20 November 2003
The World Bank's "Master Plan" for your Country: The Country Assistance Strategy
Click here for a printer-friendly pdf version (Acrobat 531 KB)
The Country Assistance Strategy (CAS) is the World Bank's "Master Plan" for each borrowing country. If your government borrows from the World Bank, then the World Bank has a CAS for your country. The Bank prepares a CAS for each of its 180 active borrowers every one to five years, which identifies all of the Bank's anticipated operations in this timeframe-operations to reform economic policies, implement projects and prepare technical analyses [Note:1]. The CAS is the Bank's strategic plan which it uses to:
- justify its involvement in a country based upon its assessment of financial risk and return on investment, the country's priorities, the activities of other donors and creditors, and the way that the Bank defines its comparative advantage;
- identify the analytical work and lending operations planned for the timeframe of the CAS; and
- describe the health, or quality, of the borrower's Bank-financed operations. The collection of all Bank-financed loan operations in a country is called the loan "portfolio."
This Toolkit includes the following sections:
1. The CAS is Designed to Cure Economic Ailments: the four steps of the CAS process
2. How the Bank Sets Priorities within the CAS
3. Public Access to the CAS
4. The Role of Civil Society in the CAS
5. What Other Information Do Citizens Need?
6. Resources
1. The CAS is Designed to Cure Economic Ailments
To treat an illness, a physician diagnoses the problem, prescribes a medicine, treats the problem with the medicine, and then evaluates the outcome. The CAS is the prescriptive step in the same four-part process of: diagnosis, prescription, treatment, and evaluation. Ultimately the CAS is intended to foster economic growth and reduce poverty in the borrowing country.
Table 1. | |
Step | Bank Instrument |
| 1. Diagnosis Analyses: | Economic and Sector Work |
| 2. Prescription: | Country Assistance Strategy |
| 3. Treatment Operations: | Projects and Programs |
| 4. Evaluation: | Country Assistance Review |
Step 1. Diagnosis: ESW
The Bank's analyses, which it calls "Economic and Sector Work" (ESW), are the Bank's diagnostic tools. The Bank sometimes invites participation by the borrowing government or civil society organizations in preparing these analyses, which include the documents outlined in Table 2.
All of the documents mentioned in Table 2, with the exception of the Public Expenditure Review, are intended to be publicly available after they have been discussed with the government [Note:2]. Because the ESW precedes operations, it sends an important signal about the Bank's long-term priorities and intentions.
Table 2. | |
Instrument/Document | Purpose of Diagnosis |
| Country Economic Memorandum: | Economic and Sector Work |
| Public Expenditure Review: | Strengths and weaknesses of government management of the fiscal budget |
| Sector Reviews: | Strengths and weaknesses of management of policies for a sector (e.g. agriculture, health, energy) |
| Poverty Assessment: | Nature, causes and extent of poverty |
| Private Sector Assessment: | Market-friendly character of economic policies |
| National Environmental Action Plan: | Major environmental problems, government capacity to tackle them, and key actions needed for improvements |
Step 2. Prescriptions: The CAS
Many governments-with or without the benefit of input from civil society-identify their own development priorities in a National Development Strategy. In theory, the CAS responds to the priorities identified by the government. In practice, this is only the case with very strong governments, for example Mexico or China, which basically dictate their priorities to the Bank. Generally, the CAS responds to the Bank's own economic policy prescriptions, sometimes taking the borrowing governments priorities into account. The Bank is attempting to change this mode of operation and become more responsive to the priorities of its client countries, in order to promote greater ownership of Bank-financed operations [Note:3]. The bottom line is that the CAS is not a negotiated document, although specific operations within the CAS are negotiated and agreed to by both the Bank and the borrower. Sometimes, the borrowing government does not like, or does not agree with, the analysis or the prescriptions outlined in the CAS. In such cases, the CAS is supposed to describe these differences. Other times, however, these differences are not articulated except in the private discussions among the Board of Executive Directors, who are responsible for approving the CAS.
How the Bank Exercises Power Through the CAS Process:
CREDIT LIMITS.
The primary way the Bank exercises its power is by raising or lowering a government's credit limit. People who have a credit card understand that they are assigned a credit limit, or ceiling, based upon their credit history. If one's credit limit is $2,000, no more than $2,000 in purchases can be charged. If one's credit rating improves, the credit limit can be raised; if it deteriorates, the limit can be lowered.Similarly, if the World Bank allows your government to borrow up to, say, $1 billion over three years, $1 billion is the credit limit, or ceiling. The Bank can raise or lower the ceiling depending on whether your government implements key reforms that the Bank requires. The reform measures are called "triggers."
