Mauritania - Development Management Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7012-MAU STAFF APPRAISAL RFPORT ISLAMIC REPUBLIC OF MAURITANIA DEVELOPMENT MANAGEMENT PROJECT November 23, 1987 Afrifa 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 contents may not otherwise be disclosed without World Bank authorization.  ISLAMIC REPUBLIC OF MAURITANIA DEVELOPMENT MANAGEMENT PROJECT CURRENCY EQUIVALENTS Currency Unit = Ouguiya (UM) US$ 1.00 = UM 76.0 UM 1.00 = US$ .013 ABBREVIATIONS AND ACRONYMS BOM Bureau' Organisation et Methodes (Organization and Methods Bureau) BCIR Bureau for Coordination of Institutional Reform CCCE Caisse Centrale de Cooperation Economique (Central Fund for Economic Cooperation) CCIR Committee for Coordination of Institutional Reform CMSN Comite Militaire de Salut National (Military Committee for Natior.xl Liberation) CNI-ATCT National Dat4-processing Center - Tunisian Agency for Technical Cooperation ENA Ecole Nationale d'Administration (National Administration School) ERP Economic Recovery Program FAC Fonds d'Aide et de Cooperation (Fund for Aid and Cooperation) MCS Ministry of Civil Service, Labor, Youth and Sports MEF Ministry of Economy and Finance MIIT Ministry of Interior, Information and Telecommunications MFME Ministry of Fisheries and Maritime Economy PE Public Enterprises PPF Project Preparation Facility RMSM Revised Minimum Standard Model SDR Special Drawing Right UNDP United Nations Development Programme FISCAL YEAR JANUARY 1 - DECEMBER 31  FOR OFmFCIAL USE ONLY ISLAMIC REPUBLIC OF MAURITANIA DEVELOPMENT MANAGEMENT PROJECT TABLE OF CONTENTS PaRe CREDIT AND PROJECT SUMMARY i-iii I. BACKGROUND ................................................ 1 Introduction ..............................................1 The Economy ....................................1 II. PUBLIC SECTOR MANAGEMENT ................................... 2 Analysis of the Issues ...... ............... 2 Government's Reform Efforts ............................... 7 Reform Management ....... ................. 8 IDA and Other Donor Support for Public Sector Management .................................. 9 III. THE PROJECT ............................................. 10 Project Objectives ............ ............................ 10 Project Description ....................................... 11 Support to the Presidency ..... ......................... 11 Economic and Financial Management ................. ..... 11 Civil Service Reform ...... ............................. 13 Municipal Development .................................. 14 Preparation of Additional Reforms ..................... 14 Project Management ....... .... . ......... 15 IV. PROJECT COSTS, FINANCING AND PROCUREMENT .... .............. 15 Project Cost . ............ 15 Financing Plan ..... ........ 17 Procurement ..... ........ 17 Disbursements ............. 18 Accounts and Audit ....... .......... 19 This report was based on the findings of a World Bank mission consisting of Messrs./Mmes. L. de Merode (mission leader), J. Albert, B. Nunberg, J.Y. Maillat and Mpoy-Kamulayi (Bank) and E. Berg and J.C. Bosse (consultants) which visited Mauritania during April/May 1987 to appraise the Project. Mmes. M. Kalina and M. Dauharry provided secretarial support. This document has a restricted distribution and may be used byrecipients only in the performance of their official duties.lIts contents may not otherwise be disclosed without World Bank authorization.  Table of Contents (continued) V. PROJECT IMPLEMENTATION ........ ......... ....... 19 Annual Action Programs and Reporting ....................... 19 Project Management ....................................... 20 Training ....... . 20 Local Skills Mobilization .............................. 21 Other Technical Assistance .............................. 21 VI. BENEFITS AND RISKS .................................... 21 VII. AGREEMENTS AND RECOMMENDATION ............................. 22 Agreements Reached ................... ..... .. ...... 22 Recommendation .................................. . .. ...... 23 ANNEXES Annex I: Implementation Schedule ............ ........... 24 Annex II: Project Cost Tables Table 1: Project Cost Sulmary ............... 26 Table 2: Project Components by Year ......... 27 Table 3: Summary Accounts Cost Summary ...... 28 Annex III: Summary Disbursement Schedule . ........... 29 Annex IV: Project Monitoring and Evaluation Selected Indicators for Measuring Project Success ....... ............ . . ..30 Annex V: Consultant Services Requirements ....... 33 Annex VI: Organization Charts ............ .... ....... 35 Anrex VII: Government Employment .......................* 37 Annex -ylII: Distribution of Technical Assistance ..... ... 38 Annex IX: Selected Documents Available in Project File ... 39 M4ap: IBRD No. 16452 R  ISLAMIC REPUBLIC OF MAURITANIA DEVELOPMENT MANAGEMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower: Government of the Islamic Republic of Mauritania Implementing Agencyt Bureau for Coordination of Institutional Reform Credit Amount: SDR 7.9 million (US$10.0 million) Terms: Standard, with 40 years maturity Cofinancing: FAC (France), US$0.4 million equivalent Project Description: The project will finance expertise, equipment and training for key institutions and processes in order to: (i) improve core government management capabilities within the Presidency, in the areas of interministerial decision-making, legal and regulatory oversight, procurement oversight, and organization and management; (ii) improve economic management, through strengthening of public expenditure management and fiscal administration, and through general institutional strengthening of the Ministry of Economy and Finance (MEF); (iii) improve civil service productivity through the rehabilitation of personnel management institutions, processes and information systems, and through implementation of the first phase of reform for civil service pay, employment, career management and training policies; (iv) strengthen the institutional framework for local administration and improve the capacity of the Ministry of Interior, Information and Telecommunications (MIIT) to oversee and coordinate municipal development management; and (v) create a framework for the continued implementation of administrative reform at core, sector and local levels. A Bureau for Coordination of Institutional Reform (BCIR) was established in December 1986 to manage the project and its director was appointed at the same time. French bilateral co-financing has been made available in area (i).  - il - Estimated Costs: 2 Foreign Local Foreign Total exchange US$ 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. Economic and Financial Management Public Expenditure Management 414 1,371 1,786 77 Fiscal Administration 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. Municipal Development 157 472 630 75 E. Preparation of Additional Reform 270 810 1,080 75 F. Prolect 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 Financing Sources: Local Foreign Total ---- US$ million ---- IDA 2.4 7.6 10.0 Government 1.0 - 1.0 FAC (France) - 0.4 0.4 Total 3.4 8.0 11.4 Estimated Disbursement: IDA Fiscal Year 1988 1989 1990 1991 1992 1993 1994 ----US$ million----------------------- Annual 1.5 2.3 2.5 2.0 0.9 0.4 0.4 Cumulative 1.5 3.8 6.3 8.3 9.2 9.6 10.0  - iii - Project Benefits and Risks: The project will begin to address long term issues of the cost-effectiveness of public institutions and provide a framework and establish a process for public administration reform. It will notably help institutionalize and internalize management capacities 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. 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 acceptable to Mauritania. The Government's recent actions --studying the reorganization of the MEF and civil service management and assigning a highly qualified project director-- demonstrate its commitment. 