Burkina Faso - Country assistance strategy

Documnt of The World Bank FOR OMCAL USE ONLY Reprt No. 4j13015-B MEMORANDUM OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A COUNTRY ASSISTANCE STRATEGY OF THE WORLD B&NK GROUP FOR BURXINA FASO MAY 9, 1994 Country Operations Division Sahel Department Africa Region This document bas a restricted distribution and may be wed bv recipients ooly io the prformnce of thei official duties. Its contents may Dot otherwise be disclosed witout World Bak autozation.  The last Country Assistance Stategy for Burkina Faso was reviewed by the Executive Directors in February 1992. CURRENCY EOUIVALENTS Currency Unit = CFA franc (CFAF) USS1.00 = CFAF 592(January31, 1994) CFAF 1 million = USS 1,687 (January 31, 1994) SYSTEM OF WEIGHTS AND MEASURE: METRIC Metric U.S. Eguivalent 1 meter (m) = 3.28 feet(ft) 1 kilometr (In) - 0.62 miles (mi) 1 square kilometer Qan2) = 0.39 square mile (sq mi) 1 hectare (ha) = 2.47 acres (a) 1 metric ton (t) = 2.205 pounds (lb) 1 kilogram (kg) = 2.2046 pounds (lb) FISCALXEAJ January 1 - December 31  FOR OFFICIAL USE ONLY ABBREVIATIONS AND ACRONYMS BCEAO Banque Centrale des Etats de l'Afrique de l'Ouest BND-B Banque Nationale de Developpement du Burkina BICIA Banque Internationale pour le Comnnerce, lIndustrie et I'Agriculture CDR Comite de Defense de la Revolution CSPPA Caisse de Stabilisation des Prix des Produits Agricoles ECOWAS Economic Community of West African States ESAF Enhanced Structural Adjustment Facility ESW Economic Sector Work GEF Global Environment Facility MEG Medicaments Essentiels et Generiques OFNACER Office National des Cereales PASA Programme d'Ajusternent du Secteur Agricole PASECT Programme d'Aju-tement du Secteur des Transports PER Public Expenditure Review PFP Policy Framework Paper PID Public Institutional Development Project PIP Public Investment Program PNGT Programme National de Gestion des Terroirs SND Service Nationd de Developpement SOVOLPLAS Societe Voltaique des Plastiques TDP Taxe Degressive de Protection WAMU West Afiican Monetary Union WAEMU West African Economic and Monetary Union This document has a restricted distribution and may be used by recipients only in the performnan of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  I  BURKINA FASO COUNTRY ASSISTANCE STRATEGY (CAS) Table of Contents I. HISTORICAL PERSPECTIVE AND RECENT ECONOMIC AND SOCIAL DEVELOPMENT ........................................ 1 Background ....................................... 1 Recent Economic and Social Developments: The Internal Adjustment Period, 1991-93 ............................ 3 Government Economic Policies for 1994-96 ................. 7 Key Constraints to Sustained Development and Sources Growth .... ... 8 Social Development and Poverty Alleviation ...... ............. 9 II. THE EXTERNAL ENVIRONMENT ............................. 10 m. DEVELOPMENT POLICIES AND BANK GROUP'S COUNTRY ASSISTANCE STRATEGY ............................................ 11 Past Bank Group Assistance (1984-1994).1 Objectives of the Bank Group's Strategy (Current Assessment) ....11.... 1 Population Growth ................................... 12 Human Resource Development ............................ 13 Management of Natural Resources ......................... 13 Management of Government Expenditures ..................... 14 Regulatory Framework for Private Sector Development .... ........ 14 Economic and Sector Work (Analysis toward Medium-term Action) 15 Portfolio Implementation (Problem of Indigestion and/or Political Will) ................................. 16 Lessons Learned ..................................... 16 Proposed Lending Program (1994-1998) ...................... 17 Programs of Special Emphasis ............................ 19 IFC and MIGA ..................................... 19 Coordination with IMF, other Donors and NGOs ................. 19 IV. AGENDA FOR BOARD CONSIDERATION ....................... 20 ANNEXES Annex 1 Selected Indicators of IDA Portfolio Annex 2 IDA Lending Program, FY94-97 Annex 3 Poverty and Social Development Indicators Annex 4 Key Economic Indicators Annex 5 Key Exposure Indicators Annex 6 Status of Bank Group Operations Annex 7 Summary of Objectives and Outputs Annex 8 Summary Description and Timetable of Macroeconomic and Structural Adjustment Policies, 1994-96   MEMORANDUM OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A COUNTRY ASSISTANCE STRATEGY OF THE WORLD BANK GROUP FOR BURKINA FASO I. Historical Perspective and Recent Economic and Social Development Background 1. Burkina Faso ('land of stalwart men", as former Upper-Volta was renamed in 1984) is a semi- arid landlocked country, its southern border more than 600 kilometers from West African port cities. Agriculture is the most important economic activity. Yet the natural -Q X:BUWNA PASO: * eowzbypnoft - resources on which agricultural output rests are meager and at risk: - .o96 i s*h 9Q% living in the coryide an soil, water, and biomass resources 0. On.li ir o (;an-d about 3 imillin are limited and fragile, and rainfall Burinabt live abroad). High growth rate 3-iyarly. is scarce and highly variable. A small but increasing share of the Socal inditors among thle westi th rlife eXpcAcy population lives in urban areas, is 4 yaon,' m 4,hoQt lbucnt 3%, w ' with Ouagadougou, the capital city moitaky 1*134 e ,00 an sduilit` 82%.- accounting for 50% of the urban dwellers. While emigration has riM u.. and th.e publi sectr d_ the eco.o..y.. At. arid liv~.tec aooumt' Air o GQ% ~(DP. md '60X'-o expo.t, sia created labor shortages in some e T- o (m de by." the rural areas, it has helped to contain l - population growth and urbanization, and brought in | ag , hae by dific eical dtinrid substantial income in the form of a tiral riource mauem t-i key p-oupaioa of-th;e emigrant workers' remittances. n et* _ _ a _ s k bur r -X roost desl pouae-onr nShlaawest, Airrica and 2. Socoeconomic p oa-tu le t conditions. With a gross domestic rO1e dld*t100. Bkihas made sigcant proes aid i L product per capita of US$304 in ..t l e 1992, Burkina is among the world's - - i - m -- ot a poorest countries. Social and economic conditions are alarming. ... 9 ,BiN3din pa t-mn t1vvu4 The Human Development Index of A unaDym.ov binwhnading UNDP ranks the country 157th out -n nf o pap of 160. Box 1 presents a profile of e s t -i-ou of t a u Burkina Faso. - pomwaY ~~~~~~~~~~~~~~~~~~~~~. . .-- ... :.-.-.. : .. ...... :.::......:: :.......: 3. Structure of the Economy. e iD PFP - d. ti.. t: - - re r Burkina Faso's economy is dominated by agriculture and the public sector. Services are the largest sector, accounting for about 40% of GDP, while mining and manufacturing - mainly agroprocessing and textiles - remain undeveloped and together contribute only about 13% of GDP. Informal activities dominate in the service sector (about two thirds of value added) and are also significant in the secondary sector. The modern sector remains essentially limited  - 2 - to government services and to the parastatal sector. In spite of heavy protection, mainly through import controls, the growth of the secondary sector was hampered by structural factors, such as the country's landlocked situation, its poor infrastructure, the small size of its market, and inefficient management, as well as unwieldy regulations governing economic activity. 4. Historical Perspective. Burkina's history is rich in changes and transitions. 1991, as a watershed year for the adoption of comprehensive reforms, takes on all the more significance when viewed in a historical perspective, in which the Sankara years - named after the man who ruled Burkina from 1983 to 1987 - occupy a special place. The Sankara regime had a marked impact on Burkina's recent history and economic developments. With bold and egalitarian objectives, the regime nonetheless undermined the economic base of Burkina Faso and its efforts proved unsustainable. The regime's political orientation was inspired by central planning and a Marxist-Leninist ideology, distrustful of external intervention, in particular of the Bretton Woods Institutions. The private sector was discouraged by confiscatory measures and political interference in the management of enterprises. Domestic and internal trade were increasingly controlled. In 1984, the Government launched a development program aimed at mobilizing rural and urban people to construct public infrastructure. In the social sectors, the Government sought to improve the education and health status of the population by aggressive vaccination and literacy campaigns, and launched the construction of a large number of basic health centers and schools. The authorities actively promoted environmental conservation and the role of women. Burkina saw several years of growth, fueled by high public investment, good weather, and increased agricultural production in onchocerciasis-freed areas, but nonetheless faced economic crisis as the economic foundations of the policies pursued were weak. Despite austerity budgets and other belt-tightening measures, widening fiscal deficits resulted in the accumulation of internal and external arrears. 5. The new Government which took power in October 1987 under the leadership of the present President, Blaise Compaore, faced the need to restore domestic and external financial equilibria while spurring economic growth. The new regime recognized the high social costs of the path pursued under Sankara, and aimed at a more systematic approach. Dialogue on economic management issues with the Bank resumed during an economic mission in June 1988 and a first draft of a Policy Framework Paper was prepared by the Government in late 1989. Because of the extensive consensus-building which the authorities chose to undertake, negotiations on a structural adjustment program with the IMF and the World Bank, initiated in February 1990, lasted about a year. An agreement was reached in February 1991 on a first Policy Framework Paper for the period 1991-93. 6. Burkina also underwent significant political change, beginning in late 1987 with the de- emphasizing and eventually the elimination of the role of populist revolutionary committees (CDRs). In 1990, a new constitution was adopted, providing for a return to the rule of law and democratic elections. Presidential elections, followed by multi-party parliamentary elections in 1992, formally completed the transition from a military single-party state to a new democracy. While there were some setbacks and difficulties in the political-economic transition, the Government succeeded, through a uniquely participatory and increasingly open consultative process, in avoiding civil disorder which has hampered political and economic reform in other countries of the sub-region. The profound political change has been reflected in the evolution of public expenditure. Under the military regime, the Ministry of Defense assumed a privileged position, absorbing nearly one third of total operating public expenditures in 1985-87. This Ministry was not only responsible for national defense but also performed certain tasks that are normally carried out by civilian ministries. Thus, it was in charge of the People's National Service which supervised several thousand young instructors who were  - 3 - temporarily assigned to teach in primary schools, as well as staffing many senior government and public enterprise posts. With the changed role of the military under the constitutional regime, the proportion of operating expenditure for Defense had fallen to 22% by 1991, and these resources were reallocated to the "priority sectors" in the PFP and SAL - primary education, health and infrastructure maintenance. 7. Burkina's Economy in 1987-90. Burkina's economic and financial situation on the eve of its structural adjustment program was critical, despite all prior austerity measures. The rate of growth of GDP had fallen significantly in 1989-90, to an annual average of 1.6% (half the rate of growth of the population), against an average of about 4% in the period 1980-88. The manufacturing sector stagnated, notably because of structural factors such as high energy and transport costs, a stringent labor code, high wages and worker benefits; rigid, complex, and sometimes contradictory price and trade regulations which hurt competitiveness; and special tax and protective measures for large enterprises under the investment code that deterred efficiency gains. Private investors were crowded out by the privileged and, in some cases, formally monopolistic, positions of public sector firms in virtually all subsectors of the economy. Because the overall efficiency of investment undertaken in the 1980s was very low, only modest benefits from past high investments were secured. The public finance situation remained difficult, with unsustainable overall fiscal deficits, mainly reflecting a rapid growth in public wage bill: with salary increases in 1987 and 1988 and increases in civil service size, expenditures for wages and salaries which had averaged 54% of government revenue in 1985-87, absorbed almost 69% of revenue on average in 1988-89. Expenditures for other recurrent expenditures as well as for debt service and local contributions to foreign-financed investment projects were squeezed out. Domestic and external arrears. continued to accumulate, and by the end of 1990 they had reached a level equivalent to one year's fiscal revenue. The financial health of commercial banks had also deteriorated markedly, and three commercial banks urgently needed restructuring. Recent Economic and Social Developments: The Internal Adjustment Period, 1991-93. 8. Since 1991 the Government of Burkina has implemented a wide range of economic and sectoral policy reforms under its structural adjustment program. A key objective of the reform program has been to improve the competitiveness of the economy, and lay the foundation for the sustained longer term growth needed to help raise standards of living and alleviate poverty. To this end, the policy agenda has emphasized: -(i) restoring macroeconomic equilibria through greater fiscal and monetary discipline; (ii) improving efficiency in public sector resource allocation and use through containment of the public sector wage bill, and restructuring of expenditures in favor of the priority sectors of health and primary education, and operations and maintenance spending; and (iii) improving incentives for private sector development through trade, tax and regulatory reform, privatization of the public enterprises, banking sector restructuring and privatization, and the liberalization of domestic trade and prices. Major sectoral reforms have been launched in the transport and agriculture sectors. Satisfactory progress in implementing these reforms has allowed IDA to approve two sector adjustment credits in 1992. In parallel to the reform program, the Government has sought to strengthen institutional capacity, especially in public expenditure management. 