Ghana - Economic Reform Support Operation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 19324 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF GHANA ECONOMIC REFORM SUPPORT OPERATION (CREDIT 30940-GH) May 20, 1999 Macroeconomics 4 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS: Currency Unit Cedi US$1.00 2,314.00 (1998 period average) WEIGHTS AND MEASURES: Metric System FISCAL YEAR OF BORROWER: January 1 - December 31 Vice President: : Jean-Louis Sarbib Country Director: : Peter Harrold Sector Manager: : Charles Humphreys Task Manager: : Rocio Castro  FOR OFFICIAL USE ONLY ABBREVIATIONS AND ACRONYMS ADB Agricultural Development Bank AfDB African Development Bank APL Adaptable Program Lending BOG Bank of Ghana CAS Country Assistance Strategy CMA Central Management Agency CPI Consumer Price Index ECG Electricity Company of Ghana ESAF Enhanced Structural Adjustment Facility ERSO Economic Reform Support Operation FIMTAP Financial Management Technical Assistance Project GCB Ghana Commercial Bank GDP Gross Domestic Product GNPC Ghana National Petroleum Corporation GOIL Ghana Oil Company GPPHA Ghana Ports and Harbours Authority GWSC Ghana Water and Sewerage Company IDA International Development Association IMF International Monetary Fund MOF Ministry of Finance MOP Memorandum and Recommendation of the President MTEF Medium Term Expenditure Framework NIB National Investment Bank NIRP National Institutional Renewal Programme NOC National Overview Committee OECF Organization for Economic Cooperation and Finance PEPTA Public Enterprise and Privatization Technical Assistance PSAC Private Sector Adjustment Credit PSAC II Second Private Sector Adjustment Credit PUFMARP Public Financial Management Reform Programme PURC Public Utilities Regulatory Commission PUSERMOS Public Sector Reinvention and Modernization Strategy RAGB Revenue Agencies Governing Board TIN Tax Identification Number TOR Tema Oil Refinery VAT Value Added Tax VRA Volta River Authority XGS Exports of Goods and Services This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  IMPLEMENTATION COMPLETION REPORT REPUBLIC OF GHANA ECONOMIC REFORM SUPPORT OPERATION (CREDIT 30940-GH) TABLE OF CONTENTS Preface Evaluation Summary .................................................................... i PART I: Project hnplementation Assessment . ................................................................... 1 A. Backround ....................................................................1 B. Project Objectives and Design ....................................................................2 C. Achievement of Project Objectives ....................................................................2 D. Bank Perfonnance ....................................................................5 E. Borrower Performance ....................................................................6 F. Sustainability, Assessment of Outcome and Lessons Learned ............... ......................6 PART II: Statistical Annexes ................................................................... 8 Table 1: Summary of Assessments .....................................................................8 Table 2: Related Bank Loans/Credits .................................................... ................. 9 Table 3: Project Timetable ....................................................................9 Table 4: IDA Adjustment Lending Program .......................................................9............ 9 Table 5: Negotiation and Effectiveness Conditions . ....................................................... 10 Table 6: Triggers for Processing of ERSO ................................................................. 13 Table 7: Compliance with Operational Directives ............................................... ........... 14 Table 8: Bank Resources: Staff Inputs ................................................................... 15 Table 9: Bank Resources: Missions ................................................................... 15 Annex 1. Borrower's Implementation Completion Report Annex 2. Economic Reforn Support Operation Revised Divestiture List Annex 3. Map  IMPLEMEENTATION COMPLETION REPORT REPUBLIC OF GhIANA ECONOMIC REFORM SUPPORT OPERATION (CREDIT 30940-GH) PREFACE 1. The Economic Reform Support Operation in Ghana (Credit 30940-GH) in the amount of SDR 37.1 million (US$50 million equivalent) was approved by the Board on June 11, 1998. The credit was a one-tranche adjustment operation that was fully disbursed upon effectiveness on July 16, 1998, and was subsequently closed on December 31, 1998. Parallel financing was provided by the African Development Bank for approximately US$19 million. 