Morocco - Second Agricultural Sector Investment Loan Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 19446 IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO SECOND AGRICULTURAL SECTOR INVESTMENT LOAN (Loan 3765-MOR) June 15, 1999 Rural Development, Water and Environment Group Middle East & North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency UInit = Moroccan Dirham (MAD) Appraisal value (1993) 1 US$ =9.50 MAD Official Exchange Rates (MAD per US$) Year Annual Average 1994 9.20 MAD 1995 8.54 MAD 1996 8.71 MAD 1997 9.53 MAD 1998 9.53 MAD WEIGHTS AND MEASURES Metric System FISCAL YEAR OF BORROWER Until 1995: January 1 - December 31 Since 1996: July 1 - June 30 ABBREVIATIONS AND ACRONYMS AER Agricultural Expenditure Review ASAL Agricultural Sector Adjustment Loan ASIL Agricultural Sector Investment Loan CED Comptroller of Expenditure Commitments CGG Government General Council CNCA Agricultural Credit Bank CPED Provincial Comptroller of Expenditure Commitments DPAE Programming and Economnic Affairs Department in Ministry of Agriculture FDA Government Grant Fund for Agricultural Development FY Fiscal Year GATT General Agreement on Tariffs and Trade GDP Gross Domestic Product GOM Government of Morocco M&E Monitoring and Evaluation MOA Ministry of Agriculture MTASAP Medium Term Agricultural Sector Adjustment Program ONICL National Cereal and Leguminous Crop Office SAR Staff Appraisal Report SMSI Small and Medium Scale Irrigation SOE Statement of Expenditures Vice President: Kemal Dervis Country Director Christian Delvoie Sector Director Doris Koehn Task Team Leader Douglas W. Lister  FOR OFFICIAL USE ONLY IMIPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO SECOND AGRICULTURAL SECTOR INVESTMENT LOAN (Loan 3765-MOR) TABLE OF CONTENTS Page No. PREFACE .................................. ,.i EVALUATION SUMMARY ........................... .,,..,,.,.,.,,,,.,,, ii PART I: PROJECT IMPLEMENTATION ASSESSMENT .I A. BACKGROUND .I B. PROJECT OBJECTIVES .. C. PROJECT DESCRIPTION ...........................,,,.,,,.2., , , , . ...2 D. EVALUATION OF OBJECTIVES ..3 E. PROJECT FORMULATION AND DESIGN CONSIDERATIONS ..5 F. PROJECT IMPLEMENTATION AND FACTORS AFFECTING THE PROJECT .6 G. PROJECT RESULTS AND IMPACT ..9 H. PROJECT SUSTAINABILITY AND FUTURE OPERATION . .14 1. BANK PERFORMANCE .15 J. BORROWER PERFORMANCE .......................... 15 K. ASSESSMENT OF OUTCOME ..16 L. KEY LESSONS LEARNED ........................... 16 PART II: STATISTICAL ANNEXES .18 Table 1: Summary of Assessments .18 Table 2: Related Bank Loans/Credits .......................... 20 Table 3: Project Timetable ................................ 21 Table 4: Loan Disbursements: Cumulative - Estimated and Actual ............................................ 22 Table Sa: Key Indicators for Project Implementation - Physical Investments .23 Table Sb: Key Indicators for Project Implementation - Reform Measures . . .,,,.24 Table 6: Key Indicators for Project Operation .................................,.,,.,.,., .. 26 Table 7: Studies Included in Project .26 Table 8a: Project Costs .27 Table 8b: Project Financing ...................................... 28 Table 9: Economic Costs and Benefits .28 Table 10: Status of Legal Covenants . 29 Table I 1: Compliance with Operational Manual Statements .......................................... 31 Table 12: Bank Resources: Staff Inputs .3.......................................... 1 Table 13: Bank Resources: Missions .......................... , 32 APPENDICES: A. Mission Aide-Memoire B. Borrower's Contribution This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO SECOND AGRICULTURAL SECTOR INVESTMENT LOAN (LOAN 3765-MOR) 1. PREFACE This is the Implementation Completion Report (ICR) for the Second Agricultural Sector Investment Loan (ASIL 2) in Morocco, for which Loan 3765- MOR in the amount of US$ 121.0 million equivalent was signed on December 5, 1994 and declared effective on March 13, 1995. In a restructuring of the Moroccan loan portfolio, the loan amount was reduced to US$ 60.0 million, effective January 9, 1996. At the Government's request, the loan was closed on June 30, 1998, one year before the original closing date. At that time, an additional amount of US$ 6.0 million equivalent was cancelled. Final disbursement took place on November 12, 1998, bringing the total amount disbursed to US$ 53,152,155.27 equivalent. The balance of US$ 847,844.73 equivalent was cancelled. This ICR was prepared by Harald Stier working as a consultant with the Task Team Leader, Douglas W. Lister, of the Rural Development, Water and Environment Group of the Middle East & North Africa (MINSRE). It was reviewed by Salah Darghouth, Sector Leader - Water & Environment, and Marjory-Anne Bromhead, Principal Natural Resource Management Economist (MNSRE). The ICR was also the subject of an internal review meeting held on February 10, 1999. Preparation of this ICR was begun during the completion mission which visited Morocco from November 2-10, 1998. It is based on material in the project file and interviews in the field. The Borrower contributed with information to the mission, by preparing its own completion report and by commenting on the draft ICR (Appendix 2).  IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO SECOND AGRICULTURAL SECTOR INVESTMENT LOAN (LOAN 3765-MOR) 2. EVALUATION SUMMARY Introduction i. In response to urgent economic circumstances, the Government, in 1986, began a Medium-Term Agricultural Sector Adjustment Program (MTASAP), which was supported by the Bank through two Agricultural Structural Adjustment Loans, ASAL I (Loan 2590-MOR) and ASAL II (Loan 2885-MOR). Progress in regaining macro-economic balances and on the MTASAP was good, and it provided the economy and the agricultural sector with an improved incentive framework. Although reforms still remained to be completed, the main need now became to launch private sector led growth again. In the agricultural sector, the emphasis was on rendering the public investment program more efficient to provide the necessary infrastructure in support of increasing private investments. Agricultural sector investment loans (ASILs) became a key feature in the new Bank assistance strategy. ASIL 1 (Loan 3403-MOR) was designed to finance priority line items in the Ministry of Agriculture's (MOA) budget for 1991 and 1992, and to support sector policy reforms in selected key areas. Project Objectives ii. ASIL 2 was intended to build on the efforts begun under ASIL 1. As stated in the SAR, the objective of ASIL 2 was: "a general resource transfer to the agricultural sector in support of a well-conceived public investment program together with a series of complementary policy actions to deepen associated sector reforms." The idea was to continue to improve the sector investment program, while addressing "unfinished business" on the sector policy agenda. iii. The loan covered a time-slice of the Government's total agricultural investment program for 1994-1997, estimated at US$993 million. It consisted of two components: an investment component and a reform program. The investment component would finance 12% of the sector investment budget and be disbursed against: priority investments in irrigation, rainfed land development, crop production, livestock, forestry & soil conservation, plant protection, agricultural education, training and planning; and against capital grants to promote private investments in the agricultural sector under the Government's Agricultural Development Fund (FDA). ii  iv. The reform program was comprised of a series of measures designed to improve operations in the sector or the efficiency of selected investments. It included: liberalization of internal and external trade, reforms in the budget execution process, reforms of the FDA, and sub-sector reforms essentially covering the same areas as the investment components enumerated above. v. The first part of the stated project objectives, "a general resource transfer to the agricultural sector in support of a well-conceived public investment program", does not seem to express what could realistically be expected of the Loan. It was well understood that although Bank loans add to the total resources at the disposal of the Ministry of Finance, there is no direct link to individual Ministries' budget who would get the same amount with or without the project (i.e. there is no "additionality" to Bank lending). Also, as it turned out, the Bank was in no position to influence the Ministry of Agriculture's (MOA's) investment program to ensure that it was "well- conceived". The second part of the ASIL 2 objective, "to deepen sector reforns", came closer to being met, and overall was realistic. IMPLEMENTATION EXPERIENCE AND RESULTS vi. Although the program to be financed included 1994, loan effectiveness was not until March 13, 1995. This delay was due to the time required for the Government Council to approve the deregulation of the domestic cereal marketing system, which was a loan covenant. vii. As a result of a general restructuring of the Bank's loan portfolio, half of the loan amount, or $61.0 million, was cancelled on January 9, 1996, without prior restructuring of the Loan. This cancellation amounted to terminating ASIL 2, since the then current January-July 1996 interim budget' would exhaust the remaining loan amount. No motivation was now left for a dialogue on the 1996/97 and following budget which were part of the original program under ASIL 2. Also there was no incentive left for MOA to follow the SAR and prepare a new action plan with further reforrns for these years. viii. Although Government budget cuts for ASIL 2 were rather limited, there was a significant structural reallocation of resources between subsectors. Irrigation received increased allocations at the expense of non-irrigation. This despite the fact that the Bank supported an increase in the relative share of dry-land investments.2 Forestry, another sub-sector strongly supported by the Bank, also saw its share of budget allocations considerably reduced. Clearly, ASIL 2 did not give the Bank much influence on MOA budget allocations. ix. No system for measuring the impact of project activities was put in place. For project investments, indicators of impact were never designed and agreed, and for the reform program, indicators proposed in the SAR were never monitored. A joint 'Morocco switched from a calendar year budget to a split year July-June budget in 1996. The interim period between the two budgets, January -June 1996, had its own budget. This support was formnalized under SAL 2, which included conditionality to this end but although it remained an underlying objective in ASIL 2, it was not very explicitly stated in the SAR. iii  FAO/MOA-DPAE study3 tried to evaluate the impact of the whole structural adjustment program on the development of the agricultural sector. It covers the period of the early 1980s to 1995 and does not relate directly to the ASIL 2 reforms. For lack of project indicators, to give some sense of impact, it has been necessary to rely on extrapolations from similar experiences, including from some of the results of the FAO/MOA study. Impact of Physical Investments x. More than one-third of MOA investments under ASIL (excluding FDA) was in Small and Medium Scale Irrigation (SMSI, about 8,300 ha), including some flood damage repairs (about 16,700 ha). In one area inspected, the impact of flood damage repairs was extremely positive, allowing the irrigation of a larger area and leading to an increase in the farmers' incomes in a short period of time. The ICR for the SMSI 2 project (Loan 2954-MOR, Report 16601, May 20, 1997) gives economic rates of return varying from 20 to 32% for similar subprojects. Some 7,500 households, or about 45,000 people would have benefited from this type of ASIL 2 works. xi. About one-quarter of the Bank-financed MOA investment program was for livestock production, mostly for animal health. More than 20 million animals are estimated to have been vaccinated in each of 1995, 96 and 97. In one way or another, this program would have benefited the vast majority of livestock owners, which in Morocco would almost equate with the 1.5 million farmers. Together with the meat inspection program under the project it would also have benefited the consumers to the extent that diseases or parasites could be transmitted to humans (see also para. xx). xii. ASIL investments in forestry went mainly for communications equipment which rendered forest operations more efficient and, in particular, improved forest protection against fires and illicit activities. It has also helped the morale of forest guards in remote areas by reducing their isolation and improving security. Under rainfed land development, 8,400 ha have been destoned and results from an evaluation of such works4 show large productivity gains, with yield increases of 33-150% depending on the crop. Farmers also have been able to extend their cultivated area by one-third and switch to higher value crops. Land holders' incomes were found to increase by over 100%. Some 2,000 households (16,000 people) may have benefited from destoning under the project. 