Algeria - Country assistance strategy completion report (CASCR) review for the period FY2004-10 : IEG review

89006 For Official Use Only CASCR Review Independent Evaluation Group 2. Executive Summary 1. CAS Data Country: Algeria CAS Year: FY2003 CAS Period: FY04 – FY06 CASCR Review Period: FY04 – FY10 Date of this review: February 3, 2011 i. This review covers the Bank Group’s FY04-FY10 strategy in Algeria as defined originally by the three-year Country Assistance Strategy (CAS) issued in June 30, 2003 and revised by the Country Assistance Strategy Progress Report (CASPR) issued on July 27, 2005. Both strategies were joint between the Bank and IFC, and are reviewed here. ii. The assistance strategy addressed the challenges of using oil and gas reserves to benefit the Algerian population, fostering non-oil growth and employment, and improving public service delivery. iii. Proposed Bank support to address these challenges focused on three pillars: (i) strengthening fiscal sustainability, oil revenue management, and government effectiveness; (ii) removing the constraints to private sector-led growth, improving the business environment and infrastructure development; and (iii) articulating and implementing a strategy for better service delivery, particularly for water supply, housing, environmental services (municipal waste management), and human development to meet the critical needs of its population. IFC sought to complement the Bank’s support through financial sector development, SME support, and promoting private investments in cement and steel. iv. The World Bank Group accomplished a number of specific achievements indicated in section 3, but its impact on key objectives outlined in the CAS was considerably limited and IEG rates the overall outcome of World Bank Group’s program as moderately unsatisfactory. In the first pillar, the World Bank Group helped improve fiscal sustainability through its advice on managing foreign reserves and large investment projects, as well as on energy sector procurement. However, the Bank’s strategy for this pillar lost relevance as the oil revenues of Algeria became more stable, changing the entire fiscal sustainability picture. In the second pillar, the World Bank Group’s activities contributed to financial sector development, greater private participation in urban transport and telecommunications, and creating linkages between SMEs and larger firms. Outcomes in all other objectives of this pillar fell short of expectations. In the third pillar, the World Bank Group’s achievements in rural development and environmental issues were overshadowed by poor outcomes in water and sanitation, housing, and, above all, human development—education and health. v. IEG concurs with many of the lessons drawn in the CASCR and places additional emphasis on three points. First, as ESW and non-lending TA will play a critical role in the new CAS, selecting topics where additional knowledge is likely to help the Government move should be a key consideration as the CAS applies its principles of responsiveness, coherence and selectivity on prospective fee-based services. Second, implementation of the new CAS will benefit from better monitoring of the intended objectives and expected outcomes. This calls for using outcome indicators that are readily available and meaningful to track those objectives. Third, IFC should consider expanding support to non-oil real sector investments, particularly in labor-intensive industries, including through SMEs linkages, given the acute unemployment problems of the country. CASCR Reviewed by: Peer Reviewed by: CASCR Review Coordinator Mauricio Carrizosa Jorge Garcia-Garcia Consultant, IEGCC Consultant, IEGCC Jaime Jaramillo-Vallejo Surajit Goswami Asita de Silva Lead Economist, IEGCC Consultant, IEGPR Sr. Evaluation Officer, IEGCC  For Official Use Only CASCR Review 2 Independent Evaluation Group 3. CASCR Summary Overview of CAS Relevance: 1. Country Context: The CAS period was preceded by a period of improved economic performance following stabilization and adjustment programs that started in 1994 with IMF and Bank support. Average annual per capita GDP growth increased from -1.5 percent during 1983-93 to 1.6 percent during 1993-2003. Average inflation (CPI) declined from 14.6 percent to 9.3 percent. Whereas declining per capita GDP increased poverty from 8 percent of the population in 1984 to 14 percent in 1995, growth starting in 1995 rolled it back to 12.1 percent in 2000. 2. Oil price increases in the year 2000 led to a capital expenditure program that raised government expenditures from an average of 30.7 percent of GDP during 1998-2000 to 31.9 percent of GDP during 2001-03. This increase was covered by the higher hydrocarbon revenues, but savings increased as well—the government’s average overall surplus increased from 1.3 to 3.8 percent of GDP between these two periods. However, Algeria’s business climate continued to rank low in international comparisons. In addition, public service delivery was weakened by the absence of a medium-term expenditure framework and by issues in sector management and budget transparency and processes. 3. Objectives of the Bank Group’s Strategy: Accordingly and after consultations with the Government and civil society, the 2004-2006 CAS defined its strategy in terms of three pillars: (i) strengthening fiscal sustainability, oil revenue management, and government effectiveness; (ii) improving the business environment and encouraging private sector participation; and (iii) articulating and implementing a strategy for better service delivery, particularly for water supply, housing, environmental services, and human development, to meet the critical needs of its population. IFC would complement the Bank with support for financial sector development, SMEs, private investments in infrastructure and privatization. The CASPR explicitly kept the same structure and objectives for the World Bank Group’s strategy (para 19). 4. Bank support envisaged included implementation of existing loans, four new loans, and analytic and advisory activities (AAA). Base case lending included four projects amounting to $267 million, supporting information and communication technology (ICT) development, municipal waste management, water sector reform, and urban/housing development. The base case did not materialize. The Bank did not approve any loans after March 2003, when the Second Rural Employment Project was approved and cancelled soon after. In 2005, the Government announced that it would repay old Bank loans and cancel most recent loans except three TA projects and the Budget System Modernization Project. The latter ended up as the most significant remaining Bank project in Algeria. Following the cancellation of the TA loans in 2007, Bank activities in Algeria would henceforth be limited to non-lending services and reimbursable technical assistance (RTA), a limitation that was clearly acknowledged in the CASPR. Twenty-six non-lending services including RTAs were planned by the CAS, with 18 not implemented. Fifteen non-lending services were added by the CASPR, with six not implemented. In addition, the Bank completed five unplanned non-lending activities. Of the seven RTAs signed, four were completed and three are being implemented and nearing completion. Non- lending service tasks completed since FY01 or planned by the CAS covered work on macroeconomic and fiscal policies, public expenditure, public sector reform, private sector development, investment climate, financial sector, ICT, rural development, poverty, health, education, gender, and environment. 5. IFC, in turn, approved eight investments during the CAS review period amounting to $132 million ($64 million of loans and $68 million of equity) towards total project investments of $987 million). These investments added to the pre-existing portfolio of seven active investments of $84 million. These 15 investments totaled $216 million, which leveraged private investments in these projects for an overall total of almost $1.5 billion. The main sectors of IFC engagement were the financial sector (9 operations, 29 percent of investments); and materials and construction  For Official Use Only CASCR Review 3 Independent Evaluation Group (4 operations, 56 percent of investments). During the CAS period, IFC carried out 19 advisory activities, including three that were approved in the previous period, with total funding of $1.9 million. These activities focused on three key areas: development of small and medium enterprises (SMEs), financial markets, and simplification of business creation. The activities sought SME development through improvement of business services (such as training) to the SME sector and through creating linkages between SMEs with large private sector companies, such as with FERTIAL in fertilizers. Financial market development advisory activities supported the creation of a credit registry (jointly with the Bank), training of staff on leasing, and conferences on SME banking best practices, control of non- performing loans, and credit risk management related to SMEs. 6. Relevance and Realism: The initial CAS relevance stems from its alignment with the development challenges identified through three rounds of consultations with the Government, regional local authorities, the private sector, associations of entrepreneurs and NGOs, the media and academia. In addition, both the CAS and the CASPR explicitly conditioned support activities to requests from the Government. Moreover, the Bank linked lending and AAA in some areas, such as ICT strengthening design. A mix of instruments strong in non-lending services was appropriate for a country with small financing needs. 7. Nevertheless, the pace of implementation of some of the projects, as well as the cancelation of one of them, hint at a weaker than expected government ownership of them. Moreover, the firming of high prices for oil in world markets undermined the Bank’s strategy and advice on macroeconomic issues, a weakness that was not remedied in the CASPR. The 2003 CAS had identified as risks that could follow from rising oil revenues a slowing in the implementation of active projects and new borrowing. However, it had not adjusted the strategy to such a change. Overview of CAS Implementation: 8. No new lending was granted during the CAS period because oil revenues reduced the government’s need for borrowing. As noted above, the Second Rural Employment Project approved in 2003 was cancelled soon after approval. In 2005 the Government announced that it would suspend borrowing, repay old Bank loans and cancel recent loans except the three TA projects (the 2002 Mortgage Finance, 2001 Energy and Mining, and 2001 Transport TA projects) and the 2001 Budget System Modernization Project. All in all, the Government cancelled pending commitments of $328 million on 14 loans originally amounting to $780 million. Implementation was also adversely affected by weaker dialogue in 2008, after the departure of the Country Manager in the field in the aftermath of the attack to the United Nations Headquarters in Algiers. Bank portfolio quality deteriorated during the CAS period, with the percent of problem projects increasing from 14.6 percent of total project amounts in 2003 (11 projects) to 59.2 percent in 2007 (3 projects) and 100 percent in 2008 (1 project). 