89786 2013 TRUST FUND ANNUAL REPORT THE WORLD BANK GROUP Concessional Finance and Global Partnerships Vice Presidency The World Bank Group 2013 Trust Fund Annual Report | A B | 2013 Trust Fund Annual Report The World Bank Group Message from the Vice President Joachim von Amsberg Vice President Concessional Finance and Global Partnerships The World Bank Group I am pleased to present the 2013 Trust Fund Annual Report of the World Bank Group. This report highlights the trends and performance of the port- folio of the World Bank Group’s trust funds and partnerships during the fiscal year ending June 30th, 2013 (FY13). The results described in this report contribute to the strength of the World Bank Group’s deployment of core resources, to knowledge generation for client countries, and to global con- sensus-building through effective partnerships. Financing outcomes were strong in FY13. While contributions to World Bank Group-administered trust funds have declined by about one tenth due to on- going budget constraints impacting development partners, disbursements and transfers have reached over $10 billion - their highest level in the past five years. Funds held in trust at the end of the year remained almost unchanged at $29 billion, of which FIFs continued to account for the largest share (63 percent), followed by IBRD/IDA trust funds (32 percent) and IFC trust funds (2 percent). During FY13, the Bank’s management deepened the reform of trust funds and partnerships, to ensure that these tools can be deployed to their full potential, to deliver innovative and transformative development solutions for our clients. We are now embarking on additional reforms that will strengthen the alignment of trust funds and partnership programs with the WBG’s core strategy and priorities. These reforms will promote greater selectivity; simplify fund architecture through a smaller number of standardized models; stream- line establishment and strengthen management of all programs; and fully integrate trust funds in the business planning and budgeting process. With these reforms, we hope that the World Bank Group’s efforts to end extreme poverty within a generation and promote shared prosperity will continue to benefit from the sustained contributions of our development partners. I hope this report contributes to your understanding of the trust fund and partnership portfolio of the World Bank Group. The World Bank Group 2013 Trust Fund Annual Report | i 2013 TRUST FUND ANNUAL REPORT Fiscal Year Ended June 30, 2013 This annual report was prepared by Valentina Toma (team leader), Amreeta Regmi, David Gray, Tingting Guo, Deborah Schermerhorn, Carina Pernia, Tatiana Nikolskaya, Luzviminda Tatlonghari, Natalia Antsilevich, Fernando J. Machado, Galina Menchikova, Aleksandre Revia and Milagros Reyes. Acknowledgments Buenaflor Cabanela provided data support. The report benefited from guidance and inputs from Jaehyang So, Sandra Bloemenkamp, David J. Kuijper, and Michael Koch. Contributions were provided by Roberto Tarallo, Louisa Huang, Nicolette Bowyer, Bruce J. Courtney, Enver Kamal, Barbry Keller, Nicholas Keyes, Rohit Khanna, Tatyana Klimova, Sahar Nasr, Maria Lourdes Abundo, Lilia Burunciuc, Bermet Sydygalieva, Lydia Kruse Tietz, Avjeet Singh, Isabel Hagbrink, Shakuntala Gunaratne, Ditte Fallesen, Colin Shepherd, and Xiaoyu Chang. Valuable comments were received from Enver Kamal, Navin Girishankar, Leena Chaukulkar, Olufunke Olabisi Oyewole, Traci Phillips, Makoto Nakagawa, Susan McAdams, Priya Basu, Mei Leng Chang, Pamela O’Connell, Neeraj Prasad, Urkaly Isaev, Andrei Markov, Jane F. Kirby-Zaki, Helena Nkole, Holger Illi, Valery Ciancio, Jonathan Caldicott, Bowen Uhlenkamp, Francois Marius Lefebvre, Yolaine Joseph, Leonie Guder, and Angela Gentile. A special thank you to all development partners who have contributed to this report. Patricia Rogers provided editorial assistance. Photography: Picture 1. World Bank, Transitional Demobilization and Reintegration Program (TDRP), Ex-combatant from Burundi Picture 2. World Bank, Geothermal Power Plant, Energy Sector Management Assistance Program (ESMAP) Picture 3. World Bank, Li Lou, Car traffic in Beijing, China Picture 4. World Bank, Graham Crouch, Afghanistan Reconstruction Trust Fund, Female Experimental High School in Herat, Afghanistan Picture 5. World Bank, Carbon Finance, Philippines North Wind Bangui Bay Project World Bank, Image Library, Japan Social Development Fund World Bank, Carbon Finance, Moldova Soil Conservation Picture 6. Nick Chudeau, Hand washing in school Picture 7. World Bank Image Library, IDA beneficiaries in Latin America CONCESSIONAL FINANCE AND GLOBAL PARTNERSHIPS VICE PRESIDENCY The World Bank Group | 1818 H Street, NW | Washington, DC 20433 | USA www.worldbank.org/cfp Questions and comments regarding this report may be e-mailed to donorqueries@worldbank.org. ii | 2013 Trust Fund Annual Report The World Bank Group Table of Contents Message from the Vice President i Table of Contents 1 Abbreviations and Acronyms 3 Development Results 4 Section 1. Trust Funds in Fiscal Year 2013 6 1.1 Introduction 7 Trust Funds and Development Assistance 7 Progress to Date and Implementation of the New WBG Strategy 7 The Complementary Role of Trust Funds 8 FY13 Highlights and Trends 9 1.2 Trust Fund Achievements 10 Assisting Fragile and Conflict-Affected States 11 Fostering Innovation in Development 15 Support to Global Public Goods 19 Engagement with Civil Society 23 1.3 Financial Trends of Trust Funds 25 Overview 25 IBRD/IDA Trust Funds 27 Financial Intermediary Funds 30 IFC Trust Funds 32 MIGA Trust Funds 34 1.4 Financial and Risk Management of Trust Funds, Controls, and Information Technology Systems 35 Financial Risk Management and Control Frameworks 35 Information Technology Systems 35 Section 2. Statistical Annex, Fiscal Year 2013 37 2.1. Statistics on the WBG-administered Trust Fund Portfolio 38 2.2 IBRD/IDA Trust Funds: Tables and Graphs 40 2.3 FIFs: Tables and Graphs 44 2.4 IFC Trust Funds: Tables and Graphs 45 Section 3: The Single Audit Report of the World Bank Group Modified Cash Basis Trust Funds 48 Trust Fund Glossary 72 BOXES Box 1: Types of WBG Trust Funds 9 The World Bank Group 2013 Trust Fund Annual Report | 1 FIGURES Figure 1: Multi-Bilateral ODA to Multilateral Institutions, 2007–2011($ billions) 7 Figure 2: Funds Held in Trust, FY09-FY13 ($ billions) 26 Figure 3: Cash Contributions to Trust Funds, FY09-FY13 ($ billions) 26 Figure 4: Disbursements and Cash Transfers from Trust Funds, FY09-FY13 ($ billions) 26 Figure 5: Cumulative Cash Contributions by Top Ten Development Funders, FY09-FY13($ billions) 27 Figure 6: IBRD/IDA Trust Funds: Annual Cash Contributions and Disbursements, FY09-FY13 ($ billions) 27 Figure 7: Cumulative Cash Contributions by Top Ten IBRD/IDA TF Development Funders, FY09-FY13 ($ billions) 28 Figure 8: Multi-donor and Single-Donor IBRD/IDA Trust Funds, FY09-FY13 (percent) 28 Figure 9: Disbursements from IBRD, IDA, and RETFs, FY09–FY13 ($ billions) 28 Figure 10: RETF Disbursements in Fragile and Conflict-Affected States, FY09-FY13 ($ billions) 29 Figure 11: Regional Shares of RETF Disbursements, FY13 29 Figure 12: Sectoral Allocation of RETF Disbursements, FY13 29 Figure 13: Share of BETF Disbursements by Main Activity, FY09-FY13 (percent) 30 Figure 14: FIF Funds Held in Trust, by Fund (percent) 30 Figure 15: FIF Cash Contributions, by Sectors/Themes ($ billions) 31 Figure 16: Cash Contributions, Commitments, and Cash Transfers from FIFs, FY09-FY13 ($ billions) 31 Figure 17: Top 10 Development Funders’ Cumulative Cash Contributions to FIFs, FY09-FY13 ($ billions) 32 Figure 18: IFC Trust Funds — Advisory Services, FY09-FY13 ($ millions) 33 Figure 19: Top 10 Development Funders’ Contributions to IFC Advisory Services Trust Funds, FY09-FY13 ($ millions) 33 Figure 20: Cash and Investments, Promissory Notes Receivables, and Contributions Receivables, as of end-FY13 ($ billions) 39 Figure 21: World Bank Administrative Expenditures, FY09-FY13 ($ billions) 40 Figure 22: Africa Region Annual Project Disbursements from IBRD, IDA, and RETFs, ($ billions) 40 Figure 23: East Asia and Pacific Region Annual Project Disbursements from IBRD, IDA, and RETFs, FY09-FY13 ($ billions) 40 Figure 24: Europe and Central Asia Region Annual Project Disbursements from IBRD, IDA, and RETFs, FY09-FY13 ($ billions) 40 Figure 25: Latin American and Caribbean Region Annual Project Disbursements from IBRD, IDA, and RETFs, FY09-FY13 ($ billions) 41 Figure 26: Middle East and North Africa Region Annual Project Disbursements from IBRD, IDA, and RETFs, FY09-FY13 ($ billions) 41 Figure 27: South Asia Region Annual Project Disbursements from IBRD, IDA, and RETFs, FY09-FY13 ($ billions) 41 Figure 28: Africa Region RETF Disbursements, by Sector, FY13 41 Figure 29: East Asia and Pacific Region RETF Disbursements, by Sector, FY13 42 Figure 30: Europe and Central Asia Region RETF Disbursements, by Sector, FY13 42 Figure 31: Latin American and the Caribbean Region RETF Disbursements, by Sector, FY13 42 Figure 32: Middle East and North Africa Region RETF Disbursements, by Sector, FY13 42 Figure 33: South Asia Region RETF Disbursements, by Sector, FY13 43 Figure 34: IBRD/IDA Trust Funds Contributions by Development Funder Type, FY13 43 Figure 35: The Asset Mix of the Trust Fund Investment Portfolio, end-FY13 43 Figure 36: Contributions to FIFs, by Development Funder Type, FY13 45 Figure 37: IFC Trust Funds Cash Contributions for Advisory Services by Development Funder Type, FY13 45 Figure 38: IFC Trust Funds Contributions for Advisory Services by Development Funder Type, FY13 45 Figure 39: IFC Trust Funds Cash Contributions Regional Distribution for Advisory Services 45 TABLES Table 1: IFC Advisory Services Project Expenditures and Share in IDA Countries 32 Table 2: Key Statistics by Trust Fund Type, FY09-FY13 ($ billions) 38 Table 3: RETF Disbursements by Country Eligibility, FY09-FY13 ($ millions) 39 Table 4: BETF *Disbursements by Country Eligibility, FY09-FY13 ($ millions) 39 Table 5: The World Bank’s FIF Trusteeships (as of end-FY13) ($ millions) 44 Table 6: Financial Intermediary Funds: Cash Contributions by Development Funder Type ($ millions) 45 Note: Dollar figures throughout this report are in U.S. dollars. Unless otherwise noted, the source for all tables and figures is the Concessional Finance and Global Partnerships Vice Presidency of the World Bank. Throughout this report the terms “World Bank” and “the Bank” refer to the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA). 2 | 2013 Trust Fund Annual Report The World Bank Group Abbreviations and Acronyms A2F Access to finance AMC Advance Market Commitments ARTF Afghanistan Reconstruction Trust Fund BETF Bank-executed trust fund BNPP Bank-Netherlands Water Partnership Program CDM Clean Development Mechanism DAC Development Assistance Committee of the OECD EFA-FTI Education for All–Fast Track Initiative ESMAP Energy Sector Management Assistance Program FIF Financial intermediary fund GAVI Global Alliance for Vaccines and Immunization GEF Global Environment Facility GFA GAVI Fund Affiliate GPEF Global Partnership for Education Fund ha hectare IBRD International Bank for Reconstruction and Development ICSID International Centre for Settlement of Investment Disputes IDA International Development Association IFC International Finance Corporation IFFIm International Finance Facility for Immunisation JSDF Japan Social Development Fund MIGA Multilateral Investment Guarantee Agency MSMEs Micro, small, and medium enterprises NGO Nongovernmental organization ODA Official development assistance OECD Organisation for Economic Co-operation and Development PHRD Policy and Human Resources Development PPP Public-private partnership RETF Recipient-executed trust fund SMEs Small and medium enterprises TA Technical assistance tCO2e Tonnes of carbon dioxide equivalent TF Trust fund UN United Nations WBG World Bank Group The World Bank Group 2013 Trust Fund Annual Report | 3 Development Results The World Bank Group continues to make major strides in how it monitors and reports on results. The proj- ects supporting the results list below, reported between 2009 and 2013, are financed from various sources, including trust funds, which both complement and are being supported by non-earmarked contributions from a large number of development funders and the World Bank Group’s lending operations. Learn more at http://www.worldbank.org/results/ 265,000 125,000 hectares villagers of degraded lands have been regenerated and in Kyrgyz Republic gained 430,000 hectares access to a functioning of primary forest have been conserved to primary health facility. protect biodiversity in 15 countries. /Kyrgyz Republic Village /Carbon Finance/ Investment Projects/ 15.6 million individuals gained access to rural sanitation in 12 countries. 6.9 million people /The Water and Sanitation Program (WSP)/ in Sub-Saharan Africa have improved access 182,500 people in Iraq gained access to improved irrigation and to clean lighting. water supply, and 32,000 people received jobs. /WBG Lighting Africa project/ / Bank-Netherlands Water Partnership Program (BNPP)/ 80 percent of children 60,000 farmers in Rwanda are now receiving basic active in the tea sector saw significant vaccination in increases in net income (10-50%). Bangladesh. /IFC Rwanda Agribusiness project/ /Bangladesh Health Sector Development Program / 4 | 2013 Trust Fund Annual Report The World Bank Group 20,784 farmers in Niger doubled their rice yields through recommended 212,602 children fertilizer application; in Zimbabwe were fully immunized 13.9 million people in just over a year. benefited under the social /Zimbabwe Health Results-Based Financing Project/ protection program. /Global Food Crisis Response Program / $9.8 billion in recoverable revenues (part 15,000 of which the housing units government was in Indonesia have been rebuilt or 1,000,000 people able to recover) rehabilitated for in Senegal gained access to were uncovered in 35,000 people potable water. Nigeria. affected by the /The Long-term Water Sector Project/ /The Extractive Industries Transparency Initiative (EITI)/ tsunami. /Multidonor Trust Funds for Aceh and Nias/North-Sumatra/ Over 920 SMEs 3.8 received IFC assistance to access finance, million resulting in a reported 44 percent increase individuals in Africa gained access to in sales and creation of 3,500 direct and affordable off-grid and low-cost lighting. 5,100 indirect jobs. /Energy Sector Management Assistance Program /IFC DRC SME Development Program/ (ESMAP)/ The World Bank Group 2013 Trust Fund Annual Report | 5 Section 1. Trust Funds in Fiscal Year 2013 265,000 villagers in Kyrgyz Republic gained access to a functioning primary health facility. of the trust fund portfolio has almost doubled, while /Kyrgyz Republic Village Investment Projects/ the WBG’s engagement in various types of programs has multiplied through diverse arrangements. These 125,000 hectares of degraded lands have been trends mirror the growing importance of partnerships regenerated and 430,000 hectares of primary and their financing instruments for multilateral orga- forest have been conserved to protect biodiversity nizations: from 2007 to 2011, the total volume of in 15 countries. official development assistance (ODA) grew from $11 billion to almost $20 billion (Figure 1). /Carbon Finance/ 60,000 farmers in Rwanda active in the tea sector For the WBG, FY13 represented a transition year got significant increases in net income (10-50%). as the organization focused on the need to improve the alignment of its current and future global en- /IFC Rwanda Agribusiness project/ gagements, which include the trust fund and part- nership program portfolio, to its emerging strategic objectives and modalities. During the year, two pa- pers prepared for a Board discussion summarized 1.1 Introduction progress in past trust fund reform implementation, spelled out the future direction of reform, and Trust Funds and Development proposed a framework for managing partnership Assistance programs, including those supported by financial intermediary funds. Trust funds and the partnerships they support have become important tools to help the World Bank Progress to Date and Group (WBG) adapt to the fast-changing landscape Implementation of the of development finance. Partnership programs are in- New WBG Strategy creasingly used to “crowd-in” nongovernmental and private sector partners and link their knowledge and During FY13 the Bank’s management deepened financing to the WBG’s capacity to deliver solutions the reform of trust funds and partnerships, to en- in client countries. In the last five years, the volume sure that these tools can be deployed to their full Figure 1: Multi-Bilateral ODA to Multilateral Institutions, 2007–20111 ($ billions) 20 18 16 14 Regional Development Banks 12 10 Other UN 8 UN Funds and Programmes 6 4 World Bank Group 2 Other multilaterals (incl. EU) 0 2007 2008 2009 2010 2011 Source: OECD-DAC. 1. The share of multilateral ODA—core contributions from DAC members to multilateral organizations such as IDA—has remained relatively stable at about 30 percent. The World Bank Group 2013 Trust Fund Annual Report | 7 potential in delivering innovative and transformative of Trust Funds development solutions to our clients. Updates on the reform and a description of the future alignment From the perspective of bilateral development part- and selectivity agenda have been summarized ners and other contributors, trust funds provide tar- in two Board Papers, completed in June, “Trust geted financial support in thematic areas where there Fund Reforms: Progress to Date and Future is significant overlap between the Bank’s priorities Directions”, and the new “Management Framework and their own development objectives, or in countries for World Bank Partnership Programs and Financial where they have a limited presence or no delivery Intermediary Funds”. capacity of their own. Development partners have used IBRD- or IDA-managed trust funds to enhance Earlier reforms of the World Bank’s trust fund busi- their cost-efficiency and the visibility of their financial ness have led to its integration into regular World contributions. Cofinancing and parallel financing of Bank business processes: IT, training, investment trust fund activities under a Bank-supported project lending, and human resources management. This have enabled partners to reduce fragmentation of has created a robust basis for the current effort to aid while scaling up their financial support in part- fully incorporate the management of the trust fund nership with the Bank. Multi-donor trust funds are and partnership program into the WBG’s strategy the primary source of finance for Bank-managed and budget planning processes. The resulting corpo- programs in fragile and conflict-affected situations rate oversight would reduce the risk of fragmentation (FCS). Contributors also value the Bank’s sector ex- and maximize opportunities to leverage bilateral ODA pertise in a given geographic region—for example, resources and IDA, making every dollar more effec- when financing an economic study in a particular tive. Given the core role of trust funds as vehicles to country. Moreover, development partners recognize organize this leverage, the current program of reform and appreciate the Bank’s fiduciary systems for trust will help the WBG respond in a focused and agile funds: its financial controls, IT systems, management manner to the global community’s demand for global oversight, investment management, monitoring of public goods and to client countries’ demand for the financial risks, and financial reporting. delivery of services for development. From the recipients’ perspective, trust funds bring The next phase in the evolution of the management down transaction costs and reduce the proliferation of trust funds will center on the need for strategic of bilateral programs. Trust funds are an important alignment with the twin goals of the World Bank vehicle for supporting client country priorities. Group’s strategy: ending extreme poverty by 2030 and boosting shared prosperity. Management will For the WBG, trust funds provide flexible arrange- draw on several tools to align trust funds with the ments that enable its engagement in a wide range WBG’s core strategy and goals, while promoting of partnerships and help it leverage development greater selectivity. First, trust funds will be subject to assistance at the country, regional, and global lev- the dynamic selectivity framework that captures their els. The role of trust funds in the WBG varies ac- innovative and transformative potential. Second, cording to the type of fund. The portfolio consists of according to the principles of the new Management IBRD/IDA trust funds, financial intermediary funds Framework for World Bank Partnership Programs (FIFs), and IFC trust funds (see Box 1). and Financial Intermediary Funds, the WB will follow a lifecycle approach to the management of IBRD/IDA trust funds allow the World Bank to expand all trust-funded programs, including robust results and complement its activities in several contexts: frameworks, stronger risk management, and clear entry and exit decision processes. Third, a new (1) When the Bank’s resources are limited by IDA’s strategy-driven budget process will provide op- assistance envelope (as in FCS), or by the avail- portunities for integrated revenue and expenditure ability of IBRD’s lending resources; planning, strengthening the alignment of trust funds (2) When the Bank’s lending instruments are entire- and partnership programs. Finally, cost recovery ly unavailable, for example because the country measures and fee simplification will accompany the is in arrears or is not a member of the Bank; integration of trust funds in the business planning (3) For non-state recipients, such as civil society or- and budget process. ganizations, which cannot receive direct funding through regular Bank instruments (IBRD loans The Complementary Role and IDA credits and grants); 8 | 2013 Trust Fund Annual Report The World Bank Group Box 1: Types of WBG Trust Funds 1. IBRD/IDA trust funds* – finance activities that IBRD/IDA implements or supervises. Disbursements are made through BETFs and RETFs: • Bank-executed trust funds (BETFs) – the Bank controls BETF disbursements and uses them to support its work program. • Recipient-executed trust funds (RETFs) – funds that the Bank passes to a third party and for which the Bank plays an operational role—i.e., the Bank normally appraises and supervises activities financed by these funds. 