.2 2.1 21.0 23.3 16.0 South Asia 45.0 36.6 15.7 89.8 84.8 68.0 Sub-SaharanAfrica 47.4 49.0 46.0 76.0 74.7 70.4 Total 29.6 23.2 13.3 62.1 55.6 38.1 (excluding China) 28.5 25.0 15.7 58.7 57.5 44.7 5 1990 1999 2015 1990 1999 2015 EastAsia andthe Pacific 486 279 80 1,114 897 339 (excludingChina) 110 57 7 295 269 120 Europe andCentralAsia 6 24 7 31 97 45 LatinAmerica andthe Caribbean 48 57 47 121 132 117 Middle East andNorthAfrica 5 6 8 50 68 62 SouthAsia 506 488 264 1010 1,128 1,139 Sub-SaharanAfrica 241 315 404 386 480 618 Total 1,292 1,169 809 2,712 2,802 2,320 (excludingChina) 917 945 735 1,892 2,173 2,101 9. Cross-country analysis shows that when average incomes rise, the average incomes o f the poorest fifth o f society rise proportionately. Thus, accelerated growth indeveloping countries will bethe most important determinant ofwhether the incomepoverty target is met. The needis particularly critical in Sub-Saharan Africa, where per capita GDP growth i s not expected to exceed 1.6 percent annually up to 2015. There are, however, variations across countries and across time inthe share of income accruing to the poorest fifth.' Reforms designedto enhance growth need to take into account the regional context and the institutional and structural conditions o f each country so as to ensure that the gains from growth are more equitably distributed. Inmany countries this will requirea more efficient use o fpublic resources as well as improved policies, institutions and service delivery. Inaddition, progress towards the other MDGtargets will not only help to reduce incomepoverty, but also help to ensure that growth favors the poor. Likewise, progress towards the income poverty MDGwill also help to accelerate progress towards the non-income MDGs. Figure 1: Percentage o fPeople Livingon Less Than $1a Day inDeveloping Countries IPercent , 40 l o ' I 1990 1995 2000 2005 2010 ~- +Actual (<$I) = = - Projected (<$I) ~ ~ Path to aoal ( ~ $ 1 ) Source: World Bank (2003), Global EconomicProspectsand the Developing Countries: Investingto Unlock Global Opportunities.Washington, D.C. 6 0 Halve, between 1990 and 2015, the proportion o fpeople who suffer from hunger. 10. Hunger is typically measuredinterms o fthe shortfall inaverage daily calorie consumption, i.e., undernourishment. The number o f undernourished people inthe developing world has fallen from 840 million in 1990 to about 777 million at the end o f the 1990s. Ifthis trendcontinues, it canbe expected to decrease to 577 millionby2015, which remains above the target o f 420 million. The prevalence o f child malnutrition inthe developingworld, another important indicator o fmalnourishment, fell from 46.5 percent in 1970 to 27 percent in2000.* Even so, 150million children under five are still malnourished. At current rates o f improvement, halving child malnutrition by 2015 i s unlikely. In2020, 140 million children under five in developing countries will still be underweight, or about 50 million short o f the goal. One o f the reasons for slow progress intackling malnutrition has been the lack o f government capacity which leads to inappropriatepolicies andprograms such as untargeted and unaffordable food subsidies.' Goal 2. Achieve universalprimay education 0 Ensurethat, by2015, children everywhere, boys and girls alike, will be able to complete a full course ofprimary schooling. 11. Recent World Bank estimates indicate that 36 countries have already achieved universal primary completion rates and 30 more may reach the goal by 2015. The regions o f East Asia and the Pacific, LatinAmerica and the Caribbean, and Europe and Central Asia have the highest share o f countries that are likely to meet the target o funiversalprimaryschool education, while the Sub-Saharan Africa regionhas the lowest share. 12. Giventhe limitedavailability ofdata on primary school completion rates since 1990, youth literacy rates are often usedas a proxy to monitor progress towards this goal. Overall, literacy rates indeveloping countries improvedonly slightly inthe 1990s, rising from 82 percent in1990to 85 percent in2000. As aresult, progress inraisingthe youth literacyrateis well below the trend necessary to achieve 100percent literacy by 2015 (Figure 2). 13. For many countries, difficulties inmeeting this goal arise not only from limited school infrastructure, but also from the inability o f the system to retain children through the whole primary cycle. Some 79 developing countries have already built enough schools to educate 100 percent o f their primary school-age children, but only 27 o f those countries retain 100percent o f children inschool through primary graduation. This highlights the complementarity o f public actions focusing on improving school infrastructure, on raising the quality o f education (including teaching materials, teacher quality and incentives, andpupil-teacher ratios), and on providingincentives for households to send their children to school for the entire cycle. 7 Figure2: Percent literacy o f 15-24 year-olds Percent Source: World Bank(2003), World DevelopmentIndicators,Washington, D.C. Goal 3. Promote gender equality and empower women 0 Eliminate gender disparityinprimary and secondary education preferably by 2005 and inall levels o f educationno later than 2015. 14. Since 1990, the ratio o f girls to boys inprimary and secondary school has beenrising gradually inlow- andmiddle-income countries, from 79.2 percent in 1990 to 84.2 percent in 1998. But, as indicatedinFigure 3, on the basis o f current trajectories, progress has been too slow to reach this goal and eliminate gender disparities inprimary and secondary education by 2005. Latin America and the Caribbean, as well as Europe and Central Asia are the regions most likely to achieve the goal o f eliminating the primary and secondary enrollment gap betweenboys and girls by 2015. Progress has also beengood inthe Middle East andNorthAfrica. InSub- Saharan Africa, where barriers to girls' schooling have traditionally been lower than insome other regions, progress has been disappointing. Figure 3: Ratio o f girls to boys inprimary and secondary schools, inpercent 1 Percent I I change from ISCED76to ISCED97. 8 15, The relatively slow progress ineliminating gender disparities inprimary and secondary education reflects not only the fact that girls are less likely to enroll inschool thanboys inmany developing countries, but also that they are more likelyto drop out, because parents think boys' schooling is more important or because girls' work at home seems more valuable than schooling. Concerns about the safety o f girls, or traditional biases against educating them, can also mean that they never start school or do not continue beyond the primary stage. Goal 4. Reduce child mortality 0 Reduce by two-thirds, between 1990 and 2015, the under-fivemortality rate. 16. The under-five mortality rate declined significantly inthe 1 9 8 0 a~period when the total ~ number o fbirthswas still rising, which gave hope that mortality rates o fchildren under-five could be cut bytwo-thirdsinthe following 25 years. Butprogress slowed almost everywhere in the 1990s, and the under-five mortality rate dropped only slightly, declining from 91 per thousand live births in 1990 to 85 per thousand live births in2000. At the end o f the 1990s, only 31developing countries were making sufficient progress to reduce under-five child mortality to a thirdo fits 1990 levelby 2015. As aresult, based on current trends, this goal will not bemet by 2015 (Figure4). Middle-income countries account for most o f those on track to achieve it, although a few poor countries (Le., Bangladesh and some o fthe poorest countries o f the former Soviet Union) are also inthis group. At the regional level, Sub-Saharan Africa i s least likely to achieve this goal by 2015; as for many countries inthis region, infant and child mortality rates actually rose inthe 1990s due to civil disturbances and the HIV/AIDS epidemic. Incontrast, countries inLatin America, South Asia and the Middle East and NorthAfrica have the greatest likelihood o f meeting this goal. Figure 4: Under 5 mortality rate Per 1,000 live births II , 2000 ~ 2~~1990 2015 Source: World Bank (2003), World DevelopmentIndicators,Washington, D.C. 17. The slow progress inreducing the under-five mortality rates reflects a decrease in vaccination coverage as well as the continued presence o f malnutrition and disease. For 70 percent o fthe children who die before their fifth birthday, the cause i s disease or a combination o fmalnutrition and diseases that could be readily preventable in a high-incomecountry, such as 9 acute respiratory infections, diarrhea, measles, andmalaria. Unhealthy conditions at the time o f birthalso play an important role ininfantmortality rates. Goal 5. Improve maternal health Reduce by three-quarters, between 1990 and 2015, the maternalmortality ratio. 18. Lack o f current data on maternalhealth limits the monitoring o f trends over time. Using current estimates o fmaternalmortality, several countries inEurope and Central Asia, Latin America and the Caribbean, and the MiddleEast and North Africa have low maternalmortality ratios and thus maybe well placed to achieve this goal by 2015, while countries inSouth Asia and especially Sub-Saharan Africa have very highlevels ofmaternalmortality and would need significant improvements to meet this target by 2015. 19. Complications o fpregnancy and childbirth are the leading cause o f death amongwomen o freproductive age indeveloping countries. Hence, access rates to skilled birthattendants provide important insights on overall progress towards meetingthe maternal mortality goal. Skilledbirthattendants can help recognize and prevent medical crises andprovide mothers with basic information. Currently, just over halfo f all deliveries globally are attended by a skilled birthassistant. Regionally, LatinAmerica andthe Caribbean has the highest share ofbirths attended by skilled health staff, while the greatest progress over the past decade has been achieved inEast and South Asia and the Middle East andNorthAfrica. InSub-Sahara Africa, the share o f births attended by skilled health staff has remained constant since 1989 (Figure 5). Figure 5: Percent o fbirths attended by skilled health staff I I 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 *Asia -Latin America &Caribbean +Middle East & NorthAfrica -Sub-Saharan Africa Source: World HealthOrganization(WHO) (2001), Maternal Mortality in 199.5: Estimates developed by WHO, United Nations Children 's Fund (UNICEF) and United Nations Population Fund (UNFPA), Geneva. 10 Goal 6. CombatHIWAIDS,malaria, and other diseases 0 Have halted by 2015, and begun to reverse, the spread o f HIV/AIDS. 20. Lack o f data again affects the ability to monitor progress towards haltingthe spread o f AIDS, although estimates from UNAIDSindicate continuedgrowth inthe number o fnewly infected adults and children. In2001, an estimated 5 millionpeople contracted the disease, about 3.4 million o fwhich were in Sub-Saharan Africa. Based on available prevalence rates, Europe and Central Asia has the lowest registeredAIDS rates, and Sub-Saharan Africa has the highest. HIV/AIDS i s the leading cause o f death inSub-Saharan Africa and the fourth largest killer worldwide. 21. With an estimated 42 millionpeople livingwith HIV/AIDSin2002 and21 million deaths since the disease was first identified,AIDS poses an unprecedented public health, economic, and social challenge. By disproportionately infecting young people-half o f all new HIVinfections are among 15- to 24-year-olds-and by killingso manyadults intheir prime, the epidemic underminesdevelopment. Among those lost are teachers, health care workers, and farmers, forcing the closure o f schools and clinics and threatening food security. Deaths o fparents have left more than 14 million HIV/AIDS orphans inthe world, mostly in Sub-SaharanAfrica. This figure expected i s expected to worsen for the next 10years, straining country-level capacity to achieve the primary education and child mortality MDGs. Have haltedby 2015, and begunto reverse, the incidence o f malaria and other major diseases. 22. Very little information is available on the incidence o fmalaria, which makes it difficult to track progress. Malaria i s endemic inmore than 100 countries and territories, affects an estimated 300-500 million people each year and accounts for more than one million deaths annually. Most o f the deaths due to malaria occur inAfrica, mainlyamong childrenunder the age o f five. But malaria i s also on the rise inmany countries where it had been previously sharply reducedor even eradicated, andmore than a thirdo f the world's populationnow lives in areas where malaria i s endemic. Although there has been some success ineradicatingthe mosquitoes that spread the disease incountries where malaria was not widespread, this has not beenpossible intropical climates. 23. Onpresent trends, there will be 10.2 million new cases o ftuberculosis in2005, and Africa will have more cases than any other region. Tuberculosis i s the main cause o f death from a single infectious agent among adults indeveloping countries with an incidence o f 164 cases for every 100,000 people, compared to only 19 per 100,000 inhigh-income countries. Over the past decade, the incidence o f tuberculosis has grownrapidly inEastern Europe and Central Asia, Sub- Saharan Africa, and Asia. The directly observed treatment short-course (DOTS) strategy has been shown to be effective intreating tuberculosis and coverage has been increasing, but in 1999 less than half of the population inthe 23 countries with the largest number o f cases had access to DOTS. 11 Goal 7, Ensure environmental sustainability 0 Integrate the principleso f sustainable development into country policies andprograms and reverse the loss o f environmental resources. 24. Progress towards sustainable development objectives has been less than expected. During the 1990s, tropical forest coverage fell by 9.4 million hectares per year and while the proportion o fprotected areas increased from 7.5 percent in 1990 to 9.5 percent in2000, the rate o f increase remains slower than inthe 1980s. While energy efficiency has increased globally, particularly in some middle-income countries, the gap betweenhigh-and low-income economies has widened further. Carbon dioxide emissions, the main cause o fthe greenhouse effect, have increasedby 22 percent between 1990 and 1998 indeveloped countries and by a staggering 63 percent inthe developing world." Inaddition, growing populations are puttinggreater pressure on landand natural resources, with rural areas experiencingmost o f the deterioration, although some urban areas are also facing worsening environmental conditions, notably inEast and South Asia. 25. The environmentprovides goods and services that sustain humandevelopment, and development must sustain the environment. Better natural resource management increases the income and nutrition o fpoor people. It also reduces the risk of disaster from floods. Improved water and sanitation reduce child mortality, and better drainage reduces malaria. Managing and protectingthe environment contributes to reaching the other MillenniumDevelopment Goals. Fortunately, good policies and economic growth, which work to improve peoples' lives, can also work to improve the environment. 0 Halve by 2015 the proportion o fpeople without sustainable access to safe drinkingwater. 26. At the current rate o fincrease, it is likelythat this goal will be achievedandthe number o fpeople without sustainable access to safe drinkingwater will be cut inhalfby 2015, with 86 percent o fthe developing world's safe water needs met. In 1990, about 72.5 percent o f the population indeveloping countries had access to safe water andby 2000 this share reached almost 79 percent, as over the last decade nearly one billion people gained access to an improved water source (Figure 6). However, to achieve the 2015 target, an additional 1.5 billion people will needto be served. O fthese, it i s estimated that more than 40 percent live inEast Asia and the Pacific, 25 percent inSub-Saharan Africa, and 19 percent inSouth Asia. Countries inSouth Asia are most likelyto meet this goal by 2015, although again there are important problems with missingdata that limit the reliability o fthe projections. 12 Figure6: Percentage ofpopulationwith improved access to safe water E- 1990 2000 2015 ~ Source: World Bank (2003), World Development Indicators,Washington, D.C. 0 By2020, to have achieved a significant improvement inthe lives o f at least 100millionslum dwellers. 27. A keyindicator ofwell-beinginslumareas is access to sanitation. Despitelarge investments inthe 1980s and 1 9 9 0 the~ ~ number o f people without access to sanitation services inurbanandperi-urban areas continues to increase, partlybecause ofthe rapidgrowthinurban settlements. Although access i s generally lower inrural areas, sanitation i s a particularly critical problem incrowded and rapidly growing urban settlements, where the disease risks associated with poor sanitation are greater. Approximately 2.4 billion people still lack sanitarymeans of disposing o f human waste; the situation i s most acute inSouth and East Asia, where more than half o fthe population lacks access. At the 2002 Conference on Sustainable Development in Johannesburg, countries agreed to commit to a target for reducing the numbers o fpeople who lack access to proper sanitationby 2015." Goal 8.Develop a globalpartnershipfor development 28. Meeting the MDGswill require a concerted effort on the part o f developing and developed countries alike. Muchwill depend on the actions taken by developing countries and on the policy frameworks they have inplace. However, greater international cooperation and assistance fi-om developed countries are also essential, particularly inorder to assist those low- income countries with severe resource and capacity constraints. The March 2002 Monterrey International Conference on Financing for Development brought together heads o f State, foreign, development and finance ministers, civil society, and internationalinstitutions, who reached a broad consensus (the "Monterrey Consensus") about what needs to be done by developing and developed countries to promote a global partnership for development and accelerate progress towards the MDGs. Progress inimplementingthe main elements o f this consensus i s briefly presentedinthe next section. 13 What will it take to achieve the MDGs? 29. Overall, increasing economic growthremains the central driver for faster progress towards all o fthe MDGs. Economic growth will not only support progress towards the income poverty target, but will also help to generate the resources necessary to accelerate progress towards the non-income MDGtargets. Inturn, improvements ineducation, health or gender equality will enhance progress toward halving income poverty by 2015. Because poverty i s multidimensional innature, many o f the MDGs are mutuallyreinforcing. These different dimensionstherefore need to be tackled simultaneously. 30. Achieving faster economic growth and accelerated progress towards the MDGswill require abroad set o f actions bybothdevelopedand developing countries. The consensus that emerged at Monterrey outlined many o f the actions to be taken byboth groups to this end. The heads o f state and governments from developing countries committed themselves to mobilizing domestic financial resources for development, acknowledging that they must take responsibility for good govemance and sound policies. They also committed themselves to implementing sound macroeconomic and trade policies, promoting good govemance, fiscal sustainability, strengthening the financial sector, and deepening social security and safety net programs. 3 1. Inturn, the international donor community, includingthe developedcountries, committed itself to scale-up and intensify its efforts to help developing countries meet the MDGs. Priorities include mobilizinginternational resources for development, expanding foreign direct investment and other private flows, promoting international trade, increasinginternational financial and technical cooperation for development, supporting sustainable debt financing and debt relief, and enhancing the coherence and consistency o f the international monetary, financial and trading systems. Three of these priorities are discussed below. I nci-easing aidflows 32. The Monterrey Conference highlighted a consensus on the need for a substantial increase inthe quantity andeffectiveness ofofficialdevelopment assistance(ODA)ifdeveloping countries are to achieve the MDGs. A World Bank studyprepared for the Conference estimated that, giventhe adoption o f adequate policies by developing countries, about $54 billion a year in additional development assistance would be needed to achieve the MDGs.'~ This i s inline with estimates from other international development agencies, and would represent roughly a doubling o f official aid flows over 2000 levels. 33. Respondingto the challenge raised at Monterrey, many countries have significantly increased their aid flows. Several member countries o f the Organizationfor Economic Cooperation and Development (OECD) have announced their intention to raise their aid budgets and the Development Assistance Committee (DAC) estimates that fulfilling these commitments andplans would raise the ratio o f ODA to gross national income fiom 0.22 percent in2001 to 0.26 percent in2006.13 However, this still falls short o f the UnitedNations goal o f 0.7 percent to which countries committed inthe 1995 Copenhagen Declaration on Social Development.l4 Moreover, even without an increase inODA, the effectiveness o f existing aid flows needs to be improved through enhanced support for national poverty reduction strategies, improved aid 14 harmonizationand donor alignment, increased untyingo f aid, together with the development of good policies and institutions on the part o f low- andmiddle-income countries. Reducing barriers to trade 34. The Monterrey consensus recognizes that the opportunities offered by trade are critical for accelerating growth and poverty reduction, but that these opportunities have beenlimitedby marketbarriers indevelopedcountries. It also recognizes that benefits from trade couldbe expanded ifdeveloping countries were to improve their trade policies and infrastructure. 35. World Trade Organization (WTO) membershave committed themselves, inthe context o fthe DohaDevelopment Agenda, to negotiations aimed at substantially improving market access for agricultural and industrial products, particularly for developing countries. This will require faster anddeeper progress inopeningmarkets andphasing out trade-distorting subsidies inindustrialcountries, particularly for agriculture, textiles andlabor-intensive manufactures. The next WTO Ministerial meeting, to be hosted by Mexico in September 2003, will set the framework for the negotiations. 36. Withinthis framework, the Bank andthe Fundhave stepped uptheir efforts onthe trade and development agenda, working closely with the WTO inthe areas o f their respective comparative advantages. The two staffs have recently produced ajoint paper on market access,15 which examines pattems o fprotection inmerchandise trade and suggests ways to make the multilateral trading system more supportive o f development. The Bank and the Fundare also encouraging developing countries to reduce their own barriers to trade and to mainstreamtrade issues intheir poverty reduction and growth strategies. The Bank has established a new Trade Department to scale up and consolidate its research, policy and operational support on trade. 