9. Of the 26 non-lending activities planned in the CAS, 18 were not implemented and 5 resulted in Bank reports (draft or final). Of the 15 additional activities planned in the CASPR, 6 were not implemented and 4 resulted in Bank reports. In addition the Bank completed five unplanned non- lending activities. The total of non-lending activities include seven reimbursable technical assistance contracts signed, of which four are among those completed and the other three are nearing completion. On some of the non-lending activities that were deemed not completed, there is no documentary record of what the Bank actually did. A QAG assessment of AAA during roughly the CAS period rated its likely impact as moderately satisfactory. 10. Even before the CAS review period, and anticipating a Government stance to open the economy to the private sector, IFC had geared up with investments in: (a) the financial sector, including the creation of two banks, an investment bank, a leasing company, and a trade finance institution, and (b) the materials and construction sector (cement and steel companies), which was  For Official Use Only CASCR Review 4 Independent Evaluation Group expected to support infrastructure initiatives (see Annex Table 10). A similar IFC strategy continued during the CAS period, with support for large private sector initiatives in cement, fertilizers, and oil-field support activities, as well as for the creation of new private sector financial institutions. IFC investments fared well, even with the Government financing much of the infrastructure on its own. The investments in trade finance and investment banking stalled because of constraints in the business environment. Beginning in FY07, the environment for IFC support became more challenging. First, public sector banks used budget resources to replace IFC as a lender to the private investors in fertilizer and oil-field support projects. Second, during FY08/09, the authorities held up approvals for sizeable IFC investments, delaying the creation of a new bank and a large cement company. 11. IFC implementation of the large number of advisory services appears to have positive outcomes. These include the development (jointly with the IBRD) of the credit registry at the Central Bank, capacity building for financial sector institutions and for providers of business services to improve SME access to business services, such as sustainable provision of training to SMEs. However, projects to develop institutions for private sector advocacy or for supporting exporters did not do well. Overview of Achievement by Objective: Pillar I: Strengthen fiscal sustainability, hydrocarbon revenue management, and government effectiveness 12. The objectives under this pillar included strengthening fiscal sustainability, improving capacity for treasury management, and furthering governance reforms. 13. Fiscal sustainability. Bolstering sustainability was to be achieved by delinking public expenditures from short run movements in oil prices and reducing the risks from the volatility of oil fiscal revenues; securing the sustainability of the non-oil fiscal deficit in the medium and long-term, and strengthening the transparency of the fiscal accounts and the role of the budget as an instrument for improved medium term macroeconomic management. Key elements of the approach backed by the Bank included anchoring the fiscal framework on the non-oil fiscal balance, measured as a ratio to non- oil-GDP; using a rules-based approach to fiscal policy; implementing a medium term expenditure framework; structuring loans and hedging products under an active asset-liability management stance; having a comprehensive coverage of all fiscal and expenditure accounts within the budget; and dealing with public sector contingent liabilities. 14. The IMF estimates that Algeria’s fiscal stance is sustainable and likely to keep oil per capita wealth constant as long as prudent macroeconomic policies remain in place. That said the share of public expenditure in non-hydrocarbon GDP remained strongly sensitive to movements in oil prices, increasing from 45.0 percent in 2003 to 53.8 percent in 2006 and 71.2 percent in 2008 as oil prices increased. Similarly, the non-hydrocarbon primary deficit increased from 24.3 to 34.1 percent and to 51.9 percent of non-hydrocarbon GDP in those same years, Nevertheless, the authorities have managed oil revenues sensibly: gross public debt declined from 43.8 percent of GDP in 2003 to 7.4 percent in 2008, while public financial assets increased from about 10 percent to about 31.4 percent of GDP in the same period. Moreover, the sustained high oil prices and Algeria’s gains in oil productivity throughout the decade shed a different light on how fiscal sustainability ought to be looked at. 15. On the policy side, Algeria continues to run its fiscal policy on a discretionary basis. The medium-term expenditure framework (MTEF) was not adopted, nor were the fiscal rule or the consolidation and coverage of fiscal accounts. However, recently the Government unified the investment and recurrent budgets on public investment management. In addition, following IMF advice, the Government improved budget transparency in 2006 by allowing the Oil Stabilization Fund to  For Official Use Only CASCR Review 5 Independent Evaluation Group finance the government deficit directly, instead of indirectly through the use of the Oil Stabilization Fund for public debt repayment. More generally, though, Algeria’s budget continues to lack transparency. 16. The World Bank Group intended to support these objectives through a) policy dialogue and advice underpinned by a Development Policy Review, the 2003 Country Economic Memorandum (CEM), the 2007 Public Expenditure Review (PER) (conducted jointly with the IMF), other non-lending support on fiscal sustainability, advisory services from the Bank’s Treasury, reimbursable technical assistance on procurement to the state oil company (Sonatrach), a Country Financial Accountability Assessment/Report on the Observance of Standards and Codes (CFAA/ROSC); and b) implementation of the 2001 Budget Systems and Modernization Project (BSMP) and the 2002 Energy and Mining Technical Assistance projects. 17. Improving capacity for treasury management. The World Bank Group strategy also envisaged possible support from the Treasury services of the Bank on public asset and debt management, capital markets financing, investors’ relations, and middle and back-office organization and operations. The successful handling of Algeria’s public assets and debt was noticeable. The Bank Treasury’s support, however, was more limited than originally expected and was restricted to the central bank’s management of foreign official reserves (Reserves Advisory and Management Program, 2007). In addition, the Bank’s 2004 Financial Sector Advisory Program (FSAP) briefly reviewed public debt management and concluded that to invigorate the public debt market, it would be necessary to articulate and disseminate the public debt management strategy, create an appropriate institutional structure, make greater use of benchmark issues characterized by greater liquidity, abide by the issue timetable, and encourage transparency between professionals and the public. A recent IMF review of Algeria’s capital market added the need to increase the predictability of public debt issues. 18. Governance reforms. The focus of World Bank Group support was to be in the areas of public procurement and modernizing budget procedures. Public procurement improvements were to follow the recommendations of the 2002 Country Procurement Assessment Review (CPAR), while budget procedures would be anchored in the BSMP and a CFAA review. As noted above, recently the Government unified the capital and recurring budgets, but the overall pace of reforms was slow. For instance, the BSMP component to improve budget presentation and dissemination had not been adopted by the time the Bank project closed in February 2009. However, the Bank reimbursable technical assistance to Sonatrach improved procurement documents and practices in the energy sector, albeit with a two-stage bidding process not in line with the Bank’s advice. 19. IEG rates the outcome of the World Bank Group’s assistance in Pillar 1 as moderately unsatisfactory. Algeria made strong progress in fiscal sustainability. The World Bank Group may have helped improve sustainability through its advice on reserves management, and the Bank/IMF 2007 PER and 2008 reimbursable technical assistance support on investment project evaluation may have helped initiate efforts towards improving the management of large public investment projects. Also, the World Bank Group helped improve procurement processes in the energy sector. However, the Bank’s strategy for this pillar lost relevance as the oil revenues of Algeria became more stable, changing the entire fiscal sustainability picture. An adjustment of the strategy at the time of the CASPR would have been warranted. Moreover, the bulk of the World Bank Group’s advice on MTEF, the fiscal rule, and related issues seems to have had little traction with the authorities, and most of the Algeria’s progress towards its fiscal sustainability is attributable to its own efforts, with little input from the World Bank Group. Pillar II: Remove the constraints to private sector-led growth, improve the business environment, and infrastructure development 20. The objectives under this pillar included: privatization and restructuring of public enterprises; financial sector development; and private sector participation in infrastructure services.  For Official Use Only CASCR Review 6 Independent Evaluation Group 21. The Bank intended to support these objectives through a) policy dialogue underpinned by a development policy review, the 2003 CEM, the 2004 FSAP and 2007 FSAP update, and analytical work on the business environment and infrastructure (transport and ICT); b) implementation of its 2000 Privatization Assistance Learning and Innovation (Loan), 2000 Telecommunications and Postal Sector Reform, 2001 Energy and Mining TA, 2001 Financial System Infrastructure Modernization, and 2002 Mortgage Finance TA projects; c) a new ICT Development Support Project; and d) IFC investments and advisory services to support, among other things, SME and financial sector development. 22. Privatizing and restructuring public enterprises. Algeria has moved to address the public enterprises issue by transparently including in the budget the subsidies given through loss-making enterprises, and by strengthening performance contracts and supervision in public banks. 23. However, after the closing of the 2000 Privatization Assistance Learning and Innovation Loan with disappointing results in December 2003, the World Bank Group did not provide assistance to Algeria for privatization. IFC invested in the already-privatized steel manufacturing company, fertilizer company and cement company. Neither IFC nor the Bank provided advisory services on privatizations. In recent years Algeria’s privatization process has been supported, reportedly, by the European Union. 