Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16626 IMPLEMENTATION COMPLETION REPORT DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA ECONOMIC REHABILITATION St JPPORT LOAN (LOAN 3834 AL) May 30. 1997 C ountry Operations Division Maghreb and Iran Department Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Currency Equivalents Unit of Currency = Algerian Dinar (DA) 1992 1993 1994 1995 JAN 1996 DA per UJS$. period average 21.84 23.34 35.06 47.66 53.00 DA per US$, end of period 22.78 24.12 42.89 52.17 53.77 Fiscal Year January I - December 31 Weights and Measures Metric Svstemr Abbreviations AFS Allocation Forfaitaire de Solidarite (Lump-sum Solidarity Allowance) APSI Agence pour la Promotion et le Soutien des Investissements (National Investment Agency) AIG Activites d'lnteret General (Public Works-based Jobs Program) 13A Banque d'Algerie (Central Bank) BAD Banque Alg&ienne de Developpement (Algerian Development Bank) CNEP Caisse d'Epargne et de Prevoyance (Household Savings Institution) C'NT Conseil National de la Transition (Interim Legislature) EFSAL Entreprise and Financial Sector Adjustment loan FPE Entreprise Publique Economiique (Autonomous Public Enterprise) EPIC Etablissement Public a caract&re Industriel et Commercial (Autonomous Public Utility) FPL Enterprise Publique Locale (Local Public Emlierprise) EPS Entreprise Publique Socialiste (Non-autonomous Public Enterprise) ERL Economic Rehabilitation Loan ERSI. Economic Reform Support l oan l.U European Union FA Fonds d'Assainissement (Restructuring Fund) IAIG Indeninite pour Activite d'lnteret General (Public Works Allowance) ICB International Competitive Bidding ICSR Indemniite aux Categories Sociales sans Revenus (Direct Transfer Payment to Households without Income) LSMS Living Standards Measurement Survey MRIP Ministere de la Restructuration Industrielle et de la Participation (Ministry of Industrial Restructuring and Participation) OAIC Office Algerien Interprofessionel dcs Cer&alcs (National Cereals Board) P'E Public Enterprise PEC-1988 Progranmnie en Cours 1988 (Program of Plublic Enterprise Investments as of 1988) P'ER Public Expenditure Review PSA Private Sector Assessment SGG Secretairc General du Gouvernerment (Secretary General of the Government) SME Small and Medium-scale Enterprise Vice President: Keinal Dervis Director: Daniel Ritchie Division Chief: Christian Delvoie Staff Member: Habib Fetini. Country Economist FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA ECONOMIC REHABILITATION SUPPORT LOAN (LOAN 3834 AL) Table of Contents Page No. PREFACE EVALUATION SUMMARY PART I: PROJECT IMPLEMENTATION ASSESSMENT A. Project Objectives ................................................ 1 B. Achievement of Objectives .................................................2 C. Major Factors Affecting the Project .................................................4 D. Project Sustainability .................................................5 E. Bank Performance .................................................5 F. Borrower Performance .................................................6 G. Assessment of Outcome .................................................6 H. Future Operation .................................................7 I. Key Lessons Learned .................................................8 PART II: STATISTICAL INFORMATION Table 1: Summary of Assessment ................................................ 10 Table 2: Related Bank Loans ................................................ 12 Table 3: Project Timetable ................................................ 13 Table 4: Loan Disbursements: Cumulative Estimated and Actual ..................... 14 Table 5: Key Indicators for Project Implementation .......................................... 15 Table 6: Key Indicators for Project Operation ................................................ 26 Table 7: Studies Included in Project ................................................ 27 Table 8A: Project Costs ................................................. 28 Table 8B: Project Financing ................................................ 28 Table 9: Economic Costs and Benefits ................................................ 28 Table 10: Status of Legal Covenants ................................................ 29 Table 11: Compliance with Operational Manual Statements ............................... 31 Table 12: Bank Resources: Staff Inputs ................................................ 32 Table 13: Bank Resources: Missions ................................................ 33 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. IMPLEMENTATION COMPLETION REPORT DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA ECONOMIC REHABILITATION SUPPORT LOAN (LOAN 3834 AL) PREFACE This is the Implementation Completion Report (ICR) for the Economic Rehabilitation Support Loan in Algeria, for whicih Loan 3834-AL in the amount of US$150 million was approved on January 26, 1995 and made effective on March 28, 1995. The Loan was closed on December 31, 1996, compared with the original date of December 31, 1996. The first tranche, released upon effectiveness, was fully disbursed by July 18, 1995. This ICR was prepared by Habib Fetini, Sr. Country Economist of the Country Operations Division, Maghreb and Iran Department, Project Manager. Steven R. Tabor. consultant, contributed to the preparation of this report. It was reviewed by Christian Delvoie, Chief, Country Operations Division (MN ICO), Rene Costa, Project Advisor (MN IDR), and James Parks, Sr. Economist (EC4CH) who was the original task manager of the operation. The draft ICR was communicated to the Government for comments . Preparation of the ICR was begun during the Bank's mission in October 1996. It is based on material in the project file. The borrower contributed to preparation of the ICR by contributing views, and , providing requested data, preparing its own evaluation of the project's execution. The preparation of the SAL operation, which followed directly this project, was also the occasion for thorough discussions of the ERL project and constituted the basis for the evaluation of the completion of this project. ECONOMIC REHABILITATION SUPPORT LOAN Loan 3834 AL DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA Evaluation Summary i. Introduction. The legacy of socialist central planning and the 1986 decline in international petroleum prices set Algeria on a course of sharp and severe economic decline. During 1987-1991, the authorities began the process of transformation. The Bank assisted this process through two adjustment operations. During 1992-93, popular discontent brought policy reform to a halt and much of the progress achieved in earlier years was reversed. By the start of 1994, Algeria could no longer meet its external debt obligations, external creditworthiness was impaired, inflation accelerated and, as imports were restricted to free resources for debt repayments, output rapidly contracted. An IMF Standby operation was concluded and the authorities indicated their willingness to implement a far-reaching stabilization and structural reforms program. ii. Project Objectives. The objectives of this project were (i) to help the authorities define and implement policy reforms to accelerate the transition to a market economy; and (ii) to contribute to, and help mobilize, the external financing necessary to restore growth and enable bolder reforms. In close collaboration with the IMF, support was provided for a range of macroeconomic initiatives aimed at stabilizing the economy. Structural measures, aimed at restoring sustained growth, were supported in the areas of trade liberalization, private sector development, privatization, restructuring of the public enterprise sector, public expenditure reform, financial sector reform and the strengthening of the social protection system. iii. The project's overall objectives were appropriate in light of Algeria's urgent need to address mounting external payment imbalances and to restore policy reform momentum. Continued efforts to rehabilitate loss-making state enterprises as a prelude to privatization was inconsistent with Bank experience in transition economies. However, it should be recognized that undertaking an accelerated privatization process under the exceptionally violent security and political turmoil in 1994 was a near impossible alternative at that time. The sequencing of trade market liberalization prior to more meaningful steps towards privatization and internal market deregulation to generate a sufficient supply response appears also inconsistent with the aims of restoring sustainable macro-economic stabilization and growth. iv. Implementation Experience and Results. This project has a satisfactory outcome, because the macroeconomic reforms supported by the loan have been largely and successfully implemented, the momentum of structural reforms have been restored, and the international community has provided Algeria with the financial support needed to restore its external payments position and to undertake more ambitious reforms. Unanticipated improvements in Algeria's external economic environment have helped the country rebuild external reserves and offset the income loss typically associated with the adoption of tight fiscal and monetary policies. v. Project macroeconomic and structural reforms were implemented significantly. In areas such as trade liberalization and subsidy removal, the Government exceeded commitments made under the - ii - project. Government deregulated de novo entry in the banking sector, the insurance market and through the passage of a modified investment law, significantly enhanced opportunities for private sector participation. But "non-hydrocarbon" private investment has yet to materialize because of the difficult civil security situation, financial market distress and the still dominant role that public enterprises play. vi. Privatization efforts were launched in this project, but implementation experience was mixed. A privatization law was passed, but quickly has proved to be rigid and deficient. Five hotels were put up for sale, but bids were received only on one. Government learned from these failures, and subsequent steps have been taken to widen the privatization scope and improve significantly the privatization legislation under a follow-up structural adjustment operation. vii. Although prudential regulations in the banking sector were tightened, the extent of the distress in the state banks exceeded expectations. Over 40% of the banks' loan portfolios was bought back by the Treasury over the 1994-96 period. Only one of the state banks was able to meet capital adequacy requirements, and was granted full accreditation by the central bank under the new law on Money and credit. Still, the State Banks began to lend at positive real interest rates and a more comprehensive plan for bank rehabilitation was adopted. viii. The Government's demonstrated a high degree of commitment to the design and implementation of this project, despite the hazards posed by a very difficult domestic security situation. The Government organized tripartite meetings with the Unions and the enterprise managers in order to create widespread ownership and understanding of project reforms. Throughout the project, the Government provided its cooperation to the Bank. Gaps in economic statistics, institutional weaknesses and the difficult security situation hampered Government's attempts to assess the impact of program reforms. ix. Special studies were conducted of public expenditures, of the private sector, of options for liberalizing banking, of living standards and of poverty alleviation options. These studies made an important contribution to Government's attempts to define and deepen the reform effort. A great number of the recommendations made in the studies were adopted and reflected either in the 1996 and 1997 Budgets under the follow-up structural adjustment