ADF-11 Resource Allocation...Total expected resources under ADF-11 amount to UA 5.95 billion. As of...
28
ADF-11 Resource Allocation by Ms. Marie-Ange Saraka-Yao Manager, Resource Mobilization and Allocation Division ADF-11 MTR 20-21 October Helsinki
ADF-11 Resource Allocation...Total expected resources under ADF-11 amount to UA 5.95 billion. As of end-September 2009, resources available for commitment 椀 攀 椀渀琀攀爀渀愀氀
Ms. Marie-Ange Saraka-YaoManager, Resource Mobilization and Allocation Division
ADF-11 MTR
20-21 October
Helsinki
Outline of Presentation
1 Resource utilization and availability
2 Results of the allocation framework
3 Issues to be discussed
1
OutlineOutline
Resource utilization has been frontloaded as requested by Deputies
2
55%
75%
97%81% 87%
100%
75% 77%
100%
0%
20%
40%
60%
80%
100%
Sept 2009 (actual) end 2009 (projected) end 2010 (projected)PBA utilization RO utilization FSF utilization
Resource Utilization Resource Utilization
15 15 2
13
408 515 386
129
965 965 786
179 4,142
2,997
2,289
708
417
5,948
4,492
3,462
1,030
Expected Available Committed Balance
ContingenciesPBA Resources*RO envelopeFSFPPF
Resources Available for Allocation are Drying Up
o Frontloaded use of resources
o Resources currently available insufficient to sustain pipeline of projects until year end and in Q1 2010 (UA 1,185 m)
o Subscriptions, including 3rd installment, paid as early as possible if the ADF is to continue to provide funds
In UA millions, as of end-September ‘09 * PBA resources are corrected for impact of negative contingencies
3
Resource Availability Resource Availability
Présentateur�
Commentaires de présentation�
Total expected resources under ADF-11 amount to UA 5.95 billion. As of end-September 2009, resources available for commitment (i.e., internal resources and received unqualified subscriptions) stood at UA 4.49 billion, of which UA 3.46 billion or 77 percent had been committed. This represents more than a doubling of the volume at the time of the ADF-10 MTR. The pipeline of ADF operations scheduled for presentation to the Board of Directors between end-September 2009 and end-March 2010 totals UA 1.185 billion, i.e. more than the Fund’s current total commitment capacity of UA 1.030 billion, based on received unqualified subscriptions as of end September 2009. Therefore, the ADF will be unable to authorize commitments corresponding to its full 2009 and first quarter of 2010 pipeline unless all 2009 subscriptions are paid as due and donor countries pay (in cash or in promissory notes) the third installment of their subscription early, preferably in December 2009 instead of end March 2010. We therefore urge you most strenuously to pay this third installment as soon as possible, and to authorize the early commitment of your subscription in order to allow the ADF to continue to provide resources to ADF countries. �
Expected Available Committed Balance Pipeline until December
Pipeline until March
965 965 786
179 53 109
‐
200
400
600
800
1,000
1,200
Expected Available Committed Balance Pipeline until December
Pipeline until March
RO envelope
515 515
386
129
10 70
‐
100
200
300
400
500
600
Expected Available Committed Balance Pipeline until December
Pipeline until March
Fragile States Facility
Including carryover
4
Resource Constraints Resource
Constraints
Performance Based Allocations
Lack of PBA resources means loss of flexibility
Présentateur�
Commentaires de présentation�
This slide shows the breakdown for three ADF windows (PBA, RO envelope, FSF). The UA 1.030 billion of commitment capacity which I mentioned is split among these windows and is not transferable among them. For the RO envelope and FSF, the current balance is enough to support the pipeline through March. The resource gap is in the PBA envelope. There, the pipeline of projects until the end of the year outweighs the balance of resources by UA 93 million, and the pipeline through March outweighs the resources available by UA 298 million. We therefore need your early payments if the ADF is to commit the full pipeline of PBA projects through end March. Apart from financing the current pipeline, there is the additional issue of flexibility. The pipeline is dynamic and can still increase. We do not know, for example, what kinds of requests we will still receive from ADF countries who are struggling with the economic consequences of the food, fuel and financial crises. We do know that with a shortage of resources, we have no flexibility at all to respond to these requests. Not only are we unable to fulfil existing demand, we cannot fulfil unforeseen additional demand. In order for the ADF to be able to continue its critical support to ADF countries, there are two options: 1) as many donor countries as possible pay the third instalment of their subscription early, i.e. in December. 2) donor countries who are willing and able agree to top up ADF-11 with additional contributions. �
Expected Available Committed Balance Pipeline until December
Pipeline until March
Including carryover
5
Resource Constraints Resource
Constraints
Performance Based Allocations
Lack of PBA resources means loss of flexibility
Third installmentis paid earlyThird installmentis paid early
Présentateur�
Commentaires de présentation�
