Cameroon - Economic Management Project

Document of The World Bank Repor No P-5083-CM MEMORANDUM AND RECOMlMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE ExECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$ 9.0 MILLION TO THE REPUBLIC OF CAMEROON FOR AN ECONOMIC MANAGEMENT PROJECT June 29, 1989 This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - CFA Franc (CFAF) 1 US$ 1 = CFAF 305 CFAF 1 million 3 US$ 3,275 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS CAA .. .... S ..... ... . ... External Debt Agency DGTC .... Direction Generale des Travaux du Cameroun ISMP ......-.Institut Sup4rieur de Management Public MINFI .............. . Ministry of Finance MINFOP .... .. .... Ministry of the Civil Service MINPAT .................. .. ....... Ministry of Pleaning and Territorial Development PIP . ...... . ... Public Investment Program PMS ............. Project Management Secretariat UDEAC ...................... Union Douanibre et Economique en Afrique Centrale (Central African Customs and Economic Union) FISCAL YEAR July 1 - June 30 1 The CFAF is tied to the French Franc (FF) in the ratio of FF1 = CFAF 50. The French Franc is currently floating.  FOR OFFICIUL USE ONLY REPUBLIC OF CAMEROON ECONOMIC MANAGEMENT PROJECT LOAN AND PROJECT SUMMARY BORROWER t Republic of Cameroon MAIN BENEFICIARIES : Ministry of Planning and Territorial Development Ministry of Finance Ministry of Civil Service. The SAL Technical Committee Technical Commission for the Rehabilitaticn of the Public and Parapublic Enterpries Sector AMOUNT : US$ 9.0 million equivalent TERMS t Seventeen years, including a five-year grace period, at the standard IBRD variable interest rate. ON LENDING TERMS I Not applicable FINANCING PLAN t Government US$ 1.5 million IBRD US$ 9.0 million Cofinancing USS 4.0 million (to be confirmed) TOTAL US$ 14.5 million ECONOMIC RATE OF RETURN t Not applicable STAFF APPRAISAL REPORT t No separate report This document has a restricted distribution and may be used by recipients only in the perfornance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OP THE INTERNATIONAL BANK FOR RECONSTRUCTION AN) DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF CAMEROON FOR AN ECONOMIC MANAGEMENT PROJECT 1. The following memorandum and recommendation on a proposed loan to the Republic of Cameroon for US$ 9.0 million equivalent is submitted for approval. The proposed loan would have a maturity of seventeen years, including a five- year grace period, at the standard variable interest rate, and would help finance an Economic Management Project (EMP). 2. Backsround. The Bank Group has supported efforts to improve management of Cameroon's economy through two technical assistance operations since 1976. The first aimed to increase Government's capacity to manage development projects in crucial economic sectors and to formulate viable projects for domestic and foreign financing under the Fourth Development Plan. The second, which closed in December 1988, continued the focus on provision of expatriate expertise, equipment and training in key ministries and provided high level expertise and short term consultancies in the social sectors. 3. Cameroon now finds itself faced with a major economic crisis and declining oil revenues. To meet the situation, the Government recently started preparing and implementing a recovery program which will be supported through a Bank Structural Adjustment Loan (SAL). Preparation of the program initially encountered difficulty due partly to the lack of coordination in the Government and weaknesses of key directorates. The management of Cameroon's economy is further hampered by the lack of well established guidelines and procedures and a weak statistical data base. The proposed project is designed to help remedy this situation and assist the Government in implementing its structural adjustment program successfully. It has been prepared and negotiated in tandem with the SAL, thus ensuring consistency between the two operations. 4. Rationale for Bank Involvement. The combination of a serious economic and financial crisis, the overriding need to maintain prudent economic management and increase the share of the *aon-oil sectors in economic output and, at the same time, implement a far-reaching reform program, places a heavy burden on the administration. To achieve all this will require an injection of well-targeted technical assistance with clear institution-building objectives. In close consultation with the Bank, France, Canada, USAID and UNDP are all preparing operations to provide this kind of assistance. The Bank's experience in Cameroon and its comparative advantage in mobilizing and coordinating international iupport for structural adjustment will enhance the Government's recovery program and its implementation of key sectoral strategies in the Cameroon economy.  2 5. Proiect Obiectives. The key objectives of the proposed project would be to assist the Government: (a) formulate and implement reforms in the context of its structural adjustment program; and (b) promote lasting, long-term improvement in policy analysis and management of the country's economy. It would also be expected to foster improved coordination among key Government agencies. This is a vital need in Cameroon where such agencies have too often worked in isolation from each other. Finally, the project would tap into the considerable pool of national expertise through the greatest possible u6e of Cameroonian consultants and broaden local participation in the adjustment process. Special training programs have been designed to enhance capabilities of Cameroonian staff in key ministries to deal more effectively with economic management. 6. Proiect Description. The project would consist of priority activities ins (a) policy analysis and macroeconomic management, in particular setting up and applying appropriate guidelines and procedures in public investment programming, debt management and statistical data production; and (b) reform of the civil service as well as the large parapublic sector. These activities ave the core of Cameroon's structural adjustment program supported by the proposed Bank SAL. Five specific project components have been defined and agreed with the Government. These are: (i) the establishment, monitoring and updating of a computerized multi-year rolling investment program and support to improve procurement procedures; (ii) support to the reform of the national statistics system; (iii) support to improve Cameroon's debt management; (iv) support for the launching of civil service reform measures --in particular reform of the civil service regulatory framework, restructuring of staffing requirements, reform of payroll management-- and development of national consulting capacities; and (v) support to the Technical Commission in charge of PE sector reform and rehabilitation. The project would also include: (vi) financing for consultant services and other assistance needs identified during the early stages of project implementation and during implementation of the adjustment program; and (vii) financing for the equipment and operation of a Project Management Secretariat (PMS) which would be responsible for day-to-day administration of the proposed project and would provide general administrative support to the SAL Technical Committee (Comite de Preparation et de Suivi du PAS).  3 7. Project activities aimed at strengthening the national statistics directorate and certain aspects of the civil service reform would be complemented and reinforced by those of the proposed Social Dimensions of Adjustment project now under preparation. 8. Project activities would be implemented over a period of four years. Depending on the future evolution of Cameroon's reform efforts, the project could be followed by further technical assistance to support subsequent stages of the adjustment process and ensure follow-up of activities launched under the proposed project. 