Morocco - Public Administration Support Project

DocuWnt off The World Bank FOR OMFCIAL USE ONLY LAl I0 f'0 AE o Repwt No. P-4913-MOR MEMORANDUK AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO USS23.0 MILLION TO THE KINGDOM OF W4ROCCO FOR A PUBLIC ADMINISTRATION SUPPORT PROJECT APRIL 5, 1989 Ths donent bas a resicted dbtrbftion and mny be ued by reipients ody in the performace of their official dutie Its contents may not othrwise be dbiosed without Wodd Bank authriation.  CURRENCY AND EQUIVALENT UNITS Currency Unit a Dirham (DR) US$ 1.00 = DH 8.0 I Dirham (DH) = US$0.1196 (as of July 1988) FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS Banque al-Maghrib: The Central Bank CDIF: Informatics and Training Coordination Committee CIPP: Inter-ministerial Project Prequalification Committee CNSS: Social Security Office COCOES: Committee for the Coordination of Economic and Statistical Studies DP: Planning Directorate, Ministry of Planning DS: Statistics Directorate, Ministry of Planning GOM: Government of Morocco ICB: International Competitive Bidding LCB: Local Competitive Bidding MCI: Ministry of Commerce and Industry MEA: Ministry of Economic Affairs MOF: Ministry of Finance MOI: Ministry of Interior MOP: Ministry of Planning SAL: Structural Adjustment Loan TD: Tax Directorate, Ministry of Finance TG: Treasury General, Ministry of Finance VAT: Value Added Tax  FOR 0FCML USE ONLY KINGDOM OF MOROCCO PUBLIC ADMINISTRATION SUPPORT PROJECT LOAN AND PROJECT SUMMARY BORROWER: Kingdom of Morocco BENEFICIARIES: Ministries of Finance, Planning, Economic Affairs, and Commerce & Industry AMOUNT: US$23.0 million equivalent TERMS: 20 years, including 5 years of grace at the standard variable interest rate. ONLENDING TERMS: Not Applicable FINANCING PLAN: Government $16.8 million IBRD $23.0 million (Amount includes $240,000 Total $39.8 million advance under Project Preparation Facility) ECONOMIC RATE OF RETURN: Not Applicable STAFF APPRAISAL REPORT: Not Applicable r 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 disclose without World Bank authoriation.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDE1fr OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A PUBLIC ADMINISTRATION SUPPORT PROJECT 1. The following memorandum and recommendation on a proposed loan to the Kingdom of Morocco in an amount of US$23.0 million equivalent is submitted for approval. The loan would assist the Government in improving economic and financial management capability and would have a term of 20 years, including 5 years of grace, at the Bank's standard variable interest rate. 2. Background. The circumstances leading to Morocco's financial crisis in 1983 are fully described in the Report of the President on the Structural Adjustment Loan (Report No. P-4867-MRO, paras. 8-14). The country's overall fiscal deficit reached 11.4% of GDP in 1983 while the external debt reached US$13.9 billion, which represented nearly 120 percent of GDP and 355 percent of foreign exchange earnings. With a debt service ratio of 53 percent and interest payments alone accounting for 20 percent of exports, Morocco was unable to shoulder its debt service burden. The Government initiated a set of stabilization and adjustment policies in 1984, which were supported by a series of IMF standby arrangements and World Bank sectoral adjustment loans; the latter covering the external trade, industry, agriculture, education, and public enterprise sectors. As a result of measures taken, combined with favorable external developments, macroeconomic imbalances have been substantially reduced and exports of manufactured goods have grown rapidly. Notwithstanding these improvements, certain structural weaknesses continue to thwart Government efforts to move the economy towards sustainable growth and return to normal relations with the international financial community. These weaknesses include a less than buoyant fiscal system, a notable decline in public investment, a depletion of foreign exchange reserves, and a precarious balance-of-payments' position. In addition to financing high priority investments and sectoral adjustment loans, the Bank is supporting Morocco's adjustment efforts through a Structural Adjustment Loan (SAL) approved in 1988. The SAL seeks to reinvigorate the economy through increasing investment levels, continuing trade liberalization and fiscal reforms, leading to a rise in the growth of per capita income and facilitating the restoration of external creditworthiness without disrupting macroeconomic stability. 3. Preliminary SAL discussions with the Government in early 1987 brought to light a series of institutional shortcomings in the planning, organization, and general management capabilities of the core ministries responsible for executing the structural adjustment program. Procedural complexities undermine short and medium-term macroeconomic management, and staffing deficiencies are manifold, while information systems have deteriorated in recent years due to relentless budget cuts. Weaknesses in tax administration, budgetary processes, trade and industrial promotion activities and other functions of the core ministries are major constraints to the adequate  - 2 - implementation of integrated fiscal, budgetary, and trade policies. To address these weaknesses, the Government of Morocco (GOM) has requested institutional assistance in the form of a loan for a Public Administration Support Project. 