This slide shows the breakdown for three ADF windows (PBA, RO envelope, FSF). The UA 1.030 billion of commitment capacity which I mentioned is split among these windows and is not transferable among them. For the RO envelope and FSF, the current balance is enough to support the pipeline through March. The resource gap is in the PBA envelope. There, the pipeline of projects until the end of the year outweighs the balance of resources by UA 93 million, and the pipeline through March outweighs the resources available by UA 298 million. We therefore need your early payments if the ADF is to commit the full pipeline of PBA projects through end March. Apart from financing the current pipeline, there is the additional issue of flexibility. The pipeline is dynamic and can still increase. We do not know, for example, what kinds of requests we will still receive from ADF countries who are struggling with the economic consequences of the food, fuel and financial crises. We do know that with a shortage of resources, we have no flexibility at all to respond to these requests. Not only are we unable to fulfil existing demand, we cannot fulfil unforeseen additional demand. In order for the ADF to be able to continue its critical support to ADF countries, there are two options: 1) as many donor countries as possible pay the third instalment of their subscription early, i.e. in December. 2) donor countries who are willing and able agree to top up ADF-11 with additional contributions. �
Disbursement rates (excluding PBL & FSF) increased significantly over time
6
5%
10%
15%21%
15%
22%
0%
5%
10%
15%
20%
25%
Q1 Q2 Q3 Q4
Dis
burs
emen
t rat
es* (
%)
2009
2008
2007
2006
* disbursement rates are calculated as disbursements within the calendar year divided by stock of undisbursed loans and grants at thebeginning of the year; Dudget Support operations and transfer to FSF are excluded
DisbursingDisbursing
13% in 2006 & 2007
16% in 2008
21% to 22% in 2009
Outline of Presentation
1 Resource utilization and availability
2 Results of the allocation framework
3 Issues to be discussed
7
Allocation Framework Allocation
Framework
Set AsidesFSF & RO without cost‐sharing10%
Direct PBA75%
PBA LinkedFSF 1 & RO with cost‐sharing15%
ADF-11 resources have been used as agreedo Performance-based
allocation: • Country performance
assessment• Debt sustainability
Framework• MDRI netting out
o Set-asides: • regional operations, • fragile states
8
Allocation Framework Allocation
Framework
Présentateur�
Commentaires de présentation�
ADF resources available for allocation are divided between PBA resources, which represent 75 percent of total resources after deductions for contingencies, and supplemental resources for regional operations (17.5 percent) and fragile states (7.5 percent). The figure shows the status of commitments for each these resources and demonstrates that resource allocation will have been strongly frontloaded by the end of 2009. We expect that not all countries will fully use their PBA allocation by the end of the ADF-11 period (for example Angola, Guinea, Madagascar); unused resources will flow into ADF-12 as carry-over. So far in ADF-11 [end-Sept. 2009], 67 percent of country PBA commitments have been for investment projects and 33 percent have been for policy-based loans (PBLs). The significant share of PBLs is due in part to high demand early in the cycle for fast-disbursing instruments. The current 2009-2010 pipeline indicates that the share of PBLs will fall below the 25 percent ceiling for PBLs agreed for ADF-11 by the end of the cycle. However, in the context of the economic and financial crisis, ongoing dialogue with RMCs indicates that there is still solid demand for crisis-related PBLs, which may lead PBLs to exceed the 25 percent ceiling. Management is closely monitoring this ratio and will report to the Board of Directors if demand exceeds the 25 percent threshold. Countries receive their allocation in the form of loans, grants, or a mix thereof in accordance with the Debt Sustainability Framework. As of end-September 2009, 73% of ADF-11 PBA resources have been allocated in the form of loans and 27% in the form of grants.�
First Quintile, 37.20%
Second Quintile, 28.10%
Third Quintile, 20.70%
Fourth Quintile, 6.80%
Fifth Quintile, 7.20%
The Allocation Framework is Yielding Solid Resultso Top performers
consistently receive a larger resource share
9
Allocation Framework Allocation
Framework
Présentateur�
Commentaires de présentation�
The allocation system is working well. Firstly, 90% of resources are allocated on the basis of performance. 75% directly through the PBA system, and 15% through FSF pillar I (supplemental resources, based on ADF-10 allocation) and the cost-sharing element of Regional Operations. Only the resources for FSF pillars II and III and the ROs without cost sharing are not based on performance. Secondly, the top performing countries consistently receive a larger share of the resources. Since ADF-9, the two strongest performing quintiles have received approximately 67% of the resources. Thirdly, by netting out the amount of MDRI debt relief from the allocations of HIPC completion point countries and redistributing the compensation received from donors to the 38 ADF-only countries through the PBA system, it is not only the HIPC countries which benefit from MDRI debt relief but all ADF-only countries. Also, the performance-based system is reinforced.�
The Allocation Framework is Yielding Solid Resultso Top performers
