Senegal - Technical Assistance Project For Economic and Financial Planning

Document of The World Bank FOR OFFMCIAL USE ONLY Report No. 10151 Reo.rt N1o o L5 1 *3P TY? (1-C1>, PROJECT COMPLETION REPORT SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOMIC AND FINANCIAL PLANNING (CREDIT 1061-SE) DECEMBER 9, 1991 Senegal Resident Mission Sahelian Department Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIV,ALENTS CFAF The exchange rate varied over the project period and averaged US $1 = CFAF 275 ABBREVIATIONS CNCA Commission Nationale des Co.-trats de l'Administration DDI Division of Debt and Investments (MEF) DFP Directorate of Finance and Programming (MPC) DP Planning Directorate (MPc) DPM Division of Programming and Monitoring (MPC) MEF Ministry of Economic Affairs and Finance MPC Ministry of Plan and Cooperation PCR Project Completion Report SAL Structural Adjustment Loan FISCAL YEAR Government: July 1-June 30  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. dfico of Direotor-General Operations EvAluatlon December 9, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report os "enegal - Technical Assistance Proiect-for Economic and Financial Planning (Credit 1061-SEN) Attached, for information, is a copy of a report entitled "Project Completion Report on Senegal - Technical Assistance Project for Economic and Financial Planning (Credit 1061-SEN)"I prepared by the Africa Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment 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 authorizatlon.  FOR OFFICIAL USE ONLY PROJECT COMPLETION-REPOR7 SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOMIC AND FINANCIAL PLANNING (CREDIT 1061-SE) TABLE OF CONTENTS Page No. PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EVALUATION SUMMARY . . . . . . . . . . . . . . . . . . . . . . . .iii PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE . . . . . . . . . . Project Identify . . . . . . . . . . . . . . . . . . . . . . . . . Project Background . . . . . . . . . . . . . . . . . . . . . . . . Project Objectives and Description . . . . . . . . . . . . . . . . 3 Project Components ...... ..... . . . . . . . . . . . . . . 3 Project Design . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Project Organization . . . . . . . . . . . . . . . . . . . . . . . 6 Project Implementation . . . . . . . . . . . . . . . . . . . . . 6 Project Results . . . .. .... . ....... 6 Project Impact . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Project Sustainability . . . . . . . . . . . . . . . . . . . . . . 8 Bank Performance . . . . . . . . . . . . . . . . . . . . . . . . . 8 Borrower Performance . . . . . . . . . . . . . . . . . . . . . . . 9 Consulting Services . . . . . . . . . . . . . . . . . . . . . . . . 9 Project Relationship . . . . . . . . . . . . . . . . . . . . . . . 9 PART III: STATISTICAL INFORMATION ... . . . . . . . . . . . . . 10 A. Related Bank Loans/Credits ... . . . . . . . . ..... . 10 B. Project Timetable . . . . . . . . . . . . . . . . . . . . . . 11 C. Project Cost and Financing ... . . .... . . . . . . . . 11 D. Credit Disbursements ... . . . . . . . . . ....... . 12 E. Compliance with Credit Covenants . . . . . . . . . . . . . . 13 P. Project Studies ... . ..... . . . . . . . . . . . . . . 15 G. Mission Data .... . . . . . . . . . . . ....... . . 17 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.  PROJECT QOMPLETION REPORT SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOMIC AND FINANCIAL PLANNING (CREDIT 1061-SE) PREEACE This is the Project Completion Report (PCR) for the Senegal Teohnical Assistance Project for Economic and Financial Planning for which Credit 1061-SE in the amount of US$5.3 million was approved in August 1980. The credit was closed on December 31. 1987, three and one-half years behind schedule. All but US$0.03 million was disbursed, and the last disbursement was on June 8, 1988. In March 1991, Parts I and III were sent to the Borrower for comment. At that time IDA also requested that the Borrower prepare Part II of the report. To date, no reply has been received. The PCR (Preface, Evaluation Summary, Parts I and III) was prepared by the Bank's Resident Mission in Senegal on the basis of the President's Report, the Credit Agreement, supervision reports, correspondence between the Bank and the Borrower, and internal Bank memoranda.  - iii - PROJECT COMPLETION REPORT SENEGAL TECHNICAL ASSISTANCE PFIJECT FOR ECONOMIC b2D FINANCIAL PLANNING (CREDIT 1061-SE) EVALUATION SUMMARY Introduction 1. The Technical Assistance Project for Economic and Financial Planning supported the Government of Sen;c-al's efforts to improve its economic and financial management syotem. It focussed on: a) the portfolio of development projects; b) external debt management; and c) public enterprise management objectives 2. The overall objectives of the project were: a) to increase the benefits of development projects by improving project preparation, selecting better and more directly productive projects and improving project implementa- tion; and b) to improve the process of Government financial control. The specific project objectives were to reinforce the Ministry of Plan and Cooperation's (MPC) management of its portfolio of projects, to help the Ministry of Finance build a system of external dGbt management, and to assist the unit of "contrats-plans" in the Presidency in tne development and implementation of detailed "contrats-plans"l for ten parapublic enterprises (para. 8). Implementation Experience 3. The project was identified in November 1979 and approved in August 1980; the Credit became effective in January 1981. The elapsed time between these stages of the project was short compared to other Bank projects in Senegal. However, the project encountered implementation delays due to deficiencies in the design of the component in the Ministry of Plan (paras. 10-17). These deficiencies included a lack of consideration of the institutional dimension within the Ministry of Plan and the underestimation of technical resources needed for building an effective external debt system (para. 19). Weak project management, which did not make judicious use of the large and diversified volume of available expatriate advisory services (para. 33), and insufficient Bank supervision (para. 31) also contributed to the implementation delays. Results 4. The project achieved some of its objectives. A new system of investment programming and budgeting, consisting of a three year rolling investment program, was designed and implemented. This system, when fully  - iv - operational, will ensure project selection a.ad financi-ng on the basis of a rigorous evaluation and economic justification (paras. 23-25). A system of external debt management in the Ministry of Finance was also established (paras. 26-27). The project was less successful regarding the management of public enterprises (para. 28). Sustainabilitv 5. These achievements will not lead to improved economic and financial management unless the Development Management Project (Credit 1910-SE), which is designed to provide continuing support to Government in all the areas assisted under the project, is successful. If not, the sustainability of the project is doubtful (para. 30). Lessons Learned 6. The main lessons the Bank can learn from this project are: a) Careful design is vital for the success of a Technical Assistance Project which deals with developing govern- ment capacity in economic and financial management. such a design should give due consideration to the appropriateness of the institutional arrangements of the Government bodies which are targeted for rein- forcing; b) If this precondition is not satisfied, bringing large amounts of additional manpower -- expatriate or national -- and financial resources does not guarantee the desired outcome; c) Structural Adjustment Loans (SALs) when concomitantly implemented with a Technical Assistance Project in economic and financial planning can serve as efficient leverage to reinforce the commitment of the Government and to prompt implementation of the desired acti.as. In return, a Technical Assistance Project of this type can facilitate implementation of the SAL by providing the financial resources needed to carry out design and implementation studies; d) A Technical Assistance Project of this type requires a significant amount of supervision by the Bank. Because of the variety of subjects to be covered, the Bank cannot always respond to the supervision require- ments. The focus should be on the most important problems rather than attempting to deal with a large spectrum of problems; and e) Before financing a massive volume of expatriate advisory services through a Technical Assistance Project, it must be ensured that the Head of the office which uses them has the requisite leadership skills to manage them efficiently.  PROJECT COMPLETION REPPQT SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOM-C AND FINANCIAL PLANNING (CREDIT 1061-SE) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE Eroj2ct Identity Name s Technical Assistance Project for Economic and Financial Planning Credit No: 1061-SE Region : Africa Country : Senegal Sector s Technical Assistance Proiect Backaround 1. The Technical Assistance Project for Economic and Financial Planning was conceived to support the efforts of the Government of Senegal in improving its capability in economic and financial management. A credit in an amount of US$5.3 million (Credit 1061-SE) was approved in August 1980. The project was closed in December 1987. It focussed on three areas: a) the system of developing a portfolio of Development Projects b) the management of external debt c) the relationship of Public Enterprises with the Government. 