FY19 World Bank Budget August 31, 2018 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CONTENTS1 OVERVIEW AND RECOMMENDATIONS ...................................................................................... 1 1.1 OVERVIEW ....................................................................................................................................... 1 1.2 FY19 BUDGET RECOMMENDATIONS ......................................................................................... 4 STRATEGIC DIRECTIONS AND BUSINESS OUTLOOK ............................................................. 6 2.1 STRATEGIC CONTEXT ................................................................................................................... 6 2.2 LENDING OUTLOOK ...................................................................................................................... 8 2.3 COST OF DOING BUSINESS......................................................................................................... 10 2.4 EFFICIENCY ................................................................................................................................... 11 FY19 EXPENDITURE FRAMEWORK ............................................................................................ 15 3.1 AGGREGATE BANK BUDGET ..................................................................................................... 15 3.2 EXTERNAL FUNDS OUTLOOK ................................................................................................... 18 3.3 AGGREGATE BANK BUDGET AND EXTERNAL FUNDS ....................................................... 19 FY19 BUDGET ..................................................................................................................................... 20 4.1 ADMINISTRATIVE BUDGET PROPOSAL .................................................................................. 20 4.2 ADJUSTMENTS TO THE BUDGET .............................................................................................. 21 4.3 STRATEGIC ALIGNMENT BY WORK PROGRAM ................................................................... 23 4.4 OPERATIONAL WORK PROGRAM ............................................................................................. 27 4.5 GRANT-MAKING FACILITIES ..................................................................................................... 39 4.6 IG&A UNITS.................................................................................................................................... 40 4.7 CENTRALLY-MANAGED ACCOUNTS....................................................................................... 43 4.8 EXPENSE FUNCTIONAL VIEW .................................................................................................. 45 CAPITAL BUDGET ............................................................................................................................. 48 5.1 FACILITIES ..................................................................................................................................... 48 5.2 TECHNOLOGY AND SYSTEMS................................................................................................... 49 ANNEXES ANNEX I: PROGRAM COST SUMMARY.............................................................................................. 51 ANNEX II. INDICATORS OF BUDGET SUSTAINABILITY, STRATEGIC ALIGNMENT, AND BUDGET EFFICIENCY ......................................................................................................................... 56 1 In the tables, charts, and text, the totals have been rounded to the nearest whole number. Numbers may not sum due to rounding. i TABLES Table 2.1: Growth in IBRD/IDA Lending Portfolio ..................................................................................... 9 Table 3.1: Bank Budget (US$ million) ....................................................................................................... 15 Table 3.2: FY19 Bank Budget and External Funds (US$ million) ............................................................. 19 Table 4.1: FY19 WB Budget (US$ million) .............................................................................................. 20 Table 4.2: Incremental Additions to the Budget (US$ million) .................................................................. 22 Table 4.3. Claw-backs from Budget (US$ million) .................................................................................... 23 Table 4.4: FY18-19 Budget by Work Program & Funding Source (US$ million) ..................................... 23 Table 4.5: 18-19 Budget Share by Work Program and Funding Source..................................................... 24 Table 4.6: FY19 Operational Budget Envelopes (US$ million) ................................................................. 29 Table 4.7: Grant-Making Facilities Budgets (US$ million)........................................................................ 39 Table 4.8: FY19 IG&A Budget Envelopes (US$ million) .......................................................................... 42 Table 4.9: FY18 and FY19 ED and IEG Budgets (US$ million) ............................................................... 43 Table 4.10: Centrally-Managed Accounts (US$ million) ........................................................................... 44 Table 4.11: FY18 and FY19 Functional Expense View of Administrative Expenses (US$ million) ......... 45 Table I.1: FY19 Funding for WB Work Program and Unit (US$ million) ................................................. 52 Table I.2: Overview of External Funds Projected Revenues FY19 by Unit (US$ million) ........................ 55 FIGURES Figure 2.1: Growth in IBRD/IDA Supervision Portfolio (Pre-Capital Increase) .......................................... 9 Figure 2.2: Growth in IBRD/IDA Portfolio Volume vs. Administrative Budget (Percentage Growth from FY14) .......................................................................................................................................................... 12 Figure 3.1: IBRD Budget Anchor ............................................................................................................... 16 Figure 3.2: IDA Budget Anchor ................................................................................................................. 16 Figure 3.3: Total Admin BB per Lending Project Approved (FY18US$ million) ..................................... 17 Figure 3.4: Total Admin BB per Project under Supervision (FY18US$ million) ...................................... 17 Figure 3.5: Total Admin BB per US$ Billion of Loans Approved (US$ million) ...................................... 17 Figure 3.6: Total Admin BB per US$ Billion Portfolio Under Supervision (US$ million)........................ 18 Figure 3.7: Share of External Funds to Total Funds ................................................................................... 19 Figure 4.1: Operational Share of Unit Budgets........................................................................................... 24 Figure 4.2: Client Engagement Share of Operational Unit Budgets (including Country Engagement and Global Engagement) ................................................................................................................................... 25 Figure 4.3: Evolution of the Country Engagement Bank Budget from FY18 to FY19 (US$ million) ....... 30 ii Figure 4.4: Country Engagement Bank Budget Allocations by Business Process for FY17-19 (US$ million)........................................................................................................................................................ 31 Figure 4.5: Country Engagement Bank Budget Allocation Shares by Business Process for FY17-19 ...... 32 Figure 4.6: CE Spending on Fiduciary and Safeguards for FY16-19 ......................................................... 33 Figure 4.7: FY19 Country Engagement Allocation Shares by Practice Group .......................................... 33 Figure 4.8: Country Engagement Bank Budget Allocations for FCV and FCV at Risk Countries for FY16- 19 (US$ million) ......................................................................................................................................... 34 Figure 4.9: Country Engagement Bank Budget Allocations to Small States for FY16-19 (US$ million) 35 Figure 4.10: FY19 Global Engagement by Practice Group and Category ................................................. 38 Figure 4.11: Full-time Bank Staff on Payroll (percentage growth since FY14) ........................................ 47 BOXES Box 4.1: Administrative Budget Envelopes ................................................................................................ 26 iii iv ACRONYMS AFR Africa Region AIP Annual Investment Plan ASA Advisory Services and Analytics (former AAA - Analytical and Advisory Activities) BB Bank Budget BETF Bank Executed Trust Fund BPS Budget, Performance Review, and Strategic Planning CCAP Climate Change Action Plan CE Country Engagement CGIAR Consultative Group for International Agricultural Research CMA Centrally Managed Accounts CMU Country Monitoring Unit COGAM Committee on Governance and Executive Directors' Administrative Matters COMO Country Monitoring CPF Country Partnership Framework CPI Consumer Price Index CRO Chief Risk Officer DEC Development Economics DGF Development Grant Facility EAP East Asia and Pacific Region ECA Europe and Central Asia Region ECR External and Corporate Relations EFO Externally Financed Output E/L Equity to Loan Ratio ESF Environment and Social Framework ER Expenditure Review FCV Fragility, Conflict and Violence FIAS Facility for Investment Climate Advisory Services GMF Grant-Making Facility GP Global Practice GPSA Global Partnership for Social Accountability GT Global Themes GSD General Services Department HRD Human Resources Development IBRD International Bank for Reconstruction and Development IAD Internal Audit Department IDA International Development Association IDF Institutional Development Fund IEG Independent Evaluation Group IFC International Finance Corporation IMF International Monetary Fund IG&A Institutional, Governance, and Administrative Units ITS Information Technology Solutions v LCR Latin America and Caribbean Region LEG Legal Department LIC Low Income Countries LLP Loan Loss Provision MFD Maximizing Finance for Development MIC Middle Income Countries MIGA Multilateral Investment Guarantee Agency MNA Middle East and North Africa Region O&M Operations and Maintenance OPCS Operations Policy and Country Services PPM Program and Practice Management PSW Private Sector Window QBRR Quarterly Business and Risk Review RAS Reimbursable Advisory Service RAMP Reserves Advisory and Management Program RETF Recipient Executed Trust Fund SAR South Asia Region SBO Strategy and Business Outlook SDG Sustainable Development Goals SEC Corporate Secretariat SME Small and Medium Enterprises SMI Salary Merit Increase SPA Salary Progression Adjustment SPF State and Peace-Building Fund STC Short Term Consultant TRE Treasury UN United Nations WB World Bank WBG World Bank Group WPA Work Program Agreement vi OVERVIEW AND RECOMMENDATIONS This document presents the FY19 World Bank Budget for Board approval. This budget proposal reflects close consultations between Executive Directors and Management throughout the Strategic Planning, Budgeting and Performance Management process for the World Bank Group. 1.1 OVERVIEW 1. The WBG has The World Bank Group (WBG) is in the unique position to developed a vision to combine knowledge and financing with global reach, and a strong help translate the representation in the field to find solutions for today’s complex ambitions of the 2030 development challenges. To continue to fulfill its role as a leading Agenda into successes development institution and help to translate the ambitions of the for development. 2030 Agenda into successes for development, the WBG developed a vision to become a stronger institution. This vision, articulated in the Forward Look paper2 endorsed by Governors at the 2016 Annual Meetings, sets a transformational path for a “better” and “stronger” WBG to help its members address today’s complex development challenges and meet their rising demand for innovative services. 2. Significant steps have With the successful completion of the IDA-18 replenishment, been taken toward the which includes the unprecedented transformation of IDA’s Forward Look’s financial model and historical capital market access, the capacity objective of a “better” of the WBG to support Low Income Countries (LICs), especially and “stronger” World countries facing fragility, conflict and violence and small states, has Bank Group. been significantly strengthened. The recent landmark decision to support the IBRD/IFC transformative package of capital measures and integrated policy reforms will enable the WBG to better support all clients, including new IDA graduates and blend countries. The launch and roll-out of the Cascade Approach (an approach to maximizing finance for development (MFD)) across the WBG, supported by the IDA-18 IFC-MIGA Private Sector Window (PSW), will leverage these resources by crowding-in private sector investment to further scale up development finance. The WBG is also breaking new ground promoting innovative responses to issues where coordinated global action is critical. Key areas include crisis management and fragility, conflict and 2 Forward Look – A Vision for the World Bank Group in 2030 (DC 2016-0008). 