Investment Project Financing (IPF) is used in all sectors, with a concentration in the infrastructure, human development, agriculture, and public administration sectors. IPF is focused on the medium to long-term (5 to 10 year horizon) and supports a wide range of activities including capital-intensive investments, agricultural development, service delivery, credit and grant delivery [including micro-credit], community-based development, and institution building.
Unlike commercial lending, Bank IPF not only supplies borrowing countries with needed financing but also serves as a vehicle for sustained, global knowledge transfer and technical assistance. This includes support to analytical and design work in the conceptual stages of project preparation, technical support and expertise (including in the areas of project management and fiduciary and environmental and social activities) during implementation, and institution building throughout the project.
Review and Reform - In 2013, the World Bank clarified processes, added more flexibility for borrowers, strengthened effectiveness and developmental impact. See this Briefing on Changes. In 2017 the Multiphase Programmatic Approach (MPA) was developed and approved for use. See more on MPA.
The DPF Policy emphasizes country ownership and alignment, stakeholder consultation, donor coordination, and results, and requires a systematic treatment of fiduciary risks and of the potential environmental and distributional consequences of supported policies. DPF can be extended as loans, credits/grants, or guarantees. Funds are made available to the client based on:
Development Policy Operations: Prior Actions
Prior Actions are policy and institutional actions deemed critical to achieving the objectives of a program supported by a DPF operation. These present the legal terms defined in the loan agreement that have to be met for each operation before disbursement. A database of prior actions for all DPF operations since fiscal year 2005 is updated annually at the end of each fiscal year by the Operations Policy and Country Services Vice Presidency.
Reviews of Development Policy Financing Use
The 2015 review focused on how reforms supported by DPF contributed to equitable growth and poverty reduction, taking into account environmental, social and economic sustainability. Previous reviews were done in 2012 and 2009.
Multiphase Programmatic Approach (MPA) allows countries to structure a long, large, or complex engagement as a set of smaller linked operations (or phases), under one program. As a result of breaking down a single loan into phases, Bank clients can match borrowing more closely with financing needs, permitting more efficient use of financial resources for both the Bank and clients. This “adaptive approach” also strengthens the potential for crowding in other sources of capital to support development objectives.
Subsequent phases of MPA programs will be prepared as separate operations with rigorous adherence to all applicable World Bank policies with regard to management reviews, fiduciary assessments, environmental and social safeguards assessments, and timely public disclosures and consultation with affected people.
This approach also encourages more learning and adaptation, as subsequent phases will be informed by lessons learned in previous ones. This will help ensure operations are more responsive to changing country circumstances.
First project using MPA
The World Bank undertakes analytical and advisory activities to inform country, regional and global development agenda in line with its commitment to the twin goals of eliminating extreme poverty and boosting shared prosperity in a sustainable manner.
Advisory Services and Analytics (ASA) are non-lending activities that help external clients or audiences advance a development objective. The World Bank provides ASA to support design or implementation of better policies, strengthen institutions, build capacity, inform development strategies or operations, and contribute to the global development agenda. ASA outputs include analytical reports, policy notes, impact evaluations, non-lending technical assistance, hands-on advice, and knowledge-sharing workshops or training programs. ASA related to private sector development can be prepared jointly with IFC and MIGA.
Reimbursable Advisory Services (RAS) are customized ASA requested by a noncommercial client, which are paid for by the client under a legal agreement. In providing RAS, the Bank's purpose is to expand the options available to member countries of all income levels, including those that have graduated from the Bank. RAS clients can be central governments; subnational governments; state-owned enterprises; non-governmental and other not-for-profit organizations (such as chambers of commerce); and multilateral institutions, including development banks and regional organizations.