2. Financial intermediary funds (FIFs) - multilateral financial mechanisms that support global development initiatives or partnerships. In FIFs, the World Bank acts as a financial trustee and provides financial intermediary services such as receiving, holding, and transferring funds to multiple implementing entities. The Bank does not always play a role in implementing FIF- supported program partnerships; when it does, the Bank may be one of multiple agencies and implementers. 3. IFC trust funds – funds, managed by IFC that support IFC advisory services and investment initiatives. * Includes MIGA trust funds, which provide political risk insurance to private sector investors and lenders. (4) To scale up work on global public goods such as mobilization tool for IFC’s Investment Initiatives to knowledge or climate change; address global challenges. (5) To provide immediate assistance in response to natural disasters or other emergencies; and FY13 Highlights and Trends (6) To pilot innovations that are later mainstreamed into the Bank’s operations. • At $28.9 billion, the amount of WBG funds held in trust on June 30, 2013 has decreased slightly With FIFs, the Bank supports the international com- from the level recorded a year earlier. FIFs con- munity in providing targeted and coordinated re- tinued to account for the largest share (63%), sponses to global priorities in areas such as climate followed by IBRD/IDA trust funds (32%) and IFC change, communicable diseases, and food security. trust funds (2%). Global initiatives involving multiple implementing en- • Funds held in trust for IBRD/IDA trust funds ex- tities and stakeholders benefit from the Bank’s ad- perienced a 5% decrease from FY12, reversing ministration of FIFs, which provide a cost-effective the upwards trend of the past few years. financial platform that obviates the need to create • Cash contributions to IBRD/IDA trust funds separate financial structures for such initiatives. dropped to $3.5 billion, the lowest mark in the IFC Trust Funds2 are the main source of financ- past five years, decreasing by 21 percent from ing IFC’s advisory services. Trust funds help IFC $4.4 billion in FY12. improve the investment climate; foster vital pub- • IBRD/IDA trust fund disbursements remained at lic-private partnerships; raise environmental, social around $4 billion, with a marginal drop of 5% and corporate governance standards; build inclu- from FY12 but reflecting an overall increase of sive supply chains; and strengthen local exper- 12% since FY09. tise. Trust Funds are increasingly being used as a • Funds held in trust in FIFs3 amounted to $18.6 2. This report does not include trust funds that support IFC’s Special Initiatives and Investment Programs, which are managed separately by IFC and do not form part of the investment portfolio maintained by IBRD for trust funds. 3. Includes AMC, which is a FIF but not a trust fund and is included in the IBRD’s financial statements. 4. Includes AMC, which is a FIF but not a trust fund and is included in the IBRD’s financial statements. 5. This excludes transfers to IBRD as implementing agency. The World Bank Group 2013 Trust Fund Annual Report | 9 billion. Approximately 80 percent of this 1.2 Trust Fund amount is held for the Climate Investment Fund (CIF), the Global Fund, and the GEF. Achievements • Cash contributions to FIFs4, at $7.2 billion in FY13, remained relatively unchanged from the Trust funds are flexible vehicles that allow the previous year and 50% higher than in FY09 World Bank to contribute to cross-cutting ac- with more than half of this amount being allo- tivities such as large reconstruction and recov- cated to the health sector. ery programs in FCS, improve its disaster risk • Cash transfers from FIFs5 to third parties have management, and catalyze innovation in devel- almost doubled from FY09, reaching $5.8 bil- opment. Trust funds provide a valuable way to lion at end-FY13. finance the provision of global public goods and • From FY09 through FY13, the United expand the WBG’s engagement with nonmem- Kingdom was the largest development funder ber countries or entities, including civil society. to the IBRD/IDA trust funds, followed by the This section highlights selected achievements of United States, the European Union, Australia, trust funds in some of these cross-cutting areas.6 and the Netherlands, collectively accounting for almost half of the total cash contributions. The showcased stories represent examples of The United States remains the largest devel- the results achieved by trust funds managed by opment funder to FIFs. various Regional and Network Vice-Presidencies • As part of ongoing consolidation efforts, the (VPUs) of the World Bank Group during FY13, number of IBRD/IDA trust funds continued and, in some cases - as of end-FY13. These ex- to decline, from a peak of 780 at end-FY10 amples may not necessarily represent all VPUs to the five-year low of 685 at end-FY13. In that are working with trust funds. Rather, these addition, the share of multi-donor trust funds stories are meant to illustrate how trust funds are increased further to 52 percent, the highest in filling important gaps in these areas and helping five years. make a difference on the ground. • In FY13, 90 percent of IFC Advisory Services expenditures were made via trust funds. These expenditures have grown by 47 percent in the past five years and by 18 percent in FY13, to $232 million, with 65 percent concentrated in IDA countries and 18 percent in Fragile and Conflict-affected States. • Over the past five years, in aggregate, the United Kingdom has been the largest con- tributor to IFC Advisory Services trust funds (15% of total signed contributions), followed by Switzerland, the Netherlands, Canada and Austria. • In FY13, five development funders made record high multiyear commitments to IFC Advisory Services trust funds: Australia, Canada, Switzerland, Luxembourg, and New Zealand. 6. The results stories from FIFs provided across the report represent only stories from those FIF activities for which the Bank served as implementing agency. 10 | 2013 Trust Fund Annual Report The World Bank Group Assisting Fragile and Conflict-Affected States Trust funds play a key role in providing financing and targeted support to FCS, and are essential for the success of critical recovery activities and a balanced preparation of future long-term development support programs. The Second Emergency Demobilization and • 2,424 vulnerable ex-combatants received ad- Reintegration Project in Rwanda. This project, ditional vocational training and other education funded by the Government, IDA and two MDTFs support; provides demobilization and reintegration support • 38 houses were built for severely disabled to armed groups of Rwandan origin based in the ex-combatants, and 385 houses for less severe- Democratic Republic of the Congo (DRC). Results ly disabled ex-combatants were subsidized by in FY13 include the following: the Government; and • 222 children were reunited with their families. • 3,932 ex-combatants were repatriated from the DRC to Rwanda, demobilized, and returned to their communities of choice; • 10,552 dependents of ex-combatants received Thanks to reintegration support, resettlement kits; • 2,604 disabled ex-combatants received medical I was able to open this little shop. support; I sell rice, salt, beans, sugar, and • 976 ex-combatants received psychiatric assistance; lots of other daily necessities. • 7,769 ex-combatants received economic re- —Anatolie, ex-combatant, Rwanda integration support such as small grants and vocational training; 10,552 dependents of ex-combatants received resettlement kits, in Rwanda The World Bank Group 2013 Trust Fund Annual Report | 11 Responding quickly in Lebanon to rebuild dam- • 4,684 streetlight poles erected; aged infrastructure and alleviate the impact of • 10.7 km of storm drains repaired; recent hostilities in Syria. Established in 2006 • 48.7 km of retaining walls built; and originally funded from IBRD’s surplus ($70 • 15 public facilities built in 15 municipalities; million), the Trust Fund for Lebanon responded to • Municipal finance studies conducted; the Government’ s request to rebuild the country’s • Municipal Observatory built and equipped; and infrastructure through the Lebanon: First Municipal • The Government’s Municipal Finance Strategic Infrastructure Project (FMIP). In FY13, an addition- Framework prepared on the basis of FMIP’s al grant of $30 million to FMIP enabled the World studies. Bank to respond quickly to the Government’s re- newed request to help rebuild the damage inflicted Afghanistan Reconstruction Trust Fund. The on the country’s infrastructure by recent hostilities in Afghanistan Reconstruction Trust Fund (ARTF) was Syria, and help alleviate the impact of the conflict on established in 2002 to provide a coordinated aid Lebanese municipalities. mechanism for Afghanistan. In 2013, the ARTF re- mains the largest single source of on-budget financ- Overall, the project contributed to short- and medi- ing for Afghanistan’s development and the vehicle of um-term reconstruction and economic recovery and choice for pooled funding, with low transaction costs, directly benefitted an estimated 375,427 people with excellent transparency, and high accountability, pro- restored basic services and economic development viding a well-functioning arena for policy debate and opportunities. FMIP technical assistance reduced mu- consensus building.7 The ARTF delivers important nicipal dependence on transfers, further strengthening results in key sectors, such as education, health, the recovery efforts. FMIP benefitted 178 municipal- agriculture, rural development, infrastructure, and ities (96 percent of the target) through 440 subproj- governance. It is the World Bank’s largest multi-do- ects; in record time it restored the basic infrastructure nor trust fund; as of June 30, 2013, the ARTF had in transport, access to water, and street lighting to received contribution payments of $6.4 billion from 33 pre-conflict, or even better, conditions. As of end- development funders. FY13, the aggregate results from FMIP are as follows: As the development agenda shifts from the imme- • 17 municipal buildings reconstructed; diate post-conflict assistance towards long-term • 175 km of roads rehabilitated and repaired; development assistance, focusing on improved and In Afghanistan, 7.7 million children (38% girls) gained access to education 7. External Evaluation 2012, “ARTF at a Cross-Roads.” 12 | 2013 Trust Fund Annual Report The World Bank Group The ARTF will continue to be a key part of our strategy for engagement in Afghanistan for the foreseeable future. In particular, its ability to partner with the Afghan state and pool donor efforts and interests makes it an invaluable part of the development architecture. —Dr. Paul Healey, Head, WB Unit, International Financial Institutions Department, UK DFID. sustainable results, the ARTF has evolved to respond transparency in the mining sector, facilitated prog- to Afghanistan’s changing needs by redistributing the ress on good practice on internal and external weight between its 2 mechanisms - The Recurrent audits, introduced a higher number of procure- Cost Window (RCW) and the Investment Window (IW), ment-certified ministries, strengthened budget which together disbursed $5.2 billion since 2002, and transparency, improved the investment climate, introducing the Incentive Program - a policy reform and helped to harmonize the civil service pay scale program focusing on fiscal sustainability. As the RCW and development partner-funded positions. has decreased as an overall share of the ARTF, the IW has grown to a total of $2.3 billion disbursed since 2002 to support 23 investment projects in five areas: Skills training for young women in Liberia. Agriculture, Rural Development, Human Development, Launched in late 2009, the Economic Empowerment Infrastructure, and Governance. As of end-FY13, the of Adolescent Girls and Young Women (EPAG) key results from the ARTF portfolio include:8 project in Liberia was the first pilot to launch un- der the Bank’s Adolescent Girls Initiative. Funded • 7.7 million children (38% girls) gained access to by $5.2 million from three multi-donor gender trust education; funds—the Adolescent Girls Initiative, EPAG, and • 3.2 million people can access electricity; GENFUND—EPAG generated the following results • 7 million people received access to water and as of end-FY13 in its first two rounds: sanitation services; • Nearly 2,500 girls and young women had been • 34 clinic and pharmacy buildings opened; trained in business skills, job skills, and life skills; and • 12,813 km of rural roads built or repaired, provid- • Compared with a control group of young wom- ing 5.7 million villagers access to all-season roads; en who had not yet participated in the program, • 762 traditional irrigation schemes were rehabilitat- trainees’ employment rate increased by 47 per- ed, serving over 687,000 ha of rehabilitated land; cent, their average weekly income by 80 percent, • 138,000 ha of additional land are now irrigated, and their average savings by $44. substantially increasing crop yields; • 1,204 ha of new orchards have been planted In FY13, the World Bank’s Umbrella Facility for and 1,000 ha rehabilitated; and Gender Equality provided $2 million of develop- • 8,000 schemes for “kitchen gardening” have ment partner financing to Round 3 of EPAG, which proved highly successful, improving the food will train an additional 1,000 young women aged security and income generation of the rural 16-24 with literacy, life skills, and job and business population; • Prenatal care coverage increased from 16% in 2003 to 49%, and institutional deliveries from This is our chance to be independent. This 14% to 39%; • Maternal mortality rate dropped from 1,600 per is my chance to learn new things, and be 100,000 births in 2000 to 327; and a leader in my community—and one day, • The under-5 mortality rate dropped from 257 per 1000 live births to 97. teach other girls. We can’t allow our fear to overcome us. – Through its Incentive Program, ARTF has worked toward policy reform and helped im- —Princess Sheriff, EPAG program participant from prove Afghanistan’s public financial management New Kru Town, Liberia systems and laws. In particular, it has promoted 8. All data in this section are based on ARTF project results, updated as of June 30, 2013. The World Bank Group 2013 Trust Fund Annual Report | 13 skills and provide placement assistance. EPAG CASA projects developed the legal foundation for Round 3 is also expanding to more rural areas in commercial activities in FCS in Sub-Saharan Africa. Grand Bassa, and is targeting younger adolescent These projects : girls and those with lower literacy levels. EPAG is considered to be one the most successful and • Channeled $143 million to fund micro, small, effective youth economic empowerment programs and medium enterprises (MSMEs); in the country, and is providing lessons to other • Introduced 50 investment climate reforms, 20 of youth skills training programs globally. them in FY13 alone; • Developed capacity in 330 MSMEs and trained Helping to improve the investment climate in 7,700 individuals; FCS. Through the WBG’s $155 million Facility for • Helped Burundi become a top reformer as as- Investment Climate Advisory Services (FIAS) and sessed in the WBG’s Doing Business Report; IFC’s $40 million Conflict-Affected States in Africa • Assisted the Government of South Sudan with (CASA) initiative, IFC has helped promote private drafting, enacting, and publishing more than 15 sector growth and job creation by alleviating barri- laws, and helped establish business registries in ers to business. the cities of Juba, Malakal, and Wau, with 28,000 businesses registered to date; In FY13, FIAS supported projects in 17 fragile- and • Strengthened the capacity of local small and conflict-affected states9, including implementation medium-sized enterprises (SMEs) in Sierra of 24 investment climate reforms in 12 countries. Leone and increased their access to finance by Highlights of their achievements: creating a functioning leasing market; • Worked with the Government of Liberia to facili- • The World Bank Group’s Doing Business 2014 tate the development of a commercial code and report ranks Burundi among the top 10 most court; and Partnered with the Financial Times to improved economies for the third year in a row; deliver a “Business after Conflict” conference in • In Togo, a one-stop shop to register business Nairobi that gathered more than 150 business has reduced the number of days to register a leaders, government officials, and civil society business from 84 in 2012 to 19; delegates. • In Togo, the cost of business registration fell from 177 percent to 119 percent of income per capita between 2012 and 2013; • Côte d’Ivoire took major strides in implementing legislative changes to lower business entry and property transfer costs and increase women’s equality in property rights; and • In Haiti, FIAS-supported industry-specific in- vestment climate activities helped leverage $59 million in garment sector investment. It is urgent and critical for fragile and conflict states to transform their business environments by creating an attractive environment for investments and promoting key areas of growth and job creation. We are pleased to see the leadership of FIAS in this area—FIAS is supporting the implementation of strategic investment climate reforms that are helping to establish stability, grow the private sector, and lift people out of poverty in these countries. —Cory O’Hara, Division Chief, Office of Trade and Regulatory Reform, U.S. Agency for International Development 9. This includes: Afghanistan, Bosnia and Herzegovina, Burundi, Central African Republic, Chad, Comoros, Congo Republic, Côte d’Ivoire, DRC, Guinea, Guinea-Bissau, Haiti, Kosovo, Liberia, Nepal, Timor-Leste, and