24. Financial sector development. The World Bank Group was to support the implementation of the recommendations of the FSAP of FY04 and its update of FY07, as well as improving the payments system. The FSAP recommendations focused on privatizing banks and developing the financial markets, including the development of the public debt market mentioned above as well as the mortgage loan market. They also addressed the root causes of the failure of Algeria’s largest private bank in 2003. Algeria has made some progress in banking supervision, the operational environment for financial intermediation, and the public banks’ governance. However, the FY07 Update noted that efforts are still needed in banking supervision, the operational environment for financial intermediation, and in further improving governance in public banks. As for the payments system, Algeria established a modern real time gross settlements system, including the required telecom network. The bulk of the large-value payments migrated to the new system. 25. The Bank’s support included the 2001 Financial System Infrastructure Modernization Project, which closed in June 2006, and contributed to the improvement of Algeria’s payments system. In addition, the Bank’s 2002 Mortgage Finance TA Project supported some institutional and legal actions to improve the environment for mortgage finance. However, these actions had little effect if any on the development of this line of business. Despite an increase in the number of housing loans and improvements in titling regulations, outstanding mortgage loans remained at less than 1 percent of GDP in 2008.1 26. IFC had nine investment projects in the financial sector with seven separate entities, all of which except one were created with IFC support. IFC was instrumental in creating the first international commercial bank in Algeria, the Arab Banking Corporation Algeria. In addition, IFC contributed to the development of the leasing market by helping create two of the largest leasing companies in Algeria, the Arab Leasing Corporation and the Maghreb Leasing Algeria. 27. Through advisory services, IFC also tried to increase access to finance for SMEs. However, IFC’s contribution in this area was limited, due to the poor overall performance of the public sector banks, which held 90 percent of assets in the sector. In addition, IFC had investments in two leasing companies that did business with SMEs. However, improvements in service quality could not be achieved only through the training seminars that IFC provided on credit risk, non-performing loan management, and SME banking. 1See Beltas, Abdelkader. “Housing and Housing Finance in Algeria: Opportunities and Challenges”. Housing Finance International. Saturday, March 1 2008. Retrieved from http://www.allbusiness.com/economy-economic-indicators/economic-conditions- growth/10597003-1.html>  For Official Use Only CASCR Review 7 Independent Evaluation Group 28. Private participation in infrastructure, including transport concessions. The World Bank Group’s strategy supported private sector participation in the urban transport sector, water and sanitation services, housing, energy, and ICT. 29. Algeria involved the private sector in helping develop Algiers’ transport system, in improving the efficiency and coverage of telecommunications. 30. In transport, the Bank’s 2001 Transport Technical Assistance helped achieve the contracting out of operations of the new Algiers metro and urban tram systems. The Bank also envisaged financing an initial segment of the East-West motorway to pave the way for private schemes that would use the cash flow from the initial segment to develop other segments. In this context, the Bank prepared a report in May 2005. But the intended Bank financing did not materialize and the Government had not yet started the project by the end of the CAS period. A 2005 Transport Roadmap Report in 2005 also failed to have an effect on sector reform. 31. With the Bank’s 2000 Telecommunications and Postal Sector Reform Project, which closed in 2006, Algeria made progress in establishing a separate telecom regulator and opening the sector to competition in the mobile sector by awarding two telecommunications licenses. These steps increased the overall telephone and internet densities, while decreasing telecom service prices. Progress was best in mobile cellular subscriptions per 100 people, which advanced from 5 in 2003 to 81 in 2007 (rank 8 of 21 MENA countries). Fixed telephone lines per 100 people advanced only modestly (from 7 to 9, making it rank 14 among MENA countries), and broadband subscription per 100 people increased marginally, advancing from 0 to 1 and ranking 11 among MENA countries. Progress in coverage of personal computers was also minimal (from 0 to 1 per 100, ranking 11). The Government did not move forward in privatizing the telecom utility (Algerie Telecom). 32. In energy and mining, the 2001 Energy and Mining TA loan had some impact on privatization in the mining sector, but not on the hydrocarbon or power sectors. 33. Other Bank non-lending activities (2004 Investment Climate Assessment [ICA] and Legal and Business Environment AAA, 2006 support for Doing Business reform, and 2008 ICA) did not lead to significant reforms or otherwise improve Algeria’s low-ranking business climate, adversely affected by, among other factors, a very high total tax burden (72 percent of profits). There was little or no change in average net foreign direct investment (as a percent of GDP) between 1999-2003 and 2004-09. 34. IFC made positive contributions to private sector development through several greenfield and brownfield investments, particularly in cement and steel sectors, and through advisory services that created linkages of SMEs with large entities. IFC’s investments helped leverage substantial funds from other investors and provided comfort to external investors in general to invest in Algeria, as exemplified by Ispat Annaba (a steel manufactures), and Fertial (a fertilizer manufacturer). 2 With IFC support, local entrepreneurs entered into sectors traditionally dominated by the public sector, such as Red Med Group’s investment in oil-field support activities. Financial support to this group, initially provided by IFC, is now provided by a public bank. 35. IFC’s linkages programs for SMEs had limited results. The linkage program succeeded in Fertial, where advisory services continued even after IFC decided not to invest in the $167 million project. This approach, however, was not pursued successfully in other cases, e.g. in Annaba, the steel project. Overall, IFC provided limited support to private investments in the non-oil economy, particularly labor-intensive industries—an area of critical importance for the country given its dependence on hydrocarbons and high unemployment. 2 The Fertial investment was never disbursed.  For Official Use Only CASCR Review 8 Independent Evaluation Group 36. IEG rates the outcome of the World Bank Group’s assistance in Pillar II as moderately unsatisfactory. The World Bank Group’s activities contributed to financial sector development, greater private participation in urban transport and telecommunications, and creating linkages between SMEs and larger firms. Outcomes in all other objectives fell short of expectations. Pillar III: Improving public service delivery 37. The objectives under this pillar included developing human capital and strengthening social protection, improving public service delivery in water and sanitation and housing, and strengthening natural resource management. 38. Developing human capital and strengthening social protection. The Bank intended to support the Government’s efforts to improve the efficiency and the quality of public service delivery in education, health and social protection, provided that the Government would seek its advice. In addition, the Bank had been involved in helping the rural poor, particularly women. 39. Primary and secondary enrollment statistics show little change, with total primary enrollment declining from 96 percent in 2003 to 95 percent in 2007, and enrollment in secondary increasing from 65 percent in 2003 to 66 percent in 2005. Health expenditures remained constant at 4 percent of GDP and aggregate health indicators including infant mortality and life expectancy improved but non-communicable diseases and deaths by accidents increased. On social protection, Algeria has health insurance, pension, and unemployment insurance systems, but statistics on coverage are not readily available. 40. The Bank’s work in this area included an analysis of health expenditures in the PER and an analysis of the pharmaceutical reimbursement system. The latter led the government to announce the reduction of import regulations on foreign drugs. However, the Bank’s 2007 PER indicates little progress in reducing the high cost of pharmaceuticals. Other Bank activities included seminars on primary and secondary education reform and an analysis of the costs associated with a reorganization of post- secondary education, but no impact of these activities on policies or performance can be identified. 41. The Bank’s work in support of the rural poor, including women, started with the 1997 Rural Employment Project, which was followed by the 2003 Second Rural Employment Project. While the first project succeeded in generating sustainable rural employment in 179 communes, the second one did not have as great an impact due to the Government’s decision to cancel the project early. 42. Water supply and sanitation services. Water quality in Algeria ranked low (104) in a 2005 international comparison. There is no information on the rehabilitation of water supply networks, or on the corporatization of utilities. The Bank provided advice on water sector strategy through its Water Resources Management Strategy report completed in June 2003, which in turn built on the Water Supply and Sewerage Project that was approved in 1994 and closed just after the CAS, was approved. This report may have informed the 2005 reform of the water code, which stressed the need for sustainable development and use of scarce water resources and for greater involvement of the private sector. Furthermore, the Bank’s 2005 Water Sector Reimbursable Technical Assistance provided advice as well as bidding packages and processes that seemed to have helped bring international operators to manage distribution in three cities. 43. Housing services. The Bank intended to help the government on policies for land management and land development, as well as on the development of a mortgage market together with IFC. Housing loans increased from 14,000 in 2002 to just under 23,000 in 2006; more recent information is not available. Following the closure of the mortgage finance technical assistance project, the World Bank Group did not play any further role in this area.  For Official Use Only CASCR Review 9 Independent Evaluation Group 44. Strengthening natural resource management. This objective had two key components: improving waste management services and propping up the Government’s ability to protect and manage the environment and respond to natural disasters. It also covered the erosion control components of the Rural Employment projects (1997 and 2003) mentioned above. In 2003, the Bank’s project information document (PID) for a Waste Management Project that did not materialize reported that Algeria had 2,000 illegal dumps that received part of the 8.5 million tons of municipal waste. The Bank’s project was to pilot integrated and sustainable municipal waste management systems in two municipalities. In the event, the Government turned down the Bank’s assistance. 