3L 'Impact du programme d'ajustement structurel sur le developpement du secteur agricole, Projet FAO/TCP/MOR4453(A), May 1997. 4 Operation Epierrage, Rapport d'Evaluation, MOA, February 1997. The evaluation was made on the basis of a 10% sample of farmers on 11 work sites representing the major zones in the country. These work sites covered 31,200 ha (38%) out of the 80,000 ha which had been covered by destoning operations at that time. iv  FDA Capital Grants xiii. Irrigation represents about two-thirds of FDA capital grants supported by the Loan (subsidies mainly for the digging and electrification of wells and irrigation equipment) and results are similar to those of SMSI projects described above. Fann equipment represents about a quarter of the FDA component, and simulation models show rates of return of about 15% for tractors and about 40% for combine harvesters. xiv. According to the SAR, FDA subsidies were to serve four principal objectives, namely: to introduce new technologies which are not widespread in the country; have positive externalities; permit a transition from full budget finance to private sector financing; and provide for income transfer to the poorest. During project implementation it was found that the FDA was not following the SAR objectives because its management did not fully agree with these objectives. This appears to be supported by available information on FDA lending. For example, the bulk of the grants were for investments such as irrigation wells, tractors, land development, livestock sheds, fru.it tree seedlings for soil conservation, etc. which even in Morocco hardly meets the criterion of new technology. On resource transfer to the poorest, FDA data show that the four percent of farms above 20 ha received 33% of the funds, hardly a resource transfer to the poorest (see para. 35). Reform Program xv. No indicators were monitored for the reform program, nor would they have been likely to show much change because many of the measures included in the reform matrix were only first or intermediary steps towards the actual reform on the ground. Also, most of the actions under the Loan were not independent reforms but were part, or remnants, of the overall macro-economic reform and liberalization program started with SAL 1 in the mid-eighties. Economic reform constitutes a holism where all the parts need to be in harmony for optimum result. This means that to the extent that project measures formed part of this whole, and they mostly did, the fact that they were taken must be considered good progress and a satisfactory result, even if the impact will only be sometime in the future. xvi. The question has been raised whether the reforms would have been taken also without the loan. This is hard to answer but presumably the likelihood of the reform being implemented without a supporting loan increases with the strength of Government ownership. However, often views are divided among the stakeholders and the process of project preparation may focus the attention on specific priority reforms and sharpen the arguments for those favoring reform and help convince those resisting it. Sometimes reforns need time to gather enough support and Bank continued backing can help this process -along. Several of the important reforms carried out under ASIL 2 are of this nature, the ideas dating back to the first sector adjustment operations (e.g. internal and external trade reforms, land policy). xvii. Among the measures, Internal Trade Liberalization had started with the ASALs in the mid-1980s but the cereal market still remained controlled and was the focus of an ASIL measure (except bread wheat). This measure (condition of v  effectiveness) was met with the approval of the ONICL law by the CGG, in October 1994, and the law was approved by Parliament in January 1995. The law was important but to some extent only formalized a liberalization of the internal cereal market (except bread wheat) which had already evolved since 1987. The main exception was that ONICL had a monopoly on imports. Nevertheless, the application of the law encountered resistance and multiple problems (definition of security stock, fate of distant mills, management of transition period5) which delayed the necessary decrees for its execution until May 1996. There is no information on what impact this has already had on internal cereal trading but some of the effects require time. For example, a rationalization of the milling industry is slowed down by continued Government subsidization of transport cost for another four years. xviii. Concerning the ASIL II measure for the Liberalization of External Trade in cereals by introducing tariff equivalents, this was also part of GATT requirements and the law was approved in May 1996. Cereals continue to rely on heavy protection and Moroccan negotiators had obtained extremely high tariff equivalents in the GATT agreements (190% for wheat). In order to stabilize the domestic market within a target price range, a two-part tariff system is used. A (lower) base rate is applied to the landed price and then an additional (higher) rate is applied to the difference between the threshold price and the landed price (para. 39). This makes the domestic price responsive to international price variations, but with a much reduced amplitude. Given the high protection levels maintained on cereal imports, the FAO/MOA study concludes that the liberalization measures will bring little change in the short term. In fact with falling international prices, the producer subsidy equivalent has increased. The effects must rather be seen in the long term. xix. Budget execution measures under ASIL II constitute a follow-up to such measures under ASIL I and they have had a considerable impact on the speed with which the budget is delegated and its monitoring, which has led to a more efficient use of budgeted funds. Of the measures related to the FDA, "allowing" (providing grants for) private investments in milk collection centers has led to private sector involvement. The measure to limit the number and amount of capital grants that a beneficiary may obtain has been very ineffective (para. 40). An environmental screening unit was established but given no resources for screening of projects, so the impact of the measure is negligible. xx. Measures for privatization of veterinary services started already in the late 1980s with Bank support and were included both in ASIL I and II. As a result the number of private veterinarians are now 295, well beyond ASIL II's objective of 144. The coverage has increased from 50% in 1985 to over 80% in 1997 for cattle and from 39% in 1985 to 85% in 1997 for sheep. It is not clear if this has yet led to corresponding reductions in budgetary costs. Measures for Medium and Small-Scale Irrigation relate to investments under the ASIL II and are similar to what is required under the SMSI I and II projects in Morocco. The application of selection criteria for inclusion in rehabilitation works help ensure the economics of the investment and the creation of user associations ensure their efficient operations and sustainability. The 5FAO/MOA report, op. cit. p 99 vi  new statute for research scientists has been supported by the Bank in previous projects and its final enactment is a major factor in efforts to establish and retain a high quality research cadre in agriculture. Problems in Project Execution xxi. Disbursements. Slow disbursements were a problem under ASIL 1 and at appraisal great efforts were made to find remedies. The solution found proved to be even more cumbersome as regards the preparation, approval and collection of supporting documents for withdrawal applications to the Bank. Disbursements became the single most important issue for ASIL 2 and may be seen as the factor which killed the project by causing serious delays and leading to the cancellation of half of the loan amount and the premature closing of the loan. The Government had its own way of preparing statements of expenditu:re, which was standard and understood throughout the country and had served it perfectly well for decades. GOM was not prepared to change the system for the sake of a Bank project. Nor was the Bank willing to simplify its requirements to fit into the Moroccan system. Perhaps a stronger commitment from the Bank and Moroccan authorities to find a solution could have avoided the abrogation of this loan. xxii. Procurement. Although model procurement documents, following Bank Guidelines, had been prepared and agreed with MOA under ASIL 1, their use remained very limited because of differences between Bank and Moroccan procedures and the reluctance of Borrower project staff to apply Bank procedures where the Moroccan regulations differed. xxiii. Project Summaries. As in ASIL 1, analytical project summaries were prepared according to a standard outline and analyzed to ensure that budget lines included for ASIL 2 financing met the agreed selection criteria. Project staff found it difficult to fill in these forms given the fact that often the budget lines to be financed consisted of small amounts and were not projects in the normal sense of the word. In addition, in the provincial services of MOA, staff often did not understand how to apply the selection criteria and the social and economic evaluation methodology. xxiv. Monitoring & Evaluation. Good work has been done by the MOA and the DPAE in the physical and financial M&E-of the project. The latter largely thanks to improvements made under ASIL 1. However, with regard to impact evaluation and development indicators, project staff have confronted problems of methodology, focus, data collection and treatrment, and they were not able to develop these indicators. xxv. Project Management. A strong project management making a concerted effort with the Bank supervision team, could have resolved the disbursement problem and the Loan could have been fully used. The failure to establish a good M&E system to measure project impact, appears to be due to a lack of commitment on the part of the Moroccan authorities to this particular component. On the Bank side, there were three Task Managers in succession working on the project during its short duration. This lack of continuity would appear to have posed a problem for the dialogue on vii  sector reforns and the consistency in the pursuit of objectives during project implementation. xxvi. Stakeholder Ownership. The ownership of the project