37. The DohaDevelopment Agenda places new emphasis on capacity buildingand technical assistance. The IntegratedFramework for Trade-Related Technical Assistance to Least Developed Countries, chairedbythe WTO, and inwhich both the Bank and the Fundparticipate, has beenrevamped. As part of this collective effort, the Bank is leading work on country diagnostics o f trade policy and infrastructure, and i s coordinating the efforts to integrate trade into development strategies for low-income countries. The Bank has also provided the initial seedmoney to help launch an inter-agency global facility for information-sharing and capacity- building related to sanitary and phyto-sanitarymeasures. The facility will help developing countries to improve national food safety andanimal andplant health systems, inpart to facilitate increased trade. Easing the burden of debt 38. The Monterrey consensus underlinedthe importance o f getting an early andenduring resolution to the long-standing debt problem o fthe poorest countries. The Bank andFundhave beencentral to the Heavily IndebtedPoor Country (HIPC) Initiative designed to address this problem.A recentlypreparedreport andstatistical update on HIPC provided to the Development and IMFCommittees show progress ina number o f respects:16 15 Ofthe 42 countries identifiedas potentially eligible for reliefunderthe enhanced HIPC Initiative, 26 have already reached their decisionpoints and are therefore benefiting from HIPC debt relief, ofwhich eight have reachedtheir completionpoints and therefore have received irrevocable debt relief. Four countries are projected to be sustainable cases. Together with debt reliefunder traditional mechanisms and additional voluntary debt forgiveness, the total reduction inthe outstanding debt stock i s about US$40billion innet present value (NPV) terms for the 26 countries which have reached their decision points,17 or a two-thirds reduction inthe overall debt stock o f these countries. This reliefi s projectedto have reduced annual debt-service payments for most o f these countries to less than 10 percent o f exports in2002. Debtreliefprovided to date has helpedthese countries to raise their annual social expenditures from around six percent o f GDP on average in 1999to a projectednine percent in2002- almost four times the amount spent on debt service. Most HIPCs are making progress inimplementing action plans to strengthen public expenditure management (PEM) systems. This will help monitor the use o f resources freed upby debt relief, although improvementsinexpenditure management and monitoring are still needed inmany countries." 39. The HIPC progress report also identifies the key challenges ahead, including working with countries to help themreach their completion points; ensuring a sustainable exit from the Initiative; and preserving long-term sustainability beyond the HIPC Initiative. These challenges require sustained efforts on the part o f HIPC countries, full participation o f all creditors, and continued support from the donor community. For HIPCs severely affected by exogenous shocks, such as falls inexport commodity prices, the Initiative has the flexibility, under exceptional circumstances, to provide additional reliefat the completion point (as occurred in Burkina Faso). The decision by IDA donors to provide up to 40 percent ingrant financing to debt vulnerable countries will contribute to maintainingtheir debt at sustainable levels. 40. Insummary, importantprogress hasbeenmadetowardsmeetingthe MDGs,butcurrent trends show that much more needs to be done by developing and developed countries ifmany o f the targets are to be met. The Bank, as part o f a global consortium, i s respondingto this call for action- by working more closely, alongside other donors, to support poverty reduction in developing countries and by increasingthe results orientation and poverty focus o f its own activities. The next chapter discusses how the Bank i s moving forward inboth o f these areas to support progress towards the MDGs. The focus i s on the overall development architecture that has been established to accelerate progress towards the MDGs, rather than on specific Bank interventions to support individual goals. 16 CHAPTER 2: BETTERMANAGEMENT AND MEASUREMENT FOR POVERTY REDUCTION RESULTS 41. Chapter 1discussed global progress towards poverty reduction based on the MDGs and outlined key elements o f the Monterrey consensus. It also described key elements o f a partnership between developing and developed countries to accelerate progress towards meeting the MDGtargets. But this new partnership i s notjust about actions; it also i s about results. Indeed, when Ministers discussed a framework paper on development effectiveness and partnership at the Spring 2002 Development Committee meeting,l9 they highlightedthe objective o fmeasurable improvements insustainable growth and poverty reduction. They also underlined the importance o f an enhanced focus on results that could be used by countries indesigningand implementing their strategies, andby donors and development agencies inscaling up and allocating their support.2o 42. While the Bank has always sought to focus on achieving poverty reduction and sustained growth, it has recently deepened its efforts to activelymeasure progress towards these objectives and, where feasible, its own contribution inthese areas. A paper prepared for the Development Committee inSeptember 2002 laid out the Bank's efforts to give specific operational content to the broad commitment to focus onresults. The paper set out the approach that the Bank is taking: to support countries inadopting results-based strategies; to increase its own results orientation; and to encourage the harmonization o f approaches to managing for results across development agencies. *' 43. This chapter reports on the applicationofthis approach for achievingbetter development results with respect to poverty reduction. The first section examines experience to date with nationalpoverty reduction strategies andhow the Bank, inpartnership with other donors, i s helping clients to prepare, implement andmonitor them; the second section examines the steps the Bank is taking to improve its own development effectiveness inattacking poverty. Helpingdevelopingcountriesto achieveresults 44. The MDGs provide an international basis for setting goals, but it is at the country level that results must be achieved. The Monterrey consensus underlined the centrality o f nationally- owned poverty reduction strategies as vehicles for adapting the MDGs to individual country contexts, and for identifyingand implementingthe policies and institutional arrangements for achieving them. Designingand implementing good nationalpoverty reduction strategies raises a number ofknowledge and institutionalchallenges, including the needto better understandthe linkages between public actions and outcomes; to improve monitoring and evaluation systems for poverty analysis; and to develop new tools to better assess the non-income dimensions o f poverty. Implementingnational poverty reduction strategies also requires strengthening international partnerships, particularly inthe areas o fharmonizing aid procedures and enhancing support for global public goods that requires action beyond national boundaries. This section first examines progress to date with respect to the development o f country-owned poverty reduction strategies for low- andmiddle-income countries, highlightingthe special needs o f low- income countries under stress (LICUS) and African countries. It then briefly reviews how the Bank i s helpingdevelopingcountries to meet the knowledge andinstitutional challenges related 17 to the preparation and implementationo ftheir national poverty reduction strategies, before concluding with an analysis o f intemational partnerships for improved development results. Poverty reduction strategies Support to low-income countries 45. This section examines progress to date with the Poverty Reduction Strategy Paper (PRSP) approach and summarizes key elements of Bank support for it. It also reviews the special approach the Bank has developed to assist low-income countries under stress more effectively and then briefly summarizes the Bank's strategy for Sub-Saharan Africa. 46. The PRSP approach has been central to poverty reduction efforts inlow- income countries since late 1999. Based on the Comprehensive Development Framework (CDF) principles,22 PRSPs are country-owned, holistic poverty reduction strategies, developed on the basis o fbroadly participatory processes, with a focus on results and accountability, and an emphasis on partnerships. To date, countries have completed 28 FullPRSPs, 46 InterimPRSPs, and 8 PRSP Progress Reports on the implementationo f their strategies. The majority of these have beenpreparedby African countries, which account for more thanhalf o fthe filland interim PRSPs and all the PRSPprogress reports (See Figure 7 and Annex G for a list). 47. A review o fthe first two years of experience withPRSPs publishedinMarch2002 suggested that the approach had already increased the prominence o fpovertyreduction inpolicy discussions and operationalizedsome o fthe keyprinciples o fthe CDF approach.23Inparticular, the review concluded that PRSPs had ledto: (i) a strong sense o f ownership among most governments o ftheir poverty reduction strategies; (ii) a more open dialogue within governments, andbetweengovernments andkeystakeholders incivil society; (iii) improved partnerships within the donor community, with commitments to consolidate its assistancebehindthe PRSP; (iv) greater incentives for better quantitative and qualitative data and diagnosis, while highlightingthe gaps indata availability and local analytical capacity; and (v) a better recognition o fthe importance o fmonitoring capacities and the need to measure final poverty outcomes. These findings were reaffinnedinthe PRSP rogress report prepared for the Development and IMF Committees inSeptember 2002. E 00 3 19 48. The review also noted some challenges facing the PRSP approach that would needto be addressedinorder to enhance its contribution to development effectiveness. Inparticular, it notedthe needto: (i) towards more institutionalized forms o fparticipation anddialogue move with stakeholders, as opposed to short-term consultative activities; (ii) the analysis ofthe deepen linkages betweenpublic actions andpovertyoutcomes, including improved poverty and social impact analysis o fpolicies; (iii)enhance the realism o fmacroeconomic scenarios and long-term targets for poverty reduction; (iv) systematically develop intermediate indicators to help track implementationofpublic programs and strengtheninstitutional structures for monitoring and evaluation; (v) increasinglyintegrate the PRSP process into national budget andplanning cycles and into other national decision-making bodies such as parliaments; and (vi) betterprioritize and cost public actions, which would involve, inter alia, a betterunderstanding o f the sources o f growth and the linkages betweengrowth and poverty reduction. 49. Since the joint review, an additional ten countries have completed their first full PRSP and others have made substantial advances inthe design and implementation o f their poverty reduction strategies. Recent experience confirms that the PRSP approach continues to show promise. The quality and commitment that characterize several o f the recent PRSPs, together with the momentum described inrecent annual PRSP country progress reports, show the dynamism andrelevance o fthe PRSP approach at the country level. But recent experience also shows that substantial challenges remainwhich countries and their development partners will needto address over time. Opening the policy dialogue, improving public expenditure management, and assessingthe poverty and social impacts o fkey policy reforms are all areas which require long-term efforts and where there i s scope for improvement. And, as countries move from the design o f PRSPs to implementation, they will also need to buildinstitutional capacity, sharpen policy choices, and more systematically monitor poverty outcomes. These changes will require sustained effort, andbothcountries and their development partners will needpatience, realism, andpersistence inconfronting them. 50. Recognizingthat PRSPs need to address the above issues, Bank and Fundstaffhave been working to help countries more effectively design and implement their PRSPs. Inparticular, the Bank is helpingits clients inthree areas-improvingthe transparency andopenness o fthe PRSP process and policy making; strengthening institutional capacity to identify priority public actions and monitor poverty outcomes; and improving donor alignment with countries' PRSPs and harmonization o fprocedures among donors. 5 1. To strengthen the transparency and openness o fpolicy design and implementation and enhance the capacity o f civil society to effectively engage inpolicy dialogue, the Bank i s helping countries to deepen their participatory processes, by providing advice and support for an enabling legal framework for participation, disseminating and implementing the PRSP at the local level, increasingparticipation o f sector ministries inthe PRSP process, and strengthening the awareness and involvement o fparliaments inthe PRSP process. 52. The Bank is also helping low-income countries to strengthentheir institutional capacity to identifypriority public policies linkedto poverty reduction andto more systematically monitor poverty outcomes throughsupport invarious areas, as described below. 20 To help countries identify an appropriate balance between higher aid flows and sustainable fiscal and other policies that support macroeconomic stability, the Bank and the IMF are developing operational guidance to their respective staffs for examining the likely macroeconomic and poverty reduction impact o f higher aid flows. The Bank is helpingcountries to undertake poverty and social impact analysis (PSIA) on a more systematic basis, as well as strengtheningcountries' public expenditure management systems (see paragraphs 67 to 75). Bank and Fundstaff are placing greater emphasis on helpingcountries to identify the policy measures needed to raise growth rates to desired levels through analytical work at the country and sectoral level as well as through operationally focused research programs on pro-poor growth (see paragraph 76). The Bank is supporting various initiatives to scale-up capacitybuildinginstatistical data collection and analysis, as well as inmonitoring and evaluation at the country level (see paragraphs 77 to 82). Also, together with the IMF, the Bank has recently launchedthe GeneralData Dissemination System(GDDS) to improve statistical capacity, and is piloting an instrumentfor improving the design and use o f M&E systems with multi-donor support, particularly inPRSP countries. The World Bank's Institute's Attacking Poverty Programhelpscountries to develop, implement, monitor, and evaluate poverty reduction strategies through a range o f capacity buildingactivities targeted to a variety of government andnon-government actors involved in the process (see Box 2). Box 2: The AttackingPovertyProgram The Attackmg Poverty Program (APP) aims to enhance the capacity o fpoor countries to design, implement, monitor and evaluate effective poverty reduction strategies. Customized medium-term "country learning programs" target stakeholders involved inthe design and implementation o fpoverty reduction strategies, including government officials at various levels from statistical agencies and ministries, civil society organizations, the private sector, media, parliament, research andpolicy institutes, as well as staff fiom the Bank and other donor agencies. APP activities are demand-driven and country- focused. To ensure tailoring to country circumstances, APP always works with local PRSP teams and partner training centers as well as with numerous regional and global institutions. The APP, which i s now being strengthened, includes the Poverty Analysis Initiative (PAI), the PRSP Design and Implementation Initiative (PRSDI), and the Macroeconomic Policy Skills courses, all o f which are mutually supportive. Inaddition, the APP now covers newer areas, such as Poverty and Social Impact Analysis (PSIA), innovative pilots on capacity enhancement o f local institutions, as well as the mainstreaming o f trade, governance and gender. The Poverty Analysis Initiative includes a number o f activities designed to buildcapacity instatistical offices and research institutes in client countries, inorder to generate high-quality poverty analysis to 21 support the PRSP process incountries. The PA1also focuses on enhancing local capacity inpoverty monitoring and impact evaluation o f PRSPs. To this end, the Initiative develops and implements country- specific capacity buildingstrategies on all aspects o fpoverty data collection, analysis, monitoring, and evaluation. Capacity enhancement tailored to specific groups fosters increased use o f informationand analysis indecision-making processes through: 0 strategic seminars for senior policy makers (short seminars with senior policymakers to promote evidence-based policy formulation inpoverty reduction strategies), 0 workshops for managers o finformation systems (workshops reviewing the steps required to establish an efficient poverty monitoring and evaluation system for PRSPs) and, 0 a variety o f technical courses for data producers and users (basic and advanced courses on poverty measurement and analysis, poverty monitoring and poverty impact evaluation). The PRSPDesignandImplementationInitiativeandthe MacroeconomicPolicy Skills courses aim to enhance local capacity, particularly among national PRSP teams and CentralBank staff, to design, implement and monitor poverty reduction strategies. Inaddition to coordinating other PRSP-related capacity enhancement activities, they offer: 0 Development Debates (debates for a broadrange o f participants aiming at stimulating dialogue about poverty reduction strategies), 0 the Attacking Poverty Course (covering key issues and tools necessary to effectively participate inthe design andimplementationofpovertyreductionstrategies, tailoredto specific audiences, country circumstances and stage o f the PRSP process), 0 Macroeconomic Management courses (using both internet and distance learning) as well as technically-oriented Economic ModelBuildingcourses, 0 Clinics (half-day seminars on PRSP-related topics organized at short notice at the request o f national PRSP teams), 0 Poverty Fora (gathering o frepresentatives o f PRSP teams, civil society and donors to share experiences, needs and best practices emerging from PRSP processes) and, 0 Communities o f Practice (electronic networks connecting experts inareas central to the development o f poverty reduction strategies). DuringFY02, APP deliveredover 60 activities andreachedmore than 3,000 participantsinover 40 countries, o f which more than half came from Sub-Saharan Africa. DuringFY03, about 52 activities reaching over 4,000 participants are likely to be delivered, with Sub-Saharan Africa as the main target, and with a growing focus on the ECAregion. For more information, see http://www.worldbank.orrz/wbi/attackingpoverty 53. It is broadly recognizedthat a country's poverty reduction strategy i s the startingpoint for ensuringthat all donor programs are nestedina comprehensive and coherent development strategy that i s focused on poverty reduction. To helppromote donor alignment and collaboration under the PRSP framework, the Bank has beenaligning both the content and timingofits Country Assistance Strategies (CASs) to full PRSPs andhas introducedPoverty Reduction Support Credits to help borrowers to implement selected parts o f their P R S P S . ~ ~ 54. Inadditionto aligningits assistanceprogramwithcountries' PRSPs,the Bank hasbeen collaborating with the donor community to harmonize aid procedures and improve the internal consistency o fpolicies among donors (see paragraphs 92 and 93). To this end, the Bank and the 22 Fundare workingwith the European Unionandbilateral donors onways o f coordinating reporting requirements andperformance assessmentframeworks to reduce the administrative burden associated with the delivery o fprogrammatic assistance to countries that are implementingPRSPs. 55. A key initiative inthis areais the framework beingdevelopedbythe Bank, the Fund, and the EUfor aligningbudgetsupport with PRSP implementation. This framework draws onwork done by the Strategic Partnership with Africa (SPA) to improve coordination o fbudget support inselected countries. Ithas four key elements whichreflect the view that for donor alignment and coordination to be effective, the country's Poverty Reduction Strategy (PRS) and its budget and planning processes should be seen as driving donor programs rather than the other way around. These elements are: (i) alignment by countries o fPRSP implementationwith their budget cycles; (ii) alignment o f individual donor programs for budget support with PRSP priorities and country processes, particularly interms o f the annual PRS review process; (iii) coordination o f donor programs so as to streamline conditionality andharmonize procedures and documentation requirements; and (iv) synchronizationo f negotiation o f individual donor programs with recipient governments. Implementationo f the new framework will initiallybe carried out incountries where donors have already indicated their willingness to play an active role. 56. Low-Income Countries Under Stress (LICUS) face special challenges inpreparingresults oriented national development strategies for sustained growth, development andpoverty reduction. LICUS are characterized byvery weak policies, institutions, and govemance. Aid does not work well inthese environments because governments typically lack the capacity to use finance effectively for poverty reduction. Yet neglect of such countries perpetuates poverty and may contribute to state collapse, with adverse regional or even global consequences. The challenge inLICUS i s thus to use other instruments, supplemented by financial transfers where necessary, to promote change. 