45. On environment protection and management, the Bank had supported the Government’s efforts to bolster the institutional capabilities and the legal framework for pollution control through the 1996 Industrial Pollution Control Project, which closed in 2005. The project succeeded in reducing pollution in the areas targeted by the project, but there is no information on the extent to which the new capabilities and legal framework may have continued to arrest pollution. 46. As for natural disaster response, the Bank intended to strengthen the disaster management capacity, as well as to reduce the vulnerability to earthquake and floods. The Bank’s involvement in this area started within the context of an emergency recovery loan intended to address the effects of the Ain Temouchent earthquake of December 1999 (Ain Temouchent Earthquake Recovery Project 2000), and continued with the emergency recovery loan that addressed the impact of the November 2001 floods in Northern Algeria (Urban Natural Hazard Vulnerability Project 2002). Within these two operations, the Bank has focused on strengthening the governmental agencies ability to respond to these disasters and develop early warning systems for floods. Both operations were rated satisfactory by IEG. 47. Bank interventions in erosion control and water resource mobilization are reported to have gained support from the farmer populations that benefited from the Rural Employment projects, who now understand the importance of upstream erosion control. 48. IEG rates the efficacy of the Bank’s assistance in Pillar III as moderately unsatisfactory. Achievements in rural development and environmental issues were overshadowed by poor outcomes in water and sanitation, housing, and, above all, human development. In particular, little was achieved in education and health. Achievement of CAS Objectives Objectives CASCR Rating IEG Rating Explanation / Comments The bulk of the World Bank Group’s advice on fiscal issues seems to have had little traction with the Moderately Moderately authorities, and most of Algeria’s Pillar I satisfactory unsatisfactory progress towards its fiscal sustainability is attributable to its own efforts, with little input from the World Bank Group. Moderately Moderately Pillar II unsatisfactory unsatisfactory Achievements in rural development and environmental issues were Marginally Moderately Pillar III overshadowed by poor outcomes in satisfactory unsatisfactory water and sanitation, housing, and, above all, human development.  For Official Use Only CASCR Review 10 Independent Evaluation Group Comments on Bank Performance: 49. The Bank had a difficult time adjusting to the declining relevance of its strategy, which hindered lending, project implementation, and delivery of non-lending services. As the world markets for oil stabilized at prices higher than originally expected in the CAS, Algeria’s prospects and challenges in all fronts changed considerably. The Bank could have been more aggressive in taking stock of the new realities and adjusting and restructuring its strategy accordingly. A better use of the Bank’s country assistance strategy policies to keep the Executive Board informed and bring structure to the strategy would have been warranted. To its credit, the Bank, in a dedicated manner, managed to maintain its engagement and concentrated on non-lending services that served the needs of a country with little need to borrow and considerable need for capacity and institutional development. A QAG review of analytical activities concluded that those implemented were strategically relevant in general, albeit with varying quality that was often compromised by lack of reliable data. Recommendations were adequate in general but neglected implementation issues. And despite responding to explicit government requests, the non-lending activities elicited only weak client engagement. In addition, several planned non-lending activities were not implemented, leaving important areas aside. The last assessment of environmental issues was in a 2002 report; a new environmental assessment planned for the CAS period did not materialize. Similarly, a planned CFAA was not implemented, while the last CPAR was completed in 2003. 50. Portfolio performance deteriorated during the CAS period. The share of problem projects increased from 14.6 percent of total project amounts in 2003 (11 projects) to 59.2 percent in 2007 (3 projects) and 100 percent in 2008 (1 project). The efforts to stall the deterioration could have been dealt with in a timely and thorough portfolio review. 51. The Bank cooperated with the IMF on the FSAP reports and with the UNDP on the ICAs. Comments on IFC Performance: 52. IFC was able to support the Government’s overall strategy throughout the CAS period. When the Government showed openness to the private sector (before the CAS period had started and at the beginning of the CAS period), IFC supported it through large greenfield projects in support of the financial, and materials and construction sectors. Later, when the Government decided to stop borrowing internationally, IFC relied for the most part, but not exclusively, on advisory services. IFC’s rating reflects its successful support to encourage private investment in a difficult business environment particularly in the first-half of the review period. 4. Overall IEG Assessment Outcome: Moderately Unsatisfactory Bank Performance: Moderately Unsatisfactory IFC Performance: Moderately Satisfactory 53. The overall outcome of the World Bank Group program is rated moderately unsatisfactory. Outcomes fell short of expectations in all three pillars of the strategy. In addition, portfolio implementation deteriorated and several non-lending services were not implemented. 54. Bank performance is rated moderately unsatisfactory. 55. IFC performance is rated moderately satisfactory.  For Official Use Only CASCR Review 11 Independent Evaluation Group 5. Assessment of CAS Completion Report 56. The CASCR provides a frank assessment of the Bank’s inadequate adjustment of its strategy to the changes triggered by high oil revenues. It also covers the implementation record well. It could have assessed CAS performance with a stronger and more specific focus on the outcomes indicated by the CAS. There was, for example, little or no discussion of the changes in the quality and quantity of public sector water delivery services as a result of the changes supported by the Water RTA. More generally, there was a dearth of evidence on the achievement of many CAS results (see Annex Table 9). The CASCR’s coverage of IFC suffered from not providing a complete list of all relevant IFC investment and advisory services projects. Without proper listing, and without the indication of how much additional funds IFC leveraged in each investment project, the reader is unable to gauge the substantial private sector role allowed by the Government at the beginning of the CAS period. 6. Findings and Lessons 57. IEG agrees with CASCR findings that (i) the RTA maybe an effective instrument of engagement when borrowing was suspended; and (ii) a weak implementation of non-lending services prevented linkages and synergies across tasks. 58. The key finding that IEG draws is that the CAS failed to deliver on its indicated objectives to a significant extent, mostly because the Bank failed to adjust the strategy to factor in the new realities of world oil markets. Weak government ownership and low capacity hindered the Bank’s efforts further. 59. This finding suggests that it is appropriate for the Bank to maintain the dialogue with the Government through AAA, including RTA, and that these activities are the appropriate channel to help the Government think through their own reform efforts. Hence, selecting topics where additional knowledge is likely to help the Government move should be a key consideration as the CAS applies its principles of responsiveness, coherence and selectivity on prospective fee-based services. 60. The CASCR focus on CAS objectives was not strong enough. This may reflect a weakness in the monitoring and evaluation arrangements of the CAS and the CASPR. The new CAS will be results- based, and its implementation will benefit from better monitoring of the outcomes it has set forth to achieve. Many outcomes (e.g., ―business environment strengthened‖) will need indicators that are both readily available and meaningful. 61. IFC should consider ways to expand its direct support to private investments in the non-oil economy, particularly in labor intensive industries and through SMEs linkages with larger firms. This may involve broadening the scope of advisory services to address weaknesses in the business environment beyond access to finance and business registration. Diversification away from oil and particularly into labor intensive industries is of critical importance for the Algerian economy, given its dependence on oil and high unemployment rates.  Annexes CASCR Review 13 Independent Evaluation Group Annex Table 1. Planned and Actual Lending, FY 2003-2009 Annex Table 2. Planned and Actual Analytical and Advisory Work, FY 2003-2009 Annex Table 3a. IEG Project Ratings for Country, FY2003-2009 Annex Table 3b. IEG Project Ratings for Country and Comparators, FY2003-2009 Annex Table 4. Portfolio Status for Country and Comparators, FY2003-2009 Annex Table 5. IBRD/IDA Net Disbursements and Charges Summary Report for Country Annex Table 6. Total Net Disbursements of Official Development Assistance and Official Aid, 2003-2007 Annex Table 7. Economic and Social Indicators for Algeria and Comparators, 2003-2009 Annex Table 8. Algeria: Millennium Development Goals Annex Table 9: Summary of Achievements of the Algeria CAS Objectives Annex Table 10. List of IFC’s investments in Algeria that were active during FY04-FY10 (US$’000) Annex Table 11: List of IFC’s Advisory Services in Algeria, FY04-FY10  Annexes CASCR Review 15 Independent Evaluation Group Annex Table 1. Planned and Actual Lending, FY 2003-2009 Proposed Proposed Approved Approval FY FY amount amount Proposed projects Rural Employment II* 2003 2003 95.0 95.0 ICT Development Support Project 2005 Dropped 22.5 Dropped Municipal Waste Management 2005 Dropped 25.0 Dropped Water Sector Reform Loans 2006 Dropped 120.0 Dropped Urban/housing 2006 Dropped 100.0 Dropped Total proposed projects CAS FY03-09 362.5 95.0 Non-proposed projects Grants Strengthening Monitoring & Evaluation DGRFE 2003 0.0 Modernization of Algeria Public Procurement System 2006 0.0 Total projects CAS FY03-09 362.5 95.0 Source: Algeria 2003 CAS and 2005 CAS Progress Report, and WB Business Warehouse Table 2a.1, 2a.4 and 2a.7 as of Nov. 9 2009 *Project had been approved as of May 2003.  