1 violence, climate change, gender, knowledge and convening, and regional integration. Actions taken in these areas, in collaboration with development partners and the private sector, support the achievement of the SDGs. Progress has been made in improving the WBG’s effectiveness and operational model. The new Environmental and Social Framework (ESF) is being rolled out to help improve the sustainability of investments. Procurement reforms make it easier to implement projects, while building the capacity of borrowers. Efforts are underway through the “Agile” initiative to promote a culture of continuous improvement and problem solving, and accelerate the pace of project processing, ensuring that staff have more face time with clients. Through the Administrative Simplification efforts, Management is pursuing a range of reforms that include simplifying expenditure approval processes, trust fund reform, intranet modernization, implementing a shared services strategy, HR process initiatives, and leveraging technology such as robotics. Significant progress has also been made to strengthen the WBG financial position, by (i) balance sheet optimization by lowering the policy minimum for the Equity to Loans (E/L) ratio to reflect improved portfolio credit quality, (ii) adoption of an income-based formula approach for IBRD transfer to IDA-18, linking IDA transfer to IBRD’s allocable net income level, (iii) implementation of a new external funds cost recovery framework, and (iv) establishment of budget anchors for IBRD and IDA. These were supported by a series of expenditure and revenue measures, including loan pricing increases, an ambitious Expenditure Review which generated over US$300 million in Bank Budget (BB) savings and an additional US$40 million of savings in Bank- Executed Trust Funds (BETFs). 2 3. Business plans are Business plans are affected by cost pressures arising from a affected by a growing growing portfolio and rising cost of doing business that will portfolio, rising cost of continue to put pressure on Bank’s resources. At the same time, doing business and Management plans several efficiency efforts that will help offsetting savings from strengthen lending capacity and fund new priorities – which will be efficiency measures. complemented by economies of scale as IBRD lending is scaled- up. Strengthened revenues arising from pricing measures, a constrained budget in an environment where the costs of doing business are rising, and a willingness to implement further cost reductions (after successful implementation of the Expenditure Review program) demonstrate management commitment to the institution’s financial sustainability and greater efficiency. 4. Despite rising costs, Considering strategic priorities but recognizing the need to Management is maintain budget discipline, Management is proposing a FY19 proposing a FY19 Bank budget that is flat in real terms and that represents a 2.4 percent administrative budget nominal increase on the FY18 budget. Management is also of US$2,611 million proposing a capital budget of US$190 million for FY19, which will be flat in comprising US$105 million for Facilities investments and US$85 real terms, and a million for IT investments. Section 4 provides details underlying capital budget of the administrative budget proposal and further details on the capital US$190 million for budget proposal are set out in Section 5. FY19. 5. As agreed with the The recent decision of Shareholders to endorse the IBRD capital Board, Management package presents Management with an opportunity to engage with will draw on the clients on strengthening and recalibrating country programs, which flexibility band to will have a budgetary impact. It also involves new policy support incremental commitments, some of which will add to cost of doing business. It costs for implementing is too early to determine the full budgetary implications of the the capital package in capital increase and Management therefore presents in this FY19. document an administrative budget based on a pre-capital increase scenario. As agreed with the Board, Management will draw on the standard 2 percent flexibility band to support any incremental costs for implementation of the capital package in FY19. If any additional administrative budget funding is required in FY19 for the IBRD scale-up above the 2 percent flexibility band, Management will seek Board approval. 3 6. The FY19 budget aligns Management has built its budget plans ensuring strategic alignment with the WBG strategic with the priorities agreed in the Forward Look and confirmed directions and during the planning and budgeting process. Key priorities over the demonstrates next few years include remaining engaged with all client groups; consistency with the working in partnership with the IFC and MIGA to mainstream the principles of financial MFD approach into operational work; strengthening global sustainability and leadership and impact in a range of areas, notably in climate efficiency. change, fragility, gender, human capital, and technological change; and strengthening our business model. The FY19 budget will support financial sustainability with a budget that allows the Bank to maintain the discipline of budget anchors in FY19 with administrative expenses that are held within target zones below revenues from operations. It is important that we adequately fund operational delivery and supervision, supported by strong analytics and institutional, governance and administrative services. At the same time, every dollar the World Bank does not spend is a dollar it can leverage to support development financing for its clients. Building on the gains of the Expenditure Review successfully completed in FY18, Management has identified opportunities for further efficiencies over the coming years in areas including corporate procurement, project portfolio management, workforce management, travel and real estate. In addition, as part of the rolling Business Reviews of VPUs, Management plans to complete reviews of IG&A units and start reviews of operational units. 1.2 FY19 BUDGET RECOMMENDATIONS 7. Management seeks Management seeks Board approval of the following FY19 Budget Board approval of the recommendations: FY19 Budget. • That the total administrative budget (Bank Budget) be set at US$2,611 million, managed within a range of +/- 2 percent. This includes: o An indicative budget of US$87.4 million for Executive Directors. This is subject to a separate endorsement process by COGAM. 4 o US$29.7 million for the Independent Evaluation Group. This is subject to a separate endorsement process by CODE. • That the capital budget be set at US$190 million. 5 STRATEGIC DIRECTIONS AND BUSINESS OUTLOOK This section outlines the strategic context and business outlook for FY19 and reviews the cost pressures arising from increasing cost of doing business as well as the efficiency efforts and compensation reform necessary to offset additional costs. Together with section 1, it sets the stage for the FY19 budget, which is detailed in sections 3-5. 2.1 STRATEGIC CONTEXT 8. Management has Ending extreme poverty and boosting shared prosperity by 2030 identified key focus requires that the WBG scale up efforts to deliver on the ambitious areas for the FY19 Forward Look vision. Four strategic focus areas have informed the planning and FY19 planning and budgeting process for the World Bank, budgeting process to consistent with the Forward Look vision: align resources with • serving all clients; the Forward Look • creating markets; vision. • leading on global issues; and • continually improving the business model. Across these areas, Management aims to foster greater partnership across the World Bank Group to enhance complementarities and leverage synergies for greater development impact. Achievement of the twin goals will require the Bank to scale up progress made across several fronts. 9. Serving all clients: IDA-18 has enabled the Bank to expand its services for low income The recent countries, double assistance to countries affected by fragility, endorsement by conflict and violence, triple assistance to small states, as well as Shareholders of the expand IFC and MIGA services in these countries through the capital package will Private Sector Window (PSW). IDA-18 implementation got off to build on the IDA-18 a robust start with strong delivery. Sustaining this trend is a key replenishment and priority for FY19. enable the Bank to expand its services The recently endorsed IBRD/IFC capital package will enable the across all client WBG to channel more resources to countries at the lower to middle groups. range of the client income spectrum – many of which are recent IDA graduates and host large populations of extremely poor people – while at the same time continuing to engage with all clients across the income spectrum. In addition, through capital strengthening measures at the IFC, the package will also strengthen WBG support to FCV countries and small states. The nature of engagements will 6 be adapted to specific development needs in all countries and interventions coordinated across WBG institutions to leverage each other and maximize WBG impact. 10. Creating markets: A strong focus on “Maximizing Finance for Development” (MFD), WBG entities are by crowding-in available private finance, is crucial to go from the working in partnership billions to the trillions needed to achieve the ambitions of the 2030 to “Maximize Agenda and the Twin Goals. The Bank, IFC and MIGA have Financing for worked in close partnership to develop and implement the MFD Development.” approach, including in the most challenging development contexts. Going forward, the focus will be on scaling up this approach, through firmly anchoring MFD in Country Partnership Frameworks, joint implementation plans and deep dives at the regional level, strengthening of internal processes such as incentives, training and advisory, analytical and financial tools for clients to operationalize the MFD effectively. 11. Leading on global The Bank is uniquely positioned to lead on global issues given its issues: The Bank global footprint and ability to adapt to a changing development continues to enhance landscape, invest in knowledge products and adopt innovative its engagement and financing mechanisms. The focus will be on the following strategic focus on issues that priorities in support of the SDGs: (1) employ a range of innovative transcend national financing solutions and analytical capacities to address crisis risks boundaries. and enhance crisis response capacity; (2) scale up efforts to tackle the climate agenda through policy advice, global advocacy and lending/investment operations; (3) step up financing to help close gender gaps; (4) increase the WBG knowledge and convening role to support the design and sharing of development solutions for greater impact; (5) continue support to help strengthen regional cooperation and the needed connective and institutional infrastructure; (6) improve access to technology and related innovative solutions as well as responding effectively to the jobs challenges that these innovations will present; and (7) develop a new human capital index to inform policy and investment decisions. In pursuing these priorities, the Bank will support South- South cooperation so that development experiences can be readily transferred and scaled up in other countries/regions. 7 12. Improving the The Bank’s ability to respond to growing demand across all client business model: The segments and to increased development ambitions calls for Bank will continue to continuous innovation, operational flexibility and agility. Through improve its the Agile Bank program, a community of staff has been put in place effectiveness by to promote a culture of continuous improvement and problem promoting operational solving. Efforts are also ongoing to speed up implementation of the agility and Administrative Simplification program through a range of administrative initiatives, including simplifying expenditure approval processes, simplification, trust fund reform, intranet modernization, implementing a shared enhancing its financial services strategy, HR process initiatives, and leveraging sustainability, and by technology such as robotics. As part of the capital package, a new implementing the new financial sustainability framework will be implemented to ensure Procurement and that IBRD’s lending trajectory is aligned with long-term Environmental and sustainable financial capacity and incorporates a crisis response Social Frameworks. buffer. These achievements are being complemented by the roll- out of the new Procurement and the Environmental and Social Frameworks which will ensure that Bank-financed projects are delivered to the highest standards. The new Procurement Framework was introduced last year. The new Environmental and Social Framework (ESF) will become operational in FY19. 2.2 LENDING OUTLOOK 13. The IBRD capital At the Spring Meetings, the World Bank Group’s shareholders package endorsed at endorsed an ambitious package of measures that include both the Spring Meetings internal measures and a US$13 billion paid-in capital increase for has altered the lending the World Bank Group, alongside a series of internal reforms, and outlook. a set of policy measures that greatly strengthen the WBG’s ability to deliver on its mission. For IBRD, the paid-in capital increase will be US$7.5 billion. 