9. Benefits and Risks. The main benefit expected to result from the proposed project would be to facilitate and accelerate implementaticr of Cameroon's economuc recovery. It would do this by providing assistance to key government agencies involved in implementing the common agenda defined in Cameroon's adjustment program and by serving as a vehicie for coordination among these agencies. The country's trained manpower base is strong by regional standards. It is therefore expected that the new guidelines, procedures and systems to be set up will be rapidly mastered by nationals, resulting in lasting improvements in economic management. The main risk associated with the project is that, like the previous technical assistance projects, it would not be adequately managed or coordinated in the field. This risk is mitigated by the strong Government commitment to the structural adjustment program in general and the proposed project in particular. Moreover, the Bank has obtained assurances on the project management measures specified below which are considered satisfactory. The recently strengthened Bank Resident Mission in Cameroon would play a key role in the day-to-day supervision of the project. 10. Actions Agreed. During negotiations, the Government agreed to: establish the Project Management Secretariat within the SAL Technical Committee to cover coordination of the proposed project and appoint appropriately qualified staff with proven records to staff it. The establishment of the PHS with the Coordinator of the SAL Technical Committee as its head and the entry on duty of the administrator and the accountant would be conditions of effectiveness of the loan. The Government also agreed that: (a) beginning December 31, 1989 and at six months intervals, it would, through the PMS, furnish proposed work plans for the execution of the project during the following s,x months to the Bank for review and approval, and, on the basis of semi-annual reports, exchange views with the Bank on the status of project implementation; (b) prior to undertaking any technical assistance, training, studies or other activity identified during implementation, it would, through the PMS, submit detailed proposals including the justification, plan of action and list of necessary supporting services; and (c) no later than June 30, 1990, it would exchange views with the Bank on project funding requirements and ways and means to fulfill them. 11. Proiect Costs and Financing. Total project costs are estimated at USS 14.3 million equivalent, of which US$ 12.4 in foreign costs. The Bank loan of US$ 9.0 million equivalent would finance 72 percent of foreign costs and 62 percent of total costs. Government's contribution of approximately  4 US$ 1.5 million equivalevt would finance 10 percent of total costs. Because public resources are so constrained, the Government has made it clear that it vishes to limit its financial contribution to the project to the minimum necessary and that the availability of concessional funds is highly desirable. For that reason, cofinancing is being actively sought. US$ 4.0 million has been requested from the Japanese Grant Facility; the request is being favorably considered for the current Japanese fiscal year. Such cofinancing would finance 28 percent of total costs. Activities scheduled for early implementation would be financed by the Bank, giving the Government time to secure the expected cofinancing. To ensure that project financing needs are met in a timely manner, the Government and the Bank would exchange views on the status of funding requirements by the end of Project Year 1. 12. Recom.L.,idation. I am satisfied that the proposec loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Barber B. Conable President Attachments Washington, D.C. June 29, 1989  -5- SCHEDULE A ECONOMIC MANAGEMENT PROJECT PROJECT COSTS AND FINANCING PLAN Percent of Proiect Costs Foreign Local Total Base Cost --------(US$ million)---- PIP Support 0.6 0.1 0.7 5S National Statistics 1.7 0.2 1.9 14! Debt Management 0.7 0.0 0.7 5Z Civil Service Reform 3.1 0.4 3.5 272 PE Reform 3.7 0.5 4.2 31! Study Fund & Other Activities 1.7 0.1 1.8 13Z PMS 0.1 0.6 0.7 52 Base Costs 11.6 1.9 13.5 1002 Total Co4tingencies 0.8 0.2 1.0 Total Project Cost 12.4 2.1 14.5 Notes Project V-ase Costs include US$ 500,000 in taxes. Financing Plan Foreisn Local Total ---------(US$ million)--------- Government 0.0 1.5 1.5 IBRD 8.9 0.1 9.0 Other 3.5 0.5 4.0 Total 12.4 2.1 14.5 AP1CG 05108189  - 6 - SCHEDULE B Procurement Method ICB LCB Other TOTAL ------------------------_------------------------_--____-----_---__-- - US$ million - Resident Advisers 1.4 1.4 (1.4) (1.4) 10.0] (0.01 Short Term Consultants 7.4 7.4 (7.4) (7.4) (0.0) (0.0) Equipment 3.3 3.3 (0.1) (0.1) 13.2] (3.2] Training 11 0.9 0.9 (0.1) (0.1) r(-8) [0.81 Operating Costs 1.5 1.5 (0.0) (0.0) (0.01 (0.0] TOTAL 14.5 14.5 (9.0) (9.0) 14.0) 14.0] Notes Parentheses ()s IBRD-financed; brackets II: financed by cofinancer. ---------------------------------------------------------_---_______------- Disbursements Cat;egory Amount (US$ 000) 1. Resident Advisers 1,100 100Z 2. Short Term Consult :nts 5,300 100Z 3. Consultant services for activities to be determined during implementation of the Project 1,150 1OOX 4. Training in support to PE reform 100 1002 5. Equipment in support to PE reform 100 852 6. Reimbursement PPF 350 Amount due 7. Unallocated 900 TOTAL 9.000 Estimated IBRD Disbursements IBRD Fiscal Year 90 91 92 93 94 95 --------------(US$ millicn)------------ Annual 0.7 2.2 2.5 2.0 0.8 0.8 Cumulative 0.7 2.9 5.4 7.4 8.2 9.0 ----Disbursement Profile for Region--- 1/ Reflects costs of logistical support to training. An additional US$ 0.7 million for training is included under IBRD financing of consultants.  -7- SCHEDULE C KEY PROCESSING EVENTS Identification Mission November, 1988 Prepared by Government with Bank assistance. Appraisal February/March,1989 Negotiations May, 1989 Board Presentation June, 1989 Anticipated Date of Effectiveness July, 1989 ApiCO 05/08/89  - 8 - SCHEDULE 0 STATUS OF BANK GROUP OPERATIW4S IN CAMEROON SUMMARY STATEMENT OF LOANS AND CREDITS AS OF MARO4 29 1930 Amount In US$ milIIon (less cancellatIons) Loan or Fislol Undis- Closing Credit No. Year Borrowe. Purpose Bank IDA burd i Dnto Credits 28 Credits cloesd 243.22 C1i1so-CAM 1981 Cameroon Technical Cooperation 10.00 .8S 12/31/88(R) Total number Credits * 1 10.00 .8S Loans 28 Loans closed) 346.24 .20920-CAM 1982 Cn roon Forestry 7.00 1.95 12V81J8S(R) L21600-CAM 1982 Csmeroqn Oil Palm/Rubber Cons 50.80 16.98 06/80/8S L21800-CAM 1982 Cameroon Road V 70.00 08/B0/89(R) L22590-CAM 1983 Camereon Port III 22.50 10.21 08/30/89 L24060-CAN 1984 Comeroon Western Province ROP 21.50 18.41 12/81/90 L24S50-CAM 1985 Caseroon Hev eam Rubber S.80 2.80 06/80/90 L26870-CAM 1986 Cameroo FSAR II 25.50 21.76 12/81/91 L25640-CAM 1985 Cmeroon Roads VI 125.00 99.09 06/10/91 U268BO-CAM 1986 Camerooe Educ. A Voc. Train. 80.10 24.71 08/80/98 LB0180-CAU 1987 Cnmeroon Roads VI 20.00 08/30/91 1-27660-CAM 1987 Caneroon Agric. Research 17.80 16.60 06/80/98 U29120-CAM 1988 Cameroon Cocoa Rehob 103.00 103.00 21/81/94 L29990-CAM* 1989 Cameroom Urban lI 140.00 148.00 08/30/94 L30140-CAML 1989 Camerosm Livestock Sector Dev. 84.80 $4.60 NO80/85 TOTAL number loans * 14 682.10 492.95 TOTAL *- 1,028.84 253.22 of which repaid 180.81 18.49 TOTAL hold by 8onk & IDA $981.03 iS:. f Amount Sold 10.45 Of which repaid 8.46 TOTAL undisburned 49S.8 Notes. * Not yet effective * Total Approved, Repayments, and Outstanding be lance represnt both active and inactive Loons and Credits. (R) Indicates formally revised Closing Date. The Signing, Effective and Closing dates are based upon Loan Department official data and ore not taken from the Task Budget file.  