Publications

	Table of Contents
p. 15 of 27 BACK | NEXT Executive Summary I. Introduction II. The Performance-Based Allocation Policy III. Lessons, Issues, and Directions IV. Enhancements to the Policy A. Principles to Guide Revisions B. Country Performance Criteria C. Country Ratings D. Proposed Allocation Formula E. Extra-Formula Allocations F. Disclosure G. Monitoring the Policy H. Summary V. Implementation VI. Recommendation Appendixes

Review of the Asian Development Bank's Policy on the Performance-Based Allocation of Asian Development Fund Resources : IV. Enhancements to the Policy

---

C. Country Ratings

68. From 2004, the World Bank’s CPIA ratings will be an unweighted average of cluster ratings A–D (Table 10). The IDA country performance rating, on which IDA allocations depend, will remain a hybrid combining the CPIA, the ARPP ratings, and the governance factor (Figure 3).

69. This review proposes a different approach to using country performance ratings for allocation purposes. Rather than amalgamating policy and institutional performance, portfolio performance, and governance, it proposes that the allocation framework accommodate these components of performance separately. This proposal responds to concerns that IDA’s governance factor is not particularly transparent and may inadvertently demote other important components of performance.

70. In aggregating across individual ratings, this review proposes that, as in IDA, clusterrating values be calculated as the simple average of indicator ratings in that cluster. The more criteria a cluster has, the less weight each carries. In aggregating across clusters to obtain a policy and institutional rating, equal cluster weights would be applied. However, to avoid double counting governance in the allocation process, it is proposed that the policy and institutional rating be defined as the average rating value of the economic management, structural policies, and policies for social inclusion/equity clusters. A separate governance rating would be equated with the cluster rating value for public sector management and institutions (cluster D).³³ Finally, the portfolio rating would remain based on the projects-at-risk scoring scheme, modified by expert assessments by ADB’s portfolio specialists. Interagency efforts to improve the use of projects-at-risk data for portfolio assessments are under active consideration.³⁴ Box 5 summarizes the proposed rating framework.

71. Policy and institutional, governance, and portfolio ratings can be combined in a variety of ways for reporting purposes. An unweighted average of the policy and institutional rating and the governance rating equates with the World Bank’s CPIA. Multiplying a weighted average of the derived CPIA and portfolio ratings by an exponentially weighted governance rating would generate IDA’s country performance rating.³⁵ Appendix 2 explains how the proposed component ratings could be combined in an overall country performance rating, consistent with the allocation model proposed below.

___________________

Back B. Country Performance Criteria	Next D. Proposed Allocation Formula