Togo. 14 | 2013 Trust Fund Annual Report The World Bank Group Fostering Innovation in Development Many trust funds support innovation in development, allowing the WBG to test new ap- proaches to address client needs and to scale them up through regular Bank operations. Knowledge services and innovative projects can have a transformative impact on sectors that are key to reducing poverty and extending equitable services. Efficient Securities Markets Institutional 2000, according to a recent report by the UN Office Development Africa Initiative. The Public-Private for Disaster Risk Reduction. Infrastructure Advisory Facility estimates Africa’s gap in financing infrastructure at $31 billion annually over the The Global Index Insurance Facility (GIIF), a partner- next 10 years.10 Bond markets are increasingly need- ship managed by IFC and implemented jointly with ed to help finance this infrastructure. The joint IFC-WB IBRD with the support of the European Commission, Efficient Securities Markets Institutional Development the Netherlands and Japan, introduced an innovative (ESMID) Africa initiative, in partnership with the response to weather and natural catastrophes such as Swedish International Development Cooperation droughts, floods, and earthquakes, which can cause ir- Agency, is assisting East Africa and Nigeria to build reparable damage to households in poor communities. local currency bond markets to help finance work in priority sectors such as infrastructure, housing, and • The GIIF Program, global in reach, supports microfinance. ESMID Africa has advised on improving projects in Africa, Asia, Latin America, Caribbean local regulations; procedures for issuing, investing in, and Pacific. In many developing countries, and trading bonds; and the knowledge and capacity traditional agricultural and natural catastrophe of all securities markets participants, including regula- insurance is prohibitively expensive or unavail- tors; and on building an East Africa regional market- able. GIIF insures a number of villages under place that would attract larger issuance and invest- one risk rather than at the individual farmer level, ment. ESMID’s Africa initiative major achievements as which allows for more affordable coverage and of end-FY13 are as follows: expedient processing of claims. The GIIF’s in- dex-based insurance pays out quickly—in 1-2 • Laws, regulations, and guidelines for issuing and weeks after the catastrophe event, versus 12-18 trading nongovernment bonds have been intro- months by traditional insurance. duced or reformed in East Africa and Nigeria, • The Syngenta Foundation for Sustainable influencing the local bond market issuance of Agriculture, one of GIIF’s partners, has created $2.7 billion; a brand called Kilimo Salama (“safe farming” in • A Regional Securities Industry Training Institute has Swahili) to market its index insurance products been established to strengthen the knowledge of for beans, maize, sorghum, coffee, potato, and market participants throughout East Africa; wheat. Since its inception, Kilimo Salama has • Over 2,500 market participants have been grown from 200 farmers insured in Kenya in 2009 trained in East Africa and Nigeria; to 185,000 farmers insured in Kenya, Rwanda • The time for bond issuance in Kenya and Tanzania and Tanzania in 2013.A $2 million collaboration has been reduced from 270 days to 30-60 days; with Barbados-based reinsurance provider • Technical support has been provided, with MiCRO will provide close to 70,000 women demonstration transactions worth $101 million in micro-entrepreneurs in Haiti with affordable cat- East Africa and $362 million in Nigeria; and astrophic weather index-based insurance. • East African countries have developed and • GIIF has been widely recognized for its innovative begun implementing a roadmap for regional approaches to solving development challenges. In market integration and cooperation, including May 2012, the agriculture group of G20 recognized implementing a single framework for regional GIIF’s role in addressing global food security and bond issuance. food price volatility. The project with Kilimo Salama has also won the Financial Times IFC Sustainable Global Index Insurance Facility: An innovative Finance Award in the technology category for using response to natural catastrophes. Natural disas- mobile phones to help insure farmers against poor ters have cost the global economy $2.5 trillion since harvests caused by adverse weather. 10. Public Private Infrastructure Advisory Facility (PPIAF) is a multi-donor trust fund managed by the World Bank to facilitate private sector investment in infrastructure. The World Bank Group 2013 Trust Fund Annual Report | 15 China Hai Basin Integrated Water and In our village, one irrigation Environment Management Project. This in- novative project, fully financed by the Global cycle has been reduced from Environment Facility, or GEF ($17 million), aims to 20-30 days to 7 days, and reduce pollution in the Bohai Sea by developing an integrated approach to water resource man- labor hours for irrigation were agement and pollution control. To do this, it will reduced by 35 percent. test advanced management and technological approaches to integrated water and environmen- tal management in 16 counties. Results achieved —Villagers in Beidonggu Village of Guantao in FY13 are as follows: County, Hebei Province • The “real water savings” concept, which reduces the consumption of water in agricul- Government’s new energy strategy, which is ture, was introduced and has proved to be designed to address three key development particularly effective in areas of water scarcity issues: (a) improve the security of energy sup- such as the Hai Basin; ply, (b) contain environmental impacts, and (c) • 266 million m3/year of groundwater overdraft eliminate market barriers to renewable energy for irrigation purposes was reduced in pilot (RE) and energy efficiency (EE) investments. The counties, considerably exceeding the target Private Sector Renewable Energy and Energy of 42 million m3/year; and Efficiency Project supports the Government’s • Environment departments in project areas strategy by providing credit lines to the privately were equipped to control pollution. Discharge owned Industrial Development Bank of Turkey targets of pollution loads from provinces, cit- and the Government-owned Development Bank ies, and counties to rivers and the Bohai Sea of Turkey. The project was launched in 2009 with have been set up and used as control indica- financing from a $100 million grant from the Clean tors by national pollution control standards. Technology Fund (CTF) and a $1 billion loan from IBRD. As of end-FY13, the project has disbursed Turkey: Private Sector Renewable Energy $737 million of the IBRD loan and $99 million of and Energy Efficiency Project. The promotion CTF funds. This attracted another $564 million of renewable energy and improved energy ef- of investments, which together financed almost ficiency are integral components of the Turkish $1.4 billion worth of RE/EE projects. In Turkey, the Private Sector Renewable Energy and Energy Efficiency Project has disbursed $737 million of the IBRD loan and $99 million of CTF funds, attracting another $564 million of investments 16 | 2013 Trust Fund Annual Report The World Bank Group Major results from the project: Energy Sector Management Assistance Program. The Energy Sector Management • 44 RE and 29 EE projects were financed, sup- Assistance Program (ESMAP) is a global, multi-do- porting such large national industries as paper, nor technical assistance program implemented by petrochemicals, plastic, and iron and steel; the World Bank to provide analytic and advisory • RE projects with a total capacity of 1,225 MW services to low- and middle-income countries in have been completed or are under construction support of affordable, reliable, and sustainable en- and are estimated to reduce greenhouse gas ergy solutions. Here are some of ESMAP’s achieve- emissions by 4.2 million tons per year; and ments as of end-FY13: • Innovative investments in small hydro, wind, geothermal and solar projects helped promote • ESMAP’s Tool for Rapid Assessment of City and attract the following new investors into the Energy (TRACE) has been used to help city plan- RE market in Turkey: ners in 25 cities in Africa, Latin America, Asia, – two local banks have taken on the EE agen- and Eastern Europe identify and prioritize energy da and obtained loans from other institutions efficiency improvements. In Romania, TRACE for this purpose; has been deployed in seven fast-growing cities – The European Bank for Reconstruction and to identify interventions to be financed under a Development has established the Turkey regional development program funded by the Sustainable Energy Financing Facility to European Union. In Turkey, TRACE findings support small-scale RE and EE through five have informed the World Bank’s $300 million commercial banks; Sustainable Cities Project to finance long-term – Agence Française de Développement and infrastructure investments. In Rio de Janeiro, city Kreditanstalt für Wiederaufbau have provid- officials are using TRACE to develop energy ef- ed support, mainly through financial institu- ficiency strategies for the 2014 FIFA World Cup tions, to EE investments; and the 2016 Summer Olympic Games. This – Turkey’s largest banks—Akbank, Garanti work builds on the success of another Brazilian Bank, Deniz Bank, Is Bank, Seker Bank, and city, Belo Horizonte, where the TRACE assess- TEB—have opened credit lines specifically ment resulted in improvements in the transport for EE products; and sector, including traffic flow optimization. – The WBG has expanded its support for EE fi- • ESMAP’s Global Geothermal Development Plan nancing by launching the Small and Medium (GGDP) is helping catalyze a major scale-up Enterprise Energy Efficiency Project through of geothermal energy in developing countries credit lines to Halkbank, VakifBank, and by removing one of the primary obstacles to Ziraat Bank. expansion of this renewable resource: the high ESMAP’s TRACE Tool has informed 25 cities in Africa, Latin America, Asia and Eastern Europe in energy efficiency strategies, long-term infrastructure investments, and transport sector, including traffic flow optimization The World Bank Group 2013 Trust Fund Annual Report | 17 up-front cost and risk of exploratory test drilling. Lighting Africa Program has Thirty-six promising sites in 16 countries have already been identified under the GGDP. The supported the development first test drilling project cofinanced under the of innovative lighting products GGDP was approved by the World Bank to as- sess the commercial geothermal potential of the that have reached nearly 7 Fiale Caldera in the Lake Assal region in Djibouti. million people, far surpassing The new initiative is informed by the Geothermal Handbook, published in FY13 by ESMAP, which the initial goal of reaching 2.5 contains global best practices in planning and million by 2012. financing geothermal power projects. • In China, a newly approved $12 million World Bank/GEF project, designed by ESMAP using global best practice for urban spatial planning for households without electricity, or with unreliable that can reduce cities’ energy consumption, is grid connections. As of end-FY13, the program has helping the Beijing and Ningbo municipalities achieved the following results: to promote sustainable spatial planning and accelerate the adoption of energy efficiency and • Innovative lighting products have reached nearly renewable energy in urban areas in China. 7 million people, far surpassing the initial goal of • The World Bank is aligning its expert and advi- reaching 2.5 million by 2012; sory services to meet client countries’ growing • 49 products have met or surpassed Lighting demand on renewable energy. In FY13, ESMAP Africa’s quality and performance standards; conducted a comprehensive renewable energy • 1.3 million products have been sold in 20 African training program for more than 250 WBG staff. countries; This program is designed to train staff to provide • 1,900 companies and 2.5 million individuals high-quality advice to clients in the areas of pol- have benefited from business support services icy development and structuring of public and such as access to finance and various forms of private investment operations. Topics include business facilitation; wind power; solar photovoltaic power; geo- • 22 million people at 1,500 village forums have thermal energy; policy incentives and support participated in awareness campaigns for solar mechanisms; financing options; grid integration, products; and transmission, and distribution; concentrated so- • 12 governments in Africa have been engaged lar power; and biofuels. toward developing local markets for small pho- tovoltaic systems, leveraging some $10 million from IDA financing for technical assistance, up- Lighting Africa Program Expansion. Nearly 600 stream analytic work, and deployment of such million people and more than 10 million micro-enter- innovative mechanisms as “lantern libraries” in prises in Africa are not on the electricity grid. Most public schools. rely on expensive, polluting, and dangerous lighting such as kerosene lamps, candles, and battery-pow- As Lighting Africa Program expands and continues ered torches, which curtail their socioeconomic to be mainstreamed into the WBG’s lending and in- activities once darkness falls. Lighting Africa, a joint vestment operations, it is on track to meet its target initiative of the World Bank and the IFC, works with of supporting the private sector and supplying 250 the off-grid lighting industry to develop commercial million people in Africa with better lighting products and sustainable markets for cleaner, affordable, and by 2030. high-quality lighting solutions. Modern portable so- lar lanterns, mobile charging features, and “pay-as- you-go” credit schemes are becoming alternatives 18 | 2013 Trust Fund Annual Report The World Bank Group Support to Global Public Goods The World Bank Group’s trust funds are an important mechanism for financing global public goods. The examples in this section illustrate the outcomes of activities supported by trust funds in the areas of global knowledge sharing, climate change, and access to water and sanitation. Pioneering carbon markets. The Kyoto Protocol’s Partnering with the private sector. Using carbon first commitment period ended in December 2012, finance as a policy instrument for climate change mit- and the World Bank is drawing lessons learned igation, the World Bank played a key role in attracting from over a decade of pioneering work in the car- new sources of development finance, particularly bon market. Since the establishment in 2000 of the from the private sector. The Bank has created a re- world’s first carbon fund—the Prototype Carbon sults-based model for global public-private partner- Fund—with contributions from six governments ships, helping to unlock an estimated $8.5 billion in and 17 companies representing Japan, Canada underlying project finance from 56 private firms and and the European Union, the World Bank has be- 23 governmental organizations. Approximately $1.3 come the trustee for a total of 15 carbon funds and billion in cumulative financial flows from payments for facilities, managing a $2.3 billion portfolio of 160 emission reductions have been disbursed from the projects in 47 countries. Of these countries, 16 World Bank’s carbon funds to its clients in develop- have first-ever carbon finance projects under the ing countries. Clean Development Mechanism (CDM). The World Bank’s initial role was to catalyze the development Next-generation carbon markets. Continuing in of the carbon market by facilitating the procurement its pioneer role, the World Bank has established five of carbon emission reductions from projects in its “next-generation” carbon initiatives to strengthen client countries by funds participants who were the impact of and scale up low-carbon activities. seeking to meet their obligations under the Kyoto Next-generation initiatives provide technical and Protocol. In the past decade, in addition to devel- financial support to help countries explore and im- oping and implementing the carbon projects for plement cost-effective and innovative approaches clients—mostly private entrepreneurs—the World to greenhouse gas mitigation, such as domestic Bank has helped to shape the regulatory framework emissions trading schemes, new carbon crediting for market mechanisms, and has established 50 instruments, and carbon taxes. These innovative new carbon accounting methodologies, including approaches will have high development benefits breakthroughs on quantifying emission reductions and will use technologies that deliver primarily from rural electrification and sustainable agriculture community and household-level results—biogas, land management. household solar, and micro-hydro power. By the end of 2012, the World Bank had overall Looking ahead, the Bank will focus on climate-smart delivered 167 million tons of CO2-equivalent development and effective blending of carbon (CO2e) reduction from its projects, which span finance with Bank lending—that is, achieving de- a wide variety of sectors—energy efficiency, re- velopment benefits and climate change mitigation newable energy, solid waste management, and at the same time. Momentum is building among reforestation. As part of the Bank’s approach to developing and emerging-market countries to take landscapes, and with support from the BioCarbon domestic mitigation action, and the World Bank is Fund, about 125,000 hectares of degraded lands actively designing initiatives to leverage it. have been regenerated through sustainable forest and agricultural activities, and 430,000 hectares IFC, on its part, is finding ways to unlock private of primary forest have been conserved to protect capital for climate-smart projects. IFC helps finance biodiversity in 15 countries and five regions of the the development of innovative technologies and world. encourages a shift toward energy efficiency and renewable energy. It also provides financing and advice to help countries mitigate and adapt to cli- mate change. The World Bank Group 2013 Trust Fund Annual Report | 19 Examples of some successful carbon projects as • Guangrun Hydropower Project in China has of end-FY13: used carbon revenues to help finance three small-sized hydro stations, providing access to • The Community-Based Renewable Energy energy to the rural poor in a region where 95 Development Project in Pakistan installed 90 percent of the population lives without electricity. micro- and mini-hydropower plants in Northern In addition, the project has supported the con- Areas and Chitral, providing electricity to 51 struction of 16 km of roads, irrigation and drink- remote rural communities and 150,000 house- ing water systems benefiting five villages (4,400 holds, and generating 78,000 carbon credits people), nine classrooms in a local elementary annually. Constructed, managed, and operated school, and a village clinic. by the communities themselves, hydropower • Nepal Biogas Program helped 225,000 families plants provide electricity for domestic uses such across the country install easy-to-operate, small- as cooking, heating, household appliances, and sized biogas plants in their backyards, convert- lighting to extremely remote and poor communi- ing human waste and animal dung to methane ties that have no access to basic infrastructure for cooking. These projects are expected to services. Routine household chores typically generate about 170,000 carbon credits per assigned to women are now less labor-intensive year, which is equivalent to avoiding emissions and time-consuming. Women are using the time from approximately 60,000 cars every year. The saved to make handicrafts and clothes, which program reduces the time spent collecting fire- they can then sell to increase their household in- wood and, since women are no longer exposed come. This has led to a rise in their status in the to the indoor smoke from burning firewood in household and strengthened their roles. Other traditional stoves, it also dramatically improves benefits include reductions in indoor smoke and the health of women and their children. Other in household monies spent on traditional fossil important benefits of the program are decreased fuels. pressure on forests and reduced greenhouse • Indocement, a cement producer in Indonesia, gas emissions. reduced thousands of tons of CO2e by imple- • Bangladesh Solar Home Program, the world’s menting technologies and techniques never be- largest off-grid renewable energy program, is fore applied in the local cement industry. The in- supported by the World Bank’s Community centive from CDM revenue helped the company Development Carbon Fund, a $93 million loan overcome consumer and other market barriers from IBRD, and approximately $71 million from to blended cement. This lower-carbon process other development partners. It has installed 2.2 gained the company increased recognition and million solar home systems in rural households market share in Indonesia. in Bangladesh. • Plantar Reforestation Project in Brazil has issued more than 4 million metric tonnes of carbon The revenues from CDM were essential for emission reductions, the first forestry project in the world to issue credits under the Kyoto our company’s decision to take on the risk of a Protocol’s CDM. This project is growing 11,600 new technology that has helped transform the hectares of sustainably managed tree planta- tions on degraded lands, sequestering carbon sector and made our company a world leader dioxide and providing a source of carbon-neu- in the use of blended cement. tral charcoal. The project also supports the pro- tection of native cerrado forests and biodiversity, helping the iron and steel sectors become more —Oivind Hoidalen, former Technical Director of Indocement. sustainable. 