REPUBLIC OF CAMEROON SUMMARY OF IFC INVESTMENTS (As of January $1, 1989) Total Fiscal Type of US$ MILLION Hold Year Company Business Loan Equity Total by IFC* Undisbur, 1976 Bats Societe Anonym Shoes 0.13 0.13 0.00 O Camerouna tso 1977/?9 S.A.F.A. Caeroun Palo Oil A Rubber - 1.38 1.38 ).O O 1981 S.A.C. 1979 Alucam-Compagnel Aluminum Smelting 7.00 0.93 7.93 0.93 Camerounalso do L'Aluminium Pechi ney-Ugin. 1981 Societe Camerounaio Flour Milling 1.12 0.19 1.31 0.54 - de Minoteries 1981 Societe 'aemrounalse Glass Container - 0.10 0.10 0.10 - do Verrcri. Ianufacturing 1982 Socleto Sucriero du Sugar Plantation 1.44 - 1.44 1.19 - Caomeroun & manutacturlg ng 1965 Societe dos Palmorales Palm Oil 1.98 O.S 2.64 1.71 - de la Forme Suisse 1986 Cotonniere Industrielle Textiles 2.98 - 2.98 3.30 - du Caeroun (CICAM) 1986 Socloto Indust:iell. Dairy Products 2.28 0.67 2.85 2.84 - Laltiere du Cameroun (SILAC) 1967 Prestige Bottling Co. Soft Drln:. 2.73 0.80 3.03 3.03 - 1988 Societe des Plantations Banana Plantation 1.91 0.36 2.26 2.83 0.09 Nouvellea du Penja TOTAL 21.44 4.61 25696 15.97 0.09 -------- - - a Amounts stated are net of repayments, write-offt, sales, cancellations and exchange adjustments.  10 REPUBLIC OF CAMEROON ECONOMIC MANAGEMENT PROJECT TECHNICAL ANNEX Table of Contents Paae SECTION As The Institutional Setting .............................. 11 SECTION Bs Detailed Project Description Part 1. Support to the Public Investment Program ... 12 Part 2. Support for National Statistics .......O-* 15 Part 3. Support to Debt Management ............ 18 Part 4. Civil Service Refom ....................... 22 Part 5. Public Enterprise Reform ................... 26 Part 6. Study Fund and Other Activities ......... 29 SECTION C: Project Management and Implementation .............. .... 29 SCHEDULE 1: Training ...................................... .. . 32 SCHEDULE 2: Implementation Calendar .. ........... ............... ... 34 Attacbments 1. Proposed Financing Plan ............................. . 36 2. Summary of Project Costs by Component and Type of Expenditure ...... .. 37  11 SECTION A: THE INSTITUTIONAL SETTIt7G 1. One of the two key objectives of the project is to provide support in preparing and implementing the Government's structural adjustment program where it is most needed. Overall responsibility for implementation of the adjustment program is entrusted to an Interministerial Committee which includes top-ranking representatives of the Presidency of the Republic, the ministries of Finance, Plan, Industry, Agriculture, the Civil Service and of the Central Bank. 2. Day-to-day preparation and monitoring of the adjustment program are delegated to a Technical Committee set up for this purpose by a Presidential Decree promulgated in December 1988. The Technical Committee's mandate specifically states that it is responsible for coordination with the World Bank and the African Development Bank which is also providing support to Cameroon's adjustment program. The Committee includes representatives of the Presidency of the Republic, the Caisse Autonome d'Amortissement (CAA) and of the ministries of Finance, Agriculture, Industry and Commerce, and Mines and Energy; the Ministry of Planning and Territorial Development (MINPAT) has two representatives on the Committee and the Committee chairman --the Coordinator-- is a high- ranking official of that ministry. The project management secretariat (PMS) will function as a Secretariat for this Technical Committee and as the management unit for the proposed project. The mandate of the Technical Committee is being extended to include the Secretariat and to cover coordination of the proposed project. 3. The proposed project will finance activities in three ministriest (i) MINPAT, where: (a) a rolling four-year public investment program is being established; and (b) assistance will be proivided to strengthen the capacity of the national statistics directorate at part of an effort to upgrade the performance of the national statistics system; (ii) the Ministry of Finance (MINFI), where assistance will be provided to make the newly created CAA, responsible for Cameroon's public debt management, fully operational; and (iii) the Ministry of the Civil Service (MINFOP) and MINFI, where it will support Government efforts to reform the management of the civil service, in particular through activities to make payroll administration more transparent and efficient. It will also finance activities in the Technical Commission for the Rehabilitation of the Public and Parapublic Enterprise Sector which operates under the authority of an Interminiaterial Committee chaired by the Secretary General of the Presidency. 4. Proiect Management. The Coordinator of the SAL Technical Committee will also be the director of the PMS. The PMS team will be composed of an administrator, a project accountant and support staff. The accountant and support staff may be drawn from outside the civil service and will be provided with the logistic and other necessary resources to ensure efficient project implementation. The team will receive training in Bank procedures for management of technical assistance before project start-up.  12 5. Interministerial Coordination. The coordination of project activities in the different ministries and agencies will be the responsibility of the Coordinator. SECTION B: DETAILED PROJECT DESCRIPTION Part 1. Support to the Public Investment Proaram Government Policy 6. Cameroon's present planning and budgeting systems are not well suited to the pursuit of rational public expenditure policies. Hitherto, ambitious development plans that did not take sufficient account of financial constraints and changing economic circumstances have been formulated every five years. The world economy has become more volatile, and an open economy like Cameroon's can find that its resource availabilities change sharply in unexpected directions in a short t.me. The authorities, realizing the deficiencies of the present system, have decided to integrate the annual budgeting process into a multiyear programming and budgeting process based on realistic estimates of resource availability. They will supplement the Plan with a rolling four-year public investment program (PIP). The annual updating of this program will be coordinated with the annual preparation of the medium-term macroeconomic forecast and the establishment of budget allocations for each of the ministries. This will provide the basis for an annual review of the updated PIP by the Bank as part of the structural adjustment program. Each year, the first year of the investment program will appear as an annex to the National Budget and will constitute binding guidelines for capital expenditures in any given year. Preparation of the Investment Program 7. MINPAT's Planning Department procedures for the selection, preparation and programming of investment projects will be strengthened. Computerized files will be established for every project and the economic justification of each will be evaluated. All government investments, whether financed from the National Budget or from external resources will be consolidated in one program. Implementation of the investment program, irrespective of financing source, will be strictly monitored. At first, however, the program will cover all investments in the Government's budget, including capital expenditures of public enterprises that are financed by the budget. In parallel, a system will be set up to monitor the performance of public enterprises; it will be operated by the Technical Commission for the Rehabilitation of Public Enterprises. Using this system, the Government intends to present a consolidated public investment program covering both government and parapublic sector investments within two to three years. 