OM Section A2/BP

Issued on 29 October 2003

Page 1 of 3

OPERATIONS MANUAL
BANK POLICIES (BP)

These policies were prepared for use by ADB staff and are not necessarily a complete
treatment of the subject.

COUNTRY STRATEGY AND PROGRAM

A. Introduction

1. ADB aims at delivering its strategic agenda through a selective, planned,

country-focused, and technically viable program of assistance to its developing member
countries (DMCs). The overall strategic approach of ADB is determined by its long-term
strategic framework, the medium-term strategy, and the poverty reduction strategy; and
its strategic priorities take into consideration global and internationally accepted
perspectives and goals.

B. The Policy

2. The overarching goal, strategic objectives, and operational themes and priorities
of ADB are translated into an individual country strategy and program (CSP) for each
DMC through the planning and programming cycle. The elements used for this
translation are:

(i) clear linkage between the CSP and ADB’s strategic priorities and
objectives, and alignment with the long-term strategic framework, the
medium-term strategy, and the poverty reduction strategy;

(ii) consideration of the Millennium Development Goals into the assistance

program;

(iii) country focus and country ownership based on the DMC’s development
priorities and strategies;

(iv) participation of DMC stakeholders;

(v) economic, thematic, and sector assessments of the DMC;

(vi) evaluation of ADB’s strategy and country portfolio performance, and an

assessment of the DMC’s development priorities;

(vii) strategic, thematic, and sector focus, and selectivity for assistance
programs;

(viii) coordination with development partners; and

(ix) matching assistance programs with loan, grant, budget, and human
resources.
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3. The CSP output must demonstrate a clear linkage between ADB’s strategic
approach to a DMC and the selection of specific interventions for that DMC, focus on
ADB’s strengths, and be aimed at achieving maximum development effectiveness.

C. Scope of the Policy

4. The CSP duration is normally aligned with the DMC’s planning cycle, which is
usually for a 5-year period. Changes in the DMC’s situation or in ADB’s policies may
necessitate revision of the CSP before the actual period lapses, but revision is not
delayed beyond 5 years. The CSP defines ADB’s medium-term development strategy for
the country, describes ADB’s distinctive role, focuses on the overarching goal of
reducing poverty, is aligned with the development priorities of the DMC, and is agreed to
by the government.

5. The CSP is based on thorough economic, thematic, sector, and poverty

analyses; an evaluation of ADB’s strategy and portfolio performance; and an
assessment of the DMC’s development priorities. It is prepared through a participatory
process involving the DMC government, nongovernment organizations, civil society, the
private sector, other stakeholders, and other aid agencies. The CSP establishes
priorities that are the most effective in reducing poverty, and these form the basis for
ADB’s interventions of lending and nonlending activities in the DMC. If a DMC is eligible
for loans from ADF resources, the CSP also provides a framework and indicators to
assess ADF allocations based on the country’s performance.
 OM Section A2/BP
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Basis: This OM section is based on:

ADB. 1999. Doc. R179-99, Fighting Poverty in Asia and the Pacific:
The Poverty Reduction Strategy of the Asian Development Bank, 19
October. Manila.

ADB. 2001. Doc. M17-01, The Long-Term Strategic Framework of the

Asian Development Bank (2001-2015), 21 February. Manila.

ADB. 2001. Doc. Sec. M101-01, Medium-Term Strategy (2001-2005),

17 September. Manila.

ADB. 2002. Doc. IN.98-02, Implementation of the Performance-Based

Allocation of Asian Development Fund Resources, 6 May. Manila.

ADB. 2001. Doc. IN.296-01, Business Processes for the Reorganized

ADB. 18 December. Manila.

This OM section is to be read with OM Section A2/OP.

Compliance: This OM section is subject to compliance review.

For inquiries: Questions may be directed to the Director, Management Support

Division; Strategy and Policy Department.

29 October 2003 Prepared and issued by the Strategy and

This supersedes OM Section No. 45/BP Policy Department with the approval
issued on 19 November 1996. of the President.
 OM Section A2/OP
Issued on 29 October 2003
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OPERATIONS MANUAL
OPERATIONAL PROCEDURES (OP)

These procedures were prepared for use by ADB staff and are not necessarily a
complete treatment of the subject.

