Burkina Faso - Public Institutional Development Project

Document of The World Bank FOR OFFICLAL USE ONLY MICROFICHE COPY Report F'o. P- 5785-BUR Type: (PM) IGRAM, JOS/ X34653 / J9 081/ AF5CC MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN THE AMOUNT EQUIVALENT TO US$15.0 MILLION TO BURKINA FASO FOR A PUBLIC INSTITUTIONAL DEVELOPMENT PROJECT MAY 12, 1992 This document bas a restricted distribution and may be used by recipients only in the performance of ther official duties. its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENTS Currency Unit = CFA franc (CFAF) US$1.00 = CFAF 272.00 CFAF 1 million = US$3,505 SYSTEM OF WEIGHTS AND MEASURES; METRIC FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AfDB : African Development Bank DAAF : Administrative and Finance Department DEP : Research and Planning Department DGAR : Director General of Administrative Reforms INSD : National Institute of Statistics and Demography MCSAR s Ministry of Civil Service and Administrative Reform NATCAP : National Technical Cooperation Assessment and Program ONMP t Office National de Marches Publics TA/ID : Technical Assistance/Institutional Development UNDP : United Nations Development Program ,  FOR OMCIAL USE ONLY BURKINA FASO PVBLIC INSTITUTIONAL DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrowers Government of Burkina Faso Implementina Acenevs Ministry of Civil Service and Administrative Reform Credit Amount: SDR 11 million (US$15.0 million equivalent) Terems: Standard IDA terms with a maturity of 40 years Joint Cofinancina: Government of Norway: US$0.30 million equivalent Coordinated Financina: UNDP: US$12 million equivalent Government of France: US$10.7 million equivalent Government of Germany: US$1.5 million equivalent AfDB: US$1.0 million equivalent Financina Plan: Cofinancing * II US$ Millions Local j Foreign Total Government of Norway 0.03 0.27 0.30 IDA 3.38 11.68 15.06 Government of Burkina Faso 1.60 0.00 1.60 TOTAL 5.01 11.95 [ 16.96 * This is the financing plan for the project described in this report. This project is part of a concerted effort with other donors for which financing has been coordinated. The total contribution of other donors is about US$25.2 million, of which US$12 million for the UNDP, US$10.7 million for France, US$1.5 million for Germany, and about US$1 million for the African Development Bank. Economic Rate of Return: Not applicable Staff Arnpraisal Relort: No. 10332-BUR This document has a restricted distribution and may be used b.* recipients only in the performance of their official duties. Its contents may not otherwise be q'9r1" ed without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMhNT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO BURKINA FASO FOR A PUBLIC INSTITUTIONAL DEVELOPMENT PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed credit to Burkina Faso for the equivalent of SDR 11 million (US$15 million equivalent), to help finance a Public Institutional Development Project. The credit would be on standard IDA terms, with a maturity of 40 years. Norway, has agreed to provide the project with joint co-financing of about US$300,000 equivalent. 2. Background: The Government of Burkina Faso (GOB) has undertaken a program of structural reforms supported by an IMF first year SAF (March 1991) and an IDA SAL of SDR 60 million (June 1991). The adjustment program was prepared by the GOB over a two year period (1989-90) in response to a sharp deterioration in economic performance and the recognition that the relatively good performance during the first part of the 1980s was no longer sustainable. The rapid growth of public consumption during these early years of the decade - financed to a great extent by the accumulation of arrears and forced lending by the banking system - resulted in GDP stagnation in 1989 and 1990, a serious budgetary impasse largely fueled by uncontrolled growth in the cost of the civil service, a growing deficit in the current account (17% of GDP in 1989), and serious deterioration in the performance of banks and public enterprises. 3. In the face of these developments, the GOB is seeking to transform the structure of Burkina's economy from one dominated by an all-encompassing public sector in which Government was to be directly responsible for productive activities, into one in which the initiative for productive activities is given to the private sector. In parallel, it is also introducing a political process with free multi-party elections and the creation of new representative institutions. The GOB knows that, to succeed in this wide ranging program of reform, it will need to be more efficient in its management of scarce public resources. It also realizes that the structure and competence of the administration, as well as certain aspects of the legal environment, will need to be reinforced if the medium term economic program is to be fully implemented. Burkina's ingrained administrative culture grounded in the notion of 'the providor state", its relatively expensive civil service, as well as very limited financial resources, present serious constraints to institutional improvements. Although the SAL supports creation of the policy framework for transforming the economy, it is not intended to reform institutions. It underlines the need to do so however. 4. In May 1991, the GOB presented its adjustment program to a Roundtable of Donors. At t14 same time, it described its ongoing effort to prepare a comprehensive framework on technical cooperation and institutional development (TA/ID). As part of the effort, a National Technical Cooperation Assessment and Program (NATCAP) survey launched by UNDP has produced preliminary results which recommend that: (i) technical cooperation be used in the future to build national capacity rather than just providing technical skills through foreign TA; (ii) TA, where it is necessary, be used increasingly in the priority sectors only (eg. Primary Education, Health, Infrastructure); and (iii) the use of technical assistance and cooperation be better managed and coordinated. 5. Objectives: The central objective of the proposed project is to support the GOB's program to bring about sustained and equitable economic growth, through reinforcing the major public institutions charged with economic and sector management. The IDA credit will finance a select number  2 of activities over a four-year v.riod. These activities constitute part of a larger program of institutional development to which a nu ir of other donors are providing or planning to provide financial and technical support. The Proje, .ill also serve as a vehicle around which the Government of Burkina can more effectively coordinate otazer TA for economic managernent institutions, specifically from France's Ministry of Cooperation, the UNDP, the AFDB and the 3overnment of Germany. 6. Proec Descrition The proposed project will finance a four year time-slice of the GOB's larger institutional reform program based on its policy framework for technical assistance and cooperation. The project components are limited to actions which can be effectively completed during the project period, and which will result in lasting improvement in key areas of civil service and administrative behavior through the introduction of greater effectiveness, accountability, and transparency. Total project costs are estimated at US$16.9 million equivalent, of which US$11.9 million are foreign costs. The IDA Credit of US$15.0 million would finance about 97 percent of foreign costs and 89 percent of total costs. Norway will provide US$300,000 equivalent, financing about 3 percent of foreign costs. Government's contribution of US$1.6 million equivalent would finance almost 9 percent of total costs. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and of disbursements, and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in Burkina Faso are given in Schedules C and D respectively. An action plan for accelerating disbursements is attached in Schedule E. More detailed information on the proposed project is provided in the Staff Appraisal Report No. P-10332-BUR, including a detailed Implementation Manual (Volume II of SAR). The project components are all considered essential to the success of the structural adjustment program. Specifically, the project will consist of the following components: (a) Support to strengthen Information and Budgetary Management (US$8.6 million). Th