among MOA management and staff seems to have taken a great leap from an interest in ASIL 1 to a desire to close ASIL 2. It is not easy to explain the difference in attitude. An important factor often mentioned by MOA was the more complicated disbursement procedures under ASIL 2, which required substantial additional work without apparent gains. Also, the lack of continuity in the sector dialogue caused by the frequent changes in Bank staff did not give the stakeholders the expected benefit that they may initially have hoped for. xxvii. Bank Performance was unsatisfactory. The failure to focus on giving the project realistic objectives is one likely factor in creating disappointment among staff responsible for its execution and lack of commitment to its goals. Inability to match Bank procedures, disbursement, audit and procurement requirements with the clients procedures and capacity bears a heavy responsibility in the Loan cancellation and its premature closure. Three different task managers prepared and supervised the Loan, which would have benefited from a more stable project team and more continuity in the sector dialogue. Irregular supervision frequencies with uneven input did not help. xxviii. Borrower performance was marginally satisfactory. Where project actions were considered important and "owned" by the Borrower and other stakeholders, these were generally carried out with diligence and method (e.g. liberalization of cereal imports and domestic marketing and privatization of veterinary services). In other areas where the ownership was not as prevalent (e.g. using of objective criteria for project selection, impact evaluation and the better targeting of the FDA capital grants), efforts were under-funded and experienced delays. The implementation of the projects physical investments and reformn measures have been satisfactorily monitored. The financial budget management and monitoring systems introduced under ASIL 1 have not only been sustained but also improved. Disbursements, however, could perhaps have been facilitated by better coordination between the different agencies involved, MOA, MOF, CED the auditors and last but not least, the Bank, which bares its share of the burden of this by its rigid requirements. Summary of Findings, Future Operation and Key Lessons Learned xxix. Even though there is still substantial "unfinished business" on the agricultural policy agenda, notably with respect to irrigation cost recovery, output pricing and public expenditure priorities, ASIL 2 was an important vehicle in moving this agenda forward. Technically, since the stated objective was resource transfer to the agricultural sector and over half of the loan was cancelled, the outcome must be considered unsatisfactory. Yet this should not hide the fact that most of the reform program was implemented which, by promoting growth and liberalizing the environment for private sector activity, should have a substantial positive impact on the development of the rural sector in the future. Investments under the loan also contributed to sector development and are likely to be sustainable. Future sector policy dialogue and lending operations are expected to follow-up on outstanding issues. viii  xxx. As for the key lessons learned, these include: * Project objectives need to be clearly defined, realistic and agreed with the Borrower if the outcome is tlo be successful. Unclear and unrealistic objectives which have not been agreed upon may result in disappointment and failure to identify with project goals among stakeholders and lead to lackluster implementation efforts. Future sector investment type operations should also be more focused on a coherent set of sector or sub-sector investments and policy and institutional reforms, and there should be more participation by the concerned Govemment agencies in their formulation. * Similarly, indicators of development outcome and impact are best agreed at the outset with the stakeholders and a system to measure these indicators needs to be put in place early on in the project. * Disbursement procedures and auditing need to be addressed during project preparation and appraisal to render them as simple as possible and permit rapid disbursements. - To the extent that the project's (i.e. the Bank's) procurement procedures (as well as any other procedures) are different from those normally practiced in the country, these need to be explicitly agreed with the Borrowers' highest executing authority in the matter, who then needs to instruct those responsible for the execution of these procedures accordingly. Any model procurement documents in a project need to follow a similar approval and internalization process. * Frequent changes in Bank project team-leaders makes it difficult to maintain a dialogue on the project with focus and direction and may lead to loss of interest among stakeholders. * The resources actually made available for supervision should be consistent with the agreed project supervision plan. This plan should be considered as a commitment by both management and staff. ix  IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO SECOND AGRICULTURAL SECTOR INVESTMENT LOAN (Loan 3765-MOR) PART I: PROJECT IMPLEMENTATION ASSESSMENT A. BACKGROUND 1. Forty-seven percent of Morocco's 28 million people live in rural areas and the agricultural sector plays a critical role in the economy. The country is characterized by large disparity between the "have" and the "have nots" and a small minority of the population control the bulk of land and other resources. Although the agricultural sector only provides 16 percent of Morocco's GDP, it provides employment for 40 percent of the labor force and generates 30 percent of export earnings. Of the 28 million ha of agricultural land in Morocco, only nine million are cultivable, leaving 19 million ha in semi-arid or mountainous regions suitable for grazing. Of the cultivable land, about 50 per cent receive an erratic rainfall of less than 400 mm and can only be put under relatively high risk, low value cropping systems. The remaining 50 percent benefit from good but inconsistent rainfall. Some 0.9 million ha are currently under irrigation. Food crops are the largest sub-sector, contributing about 60 percent of the gross value of agricultural production. Cereals alone account for 80 percent of the harvested area and one-third of the gross value of production. Livestock accounts for almost one-third of agricultural output and is composed of 16 million sheep, 5 million goats, 3 million cattle, over 1 million draught animals, including some 30,000 camels. Forest and woodland occupy nearly 6 million ha and account for about one-eighth of agricultural value added. B. PROJECT OBJECTIVES 2. In response to urgent economic circumstances, the Government, in 1984, introduced a medium-term program of stabilization and adjustment to reduce fiscal and external deficits and to increase economic productivity. In 1986, as part of this response, the Government began a Medium-Term Agricultural Sector Adjustment Program (MTASAP) which was supported by the Bank through two Agricultural Sector Adjustment Loans, ASAL I (Loan 2590-MOR) and ASAL II (Loan 2885-MOR). Progress in regaining macro-economic balances and on the MTASAP was good and it provided the economy and the agricultural sector with an improved incentive framework. Although reforms still remained to be completed, the main need now became to launch private sector led growth again. In agriculture, the emphasis was on rendering the public investment program more efficient to provide the necessary infrastructure in support of increasing private investments, all while completing remaining reforms. A key feature in the new Bank strategy in support of the agricultural sector now became agricultural sector investment loans (ASILs). ASIL I (Loan 3403-MOR), was designed to finance priority line items in the Ministry of Agriculture's (MOA) budget for 1991 and 1992 and 1  to support sector policy reforms in selected key areas. ASIL 2 would allow the Bank to build on efforts begun under ASIL 1 and the objective of ASIL 2 was stated in the SAR as "a general resource transfer to the agricultural sector in support of a well-conceived public investment program together with a series of complementary policy actions to deepen associated sector reforms." C. PROJECT DESCRIPTION 3. The Loan covered a time-slice of the Government's total agricultural investment program for 1994-1997, estimated at US$993 million. It consisted of two components: an investment component and a reform program. The investment component would finance 12% of MOA's investment budget. It would be disbursed against selected key line items in the budget and against capital grants (subsidies) for private investments in agriculture under the Government's Agricultural Development Fund (FDA). The reform program was comprised of a series of measures designed to improve sector operations or the efficiency of selected investments (see Tables 5a and 5b). Investment program 4. The project provided financing for the following activities in MOA investment budget: (a) Livestock, (i) inputs for vaccination campaigns of contagious diseases and laboratory equipment to improve animal health; (ii) demonstration materials and range rehabilitation and improvement for the animal nutrition program; and (iii) field structures, equipment and materials for the genetic program. (b) Agricultural Education and Training, construction of classrooms, laboratories, and acquisition of technical and pedagogical equipment for (i) an employment sobservatory", which identifies skills needs of private employers in the sector and (ii) professional training programs to transfer these skills to students; (iii) new programs to train students to become farmers and entrepreneurs themselves and; (iv) new programs to train farmers and laborers in modem technologies. (c) Rainfed Land Development, a program for land improvement (destoning, access roads in land consolidation schemes) and associated studies, topographical services with computer and mapping equipment. (d) Crop Production, studies, technology promotion (e.g. early vegetables in coastal zones, distribution of disease tolerant date palms and planting materials for demonstration) and continuing actions in completed Bank financed projects. (e) Plant Protection, field structures (workshops, storage, inspection stations), technical equipment, (sprayers, trucks, pumps), improved labeling and packaging of chemical products, study materials and training for MOA's plant protection, seed, rodent, bird and fraud control programs. (f) Forestry and Soil Conservation, construction of surveillance towers, communication and electrical equipment for the forest protection program. 2  (g) Medium and Small-Scale Irrigation, feasibility studies, irrigation and flood repair works. (h) Planning, consultants for specific agro-economic studies and for program and project evaluation plus some equipment for the agricultural census. 