Algeria - Technical Assistance Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16429 IMPLEMENTATION COMPLETION REPORT THE DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA TECHNICAL ASSISTANCE PROJECT Loan 3176-AL April 11, 1997 Private Sector Development, Finance, and Infrastructure Division Countrv Department I (Maghreb and Iran) N1iddle East and North Africa Regional Office 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 E0lJIVALiNTS (Currenc%x tlnit - Al,erian Dlinar (DA) 1992 1993 1994 1995 JAIN 1996 DA per tESS, period average ''.4 23.34 35.06 47.66 53.00 DA per USS,) end ot'period 92278 24.12 42.89 52.17 53.77 FISCAI. YEAR .JarUarx I to lDecem ber 31 ABBREVIATIONS ANI) ACRONYMS ANC: Agence Nationale du Cadastre (National Land Registry) B,A. Ban)que d'Algerie Bl 'A: Banique Elxterieure d'Algrrie BNA: Banque Nationale d'Algorie CNPl: Conseil National de la Planification (National Planning Council) CRD: Centre de Recherche et de Dcveloppement (Center for Research and Development) DREE: Directorat des Relations Economiques Exterieures (Directorate of External Economic Relations) LES AL: Enterprise and Finanicial Sector Adjustment L.oan FNORL Entreprise Nationiale d'Organisation et d'Information FRSI.- Econom-ic Rehabilitation Support Loan I TPI ILtiblic Econ(oimic Fnterprise L l' local Public LEnterprisc MIOUE. \linistrx ol EconoruN (0)NS: Of(tice National des Statistiques (National Statistics Bureau) SDR. Special Drawing Rlights SIBF: SociUte interbancaire de Formation (Inter-Bank T'raining Company) Vice President: Kemal Dervis Director : Daniel Ritchie Division Chiefl': Amir Al-Khafaj i StaIf Member Abderrezzak Ferroukhi, Pr. Energy Specialist  FOR OFFICIAL USE ONLY TABLE OF CONTENTS Page Introduction Project Evaluation Summary i PART 1: EVALUATION OF PROJECT EXECUTION A. STATEMENT OF OBJECTIVES 1 B. ACHIEVEMENT OF OBJECTIVES 3 C. MAJOR FACTORS AFFECTING THE PROJECT 6 D. PROJECT SUSTAINABILITY 7 E. BANK PERFORMANCE 8 F. BORROWER PERFORMANCE 8 G. ASSESSMENT OF OUTCOME 9 H. FUTURE OPERATION 9 I. KEY LESSONS LEARNED 10 STATISTICAL DATA TABLE 1: Summary of Assessments TABLE 2: Related Bank Loans/Credits TABLE 3: Project Timetable TABLE 4: Disbursements: Cumulative Estimated and Actual I-ABLE 5: Studies Included in the Project TABLE 6A: Project Costs TABLE 6B: Project Financing TABLE 7: Status of Compliance with Legal Covenants TABLE 8: Bank Resources - Staff Inputs TABLE 9: Bank Resources - Missions ANNEX Borrower's Project Evaluation 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 THE DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA TECHNICAL ASSISTANCE PROJECT (Loan 3176-AL) INTRODUCTION This is the Implementation Completion Report (ICR) on the Technical Assistance Project implemented in Algeria and financed by Loan 3176-AL (US$26 million equivalent), which was approved on March 6, 1990 and became effective on April 22, 1991. The closing date was August 5, 1996, instead of December 31, 1993 as originally planned. The loan was disbursed at 81% (up to a total of US$21,088,840.56). and the final disbursement was made on June 3. 1996, when the undisbursed balance (US$4,911,159.44) was canceled. The ICR was prepared by Abderrezzak Ferroukhi (Private Sector Development, Finance, and Infrastructure Division. Maghreb and Iran Department [Country Department 1], Middle East and North Africa Regional Office) and reviewed by Amir Al-Khafaji (Division Chief) and Charles Sterling (Financial Analyst), from the same division. The Borrower provided comments, together with the Project Evaluation annexed to the present report. This ICR was based on the material in the project files, and was prepared after interviews with the relevant Bank staff and a completion mission (November 2-10, 1996). The Borrower provided certain data on request, together with its own project evaluation and comments on the preliminary draft of the ICR.   TECHNICAL ASSISTANCE PROJECT Loan 3176-AL THE DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA PROJECT EVALUATION SUMMARY Introduction 1. This loan was made as part of the support provided by the World Bank and the International Monetary Fund (IMF) for Algeria's efforts to launch a wide-ranging program of economic and social reform. To implement this, the Algerian Government considered it essential to establish an appropriate institutional structure. The loan was to be combined with other forms of World Bank assistance in this area, specifically the Economic Reform Support Loan (3117-AL, totaling US$300 million and approved by the Board in August 1989), and lending relating to the Industrial Restructuring Demonstration Project (Loans 3210-AL through 3214-AL) totalling US$99.5 million, approved in May 1989. Both sets of loans were completed and closed. The basic objective of Loan 3117-AL was to help restore macroeconomic equilibrium and bring about sustainable growth, and it was particularly concerned with the gradual transition from a planned economy to a market economy. Discussions with the Government indicated the need for a technical assistance loan to help mitigate institutional shortcomings in the agencies responsible for implementing reforms, particularly in the Ministry of the Economy (MOE), Banque d'Algerie (BA), and other financial institutions. Subsequently (in June 1991), the Bank's Board approved the Enterprise and Financial Sector Adjustment Loan (EFSAL, loan 3352-AL, totaling US$350 million). This had been completely disbursed as of June 30. 1995, and enabled the Government to apply rigorous budgetary and monetary policies and price and trade liberalization, and to adopt basic measures for reorganizing the public enterprise sector. Project Objectives 2. The objectives of the project were as follows: (a) to strengthen the managerial, technical and administrative capabilities of MOE and BA; (b) to strengthen the technical capabilities of the staff of the participating financial institutions; (c) to strengthen the auditing capabilities of the enterprises; (d) to improve international financial management.  ii The purpose was to provide the government agencies and institutions involved in the reforms with the human and technical resources essential for the success of those reforms. 3. The project's technical assistance program consisted of the following three components: (i) technical assistance for modernizing and strengthening MOE through a training program, computerization of certain of its operations, and preparation of studies on cadastral development of the Borrower's territory; (ii) technical assistance for financial sector institutions, strengthening the technical capabilities of the Central Bank, training auditors in selected public enterprises, and training staff from commercial banks; (iii) technical assistance for the preparation of the studies necessary for the reforms (i.e. the promotion of nontraditional exports, the use of funds of insurance companies, cadastral development, and a survey of living standards indicators). Experience and Achievement of Objectives 4. Achievement of the main objective (i.e. strengthening the technical capabilities of the main agencies and institutions responsible for implementing the economic reforms) is satisfactory. This strengthening was the result of the modernization brought about by the acquisition of specialized equipment and computer hardware for the central units of MOE, the Planning Ministry, and BA. About 80% of the target for computerization was achieved in MOE (US$4.36 million of the relevant allocations) and BA (US$775,000). The specialized equipment component (i.e. specialized vehicles, and equipment for the printing facilities of BA and the Caisse Centrale) was implemented in its entirety. Overall, the initial allocations for equipment and materials were exceeded by a considerable margin, totaling US$15.6 million (60%) instead of the planned US$11.8 million (40%). Once the loan agreement had been amended (in June 1992), certain allocations had to be reprioritized to meet the needs of new beneficiaries (i.e. the Ministry of Housing), and revised to allow for the speeding up of disbursements. 5. As regards the studies component, four of the originally planned seven studies had to be canceled. The remaining three (i.e. the preliminary study on the national cadastre, and the studies of the incidence of consumer subsidies and living standards) proved to be effective tools in the preparation of the reform measures. Since it would have been premature to undertake the other studies, there was some justification for canceling them; i.e. the study on the utilization of the funds of insurance companies (which was subsequently carried out separately from the project), and the study on incentives and support for nontraditional exports. There was no reason to carry out the study on the liberalization of the price system once the Government had decided to liberalize prices.  iii 6. Project sustainability is likely. Modernizing those institutions bearing the main responsibility for implementing economic reforms was a necessary prerequisite for upgrading the quality of their management. Nevertheless, sustainability will depend on the will of the Borrower to deepen the training activities that have now been launched, as a means of improving the standards and quality of service provided by the operators, particularly the intermediaries. 