8. Proiect Files. The preparation of a budget requires that more detailed information be readily available about projects. A file (fiche) will be established for each project in the PIP. It will contain: (i) a  13 detailed description of each project; (ii) the anticipated cost for each year of execution; (iii) actual expenditures and disbursement of foreign loans or grants (to be coordinated with the CAM); (iv) the project's financing resources; and (v) a brief account of its main problems and prospects. These files will be maintained on a personal computer, using a commercially available database software with the capacity to aggregate the individual "fichesD into larger tables (tableaux de bord) showings (i) total expected and actual disbursements by year; (ii) financing by creditor; and (iii) investmenta by sector. These, in turn, will serve as the basis for the preparation of the rolling four-year investment program and for monitoring financial and physical progress. 9. Selection of New Projects. The Government intends to develop criteria for the evaluation of new project proposals and ensure that key indicators of the anticipated impact of a project are listed in the project description. Central to these criteria will be the level of recurrent expenditures they entail and, for infrastructure and productive projects, their economic rate of return. Other projects, for instance in the education and health sectors, will be judged on the criteria of least cost, relative impact on the recurrent budget, and consistency with sectoral strategies. Implementing and Monitoring the Program 10. Implementation of the Plan and of the annual investment budget has been hampered not only by lack of resources but by lengthy and complex procurement procedures which, apart from slowing project implementation, have also contributed to raising costs since contractors usually include a substantial margin in their charges to compensate for delays. The problem has been exacerbated by the Government's reputation as a slow payer. Increased efficiency in the area of public investments can only be achieved if procurement and public contract monitoring procedures are made more efficient and their cost is reduced. This will be achieved by standardizing guidelines and procurement documents, closer monitoring of project implementation, personnel training and changes in the relevant regulations where necessary. To assist with this, the Government has recently established a central agency, the Direction Generale des Travaux du Cameroun (DGTC), within the Pre dency of the Republic. 11. Over the long term, data on the implementation of the structural adjustment program should be recorded using the same computer software as for the rolling four-year investment program and annual budget, so that an integrated report on the program, its implementation and the following year's budget can be easily produced. However, this is too ambitious a proposal to implement in the next two to three years. In the interim, micro-computers will be purchased and consultants brought in to design a simple system to track project implementation based on commercially available database management software. A format will be designed for monitoring physical and financial progress that draws upon currently available information. The principal sources would be: (i) the new CAA; (ii) data on Government spending from the Budget Directorate of MINFI; and (iii) the reports on physical progress prepared by the Projects and Programs Department of MINPAT. In addition, a contact person should be identified in each key technical ministry, and information sought from the  14 local representatives of the main creditors. Responsibility for this task will be centralized in MINPAT's Projects and Programs Department which will also take performance indicators much more into account in deciding investment budget allocations. Five or six adequately trained professionals will be assigned to monitor the budget. Meanwhile, MINFI and MINPAT are in the process of preparing a joint statement on the coordination of macroeconomic programming, setting out responsibilities for preparation of economic forecasts (including forecasts of revenues and of appropriate borrowing) and of the multiyear and annual investment programs, as well as monitoring execution of the budget and the investment program. The statement is also intended to clarify the complex inter-relationship between the preparation of the synoptic tables (tableaux de bord) and the investment progress reports to minimize duplication. Project Support 12. Successful implementation of the establishment and functioning of a system to program and monitor the rolling four-year investment program is one of the conditions for release of the second tranche of the SAL. To assist the Government in this effort, the project will provide MINPAT's directorates of Planning and Programs and DGTC with the necessary resources to help them carry out their new responsibilities under Government guidelines for preparation and implementation of the multiyear rolling investment program as described above. These responsibilities can be summarized as follows: (a) The Investment Program - establishment of detailed guidelines for project selection, in particular of criteria which accord highest priority to economic return; - establishment of a computerized system for the four-year rolling investment program; - preparation of computerized project-by-project files for major investments which detail the principal components, items of expenditure, implementation difficulties encountered and economic justification; - elaboration of a computerized system which allows preparation of quarterly reports for ministries and donors on the financial and physical implementation status of major investments projects; - analysis of the impact of major projects on the State's recurrent budget; - preparation and carrying out of appropriate training programs;  15 (b) Procurement - preparation of standardized public procurement documents; - setting up of a training program for technical personnel involved in procurement; and - an analysis and revision of procurement procedures to make them more efficient, in particular, the feasibility of decentralizing decision-making. 13. Technical Assistance. Throughout preparation of the adjustment program the Government has demonstrated its preparedness to move from a static five-year Plan system to one of a rolling multi-year investment program. The presence of well-qualified staff in MINPAT will facilitate the task of the consultants called in to assist in the transition to new operational systems and procedures under the structural adjustment program. The assistance of two short term technical experts should be sufficient. Draft terms of reference have been agreed with Government. The experts will be recruited for a total of 16 manmonths at a cost of US$236,000 equivalent and will be expected to train national counterparts to take over their functions in that time frame. A further expert will be recruited for two years for the procurement procedures assistance described above at an approximate cost of US$275,000 equivalent. In the event further assistance is needed for either the PIP or procurement support, it would be financed by the project study fund. 14. Training. Short-term local training will be provided for ten staff and financing will be made available for five candidates to participate in seminars and workshops, some of them overseas, on project evaluation and monitoring. A budget equivalent to US$65,000 has been allocated for that purpose. 