Home 
About ADB Financial Resources Asian Development Fund Performance-Based Allocation Fact Sheet
 | |
Fact Sheet on ADB's Performance-Based Allocation PolicyWhat is ADB's Performance-Based Allocation Policy?ADB's Performance-Based Allocation (PBA) policy guides allocation of the Asian Development Fund (ADF) resources to the eligible developing member countries (DMCs) [ PDF ] with access to ADF. The ADF is the concessional lending window of the Asian Development Bank available to member countries that are among the poorest and least developed nations of the Asia Pacific. Under the PBA policy, allocation of ADF resources to a country is determined on the basis of performance as assessed through the country performance assessment (CPA) exercise and country needs (population and per capita income). Some ADF resources are also provided for specific purposes [ PDF ]. What is rated under the country performance assessment (CPA) exercise?The CPA assesses the quality of a country's policy and institutional framework. It measures the extent to which the policy and institutional framework supports sustainable growth, poverty reduction, and the effective use of development assistance. The CPA criteria focus on policies and institutional arrangements, which are the key elements that are within the government's control, rather than on outcomes (for example, growth rates) that can be influenced by elements beyond the government's control. Good policies and institutions are expected to lead to favorable growth and poverty reduction outcomes, notwithstanding possible yearly fluctuations due to external factors. The ratings depend on:
Steps such as passage of specific legislation can represent a breakthrough that merits consideration in the ratings. The manner in which such actions are factored into the ratings should be carefully assessed, because the impact of the legislation critically depends on its implementation. How are CPA ratings determined?Under ADB's Performance-Based Allocation (PBA) policy, each country's performance is assessed on seventeen indicators based on:
The CPAs are carried out annually for DMCs with populations exceeding 1 million, and every 2 years for countries with smaller populations. Starting with the 2005 CPA exercise, ADB conducts its annual CPAs using the World Bank's country policy and institutional assessments (CPIA) questionnaire*. [ PDF ] The CPIA questionnaire
The seventeenth indicator, portfolio performance, is also assessed on a scale of 1 to 6. The results of the 2007 CPA exercise can be viewed here. [ PDF ] Why is governance given such a large weight in overall CPA rating and in allocation?Changes in performance exert the greatest influence over changes in allocation, with the governance rating accounting for 50% of the overall performance rating. Poor governance and corruption deter investment, waste resources and distort their allocation, undermine the credibility of public authorities and increase insecurity. Moreover, the poor suffer most from the consequences of weak governance and corruption. Thus, improving governance and fighting corruption are critical to reducing poverty. Promoting governance increases the stability of the economic environment, enhances the credibility of DMC policies, and reduces resource leakages. In deriving the overall CPA rating [ PDF ] and in allocation formula [ PDF ] a large weight is assigned to governance as it is critical to the successful development outcomes and to the efficient and effective use of public resources. Do the respective governments have an opportunity to provide feedback on the assessments and resulting ratings?CPAs are ADB's own assessments. ADB country teams share the draft assessments and ratings with the respective governments and provide full opportunity for feedback, especially on the factual part of the assessments. CPAs are not subject to negotiations with the respective governments. Differing views on the assessments and ratings are recorded in an aide memoire. How does ADB ensure objectivity of the CPA ratings?CPAs are based on informed professional judgment of the country teams concerned. To ensure that these assessments are prepared rigorously and with due diligence, ADB has put in place a review and oversight system that is transparent and ensures consistency across the rated countries. The PBA focal point in the Strategy and Policy Department, outside the operational departments, manages the PBA process. This clearly separates the ADF resource allocation function and the operations for which the allocations are used. The CPA Working Group reviews and clears individual country's CPAs and ratings. The Group is chaired by the PBA focal point advisor, and consists of representatives of the regional and central knowledge departments. The Technical Group (TG), a subgroup of the CPA Working Group, vets the preliminary CPAs prepared by country teams, to ensure their quality and consistency across countries, and adds greater rigor and transparency to the ongoing CPA. TG is composed of technical experts in economics, social equity, environment and governance, who are all outside the operational departments. The interdepartmental CPA review panel, consisting of heads of departments and offices represented in the CPA Working Group is responsible for finalizing the ratings, which are then endorsed by concerned vice presidents. How do ADB's CPA ratings compare with the World Bank's ratings?ADB employs World Bank's CPIA questionnaire in its assessment of country performance, but its ratings may not necessarily be identical to the ratings given by the World Bank. Rating between the two institutions may differ because:
How do multilateral banks collaborate in the CPA exercise?ADB collaborates with other multilateral agencies, particularly with International Development Association (IDA) of the World Bank Group. ADB has:
In the context of harmonization and closely coordinating business processes and analytical work to support country strategies, joint assessments for post-conflict and weakly performing countries are being supported. Joint assessments in other countries may also be considered provided that these do not impair ownership of and accountability for ratings. The integrity of the policy and of the allocation process requires that ADB carry out independent assessments and determine its own ratings. Since ADB is accountable for the use of ADF resources, full institutional ownership of country ratings, which underline the allocation of ADF resources, is crucial. How does ADB's PBA Policy address the needs of countries facing disaster and emergencies?Decisions on allocations to support disaster and emergency needs are guided by the Disaster and Emergency Assistance Policy. Disaster and emergency needs are met through
Additional country demands will be met through borrowing against future allocations, or, in exceptional cases, through reductions in other countries' allocations. No ADF commitment authority is kept in reserve to meet disaster and emergency needs. How are postconflict countries treated under the PBA Policy?Allocations to support postconflict are made within the framework of the policy, guided by the current IDA framework*. [ PDF ] ADB decides on eligibility for postconflict assistance in consultation with international partners. For eligible countries a "transitional support strategy" containing a monitorable action plan is developed, identifying the role of ADF assistance and the scope of collaboration with international partners. Management decisions on allocations to support postconflict needs are based on staff's annual assessments of performance, based on IDA's "postconflict progress indicators", and country circumstances. A country is expected to return to the normal PBA allocation process within three years of being classified as postconflict, with the possibility of a two-year extension in exceptional cases. Per capita ADF allocations to eligible postconflict countries are typically higher than in other ADF-eligible countries. *The ADB website provides links to external websites that are not under its control. ADB is not responsible for the content of these sites. |
|
| © 2009 Asian Development Bank Privacy | Terms of Use |
 Top of page |