loan. x. Bank staff provided a full complement of skills and expertise in the identification and appraisal of the project. Conditions prior to Board appraisal were well-defined and implemented in a timely manner. Despite the fact that the supervision had to be conducted partially outside of Algeria, because of the security situation, the Bank maintained a near-continuos policy dialogue, was able to conduct a number of important economic studies and helped the authorities define reforms that later were supported by a structural adjustment operation. xi. Despite the fact that the macroeconomic reforms have been implemented, and a good start in the implementation of structural reforms has taken place, the sustainability of the project will remain uncertain in the medium term. Algeria's economy will remain highly dependent on the hydrocarbon sector in the medium term, debt relief efforts have passed-forward rather than reduced the sovereign debt burden, and the unemployment situation still didn't improve. Algeria's enterprise sector is still dominated by PEs that are both unable and unlikely to react positively to a more stable and competitive economic environment. xii. Summary of Findings, Future Operation and Key Lessons Learned. Despite a difficult security situation, the Algerian Government was able to mount a major effort to stabilize the economy and improve the environment for sustained growth. Macroeconomic balance was restored, owing largely - ii - to a strong government commitment to policy reforms and also to the fortuitous effects of unexpectedly strong global petroleum prices and good successful rainfalls. Through this project, Government succeeded in removing almost all remaining non-tariff barriers to external trade, eliminated price subsidies, restrained growth in numbers and wages in the civil service, tightened the budget constraint on the large public enterprises, deregulated access and established improved prudential regulations in the banking sector and developed the main building blocks of a targeted social protection system. This project marked the beginning of Government's acceptance and efforts to privatize public enterprises, and while privatizations activities supported under this project had only limited results, it did trigger fine tuning of the legislative and administrative framework for further reform. The main reasons for this project's success are the commitment by the new Government to restoring the reform momentum, a well- staffed Bank project preparation effort, and. in light of the security situation, the ready adoption by both the Bank and Government of creative and sometimes difficult mechanisms for project supervision and provision of external expertise. xiii. Reform initiatives that were based on the findings of studies commissioned during the project, such as the private sector assessment and the public expenditure review, were rapidly adopted by Government. Special studies have helped to define and broaden the scope of reforms, particularly in the area of public expenditure reform, financial sector liberalization, privatization and development of the social protection system. xiv. The key lessons from this project are: (i) that a single-tranche, rapid disbursing adjustment operation is a good vehicle for restoring policy reform momentum after a hiatus period because it allows the authorities to demonstrate their intention to make progress without committing either the borrower or the bank to what would have been an incomplete reform agenda; (ii) that the adverse security situation significantly complicates, but does not preclude a successful adjustment operation, although reform measures that rely heavily on external technical inputs probably should not be included; and (iii) macroeconomic reforms and measures aimed at liberalizing trade and the external sector have proven far easier to achieve than have measures to privatize and deregulate the domestic economy, but without significant progress in privatization and deregulation, the positive effects of external reforms will be muted. Part I Project Implementation Assessment A. PROJECT OBJECTIVES I. The macroeconomic imbalances that triggered the need for adjustment assistance under this project arise first and foremost from inherent faults in Algeria's socialist economic model. The failure to adjust promptly to the decline in petroleum prices in 1986 and the reversal of economic reform efforts during the 1992-1993 period triggered severe external payment imbalances. But these imbalances came after a decade of economic decline. During the decade prior to 1995, per capita income fell by close to 20 percent and unemployment rose to exceed 25 percent. Failure to foster sustained growth and development contributed to civil instability and political unrest. 2. In 1987, the authorities first embarked on a process of introducing market-based reforms, by granting autonomy to most public enterprises (PEs), lifting domestic price controls, liberalizing foreign investment, abolishing Sate import monopolies and establishing a two-tier banking system. The Bank supported this process through policy dialogue and two adjustment operations. But in 1992 and 1993, mounting civil unrest, falling oil prices and increased external debt service requirements triggered a reversal of many key policy reforms. Trade and payment restrictions were tightened, the fiscal deficit soared to 9 percent of GDP and credit was directed by Government to priority imports. Imports were severely compressed to provide for debt service, inflation soared and the exchange rate appreciated by nearly 50 percent, the latter contributing to a resumption of parallel market activity. By late-1993, the authorities were unable to meet external debt obligations, inflation was approaching 30 percent, import- access bottlenecks were disrupting manufacturing supply and gross official reserves provided less than two months of import cover. 3. By 1994, the urgency of the macroeconomic situation prompted the authorities to accelerate the pace of reform. The authorities and the IMF entered into a one-year stand-by arrangement on May 27, 1994 for a total of SDR 731.52 million (US$1 billion). The stand-by program, formulated in close consultation with the Bank, involved a substantial devaluation and reform of the exchange rate regime, trade liberalization, domestic price liberalization. fiscal deficit reduction, monetary restraint and trade liberalization. Resumption of the policy reform process led to the release of the US$175 million second tranche of the Bank's EFSAL in July 1994. This then triggered the release of an additional US$150 million from the Export-Import Bank of Japan. Following approval of the stand-by arrangement, the European Union released ECU 150 million in balance of payments support and the Government reached agreement with the Paris Club to reschedule its public debt, resulting in a reduction in 1994/1995 debt service obligations by close to US$3.5 billion. This, in turn, triggered, resumption of talks with the London Club commercial bank creditors to reschedule US$2 billion in debt service obligations due in 1994 and 1995. 4. The Economic Restructuring Loan was based on the macroeconomic measures outlined in IMF stand-by arrangement, structural reforms initiated in the two prior adjustment operations and on reforms identified through intensive policy dialogue and economic sector work, summarized in Report No. 12048-AL: The Democratic and Popular Republic of Algeria: Country Economic Memorandum: The Transition to a Market Economy. The project's objectives were to (i) help the authorities define and implement policy reforms to accelerate the transition to a market economy; and (ii) contribute to, and help mobilize, the international community's efforts to provide the external financing required to restore growth and enable bolder economic reform. The operation was designed to renew the Bank's efforts to support stabilization and structural adjustment through policy and institutional reform in the areas of private sector development, privatization, restructuring of the Public Enterprise (PE) sector, public expenditure reform, financial sector reform, and the strengthening of the social protection system. - 2 - 5. The program design reflected more the authorities urgent need to restore macroeconomic stability through conventional means than to undertake far-reaching structural reform --which were supported subsequently by a SAL operation and a Fund EFF program-- although important items, such as privatization and civil service wage restraint, were put on the reform agenda for the first time. The relatively small share of Algeria's overall external financing burden assumed by the Bank was a reflection of the Bank's catalytic role in mobilizing other sources of external assistance and also of the need to ensure that there was, in fact, country commitment to the economic transition process. Continued emphasis in the project on financial restructuring of distressed public enterprises and state banks, as a prelude to privatization, appears to be inappropriate in light of Bank experience with transition. Such experience suggests that such efforts yield little efficiency improvement and only tend to socialize PE losses. The sequencing of trade and financial market liberalization prior to more meaningful efforts to privatize and deregulate the domestic economy appears to be inconsistent with the desired improvements in resource allocation and supply response . B. ACHIEVEMENT OF OBJECTIVES 6. Overall, and judged by the objectives defined during its preparation, the project's outcome is satisfactory. The project substantially achieved its macroeconomic, sector, financial and public sector management policy objectives and partially achieved its institutional and financial development objectives. The project made a substantial contribution to restoring reform momentum and credibility, and in so doing, renewed the Bank's effort to assist Algeria in its efforts to stabilize and reform the economy. 7. Macroeconomic framework. Macroeconomic measures were fully implemented. The exchange rate was managed flexibly and external competitiveness maintained, import restrictions were eased, the tax base broadened, the public wage bill substantially reduced, the fiscal deficit reduced, bank interest rates were deregulated, tight credit ceilings were adhered to by the banks and the public enterprises, and government subsidies for energy and food products were sharply pruned back. Growth rebounded to 4.4 percent in 1995 and 3.8 percent in 1996, inflation decelerated to 22 percent in 1995 and 10 percent by March 1997, and official reserves increased from 2 to more than 5 months of import cover. In addition to prudent macroeconomic policies and exceptional financing support, excellent weather conditions and an upturn in petroleum prices made a significant contribution to the improvement in the 1995 and 1996 economic performance. 8. Incentive Framework and Private Sector Development. Significant progress was made in improving the investment code, decontrolling imports, scaling back transport subsidies and liberalizing prices of essential foodstuffs. A private sector assessment helped identify binding constraints to investment, which were then incorporated in follow-up adjustment efforts. A near-doubling of the prices of food grain and milk product prices after project-supported price decontrol is evidence of the extent to which past policies distorted these markets. 