15. Equipment. The project will also finance two micro-computers to be added to those already available in MINPAT and to be used in PIP preparation and monitoring. Part 2. Support for National Statistics The Present Situation 16. The quality of the national statistical data base is deficient in a number of areast ti) the base year for the Final Accounts (1977/78) is too old; (ii) current data to facilitate monitoring of the structural adjustment program do not exist; (iii) too much reliance is placed on the Statistical and Fiscal Report, which covers only the modern sector and has the further disadvantage of doubling as a fiscal document -- other tools, such as industrial surveys, need to be developed; (iv) the calculation of constant prices based on current prices relies too heavily on the consumer price index for middle income families in Yaounde, the capital -- data should be collected from other regions as well; (v) software verification and testing before results are accepted for inclusion in the national accounts data base is insufficiert; (vi) subsistence agriculture, rural  16 construction and informal trade are not sufficiently taken into account; (vii) data quality control is weak; and (viii) computer equipment and financial resources are both inadequate. These technical difficulties are compounded by institutional constraints. Government Obiectives and Action Proaram 17. The Government realizes that the output of the national statistics directorate needs to be more consistent, relevant, accurate, objective and timely. The Government has set for itself the following goalss (i) formulation of a national policy on statistics which aims at improving the management of the nation's economy with emphasis on improvement of national accounting; (ii) development of series of leading indicators and quarterly statistics; (iii) coordination of data processing among all agencies dealing with national statistics; (iv) adoption of a uniform system of concepts, definitions. classifications and methods; (v) establishment of administrative statistics and their inclusion at all levels of the national statistics system; and (vi) development of a collaborative approach between producers and users of statistical data. 18. To achieve the abcve objectives, the Government realizes that it needs to take the following accompanying measures in a timely manner, which it plans to do e' its own: (i) a National Statistics Council and a working level National Coordinating Committee will be established; (ii) tasks will be assigned within the Administration according to sectors -- agricultural, industrial, etc. -- to avoid duplication of effort; (iii) the use of the UDEAC Accounting System (Plan Comptable) will be made mandatory for all companies operating in Cameroon. At present, various systems are used and this further hampers the development of a smoothly functioning national statistics system; (iv) priority will be given to producing the national accounts data base in a timely fashion. At present, these data are only partial and processing is slow and subiect to error; and (v) priority will be given to producing statistical data to be used in improving the functioning of the Administration with component break-downs and input/output relationships to be used for the national accounts. All census, survey and study results will be included in the national system data base and be organized and managed at both the macro and micro levels. Proiect Support 19. The particular difficulty encountered in preparation of the structural adjustment program and general management of Cameroon's economy is due partly to the lack of reliable statistical data. A remedy for this situation is urgently needed and would be provided by successful implementation of the action program described above, which calls for provision of physical and financial resources linked to an appropriate training program for Cameroonian staff. The project will support the government action program in the most effective way possible through financing of consultant services, training and equipment. 20. Phasing of the Support Program. The program will be implemented in two phases to maximize its chances of bringing about real reform in the system. The first phase will consist of improvements in organization, data processing, and statistical methodology and of national accounts data  17 collection, particularly in the informal sectdr which is rapidly gaining in importance as the crisis in the formal sector grows. The second phase will begin when the improvements expected under the first phase are in place. It will consist of defining and setting up a data bank and adding to the Department of Statistics' inventory of computer equipment. The details of implementation of the second phase, particularly with regard to defiuing equipment needs, would be worked out during the first phase by a Data Base specialist (Post # 3) under the authority of a Statistical Systems Management specialist (Post # 1) who would be responsible for coordinating all statistics technical assistance. Phase II is expected to begin about one year after the beginning of Phase I. 21. Technical Assistance. While it will be necessary to hire some expatriate assistants, in particular for training and for operational and computerization aspects, national consultants would also be recruited to provide expert assistance under this component. Post # 1: A Statistics Systems Management specialist with counselling and training responsibilities will draw up a master plan and help organize the entire national statistics information system. Contract: 1 to 2 years (US$274,000 equivalent, for two years). Post t2: A National Accounts specialist with counselling and training responsibilities for improvement of national accounts keeping. He will be in charge of preparing and supervising survey operations designed to collect information on key economic activities (transportation, urban informal sectors, forestry, etc.) and will develop series of current and leading indicators. Contracts 3 years (US$413,000 equivalent). Post # 3: A Data Base specialist, with responsibility for preparing a concrete plan of action for setting up the computerizeu data bank to be carried out under post # 4. Contract: 6 months (US$88,000 equivalent). Post t 4: A second Data BAse Specialist, to be recruited in Phase II, will be responsizle for the implementation of the data base configuration appropriate for economic policy analysis, for technical staff training and for planning functions (follow-up of mission described in post # 3). Contract: 1 to 2 years (US$274,000 equivalent, for two years). Post descriptions for all the above experts have been discussed and agreed with Government. 22. Equipment. The regional statistical offices are properly staffed but lack the basic necessary equipment. Under Phase I, the project will provide support to five of the ten regional offices: Bertoua, Maroua, Ngaoundere, Ebolowa and Buea. The remaining five offices will be assisted by the proposed SDA project presently under preparation. The combined assistance under the project and under the SDA operation will provide the necessary support to the regional offices in producing their main outputs,  18 namely price index data and economic surveys. A standard list of equipment, including a micro-computer, has been agreed upon and will be used as a reference to determine the needs of each of the regional offices. Based on the list of equipment presently available in the five offices, a budget equivalent to US$262,000 has been allocated to finance complementary needs. 23. Government has requested financing for additional computer equipment for the central office in Yaounde. Such support would be provided under Phase II following an assessment of specific needs by the Systems Management specialist and if these needs are justified. The Bank presently believes that further equipment will not be nieeded if, following completion of the on-going census expected in mid-1990, equipment of the census directorate is transferred to the general statistics Yaounde office. 