3upport for reform among high-level civil servants was tested prior to negotiations through a reform-launch seminar. Risks will, moreover, be attenuated by having flexible and modular implementation arrangements through annual work programs and by building management assistance into the project. Finally, effectiveness of technical assistance would be obtained by maximizing the use of twinning arrangements and of local consultants, in particular through a local skills mobilization scheme which is an integral part of project design. Economic Rate of Return: not applicable Memorandum of the President: No. P-4683-AAU Map: IBRD No. 16452 R AF5CO November 23, 1987  ISLAMIC REPUBLIC OF MAURITANIA DEVELOPMENT MANAGEMENT PROJECT I. BACKGROUND Introduction 1. The project originated from the Government's request in early 1985 for assistance in the management nf its Economic Recovery Program (ERP). This led to an administrative assessment carried out by IDA in late 1985. Following the endorsement of the general conclusions of that assessment by Government in March 1986, project preparation was initiated by the Mauritanian authorities with IDA assistance. At the same time, Government's commitment to administrative reform became an integral part of the Letter of Development Policy of the first Structural Adjustmetnt Credit (Cr. 1812-MAU) approved on June 2, 1987, A Project Preparation Facility (P-360) was approved in July 1986 for US$0.5 million. in December 1986, the Government appointed a Coordinator for Institutional Reform to assume overall responsibility for administrative reform and specifically for management of the proposed project. Appraisal took place in April-May 1987. A second PPF request for an additional US$1 million is expected shortly. The Economy 2. Endowed with modest natural resources in relation tc a population of about 1.7 million, Mauritania has been through markedly contrasted phases of economic development since independence in 1960. An initial decade of rapid growth (8 percent per annum) was followed by a long period of economic decline caused by drought, the fall of international prices for its main export (iron ore), the war over the Western Sahara combined with inappropriate economic policies and management weaknesses. In 1984, the economic situation reached a critical level. Domestic cereal production covered only 20-25 percent of consumption and was only 40 percent of the level of 15 years before while mining output was only 65 percent of what it had been 10 years earlier. Foreign reserves were dwindling, with arrears on external debt payments in excess of US$100 million. External debt outstanding amounted to US$1.7 billion or roughly 250 percent of GDP. The consolidated budget deficit, before budgetary aid, amounted to more than 20 percent of GDP. Despite very high external aid levels (US$170 per capita from 1980 to 1984), a vigorous stabilization and economic adjustment program had become unavoidable. 3. In 1985, the new Government adopted an Economic Recovery Program (ERP) consisting of a coherent set of economic and financial policies to stabilize the economy and extract maximum growth from domestic resources and external aid. The ERP involves the implementation of:  -2- (a) flexible exchange rate and strict credit policies; (b) progressive liberalization of pricing and marketing policies; (c) public enterprise (PE) reform to reduce losses and subsidies, to establish a performance-oriented institutional framework for PEs, and to start rehabilitation of key PEs; (d) fiscal measures to curb public expenditures and to increase tax revenues and cost recovery for public services; (e) sector strategies, in particular for agriculture (including food aid), fisheries, banking and energy; and (f) public administration reform to strengthen economic management and to improve civil service productivity and general government effectiveness. Initial implementation of the ERP has been supported by two Stand-by agreements with the IMF which have been successfully completed and a third which is under implementation, two debt reschedulings under the auspices of the Paris Club, and the recently approved Structural Adjustment Credit (SAL). II. PUBLIC SECTOR MANAGEMENT Analysis of the Issues 4. As it embarked on the ERP in 1985, the Government became increasingly aware of the severe institutional inadequacies it would have to contend with in carrying out key economic recovery measures. Past weaknesses had severely eroded the legal and organizational basis for the functioning of Government. Adequate data, analytical capabilities, appropriate processes and procedures were largely lacking. The administration, while large and costly, was mostly dependent on external assistance for the accomplishment of critical tasks. This posed serious problems in terms of the general functioning of Government and particularly for the internalization and sustainability of economic policy reforms at the core of the ERP. 5. Realization of Mauritania's development management inefficiencies induced considerable reflexion among high-level technocrats and politicril figures. While anxious to take prompt corrective action wherever possible, the leadership is also wary of repeating the mistakes of past hasty and top-down administrative reforms which are largely perceived to have failed. For instance, from 1967-1982, the planning function has been reorganized 14 times without much tangible benefit. As a result, the Government has decided to undertake reform in a systematic and phased way and to adopt an approach involving strong leadership and the active participation of those affected.  6. Government's priority areas for reform, many of which are incorporated within the ERP and the SAL policy framework, are: core government miarnagement functions involving the Presidency; economic and financial management mainly focussing on the Ministry of Economy and Finance; civil service productivity and general personnel management; and decentralization of administrative functions to local level municipalities. At the same time, the Government is eager to establish a strong operational capacity for reform management, including mechanisms for coordination, consultation, decision-making and monitoring of implementation. 7. Functions of the Presidency. Since the end of the civilian regime in 1975, the country has been governed through a succession of constitutional charters. The current charter vests both legislative and executive authority with the Military Co:mittee for National Liberation (CMSN), wshose President is the Chief of State. The latter also presides over the executive branch of government. Major decisions go through the Council of Ministers and are submitted for approval to the CMSN. (Organization charts for the Government are included in Annex VI.) Legislation takes the form of ordonnances, while executive decisions are decrets, arretes, decisions and circulaires, in decreasing order of importance. 8. The existing legal framework fails to delineate the spheres within which the above legal instruments are operative and to relate them to levels of authority. Legal oversight capacity in the Legislative Department in the Presidency is extremely weak: there is no basis for systematic delegation of authority and little to guard against inconsistencies within and between the various laws and regulations. The poorly trained staff of the Presidency and the CMSN are presented daily with a large number of decisions ranging from the critical to the trivial. For instance, all recruitmznts into the civil service, regardless of rank, are approved by the President. Conversely, an analysis of legal and regulatory legislation over the last ten years carried out in the administrative assessment revealed several instances where a circulaire, taken at a low level in the administration, contradicted an ordonnance which had been approved at the highest level. 9. Although ultimate decision-making authority lies with the CMSN, the Council of Ministers, presided over by the President and also including the Secretary-General of the Government, plays a critical role in initiating, developing, negotiating, and monitoring policies. There is effectively no other mechanism for policy coordination within the executive branch. While the Presidency includes a Council of Ministers Service to support the functioning of the Council, its authority, staffing and procedures limit it to providing only minimal secretarial support. As a result, proposals submitted to the Council for decision are often poorly prepared with limited prior consultation or technical input and communicated late to participants. A large proportion of proposals before the Council are rejected as insufficiently prepared and have to be resubmitted. M4onitoring of the implementation of these decisions is weak and feedback nonexistent.  - 4 - 10. The Presidency also carries out certain centralized administrative functions. The Central Procurement Board (CPB) in the Presidency oversees the Government's procurement process. Above certain bidding thresholds, it reviews procurement decisions taken by ministerial procurement committees. Because of lapses and vagueness in procurement laws and regulations, lack of training of procurement officers, and imprecisions in the jurisdiction of the Board, considerable time elapses between the central and the ministerial levels, at the cost of corresponding delays in project implementation. In addition, there are other responsibilities within the Presidency, such as public sector auditing and a priori financial control which the Government is also keen to revitalize in a later phase of the reform program. 