55
F
Fiduciary Policies The World Bank fi duciary policies, set forth in the World Bank’s Policy and Procedures Framework, govern the use and fl ow of WB funds, including fi nancial management, procure- ment, and disbursement. These fi duciary policies are made binding on World Bank clients through the fi nancing agreement, which incorporates by reference the World Bank’s procurement policies and Anti- Corruption Guidelines. Fiduciary policies and guide- lines help ensure that WB funds are used for their intended purposes as required by the World Bank’s Articles of Agreement and in accordance with certain core principles, including economy, effi ciency, and transparency. Among other things, they help safeguard Bank-funded projects from fraud and corruption.Finance and Markets (See also Global Practices;
Products and Services.) One of the 14 World Bank Group Global Practices, Finance and Markets helps to create opportunity for jobs, growth, and reducing poverty.
World Bank Group and Finance and Markets Stable, effi cient, and inclusive fi nancial markets are essential to promoting economic growth and reduc- ing poverty and increasing shared prosperity.
As an integrated World Bank Group practice, the value of Finance and Markets comes from delivering
public and private sector tailored solutions to devel- opment challenges by leveraging the whole range of the WBG’s fi nancial, knowledge, advisory, and convening services for clients. The practice imple- ments comprehensive solutions that integrate World Bank services (loans, credits, guarantees, advisory services, and risk management products) and IFC services (advisory services and investments in pri- vate sector fi rms). The Finance and Markets Global Practice is also an enabler of all the other Global Practices and Cross-Cutting Solutions Areas, given the essential role that fi nance plays in delivering solutions and partnering with the broader World Bank Group fi nance team.
World Bank and Finance and Markets
Government policies have a decisive impact on shap- ing the business environment for the private sector.
The international development community can best support government policies for the business envi- ronment in fi ve key areas:
• Developing a regulatory environment that fos- ters opportunities for entrepreneurship and job creation
• Facilitating access to a broad range of fi nancial services—for fi rms and for households
56 • FINANCE AND MARKETS THE WORLD BANK GROUP A TO Z 2016
• Mobilizing the private sector to off er the poor as consumers better services, such as housing fi nance and insurance
• Supporting developing countries in building robust fi nancial systems that are resilient to shocks
• Measuring the development results of the World Bank Group’s private sector activities and helping to advance results measurement in the develop- ment community
Financing Instruments. Financing instruments include the following:
• Development policy fi nancing provides IBRD loan, IDA credit/grant, and IBRD/IDA guarantee budget support to governments for a program of policy and institutional actions that help achieve sustainable shared growth and poverty reduction.
• Program-for-Results links disbursement of funds directly to the delivery of defi ned results, helping countries improve the design and implementa- tion of their own development programs and achieve lasting results by strengthening institu- tions and building capacity.
• Trust funds and grants allow scaling up of activi- ties, notably in fragile and crisis-aff ected situations;
Egypt needs about 300,000 new homes a year, plus more to deal with a backlog. Relatively little building, houses left empty, and low incomes have led to informal housing. About 12–20 million people live in informal housing areas. The new $500 million Inclusive Housing Finance Program improves access to home ownership and rental property for low-income households. More than 3.6 million people should benefi t, including 1.6 million people living below the Household Poverty Line. © World Bank/Sabry Khaled. Permission required for reuse.
TOSEEASIMILARPROJECTINACTION, WATCHTHEVIDEOAThttps://www.youtube.com/watch?v=jAej-l9t-Gc
THE WORLD BANK GROUP A TO Z 2016 FINANCE AND MARKETS • 57
enable the Bank Group to provide support when its ability to lend is limited; provide immediate assis- tance in response to natural disasters and other emergencies; and pilot innovations that are later mainstreamed into Bank Group operations.
• Private sector options for fi nancing, direct invest- ment, and guarantees are also provided by MIGA and IFC. IBRD/IDA guarantees are issued in favor of the private sector.
• Customized options and risk management.
These include IBRD fl exible loans, local cur- rency loans, fi nancing for subnationals, and con- tingent fi nancing.
• Investment Project Financing (IPF) provides IBRD loan, IDA credit/grant, as well as IBRD and IDA guarantee fi nancing in support of clients for activities that create the physical or social infra- structure necessary to reduce poverty and create sustainable development. IPF focuses on long- term (5–10 years) fi nance of goods, works, ser- vices, and other types of expenditures. These investment projects encompass a broad range of sectors—from agriculture to urban development, rural infrastructure, education, and health.
The WB’s investment project fi nancing not only supplies developing countries with needed fi nanc- ing but also serves as a vehicle for sustained global knowledge transfer and technical assistance. This assistance includes support to analytical and design work in the conceptual stages of project preparation, technical support and expertise (including project management and fi duciary and safeguards activities) during implementation, and institution building throughout the project.
