Every year, the World Bank rates the economic, social and political performance of each borrowing government by the extent of its compliance with its own definition of “good” policies and institutions. For this purpose, it uses the CPIA. It rates the policy and institutional performance of each government relative to 20 criteria (grouped in four clusters). The World Bank uses this rating of individual governments as a diagnostic tool to a) allocate loan and grant resources among borrowers, b) determine the policy direction of new operations, and c) influence debt threshold targets. . | DEBT SUSTAINABILITY FRAMEWORK FOR LOW INCOME COUNTRIES POLICY AND RESOURCE IMPLICATIONS Paper submitted for the G-24 Technical Group Meeting Washington . September 27-28 2004 Part 4 Nihal Kappagoda Research Associate The North-South Institute Nancy C. Alexander Director Citizen s Network on Essential Services Performance Based Allocation System1 1. Every year the World Bank rates the economic social and political performance of each borrowing government by the extent of its compliance with its own definition of good policies and institutions. For this purpose it uses the CPIA. It rates the policy and institutional performance of each government relative to 20 criteria grouped in four clusters . The World Bank uses this rating of individual governments as a diagnostic tool to a allocate loan and grant resources among borrowers b determine the policy direction of new operations and c influence debt threshold targets. 2. World Bank staff uses a formula to divide up the funds available for low-income countries that includes need income per capita and performance. For the fiscal years 2003 to 2005 the Bank made resource allocations that were nearly five times higher for the governments in the top-performing quintile than for those in the poorest-performing quintile. 3. The CPIA rates countries primarily on the basis of current performance in relation to twenty equally-weighted criteria2 3 that are grouped into four clusters namely 1 This section draws on the article by Nancy Alexander of the Citizen s Network on Essential Services entitled Judge and Jury The World Bank s Scorecard for Borrowing Governments . 2 Please see Annex 2 for a full description of the criteria used and the CPIA for 2003. Economic management including management of inflation and the current account fiscal policy management of external debt and management and sustainability of the development program Structural policies including trade policy and foreign exchange regime financial stability and .