Annexes CASCR Review 16 Independent Evaluation Group Annex Table 2. Planned and Actual Analytical and Advisory Work, FY 2003-2009 Proposed Delivered to Output Type FY Client FY ECONOMIC AND SECTOR WORK Planned (CAS FY03-06) CPAR 2003 2003 Report Macroeconomic Strategy 2003 ? Social Expenditure Dialogue 2003 2003 Consultations/Country Dialogue Civil Society 2003 Dropped Investment Climate 2003 2003 Report Water Resource Management Strategy 2004 2003 Policy Note Gender Assessment 2004 Dropped Economic and Social Monitoring 2004 ? Poverty Assessment 2004 2005 Policy Note Public Expenditure Review 2004 2007 Report Country Financial Accountability Assessment 2005 ? Financial Sector Assessment Program Report and Follow up 2004-2005 2004, 2007 Report Rural Development Strategy 2004 ? HD Dialogue 2004 ? Housing Market Strategy 2004 ? Legal Business Environment 2004 2005 Policy Note Pensions and Insurance Reform Study 2005 Dropped Health Sector Financing Strategy 2005 ? Education Financing Strategy 2005 ? Post-Obligatory Secondary Education 2006 ? Poverty and Gender follow-up activities 2005-2006 ? HD follow up activities 2006 ? Public Sector Reform 2006 ? Development Policy Review 2006 ? Non-planned Assessment of PSRE ? Pharmaceuticals Reimbursement Study ? Policy Note On Business Development ? Budget Modernization ? Report Diversification Strategy Note ? Policy Note Review of Accounting and Auditing Practices 2003 Report Evaluation/ Economic Recovery Program 2003 Report Financial Sector Policy Dialogue 2004 Consultations/Country Dialogue Strategic Perspectives for ARD 2004 Policy Note Labor Market Policy Note 2004 Policy Note Algeria Education Sector Review 2004 Consultations/Country Dialogue Poverty Update 2005 Policy Note Transport Sector Roadmap 2005 Policy Note Algeria Policy Notes on Growth, Trade, Export, Labor 2008 Policy Note Investment Climate Assessment II 2008 Report Skills development/Social Protection/Labor 2008 Policy Note Exploring the potential for export diversification 2009 Policy Note  Annexes CASCR Review 17 Independent Evaluation Group Proposed Delivered to Output Type FY Client FY TECHNICAL ASSISTANCE Planned (CAS FY03-06) Support for Fiscal Sustainability 2004 ? Support for the Business Climate 2004 ? Support for Fiscal Sustainability 2004 ? Support to Public Sector Delivery 2004 ? Reimbursable Technical Assistance (RTA) to Sonatrach 2003-2004 2005 "How-To" Guidance FSAP follow up 2004-2005 2005 "How-To" Guidance Environment Assessment 2005 2005 Knowledge-Sharing Forum Non-planned Algeria Consensus Building in the Energy 2003 Knowledge-Sharing Forum Algeria Telecom Sector Investor Conference 2003 Knowledge-Sharing Forum Algeria Recovery and Public Investment Program 2003 Model/Survey Housing TA 2003 Institutional Development Plan Financial Sector TA 2003 Knowledge-Sharing Forum AML/CFT Assessment Algeria 2004 Report Payment System 2005 "How-To" Guidance Poverty Dynamics 2005 Institutional Development Plan Investment Climate Update 2006 "How-To" Guidance TA for social insurance 2006 "How-To" Guidance Planning and Implementation of the East West Expressway 2006 "How-To" Guidance Doing Business TA 2006 "How-To" Guidance ICT TA 2007 "How-To" Guidance Financial Sector TA 2007 "How-To" Guidance Support to health system governance in Algeria 2007 "How-To" Guidance RTA Water Sector and Sanitation (Phase 1) 2008 "How-To" Guidance Caisse Nationale D'equipment pour le developpment 2008 "How-To" Guidance Rural development TA 2008 "How-To" Guidance Building Quality Assurance for High Education 2008 Client Document Review TA to CNES on impact evaluations 2008 Knowledge-Sharing Forum RTA Credit Registry 2010 "How-To" Guidance RAMP ? RTA Municipal Solid Waste ? Source: Algeria 2003 CAS and 2005 CASPR and WB Business Warehouse Table ESW/TA 8.1.4 as of Nov. 9 2009.  Annexes CASCR Review 18 Independent Evaluation Group Annex Table 3a. IEG Project Ratings for Country, FY2003-2009 Total IEG Risk to Exit IEG IEG ID Project Name Evaluated IEG Outcome Development FY Sustainability Impact (US$M) Outcome * 2003 Highways VI** 111.5 Unsatisfactory # Unlikely Modest Low Income Housing** 42.0 Unsatisfactory # Unlikely Negligible 2004 Water Supply and Sewerage** 38.3 Highly Unsatisfactory # Highly Unlikely Negligible Privatization Assistance (LIL)** 2.8 Highly Unsatisfactory # Highly Unlikely Negligible 2005 Industrial Pollution Control** 23.4 Moderately Satisfactory # Likely Substantial Rural Employment** 81.0 Satisfactory # Likely Substantial 2006 Financial System Infrastructure 3.5 Satisfactory Negligible to # # Modernization low TEERP (Temouchent Emergency 78.6 Satisfactory Negligible to # # Earthquake) low 2007 Mortgage Finance Technical 5.1 Moderately Satisfactory Moderate # # Assistance Urban Natural Hazard Vulnerability 5.6 Moderately Satisfactory Moderate # # Telecommunications and Postal 8.4 Moderately Satisfactory Moderate # # Sector Second Rural Employment Project 7.7 Satisfactory Moderate # # 2008 Energy and Mining TA Loan 12.9 Unsatisfactory Significant # # (EMTAL) Transport Technical Assistance 6.5 Unsatisfactory High # # Source: WB Business Warehouse Table 4a.5 and 4a.6 as of as of Nov 10 2009. * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately. ** This project was rated with IEG previous methodology. Please refer to IEG Sustainability and IEG ID Impact. Annex Table 3b. IEG Project Ratings for Country and Comparators, FY2003-2009 Region Total Total Outcome Outcome RDO % RDO % Inst Dev Inst Dev Sustainability Sustainability Evaluated Evaluated % Sat ($) % Sat Moderate Moderate Impact Impact % Likely ($) % Likely (No) ($M) (No) (No) or Lower or Lower % Subst % Subst ($) * (No) * ($) (No) Algeria 427.3 14 49.9 57.1 84.8 75.0 34.9 33.3 34.9 33.3 MNA 4,691.2 130 86.5 72.1 77.0 55.0 33.3 33.7 87.2 70.9 World Bank 109,426.4 1,606 83.6 78.3 76.5 66.0 59.2 54.7 82.6 79.0 Source: WB Business Warehouse Table 4a.5 and 4a.6 as of as of Nov 10 2009. * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately.  Annexes CASCR Review 19 Independent Evaluation Group Annex Table 4. Portfolio Status for Country and Comparators, FY2003-2009 Fiscal year FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 Algeria # Proj 15 13 11 9 7 3 1 # Proj At Risk 3 5 2 0 2 3 1 % At Risk 20 38 18 0 29 100 100 Net Comm Amt 910.3 630.3 515.3 348.3 248.4 50.4 23.7 Comm At Risk 293.4 114.6 112.2 0.0 26.7 38.3 18.4 % Commit at Risk 32 18 22 0 11 76 78 Egypt # Proj 19 18 19 17 18 21 20 # Proj At Risk 3 3 3 1 2 2 5 % At Risk 16 17 16 6 11 10 25 Net Comm Amt 1,219.1 1,245.6 1,330.1 1,865.1 1,997.2 2,234.1 2,859.1 Comm At Risk 186.2 16.4 12.6 15.0 140.0 27.1 792.1 % Commit at Risk 15 1 1 1 7 1 28 Jordan # Proj 12 10 10 8 11 13 15 # Proj At Risk 1 0 0 1 1 2 2 % At Risk 8 0 0 13 9 15 13 Net Comm Amt 505.5 359.7 344.7 277.7 359.9 311.4 449.4 Comm At Risk 35.0 0.0 0.0 15.0 15.0 5.6 5.6 % Commit at Risk 7 0 0 5 4 2 1 Lebanon # Proj 14 13 9 7 9 11 11 # Proj At Risk 6 5 6 1 4 5 6 % At Risk 43 38 67 14 44 45 55 Net Comm Amt 620.5 605.8 394.9 321.9 346.6 447.7 407.4 Comm At Risk 239.1 194.0 240.6 20.0 63.5 83.5 149.5 % Commit at Risk 39 32 61 6 18 19 37 Morocco # Proj 22 18 16 15 17 17 11 # Proj At Risk 3 4 2 1 3 3 1 % At Risk 14 22 13 7 18 18 9 Net Comm Amt 683.5 484.3 719.8 910.8 1,195.0 1,066.0 785.9 Comm At Risk 118.5 21.8 42.2 9.6 63.7 210.5 26.8 % Commit at Risk 17 4 6 1 5 20 3 Yemen # Proj 23 21 20 20 21 22 22 # Proj At Risk 4 5 1 1 2 1 4 % At Risk 17 24 5 5 10 5 18 Net Comm Amt 813.9 824.8 853.0 806.0 817.4 872.7 1,022.4 Comm At Risk 102.1 123.1 27.5 21.3 155.3 5.0 110.0 % Commit at Risk 13 15 3 3 19 1 11 Tunisia # Proj 22 20 19 19 19 17 19 # Proj At Risk 1 2 0 1 0 0 1 % At Risk 5 10 0 5 0 0 5 Net Comm Amt 1,239.3 1,165.6 968.5 967.5 947.6 704.8 937.2 Comm At Risk 21.3 29.7 0.0 52.8 0.0 0.0 33.3 % Commit at Risk 2 3 0 5 0 0 4  Annexes CASCR Review 20 Independent Evaluation Group Fiscal year FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 Region # Proj 158 146 147 125 133 154 149 # Proj At Risk 28 29 22 13 24 32 36 % At Risk 18 20 15 10 18 21 24 Net Comm Amt 6,820.4 6,530.2 7,193.3 7,311.4 7,866.2 8,374.6 9,062.9 Comm At Risk 1,143.2 623.9 562.2 337.7 1,148.5 1,143.5 1,880.0 % Commit at Risk 17 10 8 5 15 14 21 World Bank # Proj 1,808 1,789 1,780 1,758 1,751 1,871 1,942 # Proj At Risk 291 311 298 242 285 341 420 % At Risk 16 17 17 14 16 18 22 Net Comm Amt 129,405.7 122,104.9 121,232.7 122,595.4 122,416.1 132,972.7 161,434.1 Comm At Risk 17,276.4 18,021.7 15,173.0 12,813.6 17,701.3 21,981.3 22,745.8 % Commit at Risk 13 15 13 10 14 17 14 Source: WB Business Warehouse Table 3a.4 as of Nov 11, 2009.  Annexes CASCR Review 21 Independent Evaluation Group Annex Table 5. IBRD/IDA Net Disbursements and Charges Summary Report for Country (in US$ million) Disbursement Repayment FY Net Amount Charges Fees Net Transfer Amount Amount FY 2003 50.86 200.88 -150.02 93.21 2.17 -245.39 FY 2004 51.21 197.24 -146.03 70.45 2.26 -218.74 FY 2005 27.13 173.64 -146.51 48.68 1.00 -196.19 FY 2006 28.60 748.00 -719.40 33.34 7.39 -760.13 FY 2007 6.52 11.38 -4.86 6.35 0.05 -11.26 FY 2008 6.25 12.45 -6.20 6.18 0.06 -12.43 FY 2009 0.43 100.73 -100.29 3.54 5.38 -109.21 Total (03-09) 171.01 1,444.31 -1,273.30 261.74 18.31 -1,553.35 Source: WB Loan Kiosk, Net Disbursement and Charges Report as of Nov 10 2009  Annexes CASCR Review 22 Independent Evaluation Group Annex Table 6. Total Net Disbursements of Official Development Assistance and Official Aid, 2003-2007 (in US$ million) Total 2003- Donor 2003 2004 2005 2006 2007 2007 Top 10 Donors France 125.0 172.9 231.8 173.4 185.2 888.4 EC 55.2 71.9 57.0 -13.8 85.7 256.0 Spain 4.3 12.7 -4.0 43.4 60.5 116.9 Italy 18.7 29.7 9.5 10.9 5.1 73.9 Belgium 4.2 11.3 14.5 13.2 13.0 56.1 UN AGENCIES 8.8 5.1 6.9 6.1 5.9 32.8 Arab Countries -1.0 -0.4 10.0 4.7 5.1 18.4 WFP 3.6 2.8 3.7 2.2 1.1 13.3 United States 3.2 3.8 1.1 0.8 1.7 10.5 Switzerland 2.1 1.9 2.4 1.6 2.1 10.1 DAC Countries, Total 168.8 234.7 266.2 204.6 289.2 1,163.5 Multilateral Agencies, Total 68.2 80.3 68.9 -4.6 92.1 304.8 Non-DAC Countries, Total 0.6 -0.2 11.6 7.5 7.9 27.4 All Donors, Total 237.6 314.8 346.7 207.4 389.2 1,495.7 Source: OECD DAC Online database, Table 2a. Destination of Official Development Assistance and Official Aid - Disbursements, as of Nov 10, 2009.  Annexes CASCR Review 23 Independent Evaluation Group Annex Table 7. Economic and Social Indicators for Algeria and Comparators, 2003-2009 Algeria Algeria Egypt Jordan Lebanon Libya Morocco Tunisia Yemen Series Name 2003 2004 2005 2006 2007 2008 Average 2003-2008 Growth and Inflation GDP growth (annual %) 6.9 5.2 5.1 2.0 3.0 3.0 4.2 5.5 6.8 4.6 4.6 5.1 5.4 3.8 GDP per capita growth (annual %) 5.3 3.6 3.5 0.5 1.5 1.5 2.7 3.5 4.0 3.4 2.5 3.9 4.5 0.8 GNI per capita, PPP (current international $) 6,050.0 6,430.0 6,820.0 7,150.0 7,650.0 7,940.0 7,006.7 4,588.3 4,691.7 9,695.0 13,220.0 3,715.0 6,351.7 2,071.7 GNI, Atlas method (current US$ in millions) 62,067.8 73,987.0 89,352.5 103,878.4 122,195.6 146,365.4 99,641.1 107,552.4 14,599.8 22,984.0 42,920.2 62,569.2 29,151.9 15,797.0 Inflation, consumer prices (annual %) 2.6 3.6 1.6 2.5 3.5 4.4 3.0 9.3 5.8 0.3 2.1 3.5 13.2 Composition of GDP (%) Agriculture, value added (% of GDP) 10.5 10.2 8.3 8.0 8.2 8.7 9.0 14.8 3.1 6.3 15.7 11.2 14.3 Industry, value added (% of GDP) 54.8 56.4 61.6 62.3 61.1 68.7 60.8 36.7 29.3 23.4 26.6 28.8 40.3 Services, etc., value added (% of GDP) 34.7 33.5 30.1 29.8 30.7 22.6 30.2 48.6 67.6 70.3 57.7 60.1 45.4 Gross fixed capital formation (% of GDP) 24.0 24.1 22.3 23.1 25.7 27.9 24.5 19.0 23.5 18.9 28.4 23.2 23.1 Gross domestic savings (% of GDP) 44.9 47.7 54.9 56.9 56.5 71.5 55.4 16.0 -11.4 -3.2 23.8 21.6 20.9 External Accounts Exports of goods and services (% of GDP) 38.3 40.1 47.6 48.9 47.1 59.1 46.9 29.7 53.3 23.4 33.5 51.7 38.0 Imports of goods and services (% of GDP) 23.9 25.7 24.3 21.6 23.6 24.5 23.9 32.9 88.7 45.6 39.7 54.2 41.4 Current account balance (% of GDP) .. .. .. .. .. .. 2.9 -6.4 -14.1 31.7 1.7 -2.1 0.2 External debt, total (% of GNI) 36.0 27.2 17.3 5.1 4.1 .. 