Strengthening World Bank Group Engagement on Governance and Anticorruption (GAC)

1. This report describes and assesses progress in the second year of implementation of the World Bank Group‘s (WBG) Governance and Anticorruption strategy (GAC), which was endorsed by the Board of Executive Directors in March 2007. Since November 2007, a high-level GAC Council, chaired by the Managing Directors on a rotating basis, with Vice President and Director-level members and alternates, has met on a monthly basis to review and guide implementation of the strategy. The One-Year Progress Report on implementation of the strategy was issued in October 2008.

2. As the GAC strategy clarified: ―The WBG focus on GAC follows from its mandate to reduce poverty – a capable and accountable state creates opportunities for poor people, provides better services, and improves development outcomes‖. GAC work is thus relevant at every step in the operational cycle of WBG‘s country programs:

• Country assistance strategies set priorities based on systematic diagnosis of country-specific GAC constraints to development effectiveness;
• Sectoral strategies identify feasible ways forward given the GAC context;
• Project design and implementation builds on sectoral strategies in ways that provide opportunities to incorporate enhanced transparency, participation, and third party monitoring, and other strengthened fiduciary controls into operational design; and
• Country systems capacity development enables GAC-related development benefits to be realized across the spectrum of public action, not only in donor-financed projects.

This report assesses progress in each of these areas, as well as for three cross-cutting priority themes identified in the GAC strategy – multi-stakeholder engagement, Actionable Governance Indicators (AGIs), and the global dimension. Box ES1 provides some examples of how Bank work at the operational frontline is evolving to better incorporate these GAC dimensions.

3. The GAC strategy is helping to transform development work in two complementary ways: by focusing attention on how to address governance obstacles to development effectiveness and by helping to clarify how to better manage GAC-related risks.