4. Projec4 Ob2 SKives. The project is designed to facilitate the carrying out of the SAL reform measures, and simultaneously initiate efforts to strengthen the Government's planning and financial management capabilities. It would facilitate the monitoring of the Government's investment program, introduce changes in budgetary procedures, and support the implementation of a system to improve external debt management. It would also assist the GOM in carrying out the SAL fiscal and trade policy reforms. More specifically, the project would strengthen the core agencies' administrative capability to implement the following measures: (a) increase the Ministry of Finance's capability to mobilize resources through improvements in tax administration and collection, to plan and undertake public expenditure programs, and to manage public debt; (b) improve the Ministry of Planning's capability to coordinate investment programming; (c) strengthen capabilities within the Ministries of Planning and Economic Affairs to analyze macroeconomic developments and statistics; and (d) assist the Ministry of Trade and Industry to improve export/import forecasting and external trade management and to assess further industrial and export promotion activities. 5. Project Desriptio.L The project would consist of: (I) assistance to the GOM to introduce improved financial and operational management practices by supporting enhanced methodologies and procedures aimed at rationalizing, strengthening and coordinating the flow of financial and economic information among the core economic ministries; and (II) operational support to the GOM through financing, consulting and advisory services, training and workshop activities, and equipment. Funds for these activities are not expected to be available from UNDP or other bilateral donors. I. In support of improved management practices, specific project activities include: (a) revitalizing and strengthening the Inter-ministerial Committee for the Coordination of Economic and Statistical Studies (COCOES); (b) implementing improved methodologies for the selection and monitoring of public sector investment projects and reinforcing the role of the Inter-Ministerial Project Prequalification Committee (CIPP); and (c) establishing an Intra-Ministerial Informatic Development and Training Coordination Committee (CDIF) within the Ministry of Finance. Expected results would be: (a) improved reliability of financial and economic data; (b) improved selection and monitoring of public sector investment projects; (c) timely and coordinated preparation of the national budget; (d) integration of the planning and budgetary processes; and (e) development of effective management information systems and decision making tools. While these institutional support mechanisms would not involve Bank financing, they would constitute important prerequisites for the long-term sustainability of operational improvements for the implementation of SAL's objectives.  II. To support efforts to strengthen operational capabilities of the core economic ministries, specific project activities include: (a) Resource Mobilization. The project would assist the Tax and Treasury General Directorates of the Ministry of Finance in improving tax administration and collection. A unified tax identification file would be established and computerized and a fiscal census to reconstitute and complete the file would be completed. Tax collection procedures would be streamlined and computerized; the number of tax auditors would be expanded ahd trained, and a tax advisory service would be established. Training would include: (i) annual courses for Tax Directorate staff in fiscal auditing and control techniques, commercial accounting, and familiarization with computer technology; (ii) annual courses for Treasury General staff in improved organization, procedures and methods of tax collection; and (iii courses for Tax Directorate staff in improved training and communications' techniques. Expected results would be: (i) improved performance for tax administration and collection; and (ii) increased efficiency of fiscal control and auditing. (b) Resource Allocation and Expenditures Management. The project would assist the Ministries of Finance (Budget, Treasury, and Treasury General Directorates) and Planning (Planning and Statistics Directorates) to: (i) improve budgetary planning cycle and procedures; (ii) support the implementation of a new harmonized budget nomenclature; (iii) strengthen investment project appraisal, selection, and monitoring methodology; and (iv) improve and computerize the management of public debt. Training activities to be supported under this component would include a long-term organizational training needs assessment for the Treasury Directorate (TD); seminars on techniques of public debt management, and macroeconomic management and analysis; and courses in improved project appraisal and evaluation techniques. Expected results would be: (i) rationalization and simplification of budget cycle and procedures; (ii) improvement in allocation of investment budget; and (iii) enhanced systems and procedures for public debt management. (c) Trade Facilitation. Assistance would be provided to the Ministry of Commerce and Industry's External Trade Directorate by providing staff training and computer modeling to improve import/export forecasting, statistical analysis and assessment of Moroccan export competitiveness, exchange rate fluctuations and their impact, and to promote the industrial sector. Expected results would include improved management and control of external trade operations and related procedures. (d) Macroeconomic Mana8ement and Sectoral Planning. The project would provide additional support to the GOM's efforts to improve the overall macroeconomic management required for specific economic and sectoral programs. The Project Coordination Committee would submit work programs and terms of reference for each study to the Bank for approval. Funds would be made available to relevant core agencies within the finance, planning and technical ministries, which would finance the following kinds of activityl': I/ Long-term consultants would not be included.  - 4- (i) macroeconomic studies; (ii) assessment of and assistance for improvement of macroeconomic and statistical analysis capabilities; (iii) assess-aent of physical and human infrastructure requiremen_s of the Treasury General's external services; (iv) study on debt management options; (v) study on human resottrce management improvements; and (vi) technical assistance in informatics. 6. Projeet Cost and Bank Fiuanc i. The total prcj3ct cost is estimated at US$39.8 million equivalent including approximately US$8.1 million in taxes and duties on imported equipment, with a foreign exchange component of US$23.0 million. Major beneficiaries are the Ministries of Finance, Planning, Trade and Industry, and Economic Affairs. The Bank loan will finance the full foreign exchange cost of the project. The breakdown of costs and financing plan is shown in Schedule A. Details on procurement, disbursements, and the disbursement schedule are given in Schedule B. A timetable of key processing events and the status of Bank operations in Morocco are given in Schedules C and D, respectively. Details of the project and its administration and implementation are given in the attached Technical Annex. 7. Rationale for Bank Involvement. The Bank's involvement in institution building in the core economic agencies stems primarily from its key role in the sectoral and structural adjustment process. Through its association with this process, recently enhanced with the Board approval of a Structural Adjustment Loan to Morocco in December 1988, the Bank is uniquely positioned to help design and support an institutional strengthening program to complement the implementation of the SAL's measures, to introduce a sustainable institutional framework within which the government can improve economic management, and to coordinate technical assistance from other donors. 8. AgTeed Actios During negotiations, agreement has been reached on the operational procedures to carry out the project's yearly work programs. This includes agreement on the preparation of an action plan covering all project activities for the following year. This action plan would be sent to the Bank each year by October 31 for review. 9. Justification. In order to implement and manage its policy reforms effectively, the Government needs to reorganize the flow and use of financial and economic data, simplify and coordinate the systems related to fiscal procedures and budgetary planning and execution, and enhance its own capability to design and implement economic reforms. The project would contribute towards achieving these long-term institutional objectives, while providing necessary mechanisms to facilitate implementation of the SAL's trade and fiscal reforms. 10. Risks. A major risk is the difficulty of ensuring sustained project implementation through coordination among the large number of beneficiaries. A related concern is the speed with which the reforms under the structural  - 5 - adjustment program will be approved and implemented. These risks have been minimized by: (a) establishing a project coordination committee comprised of representatives from all the agencies concerned, and appointing a project administrator; (b) establishing or revitalizing committees to improve inter- and intra-agency coordination; (c) strengthening the core agencies involved in implementing policy reforms under the SAL rather than assisting one or two in isolation; (d) covering organizational, procedural, and technical aspects; and (e) emphasizing staff training. Finally, project activities have been designed with considerable participation by key officials and staff resulting in a demonstrated commitment at the political and administrative levels. 11. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve it. Barber B. Conable President Attazhments Washington, D.C. April 5, 1989  -t - 6- Nio ofMFACO, PUBLIC AIBISThATIOI SUPPOr PO T Estimated Costs and Financing Plan Estimated Coats 1I LOCAL FORGN TOTAL ------------------- --US$ millon------- 1. Tecbnical Assistane 0.8 1.4 2.2 2. Training & Workshops 1.0 1.8 2.8 3. Equipqent a Materials 9.4 13.9 23.3 4. Incremental Operating Costs 2.5 1.0 3.5 S. Studies & Advisory Services * 1.0 2.0 3.0 6. Reftnancing of PPF 0.2 0.2 TOTAL BASE COSTS (Sept. 1988) 14.7 20.3 35.0 Price & Physical Contingencies 2.1 2.7 4.8 TOTAL PROJECT COST 16.8 23.0 39.8 Finaning Pclan LOCAL FOREIGN TOTAL ___________135 Mi_____ sllion -___ I30 0.0 23.0 23.0 Government 16.8 0.0 16.8 TOTAL 16.8 23.0 39.8 1I Include Taxes and Duties of approximately US$8.1 million. * Funds to improve macroeconomic mannement end sectoral planning capabilities.  -7- SCHEItU B Pag 1 of 2 1xlf OF HDROCCO ULIC A1UIIWKSlThaION SUPPT PROJEC Procureet Method ---------- lOCURP40T MTHWO-------- CATEGRY ICB o0m NA TOTAL 8-u$ Million- 1. Tebhnical Assistance 2.60 a/ 2.60 (2.50) (2.50) 2. Training & Workshops 3.00 3.00 (3.00) (3.00) 3. Equipment & Materials 22.90 3.50 26.40 (12.50) (2.00) (14.50) 4. Increnwtal Operating Costs 4.00 4.00 0.00 (0.00) 5. Studies & Advisory Services 3.50 a/ 3.50 (2.80) (2.80) 6. Refinancing of PPF 0.20 0.20 (0.20) (0.20) TOTAL 22.90 9.60 7.20 39.70 (12.50) (7.30) (3.20) (23.00) a/ In accordmace with Bank Group guidelines for the use of consultants. NOTE: Figures in brackets refer to amounts financed by IBRD.  SCUED1LE B KflUDt4 07 ~mocco Page 2 of 2 PUBLIC ADMINISThA2TON SUPPORT PROJDC ------------------------------------- IBMD DISSU}CEMEMS (US$ mllion) 1. Technical Assistance 2.50 902 of local expenditures for services of consultants domiciled within the territory of the Borrower and 1002 of foreign expenditures for services of other consultants. 2. Training & Workshop 3.00 1002 of total expenditures. 3. Equipment & Materials 14.50 1OOZ of foreign expenditures, 1002 of local expnditures (Ex. factory coat) and 502 of local expenditures for other items procured locally. 