World Bank Documentdocuments.worldbank.org/curated/en/898211506970609774/pdf/FY18... · 3.2 SOURCES...

FY18 World Bank Budget

September 25, 2017

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

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FY18 WORLD BANK BUDGET

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CONTENTS

1. OVERVIEW AND RECOMMENDATIONS ...................................................................................... 1

1.1 OVERVIEW ....................................................................................................................................... 1

1.2 FY18 BUDGET RECOMMENDATIONS ......................................................................................... 3

2. FY18-20 BUDGET FRAMEWORK ..................................................................................................... 4

2.1 STRATEGIC ALIGNMENT .............................................................................................................. 4

2.2 BUDGET SUSTAINABILITY ........................................................................................................... 7

2.3 CONTINUED FOCUS ON EFFICIENCIES ................................................................................... 10

3. FY18 BUDGET ..................................................................................................................................... 16

3.1 ADMINISTRATIVE BUDGET PROPOSAL .................................................................................. 16

3.2 SOURCES AND USES OF FLEXIBILITY ..................................................................................... 16

3.3 OPERATIONS .................................................................................................................................. 19

3.4 IG&A UNITS.................................................................................................................................... 29

3.5 NON-UNIT SPECIFIC ALLOCATIONS ........................................................................................ 31

3.6 EXPENSE FUNCTIONAL VIEW ................................................................................................... 33

4. CAPITAL BUDGET ............................................................................................................................. 36

4.1 OVERVIEW ..................................................................................................................................... 36

4.2 FACILITIES ..................................................................................................................................... 36

4.3 TECHNOLOGY AND SYSTEMS ................................................................................................... 36

ANNEXES

ANNEX I. PROGRAM COST SUMMARY .............................................................................................. 37

ANNEX II. INDICATORS OF BUDGET SUSTAINABILITY, STRATEGIC ALIGNMENT AND

BUDGET EFFICIENCY ......................................................................................................................... 42

ANNEX III. FULL COST RECOVERY OF STAFF BENEFITS ............................................................. 46

TABLES

Table 2.1: FY18 Emerging Budget Trajectories (US$ million) .................................................................... 9

Table 2.2: Expenditure Review Total Savings Estimates, May 2017 (US$ million) .................................. 10

Table 2.3: Expenditure Review Reconciliation Against FY18 Target Baseline (US$ million) .................. 13

Table 3.1: FY17 WB Budget and Proposed FY18WB Budget Trajectory (US$ million) ......................... 16

Table 3.2: FY18 Sources and Uses of Flexibility (US$ million) ................................................................ 17

Table 3.3: FY17-18 Budget by Work Program and Funding Source (US$ million) .................................. 18


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Table 3.4: FY17-18 Budget Share by Work Program and Funding Source (%) ........................................ 18

Table 3.5: Lending Commitments (US$ billion) ........................................................................................ 19

Table 3.6: FY17-18 Operational Budget Envelopes (US$ million) ............................................................ 21

Table 3.7: Grant-making Facilities Budgets (US$ million) ........................................................................ 29

Table 3.8: FY18 IG&A Budget Envelopes (US$ million) .......................................................................... 30

Table 3.9: FY17 and FY18 Board-Related Budgets (US$ million) ............................................................ 31

Table 3.10: Centrally-Managed Accounts (US$ million) ........................................................................... 32

Table 3.11: FY17 and FY18 Functional Expense View of Administrative Expenses (US$ million) ......... 34

Table I.1: FY18 Funding for WB Work Program and Unit (US$ million) ................................................. 38

Table I.2: Overview of External Funds Projected Revenues FY18 by Unit (US$ million) ........................ 41

FIGURES

Figure 2.1: Operational Share of Unit Budgets (excluding GMF) ................................................................ 5

Figure 2.2: Client Engagement Share of Operational Unit Budgets ............................................................. 6

Figure 2.3: FCV and FCV at Risk CE Budgets as a Share of Total CE Budget ........................................... 6

Figure 2.4: IBRD and IDA Budget Anchors with Proposed Increased Budget Trajectory .......................... 8

Figure 2.5: External Funds as a Share of Total Administrative Spending Plans .......................................... 9

Figure 2.6: Total Administrative Budget per US$ Billion Loan Approved (in US$ million) .................... 11

Figure 2.7: Total Administrative Budget per Lending Project Approved (in FY17 US$ million) ............. 11

Figure 2.8: Total Administrative Budget per US$ Billion Portfolio under Supervision (in US$ million) . 12

Figure 2.9: Total Administrative Budget per Project under Supervision (in FY17 US$ million) .............. 12

Figure 3.1: Evolution of the Country Engagement Bank Budget from FY17 to FY18 (US$ million) ....... 22

Figure 3.2: Country Engagement Bank Budget Allocations by Business Process for FY16-18 (US$

million) ........................................................................................................................................................ 23

Figure 3.3: Country Engagement Bank Budget Allocation Shares by Business Process for FY16-18 ...... 23

Figure 3.4: FY18 Country Engagement Allocation Shares by Practice Groups ......................................... 24

Figure 3.5: Country Engagement Bank Budget Allocations for FCV & FCV at Risk Countries for FY16-

18 (US$ million) ......................................................................................................................................... 25

Figure 3.6: Country Engagement Bank Budget Allocations to Small States for FY16-18 (US$ million) 25

Figure 3.7: Full-time Bank Staff on Payroll .............................................................................................. 35

BOXES

Box 3.1: Embedding the Cascade Across the Client Engagement Cycle ................................................... 26


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ACRONYMS

ASA Advisory Services and Analytics

AFR Africa Region

BB Bank Budget

BETF Bank-Executed Trust Fund

BPC Budget Planning and Consolidation

BPS Budget, Performance Review, and Strategic Planning Vice-Presidency

CCSA Cross-cutting Solution Areas

CE Country Engagement

CGIAR Consultative Group for International Agricultural Research

CMA Centrally-Managed Account

CO Country Offices

CODE Committee on Development Effectiveness

CPF Country Partnership Framework

CRO Chief Risk Officer

DEC Development Economics Vice-Presidency

DFI Development Finance Vice-Presidency

DGF Development Grant Facility

DPF Development Policy Financing

EAP East Asia and Pacific Region

EBC Ethics and Business Conduct Vice-Presidency

ECR External and Corporate Relations Vice-Presidency

ECA Europe and Central Asia Region

EFO Externally Financed Output

ER Expenditure Review

ESF Environmental and Social Framework

FCV Fragility, Conflict and Violence

GE Global Engagement

GMF Grant-Making Facility

GSD General Services Department

GGEVP Equitable Growth, Finance and Institutions Practice Group

GGHVP Human Development Practice Group

GGSVP Sustainable Development Practice Group

GPSA Global Partnership for Social Accountability

HRD Human Resources Development Vice-Presidency

IBRD International Bank for Reconstruction and Development

ICSID International Centre for Settlement of Investment Disputes

IDA International Development Association

IDF Institutional Development Fund

IEG Independent Evaluation Group

IFC International Finance Corporation

IG&A Institutional, Governance, and Administrative

IJS Internal Justice System

INT Integrity Vice-Presidency


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ITS Information & Technology Solutions Vice-Presidency

LCR Latin America and Caribbean Region

LEG Legal Vice-Presidency

LLI Learning, Leadership, and Innovation

MEF Mediation Facility

MIGA Multilateral Investment Guarantee Agency

MNA Middle East and North Africa Region

OPCS Operations Policy and Country Services Vice-Presidency

PAD Project Appraisal Document

PCRF Post-retirement Contribution Reserve Fund

PCS Program Cost Summary

PFC Pension Finance Committee

RAMP Reserves Advisory and Management Program

PPM Program and Practice Management

PSW Private Sector Window

RAS Reimbursable Advisory Services

RETF Recipient-Executed Trust Fund

RM Resource Management

SAR South Asia Region

SBO Strategy and Business Outlook

SCD Systematic Country Diagnostic

SDG Sustainable Development Goals

SPF State and Peace-building Fund

STC Short Term Consultant

TA Technical Assistance

TRE Treasury Vice-Presidency

VPU Vice Presidential Unit

WBG World Bank Group

WBT World Bank Tribunal

WFA World Bank Group Finance and Accounting Vice-Presidency

WPA Work Program Agreement


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1. OVERVIEW AND RECOMMENDATIONS

This document, which supports the key engagement with Executive Directors in this year’s strategic planning

and budget discussions, presents the FY18 World Bank Budget for Board approval. This budget proposal

reflects close consultations between Executive Directors and Management throughout the strategic planning,

budgeting and performance management process for the World Bank Group.

1.1 OVERVIEW

1. The World Bank Group

has embarked on a

number of reforms to

meet emerging

development challenges.

In recent years, the World Bank Group (WBG) has stepped forward to

meet the emerging development challenges articulated in the Sustainable

Development Goals. The WBG Twin Goals and the Forward Look paper

chart a course to building a better and stronger World Bank Group that can

meet these challenges. Implementation of the Forward Look will enable

the Bank to pursue a “2x3” strategy, i.e., achieving the twin goals with

investments in three priority areas, namely Sustainable and Inclusive

Growth, Human Capital, and Resilience. The strategic planning and

budgeting process enables management across the WBG to convert

strategy to action on the ground, with a focus on five key areas to ensure

the WBG remains “fit for purpose:” (i) serve all client segments, (ii) lead

on global issues, (iii) mobilize financing, (iv) improve the business model,

and (v) ensure adequate financial capacity.

2. The World Bank has

strengthened its

financial position and

is on track to meet all

of its FY18 budget

sustainability goals.

The World Bank (WB) has placed itself on a stronger financial footing and

is better equipped to meet the growing demands of its clients. The IDA

replenishment discussions concluded in December 2016 with a

groundbreaking US$75 billion replenishment, around 50 percent higher

than IDA-17. This will enable IDA to scale up interventions over the next

three years, including a doubling of lending to Fragility, Conflict and

Violence (FCV) affected countries, and to support critical governance and

institution building, jobs and economic transformation, climate change,

and gender equality.

Through the financial reforms and the Expenditure Review (ER), the Bank

has successfully implemented measures to increase revenues and contain

expenditures through savings and efficiencies. The Bank is on track to

meet its target of US$300 million in Expenditure Review savings by

FY18, as part of broader savings of US$400 million for WBG institutions

and Trust Funds. In addition, in a landmark achievement, IBRD and IDA

will each fully cover administrative expenses with revenues generated

from their operations and meet their budget sustainability principles in

FY18. In the case of IBRD, this will be the first time that this has been

achieved on a sustainable basis in at least 20 years, as IBRD administrative


2

expenses have for many years been funded in part from earnings from

capital.

3. Management is

proposing an

administrative budget

of US$2,550 million,

and a capital budget of

US$198 million for

FY18.

Recognizing the need to maintain budget discipline and adhere to the ER

target on the one hand, and additional work program pressures (in both

volume and scope) on the other, Management is proposing a US$2,550

million administrative budget for FY18. This represents an increase to the

FY18 administrative spending trajectory, as presented in last year’s

Budget Paper, of US$19 million, and an increase in the funding trajectory

for Grant-making Facilities (GMFs) of US$5 million for the Consultative

Group for International Agricultural Research (CGIAR). The FY18

administrative budget represents a 1.0 percent increase over the FY17

budget in nominal terms and a 1.3 percent decrease in real terms.

Management is also proposing a capital budget of US$198 million for

FY18, comprising US$113 million for Facilities investments and US$85

million for IT investments. Chapter 3 provides details underlying the

budget administrative proposal and further details on the capital budget

proposal are set out in Chapter 4.

4. The FY18 budget has

been framed taking into

account the need to

align spending plans

with strategic priorities,

meet the Bank’s budget

sustainability goals,

and promote greater

efficiency in the use of

resources.