8 14. The FY19 proposed Based on the pre-capital increase scenario, IBRD lending is budget assumes IBRD assumed to decline from US$24 billion in FY18 to US$22 billion lending to decline, in in FY19. However, following the approval of the capital increase, line with the pre- this would increase to US$25 billion in FY19. IDA lending is capital increase assumed to be US$25 billion (see Table 2.1). scenario. Table 2.1: Growth in IBRD/IDA Lending Portfolio FY17 FY18 FY19 Actual Projection Projection IBRD Pre-Capital Increase 22.6 24.0 22.0 IBRD Post Capital Increase 22.6 24.0 25.0 IDA1 19.5 25.0 25.0 IBRD and IDA Pre-Capital Increase 42.1 49.0 47.0 IBRD and IDA Post-Capital Increase 42.1 49.0 50.0 IBRD Notes:and IDA post Capital Increase 42.1 49.0 50.0 1 The IDA FY19 US$25 billion lending projection is subject to some exchange rate volatility, and includes the Crisis Response Window and Private Sector Window. 15. The IBRD/IDA In the pre-capital increase scenario, the IBRD/IDA portfolio under portfolio under supervision is projected to grow by a further 3 percent, from supervision is US$213 billion in FY17 to US$220 billion in FY19; and, more projected to grow significantly, by 9 percent from 1,460 operations in FY17 to 1,589 substantially – even in in FY19 (see Figure 2.1). This reflects long term portfolio the pre-capital dynamics (timing of exits versus entries to the stock of projects increase scenario. under supervision, in particular the IDA-18 scale up) and an increase in the number of small projects due to our enhanced focus on FCV countries and small states. In the higher lending scenario, post capital increase, portfolio growth would increase further. Figure 2.1: Growth in IBRD/IDA Supervision Portfolio (Pre-Capital Increase) $250 1,800 $221 $220 $207 $213 Net Commitment Volume $192 1,700 $200 $183 $169 No. of Projects 1,600 (US$ billion) $150 1,589 1,500 $100 1,519 1,460 1,400 1,386 1,402 1,398 $50 1,300 1,337 $- 1,200 FY13 FY14 FY15 FY16 FY17 FY18P FY19P IBRD/IDA Net Commitment (US$ billion) No. of IBRD/IDA Projects 9 2.3 COST OF DOING BUSINESS 16. The World Bank is The planning and budgeting process has been informed by a Cost asked to expand its of Doing Business analysis that examined the cost dynamics of the activity in ways which Bank’s activities. The analysis shows that above average efforts increase the cost of and costs are incurred in several areas and countries. This is doing business. expected to lead to overall higher costs as the Bank’s mix of business increases in these areas and countries. 17. The Bank is The Cost of Doing Business analysis shows that lending operations significantly tend to be more expensive to deliver in low and lower-middle expanding its services income countries including fragile, more challenging, and smaller to countries where the countries. The growth in the number of lending operations to these cost of doing business countries is outpacing that of upper-middle income countries. This is higher. trend is expected to continue as per the strategic directions discussed in sections 2.1 and 2.2. Furthermore, as the Bank expands its footprint into more complex and riskier environments, cost pressures are also rising. Ramping up the work in FCV locations has significant cost implications. Increasing our global footprint also requires increased resources, mainly due to related assignment benefits for staff decentralized to the field, and rising facilities and IT resource needs. 18. The Bank’s business The Bank’s business mix is also shifting towards more complex mix is shifting to more and riskier lending operations, which the Cost of Doing Business complex and riskier analysis has shown to be costlier to prepare and supervise. Demand operations which are from clients for projects for sustainable development (mainly also costlier to infrastructure) is also increasing, and these projects are also costlier prepare. to prepare. The Bank is increasingly being asked to finance projects in riskier and more complex environments. 19. Fiduciary and The new Environmental and Social Framework (ESF) expands the safeguard budget scope of related safeguards by including new topical areas, allocations have engaging borrowers more than before, and introducing expanded increased in recent processes, instruments, and systems. To support the roll-out, new years and are expected guidance and procedures are being developed, training of staff and to grow further with familiarization of borrowers are being implemented, and an implementation of the enhanced helpdesk and support infrastructure are being put in new frameworks. place. Implementation of the new Procurement Framework is ongoing with several supporting activities being implemented. 10 20. The finance units face The introduction of market leverage of the IDA balance sheet, with additional successful bond issuance at capital markets this spring and responsibilities to corresponding changes to the IDA financial risk framework such address the increased as the asset-liability management framework and liquidity policy, complexity of the has resulted in additional responsibilities for the Bank’s finance hybrid IDA-18 units. Additional requirements have also been introduced because financial model. of the increased number and complexity of IDA financing instruments.3 The introduction of the IBRD financial sustainability framework will further add new responsibilities for the finance units. 2.4 EFFICIENCY 21. The Bank has a track Through a period of budget transformation, Management has been record of strong able to deliver significantly more in an environment of rising costs budget management and with a flat nominal budget. In addition to meeting the over the past years. Expenditure Review (ER) targets, the Bank has significantly improved strategic planning, performance monitoring and budgeting through a coordinated WBG process. It has strengthened resource management systems, reports and accountabilities. The FY18 budget is expected to close within the flexibility band and with no major structural imbalances by business area. More importantly, we have moved to a culture where Management and staff seek to systematically align resources with WBG priorities in a way that is sustainable and delivers value for money. Because of its strong commitment to efficiency measures, Management has been able to keep the budget at a flat nominal level for the past five years, despite IBRD and IDA operations growing by some 21 percent since FY14 (see Figure 2.2). 3 The Private Sector Window and the IDA Scale-up Facility have been established to provide increased non-concessional financing for transformational projects, and transitional support for IDA graduates. 11 Figure 2.2: Growth in IBRD/IDA Portfolio Volume vs. Administrative Budget (Percentage Growth from FY14) 22. The Bank achieved As part of the WBG approach to foster a culture of efficiency US$340 million of through the US$400 million Group-wide Expenditure Review sustainable savings program, the Bank realized savings of about US$340 million through the (US$300 million clawed-back from Bank Budget and US$40 Expenditure Review. million benefiting External Funds) by FY18 against the agreed “Everything Else Being Equal” budget. Sustainable efficiency gains have been achieved mainly in areas related to organizational changes, travel, workforce, technology, and facilities – an effort which was made more challenging as changes in our business model increased the costs of doing business. 23. Management has Business Reviews have identified significant savings. Examples to continued the rolling date include the following: program of Business • Efficiencies in the operating model: A US$20 million Reviews to identify reduction in annual IT capital investment in FY18 (compared opportunities for to the previous four-year average) will help contain greater efficiency and depreciation costs over the coming years. Additionally, strategic alignment. reforms to ITS operations and maintenance management resulted in a budget reduction of US$10 million that would have otherwise increased ITS’s budget from FY19. • Lean services and staffing: DEC, LEG and ECR tightened staff complement with exit programs targeted at higher level staff while maintaining focus on supporting the front line. ECR has also focused its efforts on delivering core services, eliminating its publishing and knowledge unit. 12 • Organizational realignment: HRD off-shored more work to Chennai. Communications staff from other parts of the World Bank have been remapped to ECR which will enable it to achieve synergies and efficiencies. 24. Management is In addition to operational agility and administrative simplification continuing its drive for initiatives and Business Reviews cited in Section 2.1 and paragraph efficiencies and 23, Management has identified specific efficiencies resulting from productivity productivity improvements, savings and cost avoidance for the improvement. planning horizon in consultation with the Board. Some of these measures are being pursued in coordination with IFC and MIGA as was done during the Expenditure Review. They include the following: • Corporate procurement: Management is enhancing efforts to achieve savings and cost avoidance in the procurement/negotiation of corporate contracts by better benchmarking, targeting and tracking of savings at the contract level, by clawing-back savings achieved from unit budgets, and by introducing more transparent pricing/more economical standards for goods and services through the introduction of service catalogues. • Workforce structure and compensation: Changes in staff compensation methodology will result in downward budget adjustments. Other workforce measures being planned include controlling numbers and optimizing grade mix through a combination of workforce planning, natural attrition, and enhance performance management. • Project portfolio management: Efforts will be made to further strengthen portfolio management and enhance consolidation of new operations in the pipeline to reduce fragmentation whenever feasible. • Travel expenditures: Savings will be sought through tighter oversight of travel policy exceptions; roll-out of a mandatory global travel credit card to travelling staff; use of an external vendor to negotiate better hotel rates; rebidding the HQ travel agency contract; and tighter control over number of Bank participants in global events and conferences. 13 • Real estate expenditures: Key HQ efficiency measures planned include more efficient space standards; creation of in-house conference space to accommodate large meetings currently held externally; and reduction of leased footprint. In country offices, we are exploring options to purchase rather than lease, where feasible and economical; to increase space sharing with IFC; to consolidate country office facilities depreciation; as well as additional measures to optimize the use of office space around the world. • Other measures: Management intends to reduce discretionary spending on food services. It is also looking at opportunities to rationalize use of external contractors – particularly in IT. Finally, it will continue to implement recommendations identified through the Business Reviews. 14 FY19 EXPENDITURE FRAMEWORK This section sets out the aggregate funding budget (Bank Budget and External Funds) for World Bank expenditures and demonstrates the budget’s consistency with the principles of financial sustainability and efficiency. 3.1 AGGREGATE BANK BUDGET 25. In line with Consistent with the need to maintain budget discipline and considering (i) the Bank’s strategic priorities, (ii) increasing costs of doing business, and (iii) savings current that would derive from efficiencies and the impact of the revised financial compensation methodology, Management proposes a FY19 budget which position and would be flat in real terms. More specifically, Management is proposing to funding limit the increase of the budget for FY19 to 2.4 percent. This represents a availability, zero increase in real terms, and a budget below the one in FY14 in real terms. Management (See Table 3.1 and Figure 2.2.) proposes a FY19 budget As agreed with the Board, Management will draw on the standard 2 percent which would flexibility band to fund any incremental cost of implementation of the capital be flat in real package in FY19. If any additional budget funding is required in FY19 for terms. the IBRD scale-up above the 2 percent flexibility band, Management will seek Board approval. Table 3.1: Bank Budget (US$ million) FY18 FY19 Current Trajectory (FY18-FY19 as per FY18 WB Budget Document) 2,550 2,632 Revision to Trajectory (21) Revised Trajectory 2,550 2,611 IBRD Anchor 88% 80% Available for IBRD net income retention/transfer 150 294 IDA Anchor 104% 91% Available for other uses of IDA income - 147 15 26. The proposed Based on a pre-capital increase scenario, the IBRD anchor (the ratio of IBRD FY19 budget expenses over IBRD loan spread revenue) under the planned budget is will maintain projected to decline from 107 percent in FY17 to below 100 percent in FY18 budget and FY19 —thus strengthening financial capacity. sustainability IDA’s budget anchor (the ratio of IDA expenses over IDA net revenue) is and contribute estimated to be around 104 percent in FY18, falling below 100 percent in to the Bank’s FY19. financial Figure 3.1: IBRD Budget Anchor strengthening. 