20 | 2013 Trust Fund Annual Report The World Bank Group The Soil Conservation Project has been first and foremost an example for local communities on how to extract the added value from adequately managing their lands, whilst protecting the environment. —Dumitru Galupa, Head of the Project Implementation Unit and Director of the Forestry Research and Management Institute of Moldova • Moldova Soil Conservation Project issued • WSP’s technical assistance and knowledge 851,911 metric tonnes of carbon emission re- work has helped leverage over $120 million in ductions. This was only the second land-use investments by development partners, govern- and land-use change project to be registered ments, private sector, communities, and house- with the United Nations Framework Convention holds, as well as influencing around $8.3 billion on Climate Change (UNFCCC). Some communi- in World Bank financing. ties are replicating land-management practices established by the project, generating tangible Promoting knowledge as a global public good. benefits for local farmers and members of the In FY13, WSP’s large-scale impact evaluations and community. cutting-edge research contributed to developing critical knowledge in the sector—for example, high- lighting the strong links between poor sanitation Water and Sanitation Program. The Water and and the high prevalence of stunting and limited cog- Sanitation Program (WSP) uses innovative knowl- nitive development among children. WSP received edge management techniques to transform local eight international awards and several recognitions, learning into knowledge that can be used by part- among them the World Economic Forum’s Creative ners and the global public. Over 768 million people for Good initiative award and several Knowlympics in the world remain without sustainable access to Public Choice Awards. drinking water, and 2.5 billion people without ac- cess to improved sanitation, with severe economic, Delivering water and sanitation services in FCS. health, environment, and social consequences. WSP supports 10 FCS in Africa, East Asia, and WSP continuously seeks to innovate program ap- Latin America in generating tools and models for proaches and methodologies, foster strategic part- delivering water and sanitation services in challeng- nerships, and promote effective knowledge-sharing ing environments, while developing an understand- efforts and their effective replication in client coun- ing on the sector’s role in peace- and state-building. tries. Major achievements as of end-FY13 include In FY13, WSP’s technical assistance in Zimbabwe the following: contributed to the launch of the National Water Policy. WSP also helped develop water service • WSP’s $200 million budget provides support to mapping and investment evaluation frameworks in 33 countries across four regions,11 with a net- Sierra Leone, Republic of Congo, and DR Congo. work of approximately 144 staff; WSP’s analytic work highlighted the importance • WSP has helped governments increase 22.5 of investing in urban water and sanitation in Haiti, million poor people’s access to improved water Sierra Leone, and Zimbabwe, countries with some and sanitation services and keep 19 million peo- of the lowest sanitation access and quality in the ple from defecating in the open; and world. In Liberia, WSP supported the Water and Sewer Corporation in rebuilding its database of customers, mapping over 15,000 households and small businesses in the area. 11. WSP works with client governments in Latin America and the Caribbean, Sub-Saharan Africa, South Asia, and East Asia and the Pacific, which includes 23 focus countries with full-time staff and 10 additional non-presence countries under the fragile states initiative. The World Bank Group 2013 Trust Fund Annual Report | 21 In Kenya, WSP developed an innovative financing plan to make water and sanitation services affordable to more than 9,000 households living in informal settlements Embracing operational innovations. The key- Mitigating the impacts of climate change on wa- stone of WSP’s operations is testing and scaling ter and sanitation. WSP works with governments innovations. In FY13 WSP piloted a series of pro- in Asia and Latin America to identify the impacts of grammatic innovations to improve service delivery climate change on water and sanitation and de- and forge innovative partnerships on a global scale velop climate change adaptation and disaster risk to enhance awareness in the sector. In West Africa, management approaches for the sector. In Vietnam, WSP used mobile technologies to improve services WSP facilitated the development of a provincial-lev- through the mWater Program—a mobile-to-web el Climate Change Vulnerability Assessment and platform that helps local piped water operators pro- Adaptation Strategy. In Central America, WSP vide technical and other information to ease regula- convened baseline assessments of disaster risk tion and monitoring. In Kenya, WSP developed an management strategies for water and sanitation in innovative financing plan to make water and sanita- seven countries; the findings have provided mem- tion services affordable to more than 9,000 house- ber countries the opportunity for cross-regional holds living in informal settlements. In Bangladesh, knowledge sharing and learning on climate change WSP partnered with American Standard to build adaptation and disaster risk management. human-centered designs to provide ultra-low-cost sanitation and hygiene solutions for poor people. 22 | 2013 Trust Fund Annual Report The World Bank Group Engagement with Civil Society Trust funds enable the World Bank Group to establish closer partnerships with nongov- ernmental organizations (NGOs) to provide development benefits to poor communities. Supporting inclusive financial services and • $9 million in IBRD grants for technical assistance access to markets. Women and youth usually and capacity building helped leverage: bear the brunt of conflict in the Middle East and – $470 million in World Bank loans: $300 mil- North Africa Region (MENA), as most cultural and lion to Egypt, $70 million to Jordan, $50 mil- traditional systems in the MENA countries are not lion to Tunisia, and $50 million to Morocco; developed to provide gender-specific services. The and continuing conflict across MENA has deteriorated – $150 million in external funding from the Arab the macroeconomic environment, disproportionate- Fund for Economic and Social Development ly affecting the engagement of women and youth for Egypt and Jordan; in enterprises. Despite women’s good track record • $522 million of financing was disbursed to of loan repayment, women-owned businesses in 471,046 MSMEs—35 percent of beneficiaries MENA are considered to be riskier and more vul- were located in previously marginalized areas nerable. The IBRD’s trust-funded $9 million Middle and poor villages, 56 percent were women, and East and North Africa - Micro, Small and Medium 60 percent were youth; Enterprises (MSME) Regional Technical Assistance • 85,000 jobs, of which 30 percent were for wom- is implemented by the World Bank in Egypt, Jordan, en, were created in MENA countries as a result Morocco, Tunisia, Libya, Lebanon, and West Bank of capacity building of financial intermediaries; and Gaza in close collaboration with local NGOs • 11 financial institutions received advice on im- and civil society, such as chambers of commerce, proved delivery of financial services; federations of industries, and business associations. • 110 enterprises received capacity-building It targets marginalized groups, such as women and training; youth, and underserved areas and poor villages, • 300 women entrepreneurs in poor rural areas supporting inclusive development of MSMEs and received training in financial management, mar- improved access to markets for women and youth keting, and product innovation; through three pillars: (a) improving the regulatory • An interactive MSME website was created and and institutional environment; (b) building the ca- was seen by 38,384 unique visitors; and pacity of financial intermediaries; and (c) training and • 29 previously marginalized governorates in Egypt mentoring MSMEs. To achieve these goals, the fa- and 8 in Jordan (beyond Amman) have been trans- cility supports local banks with design and product formed, with help from local NGOs, Apex institu- development that address cultural and traditional tion in Egypt and the Social Fund for Development, barriers limiting access to finance for women and to improve the quality of and access to services in youth. Key achievements in FY13: poor villages and marginalized areas. Eight previously marginalized governorates in Jordan and 29 in Egypt have been transformed to improve access and quality of services to poor villages and marginalized areas. The World Bank Group 2013 Trust Fund Annual Report | 23 Promoting transparency and accountability in • 28 organizations received capacity building in the governance of resources in Nigeria. In the public procurement monitoring in the oil and gas 2008 Afrobarometer Survey in Nigeria—a public sector; attitude survey on democracy, markets, and civil • Partnership agreements with civil society groups society—the vast majority of respondents gave low were formalized to empower them to act as in- ratings to the performance of their local government termediaries between Bank operations, clients, in providing citizens with information about the bud- and citizens to monitor sector activities and sub- get and in allowing them to participate in its deci- mit reports; and sions; and only 3 percent of respondents thought • Online connectivity with field monitors was es- that their elected local government officials are not tablished as an information-sharing platform. involved in corruption. Recognizing the mistrust and lack of information Leveraging school feeding to achieve education between citizens and public servants, in FY13 the goals in Guyana. In Guyana’s rural communities, World Bank provided almost $100,000 from the food insecurity and low access to basic services Civil Society Fund to support the Public and Private impede children’s participation in schools, limiting Development Centre, a Nigerian civil society organi- their development and employment opportunities. zation, in increasing citizens’ participation in public Funded by the Bank’s $32.9 million Education for sector governance and improving accountability All-Fast Track Initiative (EFA-FTI) multi-donor trust and transparency in the oil and gas sector. Key fund for Guyana, the School Feeding Program (SFP) achievements in FY13 include the following: received a $12.7 million grant to achieve universal primary education for girls and boys by 2015, sup- • Enhanced procurement observation and report- porting the Government’s Millennium Development ing by procurement oversight networks via a Goals. The grant provided nutrition and technical mobile phone platform that monitors field activ- assistance to schools in Guyana’s underserved ities and provides federal agencies with real-time communities, and catalyzed future funding to en- data, including information on procurement bids; sure the sustainability of the results achieved. As In Guyana, 16,625 children received nutritionally balanced meals at schools 24 | 2013 Trust Fund Annual Report The World Bank Group part of a larger global education effort (the Global 1.3 Financial Trends Partnership for Education, previously named Education for All Fast Track Initiative), Guyana’s of Trust Funds EFA-FTI Program benefited from a network of 50 developing countries, development funder gov- Overview ernments, international organizations, the private sector, and civil society and NGOs. The European At $28.9 billion, the amount of WBG funds held in Union-funded Guyana Micro Projects assisted the trust on June 30, 2013—the end of FY13—has de- SFP by building school kitchens at primary schools. creased slightly from the level recorded a year ear- The beneficiaries of the grant were primary school lier. FIFs continued to account for the largest share children, teachers, communities, and regional ed- (63 percent), followed by IBRD/IDA trust funds (32 ucation officers in the hinterland areas. The project percent) and IFC trust funds (2 percent). closed in FY13 with the following results: The number of active trust fund accounts in the WBG • 16,625 children received nutritionally balanced decreased in FY13, from 1,064 to 1,030, while the meals at schools; volume remained largely unchanged. This decrease • 5,173 students enrolled in schools, an increase reflects a continued decline in the number of IBRD/ of 16 percent since the start of the program in IDA trust funds (from 720 to 685). The number of IFC 2007; trust funds remained unchanged at 290, breaking the • Children benefitting from the SFP grew 0.8 cen- upward trend of the past five years. The number of timeters more than children attending schools FIFs remained almost unchanged at 55.12 without the SFP; • Test scores in English increased by about 30 per- The amount of funds held in trust in FIFs grew by cent among children receiving school feeding; 34 percent between FY09 and FY13 (see Figure 2): • Math, reading, science, and social studies existing FIFs, such as the GEF, Climate Investment scores of students receiving school feeding all Funds, and the Global Partnership for Education increased up to 8.1 points compared to those of Fund, expanded, and new FIFs—such as the MENA students who did not receive school feeding; Transition Fund—were added in FY13. Beginning in • Diet diversity and food frequency was enhanced FY11, funds held in trust in FIFs have leveled off at in households with children receiving school approximately $18 billion, reaching the highest mark feeding; and of $18.3 billion at end-FY13. • The purchasing power of households where children received school feeding was stabilized Cash contributions to FIFs, at $7 billion in FY13, re- during food price shocks. mained relatively unchanged from the previous year and were 50 percent higher than in FY09 (see Figure 3). Cash transfers from FIFs to third parties have al- most doubled from FY09, reaching $5.8 billion13 at end-FY13 (see Figure 4). 12. This number represents 20 FIF programs; Debt Relief Trust Fund, CGIAR, and Adaptation Fund comprise multiple accounts. 13. This excludes transfers to IBRD as implementing agency. The World Bank Group 2013 Trust Fund Annual Report | 25 Figure 2: Funds Held in Trust, FY09-FY1314 ($ billions) As Figure 2 shows, funds held in trust for IBRD/ IDA trust funds leveled off at $9.2 billion on av- 20 erage for the past three years, with a slight drop 18 of 5 percent from FY12. Cash contributions to 16 IBRD/IDA trust funds dropped to $3.5 billion, the 14 lowest mark in the past five years, decreasing sig- 12 nificantly by 21 percent from $4.4 billion in FY12 (Figure 3). IBRD/IDA trust fund disbursements 10 Others remained at $4 billion, with a marginal drop of 5 8 percent from FY12 and an increase of 12 percent IFC TFs 6 since FY09 (Figure 4). 4 FIFs 2 In terms of disbursements, the top three IBRD/ 0 IBRD/ IDA trust funds in FY13 were the Afghanistan FY09 FY10 FY11 FY12 FY13 IDA TFs Reconstruction Trust Fund ($793 million), Carbon Funds ($356 million) and the Global Partnership for Education Trust Fund ($332 million)16; togeth- Figure 3: Cash Contributions to Trust Funds, FY09-FY1315 er they accounted for 37 percent of IBRD/IDA ($ billions) trust fund disbursements. 8 Funds held in trust for IFC trust funds amounted 7 to $0.7 billion as of end-FY13, a 28 percent de- 6 crease since end-FY12 (Figure 2). This decrease is mainly due to the repayment of fund balances 5 to development funders as part of the process of 4 closing several large trust funds from the Global 3 Trade Liquidity Program. IFC TFs 2 From FY09 through FY13, the United States and FIFs the United Kingdom made the largest contribu- 1 tions to WBG trust funds (see Figure 5). Over 0 IBRD/ FY09 FY10 FY11 FY12 FY13 IDA TFs that period, the United Kingdom was the largest development funder to the IBRD/IDA trust funds, followed by the United States, the European Figure 4: Disbursements and Cash Transfers from Trust Union, Australia, and the Netherlands. Together, Funds, FY09-FY13 ($ billions) these five development funders accounted for al- most half of the total cash contributions to IBRD/ 7 IDA trust funds since FY09. The United States remains the largest development funder to FIFs, 6 both cumulatively over the five years and in FY13. 5 Sovereign development funders remain the major 4 contributors to the WBG trust funds, accounting for 80 percent of total cash contributions received 3 in FY13 for IBRD/IDA trust funds, 95 percent for IFC TFs FIFs, and 67 percent for IFC trust funds. 2 FIFs 1 IBRD/ 0 FY09 FY10 FY11 FY12 FY13 IDA TFs 14. (1)Financial Intermediary Funds discussed in this section exclude Advance Market Commitment (AMC), which is a FIF but not a trust fund and is included in IBRD’s financial statements; (2) “Others” include amounts held in escrow on behalf of International Centre for Settlement of Investment Disputes (ICSID), development funder balance accounts, balances on administration accounts and unapplied receipts. 15. Include cash receipts from the Adaptation Fund’s Certified Emission Reductions (CERs) sales. 16. The Global Partnership for Education (GPE) includes GPETF (formerly EFA-FTI TF, an IBRD/IDA TF) and GPEF (a FIF). GPEF was established as a FIF in FY12 as part of the reform of the Education For All Fast Track Initiative (EFA-FTI). 26 | 2013 Trust Fund Annual Report The World Bank Group Figure 5: Cumulative Cash Contributions by Top Ten Development Funders,17 FY09-FY13 ($ billions) 10 9 8 7 6 5 4 IFC TFs 3 2 IBRD/ IDA TFs 1 FIFs 0 United United Japan Germany Canada France Netherlands European Norway Australia States Kingdom Union Figure 6: IBRD/IDA Trust Funds: Annual Cash IBRD/IDA Trust Funds Contributions and Disbursements, FY09-FY13 ($ billions) 5.0 IBRD/IDA trust funds are funding mechanisms that complement the World Bank’s development 4.5 operations at the country, regional, and global 4.0 levels. These funds can be disbursed in the form 3.5 of recipient-executed trust funds (RETFs) or Bank- 3.0 executed trust funds (BETFs). RETFs finance proj- 2.5 ects implemented by recipients under the Bank’s 2.0 appraisal and supervision; BETFs complement the Bank’s own budget to deliver knowledge services 1.5 or support the Bank’s preparation and supervision, 1.0 primarily of RETF-funded projects. 