Management has built its budget plans around the following three key

principles:

a) Direct resources toward strategic priorities agreed during the W

process including (i) the preparation and delivery of the pipeline for

IDA and FCV scale-up built around IDA-18’s five themes and the

Private Sector Window (PSW); (ii) maintaining engagement in IBRD

countries and optimizing lending delivery while capital options are

considered; (iii) developing and implementing WBG approaches to

“creating markets”, catalyzing private sector investments, to address

the infrastructure gap; (iv) speeding up support and innovation on key

global public goods and corporate commitments, such as climate

change, fragility, displacement, pandemics, domestic resource

mobilization, and resilience to shocks; (v) implementing the WBG

Gender Strategy, mainstreaming it into operational work; and (vi)

investments in internal reforms to ensure the Bank remains “fit for

purpose”, e.g., agile and administrative simplification initiatives,

safeguards and procurement reform, strengthening knowledge

management, increasing field presence, especially in FCV countries,

continuing adjustment of span of control in operations, improving

resource management, and continued Trust Fund reform and further

integration of external funds into strategy and budget. To better meet

these challenges, Management is improving the incentive system and

management of its staff through the implementation of the FY17-19

People Strategy.


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b) Ensuring budget sustainability with a budget that allows the Bank to

meet the budget anchor targets in FY18 and onwards for both IBRD

and IDA.

c) Promoting efficiency by pursuing savings that will ensure the Bank

meets its Expenditure Review target in FY18, implementing Business

Reviews of SEC, TRE, CRO and OPCS in FY18, and enhancing

efforts to achieve further efficiencies and savings beyond FY18.

1.2 FY18 BUDGET RECOMMENDATIONS

5. Management seeks

Board approval of the

FY18 Budget.

Management seeks Board approval of the following FY18 Budget

recommendations:

• That the total administrative budget (Bank Budget) be set at US$2,550

million, managed within a range of +/- 2 percent. This includes:

o An indicative budget of US$87.7 million for Executive

Directors;

o US$13.0 million for Board of Governors, Development

Committee Secretariat, and Inspection Panel;

o US$17.1 million for the Corporate Secretariat; and

o US$29.2 million for the Independent Evaluation Group. This

is subject to a separate approval process by CODE.

• That the capital budget be set at US$198 million.


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2. FY18-20 BUDGET FRAMEWORK

This section discusses the key strategic priorities in light of the emerging development agenda and the

principles used in determining the size of the expenditure envelope for FY18-20 based on the institution’s

financial outlook in the context of the financial sustainability framework, and the implementation of the

Expenditure Review and other efficiency initiatives.

6. The budgetary

implications of priorities

that have emerged from

the W process have been

assessed against three

principles, namely

Strategic Alignment,

Budget Sustainability

and Efficiency.

Resource allocation decisions for the planning period FY18-20 were

based on the following three broad principles:

• Strategic alignment of resources to priorities, particularly in view of

the Forward Look and IDA-18 commitments;

• Budget sustainability - ensuring that the IBRD and IDA Budgets are

affordable; and

• Efficiency - achieving the Expenditure Review targets in FY18 and

driving further efficiencies.

2.1 STRATEGIC ALIGNMENT

7. Implementation of the

Forward Look enables

the Bank to pursue its

“2x3” strategy:

achieving the twin goals

with investments in

three priority areas,

namely Sustainable and

Inclusive Growth,

Human Capital, and

Resilience.

Endorsed by shareholders at the 2016 Annual Meetings, the Forward

Look Paper provides a roadmap for a better and stronger Bank. It

positions the WB to serve its members with reforms to (i) assist all client

segments, (ii) lead on global issues, (iii) mobilize financing, (iv) improve

the business model, and (v) ensure adequate financial capacity.

Mobilization

Improving the Business Model

Leading on Global Issues

Ensuring Adequate Financial Capacity Twin Goals

(i) Eliminating Extreme Poverty(ii) Boosting Shared Prosperity

Assisting All Client Segments


5

8. The FY18-20 W process

has addressed the

substantive elements of

the “2x3” strategy.

The FY18-20 planning process has paid attention to the need to resource

Forward Look paper priorities, directing funding to critical aspects such

as scaling up IDA, especially in FCV countries, increasing

decentralization, enhancing security, implementing the new Procurement

Framework and Environmental and Social Framework (ESF), expanding

Agile Bank reforms, and knowledge management. Regional and GP

strategies are built on the “2x3” strategy, as well as key Forward Look

paper priorities such as creating markets, climate action, gender, and

crisis response.

9. As a result, the FY18

budget further aligns

resources with key

strategic priorities.

Management has continued to shift resources towards operations and

client facing services. As shown in Figure 2.1, the relative share of Bank

Budget (BB) allocated to operational units and programs (i.e., excluding

the Grant-making Facilities and central accounts) increases from 56.2

percent to 57.2 percent between FY17 and FY18.

Figure 2.1: Operational Share of Unit Budgets (excluding GMF)

Within operational units, resources have been shifted towards Client

Engagement (Country Engagement and Global Engagement) and away

from operational overheads (Program and Practice Management). See

Figure 2.2.


6

Figure 2.2: Client Engagement Share of Operational Unit Budgets

W process decisions also included shifting Country Engagement

resources from IBRD countries to IDA countries, reflecting the increased

IDA-18 scale up (see further details in section 3.3). In addition, the share

of Country Engagement resources for FCV (both IDA and IBRD) and

FCV at Risk countries1 has increased from 17.9 percent in the FY17

budget to 19.5 percent in the FY18 budget, illustrating a greater

commitment to FCV activities (see Figure 2.3).

Figure 2.3: FCV and FCV at Risk CE Budgets as a Share of Total CE Budget

For Institutional, Governance, and Administrative (IG&A) units, within

an overall context of tight budgetary constraints, Management has

targeted the key priority areas of staff security, implementation of the

complex IDA-18 Financing Framework, and implementation of the new

Procurement Framework and Environmental and Social Framework for

incremental funding. Details on the allocation of resources for FY18

across operational and IG&A units and across functions are provided in

Chapter 3.

1 Comprises Guinea, Nepal, Niger, and Tajikistan as per IDA methodology.

53.7% 54.1%54.9%

50.0%

52.0%

54.0%

56.0%

58.0%

60.0%

FY16 FY17 FY18

1 Reflects the transfer of International Offices Budget from ECA to ECR in FY17

1

18.3% 17.9%19.5%

10.0%

15.0%

20.0%

25.0%

30.0%

FY16 FY17 FY18

$121m$143m

$115m


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2.2 BUDGET SUSTAINABILITY

10. A combination of

Margins for Maneuver

and budget sustainability

measures have placed

the Bank on firmer

financial footing to meet

the budget anchors in

FY18.

Through a combination of measures designed to increase revenues (loan

volumes and charges) and contain spending (Expenditure Review) the

Bank is expected to achieve the budget anchor targets in FY18. The

budget anchor principle requires that the Bank’s own administrative

resources (or Bank budget) should be covered by the revenues generated

from its lending operations.

As referred in Figure 2.4, the IDA budget anchor has always been close

to 100 percent and is projected to be at or below 100 percent in FY18.

Unlike IDA, IBRD expenses have not been covered by revenues from

lending for many years. However, as a result of successful efforts to

grow revenues and contain spending, the IBRD anchor is projected to

fall from a historical high of 189 percent in FY10, and 148 percent even

as late as FY15, to below 100 percent in FY18. Consequently, the FY18

IDA anchor is estimated at 98 percent and the projected FY18 IBRD

anchor is estimated at 91 percent. Nevertheless, because of the volatility

of the IBRD/IDA cost sharing ratio, and of potential shortfalls of loan

revenues for IBRD/IDA and external funds, the budget anchor space is

still susceptible to unexpected changes2.

2 In particular, the incremental costs for the preparation of the IDA-18 scale-up in FY18 ahead of the related but later materialization

of incremental IDA revenues gives rise to a small possibility that IDA expenses may slightly exceed revenues in FY18.


8

Figure 2.4: IBRD and IDA Budget Anchors with Proposed Increased Budget Trajectory

IBRD Anchor

IDA Anchor

11. Management is

proposing a budget of

US$2,550 million in

FY18 which balances the

need to fund a growing

program and maintain

financial discipline.

Recognizing the need to maintain budget discipline and adhere to the

ER target on the one hand, and additional work program pressures

(volume and scope) on the other, Management is proposing a FY18

budget of US$2,550 million (Table 2.1). This represents an increase on

the FY18 administrative spending trajectory, as presented in last year’s

Budget Paper, amounting to US$19 million and an increase in the GMF

funding trajectory of US$5 million for CGIAR. The FY18

administrative budget represents a 1.0 percent increase over the FY17

budget in nominal terms and a 1.3 percent decrease in real terms.

189%

158%160%

155% 147% 148%

135%

109%

91%

0

200

400

600

800

1,000

1,200

1,400

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

0%

40%

80%

120%

160%

200%

Expe

nses

/Rev

enue

s US$

mill

ion

Budg

et A

ncho

r %

IBRD loan spread revenue IBRD-funded expenses IBRD budget anchor

93%98% 96% 98%

102% 100%94%

100% 98%

0

200

400

600

800

1,000

1,200

1,400

1,600


0%

20%

40%

60%

80%

100%

120%

Exp

en

ses/

Re

ven

ue

US$

mill

ion

Bu

dge

t A

nch

or

%

IDA revenue IDA-funded expenses IDA budget anchor


9

Table 2.1: FY18 Emerging Budget Trajectories (US$ million)

12. External funds represent

a significant share of

total administrative

spending.

The base case scenario for FY18 envisages growth in Bank Executed

Trust Funds (BETF) of 6 percent. External funds have grown

significantly as a source of funds in recent years, but this share is

expected to stabilize. In the case of Trust Funds, the Bank maintains a

stock of funds amounting to almost two years of requirements, leaving

the Bank time to adjust to any significant drop in contributions.

13. Progress continues in

aligning external funds

with strategic priorities,

improving cost recovery

and integrating Trust

Funds into budget

plans.

Strategic fundraising plans are being developed for business units to

further align external funds and priorities. Forecasting of external funds

usage and their alignment with strategic priorities are being improved

through their earlier integration into work program agreements and the

introduction of new budget planning and reporting systems. Due to the

size and importance of external funds, further efforts are being made to

accelerate Trust Fund reform and deepen Trust Fund integration.

Figure 2.5: External Funds as a Share of Total Administrative Spending Plans

FY17 FY18

Current Trajectory (FY17-FY19 as per FY17 WB Budget Document) 2,524 2,526

Revision to Trajectory 24

Of which - Work Program increase 19

Of which - CGIAR increase 5

Revised Trajectory 2,524 2,550

IBRD Anchor 109% 91%

Available for IBRD net income retention/transfer 120

IDA Anchor 1 100% 98%

Available for other uses of IDA income 5 24

1FY18 based on IDA-18 revenue definition.

27%

29%30% 31%

33%34%

35% 36%37%

20%

25%

30%

35%

40%



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2.3 CONTINUED FOCUS ON EFFICIENCIES

14. Expenditure Review

measures and ongoing

Business Reviews

support more efficient

use of resources.

The Expenditure Review (ER) program will be fully implemented in

FY18, with the Bank meeting its target. Together with other efforts, the

ER has helped the Bank meet its budget anchors and redirect resources

toward strategic priorities and corporate commitments.

The Internal Audit Department (IAD) review, completed in June 2016,

confirmed that the ER program was delivering as expected, that savings

had been firmly embedded in budget trajectories and that Management

had instituted an effective governance framework to oversee program

implementation. On completion of the ER program in FY18, IAD is

planning to perform an ex-post review and will report to the Board on its

findings.

Table 2.2 provides a summary of the evolution of ER savings since initial

May 2015 estimates. These confirm that the Bank is on its way to achieve

the savings originally targeted.