57. The Task Force on the Work o fthe World Bank inLICUS has beencreated to respond to concems about how the development community, and inparticular the World Bank Group, can best help chronically weak countries. The Task Force has proposed an approach, within the principles o f the Comprehensive Development Framework, to facilitate policy and institutional change while improving basic social outcomes. The strategy calls for focusing on a few reforms that are socio-politically feasible, aroundwhich capacity building and outcome monitoring can be coordinated. It further recommends that assistance to these countries be knowledge-intensive rather than finance-intensive, focusing on highquality analytical work (including stronger sociopolitical analysis), capacity-building, and small demonstrationprojects to identifyand support highly selective and incremental govemance reform opportunities. Post-conflict LICUS countries, where higher IDA allocations make possible substantial financial contributions to reconstruction and economic recovery, form an exception to this recommendation. The Task Force also recommendedthe use o f innovative mechanisms to supplementgovemment service provision and strengthendemand for effective service delivery.26 23 58. Implementation o f the Task Force recommendations for the Bank will involve closer working relationships with partners who have a comparative advantage inthese precarious environments. A new cooperation with UNDP will be tested infour pilot countries (Angola, Central African Republic, Somalia, and Sudan), and country level discussions are beingheld with other donors. LICUS principles will also progressivelybeimplementedinCASs. For the current fiscal year, at least seven countries will produce new strategies basedon the principles described above.27 59. As described inChapter 1, many countries inSub-Saharan Africa face significant challenges inachieving the MDGsthat call for increased efforts byboth country governments and the donor community. PRSPs are the main frame o freference inthe region and an increasing share of Bank and other donor resources will be channeled through programmatic lendinginsupport of these strategies. Inaddition to providingdirect support for the development o fpoverty reduction strategies, the Bank's engagement inthe Africa region reaffims andbolsters the strategy set out in Can Africa Claim the 21" Century?28and focuses on four major areas: (i) improving governance and supporting conflict resolution; (ii)investing in human resource development; (iii) strengthening competitiveness and supporting economic diversification; and (iv) reducing aid dependence and strengthening partnerships with other donors. Furthermore, key regional priorities remain central to Bank activities inthe region, including the provision o fpost-conflict support, capacitybuilding, assistance inconfronting communicable diseases, debt relief, expanding market access for African products, and regional integration. 60. The strategic objectives o fthe Bank's approach inthe Africa region are consistent with those outlined by African heads o f state inthe New Partnership for Africa's Development (NEPAD). This newpartnership marks an important step forward inensuringthat Africans take the leadresponsibility for their development strategies. Adopted byAfrican heads o f state inJuly 2001,it builds on many o fthe principles o fthe PRSP approach put inplace at the national level, emphasizing the importance of governance, participation, wider markets and private initiative in ensuring development. Support to middle-income countries 61. Middle-income countries (MICs) are confronted with different issues than low-income countries inaddressing poverty reduction. While their development indicators tend to be significantly better than those for low-income countries, andwhile they are more likely to meet the MDGtargets, their national poverty profiles mask significant pockets o fpoverty and inequality, especially concentrated among particular social groups and inlagging regions. For example, asset and income inequality has remained highinmanyLatin American countries; in Eastern Europe and many countries o f the former Soviet Union, inequality inbothincome and non-income dimensions o fpoverty has increased over the past decade creating new vulnerable groups.29 24 62. Another challenge that the MICs face, especially those already well integratedwith international capital markets, i s protecting poor and vulnerable groups from macroeconomic shocks and instability. The MICs have a greater financial and institutional capacity than low- income countries to help mitigate the impact o f shocks on the poor. Also, the fact that the poor constitute a smaller proportion o f the total population inmany MICs suggests that targetedsafety net programs are more affordable than inlow-income countries. Finally, while many MICshave been able to generate relatively highgrowth rates, they still face challenges related to the design and implementationo fkey social, structural and sectoral policies that will accelerate growth and improve its poverty reducing impact. 63. Unlike low-income countries, MICs do not have a single common strategic framework, such as the PRSP, for settingout or gauging their objectives and results focus.3o Nonetheless, many countries publishtheir own national strategies and some are beginningto use results-based approaches to development policy and to the management o fpublic expenditures. Moreover, some o f the key CDF/PRSPprinciples, such as country ownership andpartnerships, have already been incorporatedinto MICs' development strategies andtheir relationship with the Bank. 64. Although the Bank's involvement inMICs may not be always framed within a national poverty reduction strategy, it provides critical support to help MICs address the poverty reductionchallenges they face and ensure that the benefits o f growth are broadly shared. In particular, the Bank provides support for poverty focused public expenditures (including financial and technical support for safety nets, social services, and rural development investments); for knowledge services and technical assistance to develop a transparent investment climate that offers opportunities for the poor; and for strengthening the capacity for poverty analysis and monitoring (Box 3). Box3: Examplesof Bankinvolvementin middle-incomecountries ~ The FundescolaSchoolImprovement PrograminBrazil i s part of the Bank's effort to helpthe Ministryof Educationimprove the country's educationperformanceby helping the states andmunicipalities inthe poorestregionsofthe country (the northeast, north, andcenter-west) to reduce the educational inequalitiesintheir systems. This program focuses on improving the quality of educationbyraising schoolsto minimumoperational standards, establishinga school developmentprocessthat promotes school-basedinstitutional strategicplanning, andincreasingmanagementcapacity ofmunicipal andstate secretariatsof educationwhile also fostering community participation. The programprovides support to the poorestmunicipalities within the targetedregionsandto the schoolswith the weakest performance, which tendto serve the poorest children. This supply-sideprogram is complementedby other Government activities aimedat stimulating demandfor education.Among these, the Bolsa Escola program focuses onproviding targetedtransfers to poor families with school-agechildren, which are conditional on school attendance.The programthus acts both as a safety net andas a direct intervention to promoteschool enrollment andattendance.Although the Bank is not directly supporting the Bolsa Escolaprogram, it has worked with Government to protect this program, through adjustment lending as well as other social expenditures,during periods of increasedfiscal austerity. InThailand,the Govemmentandthe Bank launched,inMay2002, the Country Development Partnership on Povertyto help the Governmentachieveits goal ofreducing the number ofpoor by 1.5 millionby 25 2006. This program illustrates the analytical support and technical assistance that the Bank can provide in MICs. Under the partnership, the Bankprovides policy advice, technical expertise and knowledge services to combat poverty through four components: (1) upgrading the poverty data base, (2) expanding knowledge o f techniques to measure and analyze poverty, (3) refining the poverty reduction strategy to design effective pro-poor policies, and (4) settingup monitoring and evaluation systems for the poverty reduction strategy. The partnership also led to the "localization" o f the MDGs inthe Thai context, including the development o f a MDG-Plus agenda, which calls for more ambitious progress in social development indicators than those called for by the MDGs, and goes beyond the national aggregate blueprintto focus on specific population sub-groups (e.g. particular regions or social groups). Knowledge and capacity building 65. The emphasis placed on results based country-owned national poverty reduction strategies has highlightedthe need for better country-based understandings o f the linkages betweenpublic actions andpoverty outcomes, improved country statistical capabilities anddata access, and new tools to better assess non-income dimensions o fpoverty. This section discusses how the Bank i s supporting various initiatives inthese areas. Understanding the linkages betweenpublic actions andpoverty outcomes 66. A keyrequirement for designing and implementing effective poverty reduction strategies i s to understand the transmission mechanisms by which public actions produce development results. This process can be helped by: (a) an enhanced understandingo f the distributional impact o fpolicies, (b) improved management o fpublic expenditures, and (c) a greater knowledge o fthe determinants o fpro-poor growth. This section examines these three areas in more detail. 67. The first area, poverty and social impact analysis (PSIA) o fpolicy reforms can help countries make more informed choices about the reforms most likely to improve the livelihoods o fpoor and vulnerable groups, as defined interms o f income, gender, ethnicity, age, geographic location, livelihoods, etc. By analyzing impacts before the reform i s designed, duringits implementation, and after its completion, PSIA can also nurture a more open policy debate by highlightingthe trade-offs implicitinalternative reform designs. The Bankhas supported countries inundertaking such analysis inthe past, such as in: Armenia (utilityreform), Indonesia(the financial crisis), and Vietnam (state owned enterprise reform). Despite these efforts, PSIA has not beenroutinely applied across countries or across major issues with distributional or social implications. The PRSP approach - and its focus on development outcomes -has highlightedthe needfor PSIA to be conducted ina more systematic manner. 68. Systematically integrating PSIA into country strategies poses several challenges, notably including limited country capacity (and sometimes limitedgovernment demand for analysis). Another major challenge is related to the numerous methodological difficulties inherent inthis type o f analysis: inparticular, it i s very difficult - and often impossible -to define a counterfactual for nation-wide policy reforms; it can be very difficult to estimate ex-ante the impact ofreforms; and the information base available for the analysis i s often limited. During 26 the past year, supporting country PSIA has beenan important concern for many development partners, including the Bank. The Bank has expanded the numbero f countries inwhich major reforms are underpinnedby PSIA, and provided technical assistance on how to undertake it. In particular, the Bank i s supportingthis effort inthree mainways: 0 First, the Bankhas developed an approach for PSIA for use by Bank staff and countries alike. The methodology, which was publishedfor comment inthe draft PSIA User's Guide (April 2002),31draws onbotheconomic and social tools and is adaptable to different reform issues and degrees of country capacity. Several stakeholdershave commented on the approach, and the Guide has now beenrevisedto reflect their suggestions. 0 Second, the Bank i s codifying and disseminating examples o f good practice. Training courses have been developed on the broad approach to PSIA, and inthe coming year the focus will be on designingmore in-depthmodules on specific tools andreform issues. A recent technical workshop, jointly organizedby the UnitedKingdom's Department for Intemational Development (DBD), the Bank andthe IMFprovided an opportunity to draw together the lessons o f country experience with PSIA, includinglinkinganalysis to national policy processes and the choice o fmethodological approaches. The discussions found that PSIA was generally feasible inlow-income countries, thoughindividual tools varied. At the same time, itwas notedthat the analysis could bebothtime andresource intensive. Finally, a PSIA website has been developed, which makes available various resources including the Users' Guide, tools, training material andprogress reports on country work.32 0 Third, the Bank hasprepared detailed guidance ontools available to carry out the analysis o f the poverty and social impacts o fpolicy changes, posted on the external website. These include tools for the social analysis o f stakeholders, institutions, risks andimpacts; and economic tools for direct impact analysis, the modeling o fbehavior, the modeling o fpartial and general equilibriumeffects, and microeconomic simulations. The Bank i s also working to develop new tools to estimate the distributional impacts of altemative macroeconomic scenarios, where current techniques are weaker. 69. Partly as a result o fthese efforts, the Bank and its partners are supportingPSIA ina larger set o f low-income countries. Analysis covering a broadrange o f issues i s underway in numerous countries, with the assistance o f the Bank or other donors (See Annex Ifor a list o f on- going and planned PSIA activities). Inaddition to ongoing work, plans for future PSIA, to be supported by the Bank and other partners, are reasonably advanced in a number of low-income countries, including Albania, Benin, Bolivia, Burkina Faso, Cambodia, Ghana, Honduras, Indonesia, Mali, Mauritania, Nicaragua and Tanzania. Some o f the areas o f focus for this new work include: utility reform (Ghana), cotton reform (Benin, Mali), public expenditure (Mauritania), landreform (Cambodia), tax reform (Nicaragua) and trade (as a regional question inNicaragua andHonduras). Box 4 provides an example ofthe PSIA approach applied inChad to address the poverty and social impact o f the ongoing cotton sector reforms. 27 Box 4: Poverty and social impact analysis of the cotton sector reform in Chad Cotton i s a major crop in Chad, interms o f its impact both on government revenues and on poverty. Almost half o fthe population depends directly or indirectly on cotton production. Inthe past, cotton accounted for around 30 percent o f total government revenues, but the sector i s currently a drain on government resources. To address this issue and improve farmers' incomes, the government o f Chad i s considering privatizing the parastatal that manages national cotton production. Several factors have encouraged the Government to proceed carefully in designing and implementing the reform: they include the possibility that yields will fall further ifthe reformprompts farmers to return to subsistence agriculture; the limited availability o f information on rural poverty; farmers' concerns about the risks o f the reform; the number o f potentially affected individuals; and the absence o fpreconditions for a market economy, particularly inrural areas. Progress on the PSIA. The methodological approach combines ex-ante and ex-post qualitative and quantitative analysis. The first phase o f the PSIA was an ex-ante qualitative analysis which explored the social, economic, andinstitutional context o f cottonproduction, identified areas o f vulnerability, and i s informing an ex-ante quantitative analysis. The second phase, beginning inlate 2002, involves a social risk analysis o f different privatization scenarios (being developedby the Government) and a quantitative survey o f cotton producers. The survey yields further insight on the likely impact o f the different privatizationscenarios. Once a decision i s taken on the reform, household panel surveys, qualitative assessments, and institutional analyses are plannedfor a two to three year period. This will facilitate monitoring and evaluation o f the implementation o f the reform and identify any necessary adjustments (including mitigating measures). Rationalefor the choice of method. The highrisk o fthe reform, the lack o f data, the complexity o fthe sector, and the multipletransmission channels for the reformcalled for the use o f multiple qualitative and quantitative tools. These tools are being applied ina sequenced fashion, so that policy makers have new information at each step o f the analysis. Building local ownership. The PSIA methodology has been developed with relevant government institutions and some civil society groups. The analysis i s being conducted mainly by local researchers (from academia and government agencies). Identifyinglocal researchers was a difficult process, given limited national capacity. Analytical results will be discussed at a forum where the Government, delegates from the farmers' organizations and representatives from the private sector will explore the various 7rivatization scenarios. 70. The long-term objective i s to ensure that low- and middle-income countries have the capacity to apply PSIA routinely indeveloping their national poverty reduction strategies. The Bank has a major role to play at the country level, bothinstrengtheningnational capacity (so that PSIA can more routinely be carried out in-country) and inproviding direct analytical support (particularly inthe short term while domestic capacity remains weak). Bank Country Assistance Strategies will draw on the country's reform agenda to identify priority areas for PSIA analysis to be undertaken by staff or other partners. The Bank will also work to ensure that PSIA underpinsreforms supported byits lending operations. Ideally, this analysis will be undertaken as part o fthe upstream support to countries. However, analytical gaps may occur, inwhich case the Bank may have to carry out PSIA as a stand-alone analysis. Giventhe resources and time 28 requiredto undertake PSIA, integrating analysis withinnationalpoverty reduction strategies will necessarily be a gradual process. 71. The second area, strengthening countries' public expenditure management systems, aims to help countries prioritize public actions to reduce poverty and to increase the overall efficiency and poverty impact o fpublic spending. While the Bank has traditionally supported analytical work that assesses the content and overall efficiency o fpublic expenditures,its work inthis area has beenevolving to support abroader view o fpoverty reduction and focus more closely on the linkages between expenditures and poverty outcomes, involving a greater integration o fpoverty monitoring with budgetingsystems.Inparticular, the Bank's work inthis area includes capacity buildingand financial support, as well as policyadvice through economic and sector work, such as Public Expenditure Reviews (PERs), Country FinancialAccountability Assessments (CFAAs), Country Procurement Assessment Reviews (CPARs) and assistance for poverty expenditure tracking initiatives. 72. InFY02, the Bank completed 26 PERs, compared to annual average o f 13 PERs for the previous three-year period; and CFAAs and CPARs were completed in20 and 14countries respectively. Management has committed itselfto having current (defined as not more than 5 years old) reviews inplace for all active borrowers by the end o f FY04. Work i s also underway to improve the coordination o f these products and to integrate their findings inBank operations and government policy. To this end, capacity buildingactivities are beingdelivered inthe area o fpublic finance for poverty reduction, focusing on how both revenues and expenditures can contribute to it. Also, to enable more effective stakeholder participation at the country level, the Bank i s sharing knowledge about participatorybudgetingand i s providing training andtechnical assistance on social accountability and civic engagement to both civil society groups and government officials. 73. Withrespect to tracking the poverty focus o f expenditures, the HIPC expenditure tracking initiative has led the Bank and other donors to encourage beneficiary countries to assess the capacity o fnational budget institutions and focus on capacity-building and institutional development. Joint Bank-Fund assessmentso fthe capacity o f 24 HIPCs to track and report on poverty-reducing spending(20 inAfrica, and four inLatinAmerica and the Caribbean) were discussed by the Bank and FundBoards inMarch 2002.33 HIPC governments were involved in finalizing these assessments and developing actionplans to strengthen PEMsystems. Short-term actions to strengthen poverty-reducing expenditure tracking include broadening the coverage o f government expenditures, upgrading classification systems, introducing functionally based in- year reporting, andpiloting o f integrated financial management information systems (IFMISs). A March2003 Boardupdate34providedinformation on country progress inimplementingthe action plans. The updatei s basedon information for 21 countries preparedby Bank-Fundstaff inconsultationwith country authorities. Morethan three-fourths ofthe measures inthe action plan have either been fully implemented or are under implementation. These improvements need to be accompanied by increased efficiency andbetter targetingto improve social outcomes. Measures from the action plans are beingincorporated inPoverty Reduction Strategy Papers (PRSPs) as well as inFund-supportedprograms andBank adjustment operations. 29 74. A second comprehensive reviewo fthe capacityo fHIPCs for trackingpoverty-reducing spendingwill be undertaken in2004jointly by the Bank andthe Fund. The reviewwill assess country PEM performance against 15 benchmarks andprogress inimplementing action plans. In addition to updatingprogress inthe initial 24 countries, the review will cover 14 new countries inAfrica, as well as applying it inselected East Asian andLatinAmerican countries. A similar but desk-based assessment is also being developed inthe Bank's ECA region. 75. While the PEM assessmentstake a system-wide approach to expenditure tracking, the Bank i s also helping clients to better track public expenditures usinga bottom-up approach. PublicExpenditureTracking Surveys(PETS) and Quantitative Service Delivery Surveys (QSDS) allow countries to track the extent to which budget allocations for specific public services (e.g., schools, health clinics) reach their intendeddestination, andwhether resources are beingefficiently and effectively transformedinto public services. Aside from Uganda (Box 5), public expenditure tracking and service delivery surveys have been completed innine other countries and are underway infive others. (Countries with completed PETS and QSDS surveys include: Honduras, Peru, Ghana, Tanzania, Zambia, Rwanda, Senegal, Mozambique, andPapua New Guinea. Countries with PETS and QSDS surveys underway include: Nigeria, Kenya, Chad, Ethiopia, and Laos.) Inaddition, surveys o f absenteeism inpublic sector schools and health facilities have beenimplementedina number o f countries. These respective surveys vary inscope andfocus, butare all concernedwithunderstanding the determinants ofefficiency and integrityinthe public expenditure and service deliveryprocess. Results to date with PETS in Uganda show that information and transparency can be a cost-efficient way of overcoming systemic problems inservice delivery (Box 5). Box 5: Increasingthe effectivenessof expendituresinUgandawith PETS InUganda, where the PETSapproachwas pioneeredin1996, aPETSsurvey establishedthat only 20percent o f non-wage primaryeducation spending actually reached schools in 1995, with the remainder either being reallocated to other uses or captured for private gain. As a result o f the survey, the central government launched an information campaign both nationally and at the district and school level. This both increased transparency and raised public awareness. A repeat survey in 1999/2000 showed that schools now received over 90 percent o f non-wage education spending (although with delays). This remarkable improvement canbe partly attributed to the government efforts to disseminate information, both through the media and by systematically postingpublic spending information at schools and districts. 