9. Reform of the Public Enterprises. A privatization law was passed and a pilot privatization program was launched. Neither worked well initially, but this experience did help chart a course for future policy correction undertaken under the SAL operation that followed this loan. The majority of the large, financially distressed PEs were restructured and transformed into autonomous enterprises. Their ' See John Nellis, "Reform of Public Enterprises" and Vinod Thomas, "Trade Policy Reform" in V. Thomas, A. Chhibber, M. Dailami, and J. De Melo, editors (1991), Restructuring Economies in Distress, Oxford University Press. financial restructuring was done in accordance with terms agreed upon with the Bank. A number of small, local PEs were wound-up, creating a mechanism for the exit of unviable PEs. The commercial banking sector was opened to private participation, and a private bank and a private mutual fund society were then licensed to operate. The major contribution of these reforms was to tighten the budgetary constraint on the large public enterprises and to introduce privatization into the Algerian policy domain. 10. Reform of Public Expenditures. Public expenditure support to the PEs under the Rehabilitation Fund (FA) was wound-down and an agreement was reached to phase out the closing of this last-avenue of budget support by end-1996, which was done on time. Government bank guarantees for PEs were limited to the own-capital of the enterprises. A public expenditure review, implemented jointly with Government, identified a number of measures for rationalizing public investment, reorienting the public sector's role and improving the efficiency of service delivery. Several of these measures were incorporated directly in the 1996 and 1997 Budgets. Public expenditures fell from 25 percent of GDP in 1993 to 22 percent of GDP in 1995, although by restricting budget support to the PEs and rationalizing spending, the efficiency and effectiveness of public outlays has improved. 11. Reform of the Financial Sector. 1993 audits were completed for 3 of the 5 state banks, new capital-adequacy requirements were applied to these banks, new prudential regulations and procedures were adopted by the central bank (BA) including the introduction of management contracts aimed at preserving the bank's capital. Government's monopoly in the insurance industry was eliminated. The Bank audits revealed that the extent of portfolio distress was far greater than earlier perceived, prompting the initiation of a multi-year refinancing and restructuring plan for the commercial banks. Efforts to open the capital of the state banks, to subject these banks to regular audits, and to enhance the supervision capabilities of the central bank were unsuccessful due to the lack of outside investor interest and the constraints posed by the difficult security situation on obtaining the necessary external technical expertise. This components main contribution was to raise Algeria's banking regulation standards to common international norms especially in the areas of loan classification and provisioning and bank capital adequacy. In terms of actual improvement in the payments system or in the commercial banking environment, little real progress was registered. The pace at which the financial sector can be reformed is hampered by the lack of private investor interest, the limited pool of experienced bank managers, access to technical information and the poor financial outlook of most of the banking system's state-owned corporate borrowers. 12. Strengthening the Social Protection System Through this project, the three main elements of the Government's social safety net, a transitory public works program, a social transfer system to the disabled and handicapped, and an unemployment insurance system were piloted, generalized and improved. The public works program provided employment to about 420,000 job-seekers in 1995 at 16,000 work sites. The social transfer system provided modest income augmentation to 43,000 household heads and 40,000 persons were covered under the unemployment insurance scheme. The degree to which social protection reaches the growing numbers of Algerian poor is unknown. The results of the ongoing LSMS and the Poverty Assessment Study should provide valuable lessons for the design of more effective social protection mechanisms. 13. Financial Transfers and Reform Momentum. This project substantially achieved its objective of mobilizing financial resources to meet Algeria's pressing balance of payments requirements. In so doing, the Government was able to advance the reform process and restore the momentum needed to carry forward economic transition. On the basis of the conclusion of the Bank and IMF agreements, Algeria was able to obtain second-tranche release of an EU Structural Adjustment Loan, was able to secure a Japan Ex-Im bank loan for balance of payments purposes, and, most importantly, was able to successfully reschedule its public debt, first with the Paris Club creditors in 1994 and 1995 and then with the London Club of commercial banks in 1996. For 1995, Algeria received US$ 1.1 billion in multilateral balance of payments support and US$4.9 billion in debt rescheduling, enabling the country to increase imports by close to US$1 billion and run a current account deficit of US$2.24 billion. The restoration of policy reform momentum helped inspire the Government's sweeping victory in the late-1995 Presidential elections and underpinned the conclusion of a multi-year EFF agreement with the IMF and a Structural Adjustment Loan with the Bank. C. MAJOR FACTORS AFFECTING THE PROJECT 14. Factors beyond government control. Restoring macroeconomic balance was substantially assisted by unforeseen improvements in Algeria's external economic environment. Good weather, for two years in a row, led to double-digit growth in agricultural output and contributed to an easing of inflationary and import pressures. Crude oil export prices reached US$20.9 per bbl in 1996, 20 percent higher than was initially forecast. Higher oil prices led to a 20 percent increase in export values and a 3 percent of GDP increase in revenues from the oil sector. At the same time, the strengthening of the US dollar, vis-a-vis the Yen and the Euro-currencies, helped improve the trade balance, reduced Algeria's debt service costs and eased pressure on the budget. 15. But while the external environment was favorable to reform, the domestic security environment was not. Civil violence was severe in 1995. The Algerian Press estimates that around 2,000 rebels are engaged in anti-Government operations in mid-1996, many of whom belong to the violent underground cells of the Groupe Islamique Arme (GIA). Bombings, assassinations and other acts of extremism marred the 1995 and 1996 political scene. It is estimated that approximately 50,000 persons were killed 2 in acts of political violence during 1992-1996 . As a result of the deteriorating civil security situation, a number of technical assistance activities had to be deferred or redesigned, and Government's ability to monitor the effects of policy reform at the enterprise and household level were limited. The difficult security situation became the most important deterrent to inward investment in the non hydrocarbons sector--which was less effected because of its safe location-- and by extension, to mobilizing the private financial resources necessary to privatize and restructure the enterprise and the banking sectors. 16. Factors generally subject to government control. The authorities adopted a cautious "small- steps-approach" to furthering the reforms, on the background of the prevailing severe civil strife and a very high unemployment rate of around 25 percent in 1995. This has obviously contributed to the elongation of the transition process. Meanwhile, they have actively, and quite successfully, sought the understanding and back up of the general population through an intensive media campaign of explanation of the main reform measures, led by the top reformers in the Government. They, rallied the union to the reform program, and minimized its opposition to the process, even though at the price of delaying the hard decision of layoffs of workers and paying accumulated wage arrears partially through specific taxes on civil servant salary through a national solidarity tax scheme. It is not very obvious though, that at the stage of the project conception and first year of implementation, under the special conditions of the civil strife, without a solid and wide ranging social safety net, and without the political base that has been only later on established through the presidential elections, an all privatization approach could have been politically feasible. 2 Reported by London Economist Intelligence Unit, Country Report, 1997. - 5 - D. PROJECT SUSTAINABILITY 17. The sustainability of project initiated reforms will remain uncertain over the medium run. Reform momentum has been restored and Government's external payments position is far healthier in 1996/97 than in 1994. The good progress registered in 1995 triggered the IMF EFF agreement for the period April 1995 to March 1998 and the Bank's structural adjustment loan of April 1996 (Loan 6855- Al). Good rainfalls in 1995 and 1996, favorable oil price developments, and a strengthening of the dollar vis-a-vis European currencies have provided a boost to growth and improved the Government's external payments position. Forceful macroeconomic measures have continued with a budget surplus of 2.7 percent recorded for 1996, inflation falling to 10 percent in May 1997, foreign exchange reserves at 4 months of import cover in 1996 and continued progress towards maintaining realistic wage and exchange rate levels. However, the depth and breadth of structural adjustment is not yet commensurate with sustained reform, and as a result, stabilization remains fragile. Debt rescheduling efforts, while reducing the immediate payment burden, contribute to a debt overhang that may impede future investment. Privatization efforts are still limited, the state banks remain distressed and the manufacturing sector continues to contract accumulating a decline of 50 percent since 1991 (-8.7 percent in 1996). Supported by the SAL that has followed the ERL, Government has brought to the point of sale, liquidation or concession 550 small and medium public local and communal enterprises. Half of this number has been covered by the first tranche of the SAL. The effective privatization of this first lot has reached about 50 percent. 300 additional medium size local public enterprises are being identified to be liquidated and about 250 large public enterprises are being identified by the Government to be privatized. Government has thoroughly revised its privatization law easing restrictions on labor shading, permitting phased payments, and opening the way to a wide range of privatization methods including mass privatization. Still, privatization demand is weak, and the authorities have yet been unable to agree on a mass privatization effort. Little durable progress has been registered in reducing the economy's dependence on hydrocarbon revenues or in stimulating a resumption of productive employment. Poverty has intensified. Presidential elections in November 1995 reaffirmed popular support for the Government's reform effort. It is expected that up coming legislative elections will give the authorities more legitimacy and enable them to undertake bolder steps in the path of reform. E. BANK PERFORMANCE 18. Preparation. The Bank was highly involved during preparation. The skill mix of mission members was appropriate, including macroeconomic, private sector, financial sector, social safety net, privatization, competition and investment promotion specialists. The project built on the ongoing EFSAL, the World Bank "Capital Market Study", completed in 1993, and a recently completed Country Economic Memorandum. Many of the reforms proposed in the Country Economic Memorandum were reflected in the design of the project. While preparing this operation, Bank staff maintained active consultation with the IMF, the EU and the Government of Japan to ensure that the international community would provide combined and coordinated financial support for the Government's reform effort. 