9. Performance in maintaining a macroeconomic framework consistent with the objectives of the Program, as specified in the first and second Policy Framework Papers, 1991-93 and 1993-95, respectively, has been satisfactory but uneven. Because of Burkina's membership in the West Africa Monetary Union, the program placed a particular emphasis on internal adjustment to achieve a depreciation of the real exchange rate and, in particular, on containment of the budget deficit. During  -4 - the first year, 1991, the Government successfully met all targets set for fiscal revenues and expenditures, and the overall fiscal deficit, excluding grants and exceptional expenditure, declined to 4.6% of GDP, from 7.5% in 1990. Notably, the nominal wage bill was reduced through a combination of early retirements, reduction in housing benefits, and foregoing of staff promotions with their attendant costs. Revenue performance improved through rigorous enforcement of tax collection, and revenues reached 14% of GDP, exceeding the target under the program. 10. In early 1992, however, Government's attention shifted to an increasingly charged agenda of a far-reaching political reform, with multiparty parliamentary elections in May. A budget for 1992 was adopted only in June following the elections and the establishment of a new govermnent. Meanwhile, because of lagging revenues, which fell to 12.3% of GDP, the overall fiscal deficit, excluding grants and exceptional expenditure, widened to 7.2% of GDP, reversing most of the gain made by successful adjustment in 1991. The program adopted for 1993 and reflected in the 1993 budget included a series of structural measures aimed at containing the fiscal deficit in the medium-term. To that end, the salary scale was reduced by 10% as of January 1 in order to bring actual salary payments (which had been frozen and therefore did not reflect the effect of staff advancement into higher grades) in line with civil service regulations. A value-added tax was introduced to replace turnover taxes and a new import tariff structure was adopted, providing for a simplified schedule and a reduced number of rate categories. The Government also courageously reduced the total allocation for university students' stipends by 27%. Adequate provisions were made in the budget to carry out the priority road maintenance program and to support the restructuring of the banking and cotton sectors. 11. While the Government successfully contained growth of the wage bill, fully in line with the agreed targets, by mid-1993 a serious revenue shortfall was evident. The principal reason was the inability of a weak tax administration to implement effectively the tax reforms, especially the new import tariff regime. The volume of imports passing through customs appears to have declined, both because of civil unrest in Togo, an important supply route for Burkina, and because of an increase of fraud. In addition, because of the crisis in the cotton sector, special import duty exemptions were granted for agricultural inputs. The Government also failed to take several revenue-enhancing measures foreseen to be put in place in early 1993 under the program, including variable import levies on rice and sugar and a temporary tariff surcharge to substitute for removed quantitative import restrictions. These measures were put in place in October 1993, after a detailed review of macroeconomic performance with Bank and IMF staff. The Government also transferred to the Treasury some parafiscal funds held by state enterprises to help compensate for the revenue shortfall. Because these measures were in place only during the last quarter of 1993, however, total revenues in 1993, estimated at CFAF 101 billion, were well below those projected for the 1993 program. Because of delays in implementation of reforms, there was also a shortfall in disbursements of aid in support of the adjustment program, including the second tranche of SAL I which was finally released in February 1994. Although much of the expenditure linked to restructuring of the banking sector was delayed to 1994, this was not enough to compensate for the combined shortfall in revenue and in budgetary support, so, as a result,. government payments arrears to domestic suppliers as well as to external creditors increased, by an estimated CFAF 8.4 billion, during 1993. 12. While the overall fiscal situation became increasingly tenuous during 1992 and 1993, the Government sought to implement its ambitious reform agenda in public expenditure management and in improving incentives to private sector investment and employment growth.  - 5 - 13. Public expenditure management. A containment of the civil service wage bill growth was achieved during the past three years, with the civil service wage bill declining gradually, as a proportion of current expenditure, from 61% in 1990, to 58% in 1991, 56% in 1992, and an estimated 50% in 1993. Higher education stipends growth was also arrested. These are commendable accomplishments, especially in a period of transition toward a more open and democratic regime. Implementation of systemic changes in the way expenditures are programmed and monitored has been much slower than anticipated, however, and the quality and timeliness of expenditure and revenue data have remained unsatisfactory. A re-organization of the Ministry of Finance and Planning which was a pre-requisite for the reforms in expenditure programming and control, was delayed by the political transition and ministerial changes. A Public Institutional Development project (PID), supported by IDA under Cr. 2378-BUR approved by the Board in June 1992, has been launched to further the reforms in this area. 14. Since 1991, expenditures have been restructured to provide for a real increase in resources allocated to primary education, health, and infrastructure maintenance. In particular, 950 new primary school teachers were hired each year. There was little progress, however, with the preparation of 'program budgets' in the primary education and health sectors, largely because of the weaknesses of the sectoral ministries and the difficulty of integrating development expenditure financed under projects. The ministries of health and primary education, which employ 40% of all civil service staff, were the first for which personnel files were reconciled with payroll files, generating for the first time information about the availability of different categories of personnel. 15. A public investment program was prepared by the Government each year, following agreed criteria for project selection. With the exception of the paving of the Bobo-Orodara road, for which discussions on design standards and phasing have taken more than two years befora being satisfactorily resolved, the program has remained free of large, low-return projects. Starting in 1992, the investment program was presented as part of the capital budget of the Government. The quality of the program in terms of coverage has improved continually. Monitoring of actual expenditures remains weak, however, largely because about 90% of the program is financed by donors and oversight over expenditures is dispersed. In addition, systematic identification of current expenditure that is financed under projects has only begun in 1993 in several ministries so the full integration of investment and current expenditure programming is not yet achieved; important steps have been taken in that direction, however. In parallel to preparation of the public investment program, the Government has started to establish a data bank, and sliding three-year programs, covering technical assistance, which accounts for as much as one third of external aid disbursements. 16. Private Sector Incentives Reforms. The Government has implemented a wide range of reforms in support of private sector development. Starting with a highly controlled economy with numerous public enterprises, state interference in banking decisions, a rigid labor code, quantitative import restrictions covering virtually all goods, an outdated investment code, and a proliferation of exonerations, the achievements of the program during the past three years are significant. Overall, these reforms have dramatically expanded the role of market forces in the economy and have encouraged private sector investment which is estimated to have grown by an average of 8% p.a. in real terms since 1991. 17. Early on, the Government adopted modifications to the company law to induce greater efficiency in public enterprises by placing their operations on commercial principles. The strategy was  - 6 - principally one of divestiture and of mobilization of private sector resources into activities formerly dominated by the state. A privatization commission has been set up to oversee the disposal of enterprises. By the end of 1993, privatization was completed for 13 enterprises in the commercial and industrial sectors. A positive outcome of the program is that foreign investors have manifested a strong interest in taking over enterprises in association with private local investors; foreign capital is now present in 6 of the privatized companies. In addition, four enterprises have been liquidated, and a decision to liquidate a fifth, OFNACER (grain marketing) has already been made. Negotiations to privatize four of the five major commercial banks are progressing satisfactorily, while the fifth, BND- B, the development bank, will be liquidated. An agency established in mid-1991 to recover bad debts (BRCB) has been able to recover CFAF 4.5 billion by the end of November 1993, or slightly more than the target established under the SAL I program. 18. The Government simplified and gradually removed prior import authorizations which initially covered nearly all imports. In January 1994, only three products (rice, sugar, and arms and explosives) were subject to any prior import authorization. In the last part of 1993, a declining protective tax was introduced on imports of 22 goods competing with those produced locally with the intent to substitute for the protection formerly accorded by quantitative import restrictions; initially set at 30% of c.i.f. value, it was intended to decline to 10% in two years and be abolished thereafter. In 1993, a new import tariff schedule was introduced, providing for only three tariff rate categories, with a much-reduced dispersion of rates. Several parastatal entities active in external trade have been reviewed; a re-formulation of their functions, to make them more responsive to private sector needs in a liberalized incentive enviromnent, is being pursued under the Private Sector Assistance project (Cr. 2472-BUR) approved by the Board in March 1993. 19. Since 1991, price controls on both domestic and imported goods have been gradually eliminated so that, at the beginning of 1994, only utility tariffs, prices of petroleum products, wholesale prices of rice and sugar, and prices of medicine were subject to any government control. Price decontrol was fully accepted by both producers and consumers. Other regulatory reforms have included adoption of a revised investment code in June 1992, providing for neutral and transparent incentives for investors. A Law Revision Committee has been established and is consolidating legal texts, with follow-up training and other assistance under the Public Institutional Development project. The application of a revised labor code, adopted in December 1992, was made more conducive to employment generation by clarifications, published in November 1993, of the provisions of the code regarding the applicability and renewability of temporary labor contracts. 20. Since the mid-1980s, Burkina's economy was negatively affected by the economic decline in the CFAF zone as a whole, and particularly by lagging workers' remittances from the Cote d'lvoire. Since 1986, the thirteen CFA countries as a group have experienced a severe, prolonged recession that has cut real per capita incomes by some 40%. The downward deflationary spiral both impoverished the population of the zone and undermined its financial institutions. The internal adjustment programs pursued by the CFA zone countries have been unable to reverse the ongoing economic decline primarily because of the downward rigidity of wages and prices and the difficulty of making the requisite fiscal adjustments during a prolonged recession. The decline of world market cotton prices in the last two years aggravated the economic situation in Burkina as a reduction in producer prices, while insufficient to produce a profit for the cotton company, lead to a 16% fall in output in the 1993/94 crop year. Real GDP growth which averaged only about 3.3% between 1986 and 1991, or slightly more than the increase in the population, dropped to an estimated 0.7% in 1992 and 0.4% in 1993.  -7 - Government Economic Policies for 1994-96 21. Immediately after the re-alignment of the parity of the CFA franc, the Burkinabe Government has updated and revised its medium-term program of structural reforms in the third Policy Framework Paper, 1994-96. The program includes measures to reduce the fiscal deficit and contain monetary growth as well as a continuation and deepening of structural reforms underway since 1991. The Government expects that implementation of this program will allow the Burkina economy to reach a higher growth path, averaging 5-6% p.a., in the late 1990s and make headway in reducing poverty, especially through an increase of access of the population to primary education and basic health care services. 