Mauritania - Development Management Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-4683-MAU MEMORANDUM AND jRECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 7.9 MILLION TO THE ISLAMIC REPUBLIC OF MAURITANIA FOR A DEVELOPMENT MANAGEMENT PROJECT November 23, 1987 Africa Region Sahelian Department Country Operations Division This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its co ntents may not otberwi se be disdosed without World Bank authoizati on.  CURRENCY EQUIVALENTS Currency Unit = Ouguiya (UN) US$ 1.00 = UM 76.0 UM 1.00 = US$ .013 ABBREVIATIONS AND ACRONYMS BCIR Bureau for Coordination of Institutional Reform MCS Ministry of Civil Service, Labor, Youth and Sports MEF Ministry of Economy and Finance PPF Project Preparation Facility SDR Special Drawing Right U,NDP United Nations Development Programme FAC Fonds d'Aide et de Cooperation (Aid and Cooperation Fund) FISCAL YEAR JANUARY 1 - DECEMBER 31  FOR OFCML USE ONLY ISLAM-. REPUBLIC OF MAURITANIA DEVELOPMENT MANAGEMENT PROJECT CREDIT SUMMARY Borrower: Government of the Islamic Republic of Mauritania Implementing Agency- Bureau for Coordination of Institutional Reform Amount: SDR 7.9 million (US$10.0 million equivalent) Terms: Standard, with 40 years maturity Onlendin2 Termst Not applicable Financing Plan: Government US$ 1.0 million FAC US$ 0.4 million IDA US$ 10.0 million TOTAL USS 11.4 million Economic Rate of Return: Not Applicable Staff Appraisal Re2ort: No. 7012-MAU tap: IBRD No. 16452 R This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its 'ontents may not otherwise be disclosed without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE ISLAMIC REPUBLIC OF MAURITANIA FOR A DEVELOPMENT MANAGEMENT PROJECT 1. The following memorandum and recommendation on a proposed development credit to Mauritania for SDR 7.9 million (US$10.0 million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms with a maturity of 40 years and would help finance a development management project. The project would be cofinanced by FAC for FF2.3 million (US$0.4 million equivalent). 2. Background. Never rich in natural resources, over the last ten years, Mauritania has had to contend with war, severe drought, and a collapse in the price of iron ore, its primary export. Inadequate policies were also a factor in the deterioration of economic performance, as were general public sector management weaknesses: these became particularly critical as a serious financial crisis developed in the late 1970s. This led to the implementation of increasingly severe stabilization measures which culminated, in 1985, with the approval of a sweeping Economic Recovery Program (ERP) designed to restructure the economy. Because of the predominant position of the public sector in the economy, public sector management reform became a major element of this program. Slow but steady progress is being achieved in restructuring public enterprises supported by the Public Enterprise Rehabilitation Project (Cr. 1567-MAU). 3. Government now has decided to make its own deficiencies the focus of a reform program based on an administrative assessment carried out by IDA in 1985. Starting in 1987, this program is to be implemented in phases. To launch the reform, the Government created a Bureau for Coordination of Institutional Reform (BCIR), under the h.nister of the Civil Service, and a Consultative Committee for Institutional Reform (with representatives from the Presidency, central administrations, higher education, employers, and labor) to manage the program. It has also me'-ged the Ministry of Plan and the Ministry of Finance into the new Ministry of Economy and Finance (MEF) and began to reorganize civil service management with French and IDA assistance. Reflecting the importance that both Government and IDA place on public sector management issues, this administrative reform program is an important component of the first Structural Adjustment operation (Cr. 1812-MAU) approved on June 2, 1987. 4. Rationale for IDA Involvement. Improving the effectiveness of public sector management is a critical development issue for which the Government has asked for IDA support. It is also central for the SAL, as weak administration ultimately constitutes one of the significant constraints to the adjustment process. IDA, through its investment lending and past assistance to improve public sector management, has established a constructive dialogue on these issues. This led to the administrative assessment done in 1985 which provided the focal point for the Government to examine its administrative systems and procedures. Support under the project for the formulation and implementation of specific reform action programs in priority areas now provides the vehicle for Government to tackle fundamental weaknesses in its administration.  - 2 - 5. Project Objectives. The proposed project would help the Government to complete the design of its administrative reform effort and to implement key actions including those incorporated under the SAL. In the first phase, priority is focussed on: (i) improving Government's core management processes; (ii) rehabilitating personnel administration and initiating reform of the civil service; (iii) strengthening economic management; (iv) initiating decentralization of government services; and (v) laying a framework for the future extension of administrative reform to other areas. 