Table 2.2: Expenditure Review Total Savings Estimates, May 2017 (US$ million)

15. Building on the ER, the

Bank is implementing a

program of Business

Reviews across IG&A

units to monitor

efficiency and assist in

sizing of budgets. This

program will be

extended to operational

units from FY20.

Business Reviews in FY16 and FY17 covered about half of the IG&A

units, and further reviews are planned in FY18 and FY19. This practice

follows from Management’s commitment to budget discipline through

benchmarking and ensuring continued efficiency focus. The next wave

of business reviews will build on lessons learned in the first two years.

Management will put in place an enhanced peer review and governance

mechanism and will make greater use of outside expertise where

appropriate. Starting from FY20, and as requested by the Board,

Management will conduct business reviews for all operational units.

Total o/w BB o/w BETF

Immediate Measures 110 133 96 71 25 36 1

Group-Wide Measures 54 42 29 24 5 13 1

Finance, Tech & Corporate 84 99 92 91 1 7 -

Operations 100 84 78 78 - 6 -

Additional Measures 48 52 42 33 9 10 -

Total 396 410 336 296 40 72 1

Board Related Savings 8 7 6 6 - 1 -

Total 404 417 342 302 40 73 1

MIGA

`

Previous WBG

Estimates

May 2015

Latest WBG

Estimates

May 2017

IBRD/IDAIFC


11

16. Comparing the FY18

budget envelope with

expected commitments

and with the size of the

portfolio demonstrates

the Bank’s ongoing

aggregate efficiency

despite the growing

volume and scope of

our work.

While program costs will increase modestly as demand for Bank services

grows, this growth will be managed within the budget anchors,

demonstrating the Bank’s commitment to a financially sustainable budget

trajectory. As illustrated in Figures 2.6-2.9 below, comparing the FY18

budget envelope with expected commitments and with the size of the

portfolio demonstrates the Bank’s ongoing aggregate efficiency despite

the growing volume and scope of our work (see Annex II for a breakdown

of these indicators for IBRD and IDA).

Figure 2.6: Total Administrative Budget per US$ Billion Loan Approved (in US$ million)

Figure 2.7: Total Administrative Budget per Lending Project Approved (in FY17 US$ million)

88 92 90 88 83 85

46 39 53

67 79

62 59 54 61 53

-

20

40

60

80

100

120

IBRD+IDA

US$

mill

ion

10 10

10 9 9 9 8

8 7

11 10

8 9 9

7 6

-

2

4

6

8

10

12

14

16

IBRD+IDA

US$

mill

ion


12

Figure 2.8: Total Administrative Budget per US$ Billion Portfolio under Supervision (in US$ million)

Figure 2.9: Total Administrative Budget per Project under Supervision (in FY17 US$ million)

17. Proposed changes to the

budget trajectory in

FY18 fall within the ER

target.

As set out in the FY17 Budget Paper, and reproduced below, the agreed

FY18 trajectory that would meet the ER was US$2,545 million, and the

originally planned FY18 budget trajectory was US$2,526 million,

leaving a buffer of US$19 million. Two adjustments were made in

framing the FY18 Budget proposal. These include (i) an increase in the

budget trajectory of US$19 million, and (ii) an increase in the ER

trajectory to accommodate a US$5 million increase in the GMF trajectory

for CGIAR. Further details on these two increases totaling US$24

million are provided in Chapter 3.

1.4 1.6 1.6 1.7 1.6 1.6 1.5 1.6 1.5 1.6 1.7 1.7 1.6 1.6 1.5 1.4

-

0.5

1.0

1.5

2.0

2.5

3.0

IBRD+IDA

US$

mill

ion

17 20

22 22 21 20

17 15 14 14 15 14 13

12 11 11

-

5

10

15

20

25

30

IBRD+IDA

US$

mill

ion


13

Table 2.3: Expenditure Review Reconciliation Against FY18 Target Baseline (US$ million)

18. Building on the ER

efficiency gains,

Management is working

on initiatives to further

promote efficiency and

budget discipline across

the Bank.

As noted earlier, achievement of the ER targets required a number of

expenditure policy reforms as well as changes to the Bank’s operating

model, the benefits of which will continue to accrue to the Bank beyond

FY18. In addition, the program of Business Reviews of VPUs will also

continue with the enhanced framework detailed above.

As we approach the end of the ER implementation period, Management

intends to pursue further efficiencies. While at this time it would not be

appropriate to revise the FY19-20 indicative target trajectory to reflect all

possible efficiencies, given the uncertainties surrounding the future level

of IBRD lending and related resource implications, Management is

working to identify additional measures that will further promote

efficiency across the Bank. Further analysis is being conducted to define

these measures, related savings and implications for future budgets. The

next paragraphs provide an indication of the planned directions.

Management plans to further brief the Board in the Fall on them.

19. Management is

strengthening

governance over

investments in facilities

and IT projects to ensure

value-for-money.

A WBG Real Estate Council is being established to refine and implement

the WBG real estate strategy, as well as set and approve real estate and

facilities standards and principles, and prioritize and approve specific

large facilities investments in accordance with the strategy. This will

support Management in its efforts to review the Bank’s global footprint

and global space standards, both in Washington and around the world,

with a view to prioritizing and rationalizing spending on facilities overall.

As Presented in

FY17

WB Budget

Baseline

Everything Else Being Equal Trajectory 2,793

Less: GMF Phase Out (85)

Everything Else Being Equal Trajectory (BB Only) 2,708

ER Savings

Less: ER Target, Gross Savings (300)

Add: 25% reinvestment 75

Net ER Savings (225)

Adjustments

Add: IDA-18 Scale up 62

BB Target Trajectory, after Net ER savings and adjustments 2,545

FY18 Budget Trajectory in FY17 Budget Paper 2,526

∆ FY18 Existing Budget and Target Trajectories in FY17 Budget Paper 19

FY18 Budget Adjustment to GMF Trajectory for CGIAR 5


14

ITS continues to implement new efficiency measures over and above

those of the Expenditure Review. As part of the FY16 Business Review

of ITS, it was agreed to seek opportunities to rationalize spending on ITS

Operations and Maintenance (O&M).

20. As the largest spending

item, comprising around

56 percent of total

spending, Management

will continue to ensure

prudent management of

staffing costs.

The Bank will continue affordability assessments of annual workforce

plans and limit hiring by VPUs where it is not affordable within their

budget trajectory. Furthermore, analysis is ongoing on the structure of

staffing in both operational units and IG&As with a view to fine-tune it

to reduce unnecessary layers. In addition, HRD will follow Board

guidance related to staff compensation issues.

21. The Bank is working to

identify innovations in

working more flexibly,

through the Agile

initiatives, and will

continue to expand

those efforts.

Overall, the Bank continues to pilot and rapidly scale up ideas that make

our business model more agile. In selected operational units, pilots are

identifying opportunities to streamline internal processes where lessons

learned can be scaled up to create a more agile Bank. Incorporating cross

functional teams, pilots are underway on programs delivered in regions.

In the pilots, over a hundred interventions were identified through

bottom-up team workshops, and a quarter of these are being pursued.

Almost 1,800 staff have been involved thus far, with plans to reach 50

percent of all staff in the coming year. Lessons learned are being used to

enable the Bank to offer services with greater speed and more flexibility,

while ensuring that staff remain engaged and empowered throughout the

process. Examples of interventions that are improving the speed and

quality of our work, while ensuring staff empowerment, include (i) risk-

based flight paths for project preparation that allow for faster project

concept approval and tailored review meetings according to specific

project risks, and (ii) streamlined, agile Project Appraisal Documents

(PADs) that eliminate redundancies and focuses on the added-value

substance.

22. The Bank will also

pursue reforms aimed

at streamlining

procedures and

processes to generate

greater efficiencies in

IG&A units.

To build a strong institution in the long term, Management plans to

pursue administrative simplification more aggressively and capture the

cost savings that accrue from these efforts. These include (i)

standardizing, automating and simplifying processes using lean

methodologies (e.g., Lean Six Sigma pilots on loan origination and Trust

Fund activation) and robotics, and (ii) enhancing the Bank’s shared

services model for more effective and efficient service delivery for staff.

Going forward, all new initiatives and strategies must be properly costed

and budgeted before being rolled out and implemented.


15

23. The Bank will continue

to upgrade Resource

Management systems

and tools, and make

enhancements as

necessary based on user

feedback.

As part of an effort to strengthen transparency, predictability, and

accountability over expenditures across the Bank, Resource Management

(RM) systems and tools have been upgraded in the past year with the

development of the Budget Planning and Consolidation system (BPC) to

strengthen and align budget and staff planning, among others.

Implementation is at an advanced stage. A Resource Management

reporting portal has also been developed this year and widely welcomed

by managers and staff across the Bank, giving them real time access to

reports. Further upgrades are planned for FY18.

24. Reforms to improve the

way the Bank manages

external funds will

continue to be

implemented.

A number of reforms to external funds are underway including (i)

alignment of external funds with strategic priorities and budgets, (ii)

improved cost recovery, (iii) simplification and standardization of Trust

Fund requirements, and (iv) improving transparency for donors through

the Development Partner Center (DPC) portal. Priority will be given to

advancing these reforms in FY18.

25. Further efforts will also

be made to strengthen

the link between

planning, budgeting

and the Corporate

Scorecard.

As the current planning and budgeting model evolves, efforts will

continue to be made to strengthen the linkages between the Corporate

Scorecard and planning and budgeting papers across the World Bank

Group. The use of consistent metrics throughout will enhance

transparency and accountability.


16

3. FY18 BUDGET

This section presents the specifics of the FY18 administrative budget proposal, and provides details on its

impact on Operational Programs, IG&A units, other non-unit specific budgets, as well as an expense line

view.

3.1 ADMINISTRATIVE BUDGET PROPOSAL

26. Management is

proposing a budget of

US$2,550 million for

FY18, as part of a

broader total funds

envelope of US$4,046

million.

The proposed Budget for FY18 is US$2,550 million, which is an overall

increase of US$24 million compared with the FY18 trajectory presented

in the FY17 Budget Paper – comprising a US$19 million increase to

cover higher expected administrative costs associated with the IDA-18

scale up and other resource needs, and US$5 million for CGIAR (see

Table 3.1). Compared with the FY17 budget, this is an increase of 1.0

percent in nominal terms and a decline of 1.3 percent in real terms. The

“All Funds” FY18 envelope is expected to be around US$4,046 million

(see Table 3.3).

Table 3.1: FY17 WB Budget and Proposed FY18WB Budget Trajectory (US$ million)

3.2 SOURCES AND USES OF FLEXIBILITY

27. The proposed budget

increase (i) reflects an

expansion in the Bank’s

program not foreseen a

year ago, (ii) takes into

account redeployments

at the Bank and VPU

level, and (iii) can be

accommodated within

the Bank’s ER and

budget anchor targets.

At the time of the FY17 Budget Paper, it was not possible to anticipate

the extent of certain IDA-18 commitments, including the FCV scale up,

the new and more complex IDA financing framework (blending donor

and market resources), the new IDA windows (PSW and refugees) and

other cost pressures. The developments of the past year have required the

Bank to adjust and recalibrate the budget trajectory.

The total FY8 budget flexibility amounts to US$67 million. Some US$43

million was identified through internal deployments, US$19 million by

utilizing space within the existing ER target trajectory, and US$5 million

by increasing the trajectory for GMFs.

FY17 FY18

Proposed FY18 Budget Trajectory (Nominal) 2,524 2,550

% Change YOY 1.0%

Proposed FY18 Budget Trajectory (in FY17$) 2,524 2,490

% Change YOY -1.3%


17

Table 3.2: FY18 Sources and Uses of Flexibility (US$ million)

28. Allocations by Unit

reflect adjustments to

trajectories arising

from additional

flexibility, staff benefit

rate adjustments, ER

changes, and unit

reorganizations.