22. Deriving the full benefit from the devaluation is a key objective of the Government's program in the 1994-96 period. It fully recognizes the critical importance of accompanying measures, designed to ensure that the anticipated real depreciation benefits do materialize. Because the objective is to achieve and maintain a real depreciation of about 36% in foreign currency terms, the envisaged policies will ensure that the acceleration in inflation resulting from higher import prices is temporary and limited to permitting a re-alignment of relative prices sought by the change in the parity. The Government will therefore endeavor to contain increases. in domestic costs, especially of wages. At the same time, it will pursue restrictive fiscal and monetary policies designed to contain inflation (as measured by the consumer price index); after an initial increase to 31% in 1994, inflation should decline substantially in 1995-96, to less than 5% in 1997. While real household consumption will fall by more than 2% in 1994, it is expected to recover in 1995 with the pick-up of economic activity induced by the devaluation, and in 1996 it should reach a level more than 5% above that which would have obtained in the absence of comprehensive adjustment. The programmed substantial improvement in the fiscal situation (Government savings should exceed 1 % of GDP in 1996)1 along with increased incentives for private sector investment and production, will boost investment from 22% of GDP in 1993 to 27% in 1996, and domestic savings from 2% of GDP in 1993 to almost 9% in 1996. The external current account deficit (excluding official transfers) will be reduced from 16% of GDP in 1993 to 14.8% of GDP in 1996 thanks to a recovery in the growth of exports - in direct response to the devaluation - and a slowdown in the growth of imports to 1.6% per annum made possible by both the contractionary effect of the increase in their cost and expenditure switching to relatively less expensive domestic import-substitutes. 23. Improved competitiveness should provide the impetus for growth in a number of sectors of the Burkinabe economy. In agriculture, it will restore the financial viability of cotton production; allow local rice and sugar production to compete better with imports without recourse to distortionary trade tariffs; allow Burkinabe stockbreeders to compete more effectively against imports from the European Union and South America and to re-capture their share in the regional market; and promote further diversification into other high-value agricultural products and exports, notably fruits and vegetables. Enterprises in the export and import-substitution sectors (including gold, tires, bicycles, and textiles) will increase their profitability, which should stimulate investment and facilitate some of the planned privatizations. An important consequence of the re-alignment of relative prices will be a boost to real lIt is important to note that the devaluation was the occasion to reduce tax and tariff rates so as to increase incentives to the private sector. These policy choices explain both the flat trend in public resource mobilization and the increase in domestic savings.  -8- incomes in the rural areas, where close to 90% of the population lives. This shift in income distribution is expected to slow migratory flows toward the urban centers and, because the rural population has a lower propensity to consume imported goods than urban dwellers, contribute to an improvement in the balance of payments. Key Constraints to Sustained Development and Sources of Growth 24. Burkina still faces formidable constraints to development: these are notably the extraordinary ecological challenges in this war-zone of land degradation (a.k.a. desertification), low human resource development, the looming AIDS threat, and rapid and rising population growth. There are grounds for hope in the strong community reaction to natural resource management programs, the dynamic response to onchocerciasis-freed areas and to the agricultural services initiative, and dedication to education and health programs, but the capacity constraints are real and severe. The rapid spread of the HIV virus, now already present in an estimated 450,000 people, dramatirally complicates the prospects for accelerated social and economic development. 25. Growth is essential to ease these constraints and the private sector has to be the principal source of growth in the medium-term, led by the agriculture sector, with support from a more efficient provision of public infrastructure and appropriate incentives to the private sector. Several factors favor per capita income growth in the medium term: (i) a central location at the wcrossroads' of the Sahel; (ii) a hard-working and disciplined population; (iii) a domestic market approaching 10 million people; and (iv) manufacturing opportunities in the local and regional markets. Given appropriate incentives, there is room for expansion of private sector activity in both traditional and market-oriented agriculture (cotton, oil seeds, fruits, and vegetables), livestock (cattle, sheep, goats, and poultry), and related processing and service industries; and in small-scale productive. and commercial enterprises in construction materials, services such as repair facilities, and tourism. In addition, with an improved regulatory framework and streamlined fiscal incentives, exploitation of mineral deposits (gold, zinc, manganese) could make a more important contribution to overall growth. Maintenance and resumption of growth in Burkina's wealthier neighbor countries - principally Ghana and Cote d'Ivoire - would have a significant effect on Burkina's growth both through increased demand for traditional exports (ivestock and other agricultural products) and through increased remittances from Burkinabe emigrants. 26. A sustained implementation of the adjustment program necessitates a continuing change of the role of Government in the economy. The continuation of the many changes implied by the transition from a dirigist system to a liberalized one depends on the maintenance and further development of a social compact. Democratization essentially confronts two key realities: (i) the majority of the approximately 35,000 civil servants have been trained and have become accustomed to a very different set of values and behaviors (controls) from those their leaders are coming to espouse (the market); and (ii) the vast majority of the population is rural, uneducated and needs proper incentives and a great deal more information on the causes and nature of the changes occurring. Managing this tension during the adjustment process which necessitated an erosion of privileges of the urban-based elite (university students' fellowships, parastatal, civil servants' salaries and a few contractors), was a key to sustain implementation of reforms. In this regard, Burkina's tradition of consensual and participatory decision-making has been a decided asset. Nevertheless, consensus-building takes vision, political will and time; the speed with which policy decisions can be made has decreased while policy makers are learning how the new democratic institutions function.  -9- Social Development and Poverty Alleviation 27. In a poor country like Burkina Faso, the challenge of assuring social development and alleviating poverty is daunting. The vast majority of the poor in Burkina Faso live in the rural areas, in particular in the most arid northern and eastern provinces and on the Mossi plateau. These areas have lost a significant portion of their active population through emigration and migration within Burkina, mostly to regions recently freed from onchocerciasis, with those left behind - the poorest in terms of human and physical resources, the elderly and the very young - endeavoring to eke out a meager living from depleted soils. The acceleration of the rate of urbanization has exacerbated poverty in and around the major cities. New groups of poor, the so-called 'pauvres de transition", have appeared and have become more vocal in asserting their claims, namely civil servants whose relatively (to GDP) excessive purchasing power has been reduced, skilled and unskilled workers who lost their job as a result of austerity measures, and students and school dropouts who are unable to find gainful employment. In addition, the increased prevalence of AIDS is taking its toll on already overburdened traditional coping mechanisms. 28. The challenges of human resource development and poverty alleviation have been given high priority by the Government as evidenced by the shift in public resources expended on the social sectors. The devaluation has opened a window of opportunity for accelerating human resources development through an accelerated expansion of access to primary education and health, for three reasons: (i) better control over the fiscal situation will give the Government more room for increasing the resources allocated to these two sectors; (ii) the reduction in real civil service wages will translate into lower unit costs, thus allowing the Government to increase recruitment of primary school teachers and of basic health personnel; and (iii) the devaluation provides an impetus to reform the pharmaceutical market, with the expected result that generic drugs, costing one third of their brand- name equivalent will be accessible to a much larger proportion of the population. 29. Under the Economic Recovery Credit (ERC) approved by the Board in March 1994, to assist the Government of Burkina in shouldering the transitional problems arising from the devaluation and in setting the stage for sustained development, the Burkinabe authorities have adopted a Priority Action Plan for Primary Education and Health to accelerate human resources development. With regard to education, the Priority Action Plan provides for: (i) the hiring of 2,350 new teachers in 1994 (950 as agreed under SAL I, 300 for empty classrooms, and 1,100 in replacement of graduates performing their national service - SND); (ii) the acceleration of school construction and equipment through assigning their management to Faso Baara; (iii) a strearnlining of recruitment procedures so that recruitment takes place in a timely manner; and (iv) the acceleration of the introduction of textbook lending programs; and to provide subsidies aimed at poor children. With regard to health: (i) a national price list for MEG (essential and generic drugs) providing for full cost recovery and incentives to private pharmacists has been established and has become binding on private pharmacists on May 1, 1994; (ii) additional MEG are to be purchased for the public and non-profit health centers and the introduction of a wide cost recovery system will be carried out with UNICEF assistance; and (iii) pharmacists have been authorized to substitute generic equivalents in filling prescriptions and to operate branch retail outlets.  - 10- H. The External Environrent 30. Burkina Faso's small and weak economy is highly vulnerable to exogenous factors. In addition to the vagaries of weather conditions, these factors are: (i) export prospects for its primary commodities; (ii) the inflow of remittances from Burkinabe workers abroad; (iii) the availability and terms of external assistance; and (iv) the burden of Burkina's external debt. 31. Export prospects. While maintaining the competitiveness of the Burkinabe economy will be the crucial factor with regard to export prospects, they will nevertheless also depend critically on the evolution of world market prices and, as far as agricultural products are concerned, on the vagaries of the weather. With the currently projected evolution of prices for cotton, a strong growth of exports over the 1993 level may be expected; however, an expansion of volumes beyond 75-80,000 tons (export volumes peaked at about 67,000 tons in 1991) would require an expansion of the ginning capacity. The time necessary for the coming on line of new ginning mills is around two to three years. With regard to gold, more of the artisanal production (presently estimated at 3 tons and employing about 300,000 persons) which is currently smuggled across the border could be channeled through the formal economy. Considerable scope and potential also exist for the development of small mechanized mines, which could be owned and operated by local groups; however, this would require financial and technical resources and know-how that are presently absent. In addition, Burkina has the potential of developing two small- to medium-size gold mines over the next 10 years, which together could produce 6 tons of gold with a market value of US$66 million; but this would require, in particular, a regulatory and fiscal environment more hospitable to foreign investment in the sector as provided in competing countries. The same preconditions apply to the development of the mining of zinc and manganese; zinc and manganese investment projects would probably not be profitable in the immediate future because of low world market prices as well as infrastructure difficulties. The growth of livestock exports will depend heavily on the evolution of the economy in Burkina's traditional markets, in particular Cote d'Ivoire. The same holds for the export of labor services, which has traditionally been the major source of foreign exchange in Burkina Faso, exceeding by far receipts for any particular exported good. Workers' remittances, which exceeded export receipts by almost 30% in 1986, declined by 28% in nominal terms between 1986 and 1992, and in the latter year amounted to only 58% of export proceeds. 32. External debt. Burkina Faso has relied heavily - though less than other CFA franc countries - on external debt to finance its social and economic development. A rapid build-up of external debt took place in the 1970s, and the ratio of total gross external debt outstanding to GDP increased from 6 in 1970 to 22 in 1980 and peaked at 41 in 1985 before declining to 38 by the end of 1992. Although Burkina has been able to borrow on highly concessional terms, the country experienced severe debt servicing difficulties in the early 1990s, which resulted in two official debt reschedulings from Paris Club creditors in March 1991 and in May 1993. Burkina's debt servicing capacity is severely constrained by the structural weakness of its trade account (exports cover less than half of imports). Although the trade account is expected to improve as a result of the devaluation, the parity change also resulted in a quasi-doubling of the debt service burden, as about 82% of the debt is serviced in foreign currencies. However, this is not expected to create a significant additional claim on Burkina's economy in the medium-term since the increase in the local currency value of the expected adjustment assistance exceeds the additional debt service requirements; in the longer term, the beneficial effects of the devaluation are expected to outweigh its negative impact on the debt service.  - 11 - 33. Regional integration. As evidenced by measures already implemented to liberalize foreign trade and to rationalize and simplify the tariff system and reduce the level of protection of national production, and broader adjustment policies, Burkina Faso has adopted an outward-directed growth strategy. The Government of Burkina Faso attaches high priority to regional integration with neighboring countries, not only because of the small size of the country's domestic market, but also because roughly one fourth of Burkina Faso's external trade (excluding informal trade) is intra- regional, the highest proportion among Sahelian countries. Burkina Faso is a member of the Economic Community of West African States (ECOWAS) and of the West African Monetary Union (WAMU). On January 10, 1994, Burkina Faso signed the treaty establishing the proposed West African Economic and Monetary Union (WAEMU), which aims at: (i) the creation of a Customs Union between the seven member countries; (ii) the convergence of macroeconomic policies; (iii) the harmonization of sectoral policies; (iv) the harmonization of government finance statistics; and (v) the harmonization of indirect taxation. As is provided for in the national constitution, the Government is prepared to envisage the transfer to the regional union level of that part of national sovereignty that may be required to implement this project. Burkina Faso also signed, on October 15, 1993, the treaty to harmonize business law, social security systems, and insurance regulations of the franc zone countries. Finally, Burkina Faso is actively seeking to integrate its transport system by reconsolidating its railroad operations with C6te d'Ivoire under a single private company; the authorities are also studying the potential for sub-regional operation of air transportation service in collaboration with neighboring countries. III. Development Policies and Bank Group's Country Assistance Strategy Past Bank Group Assistance (1984-1994) 34. As of April 13, 1994, IDA commitments to Burkina amounted to US$666 million dating back to 1963, for 46 credits, of which 29 are closed, with some US$374 million disbursed, and US$58 million canceled. Of the 17 operations currently under disbursement, 4 are in support of adjustment (SAL I, the ERC, and the Transport and Agriculture SECALs), 4 are in agriculture, 2 in primary education, 2 in primary health, and one each in institutional development, public works and employment, urban water supply, private sector, and urban development. IFC has made one investment of US$450,000 for the manufacture of plastic products. Burkina has also been one of the major beneficiaries of the regional Onchocerciasis Control Program, financed by IDA and 22 other donors. 35. In the mid-1980s relations between Burkina and the Association were strained due to disagreement on public investment program priorities, and new IDA commitments to Burkina averaged US$17 million per annum; no new credits were approved in 1986 and 1987. Since the policy changes of 1987, the Government has sought increased help from the donor community. In response, during the past 6 years (1989-1994) IDA has approved 15 credits, raising average annual commitments to US$87 million per year, or a quadrupling of the size of our program in the past four years. Objectives of the Bank Group's Strategy 36. The goal of Bank Strategy is to help Burkina to achieve its objective of sustainable economic growth with equity and poverty reduction. The objectives presented in early 1992 for the Bank's assistance strategy were to: (i) support critical actions needed to alleviate long-term constraints on  - 12 - economic and social development; (ii) help the Government create a policy and regulatory environment supportive of the private sector; and (iii) help the Government manage public resources more effectively. These objectives essentially remain as the key guiding principles today, with the devaluation adding a new sense of urgency to seize the opportunity, and more effectively manage the implications of the parity change. Because our dialogue is considerably more advanced, and the number and focus of our program components much more complex (from five new operations by 1988, totaling US$87 million to twelve operations totaling US$332 million in 1993) than four years ago, however, the Bank is giving greater emphasis to implementation and follow-up, with heightened attention on program ownership and institutional strengthening to ensure that reforms can be sustained. 37. In the near term, IDA will continue to assist the Governmrent in reversing the deterioration in public finance while improving public resource management and ensuring adequate support for development. Critical actions are summarized in the attached Annex VIII prepared by the Government for its Policy Framework Paper, 1994-1996. They cover public management of finances, investments, statistical information, enterprises, human resources, agriculture, environment, banking, transport, industry, and the legal and regulatory framework for the liberalization process. To realize Burkina's growth potential and to achieve a lasting reduction of poverty, four integrating themes from among those covered in the policy matrix merit priority consideration: (i) population growth and movement (particularly internal migration); (ii) human resource development; (iii) natural resource management; and (iv) strengthening institutions for public sector management and private sector development. Population Growth 38. The Government of Burkina Faso appreciates that rapid population growth seriously undermines its efforts to bring about improvements in health, education, employment, and environmental protection. It is thus, committed to addressing population issues. Family planning was introduced into public health facilities in 1985. In 1991, it approved a national population policy which set ambitious targets in terms of contraceptive prevalence and fertility reduction, and in 1993, it adopted a National Family Planning Strategy for 1993-98. Efforts are also being stepped-up to slow- down the spread of AIDS, in particular through education campaigns and through the promotion of the use of contraceptives offering some protection against sexually transmitted diseases. 39. The documents supporting the Population and AIDS project elaborate on the importance and critical linkages involved in reducing Burkina's population growth rate. Rapid expansion of family planning is pivotal to efforts to arrest land degradation and forest depletion and to raise standards of living. Damage to the fragile natural resource base is occurring, especially on the Mossi plateau which has the highest population density (thirty four people per square kilometer) in the Sahel; the health care system remains woefully incapable to reduce risks to people, particularly women and infants at the time of birth; and fiscal resources are already strained merely to keep primary school enrollment ratios at present unacceptably low levels. The Government must continue to build on its emerging commitment to the promotion of family planning services and to an increased role for women in wage earning economic activity. Not yet fully appreciated in Burkina, at the highest policy-making levels, is the linkage between the alarming demographic growth, environmental degradation and the fight against poverty. The Population and AIDS program with the Health and Nutrition operation constitute two new building blocks in trying to help Government in its effort to support sustainable long-term development, and constitute new instruments to address the population/environment nexus. Pursuit of the jointly-designed and executed Poverty Assessment is the next critical step. - ~ ~ - - - - - -  - 13 - Human Resource Development 40. Education. Increasing primary school enrollment in a cost effective way is one of the main objectives of IDA's assistance. Two primary education projects are currently under implementation, and the macro-economic framework emphasizes proper resource allocation to the education sector. In the medium-term, more rapid progress in human resource development remains a most serious challenge because of the limited financial resources available and the relatively high unit costs due to high teachers' salaries. Some cost-reduction measures, such as the hiring of less costly entry-level teachers, have begun, but much more needs to be done, as agreed in the Priority Action Plan adopted in the context of the ERC, to increase enrollment ratios and quality. Part of the approach at education improvement needs to remain the promotion of primary education, while finding a way to engage the University community in a dialogue on achieving its future objectives in a cost effective manner (Higher Education), and to provide the skills needed by the economy (Youth Employment Study, Technical Education). The Government has already made progress in reducing stipends (August 1992) and student subsidies', but it must continue and this has, and will require strong political will and external support. 41. Health. Burkina allocates about 10% of all public expenditure (both domestically and foreign- financed) to health, more than most other sub-Saharan African countries and far more than the average low-income Asian country. Yet its standard health indicators are among the worst in the world. Inefficiencies have three main causes: (i) public health care personnel is concentrated (two thirds of midwives, 60% of doctors and 40% of nurses) in the two urban areas containing only 13% of Burkina's population; (ii) a significant number of health centers are closed or dysfunctional because of lack of appropriately-rained personnel or basic supplies and medicines, leaving traditional healers as the sole option; and (ii) a disproportionate share of resources is allocated to curative care in the two urban hospitals, at the expense of preventive care in the primary and secondary centers. Fundamental reforms to restructure the system have begun under the ongoing Health I project, now reinforced by the ERC, Health/Nutrition, and Population and AIDS Program. Together these operations support three sets of policies which are critical for improved functioning of the health system: (i) re-allocation and decentralization of personnel, including the authority to collect and ability to manage locally generated revenue from heath service delivery; (ii) improved selection and training of personnel; and (iii) increased access to essential generic drugs, and a minimum of essential equipment in an increasingly decentralized health services delivery system. Management of Natural Resources 42. Prudent management of the natural resource base also presents a challenge to policy-making because a reduction in population pressure, the single most important cause of present soil, biomass, and water resource degradation, will only occur in the long-term, even if early gains are made in reducing fertility rates. Agricultural research must be greatly strengthened so as to develop less environmentally damaging farming methods and to diversify production. For the dissemination to farmers of promising research results, the extension services must continue to be strengthened, with gender distinctions receiving increased attention. The 1993 Report evaluating Burkina's experience (since 1988) with the intensified extension training and visit program, confirmed clearly both the efficacy of these techniques (50% production increase in some areas) and the need for grounding them in communities' needs. Burkina is a leader in the Sahd in promoting local responsibilities for natural resources management, and in introducing simple water harvesting and soil conservation techniques. IDA supports these efforts, together with other donors, under the ongoing Agricultural Services,  - 14 - Research and Natural Resource Managernent projects. This increasingly coordinated effort is both enhanced by the potential of new oncho freed lands, and complicated by the introduction to the new lands of the "mining' practices brought by the migrants, principally from the Mossi Plateau. Future operations (Second Agricultural Sector Adjustment Credit, and Private Irrigation) will build on the results of ongoing activities. Management of Government Expenditures 43. Although financial disequilibria in Burkina's public sector have never attained the severity suffered by its neighbors before they embarked on structural adjustment programs, the establishment and maintenance of a more conservative fiscal stance is a necessary condition for the success of the structural reform program because of the need to continue to maintain price stability, improve competitiveness, and stimulate private sector savings and investment. While there are some prospects for improving revenue performance stemming from the parity change and national/regional trade reform, in the medium-term Burkina will remain a poor country whose fiscal resources will not grow appreciably. The scarcity of fiscal resources, therefore, poses a challenge for increasing, from their currently inadequate levels, those public services which are essential for supporting development, especially primary education, basic health, and maintenance of public infrastructure. A sustained effort therefore has to be made to: (i) further reallocate resources from nonessential and ineffective government services, taking the 1992 PER analysis as a starting point, through budget, civil service, and Information policy efforts, including continued reallocation of military expenditures and public enterprise subsidies; (ii) increase cost recovery where possible within an increasingly decentralized administrative context; and (iii) mobilize donor support for the financing of critical current expenditures. Regulatory Framework for Private Sector Development 44. Enterprise activity and private investment need to be stimulated through continued liberalization and reform of the regulatory framework and through the privatization of viable public enterprises engaged in commercial and industrial activities. The banking sector is being restructured under SAL I, with institutional support from the Private Sector operation, to eliminate the causes for accumulation of large non-productive assets in the past and to mobilize domestic savings and channel them to productive use. Public procurement policies can be further modified to encourage private enterprise; streamlined contracting procedures have already proven effective under the Transport SECAL and Faso Baara project, and there is room to apply them more widely through institutional support presently being provided for public procurement reform under the budget component of the Public Institutional Development project. 