7. Many factors either prevented certain objectives from being satisfactorily achieved, or caused delays in their implementation. As a result. the loan period was twice extended. Of these factors, the following are noteworthy: (i) the project's excessively complex structure, which included objectives that were sometimes irreconcilable, or else difficult to implement in the institutional environment prevailing in the country during the project period; (ii) the excessive number of beneficiary agencies and institutions; (iii) the lack of familiarity with World Bank procurement procedures shown by some of the agencies; (iv) irregular project coordination, resulting from frequent changes in the membership of the Borrower's project teams; (v) a lack of continuity in the Bank's supervision missions. 8. The quality of the Bank's performance was uneven. At the preparation and identification stages, the belief expressed that there was a need to push ahead with the project so that it could be combined with the other forms of support for economic reform made it impossible to carry out the sort of detailed appraisal that could have defined technical assistance priorities more clearly. As a result, the training component could be only partially implemented. Training needs were set at a higher level than was feasible. This was particularly true of audit training, which was to cover about 400 external auditors. 1,000 internal auditors, and 65 trainers. Consequently, no part of the US$2.39 million allocation to INF (the National Finance Institute) was used. 9. As indicated above, the lack of continuity in Bank supervision had adverse effects on project implementation, and for a certain period no supervision missions were carried out in the field. Among the reasons for this were the frequent changes in the Bank's monitoring teams. Furthermore, the pace of disbursements was not helped by a partial freeze on the loan that lasted for some months partly as a result of the security situation, and it remained very slow for a long time. Improved monitoring toward the end of the project enabled the disbursement rate to be increased before the closing date was reached. 10. Borrower performance was satisfactory during the preparation phase, but comparatively deficient during implementation. However, this judgment cannot be extended to all operators. Some were not sufficiently acquainted with the lending process and related procedures, and were therefore unable either to utilize all of the financing allocated to them, or else to utilize it in a timely manner. Moreover, agencies tended to devote most of their efforts to acquiring the physical equipment that -- without any doubt -- they urgently needed, but it is not at all certain that the staff responsible for operating it efficiently was adequately prepared. In addition, the assistance provided under the project would have been more effective if all such agencies had been able to reorganize as planned and make proper use of the resources allocated to them. However, this did not  iv happen in the case of institutions such as the commercial banks, which play a crucial role in the implementation of the economic reforms. Strengthening the technical capabilities of the staff of these banks was one of the objectives of the loan, but this was not carried out, so there is no guarantee that the staff gained the standard of expertise necessary for operating in the sort of environment that is typical of an economy in transition and was becoming increasingly market-oriented. 11. Despite these shortcomings, the outcome of the project can be rated as satisfactory. The achievement of these objectives will -- to some extent -- make it easier to implement macroeconomic reforms, because the agencies responsible for those reforms have been provided with modem management tools. Summary of Conclusions, Future Operation, and Key Lessons Learned 12. Overall, this technical assistance project has been a useful tool in providing support for Algeria's economic reform program. In particular, the acquisition of office and computer equipment and -- to a lesser degree -- pedagogical materials was a necessary step in preparing the Algerian institutions to implement reforms, all the more so since the economy was in a process of transition toward a decentralized system. It was necessary to reform this economy, which had for so long been characterized by institutional shortcomings that affected planning and organization, and by inadequate management capacity in MOE and BA, which were key institutions for the application of the reforms. Nevertheless, not all the project components were implemented with the desired degree of success. Because certain agencies (in particular, the commercial banks) practically did not benefit from the proceeds of the loan, distortions were created among the various reforming agencies with regard to their standards of management capacity. As a consequence, the loan was disbursed at 81% and some of its components have not been completed. 13. In addition, the reforms that have only recently been initiated in public enterprises (including the planned privatization of some of these) can have a chance of success only if a modem and efficient banking system is in place. One of the key lessons learned is that successful reforms in the financial sector and reorganization of the banking system are a prerequisite for the overall reorganization of public enterprises, particularly in the industrial sector. The project was overdimensioned considering the limited capacity of certain implementing agencies, the slow introduction of reforms in the financial sector, the enormous needs for training and the infancy of the external audit sector. 14. A further lesson is that it is important for a borrower to establish a coordinating team to ensure that a project will be properly implemented. Such a unit was all the more essential for supervising and managing a loan destined for a number of beneficiaries and designed to deal with institutional issues and the modernization of management through the purchase of large amounts of physical resources. The Department for External Economic Relations (DREE) -- an agency of MOE -- was made responsible for this function, but does not have the powers or human and physical resources necessary for performing it effectively.  PART 1 EVALUATION OF PROJECT EXECUTION A. STATEMENT OF OBJECTIVES Introduction I. After the sharp fall in crude oil prices in 1986, Algeria faced a serious deterioration in its trade balance, amounting to about 45%. When attempts to maintain adequate levels of investment and consumption through the use of extemal financing failed. the country embarked upon a program of structural adjustment, the objectives of which were to grant increased autonomy to public enterprises and commercial banks, and to expand the role of the private sector. This phase of the country's reforms received World Bank and IMF support. In May 1989. the IMF approved a first stand-by arrangement with compensatory financing totaling SDR 471 million. In August 1989, the Bank approved the first adjustment loan, the Economic Reform Support Loan (US$300 million). The IMF assistance was to support short-term structural adjustment in the area of monetary, fiscal and exchange rate policy, while the Bank's support was for medium- term structural adjustment, including reforms of incentives in the financial and productive sectors. The Technical Assistance Loan was considered a necessary measure for facilitating the introduction of these reforms. 2. By end-1990, the Government had established the legal and regulatory foundation for the economic reforms, and decided to continue the process of institutional reform, calling upon the Bank and IMF for their support. The country's macroeconomic position was still weak, and marked by a continuing decline in hydrocarbon revenues and a worsening of debt-service problems. The Government was obliged to restrict its nonessential imports. reduce capital investment. increase nonhydrocarbon taxes, and restructure its external debt by calling upon additional multilateral financing. 3. In June 1991, the Bank's Board approved the EFSAL (the Enterprise and Financial Sector Adjustment Loan), shortly after the IMF's SDR 300 million stand-by arrangement was signed. The essential purpose of this loan was to support action to adjust the exchange rate of the Algerian dinar, liberalize imports, apply performance criteria for increases in the issuance of credit by the banking system, obtain external loans at market rates. and restore the level of reserves. Bank support for structural adjustment was closely coordinated with the IMF.  2 Statement of Objectives 4. The project had the following objectives: (1) to strengthen the technical, administrative and managerial capabilities in general of MOE and BA: (2) to strengthen the technical and administrative capabilities of the Participating Financial Institutions; (3) to strengthen the auditing capabilities of the Borrower; (4) to improve the Borrower's international finance management capabilities. 