Madagascar - Country assistance strategy : Chairman's concluding remarks

MADAGASCAR:COUNTRY ASSISTANCE STRATEGY CHAIRMAN'S CONCLUDING REMARKS Meeting of ExecutiveDirectors l November 18,2003 The Executive Directors welcomed the discussion of the Country Assistance Strategy (CAS) for Madagascar and commended its candor and its close alignment with the Government's PRSP. Directors applauded the country's progress on economic reforms and recovery from the 2002 political crisis. They were pleased to note that the government's and international community's response to the crisis, including the Bank's continuous engagement during the crisis and portfolio restructuring, was helpful in contributing to the recovery. Directors welcomed the bold measures Government has taken to encourage private sector growth, reduce poverty, increase access to social services, improve governance, and fight corruption. Directors emphasized the importance of pro-poor, more equitable growth and sound public expenditure management. Directors welcomed the grounding of the CAS on lessons learned and appreciated the close alignment between results as spelled out in the PRSP and in the CAS. Directors agreed with the CAS'S objective of reducing the nationwide level of poverty, by integrating rural markets through better infrastructure, and putting greater emphasis on rural service delivery. They were supportive of the proposed strategic orientation of the lending scenarios in the CAS, focusing on the Bank's support to infrastructure development, education, nutrition, environment, and health. Directors welcomed the emphasis in the CAS on improving the investment climate, and in this regard supported the involvement of IFC and MIGA. Directors noted the need for more analytical studies to understand better the links between poverty, redistribution, and growth, including the need for quality assessments of expenditures made and distributional and tax impacts of the proposed programs. Other issues that Directors noted should be elaborated further in the CAS included the Bank's agriculture rural development strategy, strategies to deepen pro-poor growth, population and child labor issues Directors overall supported the proposed Poverty Reduction Support Credits as a means of PRSP implementation.. Directors agreed with preceding these Credits with the Governance and Institutional Development Project to pave the way for programmatic lending. Some Directors, however, cautioned that sufficient time was necessary to enable the country to make the best use of the PRSC instrument, including putting in place transparency and accountability mechanisms and a sound public expenditure management system. While noting that it would be important to be able to assess the progress the government had made in this regard, some EDs cautioned that the Bank be mindful of the usefulness and the limits of index ratings on transparency and corruption.  2 The Directors welcomed the many reforms, which enabled the Government to move rapidly in this direction since the 2002 crisis. In order to assure successful implementation of the proposed CAS, particularly given the shift to programmatic support, the Directors urged that close attention be paid to financial management, absorption capacity, capacity building issues, as well as overall debt sustainability. Directors were pleased to note that the indicators as defined in the CAS were consistent with the PRSP andthat there is a coordinated approachwith the broader donor community. Directors also agreed with the emphasis on analytical work to support the strategic goals of the CAS and PRSP. Directors also noted the consistency between these goals and the Millennium Development Goals, and encouraged the government's continued leadership and commitmentin the implementation of the PRSP, whichthey believed to offer a sound framework for Madagascar's continued and desirously more equitable growth. Finally, Directors encouraged the Bank and the Government to continue working together, and with all of Madagascar's development partners for the successful implementation of the CAS in the achievement of the country's development goals as outlined in the PRSP.