International Development Association (IDA) donors and others operating a country performance-based allocation system face two difficult problems: how to strengthen incentives to produce and document development results and how to increase flexibility for fragile states. Fragile states have the greatest need for projects, but their projects tend to rate poorly in performance-based allocations systems, which provide little incentive to produce successful projects in fragile states or other countries.
This paper offers a proposal to address these issues. First, rebalance incentives to increase attention to results and to the frameworks for monitoring and evaluating them. Second, supplement performance-based allocations to fragile states through a performance fund to enable well-performing projects to be scaled up. Doing so would change the conversation about allocations to fragile states from “how much?” to “where can we show value?” and lead to a stronger and more general link between development results and development financing.