consistently receive a larger resource share
o MDRI benefits all ADF countries through redistribution of netting out
10
Allocation Framework Allocation
Framework
Présentateur�
Commentaires de présentation�
The allocation system is working well. Firstly, 90% of resources are allocated on the basis of performance. 75% directly through the PBA system, and 15% through FSF pillar I (supplemental resources, based on ADF-10 allocation) and the cost-sharing element of Regional Operations. Only the resources for FSF pillars II and III and the ROs without cost sharing are not based on performance. Secondly, the top performing countries consistently receive a larger share of the resources. Since ADF-9, the two strongest performing quintiles have received approximately 67% of the resources. Thirdly, by netting out the amount of MDRI debt relief from the allocations of HIPC completion point countries and redistributing the compensation received from donors to the 38 ADF-only countries through the PBA system, it is not only the HIPC countries which benefit from MDRI debt relief but all ADF-only countries. Also, the performance-based system is reinforced.�
Outline of Presentation
1 Resource utilization and availability
2 Results of the allocation framework
3 Issues to be discussed
11
Issues for discussion Issues for discussion
Experience of Implementation: Key Issues
o Programming for countries with small allocations
12
Issues for discussion Issues for discussion
Présentateur�
Commentaires de présentation�
During two years of implementation several issues have come forward which should be addressed during the ADF-12 replenishment discussions. The first issue is the volatility of CPPRs. Despite the measures taken in the ADF-11 framework, substantial volatility in CPPRs remains a main source of volatility in ADF country allocations, as is the case at other multilateral development banks. It is much higher than any other component of the Country Performance Assessment formula. The quality of the ratings and the size of the portfolio are two of the main factors accounting for the swing in portfolio ratings from one year to the next. Efforts are being undertaken to improve the quality of the ratings through various supervision enhancement procedures presently being implemented by the Quality Assurance and Results department. But the small size of the portfolios of ADF countries—which average 11 projects, with a wide variation between countries—remains a key factor. The smaller the number of projects in the portfolio, the larger the impact on the CPPR of a deterioration in the performance of one of the projects. A second challenge, in the slightly more distant future, is the netting out of MDRI debt relief. The amount of debt cancellation provided under the MDRI will increase steadily over the coming years and will reach its peak around 2025. These amounts will be netted out from MDRI countries’ allocations and re-allocated to all ADF countries, as described earlier. While the overall level of MDRI netting out is expected to remain low relative to total allocations, the volatility in individual country allocations resulting from MDRI netting out may pose operational challenges for the Fund. The allocations of a small number of countries could decrease by more than 25 percent. While the ultimate impact of MDRI netting out will depend on the size of future replenishments, the Fund’s ability to provide financial support in the form of ADF allocations to some ADF countries could be significantly impacted. Thirdly, the impending graduation of Cape Verde, the first country to become a blend country since the Bank adopted the World Bank’s Credit Policy in 1995, and the possible graduation of additional countries, raises the need for the Bank to develop a graduation policy to provide blend countries with an adequate mix of resources during their transition to creditworthiness for pure ADB financing. In the paper on the blend policy we requested your guidance on a number of issues. We thank you for your comments and will present a proposal during the ADF-12 replenishment discussion. �
Experience of Implementation: Key Issues
o Programming for countries with small allocations
o Portfolio performance brings volatility to allocations
• Even though the methodology has been revised to exclude potentially problematic projects, volatility remains high
Average Variation 2008-2009
CPIA CPPR Governance Rating
2 percent 25 percent 5 percent
13
Issues for discussion Issues for discussion
Présentateur�
Commentaires de présentation�
During two years of implementation several issues have come forward which should be addressed during the ADF-12 replenishment discussions. The first issue is the volatility of CPPRs. Despite the measures taken in the ADF-11 framework, substantial volatility in CPPRs remains a main source of volatility in ADF country allocations, as is the case at other multilateral development banks. It is much higher than any other component of the Country Performance Assessment formula. The quality of the ratings and the size of the portfolio are two of the main factors accounting for the swing in portfolio ratings from one year to the next. Efforts are being undertaken to improve the quality of the ratings through various supervision enhancement procedures presently being implemented by the Quality Assurance and Results department. But the small size of the portfolios of ADF countries—which average 11 projects, with a wide variation between countries—remains a key factor. The smaller the number of projects in the portfolio, the larger the impact on the CPPR of a deterioration in the performance of one of the projects. A second challenge, in the slightly more distant future, is the netting out of MDRI debt relief. The amount of debt cancellation provided under the MDRI will increase steadily over the coming years and will reach its peak around 2025. These amounts will be netted out from MDRI countries’ allocations and re-allocated to all ADF countries, as described earlier. While the overall level of MDRI netting out is expected to remain low relative to total allocations, the volatility in individual country allocations resulting from MDRI netting out may pose operational challenges for the Fund. The allocations of a small number of countries could decrease by more than 25 percent. While the ultimate impact of MDRI netting out will depend on the size of future replenishments, the Fund’s ability to provide financial support in the form of ADF allocations to some ADF countries could be significantly impacted. Thirdly, the impending graduation of Cape Verde, the first country to become a blend country since the Bank adopted the World Bank’s Credit Policy in 1995, and the possible graduation of additional countries, raises the need for the Bank to develop a graduation policy to provide blend countries with an adequate mix of resources during their transition to creditworthiness for pure ADB financing. In the paper on the blend policy we requested your guidance on a number of issues. We thank you for your comments and will present a proposal during the ADF-12 replenishment discussion. �
Experience of Implementation: Key Issues
o Programming for countries with small allocations
o Portfolio performance brings volatility to allocations
• Even though the methodology has been revised to exclude potentially problematic projects, volatility remains high
o Based on estimates, MDRI netting out may significantly reduce the ADF allocations of a small number of countries in the future
14
Issues for discussion Issues for discussion
Présentateur�
Commentaires de présentation�
During two years of implementation several issues have come forward which should be addressed during the ADF-12 replenishment discussions. The first issue is the volatility of CPPRs. Despite the measures taken in the ADF-11 framework, substantial volatility in CPPRs remains a main source of volatility in ADF country allocations, as is the case at other multilateral development banks. It is much higher than any other component of the Country Performance Assessment formula. The quality of the ratings and the size of the portfolio are two of the main factors accounting for the swing in portfolio ratings from one year to the next. Efforts are being undertaken to improve the quality of the ratings through various supervision enhancement procedures presently being implemented by the Quality Assurance and Results department. But the small size of the portfolios of ADF countries—which average 11 projects, with a wide variation between countries—remains a key factor. The smaller the number of projects in the portfolio, the larger the impact on the CPPR of a deterioration in the performance of one of the projects. A second challenge, in the slightly more distant future, is the netting out of MDRI debt relief. The amount of debt cancellation provided under the MDRI will increase steadily over the coming years and will reach its peak around 2025. These amounts will be netted out from MDRI countries’ allocations and re-allocated to all ADF countries, as described earlier. While the overall level of MDRI netting out is expected to remain low relative to total allocations, the volatility in individual country allocations resulting from MDRI netting out may pose operational challenges for the Fund. The allocations of a small number of countries could decrease by more than 25 percent. While the ultimate impact of MDRI netting out will depend on the size of future replenishments, the Fund’s ability to provide financial support in the form of ADF allocations to some ADF countries could be significantly impacted. Thirdly, the impending graduation of Cape Verde, the first country to become a blend country since the Bank adopted the World Bank’s Credit Policy in 1995, and the possible graduation of additional countries, raises the need for the Bank to develop a graduation policy to provide blend countries with an adequate mix of resources during their transition to creditworthiness for pure ADB financing. In the paper on the blend policy we requested your guidance on a number of issues. We thank you for your comments and will present a proposal during the ADF-12 replenishment discussion. �
Experience of Implementation: Key Issues
o Programming for countries with small allocations
o Portfolio performance brings volatility to allocations
• Even though the methodology has been revised to exclude potentially problematic projects, volatility remains high
o Based on estimates, MDRI netting out may significantly reduce the ADF allocations of a small number of countries in the future
o Graduation policy will need to be adopted to ensure an adequate mix of resources is provided to graduating countries (Cape Verde, possibly Angola)