4. Refinancing of Project 0.24 Amountt of expenditures. Preparation Facility S. Unallocated 2.76 ESTIMATED IBMD DISBUStMENMS 1989 1990 1991 1992 1993 Annual 2.50 6.00 6.00 5.50 3.00 Cumulative 2.50 8.50 14.50 20.00 23.00  -9- SCHEDULE C KINGDOM OF MOROCCO PUBLIC ADMINISTRATION SUPPORT PROJECT Timetable of Key Processing Events A. Initial Identification February 1987 B. Preparation Mission November 1987 C. Pre-Appraisal Mission: April 1988 D. Appraisal Mission June/July 1988 E. Negotiations March 1989 F. Board Presentation May 1989 G. Effective Date June 1989 H. List of Relevant PCRs & PPARs Not Applicable  SCH 0 ULIE - 10 - Page I of 2 STATUS OF BANK OPErATIONS IN MOROCCO A. StATE=ENT OF BANK LOANS AND IDA CREDITS (As of March 31. 1989) Loan or US$ Million Amout Credit 1Lgss Cangellations) Number Yar BrreMr Purose Bank UQ Undisbursed Fourty-nine Loans Fully Oisbursed 2,005.77 Five Credits Fully Disbursed 45.16 1602 1978 Kingdom of Morocco Agriculture 40.00 10.87 1681 1979 Kingdom of Morocco Education 88.00 1.43 1848 1980 Kingdom of Morocco Agriculture 18.00 4.54 2006 1982 Kingdom of Morocco Water Supply 78.00 22.99 2038 1982 Kingdom of Morocco DFC (SSI) 30.00 3.55 2082 1982 Kingdom of Morocco Agriculture 16.00 8.69 2110 1982 Kingdom of Morocco Forestry 15.50 7.S2 2149 1982 Kingdom of Morocco Education 38.00 4.50 2217 1983 Kingdom of Morocco Agriculture 22.00 16.18 2245 1983 CIH Housing Oevelopment 60.00 9.87 22S3 1983 Kingdom of Morocco Agriculture 34.00 22.87 2254 1983 Kingdom of Morocco Highways 76.60 16.24 2272 1983 Kingdom of Morocco Village Infrastructure 16.00 1.23 2479 1985 Kingdom of Morocco Vocational Training 27.10 13.87 2487 1985 Kingdom of Morocco Electrical & Mec. Ind. 25.10 11.17 2508 1985 Kingdom of Morocco Jerada Coal Min. 21.00 11.39 2572 1985 Kingdom of Morocco Health 28.40 24.86 2656 1986 Kingdom of Morocco Agriculture 46.00 41.35 2657 1986 Port Authority Port of Casablanca 22.00 15.13 2664 1986 Kingdom of Morocco Education 150.00 37.30 2731 1986 CNCA Agric. Credit 120.00 18.94 2779 1987 Kingdom of Morocco Vocational Training 22.30 20.22 2798 1987 ONP Teleconmsnications 116.00 115.39 2806 1987 National Sank for Econ. Development Industr. Export Fin. 70.00 35.08 2820 1987 Kingdom of Morocco Publ. Enter. Rat. 240.00 119.23 2825 1987 Kingdom of Morocco Nat. Water Supply 60.00 58.80 2826 1987 Kingdom of Morocco Greater Casa. Sewerage /A 60.00 59.37 2885 1988 Kingdom of Morocco 2nd Agr. Sector Adj. 225.00 150.00 2910 1988 Kingdom of Morocco Power Distribution /k 90.00 90.0. 2954 1988 Kingdom of Morocco Small & Med. Irrig. It /b 23.00 23.00 3001 1989 Kingdom of Morocco SAL 200.00 100.00 TOTAL 4.083.77 45.16 1.075.58 of which has been repaid (only amortization) 860.54 4.52 TOTAL Held by Bank and IDA 3.223.54 40.64 Amount Sold 20.11 of which has been repaid 20.11 TOTAL Undisbursed 1.0758 /f Not yet effective. /l Not yet signed.  - 11 - RSCHEDULE Page 2 of 2 S. STATMENT OF IFC INVESTMENTS IN MOROCCO (As of January 31. 1989) Fiscal USI Million Year Obi pr Ty"O of Business Loan jqiAty Total 1962 Banque Nationale Development Financing 58.15* 1.54 59.69* 1978 pour le Diveloppement 1983 Economique (BNDE) 1985 1966 Socidte Industrielle Agroindustry 0.89 0.50 1.39 de Lukus (Loan fully repaid; equity sold 1976 Marrakech Cement Cement Production - 1.28 1.28 1977 Temara Cement Cement Production 4.75 3.57 8.32 1980 1979 Ciments d'Agadir Cement Production 15.16 - 15.16 1980 SOHIFER Mines 12.99 2.35 15.34 1981 Casablanca Cement Cement Production 15.80 2.25 18.05 1982 1985 Frumat Agroindustry 8.30 - 8.30 1987 Credit Dumbilier et Financial Institution m6telier (CIN) 25.00* - 25.00* 1987 Setafil Textile Factory 3.27 1.33 4.60 1987 Cialgas-Maroc S.A. Agar Production 1.00 0.30 1.30 Total Gross Commitments 145.31 13.12 158.43 Less Cancellations. Terminations. Repayments. Sales and Exchange Adjustments 38.54 S.96 44M50 Total Commitments Held by IFC JALSZ 1L.L6 1.L3 of which undisbursed 1.00 0.30 1.30 * IFC net. Does not include participations from commercial banks.  - 12 - TECHNICAL ANNEX SECTION A: DETAILED PROJECT DESCRIPTION 1. Intitutioa Framework. Preliminary SAL discussions with the Government in 1987 brought to light a series of institutional shortcomings in the planning, organization, and general management capabilities of the ministries responsible for executing the Structural Adjustment program. Procedural complexities hinder short- and medium-term macroeconomic management, staffing deficiencies are manifold, and information systems have deteriorated in recent years due to relentless budget cuts. Serious build-up of government arrears have been due largely to the shortcomings in budgetary management and expenditure control. Weaknesses in tax administration, budgetary and planning processes, public debt and external trade management, and other functions of the core ministries are major restraints to the adequate implementation of integrated fiscal, budgetary and trade policies. 2. In the area of tax administration, the objective of the SAL is to rationalize the tax structure and increase the expected yield of the fiscal system. In this context, the most important institutional constraints addressed by the project are: (a) the inefficiency of procedures and systems for tax administration, collection, auditing, and fiscal control; (b) the deficiencies in staff capabilities and management information systems; and (c) the dearth of tax information channeled to the public. For the management of government expenditures, the Government's structural adjustment program aims to ensure both availability of sufficient resources and the timely execution of targeted high priority projects in key socioeconomic sectors. In this context, the project would address the following constraints: (a) cumbersome budgetary planning procedures; (b) weak project appraisal, selection and