2. Preparation of this completion report was undertaken by the Resident Mission staff. Accordingly, there is no aide-memoire associated with a mission mounted from Washington. The report is based on materials in the project files, on discussions with Government officials associated with the project, and on information provided by the project coordinators. Additionally, the Borrower's Implementation Completion Report is included as Annex 1. 3. This Implementation Completion Report was prepared in March-April 1999 by Camille Lampart (AFMGH), and reviewed on April 22, 1999 in a meeting chaired by Peter Harrold, Country Director (AFC 10).  IMPLEMENTATION COMPLETION REPORT REPUBLIC OF GHANA ECONOMIC REFORM SUPPORT OPERATION (CREDIT 30940-GH) EVALUATION SUMMARY 1. Background. After implementing a program of economic refonn since 1983, Ghana's adjustment process suffered setbacks between 1992 and early 1997. Increased fiscal spending in the lead to elections in 1992 and 1996 led to the reemergence of large fiscal imbalances and inflationary pressures. Structural reforms slowed down and key reforns such as the VAT and electricity tariff increases were reversed in the face of social unrest. Against this background, the lMlF program was interrupted in mid-1996. In 1997, however, the newly elected Government launched a fiscal program aimed at restoring fiscal discipline and reducing inflation. By early 1998, key actions were taken to reinstate unfinished reforms and the macroeconomic situation had begun to stabilize. 2. Objectives and design. The Economic Reform Support Operation (ERSO) was designed as a one-tranche High Impact Adjustment Lending operation to quickly cover Ghana external and budgetary financing gap for 1998. The credit endorsed significant up-front actions including the passage of a new VAT law and the reinstatement of increases in electricity tariffs, while a deeper program of structural reforms was formulated. A set of future actions that would trigger the processing of future adjustment support was agreed upon with the Government. 3. Achievement of outcomes. Ghana made progress in restoring macroeconomic stability in 1998. Inflation fell substantially in 1998, there was a noticeable decline in real and nominal interest rates, and gross international reserves stabilized. Most notably, the Government approved a long awaited medium-term strategy for the cocoa sector developed in wide consultation with stakeholders. The VAT was reintroduced in December 1998 and electricity tariffs were raised to economic levels, this time, in a climate of general social acceptance. In addition, the Govemment adopted a Medium Term Expenditure Framework (MTEF) for the 1999 budget ahead of schedule, and made progress in launching the implementation of a major public sector reform program. The privatization program was less satisfactory and the Govemment has recently adopted a new strategy for implementing it. 4. Bank and borrower performance. The Bank's performance was satisfactory. Project preparation was rapid and very cost efficient. The identification, at appraisal, of triggers for processing firther adjustment support, was an important innovation in Ghana. The Borrower's performnance was also satisfactory, in particular, by ensuring consensus for the need to move ahead with unfinished reforms. Adequate progress on the triggers has been made in a timely fashion. 5. Sustainability, overall assessment and lessons. Although the overall macroeconomic situation continues to improve, sustainability hinges on a continued decline in inflation and real interest rates. The impetus for structural reforms remains strong in most areas and a Second Economic Reform Support Operation (ERSO II) has been prepared. The overall assessment is satisfactory because the operation achieved its  ii intended impact of supporting stabilization and the resumption of the reform program. The major lesson from this operation is that Bank processes and procedures can be managed in such a way as to deliver timely assistance very rapidly.  IMPLEMENTATION COMPLETION REPORT REPUBLIC OF GHANA ECONOMIC REFORM SUPPORT OPERATION (CREDIT 30940-GH) PART I: PROJECT IMPLEMIENTATION ASSESSMENT A. BACKGROUND 1. After implementing a continued program of economic reform since 1983, Ghana suffered severe macroeconomic instability during the period 1992-96. Higher than planned public spending in the lead to elections in 1992 and later in 1996 worsened fiscal imbalances and increased inflationary pressures. Moreover, key reforms were reversed in the face of considerable social unrest. A 17.5 percent VAT was repealed shortly after its introduction and a 200 percent increase in electricity tariffs was reversed. The IM's Enhanced Structural Adjustment Facility (ESAF) was interrupted in mid-1996 after less than a year. In 1997, the newly elected Government launched a fiscal adjustment program with the objectives of restoring fiscal discipline and bringing the program back on track. 