2. At the time of project preparation, the Government had initiated a vast program of reforms to deal with the crisis that the economy was experiencing in the late 1970s. This crisis, which was evidenced by the rapid decrease of public savings and deterioration of the current account position, was the result of the weak economic growth that the country has recorded since its independence in 1960. This poor economic performance was partially due to the adverse effects of exogenous factors such as the poor resource base of the country, the erratic climatic conditions of an economy dominantly based on aOiriculture, the unfavorable terms of trade, and the two oil shocks. It was also the consequence of inadequate economic and financial management by the Government. 3. Svstem of Developina a Portfolio of DevelolPment Prriects. The Government recognized the need to improve its economic and financial management systems. Although it was receiving massive public aid ($40 per capita), the projects being financed did not contribute significantly to accelerated economic growth. In order to ensure that investment projects were economically and financially sound, a system which efficiently identified, appraised, selected, implemented and ex post evaluated these projects was needed. Such a system would also facilitate the timely disbursement of funds from both the domestic capital budget and external sources. In the two years preceding the approval of this project, the Government implemented several measures aimed at improving project execution including the:  -2- a) establishment of the Division of Programming and Monitoring (DPM), within the Ministry of Plan, which developed analytical tools for economic and financial analysis of projects; b) establishment of small groups responsible for project preparation and analysis in the technical ministries and project agencies; c) allocation of budget priority to investment financing to provide counterpart funds for projects financed by external sources; d) creation of a unit in the Prime Minister's office, the Comit6 de Relance des Investissements, to detect and unblock specific administrative bottlenecks which were hampering project execution; and e) training of local staff working in project agencies to familiarize them with Government and donor procedures and to attempt to accelerate the various steps in the project cycle. 4. Consolidating and expanding these measures required technical and financial resources which were beyond the capabilities of the Government at that time. 5. Management of the Public Debt. Senegal's public debt and debt service grew rapidly in the late 1970s. One factor which contributed to this situation was the dispersion of borrowing responsibilities among several government offices: the Ministry of Finance, the office of Prime Minister and the Ministry of Plan. To remedy this institutional weakness, the Government centralized these responsibilities in the Ministry of Finance, and created the Department of Debt and Investment (DDI). In order to function efficiently, this institutional restructuring needed to be accompanied by proper staffing and provision of analytical skills, which were not available in the Ministry of Finance. 6. Paraoublic Sector Manaaement. With the support of the Parapublic Sector Technical Assistance Project (Credit 764-SE) approved in May 1977, the Government implemented a reform program to improve the performance of the parapublic sector. The project focussed on reinforcing the government agencies responsible for the financial and accounting control of public enterprises and training officials representing the Government on the boards of public enterprises. The next step in this reform program was clarifying the relationship of public enterprises to the Government. The wish of the Government was to establish medium-term-contracts (contrats-plans) between public enterprises and the Government, setting out responsibilities, commit- ments and expectations of both parties, particularly those relating to management's objectives and government financial obligations. As the Parapublic Sector Technical Assistance Project was near completion and its funds fully committed, the Bank used this project to respond to the Govern- ment's request for assistance in developing this approach in Senegal.  7. The project was .-oncomitantly implemented with three successive structural adjustment credits (SAL I, SAL II, SAL IIi) a-.pproved respectively in 1980, 1985 and 1987. The Development Management Project (Credit 1910-SE) was approved in 1988 to continue assistance in the areas covered by the project. Project Obiectiveag and Description 8. The overall objectives of the project were: a) to increase the benefits o