11. Economic and Financial Management. The Ministry of Economy and Finance (MEF) plays a central role in macroeconomic management. Its functions include planning (notably investment programming), budgeting, aid coordination, financial oversight of public enterprises, government accounting, revenue mobilization and statistics (see Annex VI for MEF's organization chart). Ministry leadership is thin; in his overall management responsibilities, the Minister is only assisted by a Secretary-General with limited delegated authority. While there are numerous advisers to the Minister, few are involved in policy and decision-making. To a varying degree all MEF departments suffer from lack of qualified staff and the absence of any in-service training, poor working conditions, poorly defined procedures, and lack of performance incentives and accountability. 12. As a result, many of the MEF's key functions are not being carried /-ut effectively. Despite a history of multi-year planninz dating back to independence, economic management is fragmented. Until recently, external public debt could be incurred without prior approval of the core economic institutions. Budget preparation is conducted hastily with insufficient consultation with spending ministries and budget increases discriminate poorly between priority and non-priority uses. While investment budgeting is undergoing change (see para 24), little has been done to strengthen institutional capacities, both within MEF and in spending ministries, to better identify, prepare and appraise investment projects. Externally funded investment decisions are still largely determined by donors. More generally, expenditure forecasting is rudimentary. Links are weak between recurrent and capital budgets, and with external debt management and macroeconomic policy. Commitment monitoring during budget execution is perhaps the strongest part of the budget cycle, thanks largely to computerization, but weaknesses in Govermnent expenditure accounting limit the usefulness of spending reports for feedback into the budget preparation process. 13. On the revenue side, performance is equally uneven. On the one hand the Customs Department, traditionally the better endowed in the MEF, has achieved consistently strong productivity increases over the last few years. On the other hand, internal revenues, the responsibility for which is divided between the Internal Revenue (assessment) and Treasury  - 5 - (collection) Departments, have not been able to match this performance, mainly because of coordination problems and poor information systems. 14. The Civil Service. The Mauritanian civil service has many characteristics in common with other African administrations. As it shouldered much of the burden for employment generation in the economy, its numbers increased more than tenfold since independence to about 20,000 today. In the absence of norms or safeguards, the combined pressure of growing numbers of higher-level civil servants and budget restrictions has resulted in a large, underpaid bureaucracy. There are approximately 180 departments for roughly 20,000 civil servan,s in the central administration, compared with 110 comparable departments for 70,000 civil servants in Senegal and 70 for 39,000 in Mali. Managing such a large number of departments considerably taxes Mauritania's 14- ed pool of managerial talent as well as complicates coordination. In aduition, these structures lose much of their relevance since many divisions have no personnel because there are neither the budgetary nor human resources available to staff them. 15. Civil service management was originally highly centralized under the Ministry of the Civil Service, today the Ministry of the Civil Service, Labor, Youth and Sports (MCS). Unable to cope effectively with management of the rapidly growing number of civil servants, MCS gradually relinquished control over personnel to line ministries, with the result that personnel administration gravely deteriorated. While there have been some practical advantages to this de-facto decentralization, a stage has been reached where MCS does not have the minimum capabilities required to fulfill key personnel management functions. Information is lacking on numbers and deployment of civil servants while manpower planning and in-service training are nonexistent. Weaknesses in personnel records and controls have also left the system open to abuse. 16. The civil service legal framework, as in most of French-speaking Africa, covers in considerable detail all important aspects of civil service management, including recruitment, promotion, performance evaluation, sanctions, and compensation. It is complex, rigid, and poorly adapted to the development of the administration's human resources. More than half of the public service has been recruited outside the civil service proper as auxiliaires, where the statutory requirements are more flexible. Auxiliaires are subject to entirely different and less favorable conditions of employment but work alongside civil servants in similar capacities and at all levels, including the highest (see Annex VII for statistics on public sector employment). Another illustration of the distortions brought about by the statutes is the change of civil service statutes in 1972 which lowered education requirements for higher and middle-level entry into the civil service. As a result, the upper tier of the civil servilce now outnumbers the lower tier by about four to one, whereas the proportion is closer to the reverse in comparable administrations.  - 6 - 17. Although no systematic analysis of existing civil service compensation policies has been carried out, there is considerable evidence of severe problems. Large inequities exist among civil servants of comparable skills and responsibilities. At the higher levels in general and for some specialties in particular, the lack of competitiveness with the private and parastatal sectors is clearly hampering recruitment and retention of critical skills. A recent study on public enterprise remuneration (available in the Project File) shows that for high-level civil servants remuneration is about half that of comparators in the private sector. At the lower skill levels, the comparison is to the advantage of the civil service. Except in limited instances, the relation between compensation and performance is weak with seniority alone dictating wage increases. More generally, the compensation system is unnecessarily complex to administer. 18. The civil service is also currently without a viable employment policy. The hiring freeze under ongoing IMF-supported stabilization programs cannot be maintained indefinitely without unduly restricting the administration's ability to adapt its skill mix. Past indiscriminate hiring practices are no longer affordable except at the cost of a further rapid deterioration of the civil service's competitiveness. The administration therefore needs to equip itself with a manpower planning capability which would allow it to identify priority areas where selective recruitment into the civil service is required, within budgetary constraints, and to improve the deployment of existing civil servants. 19. Along with employment policy, civil service training policy is equally in need of change, particularly in relation to manpower development. Since the hiring freeze, existing traininig institutions have been phasing out training of recruits for the civil service. However, practically no in-service training takes place and there is yet no strategy to harness available training resources to help meet civil service skill mix requirements. In conjunction with career management policies, the whole system of training incentives is in need of reform. 20. Local Government. Decentralization of government functions and the creation of local levels of authority are a major political priority. In August 1986, the Government established the legal framework for the creation of local municipalities (Ordonnance 86-134). This was followed in 17ovember 1986 with the establishment of municipalities in the 13 regional capitals and free elections for the selection of municipal leaders and representatives. The establishment of at least 30 more municipalities is planned for early 1988. Over the next few years and as rapidly as practicable, this is to take place in many other cities. The creation of municipalities is intended to bring about profound changes in development management, fostering community development and self-help at the local level, and alleviating the financial and management strain on central government. 