2. By early 1998, key actions were taken to reinstate the unfinished reforms and significant progress had been made in restoring macroeconomic stability. The Parliament passed a bill for the reintroduction of the VAT, set a 10 percent, later in the year. In addition, the independent Public Utilities Regulatory Commission (PURC) was established to set utility tariffs and implemented a 90 percent average increase in electricity rates effective from March. The IMF program was resumed in March 1998 and a new Policy Framework Paper for the 1998-2000 period was prepared. 3. The turnaround in the macroeconomic situation was significant. The domestic primary balance increased from 0.3 percent of GDP in 1996 to 3.2 percent in 1997 the highest since the start of the Economic Recovery Programme (ERP) in 1983. Inflation was reduced from 33 percent at end-1996 to 21 percent at end-1997. However, the external position deteriorated considerably. Excessive non-concessional borrowing in 1996 and early 1997 had led to a large increase in debt service payments. In addition, Ghana saw a steep 40 percent decline in grant financing of public expenditures over 1997. As a result, gross official reserves fell sharply from 4.4 to 2.6 months of imports. 4. IDA's adjustment support for FY1998 was originally programmed as a supplement to the ongoing Private Sector Adjustment Credit (PSAC). However, the developments in 1996 resulted in a long delay for the release of the third tranche of the first PSAC until March 1998. The need for waivers precluded a supplement to the PSAC. This increased the risk that the restoration of macroeconomic stability would be derailed. In late November 1997, the IMF had already begun preparations for a resumption of the standing ESAF program. An early commitment from the Bank in recognition of the recent progress was necessary to send signals to the donor community that the Ghana program had achieved an acceptable resumption. However, there was not sufficient clarity on the medium-term program to merit an acceleration of the PSAC II (planned for FY99).  2 B. PROJECT OBJECTIVES AND DESIGN 5. The Economic Reform Support Operation (ERSO) was designed as a one-tranche operation and processed along the High Impact Adjustment Lending model to quickly cover the substantial financing gap for 1998. The credit would support the early progress in restoring macroeconomic stability and endorse significant up-front actions taken by the Government to resume unfinished reforms, while a deeper program of structural refonns was being formulated. To reinforce the movement forward, a set of future actions that would trigger the processing of the next adjustment operation was agreed upon with the Government (see Table 6). 6. Key up-front actions endorsed by the ERSO were: the passage of the VAT law and the related tax administration reforms; the increase in electricity tariffs aimed at restoring the financial viability of the public utilities; and the preparation of the 1999 budget guidelines along a Medium Term Expenditure Framework (MTEF). The ERSO also sought to lay the foundations for broader reforms in public sector and public expenditure management, privatization, and movement toward increased private participation in the energy and cocoa sectors. In energy, divestiture and public sector reform, the credit endorsed and reinforced reform strategies and programs that had already been articulated by the Government, and more substantive actions were to follow as triggers for later adjustment support. On cocoa, the Government was to formulate a revised medium-term strategy for the sector. C. ACHEVEMENT OF PROJECT OBJECTIVES1 7. Covering Ghana's external financing gap for 1998. At the November 1997 Consultative Group (CG) meeting for Ghana, a financing gap of about US$150 million in program assistance was projected for 1998. It was expected that the ERSO would attract an additional US$50-70 million in parallel financing. The African Development Bank (AfDB) pledged US$26 million as parallel financing, but this was later scaled down to approximately US$19 million. The first tranche of about $14 million was disbursed in January 1999. In addition, the Government requested from the Organization for Economic and Cooperation and Finance (OECF, Japan) another US$50 million to be disbursed in the first quarter of 19992. Overall, program assistance nearly doubled 1997 levels. 8. Macroeconomic stabilization. Ghana has continued to make progress in restoring macroeconomic stability. In 1998, the overall budget deficit was contained to 6.6 percent of GDP and the domestic primary balance increased to 3.6 percent of GDP. Fiscal and monetary restraint led to substantial reduction in inflation and interest rates while the nominal exchange rate remained relatively stable. The annual rate of inflation declined to 16 percent by end-1998 and to 10 percent by April 1999. Gross intemnational reserves stabilized at around 2.5 months of imports. IFor a detailed list of conditions and their compliance, see Table 5. 