5. The loan also supported the Agricultural Development Fund (FDA), which provides direct grants for specified private investments in agriculture at a set percentage of the cost (maximum 40%). According to the SAR, these investments were to serve four principal objectives, namely to introduce new technologies, have positive externalities, pennit a transition from full budget finance to private sector financing and provide for income transfer to the poorest. Reform Program 6. The loan also supported an action program of policy reforms in support of the agricultural sector objectives and to improve the efficiency of the agricultural investment program. The program intended to address current policy issues in the sector and complement but not overlap with efforts made under other operations. Five priority set of actions had been identified: (a) Actions to secure the improvements in the budget execution process made under ASIL 1. (b) Actions in support of internal trade liberalization for cereals (except bread wheat). (c) The establishment of an environmental screening unit in the Ministry of Agriculture. (d) Measures to improve the FDA program, including improvement in the targeting of the grants with ceilings on what any individual could receive, the establishment of a permanent system to monitor the achievements of FDA objectives and the opening up of certain investments under Government responsibility to the private sector. (e) Actions to liberalize external trade, including the introduction of tariff equivalents to quantitative restrictions for the importation of cereals equal to 90% or less than those required under the GATT agreement and assuring that these tariffs remained fixed except under certain specified conditions. 7. Other actions supported the investment programn in the sub-sectors and constituted an overall program which the Governnent had undertaken to carry out. D. EVALUATION OF OBJECTIVES 8. Project objectives as described in the SAR are clearly stated, but they are typical of the time when they were made and do not represent what would now be thought of as development objectives according to the "logical framework". Although clear, the first 3  part of the objective "a general resource transfer to the agricultural sector"... does not seem to express what one could realistically expect from this Loan. It was well understood that although Bank loans add to the total resources at the disposal of the Ministry of Finance, there is no direct link to individual Ministries' budgets, in this case the Ministry of Agriculture, who would get the same amount with or without the project (i.e. there is no "additionality" to Bank lending). It was always clear during project preparation that the project would have to be defined within the existing budget and in periods of budget constraints and budget cuts (which has been the case for most years over the last decade), Bank projects have generally suffered the same reductions as the rest of the budget. It must be noted, however, that in 1995, ASIL 2 did not suffer any budget cut, while the total MOA budget was reduced by 15% . In fact, ASIL 2 was the only Bank project in Morocco which did not see its overall budget cut that year. After this, however, budget lines financed under ASIL 2 seem to have experienced their share of budget cuts, on a par with other investments if not more. Thus, while the stated objective of resource transfer may have raised expectations among the stakeholders, it was not very realistic and was not achieved. 9. The second part of the objective, that the loan was "in support of a well-conceived public investment program" assumed that the Bank would have an influence on the investment program and somehow help shaping it. This influence was to be effected through a revision of the Agricultural Expenditure Survey (AER), carried out in 1990 before the ASIL 1, through reviews and discussions of the annual budgets to be financed under ASIL 2, and through the application of transparent selection criteria for projects in the budgets. This also proved to be unrealistic. The project team was able to review the budgets to be financed and assure itself that they were generally acceptable to the Bank, but there are no records from these reviews and it is clear that the Bank was in no position to effect a change in the budget. Similar to ASIL 1, MOA staff prepared project summaries for all investments in the budget of the Ministry of Agriculture. They grouped individual budget line items into projects or programs as units for analysis. These project summaries included the project objectives, a description and costs of the project and elements of justification, inciuding economic rates of return where quantifiable, social impact (incomes, employment), environmental benefits and a justification for public intervention. This was a good effort, but there is no evidence that these project summaries ever made any difference to project selection. The models for project summaries were not very well understood by those supposed to fill them in. This resulted in rather general descriptions that did not permit an objective evaluation. However, one cannot expect that such new procedures would be understood immediately by everyone. They may have some positive effect in the long term in providing management and executing staff with a framework for more systematic project evaluation which may take root more firmly with time. 10. The last part of ASIL 2's objectives "to deepen sector reforms," is where stated loan objectives have come closest to being met and, overall, they were realistic (see Table 5b for details) and were important to the agricultural sector policy agenda.. Twenty of the 32 (62%) reforn measures under the Loan have been taken. Seven (22%) are in progress or have been taken partially and only 5 (16%) have shown little progress or have not been taken at all. Among those taken are the two, by far, most important actions, namely the measures to liberalize external and internal cereal trade. Important actions at the sub- sectoral level have also been taken. In retrospect, the reform program would appear to 4  constitute the principal justification for this Loan. Many sub-sector heads in Morocco expressed the importance that they attached to making reform proposals an integral part of the action program under a Bank loan. 11. When Bank proj ects were transferred and retrofitted to the new Form 590 system in FY97, project objectives and key indicators of development impact were supposed to be discussed and agreed with the Govemment. Given the lack of realism in the original objectives, this would have seemed to provide a good opportunity to correct this situation. However there was no documented discussion with the Governnent and the objectives were kept the same. With regard to indicators for development impact, the Forms 590 state that there was no system in place to monitor the development outcome or impact. Perhaps it might have been useful to use whatever data that was monitored (financial and physical implementation) and define some proxy indicators for development impact. However, no effort in that direction was attempted. E. PROJECT FORMULATION AND DESIGN CONSIDERATIONS 12. In the early 1990s the Bank strategy for support to the agricultural sector called for a series of ASILs to improve the overall efficiency of the Moroccan agricultural investment program (budget execution as well as project selection) and to couple this with policy reform in selected areas. This would allow the Bank to continue the sector dialogue initiated under the ASALs and include sensitive topics not covered by Bank operations at that time, such as land policy, agricultural education and livestock (we can now see that important reforms have been made, or are under way, in these areas). 13. The question has been raised whether the reform program should not have been supported by additional sector adjustment loans rather than sector investment loans. There is substantial support for this idea, but at the time, the achievements under the sector adjustment loans had been over-sold and Bank management decided that it would be difficult to revisit the reform agenda with a new sector adjustment loan. There was, at the same time, pressure in the Bank to reduce costs and the number of operations and a vision to group investment loans into loans covering the whole sector evolved. Thus a hybrid type of operation, the ASIL, was born. The design of ASIL 2 followed the general model of ASIL 1, despite the problem of slow disbursements.' This is so despite the fact that what did not work well in ASIL 1 was in principle there to serve as lesson for the design of ASIL 2. 14. On the investment side, the idea was for the Bank to continue to improve MOA's investment program towards GOM's objective of increasing the agricultural sector's efficiency, flexibility and growth and finance a tranche of MOA's investment budget where projects were selected according to objective criteria agreed with the Bank. Each year MOA was to furnish, for the Bank's review and comments, its proposed agricultural investment program for the following fiscal year, and thereafter finalize it taking into account the Bank's comments thereon. The principal need in the sector was to select investments that furthered GOM's above objectives and to focus these investments into carefully chosen areas where public sector involvement was well-justified or where they ' The Task Manager's personal interventions helped disburse the loan but these were ad hoc problem solving actions by the supervision missions and were not part of design of the project. 5  could facilitate private investments and services. Although the project provided that the Bank sign off on the entire investment program, the Bank according to its rules found it necessary to identify the individual investments it financed, which meant the identification and selection of specific budget lines against which disbursements were to be made. The need for a separate accounting and special treatment of the selected budget lines, often very small in amount, already caused problems in ASIL 1. As a result of complaints from the auditors of ASIL 1, who found it difficult to assemble the documents needed to audit statements of expenditure (SOEs), the procedures were modified for ASIL 2 which, for project staff, resulted in a multiplication of the handling requirements of such supporting documents. It must be understood that budget lines financed by the Loan, many of which were already small in the aggregate budget, were delegated to as many as 200 different field units wlhere the expenditures were made. Thus the final individual expenditures were often very small, too small to motivate staff to make the extra effort required for reimbursement from the Bank. 15. Another design problem was that, since the Bank does not allow tranching of investment loans, it had no real leverage to ensure the reforms were implemented in cases where they were not fully owned by the Government (e.g. better targeting of FDA). Although theoretically the Bank may stop disbursements if an important loan covenant is not met, the Bank has generally been reluctant to seek such remedies in its loans and the cases where disbursements have been stopped are extremely rare. Another problem was that there often was no link between the items financed and the reforms promoted. Thus for example, a plan was developed to collect outdated or banned chemicals and put them in safe storage, but it has not been possible to implement this plan for lack of funding. F. PROJECT IMPLEMENTATION AND FACTORS AFFECTING THE PROJECT 16. Although the program to be financed included 1994, loan effectiveness was not until March 13, 1995. Loan processing was initially delayed to allow the Moroccan authorities to meet audit requirements under ASIL 1, where SOEs posed a problem. Later, loan effectiveness was delayed by the covenant that the Government Council approve the deregulation of the cereal mark.eting system (excluding bread wheat) up- stream of the mills and finally by the issuing of the legal opinion. Nevertheless this did not stop investments from being made in 1994 as per budget allocations, since there is no direct link between Bank financing and allocation of investment funds (no additionality). Due to the delay in the effectiveness, ASIL 2 financing for all of 1994 became retroactive (which is limited to 10% of the loan aimiount according to Bank policy) rather than for the first six months as per SAR. Thus instead of a planned financing of $28 million for 1994, only $12 million (10% of the loan amoumt) was financed. To simplify disbursements this total amount was disbursed against capital grants under the FDA where the procedures were under better control. Yet, the first disbursements did not take place until July 1995. 