An Evaluation of the World Bank's Trust Fund Portfolio

CHAPTER 5THE IMPACT OF TRUST FUNDS ON THE BANKbecause trust funds provide resources on grant terms and a platform forcoordinated assistance. Each area of activity poses distinct challenges,however, and makes heavy demands on experienced Bank managementand staff.FINANCING OF A PARALLEL BUSINESS MODEL5.6 More than half of IBRD/IDA trust funds are focused on specificissues and finance activities in multiple countries. 2 This means that theirobjectives are stated and allocations made on the basis of globallydefined goals for advancing an issue rather than on the basis of countrypriority needs as determined in consultations between the Bank and thecountry and the IDA performance-based system of resource allocation.5.7 Bank management reports on the sector and thematic focus of theIBRD/IDA RETFs. 3 As reporting shows, public administration and lawaccounts for more than one third of all RETF disbursements followed byeducation and health and social services (see figure 5.1).Ensuring thepredictability ofthe total donorfunding fromone year to thenext is a keychallenge.5.8 Since the topics of these issue-specific trust funds are selected mainlyby donors, rather than through a systematic programming process, it isnot possible to know if trust fund financing is supporting a strategicallocation of total available resources. Nor is it possible to know theextent to which trust funds are either driving Bank work in specific areasor leading the Bank to move resources out of an area (given resourcefungibility). The issue this raises for the coherence of the Bank’s businessis not the targeting of resources on a particular issue but rather how thedetermination is made of which issues to target and who is driving theBank’s agenda. The parallel issue-oriented model also has implicationsfor how the Bank defines its own sector strategies and country programs,consistent with its areas of comparative advantage, so that it can helpcountries achieve coherence between vertical and horizontal support.From the perspective of recipients, achieving this coherence is key tomaximizing benefits from global funds.5.9 Bank senior managers, in interviews, expressed concern that trustfund finance is replacing—or “hollowing out”—IDA in prioritydevelopment areas, especially education and health, thus raisingquestions in donor countries about IDA’s continued relevance.66