monitoring criteria, and investment budget management; (c) weak capabilities for macroeconomic management and statistical analysis; (d) inadequate information systems to meet the requirements for all of the above. Fundamental to the Government's structural adjustment program also is the need to implement an effective system for monitoring, registering and reducing debt. Through the project, the major institutional issues of public debt management addressed are: (a) the absence of a strong statistical base and associated management information system to monitor debt; and (b) the weaknesses in staff capability to monitor internal and external debt, and international financial situations. In the area of external trade management, the SAL's overall objective is to rationalize trade and industrial policy and to expedite trade liberalization. The main constraints facing the GOM in reaching these goals are weaknesses in the capability of staff to meet its requirements in export/import forecasting, in exchange rate management, and in enhanced techniques of computer modeling and statistical analysis. The project would provide the support required to raise capabilities of staff to meet these requirements. 3. In order to redress these institutional imbalances and staff capability shortfalls facing the Government in implementing its structural adjustment program, specific institutional support measures, including organizational, procedural improvements, and resource strengthening programs have been prepared. These measures can be grouped into three general  - 13 - categories: (a) short- and medium-term studies and training programs aimed at improving domestic resource management and control mechanisms; (b) computerization schemes and acquisition of computing equipment and related services to improve decision-making mechanisms and work methods; and (c) longer-term institutional strengthening measures to develop internal capability (structures, personnel and manpower development policies, etc.). 4. Detailed PrOje-t Ription. Project measures focus on: (I) assistance to the GOV in introducing improved financial and operational management practices by supporting enhanced methodologies and procedures aimed at rationalizing, strengthening, and coordinating the flow of financial and economic information among the core economic ministries; and (II) operational support to the GOM through financing consulting and advisory services, training and workshop activities, equipment and studies to strengthen the capabilities of the Finance, Planning, Trade and Industry, and Economic Affairs Ministries in the areas of: (i) domestic resource mobilization and tax administration; (ii) resource allocation and public debt management; (iii) external trade; and (iv) macroeconomic management and sectoral planning. Project measures focus on the institutional needs to facilitate the carrying out of the structural adjustment policy reforms and aim at reinforcing the Government's efforts to enhance overall macroeconomic management by addressing the institutional constraints stated above. Project activities have been discussed with bilateral and multilateral donors, and complement other assistance programs being undertaken. I. To support improved management practices and to enhance Inter- and Intra-Ministerial Coordination. Specific project support includes: (a) revitalizing and strengthening the Inter-ministerial Committee for the Coordination of Economic and Statistical Studies (COCOES); (b) implementing improved methodologies for coordinating the selection and monitoring of public sector investment projects and reinforcing the role of the Inter-Ministerial Project Prequalification Committee (CIPP); and (c) establishing an Intra-ministerial Coordination Committee for Informatic Development and Training (CDIF) within the Ministry of Finance. II. To support efforts to strengthen operational capabilities of the core economic ministries, specific project financed activities include: (a) Domestic Resource Mobilization and Tax Administration - Ministry of Finance (MOF). Within the framework of implementing fiscal policy reforms, the project provides for institutional support and technical assistance to the Tax and Treasury General Directorates of the MOF aimed at improving domestic resource mobilization and efficient tax administration. Project supported activities in this area include:  - 14 - (i) Improved tax administration (Tax Directorate) through the establishment of a unified taxpayer identification file and the completion of a fiscal census to reconstitute and complete the file. (ii) Improved tax procedures through assisting the Tax and Treasury General Directorate in: (a) the development of computerized management information/decision-making systems; (b) the application of fiscal simulation relating to budgetary management, legislation and tax collection; and (c) the initiation of a training program to support simulations of basic taxes with a view to enlarging their application base. (iii) Improved tax collection and auditing procedures and systems through assisting che Tax and Treasury General Directorates in their efforts to improve tax collection procedures and staff skills, auditing and fiscal control, and the overall effectiveness of tax auditing and collection. Specific measures include: (a) preparation and implementation of a training program aimed at improving efficiency and effectiveness of existing tax collection procedures, including computerization systems; (b) design and implementation of training programs in fiscal control and recording techniques for auditors; (c) development and implementation of a computerized system with supporting guides and monographs, and related staff training for the control of tax declarations; (d) completion of a study on the use of computers for fiscal fraud