Forests Sourcebook - HCV Resource Network

pleted or unfolding national financial management, auditing,
and procurement reforms.
In the cases of Cameroon and Gabon outlined in box
6.12, these conditions were created through long processes
of intersectoral dialogue with the government and strong
collaboration within the country team. The results were not
uniformly successful, and at times proved difficult and contentious,
but some measure of reform was enabled by the
process. This, however, needs to be viewed in a context
where, in this region, two decades of World Bank experience
in providing assistance via sector investment lending to the
forest sector clearly revealed the limits of traditional sector
investment projects in reforming forest sectors traditionally
dominated by political patronage and vested interests.
Good governance as an entry point. Good governance
is a strong entry point for sector reforms (see chapter 5, Forest
Sector Governance, and associated notes). Linking forest
sector governance reforms with a broader extractive industries
transparency initiative, or positioning them as part of
the overall good public sector management effort (for
example, an anticorruption, transparency, or improved governance
component) can strengthen its hold in a policy
loan. Done this way, forest sector reform could be included
as a trigger or prior action, making the reform component
binding and essential for release of a tranche.
Avoid mixed results and signals. When a client is performing
well in general, and has achieved all the prior
actions for a policy reform loan except those associated with
forests, a decision needs to be made on whether to withhold
the release of the tranche of one unfulfilled prior action. In
some cases, the World Bank has employed a floating
tranche, disbursable when particular conditions are
expected in some way to be difficult, or more drawn-out
than others in the policy matrix: the Cameroon structural
operation is a case where this approach was applied to forest
outcomes. In other cases (see box 6.9), the nature of the
operation itself ensured that activities and measures undertaken
complemented investment loans that were focused on
specific sectors. It is sometimes possible to transfer policy
objectives related to a single sector or related group of sectors
into investment loans that are coordinated with DPLs,
and can follow policy developments that are foreshadowed
and perhaps initiated under a DPL, but require longer time
frames for implementation. 3
The primary requirement is that the World Bank remain
internally consistent in its approach to dealing with forests
and broader natural resource outcomes, in cases where these
are important. If a sector-specific condition has not been
achieved by a well-performing client, it is important to
identify how to modify the condition rather than drop it.
Natural resource and forest outcomes are not trivial adjuncts
to economic reform objectives, but may play a significant
role in the successful achievement of those objectives.
Analytical work should look at all influences on
forests. The use of analytical work should be carefully considered
in the context of forests and DPLs. Essentially, what
is required here is a broad scoping exercise that examines
the status of DPLs, proposed forest sector or larger natural
resource project activities, and other cross-sectoral developments
that are indicated in CASs and business plans. Sector
work should not be based simply on problems within the
forests sector, as perceived by forest agencies in the country
and the World Bank sector staff, but on a broader appreciation
of all influences and changes likely to affect forests, and
an analysis of what combination of macroeconomic, crosssectoral,
and within-sector measures are likely to produce
the best outcomes from national economic, environmental,
and social perspectives.
For forest outcome monitoring to be effective, the World
Bank needs to undertake continuing research on how
changes at the macroeconomic and broad cross-sectoral levels
flow through the economic and social systems to manifest
as impacts on forests.
Ownership matters. Policy conditions in DPL, as in
investment lending, are more likely to result in sector policy
reform when there is clear borrower ownership, commitment,
and demand at the sector level, and when the appropriate
central ministry (such as the Ministry of Finance) is
part of the dialogue and supports the agreements reached.
NOTES
1. For this note, a policy lending instrument will be called
a development policy loan.
2. For further information on the points raised in this section,
please refer to World Bank (2006).
3. There is some risk attached to this strategy, in that a government
may successfully implement the DPL that foreshadows
further policy changes under investment lending
but then decides not to proceed with those investment loans.
SELECTED READINGS
Numerous relevant references are available at http://
go.worldbank.org/4OJ07BWKQ0.
NOTE 6.2: PROSPECTS FOR USING POLICY LENDING TO PROACTIVELY ENABLE FOREST SECTOR REFORMS 227