Report ort of of th the Fi Fina nanc ncia ial l Advis dvisory ory Com ommitte ttee Camilla lla Helg lgø Fo Fossbe sberg rg FA FAC Cha hair ir Meeting of the Board of Directors Paris, France, 19-20 November 2012
Out utline line Recommendations for Decision: 1. Revision of list of indicative allocations and commitment of funds for program implementation grants on annual basis 2. Allocations for program implementation grants and observations on general trends 3. Supervision allocations in fragile and conflict-affected states 4. Approach for review and assessment of Supervising and Managing Entities 5. Launch of results based financing pilot For Information 6. Discussion on implementation modalities 7. Next FAC meeting and work plan 8. Accelerating GPE support in emergency and early recovery situations (covered in later session) Meeting of the Board of Directors 2 Paris, France, 19-20 November 2012
FAC Face-to to-Fa Face Meeting ting • 10-12 October 2012 (2.5 days) • Washington, DC • Participation: all members other than Eastern Europe, Middle East and Central Asia constituency • Large participation by Secretariat, especially Country Support Team • Next meeting in Washington to manage costs Meeting of the Board of Directors 3 Paris, France, 19-20 November 2012
Recom ommenda ndations tions 1 + + 2 2: Annua nual Commitm tment nts and Revision on of Indic icativ tive Alloc ocations tions List 1. Trustee to commit funds in annual tranches for Program Implementation Grants 2. Approve revised list of indicative allocations and clarify Small Island Developing States eligibility 3. Secretariat to develop: description of eligible resources available for allocation for FAC review criteria for prioritizing allocations for program implementation grants if there is a shortfall 4. Post new approved list of indicative allocations on GPE website and advise relevant LEGs Meeting of the Board of Directors 4 Paris, France, 19-20 November 2012
Indi dicativ tive Alloc ocations tions Review: : Backgrou ground January 2012: indicative allocations approved, subject to annual review June 2012: approval of standards for review Agreed that current list valid through Round 1 of 2013 Cover all eligible countries First review by FAC, recognizing that decisions made on indicative allocations and annual commitments both impact financial position of GPE and are interrelated Meeting of the Board of Directors 5 Paris, France, 19-20 November 2012
Coun untri tries s on on th the Li List: t: El Elig igibility ibility • IDA classifications updated annually on 1 July • Due to IDA classification, Nigeria, Djibouti, and Uzbekistan will no longer be eligible for funding after Round 1 of 2013 (2 consecutive years as Category iii) – Secretariat had requested an exception • Several small island developing states included on the list Clarification of definition to IDA-eligible only Expected allocations are low Feasibility of applications needs to be considered Meeting of the Board of Directors 6 Paris, France, 19-20 November 2012
Coun untri tries s on on th the Li List: t: Readine diness ss • Guinea, Lao PDR, Togo: Grants on schedule and expected to be ready to receive an allocation in next year • Mozambique, Lesotho, Liberia, Papua New Guinea: Low disbursement rate Will remain at Zero • Rwanda, Malawi and Nepal: Accelerating disbursements Will remain at zero since not expected to require funds until Round 2 of 2014 Meeting of the Board of Directors 7 Paris, France, 19-20 November 2012
Cha hange nges s to o Li List Removed Reduced to Zero Newly included (Eligibility) SIDS: Guyana, Burundi Maldives, Marshall Chad Island, Samoa, St. Lucia, St. Vincent & DRC Djibouti Grenadines, Tuvalu Ghana Nigeria Nicaragua Sudan Accelerated Uzbekistan disbursements: South Sudan Guinea Vietnam Lao PDR Togo Meeting of the Board of Directors 8 Paris, France, 19-20 November 2012
Background It is is ofte ten said id there re are re two type pes s of fore recasts sts ... .. lu lucky y or wrong!! ng!!!! !! • Forecast is a projection of future events and is therefore subject to significant change • Forecast will be refined and updated over time 9 Meeting of the Board of Directors 9 Paris, France, 19-20 November 2012