TRIGGERS.
Triggers are analogous to loan conditions. They are simply mega-conditions which are applied to the entire portfolio. Governments that perform trigger actions can generally access a higher credit limit. Where a government is an active borrower from the International Monetary Fund, the Bank's triggers are often the same as the IMF's requirements.As government compliance with conditions on a loan can ensure access to successive installments, or "tranches", of the loan, similarly, government compliance with trigger actions can help ensure access to a group of loans. Typical trigger actions include: a) macro-fiscal triggers, e.g. fiscal management, fiscal balance, IMF package, or revenue targets; b) sectoral/structural triggers, e.g. privatization or financial, trade, education or health sector reforms; and c) portfolio triggers, e.g. prevalence of problem projects, disbursement lags, effectiveness delays, or project-specific problems.
There are three scenarios, or levels, of lending that the Bank can set within the CAS, which will respond to triggers: High Case, Base Case and Low Case. The following example from Brazil explains how these scenarios work:
1. High Case Scenario-
In the 1997 CAS for Brazil, the highest amount that the Bank would make available to the government was $6 billion, if the government met or exceeded the conditions-or triggers-set forth in the CAS.
2. Base Case Scenario-
The Bank would make $4-$6 billion available to the government of Brazil contingent upon the government's compliance with fiscal, administrative, portfolio quality and private sector goals. If the government then failed to meet the goals, it would "trigger" an action to lower the lending limit to a low case scenario.
3. Low Case Scenario-
In this case, the Bank would only make $2 billion available to the Brazilian government.
TWO CLASSES OF CLIENT GOVERNMENTS.
All client, or borrowing, governments are not equal. Some have more power in relation to the Bank than others. Usually, a government's level of power is directly proportionate to its creditworthiness. That is, creditworthy governments have greater power because if the Bank's lending terms do not suit them, they will simply borrow from another creditor. On the other hand, governments with a poor credit rating are dependent upon the Bank and often lack power in relation to the Bank. Governments with poor credit borrow from the Bank's soft loan arm, the International Development Association (IDA). The average per capita income of IDA countries is $360 per year.
Step 3. Treatment: Operations
The CAS prescribes three types of operations that are to be carried out by the country and financed by the Bank for the duration of the CAS' effectiveness (1-5 years, depending on the country):
1. Economic reform, or adjustment programs. Structural adjustment programs (SAPs) shape the macroeconomic policy environment of a country; sector adjustment programs (SECALs) shape the policy environment of a sector (e.g. health, education, industry, energy, agriculture).
2. Project investments. Projects often build things: dams, irrigation systems, schools, power plants, hospitals, etc.
3. Research and analyses. The CAS identifies which Economic and Sector Work will be carried out during the period covered by the CAS, including adjustment programs and project investments.
The operations that are set forth in the CAS become part of the country's portfolio.
Step 4. Evaluation
Over time, about one third of the Bank's entire loan portfolio has been performing poorly. Therefore, the Bank watches each borrowing government's portfolio management closely. Access to loans expands for good performers and shrinks for poor performers. In addition to rating, or assessing, the quality of each borrowing country's portfolio, the Bank uses the CAS process to assess the health of subsets of the portfolio: for adjustment programs and investment programs in each sector. In evaluating a country's loan portfolio, three things are taken into account: the borrower's performance, the Bank's performance, and the external environment. These factors are inter-related.
Evaluating Country Performance
For each borrower, the Bank periodically prepares a Country Portfolio Assessment (CPA), which evaluates the quality of the portfolio, and a Country Portfolio Performance Review (CPPR), which assesses the strengths and weaknesses of the government's portfolio management. Among other things, these documents focus on the government's performance in two areas: compliance or non-compliance with designated trigger actions, and efficiency in portfolio management as determined by measures, such as the failure rate of operations or the rate at which the government "moves money." For example, when governments procure goods and services efficiently, the Bank can disburse its loan resources in a timely manner. When procurement processes bog down, the Bank will hold up disbursements. Such delays compromise the value of the portfolio and put the Bank's investments at risk.
Indicators used to measure a government's performance include: a) macroeconomic policies; b) budget management; c) aggressiveness in privatizing state-owned enterprises; d) whether the loan monies are being disbursed in a timely and efficient manner [Note:4]; and e) commitment to investing in health and education, and providing "safety nets" for populations hurt by adjustment programs [Note:5].
Evaluating the Bank's Performance
The Bank's internal Operations Evaluation Department evaluates the Bank's own performance in each country. For country loan portfolios, a Country Assistance Review (CAR) is prepared and presented to the Bank's Board of Executive Directors. In evaluations of World Bank lending, the lack of ownership has been diagnosed as a major-if not THE major-problem with portfolio performance.
