Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting...
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![Page 1: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/1.jpg)
Committing IDA for a longer term?
Gaiv TataOperations Manager, FRM
PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable
Dec. 17, 2007
![Page 2: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/2.jpg)
Outline
• Significance of IDA in recipient countries and current estimates of IDA predictability
• The IDA cycle and causes of volatility
• Distinguishing between volatility and predictability
• Changes needed for IDA to commit longer-term
![Page 3: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/3.jpg)
Significance of IDA for recipient countries
IDA disbursement in percent of government expenditure (annual and country average)
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IDA7 IDA8 IDA9 IDA10 IDA11 IDA12 IDA13 IDA14(FY06-7)
IDA disbursement in percent of GDP(annual and country average)
0
0.5
1
1.5
2
2.5
IDA7 IDA8 IDA9 IDA10 IDA11 IDA12 IDA13 IDA14(FY06-7)
IDA disbursement in 2000 US$ per capita
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IDA7 IDA8 IDA9 IDA10 IDA11 IDA12 IDA13 IDA14(FY06-7)
IDA disbursement (annual average)
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IDA7 IDA8 IDA9 IDA10 IDA11 IDA12 IDA13 IDA14 (FY06-7)
US
$ b
illi
on
s
•IDA flows increased both in current dollar and constant per capita terms.
•Its macroeconomic importance was stable over the sample IDA replenishment period.
• 1.5 to 2 percent of GDP
• 6 to 9 percent of general government expenditure
Source: World Economic Outlook and the World Bank; staff calculations.Sample size: 80 current IDA members.
![Page 4: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/4.jpg)
Volatility of IDA Disbursements Compared to Other ODA
• IDA disbursements are less volatile than other ODA as well as domestic revenues across different time periods.
Source: World Economic Outlook, the World Bank, OECD DAC; staff calculations.
Standard Deviations
Sources of Funds 1980-2003 1980-1989 1990-1999
Domestic Revenues 3.65 3.18 2.52
ODA total 6.54 4.91 5.63
ODA multilateral 3.50 2.66 2.87
IDA assistance 1.16 0.75 1.07
Other multilateral assistance 2.77 2.19 2.21
![Page 5: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/5.jpg)
Outline
• Significance of IDA in recipient countries and current estimates of IDA predictability
• The IDA cycle and causes of volatility
• Distinguishing between volatility and predictability
• Changes needed for IDA to commit longer-term
![Page 6: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/6.jpg)
IDA: long replenishment cycle
FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08IDA11 replenishment <-------->
IDA11 allocations <----------------------------->
IDA11 commitments <----------------------------->IDA11 disbursements <--------------------------------------------------Total period of 11 years-------------------------------------------------------->
Aid predictability considerations
Total level of resources
Country specific level of resources
Instrument & sector choices
Project specific choices (implementation period, capacity constraints, etc.)
![Page 7: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/7.jpg)
IDA: several replenishment cycles simultaneously under implementation
FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08IDA11 replenishment <-------->IDA allocations <--------------------------->IDA11 commitments <--------------------------->IDA11 disbursements <--------------------------------------------------Total period of 11 years----------------------------------------->IDA12 replenishment <-------->IDA12 allocations <--------------------------->IDA12 commitments <--------------------------->IDA12 disbursements <---------------------------------------Total period of 11 years-------------------------------IDA13 replenishment <-------->IDA13 allocations <--------------------------->IDA13 commitments <--------------------------->IDA13 disbursements <-----------------Total period of 11 years-----------------IDA14 replenishment <-------->IDA14 allocations <--------------------------->IDA14 commitments <--------------------------->IDA14 disbursements <Total period of 11 yearsIDA15 replenishment <------->
![Page 8: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/8.jpg)
IDA disbursement profile, per replenishment
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
1 2 3 4 5 6 7 8 9 10 11Year
0%
20%
40%
60%
80%
100%
Cummulative Disbursements Annual Disbursement Profile
Source: IDA (2007), “IDA Commitments and Disbursements , FY95-07,” Technical Note.
![Page 9: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/9.jpg)
Outline• Significance of IDA in recipient countries and
current estimates of IDA predictability
• The IDA cycle and causes of volatility
• Distinguishing between volatility and predictability
• Changes needed for IDA to commit longer-term
![Page 10: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/10.jpg)
Causes of IDA volatility: summary
• Total size: – Level of donor contributions going up due to real
increases and compensation for HIPC/MDRI• Country allocation size:
– depends on country performance (CPIA particularly governance cluster and portfolio performance) and needs (population size and GNI per capita)
• Commitments: – Choice of instruments (DPOs vs. investment
operations) and sectors (infrastructure vs. social sectors) determine length of disbursement period
• Disbursements: – Also impacted by project/program implementation
![Page 11: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/11.jpg)
Volatility vs. Predictability
• Changes in total size of IDA: – Unpredictable though on upward trajectory in recent
replenishments
• Changes in IDA allocations due to performance are volatile but can be predicted– upward and downward volatility in allocations based on
performance is part of incentive framework – Performance related volatility should not be seen as
synonymous with unpredictability.
• IDA instrument and sector choices should support country strategy. – While certain instruments (e.g. quick disbursing operations) may
be more predictable this should not be the only reason for their choice. They should lead to better outputs and outcomes.
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Evidence on Volatility
• Volatility increases as we move “downstream” in the aid delivery process:
Volatilityallocations < Volatilitycommitments < Volatilitydisbursements
IDAvariable
Number ofobservations
Percentage deviation from the mean
Average Minimum Maximum
Allocations 684 -2.44 -17.38 2.77
Commitment 684 -2.83 -25.71 14.377
Disbursement 675 -3.91 -54.15 9.407
Source: the World Bank; staff calculations.
Note: The sample consists of 76 current IDA countries for the FY97-05 period; The methodology to measure volatility in the given time series is to compute the trend in each variable series and then calculate the percentage deviation from the
trend.
![Page 13: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/13.jpg)
Outline
• Significance of IDA in recipient countries and current estimates of IDA predictability
• The IDA cycle and causes of volatility
• Distinguishing between volatility and predictability
• Changes needed for IDA to commit longer-term
![Page 14: Committing IDA for a longer term? Gaiv Tata Operations Manager, FRM PREM-DEC Brainstorming Meeting on Improving the Delivery of Aid: Making Aid More Predictable.](https://reader035.fdocuments.in/reader035/viewer/2022062718/56649ea95503460f94badcbe/html5/thumbnails/14.jpg)
Changes needed for longer-term IDA commitments
• Donors will need to be willing to move to longer replenishment cycles
• Allocations will need to not be adjusted annually. Contrary to performance focus and increased disclosure of CPIA and CPR ratings and allocations (forthcoming)
• If commitments are to translate into more predictable disbursements, this will still require improvements in project implementation or, in the case of programs, improved country systems
• More predictable disbursements will need to be demonstrated to lead to better results in IDA projects and country outcomes