The resulting allocations across programs are set out in Tables 3.3 and

3.4 and discussed in further detail in Sections 3.3, 3.4, and 3.5 of this

chapter. These highlight a shift in resources toward Operational Units,

and toward Client Engagement within these Operational Units. In

addition, they reflect changes to VPU trajectories arising from benefit

rate adjustments, remapping of units arising from reorganizations (e.g.,

ECA and ECR), implementation of the ER, and inflation adjustments.

Management plans to ensure that all Bank products and activities,

however funded, reflect the full cost of staff. The Bank currently assesses

a 50 percent charge on Washington-appointed staff salaries to the costs

of its products but this charge only partially covers the institutional

benefits of such staff, the balance being borne by the Bank’s Centrally-

Managed Accounts. Effective July 1, 2017, the benefit recovery rate will

revert to the originally set rate of 70 percent for Washington appointed

staff, enabling unit-level decision making to be based on the full cost of

staff, and to end the subsidy that IBRD and IDA currently provide to

external funds. A 45 percent benefit rate will also be introduced for

Country Office appointed staff. The Country Office rate will be

discounted for external funds cost recovery purposes until FY19. To

reflect this policy change, Bank Budget unit trajectories have been

adjusted upwards from FY18 in a cost neutral manner, with

corresponding reductions in the Bank’s Centrally-Managed Accounts.

Sources

Sources of Internal Flexibility 43 Allocations to Operations Units (75%) 39

Benefits Recovery from Reimbursables 5 Lending & Supervision Coefficient Increase 7

Unallocated Flexibility Identified in FY17 WB Budget 1 Increase in Capacity of FCV CCSAs 2

Centrally-Managed Accounts (including LLI efficiency gains) 9 Global Public Goods 5

PCRF Advance Payment in FY17 16 Safeguards/Procurement Reforms 4

Corporate Contingency 12 Staff Decentralization/Country Office Facilities 12

Managerial Span of Control 8

Knowledge/Learning 4

Simplification/Agile Bank 4

Total 45

Already in the FY18 Trajectory (6)

Trajectory Increase 24 Allocations to IG&A Units (25%) 13

Administrative Spending 19 Security 5

CGIAR 5 Safeguards/Procurement Reforms 4

Support to IDA-18 Scale Up 6

Total 15

Already in the FY18 Trajectory (2)

Corporate Contingency 10

CGIAR 5

Total Sources of Flexibility 67 Total Uses of Flexibility 67

Uses


18

Table 3.3: FY17-18 Budget by Work Program and Funding Source (US$ million)

Table 3.4: FY17-18 Budget Share by Work Program and Funding Source (%)

FY17

WB Budget

Restated

FY17 FY18

FY17

WB Budget

Restated

FY17 FY18 FY20

CLIENT ENGAGEMENT 29.9% 30.4% 31.4% 43.0% 42.5% 44.6%

Country Engagement 26.6% 27.2% 28.1% 35.7% 35.5% 37.4%

Global Engagement 3.2% 3.2% 3.4% 7.2% 7.0% 7.3%

Program & Practice Management 26.7% 26.2% 25.8% 20.5% 20.5% 19.5%

Total Operational Units 56.5% 56.6% 57.2% 63.5% 63.1% 64.2%

IG&A PROGRAMS 43.5% 43.4% 42.8% 36.5% 36.9% 35.8%

Institutional Services 16.0% 16.4% 16.6% 14.8% 15.2% 15.2%

Governance Services 8.8% 8.7% 8.4% 6.4% 6.4% 6.0%

Administrative Services 18.6% 18.3% 17.7% 15.4% 15.3% 14.6%

TOTAL: ALL UNITS (excl. GMFs) 100% 100% 100% 100% 100% 100%

1"Restated FY17" reflects FY17 WB Budget based on the new staff benefits recovery rates effective July 1, 2017. FY18

trajectory is similarly stated on the new basis. The International Offices budget of US$8.5 million was transferred from

ECA’s PPM to ECR in FY17. This transfer is reflected in the above tables in FY18. If this transfer had been reflected in FY17,

the Operational share of unit budgets (excl. GMF) in "Restated FY17" would be 56.2% for BB and 62.8% for All Funds.

Share of Budget Trajectory1

BB All Funds

FY17

WB Budget

Restated

FY17 FY18

FY17

WB Budget

Restated

FY17 FY18

CLIENT ENGAGEMENT 674 752 820 1,465 1,543 1,745

Country Engagement 601 672 732 1,218 1,289 1,460

Global Engagement 73 79 88 247 253 285

Program & Practice Management 602 648 674 699 745 764

Total Operational Units 1,276 1,400 1,494 2,164 2,288 2,509

Grant Making Facilities 44 44 35 44 44 35

Total Operations 1,320 1,444 1,529 2,208 2,332 2,544

IG&A PROGRAMS 981 1,076 1,116 1,245 1,340 1,401

Institutional Services 362 407 434 505 550 593

Governance Services 199 216 219 217 234 236

Administrative Services 420 453 463 524 556 571

TOTAL: ALL UNITS 2,301 2,520 2,644 3,454 3,672 3,944

TOTAL: ALL UNITS (excl. GMFs) 2,257 2,476 2,609 3,410 3,628 3,909

CENTRALLY MANAGED ACCOUNTS 407 188 101 418 200 102

o/w Corporate Contingency 12 12 10 12 12 10

TOTAL TRAJECTORY 2,708 2,708 2,746 3,871 3,871 4,046

o/w Funded by External Funds (184) (184) (196) (1,347) (1,347) (1,496)

Net Trajectory Funded by IBRD/IDA 2,524 2,524 2,550 2,524 2,524 2,550

INDICATIVE BUDGET TRAJECTORIES1

BB All Funds

1"Restated FY17" reflects FY17 WB Budget based on the new staff benefits recovery rates effective July 1, 2017. FY18 trajectory is

similarly stated on the new basis.


19

3.3 OPERATIONS

3.3.1 BY WORK PROGRAM AND VPU

29. Growing demand for

Bank services will be

met by higher lending

volumes overall. In

addition, the “Cascade”

approach will allow the

Bank to make greater

leverage of these

resources than in the

past.

Current projections for IBRD and IDA lending commitments suggest

higher levels of lending overall.

• IBRD delivery in FY16 was US$30 billion. In the context of a more

constrained capital environment, it is projected that IBRD’s existing

capital will support lending of up to US$24 billion in FY17 and FY18

(see Table 3.5). IBRD’s capital position is the subject of ongoing

discussions between Management and Shareholders.

• The IDA-18 envelope includes a doubling of resources to countries

facing fragility, conflict and violence (FCV). Increased financing will

also boost core IDA resources and dramatically expand IDA’s support

for crisis response and pandemic preparedness, small states, and

regional integration. The FY18 IDA pipeline is developing rapidly and

is on track for a strong launch.

• The Bank has developed a “Cascade” approach to facilitate greater

leveraging of existing resources and development solutions to mitigate

risks for private sector investors in developing countries, thereby

crowding in private capital (see Paragraph 41). A new IDA Private

Sector Window (PSW), introduced together with IFC and MIGA, will

help mobilize private capital and scale up private sector development,

particularly in fragile situations.

Table 3.5: Lending Commitments (US$ billion)

FY16 FY17 FY18

Actual Projection Projection

IBRD 30 24 24

IDA 16 16 25

Total 46 40 49


20

30. As Bank Operational

Programs expand,

budget trajectories are

also being increased to

fund key priorities.

As identified in the current budget and strategic planning process, the

major operational priorities for FY18 include (i) ensuring delivery of

IDA-18 and scaling up engagement in FCV countries and small states,

(ii) maintaining engagement in IBRD countries, (iii) accelerating work

on global public goods and corporate commitments, including climate

change, fragility, displacement, pandemics, domestic resource

mobilization, and resilience to shocks, (iv) developing and implementing

WBG approaches to “creating markets”, and (v) implementing the WBG

Gender Strategy. These priorities are reflected in the budget trajectories

for Operations.

The proposed FY18 budget for Operations is US$1,529 million, an

increase of US$86 million or 6 percent from FY17 (see Table 3.6). Of

this increase, resources for Client Engagement have increased by US$69

million, including for Country Engagement (US$60 million) and Global

Engagement (US$9 million) work to meet these priorities. PPM

allocations have increased by US$26 million, while for GMFs have fallen

by US$9 million. External funds complement Bank resources for Client

Engagement work. Annex I presents an all funds view for these by VPUs

and budget categories.

31. Allocations to Regions

reflect underlying

business shifts.

IDA-18 scale-up was a key driver in the CE realignments between

regions, and to the Africa and South Asia regions in particular, with these

incremental resources supporting CMUs covering IDA countries,

including FCV countries. IBRD budgets have also been tightened to

reflect lending projections for FY18.


21

Table 3.6: FY17-18 Operational Budget Envelopes (US$ million)

FY17

WB Budget

Restated

FY17 FY18

FY17

WB Budget

Restated

FY17 FY18

AFR

CE 207 229 266 403 425 489

PPM 108 116 119 111 119 123

Total 315 345 385 513 543 612

EAP

CE 84 96 105 180 193 232

PPM 54 59 61 55 61 66

Total 138 155 167 236 253 298

ECA

CE 78 87 86 154 163 188

PPM2 58 62 54 59 64 55

Total 135 149 140 213 227 243

LCR

CE 89 99 96 143 153 151

PPM 49 55 56 50 55 57

Total 138 153 152 193 208 207

MNA

CE 51 57 60 149 155 166

PPM 33 36 36 38 42 37

Total 84 93 95 187 197 203

SAR

CE 93 105 120 189 201 235

PPM 48 51 52 49 53 54

Total 141 156 172 239 254 289

All Regions

CE 601 672 732 1,218 1,289 1,460

PPM 349 379 378 363 393 393

Total for Regions 950 1,051 1,111 1,581 1,682 1,853

GP/CCSAs GE

GE 73 79 88 247 253 285

Total 73 79 88 247 253 285

GP/CCSAs PPM

Equitable Growth, Finance and Institutions 72 76 77 84 89 89

Human Development 37 40 37 45 47 43Sustainable Development 84 90 106 105 112 164

EAB and Other346 46 62 46 46 62

CCSAs4 15 17 13 55 57 13

Total GP PPM 253 269 295 336 352 371

Total GP/CCSAs 326 349 383 583 606 656

Operational Grant Making Facilities 44 44 35 44 44 35

Total Operations 1,320 1,444 1,529 2,208 2,332 2,544

4FY17 CCSAs include Climate Change (CC), Public Private Partnerships (PPP) and Jobs. These units are consolidated under Sustainable

Development (CC, PPP) and Human Development (Jobs) Practice Groups in FY18, reflecting the revised organizational structure.


BB All Funds

1"Restated FY17" reflects FY17 WB Budget based on the new staff benefits recovery rates effective July 1, 2017. FY18 trajectory is

similarly stated on the new basis.

2The International Offices budget of US$8.5 million was transferred from ECA’s PPM to ECR in FY17. This transfer is reflected in the

above tables in FY18.

3Includes Extended Assignment Benefits (EAB) for all GP/CCSA staff and funding to support Agile Bank initiative.


22

32. The outcome of the WPA

process shows a

substantial increase in

allocations to IDA

countries in FY18.

Allocations to IBRD and IDA countries from the CE envelope are set out

in Figure 3.1. Overall allocations to IDA countries have increased from

US$359 million to US$415 million – an increase of US$56 million (16

percent), bringing the IDA funded share of the Country Engagement

Work Program from 53 percent to 57 percent. The allocations to IBRD

countries increased by US$4 million (1 percent), reflecting the Bank’s

commitment to remain engaged in IBRD countries, albeit in an

environment of constrained IBRD capital.

Figure 3.1: Evolution of the Country Engagement Bank Budget from FY17 to FY18 (US$ million)

33. Country Engagement

allocations across

business processes are

reflective of strategic

priorities emerging from

country dialogue.