2. How the Bank Sets Priorities within the CAS
The Bank finances a wide range of policy and project operations in each of its borrowing countries and the CAS determines the Bank's priority areas. In 1998 the Bank's Operations Policy and Strategy Department produced a report, "Country Assistance Strategies: Retrospective and Outlook" that reviewed 44 full CASs and nine CAS Progress Reports that had been brought to the Board during 1997 and 1998. The report noted that the Bank's priorities are set in a process of "strategic selectivity," which purports to use three criteria for prioritizing lending: the magnitude of impact, which looks at the importance of the activity and its potential impact on economic performance and poverty reduction; the "probability" that the activity will be implemented successfully given country capacity and commitment; and the "additionality of Bank Contribution," which views the Bank's contribution and comparative advantage in relation to other "partners."
In their review of 44 CASs, the Bank found that despite broad coverage of issues in the CAS, of the 14 priority areas of Bank involvement, 3 areas-macro-fiscal management, rural development and infrastructure-constituted nearly 50% of the Bank's lending. Social protection, energy, social development and gender each received from 1-3% of Bank lending.
New Role of the CAS
The 12th round of negotiations for the Bank's soft loan window, IDA (The International Development Association), which was completed at the end of 1998, resulted in an agreement that includes an expanded role for the CAS. The new CASs are now expected to include local, national and global environmental considerations; financing for renewable energy; the systematic inclusion of governance issues that "affect economic performance and development effectiveness"; gender; core labor standards; and education sector strategies, among other things.
3. Public Access to the CAS
The IDA-12 Agreement also calls for "increased transparency and disclosure," and notes that "CASs should be made public, starting in July 1999, with sensitive information appropriately handled in consultation with the government." This policy change should update the current CAS disclosure policy, which is articulated in an Operational Memorandum [Note:6] from September 1998 that was the result of civil society pressure to make CASs publicly available. The 1998 policy change makes two types of documents available, but only with the government's consent:
1. The CAS Public Information Notice (CPIN): This is a short (2-page) summary of key elements of the country's economic and social situation, its development agenda, and the Bank's strategy. The CPIN will be made publicly available only if the government agrees to its disclosure. If the government agrees, then after the Board has discussed the CAS, it will be put on the Bank's website.
2. The CAS or the CAS Progress Report: The actual Country Assistance Strategy can be made publicly available with government request, after the Board has discussed it. The document will be available on the Bank's website and in hard copy at its headquarters and field offices.
If you cannot obtain your country's CAS from your government or the World Bank, you may be able to obtain it through the "grapevine" of non-governmental organizations (NGOs) that monitor the World Bank. Contact BIC for more information about the status of CAS information disclosure.
4. The Role of Civil Society in the CAS
Between July 1997 and January 1998, the World Bank wrote 47 CASs. Bank staff assessment of participation in the CASs found that of the 47 CASs, 20% had "broad and extensive civil society consultation," 32% had "significant civil society consultation," and 48% either had no significant consultation or there is no data [Note:7]. The Bank's internal review, however, does not rate the quality of consultation, only that some form of consultation occurred. In reality, NGO experiences with CAS consultations has been mixed. One problem is that rarely have draft CASs been made available in advance to those invited to consult. Other complaints include a lack of notification of consultation meetings, lack of civil society representativity, and a pro-forma process that has not allowed for real NGO/government/Bank dialogue on the country's development priorities.
Other problems stem from the fact that some governments feel that their authority and democratic processes are undercut when the Bank consults with NGOs and civil society groups "behind their back." More authoritarian governments simply resent the Bank's interactions with citizens. In some cases where there has been consultation, the Bank and government have made draft CASs available and invited comments from NGOs and the private sector within the borrowing country. In other cases, the Bank has held "consultations" with NGOs about a confidential document that no one has seen.
Fortunately, the Bank is getting the message that it can no longer operate on its own in determining development strategies. In its own internal studies, the Bank is finding that, when the government and civil society do not support Bank-financed operations, they often fail. The IDA-12 Agreement stressed the importance of "active civil society participation" in the CAS process as well as greater ownership by governments.
To take greater ownership of the process of developing a CAS, representative governments can convene consultative processes themselves rather than letting the Bank take the lead. Such governments can also solicit citizen input to National Development Strategies and request that donors and creditors, such as the Bank, invest in the priorities that are supported by societal consensus. Where there are authoritarian governments, Bank consultations can sometimes create "political space" for citizens to voice their concerns and give input into development processes.