45. After the parity change, these reforms are especially crucial to increasing the competitiveness of Burkinabe products. The formal sector remains largely uncompetitive; production costs are generally high not only because skilled labor and management are scarce, but also because past onerous labor regulations increased labor costs. Energy costs are among the highest in the Sahel because of Burkina's landlocked location, but also because of the pricing policy for petroleum products and high capital costs in power generation. The high levels of protection against competition from imports, extensive regulation of internal trade, and a complex investment code had in the past induced the adoption of inappropriate technologies, an increasing dependence on imported inputs, as well as production inefficiencies. While many of the inappropriate policies have begun to be removed under the adjustment program, and particularly with the impetus of devaluation, their legacy unfortunately  - 15 - persists in the present structure of Burkina's industry and in the attitudes of some union leaders, workers and management. There is still considerable scope to reduce costs through sectoral measures, for example, in agriculture sector processing and marketing (Second Agricultural Sector Adjustment Credit, Private Irrigation), petroleum pricing and marketing (SAL I 3rd tranche), transport (Second Transport Sector Adjustment operation), and power generation (Energy), where for these latter two operations the regional dimension cannot be ignored. Economic and Sector Work (Analysis toward Medium-term Action) 46. The ESW program is designed to provide an analytical foundation for IDA strategy. Consequently, the priorities are for: (i) refining our knowledge of issues in public sector management; (ii) human resource development; and (iii) private sector development. The current priority is to complete a Poverty Assessment, to provide a basis for more focused and effective interventions across sectors. This work will complement the results of the Women in Development sector work, as a result of which we are mainstreaming our effort at encouraging gender equality across all sectors. The Beneficiary Assessment for the FY94 Health and Nutrition operation will be complemented by the Youth and Employment Study, as well as by ongoing analytical work on primary and higher education quality, basic health and nutrition, AIDS (Rapid Assessment Survey) and food security. Finally, issues faced by Burkina in the area of promoting girls education, essential generic drugs and AIDS prevention figure prominently in the regional sector studies and subsequent regional seminars for policy makers organized by the Bank in FY94 and FY95. 47. The first Public Expenditure Review was carried out in 1992 by a team comprising of Bank and some donor staff, and a Government budget task force. The focus was on assessing historical trends and on examining the constraints to more rapid development of human resources. The explicit consideration of trade-offs and close involvement of the Government's task force in the analysis has helped to increase awareness of the changing role of the state in the economy, and of the need to make additional efforts in the priority sectors (primary education and health). A second Public Expenditure Review (PER) in follow-up to the Poverty Assessment will be carried out with two objectives: (i) following up on the FY93 PER to evaluate progress in the social sectors; and (ii) reviewing the efficiency of public investments, building, in particular, on improved information availability which is expected to result from implementation of the information component of the Public Institutional Development Project (PID). A FLscal Sector Review, to be carried out in conjunction with the IMF, will look at rationalizing the resource side and private sector incentives of the revenue equation. 48. Increased understanding of the functioning of the private sector is being pursued by the ongoing Private Sector Assessment. A regional seminar in Ouagadougou will look at regional experience on public enterprise reform in late May 1994, for lessons learned by experienced national teams from throughout the region. A special project preparation facility together with assistance from the Japanese Government, has allowed the establishment of Quality Control Circles (QCC) in a number of companies, with the aim of assessing whether this method can contribute to raise the competitiveness of Burkinabe industries, and also now as a potential regional QC Center. The momentum generated by this pilot experience has led to the recent initiative to introduce, in the face of considerable passive bureaucratic resistance, quality control circles in several public agencies as well. An Irrigation Sector review and an Agro Processing study will be a collaborative effort with the Government and other donors active in the subsectors, leading to a definition of a sectoral strategy for the Private Irrigation project. The just-completed Participation Study has yielded results that will  - 16 - better inform preparation of all IDA projects, especially those aimed at providing more resources to the most vulnerable segments of the population. Portfolio Implementation 49. As indicated in Annex I, the Burkina portfolio has included only one problem project over the last four years and it is now closed. The overall good performance of the portfolio has resulted from endeavoring to learn lessons from the past, from the newness of the program, and from a substantial supervision effort, averaging more than 20 staff-weeks per project. Frequent missions, better role definition with the Resident Mission staff, and extensive follow-up are generally necessary to compensate for weak managerial capacity in the Government's implementing agencies, still adjusting to new policies and roles. The substantial build-up of commitments since 1990 has, however, strained Burkina's institutional capacity and resulted in notably uneven performance, with lags on the policy reform front, co-existing with impressive improvements (Faso Baara, Urban I). The FY93 Annual Review of Portfolio Performance analyzed the reasons for the increasingly apparent limits on execution and laid the basis for an annual Country Portfolio Performance Review (CPPR), where the Burkinabe will be in charge. 50. Our implementation emphasis over the past two years has been on the program and its interlocking parts rather than on particular projects. Specifically, we have made efforts: (i) to 'launch' new operations as publicly and participatively as possible; (ii) to follow up swiftly through regularly scheduled, intensive supervision and early association with our disbursement, procurement and audit colleagues; and (iii) to stress cross-sectoral systems-building linkages (budget, civil service, information, procurement). Where implementation issues arose, until very recently, they have been largely at the macro level, and have related more or less directly to the Government's political will or inability to act, and demonstrate action, for example, SAL I second tranche conditionality (examples include BND-B closure, Labor Code revision, respect for priority sector quality and quantity improvements). The other more recent potentially major implementation issue is BCEAO/Ministry of Finance's inability to produce the proper, timely import documentation to draw down efficiently available quick-disbursing funds. 51. A second level of implementation analysis and support concerns the Public Institutional Development Project, which is IDA's main vehicle for support of the Government's administrative reform program. A key focus of the PID is support for improvement of the budgetary process (including linkages between the recurrent and investment budgets, reforms of public procurement and monitoring of expenditure), strengthened information management, and modernization of the civil service. Progress in these core functions of the Government would enhance its own performance as well as that of IDA's portfolio and increase the effectiveness of aid provided by others. But in the face of this effort after one year, there is still more promise than progress against a backdrop of political change, ministerial portfolio reshuffles, and attitudinal and structural (turf) resistance to change. Lessons Learned 52. The prioritizing and sequencing of the ESW progran builds on implementation experience and is informed by the collective lessons learned over the previous months and years of intensive change: (i) pressing, encouraging, and seeking to contribute information to the increasingly intense debate over the role of the State, its priorities for action, its polides and incentives  - 17 - for an emerging (formal) private sector; (ii) acknowledging more aggressively and specifically, the contours and the impact of the international and regional context within which this debate and necessary actions occur; (iii) recognizing that in this highly constrained, swiftly changing environment, time- consuming analysis and action planning on priority institutional, capacity building issues is central to the sustainability of our development support; (iv) realizing that a broadly-consultative participatory process is essential for lasting actions; and (v) at the heart of this process is our own sensitivity to and appropriate action on provision of information in a timely manner. Table 1: Evolution of the Lending Program 1984-93 198 1988 1989-1993 USS million Percent USS million Percent Agriculturm 31.6 36 66.0 20 Industy and Energy 7.4 9 7.0 2 htfrutzucture _ 82.5 25 Human Resources 48.2 55 24.0 7 hsutitutional Development - - 15.0 S Adjustment LI.dinj _ _| X L - 1 33.0 41 TOTAL CONM4rMENTS 37.2 1OO 332.5 100 Number of Operation 5 12 Proposed Lending Program (1994-1998) 53. Shift sector emnhasis. The lending program proposed for the coming five years was formulated to sustain an optimal response to the CFA franc devaluation. It also takes into account the sectoral distribution of past lending (Table 1), our recent experience with implementation (Annex I), as well as the results of recent economic and sector work. IDA has committed during the last five years a r,elatively small amount for human resource development because implementation of reforms assumed priority, and important sectoral operations in health and in education which were launched in the mid- 1980s were plagued by slow implementation due to institutional wealness and low priority accorded to fundamental reforms in these sectors. Convincing the Government of the priority of primary education and health, has been at the center of the policy dialogue carried out to prepare the three Policy Framework Papers, the program supported by SAL I, and confirmed most recently in the ERC. Critical reforms in these sectors have been identified in the PFP and initial steps to strengthen sector management are now being taken under the PID, in coordination with SAL I/ERC, Education IV, and Health supervision. The Bank's strategy is to push ahead on these fronts quantitatively and qualitatively in order to try and ensure a healthier, better educated human resource base in the medium- term. The relative emphasis of IDA lending has therefore shifted toward an increased share for human resource development (22%) in relation to priority productive and infrastructure investments over the coming five years.  - 18 - 54. As presently programmed, the pre-devaluation High Case has become the Base Case scenario. Since about 30% of the lending commitments would be for adjustment operations, a key determinant of the level of IDA lending will be continued good adjustment performance, starting with the monitoring and reporting function of the secretariat in charge of the structural adjustnent program. The pace of IDA lending will be directly linked to the Government's ability to implement the macroeconomic and sectoral reforms set out in the new PFP for 1994-96. These reforms are essential for more rapid growth and sustained development in the future. The lending program has therefore been structured to encourage timely action and effective follow-up on the Government's part. It starts with front-loaded supplementary financing to bolster support for the aftermath of the devaluation and mitigate its impact on the most vulnerable and politically vocal groups (supplements for the Food Security, Urban II, and Faso Baara operations). To allow for maximum flexibility, for possible sectoral differences in the pace of reforms, and for more sharply focused operations, we propose to use a combination of adjustment lending (SAL II, Agricultural SECAL U), and hybrid and/or investment operations, especially in human resource development (Health/Nutrition, Population/AIDS, Higher Education, Nutrition, Technical Education), while seeking an appropriate balance between private sector production (Faso Baara I, Private Irrigation, Mining), basic infrastructure (Urban Environment, Second Transport Sector Project, Water Supply, Energy), and preservation of the natural environment (Urban Environment, Agriculture Services II, Energy), as well as the possible new GEF-financed biodiversity pilot operation, the West Africa Community Conservation and Wildlife Utilization Project (GEPRENAF). 