2 However, the OECF support was delayed, and at the time of writing had still not been confirmed.  3 9. In addition, the economy exhibited much more resilience through a drought-related energy crisis that surfaced in early 1998. A good cocoa crop, increased volumes in the mining sector, and fast growing non-traditional exports helped to offset increased imports of petroleum, whose cost was moderated by declining oil prices. Increases in private capital flows related to privatization also helped to offset the higher amortization of external public debt. The debt service ratio decreased from 32 percent in 1997 to 27 percent in 1998 because of the Government's strict adherence to a moratorium on new non-concessional external loans and guarantees. Finally, domestically financed expenditures in health and education as a percentage of GDP were increased in 1998. 10. Resumption of unfinished reforms. The Government has made major progress on completing its unfinished program of tax reform and actions to improve the financial viability of the electricity utilities. The VAT was successfully reintroduced in December 1998 without any signs of social unrest. A unique tax identification numbering (TIN) system was established and a common governing board instituted to coordinate activities in the three separate revenue services. To date, over 13,000 businesses have registered for the VAT and received TINs, far exceeding the original target for the first phase. 11. The newly-established PURC implemented further increases in electricity tariffs in September 1998 bringing the average increase for the year to over 200 percent, thus allowing utilities to cover cash operating costs and own-guaranteed debt service through the end of 1999. In addition, the Government adopted financial recovery plans for the Electricity Company of Ghana (ECG) and the Volta River Authority (VRA) that include efficiency improvements and the settlement of arrears. 12. Foundations for next phase of reforms. The next stage of the structural refonn program for Ghana involves broad efforts to fundamentally reposition the state in the economy. These include reforms in public sector and public expenditure management, accelerating the Government's withdrawal from commercial activities through divestiture and reform of public agencies, and deepening private participation in key economic sectors, such as cocoa and energy. 13. The MTEF. The Government has made substantial progress on its Public Financial Management Reform Program (PUFMARP) during 1998. The 1999 budget was formulated according to the MTEF for the first time and was extended to all sectors rather than the three that were originally planned. The MTEF extends the budget horizon to three years to allow better planning and prioritization. The MTEF has also integrated the programming of development and recurrent expenditures and increased the transparency in the allocation of Government resources, including external funds. Other actions include the design of a new budget and public expenditure management system and new expenditure control rules. 14. Cocoa Reform. The Government recently completed a medium-term development strategy for the cocoa sector. This strategy evolved from a series of broad consultations within the sector, starting in September 1998 and culminating in a national workshop in January 1999. The resulting strategy is far-reaching: it will accelerate increases in the share of the f.o.b. export price paid to farmers; reduce the taxation of cocoa bean exports; gradually allow private participation in exports; and provide non-discriminatory access by domestic crop purchasers to government warehouse and credit facilities. This marks a  4 distinct change in the Government's approach to the cocoa sector and has surmounted significant political hurdles by raising the awareness of the need for reform, and building a constituency for change. It also represents a major breakthrough in the Bank's policy dialogue with Ghana, after several years of little progress. 15. Energy Reform. The Government has made important headway in improving the financial viability of the utilities and enhancing the regulatory framework for private participation. In addition to the substantial tariffs increases effected in 1998, both utilities are being restructured this year to prepare them for divestiture. In April 1999, the Government issued a Statement of Sector Policy outlining the future structure of the sector and the remaining reform agenda. By end-1999, it will publish a plan to guide private investment in wholesale power supply, publish the guidelines for setting tariffs in order to ensure transparency in pricing, and complete regulations for private participation in the sector. Notably, the Government plans to privatize the distribution systems of the Electricity Company of Ghana (ECG) by end-2000. This would be the first such divestiture in Africa. 