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p. 31 of 53 BACK | NEXT Classification of Developing Member Countries in Bank Operations Bank Operations in Pacific Island Developing Member Countries Lending and Relending Policies (Ordinary Capital Resources) Lending and Relending Policies (Asian Development Fund) Sector Lending Program Lending Assistance to Private Enterprises Financial Intermediation Loans/Credit Lines Financing of Interest and Other Charges During Construction Financing of Indirect Foreign Exchange Cost of Projects Lending Foreign Exchange for Local Expenditures on Projects Retroactive Financing Supplementary Financing of Cost Overruns of Bank-Financed Projects Use of Surplus Loan Funds Foreign Exchange Risk in Bank Operations Sector Development Programs Technical Assistance Guarantee and Security Arrangment for Bank Loans Environmental Considerations in Bank Operations Gender and Development in Bank Operations Project Performance Management System The Bank's Cooperation with NGOs Emergency Rehabilitation Assistance Loan for Small DMCs Rehabilitation Assistance After Disasters Cooperation Arrangements with International Organizations and Bilateral Sources Coordination with Aid Agencies Regional Cooperation Cofinancing Japan Special Fund Guarantee Operations Bank's Operational Missions Communication with Members of the Board of Directors Processing of Loan Proposals Project Financial Management Systems, Financial Analysis and Financial Performance Indicators Economic Analysis of Projects Procurement of Goods and Works Use of Consulting Services Formulation and Implementation of Loan Convenants Effectiveness of the Loan Agreement Loan Disbursement and Loan Closing Project Accounting, Financial Reporting, and Auditing Post Evaluation Country Planning and Programming Incorporation of Social Dimensions in Bank Operations Poverty Reduction ADB Accountability Mechanism Involuntary Resettlement Internal Audit Confidentiality and Disclosure of Information Indigenous Peoples Governance Anticorruption Enhancing the Asian Development Bank's Role in Combating Money Laundering and the Financing of Terrorism

Operations Manual

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OM Section 32: Issued on 13 January 1997
Bank's Operational Missions¹

Bank Policies (BP)

1. It is the policy of the Bank to send missions to its member countries to liaise with appropriate officials of the member country on its overall operations related to country strategy, country program, and economic and sector work, as well as in connection with specific loans and technical assistance (TA); to collect data and information; to make site visits connected with Bank projects and programs; to discuss with appropriate officials matters relevant to the purpose of the mission; and to seek agreement on issues that arise in connection with the objectives of the mission. Such missions are necessary to deal with matters relevant to several operational requirements of the Bank and to process loan and TA proposals in developing member countries (DMCs), administer them while under implementation, and evaluate them on completion.

2. In timing and fielding these missions, it is the policy of the Bank to work in full cooperation with and in a manner convenient to the member countries. It is also the policy of the Bank to seek and obtain the active involvement of the DMC government and agencies concerned at all stages of operational work and project processing undertaken by Bank missions.

3. Each mission has a designated mission leader. After accomplishing its tasks in the field, the mission leader, on return to Bank Headquarters,² prepares a back-to-office report for the Head of Department/Office concerned or for President/Regional Vice President as appropriate. Based on the guidance received, further steps are taken on the matter, including, when required, appropriate information to the member country officials concerned.

Operational Procedures (OP)

Introduction

1. This part of the OM Section describes the nature and purpose of Bank operational missions.¹ Additional details relating to various loan administration missions are set out in the relevant Project Administration Instructions.

2. The various operational missions relate either broadly or specifically to the preparation, implementation, and evaluation of the Bank's lending and TA activities. Missions with a broad purpose include the country economic mission, country strategy mission, country program mission, country portfolio and program review mission, sector study mission, country contact/consultation mission, country project implementation profile mission, audit review mission, country loan disbursement mission, and cofinancing mission. Operational missions with a more specific purpose relate to the processing and administration of individual loans and TA activities. This category includes the reconnaissance mission, fact-finding mission, pre-appraisal/appraisal mission, loan negotiations mission, project specific contact/consultation mission, inception mission, disbursement mission, review mission, special project or technical assistance administration mission, mid-term review mission, reappraisal mission, project completion review mission, and postevaluation mission.

