Download Developing IFAD`s middle income country strategy

Developing IFAD’s Middle Income Country Strategy
Informal Seminar of the Executive Board
Brian Baldwin
Senior Operations Management Adviser
The 8th Replenishment
“The Consultation recognized that the needs of MICs
are varied, and are changing, and that to remain
effective IFAD needs to better fulfil its mandate by
improving the service that it offers them, ensuring that
its engagement with them is relevant, and enhancing
the partnerships that these are built on”.
“IFAD will develop a graduation policy consistent with
the voluntary practice of other IFIs. It will furnish a
framework with objective and transparent criteria that
provides for consideration of the interests and wishes of
borrowing countries that reach a graduation point”.
(Report of the Consultation on the Eighth Replenishment of IFAD’s Resources,
Governing Council February 2009)
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The MICs are highly heterogeneous: 89 IFAD Member Countries (defined
by World Bank) with GDP/Capita $996-$12,195
Country
2008
GDP/Capita
(US$)
Country
2008
GDP/Capita
(US$)
Country
2008
GDP/Capita
(US$)
Vietnam
890
Sri Lanka
1 780
Angola
3 340
Pakistan
950
Congo, Rep.
1 790
Armenia
3 350
Yemen, Rep.
960
Egypt, Arab Rep.
1 800
El Salvador
3 460
Côte d’Ivoire
980
Indonesia
1 880
Jordan
3 470
Senegal
980
Philippines
1 890
Tunisia
3 480
Sao Tome and Principe
1 030
Bhutan
1 900
Iran, Islamic Rep.
3 629
India
1 040
Kiribati
2 040
Maldives
3 640
Papua New Guinea
1 040
Paraguay
2 110
Thailand
3 670
Lesotho
1 060
Syrian Arab Republic
2 160
Ecuador
3 690
Nicaragua
1 080
Timor-Leste
2 460
Belize
3 740
Sudan
1 100
Iraq
2 467
Azerbaijan
3 830
Djibouti
1 130
Georgia
2 500
Albania
3 840
Cameroon
1 150
Morocco
2 520
Peru
3 990
Nigeria
1 170
Swaziland
2 600
Fiji
4 010
Guyana
1 450
Guatemala
2 680
Macedonia, FYR
4 130
Bolivia
1 460
Tonga
2 690
Algeria
4 190
Moldova
1 500
Cape Verde
2 800
American Samoa
4 190
West Bank and Gaza
1 557
Samoa
2 820
Namibia
4 210
Mongolia
1 670
China
2 940
Dominican Republic
Honduras
1 740
Marshall Islands
3 270
Bosnia and Herzegovina
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4 330
4 520
The MICs are highly heterogeneous: 89 IFAD Member Countries
(defined by World Bank) with GDP/Capita $996-$12,195
Country
2008
GDP/Capita
(US$)
Country
2008
GDP/Capita
(US$)
Colombia
4 620
Turkey
9 020
Dominica
4 750
Venezuela, RB
9 230
Suriname
4 760
Chile
9 370
Jamaica
4 800
Mexico
9 990
St. Vincent and the Grenadines
5 050
Seychelles
10 220
St. Lucia
5 410
St. Kitts and Nevis
10 870
South Africa
5 820
Libya
12 380
Grenada
5 880
Antigua and Barbuda
13 200
Costa Rica
6 060
Cuba
13 580
Kazakhstan
6 160
Botswana
6 640
Panama
6 690
Mauritius
6 700
Lebanon
6 780
Argentina
7 190
Malaysia
7 250
Brazil
7 300
Gabon
7 320
Uruguay
8 260
Romania
8 280
Country
2008
GDP/Capita
(US$)
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IFAD Financing to MICs (2004-2009): Intermediate and
Ordinary Terms (US$ ‘000)
Country
Intermediate Terms
Gabon
Mauritius
Ordinary Terms
Total
6 000
6 000
6 001
6 001
Swaziland
5 998
5 998
China
62 345
62 345
Philippines
15 900
15 900
Argentina
39 341
39 341
Belize
3 000
3 000
Brazil
98 655
98 655
Colombia
20 000
20 000
Costa Rica
9 189
9 189
Dominican Republic
13 800
13 800
Ecuador
12 787
12 787
El Salvador
30 559
30 559
18 423
35 423
Mexico
29 973
29 973
Panama
4 200
4 200
23 037
23 037
13 000
13 000
Guatemala
Paraguay
17 000
3 100
Peru
Venezuela
3 100
Albania
9 600
9 600
Bosnia and Herzegovina
11 113
11 113
Egypt
64 134
64 134
Georgia
8 700
8 700
Jordan
11 777
11 777
Lebanon
Morocco
4 605
34 963
4 605
34 963