1,600 189% 200% 176% 1,400 160% Expenses/Revenues US$ million 158% 155% 147% 148% 160% 1,200 135% Budget Anchor % 1,000 107% 120% 800 88% 80% 600 80% 400 40% 200 0 0% FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 IBRD Loan Spread Revenue IBRD-funded Expenses IBRD Budget Anchor Figure 3.2: IDA Budget Anchor 1,800 120% 102% 104% 1,600 98% 98% 100% 97% 93% 96% 94% 100% Expenses/Revenue US$ million 90% 91% 1,400 Budget Anchor % 1,200 80% 1,000 60% 800 600 40% 400 20% 200 0 0% FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 IDA Revenue IDA-funded Expenses IDA Budget Anchor 27. In developing As illustrated in Figures 3.3-3.6, comparing the FY19 budget envelope with the FY19 the expected commitments and the size of the portfolio demonstrates the budget, Bank’s continued aggregate efficiency despite the growing volume and Management scope of our work. Annex II provides a detailed breakdown of these sought to indicators for IBRD and IDA respectively. maintain aggregate • The ratio of administrative budget to number of projects approved is budget expected to remain flat. On the other hand, the Administrative Budget efficiency. per US$ billions of loans approved has been heavily influenced by two factors. Firstly, this indicator has shown a declining trend as lending 16 volumes have surged (FY08-FY10) and as a result of cost efficiency drives (FY13-16). Over the FY18-19 period, the increase in the dollar based indicator is attributable to rising costs of doing business, as well as a decline in IBRD lending under the pre-capital increase scenario. • The ratio of administrative budget to number of projects supervised is expected to slightly improve. However, the total administrative budget per US$ billions of portfolio under supervision rises only slightly in FY18-19, reflecting the combination of growing and more challenging portfolio and budget restraint. Figure 3.3: Total Admin BB per Lending Project Approved (FY18US$ million) 16 14 12 11 11 10 10 10 10 9 9 10 9 9 9 8 8 7 7 7 7 8 6 4 2 - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD+IDA Figure 3.4: Total Admin BB per Project under Supervision (FY18US$ million) 3.0 2.5 2.0 1.7 1.7 1.7 1.7 1.7 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.5 1.5 1.4 1.5 1.0 0.5 - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD+IDA Figure 3.5: Total Admin BB per US$ Billion of Loans Approved (US$ million) 120 100 92 90 88 88 85 83 79 80 67 62 59 59 53 54 53 57 60 46 39 40 20 - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD+IDA 17 Figure 3.6: Total Admin BB per US$ Billion Portfolio Under Supervision (US$ million) 30.0 25.0 22.4 21.6 21.0 20.1 20.2 20.0 17.4 16.6 14.8 14.2 14.7 13.8 13.9 15.0 13.1 11.9 11.7 11.6 12.0 10.0 5.0 - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD+IDA 3.2 EXTERNAL FUNDS OUTLOOK 28. External Funds have Most of the Bank Executed Trust Funds (BETFs) that will be drawn grown significantly as on during FY19 have already been paid in. Cash contributions to a source of funds in trust funds have slowed during FY16-18 and, as a result, the recent years but this double-digit BETF growth of the last few years is not expected to share is expected to continue and growth in FY19 (compared to FY18 projections) is stabilize. expected to be around 4 percent. Reimbursable Advisory Services (RAS) is a key element of ASA, with revenues of US$89 million in FY17 expected to reach about US$115 million by FY19. A revised set of directives and guidelines will be issued to equip the Bank with a more flexible and responsive operational framework for RAS. 29. By FY19, Management Arising from concerns that a significant share of the costs of will complete administering external funds were being borne by the implementation of a administrative budget, the Board approved the Trust Fund (TF) program of measures cost recovery framework in FY15 which included several measures to ensure that Trust totaling US$100 million designed to redress this imbalance. The Fund cost recovery new framework became operational on July 1, 2015. All new trust arrangements better funds are established under the new cost recovery framework. reflect the actual cost Further steps were taken in FY18 by adjusting the benefit recovery of administering these rate on HQ-appointed staff from 50 percent, the previous rate, funds. which had resulted in an under recovery of actual costs that had to be borne instead by the Bank budget, to the actual 70 percent rate. In addition, a 45 percent rate for Country Office-appointed staff was introduced in FY18 but will be applied to external funds from FY19. 18 Progress continues in aligning external funds with strategic priorities. Forecasting of external funds usage is being improved through their earlier integration into work programming agreements and the roll out of new budget planning and reporting systems. 30. External Funds share Under the base case scenario, External Funds as a share of total of total administrative administrative spending plans are currently forecast to stabilize at spending plans is around 38 percent (see Figure 3.7). expected to remain Figure 3.7: Share of External Funds to Total Funds flat. 40% 38.2% 37.0% 35.4% 35.8% 35% 33.8% 32.8% 31.0% 30.5% 29.1% 30% 27.3% 25% 20% F Y 10 F Y 11 F Y 12 F Y 13 F Y 14 F Y 15 F Y 16 F Y 17 F Y 18 F Y 19 3.3 AGGREGATE BANK BUDGET AND EXTERNAL FUNDS 31. An aggregate resource Resources for both the Bank Budget (BB) and “All Funds” envelope for FY19 has (including BETFs, RASs and EFOs) show a growth of 3.5 percent emerged from the in FY19. discussion on the Table 3.2: FY19 Bank Budget and External Funds (US$ million) strategic framework and the External FY18 FY18 FY19 WB Budget Projection Funds outlook. Bank Budget Trajectory 2,550 2,550 2,611 External Funds Projections 1,496 1,535 1,616 Total All Funds 4,046 4,085 4,226 * Totals have been rounded to the nearest whole number. 19 FY19 BUDGET This section presents specific details of the FY19 administrative budget proposal and indicates how resources are allocated between main budget categories, demonstrating how this aligns with the WBG strategic directions. It provides details on allocations for operational programs, IG&A units, other non-unit specific budgets, as well as an estimated expense line view. 4.1 ADMINISTRATIVE BUDGET PROPOSAL 32. Management is The proposed Budget for FY19 is US$2,611 million as set out in proposing a Bank Table 4.1 below. The proposed budget, based on the “no capital Budget of US$2,611 increase” scenario, limits the increase over FY18 to 2.4 percent, million for FY19, as which is in line with inflation. The “All Funds” FY19 envelope is part of a broader total expected to be around US$4,226 million (see Table 3.2). funds estimate of US$4,226 million. As agreed with the Board, Management will draw on the standard 2 percent flexibility band to fund any incremental cost of implementation of the capital package in FY19. If any additional budget funding is required in FY19 for the IBRD scale-up above the 2 percent flexibility band, Management will seek Board approval. Table 4.1: FY19 WB Budget (US$ million) FY18 FY19 Proposed FY18-19 Budget Trajectory (Nominal) 2,550 2,611 % Change YOY 2.4% Proposed FY18-19 Budget Trajectory (in FY18$) 2,550 2,547 % Change YOY -0.1% 20 4.2 ADJUSTMENTS TO THE BUDGET 33. Adjustments to the Adjustments impacting the budget presented in the FY18 Budget budget were needed to Document come from (1) selected incremental additions to unit address rising cost of budget trajectories associated with rising business volumes and doing business with rising cost of doing business; and (2) new claw-backs from unit offsetting adjustments budget trajectories resulting from efficiency measures and the resulting from impact of the revised compensation methodology. It should be efficiency measures noted that incremental additions to the budget reflect only a small and productivity gains. part of the cost of doing business – some of the rising costs were already included in the budget presented in the FY18 Budget Document; other costs are being absorbed through efficiency measures, internal redeployments or trade-offs within/across VPUs, or minimized through cost avoidance and productivity measures. It should also be noted that new claw-backs more than offset the incremental additions to result in the flat real budget; and that these claw-backs are in addition to budget claw-backs to FY19 made in previous budget cycles. During the planning process, Management considered options for funding incremental requests through three mechanisms: (1) internal reallocations and trade-offs; (2) efficiency measures and productivity gains; and (3) prioritization of incremental funding as per the strategic priorities discussed in Section 2. VPUs were asked to present options for trade-offs and reductions in administrative budget spend. In addition, savings from efficiency measures and adjustments resulting from the revised compensation methodology were reflected in each VPU budget. 34. Incremental funding The following funding additions to unit budget trajectories have additions to unit been identified: budget trajectories • Supervising an expanding portfolio with more complex and have been prioritized risky projects, including enhanced supervision in FCV for FY19, with strong countries and small states. emphasis on client- facing operational • Sustaining engagement with all clients with an appropriate priorities, reflecting level of analytical and advisory services at the country level. increased business • Rolling out the new Environmental and Social Framework and volumes and to ease implementing the Gender-Based Violence Action Plan. selective rising costs of doing business. 21 • Performing additional responsibilities to address the increased complexity of the hybrid IDA-18 financial model and risk management measures, and reinvestment for efficiencies. • Addressing a range of cost pressures that are building up across the institution that cannot be offset by redeployments. Table 4.2: Incremental Additions to the Budget (US$ million) FY19 Supervising an expanding portfolio, including in FCV and 2 small states Sustaining Client engagement, including through ASA 5 Gender Based Violence Action Plan and additional 17 funding for the Environmental and Social Framework Increased complexity of IDA 18 financial model, risk 6 management and reinvestment for efficiencies Depreciation - Other cost pressures 1 Total Incremental Additions 31 As usual, a central contingency (US$10 million) will also be available to add to unit trajectories during FY19 for unforeseen priorities and cost pressures. 35. Unit budget Management has identified claw-backs for efficiency measures that trajectories were then more than exceed these cost pressures, with additional savings adjusted to reflect identified which have resulted in reduction in growth spending efficiency measures levels to flat real. Claw-backs include: and associated claw- backs. • Reductions to budget predicated on declining IBRD lending in the “pre-capital increase” scenario.4 • Reductions to budget to off-set subsidies previously paid to World Bank VPUs in lieu of full cost recovery of World Bank staff benefits for staff time spent providing shared services to IFC (IFC has agreed to cost Shared Service Agreements at the full benefit rates effective FY19). • Adjustments to the budget for Executive Directors in line with the recent endorsement by COGAM. • Reduction in the budget of the Board of Governors. 4They are predicated on a reduction of IBRD lending from US$24 billion in FY18 to the “pre -capital increase” projections of US$22 billion in FY19. 22 Reductions to budget resulting from: (i) impact of the revised compensation methodology – this is applied across units using a restated price factor; and (ii) savings from efficiency measures, including efficiencies in corporate procurement, workforce structure and other measures. Table 4.3. Claw-backs from Budget (US$ million) FY19 Savings due to lower IBRD lending volumes 3 IFC – MIGA full Benefit recovery from SLAs 8 Savings from Board of Governors Budget 1 Savings from Executive Directors Budget 2 Reductions from Compensation Review 12 Efficiency savings 25 Reductions/Clawbacks from Unit Trajectories 52 4.3 STRATEGIC ALIGNMENT BY WORK PROGRAM 36. The FY19 budget Table 4.4 presents the FY19 budget distribution by main programs distribution and funding sources. In line with Management’s commitment to demonstrates the Board, the share of Bank Budget (BB) resources to Operations increased strategic and front-line services will increase from 55 percent in FY16 to 59 alignment of percent in FY19. The share of Operations in the “All Funds” unit resources with front- budget is projected to increase from 60 percent in FY16 to around line operational two-thirds of unit trajectories in FY19. delivery. Table 4.4: FY18-19 Budget by Work Program & Funding Source (US$ million) BANK BUDGET ALL FUNDS INDICATIVE BUDGET TRAJECTORIES 1 FY18 FY19 FY18 FY19 TOTAL OPERATIONAL UNITS (Excl GMF) 1,494 1,566 2,509 2,678 Client Engagement 820 871 1,745 1,888 Country Engagement 732 781 1,460 1,578 Global Engagement 88 90 285 310 Program & Practice Management 674 695 764 790 Grant Making Facilities 35 35 35 35 TOTAL OPERATIONS 1,529 1,601 2,544 2,713 IG&A PROGRAMS 1,086 1,084 1,402 1,410 Institutional Services 404 412 595 614 Governance Services 219 216 236 234 Administrative Services 463 456 571 562 TOTAL: ALL UNITS 2,614 2,685 3,945 4,123 CENTRALLY MANAGED ACCOUNTS 100 103 101 103 o/w Corporate Contingency 10 10 10 10 TOTAL TRAJECTORY 2,714 2,788 4,046 4,226 o/w Funded by External Funds (164) (177) (1,496) (1,616) Net Trajectory Funded by IBRD/IDA 2,550 2,611 2,550 2,611 23 Table 4.5: 18-19 Budget Share by Work Program and Funding Source BB ALL FUNDS Share of Budget Trajectory FY18 FY19 FY18 FY19 Total Operational Units 57.9% 59.1% 64.2% 65.5% Client Engagement 31.8% 32.9% 44.6% 46.2% Country Engagement 28.4% 29.5% 37.3% 38.6% Global Engagement 3.4% 3.4% 7.3% 7.6% Program & Practice Management 26.1% 26.2% 19.5% 19.3% IG&A Programs 42.1% 40.9% 35.8% 34.5% Institutional Services 15.7% 15.5% 15.2% 15.0% Governance Services 8.5% 8.2% 6.0% 5.7% Administrative Services 17.9% 17.2% 14.6% 13.8% TOTAL: ALL UNITS (excl. GMFs) 100% 100% 100% 100% In addition, a greater share of these resources will be allocated to Client Engagement. The current program shows an increase of the share of BB Client Engagement (Country Engagement plus Global Engagement) in operational unit trajectories from 53.7 percent in FY16 to 55.6 percent in FY19. The Client Engagement share on an “All Funds” basis is projected to rise from 67.4 percent in FY16 to 70.5 percent in FY19. Figure 4.1: Operational Share of Unit Budgets 68.0% 65.5% 66.0% 64.2% 64.0% 62.8% 62.0% 60.4% 59.1% 60.0% 57.9% 58.0% 56.8% 56.0% 54.9% 54.0% 52.0% FY16 FY17 FY18 FY19 BB All Funds Note: FY16-18 BB restated to reflect the new arrangements for RAMP and other asset management services (original BB operational share of unit budgets were: 54.3%, 56.2%, and 57.2% for FY16, FY17, and FY18, respectively). 