17. In the Fall of 1995 the Bank started an exercise to restructure its loan portfolio in order to reduce the lag of disbursements against outstanding commitments, essentially by agreeing with the clients on the cancellation of "excessive" loan amounts. This exercise was carried out by the portfolio managers in the Bank and in Morocco. The Task Managers in the Bank and Project Management in Morocco had to accept to see their budgets reduced. In the case of ASIL 2, half of the loan amount, or $61 million was cancelled on January 9, 1996 without prior restructuring of the loan. This cancellation 6  amounted in effect to terninating ASIL 2 since the then current January-July 1996 interim budget2 would exhaust the total remaining loan amount. This left no incentive, other than academic, for a dialogue on the 1996/97 and following budget which were part of the original program to be financed by ASIL 2. Also there was no incentive left for the preparation of a new action plan for these years, as foreseen in the SAR. The main remaining interest in the ASIL 2 was now to collect the necessary documents and invoices for the disbursement of the rest of the loan, a task which did not inspire anyone. The rest of this chapter will present the major problems in project execution. It is to be stressed that most if not all the problems listed were under Government and Bank control and could have been avoided had they been given the proper attention by the concerned decision makers at the appropriate time. Problems in Project Execution 18. Disbursements. Disbursements became a major issue. The very large number of small payments in the investment component, scattered over many locations created serious problems when it came to assemble the supporting documentation required for the reimbursement from the Loan. The Government had its own way of preparing statements of expenditure, which was standard and understood throughout the country and had served it perfectly well for decades. GOM was not prepared to change the system for the sake of a Bank project. Nor was the Bank willing to simplify its requirements to fit into the Moroccan system. The potential problems that might arise with the disbursements were foreseen at project appraisal and great efforts were made to find remedies. The solution found to the ASIL 1 disbursement problem proved to be even more cumbersome as regards the preparation, approval and collection of supporting documents for withdrawal applications to the Bank under ASIL 2. Both the Bank and the project staff responsible foresaw that, because of the multiplication of people involved in the issuing and approving of the withdrawal documentation, there would be delays. In the event, for example, local level treasury officials often refused to co-sign the SOEs needed for disbursement applications according to the procedure put in place specifically for the project. This despite frequent reminders by the Ministry of Finance. A representative from the Bank's disbursement division accompanied one mission to try solve the problems but no solution was found. 19. Disbursement against capital grants under FDA went much smoother since these grants were given (i) in connection with loans for eligible items by the National Agricultural Credit Bank (CNCA, referred to as "downstream") and this bank already had a system from ASIL 1 for the central collection of supporting documentation; or by equipment dealers ("upstream") who had to submit their documents to the DPAE for the grant portion of the sale. The SAR capped ASIL 2 support for the FDA component at 35%. The Legal Agreement also allocated 35% for this component in its Schedule 1 but made no specific reference to capping. In the revised Schedule 1, after the cancellation of US$61 million, 46% of the remaining loan was allocated to FDA grants. In the event, because of their relative ease in disbursement, 60% of the loan amount went to FDA. This was all the more unsatisfactory that MOA was not operating the FDA according to 2 Morocco switched from a calendar budget year to a split year July-June budget in 1996. The interim period between the two budgets, January-June 1996, had its own budget. 7  SAR objectives (see para. 35) nor had it implemented the FDA reforms. Rather a cut in FDA financing was indicated. 20. The disbursement problem may be seen as the factor which most seriously affected the project by causing major delays and leading to the cancellation of over half the loan amount and the premature closing of the loan. Perhaps a stronger commitment from the Bank and Moroccan authorities to find a solution could have avoided this. 21. Procurement. Although model procurement documents, following Bank Guidelines, had been prepared and agreed with MOA under ASIL 1, their use remained very limited for two main reasons. First, the model documents included some deviations from standard Moroccan procedures (e.g. public bid opening, procurement of consultants from short list, etc). In 1992, the differences between Bank and Moroccan procedures had been analyzed at the Country level by GOM and the MENA procurement team and agreement had been reached that Bank procedures would be applied in Bank-financed projects. However, MOA services and the Provincial Comptrollers of Expenditure Commitments (CPED) were mostly not informed of this agreement. Second, MOA had submitted the model documents to the Central Procurement Commission for approval but this authority never gave its green light since it had certain hesitations with regard to the Bank's Procurement Guidelines. 22. During a special workshop organized on procurement at the beginning of ASIL 2, it was agreed that these documents, with some modest revisions, would be used by all MOA services. A copy of the agreement between GOM and the Bank on procurement was circulated to all the services concerned at the beginning of 1995. Despite this and efforts by subsequent supervision nmissions, the model procurement documents were never consistently applied during the project life. Now, however, the Moroccan procurement procedures have been revised and allow that, where proj ects are financed by international institutions, their guidelines may apply. 23. Project Summaries. As in ASIL 1 analytical project summaries were prepared according to a standard outline and analyzed to ensure that budget lines included for ASIL 2 financing met the agreed selection criteria. These have already been referred to above (para. 9). Suffice to say here that project staff often found it difficult to fill in these forms given the fact that often the budget lines to be financed consisted of small amounts and were not projects in the normal sense of the word. In addition, in the provincial services of MOA, staff often did not understand how to apply the selection criteria and the social and economic evaluation methodology. 24. Monitoring & Evaluation. Good work has been done by the MOA and the DPAE in the physical and financial M&E of the project. The latter largely thanks to improvements made under ASIL 1. However, with regard to impact evaluation and development indicators, project staff have confronted problems of methodology, focus, data collection and treatment. These problems were made worse by a serious under- funding of this activity. Since it concerns relatively small amounts in the overall budget, it would seem to indicate a definite lack of priority and interest on the part of MOA. As a result there is little information available to permit the evaluation of the development impact of the Loan. This is particularly serious for capital grants under the FDA. To ensure that these served the objectives of the program (see para. 5) and to improve the 8  targeting of the grants, the ASIL 2 supported the establishment of a monitoring system by December 1995. Only in 1997 (i.e. after loan funds had already been expended) was there a major effort by a new Task Manager to activate the study which would provide the basis for a permanent M&E system for the FDA. At the time of the ICR mission the study was under way but not yet finished and there is no data available to see to what extent the SAR objectives for the FDA were met. 25. Project Management. It would appear that with a strong project management making a concerted effort with the Bank supervision team, the disbursement problem above could have been solved and the Loan could have been fully used. It would also appear that the establishment of a good M&E system is not only a management responsibility but also in its best interest. It seems that there was a lack of commitment on the part of the Moroccan project management early on in the project. On the Bank side, there were three Task Managers in succession working on the project during its short duration. This lack of continuity would appear to have posed a problem for the dialogue on sector reforms and consistency in the pursuit of objectives during project implementation. 26. Stakeholder Ownership. The ownership of the project among MOA management and staff seems to have taken a great leap from an interest in ASIL 1 to a desire to close ASIL 2. An important factor often mentioned by MOA management and staff was the more complicated disbursement procedures under ASIL 2, which required substantial additional work without apparent gains. Also, the lack of continuity in the sector dialogue caused by the frequent changes in Bank staff did not give the stakeholders the expected benefit that they may have hoped for. The lack of additionality through the Loan, or at least some sort of safeguard against budget cuts, also certainly took away some of the interest that the MOA might have had in the project. However, there was no difference between the two loans in this respect. G. PROJECT RESULTS AND IMPACT 27. Since the loan amount was cut in half and the Loan was closed prematurely, SAR targets for investments financed by the Loan have not been met. However, as there was no direct link (additionality) between the loan and the investment budget, project investments continued even after the partial loan cancellation, without Bank financing. 28. The MOA budgets for 1994, 1995 and first semester 1996, which were the ones actually supported by the Loan after the partial cancellation, represented 57% of the 1994-1997 budgets for which the Loan was originally sized. The actual budget allocations for 1994-1997, however, represented 94% of SAR estimates (almost all of this reduction was for FDA), thus overall budget cuts were rather limited and overall financial investment targets were nearly met, albeit without Bank financing. Tables Sa and 5b at the end of the report, give details of the physical investments under the project and of the results of the reform program. 29. Although budget cuts for ASIL 2 were rather limited, there was a significant structural reallocation of resources between subsectors. Irrigation received increased allocations at the expense of non-irrigation. This despite the fact that the Bank supported 9  an increase in the relative share of dry-land investments.3 On the other hand, all this increase was for small and medium scale-irrigation which among irrigation investments would be a Bank priority. Forestry, another sub-sector strongly supported by the Bank, also saw its share of budget allocations considerably reduced. Other subsectors also faced important relative changes, and the conclusion must be that the ASIL 2 did not give the Bank much influence on MOA budget allocations. 