5. Implementation of this program, which was intended to provide general support for the ongoing macroeconomic reforms, was to be divided into the following three components: (i) technical assistance to MOE, modernizing and strengthening the Ministry through training programs, computerization of its operations, and the launching of the initial phase of cadastral development; (ii) technical assistance for institutions in the financial sector, strengthening the technical capabilities of BA, training auditors in selected public enterprises, and training commercial bank staff, (iii) technical assistance for the preparation of the studies necessary for implementing the reforms (i.e. the promotion of nontraditional exports, the use of funds of insurance companies, the incidence of consumer subsidies, and measuring living standards in the Borrower's territory). Evaluation of Objectives 6. The objectives were clearly defined. The technical assistance program designed during project preparation was consistent with: (a) overall Bank support for the Government's priorities in its macroeconomic reforn programs; (b) the need to modernize management in those Algerian institutions directly responsible for implementing and monitoring the reform programs. The success of the reforms depended on the action taken to provide these institutions with the necessary technical and institutional resources during this crucial phase of economic transition. The objectives were defined in light of the inadequate level of staff skills and the general shortage of equipment in the agencies concerned with economic affairs, a situation that was inconsistent with the economic changes planned by the Government.  3 7. The reform programs and related technical assistance measures proved to be ambitious and complex. They were ambitious in that the intention was to dismantle features of an economic system characterized for 25 years by a highly centralized form of management in which the State took all decisions regarding prices, resource allocation. distribution, and intervened directly in the management of public enterprises. These reforms were to be implemented at the same time as the measures adopted in connection with the technical assistance loan for strengthening the technical capabilities of the economic agencies. Some of these measures did in fact fulfill their specified function; namely, the upgrading of human and physical management resources. In contrast, the implementation of certain others proved complex because of difficulties arising both from exogenous factors, such as the deterioration in the political and social climate, and also from factors inherent in the project, resulting from problems caused by the excessive number of operators and beneficiaries, even though such problems had been anticipated during project preparation. To avert these difficulties, it had been agreed that a coordinating body would be established. since this would be crucial to the project's proper implementation. Its role was to coordinate and promote project implementation, both overall and in each component. The following specific measures had been proposed: (i) maintaining close links with the main economic actors and executing agencies; (ii) coordinating and assessing applications from the executing agencies, before forwarding these to the Bank; (iii) assisting the executing agencies with project implementation; (iv) monitoring the project timetable: (v) providing for project implementation and the preparation of documentation, in accordance with a schedule agreed jointly with the Bank. Coordination was entrusted to DREE, but it was not always effective, except during the final year of implementation. B. ACHIEVEMENT OF OBJECTIVES 7. Overall, and judged by the objectives defined during its preparation, the project's impact is rated substantial with respect to physical objectives, partial for institutional development and finance sector policy, and negligible for macro policies. The main project objectives were achieved with varying degrees of success in the three major components, i.e. principally: (i) technical assistance for MOE; (ii) technical assistance for agencies in the financial sector, particularly BA; (iii) technical assistance for studies necessary for the preparation of reforms.  4 Technical Assistance for MOE 8. The achievement of objectives was substantial particularly with respect to the strengthening of the Ministry's organization and the computerization of most of its central operations. Computer hardware and software were acquired for implementing the stated objective of strengthening technical, managerial, and administrative capabilities. Because of the implementation of the cadastral component, ANC was provided with the equipment it urgently needed, and cadastral development in the field was intensified (through the installation of orthoprojectors, topographical survey apparatus, and graphical stations, and the acquisition of spare parts for vehicles). Moreover, the cadastral study undertaken at the same time provided information on the financing necessary for the various items required for the preparation of the general cadastre, an important stage in the process of land transfers and privatization that has now been initiated. 9. Implementation of the project's computerization program benefited almost all the Directorates General concerned, specifically the Directorate of Taxes, the Directorate of the Budget, the Directorate of State Lands, and the Directorate of Competition and Prices (Direction des Imp6ts, du Budget, des Domaines, de la Concurrence et des Prix), the one notable exception being the Directorate of Customs (Direction des Douanes), the allocation for which was canceled. Particular attention was given to identifying systems and technical assistance requirements for upgrading the following: (i) the organizational and institutional bases of the government revenue collection system, and development of the tax identification system and a taxation database, (ii) the organizational and institutional bases of the Directorate of State Lands, for improving management of the national cadastre; (iii) computerization of the Directorate General of Taxes, in accordance with the master plan and implementation program approved during preparation of the Technical Assistance Project. 10. In contrast, not all the training and pedagogical materials procurement programs were implemented with the same degree of success, and their rating was partial. Some of these programs probably contributed to the -- albeit partial -- strengthening of the staff s technical capabilities, but achievements in this area failed by far to meet the training needs identified at the time by a ministerial study. The two-phase training program was not fully completed. The first phase was to comprise the training of trainers and the supply of pedagogical materials and documentation, while the second was to consist of training for several thousand ministry employees. Certain training activities were hindered by delays arising from cumbersome procedures and the lack of effective coordination. Particularly affected was the program operated by INF (Institut National des Finances) for training internal and external auditors, a profession in which the country  5 is sorely lacking. SIBF (Societe interbancaire de Financement) partially implemented the banking training programs for the staff of the financial institutions. The pilot program of audits to be applied to 25 public enterprises (the "pilot audit") was implemented during the first phase only, and the second phase -- in which a procedures manual for public enterprise auditing would have been produced -- was not implemented. Such a manual should be developed, since it is an indispensable tool for successfully reorganizing the public enterprises. Finally, it should be noted that the training of 30 inspectors constitutes a first step toward upgrading staff qualifications in the area of public finance. Technical Assistance for BA 11. The achievement of objectives relating to technical assistance for BA was rated substantial as regards institutional development (i.e. reorganization and training), physical objectives (computerization and equipment modernization), and macroeconomic policies (monetary policy, debt management, and exchange rates). In reality, both the acquisition of computer and other specialized equipment, together with training, clearly contributed toward strengthening technical and managerial capabilities in this institution. The relevant allocations were totally disbursed, and this was achieved practically on schedule. This outcome is due to sound preparation on the part of BA and a clear definition of needs by the management and the team responsible for project preparation. Computerization was carried out on the basis of a master plan that facilitated the procurement of hardware and software. The necessary process of modernizing the Caisse G6n6rale and the printing facilities was carried out by procuring and installing equipment for the monitoring of trust resources, specialized forms of transportation, and the disposal of banknotes. 