21. Having no history of local government, however, Mauritania is badly In need of assistance to ensure that the development of local level  administration does bring about the desired increase in responsiveness in providing lc:al services and does not strain the financial and institutional capabilities of the country to support such structures. The Ministry of Interior, Information and Telecommunications (MIIT), which is responsible for local administration, will be the prime agent for designing and overseeing this new development. A new division of labor has to be established between central, regional, and municipal governments. In particular, financial resources and staff have to be transferred from the central and regional to the municipal levels, and viable and functioning administrative service delivery systems have to be established within the new municipalities. Government's Reform Efforts 22. The Government's determination to tackle its public sector management weaknesses is now being translated into specific actions. In many cases, Government has laid the groundwork for the development of a reform strategy and has already undertaken steps to address the key problems facing the public sector, as described below. 23. Strengthening the Presidency. Efforts have begun to strengthen core management functions within the Presidency. At Government's request, French bilateral assistance produced two reports, one on the organization of the Presidency and a second more specifically on its responsibilities for legal oversight and for managing the interministerial decision-making process. Many of the reports' recommendations have been implemented and a long-term French adviser has been recruited to continue the work done so far. The Government is also considering the establishment of an Organization and Methods Bureau (BOM) within the Presidency to help introduce basic organizational principles in central government restructuring activities and has appointed a civil servant to head it. With IDA assistance, a diagnostic of procurement legislation has been carried out and a reform action program is being drawn up to revise the procurement system. 24. Economic and Financial Management Reforms. Since 1985, the Government instituted significant changes to establish a firmer control over economic and financial management. The Ministry of Plan and the Ministry of Finance were merged into today's Ministry of Economy and Finance (MEF). For the first time, external debt commitments and aid agreements were subjected to the prior authorization of the Ministry. The investment budgeting framework was broadened to cover not only domestic but also external resources and the counterpart funds from the sale of food aid. A Fask force was constituted to prepare the first consolidated investment budget for 1987. An Interministerial Committee has been created, consisting of the Minister of Economy and Finance, the Governor of the Central Bank and the Secretary-General of the Government, to strengthen coordination of ERP implementation. Finally, to help design a program to strengthen the MEF and enable it to meet the increasing management challenges of ERP implementation, the Minister requested a comprehensive internal assessmaent of the Ministry's organization and performance,  department by department, with an emphasis on those functions most critical for the accomplishment of ERP objectives. This was done in mid-1986 mostly by advisers working within the Ministry. 25. Civil Service Reforms. A start has also been made to reform civil service management. Under successive Stand-by arraangements with the IMF, recruitment into the administration has been stopped for all but restricted categories, especially teachers and bealth workers. Payroll audits were carried out in 1986, and irregular payments halted. A decree was passed in early 1986 to regulate excessive mobility of civil servants. Now under new leadership, the Ministry of the Civil Service is taking vigorous action to regain lost ground. In addition to numerous small practical actions to reconstitute its depleted records, collect and publish civil service statutes, and strengthen its own staff qualifications, it has prepared a masterplan funded under the PPF to rehabilitate personnel administration. This masterplan, which was contracted to CNI-ATCT, a Tunisian consortium, has been reviewed and approved by IDA. 26. Local Government Reform. Following the recent creation of local municipalities, the Government is now facing the challenge of implementing the decentralization measures. To start the process, three studies which develop the institutional, legal and financial framework for the creation of municipalities are now being funded under the Second Technical Assistance Project (1292-MAU of FY82). The first is completed, the second is near completion and the third is about to start. The first would help the Government and the Ministry of Interior, Information and Telecommunications (MIIT) to provide for a clearer demarcation of roles and responsibilities of central, regional and local authorities. The second would assess existing and potential financial resources, propose necessary adjustments to existing fiscal regulations, and help establish the municipalities' budgetary and financial management systems. The third would help MIIT reorganize its Local Government Department so as to enable it to effectively fulfill its coordinating and monitoring role in the implementation of local government reform. Reform Management 27. The Government has also moved forward to set up the organization necessary to formulate and implement its administrative reform program. In order to ensure the ccoperation and collaboration of the concerned Ministries, a Consultative Committee for Institutional Reform (CCIR) was officially created in December 1986. At the same time, the Government established a Bureau for Coordination of Institutional Reform (BCIR) and appointed its Director, a hi6hly qualified civil servant. 28. The BCIR will be the key agency to operationalize the reform strategy. Reporting to the Ministry of the Civil Service, which provides the channel to che Council of Ministers, BCIR's mandate covers administrative reform at the core, sector and local levels. It is not limited to reform efforts supported under the project, nor to those  - 9 - supported by IDA. Under its mandate, BCIR assists concerned institutions in: (a) defining the overall reform strategy and objectives; (b) preparing specific action programs; (c) ensuring consistency and coordination among actions and integrating these activities into the Government's programs; (d) advising on legal and regulatory proposals; (e) providing for the sharing of information and participation of the main actors and implementors of reform, through seminars, workshops, public relations efforts, etc.; and (f) monitoring and evaluation of program implementation. 29. CCIR will chiefly operate as a high-level coordination body. Presided over by the Minister of the Civil Service, CCIR includes 23 members in all, from each of the 14 ministries (1 each), the Presidency (4), higher education institutions (2), the private employers' federation (1), and the labor movement (1). Its composition therefore allows CCIR to represent a broad spectrum of views and interests. As well, additional participants can be added as necessary, and subcommittees can be formed. CCIR will advise BCIR on reform strategy, objectives and priorities, and implementation issues and will provide BCIR with a flexible instrument for consultation and coordination. CCIR would be operational as a condition of effectiveness cf the credit (para 67). IDA and Other Donor Support for Public Sector Management 30. IDA's strategy in assisting Mauritania strengthen its public sector focuses on redressing selected policy areas under the SAL combined with support under the proposed project as well as other projects to overcome institutional deficiencies. Under the SAL, crucial priority areas are improvements in public investment planning, budgeting and general strengthening of MEF (para 24). For civil service management, a masterplan for revamping personnel administration will be developed and reforms of the personnel policy initiated (para 25). 