24. Traininx. The project will put heavy emphasis on on-the-job training and local seminars to be organized with assistance from local training institutions. A budget equivalent to US$121,000 has been allocated to finance the training program prepared and agreed with Government. 25. The project will further assist the national statistics directorate by financing seminars for business managers to alert them to the problems the Government faces in collecting statistical data and to bridge the information gap between the statistics directorate and the business community. Three such seminars are planned over a three year-period at an estimated cost of US$20,000 equivalent. Part 3. Support to Debt Manaaement Background 26. The Government has in the past followed a cautious policy on use of external resources, as a result of which the amount of public and publicly- guaranteed foreign debt rose slowly. However, Cameroon now faces heavy financing needs if it is to restructure the economy and relaunch growth. As petroleim sector revenues and prices for Cameroon's major agricultural export commodities continue to drop, only limited amounts of financing for arrears payments, for restructuring or for new investment can be met from domestic resources. Tight control and sound man;tement of debt will be necessary in the future. 27. The present ratio of public debt service both to revenues and to exports is about 25 percent. However, with financing needs and foreign borrowing increasing, the ratio of public debt service (including debt to the IMF and service on the financing gap) to exports would increase to about 35 percent by 1993. This increase from the 24 percent level of 1988t89 would be disturbing. Thus, as part of the structural adjustment program, the Government is making every effort to: (i) improve the efficiency with which government funds are used to obtain more growth from each franc invested; (ii) incorporate PE investment into the investment planning process; and (iii) monitor the debt situation more efficiently and more closely than in the past. The PIP component of the project will  19 address the first two objectives. The third objective is the focus of attention under the present project component. Debt Manaxement and the CAA 28. Government Polics. The Government hopes to mobilize increased external resources for its economic recovery program and at the same time keep its indebtedness within manageable limits. An Autonomous Debt Agency, the Caisse Autonome d'Amortissement (CAA), was established within MINFI by Presidential Decree in 1985 and the present director was named in 1987. 29. CAA Management Obiectives. The Government's policy sets the following objectives for the CAA in monitoring direct public debts . management of debt agreements . monitoring of the projected payments schedule . management of debt service payments . monitoring of outstanding amounts For monitoring of publicly guaranteed debt, the objectives are as follows: . management of public guarantees d definition of the conditions for such guarantees , monitoring of public sector enterprises, in particular with regard to their debt capacity, through periodic surveys. 30. In addition, the CAA will be responsible fort ti) statistical monitoring of the private debt through periodic surveys; (ii) upstream management of interfacing with other systems through monitoring of HINPAT investment projects; (iii) downstream management through providing information to the Accounting and Treasury Monitoring modules; (iv) forecasting of debt service and disbursements for both direct and State guaranteed debt; and (v) assistance to high level decision makers in the form of information yielded by simulation and statistics modules. The Existing Debt ManaRement Situation 31. The Institutional Setting. Although the debt office is now officially known as the Caisse Autonome d'Amortissement, to date, largely due to the lack of adequate resources, it continuee to function simply as a directorate of the Ministry of Finance and does not have the necessary autonomy or capacity implied by its new designation. One major disadfantage of the present setup is the delay involved in making debt payments and in timely communication with creditors. Another results from the division of debt management responsibilities between the Planning Ministry and the debt office. The debt office needs to become involved in the planning process much earlier, before sources of financing are agreed upon. The existing debt office is hampered by a serious lack of resources which is felt at various levels: much needed office equipment is in short supply; few offices have the air conditioning needed for operation of new computer equipment; and few staff have access to outside telephone lines, compounding communication difficulties.  20 32. Data on the financial viability of public enterprises with government- guaranteed debt are inadequate or simply non existent. This makes any accurate evaluation of the State's risk or the financial management of this risk extremely difficult. Information and monitoring systems which allow the debt office to follow the financial situation of public enterprises which have, or are likely to contract, State guaranteed debt are urgently needed. 33. Existing Procedures. The Debt Directorate does not rely on its computer system for daily loan operations, nor for most of its statistical data. Virtually all debt data recording, calculation and reporting is still done manually. The computer system is used to prepare certain listings and for cross checking, but cannot be relied upon for more than this because its data base is incomplete and contains many errors. World Bank debt reportb are prepared from handwritten debt records and existing manual systems and procedures are judged adequate for this purpose. However, there are institutional and procedural weaknesses in the debt office that need to be ad.Aressed to improve the timeliness of debt data and improve debt management in general. The debt office possesses a large and complex set of computer programs for debt management, written initially by foreign consultants, and subsequently elaborated on by a Cameroonian expert member of the debt office staff. These programs are written in BASIC, a language not often used for financial operations and which involves the use of multiple files and reference tables. The system is able to project future schedules of debt service but several flaws need to be .ddressed. Thesa Includes (i) inadequate documentation -- the user guide dates from 1985 and does not reflect the many system changes made since then; (ii) there is no comprehensive description of the reports produced by the system; and, consequently, (iii) some of the system's features are unknown to local staff; (iv) training for the computer system users has been inadequate, in part because of the lack of up-to-date documentation; and (v) there are errors in the debt data base. Project Support to the CAA 34. The Government's plan to make the CAA operational is embodied in the SAL. The proposed project will assist the Government in gradually transforming the present debt office into a truly autonomous institution capable of assuming all responsibilities related to national debt management. 35. Technical Assistance. CAA's most immediate need is for appropriate information and managament systems. The first priority is to study the appropriate structure, organization and procedures for the CAA. The study will start with an audit of the debt office and will establish a master plan, a stLffing plan and training programs to be implemented in a second phase. This study is now underway with PPF financing. It will take six manmonths (US$88,000 equivalent). 36. At the same time, the data base should be cleaned up as an equally urgent task. To do this, the proposed project contains provision fo.