16. Divestiture. Under the ERSO, Ghana extended its divestiture program to cover all major public enterprises in the energy, transport and banking sectors. The Cabinet approved a list of the twelve strategic enterprises (including five banks) to be outsourced for divestiture by June 1999 and re-affirmed a policy to outsource the divestiture process of these enterprises to specialized investment advisors. Of these firms, four non-banking entities have been outsourced, to date. The divestiture strategy for the banks has recently been redefined in light of difficulties in finding strategic investors and the financial deterioration of two banks (see Table 5). Meanwhile, there have been substantial delays in completing a number of sales of small and medium enterprises, partly owing to delays in the outsourcing process, problems in resolving outstanding liabilities, and low investor interest. These issues were addressed at the mid-term review of the IDA-supported Public Enterprise and Privatization Technical Assistance (PEPTA) project held in April 1999. As a result, the Government has adopted a new sales strategy whereby it will streamline bidding procedures and evaluation processes while it focuses resources and attention on larger enterprises. In particular, qualification issues will be assessed up-front and selection of winning bids will be based on price only. For smaller enterprises, no high-level decision making will be required. 17. Public Sector Reform. The ERSO initiated the implementation of Ghana's Public Sector Reinvention and Modernization Strategy (PUSERMOS) adopted in late 1997. The Government outlined three main areas for action: rationalization of subvented agencies3; reforrma of central management agencies; and improvement of the policy formulation and management process. There has been progress on the first two areas. Twenty-five, rather than seventeen, subvented agencies have been targeted for closure or commercialization in the pilot phase to be completed by end-200 1. Work has also begun on the restructuring of three central management agencies. The Bank is supporting the first two areas through an Adaptable Program Lending (APL) operation approved by the Board on May 4, 1999. The policy management component has been moving slowly because of lack of clear consensus among the various agencies involved about the distribution of 3 Agencies which derive their fimding from govemnment subsidies.  5 responsibilities. This has impeded the appointment of policy analysts to the Cabinet. The Bank has postponed its support in this area until consensus is reached within Government. D. BANK PERFORMANCE 18. The Bank's performance in project identification was highly satisfactory. The decision to pursue a fast track operation was appropriate for several reasons: the need for urgent balance of payments support and as an indicator of Bank support of the significant recent turnaround in the country's performance. The cooperation between the Bank and the Borrower during stabilization provided a good opportunity to cement relations and strengthen the delivery of advisory services. The choice to support a broader range of reforms, in addition to privatization, recognized that there were issues facing the economy in other areas, and the need to rethink the Bank's involvement in the divestiture program. 19. Project preparation was satisfactory, taking only one month between identification and appraisal (see Table 3) and incurring costs of only $68,600 (see Table 9). The operation supported policy actions that were articulated and designed under other Bank projects, thus reinforcing these reform programs. For example, the credit induced policy decisions on the reform of subvented agencies which advanced the implementation of PUSERMOS. It also deepened the Bank's involvement in financing divestiture activities under PEPTA by securing a policy on outsourcing and the selection of strategic firms for privatization. 20. Project appraisal was satisfactory. The identification of future actions that would trigger the processing of the next operation was an important innovation in Ghana. These triggers were approved by the Cabinet and included in the Government's Letter of Development Policy (see Table 6). However, because these triggers were effectively conditionalities for continued support, the appraisal of both the Government's commitment and their relative relevance for the program could have been more rigorous, specifically regarding the divestiture and public sector reform programs. For example, the appointment of policy analysts to Cabinet was not as critical an action for the reform program and in hindsight, it should have been excluded from the list of triggers. 