24 Figure 4.2: Client Engagement Share of Operational Unit Budgets (including Country Engagement and Global Engagement) 72.0% 70.5% 69.6% 67.4% 67.7% 67.0% 62.0% 57.0% 54.9% 55.6% 53.7% 54.1% 52.0% FY16 FY17 FY18 FY19 BB All Funds 25 Box 4.1: Administrative Budget Envelopes Under the organization structure introduced in FY15, the World Bank’s administrative budget is allocated to units through work program envelopes and additional expense envelopes as follows: 1. Operational Units Funding is provided to operational units through the Client Engagement and Program and Practice Management envelopes. • Client Engagement: This comprises Country Engagement and Global Engagement envelopes. o The Country Engagement (CE) envelope: This includes funding for preparation and supervision work with respect to financial services (such as lending, grants and guarantees), knowledge services (such as advisory services and analytics) and convening services (such as country strategy and partner coordination/mobilization). o The Global Engagement (GE) envelope: This includes funding for global engagement activities, without a specific country identification, incl. work on Global Public Goods, global knowledge services, global convening services, and global programs administrative services. • Program and Practice Management (PPM): This envelope funds the cost of running the operational work program, and includes funding for management, administrative support services, space and IT costs, extended assignment benefits for field assignments, plus knowledge management, innovation and staff training/learning. 2. Institutional, Governance and Administration (IG&A) This envelope comprises the funding provided to IG&A units to cover the cost of running the institutional, governance and administrative services that support the World Bank’s operational delivery. Total unit trajectories are the sum of Operational and IG&A unit trajectories. The two additional expense area envelopes comprise the following: 3. Grant-Making Facilities (GMF) This envelope provides Board-mandated transfers to external facilities. 4. Centrally Managed Accounts (CMA) This envelope contains funding for expenses that are centrally administered and non-unit specific such as depreciation, lease costs and benefits as well as certain institutional programs. 26 4.4 OPERATIONAL WORK PROGRAM 37. As a greater share of As more resources are directed toward front-line activities, resources is directed to additional funding will be made available for the Bank’s key operational activities strategic priorities: (i) ensuring delivery of IDA-18 scale up, (ii) in FY19 and enhancing engagement in FCV countries and small states, (iii) allocations to all continued engagement with IBRD clients, (iv) supporting regions grow, implementation of the new ESF, and (v) harnessing collaboration additional funding across the WBG in maximizing finance for development in will be made available developing client solutions. for the Bank’s key strategic priorities. Specifically, as set out in Table 4.6, additional resources have been directed towards the two largest IDA regions, namely AFR and SAR, for the preparation and delivery of the pipeline for IDA and FCV scale-up as well as related supervision needs. The AFR Region’s FY19 Country Engagement (CE) budget would increase by 8 percent (or US$20 million) over FY18. Similarly, the SAR Region’s FY19 CE budget would increase by 4 percent (or US$5 million) over FY18. To avoid crowding out of other country programs due to cost pressures in delivering on small states, additional resources have been allocated to the two regions with the largest IDA allocations for these countries – the EAP Region (with an increase of 4 percent or US$4 million over its FY18 CE budget) and the LCR Region (an increase of 1 percent or US$1 million over its FY18 CE budget). The MNA and ECA Regions were allocated an increase to support continuing client engagement demands. As shareholders endorsed the IBRD capital package during the Work Program Agreement (WPA) process, Management has started consulting externally with clients and internally with business units on the specific lending volumes, policy commitments and budgetary implications of this package, which are not yet reflected in the WPA outcomes discussed in this section. Any incremental funding needs for FY19 emerging from this analysis will be absorbed within the 2 percent flexibility band and, if above that, Management will seek Board approval. FY20-21 budget needs will be assessed as part of the next year’s Strategic Planning and Budgeting cycle. 27 Management has recently aligned the Sustainable Development Practice Group and the Global Themes Vice-Presidency to balance the distribution of responsibility over the World Bank program. The budget of these two Vice Presidencies will be re-apportioned according to the new structure as the details are finalized and will be updated in the FY19 Q1 Quarterly Business and Risk Review (QBRR). 28 Table 4.6: FY19 Operational Budget Envelopes (US$ million) BB ALL FUNDS INDICATIVE BUDGET TRAJECTORIES FY18 FY19 FY18 FY19 AFR CE 266 286 489 528 PPM 119 123 123 127 Total 385 409 612 654 EAP CE 105 109 232 247 PPM 61 61 66 65 Total 167 171 298 312 ECA CE 86 87 188 194 PPM 54 55 55 56 Total 140 142 243 250 LCR CE 96 97 151 156 PPM 56 57 57 58 Total 152 154 207 213 MNA CE 60 61 166 189 PPM 36 36 37 38 Total 95 97 203 227 SAR CE 120 125 235 249 PPM 52 55 54 57 Total 172 180 289 306 Other Operational Units' Allocations 1 CE - 16 - 16 All Regions CE 732 781 1,460 1,578 PPM 378 387 393 400 Total for Regions 1,111 1,168 1,853 1,978 GP/GT GE GE 88 90 285 310 GP/GT PPM Equitable Growth, Finance and Institutions 77 80 89 92 Human Development 37 40 43 46 Sustainable Development 106 105 164 168 Other Operational Support 2 62 64 62 64 Global Themes 13 18 13 19 Total GP/GT PPM 295 308 371 390 Total GP/GT 383 398 656 700 Total Operational Units 1,494 1,566 2,509 2,678 1 CE funded to GPs for FCV enhanced supervision pilot, and additional funding for GBV Action Plan and the new ESF implementation. The latter is complemented by US$6 million additional funding to OPCS in FY19 to support the new ESF roll-out. 2 Includes Extended Assignment Benefits (EAB) for operational staff and funding to support Agile Bank initiative, and aspects of the work on FCV Supervision Pilot and Gender-based Violence (GBV) Action Plan. 29 38. The outcome of the Allocations to IBRD and IDA countries from the CE envelope are WPA process shows a set out in Figure 4.3. Overall budget allocations for operational significant increase in work in IDA countries have increased from US$420 million in budget allocations for FY18 to US$459 million in FY19 – an increase of US$39 million work on IDA (9 percent), bringing the IDA funded share of the Country countries in FY19. Engagement Work Program from 57 percent to 59 percent. The allocations to IBRD countries (pre-capital increase) increased by US$10 million (3 percent), but are expected to increase further post- capital increase. Figure 4.3: Evolution of the Country Engagement Bank Budget from FY18 to FY19 (US$ million) 39. Country Engagement As highlighted in figures 4.4 and 4.5, additional resources have allocations across been directed towards front-line activities, in particular for business processes are Supervision, Fiduciary and Safeguards work. The total allocation reflective of strategic for these categories in FY19 amounts to US$387 million or 50 priorities emerging percent of the total CE allocation. This is an increase of US$40 from country million over the FY18 allocation or an increase of 12 percent. This dialogue. noteworthy increase reflects the Bank’s growing and increasingly complex portfolio and the implementation of the new ESF. Funding for Analytical and Advisory Services (ASA), which aim to help our clients adopt better policies, implement reforms, strengthen institutions, build capacity and inform development operations, also see a significant increase and represents 20 percent of CE. This is the second successive annual increase and reflects the Bank’s commitment to do more core diagnostic/analytical work, 30 remain engaged in dialogue across all client groups, as well as underpin future lending including in FCV/FCV-risk countries. Resources for Lending preparation (pre-capital increase), representing 17 percent of CE, on the other hand, have slightly declined from previous years reflecting an explicit effort to consolidate tasks and reduce fragmentation in the pipeline whenever feasible. Given the IDA-18 envelope that is 50 percent larger than IDA-17, the doubling of IDA resources in FCV, and a tripling in resources for small states, as well as new windows, the Bank will need to be more agile and innovative in finding synergies in consolidating lending tasks and reducing fragmentation. Figure 4.4: Country Engagement Bank Budget Allocations by Business Process for FY17-19 (US$ million) 31 Figure 4.5: Country Engagement Bank Budget Allocation Shares by Business Process for FY17-19 20% 20% 17% 31% 31% 32% 8% 9% 9% 7% 7% 8% 21% 20% 20% 4% 3% 4% 9% 9% 10% FY17 FY18 FY19 Other COMO ASA Safeguards Fiduciary Supervision Lending 40. Fiduciary and The roll-out of the new Procurement Framework and Safeguards allocations Environmental and Social Framework have been designed to ensure will increase that Bank-financed projects are delivered to the highest standards. significantly for the The recently introduced Procurement Framework is designed to third year in a row. increase the flexibility, efficiency and transparency of the procurement process, and the new Environmental and Social framework (ESF), which will become operational in FY19, will enhance the sustainability of financing by deepening protections of people and the environment from adverse impacts. Going beyond individual projects, the framework aims to strengthen national systems and institutions in client countries. As the Bank’s portfolio grows, and the Bank’s footprint expands into more challenging environments, Fiduciary and Safeguard allocations will increase by an additional 12 percent in FY19, or 62 percent since FY16. Following a significant increase in FY17 and FY18 to support the implementation of the new procurement framework and the IDA-18 scale up, resources for fiduciary work will increase by an additional 4 percent to US$70 million in FY19. Equally, following large increases in FY17 and FY18, allocations for Safeguards work will increase by 23 percent to US$64 million in FY19. This includes an additional allocation of US$10 million provided in response to an estimate of the incremental costs of 32 project safeguard requirements expected under the new ESF effective October 2018. Figure 4.6: CE Spending on Fiduciary and Safeguards for FY16-19 41. Country Engagement FY19 WPAs, driven by client demands, have resulted in increased allocations across resources in all GP Practice Groups. The increases across Practice Practice Groups Groups are broadly equal in percentage terms and consequently the reflect strategic FY19 CE allocations show Sustainable Development, including priorities emerging Safeguards, holding the largest share, followed by Equitable from country Growth, Finance and Institutions, followed in turn by Human dialogue. Development. Figure 4.7: FY19 Country Engagement Allocation Shares by Practice Group 33 42. Country Engagement As illustrated in Figure 4.8, the CE allocation to FCV and FCV at allocations for risk countries (IDA and IBRD) increased by US$13 million (9 fragility, conflict, and percent) from US$142 million in FY18 to US$155 million in FY19. violence (FCV) Of the total FY19 CE increase (US$49 million), some 27 percent affected countries will (US$13 million) was directed to FCV/FCV-Risk countries. The increase by 9 percent increase in allocations on FCV and FCV at risk countries since in FY19, which is a 35 FY16 amounts to US$40 million or 35 percent. percent increase since FY16. The Bank is meeting its IDA-18 commitment to add staff in FCV locations during the IDA-18 three-year cycle. In the area of mobility and careers for FCV staff, the Bank’s focus is on: a) emphasizing FCV experience in selections and assignment to senior positions; b) strengthening next assignment planning; and c) monitoring recruitment, deployment, development, promotion and careers. A number of leadership, learning and mentoring programs for FCV staff and managers have been developed, such as an onboarding program customized for FCV staff and delivered in Cairo in December 2017. Hazard and Fragility Pay was introduced in October 2017, benefitting over 700 country office appointed staff in 27 hazardous and/or FCV locations. Another area of focus is staff health and wellbeing, with several initiatives underway to support FCV staff. Figure 4.8: Country Engagement Bank Budget Allocations for FCV and FCV at Risk Countries for FY16-19 (US$ million) 34 43. Country