Missions Applicable to General Country/Sector-Related Operations

A. Country Economic Mission

3. A country economic mission analyzes the economic situation in a DMC, paying particular attention to recent economic trends and performance as well as to significant development issues and short and medium-term prospects, and discusses these with government officials and other multilateral and bilateral agencies represented in the DMC. It assesses long-term macroeconomic trends, the management of structural change (on a cross-sectoral basis) and the performance of the main sectors in the economy and of the key sectors in which the Bank operates. The information and resulting analysis is used to prepare the country economic review paper - a core document that provides a regular update on economic performance, structure of the economy, and development plans of the DMC - and other papers on economic, sectoral, and operational issues that have a direct bearing on the implementation of the Bank's operational program in the DMC.

B. Country Strategy Mission

4. A country strategy mission identifies the key development objectives and strategies in a borrowing DMC and assesses how far they are consistent with the Bank's strategic development objectives. It analyzes such factors as structural changes of the economy, constraints on economic growth, macro and sector development plans and priorities, policy environment, macroeconomic and social progress, related risk analyses, institutional assessment, environmental concerns, and aid programs from other external sources. On the basis of such analysis, the mission develops the Bank's operational strategy and proposed investment exposure for the DMC concerned, which provide the broad objective and direction of Bank operations over the medium term. The country operational strategy study (COSS) is prepared in close consultation with the government of the borrowing DMC and is updated every three to five years, preferably in conjunction with the preparation of the country's medium-term development plan. The final draft of the COSS is placed before the Consultative Committee for Strategy Studies and is then presented to the Board.

C. Country Program Mission

5. The country program mission will be fielded usually between January and April of each year. The main functions of the mission are to review the Bank's country assistance strategy and to formulate the Bank's future operational program in the DMC. The mission obtains and takes account of information on political, social, and economic developments and trends; analyzes macro and sectoral policy issues; discusses development plans and priorities with government officials; reviews the general climate for investment including the performance of the existing investment portfolio; and coordinates Bank assistance strategies and plans with representatives of other multilateral and bilateral aid agencies. These discussions and findings form a basis for the identification and selection of project and TA proposals² for possible Bank assistance and for which commitment of the DMC authorities is firm or likely to be available.

Based on the studies done and discussions held, the mission is required to justify its proposed lending volume, sectoral mix, and specific project proposals, supported by available sectoral analysis, institutional capacity assessments, and demonstrated government commitment. The agreed upon country program covering a rolling three-year period is presented in the Country Assistance Plan (CAP). If the mission has identified major absorptive capacity constraints, the CAP should state the need for a capacity building program and for a policy support program for the DMC, sector, or specific institution, and make a proposal for its financing through loan and/or TA funds. The project profiles for the first year of the rolling three-year period, developed in close consultation with the borrower during the country program mission, are appended to the CAP. They should focus on the projects' role in addressing sectoral, social, environmental, and/or area priorities, and should include information on client groups. The CAP will be approved by the President in June each year and will be fed into the Three-Year Rolling Work Program to be submitted to the Board by August.

D. Country Portfolio and Program Review Mission

6. The country portfolio and program review mission, to be fielded usually during the last quarter of each year, will focus on the Bank's entire portfolio in the DMC and will firm up the country program for the following year. This mission will address generic problems in project implementation with a view to improving the performance of the Bank's portfolio in the DMC and guide the direction, composition, and volume of Bank operations in its medium term.

E. Sector Study Mission

7. A sector study mission examines and analyzes in depth³ a particular sector or subsector of a DMC's economy including social and/or environmental issues and priorities important to the sector. The information obtained and findings of the mission are used to prepare sector studies, which may focus upon broad policy and sector strategy, specific-sector issues, or sector investment plans and institutions. The findings of these studies are reflected in the formulation of future Bank assistance strategies and operations. They may also result in program and sector loans.

F. Country Contact/Consultation Mission

8. A country contact/consultation mission is fielded to review and discuss country programming and/or broad operational issues, sometimes when it is felt premature to field an economic or programming mission in a DMC. Such a mission may be required to orient a new DMC to the functions and services of the Bank; to prepare the ground for subsequent missions with more specific tasks; or to help resolve policy and operational issues that arise during the course of Bank operations, but that are not addressed by other types of missions.