0.5 Disbursements Cash 0.0 Following a rise in FY12, cash contributions to FY09 FY10 FY11 FY12 FY13 Contributions IBRD/IDA trust funds dropped to $3.5 billion in FY13, the lowest level in the past five years (see Figure 6). The value of contributions under new trust in the IBRD/IDA trust funds. In FY13, MIGA agreements signed with development funders de- launched an $80 million Facility for Conflict- creased by 21 percent over the past year, reach- affected and Fragile Economies. ing $3.5 billion for FY13. This drop was primarily due to the decline in contributions for the ARTF In the past five years the United Kingdom was from $1.7 billion in FY12 to $421 million in FY13. the largest contributor to IBRD/IDA trust funds In FY13 the top three trust-funded programs, by ($3.5 billion), followed by the United States ($1.8 received contributions, were Ethiopia Protection billion) and the European Union ($1.6 billion). In of Basic Services Program ($755 million), ARTF FY13 alone, the United Kingdom contributed over ($421 million), and the Palestinian Recovery and $730 million to IBRD/IDA trust funds. Other top Development Plan Fund ($188 million). contributors in FY13 were Norway ($335 million) and Australia ($307 million). While the United The IBRD/IDA trust fund portfolio includes MIGA States remains the second largest contributor to trust funds. Funds held in trust in the MIGA port- the IBRD/IDA trust funds, its cash contributions in folio remained practically unchanged in the past FY13 decreased sharply to $67 million from $828 five years, amounting to $48 million at end-FY13, million in FY12 (see Figure 7). or 0.5 percent of the total amount of funds held in 17. Exclude AMC, which is a FIF but not a trust fund and is included in the IBRD’s financial statements. The World Bank Group 2013 Trust Fund Annual Report | 27 Figure 7: Cumulative Cash Contributions by Top Ten IBRD/IDA TF Development Funders, FY09-FY13 ($ billions) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 2013 0.5 2009-12 0.0 United United European Australia Netherlands Norway Canada Spain Japan Sweden Kingdom States Union Figure 8: Multi-donor and Single-Donor IBRD/IDA Trust Funds, FY09-FY13 (percent) As part of ongoing consolidation efforts, the number of IBRD/IDA trust funds continued to 100% decline, from a peak of 780 at end-FY10 to the 35% 41% 43% 48% 52% five-year low of 685 at end-FY13. In addition, 80% the share of multi-donor trust funds increased further to 52 percent, the highest in five years, 60% from 48 percent in FY12 and 35 percent in FY09 (see Figure 8). In FY13, 68 new IBRD/IDA trust funds were established and 103 existing funds 40% 65% 59% 57% 52% 48% were closed. Of the new funds, the largest were the Ethiopia Promoting Basic Services 20% Program Phase III, the Korea World Bank Group Multi-Donor TF Partnership Facility, the State and Governance 0% Single-Donor TF Reform Project, the Single-Donor Trust Fund for FY09 FY10 FY11 FY12 FY13 the Energy Efficiency and Youth Corps Program, the Colombia Mainstreaming Sustainable Cattle Ranching Additional Financing Project, and Figure 9: Disbursements from IBRD, IDA, and RETFs, the Malawi Agricultural Sectorwide Approach FY09–FY13 ($ billions) Support Project Multi-donor Trust Fund. 45 12% RECIPIENT-EXECUTED TRUST FUNDS 40 RETFs provide project financing for third-party re- 10% 35 cipients, whose projects are prepared and super- vised by the Bank.18 In FY13, RETF disbursements 30 8% accounted for 11 percent of the World Bank’s total 25 6% Share of project financing (see Figure 9), up from 10 per- 20 RETFs cent in FY12. The gain in share reflected primarily 15 4% a decline in IBRD disbursements, which peaked RETFs in FY10 in the context of the global financial crisis. 10 2% IDA During FY13, RETF disbursements decreased by 5 6 percent to $3.3 billion from $3.6 billion in FY12. 0 0% IBRD Most of this decrease was linked to lower disburse- FY09 FY10 FY11 FY12 FY13 ments from the Global Partnership for Education 18. IBRD and IDA also administer a relatively small share of trust funds that help client countries service their debt repayments and other obligations. 28 | 2013 Trust Fund Annual Report The World Bank Group Trust Fund (GPETF)19 and Disaster Recovery and Figure 10: RETF Disbursements in Fragile and Conflict- Social Protection in Pakistan—decreases of 28 Affected States, FY09-FY13 ($ billions) percent and 100 percent, respectively. 1.6 50% RETFs are an important source of financing for 1.4 investments and technical assistance in FCS (see 1.2 Figure 10). RETF disbursements to FCS have 0.6 0.9 0.8 0.8 0.6 bounced back after a drop in FY12, increasing 1.0 from $1.3 billion in FY12 to $1.4 billion in FY13 0.8 40% and accounting for 42 percent of total RETF dis- bursements during FY13, 7 percent more than in 0.6 Percentage FY12. In FY13 Afghanistan accounted for 56 per- of RETFs 0.4 0.7 0.5 0.6 0.5 0.8 cent of total disbursements to FCS, followed by Other Fragile 0.2 States the West Bank and Gaza with 17 percent. About 47 percent of RETF disbursements are concen- Afghanistan 0.0 30% trated in five areas: Afghanistan, Ethiopia, West FY09 FY10 FY11 FY12 FY13 Bank and Gaza, Bangladesh, and Indonesia. Figure 11: Regional Shares of RETF Disbursements, FY13 Some two-thirds of RETF disbursements in FY13 went to IDA-eligible countries, about 20 percent Global 2% to IBRD countries, and the balance to support regional or global activities. Among the Bank’s regional units, Africa continued to be the largest Africa 32% beneficiary of RETFs in FY13, followed by South Asia, East Asia and Pacific, and the Middle East South Asia 29% and North Africa (see Figure 11). In FY13, RETFs provided financing primarily for three economic sectors: (a) public administration, Middle East East Asia and and North Africa 11% Paci c 17% law, and justice, which include the Bank’s work on governance and anticorruption; (b) education; Latin America and (c) health and social services (see Figure 12). and the Caribbean 6% Europe and Central Asia 3% BANK-EXECUTED TRUST FUNDS In the same way that the World Bank’s adminis- trative budget funds activities linked to the Bank’s Figure 12: Sectoral Allocation of RETF Disbursements, FY13 project portfolio, a large part of BETF funding is linked to RETF-funded projects, covering lending Industry & Trade 8% Agriculture 8% activities (preparation and supervision) as well as nonlending activities (analytic and advisory work). Water & Sanitation 7% In FY13, BETF disbursements continued to in- Transportation 6% crease, albeit at a slower pace, reaching $669 million, or 23 percent of total Bank administrative Public Admin expenditures,20 the highest in the past five years. Energy & Mining 7% & Law 32% On average, 47 percent of total BETF disburse- ments in FY09–FY13, and 52 percent in FY13, Health & Social were used to fund knowledge-related activities. Services 13% The share of BETF disbursements used to fund Info & Communication .4% Finance 1% project preparation and supervision was stable over the past five years at around 15 percent. Education 17% 19. As part of the reform of the Education For All Fast Track Initiative (EFA-FTI), this program was renamed the Global Partnership for Education (GPE), and the EFA-FTI TF (an IBRD/IDA TF) was renamed the Global Partnership for Education Trust Fund (GPETF) in FY12. Global Partnership for Education Fund (GPEF) was established as a FIF in December 2011 to channel most new funding for GPE. 20. Total administrative expenditures include the net administrative budget, reimbursables, and BETFs. The net administrative budget is the portion of the World Bank’s work program that is funded by the IBRD and IDA. Reimbursables are revenues generated when the World Bank provides operational or administrative services to other parties or has negotiated the sharing of administrative costs. The World Bank Group 2013 Trust Fund Annual Report | 29 Figure 13: Share of BETF Disbursements by Main Activity, Bank’s budget for nonlending TA has grown in FY09-FY13 (percent) response to increased client demand, nonlending 60% TA has been the main driver of growth in BETFs in FY09–FY13. About 65 percent of nonlending TA is 50% delivered to country clients; the remainder consists of global and regional products. Nonlending TA to 40% IDA countries has been the fastest growing com- ponent, with funding rising sharply from $19 million 30% Supervision in FY09 to almost $58 million in FY13. The bulk of and Lending this funding benefits Somalia ($5.6 million), Nigeria 20% External ($4.6 million) and Bangladesh ($4.1 million). Partnership & Outreach 10% Knowledge Financial Intermediary Funds related 0% activities The Bank may play different roles in FIFs. The FY09 FY10 FY11 FY12 FY13 main role is that of a financial trustee providing financial management services such as receiv- ing, holding, and transferring funds to multiple implementing entities and recipients. The Bank Figure 14: FIF Funds Held in Trust, by Fund (percent) does not always play a role in implementing FIF- supported partnerships; when it does, it may be 100% one of multiple agencies and implementers. 45% 36% 31% 29% 27% 80% Purpose-specific global programs in which the Bank acts as trustee have acquired a greater role in the international aid architecture in the past 60% 25% Global Fund 24% 26% few years. Funds held in trust in FIFs21 in FY13 26% GEF amounted to $18.6 billion. Approximately 80 29% 40% percent of this amount was held for the Climate 19% 25% 28% 15% CIF Investment Fund (CIF), the Global Fund, and the 4% GEF (see Figure 14). 20% 11% 4% 2% 10% 9% IFFIm 12% 14% 15% 16% 18% Two new FIFs were established in FY13: the 0% Other FIFs FY09 FY10 FY11 FY12 FY13 MENA Transition Fund to support country-led reforms in MENA, and the AgResults Initiative to help smallholder farmers improve food security and promote climate-smart agriculture. These BETFs serve mainly to fund the preparation and supervision of RETF-funded projects, and More than half of FY09–FY13 cash contributions their growth over the past five years has broadly to FIFs were allocated to the health sector (see followed the increase in RETF disbursements. At Figure 15). The Global Fund, the largest fund in this the same time, the share of BETFs coded to the sector, received $15 billion in the last five years. more general category of external partnerships, The environment and climate change sector grew outreach, and resource mobilization has been from 18 percent in FY09 to 25 percent in FY13. gradually declining, reaching its five-year low of Other sectors—agriculture and food security, and 16 percent in FY13, down from 20 percent in education—have also expanded in the past five FY12, and 28 percent in FY09 (see Figure 13). years. Overall, cash contributions to FIFs22 reached $7.2 billion in FY13, up 49 percent from FY09. The Knowledge activities funded by BETFs involve growth between FY09 and FY13 was driven pri- mostly knowledge for clients, such as nonlending marily by cash contributions to the Global Fund, technical assistance (TA), economic and sector the GEF, the Consultative Group on International work, training, and impact evaluation. Just as the Agricultural Research Fund, the GPEF, and the Global Agriculture and Food Security Program. 21. Includes AMC, which is a FIF but not a trust fund and is included in the IBRD’s financial statements. 22. Includes AMC, which is a FIF but not a trust fund and is included in the IBRD’s financial statements. 30 | 2013 Trust Fund Annual Report The World Bank Group FIFs tend to have a flexible design, they often Figure 15: FIF Cash Contributions, by Sectors/Themes involve innovative arrangements, and their struc- ($ billions) tures are customized, depending on the needs 8 of the partnership and agreement with the Bank. FIFs may use innovative approaches to fund-rais- 7 ing and deployment of funds. For example, the 6 International Finance Facility for Immunisation 53% 56% Health (IFFIm) is the first development funder support- 5 52% 46% ed initiative that uses long-term development Environment/ 4 funder contributions to support front-loaded 75% Climate Change financing for vaccination and immunization by 3 Agriculture and 32% 25% raising funds in the capital markets. In FY13, 40% Food Security 2 39% the IFFIm (through the Bank as the Treasury Education Manager) issued $878 million in bonds to fund 1 13% 18% 7% 7% 2% 4% 7% 6% 5% programs of GAVI (Global Alliance for Vaccines 0 2% 2% Other Sectors FY09 4% FY10 5% FY11 FY12 FY13 and Immunization). IFFIm’s total outstanding bond obligations as of end-FY13 amounted to $2.4 billion. Another example is the Clean Technology Fund (CTF), the first WBG trust fund Figure 16: Cash Contributions, Commitments, and Cash to accept development funder contributions in Transfers from FIFs, FY09-FY13($ billions) the form of concessional loans. As of end-FY13, total development funder loan contributions to 9 CTF amounted to $1.1 billion, which represents 8 nearly one-third of total contributions to the CTF 7 trust fund. The Advance Market Commitment for pneumococcal vaccines (AMC)—a “pull 6 mechanism” designed to provide incentives to 5 Cash pharmaceutical companies to produce vaccines 4 Transfers adapted to the needs of developing countries’ populations—uses IBRD’s balance sheet to pro- 3 Commitments vide assurance of development partner funding 2 to vaccine manufacturers. 1 Cash Contributions In FY13, total cash transfers from FIFs to imple- 0 FY09 FY10 FY11 FY12 FY13 menting and supervising entities, trustees, and FIF secretariats amounted to $6.7 billion,23 close to double the $3.4 billion transferred in FY09 As of end-FY13, the United States remained the (see Figure 16). The largest share of transfers in largest contributor to financial intermediary funds, FY13 was from the Global Fund ($3.9 billion, or with five-year cumulative cash contributions of 58 percent of the total FIF cash transfers), fol- $7.9 billion, followed by the United Kingdom lowed by the GEF ($827 million, or 12 percent), ($3.9 billion), France ($2.8 billion), Germany ($2.6 CGIAR ($584 million, or 9 percent), and the CIF billion), and Japan ($2.4 billion) (see Figure 17). ($389 million, or 6 percent). 23. FIF cash transfers include transfers from FIFs to (i) the World Bank as implementing entity and (ii) the WBG for administrative expenses as implementing entity and trustee, and for the expenses of the in-house secretariats. FIFs include AMC, which is a FIF but not a trust fund and is included in the IBRD’s financial statements. The World Bank Group 2013 Trust Fund Annual Report | 31 Figure 17: Top 10 Development Funders’ Cumulative Cash Contributions to FIFs, FY09-FY13 ($ billions) United States 7.9 3.0 United Kingdom 3.9 2.3 France 2.8 1.0 Germany 2.6 1.4 Japan 2.4 1.5 Canada 1.9 1.1 Norway 1.4 1.1 Sweden 1.0 0.5 Netherlands 1.0 0.6 EU 0.9 0.2 Non-OECD/DAC 0.6 0.2 Private Sector 0.6 0.2 & Foundations 0 1 2 3 4 5 6 7 8 3 2 1 0 All FIFs Excluding Global Fund IFC helps increase the availability and afford- Table 1: IFC Advisory Services Project Expenditures ability of financial services for individuals and for and Share in IDA Countries MSMEs. It helps provide broad-based financial Category FY09 FY10 FY11 FY12 FY13 services to financial clients and build the financial Project expenditures ($ millions) 158 167 182 197 232 infrastructure necessary for sustainable growth Share of Advisory Services project 52% 62% 64% 65% 65% and employment. At end-FY13, the A2F portfolio expenditures in IDA countries (percent)a consisted of 263 projects in 72 countries and had Source: IFC. a total value of $343 million. Advisory program a Excludes global projects. expenditures for A2F amounted to $63 million, of which 61 percent were in IDA countries and 13 percent in FCS. About 21 percent of disburse- IFC Trust Funds ments for A2F activities in FY13 supported micro- finance products. The IFC offers Advisory Services to businesses and governments in 105 countries through more IFC’s investment climate activities help gov- than 660 active projects. Funding comes from ernments implement reforms that improve the development funder partners, the IFC, and cli- business environment and encourage and retain ents. IFC trust funds are the main instrument for investment, thereby fostering competitive mar- financing Advisory Services; in FY13, 90 percent kets, economic growth, and job creation. IFC also of IFC Advisory Services expenditures were made helps resolve legal and policy weaknesses that via trust funds. IFC Advisory Services program inhibit investment. At end-FY13, IFC’s investment expenditures have grown by 47 percent in the climate portfolio consisted of 143 projects in 65 past five years and by 18 percent in FY13, to countries, and had a total value of $289 million. $232 million, with 65 percent concentrated in IDA Advisory program expenditures for investment cli- countries and 18 percent in FCS (see Table 1). mate activities amounted to $75 million, of which 76 percent were in IDA countries and 29 percent IFC Advisory Services promote private sector in FCS. About 26 percent of disbursements for development by complementing investment these activities in FY13 went to business regula- services through four business lines: expanding tion advisory products. access to finance (A2F), improving the investment climate, facilitating public-private partnerships, and promoting sustainable business. 