The distribution of the additional CE allocation has been spread across

Business Processes (Figure 3.2) for (i) increased lending volumes for a

growing program, (ii) higher lending and supervision coefficients

reflecting increased scope, and (iii) increased effort to support safeguard

and fiduciary reforms. As a result, the share of CE allocations to lending

has been growing over FY16-18 (Figure 3.3).


allocations for fiduciary

spending amount to

US$67 million in FY18.

The resources for fiduciary work respond to the need to support the

implementation of the new procurement framework, and the IDA-18

scale up. Resources for fiduciary work represent 9 percent of total CE

allocations in FY18.


23


allocations for

environment and social

safeguards work

amount to US$52

million in FY18.

The resources for safeguards work respond to the need to support the

implementation of the new Environmental and Social Framework, and

the IDA-18 scale up. Resources for safeguards work represent 7 percent

of total CE allocations in FY18.

36. Allocations for Advisory

Services and Analytics

(ASA) have broadly

maintained their share

of CE allocations since

FY17.

Additional CE resources were injected as part of the WPA process to

ensure that growth in lending and supervision volumes and coefficients

would not continue to be at the expense of critical Advisory Services and

Analytics (ASA). The outcome of the WPA process suggests that this

strategy was broadly successful, with ASA allocations held constant

overall at about 21 percent of total CE spending (after the ER-related

ASA rationalization between FY16 and FY17) (see Figure 3.3).

Figure 3.2: Country Engagement Bank Budget Allocations by Business Process for FY16-18 (US$ million)

Figure 3.3: Country Engagement Bank Budget Allocation Shares by Business Process for FY16-18

75 88 90

148 138 150

260 272 297

144 175

195

FY16 FY17 FY18

Lending1

ASA

Others2

2Includes Country Monitoring, CPFs, Portfolio Management, Quality Assurance, Contingency, Col laboration, Country Operations Support, and Internal Knowledge Management

Supervision1

628672

732

+20

+25

+12

+2

+44+60

1Includes Fiduciary and Safeguards


24


allocations across

Practice Groups reflect

strategic priorities

emerging from country

dialogue.

The FY18 CE allocations show Sustainable Development, including

Safeguards, holding the largest share at 44 percent; Equitable Growth,

Finance and Institutions, including Fiduciary, with 32 percent; and

Human Development with 14 percent. Regional, Cross-Cutting Solutions

Areas and Others, which includes regional contingencies, currently hold

a 10 percent share, but this amount will be reduced during the year as

regional contingency funds are directed to the Practice Groups, whose

allocations will increase.

Figure 3.4: FY18 Country Engagement Allocation Shares by Practice Groups


allocations for fragility,

conflict, and violence

(FCV) affected countries

have increased

significantly.

As illustrated in Figure 3.5, the CE allocation to FCV and FCV at risk

countries (IDA and IBRD) increased by US$22 million (18 percent)

from US$121 million in FY17 to US$143 million in FY18. This is on

top of a US$6 million (5 percent) increase from FY16 to FY17.

The FCV and FCV at Risk country CE share of total CE spending for

FY18 is projected to be 19.5 percent which compares with 17.9 percent

in FY17. A portion of these additional resources will fund staff to work

on these countries. As part of the IDA-18 replenishment deliberations,

Management committed to deploy 50 more professional staff for FCV

IDA by End-September 2017 and another 100 by end IDA-18. This is in

addition to an increase of 50 staff that has already taken place in FCV

countries since FY15.

Sustainable Development44%

(of which 7% Safeguards)

Safeguards

Equitable Growth, Finance & Institutions

32%(of which 9% Fiduciary)

Fiduciary Human Development

14%

Regional, Cross-Cutting Solutions Areas & Others

10%


25

Figure 3.5: Country Engagement Bank Budget Allocations for FCV & FCV at Risk Countries for FY16-18 (US$ million)


allocations to Small States

have also increased by 29

percent, on top of a 9

percent increase in FY17.

As illustrated in Figure 3.6, the CE allocation for small states (IDA and

IBRD) increased by US$10 million (a 29 percent increase) from US$35

million in FY17 to US$45 million in FY18. This is on top of a US$3

million (9 percent) increase from FY16 to FY17. Since FY16, CE

allocations to small states have increased by a total of US$13 million, a

41 percent increase.

Figure 3.6: Country Engagement Bank Budget Allocations to Small States for FY16-18 (US$ million)

3 3 5 2 2

4 6 7

8 1 1

1 7 7

10 13

15

18

FY16 FY17 FY18

AFR EAP ECA LCR MNA SAR

32

35

45

+9%

+29%

+41%


26

40. Focus on implementation

is key to successfully

deliver on the IDA-18

scale-up and commitments

agreed with partners.

To operationalize IDA-18 policy commitments and allocations,

sustained efforts and close coordination between Regions and

GPs/CCSAs are underway to: (i) build a strong and robust pipeline for

IDA-18, strengthen project preparation, and support country capacity;

(ii) launch new facilities like the Private-Sector Window; (iii) implement

the IDA-18 policy commitments; and (iv) ensure solid monitoring of

IDA-18 implementation. In addition, the Bank has increased lending and

supervision coefficients to reflect the more complex scope of work and

challenging geographies the Bank faces, and coefficients for multi sector

tasks have also been increased to reflect the increased need of closer

collaboration. As the Bank is also committed to increasing its presence

on the ground, additional resources have been made available for

Extended Assignment Benefits (EAB).

41. The Bank has developed

a “Cascade” approach to

facilitate greater

leveraging of resources.

The Bank will redouble efforts to mitigate risks for private sector

investors in developing countries, thereby helping to crowd in private

capital. In this regard, the new IDA Private Sector Window (PSW),

introduced together with IFC and MIGA, will help mobilize private

capital and scale up private sector development, particularly in fragile

situations. The “Cascade” approach is being embedded across the CE

work program. As a start, nine pilot countries have been identified, and

work is underway to explore and pursue opportunities through

diagnostics and technical support in priority sectors. Technical

assistance and policy work will also be done to address binding

constraints. Finally, investment projects with potential for commercial

finance will follow an adapted Cascade approach with commercial

financing options explored and WBG support adapted accordingly. The

Cascade is further illustrated in Box 3.1 below.

Box 3.1: Embedding the Cascade Across the Client Engagement Cycle


27

42. To support global

climate goals, the WBG

developed and is

implementing its

Climate Change Action

Plan.

Driven by client demand, the Climate Change Action Plan focuses on

activities that support the WBG’s core mission and build on its

comparative advantage. It reconfirms the WBG’s commitment to

increase the climate-related share of its portfolio from 21 to 28 percent

by 2020.

43. Gender gaps and their

impact on development

feature prominently in

regional and practice

group Country

Engagement work.

Issues including women’s employment, inclusion and gender-based

violence will be addressed through the WBG Gender Strategy,

integration of gender components in lending operations and ASA, and

Gender Innovation Labs (GILs). The WBG also partners closely with

agencies such as UN Women, Global Banking Alliance for Women, and

the Chartered Insurance Institute. The Bank will continue to track

projects to ensure that they include components addressing gender gaps.

44. Global Engagement

funding from all sources

is expected to increase in

FY18 to US$285 million

from US$253 million in

FY17.

The Bank’s Global Engagement work program supports non-country-

specific priorities including (i) fulfilling corporate commitments, (ii)

supporting innovation and product development to support evidence-

based policy making by developing global databases, tools and

evaluations, and maintain WBG leadership in global public goods, (iii)

sustaining partnerships and global engagements, and (iv) providing

operational support to facilitate knowledge services and enable rapid and

flexible operational response.

This includes US$88 million of Bank funding representing an increase

of US$9 million from FY17. Bank funding has been allocated based on

the following categories:

• Corporate Commitments: Priorities include work on climate change,

including the operationalization of the 28 percent lending target,

implementation of the WBG Gender Strategy, support to the G20,

implementation of the Cascade approach, fragility, pandemics,

refugees, debt, jobs, citizen engagement, domestic resource

mobilization and support for the SDGs.

• Innovation/Product Development: A number of activities will be

undertaken including support to the operationalization of the Twin

Goals, design of country job strategies, accelerating progress on

Universal Healthcare implementation strategies, analyzing the

potential use of guarantees in FCV countries, as well as assessment

of the impacts of climate on migration.


28

• Partnerships: Initiatives are underway including the development of

a database on public-private partnerships, support to COP23 and

G20 agendas on climate, as well as support to UN agencies and

donor funded initiatives across a range of issues.

• Operational Support: This includes allocations to Global Practices

in support of strategy development and implementation, knowledge

work, as well as issues requiring a rapid response. It also includes

an increase of US$3 million in the allocations of the Gender and

FCV CCSAs.

45. The Program and

Practice Management

(PPM) budget will

increase by US$26

million in FY18.

The budget for Program and Practice Management will increase from

US$648 million in FY17 to US$674 million in FY18, which is an

increase of US$26 million (see Table 3.3). The PPM budget for

operational units funds the support and overhead costs, including

management, support staff, Country Office Facilities. Additional

resources provided to PPM in FY18 will address a number of priorities,

including: reducing the front-line managerial span of control; supporting

additional decentralization of staff to FCV countries which will increase

spending on Country Office facilities, security, and Extended

Assignment Benefits; GP contributions to the new Procurement

Framework and Environmental and Social Framework implementation,

including for training; and implementation of the Knowledge

Management Action Plan.

3.3.2 GRANT-MAKING FACILITIES

46. Management has made

progress in phasing out,

mainstreaming or

reducing Bank funding

for Grant-making

Facilities.

In the case of Grant-making Facilities (GMFs) a decision was made to

phase out Bank funding (e.g., Institutional Development Fund (IDF),

Development Grant Facility (DGF)); mainstream the activity into a

Bank program and subject it to contestability (e.g., Global Partnership

for Social Accountability (GPSA)); or reduce funding (e.g., State and

Peace-Building Fund (SPF), Consultative Group for International

Agricultural Research (CGIAR)).


29

Table 3.7: Grant-making Facilities Budgets (US$ million)

3.4 IG&A UNITS

47. IG&A unit allocation

increases have been

constrained with

additional funding

targeted very

selectively on key

strategic priorities.

Additional funding has been allocated to IG&A units in FY18 to focus

on three strategic priorities, namely:

• Support to finance units for the IDA-18 scale up: A number of VPUs

face additional responsibilities to address the IDA-18 expansion, in

particular arising from the leveraging of the IDA balance sheet.

• Support the implementation of the new Procurement Framework

and Environmental and Social Framework3.

• Support to enhance institutional security measures.

Management will continue to seek greater efficiencies through

strengthened management of Facilities and IT investments (including

greater use of cloud computing and reviewing the Bank’s global

footprint), and control of staffing levels to ensure alignment with budget

trajectories.

3 For funding of safeguards and fiduciary work in operational units, see paragraphs 34 and 35.

FY13 FY14 FY15 FY16 FY17 FY18

State and Peace-Building Fund (SPF) 33 - 25 21 14 5

Institutional Development Fund (IDF) 17 9 - - - -

Development Grant Facility (DGF) 56 51 33 12 - -

Global Partnership for Social Accountability (GPSA)1 5 5 5 5 - -

PD 50 50 47 30 30 30

Total Operational Activities Related to Grants 161 115 110 68 44 351The activities of the GPSA have now been mainstreamed into the GE work program.


30

Table 3.8: FY18 IG&A Budget Envelopes (US$ million)


31

48. The FY18 WBG budget

for the Boards, SEC,

and IEG amounts to

US$147 million.

The FY18 budget for the Boards, which includes the Executive Directors

Offices (EDs), the Board of Governors (BDG), the Development

Committee Secretariat (DCS), and the Inspection Panel (IPN), amounts

to US$100.7 million. The FY18 budget for SEC amounts to US$17.1

million, and that for IEG amounts to US$29.2 million.