G. Country Project Implementation Profile Mission

9. The country project implementation profile mission prepares, in respect of selected borrowing DMCs, a reference document containing country-wide information on the implementation experience of Bank-assisted projects in the DMC; the mission will also compile in the document relevant policies, procedures, rules, and regulations of the DMC government and autonomous agencies receiving Bank assistance. The mission will also identify areas where improvement is needed to speed up project implementation.

H. Audit Review Mission

10. An audit review mission is fielded periodically by the Office of the General Auditor (OGA) to gain first-hand knowledge of problems and issues confronting operations in the field so that (i) more practical and effective recommendations can be formulated in operations audits; (ii) the implementation status of outstanding recommendations of past operations audit reports can be updated; and (iii) possible areas can be identified for future operations audits aimed at improving the Bank's policies, systems, and procedures. The audit review mission also makes available to the Bank an independent assessment of the economy, efficiency, and effectiveness of the Bank's project administration policies and procedures.

I. Country Loan Disbursement Mission

11. A country loan disbursement mission reviews the overall progress of Bank loan disbursements. The mission discusses with the agencies concerned aspects of project implementation such as the procurement of goods and services, imprest accounts, and disbursement procedures that have an important bearing upon disbursement performance and the status of loan utilizations. Where necessary the mission provides advice and assistance to agencies on the timely submission of procurement documentation and properly documented withdrawal applications in compliance with the Bank's guidelines and procedures.

J. Cofinancing Mission

12. The Bank, where appropriate, encourages the participation of other sources of finance in its loan and TA operations with a view to increasing resource transfer and/or improving the terms of finance. To establish, maintain, and/or foster additional flows of funds, a cofinancing mission is fielded periodically with various sources. The mission reviews with potential cofinanciers the Bank's operational program as well as specific cofinancing possibilities.

K. Other Missions

13. Bank staff also undertake other missions to participate in aid group meetings; meetings or consultations with donor countries and international agencies; and various conferences, seminars, and workshops.

Missions Applicable to Individual Loan and Technical Assistance Operations

A. Reconnaissance Mission

14. A reconnaissance mission is exploratory in nature. Its objective is to undertake a preliminary survey and acquire information on specific issues with a view to identifying, selecting, or confirming a loan or TA proposal. Loan and TA proposals not included in a country program but in which a DMC has subsequently expressed interest and for which concept clearance is to be obtained may especially require this mission. In its findings the mission may recommend the need for and the nature of further processing.

B. Fact-Finding Mission

15. After a loan or TA proposal is included in the CAP or after concept clearance is obtained from the President, a fact-finding mission is sent to the DMC.⁴ The preparation of the project brief on the basis of the feasibility study and its interdepartmental review are mandatory prior to the fielding of the fact-finding mission for a loan or TA loan proposal. In the case of a loan proposal the mission obtains detailed information on all aspects of the proposed project⁵ including technical, financial, economic, legal, institutional, social, environmental and policy matters required to provide sufficient justification to proceed to the next stage of appraisal. The mission should make every effort to secure the active involvement of the government during fact-finding. It should also make efforts to secure adequate and timely counterpart funds for the proposed project. The mission should visit project sites; consult with a cross-section of prospective beneficiaries and nongovernment organizations; and devote detailed attention to institutional capacities and arrangements, project cost and financing arrangements, the government/project beneficiary interface, and the validity of the sensitivity and risk analyses undertaken by the feasibility study. The mission should also specifically address the question of whether a TA loan will be required for detailed engineering, as a means of obviating project delays and cost overruns during implementation. This is a very important stage in the processing of a loan and the mission should obtain all necessary information in order to clarify the issues involved. The findings of the feasibility report, and the material collected by and the findings of the mission, are suitably incorporated into an aide memoire or memorandum of understanding⁶ (MOU) and provide the basis for the draft Report and Recommendation of the President (RRP) and a short issues paper, which are considered by the Management Review Meeting (MRM). The aide memoire or MOU should also describe the agreements or understandings reached between the mission and government agencies.

16. The mission is also required to use, in appropriate sectors and projects, systematic diagnostic and planning tools such as the project (logical) framework, constraints-opportunities-demand analysis, social reconnaissance surveys, environment evaluation techniques and institutional assessments. It should also look into resettlement issues to the extent feasible, where applicable.