control and enterprise audit, and implementation of recommendations; and (e) preparation and implementation of a program to provide tax advisory services to the public. (b) Resource Allocation and Expenditures Management - Ministry of Finance and Ministry of Planning. Institutional measures in this area aim at assisting the Ministries of Finance (MOF) and Planning (MOP) to reduce and optimize government expenditures through improved management planning and control mechanisms which include: (i) Improved budgetary planning cycle and procedures. Measures in this area include: (a) simplifying and clarifying budgetary procedures and staff functions; (b) continuing harmonization and implementation of new budget nomenclature; (c) establishing a new Studies  - 15 - and Evaluation Unit in the Budget Directorate (MOF) for project evaluation; and (d) computerizing budgetary procedures. (ii) Improved management of investment budget through support to: CIPP* MOP-Planning and Statistics Directorates, and MOF-Budget Directorate. Measures include: (a) building on existing CIPP programs which provide structures, methodology, and criteria for project investment analysis, selection and control; (b) introducing procedures in coordination with MOF and MOP to ensure approval of investment projects which correspond to appropriate economic and financial criteria; (c) providing computer hardware and software to develop and implement a computerized data base for project management; and (e) providing related technical assistance and training. (iii) Improved managemeni of public debt by the Treasury Directorate, through the development and implementation of a public debt management system, for external and internal debt. Measures in this area include: (a) preparing a government circular aimed at defining and clarifying the respective authorities and responsibilities related to debt management; (b) carrying out a long-term organizational and training needs assessment of the TD; (c) developing a computerized External Debt Management System and providing related informatic tools and assistance; (d) establishing an inventory of state guaranteed debt, both external and internal, and redefining criteria and conditions for granting government guarantees; (e) developing and implementing an improved information-gathering system on specialized financial institutions involved in contracting or reimbursing external debt; and (f) providing computer hardware, software, and related training to support the above. (iv) Improved capability of the Treasury Directorate staff to follow national and international financial situations. Project support includes: (a) creating a unit at the Treasury Directorate responsible for following national and international economic and financial situations; (b) developing related economic and financial modeling systems; and (c) providing related professional training and informatic support. (v) Improved capability of the Treasury General Directorate staff to follow budget execution, especially related to public debt, real expenditures, and investment budget. Project support in this area  - 16 - includes: (a) elaborating a study on public accounting (already underway with technical assistance from the French Government)* (b) establishing short- and long-term mechanisms to produce summary statistical information periodically on the operations of the Treasury General, especially those relating to the execution and follow-up of real expenditures; (c) implementing a computerization program to automate major Treasury General operations in the above areas. The program includes providing computer hardware and developing software applications for Rabat, four regional centers, and about 100 local collectivities; and (e) providing professional training and TA in the above areas. (vi) Impro-ed capability of the staff in the Ministry of Planning (MOP) and Ministry of Economic Affairs (MEA) for macroeconomic management and statistical analysis. Measures include: (a) providing professional training programs in macroeconomic and statistical analysis; (b) establishing a computerized data base of basic national statistics; and (c) providing software modeling packages, computer hardware and informatic related training for both ministries. Training in improved project appraisal and evaluation techniques would be provided to supervisory staff in the MOP. (c) Trade Facilitation. AsEistance would be provided to the Ministry of Trade and Industry (MCI) to improve the management of external trade operations and to promote the industrial sector. Project activities include: (a) training programs designed to improve import/export forecasting, statistical analysis, and assessment of the Moroccan export competitiveness, exchange rate fluctuations and their impact; (b) enhancing computer modeling and statistical analysis; and (c) building on existing staff skills in external trade policy through familiarization seminars (such as EDI in the Bank) and on-the-job training. (d) Macroeconomic Management and Sectoral Planning. The project would provide additional support to the GOM's efforts to improve the overall macroeconomic management and sectoral planning capabilities. The Project Coordination Committee would submit work programs and terms of reference for each study to the Bank for approval. Funds would be made available to relevant core agencies within the finance, planning and technical ministries, which would finance the following kinds of activityV': Long-term consultants would not be included.  - 17 - (i) macroeconomic studies; (ii) assessment of and assistance for improvement of macroeconomic and statistical analysis capabilities; (iii) assessment of physical and human infrastructure requirements of the Treasury General's external services; (iv) study on debt management options; (v) study on human resource management improvements; and (vi) technical assistance in informatics. 