31. These broad policy changes are being complemented by IDA's support to public sector reform at three levels. In addition to this project, a Public Enterprise Rehabilitation Project (1567-MAU of FY85) is helping the Government design major policy and institutional reforms of the public enterprise sector to reduce its size and increase its efficiency, besides helping rehabilitate several specific enterprises. At the sector level, assistance is also being provided in: (i) agriculture to carry out an ambitious restructuring of sector institutions and strengthen planning and budgeting functions -- including the privatization of several functions carried out until recently by parastatals; and (ii) education to adjust  - 10 - spending priorities and strengthen sector organization and management. Finally, IDA is considering continued support for municipal development at the local government level, to extend that provided under the Second Technical Assistance Project and the proposed project. 32. Other donors are joining IDA in increasing their support for institutional development and improvement to public sector management. French bilateral aid (FAC and CCCE) supplies considerable technical assistance to a large number of agencies. UNDP furthermore is providing assistance for the introduction of accounting standards, for population and agricultural statistics, for the computerization of customs operations and, along with IDA, for planning in agriculture. It is also considering assistance for technical assistance programming and management. The latter is an important area: there are approximately 960 technical assistants working in Mauritania (see Annex VIII), some of whom are financed directly by the budget, and there appears to be considerable scope for improving effectiveness and reducing costs. III. THE PROJECT Project Objectives 33. The Mauritanian Government realizes that the implementation of its economic recovery program presents it with a considerable challenge over the near term. Policy changes need to be done turgently despite institutional weaknesses in economic management. However, the implementing institutions need to be strengthened to avoid a recurrence of past policy failures. The project would thus support the Government's commitment to bring about these changes in economic management, particularly in those areas singled out under the SAL. It will also help lay the foundation for longer-term administrative reform, set its strategy and priorities, and establish a reform implementation capability. 34. More specifically, the project is designed to assist the Government to: (a) strengthen core government management capabilities within the Presidency, in the areas of interministerial decision-making, legal and regulatory oversight, procurement, and organization and management; (b) improve economic management, through strengthening of public expenditure management and fiscal administration, and through general institutional strengthening of the MEF; (c) increase civil service productivity through the rehabilitation of personnel management institutions, processes and information systems, and through implementation of the first phase of reform action programs for civil service pay, employment, career management and training policies;  - 11 - (d) support effective decentralization through the development of an appropriate institutional and legal framework for local governments, the strengthening of oversight and coordination capacities within MIIT, and the provision of training for concerned central, regional and local staff; and (e) create a framework for the continued formulation and implementation of administrative reform at core, sectoral and local levels. Project Description 35. Support to the Presidency (US$1.1 million). The project will focus on strengthening three main functions in the Presidency. First, the project will extend and complement the work done by bilateral assistance in the legal and interministerial decision-making processes within the Presidency. Second, it will help establish the BOM, define operating procedures, and carry out on-the-job training for BOM staff. The BOM would undertake an inventory of central administration organizational charts and statutes, a comparative analysis of central government structures, and develop guidelines for ministerial reorganizations. During negotiations, it was agreed that the BOM would be established by December 1988, and that the BOM's activities and effectiveness would be reviewed subsequently with IDA by July 1991 and its mandate revised if deemed necessary (para 66). Third, the project will help implement reforms of the procurement system, including procurement legislation which the Government intends to revise by end 1988. 36. For this part of the project, financing will be provided for: (i) consulting services, including one long-term adviser (48 person-months) working with both the Legislative Department and the Council of Ministers Service within the Presidency, and short-term consultants to advise on organization and procedures (8 person-months); to revise procurement legislation (2 person-months); and to establish BOM (14 person-months); (ii) in-service training in procurement, organization and management; and (iii) logistical support (micro-computers, office equipment) to the BOM, the Legislative Department, the Council of Ministers Service and the Central Procurement Board. 37. Economic and Financial Management (US$3 million). This component of the project will help to implement the first phase of the reform of economic management within the Ministry of Economy and Finance and the Central Bank. First, the project will assist MEF to reorganize to eliminate conflicts of attribution between the Planning and Aid Coordination Departments, introduce sector specialization in Planning, and integrate within the Aid Coordination Department monitoring responsibility for public investment and external debt. The outline of the reorganization  - 12 - has been agreed between IDA and MEF. It was agreed during negotiations that the reorganization would be put in place by June 1988 (para 66). 38. In addition, the project will help: (i) the Planning Department to adapt atnd institutionalize the consolidated investment budget and the three-year rolling PIP (proposed terms of reference are available in the Project File); (ii) the Budget Department to prepare budget circulars/forms and improve budget procedures; (iii) the Central Bank and MEF's Aid Coordination Department to design and put in place a debt reporting system; and (iv) the Treasury Department to update public accounting and reorganize its internal reporting. Project financing for these activities include 56 person-months of consulting services, plus staff trainit.g, and logistical support. 39. The project will also support improvements in fiscal administration through: (i) upgrading and better integration of tax assessment information systems; (ii) a redeployment of tax collectors from low to high population areas; and (iii) a pilot action to strengthen customs border patrolling activities, in order to determine the financial viability and the potential for replicability in other areas. The project will fund 16 person-months of consulting services, vehicles, office supplies, equipment (mostly microcomputers) and furniture, and production of an initial stock of printed tax information materials for taxpayers. During negotiations, it was agreed that Government would adopt full cost recovery arrangements satisfactory to IDA prior to publication and dissemination of tax regulation materials (para 66). 40. During project preparation, MEF developed a masterplan for MEF's data-processing activities which has been approved by IDA. To help implement the first phase of the data-processing masterplan, the project will finance the purchase of microcomputers, peripheral equipment, software, supplies and related maintenance contracts for the concerned departments and the Central Bank. In addition it will fund the contracts of up to seven trainees with formal systems analysis or computer programming skills, to be hired to work with the Data Processing Department under the local skills mobilization scheme (see para 62). 