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p. 9 of 30 BACK | NEXT Executive Summary I. The Setting II. Key Variables Affecting Project Quality A. The Approval Culture B. Ownership C. Quality of Macro and Sectoral Analyses D. Portfolio Management E. Institutional Capacity Assessment F. Beneficiary Involvement in Preparation and Implementation G. Evaluation of Risks/Sensitivity Analysis H. Clarity and Implementability of Project Design I. Role of the Bank in Project Administration J. Responsibility for Project Quality K. Major Themes in Project Quality Analysis III. Assessment of Current Bank Practices and Areas for Improvement IV. Findings, Recommendations and Action Plan V. Implications and Monitoring Arrangements

Report of the Task Force on Improving Project Quality : II. Key Variables Affecting Project Quality

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C. Quality of Macro and Sectoral Analyses

23. The nature and success of the Bank's investments are inevitably influenced by the macroeconomic, social and political context of the DMC concerned. Each project, while needing to be justified on its own technical, economic, financial and social merits, must also take into account and be responsive to this macro and sectoral context. Post-evaluation experience has demonstrated that such considerations are essential to consequent project quality and sustainability. The Bank's economic and sector work (ESW) in the DMC, the resultant COSS and the annual COPP are processes through which his objective is achieved.

24. In practice, the Bank's macroeconomic and sectoral analyses have not always been allocated adequate resources to ensure comprehensiveness and depth. The Bank has traditionally viewed itself as a sector-focused “project bank." While this perception has been helpful in clarifying the role of the Bank vis-a-vis the International Monetary Fund (IMF) and the World Bank, it has resulted in lower priority being given to macroeconomic and sector work in DMCs. While ESW is undertaken for each D C periodically, the inputs invested in these exercises are modest, and their results do not always link up closely with mainstream Bank operations in the country concerned. The Bank's limited capacity for macroeconomic and sector assessments has constrained its policy dialogue with DMCs and has sometimes weakened the economic basis of its projects.

25. The availability of macroeconomic and sectoral analyses from IMF, World Bank and other agencies is useful. Such analyses must be used by the Bank not only to enhance its own analyses, but also to strengthen aid coordination and avoid duplication. However, there should be an adequate level of in-house effort to carry out such analyses and associated policy dialogue, specifically targeted to support the Bank's investment program in each DMC, and at least to the extent that such analyses are n t consistently available from other sources. The above discussion does not detract from the i creasing efforts recently made within the Bank to strengthen staff capabilities and undertake m re systematic and comprehensive economic and sectoral assessments. However, this attempt to enhance ESW continues to be constrained by resource availability and the priority to achieve the current lending program.

26. The need for strengthened macroeconomic and sectoral assessments as the basis for future Bank investments in its DMCs is widely accepted. Full recognition of the need for parallel analyses of the social situation in t e DMCs and related inferences for purposes of planning and designing investment projects are yet to emerge, and the effort remains under-resourced. Development is a complex and uncertain process, extensively controlled by local social, institutional and political factors. The Bank will need to recognize more fully the role of such factors.

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