30. No system for measuring the impact of project activities was put in place. For project investments, indicators of imnpact were never designed and agreed and for the reform program, indicators proposed in the SAR were never monitored. A study on the impact of the FDA was still under implementation at the time of writing this ICR. A major effort was made in a joint FAO/MOA-DPAE study4 to evaluate the impact of the structural adjustment programn on the development of the agricultural sector. It covers the period of the early 1980s to 1995. There is little in the study which relates directly to the ASIL 2 reforms, which on the whole were carried out after the study was completed. Efforts to give the reader some sense of impact below, therefore, will necessarily have to be of an anecdotal character or an extrapolation from similar experiences, including some of the results of the FAO/MOA study where it may be generalized to cover also ASIL 2 reforms. In addition, it must be remembered that the ASIL 2 financed an ongoing program and many activities were started before, or completed after the Loan. Impact of Physical Investments 31. More than one-third of MOA investments under ASIL 2 (excluding FDA) was in Small and Medium Scale Irrigation (SMSI, about 8,300 ha), including some flood damage repairs (about 16,700 ha). A supervision mission reported that, in the Marrakech area, the impact of flood damage repairs was extremely positive having permitted an increase in the water discharge, allowing the irrigation of a larger area and leading to an increase in the farmers' incomes in a short period of time. Reports on progress with SMSI works were mixed but not dissimilar t;o reports from other larger dedicated SMSI projects financed by the Bank. The ICR for the SMSI 2 project (Loan 2954-MOR, Report 16601, May 20, 1997) gives economic rates of return varying from 20 to 32% for the various subprojects. Although it was to early to provide firm estimates on the agricultural development likely to result from the rehabilitation works, field trips showed evidence of an intensification of the production system. Farmers indicated that once they can be sure of permnanent water supply they will increase the area under high value horticultural crops and fodder and reduce fallow, thereby increasing their incomes. Similar results may be expected from SMSI investments undLer ASIL 2, which have been executed by the same MOA Departnents and project staff. Based on a similar average farm size as in SMSI II, some 7,500 households, or about 45,000 people would benefit from these works. 32. About one-quarter of the Bank-financed MOA investment program was for livestock production: first and foremost for animal health, but also for genetic improvement and some range-land development. More than 20 million animals are 3 This support was formalized under SAL 2, which included conditionality to this end but although it remained an underlying objective in ASIL 2, it was not very explicitly stated in the SAR. 4 L' Impact du programme d'ajustement structurel sur le developpement du secteur agricole, Projet FAO/TCP/MOR4453(A), May 1997 10  estimated to have been vaccinated in each of 1995, 96 and 97. Among the major campaigns were vaccination against sheep-pox, which has increased from covering 7-8 million sheep (less than 50%) in 19895 to cover between 81 and 85 % (about 14 million animals) each year 1995-97. About 70% (2.3 million) of the bovine stock was vaccinated against foot and mouth disease. About 80% of animals in anthrax infested zones were also treated. Other prophylactic treatment included camel-pox (17,000 camels), enterotoxemy (5 million goats), rabies (265,000 dogs) and anti-parasitical treatments (1 million animals). In one way or another, this program would have benefited the vast majority of livestock owners, which in Morocco would almost equate with the 1.5 million farmers. Together with the meat inspection program under the project, it would also have benefited the consumers to the extent that diseases or parasites could be transmitted to humans. 33. ASIL 2 investments in forestry were mainly for communication equipment which has rendered forest operations more efficient and, in particular, improved forest protection against fires and illicit activities. It has also helped the morale of forest guards in remote areas by reducing their isolation and improving their security. Under rainfed- land development, destoning has been carried out on some 8,400 ha and results from an evaluation of such works6 have shown large increase in productivity with yield increases of 100-150% for cereals, 46-175% for leguminous crops and 33-100% for vegetables. Farmers also have been able to extend their area under cultivation by one-third and switch to higher value crops. Land holders incomes were shown to increase by overl00%, even up to 500% under favorable circumstances in coastal areas. It may be estimated that some 2,000 households or 16,000 people benefited from destoning under the project. FDA Capital Grants 34. Irrigation represents about two-thirds of FDA capital grants supported by the Loan (subsidies mainly for the digging and electrification of wells and irrigation equipment). Preliminary results from the FDA study show over 20-40% rates of return on this type of investments and there is no doubt about their impact on production and farm incomes. Farm equipment represents about a quarter of the FDA component and simulation models show rates of return of about 15% for tractors and about 40% for combine harvesters. A study was carried out under ASIL I on the impact of the FDA program7 but results were disappointing, not very convincing and sometimes misleading. 35. It is worth examining the FDA objectives brought out in the SAR and attempt to arrive at some conclusions as to whether they-are met or not. One Task Manager pursued this question during a supervision mission. After discussions he found "that it was clearly evident that MOA was not operating the FDA on the SAR objectives, did not fully agree with these objectives and did not have their clear own objectives of the FDA". 5 Report No 14927 MNA, December 1995: Une Strategie pour le developpement des parcours en zones arides et semi-arides, Annex II, p 45-46. 6 Operation Eppierrage, Rapport d'Evaluation, MOA, February 1997. The evaluation was made on the basis of a 10% sample of farmers on 11 work sites representing the major zones in the country. These work sites covered 31,200 ha (38%) out of the 80,000 ha which had been covered by destoning operations at that time. 7 The study covered the years 1986 - 1991. 11  This appears to be supported by available information on FDA lending. First, according to SAR, FDA aims at introducing new technologies which are not widespread in the country. Consider the type of investments which uses the lion share of the funds, irrigation wells, tractors, land development, livestock sheds, fruit tree seedlings for soil conservation, etc. These are all useful investments but do not seem to meet this criterion. The second criterion mentioned in the SAR was the generation of externalities and these may indeed exist in a positive sense in some of the investments (soil conservation, water saving equipment etc) but also rnay be negative in others (labor displacement, environmental by inducing increased farm chemical use etc). The third criteria was FDA grants as a means to involve the private sector and reduce the budgetary share in investments previously carried by the State. This is true in cases like the milk collection centers, fruit tree seedlings and perhaps some other cases. The fourth and perhaps most compelling criteria, to transfer income to the poorest farmers, merits special attention. FDA claims that this criteria is met and show that two-thirds of the funds go to farmers with less than 20 ha. One may want to consider, though, that this means that fanns with more than 20 ha, which represent only four percent of the number of farms, receive 33% of the funds, hardly a resource transfer to the poorest. If one looks at the real small farmers, those with less then 5 ha land, who represent 80% of the total, the situation is even worse but the trend has improved since 1991.8 Reform Program 36. No indicators were monitored for the reform program, nor would they have been likely to show much change because of the short time since the measures were taken and because many of them were not comrrplete reforms but mile posts (e.g. draft legislation, CGG approval, "take initial steps" etc.) en route to the final legislative approval, executive order and implementation. hi other words, many of the measures included in the reform matrix were only first or intermediary steps towards the actual reforrn on the ground. Also, most of the actions under the Loan were not independent reforms but were part, or remnants, of the overall macro-economic reform and liberalization program started with SAL 1 in the mid-eighties. Economic reform constitutes a holism where all the parts need to be in harmony for optimum result and where the impact of individual measures may not be readily visible, yet they form a necessary part of the whole. This means that to the extent that project measures formed part of this whole, and they mostly did, the fact that they were taken must be considered good progress and a satisfactory result, even if the impact will only be sometime in the future. 37. The question has been raised whether the reforms would have been taken also without the loan. This is a difficult question to answer and which is valid for all adjustment operations and covenanted reforms in investment loans. Presumably the likelihood of the reform being implernented without a supporting loan increases with the strength of Government ownership. However, often views are divided in Government s The study shows that for CNCA distributed FDA subsidies in 1991, the 80% of farmers with less than 5 have received only 23% of the subsidies. The study also finds that a farmer has a greater chance of being beneficiary of one or several FDA programs the more exposure he has to the outside modem world and if he belongs to the upper strata in terms of land and animal resources. 12  and arnong other stakeholders. The process of project preparation may focus the attention on specific priority reforms and sharpen the arguments for those favoring reform and help convince those resisting it. Some Moroccan counterparts have argued that the fact that the Bank backs a reform helps to give it more credibility. Sometimes reforms need time to gather enough support and momentum to be pushed through and Bank perseverance can help this process along. Several of the important reforms carried out under ASIL 2 are of this nature, the ideas dating back to the first sector adjustment operations (e.g. internal and external trade reforms, land policy). 38. Among the measures Internal Trade Liberalization had started with the ASALs in the mid-1980s, but the cereal market still remained controlled and was the focus of the ASIL measure (except bread wheat). This measure (condition of effectiveness) was met with the approval of the ONICL law by the CGG in October 1994 and the law was approved by Parliament in January 1995. The law was important but to some extent only fornalized a liberalization of the internal cereal market (except bread wheat) which had already evolved since 1987. The main exception was that ONICL had monopoly on imports. Nevertheless, the application of the law encountered resistance and multiple problems (definition of security stock, fate of distant mills, management of transition period9) which delayed the necessary decrees for its execution until May 1996. There is no information on what impact this has already had on internal cereal trading but some of the effects require time. For example, a rationalization of the milling industry is slowed down by continued Government subsidization of transport cost for another four years. 