25 PHN 1991 Sector Review lending and sector work with respect to: the objectives and scope of the analysis, elements of the institutional development issues investigated, the extent of borrower involvement in the diagnosis, the analysis of interest groups (including beneficiaries) and 'weir likely impact, and the quality and commitment of the local leadership.

# _3. Expanding the Role of Country Operations Divisions_

4.10 The full potential of PHN policies and interventions to contribute to institution building and poverty alleviation can be realized only when policies are grounded in a macroeconomic and multisectoral policy framework oriented towards growth with poverty reduction, accompanied by a sound strategy for building institutions and the capacity to manage and implement policy. That means that country operations divisions have a critical role in assisting key national decision-makers to understand and internalize poverty alleviation and institution-building objectives and to plan and prioritize sector interventions and allocate resources accordingly. Currently, however, macroeconomic and multisectoral policy dialogue is not always fully coordinated to facilitate the development of an efficient and comprehensive strategy for poverty alleviation or for institution building.

4.11 Thanks to the impact of the 1990 WDR on poverty followed by the "Poverty Handbook," attention to the poverty issue continues to grow. The "Poverty Handbook" is rich in information and guidance on how to analyze and measure poverty, and how to design country assistance strategies. It is likely to have strong, positive impact on those aspects of a poverty strategy. Over and above all of this, however, remains the need for greater country operations divisions'attention to institutional issues. Cnuntry operations divisions, in partnership with public sector management divisions where they exist, could play a major role in analyzing institutional issues in depth. They could also provide valuable assistance in developing strategies for strengthening institutions and management capacity as an integral part of macroeconomic and multisectoral policy analysis and dialogue, in order to identify and address constraints to sustainable implementation of national policy. Resident mission staff, as an extension of country operations divisions, could also make a valuable contribution in this area and their roles and responsibilities should be reviewed with a view toward increasing time spent on institutional issues.

# 4. _Making Creative Use of Bank Instruments and Resources_

4.12 With the rapidly changing nature of PHN - operations over the recent past more policy based, more integration of social sectors, more flexible financing mechanisms, delegation of more design and implementation responsibilities to countries, greater community involvement -- the way lending instruments are used might usefully change as well. Thus it may be useful to review the nature and features of the various lending instruments available, focusing on their strengths and weaknesses in addressing various PHN sector interventions in different political and economic settings.

4.13 Significant effort has been made to increase the use of qualified local consultants in all aspects of the Bank's work on the PHN sector. Their knowledge of the socioeconomic and cultural dimensions of the sector is particularly valuable when applied to managementand institutional issues and to community involvement in PHN activity. But more information is needed about the availability of local expertise at the regional and national levels. Tbchnical departments should develop reliable rosters of regional and national experts, perhaps through occasional missions to identify and assess such individuals and institutions. They should also set up closer ties with the various capacity-building efforts being undertaken within and outside the Bank, and the PHN sectors. Thist funds should be further exploited to finance such assistance, when appropriate. Even though some of these local resources may be fully quaUfied, Bank staff may hesitate to spend scarce budget resources on people with no Bank experience, given the enormous pressures they are under. A special fund using administrative budget or other resources, could be created to cover the costs of well-designed and clearly defined short- or medium-term "internships" for lhird World experts, who have never worked with the Bank and who need a chance to become familiar with Bank procedures and to demonstrate their expertise.