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p. 7 of 14 BACK | NEXT I. Introduction II. Taking Stock of Progress III. The Current Development Environment in the Region IV. The Changing Role of the Bank V. The Bank's Strategic Directions FRO 1995-1998 A. Strategic Development Objectives B. Operating Objectives C. Annual Outputs VI. Organizational Implications and Capacity Building Requirements of the Bank

The Bank's Medium-Term Strategic Framework : V. The Bank's Strategic Directions FRO 1995-1998

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B. Operating Objectives

25. While the strategic development objectives of the Bank continue to remain relevant, it is increasingly apparent that the Bank must realign its operating role and objectives, to ensure the more effective and efficient realization of these strategic development objectives. As indicated in Section IV above, the Bank has become increasingly aware that their achievement of its strategic development objectives, which it shares with its DMCs, depends as much if not more so, on policy changes and capacity , development, as it does on project investments in the concerned sector. The role of the Bank therefore, as a catafyst of policy change and capacity, development, must be increasingly integrated with its role as a project financier. While project financing is and will continue to be the major operational instrument of the Bank, the selection of projects, the process of their design, and the approaches adopted for implementation must all be utilized to catalyze and leverage changes and development impact on a much broader front in key sectors in the DMCs

26. Traditionally, the Bank has planned its operations and assessed its annual achievements mainly in terms of project loans and TAs approved, and disbursements achieved. Now, the Bank will realign the focus, scope and planning of its operations in line with its enlarging role. It will formally adopt broader operating objectives and related monitorable performance measures of its operations in each DMC in key sectors. These objectives will go beyond just resource transfers and will include policy changes, capacity building, and regional cooperation. Thus, the Bank will set specific operating objectives for itself in each DMC and targeted sectors in the following four areas:

1. policy support
2. capacity building for development management
3. creating/strengthening productive capacity, infrastructure, and services, and
4. regional cooperation

Figure 1 illustrates the linkages among the Bank's strategic development objectives, its operating objectives (as described below), annual outputs, and key activities.

27. Several policy issues, many of which are common to the Bank's DMCs, continue to be central to the development process in the region. Some examples of these are deregulation, privatization, trade policies, the use of subsidies, and land tenure policies that influence food production and the management of natural resources. The policy framework in each sector must become the starting point and continuing frame of reference of Bank operations in a DMC. Through its annual country assistance plan (CAP),⁵ the Bank will identify/confirm each year, in each DMC, the policy issues by sector that it will target for support and work with the government to change and/or strengthen. This identification will be arrived at in consultation and agreement with the government as an integral part of the preparation of the CAP.

28. It is recognized that policy formulation and change constitute a long-term process. The pace and extent of change cannot and should not be dictated by the Bank. Ownership of such changes must always lie with the government. However, it is also important that the Bank and the concerned DMC establish a program of policy review and strengthening that is mutually agreed upon, with monitorable milestones to indicate progress as the Bank's operations in the DMC move on from year to year.

29. The Bank's policy support in a DMC will be achieved through specifically identified and programmed TAs, program and sector loans, selected project loans, and related policy dialogue. Progress on established milestones in policy reviews and related support will be monitored during the year, and year-to-year achievements will be assessed.

30. The Bank's capacity building support in DMCs will generally focus on three broad areas: (i) capacity for policy analysis, formulation, and impact assessment; this is an extension of the Bank's support for policy reform and formulation described above, though it goes beyond, and focuses on strengthening indigenous capacity for ongoing policy management; (ii) public sector reform and strengthening public administration; this focuses particularly on the efficiency, effectiveness, accountability, transparency, and predictability of public service within DMCs; it covers as well the capacity of DMC governments to mobilize domestic and external resources, and the efficient management of these resources for development; and (iii) the capacity of government to create an enabling environment for local government, and for the private and nongovernment sector, and its ability to work with them in active collaboration in development processes.

31. The bank's CAP for a DMC will also specify capacity building objectives that the Bank agrees to support with the concerned government. These capacity building objectives will be identified by sector, in consultation with concerned sector agencies, and as part of the CAP preparation process. In all cases, a link should be established between the policy agenda the Bank is pursuing in the DMC and the capacity building objectives that are targeted. The specific objectives and support program , agreed to by the government and the Bank will be identified in as tangible a manner as possible and, like the policy agenda, will be monitored in terms of progress and year-to-year achievements. These capacity building needs will be addressed through project loans, TA grants and/or direct staff sup- port.

32. This is the traditional financial role of the Bank. It focuses on the creation or rehabilitation of productive capacity (e.g., a rubber plantation project), the establishment of supporting infrastructure (e.g., roads, ports, communications), and the strengthening of public services (e.g., education, agriculture extension, water supply) through project financing in both the public and private sectors. These investments will continue to be a critical aspect of Bank operations in terms of both size and impact. In fact, it is the size and quality of such investments that will, in large measure, allow the Bank concomitantly to pursue and leverage policy change and capacity building in related sectors and DMCs. Thus, the Bank will continue to expand its project financing operations while integrating this role with the broader mandate of influencing policy change and supporting capacity strengthening.

34. The Bank will identify priority concerns in the area of regional cooperation, as identified and expressed by concerned DMC governments, and will set itself specific and monitorable objectives with respect to supporting these. The needs are many and varied. They could range from support for intra-regional trade to cooperation in technology research, to the management of common natural resources. The Bank is able to provide relatively large amounts of TA for regional activities. It is important that the Bank program the utilization of this grant facility to achieve specific and prioritized regional cooperation objectives, established in consultation with concerned DMCs. Ownership of these objectives by the DMCs will remain the guiding principle. The financing of several interrelated loan projects in different DMCs for purposes of coordinating natural resources management (water, energy) and transportation should also be pursued.

35. The Bank will also link its work in regional cooperation with its programmed objectives in the policy support and capacity building areas. For instance, the Bank will target selected high-Ievel regional conferences each year on key policy and capacity issues to highlight their relevance to development in the region, to encourage an exchange of views between developed and developing member country representatives, and to build public support for change. Wide dissemination of conference papers, translated into regional languages, is considered an important tool in supporting and catalyzing change.

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