18.0 31.5 62.6 103.4 30.0 68.2 38.4 Total debt service (% of GNI) 6.6 7.0 6.2 12.0 1.1 .. 6.6 2.4 6.2 18.5 5.9 7.7 1.5 Total reserves in months of imports .. .. .. .. .. .. 7.4 6.6 10.5 33.9 9.0 3.6 9.8 Fiscal Accounts /1/2 Total Revenue (% of GDP) 36.1 40.9 43.0 39.6 45.0 40.9 Total Expenditure (% of GDP) 29.2 29.0 29.5 35.1 36.7 31.9 Overall Balance, commitments (% of GDP) 6.9 11.9 13.6 4.5 8.2 9.0 External Debt (% of GDP) 25.6 16.7 4.8 3.8 3.0 10.8 Social Indicators Health Life expectancy at birth, total (years) .. .. 71.7 72.0 72.3 .. 72.0 69.9 72.3 71.8 74.0 70.8 73.6 62.2 Immunization, DPT (% of children ages 12-23 87.0 86.0 88.0 95.0 95.0 .. 90.2 97.8 96.6 74.0 97.2 95.6 97.4 80.4 months) Improved sanitation facilities (% of population .. .. .. 94.0 .. .. 94.0 66.0 85.0 97.0 72.0 85.0 46.0 with access) Improved water source (% of population with .. .. .. 85.0 .. .. 85.0 98.0 98.0 100.0 83.0 94.0 66.0 access) Mortality rate, infant (per 1,000 live births) .. .. 34.0 33.4 32.8 .. 33.4 31.3 21.4 26.2 17.0 34.2 19.0 57.1  Annexes CASCR Review 24 Independent Evaluation Group Algeria Algeria Egypt Jordan Lebanon Libya Morocco Tunisia Yemen Series Name 2003 2004 2005 2006 2007 2008 Average 2003-2008 Population Population, total (in millions) 31.9 32.4 32.9 33.4 33.9 34.4 33.1 77.9 5.5 4.0 6.0 30.3 10.1 21.4 Population growth (annual %) 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.9 2.6 1.1 2.0 1.1 0.9 3.0 Urban population (% of total) 61.9 62.6 63.3 63.9 64.6 65.2 63.6 42.6 78.3 86.7 77.1 55.2 65.5 29.2 Education School enrollment, preprimary (% gross) 4.0 4.7 6.1 29.1 29.7 .. 14.7 16.1 31.4 65.2 8.4 57.9 21.7 0.8 School enrollment, primary (% gross) 110.4 111.7 111.7 110.5 109.7 .. 110.8 102.4 98.4 95.5 110.6 106.6 108.6 85.4 School enrollment, secondary (% gross) 77.7 80.8 83.2 .. .. .. 80.6 87.8 88.5 80.9 101.7 49.6 82.6 46.1 1/ 2008 IMF Article IV consultation Algeria 2/ 2007 data is preliminary, 2008 data is projection Source: WB World Development Indicators as of Nov 11 2009 for all indicators excluding those noted.  Annexes CASCR Review 25 Independent Evaluation Group Annex Table 8. Algeria: Millennium Development Goals 1990 1995 2000 2005 2008 Goal 1: Eradicate extreme poverty and hunger Employment to population ratio, 15+, total (%) 39 38 39 48 51 Employment to population ratio, ages 15-24, total (%) 25 24 23 33 34 GDP per person employed (annual % growth) 0 4 1 -4 0 Income share held by lowest 20% 6.5 6.9 .. .. .. Malnutrition prevalence, weight for age (% of children under 5) .. 11.3 5.4 .. .. Poverty gap at $1.25 a day (PPP) (%) 2 1 .. .. .. Poverty headcount ratio at $1.25 a day (PPP) (% of population) 7 7 .. .. .. Prevalence of undernourishment (% of population) 5 5 .. 5 .. Vulnerable employment, total (% of total employment) .. .. 31 35 .. Goal 2: Achieve universal primary education Literacy rate, youth female (% of females ages 15-24) .. .. 86 91 91 Literacy rate, youth male (% of males ages 15-24) .. .. 94 94 94 Persistence to last grade of primary, total (% of cohort) .. .. 95 91 92 Primary completion rate, total (% of relevant age group) 81 81 83 96 95 Total enrollment, primary (% net) .. .. 93 99 96 Goal 3: Promote gender equality and empower women Proportion of seats held by women in national parliaments (%) 2 7 3 6 8 Ratio of female to male enrollments in tertiary education .. .. .. 128 140 Ratio of female to male primary enrollment 84 89 92 93 94 Ratio of female to male secondary enrollment 80 .. 105 108 .. Share of women employed in the nonagricultural sector (% of total .. .. 13 17 .. nonagricultural employment) Goal 4: Reduce child mortality Immunization, measles (% of children ages 12-23 months) 83 89 80 83 92 Mortality rate, infant (per 1,000 live births) 54 43 37 34 33 Mortality rate, under-5 (per 1,000) 69 53 44 39 37 Goal 5: Improve maternal health Adolescent fertility rate (births per 1,000 women ages 15-19) .. 12 10 8 7 Births attended by skilled health staff (% of total) 77 .. 92 95 95 Contraceptive prevalence (% of women ages 15-49) 47 52 64 61 61 Maternal mortality ratio (modeled estimate, per 100,000 live births) .. .. .. 180 .. Pregnant women receiving prenatal care (%) 58 .. 81 89 89 Unmet need for contraception (% of married women ages 15-49) .. .. .. .. .. Goal 6: Combat HIV/AIDS, malaria, and other diseases Children with fever receiving antimalarial drugs (% of children under age .. .. .. .. .. 5 with fever) Condom use, population ages 15-24, female (% of females ages 15-24) .. .. .. .. .. Condom use, population ages 15-24, male (% of males ages 15-24) .. .. .. .. .. Incidence of tuberculosis (per 100,000 people) 38 42 48 54 57 Prevalence of HIV, female (% ages 15-24) .. .. .. 0.1 0.1 Prevalence of HIV, male (% ages 15-24) .. .. .. 0 0 Prevalence of HIV, total (% of population ages 15-49) .. .. 0.1 0.1 0.1 Tuberculosis cases detected under DOTS (%) .. 133 127 109 98 Goal 7: Ensure environmental sustainability CO2 emissions (kg per PPP $ of GDP) 0.7 0.7 0.7 0.6 .. CO2 emissions (metric tons per capita) 3 3.3 3.8 4.2 .. Forest area (% of land area) 1 1 1 1 .. Improved sanitation facilities (% of population with access) 88 90 92 94 94 Improved water source (% of population with access) 94 93 89 85 85 Marine protected areas, (% of surface area) .. .. .. 0 .. Nationally protected areas (% of total land area) .. .. .. 5 5  Annexes CASCR Review 26 Independent Evaluation Group 1990 1995 2000 2005 2008 Goal 8: Develop a global partnership for development Aid per capita (current US$) 5 10 7 11 12 Debt service (PPG and IMF only, % of exports, excluding workers' 64 .. .. .. .. remittances) Internet users (per 100 people) 0 0 0.5 5.8 10.3 Mobile cellular subscriptions (per 100 people) 0 0 0 42 81 Telephone lines (per 100 people) 3 4 6 8 9 Other Fertility rate, total (births per woman) 4.6 3.4 2.7 2.4 2.4 GNI per capita, Atlas method (current US$) 2290 1580 1610 2720 4260 GNI, Atlas method (current US$) (billions) 57.9 44.7 49 89.4 146.4 Gross capital formation (% of GDP) 28.6 30.9 25 31.5 36.9 Life expectancy at birth, total (years) 67 69 70 72 72 Literacy rate, adult total (% of people ages 15 and above) .. .. 70 75 75 Population, total (millions) 25.3 28.3 30.5 32.9 34.4 Trade (% of GDP) 48.4 55.2 62.5 71.9 83.6 Source: World Development Indicators database as of Nov 10 2009  Annexes CASCR Review 27 Independent Evaluation Group Annex Table 9: Summary of Achievements of the Algeria CAS Objectives3 CAS 04-06: Pillar 1 Actual Results Comments Strengthen the Basis for Fiscal Sustainability and (as of July 2010) Government Effectiveness Objectives 1. Strengthen the fiscal framework, with Limited progress the aim of medium and long-term fiscal sustainability 2. Build Capacity in treasury Limited progress management 3. Support to Governance Reforms Limited progress Major 1. Strengthen the fiscal framework, with the aim of medium and long-term fiscal sustainability Outcome De-link public expenditure from short-run Fiscal Framework not anchored on an No progress. It is still necessary to Measures movements in oil prices and design and indicator unaffected by changes in the oil ensure non-oil sustained growth and implement a strategy to reduce the risks revenues such as the non-oil primary diversify the economy to lessen the risk resulting from the volatility in oil fiscal fiscal deficit. that volatile oil prices pose to the revenues. external stability. Source: IMF 2007 Article IV Consultation- Staff Report. Secure the sustainability of the non-oil Medium term expenditure framework not No progress. Source: IMF 2007 and fiscal deficit in the medium and long term implemented. 2009 Article IV Consultation- Staff The public saving increased from 14.7% Report. of the GDP in 2004 to 20% of the GDP in 2007. Projections indicate a larger public saving of 23.9% of the GDP in 2008 and then a pronounced drop to 7.8% of the GDP in 2009. The Non-Oil primary balance (% of Non- Oil GDP) has worsened from -27.9% in 2004 to -44% in 2007. The projections to 2008 and 2009 point to a more pronounced deficit of -52.1% and -51.4% respectively. -The non-oil primary deficit has continued to be above its long-term sustainable level in the coming years (2007-2009). - Oil receipts have strengthened Algeria’s fiscal and external positions, and helped to build up large savings in the Oil stabilization fund (FRR)4. Strengthen the transparency of fiscal Following IMF advice, the Government Limited progress. accounts and the role of the budget as improved budget transparency in 2006 an instrument for improved medium-term by allowing the Oil Stabilization Fund to macroeconomic management. finance the government deficit directly, instead of indirectly through the use of the Oil Stabilization Fund for public debt repayment. The multiyear, programmatic, comprehensive and transparent budget sought by the Bank was not achieved. In 3 The Country Assistance Strategy explicitly states that “Given the political economy considerations and the demand-driven nature of this CAS, it is proposed to have a simple evaluation and monitoring framework…” and that “There will be no specific indicators as the focus is on engagement”. Annex 9 has been completed following the text of the CAS. 4 Algeria’s stabilization fund (Fonds de régulation des recettes, FRR) is a subaccount of the government at the Central Bank in dinars. Inflows into the account are hydrocarbon budgetary receipts above the equivalent of US$19 per barrel; outflows are to amortize debt and finance the non-hydrocarbon deficit.  Annexes CASCR Review 28 Independent Evaluation Group CAS 04-06: Pillar 1 Actual Results Comments Strengthen the Basis for Fiscal Sustainability and (as of July 2010) Government Effectiveness particular, budget presentation and dissemination was not improved by February 2009 2. Build Capacity in treasury management Strength all aspects of investment and -No available information. Unknown progress. governance practices along with the management of operational and market risk in official reserves, pension funds and/or “heritage” reserves such as petroleum funds Build capacity in all aspects of - The Central Bank has received Good progress. Source: IMF 2007 Article management of official reserves assistance from the Bank’s Treasury IV Consultation- Staff Report. Department since 2007 through the Reserves Advisory and Management Program (RAMP) in support of capacity management of official reserves. One result of this assistance was the increment of official reserves. Help in managing the inherent risks in -No available information Unknown progress. government finances. Help identify priority needs for -No available information Unknown progress. improvement in public debt management Provide technical assistance in public - No available information. Unknown progress. The Macroeconomic debt Strategy for the Medium Term, the management to help build capacity and Assessment of the Programme de meet objectives with respect to cost and Soutien à la Relance Economique risk (PSRE) and the Public Expenditure Review (PER) all addressed debt sustainability. They estimated the impact of the oil windfall revenues on the first phase of the massive public investment technical assistance in asset-liability - No available information. Unknown progress. management, with a particular focus on the design and implementation of strategies to measure and mitigate foreign exchange, interest rate and commodity risk