The Tribune

• Despite funding exceeding forecaast ‘five times’

• Missed or low impact on seven of 11 objectives

• Cites Government’s ‘low’ execution capabilities

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Inter-American Development Bank (IDB) has admitted its last country strategy for The Bahamas was “overly ambitious and unrealistic” despite approvals for over five times’ the originally-forecast level of financing.

The multilateral lender, in a report by its internal watchdog, the Office of Evaluation and Oversight, found that the 2018-2022 Bahamas’ country programme made no or little contribution to seven of the 11 strategic objectives for improving areas such as fiscal consolidation, strengthening the Government’s institutional and digital capabilities and bolstering “integrity and transparency” in the public sector.

The relatively ineffective impact, during a period when The Bahamas suffered the double blow of Hurricane Dorian and COVID-19, occurred despite the IDB approving some $855.8m in new funding for 32 government-guaranteed projects - a collective sum that was “more than five times” the initial projection in the country strategy.

Completion and release of the new Bahamas country strategy, which was scheduled to be released this summer, has been pushed back to May 2024 to give the IDB and the Government time to agree priorities and come up with a revised plan. The IDB watchdog’s report also noted that the implementation of many projects was also negatively impacted by the Government’s “low” execution, management and oversight capacity which was not adequately addressed.

And 2018-2022 objectives were found to be too broad, covering too many sectors compared to the initial financing that was to be made available. “The country strategy’s usefulness in guiding the country programme was affected by the strategy’s breadth,” the IDB watchdog found. “The 11 strategic objectives covered a wide range of sectors - too many relative to the size of the estimated financial envelope.

“Cross-cutting issues further dispersed the strategy’s focus. The Office of Evaluation and Oversights’ previous [Bahamas evaluation] underscored the Government’s limited implementation capacity, and the resulting routine and extended delays in procurement and disbursement. Considering these findings and the small planned portfolio size, the objectives’ breadth was overly ambitious and unrealistic in terms of what could be achieved.”

To mitigate the Government’s inefficiencies in project execution, IDB officials had sought to increase both training and dialogue with the then-Minnis administration. However, there was little change from the previous country strategy, where the IDB’s efforts were “hampered by the country’s limited institutional capacity to implement projects, and by the lack of political consensus to move ahead with key sectoral reforms”.

“Although the bank made a significant effort to strengthen Project Implementation Units (PIUs) in its operations, implementation of these efforts was slow and results mixed. Some common issues appear to have included overestimation of the Government’s capacity to implement, inadequate ability of PIUs to co-ordinate complex projects, and inadequate identification of risks and corresponding mitigating measures,” the multilateral lender’s watchdog added.

“The country programme evaluation attributed the Government’s low implementation capacity to a lack of technical experts to design and implement financed programmes, slow decision making, low co-ordination capacity, and lack of political commitment.”

The IDB provided financing significantly more financing than originally planned during the 2018-2022 period, with sovereign (government) guaranteed disbursements ultimately hitting $563.5m - a number more than three times’ the originally estimated $183m.

“The IDB group programme in The Bahamas consisted of 63 operations totaling $1.09bn. During the period of analysis, the Bank approved $855.8m in 32 sovereign-guaranteed operations - more than five times’ the country strategy’s indicative financial envelope,” the watchdog’s report said. “The reimbursable operations consisted of six investment loans, two policy-based loans and one policy-based guarantee.

“The IDB also approved 23 non-reimbursable operations, consisting of two investment grants for a total of $14.6m and 21 technical co-operations with a total value of $6.2m. The non-sovereign-guaranteed (NSG) portfolio approved under the strategy period included two senior loans for a total of $42.2m and six advisory services for a total of $272,978.”

Some $119.5m was approved by the IDB during the country strategy period to aid The Bahamas’ response to Hurricane Dorian and COVID-19, and the report added: “Overall, the cross-cutting themes of data, gender and climate change were integrated into approximately 40 percent, 35 percent and 60 percent of programme operations, respectively.....

“Sovereign guarantee disbursement took off during the review period. Total sovereign guarantee disbursements ($563.5m) greatly surpassed the country strategy estimate ($183m) as well as total disbursements over the last strategy period ($133.6m).” However, The Bahamas’ country programme either missed or made only minimal impact on the majority of IDB objectives.

“As of the date this review was prepared, the Office of Evaluation and Oversight found that the contribution of the country programme to achieving country strategy objectives was low,” the IDB report said. “The country programme contribution was low for three strategic objectives, medium for three strategic objectives, and high for one strategic objective, and made no contribution to four strategic objectives.

“This is unsurprising for two reasons. First, given the low level of disbursement in the preceding strategy period, the legacy project portfolio was still in early stages of disbursement. Irrespective of their age, less than a third of legacy operations had disbursed more than a third of approved resources at the start of the strategy period. Thus, they did not have the depth to successfully produce results within the country strategy period.

“Similarly, the majority of new operations were approved in the strategy’s last three years, which is too short of a period to present results. Second, the strategy’s objectives were too many relative to the size of the country programme. As such, effective contribution to each country strategy objective depended on the performance of one or two projects in most cases.”

Summing up its findings, the IDB watchdog said: “The country programme’s breadth was overly ambitious given its size. As a result, various objectives were not addressed in sufficient depth or, in some instances, at all. The Office of Evaluation and Oversight found low overall contribution to country strategy objectives, even for those that were highly aligned.

“Mitigation measures to address execution capacity weaknesses identified in the last evaluation did not have the desired effects. The recurrent use of retroactive financing in investment loans allowed the bank to move forward in project implementation, but without resolving persistent implementation capacity issues.

“This raises questions about the additionally beyond financing of the investment loans implemented during this period, and whether the implementation risks were well diagnosed or mitigation measures well targeted.”