41. Finally, the project will include an extensive training program for MEF staff (see para 61). Working in close collaboration with the project-wide training advisor, a MEF training coordinator will develop a training plan for the Ministry, identifying specific courses, seminars, long-term training needs and documentation requirements. In addition, the Planning Department would initiate a trainee scheme for a limited number of qualified recent university economics graduates (see para 62 on skills mobilization scheme). The trainees will be given two-year assignments to work closely with a economic policy analyst/trainer on economic planning, policy and project evaluation. As a condition of effectiveness, MEF will have appointed the training coordinator (para 67). The project will finance the policy analyst/trainer (2 years), short-term consultants for training (12 person-months), overseas training, development of teaching  - 13 - materials, and establishment of a documentation center for use by all Government employees. 42. Civil Service Reform (US$2.3 million). Based on the recently approved masterplan (para 24), the project will assist in rehabilitating personnel administration in three phases over a four-year period . Phase one, which would take until late 1988, consists of detailed organizational and systems specification during which personnel administration procedures and information systems will be specified or revised wherever necessary, streamlined and standardized across ministries and basic hardware, software and data management decisions made. Particular attention will be given to the interfaces between the personnel information system and the payroll. Phase two consists of detailed systems design and programming and would last until about the third quarter of 1989. Phase three, systems installation, which will overlap with phase two and take until about end-1990, involves: (i) reorganizing and strengthening MCS and personnel administration generally, including increasing and upgrading staffing, particularly through training; (ii) validating personnel and payroll records prior to computerization; and (iii) gradual implementation of the new procedures and systems. These activities are expected to result in more rigorous and transparent personnel management, generate budgetary savings, facilitate proactive personnel management, and provide a stronger foundation for public finance reforms. The project will finance consulting services (86 person-months), computer and office equipment, vehicles, training, and refurbishing of MCS office space in connection with the installation of computer equipment. Implementation will be overseen by a Technical Committee formed in early 1986 with th,2 participation of MCS, MEF, and technicians from concerned administrations. 43. In addition, the project will finance three basic studies to prepare reform of civil service policies: specific reforms on pay, employment, career development management and training are to be developed and initial reform actions implemented with project assistance. The first study entails an analysis of pay and grading policy and addresses the following issues: providing adequate incentives to attract skilled personnel, in the context of comparisons with the private and parastatal sectors; redressing internal inequities within central government; affordability of wage bill in light of budgetary constraints; and capacity of institutional mechanisms to set, carry out and monitor policy. Phase one of this study would include a diagnosis of the present system covering all levels of civil service across central government agencies and including auxiliary and contractual employees, with a view toward the consolidation of these groups, and present the costs and benefits of various reform options. Phase two would consist of preparing a detailed implementation plan. The second study to be financed under the project will focus on government employment and recruitment, analyzing current policies and their consequences and recommending reforms in policies and institutional mechanisms as appropriate. The final study will focus on the development of a career management system for the civil service, analyzing career schemes, the current mechanisms for performance evaluation and advancement within Government.  - 14 - 44. The project will also finance the preparation of a training strategy for the civil service, on the basis of a training needs assessment for the central government and an assessment of the capacity of existing training institutions. Incentives must be found to encourage civil servants to participate in in-service training courses. These would include establishing clear links between training and promotion, and introducing new procedures emphasizing merit-based performance incentives. 45. The project would finance 44 person-months of consulting services to carry out the above studies (terms of reference available in the Project File) and to assist Government in the implementation of initial reform actions; a long-term resident legal adviser (2 years); and training for MCS and sector ministry personnel staff. The three studies and the training strategy would be contracted to a single firm and carried out concurrently. During negotiations, it was agreed that interim reports laying out basic reform options would be submitted by April 1989 and that the final reports, including a reform action program, would be released by February 1990 (para 66). 46. Municipal Development (US$0.6 million). This component of the project will improve the capacity of the Ministry of Interior, Information and Telecommunications (MIIT) to oversee and coordinate municipal development management based on three studies now being carried out under the Second Technical Assistance Project (para 26). The recommendations from the studies will be implemented with assistance provided under the project. More specifically, the project will finance advisory services (30 person-months) to implement the redistribution of functions between different levels of authority, design the financial systems of municipalities, and effectively carry out MIIT's reorganization; training for the technical and administrative staff seconded to or directly hired by the municipalities; and office equipment for MIIT's Local Government Department. 47. Preparation of Additional Reforms (US$1.1 million). As implementation of the ERP and SAL proceeds, additional institutional constraints will emerge requiring remedial action. The project will finance studies and institutional audits leading to proposals for additional reform action programs. These proposals will be reviewed by IDA and the Government. Limited funding (up to approximately US$200,000 per activity) would be provided for implementing proposed reforms with additional sources of funding to be sought from other donors if necessary. Already identified reform areas include: (i) the Ministry of Fisheries and Maritime Economy (MFME) which needs to be reorganized and strengthened so as to be able to effectively manage the new fisheries policy recently approved under the SAL; and (ii) the Auditor-General and the Financial Controller Offices, in the Presidency. During negotiations, it was agreed that all proposals would be submitted by BCIR for approval to CCIR (or to the Council of Ministers) and to IDA, by no later than end-1989. Funding would be available to finance consultancies (80 person-months), training, and limited logistical support.  - 15 - 48. Project Management (US$2.45 million). The project will support BCIR, which would be responsible for overall implementation (paras 58-60), and assist the implementing agencies to identify and mwanage technical assistance. This would be done by exploring possible twinning arrangements, compiling a roster of local consultants, helping to draft terms of reference for consulting dssignments and establishing short lists. BCIR is also responsible for managing the skills mobilization scheme (para 62). To help establish BCIR, the project will finance consulting services (20 person-months), logistical support (vehicles, office equipment and furniture), and BCIR's o3perating expenses, including all of BCIR's contractual staff. BCIR staff would include a Coordinator, two trainees, an accountant, a training coordinator, and six support staff. The BCIR Coordinator and project accountant have already been appointed. The training coordinator will have been appointed as a condition of effectiveness (para 67). IV. PROJECT COSTS, FINANCING AND PROCUREMENT Project Costs 49. Total project costs are estimated at US$11.48 million (UM 865 million) including taxes and duties of US$0.52 million (UM 39.2 million). The estimated foreign exchange component is US$8 million, or 70 percent of total costs. Details by major component are provided on the next page:  - 16 - Estimated Costs X Foreign Local Foreign Total Exchange ------- US$o000 ------- A. Presidency Legislative Department & 164 511 676 76 Council of Ministers Service Organization & Methods Bureau 70 237 306 77 Central Procurement Cot.nittee 24 110 134 82 B. Economic and Financial