12. The training programs financed under the loan made a considerable contribution toward upgrading technical and managerial skills in the following areas: management of the money market, management of overseas services, international financial management, and risk assessment. BA also established an internal training system as a result of the assistance received from outside consultants. External technical assistance enabled BA's Personnel Department to define its training needs and train personnel operating in priority sectors in the Research, External Relations. and Credit Departments. 13. Nevertheless, there is some doubt as to whether the other participating financial institutions benefited to the same degree from the training programs in the areas identified in the project, such as risk management and international financial management. Most of the commercial banks are far from having the qualified human resources, and equipment of an acceptably advanced standard of technology, that would be necessary for managing their operations efficiently. Considered from this viewpoint, the project had not achieved its purpose. Without any doubt, the shortcomings in the bank modernization and training components deepened the skills gaps among the various agencies directly involved in implementing the reforms.  6 Technical Assistance with Studies 14. The rating for this aspect of assistance was marginal. The program of studies defined in the project was disrupted by changes in government policy and by the worsening economic and social context. Four of the originally planned seven studies had to be canceled. Of the three that were in fact carried out, that relating to the development of the general cadastre will prove a useful tool during preparations for the complex and lengthy process upon which the Government has embarked of privatizing and transferring the ownership of agricultural land. The cancellation of some of the studies, such as the one concerned with the liberalization of the price system, was justified; and, as indicated above, some of the reform measures -- including price liberalization -- were promptly and effectively implemented. The statistical survey for measuring living standards was performed by Office National des Statistiques outside the framework of the project. Some parties consider that it would have been premature to carry out important studies such as that on the promotion of nontraditional exports. C. MAJOR FACTORS AFFECTING THE PROJECT Factors Generally beyond the Government's Control 15. Project implementation was disrupted by two factors that were beyond the Government's control. The first was the deterioration in the country's political and social climate, following the annulment of the 1991 legislative elections and the ensuing disturbances. In this difficult context, the Government was facing the need both to reestablish law and order, and to restore economic growth. These problems led to delays in the project, and to changes in its priorities. In particular, the institutional development objectives relating to staff training for the participating agencies were revised, and some of the courses and specialized seminars had to be canceled. 16. The second factor was the deterioration in the economic situation, which was essentially the result of the decline in hydrocarbon revenues. This adversely affected the overall performance of the economy, and aggravated the problems faced by the Government in its attempts to reestablish macroeconomic stability, promote growth, and thus bring about structural change. In 1990, during project implementation. the average price of Algerian crude fell from US$24 per barrel to US$20. Macroeconomic projections had been based on a price of US$20 in real terms over the 1992-94 period, but in fact the price continued to fall in real terms, sinking to about US$15. The resulting deterioration in the external debt situation made rescheduling necessary. The schedule of the reforms for which the various Bank loans had been obtained had to be revised, and implementation was delayed.  7 Factors within the Government's Control 17. The Borrower's numerous changes of project personnel was one of the factors that affected the scheduling of implementation; however, this risk had been anticipated during project preparation, and it had been specified that a coordinating body should be established. As indicated above, the management unit -- headed by a member of DREE - - was unable to provide the necessary coordination, and it did not receive the necessary resources for fulfilling its key role of leading, coordinating, and supervising the project. It was therefore impossible to solve the problems encountered by the beneficiaries with respect to the World Bank's procurement procedures, withdrawals of proceeds, and the use of Bank -- or outside -- experts. Only those agencies with staff that were familiar with the various project components and the Bank's procedures were able to achieve their objectives to a satisfactory degree. Factors within the Control of the Executing Agencies 18. Some of the Algerian operators were unable to benefit from their loan allocations, either because of their unfamiliarity with Bank procedures, or because of administrative delays in the release of funds. These agencies -- such as SIBF and ONS -- had had no previous exposure to the Bank's procurement procedures. SIBF was unable to carry out the pedagogical materials component, which was a necessary step toward the implementation of short courses and long-term training. ONS was unable to adopt the necessary measures in a timely manner, and had to take the decision not to acquire computer hardware, even though its loan allocation was increased. SIBF was obliged to abandon its plan of preparing pedagogical tools. D. PROJECT SUSTAINABILITY 19. Project sustainability is rated as likely. The modernization and strengthening of technical capabilities in the main financial and banking institutions will facilitate implementation of the successive institutional reform programs undertaken by the Government. As part of these programs, a number of measures have been adopted for increasing the autonomy of the public enterprises, strengthening the role of the private sector, establishing an efficient financial system, and continuing the implementation of macroeconomic policies for fostering strong, stable growth. The existence of modem management resources provides a favorable institutional environment for the successful implementation of these measures. 20. Nevertheless, the sustainability of this technical assistance will depend on the Borrower's commitment to continue providing training for the staff of the institutions. Implementation of these programs was partial, and thus it has not been possible to mitigate the problems caused by the lack of qualified managers and personnel. This is all the more important. since the enterprises themselves have yet to be reorganized. The  8 future phases of financial sector reform will include extensive training for the operators responsible for managing the reforms. E. BANK PERFORMANCE 21. Identification. Bank performance was judged satisfactory. The project was identified as a means of providing technical support and supplementing the Bank's other projects of support for the successive macroeconomic reform programs. Appraisal took account of training and equipment needs at the time of project preparation, and was consistent with the priorities indicated in the Borrower's economic development policies and with the Bank's commitment to provide assistance with these efforts. 22. Preparation/Appraisal. The performance of the Bank was rated marginally satisfactory. It had certainly emphasized the need for a unit that would be responsible for project management and coordination, anticipating that such a unit would have an important role to play by coordinating activities in the large number of agencies involved. Appraisal seems to have been based to a greater extent on various requests presented by the Algerian Government, rather than being submitted to a thorough appraisal of the feasibility and consistency of the different components. The insistence at the time of project preparation that it be implemented as a matter of urgency made it impossible to anticipate the problems posed by certain components for certain agencies lacking the necessary preparation. Despite the urgency that was stressed during project preparation, it was to be 16 months before the loan became effective. 