17. In the case of a TA proposal,⁷ the fact-finding mission develops a full specification of the proposal including objective, scope, work program, terms of reference for consultants, cost estimates, financing plan, and other implementation arrangements. This information is incorporated into an aide memoire or MOU and used to prepare a technical assistance report for approval by the President or the Board of Directors.

C. Pre-Appraisal/Appraisal Mission

18. A pre-appraisal/appraisal mission is dispatched only after the approval of the MRM. A pre-appraisal mission is fielded for a loan proposal when major issues relating to the scope, design, implementation, and policy framework of the project remain to be resolved, and an appraisal mission may not be effective without their resolution. If successful in resolving outstanding issues, a pre-appraisal mission, upon the President's approval, may be converted to an appraisal mission either in the field or retroactively after return to the Bank's Headquarters.

19. The appraisal mission for a loan proposal⁸ is required to complete the review and analysis of all aspects of the loan proposal and sector/subsector to which it relates. Information necessary to describe and analyze the technical, financial, economic, legal, institutional, social, environmental, and other aspects of the proposed project is finally reviewed during appraisal.⁹ The mission is normally expected to reach a written understanding in the form of an MOU¹⁰ on the salient features of the loan proposal as well as on policy issues, and covering nonstandard loan covenants with the borrower/executing agency concerned. The MOU also aims to ensure that implementation arrangements are understood by all parties concerned and are agreed to. Where necessary, the mission should secure appropriate undertakings from the borrower/executing agency on these matters. The mission is also required to prepare and discuss with DMC counterparts a draft Project Administration Memorandum (PAM)¹¹ as a part of the MOU for project implementation. It should also try to obtain commitments from the government on establishing the project office, and on associated steps such as budget provision, timely release of counterpart funds, staff and services, and on appointing the project manager prior to loan approval. If appointed prior to appraisal, the project manager should be fully involved in the formulation of the project during the appraisal period, as this will enhance the potential contribution of the project manager to effective implementation. The work done by the appraisal mission forms the basis for the RRP and the legal documents.

D. Loan Negotiations Mission

20. Usually, loan negotiations are held at the Bank's Headquarters. However, if necessary, negotiations may be held in the borrowing DMC.¹² In these circumstances the Bank sends a loan negotiations mission, which is authorized to undertake the negotiations of the loan on the basis of the draft legal documents. Any amendments to the draft documents agreed to during the negotiations should be incorporated into the draft and be duly noted in the minutes of the negotiations meeting, signed by both parties, and, where necessary, reflected in the legal documents.

E. Project-Specific Contact/Consultation Mission

21. The processing of a loan proposal may call for further consultation or discussion on specific issues, for example, the possible involvement of other aid agencies or cofinanciers. If such matters arise and cannot be resolved as part of the normal process of loan processing it may be necessary to field a separate contact/consultation mission for the purpose.

F. Inception Mission

22. In the case of a loan, the inception mission is dispatched soon after the approval of the loan. The mission (i) advises the borrower on actions to be taken and documents to be prepared to make the loan effective; (ii) seeks to establish an effective working relationship between Bank staff and the staff of the borrower/executing agency; (iii) explains the Bank's and any co-financing institution's policies, procedures, and other requirements relating to project implementation and loan administration (e.g., regarding engagement of consultants, procurement of goods and services, and withdrawals from the loan account); (iv) discusses the implementation of the various loan covenants and assists in working out a suitable timetable for carrying them out; (v) assists the borrower in setting up records and accounting systems for the loan; and (vi) finalizes the PAM¹³ to serve as the basic reference document for implementing agencies. Thus this mission strives to ensure a full understanding by the borrower/executing agency of its responsibilities under the loan.

23. In the case of TA, the inception mission is dispatched, if necessary, after the fielding of consultants and agreement with the recipient DMC on an appropriate starting date. The mission should satisfy itself as to the consultant's working arrangements. Tripartite discussions should be held during the inception mission to refine the terms of reference of the TA and to make stipulations regarding the availability of counterpart staff, services, and facilities to be provided by the government for implementing the TA. The mission should assist in finalizing the work program and should ensure that the responsibilities of all concerned are explicit and clear.