Engagement As illustrated in Figure 4.9, the CE allocation to Small States allocations to Small increased by 8 percent from US$45 million in FY18 to US$48 States will increase by million in FY19. The increase in spending on Small States since 8 percent in FY19, FY16 amounts to US$16 million or 51 percent. which is a 51 percent increase since FY16. Figure 4.9: Country Engagement Bank Budget Allocations to Small States for FY16-19 (US$ million) 44. The Bank is Continued ambitious attention to, and global leadership on, climate continuing to make change is critical to meeting the development mission of the World progress on the goals Bank Group (WBG). To this end, the WBG is expected to reach at set out in the WBG least 26 percent climate co-benefits in total commitments by the end Climate Change of FY18 and will meet its 28 percent target by 2020. This continues Action Plan. the strong upward trend from 18 percent in FY15. The World Bank will continue to support transformational policies needed to deliver climate actions, mobilize private sector investment and inform the global discussion on the climate agenda. Funding for such efforts will be directed through: (1) the Country Engagement budget envelope in support of the preparation and supervision of projects that generate climate co-benefits and of climate related analytical and advisory work (both projects and analytical/advisory tasks are “climate tagged” during the FY as their content and design are defined); (2) the Global Engagement and PPM budgets in support of the Global Themes VPU (see Table 4.6); and (3) research work done by DEC. 35 45. Narrowing the gender The World Bank Group Gender Strategy (FY 2016-2023) outlines gap features the support to countries and companies to (i) close gaps in health prominently in the and education, (ii) remove constraints to women’s labor force World Bank Group’s participation, (iii) work to increase women’s ownership and control FY19 work program. of assets, and (iv) enhance women’s voice and agency, including addressing gender-based violence. In addition, following the report of an independent Task Force in the Fall of 2017, an action plan has been adopted by Management and shared with the Board detailing measures to help prevent and respond to sexual exploitation and abuse or gender-based violence, improve monitoring systems, and empower teams to report any cases as they emerge in the projects the Bank supports. To operationalize the Bank’s gender goals, gender issues will be included in the Country Partnership Frameworks (CPF) and other diagnostic instruments. Bank tasks are becoming increasingly gender informed reflecting the mainstreaming of Gender in to the Bank’s work program. Accordingly, funding for gender work will be directed through: (1) the Country Engagement budget envelope in support of the preparation and supervision of projects and of analytical and advisory work that address gender gaps (both projects and analytical/advisory tasks are “gender tagged” during the FY as their content and design are defined); (2) the Global Engagement and PPM budgets in support of the Global Themes VPU; (3) the Practice and Program Management budget in the two regions (AFR and EAP) where staff work on gender issues in the Gender Innovation Labs; and (4) research work done by DEC. 46. Global Engagement The Bank’s Global Engagement work program supports non- funding from BB country-specific priorities, including (i) fulfilling corporate sources is expected to commitments; (ii) supporting innovation and product development increase in FY19 to to support evidence-based policy making by developing global US$90 million and is databases, tools and evaluations and to maintain WBG leadership complemented by in global public goods, (iii) sustaining partnerships and global external funds engagements, and (iv) providing operational support to leverage provided by various knowledge services and enable rapid and flexible operational partners. response. 36 Bank funding has been allocated based on the following categories: • Corporate Commitments (US$40 million). Priorities include work on data quality and production in support of both the Twin Goals and the SDGs (Data for Goals), support to the G20, and contributions to the Global Partnership for Social Accountability (US$1.5 million) and Facility for Investment Climate Advisory Services (US$2.0 million). Other engagements include work on the Human Capital Project, debt relief, sustainability and management, jobs, Universal Financial Access, support to the Financial Stability Board (FSB), products design to support MFD, and the Stolen Asset Recovery (StAR) initiative. • Global Themes (US$26 million). This category supports the Bank’s efforts to better deliver on cross-cutting commitments that involve multiple Global Practices, and in many cases IBRD/IDA, IFC and MIGA. These commitments comprise Fragility, Conflict and Violence (FCV), Gender, Infrastructure/PPPs/Guarantees, Knowledge Management as well as addressing key climate change mitigation and adaptation priorities in partner countries and to enable delivery of the Climate Change Action Plan. Priorities include delivering on IDA-18 commitments and the MFD approach. • Operational Support (US$24 million). This includes allocations to Global Practices to support on-going and new strategic engagements, innovation, product development and partnerships, and to facilitate knowledge services. New engagements in FY19 are expected to include work on trade, poverty and inequality; Jobs Country implementation and analysis; adult learning and literacy; Schools of the Future; Disruptive Technologies for Development; pollution-smart interventions; and innovative financing for city development and infrastructure. 37 Figure 4.10: FY19 Global Engagement by Practice Group and Category 47. The Program and The PPM budget for operational units will continue to support the Practice Management operational work program, including for priorities like (PPM) budget will decentralization and staff learning. Rising cost pressures in this increase by 3 percent area (notably for country office facilities, security and extended (see Table 4.4), with assignment benefits resulting from continuous decentralization) units targeting will be addressed through efficiencies measures – keeping focus on efficiencies to address how best to optimize organizational and management structure, rising cost pressures. grade mix and facilities management, and applying agile and simplification in approaching our work. Within the PPM budget, units continue to redeploy resources toward priorities, for example staff learning (including for the new ESF implementation learning requirements) and span of control of Practice Managers. PPM in FY19 also includes allocations toward aspects of work under FCV supervision pilot and the Gender Based Violence (GBV) Action Plan, and for the implementation of the Knowledge Management Action Plan. 38 4.5 GRANT-MAKING FACILITIES 48. While significant As part of the budget reforms in recent years, the Bank changed its progress has been practice from funding grant-making activities “below the line” to made in phasing out, allocating grant-making funds as part of the planning process. In mainstreaming or some cases, Bank funding has been phased out (e.g., Institutional reducing Bank Development Fund (IDF) and Development Grant Facility (DGF)); funding for Grant- in others, it was decided to mainstream the activity into a Bank Making Facilities, program and subject it to contestability (e.g., Global Partnership for alternative financing Social Accountability (GPSA)), or reduce funding (e.g., State and for CGIAR has not Peace-Building Fund (SPF) and Consultative Group for been forthcoming. International Agricultural Research (CGIAR)). Table 4.7 below sets out the progress made to date in meeting these objectives. Table 4.7: Grant-Making Facilities Budgets (US$ million) FY14 FY15 FY16 FY17 FY18 FY19 State and Peace-Building Fund (SPF) - 25 21 14 5 5 Institutional Development Fund (IDF) 9 - - - - - Development Grant Facility (DGF) 51 33 12 - - - Global Partnership for Social Accountability 5 5 5 - - - (GPSA)1 Consultative Group for International Agricultural 50 47 30 30 30 30 Research (CGIAR) Total Operational Activities Related to Grants 115 110 68 44 35 35 1 The activities of the GPSA have now been mainstreamed into the GE work program. Management has explored alternative sources of funding for CGIAR and SPF. In the case of SPF, funding levels have been reduced in recent years to US$5 million and are expected to remain at this level. Management responded in June 2017 to a request from some Board members to provide a briefing on CGIAR, including details of alternative funding models. Despite much effort on the part of the Agriculture Global Practice over many years, no additional external funding for CGIAR has been forthcoming to replace World Bank funding. 39 4.6 IG&A UNITS 49. Allocations to IG&A Allocations to IG&A units have been assessed against their units will remain contribution to key priorities, namely: broadly flat despite • Support to finance units for the IDA-18 scale up, in particular increasing mandates, arising from the leveraging of the IDA balance sheet, supporting with IG&A units delivery of a higher lending envelope, support to the IDA-18 achieving savings mid-term review and IDA-19 replenishment, and facilitating the through expansion of the Bank’s field presence in priority locations. administrative simplification; and • Strengthening the IBRD financial position, through measures to with increases being enhance IBRD financial capacity. Additional resources will limited to critical also be considered as part of the incremental funding for the needs or to fund implementation of the capital package to support efficiency initiatives. implementation of its financial commitments. • Implementation of the Environmental and Social Framework (ESF), for OPCS to support the roll-out of the new Environmental and Social Framework and strengthening oversight. • Supporting other operational priorities including Maximizing Finance for Development (MFD), Climate commitments, Fragility and Gender. • Supporting the WBG delivery including the People Strategy, security, knowledge, data and statistical capacity work, communication and stakeholder engagement, enhanced risk management and innovative financial products. • Enhancing the business model through administrative simplification measures. Management has made continuous efforts to seek efficiencies, productivity improvements and cost avoidance in IG&A VPUs. IG&A units have pursued such efficiencies through the administrative simplification initiative and Business Reviews (see Section 2.4), both of which have played a critical role in this realignment of resources. As already detailed in Section 2, Management will continue to seek greater efficiencies from these VPUs by pursuing more innovative and simpler ways of doing business that conform with external best practice. In FY19, incremental funding for IG&A units have been limited to fund 40 critical needs, namely to support the implementation of the new ESF Framework and support to Treasury and risk management functions, as well as investments to improve the business model. Management has recently informed the Board of its intention to create a data compliance function. The budget implications of this new function are being assessed. 41 Table 4.8: FY19 IG&A Budget Envelopes (US$ million) BB All Funds INDICATIVE BUDGET TRAJECTORIES FY18 FY19 FY18 FY19 1.0 Institutional Services 1.1 Budget, Performance & Strategy 74 76 74 76 1.2 Financing for Development - 1 - 1 1.3 Chief Risk Office 1 17 16 18 17 1.4 Development Economics 52 52 107 106 1.5 Development Finance 2 28 24 65 65 1.6 External & Corporate Relations 50 54 53 57 1.7 Global Environment Fund - - 33 37 1.8 Legal Services 39 39 41 41 1.9 Operational Policy & Country Services 3 51 58 52 58 1.10 Strategy, Performance, and Admin. 9 11 12 14 1.11 Treasury 4 38 36 86 89 1.12 WBG Finance & Accounting 46 46 53 53 Sub-Total 404 412 595 614 2.0 Governance Services 2.1 Administrative Tribunal 2 2 2 2 2.2 EDs 88 87 88 87 2.3 Board of Governors 7 6 7 6 2.4 DC Secretariat 2 2 2 2 2.5 Conflict Resolution System 5 5 6 6 2.6 Corporate Secretariat 17 16 18 17 2.7 Independent Evaluation Group 29 30 38 39 2.8 Integrity Vice Presidency 21 21 21 21 2.9 Internal Audit 9 9 11 11 2.10 Inspection Panel 4 4 4 4 2.11 Office of Ethics and Business Conduct 7 7 9 9 2.12 Office of the President 7 7 7 7 2.13 Office of Suspension & Debarment 2 2 2 2 2.14 Office of the CEO 4 4 4 4 2.15 Office of the MD and CAO 3 3 3 3 2.16 Office of the MD and CFO 3 3 3 3 2.17 Office of the SVPMM 5 6 6 6 6 2.18 Sanctions Board 2 2 2 2 2.19 Strategic Initiatives Unit 1 1 1 1 Sub-Total 219 216 236 234 3.0 Administrative Services 3.1 General Services and Facilities 153 152 193 192 3.2 Human Resources 6 68 63 84 78 3.3 Information & Technology Solutions 241 241 293 292 Sub-Total 463 456 571 562 TOTAL INSTITUTIONAL, GOVERNANCE & ADMIN. 1,086 1,084 1,402 1,410 1 CRO: Reflects the cessation in FY18 of timebound allocations for work on IDA-18 and the IBRD capital package. 2 DFI: Reflects in FY19 the move from DFI of Financing for Development as a stand-alone unit, staff transfers to other units, in particular to ECR, and adjustment to the staff benefit rate compensation allocation in FY18. 3 OPCS: Reflects in FY19 staff transfers to ECR and incremental funds to support the ESF roll-out. 4 TRE: FY18 BB restated to reflect the new arrangements for RAMP and other asset management services; also reflects adjustment to the staff benefit rate compensation allocation in FY18. 