Although the Bank’s share of these budgets is authorized as part of this

document, the sizing of these budgets is not determined by Management.

Table 3.9: FY17 and FY18 Board-Related Budgets (US$ million)

3.5 NON-UNIT SPECIFIC ALLOCATIONS

49. The changes in budget

for the Centrally-

Managed Accounts are

principally due to the

changes to the staff

benefit recovery rate

and the scaling down of

funds set aside for staff

separations.

The principal movement in the Centrally-Managed Accounts (CMAs) in

FY18 is due to the change in the staff benefit recovery rates as explained

previously. The FY17 restated information in Table 3.10 shows a

decline in budget for the CMAs by US$219 million as budgets are

correspondingly transferred to VPUs to compensate them for the

adjusted benefit recovery rates. After adjusting for the benefit rate

increase, the net change in the budget for the CMAs between Restated

FY17 and FY18 is US$87 million, as explained below:

• Budget Recoveries in FY18 comprise principally the recovery of the

staff benefit charge from both units and external funds as well as

other recoveries for indirect costs. The increase from FY17 is due

to a combination of the elimination of the Washington-appointed

staff cost subsidy to external funds and salary increases.

• Corporate Contingency is set at US$10 million in FY18 (reduced

from US$12 million in FY17).

FY17

WB Budget

Restated

FY17

FY18

WB Budget

Executive Directors (EDs) 79.0 85.7 87.7

Board of Governors (BDG) 7.3 7.3 7.3

DC Secretariat (DCS) 1.7 1.7 1.7

Inspection Panel (IPN) 3.6 3.9 4.0

Total Boards 91.7 98.6 100.7

SEC 15.5 16.8 17.1

IEG 26.3 28.8 29.2

Total 133.4 144.1 147.0


32

• Depreciation is expected to increase by US$11 million (12 percent)

over FY17 primarily due to an increase in Centrally-Managed ITS

depreciation. This reflects the downstream impact of the significant

ramp up of ITS investment over recent years.

• Funding for Institutional Programs is decreasing by US$53 million

(38 percent). This decline is mainly due to the completion of the

Expenditure Review and accompanying scaling down of funding for

the Staff Separation program (US$45 million). Unallocated LLI

savings are fully utilized in FY18 (US$8 million) and are a source

of flexibility as presented in Table 3.10. Other Institutional

Programs are expected to stay relatively flat.

• Centrally-Managed Staff Benefits expenses are expected to increase

by US$52 million (7 percent) due to a combination of salary and

staff growth from original FY17 budget estimates.

Table 3.10: Centrally-Managed Accounts (US$ million)

FY17

WB Budget

Restated

FY17FY18 $ Change % Change

A B C=(B-A) (C/A)

Budget Recoveries (613) (842) (937) (95) 11%

Corporate Contingency 12 12 10 (2) -17%

Depreciation 91 91 102 11 12%

Institutional Programs 138 138 85 (53) -38%

Staff Separations 59 59 14 (45) -76%

Washington real estate costs 31 31 32 1 3%

Business Continuity 18 18 18 - 0%

HRD-managed awards programs 4 4 4 - 0%

Corporate insurances 4 4 4 - 0%

Community Connections 3 3 3 - 0%

Evacuation costs 2 2 2 - 0%

Unallocated LLI efficiency gains 8 8 - (8) -100%

Other programs 9 9 8 (1) -11%

Staff Benefits & Allowances 779 789 841 52 7%

HRD-managed Staff Benefits 233 243 251 8 3%

Tax Allowances 122 122 129 7 6%

Staff Retirement and PCRF 424 424 462 38 9%

Total 407 188 101 (87) -46%


33

50. The Bank’s required

contributions to the staff

post-retirement plans are

based on actuarial

recommendations

approved by the Pension

Finance Committee

(PFC).

Using the PFC’s approved FY18 rates, required contributions to the

Staff Retirement and related plans are expected to increase to an

estimated total of US$398 million in FY18 compared to US$380 million

in FY17. This change is a combination of a slight increase in the

actuarially determined contribution rate to 30.15 percent from FY17’s

rate of 29.99 percent, and projected salary increases. Total Staff

Retirement Plan costs, comprising contributions to the plans and

contributions to the Post-Retirement Contribution Reserve Fund (PCRF)

will increase from US$459 million projected in FY17 to US$462 million

in FY18.

51. The PCRF was

established in FY13

with the objective of

reducing budget

volatility resulting from

the Bank’s

contributions to the

staff post-retirement

plans.

The Bank’s contributions to the staff post-retirement benefit plans has

been set at 35 percent of net salaries, above the actual annual contribution

rate currently recommended by the actuaries, so that the excess

(difference between the actual rate determined by PFC and the 35 percent

fixed contribution rate) can be added to the PCRF in order to build up the

Reserve Fund. The balance of the Fund is projected to be US$263

million at the end of FY18.

52. In FY17, Management

settled a US$16

million deferred

contribution to the

PCRF, reducing

pressures on the FY18

budget.

The Board had agreed that an FY15 obligation to contribute US$16

million to the PCRF could be deferred to FY18. Based on anticipated

savings in the current year, Management decided to settle this obligation

in FY17, resulting in creating flexibility of US$16 million in FY18.

3.6 EXPENSE FUNCTIONAL VIEW

53. The functional expense

view shows staff costs to

be the main expense

category.

The Bank follows a dollar budget approach which allows budget holders

flexibility to vary inputs as long as they stay within staffing affordability

parameters and their authorized budgets. As a result, the Bank does not

set specific budgets by expense category for staff salaries, short term

consultants, or travel. Accordingly, the functional expense line view

presented in Table 3.11 below is an illustrative decomposition of the

administrative budget by expense line item. Nevertheless, as the relative

shares of the expense items have remained relatively stable over the

years, the estimates below represent the current view of the most likely

outcome. The actual outcome may differ because work programs vary

during the year, and decisions are made to respond to changing business

needs that may entail trade-offs between different expense categories.


34

Table 3.11: FY17 and FY18 Functional Expense View of Administrative Expenses (US$ million)

FY18 projected administrative expenses on an All Funds view are

expected to grow by 2.9 percent (US$114 million), compared to FY17

projections of expenditures4, mainly driven by an increase in external

funds of 6.3 percent (US$88 million) with Bank Budget increasing by

1.0 percent (US$26 million).

Staffing is the main expense category, representing about 56 percent of

total unit gross expenses on an All Funds view (63 percent of Bank

Budget).

4 The difference between the FY17 projection of US$3,932 million and the US$3,871 million presented in Table 3.3 is due to revised

estimates of External Funds from the FY17 Budget.

US$mPercent of

Total US$mPercent

of Total US$mPercent

of Total US$mPercent

of Total

Fixed Expenses 2,268 76% 2,607 67% 2,312 76% 2,701 67%

Of which:

Staff Salaries and Benefits 1,890 63% 2,178 56% 1,922 63% 2,255 56%

Other Fixed Expenses 1

378 13% 429 11% 390 13% 446 11%

Variable Expenses 700 24% 1,268 33% 724 24% 1,310 33%

Of which:

ST Consultants & Temporaries 214 7% 610 16% 221 7% 631 16%

Travel Costs 224 8% 336 9% 235 8% 350 9%

Contractual Services 218 7% 266 7% 224 7% 273 7%

Other Variable Expenses 2 44 1% 57 1% 45 1% 57 1%

Total Unit Gross Expenses 2,968 100% 3,875 100% 3,036 100% 4,011 100%

Grant Making Facilities (GMFs) 44 57 35 35

Total Gross Admin Expenses (incl. GMFs) 3,012 3,932 3,071 4,046

Reimbursable Revenues and Fee income (488) (521)

Total Net Admin Expenses (incl. GMFs) - BB Only 2,524 2,550

Type of Expense

1 Other fixed expenses include Communications & IT, Equipment & Building, Depreciation, and TF Indirect costs. 2 Other variable expenses include Supplies, Printing, and other indirects costs.

FY17

Projections

FY18

Projections

BB+Reimb. All Funds BB+Reimb. All Funds


35

54. The average number of

full- time Bank staff has

increased by about 1

percent in FY17.

In terms of staff count, the average level of full-time Bank staffing in

FY17 has been about one percent above the average of FY16 (refer to

Figure 3.7 below). Terminations of full-time staff, including those

related to the phasing out of the Extended Term Consultants/Temporaries

and Junior Professional Associates, were offset by new hires mainly in

operational units.

Figure 3.7: Full-time Bank Staff on Payroll

55. The People Strategy for

FY17-19 prioritizes

areas that will have the

most impact on the

WBG’s ability to

achieve strong business

outcomes.

56. All other expenses are

estimated to grow in

FY18 by 2.1 percent

across all funds.

The People Strategy for FY17-19 prioritizes areas that will have the most

impact on the WBG’s ability to achieve strong business outcomes, while

strengthening the Employment Value Proposition (“EVP”). The strategic

staffing reviews by HRD is one element of the new People Strategy for

FY17-19 which is anchored on five areas of focus: (i) leveraging the

WBG’s global and diverse talent; (ii) building and developing leadership

and managerial capacity; (iii) strengthening performance and rewards;

(iv) promoting the health, safety, and well-being of staff; and (v)

improving the WBG’s organizational effectiveness. Three cross cutting

themes of diversity and inclusion, FCV and focus on HR fundamentals

are embedded throughout the action items in the strategy. To this end,

efforts will be made to strengthen technical skills, and align demand with

business needs and corporate priorities, while remaining within the

proposed budget envelope.

In terms of other expense categories, FY18 projections reflect the growth

in total administrative expenses from projected FY17 levels and a stable

share of major line items to total costs. These costs are driven by the needs

of Operational units and increased depreciation.


36

4. CAPITAL BUDGET

This chapter includes an outline of the Bank’s FY18 Capital Budget request.

4.1 OVERVIEW

57. The proposed capital

budget for FY18 is

US$198 million.

The proposed capital budget for FY18 is US$198 million, comprising

US$113 million for Facilities investments and US$85 million for

Technology and Systems investments.

4.2 FACILITIES

58. The proposed Facilities

Capital Budget for FY18

is US$113 million.

The proposed FY18 Facilities investment of US$113 million comprises:

• Country office construction, purchases, relocations, and upgrades

(US$74 million or 65 percent) in select country offices.

• HQ facilities repairs, renovations and upgrades (US$30 million or 27

percent) that include higher-density office space set-up, pilots to

modernize efficient space concepts, relocations and construction of

facilities, replacement of equipment, and security systems.

4.3 TECHNOLOGY AND SYSTEMS

59. The proposed Capital

Budget for Technology

and Systems in FY18 is

US$85 million.

The FY18 Technology and Systems investment plan of US$85 million is

spread across three segments, as follows:

• Business Programs Solutions (US$62 million or 73 percent) that

address the day to day business needs of Bank VPUs, including

modernizing operations and HR; information, knowledge and

learning; core financial and strategic budget systems; and digital

workspace programs.

• Technology and Systems Capabilities Enhancements (US$12 million

or 14 percent) with focus on enhanced capabilities in: data

management, analytics, information management, collaboration,

cloud, connectivity, mobility, and security.

• Cyclical Replenishment Investments (US$11 million or 13 percent) to

build a modern, robust and flexible IT infrastructure.


37

ANNEX I. PROGRAM COST SUMMARY

1. Table I.1 Program Cost Summary (PCS) shows the FY17-18 budget by: work program and unit, Bank

Budget, and external funds. Table I.2 further classifies external funds into coupled reimbursable

revenues (refer to definition below) and BETFs. All budget figures are reported in nominal terms.

2. As described in Annex III, changes are to be made effective July 1, 2017 to the staff benefit recovery

rates. To reflect these policy changes, Bank Budget unit trajectories have been adjusted upwards from

FY18 in a cost neutral manner, with corresponding reductions in the Bank’s Centrally-Managed

Accounts. To enable the reader to see trajectories on a consistent basis, the Restated FY17 column of

the PCS displays FY17 WB Budget for units as if the recovery rate changes had always been in place.

