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Bank Operations

Decentralization and subnational development are supported through numerous operations and analytical products. In FY02, around 30 projects ($500 million) have decentralization components. Decentralization projects include adjustment loans that establish a decentralization framework (i.e., Mexico Decentralization Adjustment Loan, subnational (or state) adjustment loans in federal countries like Argentina, Brazil, India, Mexico and Pakistan. Investment loans support sectoral investments in education, health, community driven development, as well as “traditional” investment loans supporting local infrastructure and municipal development funds (MDFs).

AAA includes state economic memoranda (e.g., Brazil); state fiscal studies (e.g., India); reviews of intergovernmental fiscal relations, municipal finance and governance, sectoral decentralization and service delivery; and analysis of constraints to regional development. An increasingly important trend has been the use of provincial/state Public Expenditure Reviews (e.g., China, Indonesia, Mexico, Ethiopia) and State Financial Accountability Assessments (Karnataka and Lagos) that focus on decentralization and intergovernmental fiscal relations.