55. The triggers for moving between lending scenarios would be implementation of the program of macro-economic reforms summarized in the PFP (and the specific time bound actions described in Annex VII and meeting the targets in Table 2 below), and good implementation of the ongoing portfolio defined by problem free ratings and good disbursement performance. Table 2: Selected key indicators in %) _ 1991 1 1993 1994 1995 2000 GDP srowU (conutant 1985 prices) 0.0 6.0 0.7 0.4 3.3 6.4 5.0 Ral Pivae co.uun per a_ta srowth _ 0.2 -0.2 -2.0 -1.4 -10.5 5.5 2.7 Curw ccowut balau (exc. Eram)/ODP -12.2 -14.1 -14.6 -16.0 -21.5 -17.6 -13.2 Ovenrl Government deficit (-). excl.nOntalGDP -7.5 -7.5 -7.4 -9.2 -16.2 -10.6 NA Private inv_gmWODP 11.2 11.6 14.5 15.3 19.9 19.5 20.5 Donieotic mvinaaGDP 3.3 4.2 2.9 2.2 6.8 7.9 9.7 Source: PFP 1994-96projectons 56. Indicators of performance to stay on the proposed program would be: (i) Government begins to collect and confirm receipt of the revenues projected in the PFP; (ii) the monthly and quarterly reports on the adjustment program are received on time and are of sufficient detail and coherency that a real integrated reporting system is starting to fall into place, allowing for timely corrective action; and (iii) the PID begins to focus and utilize its resources to find solutions to the pubUc resource muangement needs for which they were mobilized. Critical short-term triggers in the above-listed three areas are detailed in the ERC Priority Action Plan and will be the focus of a joint IMFIBank mission in mid May 1994 and a joint follow-up mission in early September 1994. Symptomatic also will be what the Government decides on the Faso Baara Board of Directors' sudden decision, so far unsatisfactorily explained, to fire its Director General, which puts directly in question the logic of a  - 19 - supplement for the impressively utilized first credit and of a follow-up operation. Reverting to a core scenario will be triggered by the PFP targets not being met, and the program going off track. The interplay between Base and High case scenarios will be based on the speed of progress in program implementation, the magnitude of the supply response to the devaluation, and Government's willingness to take timely action to confront any macro and sectoral impediments to program implementation. Programs of Special Emphasis 57. Concern with Women in Development, the Environment, and Food Security is fully reflected in the IDA assistance strategy for Burkina with its ultimate focus on poverty alleviation. The needs of women and children are the main focus of the Health/Nutrition and Population and AIDS projects, while the ongoing Education IV project supports increased primary school enrollment among girls. There is also a strong emphasis on women's role in agriculture and livestock production supported by the Agriculture Services and Natural Resource Management operations. Burkina's laws explicitly recognize the social and economic equality of women, and the Government's policy is to acknowledge and support their roles more effectively in the development effort. According to the 1991 National Environmental Action Plan, the environmental effects of poor natural resource management in rural Burkina are a major threat to its long-term development. Building on Burkinabb/NGO experience, this threat is addressed in a significant fashion in the Natural Resource Management (NRM) project in coordination with IDA support for strengthening the agricultural research and extension services. The urban environment drainage and sanitation issues will be the focus of the Third Urban project, prepared with extensive community, NGO and private sector participation. All three operations build on experience well-reflected in the Partidpation Study. Food security is addressed primarily through the overall poverty focus of the IDA assistance program and through the emphasis of IDA lending on operations in the agriculture sector. A number of ongoing operations (including Health I, and Nutrition, Population, Agriculture Services, NRM, and most specifically Food Security) make significant use of the ability of the non-governmental organizations to reach and assist vulnerable portions of the population. IFC and MIGA 58. Due to the weak economic situation and enabling environment of the country, there has been relatively little private investment and consequently little activity by IFC in the past. The one IFC investment was in SOVOLPLAS, a producer of polypropylene, which closed in 1988. There is potential for IFC involvement in the mining sector, mainly in the development of the zinc deposit which will require a very large investment of the kind that IFC has helped syndicate in other countries in the region. IFC also supports the development of small- and medium-size enterprises through the recently established African Project Development Fadlity (ADPF), and the African Enterprise Fund. The Foreign Investment Advisory Service (FIAS), IFC and MIGA have been closely involved in the preparation of reforms in the regulatory framework for the private sector undertaken under SAL 1. In the future, IFC will also explore ways to assist the Government in implementing privatization through advisory services and help in the search for partners and financing. IDA's Mining Division as well as MIGA are preparing a seminar for assistance with mining sector investments for June 1994.  - 20 - Coordination with the IMF, other Donors and NGOs 59. Four IDA adjustment operations have been launched since Burkina started its adjustment program. IDA provides only partial support for Burkina's policy reform program, with the balance being financed by the IMF and a number of other bilateral and multilateral donors. The macroeconomic and sectoral adjustmnent programs have been prepared in close collaboration with the IMF staff, and with the assistance from other donors, including France, the European Union, the ILO, the UNDP, the African Development Bank, Norway, and Germany. Burkina's first annual ESAF arrangement for SDR 17.68 million (40 percent of quota) was approved by the IMF Board on March 31, 1993; and its second was approved with the 3rd year PFP in March 1994. The Association will continue to work very closely with the IMF in providing policy recommendations to maintain macroeconomic stability and to ensure the consistency of the overall program. 60. Burkina's adjustment efforts were the main subject of a macro round table in June 1993. Since 1991, significant budgetary support has been provided by France, the European Union, the African Development Bank, and Norway. In addition to continued support from these donors, Japan is considering cofinancing the adjustment program in 1994-95. The Transport Sector Project investment and current expenditure programs are cofinanced by eleven donors. The Agricultural Sector Adjustment Credit is being supervised in close consultation with key donors in the sector: notably France, the African Development Bank, the Netherlands, and the European Union. Denmark has recently decided to significantly enlarge its assistance program to Burkina. The admittance of Burkina to the Special Program of Assistance (SPA) for low-income debt-distressed countries in Sub-Saharan Africa in 1991, has provided access to a regular forum for aid coordination. 61. Given the importance of foreign aid in Burkina and the large number of interested donors aid coordination will continue to be a high priority. A key objective of IDA efforts will be to maintain and strengthen agreement with other donors on the content of the policy reform programs and on the priorities for the public investment program. A number of vehicles will be used to assure close coordination among donors: a continuation of informal donor meetings in the context of specific operations, such as those organized annually in the health sector, the recent macro round table, and the transport sector donors meeting; bi-annual SPA meetings for sharing information on adjustment performance and cofinancing requirements; and continued close contact by the Resident Mission and visiting bank missions with the local donor representatives. At the Round Table in June 1993, the Permanent Secretary in charge of monitoring the adjustment program offered to organize quarterly review meetings on the execution of both the investment and recurrent budgets with the donors involved in their financing, but to date follow-up has been weak largely because he has worked under 3 different Ministers of Finance during that period. Government leadership in this area remains critical. IV. Agenda for Board Consideration 62. The last Country Assistance Strategy statement was presented to the Board with the Transport Sector Project in February 1992, arguing for the substantial build-up of the size and sectoral coverage of our program. As discussed above, the objectives of our strategy remain to: (i) continue to support and strengthen critical actions to alleviate long-term constraints on economic and social development;  - 21 - (ii) continue to help the Government to create a policy and regulatory environment supportive of the private sector; and (iii) further strengthen the effort of the Government to manage public resources more effectively. 63. Much has been done in the intervening two years in pursuit of these objectives, but we are still far from reaching them. The devaluation and the adoption of a strong macro-economic program have created new opportunities. IDA's strategy is guided by a vision of Burkina as a small economy, giving priority to the development of its human resources, taking action to preserve its fragile natural resources through appropriate village-based and participatory techniques, and building the capacity needed to manage its public sector, and design and maintain an environment favorable to private sector led growth. In this vision, macro-economic policy reform remain paramount to remove the remaining bottlenecks and improve resource mobilization and allocation. Public resources need to be allocated to human resource development (to increase enrollment in primary school, especially for girls; rationalize secondary and tertiary education expenditures; decentralize health services; and implement appropriate cost recovery and essential generic drug policies). Private investment (in agriculture, livestock, mining, small industry) is favored by an appropriate incentive framework (including a reduced tax burden), flexible labor laws, an open economy, efforts at regional integration, and by public enterprise reform. 64. To bring about this ambitious vision, the Bank's assistance is focused on: (i) policy reform through the PFP process and selected sector adjustment credits (agriculture, transport); (ii) human resource development (through emphasis on public resource allocation in the macro dialogue and specific investment operations in the concerned sectors, bolstered by a poverty assessment and selected ESW tasks on participation); (iii) institution building to improve the efficacy of the public sector (especially on public finance management and policy design and monitoring) and strengthen the institutions responsible for private sector development (chambers of commerce, courts, banks, business laws, etc.); and (iv) natural resource management. The Executive Directors might wish to review these priorities and their adequacy to the vision they are intended to support. 65. Three lending scenarios (base, core and high) would match the commitment of IDA resources to performance as measured by the timely implementation of the reforms adopted in the 1994-96 PFP, and the achievement of the specific targets in key sectors adopted in the context of specific investment operations. Moving from base to high scenario would be the result of maintaining a problem free portfolio and incurring no disbursement lags. On the contrary, failure to implement agreed policy reforms would lead to a core lending program focused on essential investment in human resources and basic government services. 66. In a liberalizing polity and economy, there is an increasing number of other parties to be informed and consulted. In tackling these agendas, the audience is much broader than Government officials with whom we work. This places a clear priority on making information available in a timely, substantive and appropriate way, and underlines our basic commitment to the information, training and educational dimensions of our work. A key by-product of this approach is to help stimulate a debate in Burkina on what the Government can and cannot, should and should not be doing with its scarce resources capacities. The role of the Bank in this debate must be carefully defined. 67. The proposed strategy takes into account accelerating changes, particularly with the devaluation, in the regional and international environment and aims to speed up and intensify the process of economic change. Burkina is finally showing signs, as are some of its neighbors, of waking  - 22 - up to regional developments and possibilities. Burkina, like C6te d'Ivoire and Togo, is confronted with achievements in Ghana with which economic relations are far below potential, a result of political disagreements and the colonial heritage. However, migrants and traders from the Mossi plateau have historically moved South as well as Southeast and Southwest. The most promising solutions to high energy costs, water availability, and high transport costs are also regional in nature. The regional and sub-regional context should be taken into explicit consideration by the Burkinabh, with the support of their donor partners where appropriate, so that timely solutions can be found. The leadership role played by Burkina in the recent parity change and creation of an economic union shows the Government's interest in and commitment to regional issues. IDA is supporting these efforts, as evidenced by regional telecommunications and energy analyses, and work with the BCEAO on strengthening zone-wide banking practices. 