Management Public Expenditure Management 414 1,371 1,786 77 Fiscal Administration 192 736 928 79 MEF Institutional Strengthening 140 232 371 62 C. Civil Service Reform Persor.niel Management Rehabilitation 365 1,325 1,689 78 Civil Service Policy Reform 152 456 608 75 D. Municipal Development 157 472 630 75 E. Preparation of Additional Reforms 270 810 1,080 75 F. Project 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 ===z= -===m ====== == 50. Base cost estimates are in mid-87 prices. Physical contingencies amounting to 4 percent of base costs are included. i'rice contingencies have been estimated at 6 percent of base costs at annual rates as follows: Assumed inflation rates (percent per annum): 1988 1989 1990 1991 1992 1993 1994 Local 5 5 5 5 5 5 5 Foreign 1 1 1 3.5 3.5 3.5 3.5  - 17 _ Financing Plan 51. The proposed IDA credit of US$ 10.0 million equivalent will finance approximately 92 percent of total project costs net of duties and taxes; this would cover approximately US$7.6 million of foreign costs and US$2.4 million of local costs. A PPF in the amount of US$0.5 million has financed (a) a masterplan to help rehabilitate the Civil Service personnel administration; (b) an analysis of procurement legislation and formulation of a reform action program; and (c) consultant services to help prepare this project. A second PPF request for an additional US$1 million is expected shortly. The Government's contribution of US$1 million will finance all duties and taxes, office space for BCIR as well as newly created tax collection posts. Co-financing estimated at US$0.4 million by FAC (France) has been put in place for one long-term adviser for the Legislative Department. The financing plan is set out below: Proposed Project Financing IDA FAC GOM Total % IDA --------- US$ million ----- Contribution Advisory Services 3.4 0.4 - 3.8 89 Training 3.3 - - 3.3 100 Office Equipment 0.9 - - 0.9 100 Civil Works 0.1 - - 0.1 100 Vehicles 0.3 - - 0.3 100 Incremental 0.9 - - 0.9 100 Salaries Operating Expenses 1.1 - 1.0 2.1 52 Project Total 10.0 0.4 1.0 11.4 88 Procurement 52. Procurement includes a limited amount of civil works and purchases of goods plus services. Civil works funded under the project consist of refurbishing of existing office space (para 42), for an amount that is unlikely to attract foreign bidders and therefore will be contracted under local competitive bidding procedures acceptable to IDA. Consultant services will be subject to Bank guidelines for the use of consultants. Within these guidelines, efforts would be made under a specially conceived local skills mobilization scheme (see para 62) to maximize the use of local capacities. A detailed list of consultant services required under the project (total of 472 person-months) is attached as Annex V. Packages of equipment and vehicles valued at US$100,000 or more will be procured through international competitive bidding (ICB) according to Bank guidelines. Subsequent changes totalling less than 15 percent of the value of the contract will not need further review. Items valued at less than US$100,000 will be procured through local competitive bidding procedures acceptable to IDA. Bidding packages  - 18 - for goods totalling over US$50,000 would be subject to the Bank's prior review of procurement documentation resulting in a coverage of about 75 percent of contracts. Minor items costing $20,000 or less, in an aggregate amount not to exceed US$600,000, will be purchased following local shopping procedures by obtaining quotations from at least three suppliers. A procurement table is presented below: Amounts and Methods of Procurement a/ Procurement Component ICB LCB OTHER N.A. TOTAL --(US$ million)---------------- Consultant Services, - - 3.8 0.9 4.7 Studies and BCIR Staff - (3.4) (0.9) (4.3) Training - - 3.3 - 3.3 (3.3) (3.3) Civil Works - 0.1 - - 0.1 (0.1) _ O.1) Vehicles, Furniture 0.7 0.2 0.1 - 1.0 and Equipment (0.7) (0.2) (0.1) (1.0) Operating Costs - 0.1 2.3 - 2.4 (0.1) (2.1) (2.2) Total 0.7 0.4 9.4 0.9 11.4 (0.7) (0.4) (8.8) (0.9) (10.8) A/ Contingencies and expenditures financed by the PPF are included in the amounts shown. IDA contribution is indicated in parentheses. Disbursements 53. The proceeds of the credit will be disbursed against: 100 percent of the cost of consultants (local and foreign), BCIR contractual staff salaries, and training costs; 100 percent of total expenditures for equipment, office furniture, vehicles, office supplies and materials; 100 percent of total expenditures for civil works; and 90 percent of total expenditures for operating costs (all BCIR operating costs, excluding salaries, and maintenance costs for vehicles and equipment). A disbursement schedule is attached as Annex III. The disbursement schedule follows the standard seaven-year disbursement profile for technical assistance projects in the Africa region. The expected project completi_n date is June 30, 1994.  - 19 - 54. A Special Account of up to UM 13 million (US$170,000) has been established for the PPF in a conmercial bank. It will be brought up to UM 53 million (US$700,000) upon credit effectiveness. These funds would be maintained by BCIR to cover pxoject expenditures and would be replenished by IDA on the basis of eligible aggre-Rted withdrawal -equests; replenishm'rit applications would be submitted on a monthly basis. Payments will be fully documented except for payments against contracts of less than US$20,000, training and operating costs which would be disbursed against statements of expenditure with the underlying documentation held available locally fcr inspection by IDA supervision missions. During negotiations, Government agreed to provide all complementary counterpart funding required as and when needed. Requirements for 1988 are estimated at UM 4 million. Accounts and Audit 55. BCIR will maintain separate accounts for all expenditures funded under the credit. Project accounts are to be audited annually by independent auditors satisfactory to IDA, including an audit of statements of expenditures. The audit reports, of such scope and in such detail as IDA shall reasonably request, would be submitted to IDA no later than six months following the end of the Government's fiscal year. V. PROJECT IMPLEMENTATION Annual Action Programs and Reporting 56. The project will be implemented on the basis of an annual action program for each component which serves as a flexible planning, implementation and monitoring tool. Each annual action program would I.nclude: (i) an evaluation of the previous year's action program; (ii) a statement of monitorable objectives to be pursued and a description and timetable of the activities to be carried out to realize those objectives; (iii) detailed budgets and financing plans as well as a procurement program and timetable; and (iv) staffing and training plans. Action programs are to be prepared and implemented by each agency concerned (MEF, MCS, MITT, Central Bank, MFME). The concerned implementing agencies are responsible for formulating and implementing their own activities, subject to review and approval by BCIR, IDA and, whenever appropriate, CCIR, with overall project administration done by BCIR. Agreement on first-year action programs would be a condition of effectiveness (para 67). During negotiations, It was agreed that action programs for the following year would be submitted to IDA for review and approval by October of each year (para 66). A proposed schedule for implementing project activities is attachee as A.nnex I. In addition, criteria for measuring project success to be used in project monitoring and evaluation h.ve been defined and are attached as Annex IV. 57. BCIR will also prepare semiannual progress reports for submission to CCIR, the Minister of the Civil Service and IDA and will prepare a project completion report and submit it to IDA no later than six months  - 20 - after the credit closing date. Each component manager would be responsible for providing BCIR with the necessary documentation to enable it to prepare the progress as well as the completion reports. Proj ect Management 58. A component manager has been designated for each one of the four components to liaise with BCIR and IDA. 59. As the key implementing agency, BCIR's project responsibilities would include the following: (a) ensuring coordination among components and between implementation agencies and IDA; (b) helping implementing agencie ';: the preparation of annual action programs and budgets; (c) preparation of semi-annual progress monitoring reports; (d) disbursements and preparation of claims for reimbursements; (e) assisting in and monitoring of the procurement of goods and services to be financed under the credit; and (f) coordination of project-related training activities from participating agencies with local or overseas training institutions. 