19. Appraisal. The Bank reviewed the project sufficiently. Timely implementation of the prior conditions specified for Board submission is proof that the measures identified were realistic and that the Bank correctly assessed Government's commitment to rapid implementation of macroeconomic and structural reforms. The Bank over-estimated Government's ability to rationalize the state-banks and to mount an ambitious privatization process, but information gleaned from special studies built into the project helped provide guidance for further improvements in both areas. - 6 - 20. Supervision, The deteriorating security environment forced the Bank staff to rely on a variety of remote mechanisms for supervising the project. This, plus the fact that Algerian economic statistics have a number of gaps (e.g. on private sector activities, recent employment surveys, poverty statistics), complicated the task of supervising an adjustment operation. Task management responsibilities were changed during the implementation of the project, and while some learning was required, this handover was managed smoothly. Because travel to Algeria was restricted, Bank staff were unable to directly assess the full impact of reforms in Algeria. But despite these difficult constraints, Bank supervision was effective in quickly resolving the relatively small number of implementation problems that arose, providing advice and feedback on special studies and technical assistance activities, and in mounting a number of special studies (e.g. Private Sector Assessment, Public Expenditure Review, Poverty Assessment) that provided a foundation for future reform efforts in the framework of the SAL that followed the ERL project. F. BORROWER PERFORMANCE 21. Preparation. The borrower was deeply involved in all aspects of project preparation. The Government cooperated actively with the Bank to articulate a reform effort that addressed major policy and institutional impediments to economic rehabilitation to the Bank's satisfaction. The Government organized a tripartite meeting with the Unions and the enterprise managers in order to create widespread ownership and understanding of project reforms. During preparation, the Government identified gaps in information and understanding and established a program of special studies and technical assistance to address these needs. 22. Implementation. The borrowers performance during implementation was commendable in light of the difficult domestic security situation. Macroeconomic and most of the structural reform measures were implemented in a timely fashion. The highest levels of Government leadership were committed to making this project a success. However, the borrower's ability to manage the policy reform implementation effort was weakened by the long-standing lack of: (i) timely and accurate data on private sector activity and standards of living; (ii) the chronic lack of a unified Government budget document; (iii) an inability to obtain international audits of major PEs and commercial banks; and (iv) insufficient technical exposure to privatization, financial sector restructuring and social safety net reform efforts in other transition settings. The Government responded to requests tor information from the Bank, except some delays in the case of its survey of living conditions, which delayed the formulation of poverty reduction to improve the effectiveness of the social safety net measures. 23. Covenant compliance. The Government was not in violation of any specific covenants defined in the loan agreement. The goods and services financed by the Bank were procured according to procurement procedures and eligibility criteria consistent with that defined in the loan document. Records of eligible imports were provided to the Bank and a financial monitoring system for the project was established. Regular economic reports were furnished to the Bank in accordance with the indicators defined in the President's Report. G. ASSESSMENT OF OUTCOME 24. The project has a satisfactory outcome, because it has achieved its major objectives and, despite problems encountered, is expected to achieve satisfactory development results. Tight fiscal and monetary policies have been maintained, the balance of payments has improved, trade liberalization and price decontrol have become well-engrained, opportunities to broaden entry in banking and insurance have been exploited, recourse to the budget by the PEs has been sharply reduced, and the basic - 7- framework for a social safety net that targets income protection to the poor has been put in place. But on the other hand, the expected supply response from improvements in public policy has not been fully realized. Growth in the hydrocarbon and agriculture sectors continues apace, but development in the other sectors remain insufficient, in particular in the manufacturing sector --dominated by public enterprises-- which continued contracting. While immediate pressures on the current account have eased, Algeria debt service requirements will resume and then steadily rise by the end of the decade. 25. Development Results. Efforts to restore sustained growth and employment generation hinge very much on the transformation of a public-enterprise dominated economy to one with a solid core of private sector entrepreneurs. This project pilot-tested a number of privatization efforts wlhich did not work as expected. Government has, however, learned important lessons from this, and has subsequently improved the enabling legislation, liquidated more non-viable small public enterprises and has combined the major PEs into 11 holding companies. Still, the degree to which a meaningful privatization process, with a defined implementation time table, will actually take place is unknowin. Neither a decade of falling incomes or Algeria's difficult security environment provides an environment conducive to the sale of large Government companies. Other means of ownership transformation will be required. It is important to underscore that, without meaninigful progress in privatization, the durability of both Algeria's macroeconomic performance and its structural reforms aimed at rationalizing the budget, strengthening the financial sector and expanding the scope for private sector activity are in question. 26. Poverty Reduction. Elimination of price subsidies for fuel, transport and basic foodstuffs caused a near-doubling of the prices of a number of essential items. Real wages fell, unemployment increased and employment growth is still lagging the increase in new entrants to the labor force. Social safety net measures, while providing some income support, did not offset the loss in incomes or employment opportunities available to the poor. Preliminary results from the Poverty Assessment Study suggest that poverty intensified during this period, although good crop harvests helped abate the most serious consequences of declining real incomes. That poverty has intensified suggests that popular support for further structural reform may be difficult to maintain, unless improvements are made in the social protection system, privatization is accelerated and reforms ained at augmenting employment and incomes of the very poor are placed high on the policy reform agenda. H. FUTURE OPERATION 27. Measures initiated under this project have been furthier advanced through a Structural Adjustment Loan (6855-AL) of April 4, 1996. That loan is aimed at contributing to macroeconomic stabilization and reform of public expenditures, further public enterprise reform and private sector development including small-scale privatization efforts, and support for the social protection system. In recognition of the depth and severity of the unemployment and poverty problem, the Bank is initiating a study of Algeria's labor market with the objective of identifying ways and means of stimulating productive employment creation. More comprehensive reform of the financial sector will require a better understanding of the portfolio and management problems of Algeria's state banks, and this will require further attempts to enhance technical skills and introduce professional auditing, accounting and supervision capacity. More importantly, statutory constraints on bank privatization need to be removed. Meanwhile, efforts will be needed to improve the payments system, whose obsolescence severely constrains the expansion of bank services and reduces the attractiveness of the banking sector for private investors. 28. The macroeconomic progress registered in 1995 and 1996 hinges very much on a number of what are likely to be transitory factors, most notably higher petroleum prices and good weather. Debt - 8- rescheduling has only delayed the point at which the Government will have to resume large-scale external debt service payments and during the process of PE and bank restructuring, the Government's domestic debt burden increased significantly. In the long-term. without a substantial improvement in growth and creditworthiness, Algeria's public debt burden may not be sustained. Careful monitoring of the domestic and external debt situation is therefore warranted. I. KEY LESSONS LEARNED 29. Prior to this operation, the Government's economic management strategy was premised on the notion that the existing economic system could be gradually reformed, albeit by providing some scope for market competition. A fundamental transformation of the economic system was deemed unnecessary. This loan succeeded in changing that perspective. The use of a single-tranche, rapid disbursing operation was an appropriate instrument with which to restore policy reform momentum and to introduce hitherto sancrosact items, such as privatization, the opening-up of the banking sector, civil service wage restraint and targeted provision of income transfers to the poor onto the Government's reform agenda. The use of a single-tranche operation helped affirm the need to accelerate the reform of the economic system without committing either the Bank or the authorities to a multi-year implementation program at a time when only a relatively conservative and incomplete notion of what Algeria's transition process might involve was predominate. 30. Implementation slippage can be traced primarily to the adverse security situation, a factor largely beyond the authorities immediate control. Off-shore monitoring and supervision was possible but this arrangement limited the scope for contact between the Bank and parties outside Government. Technical assistance activities for which international expertise was required, such as the auditing of the commercial banks, was hampered by the difficult security situation. The resulting lack of necessary technical information impeded key reforms. In addition, travel restrictions placed on the Algerian authorities impeded their exposure to transition experience in other countries. The key lessons learned from this are: (i) significant progress towards structural policy reform is possible even in an economy marked by civil insecurity; (ii) civil insecurity will undoubtedly disturb skill-intensive policy dialogue, technical assistance and awareness-broadening efforts; (iii) off-site supervision and policy dialogue is at best a partial substitute for in-country policy dialogue; and (iv) in instances in which security problems deter travel, structural policy reforms should not be tightly linked to technical information that cannot reasonably and readily be provided. 