23. Supervision. Bank supervision during the project was uneven, and was rated marginally deficient. The project suffered from a lack of continuity in supervision because of the many changes in the relevant Bank teams, and the failure for over two years to provide supervision missions in the field. The final supervision mission was in June 1993. The disbursement rate remained low; in 1993, it got no higher than 30%. Even though the project was amended in June 1992, disbursement was speeded up to an appreciable degree only in the final months preceding the closing date. F. BORROWER PERFORMANCE 24. Preparation. Borrower performance was rated satisfactory. The agencies benefiting from the project participated actively in preparation, and some speedily provided information relating to their equipment and materials needs. Detailed studies had been made of staff training needs in key positions in MOE and BA. The latter, which already possessed skilled supervisory staff, had prepared documentation on its human resource and skills requirements, based on future expansion and the new role it was to play.  9 25. Implementation. Here, performance was judged somewhat deficient. In spite of sound preparation and the interest shown by the various actors in moving ahead with an exhaustive program of assistance, the project was slow in getting under way. More than a year elapsed between Board approval and effectiveness. Decision-making was slow, particularly as regards procurement. Certain studies which had to be carried out during the first project year in order to be useful were either delayed or canceled, in spite of the potential usefulness of their conclusions and recommendations in providing responses to the problems of implementing structural reforms. These delays particularly affected the establishment of the coordinating unit in DREE and the changes that ensued. As a result of these delays, the project was revamped in 1992 -- two years after preparation -- to take account of the changes in the economic environment and new technical assistance needs. G. ASSESSMENT OF OUTCOME 26. Nevertheless, the overall outcome is judged satisfactory. The main project objectives were in fact achieved, albeit to different degrees. The modernization of the various institutions in the banking and financial sector and of the Government's central agencies was productive, since these acquired modem management resources as a result of the financing provided for importing specialized equipment at a time when foreign exchange resources were inadequate. The large-scale computerization that was carried out contributed greatly toward upgrading the management capabilities of the Algerian operators and improving the monitoring of an economy in transition. Such achievements will go some way toward offsetting the shortcomings affecting the key institutions of the economy, especially with regard to resource mobilization and allocation, and should serve to upgrade the agencies' capacities for properly applying government policy in the areas of taxation, monetary questions, and trade, as part of the ongoing restructuring process. H. FUTURE OPERATION 27. In 1994, it became clearly evident to the Borrower and the Bank that the EFSAL objectives would not be achieved. Additional reforms were formulated, supported, and followed by adjustment operations. The first of these was the Economic Rehabilitation Support Loan (ERL). approved at the beginning of 1995. It had the same objectives as the EFSAL. but went further in the following significant aspects: the Government formally adopted a privatization policy permitting the privatization of EPEs (Public Economic Enterprises), and issued decrees liquidating EPLs (Local Public Enterprises). In 1996, the Government continued its reform efforts, with support form the SAL (Structural Adjustment Loan), and consequently: (a) began the privatization process, in the form of pilot programs; (b) undertook to continue the privatization program in a large number of sectors; (c) launched the process of liquidating small EPLs; (d) began to impose budgetary constraints and controls on public enterprises; (e) undertook to continue its reform measures in the financial sector, including the opening up to the private sector of the capital resources and management of at least one public commercial bank. All these activities are far from complete, and there is still a long way to go before  10 a decentralized economy has been established in the country, but the Government's commitment to privatization and improved perfornance in the banking and enterprise sector is a determining factor for the success of the deep reforms affecting all spheres of activity. Future Bank support must be focused on reforms in specific sectors -- particularly the financial sector -- and on providing assistance for promoting the private sector, so as to enable the latter to play its full role in the economy. 1. KEY LESSONS LEARNED 28. The objectives as defined during project preparation were reasonably in line with the prevailing conditions and constraints, so that some of them were satisfactorily achieved, particularly as regards the physical components. This was the case with the modernization of management tools in the agencies concerned, which was achieved as a result of the acquisition of computer hardware and specialized equipment and materials. Subsequently, however, it rapidly became evident that uncertainties existed regarding the implementation of a number of other objectives, as a result of political, economic, and social changes in Algeria during the lifetime of the project. As a consequence, difficulties arose that particularly affected the soft components of the project, such as some of the training programs (e.g. those for auditors, the managerial staff of the financial institutions, etc.), and some of the studies had to be canceled. The project's objectives were probably too ambitious in relation to the country's economic and social environment. At the time of preparation, there was a mismatch between the institutional needs of the agencies that were to benefit -- particularly as regards training -- and their absorptive capacity. 29. The first lesson to be learned is that, unless the arrangements for coordination are good. it is difficult to manage a technical assistance program of this complexity with any success. The establishment of a coordinating unit is a prerequisite for the proper implementation of a program involving many parties. The project had strongly insisted on the establishment of such a unit, and responsibility for it was placed on DREE. The unit was not often effective in playing its role, despite the various calls from Bank supervision missions for it to be made more active. This partly accounts for the implementation problems encountered. and even the cancellation of some contracts. This is why it is important in future to secure both the definite commitment of the Borrower to establish such a body, and for the latter to be formally vested with the necessary authority for fulfilling its functions. 30. The second lesson is that the assistance provided under the project -- whether this was in the form of physical resources or the upgrading of human resources -- did not benefit all the recipients in the same way or with the same degree of effectiveness. The result was that some agencies were better prepared for carrying out their roles in the reform process (BA. for example), whereas others were affected by delays in their programs of equipment, management modernization, and staff training. This is particularly true of the commercial banks, which are still far from possessing the modern  I1 management tools that would enable them to offer services of the sort to be expected from financial institutions providing support for an economy in transition. 31. The third lesson to be drawn from this operation is the importance of sound planning in the Bank's activities for providing overall support for the Borrower at the various stages of the implementation of reforms. The technical assistance supplied under this loan was quite rightly regarded as a necessary addition to the other loans' provided by the Bank in support of the Borrower's macroeconomic reforms. Consequently, proper implementation of the technical assistance loan -- at least in some of its components -- will have a positive impact on the anticipated outcomes of the other loans, particularly loan 3117-AL. All of these were followed by the important EFSAL loan, designed to help deepen the reform process, and the context for its implementation was improved by the higher standard of management provided by the now better equipped economic agencies. The Economic Reform Support Loan (3117-AL), and the Industrial Restructuring Demonstration Project (Loans 3210-AL through 3214-AL).  