- a six-month mission (cost: US$88,000 equivalent) by a knowledgeable systems analyst, preferably one who has already worked on the Cameroon system. The mission will specifically: (i) update the existing system user's guide;  21 (ii) set up appropriate procedures to check data quality; and (iii) prepare and implement training programs for Cameroonian counterparts and users of the system. This mission is also underway with PPF financing. 37. Equipment. The project will provide financing to cover the immediatt needs of the CAR in the form of two portable computers, software, maintenance of an existing compr4er and other material needs (total costs US$39,000 equivalent). 38. In addition to the support proposed above for immediate improvements to the existing computerized debt system, the project would help the CAA determine needs in the areas of new computer hardware and software and in financing these needs. Looking ahead to the CAA's longer term neads, new hardware and software equipment is required to modernize and improve not only debt data management but several other office functions as well. The Government favors a new IBM mini-computer that supports numerous work stations to replace the present Thompson Micromega line. However, the findings of the master plan on debt office procedures and data processing requirements must be available before any hardware decisions are made. The master plan will include the terms of reference of a specific study of the CAA's long term computer equipment rAeds. That study will examine future computerization needs from several perspectives and make recommendations on system design, hardware selection, maintenance and location, new procedures to ensure smooth integration into the daily operation of the CAA, and training programs. The study should not require more than three manmonths. Implementation of the recommendations of the study, once approved by Government and the Bank, would be financed by the project study/equipment fund. 39. The new CAA systems will be implemented in phases so that staff can become familiarized with them over time. In this way, errors or omissions in planning or training can be identified and corrected before the entire system is fully implemented. 40. Training. With the adoption of new information and management procedures and systems, consultants to be recruited under the project will prepare --and in most cases carry out-_ training programs for CAM computer operators and users. A budget of US$262,000 equivalent has been allocated for training. 41. For users of the system, training will cover areas such as debt management and computer applications, in particular, for user counterparts of the computer specialists. At a higher level, training is also needed for senior managers in the use of debt data in macroeconomic analysis, and in advanced financial management techniques, especially in connection with debt rescheduling. 42. For operators, activities will include training in methodology, hardware, computer applications and programming languages. The Cameroonian expert who runs the computerized debt system is competent. An additional staff member will be added to the computer systems unit to work with the consultant and the Cameroonian expert on strengthening the existing system and improving the accuracy of the data base. He will receive overseas training for one year and be expected to serve as a backup system manager  22 when the Cameroonian expert is absent. To satisfy the long-term needs of the CAA, three Cameroonians will receive appropriate computer analysisiprogramming training abroad for a period of one to three years. 43. ImDrovements in Monitoring of Guaranteed Debt. The project will finance a study, the terms of reference of which have been prepared and agreed with Government, on procedures which in the future must be applied before Government gives any guarantee for public enterprises borrowing and procedures to improve collection and monitoring of guaranteed debt. The study will require two to three manmonths of consultant services (US$44,000 equivalent). Implementation of the recommendations of the study, once approved by the Government and the Bank, would be financed under the project by the study fund. 44. The project will further assist the CAA in financing seminars for PR managers to alert them to the problems the Government presently faces in monitoring the guaranteed debt situation. Such seminar' will also be designed to bridge the information gap between the CAA and the beneficiaries of Government guarantee. A budget of US$65,000 equivalent has been allocated to cover the costs of the seminars and an additional US$33,000 equivalent to cover logistical support for monitoring activities in the field. Part 4. Civil Service Reform Background 45. In the period from 1983184 to 1987/88, Cameroon's civil service has grown increasingly costly while its efficiency and productivity have remained low. The wage bill rose by about one third during this period (to total over CFAF 260 billion), the number of people on the public payroll increased by about lOZ (to total rearly 180,000) and the share of the public payroll in Government operating expenditures and non-oil tax revenue climbed to 56Z and 68Z respectively. Government Policy 46. The Government has taken preliminary measures to limit these expenditures through a computerized wage bill control system (svsteme Antilope). Results so far are encouraging, particularly in tracking down unjustified wage and benefits payments. In addition, the Government intends to limit the wage bill to CFAF 236 billion in FY 1989/90 as a key element of the IMF stabilization program and the SAL. Other SAL measures to limit personnel expenditures will includes (i) a restrictive recruitment policy; (ii) an early retirement system; (iii) the consolidation of 'syst&me Antilope'; (iv) reform of the social benefits system; and (v) a staff reduction program. 47. On the other hand, the present economic crisis is compounded by a heavily bureaucratic public management system which makes it difficult for Government to attract or retain needed staff. Under the SAL, the Government will adopt a program to address this problem. The program will includes (i) reform of the civil service regulatory framework;  23 (ii) strengthening personnel management; (iii) a national roster for administrative consulting capacity; and (iv) definition of an adequate in- service training policy. Proiect Sumort 48. The civil service reform component of the proposed project will help the Government implement this program. The proposed project will include the following actions, all of which are embodied in the SAL as measures the Government intends to take by fixed dates: Ci) an operational review of key ministries; (ii) reform of the civil seriice regulatory framework; (iii) payroll management reform; and (iv) a plan of action to make more efficient use of existing human resources. 49. This support to civil service reform over the three year period of the project is intended to provide Government with key diagnostic studies and actions plans to be implemented over the long run. Additional support will probably be needed to carry out the action plans to completion. This could be done in a possible follow-up operation financed by the sank and other donors who have expressed interest in participating in the subsequent stages of the civil service reform. 50. The terms of reference for consultants and budget allocations for consultant services, training programs and equipment mentioned below have been prepared and agreed with Government. 