5 Office of the SVPMM includes New York and Geneva Offices. 6 HR: Reflects in FY19 adjustment to the staff benefit rate compensation allocation in FY18 and staff transfers to ECR. 42 50. The FY19 WBG The FY19 budgets for the Executive Directors Offices (EDs) and budget for the the Independent Evaluation Group (IEG) amount to US$117 Executive Directors million – a small increase in the budget of IEG and a reduction in and IEG amount to the budget of Executive Directors. US$117 million. Although the Bank’s share of these budgets is authorized as part of this document, and included in the total administrative budget approval, the sizing of these budgets is not determined by Management. Table 4.9: FY18 and FY19 ED and IEG Budgets (US$ million) FY18 FY19 Executive Directors (EDs) 88 87 IEG 29 30 Total 117 117 4.7 CENTRALLY-MANAGED ACCOUNTS 51. Centrally-Managed Centrally Managed Accounts (CMAs) contain funding for Accounts (CMAs) will expenses that are either not easily attributed to specific units, or increase by US$3 million institutional programs that are managed by units but for which in FY19 due to higher Management maintains discretion over the budget. The net depreciation costs and change in the budget for the CMAs between FY18 and FY19 is staff separations offset US$3 million, as explained below: by trust fund recoveries. • Depreciation is expected to increase by US$12 million (12 percent) over FY18 primarily due to increases in Centrally- Managed IT depreciation. Further details are provided in section 5. This reflects the downstream impact of the significant ramp up of IT investment over the past decade. • Corporate Contingency is set at US$10 million in FY19 to support unforeseen priorities and cost pressures (same as FY18). • Funding for Institutional Programs will remain flat at FY18 levels. • Staff Benefits and Allowances are budgeted at US$894 million in FY19 and shown net of an estimated US$914 million of recoveries from units and external funds collected through the 70 percent and 45 percent staff benefit rate for HQ-appointed and Country Office-appointed staff. While 43 overall net staff benefits increase by US$2 million, this is due to a US$53 million increase in gross benefits and a US$51 million increase in recoveries. Gross benefits are expected to increase faster than salary expense growth due to certain benefits, such as medical costs, rising at a faster rate. The budget for recoveries includes an expected additional US$10 million due to the introduction of the 45 percent Country Office staff benefit rate on external funds in FY19. • Other Budget Recoveries comprise the recovery of indirect costs from BETFs and other external funds as well miscellaneous rebates and internal recoveries. The increase of US$11 million in this category is principally due to an anticipated increase in recoveries from the 17 percent personnel charge on BETFs. Table 4.10: Centrally-Managed Accounts (US$ million) FY18 WB FY19 % Change $ Change Budget A B (B/A) (B-A) 1 Depreciation 102 114 12% 12 Corporate Contingency 10 10 0% - Institutional Programs 84 84 0% - Staff Separations 14 21 48% 7 Washington Real Estate Costs 32 28 -12% (4) Business Continuity 1 18 15 -16% (3) Awards Programs 4 4 0% - Corporate Insurance 4 4 0% - Community Connections 3 3 0% - Evacuation Costs 2 2 0% - Other Programs 7 7 0% - Net Staff Benefits & Allowances (22) (20) -7% 2 Gross Staff Benefits & Allowances 841 894 6% 53 HRD-managed Staff Benefits 251 273 9% 22 Tax Allowances 129 136 6% 7 Staff Retirement and PCRF 462 485 5% 24 Institutional Benefits Recovery (863) (914) 6% (51) Other Budget Recoveries (74) (85) 15% (11) Total 100 103 2% 3 1 Includes a US$3 million transfer in FY19 from the Business Continuity allocation to Depreciation for the centralization of related IT depreciation costs. 44 52. The Post-Retirement The Bank’s contributions to the staff post-retirement benefit Contribution Reserve plans remain at the established 35 percent of net salaries, which Fund (PCRF) was is higher than the FY19 contribution rate of 28.43 percent established in FY13 with calculated by actuaries. The excess (the difference between the the objective of reducing actual rate determined by PFC and the 35 percent fixed budget volatility contribution rate) is added to the PCRF to build up the Reserve resulting from the Fund. The balance of the Fund is projected to be US$357 Bank’s contributions to million at the end of FY19. A review of the PCRF, led by the staff post-retirement Treasury, is scheduled for FY19. plans. 4.8 EXPENSE FUNCTIONAL VIEW 53. The Bank follows a The Bank does not set specific budgets by expense category, for dollar budget example, staff salaries, short term consultants or travel. approach which allows Accordingly, the functional expense line view presented in budget holders Table 4.11 below is an illustrative decomposition of the flexibility to vary administrative budget by expense line item. Nevertheless, as the inputs as long as they shares of the expense items have remained relatively stable over stay within workforce the years, the estimates below represent the current view of the planning affordability most likely outcome. The actual outcome may differ because parameters and their work programs vary during the year, and decisions are made to authorized budgets. respond to changing business needs that may entail trade-offs between different expense categories. Table 4.11: FY18 and FY19 Functional Expense View of Administrative Expenses (US$ million) FY18 FY19 Projections Projections Expenses by Type of Expense BB+Reimb. All Funds BB+Reimb. All Funds % of % of % of % of US$m US$m US$m US$m Total Total Total Total Fixed Expenses 2,300 76% 2,728 67% 2,372 76% 2,818 67% Of which: Staff Salaries and Benefits 1,919 64% 2,286 56% 1,971 63% 2,355 56% Other Fixed Expenses 1/ 381 13% 442 11% 401 13% 464 11% Variable Expenses 710 24% 1,322 33% 738 24% 1,373 33% Of which: ST/ET Consultants & Temporaries 215 7% 647 16% 226 7% 676 16% Travel Costs 229 8% 349 9% 238 8% 363 9% Contractual Services 224 7% 273 7% 230 7% 279 7% Other Variable Expenses 2/ 42 1% 52 1% 44 1% 54 1% Total Unit Gross Expenses 3,009 100% 4,050 100% 3,110 100% 4,191 100% Grant Making Facilities (GMFs) 35 35 35 35 Total Gross Admin Expenses (incl. GMFs) 3,044 4,085 3,145 4,226 Reimbursable Revenues and Fee income (495) (534) Total Net Admin Expenses (incl. GMFs) - BB Only 3/ 2,550 2,611 1 / Other fixed expenses include Communications & IT, Equipment & Building, Depreciation, and TF Indirect costs. 2 / Other variable expenses include Supplies, Printing, and other indirects costs. * Numbers may not add up due to rounding. 45 FY19 projected gross administrative expenses on an All Funds view are expected to be higher than FY18 projections by US$141 million or 3.5 percent. This increase is driven by an increase in Bank Budget funded expenditures of US$61 million or 2.4 percent, and externally funded expenditures of US$80 million or 5 percent. 54. The functional Staffing is the main expense category representing about 56 expense view shows percent of total unit gross expenses on an All Funds view (63 staff costs to be the percent of Bank Budget). main expense category. 46 55. Management considers Staff costs across all funds are projected to increase by 3.0 percent that the staff (US$69 million) in FY19 due to the proposed structure adjustment remuneration increase of 1.1 percent for Washington-appointed staff and the country-by- proposed in the 2018 country structure adjustments covering country office-appointed Review of Staff staff. Management considers the projected increase in staff costs Compensation paper to to be affordable and manageable within the overall budget the Board is affordable framework. within the proposed budget. 56. Staffing counts are In terms of staff count, the number of full-time Bank staff in FY18 below FY14 levels. is projected to be around 2.5 percent above that in FY17 but, from a longer perspective, Bank budget-funded FTE staff is 4 percent below the level in FY14 (1 percent below on an All Funds view), despite the significantly increased IBRD/IDA portfolio (20.8 percent over FY14) with a flat nominal budget over the same period (see Figure 4.11 below). Figure 4.11: Full-time Bank Staff on Payroll (percentage growth since FY14) 24% 20.8% 20% 16.0% 16% 13.2% 12% 8% 4.8% 4% 1.1% 0.1% -0.7% -0.9% 0% 0.0% -1.1% FY14 FY15 FY16 FY17 FY18P* -4% -3.5% -3.0% -7.4% -4.0% -8% -6.3% -7.9% *Projected % Growth in IBRD/IDA Net Commit (US$ billion) % Growth in Admin. Budget (BB) US$ million % Growth in Full-time WB Staff Count on Payroll (All Funds) % Growth in Full-time Equiv. (FTE) WB Staff Count on Payroll (BB+) 57. Variable expenses are In terms of other expense categories, FY19 projections reflect a estimated to grow in stable share of major line items to total costs, driven by the needs FY19 by 4 percent of operational units and travel costs. The re-introduction of the across all funds. Extended Term (ET) category of consultants/temporaries under Variable Expenses may have some impact on this cost category. Expenses on the contingent work force will be monitored as the reintroduction of ET consultants/temporaries moves forward. 47 CAPITAL BUDGET This section includes an outline of the Bank’s FY19 Capital Budget. 5.1 FACILITIES 58. The proposed The proposed FY19 Facilities investment of US$105 million Facilities Capital comprises: Budget for FY19 is • Country office construction, purchases, relocations, and US$105 million. upgrades (US$53 million or 50 percent). These investments aim to accommodate an increasing presence in the field, prioritize FCV needs, and to move from expensive leasehold properties to Bank owned properties in select countries. • HQ facilities repairs, renovations and upgrades (US$30 million or 29 percent) represent ongoing maintenance and upgrades as well as efforts to increase efficiency of space usage. Key investments include replacements of lighting system, air handling unit, roof, chiller plant, and video conferencing equipment. • Security in HQ and country offices (US$22 million or 21 percent) mainly for country office security equipment upgrades in medium and high priority offices, integrating and upgrading country office access systems, fire alarm and other system upgrades in Washington, and deployment of defibrillators and trauma kits. The planned increase in security spending from prior years reflects the Bank’s expanded footprint in more challenging and less secure environments, as well as the deterioration in the global security environment generally. 48 5.2 TECHNOLOGY AND SYSTEMS 59. The proposed Capital The FY19 Technology and Systems investment plan of US$85 Budget for Technology million is spread across three segments, as follows: and Systems in FY19 • IT Infrastructure Services (US$26 million or 31 percent) is US$85 million. aimed at (i) ensuring the reliability, continuity, and resiliency of IT infrastructure and WBG global network, (ii) replacing and upgrading end-of-life infrastructure, and (iii) safeguarding information based on business value and risk. • Modern Operations (US$16 million or 19 percent) which will be used to enhance systems and enable operational staff to deliver better and faster results. These enhancements will enable simpler processing of projects, ensure robust compliance, strengthen data analytics and collaboration, strengthen mobile access to key operations solutions, and deliver standard reports and dashboards. • Finance, Accounting and Budget Systems (US$15 million or 18 percent) which will allow the Bank to meet compliance with current market practices and expanding regulatory requirements (IBRD), and compliance with the Financial Accounting Standards Board’s (FASB’s) directive for implementation of the new accounting standards for lease. In addition, systems enhancements will also automate corporate re-organizations which are conducted at least twice annually and involve many manual interventions. • Information, Knowledge and Learning (US$9 million or 11 percent) which will simplify and centralize our knowledge repositories, provide easier contextual access to information, leverage information, learning, and data in client solutions, and promote collaboration and knowledge sharing. • Digital Workspace (US$9 million or 10 percent) which will provide safe and secure end points, enabling easy and appropriate access and functionality to Bank IT systems anytime and anywhere, and across all devices. • Risk Management (US$5 million or 6 percent) which will upgrade systems capabilities to handle valuation of capital market issuances and IBRD liquidity management. 49 • Modern HR (US$5 million or 5 percent) which will be directed at consolidating HR IT platforms to take advantage of the most efficient HR technologies, as well as allow systems to provide agile solutions for contextual, data-driven decision making. 50 ANNEX I: PROGRAM COST SUMMARY 1. Table I.1 Program Cost Summary (PCS) shows the FY19 budget by: work program and unit, Bank Budget, and external funds. Table I.2 further classifies external funds into coupled reimbursable revenues (refer to definition below) and BETFs. All budget figures are reported in nominal terms. 2. The PCS reflects framework adjustments since FY15 and takes another step towards a unified approach to planning for revenues and expenditures. As was done since FY16 this budget is constructed using holistic revenue and expense budgeting with respect to reimbursable revenues and IBRD/IDA funding. Reimbursable revenues have been classified as either: • Coupled Reimbursable Revenues (CRR) which are earned by the Bank for services that are directly related to the underlying expense incurred by a unit; revenue is not earned unless there is a corresponding expense, similar to BETF; or • Decoupled Reimbursable Revenues (DRR), on the other hand, which are earned by the Bank for services that are not directly driven by the underlying expenses incurred by the managing unit. Examples of these revenues include: Trust Funds fee income, Health Services Department services, and revenues from sub-letting office space to third parties. 