COUNTRY STRATEGY AND PROGRAM

A. Introduction

1. ADB’s strategy for a developing member country (DMC) is formulated through

the Country Strategy and Program (CSP), the primary country-specific document in the
planning and programming cycle.

B. Application of the Policy

1. Processes of the CSP

a. Initiating Process

2. The CSP process is initiated when (i) the 5-year time horizon for an existing CSP
is due to expire within the following 9–12 months; or (ii) sufficient change has occurred in
the economic conditions of the DMC or in the policies of ADB to warrant a revision of the
CSP.

b. CSP Stocktaking

3. Prior to a CSP stock-taking meeting, a report on the status of the existing CSP is
prepared, which contains: the rationale for preparing a new or revised CSP; the status of
analytical studies or assessments in the DMC; the proposed method for evaluating the
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selection of lending and nonlending initiatives will have the most impact in reducing
poverty.

6. If not in existence, a poverty partnership agreement needs to be prepared to

formalize agreement between ADB and the DMC on the strategy to reduce poverty. The
Millennium Development Goals (MDGs) are a critical ingredient of the assistance
program, and priorities need to be identified through assessment of the DMC’s status
and plans for achieving the MDGs. Sector plans are important in determining the DMC’s
medium-term priorities by sector, and ”sector roadmaps” incorporating major sectors
need to be prepared to describe targets and plans for each sector, including planned
policy reform, institutional development, and investment initiatives.

d. Pre-CSP Assessment Mission

7. A pre-CSP assessment mission updates analysis of the DMC, including changes

in political and economic conditions, development priorities of the DMC, changes in
poverty trends, effectiveness of the current CSP, priorities of development partners,
portfolio performance, and the process of stakeholder participation. Following the pre-
CSP assessment mission, a CSP initiating paper is prepared that identifies constraints to
poverty reduction, including issues related to economic growth, social development and
governance and, key development issues and challenges, and proposed strategic focus
of ADB operations. The draft CSP initiating paper is discussed with DMC stakeholders,
revised as necessary, and confirmed by the stakeholders. It is then reviewed and
discussed by the CSP initiating meeting, the conclusions of which form the basis for the
CSP formulation mission.

e. CSP Formulation Mission

8. The CSP formulation mission examines the issues identified in the CSP initiating
paper; consults with DMC stakeholders; agrees with the DMC government on the
selection of sectors, thematic areas, geographical focus, medium-term goals, targets,
milestones, and assistance program; discusses cofinancing arrangements; prepares
and/or updates concept papers for lending and nonlending product proposals for the first
3 years of the CSP; and concludes with a memorandum of understanding with the DMC.
The mission also holds in-depth discussions with the DMC government and civil society
on strategies to reduce poverty. This is usually best effected through a forum of all
stakeholders and is intended to help finalize or refine the government’s poverty reduction
strategy. On this basis, ADB identifies aspects of the strategy that match ADB’s priorities
and comparative advantages.

9. The CSP formulation mission also coordinates with other aid agencies and
partners concerning the overall approach to external aid; development priorities; and
policy at the country, sector, and thematic levels. In collaboration with the development
partners, a coordination matrix is prepared that identifies lead agencies by
sector and thematic areas, and establishes ADB’s involvement in these. On this basis,
the mission identifies possible projects in ADB’s selected sectors and thematic areas,
and prepares concept papers for the projects, which lead to a program of lending and
nonlending assistance that is linked to ADB’s strategic objectives for the DMC. DMC
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stakeholders are then briefed on the issues and directions of the draft CSP, which is
then reviewed interdepartmentally within ADB.

f. Management Review Meeting

10. After interdepartmental review of the draft CSP, guidance is sought from
Management at a management review meeting on issues in the CSP that require
resolution, and the CSP is revised accordingly. After the revised draft has been cleared
by the regional director general (RDG), a copy is forwarded to the government; a
mission may be needed to explain to the government any revisions that may have been
made during ADB’s internal review process, and to confirm the CSP with the
government. Final revisions, if any, are made as a result of this confirmation mission.

g. CSP Approval

11. After being endorsed internally in ADB, the final draft of the CSP is edited and
submitted to Management for approval for Board circulation. Following Board
consideration of the CSP, a written statement that reflects the discussion of the Board on
major issues is prepared for approval by Management for circulation to the Board. Any
major changes to the CSP that may result from Board consideration are discussed with
the DMC, and the DMC’s concurrence is sought to release the final version of the CSP
to the public through ADB’s web site.