Fu Fund nding ing Assum sumptions ptions 2012-2014 • US$1,500m – results of Janua nuary 2012 Assum umption ptions the replenishment • US$500m expectation of USD Mill llio ions additional pledges Projected 2,000 contributions • US$168m for Dec 2011 Less previous (368) implementation grants approvals and funds • US$50m for results set aside based financing Projected funds 1,632 • US$150m for other costs available 25% over 408 Based on assumption programming that not all countries Funds for indicative 2,040 would apply in 2012-2014 allocations period Meeting of the Board of Directors Paris, France, 19-20 November 2012 10
Fund Fu nding ing Assum sumptions ptions 2012-2014 • US$480m received • US$26m from Kenya refund Curr rrent nt Assum umpt ption ions • US$724m expected from signed USD Mill llio ions contribution agreements Based on Projected 2,098 • US$868m in Secretariat contributions assumption that not projections of additional contributions all countries would Less previous (832) approvals and apply in 2012-2014 • Dec 2011 - US$168m funds set aside period • Jul 2012 – US$228m Projected funds 1,268 • Nov 2012 – US$278m available • Other Costs – US$156m Over programming 42 Value of indicative allocations of countries not expected to apply Funds for indicative 1,310 in the period allocations Meeting of the Board of Directors Paris, France, 19-20 November 2012 11
Fund Fu nding ing Assum sumptions ptions 2012-2014 Janua nuary 2012 Assum umption ptions Curr rrent nt Assum umpt ptions ions USD Mill llio ions USD Mill llio ions Projected Based on 2,098 Projected 2,000 contributions contributions assumption that not Less previous (832) all countries would Less previous (368) approvals and approvals and funds apply in 2012-2014 funds set aside set aside period Projected funds 1,632 Projected funds 1,268 available available 25% over 408 Over programming 42 programming Funds for indicative 2,040 Funds for indicative 1,310 allocations allocations Meeting of the Board of Directors Paris, France, 19-20 November 2012 12
Funds nds Available le: : Pr Projections tions 2012-2014 – US$ S$868 million on Amounts pledged at replenishment but not signed into • contribution agreements - US$231 million Amounts indicated verbally by senior officials in donor • countries - US$243 million Projection of continuation of current funding levels in • 2014 - US$34 million Projected investment returns on funds held in trust • funds - US$30 million Conservative approach to remaining US$330 million – • No amounts included for emerging donors US$83 million projected for G7 countries Only one new donor included Meeting of the Board of Directors 13 Paris, France, 19-20 November 2012
Demand d for r Progra gram Imple lementation tion Grant nts • Information from countries: up to 28 applications in Round 1 of 2013 Valued at US$1,234 million • Secretariat assessment: between 15-18 applications in Round 1 of 2013 Valued at US$524-678 million • Existing indicative allocations apply • Funding will need to come from US$1,310m Meeting of the Board of Directors 14 Paris, France, 19-20 November 2012
Analy lysis is of Options ions for Indic dicative Alloc ocation ion Levels ls OPTIO TION 1 – Exist Existin ing g OPTIO TION 2 – OPTIO TION 3 – Allo locatio ion n Levels ls Reduc uce Allo locatio ions ns to Adhere to Board d Match h Proj ojected d Approved d Crite iteri ria Fundin nding g in the Period riod for the Review US$1,490 million US$936 million (adjusted US$0 Indicative from US$1,310 for Allocation Round 1 2013) Amount No Change Reduced by 46% Reduced by 100% Country Allocations US$0.3 billion 0 0 Projected Shortfall in 2012-2014 Delayed Delayed Reputational • • • Risks implementation (Full implementation • Severe Impact Commitment) • Reputational on ability to Resources may not Resources may not achieve • • materialize as planned materialize as strategic Risk of program planned objectives • disruption (Annual Commitments) Increased pressure on • next replenishment Meeting of the Board of Directors 15 Paris, France, 19-20 November 2012
1. Donors sign contribution agreements 5. Board Approves and subsequently deposits cash (or an Allocation promissory note) with Trustee Board Donors 4. FAC Review and Recommendation 6. If funds available – signs a commitment letter with Trustee FAC the SE or ME for the Full Allocation amount and transfers funds based on 3. Quality their requests Assurance Review Supervising Managing 7. SE Signs Grant Secretariat Entity Entity Agreement with Implementer and Disburses Funds 2. LEG Submits Developing Proposal Country 8. ME and Partner Developing LEG Country Partners Implement Activities 1
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