Across all 134 operations for which IEG outcome ratings are available, slightly over 40 percent are rated satisfactory or highly satisfactory; slightly over 30 percent are rated moderately satisfactory, and the remaining quarter is rated moderately unsatisfactory or worse. As reflected in Graphs 1a)-c), the rate of _less_ satisfactory operations is somewhat higher for investment loans (29 percent) than for development policy loans (20 percent).

A first observation is that given the broad spread and scope of operations noted in the previous section and widespread disincentives to pursue public sector reforms that emerges from the literature discussed in section II, the actual success rate of Bank public sector operations is rather high, with two-thirds of operations rated as moderately satisfactory or better. Three reasons appear to account for this fact. One is a higher success rate for Development Policy Loans – which tend to be focused on specific one-off actions, such as legal changes. Moreover, core elements of these actions have to be implemented as ̳prior actions‘ – i.e. prior to the operation being approved and becoming effective. However, a 71 percent success rate for investment lending operations is still high relative to the expectations resulting from the literature.

A second reason is the fact that Bank operations are rated according to their specific development objectives, which may be achieved even when overall public sector transformation is not. Nearly 40 percent of all operations and over 45 percent of investment operations are rated as ̳moderately satisfactory‘ which implies the achievement of most of the development objective, but often weaknesses in individual components and often also in the wider impact of reforms. This may also mean that despite success in an operation as such, progress in the overall quality of public sectors frequently remains more limited. As noted by IEG‘s 2011 Annual Review, while a rather high share of public sector operations is rated as successful, overall progress on public sector reform was only observed in 47 percent of completed and reviewed country programs (IEG 2011: 8).

A third factor is the fact that a good share of public sector operations has been focused on more propitious environments – while at the same time this has been combined with a better than expected performance in more challenging environments. To a degree, the expected pattern of project performance - more likely to be good in better and worse in worse environments - _broadly_ holds also for Bank operations, but the relationship is less strong than might be expected. This is reflected in graphs 2 and 3 (covering all public sector operations and IL operations specifically).<sup>28</sup> Operations that are rated as moderately unsatisfactory or worse are more likely to have been implemented in a more difficult environment than operations that were implemented in more propitious contexts; and there have been no unsatisfactory operations in a propitious environment. As would be expected, the association between the environment and operational outcome ratings is somewhat stronger for ILs and weaker for DPLs.

> 28 Note that four of the countries appear in more than one category, i.e. they had multiple operations with different outcome ratings. The chart reflects the governance indicators for  ̳government effectiveness‘ from the World Governance Indicators (WGIs) compiled by the World Bank Institute (WBI) for 2000 and for 2010. While methodological shortcomings of the WGIs have been widely discussed, they offer a useful rough gauge of country context.

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