6. Project Dascription. The proposed project would provide the Mauritanian Government with the resources and skills required for its administrative reform program, in partlcular to: (a) improve core Government management capabilities within the Presidency, in the areas of interministerial decision-making management, legal and regulatory oversight, public sector auditing, financial control, procurement oversight and Organization and Method; (b) strengthen economic and financial management by reinforcing (i) ;ublic expenditure management, (ii) fiscal administration, and (iii) by supporting an institutional strengthening program for the MEF; (c) initiate civil service reform with assistance to the Ministry of Civil Service, by rehabilitating personnel management procedures and information systems, and starting a gradual and consultative reform process of the personnel management policy framework; and (d) help establish local municipalities recently created under the Government's decentralization policy, through support to the Ministry of the Interior and training of municipal staff and elected officials. Surport would also be provided to prepare additional reform prcgrams, partic larly in the area of fisheries, and to the recently created BCIR, which is responsible for managing the administrative reform program. The project would provide each of these components with the required consultancy and advisory services, training, vehicles, office equipment, computers and logistical support to carry out the project activities. Annual work programs will be established for the individual components In agreement with IDA. The project, to be carried out over seven years, is estimated to cost US$11.4 million equivalent, with a foreign exchange component of US$8.0 million (70 percent). A PPF of US$0.5 million was extended to prepare the project; a request for a second PPF for an additional US$1.0 million is expected shortly; both will be refinanced. Bilateral assistance from France is providing co-financing, amounting to US$0.4 million, for advisory services to the Presidency. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and disbursements are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in Mauritania are given in Schedules C and D respectively. A separate Staff Appraisal Report (No. 7012-MAU, dated November 23, 1987) is attached. A map is also attached. 7. Agreed Actions. During negotiations, agreement with Government was reached on: (a) the establishment of the Organization and Methods Bureau by December 1988 and a review of its mandate and effectiveness by July 1991; (b) completion of MEF's reorganization of its Planning Aid Coordination and Budget Departments by June 1988; (c) adoption of satisfactory full cost recovery measures for the publication of tax  materials; (d) submission of interim reports on civil service reform ty April 1989 and final reports by February 1990; (e) provision of detailed action programs for each component by October of each year; and (f) submission of proposals for strengthening the Ministry of Fisheries and Maritime Economy, the Auditor General's Office, the Financial Controller's Office and any other activliies in support of administrative reform by December 1989. Conditions of effectiveness are that: (a) the Committee for Coordination of Institutional Reform would be functioning; (b) NEF would have appointed a training coordinator; (c) the project training coordinator be appointed; and (d) first-year action programs for all components would have been agreed to. 8. Benefits. The project will begin to address long term issues of the cost-effectiveness of public institutions. It will provide a framework and establish a process for public administration reform, notably in areas critical to structural adjustment, which today are being carried out on an ad-hoc basis and with a large and unsustainable element of technical assistance. 9. Risks. The main risks are that: (i) the political commitment behind public sector management reform waivers; (ii) reform management requirements exceed local capacities; (iii) civil service resistance blocks implementation; and (iv) it proves difficult to identify technical assistance with the required expertise and acceptable to Mauritania. The Government's recent actions including the assignment of a highly qualified project director, demonstrate its commitment. The management risk will be attenuated by having flexible implementation arrangements through annual work programs and by building management assistance into the project. Finally, effectiveness of technical assistance will be enhanced by maximizing the use of twinning arrangement and of local consultants, in particular through a local skills mobilization scheme which is an integral part of project design. 10. Recommendation. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments Washington, D.C. November 23, 1987  -4 Schedule A ISLAMI4I REPUBLIC OF MAURITANIA DEVELOPMENT MANAGEMENT PROJECT ESTIMATED COSTS AND FINANCING PLAN Estimated Costs at S Fcreign Local Foreign Total Exchange ____- (US$ '000) ---- A. Presidency Legislative Department & 164 511 676 76 Council of Ministers Service Organization & Methods Bureau 70 237 306 77 Central Procurement Committee 24 110 134 82 B. Econom c and Financial Management Public Expenditure Management 414 1,371 1,786 77 Fiscal Administiation 192 736 928 79 MEF Institutional Strengthening 140 232 371 62 C. Civil Service Reform Personnel Management Rehabilitation 365 1,325 1,689 78 Civil Service Policy Reform 152 456 608 75 D. Munizipal Development 157 472 630 75 E. Preparation of Additional Reforms 270 810 1,080 75 F. Proiect Management 992 1,143 2,136 54 Baseline Costs 2,941 7,403 10,345 72 Physical Contingencies 85 319 405 79 Price Contingencies 381 249 630 40 Total Project Costs 3,408 7,972 11,380 70 ======