Farmers’ organizations, policies and markets

Implications of the Performance Base Allocation System for

Countries and Projects

Farmers’ organizations, policies and markets

PBAS: Foundations of the System

• Builds on similar systems from other international financial institutions (International Development Association [IDA], African Development Bank [AfDB], Asian Development Bank [AsDB], Islamic Development Bank [IsDB], but taking the specific terms of IFAD’s mandate into account

• a system stimulating establishment of the national- and local-level conditions needed for a sustainable reduction in rural poverty

• a tool for political dialogue

Farmers’ organizations, policies and markets

PBAS: Objectives

To increase the effectiveness of IFAD’s development aid by

• establishing the distribution of IFAD loans on a coherent and transparent basis

• Encouraging the establishment of the national- and local-level conditions needed to reduce poverty

• initiating a periodic review of countries’ progress in establishing an institutional and political environment favourable to poverty reduction

Farmers’ organizations, policies and markets

PBAS: Criterion for calculating country allocation

1. the country’s performance:• performance of the project and programme portfolio (35%)• country’s rating in establishing a political and institutional environment

favourable to a reduction in rural poverty (45%)• general development framework (20%)

2. the country’s needs:• population• national per capita income

Farmers’ organizations, policies and markets

PBAS - Modalities

• the system applies to all borrowing countries

• the system is applied in accordance with regional allocations

approved by IFAD’s Governing Council

• the allocation process is set within a three-year planning cycle

(first cycle 2005-2007)

• allocations are re-examined each year

• the minimum allocation is USD 1 million per year

• special treatment for countries in a post-conflict or other crisis

situations, in particular in the case of natural disasters

Farmers’ organizations, policies and markets

PBAS : Main implications for countries

• IFAD allocations are based on performance

• resource planning covers three years

• special attention is paid to the institutional and political environment

with a view to reducing rural poverty

• authorities are involved in monitoring and improving the

performance of IFAD projects and programmes in the country

Farmers’ organizations, policies and markets

PBAS: Main implications for projects

The performance of each project has a positive or negative influence on the rating and allocation of each country:

• improvement in project implementation and supervision

• improvement in monitoring and evaluation in order to take corrective

measures more quickly

• establishment of the Results and Impact Management System (RIMS) to

measure the impact of projects on rural poverty

• close monitoring of performance in project management, including that

of key staff

Farmers’ organizations, policies and markets

Implications for projects: indicators for monitoring project performance

IFAD’s 11 early warning flags

Execution indicators:•compliance with loan covenants•project management performance•compliance with procurement procedures•availability of counterpart funds•quality and timeliness of audits•disbursement rate•performance of M&E system

Farmers’ organizations, policies and markets

11 Early warning flags (continued)

• Impact indicators:• beneficiary participation • gender focus in implementation• poverty focus in implementation • responsiveness of service providers• Two general performance indicators:• progress of implementation• achievement of development objectives

Farmers’ organizations, policies and markets

PBAS: A System in Evolution

The PBAS will be finalized in the light of experience gained during its implementation

• weight of the population in the allocation formula• treatment of countries emerging from conflict or affected by crises, natural

disasters• level of allocations (floor/ceiling)• management of allocations in a multi-annual context• maintenance of regional