was to be measured in three ways: a significant and growing number of countries seriously addressing key governance impediments to development effectiveness and poverty reduction; Bank projects and programs increasingly addressing impediments to better governance; and countries and global partners valuing and respecting the Bank’s capacity in this area. It was envisaged that these objectives would eventually be reflected empirically in improvements in country governance performance.

Several initiatives—comprising joint workshops, peer-to-peer learning events, clinics, and upstream assessment activities—were launched in 27 countries to help Bank teams systematically diagnose governance challenges and identify ways of addressing them through the Country Assistance Strategy (CAS), sector strategies, and project preparation. They were intended to deepen the Bank’s understanding of what can be done to identify governance entry points (for example, core public management and accountability institutions, private sector engagement, and demand-side capacities and frameworks). Following these initiatives, a more targeted effort involving 18 countries sought to enhance Governance and Anti-Corruption (GAC) responsiveness with the help of considerable support provided under the Governance Partnership Facility (GPF).

There was an effort to strengthen staff sensitivity to governance issues and an increase of the use of political economy analysis, actionable governance indicators, and demand-side measures. Guidance notes and toolkits were designed to advise Bank teams on how to address GAC issues in the sectors and to support cross-cutting concerns, such as social accountability. They also included handbooks, tools, and training to support efforts to prevent fraud and corruption in projects. A 2009 Quality Assurance Group (QAG) survey of projects approved in FY08 aimed to establish a baseline for incorporation of generic GAC elements in projects. The Bank increased its involvement in collaborative governance initiatives, such as the Extractive Industries Transparency Initiative (EITI), and in legal conventions, such as the Stolen Asset Recovery (StAR) Initiative, Medicines Transparency Alliance (MeTA), and Construction Sector Transparency (CoST) Initiative. Finally, internal reforms were also carried out (Volcker Panel strengthening the Integrity Vice Presidency; new World Bank Institute strategy emphasizing multi-stakeholder engagements, updating the Bank’s disclosure policy, new Operational Risk Assessment Framework for investment lending, recruiting a Chief Risk Officer, etc.) Significant incremental budgetary and donor resources were deployed over the FY08–12 period to support GAC implementation. This comprised $54 million in incremental Bank budget as well as $61 million in donor funds allocated through the Governance Partnership Facility (GPF), a trust fund financed by the United Kingdom, the Netherlands, and Norway.

Supporting effective public sector reform is a major challenge. Bunse and Fritz (2012), who reviewed World Bank public sector loans over 2000–2010, mention that nearly 70 percent of all developing countries borrowed from the Bank for public sector reforms during that decade, indicating a significant interest on their part. Only a quarter of the countries borrowing for public sector reforms can be considered aid-dependent (i.e., where aid accounts for more than 10 percent of gross national income). Typically, these projects involve areas that are technical (e.g., revising a chart of accounts, introducing a Medium Term Expenditure Framework, or reforming procurement or external audit) as well as areas that are more politically salient or sensitive.

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