32 | 2013 Trust Fund Annual Report The World Bank Group IFC helps governments design and implement million (17 percent) since FY12 (see Figure 18). public-private partnerships (PPPs) in infrastructure About 80 percent of the FY13 increase was due and other basic public services such as electrici- to spending on various programs in Sub-Saharan ty, water, health, and education, while enhancing Africa and A2F programs. their quality and efficiency. At end-FY13, the PPP portfolio consisted of 103 projects in 53 countries In the past five years, in aggregate, the United and had a total value of $126 million. Advisory Kingdom was the largest contributor to IFC program expenditures for PPPs amounted to $40 Advisory Services trust funds (15 percent of total million, of which 59 percent were in IDA countries signed contributions ), followed by Switzerland and 15 percent in FCS. About 82 percent, or (14 percent) and the Netherlands (13 percent) $32 million, of disbursements for PPP activities (see Figure 19). As in FY12, Switzerland remained in FY13 were made to Advisory Mandate prod- the top development funder in FY13, contributing ucts, which include expanding access to public 25 percent of the signed contributions for the services such as power, water and sanitation, year, followed by Canada (19 percent), the United transport, health, and education services. Kingdom (14 percent), Australia (9 percent), and the Netherlands (9 percent). In FY13, five devel- IFC works with clients to promote sound environ- opment funders made record high multiyear com- mental, social, governance, and industry stan- mitments to IFC Advisory Services trust funds: dards; catalyze investment in clean energy and Australia, Canada, Switzerland, Luxembourg, resource efficiency; and support sustainable sup- and New Zealand. ply chains and community investment. Working in such sectors as agribusiness and forestry; manu- facturing and services; infrastructure; oil, gas, and Figure 18: IFC Trust Funds — Advisory Services, mining; and financial markets, IFC helps advance FY09-FY13 ($ millions) women in business, strengthens small-scale farms 600 and agribusinesses, and engages the private sec- tor in climate-change solutions. At end-FY13, the 500 IFC sustainable-business portfolio consisted of 157 projects in 58 countries with a total value of 400 $280 million. IFC advisory program expenditures in this area totaled $55 million, of which 59 per- 300 cent were in IDA countries and 10 percent in FCS. More than a quarter of these disbursements went Funds Held 200 toward training for farmers and SMEs. in Trust In FY13, the overall volume of IFC disbursements Disbursements 100 for advisory services reached a five-year high of $338 million—an increase of $72 million (nearly 0 Cash one-third) since FY09 and an increase of $50 FY09 FY10 FY11 FY12 FY13 Contributions Figure 19: Top 10 Development Funders’ Contributions to IFC Advisory Services Trust Funds, FY09-FY13 ($ millions) 200 180 160 140 120 100 80 60 40 2013 20 2009-12 0 United Switzerland Netherlands Canada Austria EU Australia Norway MasterCard Japan Kingdom Foundation The World Bank Group 2013 Trust Fund Annual Report | 33 In addition to partnering with sovereign develop- MIGA Trust Funds ment funders, IFC has strengthened its partner base through cooperation with 14 nongovern- MIGA was created as part of the World Bank mental partners—multilateral institutions, foun- Group to promote foreign direct investment in dations, corporates, and a nonprofit entity—that developing countries to help support economic committed $14 million to various IFC advisory growth, reduce poverty, and improve people’s programs in FY13. As a result of IFC’s innovative lives. MIGA provides political risk insurance to approach to partnership-building, SABMiller, private sector investors and lenders. Coca Cola, Nestlé, and PepsiCo foundation have joined IFC as contributors to the 2030-Water In recent years, MIGA has been actively exploring Resource Group, a consortium of public and partnerships with trust fund development funders private sector and civil society entities helping to leverage its limited resources and to gain flexi- countries address the challenge of water secu- bility in developing innovative insurance products. rity. In addition, the Blue Moon Fund and Marie In partnering with development funders to es- Stopes International joined IFC’s community of tablish specialized guarantee trust funds, MIGA development partners in FY13, providing financial (a) works with external partners to develop new support to IFC Advisory Services. products aimed at addressing the evolving needs of the private sector, including emerging market In FY13, several strategic partnerships were investors; (b) mobilizes guarantee capacity in launched or extended and strengthened by IFC in FCS, where it could not otherwise operate, and cooperation with the global development funder (c) underwrites certain highly developmental proj- community to maximize development impact ects that it could not otherwise support because through blending flexible financing, leadership and of restrictions in the MIGA Convention. knowledge sharing. The Canada-IFC Partnership Fund was created to address pressing develop- As of end-FY13, MIGA’s portfolio consisted of ment issues in the extractive and financial sectors, four active trust funds, with total contributions of and to promote gender equality worldwide. The $48 million. Three of the trust funds—about 97 Luxembourg-IFC and Ireland-IFC Partnerships percent of the funds—are being used to provide have continued to promote sustainable business guarantees and assist with attracting private in- and corporate governance, build robust invest- vestment flows for the reconstruction and eco- ment climate, and support conflict-affected states nomic development of three FCS: Afghanistan, in Africa. The Netherlands-IFC Partnership was Bosnia and Herzegovina, and West Bank and extended to enhance the collaboration on sus- Gaza. The fourth trust fund is for technical advice tainable business, investment climate, access to to improve the social and environmental perfor- finance, public-private partnerships, and conflict mance of MIGA’s projects in Africa. These trust situations. The Pacific Partnership with Australia funds are included in the IBRD/IDA trust fund and New Zealand was established to help drive portfolio. regional private sector development. The partner- ship with Japan has been deepened to support private sector development activities in Asia and Sub-Saharan Africa. 34 | 2013 Trust Fund Annual Report The World Bank Group 1.4 Financial and foreign currency hedging are used. WBG has no obligation to hedge trust fund currency risk Risk Management unless otherwise contractually agreed. The Bank is developing additional risk management tools to of Trust Funds, identify and address partnership programs. Controls, and In addition, the WBG has established a compre- hensive internal control framework for trust funds Information to ensure that development partner funds are available for development purposes. This fidu- Technology Systems ciary assurance framework is based on a robust governance structure, comprehensive policies As trustee, the World Bank Group uses strong and procedures, and ongoing oversight and fiduciary standards and sound financial and risk monitoring mechanisms to ensure compliance management to ensure the prudent management throughout the lifecycle of a fund’s operations. of development partner funds. The Bank is re- Using a risk-based approach that focuses on a sponsible for investing the development partner fund’s financial, procurement, and disbursement funds in the capital markets and for ensuring management, the Bank evaluates each fund that they are available for disbursement when operation at inception and throughout implemen- required. For IBRD/IDA and IFC trust funds—for tation to determine the extent of supervision and which the WBG has an operational role—the mitigation required. In addition to supervision, Bank also provides assurance that development trust funds undergo independent evaluation and partner funds are used for agreed purposes. audits. Trust funds that are reported using the modified cash basis of accounting are typically Financial Risk Management included in the annual Single Audit Report. In ad- and Control Frameworks dition, audited financial statements are prepared separately for a few large FIFs. Furthermore, most The WBG exercises comprehensive risk manage- recipient and project implementing entities are ment of the financial risks for trust funds—includ- subject to project level audits on an annual basis ing basis of commitment, liquidity, investment, to review financial viability. counterparty exposure, development partner funding, and currency risk. Bank staff monitor, Investment Management manage, and regularly report on financial risks to the Board and senior management. The Bank From the time development funder contributions has robust policies and procedures in place are received until those funds are disbursed for to mitigate these risks. It monitors each fund’s project activities, the WBG invests these re- liquidity levels to ensure that a fund disburses sources conservatively in the international capital to the extent it has sufficient liquid assets. To markets. Trust fund assets are commingled in a manage counterparty risk, the Bank conducts common pool, but maintained separately from active eligibility review and approval of counter- Bank assets. To ensure that funds are available parties with sound credit ratings. For currency for disbursement when needed, capital preser- risk, the WBG has developed good practices for vation is the primary investment objective for the addressing future commitments with respect to trust fund liquidity portfolio. In addition, the Bank currency fluctuations: it supports practices such aims to maximize investment income subject to as matching the contribution currency with the a conservative risk tolerance over the investment holding currency of the fund. In addition, to pro- horizon. As of end-FY13, the total amount invest- tect against the risk of over-commitment due to ed for trust funds stood at over US$25 billion,24 currency volatility, commitments are limited to a down by 1 percent from FY12. The average percentage of future receivables for those trust rate of return on trust fund resources, which are funds where there is currency risk. For some FIFs, primarily invested in the fixed-income markets, specific reserves and other methods including was 0.39 percent for the year, reflecting the low 24. Excludes Advance Market Commitments (AMC). The World Bank Group 2013 Trust Fund Annual Report | 35 market yield environment.25 The average annual Access to Information rate of return for trust fund liquidity over the last three years was 0.88 percent, and 1.88 percent An essential part of the Bank’s risk manage- over the last five years, with the largest concen- ment and controls is transparency of trust fund tration of the investment portfolio in sovereign activities and financial information. The Bank bonds (see Statistical Annex, Figure 35). The maintains a policy of open access to information portfolio—which is primarily denominated in US and supports four web-based applications that dollars—continues to outperform its benchmark, are available to development funders and other with the USD portion exceeding the benchmark partners: by 32 basis points for the year. The portfolio also has a smaller EUR portion, which was in line with • The Donor Center (http://clientconnection. the benchmark for the year. worldbank.org) provides development funders (not the public) with detailed financial Information Technology Systems data on their IBRD/IDA trust fund portfolio, in a secure, access-controlled environment. In FY13, the World Bank continued to focus on • AidFlows (www.aidflows.org), a publicly enhancing the quality of its information technol- available website, provides a unique view of ogy systems to strengthen controls and better country-by-country data on the sources and serve the needs of trust funds and their devel- uses of development-related funding around opment funders, recipients, and other partners. the world. For WBG entities and trust funds, Initiatives included (a) further streamlining grant AidFlows provides visualizations, by individual funding requests and new BETFs to achieve country, of commitments, disbursements, more integration with the Bank’s operations; (b) balances of undisbursed committed amounts, integrating trust fund data into the World Bank’s and sector breakdowns. For trust funds, data warehouse for improved data reporting and there are project counts by country, and for analytical capabilities; (c) creating a new partner- trust fund commitments and disbursements, ship program data management and directory there is program-level detail and breakdowns tool; (d) automating the commitment authority by grant type. monitoring reports in the new Liquidity and Risk • World Bank Finances (https://finances.world- Management Dashboard for trust funds; and bank.org), a publicly available website and (e) implementing the FIF IT Systems Project to part of the World Bank’s Open Data Initiative, support trustee financial operations as well as provides data related to IBRD loans, IDA cred- FIF program operations and related workflow be- its and grants, IBRD/IDA/IFC trust funds and tween the trustee, secretariats, and implementing FIFs, the World Bank’s operational summary, agencies. Furthermore, initial work on selecting and financial statements. a vendor for a new shareholder recordkeeping • For FIFs, a dedicated public website (http:// system for investment portfolio management is fiftrustee.worldbank.org) provides financial complete. This system will serve as a platform for information and trend analysis, scheduled re- all trust fund investment accounting information, ports, financial statements, governance doc- improving client reporting and existing business uments, and links to other useful resources. processes. 25. The rate of return for individual trust funds varies according to their participation in the different asset classes, depending on each trust fund’s investment horizon and risk tolerance. 36 | 2013 Trust Fund Annual Report The World Bank Group Section 2. Statistical Annex, Fiscal Year 2013 2.1. Statistics on the WBG-administered Trust Fund Portfolio Table 2: Key Statistics by Trust Fund Type, FY09-FY13 ($ billions) Number of Active Main TFs FY09 FY10 FY11 FY12 FY13 IBRD/IDA TFs 761 780 748 720 685 including MIGA 4 4 4 4 4 Financial Intermediary Funds 50 48 51 54 55 IFC TFs 233 247 273 290 290 Grand Total 1,044 1,075 1,072 1,064 1,030 Funds Held in Trust* (US$ billion) FY09 FY10 FY11 FY12 FY13 IBRD/IDA TFs 8.8 8.9 9.6 9.7 9.2 including MIGA 0.05 0.05 0.05 0.05 0.05 Financial Intermediary Funds 13.6 15.3 18.0 17.8 18.3 IFC TFs 0.6 0.7 0.6 1.0 0.7 Others 0.8 0.9 0.9 0.7 0.7 Grand Total 23.8 25.8 29.1 29.2 28.9 Cash Contributions (US$ billion) FY09 FY10 FY11 FY12 FY13 IBRD/IDA TFs 3.6 4.3 3.9 4.4 3.5 including MIGA 0.003 0.001 - 0.003 - Financial Intermediary Funds 4.5 6.0 6.1 7.2 7.0 IFC TFs 0.3 1.1 0.3 0.3 0.4 Grand Total 8.5 11.4 10.3 11.9 10.8 Disbursements and Transfers (US$ billion) FY09 FY10 FY11 FY12 FY13 IBRD/IDA TFs 3.6 3.7 3.8 4.3 4.0 BETF** 0.4 0.5 0.6 0.6 0.7 RETF 3.2 3.1 3.2 3.6 3.3 including MIGA 0.0002 0.0003 0.0001 0.0001 0.0001 Financial Intermediary Funds 3.0 4.8 4.5 5.2 5.8 IFC TFs 0.3 1.0 0.4 0.3 0.4 Grand Total 6.9 9.5 8.8 9.7 10.2 * Refers to the total balance of “cash and investments” and “promissory notes receivable” as of end-FY13; “Others” category includes amounts held in escrow on behalf of ICSID, donor balance accounts, balances on administration accounts, and unapplied receipts. ** Represents a subset of BETF disbursements; excludes grants managed by IFC and some reimbursable funds.   38 | 2013 Trust Fund Annual Report The World Bank Group Table 3: RETF Disbursements by Country Eligibility, FY09-FY13 ($ millions) Country Eligibility Category FY09 FY10 FY11 FY12 FY13 IDA 1,901 1,774 1,808 2,080 2,016 Blend 69 153 155 214 167 IBRD 708 680 728 749 702 Other* 486 518 462 528 455 Total 3,164 3,126 3,152 3,571 3,340 * Includes transfers from IBRD/IDA trust funds to IFC and other organizations. Table 4: BETF *Disbursements by Country Eligibility, FY09-FY13 ($ millions) Country Eligibility Category FY09 FY10 FY11 FY12 FY13 IDA 90 107 121 137 160 Blend 20 34 37 43 49 IBRD 75 83 90 102 98 Other 255 306 340 357 359 Total 440 530 588 638 666 * Represents a subset of BETF disbursements and excludes grants managed by IFC and some reimbursable funds. The “Other” category includes transfers from IBRD/ IDA trust funds to IFC and other organizations. Figure 20: Cash and Investments, Promissory Notes Receivables, and Contributions Receivables, as of end-FY13 ($ billions) 30 25 20 15 10 Contributions Receivable 5 Promissory Notes Receivable 0 Cash and Investments IBRD/IDA TFs FIFs IFC TFs Others Note: Excludes AMC, which is a FIF but not a trust fund and is included in the IBRD’s financial statements. The “Others” category includes amounts held in escrow on behalf of ICSID, donor balance accounts, balances on administration accounts, and unapplied receipts. The World Bank Group 2013 Trust Fund Annual Report | 39 2.2 IBRD/IDA Trust Funds: Tables and Graphs Figure 21: World Bank Administrative Figure 22: Africa Region Annual Project Expenditures, FY09-FY13 ($ billions) Disbursements from IBRD, IDA, and RETFs, FY09-FY13 ($ billions) 3.5 25% 8 3.0 7 20% 6 2.5 5 2.0 15% 4 1.5 10% 3 1.0 2 5% 0.5 1 0.0 0% 0 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 IBRD IDA RETF Bank Budget* BETF % Share of BETF NOTE: Bank budget includes net administrative spending and reimbursables. Figure 23: East Asia and Pacific Region Annual Figure 24: Europe and Central Asia Region Project Disbursements from IBRD, IDA, and Annual Project Disbursements from IBRD, IDA, RETFs, FY09-FY13 ($ billions) and RETFs, FY09-FY13 ($ billions) 7 9 8 6 7 5 6 4 5 3 4 3 2 2 1 1 0 0 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 IBRD IDA RETF IBRD IDA RETF 40 | 2013 Trust Fund Annual Report The World Bank Group Figure 25: Latin American and Caribbean Figure 26: Middle East and North Africa Region Region Annual Project Disbursements from Annual Project Disbursements from IBRD, IDA, IBRD, IDA, and RETFs, FY09-FY13 ($ billions) and RETFs, FY09-FY13 ($ billions) 12 3.0 10 2.5 8 2.0 6 1.5 4 1.0 2 0.5 0 0.0 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 IBRD IDA RETF IBRD IDA RETF Figure 27: South Asia Region Annual Project Figure 28: Africa Region RETF Disbursements, Disbursements from IBRD, IDA, and RETFs, by Sector, FY13 FY09-FY13 ($ billions) 8 Water/Sanitation/ Industry and Trade 2% Flood Protection 5% 7 Transportation 6% Agriculture 15% 6 Energy & Mining 3% 5 Public Admin, 4 Health & Social Law 17% Services 17% 3 Info & Communication 1% 2 Finance 1% 1 0 FY09 FY10 FY11 FY12 FY13 Education 34% IBRD IDA RETF The World Bank Group 2013 Trust Fund Annual Report | 41 Figure 29: East Asia and Pacific Region RETF Figure 30: Europe and Central Asia Region Disbursements, by Sector, FY13 RETF Disbursements, by Sector, FY13 Agriculture 3% Industry and Trade 3% Water/Sanitation/ Agriculture 11% Industry and Trade 36% Public Admin, Law 15% Flood Protection 12% Public Admin, Info & Law 21% Transportation 2% Communication 1% Education 11% Finance 1% Info & Water/Sanitation/ Health & Social Communication 1% Flood Protection 5% Services 11% Education 10% Transportation 5% Energy & Mining 31% Finance 3% Energy & Mining 12% Health & Social Services 5% Figure 31: Latin American and the Caribbean Figure 32: Middle East and North Africa Region Region RETF Disbursements, by Sector, FY13 RETF Disbursements, by Sector, FY13 Water/Sanitation/Flood Protection 8% Agriculture 2% Industry and Trade 9% Transportation 1% Agriculture 17% Water/Sanitation/ Energy & Flood Protection 12% Mining 13% Public Admin, Law 14% Transportation 5% Health & Social Services 5% Finance 1% Education 1% Education 4% Health & Social Services 7% Public Admin, Law 67% Energy & Mining 35% 42 | 2013 Trust Fund Annual Report The World Bank Group Figure 33: South Asia Region RETF Figure 34: IBRD/IDA Trust Funds Contributions Disbursements, by Sector, FY13 by Donor Type, FY13 Industry and Trade 1% Water/Sanitation/ Agriculture 8% Flood Protection 7% Non-sovereign donors 20% Governments 80% Transportation 8% Energy & Mining 7% Health & Social Services 13% Education 7% Public Admin, Law 49% Figure 35: The Asset Mix of the Trust Fund Investment Portfolio, end-FY13 Multilaterals/Supranational Bonds 0.3% Corporates 5% Asset Backed Securities 3% Agencies 13% Mortgage Backed Securities 10% Government Sovereign Bonds 37% guaranteed 4% Money Market Instruments/ Cash Equivalent, and Swaps 28% The World Bank Group 2013 Trust Fund Annual Report | 43 2.3 FIFs: Tables and Graphs Table 5: The World Bank’s FIF Trusteeships (as of end-FY13) ($ millions) Fund Established Cumulative Funding 1/ Agriculture and Food Security 2,669 AgResults Initiative 2013 37 Global Agriculture and Food Security Program (GAFSP) 2010 973 CGIAR Fund (CGIAR) 2/ 2005 1,659 Debt Relief 7,683 Debt Relief Trust Fund (DRTF) 1996 7,683 Environment/Climate Change 19,600 Adaptation Fund (AF) 2008 332 Green Climate Fund (GCF) 2012 8 Global Environment Facility (GEF) 1991 12,125 Least Developed Countries Fund (LDCF) 2002 606 Special Climate Change Fund (SCCF) 2004 244 Nagoya Protocol Implementation Fund (NPIF) 2011 16 Clean Technology Fund (CTF) 2008 3,534 Strategic Climate Fund (SCF) 3/ 2008 2,669 Guyana REDD-Plus Investment Fund (GRIF) 2010 68 Health 29,584 Global Fund to Fight AIDS, Tuberculosis and Malaria (The Global Fund) 2002 26,026 “International Finance Facility for Immunisation (IFFIm)/ GAVI Fund Affiliate (GFA) 4/” 2006 2,750 Advance Market Commitment (AMC) 5/ 2009 652 African Program for Onchocersiasis Control II (APOC) 2001 157 Natural Disasters 381 Haiti Reconstruction Fund (HRF) 2010 381 Education 756 Global Partnership for Education Fund (GPEF) 6/ 2011 756 Other 96 Middle East and North Africa (MENA) Transition Fund 2012 96 Total 60,769 1/ Cumulative Funding represents cash contributions (cash and encashment of promissory notes) and other sources of funds such as Certified Emissions Reductions (CERs) and net funding received from bond issuances, excluding investment income. 2/ The Consultative Group on International Agricultural Research (CGIAR) was established in 1971 and began receiving donor trust fund support in 1975 as part of its funding. The CGIAR MDTF was established in 2005 and restructured and reestablished as a FIF in 2010. The number presented in this table represents cumulative funding to the CGIAR MDTF and CGIAR Fund since 2005. 3/ Represents totals for SCF fund including pass-through funds for the Congo Basin Fund and Forest Carbon Partnership Facility, and excluding pass through contri- butions for the Clean Technology Fund. 4/ GFA is a pass-through account for IFFIm; therefore this FIF is presented together with IFFIm. 