1See: h~://w\vw-wbweb.worldbank.orn'prenvp~ps/expenditure/PREMnote23.pdf 76. Inthe thirdarea, pro-poor growth, analytical activities at the country and sectoral level, together with operationally-focusedwork andresearch programs on pro-poor growth, are aimed at helping countries identifythe policy and institutional reforms neededto raise growth rates and increase the participation o fthe poor inthe growth process. 0 The Bank is implementinga researchprogram to better understand what makes growth "pro- poor," requiring, inter alia, a deeper understandingo f the role playedby initial conditions and the drivers o f distributional changes (Box 6).35Bank staff are also pursuing an operationally-orientedwork program that aims to provide practical advice to staff andpolicy 30 makers inlow- and middle-income countries about how to design PRSPs and other poverty strategies that involve the poor inthe growth process.36 An important element o fwork onpro-poor growthis the use ofinvestment climate assessments, whichprovide insight o n the k e y constraints to job creation andpromotion of income-generating opportunities for the poor at the country and sub regional levels (Box 6). The Bank i s also working to help developing countries to upgrade the trade policies and related institutions needed inorder to support export-led growth strategies that involve the poor. This work has been undertaken inan interagency and multi-donorinitiative, the IntegratedFramework for Trade Related Technical Assistance, whose objective is to strengthen trade policies andmobilize donor support for their implementation (Box 6). Box 6: Improvingunderstandingof the linksbetweenpublicactions andpovertyoutcomes Pro-Poor Growth: The Bank Group has begun a researchprogram to better understand what makes growth processes pro-poor. The program has four objectives, which include: (i) understanding the specific ways in which initial conditions (including initial inequalities) affect the rate of poverty reduction for a given growth rate; (ii) understanding the sub-national determinants o f pro-poor growth; (iii) examininghow exposure to uninsuredrisk can impede overall rates o f growth and poverty reduction; and (iv) understanding the relationshipbetween social exclusionand poverty. These questions are being examined inthe context o f case study work ina number o f countries, including India, China, Brazil, and Indonesia. A recent study conducted inIndia illustrates some o f the policy ramifications o f this research. The study, which tests for inter-state differences inthe impact o f growth on poverty, shows how state- level factors such as the composition o f growth, literacy, urban-rural differences, and the level o frural infrastructure affect the rate o f poverty reduction. Sources: World Bank, `ZookingBeyond Averages: A ResearchProgram on Poverty and Inequality" and Gaurav Datt and Martin Ravallion, "Is India's Economic GrowthLeaving the Poor Behind?" 2002, and econ.worldbank.org/programs/poverty/topic/2543/. Investment ClimateAssessments: Improving the investment climate i s a key pillar o f the World Bank Group's work to promote growth and reduce poverty. Identifyingthe key obstacles to firm performance and entry, particularly inareas where poor people live and work, i s critical for devisingpolicies that can enhancejob and income opportunities for the poor. Over the past two years, the Bank Group has dimate conditions incountries. These standardized survey tools - called Investment Climate Assessments undertaken systematic efforts to develop a standardized approach to measuringand comparing investment - review the regulatory, legal, policy, and governance conditions ina country andtheir impact onfirm performance. The assessments will enable policy makers to: (i) identify the features o fthe better investment climate that matter most for productivity and hence income growth; (ii) track changes inthe investment climate within a country over time; and (iii) compare conditions within and across countries. The Bank Group has thus far completed four assessments (for India, Morocco, Nigeria, and Bhutan), and plans to complete another 24 by the end o f fiscal year 2003. These will include seven inEast Asia (including China), six inSub-Saharan Africa, five inLatinAmerica, two inthe CIS, two inMENA, and m e each in South Asia and CEE. Recent work completed inIndia examines the country's investment Aimate conditions compared to international standards; it also reviews the differences inconditions xmong Indian states. Amongst its other findings, the study highlightsthe particularly adverse effects o f 31 regulatory burdens, poor power supply, and heavy state regulations inlabor markets on the performance o f small- and medium-sized enterprises. Source: http://rru,worldbank,org/CountryAssessments/index.asp Promoting trade's contribution to growth: Case of Senegal: Under the Integrated Framework for Trade RelatedTechnical Assistance Initiative, sponsored by several agencies (WTO, UNCTAD, IMF, the World Bank, and ITC), the Bank prepared a Diagnostic Trade Integration Study for Senegal that examined issues relatedto national trade policy, market access, competitiveness and supply o f exportables by selectedkey economic sectors (fisheries, agriculture, tourism and textile). The government has indicated its intention to incorporate key elements o f the trade report into its PRSP progress report and to further explore the impact o f its renewed emphasis on export promotion on poverty, drawing on recent household data. Source: WorldBank. Senegal: Diagnostic TradeIntegration Study. March 12,2003. I' 'I Strengthening monitoring and evaluation systemsfor poverty analysis 77. Poverty reduction strategies and the MDGs have increased the demand for evidence- based policy making and poverty monitoring. An important constraint identified by the 2002 PRSP reviewwas the lack o f timely, high-qualitydata on key aspects o fpoverty andpublic actions, which also underminesthe international community's ability to monitor progress towards the MDGs. Many developing countries face difficulties inproducingreliable, timely statistics at the national, regional or sectoral level ina sustainable and transparent way. The Bank i s engaged in several initiatives to strengthen national statistical capacity, monitoring and evaluation systems, and poverty analysis methods. 78. The Bank supports the development o fnational statistical capabilities by helping countries - especiallyPRSP countries -to improve their statistical systems. This work focuses on helping countries to upgrade the collection, processing, and storage o f data by national statistical offices andsector ministries. Inparticular, the Bank (i) supports200 projects with a focus on statistical capacity, including data collection, compilation and processing, and dissemination; (ii) provides direct advice to countries, notably inchoosing indicators to monitor national PRSPs; and(iii) disseminates best practice, tools and methods to practitioners. 79. The Bank i s also an active membero f the PARIS21Consortium (Partnerships In Statistics for Development inthe 2lSt which promotes a culture o f evidence-based Century), policy making and monitoring o f the development objectives o f PRSPs and the MDGs through advocacy and tools development, andplays an important role inthe coordination o f development partners' involvement inbuildingcapacity to monitor poverty.37The Bank also manages the Trust Fundfor Statistical Capacity Building(TFSCB), a global facility administeredon behalfo f donors, to support efforts at the national, regional and global levels to improve the collection, processing, analysis, storage, dissemination and use o f statistics to support poverty reduction. The TFSCB providesa practicalmechanismto achieve the PARIS21 vision, andhas so far supported the implementation o f 45 projects, mostly at the country level but also including some global and regional projects. The activities supported range from the design o fnational action 32 plans for establishing poverty monitoring systems to improving living standards surveys, and strengtheningnational statistical systemse3* 80. To support the development o f systems for monitoring and evaluation, the Bank established a program for Evaluation Capacity Development (ECD) in 1994 to help countries improve their monitoring and evaluation systems as an integral part o f sound governance. In 2000, the Board endorsed the Monitoringand Evaluation Improvement Program, whose work includes evaluating countries' strategies for strengthening their results-based monitoring systems. Under this program, a diagnostic guide is beingusedinseveral countries to assess their readiness to introduce results-oriented monitoring and evaluation. The first Annual Report on ECD was completed inJune 2002, and the Bank i s following-up to implement its recommendation^.^' 81. The Bank also provides technical assistanceto helpcountries establish systemsto monitor and evaluate national poverty reduction strategies. Inaddition to providing advice, training, and leaming materials on tools for monitoring poverty, the Bank i s developingmaterial on institutional issues that arise when setting-uppoverty monitoring systems.40 Trainingand learning activities are often aimedjointly at data producers, data analysts, and policy makers, so as to reinforce the linkages between institutions and foster a greater use o f data inthe formulation o fpolicies (see Box 2). 82. The Bank also plays a central role inimproving methods for poverty and inequality analysis. New techniques for poverty analysis are being developed, for instance by linking existing data sources to generate detailed poverty maps. A standardized database is being constructed to improve the comparability and accessibility o f disaggregated poverty data over time and across countries. Approaches to definingindicators andmeasuring empowerment aim at expandingthe analysis o fpoverty and its determinants beyond monetary andhuman development concepts. These new approaches are beingappliedinmany countries where the Bankis supportinganalytical work onpoverty. Finally, muchwork is being done to strengthen the ex-ante assessmento fthe poverty impact o fprograms or projects (see paragraphs 67 to 70). Operationalizing new tools to assess multiple dimensions of poverty 83. The Bank has introduced several new tools to help countries develop abetter understanding o fthe multi-faceted and cross-cutting nature o fpoverty as laid out inthe WDR 2000/01. These tools are intendedto help developing countries to better identify andprioritize public actions. 84. Inparticular, greater appreciationofissues related to security andvulnerability in individual country contexts will significantly enhance progress towards the MDGs andother national development goals. Measuring vulnerability i s difficult: it i s a multi-faceted and dynamic concept, andthe necessary data are often not available or inadequate. Attempts to define, formalize and quantify vulnerability inan operationally relevant fashion abound inthe poverty-relatedliterature. However, these efforts each look at very specific indicators of 33 vulnerability tailored to country circumstances, andthere is a growing consensus that it i s neither feasible nor desirable to capture vulnerabilitywith a single indicator. 85. Inorder to better analyze this dimensionofpoverty, the Bank has developedguidelines that lay out a conceptual framework to analyze the sources o f vulnerability, andprovide steps for an assessment o frisks and the risk management system available to cope with them. They complement static poverty analysis by adopting a forward lookingperspective on household welfare, andby explicitly analyzing the sources o f household vulnerability as the combined effect o f (i) exposure to shocks, and (ii)household's ability to withstand these shocks, that a can together leadto, perpetuate or deepenits poverty.41 86. Bythe endo fFY02, the Bankhadcompletedover 30 RiskandVulnerability Assessments (RVAs) with 20 more underpreparationinFY03. Some o f the Bank's Poverty Assessments, such as the Pakistanassessment, adopted an integrated approach, which combines the analysis o fvulnerability andpoverty. Insights from these assessments havebegunto influence Bank lending (e.g., Turkey RiskMitigationLoan, Guyana Poverty Reduction Support Credit) andprovide important recommendations for social protection and safety net policies. For example, a vulnerability analysis carried out inColombia inthe context o f a broader assessment o f safety nets yielded recommendations on reforming the national childcare system, revisingthe proxy means test mechanisms usedfor poverty targeting, establishing a counter-cyclical social safety net stabilization fund, and paying greater attentionto the problems faced by the internally displaced p ~ p u l a t i o n . ~ ~ 87. Gender equality and the empowerment o f women represent a cross-cutting theme for poverty reduction, as reflectedinthe MillenniumDevelopment Goals. As with vulnerability, the Bank's strategy for mainstreaming gender notes that gender equality contributes to poverty reduction, economic growth, human well-being, and development effectiveness (see Box 10 for a summary o f the Bank gender strategy). Achieving better results inmainstreaming gender inthe Bank's work will dependcritically on developing a betterunderstanding o f gender inequalities, the conditions that give rise to them, and constraints to addressing them inparticular country contexts. The Bank has developed guidelines for country gender assessments (CGAs), which lay out a framework for the Bank andborrowing countries to collaborate on analyzing the gender dimensions o f development within and across sectors ina given country and to identify gender responsive policies and actions.43 88. Empowerment was also highlightedby the WDR 2000/2001 as a key dimension o f poverty. This i s a relatively new concept, which presents difficulties with respect to identifying concrete indicators to monitor progress. To date, instruments for measuring and tracking empowerment are nascent and only partially embeddedinpoverty monitoring systems in developing countries. A combination o fparticipatorymethods, opinion polls and surveys on quantitative variables such as the extent o f civil and political liberties has beenusedininitial attempts to measure empowerment. 34 89. Inorder to helpborrowing countries andBank staffto incorporateempowermentissues and actions into their country strategies, the Bank has produced a sourcebook on empowerment and poverty reduction. The sourcebook presents a framework for the key elements o f an empowerment strategy, and identifies critical areas for hrther Bank action. Itpresents the various aspects o f empowerment: increasing access to information, increasing inclusion and participation, enhancing accountability and enforcement, and strengthening local organizational capacity. It also outlines key areas for support, presents tools and good practices, andproposes practical illustrations o f the application o fthe framework infive areas: provision o f basic services, improved local govemance, improved national govemance, pro-poor market development and access by poor people to justice.44 90. Over the next year, Bank staff will focus on applying these empowerment approaches in various operational contexts so as to develop and test indicators and methods for better analyzing and tracking empowerment. The Bank will also focus on developing a set o f policy options for integration into country strategies, policy dialogues, and specific operations that aim to strengthen accountability and transparency instate-society relations, andto improve poor people's access to markets and influence on government policies. Internationalpartnerships to improve development outcomes 91. The Bank is increasingly working with its development partners to improve the effectiveness o f development assistance. This section highlights three areas where international partnerships have become increasingly important for the Bank: harmonization o f donor policies procedures and practices; support for Global Public Goods (GPGs), covering such areas as communicable diseases, environment, trade and technology; and better international efforts for measuring, monitoring and managing for results. 92. Inrecent years concems havebeenraisedabout thewide variety ofdonor requirements and processes for preparing, delivering and monitoring development assistance. These various requirements generate unproductive transaction costs, do not always fit well with national priorities, and can undermine national management systems. The need for accelerated harmonization and alignment among donors was stressed at Monterrey as a major step towards improving aid effectiveness. The Bank i s supporting harmonizationboth through improved coordination with donors (see Box 7) and through intemal reforms. IBox 7: High-Level Forum on Harmonization A milestoneinthis effort was the High-Level Forumon Harmonization, hosted bythe Government of Italy inRome inFebruary 2003, co-sponsored by the Multilateral Development Banks (MDBs), including the World Bank, and DAC/OECD. The High-Level Forum: (a) endorsed good practice principles and standards for harmonization for a broadrange of activities, including country strategies, analytic work, technical assistance, financial managementheporting, procurement, and evaluation; (b) supported the harmonization o f donor practices across a variety o f instruments (technical assistance, projects, budget support operations, regional and global programs); (c) stressed the importance o f implementation at the country level, with donors aligning support to recipient government priorities, highlighting an indicative 35 set o f initial countries; and (d) committed to usingmodem information and communicationstechnology, including the Development Gateway, to facilitate harmoni~ation.~' 93, The Bank has also undertaken duringFY 2002 and 2003 several internal changes aimed at increasingits capacity to harmonize with others. Inparticular, it has: (a) set-out an approach for participatingwith borrowers and donors inpooled financial arrangements for sector wide approaches (SWAPS);46(b) aligned CASs with PRSPs since July 2002, usingthe assistance strategy to show how the Bank will support country-led strategies (see paragraph 54); (c) proposed a framework for testing increased innovation and flexibility inapplying environmental and social safeguards in line with Bank policy, while improving development effectiveness and reducingunnecessary burdens on the country; and (d) approved new policies on auditing that will allow easier harmonizationwith other donors andprovide flexibility for greater use o f borrowers' own systems. Ongoing Bank reforms include revisingguidelines on the eligibility o f expenditures, investment lending simplification, and disbursementandprocurement reform. In addition, the Bank i s continuing to support systematic work on harmonization inVietnam, Ethiopia and Jamaica and i s expanding its country focus work to other countries specially mentioned inthe Rome D e ~ l a r a t i o n . ~ ~ 94. The Bank is also increasingly working with partners to support global public goods (GPGs) that play a critical role inhelpingcountries to reduce poverty and accelerate progress towards the MDGs. GPGs complement country level action with collective global action in priority areas, such as fighting communicable diseases, promoting education, improvingthe global environment, and creating and disseminating information and knowledge (see Box 8). Other global issues that are central to the Bank's work, include trade and integration, where the Bank has made important contributions inthe areas o fresearch and ideas, andplays a central role intrade advocacy on behalf o f developing countries; andthe strengthening of the international financial architecture, where the Bank is focusing on developing international standards, financial stability, andinternational accounting and legal frameworks. Box 8: Globalpublic goods Communicable diseases. The World Bank, jointly with UNAIDS and the International Partnership against A I D S launched the Multi-country AIDS Programfor the Africa Region (MAP) in September 2000 to support national HN/AIDS programs in Sub-Saharan Africa. Inaddition to providing an initial US$500 million, the Bank inFebruary 2002 pledgedanother US$500 million for the program's second stage, which will also support sub-regional and cross-border HIV/AIDS initiatives. The Bank's support for reducing malaria-associated mortality through the Roll Back Malaria (RBM)initiative involves providing consistent technical advice and guidance to malaria endemic countries on updating their anti- malarial drug policies. The Bank i s also committed to capacity buildingincountries where malaria i s endemic through provision o f technical guidelines for establishing monitoring and evaluation systems for the implementationo f RBM. Plans are also currently underway to expand Africa Malaria Day to World Malaria Day, to include all endemic countries. Education. The Development Committee endorsed the Education for All "Fast Track" initiative inApril 2002 inan effort to accelerate progress towards meetingthe Millennium Development Goal o f providing every girl and boy with quality primary school education by 2015. One o f the objectives o f this initiative 36 i s to mobilize adequate financing at the global level to ensure that no country with a credible program fails to implement it for lack o f external resources. As part o f this initiative, the Bank i s helping 23 countries inthe first phase to strengthen the quality and delivery o f their education systems, and to remove key bottlenecks inschool completion. Another objective o f the Education for All "Fast Track" initiative i s to provide instructive lessons for scaling up efforts to achieve education for all in all developing countries. Inpartnership with other agencies such as UNESCO, UNICEFand bilateral agencies, the Bank also provides long term support to institutional strengthening and capacity buildingin areas such as data collection and management (with the UNESCO Institute o f Statistics); policy analysis and formulation (withthe Association for Development o f Education inAfrica, ADEA); and assessment (withthe InternationalEducationAssessment, IEA). GZobaZ environment. Inaddition to supporting environmental programs inindividual counties, the Bank i s actively involved ininitiatives such as the Global Environmental Facility (GEF) and the Prototype Carbon Fund(PCF). Since its launch in 1991, the GEF has grown to become the largest investor in projects and programs that protect the global environment. Ithas provided $4 billion in grants, while leveraging $12.4 billion inadditional financing. InAugust 2002, donor nations pledgednearly $3 billion for new GEF activities through 2006, the highest replenishment ever. The Bank, inpartnership with governments and private companies, created the US$180 millionPCF to develop real-world experience on how carbon markets and trading could operate indeveloping countries and transition economies. Another joint initiative, inpartnership with the United Nations Development Programme (UNDP) and the InternationalCouncil for Environmental Initiatives (ICLEI) and others, i s the Global Water Partnership, an internationalnetwork to promote and facilitate integrated water resource management. Information and knowledge. The Bank i s supporting the Development Gateway, a multi-donor initiative to make development knowledge more widely accessible and to promote the use o f information technology inthe fight against poverty. By providing a space where communities can share their experience on development efforts, the Development Gateway will encourage the exchange o f ideas and knowledge, provide a database on development activities throughout the world, offer a global online market place fosteringbusiness opportunities, and support the development o f national ICT a ~ t i v i t i e s . ~ ~ An important complementary benefit ofthe DevelopmentGateway will be to facilitate coordinationand increased alignment among donors, as well as the exchange o f information on development projects. World Bank lending i s also helping to buildcountries' information systems (75 percent o f Bank projects have such components). The Bank i s also increasing its support for the development o f legal and regulatory frameworks to help bridge the digital divide. It is also committed through the Global Development Learning Network (GDLN) to offer courses, seminars, and web-based programs to build local capacity, share knowledge, and develop a global community dedicated to fighting poverty. Finally, the Bank recognizes the importance o f science and technology as an essential underpinning o f development. Inthis context, the Bank's partnership with the Consultative Group on International Agricultural Research (CGIAR) remains a key component o f the effort to suppok enhanced agricultural productivity, inparticular incountries where agriculture i s the main driver o fthe economy. 