ADF-14 Resource Allocation Framework. ADF-14 Second Replenishment Meeting June July, 2016 Abidjan, Côte d Ivoire

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1 ADF-14 Resource Allocation Framework ADF-14 Second Replenishment Meeting June July, 2016 Abidjan, Côte d Ivoire

2 Allocated Resources under ADF-13 Share, by Regions* Central 15% West 38% Allocation by Regions (in UA million)* East 39% 663 1, ,634 Central East North South West South 7% North 1% * Resources allocated through the PBA, the Pillar I of the TSF, and approved regional operations 2

3 ADF-13 Resource Utilization Rate As at May 17, 2016 UA Million PBA 64% RO 84% 1,046 TSF Pillar I 71% 591 Fully Prioritized TSF Pillar II PSF UA 2,017 Million Balance available for commitment 3

4 CPIA/PBA Adjustments under ADF-13 Performance Needs Addition of a New Cluster E to the CPIA Questionnaire Country Performance Assessment Minimum Allocation AIDI in the PBA Formula Infrastructure Development Regional Integration Greater weight (Larger Exponent)

5 No CPIA Distortion because of Cluster E Avg. Cluster A to D Avg. Cluster A to E

6 Country PBAs under ADF-13 Impact of the AIDI under ADF-13 Country PBAs by AIDI s Avg AIDI s 28.9 Performance Remains the Bedrock 50.2 Country PBAs by CPIA s Avg CPIA (A E) s First Second Third Fourth Fifth First Second Third Fourth Fifth 6

7 Move to a Biennial CPIA CPIA scores DO NOT change a lot in one year 4 ADF Countries CPIA Avg. A to E Africa Help Streamline the CPIA Process give the Bank and RMCs a clearer picture of the CPIA 3 CPIA Avg. A to E

8 Addressing Fragility in the PBA Formula Input Data Same as ADF-13 Envelopes PBA PBA plus TSF Fragility Indices State Fragility Index (SFI) Scenario 1: Exp. (+0.5) Scenario 2: Exp. (+1.0) Scenario 3: Exp. (+1.5) ND-GAIN Scenario 1: Exp. ( 0.5). Scenario 2: Exp. ( 1.0) Scenario 3: Exp. ( 1.5) Explored Options Option 1: SFI Only Option 2: ND-GAIN Only Option 3: ND-GAIN and SFI 8

9 Keeping the PBA formula Unchanged UA Billion TSF envelope TSF envelope 1.05 TSF envelope TSF envelope Keep the current formula adding a fragility component to the PBA formula would not scale-up resources to countries experiencing fragility Baseline Option 1 SFI Only Option 2 ND-GAIN Only Option 3 SFI & ND-GAIN PBA envelope PBA + TSF envelopes 9

10 CDLs (UA million) Tradeoff between Set-Asides and CDLs Set-Asides (UA million) 10

11 Proposed Eligibility to TSF Eligible for TSF Pillar I (15) Eligible for TSF Pillar III (17) Qualitative Assessments (3) Exit (1) Burundi Central African Rep. Chad Comoros Congo Democratic Rep. Guinea-Bissau Liberia Madagascar Eritrea Guinea Malawi Côte d Ivoire Mali Sierra Leone Somalia South Sudan Sudan Togo Zimbabwe Gambia Niger 11

12 The TSF Envelopes ADF-13 ADF-14 Proposal Pillars Envelopes (Baseline Scenario UA Million) Resources to TSF Countries (Baseline Scenario UA Million) 1,786 1,384 Côte d Ivoire Guinea 10% 30 15% 20 Pillar I Pillar II Pillar III PBA + TSF Pillar I 12

13 TSF Pillar I Calculation Country allocations as agreed under ADF-13 discussions 15 Countries = UA 572 million Proposed country allocations for ADF Countries = UA 534 million Burundi Central African Rep. Chad Comoros Congo Democratic Rep. Cote d'ivoire Guinea Guinea-Bissau Liberia Madagascar Mali Sierra Leone Somalia South Sudan Sudan Togo Zimbabwe Unallocated Reserve UA Million 13

14 RO Proposal for ADF-14 Maintain the RO Envelope at 21% of Resources Available UA 1,388 million expected under the baseline scenario (UA 1,046 million under ADF-13) Eligible for the TSF PBA 1 RO 1.5 Reduce the RO Contribution Leveraging Ceiling Eligible to TSF: From 1:2 To 1:1.5 Not Eligible to TSF: From 1:1.5 To 1:1 Reduce the number of postponed regional operations Not Eligible for the TSF PBA 1 RO 1 ADF-14 14

15 Scaling UP the PSF for ADF-14 40% PSF s exposure capacity allocated 15 ADB private sector transactions approved Higher risk return operation in fragile situations Reaching under-served sectors through private sector ADF-13 UA 200 million 15

16 Excepted Envelopes for ADF-14 Under the Baseline Scenario of UA 7 Billion ADF-13 ADF-14 (Baseline) 4,408 UA Million 3,109 1,046 1, PBA RO TSF PSF 16

17 Excepted Allocations for ADF-14 Under the Baseline Scenario of UA 7 Billion ADF-13 ADF-14 (Baseline) UA Million 3,091 2,187 1,046 1,388 1,384 1, PBA (Excl. Non Fragile Situations) RO TSF Pillar I + PBA (Fragile Situations) PSF 17

18 Recommendations Undertake the CPIA exercise every two years Keep the current PBA formula unchanged Increase the unused reserve of the TSF Pillar I from 10% to 15% UA 20 million to Pillar II of the TSF RO envelope at 21% Reduce the RO contribution leveraging ceiling UA 200 million to PSF 18

19 Thank You 19

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