What is an MDTF?

Multi-Donor Trust Funds (MDTFs) are an instrument for resource mobilization and coordination. Multiple donors contribute to a multi-year program of coordinated activities governed by a common framework.

What is the KP/FATA/Balochistan MDTF?

The purpose of the KP, FATA and Balochistan MDTF is to support the implementation of a program for reconstruction and development aimed at facilitating the recovery of the affected regions in KP, FATA and Balochistan from the effects of the 2009 crisis.

Which donors have contributed to the MDTF?

Eleven development partners have contributed funds totaling US $183.2 million to the MDTF. These development partners are: Australia, Denmark, the European Union, Finland, Germany, Italy, Netherlands, Sweden, Turkey, UK, and the USA.

Why was the trust fund created?

In 2009, KP and FATA witnessed one of the worst crises in the country’s history. An estimated 2 million people were displaced and considerable damage was caused to the physical and social infrastructure. The Government and other development partners then requested the World Bank to establish and administer a MDTF to finance critical investments in support of reconstruction and rehabilitation in KP, FATA and Balochistan. (watch video on MDTF’s creation: The Journey: http://vimeo.com/61795987

How does the World Bank ensure transparency and efficiency in disbursing funding from the MDTF?

Economies of scale will be achieved by pooling resources into one fund. This will also reduce transaction costs for the Government of Pakistan by reducing the number of development partners that it needs to coordinate with. MDTFs have proven to be flexible because they can strategically fill sectoral and geographic gaps. All MDTF money flows through the World Bank, acting as administrator. The Bank applies its financial management, procurement, environmental/social safeguards, information disclosure, and other procedures to ensure the proper use of funds. . An up-front capacity assessment of each recipient organization is conducted, and submissions of regular interim financial reports as well as annual audited financial reports are required, as per the Bank’s grant agreement and disbursement process.

How long will the trust fund remain active?

The closing date of the MDTF was June 30, 2015, which has been extended to another 5 years, following a thorough review of the Fund operations and in consultation with development partners.

What is the PCNA and how is it linked to the MDTF?

The PCNA was developed by the Asian Development Bank, the European Union, the World Bank and the UN, in collaboration with the provincial governments of KP and FATA with oversight by the Government of Pakistan. The PCNA covers the immediate post-crisis needs and identifies the strategic priorities through a thorough analysis of the drivers of the crisis.

The MDTF is an important tool for PCNA resource mobilization and implementation. The Trust fund supports the PCNA’s comprehensive reconstruction and development strategy designed to restore infrastructure, services and livelihoods while addressing governance and other challenges that contributed to the crisis. However, the MDTF is not the only avenue for external financing for the aforementioned strategy and activities

What do development indicators tell us about the poverty in KP, FATA and Balochistan?

Development outcomes in KP, FATA and Balochistan are far worse than for the rest of Pakistan.  The Bank’s NWFP Economic Report (2005) observed that the province’s estimated per capita GDP in 2002/03 was only 60% of the average for the country, a clear indication of widespread poverty, particularly in its rural areas.  The province’s performance in education and health also remained below the national average. Balochistan is also a lagging region with the weakest long-term growth performance of all provinces and a 2004 per capita income level of only two-thirds of Pakistan's overall level.  It also stands out as the province with the worst record on gender equality. Similarly, FATA is among the poorest regions in the country, with about 60% of the population below the poverty line, according to Government estimates.

What are the benefits of MDTFs?

Based on international experience, MDTFs improve resource efficiency and effectiveness by reducing transaction costs, and by harmonizing donor programs with the government priorities. For national authorities, MDTFs increase and untie funding and facilitate access to the international community. MDTFs reduce administrative and access costs by working in a coordinated manner. This accelerates the pace and improves the quality of developmental spending in the KP, FATA and Balochistan regions.

What sectors will be covered in MDTF-funded projects?

The MDTF works on three streams:

1.Improving local services and community support

2.Growth and job creation

3.Policy reforms and governance support

How many projects does the MDTF implement under these three programme stream?

The MDTF has 11 projects under the three programme stream relating to health, infrastructure, education, governance, disaster management and livelihoods.

How does the MDTF deal with security concerns while it undertakes work in the KP, FATA and Balochistan?

MDTF projects include a strategy for working in security risk areas that defines the supervision approach and tools that are used to support implementation. These strategies include working through government systems and local partners and the use of a third party monitoring agent.  Task teams are also considering web-based tools to monitor programmes.

How are projects approved under the MDTF?

The project approval process has the following steps:

  1. Projects are submitted as concepts to the MDTF by the provincial governments and FATA Secretariat, with Economic Affairs Division (EAD) approval; 
  2. On receiving EAD approval of the concept in writing, the project design stage begins; 
  3. The government teams then work with the World Bank project teams to develop the project proposal in full in the form of an Emergency Project Paper (EPP). This process of project development include consultations with  relevant stakeholders and other organizations with activities in the area and will follow World Bank OP 8.0 policy for project development; 
  4. The provincial government approves the project proposal through the Provincial Development Working Party (PDWP) and submits its approval to the EAD and the MDTF
  5. EAD endorses the PDWP approval in writing to the MDTF. 
  6. Once approved, EAD issues a formal letter to the World Bank accepting the project document. 
  7. Based on this letter, the project preparation is finalized and the project submitted for internal processing and approval 
  8. Following Bank OP 8.0 approval, negotiations take place between the government counterparts and the Bank to agree the final grant agreement. For more details, refer to the MDTF Operations Manual
What is the governance arrangement for the MDTF?

The working of the proposed MDTF shall be governed by: (a) Administration Agreements between the Bank and donors; and, (b) Grant Agreements between the Bank and grant recipients being KP, Balochistan and FATA. The Bank administers the MDTF in accordance with its guidelines and procedures including the Bank’s fiduciary policies and framework regarding governance and anti-corruption.

The oversight body for the MDTF activities is the Steering Committee (SC). Representatives from provincial governments, FATA Secretariat and development partners sit on the SC which is co-chaired by the Government of Pakistan and the World Bank.

What does it mean when you say the World Bank is the administrator of the trust fund?

The World Bank as the Administrator of the MDTF is responsible for appraisal, implementation review, and monitoring and reporting on all performance aspects of the MDTF. Projects are implemented through country systems. The Administrator supervises implementation, ensuring that funds are disbursed in accordance with the grant and administration agreements. The Administrator can also deny funding to any activity where in its view; significant doubts arise as to whether the funds concerned will be effectively utilized for the agreed purpose.

Is the trust fund a flexible mechanism for financing?

Yes. Flexibility is an essential element of the MDTF. Projects are being implemented in a dynamic environment, and priorities shift over time. Activities are grounded in the findings of the Post Crisis Needs Assessment (PCNA) for KP and FATA and the Balochistan Development Issues and Prospects report for Balochistan. However, the governance arrangements of the MDTF allow for flexibility to respond to unanticipated needs or emerging opportunities subject to the availability of funds.

Can other donors still contribute to the trust fund?

Yes. For as long as the MDTF is operational, countries are able to contribute to it. There is no minimum contribution per development partner and such contributions may be made at any time during the year.

What approach will the MDTF adopt for Round II operations?

After having programmed all funds in the first round, the MDTF, is developing a strategy and results framework that will be used to guide Round II of the MDTF. Drawing from lessons learned and other research studies, Round II will adopt a programmatic approach which is more flexible, strategic, responsive, and less fragmented. Consultative sessions have been held with the provincial governments and the FATA Secretariat to identify key development priorities for Round II.