95. The Bank participates inthe international effort to monitor progress towards the MDGs at the global, regional and country levels, under the overall leadership of the United Nations. The UNisresponsible for producingglobalreports onimplementingthe MDGs,drawingoninputs from development partners, including the Bank.49 The Bank, the IMF, and the OECD-DACare working with the UNagencies to strengthen MDGreporting inmany developing countries. The Bank inparticular i s supporting countries to reinforce their national statistical monitoring capabilities andimprove their ability to generate reliable, up-to-date information on development 37 results. Under the Global Monitoring initiative the Bank and the Fundare developing a framework to monitor policies and actions for achieving the MDGs and related outcomes. 96. The Bank i s also engaged with other MDBsincollaboration on results-based management, including the development o f outcome indicators incountry operations. A jointly hosted roundtable, "Measuring, Monitoring and Managing for Results," inJune 2002 brought together representatives from borrower countries, as well as from bilateral andmultilateral institutions to discuss the challenges o f results-based management and agree uponjoint next steps.50 97. More generally, the Bank collaborates with other partners to promote the overall improvement o f statistical and analytical capacities indeveloping countries, including through its work with the PARIS21 Consortium and its management o f the Trust Fundfor Statistical Capacity Building(see paragraph 79). Increasingthe resultsorientationofWorldBanksupportfor povertyreduction 98. The second part o f this chapter lays-out some o f the actions beingtaken by the Bank to increase its own results orientation and effectiveness inattacking poverty, particularly with respect to CASs, sector strategies, lendingoperations, and analytical work. While progress has beenmade indevelopingmethodologies to assess the poverty focus o fthese instruments, there are still methodological issues that limit the comparability o f the results across countries, sectors, and time. Meanwhile, it i s working to identify and operationalize approaches that will allow it to better evaluate the poverty impact and overall development effectiveness o f its activities. This section examines the status o f the Bank's current efforts to monitor the poverty focus and impact o f its CASs, sector strategy papers (SSPs), projects, and analytical work, while Chapter 3 discusses inmore depth some o f the challenges involved inincreasing the Bank's poverty focus andresults orientation. Building povertyfocused country assistance strategies 99. Country assistance strategies (CASs) lay-out the Bank's program to assist countries through policy advice, analytical work, lendingand other instruments. To increase the effectiveness and results orientation o f CASs, the Bank is: (i) revising operational guidelines to ensure that CASs are more closely aligned with national poverty reduction strategies (particularly inPRSP countries), and to ensure that core poverty analysis i s inplace for all borrowing countries; (ii) assessingthe ex-ante poverty focus and ex-post effect o f CASs on development outcomes; and (iii) strengtheningarrangements to allocate IDA resources to favor countries with good performance records. Each o f these initiatives i s reviewed inmore detail below. 100. Increasingly, the CAS takes as its starting point the country's own vision o f its development goals and its strategy for achieving them, as set out ina PRSP for IDA-eligible 38 countries, or ina CDF or other country-led process for middle income countries. (The experience inVietnam is described inBox 9). BeginninginJuly 2002, preparationofCASs for IDA countries will normally follow completion or updatingof the PRSP. The CAS will draw from the country's PRSP and will set forth the business plan by which IDA will support selected components of the country's strategy.51 The Bank is also revising its operational policy o n CASs (Business Procedure 2.11)to reflect the need for increasing the alignment between the CAS and national poverty reduction strategies, and for grounding CASs andnational strategies ingood poverty analysis. Box 9: Aligningthe CAS to the PRSP the case of Vietnam - The Vietnam Comprehensive PovertyReductionand Growth Strategy (CPRGS, as the government's PRSP i s called) was welcomed for its highlyparticipatory process and for its strong recognitiono f the importance o f growth and o f policy and institutional reform for poverty reduction. The Bank delayed its CAS by twelve months so that the CPRGS could be completed and the CAS aligned with it. Some o f the ways inwhich the Bank built its country strategy around the Government's national poverty reduction strategy are outlined below: Content of the CAS. Consultations with the poor have helpedto change the Government's priorities and to bringthe key needs o f the poor to the forefront. The CPRGS-and therefore the CAS-give greater recognitionto the special needs o f vulnerable groups (such as ethnic minorities, women, and unregistered urban migrants), place greater emphasis on making basic social services affordable for the poor, and reflect a greater awareness o f vulnerability to health shocks andnatural disasters. The nature of the policydialogue. The Government has developed a detailed medium-termprogram o f policy and institutional reforms that i s laid out inthe CPRGS matrix. The Bank will use its instruments to support the implementationo f the Government's reformprogram. The way aid is delivered.In order to deliver aidmore effectively, the CAS proposesto deliver 25-40 percent o f highcase lending every year through Poverty Reduction Support Credits and sub-sector "SWAPS"(Sector Wide Approaches). Major efforts are also underway to harmonize procurement, financial management, safeguards and other measures with the Government and other development partners. OutcomeIndicators. The CPRGS contains localizedMillenniumDevelopment Goals to which the Government has committed itself and against which it will measure success. The Bank Group and other donors are also committing to aligning their assistance inways that will deliver the same outcomes. Source: IMF and IDA, Poverty Reduction Strategy Papers-Progress in Implementation,August 2002 101. Since 1998,the Bank has assessed the ex-ante poverty focus of country assistance strategies. The current criteria, first introduced in 1999, are organized aroundfive themes: (i) use o f poverty diagnosis; (ii) description and analysis of the country's poverty reduction strategy; (iii) linkages o f Bank assistance to the poverty diagnosis andthe country's poverty reduction strategy; (iv) monitoring and evaluation arrangements for the CAS; and (v) participation inCAS ~ r e p a r a t i o n . ~ ~ 39 102. Despite important progress inrecent years, analysis suggests that efforts to sustain and strengthen the poverty focus of Bank country assistance strategies are still needed, particularly in middle-income countries. An analysis by the Bank's Poverty Reduction Group o f CASs from FYOOandthe first halfo fFYOl indicated aheightenedemphasis onpoverty-particularly inthe areas o fpoverty diagnosis, alignment with nationalpoverty reduction strategies and participation-compared to CASs from the previous period. However, the analysis of CASs from the second half o fFYOl and FY02showeda reduced focus on poverty reduction, insome o f the areas mentioned above.53 This i s explainedinpart by the higher share o f CASs from middle-income countries inthe latter sample (second half o f FYOl and FY02), reflecting the postponement o f CASs for several low-income countries untiltheir PRSPs were finalized. Middle-income country CASs have insome cases weaker linkages to poverty, reflecting their broader development strategies. Nonetheless, the results need to be viewed with caution for several reasons. The sample o f CASs under review was small; the evaluation methodology i s still under development; and some technical issues, including the weighting and scoring system used to aggregate information from different indicators into a single overall indicator o fpoverty focus, are still being addressed. 103. The Bank also assesses the ex-post effect of selected CASs on poverty and other country outcomes. The Bank's Operations Evaluation Department (OED) carries out selective ex-post evaluations o f a subset o f completed CASs, known as Country Assistance Evaluations (CAEs). These evaluations face the challenge o f attribution: it i s notoriously difficult, ifnot impossible, to disentanglethe impact o fthe package o f interventions supported by one partner from that o f the development efforts o fthe country itselfand its other partners.The problem is not specific to the evaluation o foverall packages o finterventions, but is particularly relevant insuch circumstances. Moreover, inthe past, CASs have typically not had specific outcome indicators or links to Government outcome targets, which would facilitate the evaluation o f their development impact.54 Nonetheless, CAS evaluations provide insight into the Bank's effectiveness and its comparative strengths.By taking a country-based approach, the evaluations also shed light on priority areas for interventions and the usefulness o f specific interventions, including analytical work (Box 10). Box 10: Lessons learned from Country Assistance Evaluations inEl Salvador, Vietnam and Haiti InElSalvador, nationaldatashowadecline inhouseholdincomepovertyfrom60percent in1990to41 percent in 1999. Over the same time the infant mortality rate fell by 33 percent. The CAE finds that Bank analytical studies "helped to identify and break down the obstacles to poverty reduction." The first o f these studies, "The Challenge o f Poverty Alleviation" (1994), identified a multifaceted approach to poverty reduction, including work on public sector management reform, agriculture (especially land titlingand registration), labor markets, healthand education. Inthe area ofprogrammatic lending, the CAE singles out a Social Sector Rehabilitation Loan (SSRL,). Ineducation, this loan supported the government's Community Managed Schools Program (EDUCO), which expanded community-based pre- school and primary education inrural areas. The C A E notes that this program i s "perhaps the most extensive devolution o f power to rural communities inthe world." When comparedwith the regular school system, evaluation results showed that EDUCO delivered as good or better education at similar costs and had lower drop-out and repetitionrates. 40 Vietnam i s another country that has seen a large decline inpoverty. National data show that income poverty fell from an estimated 58 percent in 1993 to 37 percent in 1998. H o w much have the Bank's lending and non-lending services contributed to this remarkable decrease inpoverty? The CAE finds that "On balance, the (Bank) lendingprogramhas displayed explicit poverty orientation...,..Thepoverty focus and the cross-fertilizationwith analytic work are strong points o f Bank assistance to Vietnam." The CAE also notes that Bank analytical work on poverty has "served to orient the thrust o f the lending program." Two Living Standards Surveys were done inthe 1990s, each followed up by a Poverty Assessment. The first Poverty Assessment led to the development o f Vietnam's Gender Strategy, among other things, and the second i s contributing to the government's poverty reduction strategy. While the previous cases illustrate what can be achieved when there is good Bank-country cooperation, Haiti presents a very different picture. InHaiti the CAE finds that "Roughly two-thirds [of the population] live below the poverty line. Half o f adults are illiterate, and less than one-quarter o f rural children attend primary school. Infant and maternal mortality rates are among the highest inthe world." According to the CAE, poor governance i s at the root o f Haiti's problems. The Bank's 1998 Poverty Report noted that "Haiti has never had a tradition of governance aimed at providing services to the populationor creating an environment conducive to sustainable growth." Given these circumstances, Bank assistance to Haiti has had little impact on poverty. After four education projects, illiteracy remainshighand enrollmentrates low. A healthproject hadpositive results with respect to tuberculosis, but components related to H N / A I D S and other issues were not satisfactory. Inthe absence of a functioning parliament, no new Bank lendinghas been undertaken since 1997, although economic and sector work has continued. The evident lesson from the Haiti experience i s that Bank assistance for poverty reduction can only be effective ifminimal standards o f good governance are inplace. 104. Inaddition, as part ofthe Bank-wide results agenda, country teams arepilotingresults- based CASs, which focus on greater clarity about intendedoutcomes andmore transparent monitoring systems. CAS teams working with country counterparts define desired country outcomes ex-ante, and work backward from these to a set o f intermediate outcomes that the Bank can more directly influence through its products and services. Focusing on results inthe design of CASs makes it easier to monitor progress duringimplementation andevaluate outcomes at completion. Along with the introduction o fresults-based CASs, the Bank has initiated systematic self-assessments at the completion o fthe CAS (CAS Completion Report - CASCR), which i s designed to provide learning and feedback for the preparation o f the next CAS and will be developed by the Bank country team inconsultationwith borrower counterparts. Fivepilots havebeen launched inFY03 to develop and test the design of the results-based CAS and CASCR, with refinement androllout planned for FY04. The pilots will help to improve understandingo fthe strengths andweaknessesinvolved indefiningandmeasuring appropriate outcomes and inusing this information to improve the relevance and strategic selectivity o f the CAS.55 105. Finally, to increase the impact o f the Bank's assistance on poverty, the allocation o f IDA resources i s increasinglytargeted to countries with good policies and institutions that support growthandpoverty reduction. IDA'Sfunds have been increasinglywell targeted through the Performance-Based Allocation (PBA) system, which allocates funds based on an assessment o f the quality o fclient countries' policies andinstitutions. The system has become a standard setter 41 for manymultilateral and bilateral development agencies, even as it continues to incorporate refinements with respect to methodology and application. A country's performance rating i s based largely on the Country Policy and Institutional Assessment (CPIA) (Annex H). The CPIA reflects a combination o f indicators based on the country's policies, institutions and governance. The performance of the Bank's portfolio inthe country is also a factor inthe rating as i s the "governance factor" which places particular emphasis o n the country's performance o n the governance-related criteria of the CPIA.56 Developing sector strategies with greaterfocus onpoverty 106. To help sector interventions better address poverty reduction inlow-income countries, the Bank has also worked to strengthen the poverty focus of its sector strategies. Sector strategy papers (SSPs) articulate Bank-wide sector strategies. The most recent sector strategies embody a distinctly stronger focus on poverty than inthe past, interms of: (i) and stronger linkages clearer between sector diagnosis and poverty reduction; (ii) linkages between diagnosis and strategy; and (iii) monitoring and evaluation. B o x 11summarizes six Bank sector strategies developed in FY02and FY03,indicatinghow they articulate a framework for better linking sectoral activities to poverty reduction. Box 11: Sector strategies in FY02 and poverty reduction Drawing on empirical studies, the basic principle o f the gender strategy' i s that gender inequalities tend to slow economic growth and poverty reduction. The strategy calls for a better diagnosis o f gender-related barriers inclient countries and strengthened collaborationwith governments, civil society and other donors to identify and support appropriate actions to reduce these barriers and capitalize on potential opportunities for growth and poverty reduction. Among other actions, the strategy calls for: the preparationo f multisectoral country gender assessments that identify the gender dimensions ofpoverty reduction, economic growth, human well-being and development effectiveness; a stronger integration o f gender dimensions into relevant analyticalwork, policy dialogue and lending instruments; and improved monitoring and evaluation o fresults on the grounds. The private sector development strategy' aims to promote growth, reduce poverty and help improve the quality o f life through private sector development. The strategy embodies a two-pronged approach: (i) extending the reach o f markets through the creation o f more productivejobs and increasing entrepreneurial opportunities for poor people; and (ii)empowering poor men and women by improving access to infrastructure and social services. Among the actions proposed are to: conduct systematic investment climate surveys and assessments that allow for a better understanding o f the linkages between the investment climate andproductivity and income growth, especially for poor men and women; continued direct support to entrepreneurs, including increased access to rural credit, micro finance, and basic services including infrastructure; and, improved monitoring o f the impact o fprivate sector initiatives on poverty reduction. The environment strategy3i s based on the understanding that environmental degradation due to unsustainable development patterns undermines poverty reduction and long-term economic growth by adversely affecting human health and livelihoods, and by increasing vulnerability. The strategy aims to: (i) people'squalityoflife(enhancinglivelihoods;preventingandreducingenvironmentalhealth improve risks; and reducing people's vulnerability to environmental hazards); (ii) improve the quality o f growth 42 (supporting policy, regulatory, and institutional frameworks for sustainable environmentalmanagement and promoting private sector development); and (iii) protect the quality o f regional and global commons. Inparticular, the strategy stressesimprovements inthe three keytoolsthat the WorldBankusesto help clients to pursue environmentally sound development: (i) strengthening analytical and advisory assistance including a more systematic application o f strategic analyses; (ii) addressing environmental priorities through projects and programs; and (iii) improving the safeguard system. The informationand communicationstechnologies (ICT) strategy4i s based on the assumption that ICT i s fundamental for: (i) development and global integration, (ii) increasing the economic and social well-being o f poor people and empowering individual and communities, and (iii) enhancing the effectiveness and transparency o f the public sector. The strategy proposes to improve access to ICT and promote its use in stimulating economic growth, increasing equality, and reducingpoverty. The strategy comprises action to increase both access to I C T services and their effectiveness, inorder to promote poverty reduction and private sector led growth. The strategy also proposes research and dissemination o f knowledge about ICT and the mobilization o flocal and international information technology (IT) industriesto focus directly on IT-basedpoverty alleviation. The urbantransport strategy' concentrates on the problems o fpeople who are very poor, not only in terms of income but also interms o f the broader dimensions o f social exclusion associated with inaccessibility: inaccessibility to jobs, schools, health facilities, and social activities. The strategy i s basedon the assumption that urban transport can contribute to poverty reductionbothindirectly, through its impact on the city economy and hence on economic growth, and directly through its impact on the daily needs o f poor people. The strategy proposes an eclectic approach that involves the following: (i) structural change, (ii) improved operational efficiency o f transport modes, (iii) focusing o f better interventionto assist the poor (by directly serving the locations where poor people live and work, targeting disadvantaged groups and focusing on issues such as the pollutedurban environment, safety and security) and (iv) policy and institutional reform. The ruraldevelopment strategy6 recognizes the multi-dimensionalnature o f rural poverty reduction and that renewed efforts should be made to pursue a holistic and multi-sectoral approach to rural development. Specifically, the strategy addresses (i) fostering an enabling environment for broad-based and sustainable rural growth; (ii) enhancing agriculturalproductivity and competitiveness; (iii) encouraging non-farm economic growth; (iv) improving the welfare o frural people, including their ability to manage risk and vulnerability; and (v) enhancing the sustainable use o f natural resources. Inaddition, the strategy will address key global public goods that potentially hamper progress inruralpoverty reduction including issues o f global trade, access to science and technology, and the effective management o f risks associated with global climate change. 