Operations Policy and Country Services June 18, 2002

1. opcs Adaptable Program Loans (APLs):Emerging Findings Operations Policy and Country Services June 18, 2002

2. Contents • When to Use APLs • Facts and Figures • Emerging Findings • Outlook

3. When to Use APLs • When there is a long-term vision of sector reform (buy-in from relevant stakeholders)—rationale in PER • When there is upfront agreement on the policy framework and triggers—risk management aspects • When there is a need for donor coordination under a common strategy

4. Facts and Figures • 112 APLs for $5 billion, or 9% of Bank volumes • APLs avg. 10 years compared to 6 years for others • APLs avg. 2-3 phases of 3-4 years each • APLs avg. $100 mil. per program; $40 mil. per phase

5. Facts and Figures • APLs under implementation: • Sectoral share:

6. Finding: APLs by Type

7. Findings: PER Work in APLs • 88% of APLs approved fell within an IMF program or Bank adjustment program underpinning macro/fiscal policy • 84% of APLs had the necessary policy framework in place • 62% of APLs are underpinned by recent PER

8. Findings: Triggers • Triggers are mostly of the input/output type, but also of institutional/capacity building and policy reforms—mixed approach • too much emphasis on output indicators says too little about progress on institutional/policy reforms • too much emphasis on institutional/policy reforms does not say whether reforms are working in practice

9. Findings: Triggers • Triggers are based on tangible and concrete performance targets essential for the success of the program • More specificity in triggers helps guide implementation and discourage unambiguous monitoring results • Triggers more specific in higher performing countries

10. Findings: M&E • 25% of APLs had the necessary M&E systems in place at the outset of the program (e.g., like having the software but not the hardware to run the program). Most of these were sector-wide APLs. • 40% of APLs had the necessary baseline information at the outset of the program. • 50% of APLs incorporated M&E in management decision making—mixed record on accountability

11. Findings: M&E • 80 percent of APLs had performance indicators consistent with the APL program and trigger strategy • Selectivity of performance indicators important for triggers (most triggers are drawn from performance indicators and in some cases they are the same) • APLs forces task manager to think ahead about triggers and performance indicators—their progressive sequencing in time and how they link the different phases to the long-term development program.

12. Findings: M&E • New approaches are emerging in some APLs: • Donors and borrowers are beginning to assess performance based on outcome and results at the program level—beyond the project level—and this is happening particularly in some sector wide APLs • But still early to tell—not that many second phase APLs around

13. Findings: Why not many second phase APLs

14. When to Use APLs • When there is a long-term vision of sector reform (buy-in from relevant stakeholders)—rationale in PER • When there is upfront agreement on the policy framework and triggers—risk management aspects • When there is a need for donor coordination under a common strategy

15. Outlook • Outlook for APLs: • APLs here to stay-- will continue growing • We continue to learning • So far, APLs being used as intended – to support the implementation of long-term development programs. • Adaptable Lending: Third Review of Experience (forthcoming).