60. Among the BCIR's first activities was a national seminar in July 1987 launching the administrative reform program with the participation of higher-level professional staff and management. The seminar successfully involved some of the reform's main actors and implementors thus analyzing problems, establishing priorities for reform and discussing the operational approach. Training 61. Each of the project components emphasizes training as a crucial element in capacity building and sustaining the reform process. Project training activities are the responsibility of a training coordinator. Although working in close cooperation with the project director, the training coordinator would report to the Ecole Nationale d'Administration (ENA). ENA teaching facilities will be utilized to conduct project training courses, especially in-service workshops and seminars. Faculty members with appropriate experience would be asked to offer courses; other teaching staff would be recruited locally or overseas. To the extent possible, retired civil servants would be recruited as lecturers and offered honoraria financed under the skills mobilization scheme (see below). .r  - 21 - Local Skills Mobilization 62. While in many instances there will be no substitute for the use of international consultants, the project will seek to maximize the use of local skills to complement the human resources available within the administration. For instance, the project proposes to fund retired civil servants in project training activities, and trainee schemes in MEF's Planning and Data Processing Departments (see paras 40 and 41) using local graduates. The project, furthermore, dims to aid the development of the local consulting industry, which is in an incipient state in all but the accounting field. BCIR is establishing a roster of available capacities, preparing standaid contracts and investigating market conditions in the consulting industry. Wherever local consultants are not able to compete unassisted for project consulting contracts, mechanisms acceptable to IDA would be used to encourage their association with international firms. On a pilot basis, the project also attempts to create the conditions for the emergence of a consulting capacity for the development and maintenance of microcomputer-based systems. Specifically, project-funded trainees could form the technical core of one or two consulting firms competing for local contracts. The project will attempt to identify other similar ventures. Other Technical Assistance 63. Significant technical assistance is already active in project- related areas, particularly in MEF where FAC has financed 15 advisers since 1979. Their full utilization will be sought prior to recourse to external consultancies. Additional needs for consulting services for the economic management components are expected to be furnished through twinning arrangements with Tunisian and/or French administrations, to reduce costs and management requirements. Both ATCT (Tunisian) and ADETEF (French) have been actively providing similar services elsewhere in francophone Africa. Civil service administration rehabilitation will be able to draw on the resources of the Tunisian administration through an already successful contract with CNI-ATCT. VI. BENEFITS AND RISKS 64. The project will begin to address long term issues of the cost-effectiveness of public tnstitutions. It will provide a framework and establish a process for institutional reform, notably creating and strengthening management capacities in areas critical to structural adjustment, which today are carried out on an ad-hoc basis and with a large and unsustainable element of external technical assistance. The benefits to be expected of successful project implementation are numerous: for the Ministry of Economy and Finance, they range from the benefits of better informed budget and investment decisions to an increase in budget revenues through improved tax administration as well as budget savings from better cash management. For the civil service, the benefits are to come from budgetary savings from tighter personnel management and are expected to translate into significant productivity gains. For municipal development,  - 22 _ there is much evidence of the advantages of community-based development over centralized administration. Over the longer term, together with the Public Enterprise Rehabilitation Project, these institutional reform efforts would attempt to tap the considerable potential for improving the productivity of the public sector. 65. The risks of this project in particular, and of institutional reform in general, are of four types: (i) that commitment for reform waivers or that resistance to reform blocks implementation, due to bureaucratic resistance or to linguistic or social divisions inhibiting change; (ii) that managing the reform process exceeds local capacities; (iii) that it proves difficult to identify acceptable technical assistance with the required expertise; or (iv) that BCIR's position under MCS prevents it from assuming a proactive coordination role. Regarding the first risk, there is abundant evidence of leadership commitment, such as the nomination of a highly qualified director for the BCIR, the carrying out of an institutional assessment of the MEF, and the preparation of the program to rehabilitate civil service management. Government commitment was also convincingly demonstrated during the recent national seminar on administrative reform which will be replicated at regular intervals. The second risk will be alleviated by having strong project management, already operational; flexible and modular implementation arrangements minimizing interdependence between reform components; a seven-year implementation period even though initial action programs span only four years; and direct management support to BCIR. The effectiveness of technical assistance provided under the project would be enhanced by resorting to external consultants as a last resort, by maximizing the use of technical assistance in place, of local consultants and of twinning arrangements, in particular through a skills mobilization scheme which is an integral part of project design. Finally, the last risk, that of MCS's lack of stature within the Government, is offset by the strong commitment already evident at higher decision making levels. VII. AGREEMENTS AND RECOMMENDATION Agreements Reached 66. During negotiations, agreement was reached: (a) that BOM would be established by December 1988 with functions and responsibilities satisfactory to the Association and with qualified and experienced staff in adequate numbers (para 35); (b) that BOM's activities and effectiveness would be reviewed by July 1991 and its mandate revised if deemed necessary (para 35); (c) that MEF would have completed its reorganization of the Planning, Aid Coordination and Budget Departments by June 1988 (para 37);  - 23 - (d) that MEF would adopt measures to ensure satisfactory full cost recovery arrangements for publication and dissemination *f tax regulation information (para 39); (e) that interim reports for the civil service studies and trainIng strategy would be submitted to lDA for review by April 1989, with the final reports com.1pleted and submitted to IDA by February 1990 (para 45); Uf) that annual work programs for each component would be submitted to IDA for review and approval by October of each year (para 56); and (g) that proposals for str2ngthening the Ministry of Fisheries and Maritime Economy, the Auditor General's Office, the Financial Controller's Office and any other proposals for administrative reform would be submitted to CCIR and to IDA for approval by December 1989. 67. Conditions of effectiveness would be: (a) that CCIR is operational (para 29); (b) that MEF's senior training coordinator has been appointed (para 41); (c) that the overall project traininig coordinator has been appointed (para 48); and (d) that IDA has agreed on first-year action programs for each component (para 56). Recormniendation 68. Subject to the above conditions, the proposed project is suitable for a credit of US$10.0 equivalent to the Islamic Republic of Mauritania on IDA terms with 40 years maturity. AF5CO November 23, 1987  MAURITANIA DEVELOPMENT MANAGEMENT PROJECT IMPLEMENTATION SCHEDULE Component/Subcomponent Year and Quarter Activity 1987 1988 1989 199 1991-92 Tasks 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4