Statistical Tables Table 1: Summary of Assessments Table 2: Related Bank Loans/Credits Table 3: Project Timetable Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual Table 5: Studies Included in Project Table 6A: Project Costs Table 6B: Project Financing Table 7: Status of Legal Covenants Table 8: Bank Resources: Staff Inputs Table 9: Bank Resources: Missions  Table 1: Summary of Assessments A. Achievement of Obiectives Substantial Partial Negligible Not Applicable Macro Policies v Sector Policies v Financial Objectives , Institutional Development v Physical Objectives V Poverty Reduction Gender Issues Other Social Objectives v Environmental Objectives V Public Sector Management v Private Sector Development v Other (Energy Conservation) v B. Proiect Sustainability Likely Unlikely Uncertain C. Bank Performance Highly Satisfactory Satisfactory Deficient Identification V Preparation Assistance v Appraisal V Supervision V D. Borrower Performance Highly Satisfactory Satisfactory Deficient Preparation V/ Implementation v Covenant Compliance V Operation (if applicable) V E. Assessment of Outcome HivhIy Hiehlv Satisfactorv Satisfactorv Unsatisfactory Unsatisfactory Ve  Table 2: Related Bank Loans/Credits Loan/credittitle Purpose Year of approval Status Preceding operations I. Loan 3117- EconomicReform Torestoremacro-economicequilibriaand August31, 1989 Closedon 12/31/91 SuppornLoan sustainablegrowth: focus on gradual transformationfrom centrally planned Essentiallyfully disbursed US$ 300 M economy into a more decentralized,market- (cancellationofUSS 1 .2 m) oriented system Followingoperations 1. Loan 3210-14 - Industrial To supportrestructuringand corporatization May 5, 1990 Closed on 6/30/95 and RestructuringDemonstrationProject of four representativepublic enterprises 12/31/95. USS69.3 m disbursed. US$99.5 M 2. Loan 3352 - Enterpriseand Financial To re-establishmacro-economicequilibria June 21,1991 Closed on June 30,1995. SectorAdjustmentLoan through rigorous budgetary and monetary Fully disbursed(USS350 m) policies and a flexible exchange rate policy; US$350 M implementtrade and price liberalization,in order to enable most prices to be market determinedand allow decentralized decision-making,effect structural change. with a view to decentralizingeconomic decision-makingand creating a level playing field for all enterprises,private as well as public; the ultimate aim was to create an economy driven by competitive forces and market discipline; and to strengthensocial and employmentpolicies to protect the most disadvantagedgroups from negative effects of reforms. 3. Loan3834-EconomicRehabilitation Tosupportdeepeningofmacroeconomic January 12, 1995 ClosedonDecember31, 1996. Support (ERL) stabilizationand structural reform program; Fully disbursed(USS150Gm) measures include devaluation, trade reform, US$150 M price and interestrate liberalization,granting autonomy to remainingpublic enterprises, private sector developmentmeasures, a small privatizationprogram, and strengtheningof social protection system 4. Loan 4005- Structural Adjustment To transformeconomy quickly towards a April 25, 1996 Not yet effective Loan market-basedone. Measures include: public expenditure reform, l arge-scale program of US$300 M privatizationof small enterprises,banking reform, strengtheningof social safety net.  Table 3: Project Timetable Steps in Project Cycle Date Planned Date Actual/ Latest Estimate Identification (Executive Project Summary) 03/28/89 03/28/88 Preparation 05/89 09/18/88 Appraisal 10/06/89 10/06/89 Negotiations 01/03/90 01/03/90 Board Presentation 03/06/90 03/06/90 Signing 09/26/90 09/26/90 Effectiveness 12/26/90 (5/90)' 04/22/91 Loan Closing 12/31/93 12/31/95 As originally estimated in the MOP.  Table 4: Loan/CreditDisbursernents: CumulativeEstimated and Actual (tJ.SS mi/lon.s) FY 90 FY 91 FY 92 FY 931 FY 94 FY 95 1FY 96 Original Estimate 0 8.6 16.2 23.8 26 26 26 Actual 0 2.29 2.29 3.53 8.5 15.68 21.08 Actualas%oofEstimate 0% 26.6% 14.1% 14.8% 32.7% 60.3% 81.11% Date of Final Disbursement 06/13/96 Sources: President'sReport, FDB Reports Original closing date of loan.  Table 5: Studies Included in Project Purpose as Defined Cost Study at Appraisal/Redefined Status (US$) Impact of Study I. Liberalizationof To adviseon nextphasesof liberalization Canceled $150,000 n.a. Price System of price system and formulate action plan for phasing out price controls. Study based on an evaluationof potential impactof their removal and an estimate of their real costs. 2. 1ncentivesand To identify waystopromotenon- Canceled S240,000 n.a. Institutional Support traditional export and make for Non-Traditional recommendationsfor stimulatingnon- (non-hydrocarbon) traditional export growth. Exports 3. InsuranceStudy To bener utilizefundsofinsurance Canceled $160,000 n.a. companies. To make recommendations for reforms goveming their operations based on an analysis of the supervisory framework in which they operate and prospect of involving them in financial markets. 4. ConsumerPrice Toexamineincidenceofconsumer Completedin Fall 1990 $250,000 (BADpaidTineStanounik Subsidies Study subsidies and improve their targeting. S39,000) 5. LivingStandards Analyze,usingintrasectoralmethods, Work in progress. S1,900,000 Establishedpovertyline; MeasurementSurvey causality between differentpol icies and Originally scheduled for determined consumption indicators of living standards. completion in the MOP pattems by income groups; by 91. developeda povertyprofile in order to improve targeting mechanisms for consumer subsidies. 6. Local Govemment To examine aspectsof local govemment Canceled $1,400,000 n.a. DevelopmentStudy i.e. fiscal resources, local public accounting, land management, reorganizationof local public services. 7. PreliminaryStudy To help the Ministry of Economy and Completed in June 1991 $1,900,000 No significantimpactsince only for a National Cadastre ANC decide on a the type of cadastral S10,033 was spentto perform coverage for Algeria. the studv.  Table 6A: Project Costs (US$ mtilliolns) Appraisal Estimate (US$M) Actual/Latest Estimnate(US$M) Local Foreign Total Local Foreign Total Item Costs Costs Costs Costs 1. Studies 2.16 2.27 4.43 na. 2.51 na. 2. MOE Strengthening 4.34 7.88 12.22 na. 9.26 na. - Training 0.44 1.20 1.64 1.46 - Cadastre 0.44 1.34 1.78 1.50 - Computerization 3.46 5.34 8.80 6.30 3. BCA Strengthening 0.43 5.67 6.10 n.a. 6.70 n.a. 4. BankingTraining 1.88 1.25 3.13 n.a. 1.50 n.a. 5. Audit Training 1.30 2.02 3.32 n.a. 2.40 n.a. 6. Auditof Enterprises 2.16 4.12 6.28 n.a. 4.85 n.a. 7. RefinancingofPPF - 1.40 1.40 n.a. n.a. TOTALBASECOSF 12.27 24.61 36.88 n.a. 24.61 na. Price & Physical 1.44 2.68 4.12 n.a. 2.68 na. Contingencies TOTAL 13.71 27.29 41.00 n.a. 27.29 n.a.  Table 6B: Project Financing Appraisal Estimate(US$M) Actual/Latest Estimate(US$M) Local For-eign Total Local Foreign Total Source Costs Costs Costs Costs IBRD/IDA - 26.00 26.00 n.a. n.a. n.a. IMF/UNDP - 1.29 1.29 n.a. n.a. n.a. Government 13.71 - 13.71 n.a. n.a. n.a. TOTAL 13.71 27.29 41.00 n.a. n.a. n.a.  Table 7: Status of Legal Covenants Sectioll Covnialt P'resent Originial Comnctits Description of Covenanit Type Statis fulrfillaent datc 3.0 (c) 3,5 llorrowcr rlecids to SMFl by entering itto a subsidiary loan agreemcnt in (he amount ofl 1,5()0,00( at an interest rate per annum equal to at least the rate as per Section 2.05, with a commitment charge set forthi in Section 2.04, and payable within 8 years with a grace period of 3 years. 3.02 3,5 NC No later than June 30, 1990, and annually thereafler Bank and Borrower meet to review progress on Project implementation. 3.04 (a) & (b) 3,5 C The Borrower delegates the responsibility of carrying out the Project to the Directeur Charge des Relations Econoniiques Exterieures of MOE in concert with the Project Managemenit Group. 4.01 (a), (b), 2 C n1 a. Borrower shiall mainitain records and accounts reflecting resources and expenditures of agencies & (c) carrying out Project. to be furnished to Bank. Also produce separate opinion by auditors as to reliability of statement of expenditures supporting withdrawals from Loan Account. 5.01 (c) PC Borrower shall suspend operations ofCB or/and CRD. Schedule 2 tO C To carry out a banking training program for Participating Financial Institutions B.2 Schedule 2 rO PC Carrying out an audit training program 10 PC Carrying out a pilot audit program for about 20/thirty public enterprises, and strengthening the capabilities of the CRD. Schedule 2 10 PC Preparing studies on Borrower's: (i) price systent; (ii) promotiont of notn-traditional exports; (iii) tise C. I of funds of insurance companies; (iv) incidence of consumer studies; (v) statistical survey measuring living standards Schedule 2 10 NC Preparing studies on: (i) local taxation; (ii) local accounting; (iii) land management; (iv) C.2 reorganization of local public services; and (v) Economic Reform Program 4.01 (b) ii C The Borrower shall furnish to the Bank not later than 6 months after the end of each year. the report of such audit by said auditors, of such scope and in sticih detail as Itank shall have reasonably requested.  Table 8: Bank Resources: Staff Inputs Stage of Planned Revised Actual Project Cycle Weeks USS Weeks USS Weeks USS Preparation to Appraisal 133.4 S314.10 Appraisal-Board 13.7 S40.0 Negotiations through Board Approval 17.9 S53.00 Supervision 151.9 S413.60 Completion 7.0 S20.20 TOTAL 323.9  Table 9: Bank Resources: Missions PerformanceRating Number Specialized Implemen- Develop- Stage of Month/ of Days in StaffSkills tation ment Typesof ProjectCycie Year Persons Field Represented Status Objectives Problems Through Appraisal LENP /l8 4 (Carrere, _ _ Coudol, Laporte,Roche) LEN /88 1 (Molineus) LENP /89 5 (Carrere, 46.6 - - - Coudol, Costa, Ayub, Ahmed) Appraisal through _ _ Board Approval LENA /90 4 (Cartere,Ayub. 13.6 - - - Pleskovic,El- Naggar) LENN /90 4 (Carrere,Ayub, 4.75 _ _ Pleskovic. El- Naggar) Supervision 6/30/90 n.a. - R R R 3/19/91 1 (Carrere) 4 (0.8 S/W Sr. Operating 3 1 P. M, T, A refers to Officer previous mission) 01/06/92 2 (Kjellstrom, 1 (0.2 S/W) 1, C 3 2 P. M, T, A, S Saltoglu) 06/26/92 2 (Kjellstrom, 15 (3 SIW) 1, C 3 2 P. M, T, A, S Zwanikken) 06/30/92 2 (Kjellstrom, 17 (3.4 1, C n.a. 2 P, M, T, A, S Zwanikken) S/W) 03/17/93 2 (Kjellstrom, 22 (4.4) 1, C n.a. 2 P, T. A, S Zwanikken) 06/30/93 2 (Meunier, Kim 43 (8.6) 1, C 2 2 P. T, A, S Pham) Completion 11/02196 2 (Ferroukhi, 8 Pr. Energy Sterling) Specialist/ Financial _____ ____ ____ ____ ___ ____ ___ ____ ____ __ _ ____ ____ A nalyst_ _ _ _ _ _ _  ANNEX Borrower's Project Evaluation  THE PEOPLE'S DEMOCRATIC REPUBLIC OF ALGERIA MINISTRY OF FINANCE DIRECTORATE GENERAL OF EXTERNAL FINANCIAL RELATIONS PROJECT COMPLETION REPORT - LOAN 3176-AL TECHNICAL ASSISTANCE PROJECT October 1996  TECHNICAL ASSISTANCE PROJECT I. LOAN HIGHLIGHTS Signing: September26, 1990 Effective: April 22, 1991 Closing date: Original: December 31. 