'SeeEngendering Development - Through Gender Equality in Rights, Resources and Voice (2001); Integrating Gender into the *WorldBankSSector Work-A Strategyfor Action (2001) See Private Development Strategy-Directionsfor the World Bank Group (2002) See Making Sustainable Commitments -An Environment Strategyfor the WorldBank (2001) 4See Information and Communications Technology Sector Strategy Paper (2001) See Cities on the Move - A WorldBank Urban Transport Strategy Review (2002) 6See Reaching the Rural Poor: A Renewed Strategyfor Rural Development (2002) 107. The Bank has improved the poverty focus o f its sector strategies, but challenges remain intheir implementationandwith respect to selection ofindicators andbenchmarks. Ingeneral, 43 sector strategies need to be more transparent about the Bank's intended objectives and how they are to be achieved, including developingbenchmarks and indicators for monitoring performance. Inview ofthe many complexities anddegrees of separation betweensector strategies andactual country results, sector strategy benchmarks needto include indicators o f the Bank's inputs (such as staffing andbudget), country demand (such as lending), as well as trends incountry outcomes and global programs.57 Better measurement and monitoring of results of lending operations 108. This section describes three types o f monitoring activities designed to improve knowledge about the impact o f the Bank's work on povertyoutcomes. First, as part o fthe results agenda, the Bank i s puttinginto place a monitoring and evaluation architecture to better linkBank activities to CAS and country outcomes. Second, since the late 1990s, QAGhasbeen monitoring the ex-ante poverty focus o fprojects. Third, the Bank and OED regularly carry out specific evaluations on selected types o fBank interventions, e.g., social funds or education projects. Each o fthese monitoring efforts i s briefly reviewedbelow. 109. Analyzing the poverty focus o f the Bank's portfolio complements efforts made at the CAS level to better understand the impact o fBank activities onpoverty outcomes. This analysis will depend on a revised, results-focused monitoring and evaluation architecture that extends from lendingoperations (and non-lending services) up to the CAS level. This "joined-up" M&E architecture promotes a clearer definition o f outcome objectives at the CAS andproject levels. The development objectives o f investment operations will become more explicit and outcome- focused, but will be geared more carefully to the level o f specific activities within a given project, so as to make them more useful as a monitoring indicator andmanagement tool. Another important aspect o fthis effort i s the more systematic linkage o fproject results measurement to country statistical systems and sector wide data. Similarly, policy based lending will better articulate the link betweenoutcome-oriented objectives andthe measures takento achieve them.58 110. Complementing this work, QAG i s piloting a project-level methodology that tracks the ways inwhich interventions can affect poverty.59 This approach analyzes projects based on the quality o f the underlyingpoverty diagnosis andpoverty strategy, as well as the operational design used to implement and monitor the strategy. The methodology acknowledges the potential for both direct and indirect transmission mechanisms by which project activities can affect poverty. This approach was first used to review the poverty focus o f projects under implementation inrural areas over the FY99-01 period. It revealedthat projects were weakest in linkingtheir interventions to the poverty diagnosis.60 An earlier pilot review conducted by QAG on a sample o f projects preparedinFYOl indicatedthat most hadbeendesigned with a satisfactory overall poverty focus, that they were particularly strong on strategic orientation, but that they were weak on monitoring and evaluation for effective implementation. While this methodology i s promising, additional work i s still needed (and will be undertaken with support from the Poverty Reduction Board) to refine the approach so that it is applicable to interventions across a variety o f sectors. 44 111. Inadditionto ex-ante monitoring ofthepoverty focus ofthe portfolio, the Bankcarries out selective ex-post analyses o f the poverty impact o f specific types o f interventions and policies. As already noted inthe discussion o f evaluationo f the impact o f CASs, attributing changes indevelopment outcomes to a specific interventioni s often impossible, and at best very difficult, since it i s not always possible to establish the counterfactual (what would have happened without the intervention) or to follow the complex chain o f causality from action to results (see paragraph 103). However, judgment must be applied indetermining whether there i s a plausible association between actions and outcomes. Careful ex-post analyses can yield useful insights on how to increase the poverty impact o foperations byproviding information that can promote better designand implementationo f fiture interventions. For example, a careful analysis o fthe impact o f a large-scale rural roadrehabilitation inVietnamwas carried out with a view to improving the methods usedto allocate budgets on rural roads projects. The analysis provides guidance on how to strengthenthe poverty and efficiency impacts of road rehabilitation projects that can be easily replicated to other countries or interventions.61 112. Another illustration o f the type andrange o f lessons that can be drawn from impact evaluation comes from two recent evaluations o f the impact on poverty o f a selected sample o f social funds. The poverty impact analyses suggest the following recommendations for social funds to better achieve their long-term development objectives: (i) assertive targeting o f more poor regions andhouseholds; (ii) some changes inpriorities (for example, with respect to the balance between expanding access and rehabilitating existing infrastructure, or between completion and maintenance o fprojects); (iii) strengtheningmechanisms to promote the sustainability o f investments(cost control and sharing, capacity issues); (iv) improving selection mechanisms for effective investments; and (v) better coordination with non-infrastructure inputs and integrationwith the country's poverty reduction strategy andthe Bank's CAS (Box 12). Box 12: Evaluation of the impact of social funds on poverty The Bank's Human Development Network recently carried out a study o f social funds inArmenia, Bolivia, Honduras, Nicaragua, Peru, and Zambia, and OED undertook an assessment o f social funds' effectiveness ingeneral, with an in-depth analysis o f funds inJamaica, Nicaragua, Malawi and Zambia.' Social funds are an innovative alternative to traditional economic development programs, and represent one of the first attempts to implement a development model that relies on communities taking the lead in defining their investment priorities. They typically provide fast and flexible mechanisms for getting resources to communities. Between their creation inthe late 1980s and the early 2000s, social funds have attracted over $8 billion ininvestments across the world. The conclusion o f both analyses i s that social funds have met the broad objectives they were designed to address and have made important contributions to improving welfare. Overall, social fundresources have reachedthe poor and have ledto an increase inthe quality o f services providedto the poor. Social funds have been effective indelivering small-scale infrastructure. Increased facility access and utilization has translated into tangible improvements inwelfare ineach o fthe countries studied. Geographic distribution of services has beenprogressive inall cases, with the poorest districts receiving more than their population share. At the household level, the distribution o fresources favored the poor and generally remainedprogressive, even for the poorest households. The progressive distribution i s notable when compared to the performance o f available alternatives ineach country. 45 However, social funds also have some important limitations. Inparticular, there are often significant leakages to the non-poor, arising mainly because o f the nature o f the investments; resources are not always targeted to the biggest community problems; and social funds activities have often not been coordinated with those o f central ministries, which can limit the efficiency o f resource allocation. More specifically, the degree and type o f impacts on outcomes varied across countries and types o f activities: - Changes in education outcomes: While no significant increases were observed inprimary school enrollment rates inrural areas o f Bolivia, enrollments increased significantly inNicaragua and urban Zambia. InPeru, gains were largest in districts that receivedthe most social fundexpenditures. In almost all countries, there was a positive impact on education attainment, pointing to a positive link - with future poverty outcomes. Changes in health outcomes: A dramatic reductionininfant mortality was observed inBolivia, the only country where this could be assessed. Mortality rates dropped from 60 deaths per 1,000 live births to 30 in social fundcommunities, versus an increase to 67 inthe comparison group. Inother countries, the observed increaseinutilization was not accompanied bya clear, significant impact on other health - outcomes, although it i s notably difficult to disentangle the effects o f social funds from other factors. Changes in water and sanitation outcomes: Significanthealth gains were observed from expanding access to water supply, particularly inrural areas. Social fund water investment halvedchild mortality rates inPeru and Bolivia relative to comparison groups. Nonetheless, inHonduras, where investments were focused on rehabilitating pre-existingurban water systems, positive net health impacts were not observed. 'For the Bank's analysis, see World Bank, Letting Communities Takethe Lead: A Cross-Country Evaluation of Social Funds Performance, Draft, September,2001. Available fromthe Bank SocialProtectionWebsite, underpublications: httdiwwwl.worldbank.ordsu/.For the OED analysis, see World Bank Social Funds: Assessing Effectiveness, 2002. Available at httd/www.worldbank.org/oed/, type SocialFundinthe searchoption. 113. The challenges o fpoverty impact evaluationare amplifiedwhen applied to programs or policies, because the establishment o f a counterfactual i s an even greater challenge. However, analysis can still be carried out - and lessons learned - on specific aspects o f the reforms or programs. For instance, the Bank evaluated the impact o f a series o f education sector reforms that focused on the decentralization o f decision-making from central to local governments (in Colombia, El Salvador, Nicaragua, Pakistan and Tanzania). The studies found that reforms that transfer greater power to schools are transforming management o fpublic schools andhaving a positive impact on the quality o f schools and the performance o f students. The evaluationresults led, inthe case o fNicaraguainparticular, to changes inthe reform, reinforcing components which were found to be instrumental, and to greater government attention to monitoring and evaluation o f its interventions. Strengthening thepoverty focus of analytical work 114. To increase the poverty focus its analytical products, the Bank has begunto evaluate their overall quality and results orientation. It i s updating guidelines for Economic and Sector Work products to strengthenlinks betweenthese products and CAS outcomes. The approach to 46 assessing analytical work i s summarized below, followed by a brief discussion ofthe proposed new operationalpolicy for poverty reduction and the related guidance note onpoverty assessments. 115. A good analysis o fdevelopment challenges and options is important for outcome- oriented national povertyreduction strategies and CASs, as well as for interventions that address key constraints. Starting in2000, the Bank beganto rate a sample o fits analytical work (including, among other products, poverty assessments, public expenditure reviews, financial accountability assessments, development policy reviews and country economic memoranda).62 The rating i s based on four broad criteria: scope and strategic relevance; intemal quality; dialogue and dissemination; and likely impact. Within this framework, it also provides an assessment o f the poverty focus o f analytical work. 116. InFYOO,the evaluation revealed important deficiencies inthe extent to which analytical work paid sufficient attentionto poverty reduction. For example, analytical work too often did not: link policy options with poverty outcomes; analyze regional spendingpatterns inlight o f observed regional differences inpoverty; evaluate the impact o fprivate sector participation and other policy shifts on the poor; or sufficiently assess the impact o freforms on the poor and on groups most vulnerable to income shocks. InFYO1, the ratings improved significantly and most o f the analytical work was rated satisfactory or better interms o f its poverty analysis. In addition, greater emphasis on participatory analysis, carried out incollaborationwith countries and other development partners, ledto higher quality analytical work, especially interms o f relevance and impact. 117. As part o fthe overall effort to providebetterguidance to staff inthe preparationo f analytical work, the Bank i s revisingits operationalpolicy on poverty analysis andhas prepared a draft guidance note on poverty assessments, both o fwhich are currently undergoing extemal consultation^.^^ 64 The proposed update o f old OD 4.15 is intendedto reflect the current framework o f the Bank's poverty reductionmandate, the revisedcontext for poverty assessments, and the overall effort to streamline operational guidance to staff, The new draft OP 1.OO buildson the World Development Report 2000/2001 andproposes two pillars (drawing on the Strategic Framework) to support the Bank's poverty reduction mandate: helping to build a climate favorable to investment, jobs, and sustainable growth; and investing inpoor people to increase their participation inde~elopment.~~The draft OP 1.OO also builds on the principles o f the CDF by confirming that the Bank supports borrowing countries inarticulating their vision and strategy for reducingpoverty, and acknowledging that poverty analysis may be conductedby a govemment, the Bank, or other donors and development partners.66 118. The proposedOP 1.00contains minimumrequirements for poverty assessments: (a) an analytical synthesis o f the existing body o fknowledge on three topics: (i) assessment of the poverty situation; (ii) o f the impact o f growth andpublic actions on poverty, and (iii) analysis appraisal o fpoverty monitoring and evaluation systems; (b) an identification o f key knowledge gaps with respect to these three topics; and (c) new analysis intended to address identified gaps or complement existing work. To assist inthe preparation o f good quality poverty assessments that meet these requirements, the Bank has prepareda draft guidance note which discusses the core elements o f poverty assessments and highlights good practice.67 47 CHAPTER CHALLENGESAHEAD 3: 119. This year's poverty progress report has focused on results in achieving poverty reduction, broadly defined, and the Bank's efforts to improve its effectiveness insupporting poverty reduction outcomes. Chapter 1reviewedglobal progress towards reducing income andnon- income dimensions o fpoverty as definedby the MDGs and described the international partnership between developing and developed countries that has emerged to accelerate progress towards these goals. Chapter 2 examinedways inwhich the Bank i s seeking to better manage for poverty reduction outcomes, by supporting country owned poverty reduction strategies and strengthening the poverty orientation and results focus o f its own work. This final chapter briefly outlines two broad challenges for the institution related to (i) the Bank's support for achieving the MDGs, and (ii) its efforts to operationalize its increased results orientation. Supportingprogresstowards the MDGs 120. While significant steps have beentaken towards reaching the MDGs, the rate o fprogress needs to be increased ifthe goals are to be met. The first challenge facing the Bank i s to support the internationalpartnership that emergedat the Monterrey Conference to accelerate progress towards the MDGs. While the Bank provides active support to developing countries inall the sectors covered by the MDGs, there are three cross-cutting areas inparticular where it needs to intensify its contribution. 121. First,the Bank must continue to help spearheadthe effort to improve the development community's knowledge base on how to help promote pro-poor growth, in low-income and middle-income countries alike, through research and operationally focused analytical work. While much progress has been made inthe last decade inidentifyingthe key policies and reforms relatedto growth, questions emerge for policy makers in: (i) adapting these policy packages to specific country conditions, (ii) supporting the necessary institutional capacity to promote their implementation, and (iii) prioritizing and sequencing policies to achieve broadly shared and sustained growth. The PRSP experience underscores the importance o f strengthening the ability o f national policy makers to develop country specific growth strategies with clear linkages to poverty reduction. Similarly inmiddle-income countries, which contain 30 percent o fthe world's poor living on under a dollar a day, strategies to.integrateimpoverished regions, excluded groups and the chronic and extreme poor effectively into the growth process remainpoorly understood. Inparticular, more knowledge i s needed to understandbetter how to achieve labor-intensive growth, foster asset and income redistribution, and implement social safety nets. 122. Second, the Bank has a major role to play indeepening country capacity for data collection and analysis. These are critical inputs for the evidence based policy-making and poverty monitoring needed to support progress towards the MDGs. Many developing countries face difficulties indeveloping reliable, comprehensive, timely, and transparent statistics, at the national, sectoral and regional levels. This i s particularly true for IDA countries. The 2002 PRSP Reviewnoted that many PRSP countries lacked sufficient data and institutional capabilities to track outputs or outcomes effectively. The Bank and other donors are working to expand their involvement inthis area, andincreased levels o f technical and financial assistance are beingmade available to developing countries, through country assistance programs, 48 analytical work, and leaming events. Inaddition, as noted inChapter 2, the Bank is engaged in global initiatives to improve national statistical capabilities, along with monitoring and evaluation improvements through the PARIS 21Consortium, TFSCB,and ECD country-based assistance for monitoring and evaluation. Nevertheless, important institutional and financial challenges remain instrengtheningnational capacity to collect, analyze and use evidenced-based policy-making. 123. Third, the Bank is supportingprogress towards the MDGsbyhelping low-income countries inthe design and implementation o f country-owned poverty reduction strategies. While countries will needto reflect on the MDGs inthe process o fpreparing their national strategies for poverty reduction, the specific goals they set, and the indicators they use at the country level to assess progress on those goals, will reflect their individual starting points and priorities. By adapting and integrating the MDGs into their national strategies, rather than addressing them ina piecemeal fashion, it will be easier for countries to put inplace the broad inter-linking set o f interventions requiredto reduce poverty. The challenge for the Bank will be to help strengthen national strategies along these lines while respecting the principle o f country ownership and individual country priorities and capabilities. Operationalizing the Bank's results orientation for poverty reduction 124. The second overarching challenge relates to how the Bank will move forward in strengthening its own results orientation with respect to sustained growth and poverty reduction. Notwithstanding the attribution problems discussed inChapter 2, the Bank needs to identifyto the extent possible the outcomes it expects to influence, along with the transmissionmechanisms that can be expected to lead from inputsto country outputs and outcomes, as identified inthe country strategy process. 125. The overall framework for better measuring, monitoring and managing for development results was endorsed by the Development Committee in September 2002 and the implementation action plan was endorsed by CODE inDecember. The overall results framework has three pillars: (i)buildingcountry capacity and demand for results-based approaches to development, (ii)harmonizing results-based reporting among development agencies andproviding coordinated support to clients for statistical systems and monitoring and evaluation capacity; and (iii) establishing a results-focused corporate culture results-based strategies and instruments. 126. The results agenda has already yielded some concrete progress inthe three areas described above, as highlighted inthis report (including results-based CASs, the growing integration o f the results focus into investment lending, and results focused SSPs). However, fully meetingthe challenge o f strengthening the Bank's results orientationwill take time and effort. It will also need to overcome important capacity and knowledge constraints as well as methodologicalproblems. Inparticular, four key challenges will need to be addressed: 0 Creating country demand and capacity to monitor results and increase government accountability. This will involve supporting countries to develop comprehensive monitoring and evaluation systems with well-defined and timely connections to policy making. 49 Mainstreamingresults-basedmanagementwithin countryprograms. Results-based CASs will needto be mainstreamed. This will involve aligning CASs to national goals and ensuringthe linkages between CAS inputs, outputs and these goals. CASs will also need to provide the necessary statistical, monitoring and evaluation support to effectively manage for results. 0 Strengtheningpublicsector management. Thiswill require increased andbetter- coordinated support for results-oriented public sector management (through, e.g., PEMs, PETS,financial management strategies, expenditure frameworks) to underpin programmatic and sector-wide approaches. 