15
Issues for discussion Issues for discussion
Présentateur�
Commentaires de présentation�
During two years of implementation several issues have come forward which should be addressed during the ADF-12 replenishment discussions. The first issue is the volatility of CPPRs. Despite the measures taken in the ADF-11 framework, substantial volatility in CPPRs remains a main source of volatility in ADF country allocations, as is the case at other multilateral development banks. It is much higher than any other component of the Country Performance Assessment formula. The quality of the ratings and the size of the portfolio are two of the main factors accounting for the swing in portfolio ratings from one year to the next. Efforts are being undertaken to improve the quality of the ratings through various supervision enhancement procedures presently being implemented by the Quality Assurance and Results department. But the small size of the portfolios of ADF countries—which average 11 projects, with a wide variation between countries—remains a key factor. The smaller the number of projects in the portfolio, the larger the impact on the CPPR of a deterioration in the performance of one of the projects. A second challenge, in the slightly more distant future, is the netting out of MDRI debt relief. The amount of debt cancellation provided under the MDRI will increase steadily over the coming years and will reach its peak around 2025. These amounts will be netted out from MDRI countries’ allocations and re-allocated to all ADF countries, as described earlier. While the overall level of MDRI netting out is expected to remain low relative to total allocations, the volatility in individual country allocations resulting from MDRI netting out may pose operational challenges for the Fund. The allocations of a small number of countries could decrease by more than 25 percent. While the ultimate impact of MDRI netting out will depend on the size of future replenishments, the Fund’s ability to provide financial support in the form of ADF allocations to some ADF countries could be significantly impacted. Thirdly, the impending graduation of Cape Verde, the first country to become a blend country since the Bank adopted the World Bank’s Credit Policy in 1995, and the possible graduation of additional countries, raises the need for the Bank to develop a graduation policy to provide blend countries with an adequate mix of resources during their transition to creditworthiness for pure ADB financing. In the paper on the blend policy we requested your guidance on a number of issues. We thank you for your comments and will present a proposal during the ADF-12 replenishment discussion. �
Conclusion
o The PBA system plays a key role in the resource allocation mechanism under ADF-11 and will continue to do so.
o Implementation issues have been identified and will be discussed in the context of ADF-12.
o Commitments are being frontloaded as requested by the G20. Donor countries are thus encouraged to expedite payment of their installments so that ADF can continue its mission.
16
ConclusionConclusion
THANK YOU
17
BACKUP SLIDES
18
-
1,000
2,000
3,000
4,000
5,000
6,000
Q1/'08 Q3/'08 Q1/'09 Q3/'09 Q1/'10 Q3/'10
Other instrumentsCapacity-BuildingBudget Support
Due to approvals early in the cycle, the overall share of governance projects will go down from 33% to 23%
33%of PBA
23%of PBA
1919
49%
79%
20%
55%
33%
4%
69%
28%
13% 11% 12%5% 6% 11% 5%
0%
20%
40%
60%
80%
100%
PBA RO FSF, excl arrears clearance
TOTAL
Infrastructure Governance/PBLs Agriculture & Rural Devt Human Development
Sector focus in line with core priorities was preserved for PBA, as well as RO and FSF
Human Development Agriculture & rural Devt Governance Infrastructures
Cost Sharing
67%
RPG22%
Small Cap11%
Number of countries per DSF traffic light category, 2005-2009
23
14
5
21
16
4
20
13
9
18
14
8
18
14
8
18
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009
Red
Yellow
Green
23
Number of ADF Countries by HIPC Status and Traffic Light Designation, 2005-2009
912
9 9 95 4 4 5 5
42 7 7 7
1 2 2 1 1
13
3 3 4
108 7 9 9 8 8 7
5 4
2 1 1 1 1
0
5
10
15
20
25
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
Completion Point Decision Point Pre‐Decision Point Non‐HIPC
Red
Yellow
Green
24
Share of loans and grants in PBA allocations, 2005-2009
25
65.7% 71.5% 71.8% 74.5% 74.4%
34.3% 28.5% 28.2% 25.5% 25.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009
Grants
Loans
August 2009 Review of the DSF
• IMF and WB approved adjustments to DSF :– Emphasis on diagnostic tool;– Greater focus on investment – growth nexus– Remittances– Flexibility for public enterprises
• Changes will become effective in all DSAs in 2010
26
Revision of the NCBP
o IMF approved revised concessionality policy in August 2009
o Shift from one-size-fits-all approach, to country specific approach
o Non concessional debt limits determined based on –Debt vulnerability–Debt Management Capacity
o ADF will revise its NCBP in coordination with IDA
![Welcome [isana.proceedings.com.au]isana.proceedings.com.au/wp-content/uploads/2017/12/... · 2017. 12. 14. · Welcome and overview\爀吀栀椀猀 猀攀猀猀椀漀渀†ጀ 椀渀琀攀爀愀挀琀椀瘀攀㬀](https://img.pdfslide.net/doc/110x75/5ff1b9d2ae293132d44ccff7/welcome-isana-isana-2017-12-14-welcome-and-overviewccoe-coecoecoeaoe.jpg)