1993 I st extension: December 31. 1994 2nd extension: December 31, 1995 Special extension: April 30, 1996 Loan amount: US$26 million 11. PROJECT OBJECTIVES Main obiective: To facilitate implementation of the program of economic reforms, in particular by: 1. strengthening managerial, technical and administrative services in the MOE and BA; 2. strengthening the technical capabilities in the participating financial institutions; 3. strengthening audit capabilities; 4. improving international financial management. III. PROJECT COMPONENTS SECTION A: A(l): Preparation and implementation of a training program in MOE (public finance, accounting, administrative law, etc.); - auditing and accounting in connection with the World Bank and IGF; - procurement and installation of technical equipment relating to this training program. A(2): - Adaptation and implementation of a computerization program in MOE (tax administration, accounting, customs); - procurement and installation of data-processing equipment and related materials. A(3) - Completion of a study on the development of the cadastre; - procurement and installation of related equipment; -- procurement of surveying equipment.  2 SECTION B: B(1): Provision of technical assistance to the BA (computerization system, procurement and installation of related equipment, procurement of specialized vehicles for transporting cash, training program, etc.). B(2): Execution of a training program in banking for staff of financial institutions and procurement of associated equipment. B( 3): Strengthening of SIBF capabilities (training, procurement of equipment). B(4): Implementation of training program in auditing (seminars, etc.), procurement of associated equipment, and short courses abroad. B(5): - Organization and implementation of a pilot audit program for 20-30 public enterprises, - strengthening of CIEF capabilities. SECTION C: C(1): - Preparation of studies and statistical survey; - survey: - on the use of funds by insurance companies; - on the incidence of consumer price subsidies; - on living standards. IV. STATUS OF PROJECT BY COMPONENT: 1. Strengthening of MOE A. CADASTRE Objective The cadastre component has been considered closed since 1993, with a performance rate of 100%. This component was intended: - firstly, to furnish the ANC with priority equipment deemed urgently needed for general cadastre operations: - secondly, to conduct a preparatory study for a special World Bank loan to finance the necessary resources for conducting the general cadastre program country-wide. Progress Made The results are deemed appreciable for the following reasons:  3 - the equipment purchased has expedited field work on the cadastre and made it possible to computerize operations - the study has given rise to a special loan from the World Bank (3488-AL) implementation of which is now under way. The amount allocated to this component is US$1,523,490. All the elements in this component have been performed and disbursed. Budget Status Allocated US$ 1,523,490.00 Disbursed 930,239.56 Balance 593,250.44 B. TRAINING Obiective: Preparation and implementationof a training program for the staffof MOE, and procurement and installation of teaching equipment. Progress Made: The amount disbursed, US$13,485, represents fees paid to Mr. Pierre Runner of the company Evalude, in connection with his role in drawing up the documentation for training Ministry staff. Budget Status: Allocated US$ 893,000 Disbursed 13,485 Balance 879,515 C. COMPUTERIZATION Obiective: Preparation and implementation of a computerization program in connection with the restructuring of MOE. Progress Made: The situation in terms of equipment procurement for each directorate is as follows:  4 C- I Directorate of Taxes Three computer systems acquired under the loan from the company BULL-SA, for a total amount before tax of F 6,674,525. Payment was made in accordance with the contract, as follows: - 15%/asanadvance(F 1,001,178.75) - 85% by documentary credit (F 5,673,346.25) The equipment and supplies (hardware and software) were installed at the regional information centers in Algiers, Oran and Constantine, and have been operating quite satisfactorily since February 9, 1994. Budget Status: Allocated US$ 1,295,000 Disbursed 1,295,000 Balance 0 C-2 Directorate of the Budyet Objective: - Supply of computer equipment. Budget Status: Allocated US$ 300,000.00 Disbursed 316,233.65 Balance -16,233.65 C-3 Directorate of State Lands Obiective: Procurement of computer equipment and software.  5 Budget Status: Allocated US$ 1,620,000.00 Disbursed 1,656,848.98 Balance -36,848.98 C-4 Directorate General of Customs Loan component not implemented (canceled) Budget Status: Allocated US$ 1,400,000 Disbursed 0 Balance 1,400,000 C-5 Directorate General of External Economic Relations Objective: Strengthening of management capacity and capacity for monitoring the portfolio of World Bank loans through a computerization and training program. Budget Status: Allocated US$ 100,000.00 Disbursed 52,943.17 Balance 47,056.83 C-6 Directorate General of Competition and Prices Objective: Procurement of computer equipment. Budget Status: Allocated US$ 1,050,000 Disbursed 1,073,585 Balance -23,585  6 C-7 Directorate General of Commercial Organization Budget Status: Allocated US$ 19,800 Disbursed 19,800 Balance 0 C-8 Central Directorate of the Treasury Objective: Preparation of a supplementary study on the master plan for computerizationof MOE. Budget Status: Allocated US$ 4,200 Disbursed 1,943 Balance 2,257 C-9 Inspectorate General of Finance Allocated: US$500,000, broken down as follows: 1. US$300,000for training 30 financial inspectors. 2. US$ 100,000 for the purchase of 12 Fiat vehicles. 3. US$100,000, of which US$50,000 was earmarked for additional training and US$50,000 for seminars that did not take place, which was therefore canceled The US$400,000 breaks down as follows: (A) Contract between IGF and Ernst & Young, approved by the ministerial commission on October 24, 1993 under No. E-06-93 Contract amount: F 1,423,000 (US$300,000), disbursed as follows: F 143,320 (10% of the contract) on November 27, 1993 F 284,640 (20% of the contract) on November 27, 1993 F 284.640 (20% of the contract) on August 10, 1994 F 284,640 (20% of the contract) on February 7, 1995 F 426,960 (20% of the contract) on March 13, 1995 (B) Contract between IGF and Fiat, signed on December 21, 1993 Contract amount: Lit 163,800,000 (US$100,000)  7 Obiectives: Training of junior inspectors and upgrading and certification of inspectors currently on staff, through implementation of a two-year professional training program for approximately 30 persons, at a cost of about US$10,000 per person. Budget Status: Allocated US$ 500,000.00 Disbursed 319,913.25 Balance 180,086.75 C- 10 National Finance Institute Obiective: Implementation of a training program in auditing, including seminars for approximately 400 external auditors, 1,000 internal auditors and 65 trainers; procurement and installation of training materials; and short courses abroad for trainers. Status of Implementatiorn It was not possible to carry out the work program covering training and procurement of training materials. Budg,et Status: Allocated US$ 2.390,000 Disbursed 0 Balance 2,390,000 Since CNP failed to release payment credits for INF contracts in a timely manner, before the loan closing date of December 31, 1994, the contracts could not be concluded successfully. C-l l SIBF Obiective: Implementation of a banking training program for the staff of the participating financial institutions, including seminars and workshops, and procurement of training materials.  