0 Extendingresults-basedapproachesto sectoralstrategies. Issues include defining key sector goals, together with establishing measurable indicators to monitor progress and facilitate improvedportfolio analysis and alignment at the sectoral level. At the same time, our understanding o fcross-sectoral linkages will needto be deepened and integrated into the indicators. 127. Chapter 1ofthis report laid out some o fthe critical challenges faced by the Bank and the global community inattackingpoverty - and specifically inworking towards achieving the MillenniumDevelopment Goals. Itnotedthat many o fthe goals mightnot bemet,without an intensified effort on the part o f developing countries and their extemal partners, including the Bank. Chapter 2 focused on how the Bank, inpartnership with other donors, i s working with developing countries to achieve better and faster results with respect to non-income as well as income dimensions o fpoverty, and on the steps the Bank i s taking to improve its own development effectiveness. 128. As the Bank moves forward it faces two keychallenges. The first is how best to support the global effort to accelerate progress towards the MDGs, particularly with respect to generating pro-poor growth, deepeningcountry capacity for data collection and analysis, and helpinglow- income countries design and implementcountry-owned poverty reduction strategies. The second challenge relates to how the Bank will move forward instrengthening its own results orientation with respect to sustained growth andpoverty reduction. Meetingthis challenge will take time and effort, but good progress has already beenmade andis on track to continue and accelerate as we move further into the new millennium. 50 ENDNOTES World Bank, World Development Report, 1990, Washington, DC, 1990. World Bank, World Development Report 2000/01. WashingtonDC, 2000. World Bank, Strategic Framework. Washington DC, 2001. Available at hthx//www.worldbank.ornlhtmllextdr/strateovapers/stratenic.pdf. The ComprehensiveDevelopment Framework was introducedby the World Bank in 1999and offers a set of core principles for the developmentofcountry strategies: country ownership, along-term vision andstrategy, a focus on accountability for developmentresults, and a strategicpartnershipamong stakeholders. For more information, see: http://www.worldbank.org/cdf. The assessment ofprogresstowards the MDGs draws upon:Achieving the Millennium Development Goals in Africa: Progress, Prospects, and Policy Implications - GlobalPoverty Report 2002, July 2002, preparedby the African Development Bank andthe WorldBank incollaboration with the IMFand other regional development banks; Achieving the MDGs and Related Outcomes: A Frameworkfor Monitoring Policies and Actions (DC2003- 003), preparedfor the Development Committee Meetings, 2003; GlobalEconomic Prospects and the Developing Countries 2003, WorldBank, 2003; and, World Development Indicators 2003, World Bank, 2003. The $1 a day is in 1993 consumptionpurchasingpower parity terms. The numbers are estimatedfromthose countriesineachregion for which at least one survey was available during the period 1985-2001.Survey dates often do not coincide with the dates inthe table. To line up withthe dates, the survey estimates were adjustedusing the closest available survey for eachcountry and applying the consumptiongrowth rate from national accounts. Using the assumptionthat the sample of countriescoveredby surveys i s representativeofthe regionas a whole, the numbersofpoor are then estimatedbyregion. This assumptionis obviously less robust inthe regionswiththe lowest survey coverage.The headcountindex i s the percentage of the population below the poverty line. Further details on data andmethodology canbe found inat http:llwww.worldbank,or~lresearchbovmonitor/.The historical series to 1999 was updatedinOctober 2002 for the 2003 edition of Global Economic Prospects. 'See Dollar, David and Aart Kraay. "Growth i s good for the poor." Journalof Economic Growth (US.);7, No. 3:195-225, September 2002. *The prevalenceof childmalnutritioni s measuredby the percentage of childrenwhose weight i s more thantwo standard deviationsbelow the medianreference standard for their age as establishedbythe U.S. National Center for Health Statistics, the U.S. Centers for Disease Control and Prevention, and the World Health Organization. The data are basedon a sample of childrenwho survived to age three, four or five years, dependingonthe country. Source: World DevelopmentIndicators 2003. Meashanm, Anthony R.2001. Assessing Malnutrition in the Africa Region: Why Bother? Africa Region Health, Nutrition andPopulation, World Bank, Washington, D.C IoHowever, as of 1998, developedcountries, while accounting for only 15 percent of the world population, are still responsiblefor half of world carbondioxide emissions. ``See TheJohannesburg Declaration on Sustainable Development, September 2002. Available at http://www.johannesburgsummit,org/htmlidocuments/su"it_docs/1009wssdqol-declaration.doc l2Devarajan, S., M.Miller andE. Swanson (2002) Goalsfor Development: Histoy,Prospects and Costs,World Bank, WorldBank Policy ResearchWorking Paper 2819. Respondingto the requestof the Development Committee at the 2003 Spring Meetings, work i s on-going to groundthese global estimates better incountry case studies. l3DCD/DAC (2003)8. ODA Prospects After Monterrey: Update. Noteby the Secretariat. l4See www.un.orglesalsocdev/wssd/agreements/decpartc.htm. l5Market Accessfor Developing Country Export-Selected Issues (SecM2002-0456, September 5,2002; and S/02/280, August 28, 2002). l6"Heavily IndebtedPoor Countries Initiative -Progress inImplementation", September 23, 2002, SM/02/264 Revision 1,htttxl/www.imf.orglextemaUhp/hipc, andhttwliwww.worldbank.org1hipc: and"Heavily IndebtedPoor Countries (HIPC) Initiative - Statistical Update" (IDNR2003-0042, March 10,2003) ''Thisfigureon l7 is based on the net present value of the assistanceat the time of the decision point for each country. "Update Implementation ofAction Plansto StrengthenCapacity of HIPCs to Track Poverty-ReducingPublic Spending", World Bank, March 7,2003. l9 See Development Effectiveness, Partnership, and Challenges for the Future (DC2002-0006), prepared for the April 2002 Development Committee meeting. 51 20World Bank, Development Committee Communique, April 2002. More recently, at the Spring 2003 Development Committee meetings, Ministers r e a f f i i e d the need for rapid implementation o f the results agenda as a key element inimproving the overall quality o faid. See World Bank, Development Committee Communique, April 2003. 21World Bank, Better Measuring, Monitoring and Managingfor Development Results, September 18, 2002, DC2002-0019. This approach was further deepenedby the ImplementationAction Plan for the results initiative discussed with CODE inDecember 2002 and by the High-Level ForuminFebruary 2003 and the related follow-up activities on harmonizing operational policies, procedures and practices. See World Bank. Better Measuring, Monitoring and Managingfor Development Results: Implementation Action Plan, December, 2002 and World Bank. Harmonization: Recent and Future World Bank Activities. February, 2003; and the Rome Declaration on Harmonization, February 2003. See also the website for the forum at: http:llwww1.worldbank.org/harmonization/romehlf/ 22The four CDF principles include a long-term vision and strategy, enhanced country ownership o f development goals and actions, more strategic partnership among stakeholders and accountability for development results. For more information, see www.worldbank.org1cdf. 23 A joint assessment o fthe first two years o fimplementation experience was conducted in2001102, drawing onthe views o f member countries, their multilateral and bilateral official partners, and civil society organizations (CSOs). The Review drew on: (i) participatory contributions from PRSP countries themselves; (ii) o f countries' views multilateral, bilateral and CSO partners; (iii) thematic reviews o f experience undertakenby Bank and IMF staff; and, based on these inputs, (iv) an international conference held inJanuary 2002. It covered the first ten PRSPs, which included: Albania, Bolivia, Burkina Faso, Honduras, Mauritania, Mozambique, Nicaragua, Niger, Tanzania, and Uganda. See Review of the Poverty Reduction Strategy Paper (PRSP) Approach: Main Findings (DC 2002-03), March 27, 2002. 24 See IMFand World Bank. Poverty Reduction Strategy Papers-Progress in Implementation. Washington, D.C.. September 13,2002. 25 As o fMay 2003, there have been 15 CASs insupport o fPRSPs discussed bythe Board and 7 PRSCs, two for Uganda, two for Burkina Faso, and one each for Albania, Guyana, and Vietnam. 26 The full report issuedby the Task Force inSeptember 2002 i s available at: http:l/www1.worldbank.orrrlo~erationsllicusldocumentsllicus.~df 27 The countries are: Angola, Central African Republic, Haiti, PapuaN e w Guinea, Somalia, Sudan and Tajikistan. 28 See http://lnweb 18.worldbank.orglAFRlafr.nsflGeneral/9D48D6DCE826CCDO852568F 1006DBF2E?OpenDocument 29 See World Bank (2002), Transition: TheFirst Ten Years,Analysis and Lessonsfrom Eastern Europe and the former Soviet Union. Washington D.C. Available for download from the "publications" section o f http://lnwebl8.worldbank.orglecaleca.nsf. See also Milanovic, B.(1998), Income, Inequality and Poverty during the Transitionfrom Planned to Market Economies, World Bank, Washington D.C. Available at http://www.worldbank.orglresearchiinequality1inequalityandtransition.htm. 30 See Supporting Country Development: Strengthening the World Bank Group S Supportfor Middle-Income Countries (DC2001-0005), April 10,2001, prepared for the April 2001 Development Committee meeting. 31 See http:llwww.worldbank.orglpsia. 32 Ibid. 33 Actions to Strengthen the Tracking of Poverty-Reducing Public Spending in Heavily Indebted Poor Countries (HIPCs). World Bank and IMF.March22, 2002. See http:llwwwl.worldbank.orglpublicsectorlpelnewhipc.pdfand http:llwww.imforglexternallnpkipcl2002/tracW032202.htm. 34 Update on Implementation ofAction Plans to Strengthen Capacity of HIPCs to Track Poverty-Reducing Public S ending, World Bank, IDA/R2003-0043,March 25, 2003. 3PResearch over the next two years will focus on investigating pro-poor growth and inequality at the country level; sub-national determinants o f pro-poor growth; income dynamics, risk and vulnerability; and social exclusion. See Martin Ravallion, 2001, Growth, Inequality and Poverty: Looking Beyond Averages, World Development. See also: http:llecon.worldbank.org/programs/poverty. 36 A workshop was heldto take stock o fexisting analytical and operationalknowledge on key questions related to pro-poor growth inFebruary 2003. Future activities include a series o f country case studies which will focus on developing a core approach to evaluating growth and poverty linkages at the macro and sectoral levels, as well as showcasing methodological tools to assess pro-poor growth. T o complement this work, a separate study is examining critical bottlenecks faced by both middle-income and low-income countries inpromoting growth. There 52 is also an on-going study examining the growth and distribution lessons learned from the adjustment and macro reforms o f the 1990s. 37See http:l/www.paris2 1.org 38TFSCB InternalManagement Committee and Administrative Unit (2002), TrustFundfor Statistical Capacity Building, Progress Report, October 2001 -April 2002. Available at http://web. worldbank.orgiWBSITEIEXTERNAL/DATASTATISTICS/SCBEXTERNAL/O,,pagePK:229515-thesit ePK:239427,00,html and ww.paris21.org. 39OED,Annual Report on Evaluation CapacityDevelopment 2002, World Bank, June 2002. 40 This work is being donejointly byDEC, PREM, and WBI. 41 K.Heitzmann, R.Sudharshan CanagarajahandP.B.Siegel, Guidelinesfor Assessing the sources of Risk and Vulnerability. Social Protection Discussion Paper. World Bank, Washington D.C., 2002. 42 Laura B.Rawlings, "Columbia Social Safety Net Assessment", World Bank, Office o f the Vice President, Latin American and Caribbean Group, Washington D.C., 2002. 43 The World Bank, Gender Mainstreaming Strategy Paper (http://www.worldbank.org/gender/overview/ssp/home.htm)and Country Gender Assessment (CGA) Guidelines (http://gender/gadboard/workinprogress/cgs/home.htm). Washington D.C. 2002 44 World Bank, Empowerment and Poverty Reduction: a Sourcebook, Washington D.C., 2002. Available at http://www.worldbank.org/poverty/empowerment/index.htm. 45 For more information o n the High LevelHarmonization Forum and the OECD-DAC good practice papers see: http://wwwl .worldbank.ora/harmonizatiodromehlf/ and http:/lwww.oecd.or~l~dfiM00039OOO/MOOO39775.~df. 46 Sector Wide Approaches (SWAPS) represent a shared approachby development partners to support country-led programs whose scale i s greater than that o f traditional projects. They typically encompasses an entire sector or large portions o f one. 47 These countries are Bangladesh, Bolivia, Cambodia, Honduras, Kenya, Kyrgyz Republic, Morocco, Niger, Nicaragua, Pacific Islands, Philippines, Senegal and Zambia. 48 See Developmentgateway.org 49 More information can be found at htttxl1www.un.orglmiIlenniumgoals. 50 See the joint Statement o f Heads o f Multilateral Development Banks made inMonterrey o n March 19, 2002. 51 As o fthe first quarter o fFY03, a total o f 15 IDA CASs supporting the implementationo f a PRSP were presented to the Board. They include: Albania, Burkina Faso, Ethiopia, the Gambia, Guyana, Mauritania, Nicaragua, Niger, Rwanda, Senegal, Sri Lanka, Tajilustan, Uganda, Vietnam, and Yemen. 52 Assessment i s currently based o n 16 questions covering the 5 topics. For each question, the quality o f the CAS i s rated "unsatisfactory", "marginal", "satisfactory", or "highly satisfactory". For eachtopic, a score i s calculated as the percentage o f "satisfactory" and "highly satisfactory" inthe questions under that topic. The overall score i s calculated as an un-weighted average o f the scores for the five topics. An improved methodology for aggregating the results into a single composite index is being developed. 53 Analysis is carried out annually by the Poverty ReductionGroup under the guidance o f the Poverty Reduction Board. The results are reported every eighteen months to the Board inthe CAS Retrospective. 54 OEDMethodology for Country Assistance Evaluation: BackgroundPaper for Committee onDevelopment Effectiveness (CODE) Subcommittee Meeting, March 14, 2002. 55 The five pilot CASs are Brazil, Cambodia, Cameroon, Sri Lanka andUkraine. For more information see: World Bank. Better Measuring, Monitoring, and Managingfor Development Results: Implementation Action Plan, SecM2003-0038. 56 For more information on the P B A methodology, see http://siteresources. worldbank.org/IDAIResourcesPBA2002.pdf 57 World Bank, Better Measuring, Monitoring and Managingfor Development Results, September 18,2002, DC2002-0019. See also World Bank, Better Measuring, Monitoring and Managingfor Development Results- Implementation Plan, SecM2003-0038. As a follow-up, an initiative was launched inJanuary 2003 inseven selected to better define expected outcomes and measurable indicators and align future work programs to achieve these outcomes. The areas include: Education for All, HIVIAIDS, matemal and child health, water supply and sanitation, investment climate and finance, trade, environmental sustainability. 58 Ibid. 59 Previously, the Bank measured the poverty focus o f projects by assessing ifinvestment operations were part o f the Program o f Targeted Interventions (PTI) and had a specific mechanism for targeting the poor, and/or ifthe proportion o fthe poor among project beneficiaries was significantly larger than their proportion inthe overall 53 population. Similar criteria existed for adjustment operations. Last year, the Bank stopped using the PTI to measure the poverty focus of investment operations as the Board agreedthat the measure was too restrictive and did not take into account the full potential poverty impact and linkages o f Bank operations. The PTI also didnot take into account what other partners were doing. See http:llwww.worldbank.orglpoverty/(sub-page on Bank activities, PTI). 6Q See Reaching the Rural Poor: A Renewed Strategyfor Rural Development (2002). 61 See Van de Walle (2000), Choosing Rural Road Investments to He@Reduce Poverty, Policy ResearchWorking Paper 2458, World Bank. Washington D.C.; and descriptiono f the on-going researchproject at http://econ. worldbank.org/programslpublic-serviced. 62 World Bank, Quality of ESW in FYOI: a QAG Assessment,March 2002. andWorld Bank, Quality of ESW in FYOO: a QAG Assessment.March 2001.QAG is revising its quality o f ESW assessmentsto include more criteria for assessingthe results focus. Beginning inFY04 QAG i s also moving from a product-by-product assessmentto a country-based assessmento f ESW, focusing on the overall ESW programinrelationship to the CAS. See World Bank, Better Measuring, Monitoring and Managingfor Development Results- Implementation Plan, SecM2003- 0038. 63 OperationalPolicy 4.15 was discussed with CODE on July 31,2002 and was posted on the extemal web for consultations (along with the guidance note for poverty work) betweenApril 15 and June 30,2003. See: http:/lwww.worldbank.orglpovertylwbactivities/op~3.htm 64 Since the late 198Os, the World Bank has prepared 156 Poverty Assessments and 4 poverty notes, 12 o f which were completed inFY 2002 (Annex C). 65 See: httdiwww.worldbank.orglpovertvlwdrpovertv1reportlindex.htmand World Bank, Strategic Framework, Washington, D.C. 2001. Available at: h~:llwww.worldbank,org/htmvextdr/strate~~apers/strategic.pdf. 66 See: http:/lweb.worldbank.org/WB SITEIEXTERNALIPROJECTS/STRATEGIES/CDF/O,,pagePK:60447-theSitePK:14 ''0576,OO.html See http:llwww. worldbank.orrr/povertvlwbactivitieslop 3.htm. 54 Annex A ANNEXA. LISTOFMILLENNIUM DEVELOPMENT GOALS, TARGETS INDICATORS AND Goals Targets Indicators 1. Eradicateextreme J Halve, between 1990 and 2015, the ' Proportionofpopulationbelow$1aday poverty and hunger proportion ofpeople whose income is less 1 Povertygap ratio (incidence x depthof poverty) than one dollar a day 1 Share of poorestquintile innational consumption . 4 Halve, between 1990and 2015, the Prevalenceof underweight inchildren (under five years of proportion ofpeople who suffer from hunger age) Proportionofpopulationbelow minimumlevel of dietary energy consumption 2. Achieve universal J Ensure that, by 2015, children everywhere, 1 Net enrollment ratio inprimary education primaryeducation boys and girls alike, will be able to complete 1 Proportionofpupils startinggrade 1who reachgrade 5 afull course ofprimary schooling 1 Literacyrate of 15to 24-year-olds 3. Promotegender . J Eliminate gender disparity in primary and ' Ratio of girls to boys inprimary, secondary, andtertiary equality and empower secondary education preferably by 2005 and education women to all levels ofeducation no later than 2015. Ratioof literate females to males among 15- to 24-year-olds 1 Share of women inwage employment inthe nonagricultural sector 1 Proportionof seatsheldby women innationalparliament 4. Reducechild Reduce by two-thirds, between 1990 and 1 Under-fivemortalityrate mortality 2015, the under-five mortality rate . Infantmortality rate 1 Proportionof one-year-oldchildren immunizedagainst measles 5. Improvematemal Reduce by three-quarters, between 1990 and 1 Matemalmortality ratio health 2015, the maternal mortality ratio Proportionofbirths attendedby skilledhealthpersonnel 6.Combat HIVIAIDS, Have halted by 2015, and begun to reverse, 1 HIVprevalenceamong 15-to 24-year-old pregnantwomen malaria, and other thespread of HIV/AIDS . Contraceptiveprevalencerateb diseases m Number of childrenorphanedby HN/AIDS J Have halted by 2015, and begun to reverse, 9 Prevalenceand death rates associatedwith malaria the incidence of malaria and other major Proportionofpopulationinmalaria-riskareas using effective diseases malaria preventionandtreatmentmeasures ... .. Prevalenceand deathratesassociatedwith tuberculosis Proportionof TI3 cases detectedand cured under DOTS 7. Ensure J Integrate theprinciples of sustainable Change inland area coveredby forest environmental development into country policies and Land areaprotectedto maintainbiological diversity sustainability program and reverse the loss of GDPper unit of energy use environmental resources Carbondioxide emissions (per capita) J Halve, by 2015, theproportion ofpeople 1 Proportionof populationwith sustainableaccessto an without sustainable access to safe drinking improvedwater source water J Have achieved, by 2020, a significant Proportionofpopulationwith access to improvedsanitation improvement in the lives of at least 100 .. Proportionofpopulationwith access to secure tenure million slum dwellers [Urbaniruraldisaggregationo f severalof the above indicators may berelevant for monitoring improvementin the lives of slumdwellers] 55 Annex A ~~~~ ~ ~ ~ ~~~~~ ~~ ~~ ~ 8. Develop a global J Developfurther an open, rule-based, partnership for predictable, nondiscriminatory trading and development financial system . J Official development assistance. Address the ' NetODAasapercentageofDACdonors' gross national special needs ofthe least developed countries... income Proportiono f ODA to basic social services (basic education, primary health care, nutrition, safe water, and sanitation) Proportiono f ODA that i s untied Proportiono f ODA for environment in small island developing states Proportiono f ODA for the transport sector in landlocked countries .. J Market access.Address thespecialneedsof Proportiono f exports (by value, excluding arms) admitted free landlocked countries and small island o f duties and quotas developing states Average tariffs and quotas on agriculturalproductsand textiles and clothing Domestic and export agricultural subsidies inOECD countries Proportiono f ODA provided to help build trade capacity J Debt sustainability Deal comprehensively Proportiono f official bilateral HIPC debt canceled with the debtproblems of developing . Debt service as a percentage o f exports o f goods and services countries through national and international ' Proportiono f ODA provided as debt relief measures in order to make debt sustainable Number o f countriesreaching HIPC decision and completion in the long term points J Other. (i) In cooperationwith developing 1 Unemploymentrate o f 15- to 24-year-olds countries, develop and implement strategies Proportiono fpopulation with access to affordable, essential for decent andproductive workfor youth; (ii) drugs on a sustainable basis in cooperation withpharmaceutical Telephone lines per 1,000 people companies, provide access to affordable, ' Personal computers per 1,000 people essential drugs in developingcountries; (iii) in cooperation with theprivate sector, make available the benefits of new technolopies. - especially information and communications ~~ 56 Annex B ANNEXB. MILLENNIUM DEVELOPMENT GOALS: REGIONAL DATA Percentof people living below $1 Percent of peoplelivingbelow $2 ~~POVERTY & HUNGER per day per day 1990 1999 2015 1990 1999 2015 East Asia andthe Pacific 30.5 15.6 3.9 II 69.7 50.1 16.6 (excludingChina) 24.2 10.6 1.1 64.9 50.2 18.4 Europe andCentralAsia 1.4 5.1 1.4 6.8 20.3 9.3 Latin America andthe Caribbean 11.0 11.1 7.5 27.6 26.0 18.9 Middle East andNorthAfrica 2.1 2.2 2.1 21.0 23.3 16.0 SouthAsia 45.0 36.6 15.7 89.8 84.8 68.0 Sub-SaharanAfrica 47.4 49.0 46.0 76.0 74.7 70.4 Total 29.6 23.2 13.3 62.1 55.6 38.1 (excludingChina) 28.5 25.0 15.7 58.7 57.5 44.7 POVERTY & HUNGER Number of people living below $1 Number of peoplelivingbelow $2 1990 1999 2015 1990 1999 2015 (excludingChina) 110 57 7 295 269 120 Europe andCentralAsia 6 24 7 31 97 45 Latin America andthe Caribbean 48 57 47 121 132 117 Middle East andNorthAfrica 5 6 8 50 68 62 SouthAsia 506 488 264 1010 1,128 1,139 Sub-SaharanAfrica 241 315 404 386 480 618 Total 1,292 1,169 809 2,712 2,802 2,320 (excluding China) 917 945 735 1,892 2,173 2,101 Source: World Bank (2003), Global Economic Prospects and the Developing Countries: Investing to Unlock Global Opportunities. Washington, D.C. Notes: The $1 aday is in 1993WorldBank consumptionpurchasingpower panty terms. The numbersare estimatedfrom those countriesin each regionfor which at leastone surveywas available during the period 1985-2001.Surveydates often do not coincidewith the dates in the above table. To line up with the above dates, the survey estimates were adjustedusingthe closest available survey for each country and applying the consumptiongrowthrate from nationalaccounts. Usingthe assumptionthatthe sample of countriescoveredby surveysis representativeof the regionas awhole, the numbersofpoor are thenestimatedby region. This assumptioni s obviously less robustinthe regions with the lowest survey coverage. The headcountindex is the percentage of the populationbelow the poverty line. Further details on data andmethodology canbe found inM.Ravallion and S. Chen (2000), "How Did the World's Poorest Fare inthe 1990s?",Review of Income and Wealth, Vol. 47,2001. The historical series to 1999was updatedinOctober 2002 for the 2003 edition of Global Economic Prospects. 