39. Concerning the ASIL II measure for the Liberalization of External Trade in cereals by introducing tariff equivalents, this was also part of GATT requirements and the law was approved in May 1996. Cereals continue to rely on heavy protection and Moroccan negotiators had obtained extremely high tariff equivalents in the GATT agreements (190% for wheat). In order to stabilize the domestic market within a target price range a two-part tariff system is used. A (lower) base rate is applied to the landed price and then an additional (higher) rate is applied to the difference between the threshold price and the landed pricelo. This makes the domestic price responsive to international price variations, but with a much reduced amplitude. Given the high protection levels maintained on cereal imports, the FAO/MOA study concludes that the liberalization measures will bring little change in the short term. In fact with falling international prices, the producer subsidy equivalent has increased. The effects must rather be seen in the long term. 40. Budget execution measures under ASIL II constitute a follow-up to such measures under ASIL I and they have had a considerable impact on the speed with which the budget is delegated and its monitoring, which has led to a more efficient use of budgeted funds. Of measures related to the FDA, "allowing" (providing grants for) private investments in milk collection centers, has led to private sector involvement. The reform to limit the number and amount of capital grants that a beneficiary may obtain for each type of investment has been very ineffective and has not really been carried out in spirit; only in very few cases are there limits on repetitive investments (wells, drip irrigation and 9 FAO/MOA report, op. cit. p 99. '0 For example, for wheat the base tariff is 33.5%, the additional tariff is 103.5%, and the threshold price is 2000 DH. If the landed price is 1120 DH (2/1999) the tariff is 1120x0.335+(2000-l,20)xl.035 = 1286 DH. 13  destoning were mentioned)" and where there are limits in the amount, they are very high (up to DH2 million). An environmental screening unit was established by Ministerial Note but no resources was given to it for screening of projects, so the inpact of the measure is negligible. 41. Measures for privatization of veterinary services started already in the late 1980s with Bank support and were includecd both in ASIL I and II. As a result the number of private veterinarians are now 295, well beyond ASIL II's objective of 144. The coverage has increased from 50% in 1985 to over 80% in 1997 for cattle and from 39% in 1985 to 85% in 1997 for sheep. Although the private sector has taken over many of the state's responsibilities in the veterinary medicine and genetic area, it is not clear if this has yet led to corresponding reductions in budgetary costs. Measures for Medium and Small-Scale Irrigation relate to investments under ASIL 2 and are similar to what is required under the SMSI I and II projects in Morocco. The application of selection criteria for inclusion in rehabilitation works help ensure the economics of the investment and the creation of user associations ensure their efficient operations and sustainability. The new statute for research scientists has been supported by the Bank in previous projects and its final enactment is a rmajor factor in efforts to establish and retain a high quality research cadre in agriculture. For Other measures the results are summarized in Table 5b. H. PROJECT SUSTAINABILITY AND FUTURE OPERATION 42. It is likely that most of the major project results will prove sustainable, since they consist mainly of private investments (FDA) or ongoing activities and current policies of the Government. Physical investments in the field under the loan are of many different types and in many locations, so in an overall assessment of sustainability it must be understood that this involves some judgement on what constitutes the majority. The reform program was largely carried out, and is consistent with global economic policy changes favoring greater liberalization and privatization which are unlikely to be reversed. Livestock investments in animal health and genetics are likely to be sustainable but will depend on future budget allocation. The sustainability of the range improvement program is more doubtful due to high population pressure. Measures to privatize certain veterinary and genetic services are very likely to be sustainable. The future of both investments and reform measures under the Agricultural Education and Training program will depend on Government commitment and funding but are likely to be sustainable. The Rainfed land development component includes destoning which is of high financial interest to the beneficiary and therefore likely to be sustainable and so is also access road construction but which will depend on future public funding for maintenance. Legislation on land issues is likely to be enacted eventually. Investments under the crop production component involves different new technologies where sustainability will necessarily vary but the majority (disease tolerant date palms) are likely to be sustainable; this component also includes investments to render previous, completed Bank projects sustainable. The sustainability of investments under the plant protection component will depend on future Government funding for maintenance. 1 Officials claimed that the limnit was the nurmber or amount not number and amount. This is not what the LA says but interestingly enough it is found in the matrix in the SAR. Conclusion: proofreading does matter! 14  Investments in small and medium scale irrigation (SMSI) are similar to those of other such Bank projects and are therefore also likely to be sustainable. The tariff and domestic trade reform are likely to be sustainable, the first because of GATT membership and the second because it is in line with overall Government policy. FDA investments financed by the loan, although varied, are generally likely to be sustainable since the capital grants accompanied investments by private farmers in projects which were in their financial interest. I. BANK PERFORMANCE 43. Although each TM, given the circumstances, seems to have performed a satisfactory job, the performance of the Bank, as an institution, was unsatisfactory. Bank preparation and supervision of the project suffered from an unfortunately frequent change of Task Managers (TM). One TM prepared and appraised the project. A second TM took over in July 1994, after Board presentation, a third TM in December 1995 and a fourth TM was responsible for the preparation of the ICR, from August 199812. Although each individual strived to do his/her best, they each had to learn anew about the project from their Moroccan counterparts and their interests and emphasis may have varied during the supervisions making a sustained dialogue difficult. The Loan would have benefited from a more stable project team on the Bank side and more regularity in the supervisions. This would have permitted the dialogue to be pursued with more purpose and direction. Some reforms require a long gestation period and perseverance and a clear vision of the final goal will bring it to fruition. Examples are the land policy reforms, which were initiated under ASAL 1 in the mid-eighties and only gave rise to the legislative process under ASIL 2, perhaps because the same expert consultant had been recruited by the various task managers to pursue this issue. A Bank disbursement expert participated in an early supervision and made a proposal in the aide-memoire for a simplified system permitting rapid disbursement but there is no evidence that this was ever followed up upon. The Bank carried out eight supervisions of the project and one ICR mission after Loan closure. The staffing of the supervision missions (Table 13) did not adhere much to the supervision plan in the SAR and were generally understaffed in comparison. This leads to the question whether the supervision plan has other than a bureaucratic purpose since it is not related to any commitment of funds. It is not clear whether it was a lack of funds or some other reason that caused the supervision input to dip from 18 staff-weeks in FY95 to 10 in FY96 and 7 in FY97 and then recover to 12 in FY98. There was a full year between the supervision in January 1997 and January 1998. J. BORROWER PERFORMANCE 44. The performance of the Borrower was marginally satisfactory. Where project actions and policy reforms were considered important and "owned" by the Borrower and other stakeholders, these were generally carried out with great diligence and method. Examples are measures carried out by the livestock services to privatize veterinary and other services, which exceeded targets and the deregulization of the domestic cereal market. In other areas such as the introduction of objective criteria for project selection, impact evaluation and the better targeting of the FDA capital grant scheme, the 12 In fact a fifth person was involved as TM for a brief period in the summer of 1994. 15  ownership was not as prevalent and the efforts have been under-funded and experienced delays. The monitoring of the implementation of the project's physical investments and reform measures was satisfactory. The financial budget management and monitoring systems introduced under ASIL 1 have not only been sustained but also improved. The disbursements, however, did cause a serious problem and could perhaps have been facilitated by better coordination between the different agencies involved, MOA, MOF, CED, the auditors and last but not least, the Bank which bares its share in the burden of this by its rigid requirements. K. ASSESSMENT OF OUTCOME 45. Even though there is still substantial "unfinished business" on the agricultural policy agenda, notably with respect to irrigation cost recovery, output pricing and public expenditure priorities, ASIL 2 was an important vehicle in moving this agenda forward. Technically, since the stated objective was resource transfer to the agricultural sector and over half of the loan was cancelled, the outcome must be considered unsatisfactory. Yet this should not hide the fact that most of the reform program was implemented which, by promoting growth and liberalizing the environment for private sector activity, should have a substantial positive impact on the development of the rural sector in the future. Investments under the loan also contributed to sector development and are likely to be sustainable. Future sector policy dialogue and lending operations are expected to follow- up on outstanding issues. L. KEY LESSONS LEARNED 46. Loan implementation shows that project objectives need to be clearly defined, realistic and agreed with the borrower if the outcome is to be successful. Unclear and unrealistic objectives which have not been agreed upon may result in disappointment and failure to identify with project goals among stakeholders and lead to lackluster implementation efforts. Future sector investment loan type operations should also be more focused on a coherent set of sector or sub-sector investments and policy and institutional reforms, and there should be more participation by the concerned Government agencies in their formulation. There needs to be some practical exit mechanism should important objectives not be met. 47. Similarly, indicators of development outcome and impact are best agreed with the stakeholders (and documented in the minutes of the negotiations). A system to measure these indicators needs to be put in place and would best be included in the project design, as is mandatory in Bank projects since 1997. 