Tunisia
15 490
15 490
Turkey
43 300
43 300
371 360
635 990
Total (28)
264 630
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IFAD current financing portfolio
MICs≈IFAD
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IFAD portfolio: without current MIC financing
MICs≈IFAD
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Rural Poverty in MICs
•
MICs still account for a third of the world’s poor, and a substantial majority of these poor people
reside in rural areas;
•
MDG1 in MICs still to be accomplished. Needs more domestic and international investment in
agriculture and rural development, both public and private, focussed on:
–
–
Smallholder production and productivity improvement, particularly amongst the poorest rural population and
women
Rural employment generation through investment in smallholder farming, agro-industry, marketing, input
supply
•
Example: Turkey-16 of the 20 least-developed provinces, located in either the eastern or southeastern regions, have GDP less than 30% of the national average;
•
Example: Venezuela- about 12 per cent of Venezuelans live in rural areas, where more than
70 per cent of the population is poor, The Orinoco Delta Warao Support Programme targets the
Warao indigenous group;
•
Example: Indonesia-50% of the total households of Indonesia remain clustered around the
national poverty line and 70% of the poor live in rural areas. Poverty gap index indicates that
although the proportion of people living in poverty has fallen to almost the pre-1997 crisis level,
those who are poor now are worse off than before, especially in the Eastern Indonesia.
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IFAD and MICs
•
IFAD projects have performed well in MICs
– Office of Evaluation finds 80% project success rate in MICs (ARRI 2009)
– All Country Program Evaluations undertaken by OE in MICs have all found IFAD
performance satisfactory
– Recent examples: India, Argentina, Brazil, Philippines
•
IFAD projects in MICs heavily cofinanced:2007-09
–
–
–
•
52% IFAD financing
37% government and beneficiaries
11% other donor financing
IFAD-financed projects in MICS transfer the following to other MICs and to
low income countries :
–
–
–
–
Knowledge about rural poverty reduction
Project management and supervision techniques
Policy advice based on successful MIC experience
Targeting the rural poor
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The future MICs and IFAD: A partnership
for rural development
IFAD’s
program
of loans
& grants in
MICs
Loan reflows
from MICs
finance IFAD’s
PoW
MICs provide
transferable
knowledge
MICs≈IFAD
Mobilisation of
MIC national
public resources
for rural poor
MICs provide
financial
resources to
IFAD
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Partnership examples
Support to developing national agricultural/rural development strategies:
•
•
•
•
In 2008, Egypt asked IFAD and the World Bank to help in the preparation of a new agricultural
development strategy; IFAD responded
Lebanon requested technical assistance for the pro-poor update of its agricultural development
strategy
China, Indonesia, Vietnam and Sri Lanka: grant on "Pro Poor formulation , dialogue and
implementation at the country level”.
China, Indonesia, Philippines: Effects of bio-fuel on agricultural development, food security ,
poverty and impact
Policy, ‘convening’ and advocacy platforms

DR CAFTA in Central America and the Caribbean; REAF and COPROFAM in MERCOSUR acting
as policy dialogue platforms for regional MICs/low income countries contributing to governments’
policy reform and to expanded investment in rural development and poverty reduction.