2. CSP Updates

12. The CSP defines ADB’s strategy for a DMC, and includes the initial 3-year
operational program. Each year, this program is reviewed through the annual
programming cycle. This is guided by the President’s planning directions, which are
issued at the start of each year and provide key planning guidelines on operational
priorities, the resource position of ADB, and the overall framework for the lending and
nonlending program for the next 3 years. On the basis of the planning directions, the
CSP is updated annually. This CSP update (CSPU) is not a comprehensive revision of
the CSP but provides an overview of political, social, and economic developments in the
DMC; an assessment of implementation of the CSP; and changes in the operational
program.

13. The CSP or CSPU is reviewed; major changes, or potential ones, are identified;
and a draft revised CSP is prepared. Based on this, an issues paper, which includes key
sector and country issues, is reviewed and discussed at the regional management team
(RMT) meeting. At this meeting, indicative planning figure parameters are defined in line
with the planning directions or, in the case of countries eligible for Asian Development
Fund resources, in line with performance-based allocation assessment; and decisions
are made on the need for a full-scale country programming mission (CPM) and schedule
for completing the CSPU.

14. Following the CPM, the CSPU is revised, circulated for interdepartmental
comments, and further revised in the light of comments received. This revised draft is
forwarded for clearance by the government and revised again, if necessary, to
incorporate comments by the government. The final draft is edited and forwarded to the
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President to decide if the revisions made are sufficiently significant to warrant discussion
by the Board or if the CSPU can be considered by the Board on a no-objection basis. If
Board discussion is warranted, the same procedures apply as for Board discussion on
the CSP. Board discussion or consideration is to be completed by 31 August each year,
well before Board consideration of the Work Program and Budget Framework.

15. After Board discussion or consideration of the CSPU, concurrence of the

government is sought with it, and the CSPU is placed on ADB’s web site.

3. Roles and Responsibilities

16. The operations vice-presidents (OVPs) provide strategic guidance and oversight
to the preparation of the CSP and CSPU. Primary responsibility for managing the
CSP/CSPU process at the department level rests with the RMT, and with the country
team (CT) at the country level.

17. The RMT comprises the RDG, the deputy RDG, advisor to the RDG, directors of
the sector divisions (SDs) and operations coordination division within the RD, and
country directors. A CT is established for each DMC. The CT prepares the CSP and
CSPU and supports their implementation. The CT monitors and supports preparation of
country economic reports, thematic assessments, and sector analyses. The prime
responsibility for these, however, is with the SDs.

18. The RMT decides if and when a new CSP or a CSPU is required. The CSP or
CSPU is prepared by the CT. Interdepartmental review is carried out by the Economics
and Research Department (ERD), Central Operations Services Office (COSO), Office of
Cofinancing Operations (OCO), Operations Evaluation Department (OED), and Regional
and Sustainable Development Department (RSDD). The MRM is chaired by the
President and attended by the OVP, RMT, CT, ERD, COSO, OCO, OED, and RSDD. If
discussions at the MRM are proposed concerning internal resource requirements or
ADB-wide strategic issues, the Budget, Personnel and Management Systems
Department or Strategy and Policy Department, respectively, also attends it.

19. The government participates in and is consulted at all stages of the processing of
the CSP and CSPU. Also, stakeholders and other aid agencies are consulted during
formulation of the CSP. The Office of the Secretary is responsible for editing the final
draft of the CSP or CSPU and for circulating it to the Board. The public is informed of the
CSP and CSPU through their placement on ADB’s web site by the Office of the External
Relations.
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Basis: This OM section is based on OM Section A2/BP and the documents

cited therein.

Compliance: This OM section is subject to compliance review.

For inquiries: Questions may be directed to the Director, Management Support

Division, Strategy and Policy Department.

29 October 2003 Prepared and issued by the Strategy and

This supersedes OM Section No. 45/OP Policy Department with the approval
issued on 19 November 1996. of the President.