Technical Assistance. The World Bank Group’s professional technical advice supports legal, policy, management, governance, and other reforms needed for a country’s development goals. The WBG’s wide-ranging knowledge and skills help countries
build accountable and effi cient public sector institu- tions to sustain development in ways that benefi t their citizens over the long term. WBG staff mem- bers off er advice and support governments in the preparation of documents, such as draft legislation, institutional development plans, country-level strat- egies, and implementation action plans. The WBG can also assist governments in shaping or putting in place new policies and programs.
Reimbursable Advisory Services. By client request, the World Bank can provide reimbursable advisory services, which can be used when the WB cannot fully fund an activity within the existing budget. This service can include traditional knowledge and advi- sory work as well as convening services. Subject to appropriate safeguards and risk management, the WB may provide technical assistance for project- related preparation and implementation support services—except for advice directly related to engi- neering or fi nal design.
Economic and Sector Work. In collaboration with country clients and development partners, WB country staff gather and evaluate information (data, policies, and statistics) about the existing economy, government institutions, or social services systems.
The data provide a starting point for policy and strategic discussions with borrowers and help enhance a country’s capacity and knowledge.
Studies and analytical reports support clients in planning and implementing eff ective development programs and projects.
Donor Aid Coordination. The World Bank Group acts, on occasion, as a coordinator of organized regu- lar interaction among donors (governments, aid agencies, humanitarian groups, foundations, devel- opment banks). Activities range from simple infor- mation sharing and brainstorming, to cofi nancing a particular project, to joint strategic programming in a country or region. Activities also include the prep- aration of donor coordination events such as
58 • FINANCIAL MANAGEMENT THE WORLD BANK GROUP A TO Z 2016
consultative group meetings ( joint meetings of part- ners) focused on a particular issue or country.
IFC and Finance and Markets
Sound, inclusive, and sustainable fi nancial markets are vital to development because they ensure effi - cient resource allocation. IFC’s work with fi nancial intermediaries has helped strengthen fi nancial insti- tutions and overall fi nancial systems.
Working through fi nancial intermediaries enables IFC to encourage them to become more involved in sectors that are strategic priorities—such as women- owned businesses and climate change—and in under- served regions such as fragile and confl ict- aff ected states as well as in housing, infrastructure, and social services.
In fi scal year 2015, IFC’s new long-term com- mitments in fi nancial markets totaled more than
$4.7 billion, about 45 percent of commitments for IFC’s own account.
Financial Management As a function of good gov- ernance, Financial Management (FM) forms an inte- gral part of the development process in all WB-fi nanced operations and country institutional strengthening eff orts, and is crucial to achieving the WBG goals of ending extreme poverty and boosting shared prosper- ity in a sustainable way. The WB’s FM work has dual objectives that are closely intertwined: to support bor- rowing countries in improving their fi nancial manage- ment performance and capacity while encouraging public disclosure and transparency, and to provide rea- sonable assurance on the use of WB loan proceeds.
Sound public fi nancial management (PFM) ensures accountability and effi ciency in the management of public resources and is an essential underpinning to improve governance and fi ght corruption.
Building Country Capacity
At the country level, FM staff collaborate across the WBG and with international accounting and audit- ing bodies and donor partners to help countries strengthen their FM capacity in both the public
and private sectors. FM specialists focus on help- ing countries develop sound fi nancial systems and practices, including a strong accountancy profession with quality corporate fi nancial reporting, effi cient delivery of services, and enhanced accountability and transparency in the use of public resources.
FM Policies in WB-Financed Operations
In accordance with the WB’s operational policies and procedures, FM specialists work with partner countries to design fi nancial management and dis- bursement arrangements and to supervise and sup- port the performance of WB-fi nanced operations.
The WB’s current portfolio of operations consists of more than 2,000 active projects with commitments of over $182 billion.
Engagement with Global Partners
At the international level, the WBG engages in global partnerships with development partner organiza- tions to promote FM standards and FM capacity development initiatives. As well, staff play leadership roles in partnerships with bilateral and multilateral donors to coordinate and harmonize FM policy and operational practices, which enhances development eff ectiveness.
; http://go.worldbank.org/0HI4LODL60
Financial Products and Services (See also Products and Services; Finance and Markets.) The World Bank Group off ers a number of innovative fi nancing instruments and banking products for a wide variety of projects, sectors, and investors:
Investment Project Financing provides IBRD loan, IDA credit/grant, and guarantee fi nancing to clients for activities that create the physical and social infra- structure necessary to reduce poverty and create sustainable development.
Development Policy Financing provides IBRD loan, IDA credit/grant, and guarantee budget support to clients for a program of policy and institutional actions that help achieve sustainable shared growth and poverty reduction.