21. The major risk of this operation was whether, as a package, the up-front actions taken under the operation positively signaled the end of the Ghana's periodic slippage on macroeconomic policies and a renewed commitment to structural adjustment. These risks were recognized in the President's report and at each level of review. Indeed, the operation was the result of a strategy of waiting for significant action and then moving very rapidly to provide support, which proved to be effective. 22. The risk that reforms would be weakened by adverse social reactions, as with previous experiences, was mitigated by the Government's new approach of broadly consulting social partners in policy formulation (see para. 23).4 In fact, this approach was also adopted for the formulation of the cocoa sector strategy, with similar success. 4 These ideas were captured in the Concept Review Paper but not reflected in the President's Report.  6 E. BORROWER PERFORMANCE 23. The borrower's performance on preparation was satisfactory. The Govemment had already articulated a number of reform strategies, including PUSERMOS and PUFMARP, aimed at improving the efficiency of the public sector and the Power Sector Development Program for the energy sector. Most notably, in September 1997 a National Economic Forum involving a wide range of stakeholders was held on the country's economic growth strategy. This consultation served to underscore the private sector as an engine of growth, to coalesce support for the Government's Vision 2020 goals, and to build consensus on the need to move ahead with unfinished reforms (such as the VAT). The Government also took full ownership of the preparation of the Letter of Development Policy, and expedited the legal steps for the processing of the credit. 24. Implementation was also satisfactory. The operation endorsed up-front actions therefore all of the conditionalities were completed prior to Board presentation. More importantly, the Government has adequately satisfied eight of the ten triggers (outlined in Table 6) for the processing of a follow-up adjustment operation. As noted earlier, progress on the divestiture program has been less than satisfactory. In light of this and in the context of the PEPTA mid-term review, the Government has decided to concentrate efforts on the larger enterprises, to streamline procedures, and increase the speed of decision making to close transactions. In addition, while the policy management component of public sector reform is moving slowly, the Government is working on reaching the necessary consensus while it has started the restructuring of the central and subvented agencies, which are very critical for the reform process. F. SUSTAINABILITY, ASSESSMENT OF OUTCoME AND LESSONS LEARNED 25. Sustainability. Although the macroeconomic situation has continued to improve, sustainability is hinged on a continued decline in inflation and real interest rates in order to contain the domestic debt burden. Expenditure restraint continues to be necessary, but resources need to be delivered to ministries in line with the MTEF in order to maintain the new ethos of planning and judicious target setting. As a result, the fiscal program is acutely balanced on increases in tax revenues, a recovery in external concessional funding, and a reduction in domestic interest rates and payments. 26. The major risks to the program are the possibility of another bout of fiscal excess prior to the 2000 presidential elections, and demands by public servants for salary increases. On the former, it appears that having experienced the inflationary consequences of previous election-related excesses, both the electorate and the Government have begun to value macroeconomic stability over one-shot transfers. 27. The impetus for structural reforms remains strong in most areas supported by the ERSO. A Second Economic Reform Support Operation (ERSO II) has been recently prepared because the Government has satisfied the specified triggers. This credit will support the implementation of policy reforms in the cocoa, energy, and financial sectors; including the privatization of key enterprises. For public sector reform, the Bank has recently approved an APL, which is a more appropriate vehicle for supporting institutional reform. The MTEF process and public expenditure management will  7 continue to be supported by the Financial Management Technical Assistance Project (FIMTAP). 28. A major concern is implementation of the divestiture program. The Bank is now focusing on strengthening Government ownership of the program while shifting attention and resources to support the divestiture of economically significant enterprises. The recent PEPTA mid-term review and the preparation of ERSO II have proved instrumental to moving in this direction. In particular, the ERSO II is concentrating on the divestiture of key enterprises in energy and banking sectors, while the divestiture process in general, including that for smaller enterprises, will continue to be supported by the PEPTA project. 