51. Review of Key Ministries. The Government intends to carry Out an operational review of all ministries. As a first step, the proposed project will focus on a strategy to review the structure, staffing and operating budgets of selected key ministries. The operational review will be done in two phases. The first will consist of a study to: Ci) evaluate the existing structure and identify staffing and other needs; and (ii) formulate recommendations for restructuring, staffing plans and adequate operating budgets for each ministry appropriate to its role in the economy. Once the recommendations arising from the first phase have been adopted, the second phase, implementation, will begin and will include the physical reorganization of the ministries and the selection of staff. Implementation is a SAL covenant. The project will finance consultant services to carry out the review and prepare organizational charts and staffing plans as part of first phase activities. In the second phase, the concerned agencies will implement the recommendations of the staffing plans. It is not expected that this will require input from the project but if it did, sufficient provision exists in the project study fund to assist with technical assistance as needed. 52. The objectives of the new organizational charts will be to: Ci) optimize the ministry's administrative units; and (ii) rationalize and streamline internal procedures and internal information flows. They will identify all positions which carry administrative responsibilities. The staffing plans will include the nominal list of current staff and propose a list of positions, together with the professional profiles they require. They will also detail the requirements for executive positions to be maintained under the recommended new structure together with selection methods and criteria. Once selection has taken place and Government is  24 ready to start implementation, agents who have become redundant will be assigned to the Ministry of Civil Service for a limited time during which they may either await reassignment within the administration or resign from the civil service. Estimated operating budgets will be established in line with the minimum financial needs for the ministry in question to operate efficiently and will include personnel and equipment recurrent costs. A list of budgetary requests will consequently be forwarded to MINFI, to be included in the annual provisions. The redeployment operation as such will not be part of the proposed project. It will be conducted in conjunction with a private sector redeployment program to be supported under an SDA operation now in preparation. The program will be designed to help ex- civil servants, individuals who will lose their jobs as the result of the PE sector reform and graduates of higher education institutions to identify opportunities in the private sector, either through new employment or through creation of their own small business. 53. The key ministries in which the operational review will be carried out as a first priority ares (i) the Ministry of Finance (MINFI); (ii) the Ministry of Planning (MINPAT); (iii) the Ministry of Civil Service (MINFOP); and (iv) the Ministry of Commerce and Industry. Subsequently, after satisfactory progress has been shown in the review of the first group of ministries, work will start on a second group which will include the ministries of Health, Education and Agriculture. The Government intends eventually to examine ths restructuring possibilities in all ministries. The project does not concain specific provision for funding other than for ministries listed above, but in case additional resources are neet.ed during project implementation, they could be provided from the project study furd. 54. Short term national as well as foreign consultants will carry out the review of ministries at an estimated cost of US$410,000 equivalent (approximately 25 manmonths). 55. Reform of the Civil Service Regulatorv Framework. A study (ten manmonths, US$164,000 equivalent) will be carried out by public sector specialists financed under the proposed project to evaluate the present regulatory framework, analyze its shortcomings and make recommendations for the harmonization of statutes; selective recruitment; review of the compensation structure; individual performance evaluation systems; career rehabilitation; performance-based compensation, benefits and promotion systems; disciplinary procedures for non-performance; and new provisions for retirement. 56. Ten seminars are planned for administrative executives to discuss the study findings and participate in its finalization before implementation. (Estimated cost: US$100,000 equivalent). 57. Payroll Management Reform. Personnel management involves MINFOP for administrative management, MINFI, for financial management and the sectoral ministries, for day to day ministerial staff management. The proposed project will provide support to the Directorates of the Payroll and of the Treasury in MINFI and to the General Directorates (Directions des Affaires G6n6rales) in the sectoral ministries. It will finance consulting services for organization and computerization studies, data processing system development and training, and computer equipment, furniture, supplies and  25 maintenance. The expected impact of these activities would be tos li) establish a comprehensive, timely accurate, and efficient data processing management system, (ii) upgrade staff skills; and (iii) produce savings in the wage bill. Project support will specifically includes Technical Assistance: Post # 1. A public management expert for the reorganization of the payroll management system within Payroll and Treasury and its extension to key sectoral ministries, including consolidation of the uAntilope" wage bill control system and its transfer to Directorate of the Payroll. (Costs six manmonths; US$100,000 equivalent); Post # 2. Experts for setting up a computerized payroll budgeting system. Studies will include an assessment of computer equipment needs to be financed under the project. (Twenty-six manmonths, of which 50 percent local consultants; US$320,000 equivalent); Post # 3. Computer software experts to provide the necessary complementary backing to Post # 2. Posts 2 and 3 could be parts of the same bidding operation. (Forty manmonths of which 50 percent local consultants; USS498,000). Post # 4. A public management and computer expert for the development of a personnel management information system. (Pour manmonths; US$65,000 equivalent). Training: Personnel in the concerned directorates will be trained to use the new procedures and computer systems. A US$80,000 equivalent training budget has been allocated for that purpose. Equipment: The project would finance equipment needs to be identified by experts (Post 1 2). A budget of US$1,600,000 equivalent has been allocated for that purpose on the assumption that such needs would include a mainframe computer and five micro- computers. 58. Human Resource Mobilization. A key project objective is to tap into the pool of national expertise through the greatest possible use of Cameroonian consultants and specific assistance to increase their participation in the adjustment process is included, It is expected that national consultants will participate in all project components but particularly in the Civil Service and PE reform activities. As much as 200 manmonths of national consultant services could be hired in the course of the proposed project. 59. The Directorate of Human Resources in MINPAT has started to draw up a roster of consulting capacities within the civil service. The Government  26 intends to use this roster to increase the possibilities for involvement of Cameroonian firms and individuals in development projects and the structural adjustment program. The proposed project will support this effort through the provision of technical assistance and computer equipment tot (i) complete the roster; and (ii) organize training seminars for Cameroonian consultants with the assistance of the Federation of African Consultants, an Abidjan-based panafrican organization which benefits from subst