68. Risks. It is clear after the rapid and substantial program build up of the past 3-4 years, and particularly our adjustment and investment lending burst post-devaluation, that our implementation focus, stressed in our last two ARIS/ARPP reviews, will be both necessary and the delays potentially frustrating. But this must be where our focus stays: on long-term human resource investment in support of adjustment; on maintenance of existing assets rather than increased infrastructure investments; on incentives for productivity increases and diversification in an emerging private sector opposed by old state-supported narrow interests; and above all on the institutional strengthening to get essential services to the silent majority of (mostly rural-based) Burkinabb. The risk is delay or even backtracking, at a time when aggressive action is more critical than ever, and we or the Burkinabh lose patience. Both sides have been severely tested, particularly at the start (in 1988, 1989) and in the past two years of wrenching change in the face of entrenched interests. Burkina has taken a new step in its adjustment effort. Building understanding and a consensus on the central importance of the current reforms for the future will be a key objective of a national forum (es Assises) convened on May 9 and 10, 1994 to explain, answer questions, and convince that the post devaluation program is worthy of support. If the 1991 experience is any indication, this initiative should considerably mitigate the risks entailed by resistance of vested interests to the program. Lewis T. Preston President Attachments Washington D.C. May 9, 1994  Annex 1 page 1 of 1 Selected Indicators of EDA Portfolio Performance Indicator FY91 FY92 FY93 FY94 Portfolio Performance No of projects under implementation 11 14 17 18 Averge implementation period (years) 3.1 3.3 3.6 3.8 Average ratings Development objectives 1.3 1.5 1.5 1.4 Ovenll status 1.5 1.7 1.8 1.7 Percent of projects rated 3 or 4 11.0 0 0 0 Development objectives 1 - - - Oveall staus - - - Cancelled during FY 0 0 0 0 Disbursement ratio (%) 13.4 17.1 23.6 16.2 Disbursement lag (%) 24.1 25.1 17.1 30.1 Portfolio Management Supervision resources (total staff-weeks) 155.8 253.9 435.8 272.7' Averge supervision (staff-weeks/project) 15.8 18.1 21.2 17.0 Supervision resources by location (in %) Percent headquarten 93.0 73.9 78.3 77.3 Percent resident mission 7.0 26.1 21.7 22.7 Supervsion resources by rating category (staff-weeks/project) Projects rated 1 or 2 15.3 18.1 21.2 17.0 Projects rated 3 or 4 19.7 0 0 0 Memorandum item: date of last/next CPPR: (Dec. 14, 1994/Oct. 1995) 1/ One FY94 reporting quarter rens   Annex 2 Page 1 of2 BURKINA FASO - Bank Group Fact Sheet, FY92 - 97 IlDA Lending Program, FY94-97 1/ Past Current Plsnned Category FY91 FY92A FY93A FY94 FY95-FY97 Commitments (USSm) 140.5 109 18.8 80.6 1 i 0 - 4102 Sector (%) Agriculture 12 26 40.0 - 23 Industry Mining and Energy - 23 - 12 Infrastructure & Urban Development 14 60 37 - 23 Human Resources & Capacity Building 17 14 - 67 16 Multi Sector/SAL 57 - - 33 0 - 26 TOTAL 100 100 100 100 100 Lending Instrument (%) Adjustment Credits 57 86 0 32 0 - 26 Specific Investment Credits & others 43 14 100 68 100 -74 TOTAL 100 100 100 100 100 Disbursements (USSm) 14.5 67.6 49.6 79.9 370.8 Adjustment Credits . 41.2 - 39.9 190.8 Specific Investment Credits and others 14.5 26.5 49.6 40.0 180.0 Repayments (USSm) L3 2.0 2.7 4.4 17.3 Interest (USSm) L9 2.4 2.8 3.7 14.3 Source: Lending Program & Disbursement Reports (4/27/94)-MIS data 1/ Excludes Reserve Projects 21 The range of planned IDA Commitments has been determined to reflect the scenarios developed in the Country Assistance Strategy and will be reviewed and revised as necessary in view of actual performance and the overall availability of IDA resources.  Annex 2 Page 2 of 2 BURKINA FASO - IFC and MIGA Program, FY982-93 Past Category FY79 FY92 FY93 IFC approvals (US$m) .5 Equity (USSm) TOTAL .5 Sector (%) Agribusiness Capital markets -- Chemicals/fertilizers -- Infrastructure Manufacturing (Food processing) 100.0 Oil/mining - TOTAL 100.0 Investment Instrument (%) Loans 100.0 Equity - Quasi equity -- TOTAL 100.0 MIGA guarantees (US$m) MIGA commitments (USSm) -- --  Annex 3 Page l of2 Poverty and Social Development Indicators Buridna Faso: Priority Poverty Indicators ead Smw rqason4mcon ,r*W Nmu L~iq &YGW roV .tU. hiqhw u-k - Moep Sghm, LAW- AMeww Indlcar 1979-75 1""4 1957.92 Aftl bean,. pWe Priority Poverty Indicators POVERTY Uppu povuer line loca ew. _ H"doo index % of pop. - _ _ _ 19 Low povty line locw ew. _ _ _ _ _ _ Hudomme id_ % of pop. - _ _ _ GNP perca,i USS 110 170 300 520 390 _ SHORT TERM IDCOME INDICATORS Unsied urba wq local cu f . - _ . UnsdWlldnzWawagi R=W terms of ade _ _ _ ConQr pnei lndei 1987-100 43 106 103 _ .. _ Lowe bmoce.- Fooe * 122 105 .. - Urbu Rurd . SOC1AL INDICANORS Plublic expendin en _biea soalm % of GDP - - 9.5 Gran mial- r P|"ry % shool a pop. 16 29 31 66 103 Mic * 21 36 37 79 113 _ Femae * u2 21 24 62 9f .mommiity hii mormity pw own live bfr 173.0 149.0 0 99.0 73.0 45.0 Under 5 m*mf - 195.7 169.0 103.0 59.0 Meadds % AP pOW - 33o 42.0 54.0 72.7 - DT * _ 2.0 37.0 54.6 306 _ Child malmn rdnea (ndrS) - - 45.5 2t.4 33.3 - Totai Ye.' 41 45 43 52 62 63 Feanle advumug* 3.2 3.1 33 3.4 2.4 6.4 Toul 06WIty tam bbfa perw 6.4 6. 6.9 6.1 3.4 3.1 Matrl moirtlity rp pa 100.000 [Iw b 600 - _ SupplementLry Povert Indicators Expedhmtu on social snezy %ofccel vIttap. 6.0 6.7 Soc Security cowvap % eo.ed pop. - _ _ _ Access to sea wr: is %0fpo,. 25.0 67.0 - 41.1 68.4 _ Urban . 30.0 43.0 - 77.1 73.9 _ RuPW * 23.0 69.0 - 273 603 A==ee to heate - 70.0 _ _ _ Population growth rat GNP per capita growth t Development diamondb 6 nusl'o f'. pll (c mk p-isa, 1970 75 19S t9 92 1970-?5 19 L5 19r-91 wy 4 7 21- - - aid ow aeem .2 1970-75 1931043 979 1970-7 19300 1937.92 !ii ----Burkm F.. Burkicna Faso -t Low-ncome - Low.inacm a See the echnicj nows. p.39. b. The development diamond. baed on w key itdicawt, sow dt. avage level of development in due counuy compared wiLh iu income pow. See dte inuvducuon.  Annex 3 Page 2 of 2 Burkina Faso: Resources And Expenditures Manr Same revo&4xcomve zroup Ne= Latef sbingl year recent Sid& higher Unit of aunwea Sdahuzj Lo-. Income Indicator measure 1970.75 195045 1957.92 Africa lnco,vv goup Resources and Expenditurm HUMAN RESOURCES Population (mre-192) thousands 6.202 7.181 9.546 546.390 3.194.535 94Z.547 Age dependency ratio mtna 0.28 0.90 0.96 0.95 0.67 0.66 Urban % ofpop. 6.3 11.4 16.9 29.5 26.7 57.0 Population growth rar annual % 2.1 2.6 2.9 2.9 1.8 1.4 Urban ~~~~ ~~~~~~~4.0 7.8 S.1I S.1 3.4 4.1 Labor force (15-64) thousands 3.111 3,765 4,355 224,025 1,478.954 Agriculniu% o labor force 87 87 . Industry 4 4 . Femalc 48 47 46i 37 33 3,6 Females per 100 males Urban number 94... Rural 110... NATURAL RESOURCES Area thou. sq. kin 274.20 274.20 274120 24.274.03 38,401.06 40,697.37 DenLsicy pop. per sq. ]an 22.6 28.7 33.8 21.9 81.7 2.2.8 Agricultural lezd % of land amt 45.8 47.6 49.5 52.7 50.9 Change in apiculmral land annual % 0.7 0.4 0.0 0.1 0.0 Agricultural landunder impugaao 0.1 0.1 0.2 0.8 18.2 Foresuand woodand thou. sq. Ian 75 69 65 Deforestation (net) annual % ...0.7 INCOME Household income Share oftop 20%.ofhouseholds % ofincome . ....42 Share of botnom 40% of housebiolds -. ....1 9 Share of boswm 20% of bousehas ... .. LXPENDflrr Food .% ofGCDP . . 35.7 Staples 1. Mmfish, milk.... ha W13.96. Cmere iwmos dsun meule wwar 26 205 145 20,311 46.537 74.924 Food aid in cereals 28 121 87 4.303 9.008 4,054, Food prductdon per capita 1987 100 107 117 121 90 123 Fertilizeconsumption kg/ha 0.1 0.9 1.9 4.2 61.9 Sham of aplcWiuain GDP % ofGDP 37.5 42.4 41.6 18.6 29.6 Housing % of GDP .. . 15.2 Averag household size perwns per housebold --. Fitxed invesunent housing %ofOGDP .. 3.5 Fue and power % ofGDP .. 11.7 Energconsumptkouper capima kg ofoil equv. 12 1s 16 258 335 1,182 Households with elecuicity Urban . % of bousehokds .. ... Rural -. Trarnsport and eommusadaaou % of GDP - . 15.0 Fixed invesueuC umusport equap.mt t. . . Totalroad lengthl thu. km 17 9 1 1 INVESTMENT IN HUMAN CAPITAL H4ealth Population per physician persons 97.121 $7,191 57,307 Population per nurse *3-999 1.683 1,6112 Population per hospita bed 1,70m. 3.92 1,329 1.050 516 Oral rehydyrauon therapy (umdv4.) % ofe . is 1 36 39 Educasdon Gross enrollmcnt ratio Secondary %of school-age pop. 2 5 8 18 41 Fernale *1 3 5 14 35 Pupil4ahchr ratio: primary pupils per teacher 47 58 58 39 37 26 Pupil-ecwher ratio: secondary 23 23 3 1 ..19 Pupils maching grade 4 %orcohort 72 82 is Repeater raue: primary % of ttlW enroll 17 14 17 Illiteracy % of pop. (age Is') 91 36 82 s'I 39 Female %oftfem. (age 15.+) .94 9 1 62 52 Newspapr circulation per thou. pop. 0 0 0 1 4 ..100 World Bank intemauonal licortomncs LeAtUT.ent. Apni 1994  Annex 4 Page 1 of2 BURK[NA FASO - Key Economic Indicators 1988 1%9 19 1991 1992 1993 1994 1995 199 1997 198 1999 Z00 - - <----------------- Projecti ----------- NATI4A.L AcnJTS (85 X af GDP at Oarut nnrket pric_) GDP at mp. 102.0 100.0 100.0 102.0 100.0 10.0 101.0 100.0 100.0 100.0 10X.0 100.0 102.0 PrimFy sector at f.c. 1V 44.7 42.6 39.6 42.7 40.9 40.7 40.6 40.5 40.5 40.2 39.8 39.7 39.5 Secaay sector at f.c. 1/ 16.0 16.6 17.9 16.8 17.8 18.0 18.0 17.9 17.9 18.1 18.4 18.6 18.8 Tertiary sector at f.c. 1/ 35.2 36.6 38.1 36.2 36.8 37.2 37.1 36.9 36.9 37.0 37.0 37.0 37.0 Net irdirect tam 1/ 4.1 4.1 4.4 4.2 4.5 4.1 4.3 4.6 4.7 4.7 4.8 4.J 4.8 CnptxMirn 97.1 96.8 96.7 95.8 97.1 97.8 93.2 92.1 91.1 90.6 90.6 90.7 90.3 Gross dIstic irvs_trut 21.6 21.2 19.1 Z.7 21.4 Z.1 31.9 28.8 26.7 26.7 26.0 25.0 25.0 PULic fixe irvswitt 10.1 10.1 9.3 8.5 7.0 6.8 12.0 9.3 7.7 6.6 5.8 4.7 4.5 Private fixed inestrw.t 9.6 11.1 11.2 11.6 14.5 15.3 19.9 19.5 19.0 20.1 2.2 a2.3 20.5 Omge in stcks 1.9 0.0 -1.4 2.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Resaive bFlaAce -18.8 -18.0 -15.8 -18.5 -18.6 -19.9 -25.1 -2D.9 -17.8 -17.3 -16.6 -15.7 -15.3 ExN=-ts GNFS 12.3 10.9 13.5 12.2 11.9 11.9 20.6 21.9 22.9 22.9 22.7 22.4 22.2 1npoi QIFS 31.1 28.8 29.3 30.7 30.4 31.8 45.7 42.8 40.7 40.3 39.2 38.1 37.5 Gross ' stic saviras 2.9 3.2 3.3 4.2 2.9 2.2 6.8 7.9 8.9 9.4 9.4 9.3 9.7 Gross rutiamL savirgs 9.7 6.9 7.0 6.6 6.9 6.1 10.4 11.2. 11.9 12.2 12.0 11.6 11.8 Mervr..m Ita: GDP at mp. (currwit US mitlin) Z37.8 2174.7 2580.7 2752.5 29.3 2781.8 1737.8 1973.4 2Z.7 2417.0 2640.0 2W3.5 3149.7 GDP per caita (trrit USS) 26.2 248.0 236.2 296.9 338.0 283.3 172.0 189.8 33.5 219.6 2s.1 247.4 2S2.6 Av.rg exdhw r (tCFAFA) 2Y7.8 319.0 272.3 2Z.1 264.7 286.5 604.7 611.1 619.3 627.0 627.0 627.0 627.0 RISC FIMAN (as X of DP at a.rvnt wkat pric) TotaL reAua (ecL. gtv.m) 11.8 11.5 13.2 14.0 12.3 12.6 11.6 11.6 11.5 11.4 Total uwqditu awd rwt lwdirc 21.1 19.2 a2.8 21.5 19.6 21.8 27.9 2.2 18.0 16.3 ovrall supmlB (+) or dficit H-) -9.3 -7.7 -7.5 -7.5 -7.4 -9.2 -16.2 -10.6 -6.5 -4.9 capital edfitLr 9.0 6.5 5.8 9.3 6.9 7.1 14.4 10.6 7.9 6.7 Foreign firwcirV 6.3 4.9 5.4 7.9 7.3 8.5 17.4 12.2 7.8 6.3 (ircL.grts w debt relief) REAL A*IL GJTN RATES (1985 pricm) tX) Gros dmstic prcdct 5.7 3.3 -0.0 6.0 0.7 0.4 3.3 6.4 7.7 4.8 5.0 5.0 5.0 Gross stic i. 6.6 2.6 1.1 5.2 0.6 -1.0 2.9 6.9 7.8 4.5 5.3 5.3 5.3 EAl. ANNUAL PER CAPITA GJTN RATES (lgei pric) CZ) Gross 1imtic prockt 2.9 0.5 -2.8 3.1 -2.2 -2.4 0.3 3.4 4.6 1.8 2.1 2.1 2.1 TotaL cenptian 1.3 -1.9 0.1 0.2 -2.2 -1.3 -12.3 4.0 4.6 2.0 2.5 2.8 2.1 Private cr ptian 1.9 -2.0 -0.2 -0.2 -2.0 -1.4 -10.8 5.5 6.2 2.7 2.9 3.5 2.7 rMTARY IDICATORS Velocity CGDP/Me) 4.5 4.5 4.6 4.8 4.5 4.2 4.6 4.5 4.5 4.5 NA A mI GrCt rate of Pe CX) 16.6 3.7 -0.5 5.7 6.3 9.2 20.5 17.4 15.1 10.0 a NA NA Private sector crdit gridVt/otaL credit tr gr M 98.7 71.0 251.4 -4249.5 107.1 A mI NA la A MA M MA  Annex 4 Page 2 of 2 BURK[NA FASO - Key Economic Indicators (Continued) 198l 19S 190 1991 1992 1993 1W4 1995 19% 1997 1995 1999 2W0 _ _ _ _ _ _ ( - --- ------ Projectiers -------------------- uAND Of PAYMNTS (aCrwt LSS mfLLion) gnrts GNfS 275.0 236.0 349.3 336.4 349.0 331.8 37.9 4M.0 511.4 554.5 5W.0 646.7 698.3 of fidh: Mwwdisa f.o.b. 240.1 184.6 26.6 2l3.2 27.7 Z73.5 D5.0 357.0 421.7 457.0 4%.6 5343 577.3 vrt GNFS 695.0 627.3 757.0 55.8 l4.3 a.4 7Y.4 84.8 1Z2 973.8 16.1 1100.1 11.7 of hidh: M Hwvh ds f.o.b. 41.8 441.7 542.9 601.9 6Z.3 65.9 S7.4 606.8 6523 699.3 744.0 7 8C7.4 ua.e bLavl -42D.0 -3P1.2 -07.7 -509.4 -545.3 -553.6 -436.5 411.7 -396.7 -419.3 -437.1 -4e3 -4S.4 t facto- -Uits 13.1 -16.9 -11.8 -22.0 -23.0 -3.3 -27.0 -28.6 -.3.4 -263 -263 -26.5 -27.7 of %4iidc: Intwl t dAC (1rtu) 27.2 3.s 23.5 29.4 L.7 24.5 26.4 26.7 26.7 26.4 26.3 26.5 27.7 !t a.rint trw (priwe) 166.2 140.4 105.0 142.9 1U.7 138.5 90.4 93.2 %.6 95.2 943 95.8 93.4 .rr. ct btL.bff official truufts -367.9 -267.7 -314.4 -3S.5 -436 -444.4 -373.1 -347.1 -330.5 -350.4 -369.2 -*35.9 416.7 !t off ici&L trwwffs 21.8 356.7 2.5 29.2 331.7 329. .1 231.4 218.0 218.3 4.7 249.9 234.8 rr. act bl., after afficial trivinr -66.1 9.0 -3s.9 -19.3 -6.9 -1153 -93.0 -115.7 -112.5 -132.1 -120.5 -136.1 -131.8 .t foreign dirwt irvumit 1.7 113 81 0.7 0.0 0.0 0.0 1.6 3.2 12.8 13.2 13.8 14.5 !t LT lo". (LF cata) 61.4 -211.6 50.0 114.1 119.8 112.7 161.1 137.8 112.4 97.9 1m.5 127.7 118.8 Oishnrswat (IW ca) 3.6 81.8 90.0 145.7 151.5 152.5 206.2 179.3 151.1 152.8 145.6 171.2 186.4 Dcortizatiam d& (CW d a) 27. 203.4 40.0 31.5 31.7 39.1 45.1 41.5 38.7 54.9 45,1 43.5 67.5 lercupitaL (irOcL. wror a Missiar) 21 23.8 -19.4 -12.5 53 34.5 5.1 -0.0 0.0 0.0 -0.0 -0.0 -0.0 0.0 O1LL blwm 2D.a -130.7 -3.3 30.8 57.4 2.5 68.1 23.7 3.1 -21.4 '6.8 5.5 1.5 TotaL firuiuu -a0.8 130.7 43.3 -30.8 -57.4 -2.5 -68 1 -23.7 -3.1 21.4 6.8 -5.5 -1.5 teL do In rmrwo I- incrumse) -35.6 48.6 -6.2 -26.6 -54.7 -36.0 -50.0 -57.4 -45.2 -1.8 -12.2 -12.5 -15.5 Not afdlts fns the IW 0.0 0.0 0.0 L5 9.1 12.2 24.6 24.4 -0.8 -1.8 -1.8 -1.s -1.8 PuL1m 0.0 0.0 0.0 8.5 9.1 12.2 a4.6 a4.4 0.0 0.0 0.0 0.0 0.0 R OO OO O0.0 0.0 0.0 0.0 0.0 0.0 0.0 80.0 0. 1.8 1.8 1A. 1.8 Grws offic.rw do - irfrewe) -35.6 48.6 -6.2 -35.1 -.8 -48.2 -74.6 -81.8 -4.4 0.0 -10.4 -10.7 -13.7 w- in arrs(+ Ic.rease) 14.8 65.5 49.6 -*us.3 -4.2 X.1 -4.2 0.0 0.0 0.0 0.0 0.0 0.0 t reLief 0.0 16.6 0.0 13.1 21.5 9.4 26.1 8.7 0.0 0.0 0.0 0.0 0.0 rucir gap -0.0 0.0 0.0 -0.0 0.0 -0.0 -0.0 25.0 42.1 23.2 19.0 7.0 13.9 nmxi I tw: Nas rogw%.w, Yerw-d CUS .illiLon) 325.4 269.9 304.J 350.0 345.0 393.2 467.8 549.6 594.0 594.0 604.4 615.1 621.8 3s rnr%vg aM. tUw of iWPs GS 5.4 4.9 4.7 4.7 4.5 5.2 6.8 7.6 7.6 7.1 6.8 6.6 6.2 =-ts aNFS - X of GDP 12.3 10.9 13.5 12.2 11.9 11.9 2D.6 21.9 Z.9 23.9 2.7 Z.4 22.2 = OGFS i X af GP 31.1 2.8 29.3 30.7 30.4 31.8 45.7 42.8 40.7 40.3 39.2 3.1 37.5 wurce beia c X of GP -18.8. -18.0 -15.8 -18.5 -18.6 -19.9 -3.1 -2.9 -17.3 -17.3 -16.6 -15.7 -15.3 M.t accat, .ct.offic.trwnf. - Z of DP -12.0 -12.3 -12.2 -14.1 -14.6 -16.0 -21.5 -17.6 -14.8 -14.5 -14.0 -13.4 -13.2 .L _M*L GATN PATES _19 pic) CZ) o Of OS -6.1 -8.4 32.2 -3.5 X4.1 -2.8 9.0 12.1 13.2 5.4 3.5 3.7 3.7 a-ts of GOFS 1.4 -6.9 12.3 8.2 1.2 3.3 -2.1 2.6 4.8 5.5 3.5 3.4 4.4 CE WINIES Cl1sl1X) xat pric ir, d CI to, ) 137.1 126.4 14.7 14.0 119.3 116.8 115.6 124.6 130.0 133.7 160.0 167.1 174.5 ort price irc, gdO tare.) 114.0 109.J 119.1 123.4 128.9 123.5 113.2 117.3 1D.4 123.3 1529 157.0 161.6 turdi t ttn of tru 12.3 115.1 1t2.7 115.9 92.6 94.6 IM.1 1063 U1M.0 109.3 104.6 16.4 1.0 I ef ftiac i dw. rt (1W ciBta) 94.6 90.4 89.9 87.5 90.2 17.9 53.3 54.8 56.2 56.9 MA uA MA ..Tr p-ic inr CX p-wd rate) 4.0 -0.3 -0.8 5.1 -0.8 1.8 31.2 7.5 6.3 4.6 4.0 3.9 3.8 ef Lator aX grot rh t) 3.7 0.7 1.3 43 -0.5 2.0 27.7 7.9 6.4 4.7 4.0 4.0 4.0 inet disomt rate M) 9.5 11.0 11.0 11.0 12.5 10.5 MA MA MA I A M MA NA Idisca.nt rataC) 5.6 10.2 9.5 6.5 13.1 8.3 M N NA MA M MA M As pmon,t af DP at caunit 15 market pic. Irclru rat itort-tar cpitkl, mmary cpitaL, rd eTors ad iars. ar-ce: IFW, PfP3 ib*fr, Tabm, 3/2/94.  