5/ The AMC is not a trust fund but is a FIF supported by the IBRD. 6/ The Education for All Fast Track Initiative (EFA-FTI) was established in 2002. The Global Partnership for Education Fund (GPEF) was established as a FIF in 2011 as part of the reform process of EFA-FTI. The number presented in this table represents cumulative funding to the GPEF since December 2011.   44 | 2013 Trust Fund Annual Report The World Bank Group Table 6: Financial Intermediary Funds: Cash Figure 36: Contributions to FIFs, by Donor Contributions by Donor Type ($ millions) Type, FY13 World Bank Group 1% Private Non-Provite Entities 2% Type of Donor FY09 FY10 FY11 FY12 FY13 Intergovernmental Institutions 3% Sovereign Government 4,392 5,223 5,984 7,014 6,764 Intergovernmental 135 555 71 169 203 Institutions World Bank Group 2 2 52 52 51 Private Non-Profit Entities 189 162 84 83 127 Others 18 88 57 17 8 Grand Total 4,736 6,029 6,248 7,335 7,153 Note: Includes AMC, which is a FIF but not a trust fund. AMC is included and re- ported in the IBRD’s financial statements. AMC contributions totaled $169 million in FY13, $181 million in FY12, $137 million in FY11, $72 million in FY10, and $211 million in FY09. Sovereign Governments 94% 2.4 IFC Trust Funds: Tables and Graphs Figure 37: IFC Trust Funds Cash Contributions Figure 38: IFC Trust Funds Contributions for for Advisory Services by Donor Type, FY13 Advisory Services by Donor Type, FY13 Non-sovereign donors 11% Non-sovereign donors 6% Governments 89% Governments 94% Figure 39: IFC Trust Funds Cash Contributions Regional Distribution for Advisory Services 100% SOUTH ASIA 80% MIDDLE EAST & NORTH AFRICA 60% LATIN AMERICA & THE CARRIBEAN 40% GLOBAL EUROPE & CENTRAL ASIA 20% EAST ASIA & PACIFIC 0% AFRICA FY09 FY10 FY11 FY12 FY13 The World Bank Group 2013 Trust Fund Annual Report | 45 IBRD/IDA Trust Funds: Top 10 Donors by Cash Contributions, Regional Breakdown Latin America and Caribbean total cash contributions in FY09-FY13 is $152 mln Italy $3 mln Switzerland $1 mln Netherlands $4 mln Sweden $1 mln Denmark $7 mln EU $40 mln United Kingdom $22 mln Canada $33 mln Spain $40 mln Africa total cash contributions in FY09-FY13 is $3,008 mln Other $356 mln Ireland $59 mln United Kingdom $1,122 mln Finland $65 mln Sweden $96 mln Norway $97 mln Spain $99 mln Canada $229 mln Netherlands $302 mln EU $583 mln 46 | 2013 Trust Fund Annual Report The World Bank Group Middle East and North Africa total cash Europe and Central Asia total cash contributionsin FY09-FY13 is $1,331 mln contributions in FY09-FY13 is $617 mln Spain $15 mln Other $53 mln Other $301 mln United Kingdom Russian Federation United States $284 mln $23 mln $150 mln Austria $23 mln EU $16 mln United Kingdom Denmark $26 mln $43 mln Canada $31 mln Norway France $34 mln Netherlands Sweden Sweden $43 mln $271 mln $60 mln $88 mln Australia $97 mln Kuwait $230 mln Switzerland $74 mln EU $88 mln South Asia total cash contributionsin FY09-FY13 is $4,890 mln East Asia and Pacific total cash contributions in Other $356 mln FY09-FY13 is $1,828 mln Netherlands $166 mln Indonesia $22 mln New Zealand $19 mln United States EU $186 mln $1,462 mln Switzerland $30 mln Other $58 mln Sweden $203 mln Canada $41 mln Norway $209 mln Denmark $53 mln United States Australia $742 mln Canada $259 mln $94 mln Japan $268 mln Netherlands $248 mln Australia $362 mln United Kingdom Germany $407 mln $1,012 mln United Kingdom $257 mln EU $264 mln Note: Charts exclude contributions to global programs, which account for about 40 percent of overall cash contributions to IBRD/IDA trust funds in FY09-FY13. The World Bank Group 2013 Trust Fund Annual Report | 47 Section 3. The Single Audit Report of the World Bank Group Modified Cash Basis Trust Funds This section provides excerpts from the World The Independent Auditors’ Reports, issued by Bank Group Modified Cash Basis Trust Funds KPMG LLP and included with the excerpts, are Report on Internal Control over Financial based on the complete Single Audit Report, and Reporting and Combined Statements of should be read only in conjunction with the Single Receipts, Disbursements, and Fund Balance Audit Report in its entirety. (which Management refers to and defines as the Single Audit Report). The complete Single Audit Trust funds that are reported using the modified Report can be obtained at www.worldbank.org/ cash basis of accounting are included in the financialresults. Single Audit Report. A detailed list of individual trust funds that are included in the Single Audit Report is provided in Annex 1 of the full report. The World Bank Group Modified Cash Basis Trust Funds Report on Internal Control over Financial Reporting & Combined Statements of Receipts, Disbursements and Fund Balance June 30, 2013 and 2012 Table of Contents Management’s Assertion Regarding Effectiveness of Internal Control over Financial Reporting of the Modified Cash Basis Trust Funds 50 Independent Auditors’ Report on Management’s Assertion Regarding Effectiveness of Internal Control over Financial Reporting of the Modified Cash Basis Trust Funds 52 Independent Auditors’ Report on the Combined Statements of Receipts, Disbursements and Fund Balance 54 Combined Statements of Receipts, Disbursements and Fund Balance 56 Notes to the Combined Statements of Receipts, Disbursements and Fund Balance 57 The World Bank Group 2013 Trust Fund Annual Report | 49 MANAGEMENT’S ASSERTI ON REGARDING EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING OF THE MODIFIED CASH BASIS TRUST FUNDS 1 MODIFIED CASH BASIS TRUST FUNDS 50 | 2013 Trust Fund Annual Report The World Bank Group MANAGEMENT’S ASSERTI ON REGARDING EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING OF THE MODIFIED CASH BASIS TRUST FUNDS (CONTINUED) 2 MODIFIED CASH BASIS TRUST FUNDS The World Bank Group 2013 Trust Fund Annual Report | 51 INDEPENDE NT AUDITORS’ REPORT ON MANAGEMENT’S ASSE RTION REGARDING EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING OF THE MODIFIED CASH BASIS TRUST FUNDS 3 MODIFIED CASH BASIS TRUST FUNDS 52 | 2013 Trust Fund Annual Report The World Bank Group INDEPENDENT AUDITORS ’ REPORT ON MANAGEMENT’S ASSERTION REGARDING EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING OF THE MODIFIED CASH BASIS TRUST FUNDS (CONTINUED) 4 MODIFIED CASH BASIS TRUST FUNDS The World Bank Group 2013 Trust Fund Annual Report | 53 INDEPENDENT AUDITORS ’ REPORT ON THE COMB INED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE 5 54 | 2013 Trust Fund Annual Report The World Bank Group MODIFIED CASH BASIS TRUST FUNDS INDEPENDENT AUDITORS ’ REPORT ON THE COMB INED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE (CONTINUED) 6 The World Bank Group 2013 Trust Fund Annual Report | 55 MODIFIED CASH BASIS TRUST FUNDS COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE For the fiscal years ended June 30, 2013 and June 30, 2012 Expressed in millions of U.S. dollars Notes 2013 2012 Contributions 4 $ 5,377 $ 6,094 Transfers from other trust funds 6 306 347 Other receipts 5 56 554 Net investment income 2 54 80 Advances received from the Bank 10 9 6 Trust Fund brought into the Statements 3 70 - Total receipts 5,872 7,081 Project-related disbursements 7 4,977 5,044 Refunds to donors 8 356 298 Administrative fees and expenses 9 218 236 Transfers to other trust funds 6 7 7 Advances repaid to the Bank 10 7 6 Total disbursements 5,565 5,591 Excess of receipts over disbursements before foreign currency adjustment 307 1,490 Foreign currency adjustment 2 7 (117) Excess of receipts over disbursements after foreign currency adjustment 314 1,373 Fund Balance: Beginning of the fiscal year 11,737 10,364 End of period $12,051 $11,737 Fund balance consists of: Trust Funds' share of the cash and investments in the Pool 11 $12,051 $11,737 The accompanying notes are an integral part of the Statements. 56 | 2013 Trust Fund Annual Report World Bank Group The 7 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Note 1 - Organization and operations The International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), herein collectively referred to as “the Bank”, enter into legal agreements, individually or jointly, with various external donors for funding trust funds. The Bank is the Administrator and/or Trustee of such trust funds. IBRD, IDA, IFC, and MIGA are members of the World Bank Group, which also includes the International Centre for Settlement of Investment Disputes (ICSID). Trust funds generally provide grants to meet diverse development needs, including project preparation, technical assistance, advisory services, debt relief, post conflict transition, disaster recovery, climate change and co-financing of lending projects. IBRD performs certain administrative, accounting, financial reporting and treasury services related to trust funds’ activities on behalf of the Bank. Basis of combination Individual trust funds, which are administered by the Bank and are reported using the modified cash basis of accounting, as described in Note 2, are included in the Combined Statements of Receipts, Disbursements and Fund Balance (the Statements), except as mentioned below. The list of trust funds that are included in the Statements is provided in Annex 1. These trust funds are referred to as “modified cash basis trust funds” and are combined for purpose of presenting the Statements. In addition to the modified cash basis trust funds, the Bank administers a number of other trust funds which are reported under (i) accounting principles generally accepted in the United States of America (U.S. GAAP), (ii) International Financial Reporting Standards (IFRS), (iii) special purpose basis of accounting, or (iv) another basis as defined and disclosed in the applicable trust fund financial statements. These trust funds are separately audited and excluded from the Statements. If the basis of reporting for these trust funds changes to modified cash basis and is confirmed by the donors, they will be included in the Statements (Note 3). Activities of the modified cash basis trust funds are carried out primarily in the following ways: Recipient-executed activities Recipient-executed trust funds involve activities carried out by recipient third-party executing agencies (Recipients). The Bank enters into legal agreements with and disburses funds to those Recipients, who then exercise spending authority to meet the objectives and comply with terms stipulated in these legal agreements, including submission of progress and audited financial reports to the Bank. The World Bank Group 2013 Trust Fund Annual 8 Report | 57 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Bank-executed activities Bank-executed trust funds involve activities executed by the Bank, as described in the relevant legal agreements with donors, which define the terms and conditions for use of the funds. Spending authority is exercised by the Bank. The Bank prepares the terms of reference, procures goods and services from suppliers, makes payment, and submits progress and financial reports for these activities to donors. Financial intermediary funds Financial intermediary funds comprise a heterogeneous mix of trust funds not covered by either the Bank- executed or Recipient-executed categories. They include trust funds with complex financial structures or arrangements in which the Bank provides specific administrative or financial services with a limited fiduciary or operational role. Arrangements include the administration of a variety of debt service trust funds, fiscal agency services funds and other more specialized limited fund management roles. Financial intermediary funds hold and disburse funds in accordance with the instructions from donors, or in some cases the governing bodies operating on behalf of the donors. Note 2 - Significant accounting policies Basis of presentation The Statements have been prepared on the cash receipts and disbursements basis of accounting, modified to record the modified cash basis trust funds’ share in the pooled cash and investments (see further discussions below) at fair value (modified cash basis of accounting). Accordingly, net investment income includes realized and unrealized gains/losses. The modified cash basis of accounting is a comprehensive basis of accounting other than U.S. GAAP or IFRS. Therefore, the Statements are not intended to be a presentation in conformity with U.S. GAAP or IFRS. Receipts, with the exception of net investment income as described above, are reported when collected (i.e., when credited to the modified cash basis trust funds) rather than when pledged/earned, and disbursements are reported when paid (i.e., when debited to the modified cash basis trust funds) rather than when incurred. In accordance with the modified cash basis of accounting, as described above, and with the policies adopted for the administration of the modified cash basis trust funds, certain transactions are reported in the Statements in the period in which the transactions are credited/debited to the modified cash basis trust funds, rather than in the period to which they relate. These may include contributions not credited to the modified cash basis trust funds by the period end date due to timing or other reasons; repostings of disbursements in the ordinary course of business, as deemed necessary, and any refunds of previous disbursements deemed by the Bank to be ineligible in accordance with the relevant legal agreements with the donors. 58 | 2013 Trust Fund Annual Report World Bank Group The 9 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Share in the pooled cash and investments and net investment income Amounts paid into the modified cash basis trust funds, but not yet disbursed, are managed by IBRD, on behalf of the Bank, which maintains an investment portfolio (the Pool) for all of the trust funds administered by the World Bank Group. The Pool also includes funds in ICSID’s escrow accounts. IBRD , on behalf of the World Bank Group, maintains all trust fund assets separate and apart from the funds of the World Bank Group. The Pool is divided into sub-portfolios to which allocations are made based on fund specific investment horizons, risk tolerances and/or other eligibility requirements for trust funds with common characteristics as determined by IBRD, on behalf of the World Bank Group. These sub-portfolios may hold all or a portion of the financial instruments held by the Pool. Generally, the Pool includes cash and liquid financial instruments such as government and agency obligations, time deposits, money market securities and asset-backed securities. The Pool may also include securities pledged as collateral under repurchase agreements as well as derivatives with other counterparties and receivables from resale agreements as well as derivatives for which it has accepted collateral. Additionally, the Pool includes derivative contracts such as currency forward contracts, currency swaps, interest rate swaps and contracts to purchase or sell Mortgage-Backed Securities To-Be-Announced (TBAs). Payables and receivables associated with the investment activities are also included in the Pool. The Pool is a trading portfolio and is reported at fair value, with realized and unrealized gains/losses included in net investment income. The share in the pooled cash and investments represents the modified cash basis trust funds’ share of the Pool’s fair value at the end of each reporting period. Net investment income consists of the modified cash basis trust funds’ allocated share of the following: interest income earned by the Pool, realized gains/losses from the sales of securities, and unrealized gains/losses resulting from recording the assets held by the Pool at fair value. Foreign currency adjustment The Statements are presented in U.S. dollars, the reporting currency. Transactions in currencies other than U.S. dollars are reported at the market rates of exchange in effect on the date of the transaction. At the end of each reporting period, fund balances that are not denominated in U.S. dollars are revalued at the market rates of exchange prevailing at the end of the respective reporting period. Any adjustment resulting from currency exchange rate changes is recognized as foreign currency adjustment in the Statements. Project-related disbursements made from the Bank’s resources, on behalf of the modified cash basis trust funds (refer to Notes 7 and 9), are reimbursed to the Bank by those trust funds on a regular basis. To the extent that disbursements are made in currencies other than U.S. dollars, the Bank may be reimbursed a The World Bank Group Annual Report | 59 2013 Trust Fund 10 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted different amount due to the difference in exchange rates on various dates, and such transaction gains or losses on disbursements, if any, are borne by IBRD, on behalf of the Bank. Use of estimates The preparation of the Statements requires management to make estimates and assumptions based upon information available as of the date of the Statements. Actual results could differ from these estimates. Areas in which management makes estimates and assumptions in determining the amounts to be recorded include the fair value of financial instruments. Certain reclassifications of the prior year’s numbers have been made to conform to the current year’s presentation. In particular, certain administrative expenses that were previously reported under Project- related disbursements are now reported under Administrative fees and expenses (previously “Administrative fees”). For the fiscal year ended June 30, 2012, the impact of this reclassification was an increase in Administrative fees and expenses by $141 million and a corresponding decrease in Project-related disbursements. Note 3 - Trust fund brought into the Statements Effective January 1, 2013, pursuant to the change in the basis of reporting to the modified cash basis of accounting, the Ozone Projects Trust Fund is included in the Statements for the fiscal year ended June 30, 2013 and will be included in subsequent periods. The fund balance of this trust fund as of December 31, 2012, is reported as ‘Trust fund brought into the Statements’. 60 | 2013 Trust Fund Annual Report World Bank Group The11 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Note 4 - Contributions Contributions represent funds provided by the donors, including the Bank, in support of various trust fund activities. Contributions are recognized in the modified cash basis trust funds upon receipt of funds and the countersigned legal agreements with the donors. Contributions received from various donors during the fiscal years ended June 30, 2013 and June 30, 2012, are as follows: Donor 2013 2012 Sovereign countries and European Commission United Kingdom $ 1,010 $1,159 Australia 433 587 United States 424 1,053 Norway 400 346 Netherlands 355 318 European Commission 327 341 Japan 291 281 Sweden 270 246 Canada 266 211 Germany 212 226 Switzerland 153 127 Denmark 115 142 1 Others 463 443 Subtotal 4,719 5,480 World Bank Group organizations IBRD 103 212 IFC 96 96 MIGA 2 3 Subtotal 201 311 2 Other donors 457 303 Total Contributions $5,377 $6,094 1 Includes donors whose contributions were less than $100 million during the fiscal year ended June 30, 2013. 