in government finances; technical assistance in the design and - No available information. Unknown progress. execution of a government funding program in the international markets, including assistance with rating agency processes and relationships, design of a sustainable funding strategy, and management of banking and investor relations, and back- and middle-office  Annexes CASCR Review 29 Independent Evaluation Group CAS 04-06: Pillar 1 Actual Results Comments Strengthen the Basis for Fiscal Sustainability and (as of July 2010) Government Effectiveness 3. Support to Governance Reforms Implement the recommendations of the -No available information. Unknown progress. Country Procurement Assessment Review (CPAR) Provide technical assistance in the areas The Government has unified the capital Some progress. Creation of the Caisse of public expenditure management and and recurrent budget. Nationale d’Equipement et de information management The Government has created, under the Développement (CNED) to evaluate Ministry of Finance, an office in charge large projects in the public expenditure of promoting strategic development and program supported by a Bank RTA. monitoring and evaluation in the country. Furthermore, the Bank’s BSMP supported a new budget classification system; a Comprehensive Finance Law (Loi Organique des Finances); strategic planning now in place in 15 ministries that will support the introduction of programmatic approach to budgeting; an expenditure management handbook that simplifies the expenditure circuit; and an MTEF adopted for the 2010-2014 period. Ongoing P064921 Budget System Modernization ISR rating as of 11/2008. pre DO: Moderately Unsatisfactory; IP: CAS/CPS Moderately Unsatisfactory. 04-06 P054217 Financial System Infrastructure ISR rating as of 12/2004. DO: Support Modernization Project Satisfactory. IP: Satisfactory. New Lending None planned. Support Planned Macroeconomic Strategy Approved FY03. AAA Support for Fiscal Sustainability Not Found. Economic and Social Monitoring Not Found Public Expenditure Review (PER) Approved FY04. Delivered FY08. CNED RTA Approved FY06. Delivered FY08. Development Policy Review (DPR) Not Found. Country Fin. Acc. Assessment (CFAA) Dropped Additional Rev. of Acc. and Auditing Practices Delivered FY03. AAA (ROSC) Evaluation/Economic Recovery program Delivered FY03. Reimbursable TA to Sonatrach5 Delivered FY05. RAMP Delivered FY07 Diversification Strategy Note Not Found Assessment of PSRE ESW Not Found Labor Market Policy Note Not Found Budget Modernization ESW Not Found. 5 The oil and gas state company.  Annexes CASCR Review 30 Independent Evaluation Group CAS 04-06: Pillar 2 Actual Results Comments Improve the Business Environment and (as of July 2010) Encouraging Private Sector Participation Objectives 1 Encourage further No progress privatizing/restructuring of public enterprises. 2 Furthering banking reform, including Limited progress privatization of banks, and financial market development. 3 Encourage private sector participation Limited progress in infrastructure services, including telecommunications. Major 1) Encourage further privatizing/restructuring of public enterprises. Outcome -Support the privatization/restructuring Implementation of program to create and No progress. There was a shift of Measures process of public enterprises. operate regulatory frameworks that emphasis in the Government’s program encourage the participation of the private towards state-led development. sector fell short of original expectations in the CAS and the Bank-supported program was cancelled. - The activities under this pillar did not lead to any significant reform and had limited impact, even if they informed the ongoing legal reforms. CASCR 2) Furthering banking reform, including privatization of banks, and financial market development. -Support the implementation of FSAP 2007 FSAP update and found some Limited progress. IMF Art IV recommendations, such as address the progress in banking supervision, the - The first privatization ever initiated financial sector vulnerabilities. operational environment for financial (Crédit Populaire d’Algérie-CPA) did not intermediation, and the public bank’s take off and no further timetable has governance framework, with progress still been released in light of the impact of needed on privatization, strengthening the financial crisis. The expectation is the operational environment of the that the public banks will continue to sector, developing non-bank financing, dominate the banking sector. CASCR and ensuring effective liquidity management. IFC supported financial market development through advisory activities, which supported: the creation of a Credit Registry (jointly with IBRD); training of staff on leasing; and conferences on SME banking best practices, control of non-performing loans, and credit risk management related to SMEs. - Modernization of the Financial System A banking payment system (RTGS) was Good progress. Source: Financial Infrastructure implemented, including a supporting System Modernization ISR 6/2006 telecommunications infrastructure that allows a better and faster operation. -Strengthen the mortgage loan market. -Housing loans increased from 14,000 in Limited progress. Source: Mortgage 2002 to 22,869 by December 2006. Finance ISR 12/2006 (Target value: 35,000), but outstanding The outcome of the Mortgage Finance TA mortgage loans remained at less than 1 was rated moderately satisfactory by the percent of GDP. team and by IEG because the new - The draft law for titling regularization institutional framework had not been fully  Annexes CASCR Review 31 Independent Evaluation Group CAS 04-06: Pillar 2 Actual Results Comments Improve the Business Environment and (as of July 2010) Encouraging Private Sector Participation discussed in Parliament, vote by both adopted by the completion of the project Chambers by December 2006. was prepared. -By December 2006, 3 New collateralization arrangements for each target institution (Target value: 6) 3) Encourage private sector participation in infrastructure services, including telecommunications. -Improve infrastructure in the urban - Operations of the new Algiers metro Limited progress. A bank operation transport sector. and urban tram systems were contracted. aiming to set up a policy and - No information about the ports near institutional framework encouraging Algiers. competition and private participation in - No information about the East-West infrastructure was completed but rated motorway unsatisfactory. - No information about the privatization of the road contracting industry, city bus services, air transport, port services, and non-core railway services. Facilitate private sector participation in Bank’s 2005 water sector reimbursable CASCR infrastructure of the water and sanitation technical assistance provided advice as services well as bidding packages and processes that may have helped bring international operators to manage distribution in three cities. Facilitate private sector participation in -Not available. Unknown progress. infrastructure of the housing sector -Improve infrastructure and promote The bank has helped to develop a No progress. private sector participation in the energy regulatory legislation in electricity. That sector. legislation was approved but most of it reversed through a 2006 Presidential Decree. CASCR and EMTAL ICR. -Support the Government’s Information, - The bank has supported a regulatory Some progress. Communications and Technology (ICT) reform which has opened the reform strategy. telecommunications sector to competition - Establish a new postal and and engaged the private sector. telecommunications regulatory - The drawback was the inability to framework; privatize the main public operator Algérie - Create and provide institutional support Télécom (AT). to the Algerie Poste (AP), Algerie Telecom and the regulatory authority (ARPT); Strength the regulatory framework to -Not available. . Unknown progress. develop an information society. No information about the transformation of the AP into an e-commerce enabler. No information about e-government flagship applications Institutional Development support to No information Unknown progress. Algiers Technology Park  Annexes CASCR Review 32 Independent Evaluation Group CAS 04-06: Pillar 2 Actual Results Comments Improve the Business Environment and (as of July 2010) Encouraging Private Sector Participation Ongoing P054217 Financial System Infrastructure IEG outcome rating: Satisfactory pre Modernization CAS/CPS P064983 Mortgage Finance TA IEG outcome rating: Moderately 04-06 Satisfactory Support P072458Transport Technical Assistance IEG outcome rating: Unsatisfactory P067567 Energy and Mining TA loan IEG outcome rating: Unsatisfactory P070123 Privatization Assistance ISR rating as of 12/2003. DO: Highly Unsatisfactory; IP: Highly Unsatisfactory. P070308 Telecom. and Postal Sector IEG outcome rating: Moderately Reform Satisfactory New ICT Development Support Project. Dropped Lending Support Planned Investment Climate Assessment (ICA) Delivered FY03. AAA Support for the Business Climate Not Found. Financial Sector Assessment Program Approved FY05. Delivered FY04 Report Financial Sector Assessment Program Approved FY05. Delivered FY07 Update Pharmaceuticals Reimbursement Study Not Found. Housing Market Strategy Dropped ICT TA Delivered FY07. Strategic Persp. for Agr. and Rur. Dev. Delivered FY04. (ARD) Legal and Business Environment Approved FY04. Delivered FY05. Additional Policy Note On Business Development Not found. AAA PSD Strategy Note Update Delivered FY03. Financial Sector Policy Dialogue Delivered FY04. AML/CFT Assessment Algeria Delivered FY04. Transport Sector Roadmap Delivered FY05. Payment System TA Delivered FY05. Policy Notes on Growth, Trade, Exp. & Delivered FY08. Labor Algeria TA CNES Investment Climate Delivered FY08 Indicators Investment Climate Assessment (ICA) II Delivered FY08. Exploring Potential for Export. Delivered FY09. Diversification Consensus Building in Energy TA Delivered FY03. Telecom Sector Investor Conference TA Delivered FY03. Recovery and Public Investment Delivered FY03. Program TA Housing TA Delivered FY03. Financial Sector TA Delivered FY03. Investment Climate Update TA Delivered FY06. Plan. and Imp. of East-West Expressway Delivered FY06. Doing Business TA Delivered FY06. Financial Sector TA Delivered FY07. Credit Registry RTA Delivered FY10.  Annexes CASCR Review 33 Independent Evaluation Group CAS/CPS 04-06: Pillar 3 Actual Results Comments Improve Public Service Delivery (as of July 2010) Objectives 1. Develop human capital and No progress strengthen social protection. 2. Improve public service delivery in Limited progress water and sanitation. 3. Improve public service delivery in No progress housing. 