29. On the policy management component of public sector reform, concerns raised during the ERSO Concept Review remain unresolved, i.e. the relationship between the Policy Management Group and the Cabinet are still unclear. The Bank has postponed its support for this component under the new APL until the necessary consensus within Government is reached. 30. Notwithstanding the sustainability concerns, the overall assessment of the ERSO is rated satisfactory. The project fully achieved its intended developmental impact of supporting the restoration of macroeconomic stability, the completion of one phase of reforms and laying the foundations for the next stage. 31. The major lessons learned from this operation are as follows: a. Bank processes and procedures can, with effort and cooperation, be managed in such a way as to deliver timely assistance very rapidly. After a period in which the program has been off-track, there appears to be merit in waiting for significant up- front actions and then moving very rapidly to provide commensurate support. b. Institutional development and capacity building actions should not be included as conditionalities (or triggers) in fast track adjustment credits, because for these types of actions that cannot be sufficiently predetermined, implementation often does not proceed as planned. c. In a maturing democracy, policy reforms will generally take a longer time because of the need to build consensus. However, in turn, this participatory process can safeguard reforms by forming a coalition and building the momentum for change. d. Triggers should be treated with the same rigor as conditionalities, especially in the appraisal of the Government's commitment and their relative relevance to the overall program (selectivity). e. The Bank needs to make additional efforts to strengthen the Govemment's ownership of the divestiture program in order to enhance the effectiveness of both adjustment (conditionalities) and technical assistance instruments.  8 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF GHANA ECONOMIC REFORM SUPPORT OPERATION (CREDIT 30940-GH) PART II: STATISTICAL ANNEXES TABLE 1: SUMMARY OF ASSESSMENTS _ ~~~~~~~~~~~~~~~~~~~~~~~~~K Macroeconomic policies X Sector poxicies _ Financial objectives X Public sector management X Private sector development X Physical objectives . X~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. ....6 Sumnmary Assessment X Identification X Preparation assistance X Appraisal _______ X ___ Superision __ _ _ _ _ _ _ _ X _ _ _ _ _ Summary Assessment X Preparation X Implenentation X Covenant compliance X Suwm marysAssmentsment  9 TABLE 2: RELATED BANK LOANS/CREDITS ;. Preceding Operations 1. Second Phase of 2nd phase of structural adjustment program: 1 989 Closed StructuralAdjustment trade, exchange rate and tax reforms, public Program expenditure management, state enterprise and civil service reforms. 2. Private Investment and Improved regulatory framework for private 1991 Closed Sustained Development investment, state enterprise reform, tax (SAC III) reform, and public expenditure. __ 3. Private Sector Accelerated privatization program, 1995 Closed Adjustment Credit Improved public expenditure management. 5. Public Enteiprise and Divestiture of public enterprises and 1996 Ongoing Privatization Technical rationalization of subvented organizations. Assistance Project I_ _ 6. Financial Management Improvements in public financial 1997 Ongoing Technical Assistance management. Project Following Operations 1. Second Economic Fiscal reform, cocoa sector reform, energy 1999 Board date Reform Support Operation sector reform, financial sector form, including (in progress) May 27, 1999 (ERSO II) privatization of key enterprises. _ 2. Public Sector Institutional development 1999 Approved Management Reform Improved efficiency and effectiveness of Program - APL public services. TABLE 3: PROJECT TIMETABLE Identification (Concept Review Meeting) March 17, 1998 Preparation (Decision Meeting) March 25, 1998 Appraisal April 14, 1998 Apnrl 14, 1998 Negotiations April29,1998 April 30,1998 Board Presentation June 18, 1998 June 11, 1998 Signing July 13, 1998 Effectiveness and Single Tranche Release July 31, 1998 July 16, 1998 Loan Closing December31 1998 December31, 1998 TABLE 4: IDA ADJUSTMENT LENDING PROGRAM (US$ millions) CAS Base Case Program 70-150 40-90 PSAC II 70-150 PSAC Ill 40-90 Actual and Planned Commitments 50 180 0 ERSO (Cr. 30940-GIH) 50 ERSO H 180 0  10 TABLE 5: NEGrTIATION AND EFFECTVENESS CONDITIONS (or Key Indicators for Project Implementation) Macroeconomic Program ESAF performance criteria (June 1998) program actual Inflation rate fell from 21% at end-I 997 Domestic primary balance (c billion) 287 (min) 342 to 16% at end-1998. % GDP 1.6 2.1 Net domestic fm of budget (