5. The specific actions mentioned above are carefully phased to translate government commitment into tangible action and sustain reform. This will be accomplished by using existing local resources wherever possible, while allowing for flexibility in work program development in response to evolving administrative circumstances. These actions would be further enhanced through: (i) implementing the inter-ministerial and intra-ministerial coordination measures referred to under 4 tT(a)] above aimed at improving financial management via the rationalization and normalization of financial information; and (ii) enhancing communication through the establishment of coordinating groups for the SAL and the project. 6. Project Costs and Fmancig. The total project cost is estimated at US$39.8 million equivalent including approximately US$8.1 million in taxes and duties, with a foreign exchange component of US$23.0 million. The breakdown of costs and the financing plan are shown in Schedule A. The Bank loan will finance the full foreign exchange cost of the project. SECTION B: PROJECT ADMINISTRATION AND IMPLEMENTATION 7. Project ImDlementation. The respective ministries would be responsible for implementing project actions, aided by an already established inter-ministerial Project Coordination Committee. The project would be implemented along the lines of annual work programs agreed to with the Bank. Each ministry's Secretary-General would report periodically to his Minister on implementation progress. A schedule of key activities and a Program of Professional Training are shown in the following pages. 8. Project Coordination. The Project Coordination Committee consists of representatives from the ministries responsible for implementing the project, headed by the Director of Budgetary and Banking Operations at the Treasury General. He acts as an overall project administrator and is responsible for the administrative aspects of the project including liaison with the Bank. During negotiations detailed TOR for project administration were finalized with the Government. The Committee would meet annually to approve individual agencies' annual work programs and at least once every quarter to review their implementation, to coordinate project actions, and to take appropriate corrective measures. Its operating procedures were finalized during negotiations. The Committee would review proposals for financing under the macroeconomic and sectoral planning component, and would communicate its recommendations to the Bank for review and approval in the context of the  - 18 - annual work program. It would also coordinate and liaise with the SAL coordination committee and the investment budget working group to ensure consistency and complementarity of project and program implementation. 9. Disbursement. Disbursements from the loan would be made on the following basis: (a) 90% of local expenditures for services of local consultants and 100% of foreign expenditures for foreign consultants; (b) 100% of total cost for training; and (c) 100% of cost of foreign expenditures for manufactured equipment and materials, 100% of the ex-factory cost for locally manufactured items, and 50% of local expenditures for other items procured locally. All disbursements would be fully documented. except those for payments against contracts of less than US$30,000 equivalent, which would be made against statements of expenditure. The documentation would be available for review by the Bank's supervision missions. The decision to have a Special Account was left open for the present, allowing the Government the possibility to have such an account in a currency and an institution acceptable to the Bank. Agreement was reached on a minimum acceptable amount (US$65,000) for withdrawal applications. Project implementation is scheduled for four years but a five-year disbursement period will be maintained in accordance with the regional disbursement profile for similar projects. 10. Procurement. (a) Services: The specialists for technical assistance and for studies to be funded under the project would be recruited directly by the Government under individual contracts or through consulting firms in accordance with the Bank's guidelines for use of consultants. The TOR, list of firms, and letter of invitation would be reviewed with the Bank before inviting proposals. Draft contracts will also be reviewed with the Bank before signature. (b) Goods: (i) computer equipment grouped in lots totalling US$300,000 or more would be procured through international competitive bidding (ICB); and (ii) computer and office equipment grouped in lots under US$300,000 would be procured through local shopping, requiring price quotations from a minimum of three vendors. The overall ceiling for local shopping would not exceed US$3.5 million equivalent or 13% of the total cost of procured goods. Competitive bidding would be encouraged by grouping items together whenever possible. Contracts awarded on the basis of ICB will be subject to prior Bank review. 11. Accountsand Audits. Separate accounts would be kept for all expenditures made under the Project. The Project Administrator would maintain records and accounts for all project activities. The accounts and statements of expenditures would be audited annually by external auditors acceptable to the Bank and submitted no later than six months after the close of the financial year. 12. Reporting, Monitorng and Accountablity. Reports on project implementation, summaries of progress achieved, difficulties encountered, and changes or adjustments to be made, would be submitted quarterly by each Ministry concerned to the Project Coordination Committee. The Committee would meet at least quarterly to review progress, take appropriate actions, and assign responsibility for follow-up.  