G. Disbursement Mission

24. A disbursement mission is sent to assist the borrower in resolving specific financial and disbursement problems. The mission reviews with the borrower/executing agency the appropriate disbursement documentation, the procedures to be followed for compliance with the Bank's guidelines relating to disbursement, and the measures needed to support and expedite disbursement. The mission also assesses the executing agency's accounting capability and financial controls for approval of imprest fund and statement of expenditures procedures, and undertakes the verification of documentation under these procedures.

H. Review Mission

25. A review mission¹⁴ is required to conduct a detailed review of the progress made in implementing all aspects of the project funded under a loan and to devise, in consultation with the borrower/executing agency, solutions to any problems impeding its implementation. The mission should review, and propose revision as may be necessary in the implementation, procurement and construction schedules and institutional issues. Other matters that must be reviewed by the mission are project expenditures, disbursement of Bank loan funds, and compliance with loan covenants. Where agreement is reached on the need for the borrower/executing agency to undertake specific actions, such agreement should be recorded appropriately. Status classification of the project in regard to implementation should be made (C category projects will require more in-depth review). Unresolved problems should be reported on return to the Bank's Headquarters.

26. There may be a need for a Mid-Term Review (MTR) which can either be anticipated during the project formulation stage or identified during project implementation when the project runs into major difficulties threatening the achievement of the project objectives. MTR is not necessarily carried out for all projects. The MTR should cover all aspects of project implementation including those which may have an impact on the performance of the project and on its continuing viability.

27. For TA, the review mission conducts an in-depth review of the progress of the activities being funded, which may be, where applicable, based on an interim report prepared by the consultants. Comments of the mission should be made available to the consultants for additional analysis required, if any, and to serve as a basis for their final report. Discussions with the executing agency and the consultants may be held on a tripartite or bilateral basis. Where agreement is reached on the need for the executing agency or consultants to undertake specific actions, then such agreement should be recorded.

I. Special Project or Technical Assistance Administration Mission

28. A special project or technical assistance administration mission is sent to a DMC to deal with specific problems that arise with an individual project or TA and that warrant in-depth discussion of the issues involved. The mission analyzes the problems with the appropriate officials of the borrower/executing agency, and in consultation with consultants and other parties concerned seeks to devise solutions.

J. Reappraisal Mission

29. A reappraisal¹⁵ mission is sent when substantial or basic changes have become necessary in the scope or implementation arrangements of an approved project or when cost overruns are incurred in its implementation. As in the case of an appraisal mission, the re-appraisal mission is required to obtain all the necessary information to analyze the technical, economic, financial, legal, institutional, social, environmental, and other aspects of the revised project and should also reach a written understanding in the form of an MOU with the borrower/executing agency concerned. The mission is expected to examine the completed and ongoing works of the approved project and to determine whether substantial changes in the project scope or implementation arrangements are necessary to achieve the original objectives of the project or whether supplementary financing of cost overruns could be considered based on the policy and operational guidelines established for such purpose.¹⁶ The work done by the reappraisal mission forms the basis of the required Board paper (normally for approval on a no-objection basis) proposing major changes in project scope or implementation arrangements, or the RRP and legal documents for a supplementary loan.

K. Project Completion Review Mission

30. When a project financed under a loan is substantially completed it is inspected by a project completion review mission. The mission reviews the actual implementation vis-a-vis the project implementation schedule, the costs and benefits associated with the project, and the fulfillment of loan covenants and other obligations by the borrower/executing agency under the loan agreement. The mission identifies problems or deficiencies in the implementation or management of the project and recommends corrective action. It also makes a preliminary assessment of the initial operation of the project. Information gathered during this mission is used to prepare the project completion report (PCR).

L. Postevaluation Mission

31. A postevaluation mission is undertaken for selected projects funded by loans or technical assistance (TA) grants after appropriate interval of their completion. This mission is fielded taking into consideration the time¹⁷ needed for the impact of the project funded under the loan or TA grant to yield benefits. The mission undertakes an independent in-depth assessment of the project in regard to its effectiveness and efficiency. The mission reviews the preparation, design, appraisal and implementation aspects of the project; reviews the costs and benefits; assesses the performance of the project in relation to its initial objectives; and indicates any lessons that may be learned to improve future Bank operations in similar projects. The findings of the mission form the basis of the project performance audit report (PPAR) or the technical assistance performance audit report (TPAR). Post evaluation missions are also undertaken to prepare impact evaluation studies and reevaluation studies of projects that have been postevaluated.

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