31. In the Algeria case, progress in liberalizing external trade and exchange rate arrangements has proceeded far faster than has progress in privatization. In manufacturing, for example, producers did face more external competition, but as public enterprises, are unable to restructure to effectively meet this competition. These rigidities are a result of financial market weaknesses, barriers to entry and exit, restrictions on shedding labor, weak balance sheets, limited managerial freedom of the PEs, and a slow- gestating privatization effort. Hence, while external market liberalization has eased immediate import constraints, it has also contributed to a hollowing-out of Algeria's industrial sector. It is well known that the effects of exchange rate and trade liberalization reform are muted when external competition is introduced into an environment replete with internal market rigidities. Bank-supported adjustment operations in transition economies should be mindful of the need to sequence trade-liberalization measures after measures aimed at establishing a viable private sector and enhancing domestic market competition. IMPLEMENTATION COMPLETION REPORT DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA ECONOMIC REHABILITATION SUPPORT LOAN (LOAN 3834 AL) PART II: STATISTICAL INFORMATION Table 1: Summary of Assessment Table 2: Related Bank Loans Table 3: Project Timetable Table 4: Loan Disbursements: Cumulative Estimated and Actual Table 5: Key Indicators for Project Implementation Table 6: Key Indicators for Project Operation Table 7: Studies Included in Project Table 8A: Project Costs Table 8B: Project Financing Table 9: Economic Costs and Benefits Table 10: Status of Legal Covenants Table 11: Compliance with Operational Manual Statements Table 12: Bank Resources: Staff Inputs Table 13: Bank Resources: Missions - 10- Table 1: Summary of Assessments A. Achievement of Objectives Substantial Partial Negligible Not applicable Macro Policies E3 0 0 0 Sector Policies Financial Objectives E3 n o Institutional Development J j3 E0 Physical Objectives a a Poverty Reduction El 0 0E Gender Issues I I ElI Other Social Objectives [I E3 0Z0 Environmental Objectives E El El Public Sector Management D El Private Sector Development E0 Other (restoring momentum) E3 El - 11 - (Continued) B. Proiect Sustainability Lilcel Unlikely Uncertain Highly C. Bank Performance satisfactovy Satisfacto Deficient Identification i0 E] Preparation Assistance 0 C Appraisal C 0 a Supervision [ 0 a D. Borrower Performance satisfactory Satisfactor Deficient Preparation n 0 o Implementation o El Covenant Compliance Highly H E. Assessment of Outcome satisfa=13i Satisfractoy Unsatisfactv unsatisfactoly C 0 I;Z O - 12 - Table 2: Related Bank Loans/Credits Loan/credit title Purpose Year of approval Status Preceding operations 1. 3117-Al Economic To restore growth by August 31, 1989 Closed on December 31, Reform Support Loan introducing a more 1991 (cancellation of market-oriented US$1.2 million) US$300 million economic system; 2. 3176-Al Technical To build institutional March 6, 1990 Closed on June 3, 1996 Assistance Project capacity for policy instead of December 31, reform and management 1993 (cancellation of US$25 million of a market economy; US$4.9 million) 3. 3210-14-Al Industrial Trial restructuring and May 5, 1990 Closed on June 30, 1995. Restructuring corporations of four US$69.3 million was Demonstration Project industrial public disbursed. enterprises US$99.5 million 4. 3352-Al Enterprise and To restore macro-balance June 21, 1991 Closed on June 30, 1995 Financial Sector through tight fiscal and US$350 million was fully Adjustment Loan monetary policy while disbursed. introducing competitive US$350 million structural policies and strengthening the social safety net Following operations 1. 4005-AL Structural To deepen the April 25. 1996 Loan was declared Adjustment transformation to a effective on March 28, market economy through 1995. US$300 million correct macroeconomic policies, public expenditure reform, privatization of SMEs, banking reform and strengthening the social safety net. - 13- Table 3: Project Timetable Steps in Project Cycle | Date Planned Date Actual/ Latest Estimate Identification (Executive Project Summary) June 15, 1994 June 15. 1994 Preparation July 22, 1994 July 22, 1994 Appraisal September 23, 1994 September 23, 1994 Negotiations November 4, 1994 November 4, 1994 Board Presentation January 12, 1995 January 12, 1995 Signing January 26, 1995 January 26, 1995 Effectiveness January 20, 1995 March 28, 1995 Loan Closing December 31, 1996 December 31, 1996 - 14- Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ millions) FY 1996 Appraisal Estimate 150 Actual 150 Actual as % of Estimate 100 Date of Final Disbursement 6/95 Note: IBRD fiscal year ends on June 30. - 15- Table 5: Indicators of Project Implementation Measures to be taken before Measures to be taken during Component Measures taken before July presentation of the ERL to the 12 months following Implementation Status 1994 the Board presentation of the ERL to the Board Macroeconomic framework - A managed float of the dinar was introduced and has been Foreimn - substantial exchange rate - Implementation of fixing - preparation by the BA of the maintained since October 1, 1994. The exchange rate is determined exchange adjustment, including a devaluation sessions between the Central Bank introduction, during the second in conjunction with the five commercial banks through fixing of 40. 1 No in April 1994. (BA) and the banks to determine semester of 1995, of an interbank sessions at the Bank of Algeria. An interbank market in foreign the exchange rate of the dinar foreign exchange market. exchange was established since the end of 1994 and continues to according to a mechanisms agreed operate. After the sharp devaluation of the exchange rate in 1994, with the IMF. the dinar experienced some real appreciation in 1995 and 1996. The IMF estimates that the REER, based on unit labor costs in manufacturing, has fallen by about 30 percent since January 1993, relative to Algeria's trading partners. Trade - dissolution of the interministerial - elimination in July 1994 of a - elimination of all import Jiberalization committee overseeing imports, and dozen products from the list of suspensions except for a list of -An inter-Ministerial decree of 26 December 1994 abrogating all replament of import licenses import suspensions. products prohibited for religious, import quantitative restrictions was adopted and applied. (cahiers des charges) by moral, health or security reasons. -The negative list of imports was abolished in January 1995. professional criteria for sensitive and basic commodities; reduction in the number of suspended imports from 107 to 85. - elimination of a broad range of - elimination of barley, coffee and - elimination of sugar (before --Barley, coffee and infant fonmula were eliminated from the list of products from the list of infant fomiula from the list of December 31, 1994) and commodities subject to professional criteria; comniodities subject to commodities subject to pharmaceuticals (before June 30, -Sugar and medication were eliminated from the list of professional professional criteria, including professional criteria 1995) from the list of commodities criteria on 26 December 1994; construction materials and subject to professional criteria) agricultural inputs. - review of the professional criteria -The professional criteria system was reviewed and then eliminated system. Evaluation of the results on 29 March 1995; and adoption of jointly agreed recommendations for adapting the --Total imports increased from US$9.15 billion in 1994 to US$10.10 system as necessary. billion in 1995 after import liberalization; - 16- Table 5: Indicators of Project Implementation Measures to be taken before Measures to be taken during Component Measures taken before July presentation of the ERL to the 12 months following Implementation Status 1994 the Board presentation of the ERL to the Board - implementation of a series of - reduction of the Treasury deficit --The Treasury deficit fell from 8.7 percent of GDP in 1993 to 4.4 measures to limit budgetary from 9.4% of GDP in 1993 to 5.0% percent of GDP in 1994, and then to 1.6 percent of GDP in 1995. A expenditures in conformity with the in 1994; acceleration of deficit budget surplus of 2.7 percent of GDP was recorded in 1996. stand-by agreement. reduction in 1995. Monetary policy - replacement of the 20% ceiling - introduction of mandatory - achievement, by the end of 1994, -In October 1994, minimum reserve requirements of 3 percent on and Interest rate on lending rates with a ceiling of 5 reserve requirement for banks of positive real interest rates on bank bank deposits were introduced, remunerated at II percent per annum; percentage points on bank margins; remunerated at 11.5%. The deposits with respect to the - By December 1994, deposit rates in the commercial banks ranged increase in reference interest rates perspective increases in the annualized inflation rate anticipated between 17 and 20 percent, exceeding forecast rate of inflation and of about 4 percentage points. reserve rate will permit the within the framework of the stand- positive in real terms; absorption of all potential sources by agreement. -The ceilings on bank lending and deposit rates, which were removed of additional liquidity outside of in May 1994, were not reimposed. This facilitated achievement of the monetary system. positive, real deposit rates. - establishment of credit ceilings - establishment of credit ceilings - establishment of credit ceilings -credit ceilings were established for the 23 EPS in conformity with (by bank) for the 23 non- (by bank) for the 23 EPS for the (by quarter and by bank) for the EPS the stand-by agreement; autonomous public enterprises last quarter of 1994 in conformity for 1995, which have been agreed (EPS) for the second and third with the stand-by agreement. beforehand with the Bank. quarters of 1994 in conformity with the stand-by agreement - establishment of an objective for - respect of the objective for M2 -Growth in the broad money supply was reduced from 21.5 to 15.4 broad money (M2) of a maximum growth for 1994, which has been percent per annum during 1993-94. Money supply growth was increase of 15% in 1994. adjusted to 17%; establishment of an further reduced from 15.4 to 10.5 percent during 1994-95. objective of less than 14% for 1995. -end-of-period inflation peaked at 38.6 percent in 1994 and then fell to 21.9 percent in 1995 and to 15.1 percent in 1996. - liberalization of the interbank - review of progress in developing -A decree of the Bank of Algeria on the money market was adopted money market rates. the money market, notably with in April 1994, defining the disposition of credit adjudication, and the respect to the implementation of an rules and regulations goveming secondary market activity in treasury adjudication system for central bank bills and open market operations. credit. -Govemment bonds were issued in October 1994 carrying a 16.5 percent interest rate; Wage policy - establishment of a ceiling in the - respect of the ceiling on salary -Wage setting in 1994 respected the ceiling set under the IMF increase in salaries for civil increases. Standby on the central govemment wage bill. and the limitation of servants and EPS employees during minimum wage increase to 12.5 percent. the period of the stand-by -During 1994-96, tight govemment pay policies have contributed to a agreement. reduction in the real wages by 30 percent; A zero net civil service recruitment policy was adopted in 1995. and the share of the wage bill in the budget fell from II percent of GDP in 1994 to 8 percent of GDP in 1996. - 17 - Table 5: Indicators of Project Implementation Measures to be taken before Measures to be taken during Component Measures taken before July presentation of the ERL to the 12 months following Implementation Status 1994 the Board presentation of the ERL to the Board Subsidy policy - increase (on average) between - further increase in September - continuation of the policy of -The weighted average price of subsidized energy and food products March and June 1994 in the prices 1994 in the prices of subsidized reducing price subsidies in parallel was increased by 98 percent during 1994/95, halving the budgetary of subsidized food staples of 56%, food staples and in controlled with improvements in the efficiency burden of the subsidies. and in