8 Status of lmplementatior Budget Status: Allocated US$ 650,000.00 Disbursed 481,287.09 Balance 168,712.91 C- 12 CIEF (Engineering and Financial Evaluation and Appraisal Center) (a) Pilot program of audits of 23 public enterprises. Obiective: To organize and carry out a pilot program of audits of 23 public (autonomous) enterprises and. based on the conclusions and recommendations of the audits. draw up a manual of auditing procedures for public enterprises. Status of Implementatiorr Item Authorized Contractual Final Execution Unexpended Amount Commitments Balance Pilot audit 4,000,000 3,556,649 3,258,126 741,871 (Phase 1) Operational 1,097,515 110,600 121,047 976,468 audit (Phase 2) Equipment 280,000 198,837 186,364 93,636 Total 5,377,515 3,866,086 3,565,537 1,811,978 Budget Status: AllocatedUS53751 Disbursed 3,565,537 Balance 1,811,978 C- 13 SOFIN (Societe de Services Financiers et d'Investissement) Status of Implementatiorr The following work has been completed:  9 (i) participation by two employees in a course organized by Banque Nationale de Paris (US$15,488.14); (ii) training program (US$8,050); (iii) purchase of vehicles (US$39,739.09). A total of US$63,277.23 has been disbursed. Budget Status: Allocated US$ 63,277.23 Disbursed 63,277.23 Balance 0 C-14 BA (a) Mandates: - to improve the banks' accounting systems; - to carry out training programs in the following areas: money market management, foreign services management, international financial management, risk assessment; - to carry out a training program intended for certain individuals in BA and the participating financial institutions and for staff in other agencies, in order to strengthen their skills in the following areas: risk management and international financial management; - to design jointly a program for computerizing BA, and an information system for the financial sector; - to purchase and install computer equipment and related materials; - to purchase and install equipment for monitoring fiduciary assets and purchasing specialized vehicles for transporting cash Component Allocated Disbursed Balance - Computerization 875,000 775,000.00 100,000.00 - Communications 157,365 157,365.00 0 - External Debt 100,370 105,109.52 -4,739.52 - Cash Management 6,603,000 6,489,542.19 113,457.81 Total, including PPF 7,735,735 7,527,016.71 208,718.29 (1) Computerization Obiective: Joint design of a program for computerizing BA and a system for automating the financial sector, through the procurement and installation of software programs and packages.  10 Budget Status: Allocated US$ 875,000 Disbursed 775,000 Balance 100,000 (2) Directorate of Communications Objective: Financing the services of the consultant Corm in connection with BA's in-house training system. The financing of US$157,365 was drawn on the PPF. Budget Status: Allocated US$ 157,365 Disbursed 157,365 Balance 0 (3) External Debt Management Obiective: Training for 16 staff members from the External Financing and Contracts Directorate (DMFE), at the Institut des Hautes Etudes Commerciales in Montreal. The training program for DMFE officers took place in July 1991, for a total cost of US$100,370. Budget Status: Allocated US$ 100,370.00 Disbursed 105,109.52 Balance -4,739.52 (4) Cash Management / Printing Facilities Objective: Procurement and installation of equipment for handling fiduciary assets (equipment for sorting and processing bank notes, specialized vehicles for transporting cash, and equipment for destroying bank notes). Budget Status: Allocated US$ 6,352,000.00 Disbursed 6,489,542.19 Balance -137,542.19  11 Budget Status for Overall BA Component Allocated US$ 7,735,735.00 Disbursed 7,527,016.71 Balance 208,718.29 C-15 ONS Objective: Preparation of study and statistical survey on living standards. Status of Implementation As yet, no work has been completed under this component. Budget Status: Allocated US$ 750,000 Disbursed 0 Balance 750,000 C-16 CREAD/CNP Obiective: Preparation of a study on the incidence of consumer subsidies in Algeria. Progress Made: The study was completed in 1990 at a cost of US$39,000. Budget Status: Allocated US$ 39,000 Disbursed 39,000 Balance 0 C-17 Insurance The Central Directorate of the Treasury financed this study using a different source of funding, in an amount of US$160,000.  12 STATUS OF IMPLEMENTATION: Summary of Applications of Loan Proceeds Component Allocated Disbursed Balance DGREE 100,000.00 52,943.17 47,056.83 Cadastre 1,523,490.00 930,239.56 593,250.44 Training 893,000.00 13,485.00 879,515.00 Computerization: 5,689,000.00 4,363,410.63 1,325,589.37 Taxes Directorate 1,295,000.00 1,295,000.00 0 Budget Directorate 300,000.00 316,233.65 -16,233.65 State Lands Dir. 1,620,000.00 1,656,848.98 -36,848.98 Competition& Prices 1,050,000.00 1,073,585.00 -23,585.00 Commercial Org. Dir. 19,800.00 19,800.00 0 Customs Directorate 1,400,000.00 0 1,400,000.00 Expertise 4,200.00 1,943.00 2,257.00 IGF 500,000.00 319,913.25 180,086.75 INF 2,390,000.00 0 2,390,000.00 SIBF 650,000.00 481,287.09 168,712.91 CIEF 5,377.515.00 3,565,537.00 1,811,978.00 BA: 7.735,735.00 7,527,016.71 208,718.29 Computerization 875,000.00 775,000.00 100,000.00 Communications 157,365.00 157,365.00 0 Debt 100,370.00 105,109.52 -4,739.52 Cash Management 6,603,000.00 6,489,542.19 113,457.81 CREAD/CNP studies 39,000.00 39,000.00 0 SOFIN 63,277.23 63,277.23 0 Insurance studies 160,000.00 0 160,000.0 ONS 750,000.00 0 750,000.00 Managementfees 12,300.80 12,300.80 0 Unallocated 116,681.97 0 116,681.97 TOTAL 26,000,000.00 17,368,410.44 8,631,589.56  13 New components, using the balance of the loan: 1. National Planning Council Obi ective: Procurement of computer equipment and office technology. Budget Status: Allocated US$ 522,000 lDisbursed 522,000| lBalance 0 II. Ministry of Housing Obiective: Preparation and provision of studies and services for implementing a program to restructure the eight so-called "strategic" enterprises, six of which fall under the Ministry of Housing and one each under the Ministries of Infrastructure, Land Use, and Transportation. The contract amount in the contractual currency (US$) is as follows: Transferable portion in F Nontransferableportion in Transferable portion DA 9,387,694 4,450,000 1,899,234.20 Amount disbursed: US$2,000,000. Budget Status: Allocated US$ 2,000,000 Disbursed 2,000,000 Balance 0 III. Ministry of Industrial Restructuring and Participation Status of IBRD Loan 3176-AL Procurement items: Procurement of 22 Macintosh computers: Amount of contracts signed: F 203,940 Amount of contracts pending:  14 Amount of contracts not completed: Amount disbursed: US$ 40,561.13 Amount undisbursed: Date of settlement by BIA: March 14. 1995 Remarks: 100% financing Purchase of Rank Xerox machine: Amount of contracts signed: DA 5,142.500 Amount of contracts pending: Amount of contracts not completed: Amount disbursed: US$121,174 Amount undisbursed: Date of settlement: March 14, 1995 Remarks: 50% financing Purchase of eight photocopiers: Amount of contracts signed: F 153,500 Amount of contracts not completed: Amount of contracts pending: Amount disbursed: US$ 31,615.09 Amount undisbursed: Date of settlement: April 24, 1995 Remarks: 100% financing Budget Status: |Allocated |US$ 193,350.22 Disbursed 72,176.22 Balance 121,174 IV. New subcomponents for BA: IVa. Audit of bank financial statements Budget Status: Allocated US$ 599,280.37 Disbursed 599,280.37 Balance 0 IVb. General Directorate Obi ective: Procurement of computer equipment and software.  15 Status of Implementation Three contracts have been signed with the following suppliers: HP-RTI for the supply of computer hardware and software in an amount of approximately US$263,277 before tax; - HP-RTI for the supply of a server in an amount of approximately US$62,014 before tax: DIGITAL for the supply of 100 PC 486 computers with accompanying equipment for an amount of approximately US$143,040 before tax. Budget Status: Allocated US$ 468,331 Disbursed 468,3310 Balance 0 STATUS OF IMPLEMENTATION OF NEW COMPONENTS: Summary Component Contract amount Amount disbursed New balance BA: 1,067,611.37 1,067,611.37 0 Bank audits 599,280.37 599,280.37 0 General Directorate 468,331.00 468,331.00 0 Ministry of Housing 2,000,000 2,000,000 0 Min. of Ind. Restr. 193,350.22 72,176.22 121,174 Nat. Plan. Council 522,000 522,000 0 TOTAL 3,782,961.59 3,661,787.59 121,174 Balance: US$8,631,589.56 After the new components have been allocated for a disbursement amount of US$3.661,787.59,the new balance is US$4,969.801.97. CONCLUSION: Start-up of the project was very slow, with several participants involved. The loan closing date was maintained as December 31, 1994 for all components except for the activities indicated below, for which the closing date was extended to December 31, 1995: - the ONS study on living standards;  16 - preparation by the Ministry of Housing of plans for restructuring eight enterprises in the areas of housing, transportation and facilities, for which the Ministry is executing agency: preparation of the audit of Algerian banks, for which BA is the executing agency; eligibility of contracts signed before December 31, 1994 for the procurement of computer equipment and office materials, using the loan proceeds. For three contracts (INF. BA. and Ministry of Finance), a special extension was obtained to April 30, 1996 to allow them to be charged to the balance of the loan, which stood at US$8.23 million as of December 31, 1995. Payment credits were not released by CNP for the INF contracts for the supply of computer equipment, office technology and software in an amount of approximately US$232,755 before tax. The same is true of the Ministry of Finance with respect to the supplier Canon- Sabi for the supply of three Xerox photocopiers in an amount of approximately US$109,000 before tax. These two contracts were therefore not concluded successfully. Only the BA contracts with the suppliers HP-RTI and DIGITAL, in a total amount of US$468,331 before tax, will be completed. As regards implementation, the following was observed: Processing of the loan was inadequate and use of the proceeds was slow, leading to several postponements of the closing date to allow for disbursement of the balance. On both sides. a number of changes took place among the staff responsible for implementation. No appraisal documents were available at the outset. Some Algerian operators were not familiar with IBRD procedures.   IMAGING Report No.: 1642Q Type: ICR