57 Annex B UNIVERSAL PRIMARY Netprimary enrollment Percentageof cohort Youth literacyrate EDUCATION ratio reachinggrade 5 % or relevant age group % of grade one students % ages 15-24 ~~ who-reach gradefive 1990 1999 1990 1997 1990 2001 World HighIncome 98 97 Low & Middle Income 82 85 East Asia & Pacific 97 93 86 93 95 97 Europe & Central Asia 98 99 Latin America & 89 97 75 93 95 Caribbean MiddleEast &North 83 71 81 SouthAsia 61 69 Sub-Saharan Africa 67 78 Source: World Bank (2003), World Development Indicators, Washington, D.C. GENDER EQUALITY Ratio of girlsto boys in Ratio ofyoung literate Share of women primary& secondary females to males employed inthe schools nonagriculturalsector % % ages 15-24 % of total employment in sector 1990 1998 1990 2000 1990 2000 World 85 87 HighIncome 96 92 43 45 Low & MiddleIncome 82 86 89 92 East Asia & Pacific 84 89 95 98 Europe & Central Asia 90 88 98 99 43 LatinAmerica & Caribbean 98 99 100 101 38 41 MiddleEast & NorthAfrica 79 84 77 87 18 South Asia 68 78 70 77 Sub-Saharan Africa 79 80 80 89 Source: WorldBank (2002), WorldDevelopment Indicators, Washington, D.C. INFANT & CHILD Under-5 mortalityrate Immunizationrate, MORTALITY Infant mortalityrate measles Per 1,000 live births Per 1,000 live births % of children under 12 months 1990 2001 1990 2001 1990 2001 World 63 56 93 81 73 72 HighIncome 8 5 10 7 81 90 Low & Middle Income 68 61 101 88 72 71 East Asia & Pacific 43 34 59 44 89 76 Europe & Central Asia 36 31 44 38 95 LatinAmerica & Caribbean 42 28 53 34 77 91 MiddleEast & North Africa 57 44 77 54 84 92 SouthAsia 86 71 129 99 56 58 Sub-SaharanAfrica 110 105 178 171 57 58 Source: WorldBank (2003), WorldDevelopment Indicators, Washington,D.C. 58 Annex B MATERNAL HEALTH Births attendedby skilledhealthstaff % oftotal 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Asia 39 40 41 42 43 44 45 46 47 48 49 LatinAmerica & Caribbean 74 74.7 75.4 76.1 76.8 77.5 78.2 78.9 79.6 80.3 81 Middle East & NorthAfrica 49 50.4 51.8 53.2 54.6 56 57.4 58.8 60.2 61.6 63 Sub-SaharanAfrica 44 44 44 44 44 44 44 44 44 44 44 Source: World Health Organization (2001), Maternal Mortality in 1995:Estimates developed by WHO, UNICEFand UNFPA, Geneva. COMMUNICABLE PrevalenceofHIV, female Incidenceof tuberculosis DISEASES % ages 15-24 Per 100,000people 1999 1999 World 1.24 142 HighIncome 0.13 19 Low & Middle Income 1.46 164 East Asia & Pacific 0.18 144 Europe & Central Asia 0.23 85 Latin America & Caribbean 0.31 75 MiddleEast &NorthAfrica 66 South Asia 0.48 191 Sub-SaharanAfrica 8.98 339 Source: WorldBank (2003), World Development Indicators, Washington,D.C. ENVIRONMENT Access to improved Access to improvedwater ForestArea sanitationfacilities source % ofpopulation % ofpopulation % of total land area 1990 2000 1990 2000 1990 2000 - VT--l,-I World 45.32 A < 55.4 C C A 7 A 'l 74.2 Qf3 7 80.7 i n A 30.4 29.7 'la 7 - H HighIncome 25.8 26.1 Low & Middle Income 39.2 51.3 71.3 78.9 31.8 30.9 - East Asia & Pacific E 35.0 45.7 71.2 75.9 27.6 27.2 Europe E L & CentralAsia 91.0 39.4 39.7 Latin America & Caribbean 72.2 77.2 82.4 86.4 49.3 47.1 Middle East & NorthAfrica 85.2 88.2 1.5 1.5 South Asia 21.5 34.0 72.0 84.4 16.5 16.3 Sub-SaharanAfrica 54.0 53.4 53.2 58.1 30.7 27.3 Source: WorldBank (2002), World Development Indicators database, Washington, D.C. 59 Annex C ANNEXc. SUMMARIESOF COMPLETEDPOVERTYASSESSMENTS, FISCAL YEARS 2000 AND 2001 Note: Summaries o f completedpoverty assessments are available on the Poverty Net web site, at http://wbln00 18.worldbank.org/dg/povertys.nsf/Poverty+assessment?openview&count=l999,so they are no longer included inthis report. See Annex D for the number o f poverty assessments completed by region and Annex E for full listing report titles and document numbers. 60 Annex D ANNEXD. NUMBER POVERTY ASSESSMENTS OF COMPLETED, FISCAL 1989-2002 Completed FY89-01 FY02 Total East Asia and the Pacific 18 2 20 Europe and Central Asia 28 2 30 Latin America and the Caribbean 37 4 41 Middle East and North Africa 8 2 10 South Asia 13 2 15 Sub-Saharan Africa 41 0 41 Total 145a 12b 157' a. Includes 102 first-roundpoverty assessmentsand 43 updates. b. Includes 1 first-roundpovertyassessment and 1lupdates. c. Includes 103 first-roundpoverty assessmentsand 54 updates. Note: Some country teams prepared a poverty note instead o f a full poverty assessment for reasons that include political constraints and data or resource limitations. While poverty notes do not contain the same level o f comprehensive analysis as a full poverty assessment, they serve as a springboard for action and further analysis. Poverty notes, which are not included inthe table above, have been completed for the following countries: Burkina Faso (fiscal 1997), Central African Republic (fiscal 1998), PapuaN e w Guinea (fiscal 2000), and Turkmenistan (fiscal 2001). 61 Annex E ANNEXE. LISTOFCOMPLETEDPOVERTY ASSESSMENTS, FISCAL 1989-2002 Country Report Title Report No. Report Date EAST ASIA AND THE PACIFIC Cambodia Poverty Assessment 19858-KH 11-22-1999 China Strategies for ReducingPoverty inthe 1990s 10409-CHA 6-29-1992 China (update) Overcoming Rural Poverty 21105-CHA 10-18-2000 Fiji Restoring Growthina Changing Global Environment 13862-FIJ 6-20-1995 Indonesia Poverty Assessment and Strategy Report 8034-rND 5-11-1990 Indonesia (update) Public Expenditures, Prices and the Poor 11293-IND 8-31-1993 Indonesia (update) Poverty Reduction inIndonesia: Constructing a New 23028-IND 10-29-2001 Strategy Indonesia (update) People, Poverty and Livelihoods: Links for Sustainable _- 1-31-2002 Poverty Reduction inIndonesia Lao PDR Social Development Assessment and Strategy 13992-LA 8-15-1995 Malaysia Growth, Poverty Alleviation and ImprovedIncome 8667-MA 1-31-1991 DistributioninMalaysia Mongolia Poverty ina Transition Economy 6-27-1996 Mongolia Participatory Living StandardsAssessment --15723-MOG 9-8-2000 Philippines The Philippines: The Challenge ofPoverty 7144-PH 10-17-1988 Philippines (update) An Opening for Sustained Growth 11061-PH 4-1-1993 Philippines (update) A Strategy to Fight Poverty 14933-PH 11-13-1995 Philippines (update) Poverty Assessment 20498-PH 5-31-2001 Thailand Growth, Poverty, and Income Distribution: An 15689-TH 12-13-1996 Economic Report Thailand (update) Thailand Social Monitor: Poverty and Public Policy 23147-TH 11-30-2001 Vietnam Poverty Assessment and Strategy 13442-VN 1-23-1995 Vietnam (update) Development Report 2000: Attacking Poverty: Country 19914-VN 11-15-1999 Economic Memorandum EUROPE AND CENTRAL ASIA Albania Growing Out o f Poverty 15698-ALB 5-30-1997 Albania (update) A Qualitative Assessmentof Poverty inTenAreas o f 23521-ALB 6-30-2001 Albania Armenia Confronting Poverty Issues 15693-AM 6-10-1996 Armenia (update) Assistance inArmenia 19385-AM 6-8-1999 Azerbaijan Poverty Assessment 15601-AZ 2-24-1997 Belarus AnAssessment ofPoverty andProspects for Improved 15380-BY 6-28-1996 Living Standards Bulgaria Poverty during the Transition 18411-BUL 6-7-1999 Bulgaria (update) Poverty Assessment 24516-BUL Croatia Economic Vulnerability and Welfare Study 22079-HR 4-18-2001 Estonia Living StandardsDuring the Transition 15647-EE 6-17-1996 Georgia Poverty and Income Distribution(2 volumes) 19348-GE 3-31-1999 Georgia (update) Poverty Update 22350-GE 1-10-2002 Hungary Poverty and Social Transfers 14658-HU 3-14-1996 Hungary (update) Long-TermPoverty, Social Protection, and the Labor 20645-HU 4-30-2001 Market (2 volumes) Kazakhstan Living StandardsDuring the Transition 17520-KZ 3-22-1998 Kosovo Poverty Assessment 23390-KOS Kyrgyz Republic Poverty Assessment and Strategy 14380-KG 5-30-1995 Kyrgyz Republic (update) Update on Poverty inthe Kyrgyz Republic 19425-KG 6-30- 1999 Kyrgyz Republic (update) Poverty inthe 1990s inthe Kyrgyz Republic 21721-KG 6-30-2001 Latvia Poverty Assessment (2 volumes) 20707-LV 6-14-2000 62 Annex E ~ ~~~~~ ~~ ~~~~ ~ Country ReportTitle ReportNo. Report Date Macedonia, FYR Focusing on the Poor (2 volumes) 19411-MK 6-11-1999 Moldova Poverty Assessment 19926-MD 11-30-1999 Poland Poverty inPoland 13051-POL 9-14-1994 Romania Poverty and Social Policy 16462-RO 4-30-1997 Russia Poverty inRussia: An Assessment 14110-RU 6-13-1995 Russia (update) Targeting and the Longer-Term Poor (2 volumes) 19377-RU 5-31-1999 Slovak Republic Living Standards, Employment and Labor Market Study 22351-SK Tajikistan Poverty Assessment 20285-TJ 6-8-9-2001 29-2000 Turkey Economic Reforms, Living Standards and Social 20029-TR 1-27-2000 Welfare Study Ukraine Poverty inUkraine 15602-UA 6-27-1996 LATIN AMERICA AND THE CARIBBEAN Argentina Argentina's Poor: A Profile 13318-AR 6-27-1995 Argentina (update) Poor People ina Rich Country (2 volumes) 19992-AR 3-23-2000 Bolivia Poverty Report 8643-BO 10-3-1990 Bolivia (update) Poverty Equity & Income: Selected Policies for 15272-BO 2-22-1996 Expanding Earning Opportunities for the Poor (2 vol.) Bolivia (update) Poverty Diagnostic 2000 20530-BO 6-30-2000 Brazil Brazil: A Poverty Assessment (2 volumes) 14323-BR 6-27-1995 Brazil (update) Ceara: Strategies for Poverty Reduction-- The 24500-BR Challenge o f Inclusive Modernization Chile Social Development Progress inChile: Achievement 8550-CH -- and Challenges Chile (update) Poverty and Income Distribution ina High-Growth 16377-CH 11-25-1997 Economy: The Case o f Chile 1987-95 Chile (update) Poverty and Income Distribution ina High-Growth 22037-CH 8-30-2001 Economy: The Case o f Chile 1987-98 Colombia Poverty Assessment Report (2 volumes) 12673-CO 8-8-1994 Colombia (update) Poverty Report 24524-CO 4-1-2002 Costa Rica Public Sector Social Spending 8519-CR 10-23-1990 Costa Rica (update) Identifyingthe SocialNeeds o fthe Poor: AnUpdate 15449-CR 5-12-1997 Dominican Republic Growth with Equity: An Agenda for Reform 13619-DO 5-15-1995 Dominican Republic Poverty Assessment: Poverty ina High-Growth 21306-DO 12-17-2001 (update) Economy (1986-2000) Ecuador A Social Sector Strategy for the Nineties 8935-EC 11-28-1990 Ecuador (update) Poverty Report 14533-EC 11-27-1995 ElSalvador The Challenge o fPoverty Alleviation 12315-ES 6-9-1994 Guatemala AnAssessment ofPoverty 12313-GU 4-17-1995 Guatemala (update) Poverty Assessment 24221-GU Guyana Strategies for Reducing Poverty 12861-GUA 5-6-1994 Haiti The Challenges o fPoverty Reduction (2 volumes) 17242-HA 8-31-1998 Honduras Country Economic MemorandudPoverty Assessment 13317-HO 11-17-1994 Honduras (update) Poverty Diagnostic 2000 20531-HO 6-29-2001 Jamaica A Strategy for Growth andPoverty Reduction 12702-JM 4-12-1994 Mexico Mexico inTransition: Towards a New Role for the 8770-ME 5-22-1991 Public Sector Mexico (update) Government Programs and Poverty inMexico 19214-MX Nicaragua Poverty Assessment 14038-NI 6-1-1995 Nicaragua (update) Poverty Assessment: Challenges and Opportunities for 20488-NI 2-21-2001 Poverty Reduction (2 volumes) Panama Poverty Assessment: Priorities and Strategies for 18801-PAN 6-28-1999 Poverty Reduction (2 volumes) Paraguay Public Expenditure Review -- the Social Sectors 10193-PA 6-16-1992 63 Annex E Country Report Title Report No. Report Date Paraguay (update) Poverty and the Social Sectors inParaguay: A Poverty 12293-PA 6-29-1994 Assessment Paraguay (update) Attacking Poverty 22703-PA -- Peru Poverty Assessment & Social Sector Policies & 11191-PE 5-5-1993 Programs for the Poor Peru (update) Poverty and Social Developments inPeru, 1994-1997 19651-PE 5-31-1999 Trinidad and Tobago Poverty and Unemployment inan Oil Based Economy 14382-TR 10-27-1995 Uruguay Poverty Assessment: Public Social Expendituresand 9663-UR 5-4-1993 Their Impact onthe Income Distribution Uruguay (update) Maintaining Social Equityina Changing Economy 21262-UR 7-17-2001 Venezuela FromGeneralized Subsidies to Targeted Programs 9114-VE 6-5-1991 Venezuela (update) Investing inHumanCapital for Growth, Prosperity, and 21833-VE 3-30-2001 Poverty Reduction MIDDLE EAST AND NORTH AFRICA Algeria Growth, Employment and Poverty Reduction (2 18564-AL 1-20-1999 volumes) Egypt, Arab Rep. o f Alleviating Poverty During Structural Adjustment 9838-EGT 7-31-1991 Egypt, Arab Rep. o f Poverty Reduction inEgypt: Diagnosis and Strategy (2 24234-EGT 6-29-2002 (update) volumes) Jordan Poverty Assessment 12675-JO 10-28-1994 Morocco Poverty, Adjustment, and Growth (2 volumes) 11918-MOR 1-31 -1994 Morocco (update) Poverty Update (2 volumes) 21506-MOR 3-30-2001 Tunisia Poverty Alleviation: Preserving Progress while 13993-TUN 8-31-1995 Preparing for the Future (2 volumes) West Bank and Gaza Poverty inthe West Bank and Gaza 22312-GZ 6-18-2001 Yemen, Republic of Poverty Assessment 15158-YEM 6-26- 1996 Yemen, Republic o f Poverty Update (2 volumes) 24422-RY 6-27-2002 SOUTH ASIA Bangladesh Bangladesh Poverty andPublic Expenditures: An 7946-BD 1-16-1990 Evaluation o f the Impact o f Selected Government Progs, Bangladesh (update) FromCounting the Poor to Making the Poor Count 17534-BD 4-29-1998 Bangladesh (update) Poverty inBangladesh: Building on Progress India Poverty, Employment and Social Services 7617-IN 5-10-1989 India (update) Achievements and Challenges inReducing Poverty 16483-IN 5-27-1997 India (update) Reducing Poverty inIndia 17881-IN 6-29-1998 India (update) Policies to Reduce Poverty and Accelerate Sustainable 19471-IN 1-31-2000 Development India (update) Uttar PradeshPoverty Assessment 22323-IN 6-27-2001 Nepal RelievingPoverty ina Resouce-Scarce Economy 8635-NEP 8-15-1990 Nepal (update) Poverty inNepal at the Turno f the Twenty-First 18639-NEP 12-01-1998 Century Pakistan A Profile ofPoverty 8848-PAK -- Pakistan (update) Poverty Assessment 14397-PAK 9-25-1995 Pakistan(update) Poverty inPakistan: Vulnerabilities, Social Gaps, and 24296-PAK 5-31-2002 Rural Dynamics Sri Lanka Poverty Assessment 13431-CE 1-11-1995 Sri Lanka (update) Poverty Assessment 22535-CE -- SUB-SAHARAN AFRICA Benin Toward a Poverty Alleviation Strategy for Benin 12706-BEN 8-5-1994 Burundi Poverty Note: Prospects for Social Protection ina Crisis 17909-BU 2-23-1999 Economy 64 Annex E Country ReportTitle ReportNo. Report Date Cameroon Diversity, Growth, and Poverty Reduction 13167-CM 4-4-1995 Cape Verde Poverty inCape Verde: A Summary Assessment and a 13126-CV 6-30-1994 Strategy for its Alleviation Chad Poverty Assessment: Constraints to Rural Development 16567-CD 10-21-1997 Comoros Poverty and Growthina Traditional Small Island 13401-COM 9-29-1994 Economy Congo Poverty Assessment 16043-COB 6-16-1997 Cote d'Ivoire Poverty inCote d'Ivoire: A Framework for Action 15640-IVC 6-14-1997 Djibouti Crossroads o f the H o m o f Africa Poverty Assessment 16543-DJI 10-7-1997 Eritrea Poverty Assessment 15595-ER 6-13-1996 Ethiopia Toward Poverty Alleviation and a Social Action 11306-ET 6-28-1993 Program Gabon Poverty ina Rent-Based Economy 16333-GA 6-27-1997 The Gambia AnAssessment ofPoverty 11941-GM 6-30-1993 Ghana 2000 and Beyond: Setting the Stage for Accelerated 11486-GH 11-6-1992 Growth and Poverty Reduction Ghana (update) Ghana: Poverty Past, Present and Future 14504-GH 6-29-1995 Guinea A Socioeconomic Assessment ofWell-Being and 16465-GUI 3-31-1997 Poverty Guinea-Bissau Poverty Assessment and Social Sector Strategy Review 13155-GUB 6-3-1994 Kenya Poverty Assessment 13152-KE 3-15-1995 Lesotho Poverty Assessment 13171-LSO 8-18-1995 Madagascar Poverty Assessment 14044-MAG 6-28-1996 Malawi Growth Through Poverty Reduction 8140-MA1 3-22-1990 Malawi (update) HumanResources and Poverty: Profile andPriorities for 15437-MA1 3-19-1996 Action Mali Assessment o f Living Conditions 11842-MLI 6-30-1993 Mauritania Poverty Assessment 12182-MAU 9-23-1994 Mauritius CEM: Sharpening the Competitive Edge 13215-MAS 4-12-1995 Mozambique Poverty Reduction Framework Paper* None -- Namibia Poverty Alleviation with Sustainable Growth 9510-NAM 10-29-1991 Niger A Resilient People ina HarshEnvironment: Niger 15344-NIR 6-28-1996 Poverty Assessment Nigeria Poverty inthe Midst o fPlenty: The Challenge o f 14733-UNI 5-31-1996 Growth with Inclusion Rwanda Poverty Reduction and Sustainable Growth 12465-RW 5-16-1994 Rwanda (update) Poverty Note: Rebuilding an Equitable Society - 17792-RW 6-19-1998 Poverty and Poverty Reduction After the Genocide Senegal AnAssessment ofLiving Conditions (2 volumes) 12517-SE 5-5-1995 Seychelles Poverty inParadise 12423-SEY 6-24-1994 Sierra Leone Policies for Sustained Economic Growth and Poverty 11371-SL 5-14- 1993 Alleviation Swaziland Reducing Poverty Through Shared Growth 19658-SZ 1-12-2000 Tanzania The Challenge o fReforms: Growth, Incomes and 14982-TA 5-31-1996 Welfare Togo Overcoming the Crisis, Overcoming Poverty: A World 15526-TO 6-25-1996 Bank Poverty Assessment Uganda Growing Out o f Poverty 11380-UG 3-3 1-1993 Uganda (update) Lessons from Uganda on Strategies to fight Poverty 9-30-2000 Zambia Poverty Assessment 12985-ZA 11-10-1994 Zimbabwe Achieving Shared Growth: Country Economic 13540-ZIM 4-21- 1995 * Document Memorandum (2 volumes) was preparedfor consultative group meeting. 65 Annex F ANNEXF. ANNUALLENDING SELECTED SECTORS, FISCAL1985-2002 TO Table F-1. Average lending to selected sectors, fiscal 1985-2002 FY85-87 FY88-90 FY91-93 FY94-96 FY97-99 FY00-02 World Bank (IBRD and IDA) lending($USmillions) Humancapital development 963.6 1,680.8 3,516.9 4,149.6 5,138.7 3,001.9 Education 738.7 1,064.4 1,866.5 2,004.8 1,819.3 910.6 Health,nutrition& population 221.5 569.9 1,198.8 1,453.9 1,339.4 960.2 Social Protection 10.0 46.5 451.6 690.9 1,980.0 1,131.1 Agriculture 3,759.4 3,761.2 3,090.2 2,608.9 2,965.4 1,596.6 Water supply & sanitation 795.7 730.2 1,091.9 1,148.2 643.7 751.0 TotalBank lending 16,152.4 20,429.7 22,695.7 21,570.0 25,564.1 17,348.7 As share of total Bank lending (percent) Humancapitaldevelopment 6 8 15 19 20 17 Agriculture 23 18 14 12 12 9 Water supply & sanitation 5 4 5 5 3 4 IDA lending($USmillions) Humancapitaldevelopment 421.3 834.6 1,715.5 1,748.6 1,675.6 1,455.5 Education 316.7 538.2 752.8 712.7 663.8 489.4 Health,nutrition& population 101.3 267.1 598.6 683.0 782.2 547.6 Social Protection 10.0 29.3 364.1 352.9 229.6 418.6 Agriculture 1,141.0 1,5 14.5 1,3 17.0 1,329.0 977.1 850.1 Water supply & sanitation 166.3 171.4 407.4 181.0 235.8 306.0 Total IDA lending(US$millions) 3,218.0 4,971.4 6,53 1.5 6,375.1 6,314.2 6,396.3 As share of total IDA lending (percent) Humancapital development 13 17 26 27 27 23 Agriculture 35 30 20 21 15 13 Water suonlv & sanitation 5 3 6 3 4 5 Note: The data are for average annual lending during the three-year period indicated. The World Bank's fiscal year runs from July 1 o f the previous year to June 30 o f the year indicated. Three-year moving averages have been reported since the first Progress Report on Poverty infiscal 1992to smooth out Far-to-year fluctuations. Because o f a recent sector reclassificationofprojects, some numbers may differ from those reported in earlier tables. Note that these sectors do not account for all poverty-focused lending; projects in such sectors as urban development and transport also have components designed to help reduce poverty. a. Social protection lending includes employment, social assistance, social insurance, and social investment funds. 66 Annex F Table F-2. Annual lending to selected sectors,fiscal 1992-2002 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FYOO FYOl FYO2 World Bank (IBRD and IDA) lending($US millions) Humancapital development 2,715.4 4,034.3 3,241.0 4,179.1 5,028.6 3,473.5 6,817.0 5,125.6 2,561.0 3,514.5 2,930.2 Education 1,666.5 1,871.2 2,119.2 2,027.2 1,868.0 994.4 3,129.3 1,334.3 684.0 834.1 1,213.6 Health, nutrition &population 922.1 1,378.6 885.7 1,122.5 2,353.4 920.4 1,990.9 1,106.8 987.1 1,007.9 885.7 Social Protection 126.8 784.5 236.1 1,029.4 807.2 1,558.7 1,696.8 2,684.6 890.0 1,672.6 830.9 Agriculture 3,209.9 2,902.8 3,555.1 2,208.5 2,063.2 3,540.5 2,636.9 2,718.8 1,336.7 1,456.9 1,996.2 Water supply & sanitation 786.4 1,263.9 1,135.2 1,149.5 1,159.8 682.8 703.6 544.7 903.6 925.8 423.7 Total Bank lending 21,705.7 23,695.9 20,836.0 22,521.7 21,352.2 19,146.7 28,593.9 28,951.6 15,276.2 17,250.6 19,519.4 As share of total Bank lending (percent) Human capital development 13 17 16 19 24 18 24 18 17 20 15 Agriculture 15 12 17 10 10 18 9 9 9 8 10 Water supply & sanitation 4 5 5 5 5 4 2 2 6 5 2 IDA lending(US$ millions) Humancapital development 1,297.8 2,139.5 1,245.1 ,828.2 2,172.6 1,015.7 2,445.1 1,566.0 1,321.5 ,776.0 1,269.1 Education 561.3 970.2 619.3 771.6 747.2 255.1 1,201.5 534.8 468.7 452.5 546.8 Health, nutrition & population 615.1 541.8 519.7 671.2 858.2 674.6 1,079.4 592.5 579.4 524.2 539.1 Social Protection 121.4 627.5 106.1 385.4 567.2 86.0 164.2 438.7 273.4 799.3 183.1 Agriculture 1,219.2 1,084.0 1,523.3 ,355.2 1,108.5 719.4 1,236.9 975.1 568.1 783.0 1,199.1 Water supply & sanitation 297.4 505.4 103.2 309.2 130.7 302.4 151.0 253.9 109.7 519.3 288.9 Total IDAlending 6,549.7 6,751.4 6,592.1 5,669.2 6,864.1 4,621.8 7,507.7 6,813.3 4,357.6 6,763.6 8,067.6 As share of total IDA lending (percent)20 Humancapital development 32 19 32 32 22 33 23 30 26 16 Agriculture 19 16 23 24 16 16 16 14 13 12 15 Water supply & sanitation 5 7 2 5 2 7 2 4 3 8 4 Note: The World Bank's fiscal year runs from July 1 o f the previous year to June 30 o f the year indicated. These sectors do not account for all poverty-focused lending; projects in such sectors as urban development and transport also have components designed to help reduce poverty. See World Bank Annual Report 1999 for further details on sector lending. Becauseo f a recent sector reclassification of projects, some numbers may differ from thosereported in earlier tables. a. Socialprotectionlendingincludes employment, social assistance, social insurance, and social investment funds. 67 Annex F Figure F-1. Trends in lendingfor human capital development,fiscal 1985-2002 6.000 I+ +Human capitaldevelopment 1 Education i -4-Health,nutrition&population1 5.000 X SocialProtection 4,000 * 1 3,002 3 1,960 2.000 1,131 1,000