controlled energy prices of energy prices in conformity with of the social safety net. -Price of electricity and gas were revised quarterly in line with 40%. the stand-by agreement. inflation trends in 1995 and 1996. -Subsidies were narrowed to Semolina and Milk products in 1995 through a series of four decrees promulgated by the Ministry of Commerce in 1995; -Price ceilings and profit margins for Semolina, milk, powdered milk and fluid milk were increased in March 1995. -Budgetary allocations for all subsidies declined from 5.3 percent of GDP in 1993 to 2 7 percent of GDP in 1995. Incentive - enactment of a revised - adoption by the Council of - Promulgation of the law on -The Law on Competition was promulgated and implementing framework and Commercial Code applying the Ministers of the draft law on competition. regulations issued in January 1995. private sector same regulations to public and competition. development private enterprises. - elaboration of the implementing -The implementing regulations were completed in consultation with regulations for the law on the Bank and issued in 1995. The text was provided to the Bank for competition in consultation with the review except for the parts relating to violations and price Bank, and publication of these texts notification - enactment of an Investment - publication of a decree - review of the functioning of the -The Agency for Investment Promotion (APSI) was created and the Code. establishing the national Investment Code in collaboration Director General nominated in March 1995. investment agency (APSI). with the Bank. -The Investment Code was reviewed in collaboration with the Bank in 1994 and 1995. - commitment by the authorities - Interest rate subsidies were excluded from the revised Investment to postpone, until further Code. consultation with the Bank, the implementation of the interest rate subsidies foreseen in the Investment Code. - publication of the other -Investment code implementing regulations were reviewed with the implementing regulations for the Bank and published in 1995. Investment Code after consultation with the Bank. - 18- Table 5: Indicators of Project Implementation Measures to be taken before Measures to be taken during Component Measures taken before July presentation of the ERI, to the 12 months following Implementation Status 1994 the Board presentation of the ERL to the Board - freeing of the prices of some 80% - dissemination of a circular to - execution of a study to reform the -A Study on the System of Renewing Subsidies for transport of of the CPI basket. the enterprises concerned stating system of explicit subsidies of products to the Grand South was made in May 1995, with the aim of that obligatory pan-territorial transportation costs to the south in establishing actual transport costs and using the Wilaya's of Adran, pricing only applies to products collaboration with the Bank. Tindouf, Illizi and Tamanrasset as sample points. subject to fixed prices. -Produce transport subsidies were then reduced. - transfer of barley, coffee, - transfer of corn, pulses and rice -price of barley, coffee, matches and infant formula were shifted to matches, and infant formula from from the fixed margin category to the free price category in 1994; the fixed margin category to the the free price category before March - Corn, pulses and rice prices were decontrolled in 1994; free price category. 31, 1995. - Price of sugar and cooking oil was also shifted to frec price category, going beyond the price liberalization targets extended under the program; -Food subsidies were entirely eliminated by the end of 1996; - elimination of administrative - adoption of the Council of - implementation of the -The Finance Law on the Import of Used Equipment was restrictions on private investment Ministers ofa disposition in the liberalization of the import of used promulgated and published in 1995; and on private investors' access to 1995 Finance law liberalizing the equipment, including the -An explanatory circular explaining the Law has been prepared; bank credit; creation of a SME import of used industrial and dissemination of an explanatory ministry. professional equipmnent. circular to interested parties. - presentation to the Bank of a -A Technical Assistance Program was Prepared by the Ministry of technical assistance progran for the Small and Medium Scale Enterprises and was provided to the Bank private sector. in May 1995. - completion, in the framework of - agreement on the terms of - completion of the PSA and -The Terms of Reference of a Privatc Sector Assessment were agreed the EFSAL, of a study of small- refcrence for a private sector initiation of agreed upon with the Government and this study was executed by the Bank. and medium-scale industry in assessment (PSA) to be carried out recommendations. -Recommendations identified in this study, such as the need to Algeria. by the Bank. improve the urban real estate market, to reduce the payroll tax rate, and to eliminate public monopolies that compete with private initiative were initiated under the follow-up Structural Adjustment Loan; Reform of - launching of a restructuring - adoption by the Council of - implementation of the -A pilot privatization program was launched which involved the public program for public enterprises, and Govemment of the privatization privatization program in priority passage of enabling legislation, the liquidation of 88 local public enterprises passage to autonomy of almost 400 policy prepared in consultation sectors. enterprises and pilot auctions of five Govemment hotels. public enterprises (EPEs). with the Bank. - opening of the capital of EPEs up - presentation to the SGG and - publication of the decree cited in -A multisectoral privatization program, based on articles 24 and 25 of to 49%/o, and authorization to sell adoption of the implementing column three. the Finance Law, published on 7 November 1994, allowed the sale, EPE assets to the public sector decree for article 24 of the 1994 liquidation and opening-up of capital participation. complementary Finance Law conceming the sale of APE assets. Table 5: Indicators of Project Implementation Measures to be taken before Measures to be taken during the 12 Component Measures taken before July presentation of the ERL to months following presentation of the Implementation Status 1994 the Board ERL to the Board - preparation of a draft law on - promulgation of the law on privatization. - A Privatization Law was approved by Parliament in July privatization in consultation with Publication of the implementing texts after 1995 after tripartite consultations between Govemment, the Bank. consultation with the Bank, and Unions and Private Sector held on 9 April 1995. The implementation of these texts. Bank highlighted a number of deficiencies in this law, such as requirement that the activity must be retained for five years, buyers must pay cash, and that all workers had to be retained. -A Revised Privatization Law was enacted in 1996 which would increase flexibility in privatization procedures and allow for equity participation by employees, auctions and mass privatization. - launch of a pilot privatization - pursuit of the pilot privatization program - A pilot project was launched to privatize five hotels. program for EPEs. for EPEs with the support of the Bank. Bids were only received on one hotel (in Oran). This was sold (in 1996) and the other four hotels assigned to future privatization efforts. - preparation of a technical - implementation of the technical assistance -The Ministry of Industrial Restructuring and assistance program for the program cited in column three. Participation provided the Bank with a Technical Ministry of Industrial Assistance proposal for advice in the area of privatization. Restructuring and Participation The Bank was requested to provide in-depth advice on (MRIP). privatization and fielded a high-level policy workshop on this topic in Algeria in 1996. - establishment of a legal framework - publication of a decree -The decree establishing the modalities for the liquidation for the dissolution and liquidation of establishing the modalities for the and dissolution of non-autonomous PE's and EPICs was non-autonomous public enterprises dissolution and liquidation of published in the Govemment Journal, Number 80, 7 and EPICs in the 1994 Finance law. non-autonomous public November 1994. enterprises and EPICs -The large PEs and EPICs were reorganized into 11 semi- autonomous holding companies in 1995/96 to facilitate their eventual rationalization and privatization. - dissolution of a group of 88 - implementation of the liquidation of the -88 local public enterprises were to be liquidated, and local PEs (EPL) in accordance EPLs concemed. procedures were initiated to liquidate these firms in 1995 with regulatory procedures. and 1996. -During 1994-1996, more than 240 public enterprises were liquidated and 30 local small-scale private enterprises were sold or given in concession as of October 1996. - preparation of medium-term - completion of the preparation -A medium-term restructuring plan was prepared for the restructuring plans for 23 EPS. of medium-term restructuring 23 largest, loss-making EPS in 1995. plans for at least 6 EPS. -Restructuring Fund finance of DA 36.9 billion in 1995 and DA 24.4 billion in 1996 was provided to cover the losses of 22 EPS. - 20 - Table 5: Indicators of Project Implementation Measures to be taken Measures to be taken during the 12 Component Measures taken before July before presentation of the months following presentation of the Implementation Status 1994 ERL to the Board ERL to the Board - adoption by the authorities of - continued implementation of restructuring -On December 28, 1994. five of the loss-making EPS a framework for the for the 23 EPS in accordance with the (SNVI, SIDER, CELPAP, ENEPAC, ENMTP) were passed implementation of the adopted framework. into the autonomy stage and signed performance contracts restructuring of the 23 EPS with Govemment, Rehabilitation financing was provided during 1995 in collaboration only to SIDER. with the Bank. - By June 1995, an additional eight EPS were transformed into the autonomy stage, including ENF, ENTC, ENMGP & PMA. - By December 1995, all but one of the 23 EPS had been passed into the autonomy stage and signed performance contracts. - establishment of a ceiling on salary - agreement to fix a ceiling on - respect of the ceiling on the increase of -A policy was agreed upon in 1995 whereby the salary increases in the EPS during the period the increase in salaries in the salaries in the EPS in 1995. ceiling for non-autonomous PEs would be linked the of the stand-by Agreement. EPS during 1995 collaboration salaries prevailing in the private sector. This ceiling was with the Bank. respected through 1995. - definition of terms of - implementation of the study cited in -terms of reference for the study on opening-up the capital reference for a study of the column 3. and initiation of the agreed of private banks was agreed-upon at the ERL review in May opening of the capital of the recommendations 1995. Study was unable to be executed satisfactorily due to existing banks. the lack of an institutional and financial audit of the banks, according to accepted intemational norms. - significant progress towards the -New investment code of April 1994 allows foreign privatization of the existing banks participation in domestic banks. -One commercial bank was opened-up to participation by private investors. Reform of - withdrawal by the Treasury from the - commitment of the authorities -The authorities honored their commitment not to public financing of new investments in to not participate in the participate in rehabilitation investment for the EPS except expenditures public enterprises as of 1989. financing of the rehabilitation in accordance with the agreement adopted. investments for the EPS except -Rehabilitation financing was provided to SIDER, ENF, in accordance with the adopted ENTC, ENMGP & PMA in 1995 in accordance with agreed framework. procedures Table 5: Indicators of Project Implementation Measures to be taken Measures to be taken during the 12 Component Measures taken before July 1994 before presentation of the months following presentation of the Implementation Status ERL to the Board ERL to the Board - establishment of a ceiling of 5 billion - notification to EPEs that the - execution of a review of the PEC-1988 for -The EPEs were notified that Treasury would stop financing DA (in net terms) on Treasury Treasury will stop financing the public utilities (EPICs) in collaboration their investments as of March 1995. financing of the 1988 public enterprise their investments under the with the Bank, and initiation of agreed -A review of the EPICs was deemed unnecessary on the investment program (PEC-1 988) in PEC-1 988 as of end-March recommendations. grounds that their restructuring had to be completed before 1994. 