3. The PCS reflects framework adjustments since FY15 and takes another step towards a unified approach

to planning for revenues and expenditures. As was done in FY16 and FY17, the FY18 budget is

constructed using holistic revenue and expense budgeting with respect to reimbursable revenues and

IBRD/IDA funding. Reimbursable revenues have been classified as either:

• Coupled Reimbursable Revenues (CRR) which are earned by the Bank for services that are directly

related to the underlying expense incurred by a unit; revenue is not earned unless there is a

corresponding expense, similar to BETF, or

• Decoupled Reimbursable Revenues (DRR), on the other hand, which are earned by the Bank for

services that are not directly driven by the underlying expenses incurred by the managing unit.

Examples of these revenues include: Trust Funds fee income, and revenues from sub-letting office

space to third parties.

4. Since the FY16 Budget Framework, expenditure authorization previously given as reimbursables

expense budget associated with DRR is now allocated to units or programs as regular Bank Budget (i.e.,

it is “budgetized” and is now no different from a unit’s other BB allocations). This facilitates better

medium-term planning for the units, while allowing flexibility at the corporate level. All changes in BB

allocation are now subject to the annual planning (W) process as they are no longer linked to the revenue

earned.


38

Table I.1: FY18 Funding for WB Work Program and Unit (US$ million)

FY17

WB Budget Restated

FY17 FY18

FY17

WB Budget FY18 FY17

WB Budget Restated

FY17 FY18

1.0 Country Engagement

1.1 AFRVP 207.0 229.2 265.7 195.6 223.6 402.7 424.8 489.2

1.2 EAPVP 83.9 96.2 105.5 96.5 126.6 180.4 192.7 232.0

1.3 ECAVP 77.6 87.0 85.6 76.4 102.0 153.9 163.3 187.7

1.4 LCRVP 88.7 98.5 95.9 54.2 54.6 142.9 152.7 150.5

1.5 MNAVP 50.9 56.7 59.6 98.2 106.4 149.1 154.9 166.0

1.6 SARVP 93.2 104.8 120.0 96.1 114.9 189.4 200.9 234.9

Sub-Total 601.4 672.3 732.3 617.0 728.1 1,218.4 1,289.4 1,460.4

2.0 Global Engagement

2.1 GP/CCSA 72.9 79.5 87.7 174.0 196.9 246.8 253.5 284.7

Sub-Total 72.9 79.5 87.7 174.0 196.9 246.8 253.5 284.7

A TOTAL CLIENT ENGAGEMENT 674.2 751.8 820.0 791.0 925.0 1,465.2 1,542.8 1,745.0

3.0 Region PPM

3.1 AFRVP 107.5 115.6 119.4 3.1 3.4 110.6 118.6 122.8

3.2 EAPVP 53.7 58.9 61.1 1.7 5.2 55.4 60.6 66.3

3.3 ECAVP2 57.8 62.3 54.1 1.5 1.3 59.3 63.8 55.4

3.4 LCRVP 49.4 54.6 55.7 0.9 0.9 50.3 55.4 56.6

3.5 MNAVP 32.8 36.2 35.8 5.5 1.4 38.3 41.7 37.1

3.6 SARVP 47.5 51.2 52.2 1.8 2.2 49.3 52.9 54.4

Sub-Total 348.7 378.8 378.3 14.3 14.3 363.0 393.1 392.6

4.0 GP/CCSA PPM

4.1 Equitable Growth, Finance and Institutions 71.5 76.4 76.9 12.8 12.2 84.3 89.2 89.1

4.2 Human Development 37.1 39.6 37.3 7.8 5.4 44.9 47.4 42.7

4.3 Sustainable Development 83.8 90.4 105.9 21.6 57.8 105.4 112.0 163.7

4.4 EAB and Other3 46.2 46.3 62.2 - - 46.2 46.3 62.2

4.5 CCSAs4 14.7 16.8 12.9 40.5 0.4 55.2 57.3 13.3

Sub-Total 253.2 269.5 295.3 82.7 75.8 335.9 352.1 371.1

B TOTAL PROGRAM & PRACTICE MGMT. 601.9 648.2 673.6 97.0 90.1 698.9 745.2 763.7

5.0 Operational Grant Making Facilities

5.1 CGIAR 30.0 30.0 30.0 - - 30.0 30.0 30.0

5.2 State and Peace Building Fund 14.0 14.0 5.0 - - 14.0 14.0 5.0

5.3 Development Grant Facility - - - - - - - -

5.4 Global Partnership for Social Accountability - - - - - - - -

Sub-Total 44.0 44.0 35.0 - - 44.0 44.0 35.0

C TOTAL OPERATIONS 1,320.1 1,444.1 1,528.6 888.0 1,015.1 2,208.1 2,332.0 2,543.7


BB External Funds All Funds


39

Table I.1: FY18 Funding for WB Work Program and Unit (US$ million) (Cont’d.) / 2 of 3

FY17

WB Budget Restated

FY17 FY18

FY17

WB Budget FY18 FY17

WB Budget Restated

FY17 FY18

6.0 Institutional Services

6.1 Budget, Performance & Strategy 68.8 79.0 74.0 - - 68.8 79.0 74.0

6.2 Chief Risk Office 13.4 15.0 17.2 0.7 0.9 14.1 15.7 18.0

6.3 Development Economics 47.3 52.4 52.4 47.1 54.7 94.3 99.4 107.1

6.4 Development Finance 22.5 25.8 27.8 37.0 37.3 59.5 62.9 65.1

6.5 External & Corporate Relations2 34.8 39.1 50.0 2.2 3.1 37.0 41.3 53.0

6.6 Global Environment Fund - - - 32.0 33.0 32.0 32.0 33.0

6.7 ICSID - - - - - - - -

6.8 Leadership, Learning & Innovation - - - - - - - -

6.8 Legal Services 32.0 36.7 38.8 1.9 2.4 33.9 38.5 41.2

6.9 Operational Policy & Country Services 45.4 49.4 51.4 0.7 0.5 46.1 50.1 51.9

6.10 Treasury 59.4 65.7 67.8 15.9 16.7 75.4 81.6 84.6

6.11 WBG Finance & Accounting 38.5 44.0 46.0 5.7 7.4 44.2 49.7 53.4

6.12 Strategy, Performance, and Admin.5 - - 8.9 - 3.2 - - 12.1

Sub-Total 362.1 407.0 434.2 143.3 159.3 505.3 550.2 593.4

7.0 Governance Services

7.1 Administrative Tribunal 1.7 1.8 1.9 0.5 0.5 2.2 2.3 2.4

7.2 Boards 91.7 98.6 100.7 - - 91.7 98.6 100.7

7.3 Conflict Resolution System 4.3 4.9 5.0 2.5 1.5 6.9 7.4 6.4

7.4 Corporate Secretariat 15.5 16.8 17.1 1.2 1.2 16.7 18.0 18.4

7.5 Independent Evaluation Group 26.3 28.8 29.2 8.6 9.0 34.9 37.4 38.2

7.6 Integrity Vice Presidency 18.5 20.5 21.0 0.1 0.4 18.6 20.6 21.4

7.7 Internal Audit 7.7 8.4 8.6 2.5 2.7 10.2 10.9 11.3

7.8 Office of Ethics and Business Conduct 6.6 7.4 7.2 2.3 2.1 8.9 9.7 9.3

7.9 Office of the President 7.0 7.5 7.4 - - 7.0 7.5 7.4

7.10 Office of Suspension & Debarment 1.6 1.8 1.8 - - 1.6 1.8 1.8

7.11 Office of the CEO 5.4 5.9 5.3 - - 5.4 5.9 5.3

7.12 Office of the MD and CAO 2.4 2.7 2.7 - - 2.4 2.7 2.7

7.13 Office of the MD and CFO 2.9 3.1 3.2 - - 2.9 3.1 3.2

7.14 Office of the SVPMM6 5.6 6.2 6.3 - - 5.6 6.2 6.3

7.15 Sanctions Board 1.7 1.8 1.9 - - 1.7 1.8 1.9

Sub-Total 198.9 216.0 219.1 17.7 17.4 216.5 233.7 236.5

8.0 Administrative Services

8.1 General Services and Facilities 138.4 143.7 152.7 38.0 40.3 176.4 181.7 193.0

8.2 Human Resources 57.3 67.0 68.4 12.8 15.9 70.1 79.8 84.4

8.3 Information & Technology Solutions 224.6 241.9 241.4 52.4 51.8 277.1 294.4 293.2

Sub-Total 420.3 452.6 462.5 103.3 108.1 523.6 555.9 570.6

D TOTAL INSTITUTIONAL, GOVERNANCE & ADMIN. 981.3 1,075.6 1,115.8 264.2 284.7 1,245.5 1,339.7 1,400.5

E TOTAL: ALL UNITS 2,301.4 2,519.6 2,644.4 1,152.2 1,299.9 3,453.6 3,671.8 3,944.3




40

Table I.1: FY18 Funding for WB Work Program and Unit (US$ million) (Cont’d.) / 3 of 3

FY17

WB Budget Restated

FY17 FY18

FY17

WB Budget FY18 FY17

WB Budget Restated

FY17 FY18

9.0 Centrally Managed Accounts & Programs

9.1 Budget recovery7 (613.0) (842.0) (936.9) - - (613.0) (842.0) (936.9)

9.2 Corporate Contingency 12.0 12.0 10.0 - - 12.0 12.0 10.0

9.3 Depreciation 91.0 91.3 102.4 - - 91.0 91.3 102.4

9.4 Institutional Programs 138.0 138.2 85.1 11.3 0.4 149.3 149.5 85.5

9.5 Staff Benefits & Retirement 778.6 788.9 840.8 - - 778.6 788.9 840.8

Total Centrally-Managed Accounts & Programs 406.6 188.4 101.4 11.3 0.4 417.9 199.7 101.8

F TOTAL ALL FUNDS EXPENDITURE ENVELOPE 2,708.0 2,708.0 2,745.7 1,163.5 1,300.3 3,871.5 3,871.5 4,046.0

G o/w Funded by External Funds DRR (184.0) (184.0) (195.7) - - (184.0) (184.0) (195.7)

H o/w Funded by External Funds CRR - - - (322.3) (325.1) (322.3) (322.3) (325.1)

I o/w Funded by External Funds BETF - - - (841.1) (975.2) (841.1) (841.1) (975.2)

J o/w Admin Budget Funded by IBRD/IDA 2,524.0 2,524.0 2,550.0 - - 2,524.0 2,524.0 2,550.0

2The International Offices budget of $8.5 million was transferred from ECA’s PPM to ECR in FY17. This transfer is reflected in the above table beginning in FY18.

3Includes Extended Assignment Benefits (EAB) for all GP/CCSA staff and funding to support Agile Bank initiative.

4FY17 CCSAs include Climate Change (CC), Public Private Partnerships (PPP) and Jobs. These units are consolidated under Sustainable Development (CC, PPP) and

Human Development (Jobs) Practice Groups from FY18, reflecting the revised organizational structure.

5Reflects the move of the Corporate Procurement unit from BPS.6Office of the SVPMM includes New York and Geneva Offices.

7Includes staff benefits recoveries from internal transfer pricing, rebates, TF recoveries, and Corporate Services.



1"Restated FY17" for BB reflects FY17 WB Budget based on the new staff benefits recovery rates effective July 1, 2017. FY18 trajectory is similarly stated on the new

basis.


