Given the instrument’s growing importance and evolving design, the Bank commissioned this independent evaluation to assess its relevance, effectiveness, and future strategic positioning.

The evaluation concludes that the CDB should continue using Policy-Based Loans (PBLs) but ensure clear policy and institutional additionality through complementary operations grounded in technical assistance (TA). These engagements should prioritise a sequenced, programmatic, and development-oriented approach. The evaluation indicates that PBLs are more likely to contribute to sustained reforms when they are:

• Cross-sector integrated from the outset, rather than primarily economics-led;
• Anchored in coherent reform trajectories coordinated across sectors and development partners;
• Designed around broader reform pathways rather than discrete prior actions; and
• Supported by grounded technical assistance designed alongside the operation and focused on institutionalising reforms beyond disbursement.

The analysis further shows that reliance on ex post evaluation and limited post-disbursement follow-up constrains the depth of reform and organisational learning. This insight points to the need for a more systematic engagement that builds on CDB’s comparative advantage, learning, and adaptation.

Such an approach should:

• Enable sector-integrated course correction during implementation;
• Strengthen PBL governance and incentive arrangements that support reform continuity and sustainability; and
• Prioritise development impacts rather than speed of disbursement.

In practical terms, this would require institutionalising structured post-disbursement engagement through ongoing evaluation and a diversified set of monitoring, evaluation, and learning methods embedded within dynamic learning loops. These systems would enable continuous feedback, adaptive course correction, and sustained policy dialogue beyond loan closure.