1995. decisions on investment financing arrangements was made. This decision was made in consultation with and agreed upon by the Bank. - establishment of a Restructuring - agreement of the nature of -An agreement was reached that the FA (Restructuring Fund) Fund (FA) in 1991 to finance the future expenditures of the FA would be managed in general agreement with the principles financial restructuring of the public in accordance with Appendix outlined in Appendix B to the ERL enterprises and banks B. -The Govemment has agreed to wind-up the FA by December 31, 1996 in terms of committments and in March 30, 1997 in terms of disbursement. Both have taken place on time. -Close to 20 percent of GDP was allocated to financially rehabilitate public enterprises during 1991-1996. --A Govemment letter was issued in 1995 to each Participation Fund limited the level of guarantees to the Fund's own resources; - completion of the public expenditure -A public expenditure review was conducted in 1995 and review (PER) and initiation of agreed 1996. The results of the review provided input into the 1996 recommendations. and 1997 budget, inspired structural reforms in health, education, transport and civil service management, and contributed to follow-up efforts aimed at improving public sector management. Significant savings were realized through the review by identifying options for rationalizing current expenditures and public investment, particularly by eliminating uneconomic investments. Needed improvements in public debt management and the management of revenues arising from the hydrocarbon sector were also identified. Reform of the - financial and institutional audits of - completion of audit reports - completion of audits of end-1993 and end- - 1993 Audits for four of the five state banks were completed financial sector the 5 public banks on the basis of their of the end-1993 balance sheets 1994 bank balance sheets and their (the audit of BADR was not). accounts at the end of 1991. for at least 3 banks. communication to the Bank. -The balance sheets for 1993 and 1994 have been provided to the Bank -No further audits of the State Banks were done in 1994, 1995 or 1996 because the security situation hindered access to intemational auditors. - enactment of the law on money and - establishment of eligibility - approval of licensees for existing banks - Eligibility criteria for the banks were established, starting credit, and establishment of criteria for approval of licenses which meet criteria with a minimum capital/risk weighted assets ratio of 4 capitalization thresholds for banks and for existing banks. percent that is to rise to BIS minimums of 8 percent by 1999. financial institutions. -Only one of the Banks (BNA) met the criteria. but all existing banks were licensed. - 22 - Table 5: Indicators of Project Implementation Measures to be taken Measures to be taken during the 12 Component Measures taken before July 1994 before presentation of the months following presentation of the Implementation Status ERL to the Board ERL to the Board - adoption of an approach - publication of the regulatory text for the -The Agricultural Mutual Credit Fund (Caisse Nationale de aimed at authorizing the establishment of credit unions. Mutualiid Agricole)regulation of 1995 allows this entity to establishment of credit unions. undertake credit-union like activities and subjects it to prudential supervision by the Finance Ministry. This regulation is seen as establishing a precedent upon which other credit unions could be established. - agreement on the terms of - completion of the study cited in column -The terms of reference for a study to encourage the creation reference for a study to three, and initiation of implementation of of private banks was agreed upon between the Govemment identify measures to encourage agreed upon recommendations. and the Bank during the May 1995 review of ERL progress. the creation of private banking This study examined the legal and regulatory framework, institutions. bank clientele, the payment system and promotional measures. -A new private bank was chartered in September 1995 (the Union Bank), along with the Agricultural Mutual Credit Fund, which was owned by private agriculture cooperatives. - approval by BA of institutional - implementation of the -An institutional development plan was prepared in 1995 to development plans for existing banks, institutional development recapitalize the distressed state banks. and the initiation of a recapitalization plans of existing banks with a -In 1996, the Govemment issued DA 24.9 billion worth of 20 program for the banks view to opening their capital to year bonds to recapitalize four of the public banks. An private investors. agreement was reached to issue DA 18 billion of bonds to recapitalize the Development Bank (BADR) in 1997 and the Housing Fund (CNEP) in 1997. Govemment has also agreed to swap 187 non-performing bank loans for 12 year Treasury bills in 1997. - agreement on a model - signature and implementation of the -management contracts were signed with the five public banks management contract between management contracts. in 1994 and included provisions to respect capital adequacy the Ministry of Finance and requirements; the managers of the banks, -implementation of the management contracts has been holding the latter responsible adhered to, most notably through the elimination of directed notably for respecting the credit programs. Enforcement of the capital adequacy capital adequacy requirements. requirement was deferred until after the financial restructuring of the Banks and more up-to-date audits of Bank performance were made available. -Some evidence of greater commercial bank autonomy is provided by the conversion of PE overdrafts into medium- term loans in 1996. - L.J - Table 5: Indicators of Project Implementation Measures to be taken Measures to be taken during Component Measures taken before July before presentation of the the 12 months following Implementation Status 1994 ERL to the Board presentation of the ERL to the Board - enactment of prudential -publication of an instruction - implementation of the measures -New prudential regulations were started in early 1995 that i) limit regulations prepared in expanding the prudential required to allow existing banks to overdrafts to 15 days tumover; (ii) not to register overdue interest collaboration with the Bank regulations, including the meet the minimum capital ratio payment as revenue; and (iii) to establish provisions for off-balance sheet establishment of the minimum cited in column 3, including claims. Capital adequacy requirements were defined and will rise to 9 capital adequacy ratio for expenditures to be included in the percent of risk-weighted assets by 1999. existing banks at the end of 1995 State budget (after -Implementation of the measures required to allow the banks to meet June 1995, after consultation consultation with the Bank). these capital-adequacy requirements was delayed until an agreement on with the Bank. recapitalization of the Banks was reached in late 1995. - establishment of the bank - elaboration and adoption by - implementation of the plan to - A plan for strengthening the supervision of the banking system was inspection department within the the BA of a plan to strengthen strengthen the supervision of the agreed to by BA and the World Bank. Implementation has been behind BA, and creation of a banking the supervision of the banking banking system. schedule due to difficulties (created by the security situation) to obtain commission. system after consultation with the necessary expertise and to conduct on-site supervision. the Bank. - replacement of the ceiling on - publication of an instruction - review in collaboration with the -A ceiling of 5 percent on bank spreads was issued as part of the lending rates with a ceiling of 5 for the application of the Bank of the ceiling on bank deregulation of ceilings on bank lending in 1994. Average Bank spreads percentage points on bank margins ceiling on bank margins, after margins and establishment of a have remained below five percent during 1995 and 1996. Bank margin consultation with the Bank. timetable for its elimination. requirement was eliminated in late 1995. - adoption by the Council of - presentation of the draft - enactment of the insurance - The Law in Insurance was revised in 1995, in consultation with the Govemment of a draft law insurance market law to the market law and publication of Bank. The new law abolishes the Govemment insurance monopoly and liberalizing the insurance market CNT. implementing regulations after permits the establishment of private insurance companies. consultation with the Bank. - 24 - Table 5: Indicators of Project Implementation Measures to be taken Measures to be taken during Component Measures taken before July before presentation of the the 12 months following Implementation Status 1994 ERL to the Board presentation of the ERL to the Board Strengthening of - establishment of a system of - launch of the reform of the -A pilot test of the public works (the AIG) was established on I the social direct transfers to compensate social safety net, including the September 1994. This was then generalized to the nation as a whole on I protection system lower income households for the introduction of a program of October 1994, in accordance with the agreements reached with the IMF. reduction in consumer price public works, (activitw The new scheme involved half-day public work for the unemployed. One subsidies. d'inrertgenera1, AIG) as deficiency was that the effective daily wage paid under AIG was above agreed with the IMF the minimum wage. A self-targeted unemployment scheme (the PAIG) paying very low wages was adopted in 1995 and 1996. Participation rose to 580,000 in 1995 and is expected to fall to 200-300,000 in 1996. -A cash transfers system, the AFS, was initiated in July 1994 for those unable to work (mainly the handicapped and the elderly who were ineligible for public pensions). Participation has stabilized at about 500,000 persons in this program by 1996. - During 1995/96. the Public Works program provided jobs to 420,000 participants at 16,000 work sites, the social transfer system covered 430,000 heads of households and about 40,000 people have been eligible for benefits under the unemployment insurance scheme. -In 1995. the monthly wage for AIG employees was set at 2100 DA and that provided under the AFS at 600. These were raised to 2800 and 900 DA per month respectively in October 1996. - agreement on terms of - implementation of the review of -Agreement was reached on the terms of reference for a review of the new reference for a review of the the safety net and implementation social safety net. A limited review (confined to 4 Wilaya's) of the new social safety net of the agreed recommendations, implementation of the new program was conducted. This identified the with the support