5. What Other Information Do Citizens Need?
- The more you know about the World Bank's operations in your country, the better off you will be in terms of providing meaningful input into the CAS process. Some useful information could include:
- The Bank's current portfolio. What is the current size of the portfolio? What projects is the Bank financing? How well do those projects address development problems such as poverty alleviation, rural development, health and education, environmental protection and natural resource management?
- The impacts of structural adjustment: What structural adjustment conditions is the government being forced to meet? Do these conditions undermine or enhance economic development and poverty alleviation? Do NGOs have an analysis of the social and environmental impacts of SAPs that could bear on the CAS dialogue?
- The Relevant Actors: Who in the Bank and in the government are responsible for CAS negotiations? Are the officials accessible to NGOs and willing to share information? The Bank has an NGO liaison in every resident office. Find out who your liaison officer is. It is often useful to start there to establish relationships with Bank country operations staff.
- Citizens' Rights Protected by Bank Policy: What Bank policies apply to proposed projects? The Bank has ten "safeguard" policies in place that are designed to protect the environment and vulnerable populations (indigenous peoples and those forcibly displaced by projects) from the impacts of Bank-financed operations. Many of these policies have provisions for increased access to information, public participation, and analysis of alternatives, among other things [Note:8].
6. Resources
The most in-depth citizen's-eye perspective on the CAS process and how to influence it is Nancy Alexander's Who Shapes Your Country's Future? A Guide to Influencing the World Bank's Country Assistance Strategies, Bread for the World Institute (January, 1998). For a copy of the paper, contact:
Bread for the World Institute
1100 Wayne Avenue, Suite 1000
Silver Spring, MD 20910
Tel. +1-301-608-2400, Fax +1-301-608-2401
www.bread.org
For a discussion of how environmental issues should become a higher priority within the CAS, see Joy Hecht and Christine Real de Azua's Integrating the Environment Into the World Bank's Country Assistance Strategy; IUCN Green Accounting Initiative and The Accounting for the Environment Project (June, 1997).
For materials related to the CAS and environment, contact:
IUCN - Accounting for the Environment Project
1630 Connecticut Avenue, NW
Washington, D.C. 20009
Tel. +1-202-387-4826, Fax +1-202-387-4823
For an analysis of participation issues related to the CAS, see Kamal Malhotra, "Participation and Related Strategic Issues in World Bank Country Assistance Strategies for the Asia-Pacific", Focus on the Global South. The paper prepared for Second Asia-Pacific Regional Meeting of the NGO Working Group on the World Bank, Manila, Philippines, 21-24 April, 1996.
Contact:
Focus on the Global South
c/o CURSI, Chulalongkorn University
Bangkok 10330, Thailand
Tel. 662-218-7363, Fax 662-255-9976
NOTES:
1. To find the CAS schedule for your country, check the Bank's website or contact the Resident Mission.
2. For information about how to obtain these documents, see BIC Toolkit: Getting Access to Information From the World Bank: The Fundamentals.
3. See Wolfensohn, James, "A Proposal for a Comprehensive Development Framework" (Discussion Draft) January 21, 1999. The paper can be obtained from the World Bank's website at www.worldbank.org/cdf.
4. If governments have slow or inefficient ways of procuring or buying goods and services, they will get a poor rating. Corruption in procurement practices is something that, historically, the Bank has not measured, but this is changing.
5. Mozambique Country Assistance Review, 1997.
6. In 1998, CASs with a focus on social development were prepared for eleven countries: Albania, Bangladesh, Bolivia, Guatemala, Kenya, Mongolia, Nepal, Papua New Guinea, Tajikistan, Vietnam and Yemen. In all of these countries, some type of involvement in CAS preparation by civil society organizations took place.
7. World Bank Operational Memorandum, September 21, 1998: JoAnn Salop to Staff re: Public Disclosure of Country Assistance Strategies; available from the Bank's website.
8. World Bank, "Country Assistance Strategies: Retrospective and Outlook" (March 30, 1998); Operations Policy and Strategy Department Report.
9. See the BIC Toolkit, The World Bank's Policy Framework: The Safeguard Policies and the Independent Inspection Panel for information about the safeguard policies.
This toolkit was prepared by Nancy Alexander of the Global Challenge Initiative, and edited by Kay Treakle. It is part of the Bank Information Center's Toolkits for Activists: A User's Guide to the Multilateral Development Banks. The Bank Information Center (BIC) is an independent non-profit, non-governmental organization that provides information and strategic support to NGOs and social movements throughout the world on the projects, policies and practices of the Multilateral Development Banks (MDBs). BIC advocates for greater transparency, accountability and citizen participation at the MDBs. BIC is supported by private foundations and organizations that work in the fields of environment and development, and is not affiliated with any of the MDBs.