PBA Country Allocations
ADF country allocations are calculated based on:
- Countries’ poverty levels;
- The size of their population;
- Their infrastructure gap; and
- Their institutional, policy and project implementation performance.
Following the allocation of resources to the agreed set-asides (Regional Operations envelope, Fragile States Facility and PSF), the annual allocation of PBA resources to ADF-eligible RMCs is a three-step process led by the Resource Mobilization and External Finance Department (FRMB). First, resources are allocated to eligible countries using the PBA formula. Second, the country-specific financing mix (loan, grant, or loan/grant combination) is determined using the agreed Joint World Bank-IMF Debt Sustainability Framework (DSF). Third, the MDRI debt relief provided to eligible RMCs is netted out of those countries’ allocations and donor replacement funds to compensate ADF for foregone reflows will be reallocated to all ADF-only RMCs on the basis of the PBA.
First Step: Applying the PBA Formula
The PBA formula aims to provide a transparent means of allocating concessional ADF funds to ADF-eligible countries. The two main determinants of the PBA formula are: (i) Country needs, given by the gross national income per capita (GNI pc), country population (P or Pop) and the Africa Infrastructure Development Index (AIDI) ; and (ii) country performance, using the country performance assessment score (CPA) .
It entails the calculation of a basic allocation for each country following a three step process: i) calculation of initial allocations; ii) individual country initial allocations are capped at 10% of total available resources and the excess is reallocated to all other countries; iii) reallocation of a 50% discount for blend countries and discounts for graduating countries whose ADF allocations are being gradually phased out.
The PBA formula has been adjusted in ADF-13 in order to better align the PBA system with the ADF’s operational priorities and the Bank Group’s mandate as set out in its Strategy 2013-2022 . The Africa Infrastructure Development Index (AIDI) , which measures the level of a country’s infrastructure, was included in the formula’s needs component with a negative exponent of -0.25, so that countries with a greater infrastructure deficit benefit more. On the performance side, a new group of questions focused on infrastructure and regional integration (cluster E) has been added to the Country Policy and Institutional Assessment (CPIA) with a weight of 0.06.
To maintain the balance between performance and needs, the exponent of the performance component in the formula was increased by 0.125 points from 4 to 4.125. The effective weight of the CPIA cluster D for governance and the Portfolio Performance Assessment (PPA) remain unchanged, i.e. 58% and 16%, respectively. In the absence of a Bank Group portfolio of operations in a country, the weight of the PPA is added to the one of the CPIAABC.