of the Bank, need to further improve the self-targeting mechanisms within the AIG. -Monthly family allowances were set at DA 450 in 1995 and raised to DA 600 in 1996. The annual education allowance was set at DA 400 and raised to DA 800 in 1996. - establishment of a protection - commitment of the - review (in collaboration with the -A review of the protection system of workers laid-off for economic system for workers laid-off for authorities to postpone, until Bank) of the protection system for reasons was conducted jointly with the bank, and implementation of economic reasons, incorporating revision, the implementation workers laid-off for economic articles 25 and 26 of legislation decree No. 94-09 was postponed until unemployment and early or articles 25 and 26 of reasons and adoption of agreed after this review. retirement schemes. legislation decree No 94-09. recommendations. -Further reviews of the youth employment scheme, with an aim of improving targeting and effectiveness are scheduled for 1996/97. - publication of the other -Implementing regulations for the unemployment insurance scheme have implementing regulations for been published, widely discussed and disseminated. the protection system for workers laid off for economic reasons, after consultation with the Bank. Table 5: Indicators of Project Implementation Measures to be taken Measures to be taken during Component Measures taken before July 1994 before presentation of the 12 months following Implementation Status the ERL to the Board preseptation of the ERL to the Board - completion of preparatory work for - launching of the LSMS - completion of the LSMS study -the LSMS study was conducted during the first half of 1995. Part of the living standards measurements study and communication of its results to the results of this study were communicated to the Bank in 1996. survey (LSMS). the Bank. -Difficulties were encountered in securing free and unfettered access to the LSMS survey results due to confidentiality restrictions imposed by Govemment. - agreement on the terms of -An agreement was reached on the terms of reference for a poverty reference for a poverty assessment assessment study to be carried out by the Bank. That study is being to be carried out by the Bank. implemented in 1996/97 by the Bank. - 26 - Table 6: Key Indicators for Project Operation Key Operating Indicators Estimated 1996 Actual 1996 in President's Report Macroeconomic Framework 1. GDP Growth 4.0% 3.8% 2. Inter-bank Interest Rate 21.0% (July 96) 3. Consumer Price Index 10.1% 10.2% (March 97) Private Sector Development and Incentives 4. Value-added by private 43.8% (1994) industry (% total VA) 5. # new private firms/projects 2,075 6. Average customs tariff (import-weighted) 12.3% Reform of Public Enterprises 7. # PEs partially or totally 5 (under ERL) 365 privatized or liquidated Public Expenditure Reform 8. Treasury balance (% GDP) -1.0% 2.7% 9. Rehabilitation Fund Cost 1.0% 1.0% (% GDP) l Financial Sector Reform 10. Overdrafts of large 30 29.6 (Sept. 96) borrowers (in days of sales) I 1. Average equity capital ratio 4% 4% (April 96) of banks Strengthening the Social Protection System 12. Early retirement - As of Oct. 30, 1996: # beneficiaries 17,890 admitted 13. Unemployment insurance - 43,297 admitted, o/w 22,959 # beneficiaries actually paid 14. AFS - # beneficiaries Cumulative end-96: 410,000 household heads (total 840,000 people covered) 15. PAIG - # beneficiaries Cumulative end-96: 190,000 -27 - Table 7: Studies Included in Project Purpose as Defined Study at Appraisal/Redefined Status Impact of Study | 1. Review of the Determnine need for professional Completed The Government's review indicated that Professional Criteria criteria this system hidered efficient operation l System of external trade. The professional criteria system was thereafter eliminated. 2. Study to Reform System Assess transport costs for Completed Based on the Government's findings, of Explicit Subsidies of agricultural products in 4 distant transportation subsidies were cut back. Transport Costs to the Wilaya's of the Grand South. South | 3. Private Sector Assessment Identify legal, regulatory and Completed Helped identify regulatory constraints 3l Private Sector Assessment Ianti-competitive practices that and impediments to private sector hinder private sector development arising from the dominant hindeveloprivatsector role of the Government in manufacturing development, and other sectors; a number of these reforms have been agreed-upon within the framework of the ongoing SAL. 4. Study for the Opening-up Determine the necessary Completed This study identified the need to of the Capital of the measures for opening banks' restructure bank portforios and i l existing banks capital. recapitalize the banks prior to opeDing- existing banks capital. up of bank capital. l 5. Review of the PEC-1988 Review the PEC-1988. PEC was Major changes were made in the for the public utilities reviewed composition and priorities accorded to (EPICs) public investment. -A decision was made to defer the review of the EPICs until after the restructuring of the State Banks has taken place. 6. Public Expenditure Assess efficiency of public Completed Public expenditure reforms arising from Review expenditures. the review were included in the 1996 and 1997 budgets. PER reform initiatives were carried forward into the SAL. 7. Study to Encourage Examine the regulatory, Completed FBdcngs from the studyp managed by thed Creation of Private payments implications, legal BA, contributed to the policies which led banking institutions and promotional aspects of to the establishment of 2 private opening-up the banking sector. financial institutions (a bank and a cooperative) in 1995 and 1996. 8. Review of the New Social A limited review in 4 Wilaya's Completed The study pointed to the need to make Safety Net was undertaken. the PAIG more self-targeting by offering wages below the minimum wage. 9. LSMS Study Assess the standard of living and Launched/ Valuable data on living standards and poverty conditions. Partial poverty conditions was obtained by this Results study. The impact of the study's Available findings are perhaps less than expected because of the degree to which confidentiality has been imposed. 10. Poverty Assessment Determine the degree of poverty Launched This study is expected to provide in Algeria. recommendations for improving the poverty-reduction impact of public expenditures and the targeting of social safety net support. - 28 - Table 8A: Project Costs Appraisal Estimate (US$M) Actual/Latest Estimate (US$M) Local Foreign Total Local Foreign Total Item Costs Costs Costs Costs Balance of Payments 150 150 150 150 Support TOTAL 150 150 150 150 Table 8B: Project Financing Appraisal Estimate (US$M) Actual/Latest Estimate (US$M) Local Foreign Total Local Foreign Total Source Costs Costs Costs Costs IBRD/IDA 150 150 150 150 Govemment of Algeria 0 0 0 0 TOTAL 150 150 150 150 Table 9: Economic Costs and Benefits -Not Applicable- Table 10: Status of Legal Covenants Agreement Section Coven Original Revised Status Description of Covenant Comments ant fulfillmen fulfillment type t date date L3834 AL Section99 1/07/97 Not yet due the Borrower shall prepare and No comment. C furnish to the Bank a report on the execution of the program... the perforrnance by the Borrower and the Bank of their respective obligations and the accomplishment of the purposes of the Loan. L3834 AL Section 3.01 9 periodic periodic complied The Borroxker and the Bank shall No comment. (a) Project with from time to time, exchange * iews Execution on the progress achieved in carrying out the Program L3834 AL Section 3.01 9 periodic periodic complied the Borrower shall furnish to the No comment (b) with Bank a report on the progress Project achieved in carrying out the Execution Program L3834 AL Section 3.01 9 June 30. May 7. complied The Borrower and the Bank shall No comment (c) 1995 1995 uvith carry out a review for the purpose- of evaluating the progress achieved by the Borrower in carrying out the Program L3834 AL Section 3.02 3 December December complied Procurement of the goods shall be No comment Procurement 31, 1996 31, 1996 with governed by provisions of Schedule 3 of this Agreement. L3834 AL Section 3.03 3 December December complied Selection of the consultants shall Contracts were less than Procurement 31,1996 31, 1996 with take place in accordance with UJS$100.000 in each case principles and procedures satisfactory to the Bank. with exceptions as noted in Section 3.04 b L3834 AL Section 3.04 1 December December complied The Borrower shall maintain or No comment (a) Financial 31. 1996 31, 1996 with cause to be maintained records and Covenants accounts to reflect in accordance with sound accounting practices to reflect the expenditures financed out of the Loan - 30 - Table 10: Status of Legal Covenants Agreement Section Coven Original Revised Status Description of Covenant Comments ant fulfillment fulfillment ______ ~type date date L3834 AL Section 3.04 1 December December The Borrower shall have the (b) 31, 1996 31, 1996 records and accounts including Audit those in the Special Account audited for each FY audited, by independent auditors L3834 AL Section 3.04 1 December December The Borrower shall fumnish not (b) 31, 1996 31, 1996 later than 6 months after the end of Audit each FY, such audit report to the Bank. L3834 AL Section 3.04 I December December The Borrower shall maintain (c) 31, 1996 31, 1996 records and accounts reflecting all Statement of expenditures or withdrawals made Expenditures on the basis of statements of expenditure L3834 AL Section 3.04 1 December December The Borrower shall retain until at Not yet due (c) 31, 1997 31, 1997 least I year after each audit report Statement of all records evidencing such Expenditures expenditures L3834 AL Section 3.04 1 December December The Borrower shall enable the Not yet due (c) Statement 31, 1997 31, 1997 Bank's representatives to examine of such records Expenditures L3834 AL Section 3.04 1 December December The Borrower shall ensure that (c) Statement 31, 1996 31, 1996 such records and accounts are of included as a separate opinion, in Expenditures the annual audit report Covenant Class: 1 Accounts/audit 3 Flow and utilization of project funds 9 Monitoring, review and reporting - 31 - Table 11: Compliance with Operational Manual Statements No significant lack of compliance with applicable Bank Statements in the Operational Manual (OD or OP/BP) was observed under the project. Statement number and Title Description and comment on lack of compliance Not Applicable - 32 - Table 12: Bank Resources: Staff Inputs Stage of Planned Revised Actual Project Cycle Weeks US$ Weeks US$ Weeks US$ thous. thous. thous. Preparation to Appraisal 72.0 161.6 34.0 106.0 33.9 140.7 Appraisal-Board 0.0 0.0 39.2 154.2 43.7 150.8 Negotiations through Board Approval 0.0 0.0 0.0 0.0 0.0 0.0 Supervision 0.0 0.0 4.3 13.8 7.7 43.0 Completion 8.0 24.6 8.0 14.8 8.0 14.8 TOTAL 80.0 186.2 85.5 288.8 93.3 349.3 Source: World Bank Management Information System - 33 - Table 13: Bank Resources: Missions Performance Rating Number Specialized Implemen- Develop- Stage of Month/ of Days in Staff Skills tation ment Types of Project Cycle Year Persons Field Represented Status Objectives Problems Through Appraisal 7/94 3 12 Economist S S 8/94 I 26 - macro 9/94 5 50 - social sectors 10/94 3 27 - financial 11/94 1 8 PSD specialist 4/95 3 22 Legal Appraisal through Board Approval Supervision 5/95 3 11 Economist S S Completion 10/96 1 2 economist S S Sources: World Bank Management Information System, Form 590s IMAGING Report No.: 1BB26 Type: ICR
World Bank Group · Implementation Completion and Results Report
Algeria - Economic Rehabilitation Support Loan Project
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Organisation
World Bank Group
Document type
Implementation Completion and Results Report
Country
Algeria
Source
World Bank