2 Includes contributions received from other multilateral development banks, United Nations agencies, public and private institutions. The World Bank Group Annual Report | 61 2013 Trust Fund 12 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Note 5 - Other receipts Other receipts comprises the following: Receipts 2013 2012 Reimbursements of ineligible disbursements $29 $ 2 Fees for advisory and other services 11 11 Repayment of credits by recipients of amounts previously disbursed by the Trust Fund for Gaza and West Bank 9 8 Refunds from closed projects 2 2 Loan repayments and interest receipts for loans disbursed by the Global Trade Liquidity Program Trust Fund 1 528 1 Others 4 3 Total Other receipts $56 $554 1 Includes project specific receipts, investment income from agencies, etc. Note 6 - Transfers from/to other trust funds Transfers from/to other trust funds represent the transfer of funds upon receipt of instructions from donors or relevant governing bodies between the modified cash basis trust funds included in the Statements and trust funds excluded from the Statements. Note 7 - Project-related disbursements Project-related disbursements represent amounts disbursed for trust fund activities consistent with the terms of the legal agreements with the donors. Project-related disbursements by trust fund type during the fiscal years ended June 30, 2013 and June 30, 2012, are as follows: Trust fund type 2013 2012 a Recipient-executed trust funds $3,257 $3,493 b Bank-executed trust funds 940 899 c Financial intermediary funds 780 652 Total Project-related disbursements $4,977 $5,044 a. Represents disbursements from Recipient-executed trust funds to Recipients for carrying out development activities and financing the investment and recurrent needs of service delivery, capacity 62 | 2013 Trust Fund Annual Report The 13World Bank Group MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted building and technical assistance. These disbursements include payments to IBRD and IDA from debt service trust funds amounting to $26 million (2012: $45 million) towards repayment of loans and credits, on behalf of beneficiaries. b. Represents disbursements from Bank-executed trust funds: (i) to support the Bank’s own work program, including analytical and advisory activities, (ii) for trust fund administration activities, and (iii) for other project-related activities. These disbursements include $273 million (2012: $230 million) towards direct staff costs, related benefits and overheads, which were reimbursed to the Bank for its estimates of costs incurred for executing activities consistent with the legal agreements entered into with the donors of the modified cash basis trust funds. c. Represents disbursements from financial intermediary funds in accordance with instructions from donors or governing bodies operating on behalf of the donors. As part of its internal control framework, the Bank performs various compliance reviews of trust fund activities, which may result in the identification of ineligible expenditures related to the modified cash basis trust funds. In the event that disbursements which are deemed not to be eligible in accordance with the relevant legal agreements with the donors for the modified cash basis trust funds are identified, the Bank will consult with the donors to determine the appropriate remedy and account for them pursuant to the established policy. The World Bank Group Annual Report | 63 2013 Trust Fund 14 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Note 8 - Refunds to donors Refunds to donors primarily represent the return of unused fund balances upon completion of individual trust fund activities. Refunds to various donors during the fiscal years ended June 30, 2013 and June 30, 2012, are as follows: Donor 2013 2012 Sovereign countries and European Commission 1 Saudi Arabia $301 $ 3 European Commission 12 26 United Kingdom 10 33 Sweden 5 5 Netherlands 5 5 Others 8 219 Subtotal 341 291 World Bank Group organizations 2 IDA 6 6 IBRD 4 - 3 Other donors 5 1 Total Refunds to donors $356 $298 1 Includes refund of accumulated loan repayments received by the Global Trade Liquidity Program Trust fund amounting to $301 million during the fiscal year ended June 30, 2013 (2012: $3 million). 2 Represents refund of accumulated credit repayments received by the trust fund for Gaza and West bank amounting to $6 million during the fiscal year ended June 30, 2013 (2012: $6 million). In accordance with the IBRD and IDA Board resolution establishing this trust fund, the refund is made to IDA. 3 Represents refunds to other multilateral development banks, United Nations agencies, public and private institutions. 64 | 2013 Trust Fund Annual Report The 15World Bank Group MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Note 9 - Administrative fees and expenses To assist in the defrayment of the costs incurred by the Bank for the administration, supervision and oversight of modified cash basis trust funds, the Bank, charges administrative fees and expenses as applicable, pursuant to legal agreements with donors. The details are as follows: Fees and expenses charged 2013 2012 1 Administrative expenses charged $143 $141 Fee charged as a percentage of contributions received from donors 64 86 2 Other fees 11 9 Total Administrative fees and expenses $218 $236 1 Includes $99 million (2012: $98 million) towards direct staff costs, related benefits and overheads, which were reimbursed to the Bank for its estimates of costs incurred. 2 Includes fixed fee, start-up fee for new trust funds and other fee arrangements agreed upon with the donors. Note 10 - Advances received from/repaid to the Bank Advances received from the Bank in the amount of $9 million represents interest-free advances provided by the Bank to the modified cash basis trust funds during the fiscal year ended June 30, 2013 (2012: $6 million) in anticipation of receipts of contributions previously committed by donors. Repayments of advances previously made amounting to $7 million occurred during the fiscal year ended June 30, 2013 (2012: $6 million). Note 11 - Fair value of financial instruments The modified cash basis trust funds’ share in the Pool is not traded in any market; however, the underlying assets within the Pool are reported at fair value. All investment decisions are made and performance monitored at the Pool level. The disclosure on fair value measurement and fair value hierarchy is therefore at the Pool level. The fair value amount of the modified cash basis trust funds’ share in the pooled cash and investments at the end of the reporting period is also disclosed. Fair value measurements IBRD, on behalf of the World Bank Group, has an established and documented process for determining fair values. Fair value is based upon quoted market prices for the same or similar securities, where available. Financial instruments for which quoted market prices are not readily available are valued based on discounted cash flow models. These models primarily use market-based or independently-sourced market parameters such as yield curves, interest rates, volatilities, foreign exchange rates and credit curves, and may incorporate The World Bank Group Annual Report | 65 2013 Trust Fund 16 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted unobservable inputs. Selection of these inputs involves judgment. The Pool may include financial instruments such as government and agency obligations, time deposits and money market securities, asset-backed securities, securities purchased under resale agreements and securities sold under repurchase agreements, and derivatives. The techniques applied in determining the fair values of financial instruments are summarized below: Government and agency obligations and asset-backed securities Where available, quoted market prices are used to determine the fair value of government and agency obligations and asset-backed securities. For securities for which quoted market prices are not readily available, fair values are determined using model-based valuation techniques, either internally-generated or vendor-supplied, that include the standard discounted cash flow method using market observable inputs such as yield curves, credit spreads, prepayment speeds, foreign exchange rates, and funding spreads. Time deposits and money market securities Unless quoted prices are available, time deposits and money market securities are of a short term nature and are reported at face value, which approximates fair value. Securities purchased under resale agreements and securities sold under repurchase agreements Securities purchased under resale agreements and securities sold under repurchase agreements are of a short term nature and are reported at face value, which approximates fair value. Derivative contracts Derivative contracts include currency forward contracts, currency swaps, interest rate swaps and contracts to purchase or sell TBA securities. Derivatives are valued using model based valuation techniques which include the standard discounted cash flow method with market observable inputs such as yield curves, foreign exchange rates, basis spreads, and funding spreads. 66 | 2013 Trust Fund Annual Report The 17World Bank Group MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Fair value hierarchy Financial instruments representing the pooled investments for all of the trust funds administered by the World Bank Group are recorded at fair value on a recurring basis and are categorized based on the inputs to the valuation techniques as follows (in order of priority placed on the inputs): Level 1: Financial instruments whose values are based on unadjusted quoted prices for identical instruments in active markets. Level 2: Financial instruments whose values are based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or pricing models for which all significant inputs are observable, either directly or indirectly, for substantially the full term of the instrument. Level 3: Financial instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety. Thus, a Level 3 fair value measurement of the instrument may include inputs that are observable (Level 2) and unobservable (Level 3). The World Bank Group Annual Report | 67 2013 Trust Fund 18 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted The following tables present the Pool’s fair value hierarchy for financial instruments measured at fair value on a recurring basis as of June 30, 2013 and June 30, 2012. Payables and receivables associated with the investment activities and cash are not included in the fair value hierarchy table and their carrying amounts approximate their fair values. The modified cash basis trust funds’ share of the Pool’s financial instruments may comprise varying proportions among the three levels. In millions of U.S.dollars Fair Value Measurement as of June 30, 2013 Level 1 Level 2 Level 3 Total Government and agency obligations $5,257 $9,457 $- $14,714 Time deposits and money market instruments 905 6,204 - 7,109 Asset-backed securities - 2,829 - 2,829 Securities purchased under resale agreements and securities sold under repurchase agreements, net 80 (46) - 34 Derivatives, net - 59 - 59 Total of financial instruments in the Pool at fair value $6,242 $18,503 $- $24,745 In millions of U.S.dollars Fair Value Measurement as of June 30, 2012 Level 1 Level 2 Level 3 Total Government and agency obligations $4,506 $8,400 $- $12,906 Time deposits and money market instruments 529 8,145 - 8,674 Asset-backed securities - 3,349 1 3,350 Securities purchased under resale agreements and securities sold under repurchase agreements, net 50 (20) - 30 Derivatives, net - 76 - 76 Total of financial instruments in the Pool at fair value $5,085 $19,950 $1 $25,036 During the fiscal years ended June 30, 2013 and June 30, 2012 neither transfers between levels nor changes in the fair value of Level 3 securities were significant; therefore, no further disclosures on these items are included. 68 | 2013 Trust Fund Annual Report The 19World Bank Group MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Risk management related to the Pool The modified cash basis trust funds are exposed to credit risk on its share of the cash and investments in the Pool. IBRD, on behalf of the Bank, limits investments to those financial instruments with minimum credit ratings at the time of purchase in the U.S. markets or equivalent as follows:  Government and agency obligations - issued or unconditionally guaranteed by government agencies rated at least AA- if denominated in a currency other than the home currency of the issuer. Obligations issued by an agency or instrumentality of a government, a multilateral organization or any other official entity require a minimum credit rating of AA-;  Time deposits and money market instruments - issued or guaranteed by financial institutions whose senior debt securities are rated at least A-;  Asset-backed securities - minimum rating must be AAA; and  Derivatives - counterparties must have a minimum rating of A-. IBRD, on behalf of the World Bank Group, may require collateral in the form of cash or other approved liquid securities from individual counterparties in connection with resale agreements as well as derivatives. This collateral serves to mitigate IBRD’s exposure to credit risk. The risk is also mitigated through the application of eligibility criteria and volume limits for transactions with individual counterparties and through the use of mark-to-market collateral arrangements for derivatives. Under resale agreements, IBRD, on behalf of the World Bank Group, has received securities as collateral with a fair value of $80 million and $75 million as of June 30, 2013 and June 30, 2012, respectively and is permitted to sell or repledge these securities. No securities have been sold or repledged as of June 30, 2013. As of June 30, 2013 and June 30, 2012, the carrying amount of securities pledged as collateral under repurchase agreements was $46 million and $45 million, respectively. The World Bank Group Annual Report | 69 2013 Trust Fund 20 MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted The following is a summary of the collateral received/paid by IBRD, on behalf of the World Bank Group, in relation to derivatives as of June 30, 2013 and June 30, 2012: In millions of U.S. dollars 2013 2012 Collateral received at fair value $13 $128 Collateral permitted to be repledged 13 128 Amount repledged - - Collateral paid at carrying value 8 - Modified cash basis trust funds’ share of cash and investments in the Pool The modified cash basis trust funds’ share of cash and invest ments in the Pool, which was allocated to sub- portfolios based on the specific investment horizons, risk tolerances and other eligibility requirements pursuant to the trust fund legal agreements with the donors, has a fair value of $12,051 million as of June 30, 2013 (2012: $11,737 million). The following table presents investment holdings at fair values in the sub-portfolios in terms of the counterparty credit risk exposure and investment categories as of June 30, 2013 and June 30, 2012: Counterparty credit ratings 2013 2012 AA or greater 63% 65% A- or greater 99% 100% BBB+ or greater 100% - Types of financial instruments Government and agency obligations 65% 57% Time deposits and money market securities 34% 41% Asset-backed securities 1% 2% Securities purchased under resale agreements and securities sold under repurchase agreements, net * * Derivatives, net * * Total 100% 100% * Holdings of less than 0.5%. 70 | 2013 Trust Fund Annual Report The 21World Bank Group MODIFIED CASH BASIS TRUST FUNDS NOTES TO THE COMBINED STATEMENTS OF RECEIPTS, DISBURSEMENTS AND FUND BALANCE June 30, 2013 and 2012 Expressed in millions of U.S. dollars unless otherwise noted Note 12 - Subsequent events Management has evaluated subsequent events through September 27, 2013, the date these Statements were available to be issued and there are no subsequent events that would require adjustment to or disclosure in these Statements. Note 13 - List of Trust Funds included in the Statements Annex 1 provides the listing of individual trust funds which are administered by the Bank and are reported for using the modified cash basis of accounting, as described in Note 2, and therefore are included in the Statements. Certain trust funds are included in the fiscal year ended June 30, 2012, but not in the fiscal year ended June 30, 2013 because they were closed during the fiscal year ended June 30, 2012. Similarly, certain trust funds are included in the fiscal year 2013, but not in fiscal year 2012 because they were created and activated, or their basis of accounting was changed (Note 3) during the fiscal year 2013. The World Bank Group Annual Report | 71 2013 Trust Fund 22 MODIFIED CASH BASIS TRUST FUNDS Trust Fund Glossary Term Definition Administration Agreement An agreement or arrangement between the World Bank, as trustee, and a development funder, setting forth specific terms for the receipt and use of a specific contribution for a specific trust fund. Bank-executed trust fund A fund that supports the Bank’s work program. Cash contributions Contribution or installment provided in the form of cash, including encashments. Cofinancing Funding provided to supplement IBRD/IDA loans, credits, grants, or guarantees provided for a particular project or program. Commitment Amount of financing approved for project(s) or activity(ies) at the grant level. Commitment authority The amount of trust fund assets available for future commitments. Contributions receivable Any portion of a contribution that is not a qualified contribution, to be received in the form of cash or promissory note. Disbursement Cash payment to a recipient based on a commitment by the trustee; also referred to as cash transfers for FIFs, and as expenditures for IFC trust funds. Development Funder/ Any entity, including a WBG entity, making a contribution to a trust fund or a FIF. Development Partner Financial intermediary fund A fund that involves financial engineering or complex finance schemes, or for which the Bank provides a specified set of administrative, financial, or operational services. Free-standing trust fund A trust fund established to support a specified set of projects or activities agreed at the time of establishment. Funds held in trust Fund balance (i.e., cash and investments) plus promissory notes receivable. Grant The funds provided from a trust fund to an external recipient or to the Bank to implement the trust fund activities. A grant normally carries no repayment obligation when used for the agreed activities. When a grant is provided to an external recipient, the recipient signs a grant agreement, agreeing to implement the grant activities. Grant agreement An agreement between a World Bank entity, as trustee, and a recipient for the granting of funds by the trustee to the recipient under terms that involve trustee responsibility (including supervision) post-transfer. IBRD/IDA trust fund A trust fund for which IBRD/IDA implements or supervises the activities financed. 72 | 2013 Trust Fund Annual Report The World Bank Group IFC trust fund A trust fund administered by IFC. Multidonor trust fund A trust fund that may receive contributions from more than one development funder; all funds are pooled under a single set of agreed terms. MIGA trust fund A trust fund administered by MIGA. Partnership program A body that (a) facilitates agreement among partners; (b) has a multicountry scope; and (c) provides dedicated funding for implementation of a program of activities over time (IBRD/ IDA trust funds, FIFs, and/or grants from the Bank’s administrative budget, generally made through the Development Grant Facility). May be managed internally within the Bank or externally through outside organizations. Programmatic trust fund A trust fund for which the development funder(s) and trustee agree to a framework and criteria in support of a program of projects or activities. Funds are subsequently allocated to specific projects or activities for program implementation on the basis of the framework and criteria. Promissory note A document consisting of a promise to pay that is non-interest-bearing and payable on de- mand. The balance of a promissory note not yet received in cash. Promissory note receivable The balance of a promissory note not yet received in cash. Recipient Any entity receiving funds from a trust fund or FIF. Recipient-executed trust fund Funds that the Bank passes on to a third party and for which the Bank plays an operational role—i.e., the Bank normally appraises and supervises activities financed by these funds. Trust fund A financing arrangement set up to accept contributions from one or more development funders to be held and disbursed/transferred by a WBG entity as trustee in accordance with agreed terms. Trustee The WBG entity given the legal obligation to administer funds in accordance with agreed terms. World Bank Group Consists of five organizations: International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID). The World Bank Group 2013 Trust Fund Annual Report | 73 74 | 2013 Trust Fund Annual Report The World Bank Group The World Bank Group 2013 Trust Fund Annual Report | C Concessional Finance & Global Partnerships Global Partnerships and Trust Fund Operations (CFPTO) D | 2013 Trust Fund Annual Report The World Bank Group