KING" OF MOROCCO: PUBLIC ADMINISTRATION SUPPORT PROJECT (PAL) INTER- AND INTRA-MINJSTERIAL COORDINATION KEY PROJECT ACTIVITIES .. .. .................... .... .................. .............. ............ ........................... ................... ....., .............. GOVERNMENT OBJECTIVES MEASURES ALREADY FIRST YEAR YEARS 2 - 4 EXPECTED OJTPUT RESPONSIBILITY ADOPTED ........................ ........................ ........................... ........................... ........................ .............. loprovement of Agreement to revftalzfe Def nitf on and preparatfon Implementation of COWS Increased awvlef(tilty, NP financial m mnt COCOES (the Comnittee by COO=ES of procedures recomumndations. ctrculatfon and DS by: (a) rationalization for Coordinating for identifying and using Nov. 1989 - April 1992. frequency of data. and standardi2ation of Statistical Studies). financial and economic financial and economic data, and determining of data; (b) intra- and Issue of PM circular on the responsibilities of inter-ministerial strengthenirn of the vraious agencies coordination of COCOES's role. concerned in particular information flow. the Ministry of Finance (MOF), the Ministry of Plaming (MOP), the Ministry of Interior (MDI), and the Ministry of Comerce & Industry (MCI). Jan. 1989 - Dec. 1989. MOF circular on Implementation of Monitoring of effectiveness Integration and MOF establIahment of CDIF coordinating capability. of coordinating procedures. compatibilIty of CDIF (the informatics and Jan. 1989 - Mar. 1989. Jan. 1989 - Dec. 1989. computer equipuent and Training Development information system. Comrttee). Establishnent in MOF Preparation of MOF Economic monitoring MOF %z of an econmic performance chart. capabilIty. Treasury projections and studies Jan. 1989 - Dec. 1989. unit. Iproved coordination April 1987 circular Availabitity of criteria CIPP in selection and for implementation of for selection of MOP (DS) monitoring of econooic approval of operational projects. investment projects. Investment proJects Meeting of CIm (the Inter-Ministerial Project Prequalification Committee). Preparation of PM circular of April Preliminary draft of new Narmonization of budget improved correlation MCP (DP) economic budget. 1987; Law No. 39-87. Budget outline. Plan With Appropriation's between economic July 1989 - Dec. 1989 law; review of Budget project fons and budget Plan. Jan. 1990 - Dec. 1991 execution. ........................ ........................ ........................... ........................... ........................ ..............  KINGDO OF MCROCO: PUBLIC ADMINISTRATION UPPONT PROJECT (PAL) RESRMCE MMBILIZATION: TAX ADMINISTRATION KEY PROJECT ACTIVITIES .......,........................ ........... ............... ............ ............... ........................... .............. ......,......... ... .............. GOVERNMENT OBJECTIVES MEASURES ALREADY FtIST YEAR YEARS 2 - 4 EXPECTED OUTPUT RESPONSIBILITY ADOPTED ........................ ........................ ........................... ........................... ....................... .............. INCREASED FISCAL REVENUE WITHIN THE FRAMEWORK OF GOVERNMENT ADiUSTMENT PRO"W I t of tax Registration of Cnpteti on of file and Carputerization of Progress nude in MOF administration through prelimInary ffles, 9oX analysis of records. selected pert of file taxpayer identification. the establishment of a coqplete. Jan. 1989 - Dec. 1989. records. uLnified taxpayer By April 1990. identification file. Selection form file of Fiscal cenus, collection MOF data relevant to taxation. & preparation of other TD July 1989 - Dec. 1989. fdentffyflg data. Jan. 1990 - Dec. 1990 Establishment of records, and preparation of taxpayer identification. Canputerization of general Aetal use of capute- taxpayer records. rtzed uniffed taxpayer Jan. 1990 - Dec. 1990. identification file. file. Copletion and updatirn of fiscal data base. Jan. 1991 - Dec. 1991. Improveents in tax Two coaputer centers Study to identify fiscal Use of data provided for Progress nude in use of MOF adainistration methods Established. simulation techniques. legfslative menent ard data base. TD & TG mid procedures through Formutation of a grou to adsInistrative adaptation. developnnt of caoep Harmonization of VAT study simulation Jan. 1991 - Dec. 1991 terized informetion codes within the coumtry techniques. eagnauelnt decision- with VAT codas for Jan. 1989 - Dec. 1990. ak1n8 systems. importation. ........ . ............................ ........................... ......, ..............  KINGDOM Of NMOCCO: PUBLIC ADMINISTRATION SUPPORT PROJECT (PAL) RESOURCE MOBILIZATION: TAX ADMINISTRATION KEY PROJECT ACTIVITIES .... .............. ............ ............................. ,.............................. ..... ... ......................... ........................ .............. GOVERNMENT OBJECTIVES MEASURES ALREADY FIRST YEAR YEARS 2 - 4 EXPECTED OUTPUT RESPONSIBILITY ADOPTED ........................ .................... .............. ...................................... ....................................... ................................ .............,........ Study for idmntifying Application of results of Progress in MOm requirements for data the study to the devetop- coWterization at TG. Intra- transfer, procedural ment of the computer Ministerfal interfaces and systems program for tax adeinistra- Committee compatibility a7mg the tion. (software for tinking Budget, Treasury General cotlection and issue). and Tax Directorates. June 1989 - Sept. 1989. Jan. 1990. Computerization plan Review and/or updating of MOF prepared. computerization plan, If (T & TS) necessary. Sept. 1989 - Dec. 1989. Preparation of bidding Develomnt & installation Direct access to unified MOF docu