2018-2019 Trust Fund Annual Report

Value Proposition of Trust Funds

KEY MESSAGES

Trust funds support the achievement of the goals of the Forward Look strategy by providing financial resources, contributing to the knowledge agenda, and leveraging the Bank’s convening power and global and local presence to contribute to country, regional, and global development. Below is a summary of the trust fund value propositions anchored around the Forward Look pillars.

Pillar 1: Serving All Clients

Trust funds are used strategically to complement the core WBG funding. They enhance global, regional, and country-level knowledge; provide targeted support to clients as a complement to IBRD and IDA funding; and provide funding to countries and clients that cannot receive IBRD and IDA funding. They finance much of the Bank’s analytical work and pilot innovative ideas; provide funding to support quality and scale up the development impact of IBRD- and IDA-funded operations; and make it possible for the WBG to provide development resources to non-member countries, countries in arrears, and non-sovereign institutions.

Pillar 2: Maximizing Finance for Development

One of the key factors hampering progress in achieving the SDGs is a global financing gap estimated at $3 trillion to $5 trillion a year. Trust funds help close that gap by helping governments build their capacity to mobilize revenue, manage public expenditure and public debt, and improve their procurement and public financial management systems, and they support the development of innovative financial solutions and mobilization of new, nontraditional sources of development finance.

Pillar 3: Leading on Global Issues

The Forward Look identified five global issues that the WBG would focus on: climate change, crisis response, jobs, gender, and infrastructure. In each of these focus areas, trust funds play a vital role, complementing IBRD, IDA and IFC. Individual countries are usually reluctant to borrow for the provision of regional or global public goods (GPGs): while the country would bear the costs alone, others would also receive the benefits. Trust funds support the global aspects of public goods and facilitate assembling different national and global stakeholders into partnerships. For example, work carried out under trust funds helps scale up the implementation of renewable energy and energy efficiency measures and boost climate resilience through improved management of natural resources; ensure that WBG staff and clients, policymakers, and partners have the data, knowledge, and evidence they need to design effective gender programs and policies; and design and deliver comprehensive, integrated, and high-impact jobs strategies that involve all relevant sectors in client countries

Pillar 4: Improving the Business Model

 The focus of actions under this pillar is to increase the development impact, effectiveness, and efficiency of trust funds. The portfolio contains a large number of trust funds, most very small in size. This means that their strategic alignment and effectiveness are modest, there may be potential risks of duplication, and need for improving coordination. Higher costs of coordination to ensure strategic alignment, fundraising, establishment, governance, management, supervision, evaluation, and reporting affect the efficiency of these small trust funds. Therefore, the Bank is engaged in an ambitious trust fund reform effort as part of improving the business model.