41

Table I.2: Overview of External Funds Projected Revenues FY18 by Unit (US$ million)

FY17

WB Budget FY18 FY17

WB Budget FY18 FY17

WB Budget FY18

1.0 Country Engagement

1.1 AFRVP 30.4 22.2 165.2 201.4 195.6 223.6

1.2 EAPVP 6.2 6.7 90.3 119.9 96.5 126.6

1.3 ECAVP 24.2 32.6 52.2 69.5 76.4 102.0

1.4 LCRVP 11.3 9.4 42.9 45.2 54.2 54.6

1.5 MNAVP 61.0 53.0 37.2 53.4 98.2 106.4

1.6 SARVP 6.6 7.3 89.5 107.6 96.1 114.9

Sub-Total 139.7 131.1 477.3 597.0 617.0 728.1

2.0 Global Engagement

2.1 GP/CCSA 4.5 10.1 169.5 186.8 174.0 196.9

Sub-Total 4.5 10.1 169.5 186.8 174.0 196.9

A TOTAL CLIENT ENGAGEMENT 144.2 141.2 646.8 783.8 791.0 925.0

3.0 Region PPM

3.1 AFRVP 1.4 1.5 1.7 1.9 3.1 3.4

3.2 EAPVP 0.3 3.6 1.4 1.6 1.7 5.2

3.3 ECAVP 1.5 1.3 - 0.0 1.5 1.3

3.4 LCRVP 0.2 0.2 0.7 0.7 0.9 0.9

3.5 MNAVP 4.6 0.5 0.9 0.9 5.5 1.4

3.6 SARVP 0.3 0.7 1.5 1.5 1.8 2.2

Sub-Total 8.1 7.6 6.2 6.6 14.3 14.3

4.0 GP/CCSA PPM

4.1 Equitable Growth, Finance and Institutions 1.3 2.8 11.5 9.4 12.8 12.2

4.2 Human Development 1.1 0.9 6.7 4.5 7.8 5.4

4.3 Sustainable Development 0.6 5.3 21.0 52.5 21.6 57.8

4.4 CCSAs 0.3 0.1 40.2 0.3 40.5 0.4

Sub-Total 3.3 9.1 79.4 66.7 82.7 75.8

B TOTAL PROGRAM & PRACTICE MGMT. 11.4 16.8 85.6 73.3 97.0 90.1

C TOTAL OPERATIONS 155.5 158.0 732.4 857.1 888.0 1,015.1

5.0 Institutional Services

5.1 Chief Risk Office 0.7 0.9 - - 0.7 0.9

5.2 Development Economics 5.8 7.1 41.3 47.6 47.1 54.7

5.3 Development Finance 6.0 6.1 31.0 31.2 37.0 37.3

5.4 External & Corporate Relations 0.4 0.7 1.8 2.3 2.2 3.1

5.5 Global Environment Fund - - 32.0 33.0 32.0 33.0

5.6 Legal Services 1.9 1.8 - 0.6 1.9 2.4

5.7 Operational Policy & Country Services 0.3 - 0.4 0.5 0.7 0.5

5.8 Treasury 15.6 16.1 0.3 0.7 15.9 16.7

5.9 WBG Finance & Accounting 5.7 7.4 - - 5.7 7.4

5.10 Strategy, Performance, and Admin. - 3.2 - - - 3.2

Sub-Total 36.5 43.4 106.8 115.9 143.3 159.3

6.0 Governance Services

6.1 Administrative Tribunal 0.5 0.5 - - 0.5 0.5

6.2 Conflict Resolution System 2.5 1.5 - - 2.5 1.5

6.3 Corporate Secretariat - - 1.2 1.2 1.2 1.2

6.4 Independent Evaluation Group 7.9 8.3 0.7 0.7 8.6 9.0

6.5 Integrity Vice Presidency 0.1 0.4 - - 0.1 0.4

6.6 Internal Audit 2.5 2.7 - - 2.5 2.7

6.7 Office of Ethics and Business Conduct 2.3 2.1 - - 2.3 2.1

Sub-Total 15.8 15.5 1.9 1.9 17.7 17.4

7.0 Administrative Services

7.1 General Services and Facilities 38.0 40.3 - - 38.0 40.3

7.2 Human Resources 12.8 15.7 - 0.2 12.8 15.9

7.3 Information & Technology Solutions 52.4 51.8 - - 52.4 51.8

Sub-Total 103.3 107.8 - 0.2 103.3 108.1

D TOTAL INSTITUTIONAL, GOVERNANCE & ADMIN. 155.5 166.7 108.7 118.1 264.2 284.7

E TOTAL: ALL UNITS 311.0 324.7 841.1 975.2 1,152.2 1,299.9

8.0 Centrally Managed Accounts & Programs

8.1 Other Centrally Managed Accounts 11.3 0.4 - - 11.3 0.4

Total Centrally-Managed Accounts & Programs 11.3 0.4 - - 11.3 0.4

F TOTAL EXTERNAL FUNDS 322.3 325.1 841.1 975.2 1,163.5 1,300.3

Coupled

Reimbursable Funds (CRR) External Funds

Bank Executed

Trust Funds (BETF)


42

ANNEX II. INDICATORS OF BUDGET SUSTAINABILITY, STRATEGIC ALIGNMENT AND BUDGET

EFFICIENCY

Focus Indicator Definition Trend

IBRD Anchor Administrative expenses as a

share of operational revenues

(loan spread revenue) (percent)

IDA Anchor Administrative expenses as a

share of operational revenues

(IDA net loan revenues)

(percent)

External Funds

Ratio

External funds as a share of

total administrative spending

plans (percent)

Bu

dg

et S

ust

ain

ab

ilit

y

189%

158%160%

155% 147% 148%

135%

109%

91%

0

200

400

600

800

1,000

1,200

1,400


0%

40%

80%

120%

160%

200%

Exp

en

ses/

Re

ven

ue

s U

S$ m

illio

n

Bu

dge

t A

nch

or

%

IBRD loan spread revenue IBRD-funded expenses IBRD budget anchor

27%29%

30% 31%33%

34%35% 36%

37%

20%

25%

30%

35%

40%


93%98% 96% 98%

102% 100%94%

100% 98%

0

200

400

600

800

1,000

1,200

1,400

1,600


0%

20%

40%

60%

80%

100%

120%

Exp

en

ses/

Re

ven

ue

US$

mill

ion

Bu

dge

t A

nch

or

%

IDA revenue IDA-funded expenses IDA budget anchor


43

Focus Indicator Definition Trend

Operational Share of Unit

Budgets

Total share of unit

Administrative Budget (BB)

allocated to Operational Units

excluding GMFs (percent)

Client Engagement

Share of Operational Unit

Budgets

Share of Operational Unit

Budget (BB) excluding

GMFs Allocated to Country

Engagement (CE) and Global

Engagement (GE) (percent)

FCV Share of Country

Engagement Budgets

CE (BB) budget share for

FCV and FCV at Risk

countries over total CE (BB)

envelope (percent)

Str

ate

gic

Ali

gn

men

t

1

53.7%54.1%

54.9%

50.0%

52.0%

54.0%

56.0%

58.0%

60.0%

FY16 FY17 FY18

1Reflects the transfer of International Offices Budget from ECA to ECR in FY17

1

18.3% 17.9%19.5%

10.0%

15.0%

20.0%

25.0%

30.0%

FY16 FY17 FY18

$121m$143m

$115m


44

Focus Indicator Definition

Bank Budget per

Project Approved

Ratio

TrendB

ud

get

Eff

icie

ncy

Bank Budget to

Lending Volume

Ratio

Total Administrative

Budget (BB) per US$

billion loan approved

(US$ million)


Budget (BB) per lending

project approved

(FY17 US$ million)

88 92 90 88 83 85

46 39 53

67 79

62 59 54 61 53

-

20

40

60

80

100

120

IBRD+IDA

US$

mill

ion

74 85

74 74 80 81

35 27

43

59

80 68

54 44 50 48

-

20

40

60

80

100

120

IBRD

US$

mill

ion

111 101

115 108

87 91

72 75 70 78 77 58

65 73 75 58

-

20

40

60

80

100

120

IDA

US$

mill

ion

10 10 10 9 9 9 8 8 7

11 10 8 9 9

7 6

- 2 4 6 8

10 12 14 16

IBRD+IDA

US$

mill

ion

12

15

12 12 12

13

11

9 10

15 15 14

12 12 10

8

-

2

4

6

8

10

12

14

16

IBRD

US$

mil

lio

n


45

Focus Indicator Definition

Bank Budget per

Project under

Supervision

Ratio

Trend

Bu

dget

Eff

icie

ncy

(C

on

t'd

.)Bank Budget to

Portfolio Volume

Ratio


Budget (BB) per US$

billion portfolio under

supervision

(US$ million)


Budget (BB) per project

under supervision

(FY17 US$ million) 1.4 1.6 1.6 1.7 1.6 1.6 1.5 1.6 1.5 1.6 1.7 1.7 1.6 1.6 1.5 1.4

-

0.5

1.0

1.5

2.0

2.5

3.0

IBRD+IDAU

S$ m

illio

n

1.5 1.8

1.9 2.0 2.0 2.1 2.0 2.1 1.9

2.1 2.2 2.2 2.1 2.1 1.8 1.8

-

0.5

1.0

1.5

2.0

2.5

3.0

IBRD

US$

mill

ion

1.3 1.4 1.4 1.4 1.4 1.3 1.2 1.3 1.2 1.2 1.4 1.4 1.3 1.2 1.3 1.2

-

0.5

1.0

1.5

2.0

2.5

3.0

IDA

US$

mill

ion

17 20

22 22 21 20

17 15 14 14 15 14 13 12 11 11

-

5

10

15

20

25

30

IBRD+IDA

US$

mill

ion

14

18 19 20 19 19

16 13 12 12 13 13 13 12

10 10

-

5

10

15

20

25

30

IBRD

US$

mill

ion

22 23

26 26 24

21

18 18 16 17 17

15 13

12 12 13

-

5

10

15

20

25

30

IDA

US$

mill

ion


46

ANNEX III. FULL COST RECOVERY OF STAFF BENEFITS

1. Management plans to ensure that all Bank products and activities, however funded, reflect the full cost

of staff.

2. The Bank currently assesses a 50 percent charge on Washington-appointed staff salaries to the costs of

its products which partially covers the institutional benefits of such staff. The balance between these

charges and the total staff benefit cost (equivalent to 20 percent of salary costs for at least the past five

years) is borne by the Bank’s Centrally-Managed Accounts. Effective July 1, 2017, the benefit

recovery rate will revert to the originally set rate of 70 percent, enabling unit-level decision making to

be based on the full cost of staff.

3. The benefit costs of Country Office (CO)-appointed staff had not to date been assessed to products and

activities in the same manner as for Washington-appointed staff. With a third of the Bank's staff now

Country Office (CO)-appointed, Management plans to introduce a benefits recovery rate, set at 45

percent, to be applied to CO salaries to fully cover their benefit costs. This is effective July 1, 2017

except for external funds which will be charged the new rate from FY19.

4. These policy changes are budget neutral from a Bank Budget perspective. Bank Budget unit trajectories

have been adjusted upwards in a cost neutral manner to reflect these changes with corresponding

reductions in the Bank’s Centrally-Managed Accounts. To enable the Board to see trajectories on a

consistent basis, the VPU trajectories for FY17 have been restated as if the changes had always been in

place.

5. Charging the actual benefit rate on all sources of funds is an integral step to fully implement the US$100

million incremental annual cost recovery targeted from BETFs as part of the trust fund cost recovery

framework approved by the Board in FY15. The recovery from BETFs of the subsidy of around US$30

million for Washington-appointed staff benefits was already assumed in the FY18-19 trajectory set out

in the FY17 Budget. The incremental cost of these policy changes on Trust Funds is estimated to

amount to around 1 percent of total annual Bank Trust Fund disbursements. This cost increase though

is expected to be offset by the savings already being applied to trust funds under the Expenditure

Review measures at the aggregate trust fund portfolio level.

6. These policy changes also apply to other external funds (i.e., RAS and EFO instruments) and US$5

million annually is expected to be recovered from the elimination of the benefit cost subsidy on these

funds.

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