South-South Cooperation and Learning

New Delhi Conference on Rural Transformation of Emerging Economies (April 2010) organised
by India, China, Brazil and South Africa: rural development technologies; multi-sectoral planning
and coordinated investments.
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MIC financing parameters
MICs increasingly provide most of the finance for IFADsupported projects in own country, and increasingly
contribute resources to IFAD to finance low income
countries
• Loan reflows from MICs for 2010-12: $275M (projected)
• Replenishment contributions 2010-2012: $68M
• Domestic mobilisation and cofinancing of MICs projects
for 2010-2012: up to $1B
• Projected lending to MICs for 2010-12: $500M
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IFAD services to MICs
• IFAD Loans and grants to MICs will decline as MICs
finance more of own rural development;
• IFAD supported projects in MICs to be increasingly
customized to MIC needs;
• Knowledge products to MICs (project design, analysis,
policy)
• IFAD technical assistance to higher per capita MICs
could be reimbursable;
• IFAD will help mobilize additional external and internal
resources for MIC country projects
• IFAD will facilitate South-South cooperation
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Current IFAD graduation policy
•
•
•
•
•
•
•
IFAD members, through the Lending Policies and Criteria, ‘progress’ from
borrowing at highly concessional terms to ordinary terms members and can
“voluntarily” graduate from borrowing loans and from grants;
Other non-financial services are available from IFAD (policy advice,
supervision of ongoing projects-Algeria) when member stops borrowing;
IFAD can provide reimbursable technical services to non-borrowing MICs;
MIC members no longer borrowing are encouraged to contribute to IFAD
replenishment (Malaysia, Thailand, Argentina, Chile, Colombia, Uruguay,
Algeria, Jordan and Tunisia did not borrow in 2007-09 but contributed to 8th
Replenishment);
MICs provided $ 68M for 8th Replenishment;
Other MICs which did not borrow from IFAD (2007-2009) include: Namibia,
several Pacific and Caribbean islands, Kazakhstan, Macedonia and Croatia;
For MICs that borrow, the PBAS system reduces their potential loan/grant
ceilings as a function of per capita income increase (high per capita income
results in a lower PBAS allocation, all other things equal):
– PBAS is therefore a mechanism for gradual graduation.
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Graduation policies of other IFIs
World Bank:
•
progression of lending terms from IDA, through blends, to IBRD;
•
flexible approach to determining the pace of graduation with re-engagement allowed;
•
graduation process from IBRD initiated at $6,885 per capita GNI (1 July 2010);
•
Mexico, with per capita income of $7,890 still borrows from IBRD.
Asian Development Bank:
•
progression of lending terms from ADF, through blends, to ADB;
•
availability of commercial capital flows on reasonable terms;
•
key economic and social institutions, attainment of a certain level of development;
•
graduation process from ADB initiated at $6,885 per capita GNI(1 July 2010);
•
borrowing has ceased only at member’s initiative.
Inter-American Development Bank:
•
progression of lending terms from FSO (Fund for Special Operations) to OC (Ordinary Capital);
•
No policy for graduation and recent General Capital Increase took account of anticipated
borrowing of all members.
African Development Bank:
•
Credit Policy determines progression of lending terms from ADF through blends to ADB;
•
No graduation policy, countries have ceased borrowing at own initiative, re-engagement possible.
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Options for future IFAD graduation policy
• Option 1: Maintain existing graduation/progression
mechanism (in line with Agreement Establishing IFAD)
– Voluntary cessation of borrowing at discretion of the MIC
– Continued eligibility for other IFAD services and encouraged to
provide replenishment resources
– Borrowing MICs gradually receive lower PBAS allocation as per
capita income increases
• Option 2: As above, but with IBRD system of per capita
income level above which graduation process is
launched - currently at $6,885 for IBRD (1 July 2010);
• Process would include assessment of readiness to
graduate, pace and nature of continued partnership.
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Thank you
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