3. Since the FY16 Budget Framework, expenditure authorization previously given as reimbursables expense budget associated with DRR is now allocated to units or programs as regular Bank Budget (i.e., it is “budgetized” and is now no different from a unit’s other BB allocations). This facilitates better medium-term planning for the units, while allowing flexibility at the corporate level. All changes in BB allocation are now subject to the annual planning process as they are no longer linked to the revenue earned. 51 Table I.1: FY19 Funding for WB Work Program and Unit (US$ million) BB External Funds All Funds INDICATIVE BUDGET TRAJECTORIES FY18 FY19 FY18 FY19 FY18 FY19 1.0 Country Engagement 1.1 AFRVP 265.7 286.0 223.6 241.5 489.2 527.5 1.2 EAPVP 105.5 109.3 126.6 137.3 232.0 246.6 1.3 ECAVP 85.6 87.1 102.0 107.0 187.7 194.1 1.4 LCRVP 95.9 97.0 54.6 58.8 150.5 155.8 1.5 MNAVP 59.6 60.6 106.4 128.4 166.0 189.0 1.6 SARVP 120.0 125.3 114.9 123.7 234.9 249.0 1.7 Other Operational Units' Allocations 1 - 15.8 - - - 15.8 Sub-Total 732.3 781.2 728.1 796.8 1,460.4 1,578.0 2.0 Global Engagement 2.1 GP/GT 87.7 89.6 196.9 220.7 284.7 310.3 Sub-Total 87.7 89.6 196.9 220.7 284.7 310.3 A TOTAL CLIENT ENGAGEMENT 820.0 870.8 925.0 1,017.5 1,745.0 1,888.3 3.0 Region PPM 3.1 AFRVP 119.4 122.9 3.4 3.7 122.8 126.6 3.2 EAPVP 61.1 61.3 5.2 3.7 66.3 65.0 3.3 ECAVP 54.1 55.1 1.3 1.0 55.4 56.1 3.4 LCRVP 55.7 56.6 0.9 1.0 56.6 57.6 3.5 MNAVP 35.8 36.2 1.4 1.5 37.1 37.7 3.6 SARVP 52.2 54.9 2.2 2.3 54.4 57.2 Sub-Total 378.3 387.0 14.3 13.2 392.6 400.2 4.0 GP/GT PPM 4.1 Equitable Growth, Finance and Institutions 76.9 79.8 12.2 12.6 89.1 92.4 4.2 Human Development 37.3 40.4 5.4 5.7 42.7 46.1 4.3 Sustainable Development 105.9 105.4 57.8 62.1 163.7 167.5 4.4 Other Operational Support2 62.2 64.4 - - 62.2 64.4 4.5 Global Themes 12.9 17.9 0.4 1.2 13.3 19.1 Sub-Total 295.3 307.9 75.8 81.6 371.1 389.5 B TOTAL PROGRAM & PRACTICE MGMT. 673.6 694.9 90.1 94.8 763.7 789.8 C TOTAL OPERATIONAL UNITS 1,493.6 1,565.7 1,015.1 1,112.3 2,508.7 2,678.1 5.0 Operational Grant Making Facilities 5.1 CGIAR 30.0 30.0 - - 30.0 30.0 5.2 State and Peace Building Fund 5.0 5.0 - - 5.0 5.0 Sub-Total 35.0 35.0 - - 35.0 35.0 D TOTAL OPERATIONS 1,528.6 1,600.7 1,015.1 1,112.3 2,543.7 2,713.1 52 Table I.1: FY19 Funding for WB Work Program and Unit (US$ million) (Cont’d.) / 2 of 3 BB External Funds All Funds INDICATIVE BUDGET TRAJECTORIES FY18 FY19 FY18 FY19 FY18 FY19 6.0 Institutional Services 6.1 Budget, Performance & Strategy 74.0 76.1 - - 74.0 76.1 6.2 Financing for Development - 0.9 - - - 0.9 6.3 Chief Risk Office 17.2 16.2 0.9 0.9 18.0 17.1 6.4 Development Economics 52.4 52.0 54.7 54.2 107.1 106.2 6.5 Development Finance 27.8 23.6 37.3 41.0 65.1 64.6 6.6 External & Corporate Relations 50.0 53.5 3.1 3.7 53.0 57.2 6.7 Global Environment Fund - - 33.0 36.6 33.0 36.6 6.8 ICSID - - - - - - 6.9 Legal Services 38.8 39.2 2.4 1.7 41.2 40.9 6.10 Operational Policy & Country Services 51.4 57.9 0.5 0.5 51.9 58.4 6.11 Strategy, Performance, and Admin. 8.9 10.5 3.2 3.2 12.1 13.7 6.12 Treasury3 37.7 35.5 48.0 53.8 85.8 89.3 6.13 WBG Finance & Accounting 46.0 46.2 7.4 7.1 53.4 53.3 Sub-Total 404.1 411.6 190.6 202.8 594.6 614.4 7.0 Governance Services 7.1 Administrative Tribunal 1.9 1.9 0.5 0.5 2.4 2.4 7.2 EDs 87.7 87.4 - - 87.7 87.4 7.3 Board of Governors 7.3 6.2 - - 7.3 6.2 7.4 DC Secretariat 1.7 1.8 - - 1.7 1.8 7.5 Conflict Resolution System 5.0 4.5 1.5 1.5 6.4 6.0 7.6 Corporate Secretariat 17.1 15.8 1.2 1.4 18.4 17.2 7.7 Independent Evaluation Group 29.2 29.7 9.0 8.9 38.2 38.6 7.8 Integrity Vice Presidency 21.0 20.9 0.4 0.4 21.4 21.3 7.9 Internal Audit 8.6 8.6 2.7 2.8 11.3 11.4 7.10 Inspection Panel 4.0 4.1 - - 4.0 4.1 7.11 Office of Ethics and Business Conduct 7.2 6.8 2.1 2.1 9.3 8.9 7.12 Office of the President 7.4 7.2 - - 7.4 7.2 7.13 Office of Suspension & Debarment 1.8 1.8 - - 1.8 1.8 7.14 Office of the CEO 4.3 4.1 - - 4.3 4.1 7.15 Office of the MD and CAO 2.7 2.8 - - 2.7 2.8 7.16 Office of the MD and CFO 3.2 3.3 - - 3.2 3.3 7.17 Office of the SVPMM4 6.3 6.4 - 0.0 6.3 6.4 7.18 Sanctions Board 1.9 1.9 - - 1.9 1.9 7.19 Strategic initiatives unit 1.0 1.0 - - 1.0 1.0 Sub-Total 219.1 216.1 17.4 17.5 236.5 233.7 8.0 Administrative Services 8.1 General Services and Facilities 152.7 151.7 40.3 40.2 193.0 191.9 8.2 Human Resources 68.4 63.4 15.9 14.7 84.4 78.1 8.3 Information & Technology Solutions 241.4 241.3 51.8 50.9 293.2 292.2 Sub-Total 462.5 456.4 108.1 105.8 570.6 562.2 53 Table I.1: FY19 Funding for WB Work Program and Unit (US$ million) (Cont’d) / 3 of 3 BB External Funds All Funds INDICATIVE BUDGET TRAJECTORIES FY18 FY19 FY18 FY19 FY18 FY19 E TOTAL INSTITUTIONAL, GOVERNANCE & ADMIN. 1,085.7 1,084.2 316.0 326.1 1,401.7 1,410.3 F TOTAL: ALL UNITS 2,614.3 2,684.9 1,331.2 1,438.4 3,945.5 4,123.4 9.0 Centrally Managed Accounts & Programs 9.1 Budget recovery5 (936.9) (999.5) - - (936.9) (999.5) 9.2 Corporate Contingency 10.0 10.0 - - 10.0 10.0 9.3 Depreciation 102.4 114.4 - - 102.4 114.4 9.4 Institutional Programs 83.8 83.7 0.4 0.5 84.2 84.2 9.5 Staff Benefits & Retirement 840.8 894.0 - - 840.8 894.0 Total Centrally-Managed Accounts & Programs 100.1 102.6 0.4 0.5 100.5 103.1 G TOTAL ALL FUNDS EXPENDITURE ENVELOPE 2,714.4 2,787.6 1,331.6 1,438.9 4,046.0 4,226.5 H o/w Funded by External Funds DRR (164.4) (176.6) - - (164.4) (176.6) I o/w Funded by External Funds CRR - - (356.4) (357.3) (356.4) (357.3) J o/w Funded by External Funds BETF - - (975.2) (1,081.6) (975.2) (1,081.6) K o/w Admin Budget Funded by IBRD/IDA 2,550.0 2,611.0 - - 2,550.0 2,611.0 1 CE funded to GPs for FCV enhanced supervision pilot, and additional funding for GBV Action Plan and the new ESF implementation. The latter is complemented by US$6 million additional funding to OPCS in FY19 to support the new ESF roll-out. 2 Include Extended Assignment Benefits (EAB) for Operational staff and funding to support Agile Bank initiative, and aspects of the 3 FY18 BB restated to reflect the new arrangements for RAMP and other asset management services. 4 Office of the SVPMM includes New York and Geneva Offices. 5 Includes staff benefits recoveries from internal transfer pricing, rebates, TF recoveries, and Corporate Services. 54 Table I.2: Overview of External Funds Projected Revenues FY19 by Unit (US$ million) Coupled Bank Executed Trust Reimbursable Funds External Funds Funds (BETF) (CRR) FY18 FY18 FY18 WB Budget FY19 WB Budget FY19 WB Budget FY19 1.0 Country Engagement 1.1 AFRVP 22.2 18.1 201.4 223.4 223.6 241.5 1.2 EAPVP 6.7 4.4 119.9 133.0 126.6 137.3 1.3 ECAVP 32.6 30.0 69.5 77.1 102.0 107.0 1.4 LCRVP 9.4 8.7 45.2 50.1 54.6 58.8 1.5 MNAVP 53.0 69.2 53.4 59.2 106.4 128.4 1.6 SARVP 7.3 4.4 107.6 119.3 114.9 123.7 Sub-Total 131.1 134.7 597.0 662.0 728.1 796.8 2.0 Global Engagement 2.1 GP/GT 10.1 13.5 186.8 207.2 196.9 220.7 Sub-Total 10.1 13.5 186.8 207.2 196.9 220.7 A TOTAL CLIENT ENGAGEMENT 141.2 148.2 783.8 869.2 925.0 1,017.5 3.0 Region PPM 3.1 AFRVP 1.5 1.6 1.9 2.1 3.4 3.7 3.2 EAPVP 3.6 2.0 1.6 1.8 5.2 3.7 3.3 ECAVP 1.3 1.0 0.0 0.0 1.3 1.0 3.4 LCRVP 0.2 0.2 0.7 0.8 0.9 1.0 3.5 MNAVP 0.5 0.6 0.9 1.0 1.4 1.5 3.6 SARVP 0.7 0.6 1.5 1.7 2.2 2.3 Sub-Total 7.6 5.9 6.6 7.4 14.3 13.2 4.0 GP/GT PPM 4.1 Equitable Growth, Finance and Institutions 2.8 2.2 9.4 10.4 12.2 12.6 4.2 Human Development 0.9 0.8 4.5 5.0 5.4 5.7 4.3 Sustainable Development 5.3 3.9 52.5 58.2 57.8 62.1 4.4 Global Themes 0.1 0.8 0.3 0.4 0.4 1.2 Sub-Total 9.1 7.6 66.7 74.0 75.8 81.6 B TOTAL PROGRAM & PRACTICE MGMT. 16.8 13.5 73.3 81.3 90.1 94.8 C TOTAL OPERATIONS 158.0 161.7 857.1 950.6 1,015.1 1,112.3 5.0 Institutional Services 5.1 Chief Risk Office 0.9 0.9 - - 0.9 0.9 5.2 Development Economics 7.1 1.4 47.6 52.8 54.7 54.2 5.3 Development Finance 6.1 6.0 31.2 35.0 37.3 41.0 5.4 External & Corporate Relations 0.7 1.1 2.3 2.6 3.1 3.7 5.5 Global Environment Fund - - 33.0 36.6 33.0 36.6 5.6 Legal Services 1.8 1.7 0.6 - 2.4 1.7 5.7 Operational Policy & Country Services - - 0.5 0.5 0.5 0.5 5.8 Strategy, Performance, and Admin. 3.2 3.2 - - 3.2 3.2 5.9 Treasury 47.4 52.3 0.7 1.5 48.0 53.8 5.10 WBG Finance & Accounting 7.4 7.1 - - 7.4 7.1 Sub-Total 74.7 73.8 115.9 129.0 190.6 202.8 6.0 Governance Services 6.1 Administrative Tribunal 0.5 0.5 - - 0.5 0.5 6.2 Conflict Resolution System 1.5 1.5 - - 1.5 1.5 6.3 Corporate Secretariat - - 1.2 1.4 1.2 1.4 6.4 Independent Evaluation Group 8.3 8.5 0.7 0.4 9.0 8.9 6.5 Integrity Vice Presidency 0.4 0.4 - - 0.4 0.4 6.6 Internal Audit 2.7 2.8 - - 2.7 2.8 6.7 Office of Ethics and Business Conduct 2.1 2.1 - - 2.1 2.1 Sub-Total 15.5 15.8 1.9 1.8 17.4 17.5 7.0 Administrative Services 7.1 General Services and Facilities 40.3 40.2 - - 40.3 40.2 7.2 Human Resources 15.7 14.4 0.2 0.3 15.9 14.7 7.3 Information & Technology Solutions 51.8 50.9 - - 51.8 50.9 Sub-Total 107.8 105.5 0.2 0.3 108.1 105.8 D TOTAL INSTITUTIONAL, GOVERNANCE & ADMIN. 198.0 195.1 118.1 131.0 316.0 326.1 E TOTAL: ALL UNITS 356.0 356.8 975.2 1,081.6 1,331.2 1,438.4 8.0 Centrally Managed Accounts & Programs 8.1 Other Centrally Managed Accounts 0.4 0.5 - - 0.4 0.5 Total Centrally-Managed Accounts & Programs 0.4 0.5 - - 0.4 0.5 F TOTAL EXTERNAL FUNDS 356.4 357.3 975.2 1,081.6 1,331.6 1,438.9 55 ANNEX II. INDICATORS OF BUDGET SUSTAINABILITY, STRATEGIC ALIGNMENT, AND BUDGET EFFICIENCY Focus Indicator Definition Trend IBRD Anchor Administrative expenses as a share of operational revenues 1,600 189% 200% 176% (loan spread revenue) (percent) 1,400 160% 158% 155% Expenses/Revenues US$ million 147% 148% 160% 1,200 135% Budget Anchor % 1,000 107% 120% 800 88% 80% 600 80% 400 40% 200 0 0% FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 IBRD Loan Spread Revenue IBRD-funded Expenses IBRD Budget Anchor Budget Sustainability IDA Anchor Administrative expenses as a share of operational revenues 1,800 120% (IDA net revenues) (percent) 1,600 98% 96% 98% 102% 100% 97% 104% 93% 94% 100% Expenses/Revenue US$ million 90% 91% 1,400 Budget Anchor % 1,200 80% 1,000 60% 800 600 40% 400 20% 200 0 0% FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 IDA Revenue IDA-funded Expenses IDA Budget Anchor External Funds Ratio External funds as a share of total administrative spending 40% 38.2% 37.0% plans (percent) 35.4% 35.8% 35% 33.8% 32.8% 31.0% 30.5% 29.1% 30% 27.3% 25% 20% F Y 10 F Y 11 F Y 12 F Y 13 F Y 14 F Y 15 F Y 16 F Y 17 F Y 18 F Y 19 56 Focus Indicator Definition Trend Operational Share of Unit Total share of unit Budgets Administrative Budget (BB and All Funds) allocated to 68.0% 65.5% Operational Units excluding 66.0% 64.2% 64.0% 62.8% GMFs (percent) 62.0% 60.4% 59.1% 60.0% 57.9% 58.0% 56.8% 56.0% 54.9% 54.0% 52.0% FY16 FY17 FY18 FY19 BB All Funds Strategic Alignment Client Engagement Share of Operational Unit Share of Operational Budget (BB and All Funds) Unit Budgets Allocated to Country 72.0% 69.6% 70.5% 67.4% 67.7% Engagement (CE) and 67.0% Global Engagement (GE) 62.0% excluding GMFs (percent) 57.0% 54.9% 55.6% 53.7% 54.1% 52.0% FY16 FY17 FY18 FY19 BB All Funds FCV Share of Country CE (BB) budget share for Engagement Budgets FCV and FCV at Risk 19.8% 20.0% Countries over Total CE 19.4% Envelope (percent) 19.0% 18.3% 18.3% 18.0% 17.0% 16.0% 15.0% FY16 FY17 FY18 FY19 57 Focus Indicator Definition Trend Bank Budget to Total Administrative Lending Volume Ratio Budget (BB) per US$ 120 billion of loans approved 100 92 90 88 (US$ million) 88 83 85 79 80 67 62 59 59 53 54 53 57 60 46 39 40 20 - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD+IDA Administrative Budget Efficiency 120 115 120 111 108 101 100 100 91 85 87 80 81 80 78 77 74 74 74 72 75 73 80 68 80 70 68 65 59 58 59 61 54 52 52 60 60 44 47 43 35 40 40 27 20 20 - - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD IDA Bank Budget per Total Administrative Project Approved Budget (BB) per lending 16 Ratio project approved 14 12 11 11 10 10 10 (FY18 US$ million) 10 10 9 9 9 8 8 9 9 7 7 7 7 8 6 4 2 - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD+IDA 15 15 15 16 15 16 14 14 12 12 12 14 12 12 12 12 11 12 10 9 9 10 9 9 10 8 8 8 8 8 8 8 8 7 7 7 7 8 6 6 6 6 6 6 6 6 4 4 2 2 - - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IDA IBRD 58 Focus Indicator Definition Trend Bank Budget to Total Administrative Porfolio Volume Budget (BB) per US$ 30.0 Ratio billion portfolio under 25.0 22.4 21.6 21.0 supervision 20.0 17.4 20.1 20.2 16.6 (US$ million) 15.0 14.8 13.8 14.2 14.7 13.9 13.1 11.9 11.7 11.6 12.0 10.0 5.0 - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) Administrative Budget Efficiency (Cont'd.) IBRD+IDA 30.0 30.0 25.8 25.8 23.1 23.6 25.0 21.9 25.0 21.2 18.6 19.8 18.9 19.4 17.9 20.0 17.9 17.7 17.1 20.0 15.7 16.4 16.7 14.5 15.2 12.9 11.8 12.4 12.8 12.8 12.8 12.0 13.3 12.9 15.0 11.0 10.3 10.9 15.0 11.9 12.5 12.8 10.0 10.0 5.0 5.0 - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD IDA Bank Budget per Total Administrative Project under Budget (BB) per project 3.0 Supervision Ratio under supervision (FY18 2.5 US$ million) 2.0 1.6 1.7 1.7 1.6 1.6 1.6 1.6 1.7 1.7 1.6 1.6 1.7 1.6 1.6 1.5 1.5 1.4 1.5 1.0 0.5 - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD+IDA 3.0 3.0 2.5 2.1 2.1 2.2 2.2 2.2 2.2 2.2 2.0 2.0 2.0 2.1 2.0 2.0 2.0 1.9 1.9 1.8 1.4 1.5 1.5 1.4 1.5 1.4 2.0 1.3 1.4 1.3 1.4 1.3 1.5 1.5 1.2 1.3 1.3 1.3 1.2 1.3 1.0 1.0 0.5 - - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P) FY19(P) IBRD IDA 59