4. Strengthen natural resource No progress management. Major 1. Develop human capital and strengthen social protection. Outcome Enhance efficiency and quality of public The primary net enrollment rate dropped No progress. UIS Unesco Report. Measures service delivery in the education sector6. from 96% in 2003 to 95% in 2008. The secondary net enrollment rate was constant between 2003 and 2005. Enhance efficiency and quality of public Health expenditures (%GDP) was 3.7% No progress. Source: World service delivery in the health sector. in 2004 and 4.36% in 2007. Development Indicators Infant Mortality rate dropped from 37.8 in 2005 to 35.99 in 2008. Life expectancy at birth was 71 years old in 2004 and it was 72 years old in 2008. Non-communicable diseases and deaths by accidents increased. Enhance efficiency and quality of public No information available. Unknown progress. The bank has service delivery in the social protection helped the authorities to undertake a sector. household survey that updated the information about poverty incidence and evolution of poverty in the country. It also helped the authorities build their in- house statistical capacity. 2. Improve public service delivery in water and sanitation Stabilize water supply networks by No information available. Unknown progress. A new water code, rehabilitating the networks to reduce stressing the need for sustainable losses. development and use of scarce water resources was adopted in June 2005. The strategy of the Authorities has been to launch alternatives schemes for water production (desalination plants under BOT) and improve efficiency in water allocation and distribution (including management contract with private international operators for water distribution in the largest cities, starting with Algiers). Corporatize the utilities with an No information available. Unknown progress. appropriate level of financial and managerial autonomy, and increasing tariff levels to cover operation and 6The Bank is ready to engage with the Government on enhancing the efficiency and quality of public service delivery in the education, health and social protection sectors and on broader sector reform issues once the Government is ready to seek the Bank support. Over the next 3 years, the Bank will continue its dialogue on social sectors through sector work and continuous dialogue.  Annexes CASCR Review 34 Independent Evaluation Group CAS/CPS 04-06: Pillar 3 Actual Results Comments Improve Public Service Delivery (as of July 2010) maintenance (O&M) costs. Introduce the private sector in International operators were brought to Limited progress. A new water code, O&M in the form of lease or performance manage water distribution in the three stressing the need for greater based management contracts. largest cities of Algeria, improving involvement of the private sector, was efficiency in water allocation and adopted in June 2005. distribution 3. Improve public service delivery in housing. Design and implementation of action There was no significant reform of the No progress. The bank provided plans to move forward the strategic Government social housing policies. assistance to reduce the vulnerability of reforms of the housing sector. the urban zones most affected and improve the ability of Algerian institutions at the national level to cope with natural disasters, not highlighted in CAS. Pilot alternative approaches to address No information available. Progress unknown. The government priority policy reforms for land addressed land planning with a National management and public-private Master Plan for Land Use Planning “Le partnership in land development. Schema National de l’Aménagement du Territoire 2025 (SNAT)” Support to develop the local -Housing loans increased from 14,000 in Limited progress. Source: Mortgage debt/mortgage market. 2002 to 22,869 by December 2006. Finance ISR 12/2006 (Target value: 35,000), but outstanding mortgage loans remained at less than 1 percent of GDP. - The draft law for titling regularization discussed in Parliament, vote by both Chambers by December 2006. -By December 2006, 3 New collateralization arrangements for each target institution (Target value: 6) 4. Strengthen natural resource management. Build local institutional capacity to No information available. Unknown progress. understand the externalities between energy, trade policies, poverty and the environment. - Mainstream environmental concerns into high impact strategic lending in water and waste-water Strengthen the management capacity of The 1996 Industrial Pollution Control Limited progress. The bank helped environmental institutions and agencies Project, which closed in 2005 succeeded establish a legal and regulatory in reducing pollution in the areas targeted framework for the environment sector, by the project, build up the capacity of the Ministry of Environment (MATE), and improve the management of the environmental and pollution abatement Fund. Encourage an environmental sustainable No information available. Unknown progress. private sector development strategy. Support the formulation and No information on what extent has the Unknown progress. The Bank provided implementation of a water management bank influenced the Government strategy advice on water sector strategy through strategy focused on on water management. its Water Resources Management quality, sustainability of resource use, Strategy report completed in June 2003  Annexes CASCR Review 35 Independent Evaluation Group CAS/CPS 04-06: Pillar 3 Actual Results Comments Improve Public Service Delivery (as of July 2010) economic efficiency and equity Strength Government’s capacity for No information available. Unknown progress. Two RTAs were harmonizing environmental and social designed and launched in December safeguards policies with the Bank’s 2007 on (i) capacity building and policies by developing a structured institutional strengthening in the learning program aimed at building in- municipal solid waste sector, and (ii) country capacity for upstream integration capacity building in the area of Clean of environmental considerations in the Development Mechanisms. planning and decision making processes Implementation of the two RTAs has been slow mainly due to the lack of an existing legal framework and changes in counterparts. Ongoing P004974 Water supply and sewerage IEG outcome rating: Highly pre Unsatisfactory CAS/CPS P043724 Rural Employment Project IEG outcome rating: Satisfactory Support P042940 Low income housing IEG outcome rating: Unsatisfactory P067605 Urban natural hazard IEG outcome rating: Moderately vulnerability Satisfactory P069947 Ain Temouchent Emergency IEG outcome rating: Satisfactory Earthquake Emergency Project P004960 Industrial Pollution Control IEG outcome rating: Moderately Satisfactory P064983 Mortgage finance technical IEG outcome rating: Moderately assistance Satisfactory New P077753 Municipal Waste Management Dropped Lending P076920 Water Sector Reform Project Dropped. Support Urban/Housing Project Dropped. P076784 Second Rural Employment IEG outcome rating: Satisfactory Project Planned Social Expenditure Dialogue Approved FY03. Delivered FY03. AAA Civil Society Dropped. Support to Public Sector Delivery Not Found. Rural Development TA Delivered FY08. Environment Assessment Approved FY05. Delivered FY05. Poverty Dynamics TA Delivered FY05. RTA Water Sector and Sanitation Phase I Delivered FY08. Post-Obligatory Secondary Education Not Found. Public Sector Reform Dropped Pensions and Insurance Reform Study. Dropped. Water Resource Management Strategy Dropped Gender Assessment Dropped Poverty Assessment Dropped HD Dialogue Dropped Health Sector Financing Strategy Dropped Education Financing Strategy Dropped Poverty and Gender Follow-up Activities Dropped HD Follow-up Activities Dropped Public Sector Reform Dropped  Annexes CASCR Review 36 Independent Evaluation Group CAS/CPS 04-06: Pillar 3 Actual Results Comments Improve Public Service Delivery (as of July 2010) Additional Strategic Persp. for Agr. and Rur. Dev. Delivered FY04. AAA (ARD) Education Sector Review TA Delivered FY05. Poverty Update Delivered FY05. Skills Dev./Social Protection/Labor Delivered FY08. Policy Notes on Growth, Trade, Exp. Delivered FY09. Labor II TA for Social Insurance Delivered FY06. Support for Health System Governance Delivered FY08. TA Caisse Natl D’equip. pour le Deve. Delivered FY08. (CNED) Building Quality Assurance for High Delivered FY08. Educ. TA to CNES on Impact Evaluations Delivered FY08. DZ-RTA Municipal Solid Waste Mgmt  Annexes CASCR Review 37 Independent Evaluation Group Annex Table 10. List of IFC’s investments in Algeria that were active during FY04-FY10 (US$’000) Greenfield/ Project Project Short Approval Closure Project IFC Sector Project Net Net Total Net Existing ID Name FY FY Status Group Size Loans Equity Commitment project Investments approved in the pre-CAS period, but active during the CAS period 008567 SGA 1998 2005 Closed Finance E 10,000 1,000 1,000 008576 ABCA 1998 Active Finance G 20,000 2,000 2,000 010046 AIP 2000 2009 Closed Finance G 1,500 100 200 300 010331 ALC 2001 Active Finance G 20,000 692 692 Materials & 010371 ACC Cement 2002 2007 Closed G 260,000 35,000 35,000 Construction 010855 ATEF 2002 2004 Closed Finance G 40,000 20,000 20,000 011165 Ispat Annaba 2003 2007 Closed Metals G 127,475 25,000 25,000 Subtotal: 478,975 80,100 3,892 83,992 Investments approved in the CAS period Materials & 022999 ACC 2 2004 2010 Closed E/G 187,000 10,000 10,000 Construction 024478 Fertial Equity 2006 2010 Closed Chemicals E 167,000 24,242 24,242 024491 RedMed 2006 2009 Closed Extractive G 34,000 10,000 10,000 025356 MLA-Algeria 2007 Active Finance G 11,044 8,386 2,963 11,349 026339 BMIC 2008 Active Finance G 16,898 15,362 15,362 Materials & 027920 ASEC Algeria 2009 Active G 560,000 26,000 24,000 50,000 Construction 028069 MLA 2 2009 Active Finance E 9,703 9,703 9,703 028698 MLA Rights 2010 Active Finance E 1,506 1,508 1,508 Subtotal: 987,151 64,089 68,075 132,164 Grand Total 1,466,126 144,189 71,967 216,156 Source: IFC, May 2010 Note: The list does not cover the regional projects.  Annexes CASCR Review 38 Independent Evaluation Group Annex Table 11. List of IFC’s Advisory Services in Algeria, FY04-FY10 Project Project Primary Business Total Funds, ID Project Name Start FY End FY Status Line US$ Advisory Services operations approved in the pre-CAS period, but active during the CAS period 520885 ALC 2003 2004 Closed Access To Finance 60,000 520889 CEIMI 2003 2006 Closed Corporate Advice 131,627 520891 ANEXAL 2003 2006 Closed Investment Climate 70,000 Subtotal: 261,627 Advisory Services operations approved in the CAS period 523651 Banking Seminar (Credit Risk) 2004 2004 Closed Access To Finance 39,360 530521 BKL SEs Network 2005 2006 Closed Corporate Advice 162,000 530522 MDI-CEIMI 2005 2005 Closed Corporate Advice 16,050 530828 Care Advocacy Program 2005 2005 Closed Investment Climate 70,000 Best Practices in Non-Performing 531362 Loans Management 2005 2009 Closed Access To Finance 26,705 535443 CPA PEP MENA 2005 2010 Closed Access To Finance 222,015 536853 CNCPME 2005 2006 Closed Investment Climate 37,100 537610 MF - Algeria 2006 2006 Closed Access To Finance 40,000 539241 Conference on SME Banking 2006 2006 Closed Access To Finance 26,705 542704 Algeria DB’06 TA 2006 2007 Closed Investment Climate 102,116 546546 Care Advocacy 2 2006 2008 Closed Investment Climate 100,462 549325 Biz Simp Algeria 2007 2008 Closed Investment Climate 280,000 534507 SME Toolkit Algeria 2005 2009 Closed Corporate Advice 53,331 Enhancing Services to Small and 552145 Medium-sized Farmers (FERTIAL) 2009 2010 Active Corporate Advice 253,060 Dev. of Fee-based Training Services 551485 for SMEs (CEIMI 2006) 2007 2008 Closed Corporate Advice 40,060 561069 Credit Registry - Algeria 2008 2009 Closed Access To Finance 213,500 Subtotal: 1,683,004 Grand Total 1,944,631 Source: PEP-MENA 2009 Annual Report