Annex 5 BURKINA FASO: Key Exposure Indicators 1989 1990 1991 1992 1993 1994 1995 1996 PojctCon s- In USS million at current orices Total debt disb. out-stnding (TDO)11 717.3 834.0 967.S 1128.7 1580.1 1487.6 1693.2 1824.7 Netdisburserncnts(noLTdabt&na DMF) -211.6 50.0 122.6 12X.9 124.9 125.7 162.2 111.6 Total debt service due (IDS)l/ 321.9 63.5 61.0 60.0 69.0 72.3 70.2 67.5 Debt and Debt Service Indicators M%) TDO/GDP 33.0 32.3 35.2 3SA 56.8 S5.6 85.8 81.8 TDO/XGS 282.5 227.3 273.0 323.4 476.2 415.6 391.0 356.8 TDS/XGS 126.8 17.3 17.2 17.2 20.8 20.2 16.2 13.2 Concessional/rO U2.1 32.9 84.7 35.9 87.4 89.4 91.1 92.3 World Bank ExDOsure Indicators (IDA) (%) World Bank DS/Public DS 4.9 4.9 7.4 12.1 13.3 13.0 14.0 16.2 Preferred Creditor DS/Public DS 40.7 33.2 69.S 56.8 69.8 67.0 66.6 67.9 WorldBankDS/XGS 1.1 0.8 1.1 1.4 2.2 23 2.2 2.1 IFC russ millionL) Loans 0 0 0 0 0 NA NA NA Equity and quasi-equity 0 0 0 0 0 NA NA NA MIGA (USS million) MiGA guarantms 0 0 0 0 0 NA NA NA I/ Includes public and publicly guarantod deb prite nonuaanteed debt uas of IMF credits. and sbort-m capital. Souree: DRS, Worid Debt Tales 1993-94 Edion and IDA Fiveyear Lending Progrm 4/7/94. Data for 1992-96 a orom M PFP3 Working Tables 3/2/94.   Annex 6 page 1 of 1 BURKJNA FASO Status of Bank Group Operations Statement of MDA Crediu As of March 31, 1994 Amount in USS miUion Last ARPP (FY93) (less cancellation) Supervision mting ~~~~~~~~~~ ~- ~ Undisbun ed Fucal as percent of Development Overall Credit No. Ystr Borrower Purpoe IDA Undisbunsd commitmeanu Objectiv" mat 29 credit closed 227.76 0.00 0.00 C15980-BUR 1985 Government Education m 21.60 3.09 14.31 2 2 C16070-BUR 1985 Governmeot Health 1 26.60 6.02 22.63 2 2 C18960-BUR 1938 Government Agric. Rearch 17.90 7.17 40.06 1 2 C19760-BUR 1989 Government Agric. Services 42.00 21.86 52.05 1 2 C20670-BUR 1990 Government Urban 22.00 11.16 50.27 2 1 C22290-BUR 1991 Government Environrnental Mgt. 16.50 13.34 80.85 1 2 C22440-BUR 1991 Government Education IV 24.00 24.07 100.29 2 2 C22810-BUR 1991 Governnent SAL I 80.00 42.37 52.96 2 2 C22820-BUR 1991 Government Public Works A Empl. 20.00 3.5S 17.90 2 2 C23320-BUR 1992 Government Transport SECAL 66.00 52.06 78.8 1 1 C23780-BUR 1992 Government Public Inst. Develop. 15.00 13.64 90.93 2 2 C23810-BUR 1992 Government Agric. SECAL 28.00 20.82 74.36 1 2 C24140-BUR 1993 Government Food Security 7.50 6.95 92.67 1 2 C24720-BUR 1993 Government Private Sector 7.00 7.01 100.14 2 2 C25190-BUR 1993 Government Enginering Credit 4.25 4.24 99.76 1 1 C25900-BUR 1994 GoverneAnt Econ. Recovery Credit 25.00 25.42 101.68 - - C25950-BUR 1994 Government HealthfNutrition 29.20 29.94 102.53 17 disbursing crdits 452.75 292.74 64.66 1.5 1.8 Grand total (IBRD and IDA) 680.51 292.74 Of which repaid 14.21 Total held by IRD and IDA 666.30 Amount sold 0.00 Of which rpaid 0.00 ToLal undisbursed 292.74   Annex 7 Page 1 of 2 COU'NTRY ASSISTANCE STRATEGY SU,MARY OF OBJECTIVES AND OUTPUTS AF5 BURKINA FASO Objectivss Actions/Gols lnstrurnenta/Sequencing A. Consolidate post-devaluation Prioriues and actions agreed with the joint IMF/BANK PFP mission in adjustment through upport for late January 1994, a new policy frnaework is now in place, reinforcing PFP 1994-96 (March 1994) further clarification of sate and and adjusting earlier PFPtESAF/SAL and sectoml agreerents to the - ERC/IESAF- SAL 1(3rd tanche) pnvate sector rols: eiO achievement parity shift. To seize this opportunity, inflation must be controlled - Education IV of subilization targets; (Li) by (30% in 1994, 6% in 1995), sensitive prices (rice, wheat, petroleum, - Health 11(3/94), Pop/AIDS deepenring policy reforms (trade, essential drugs) must be managed with great care, interral and exterral (5194) banking, public enturprirea, labor arrears cleaned up and the productive sectors: (cotton producer price PMD (FY92 - institutional code, priority seorn); and (iii) increase by 40-60%), and mining investment will be encouraged through priorities. promotion of steady, sustainable revision of the fiscal regime within a Iiberalizing regional context - Private Sector Support (FY93) supply respon (apicultiral, (UEMOA pact). - PASA (FY92 Agriculture polcies) livetock, minig ud srvce Fiscal Sector Review sectors). - PASECT (FY92, Transport policies) - SAL and PASA 11 (FY95) - Mining, Private Irrigation FY96 B. Promote HumaLnResources Incrse orimrv schoo enrollment to 40% by 1996, by annual teacher On-going: FY92 PER. FY93 WID development, mployment reation increas of 950 per year (1992-93) and 2,300 (1994-96) as well as ctntegy and pursue our strategy an poverty incremaed allocAtions for school books and teching muteriasI, classroom - FY91 SAL, PID and priority a|lliation, both in the short term as construction, school inspection support and pnvate school sectors it relates to the devaluation and for encourgerment. Develop program with Goverunent for rmbitious - Education m (close 3/94), IV the long term, prognm for acceletraing primary education beyond 1996. Tranalace (FY9 1) curnnt dialogue on higher education into an action pian to completely - Health (FYS9) overhaul the higher education sysem to respond to stgntion uad - PASA (1992), Food Sec. (1993) decline in public employment, and an emerging private sctor. Develop - PASECT (1992), Fao Bers programs to rnovate vocational and technical traiini . Support short in- (1991) service retaining for civil servants in accounting and ranagement - Participation Study (FY94) prctices, as wel as in the decentnlizing helth and NRM sectors. Help - Regional AIDS, Gender uad Girls develop and implement an aggressive AIDS control stntgy nd Education Stategiee (FY94) nonulation nroenm, as pan of continued stmngthening of the quality, New: 1994-96 PFP(ERC, ESAF) coverge and utilization of besic health services with particular enphasis - Health/Nuuition (FY94), on the decentralizing delivery of eential generic drugs and on the Population/Aids (FY95), and nutritional stats of the population. The 1992-93 PER sharpened our posibly Faso Bear, Urban, Food focw on the priority service delivery aemas of humen resource Securiry supplemenua (FY94, development, and our 1993 WID sttegy sharpened our gender focus 525rn) and Faso Beas m (FY95R) acro the priority sectors, for follow-up in FY94-95 with the Poverty - Urban Environmet (FY95) Assessment, Youth and Employment Study nd a Human Resources - Poveny Amesment(FY94-95) and Round Table in FY95 - lading to SAL n in late FY95 reinforcing our Youth nd Employment Study priority human resources nd poverty aUleviation focus. - SAL II S85m (FY95) - Higher and Technical Education (FY96-97) C. In relation to sharpening and Pursue the tariff and trade, banking, public entrprise and privatization On-going: FY91 SAL narrowing pubUc sector bicus, reform procs begun under SAJL I disengaging the state and budget - FY90 Agriculture services, provide incnivea for privae sctor from its excessive control functions, rent eeking and unproductive Research growth in the productive aeas of behavior while stnngthening private sector incentives for productive - FY91 PNGT, Faso Bears, Burkina's economy within its investment particularly in the mining (gold nd manganese) nd Education IV, NEAP (revised regional Setting agricultural (cotton, karit, fruits nd vegetabls, nd livestock) aector. 1/94) Encourg the us, wide distribution and faU con recovery of essenia - FY92 PMD, PASA, PASECT gneric drugs. Encourage fiscal rform (mining code) and privatization - FY93 Energy Sector Review (CMBP) in the mining sector, and the related regional factor cost - FY93 Private Sector, Water adjutments for petroleum (SAL r), energy (interconnections with Ghana Supply EngineeringTA and Cote d'lvoire - Energy, FY97) and transport (SCFE railway, nd New: - FY94 Health & Nutrition, sub-regional air services) sectors and Ouagsdougou water provision via Participation Study, Private Sector (ZIGA U, FY97). NGOa and conmunity associations ,re another Asseusnent manifesation of an emerging private sector, as recently tressed by the - FY95 Paricipation Study, whose roles need strengthening Lo ensure the Fiscal Sector Review, Private sustainability of our program. Sector Assessment Urban Environment Faso Bear 1 PASA, SAL I - FY96 Mining Sector Capacity Private Irrigation PASECT L Ag.Services/Rescamch/PNGT - FY97 - ZIGA U  Alnex 7 Page 2 of 2 COUNTRY ASSISTASCE STRATEGY SUMMARY OF OBJECTIVES AND OUTPUTS AF5 . BL7JXI2A FASO Objectives Actiona/Go hs Insrruments/Sequenctng D. Focus and stenthn economiuc The PMD in support of Government's Programine d'Appui I On-going: SAL 1. PID, PER and financial rmgemnrt through I'Admistrauion (PAA) is our msjor contribution to strengthening 4 - Educuion IV, Health 1, Private heightened sensitivity to eCpacity critical functions: (i) iuproved informstion/stsistics (seminar on Sector building, governace priorities, informution policy/role seting, May 1994); (u) strengthened budgetary - PASA,PASECT proceus - surting from resourme mobilization (customs, in relation to - Faso Basra, Food Security tariff reforn taxes), their use in relation to agreed priorities, New: 1994-97 PFP (ESAF/ERC) procurement reform and investment progmraming, underway nd to-date - FY94: - PANE revisions driven by the demand for transparency in the use of the 50% of - Health nd Nutrition investmnt funds provided by enernal donon in relation to arce - Higher Education Self- Government counterpan resourmes; Ciii) civil service reformn, starting Evaluation with a focus on the priority sectors, followed by a full cenas - linking - Feao BRa, Urban II technical competence to budgeted posts; and Civ) legal reform - major supplemenu training program Progres on building capacity for these critical Poverty Asseument .generic' functions is slow. Budgetary transparency and accountability - Population and AMDS through coordirated supervision (PID and Education IV, Health I and II, - FY95: SAL II, PASA 11 PASECT, PASA) in relation to priority sector actions is already - Faso Dasra U (R) emerging and wiD in time be strengthened. The PASA Ministy of - Urban Environment Agriculture institutional study is awaited as another critical building - FY96: Mining Sector Capacity block, as is the Higher Education Self-Evaluation awdy. Private Irrigation -Agric. Services/Resesrch/ PNGT 11 E. Other: Moving from public propaganda to active publie/private medi - PID (FY92) - Economic journalist 1 Encourage improved (newspapers, journal, radio, TV) with diverse anaysis of topics of training conmpooent. Public currnt interest is a critical part of the economic (and poCtical) - Resident Mission - edearship in Infornanion liberalization prores Burkina has launched. 7 PID has alrdy information dissmnation and provided funncing for two teams of I Burkinabe to panicipate in coordinated public information EDUFAC organized journali tiraning in Dakar and Yaounde. A strategy. regional trining of truainers sminar just occurred in April 1994 with follow-up support for in-country seminars end re gional journalistic network. 2. lItegrtg tems: Strategy and Action Plan in place. Leadership witb necessry vision PANE (NEAP) 6/91, updat 1/94 -Environmae awaited for institutional uppot and integrated action to materialize. - Decesratlizsion Rural and urban IDA building blocks in place. GovenmuAnt of Burkina PNGT (FY91), Urban Environment internal retection proceeding. (FY95), Helth and Nutrition (FY94) - Regional contxt UEMOA fnamwork agred on 11 Jan. 1994 - for foLow-up in trade, SAL I (FY91), PASEC7T (FY92) banking, transport, lgal tbusiness, pnl) enegy mstors. PID, legal component (FY92). Energy Sector Review (FY93) 3. Accelate pofYolio Our ARPP FY93 Implemenaution Later was set to the Government on irmemnp tion 10 Dec. 1993, surasyig nesary actions on the macro (SAL, PM, PASA, PASECT) front while noting considerable improvemnnt (526- - Mid-term reviews: S37m) on invement execution. The importance of proceeding with the - FY92 - Agric. Services/Rsearch institutional rfornm (Part D above) was underlined, and 3 critical points - FY93 - Faso Beara of coordination: STP PAS, PAA Coordination nd DO Coop wo - FY94 - Urban 11(1/94) sted as focal points (nmcro, nefric nd project sific) along with FY95 PNGT (9/94). our Resident Mission for implemenutaion problm reolution. - aodified ARPP (6/94)  Annex 8 Page 1 of 6 Buikina Faso: Suimry Description arid TiaetaDle of Iacrogocmic wid Struturat Adjustmnt Pokicies, 199-96 Objectives by Sector Measures Dat" A. Pubtic finance 1. Improve the offciuicy of (a) CamoeLtion of roorganization of the 1994 the GoveCumt's finwicaL Ministry of Finance to inure more mnagnnt and rationalize efficient budget execution, control, and budget choices. monitoring. (b) marmwlizstiom of central persrruil Juro 30, 1994 files with those of ministries. (c) Civil sorvice ewra. October 1994 (d) Revision of budget rne_clature to D caer 1994 simptify it nd altoi for functionaL ctassif:cation. (e) lprovmnt of plic ccounting by: 1994-95 * adoption of a noenclature corsis- tent with that for the bsgt; * reform of data cntralization procedures at the genraL accouting off ice. t f Sipit fication of expenditure 1994-95 procedur to accelerate aid imrev b t menitoring. Ct) Cmjterization of Ministry of 1994 fence dWeprcnts accoding to meter plan, hilte giving priority to the finmncial control unit wid using existing end underutitized eip nt. (h) Trainir7in persaoiel &ad finnciall 1994-96 _rg_nt for adinistrative _geis of ministris wid directon of spending agenrcies. 2. increae central or_ (a) Soifltication of colection S.ptser 1, 1994 reym by strgdthaning procdure for direct taxes. collection aI broadening tax bas. Cb) Imruvinnt of ta control. 1994-95 Cc) Strenthening of efficiency of custom sinistration: - nthly proidction of detailed March 1994 statistical stat_nts to track ipocts by firm liable to VAT; - intreution of ASC.A wdJinury 1,