48. Disbursement procedures and auditing need to be addressed during project preparation and appraisal to make them as simple as possible and permit rapid disbursements. Rather than selecting many small unrelated budget lines, future program- type lending should focus on the expenditures of the key departments involved in the program, with whom the Bank could also have a continuous dialogue on policy and institutional reforms as well as investment programming. 16  49. To the extent that the project's (i.e. the Bank's) procurement procedures (as well as any other procedures) are different from those normally practiced in the country, these need to be explicitly agreed with the Borrowers' highest executing authority in the matter who then need to instruct those responsible for the execution and policing of these procedures accordingly. Any model procurement documents in a project need to follow a similar approval and internalization process. 50. Frequent changes in Bank project team-leaders makes it difficult to maintain a dialogue on the project with focus and direction and may lead to loss of interest among stakeholders. Although one should make all possible efforts to institutionalize projects, people do count. 51 The resources actually made available for supervision should be consistent with the agreed project supervision plan. This plan should be considered as a commitment by both management and staff. 17  PART II: STATISTICAL TABLES Table 1: Summary of Assessments A. Achievement of objectives Substantial Partial Negligible Not Applicable Macro policies L F' Sector policies x F: E7 F Financial objectives EZ F F x Institutional development F Physical objectives F x C Poverty reduction ZJ Gender issues EK Other social objectives F T Environmental objectives F 7x 7 Public sector management Private sector development LxI B. Project sustainability Likely Unel Uncertain Hi C. Bank performance satisfactory Satisfactory Deficient (0) (N) (0) Identification L LI LI Preparation assistance L LI L Appraisal LI LL Supervision LI LI 18  Highly Marginallv D. Borrower performance satisfactorv Satisfactory Deficient Preparation [ m L Implementation [Z m L Covenant compliance [= mWz Highly Highly E. Assessment of outcome satisfactorv Satisfactory Unsatisfactorv unsatisfactory 19  Table 2: Related Bank Loans/Credits Loan/credit title Purpose Year of Status , : 00 0. ;;fS :: :: 0 Xf:SS . :;S; f ; RX t ;:0: :::: 00 Xapprovaly;i0:0:X Preceding operations I. Loan 1602-MOR Improve rural income and social well-being of 33,900 farm families in the FY 1978 Closed Fes-Karia-Tissa project area through improvements to research, extension services, credit 06/30/90 Agriculture Project and input supply, as well as through investments in infrastructure such as roads, schools, health facilities, and water supply. 2. Loan 1848-MOR Improve the agricultural systems prevailing in Loukkos watershed into FY 1980 Closed Loukkos Rural sustainable systems by alleviating the destructive effects of soil erosion December Development Project and increasing agricultural productivity and incomes of poor farmers. 1988 Project activities were to serve as a model for wider replication in the Riff region. 3. Loan 1602-MOR Increase production of meat, milk and cereals; increase of the rural FY 1982 Closed Middle Atlas-Central population income and employment; and reverse environmental December Area Agricultural deterioration of forest and rangelands. 1990 Development Project 4. Loan 21 10-MOR Establish plantations to increase the production of pulpwood for the local FY 1982 Closed Forestry I Project - mill and of industrial timber and fuelwood to meet domestic needs and June 1990 Gharb - Mamora strengthen planning and management in the sector. 5. Loan 2217-MOR Improve the living standards of the predominantly rural population living FY 1983 Closed Oulmes-Rommani within the project area through development of agriculture, livestock and June 1992 Agricultural forestry and through provision of better social and agriculture services. Development Project 6. Loan 2253-MOR Small Support the development of the development of the neglected Small and FY1983 Closed and Medium Scale Medium Scale Irrigation sub-sector through the rehabilitation of five December Irrigation Project I schemes and the preparation of a second-stage project 1992 7. Loan 2590-MOR Support the first phase of implementation of the Government's program of FY 1985 Closed Agricultural Sector adjustment in the agricultural sector. The principal objectives of the June 1987 Adjustment Loan program were to improve the growth rate in agriculture within the overall (ASAL 1) constraints in public resources. 8. Loan 2885-MOR Support the second phase of implementation of the Govemment's FY 1987 Closed Second Agricultural medium-term agricultural sector adjustment program within the April 1992 Sector Adjustment framework of a general macro-economic restructuring program. The Loan (ASAL 2) essential objectives are to foster efficient agricultural growth and to contribute to the reduction of budgetary and current account deficits to manageable levels. 9. Loan 2954-MOR Part of a long term program for the rehabilitation of SMSI schemes FY 1988 Closed Small and Medium covering 250,000 ha with the specific aim to rehabilitate 120 such December Scale Irrigation 11 schemes covering 32,000 ha, setting up seven mechanical repair brigades 1996 and institutional strengthening 8. Loan 3036-MOR Support the establishment of efficient national research and extension FY 1989 Closed Agricultural Research institutions for the development and dissemination of improved June 1996 and Extension Project agricultural technology so as to increase agricultural productivity, production of food, livestock and cash crops, and farmers' income throughout the country. 10. Loan 3156-MOR To strengthen forestry planning and policies and assist Morocco in FY 1990 Closed Second Forestry maintaining and improving its forestry potential and meet the country's June 1998 Development Project wood needs and protect its watersheds in harmony with other demands on the areas such as domestic stock grazing 20  Table 2 (cont'd): Related Bank Loans/Credits Locredit title Purpose Year of Status approval 11. Loan 3403-MOR To support a 1991/92 time-slice of the agricultural sector investment FY 1992 Closed Agricultural Sector program, to promote essential policy reform measures to improve the June 1994 Investment Loan investment process and strengthen MOA's institutional capacity and to (ASIL 1) continue implementing key sector policy issues. Following operations 1. Loan 3935-MOR Alleviate the impact of the current severe drought by providing: (i) rural FY 1996 Closed Emergency Drought infrastructure (water and roads) to generate income; (ii) agricultural inputs June 1998 to restore crop production; and (iii) animal feed to safeguard productive livestock. 2. Loan 5521-MOR To assist Govemment in promoting comprehensive water management FY 1998 Ongoing Water Resources that is economically efficient, equitable and environmentally sustainable. Management Project Specifically the project would support the establishment of an institutional framework for integrated water resources mgrnt and the creation of a River Basin Agency, improving water use efficiency and pollution control. Table 3: Proiect Timetable Steps in project cycle Date planned Daw actual/ latest estimate Identification (Executive Project - June 1992 Sumnary) Preparation - October 1992 Appraisal - April 1993 Negotiations - May 1994 Board presentation - 06/23/94 Signing - 12/05/94 Effectiveness September. 1994 03/13/95 Midterm review (if applicable) Project comnpletion 12/31/98 06/30/98 Loan closing 06/30/99 06/30/98 21  Table 4: Loan Disbursements: Cumulative - Esfimated and Actual (US$ '000) AAXraisal tual _ < Les oft etimNate 0 revised4 estitmatleC ' A r i a 1l FY95 7.20 - 0 0 - FY96 34.00 13.48 40 15.00 90 FY97 70.40 40.31 57 35.00 115 FY98 109.00 52.18 48 55.00 95 FY99 121.00 53.15 44 60.00 89 Date of final disbursement 11/12/98 22  Table 5a: Key Indicators for Proiect Implementation - Physical Investments Directorate Physical achievments NON-IRRIGATION Agricultural Education 11 education centers built and equipment purchased. (DERD) Livestock Vaccination of more than 20 M animals in each of 95, 96 and 97; lab equipment purchase; genetic (DE) improvement; treatment of 7,700 ha of range-lands; sanitary inspection of 360,000 tons of red meat. Crop Production Studies on refrigeration of fruits and legumes, varietal improvement of citrus and tomato exports, (DPV) crop production, pedology, land consolidation; distribution of 100,000 olive seedlings for erosion control, 60,000 date-palm seedlings and establishment of date-palm nursery. Plant Protection Plant protection: Construction of administrative buildings (4) and guest quarters (4) in 8 provinces, (DPVCTRF) lab equipment. Seed quality: equipment, phone services and works. Pest control: construction of 5 loging units, one administrative unit, remodeling of and occupying offices in 3 DPAs and I ORMVA, purchase of materials and documentation. Fraud repression: construction of 2 loging units and remodeling and installation of offices in 2 DPAs, purchase of equipment and supplies. Land Policy Establishment of 84 maps, re-establishment of 790,000 border markers, purchase of 44 PCs, 8 (DCFTT) portables, 170 printers and 80 RAM extensions. Rainfed Land Dev. Soil conservation studies for 50,000 ha, land development works in Sebou, destoning on 8340 ha, (AGR/DAF) clearing of 1,330 ha from brush. Forestrv (AEFCS) Installation of 59 transceiver stations Planning (DPAE) Not available IRRIGATION Small-Scale 59 operations of small-scale irrigation started on 8,388 ha of which 40 operations are completed; 87 Irrigation operations on flood damage started on 16,692 ha, of which 64 are completed; 19 operations of land development downstrearrm of hill dams, including 11 water points for livestock and 1207 ha irrigation; 2 operations still on-going; completion of feasibility studies (4) and topographical (10) for 14 perimeters and one study on water tariffs. 1. FDA Irrigation of 14,000 ha, digging of 4,963 wells and equipment or electrification of 5,682 wells; land development of 14,197 ha and 47,664 meters length; equipment of 16,093 ag. exploitations; construction of 26,265 mn3 cold storage; acquisition of 2.7 m fruit tree seedlings and planting of 1,342 ha citrus; acquisition of 4.530 purebred animals and 510 bee colonies; construction of 52,278m2 and 7,809m2 animal feed storage; acquisition of 52 units of livestock materiel and equipment of 21 dairies. 23  Table 5b: Key Indicators for Proiect Implementation - Reform Measures 2. Measure 3. Status Internal Trade Liberalization Done, May 1 1996 (1) Submission to Parliament of mechanisms to deregulate domestic marketing systems for cereals (except bread wheat) upstream of the mills. External Trade Liberalization Done (2) Introduce tariff equivalents for all cereals before April 1995 Budget execution Done but Central Procurement Commission is in process of revising (3) Establish guide for bidding documents bidding documents for Morocco (4) Prepare and introduce "contract monitoring sheets" Computerization done for DPAE. Experience will be consolidated in all MOA services before extended to other MOA services (5) Implement a training program in budget execution Done for at least two members of each MOA service FiDA (6) Introduce ceilings limiting the number or amount Ceilings are being applied to irrigation (amount per holding) tractors of each type of investment that an individual can (per unit) for certain analysis and for refrigeration equipment (per obtain fort agreed items in the FDA program unit) (7) Publish regulation permitting private investments Done since 1994 in milk collection centers (8) Design and introduce a permanent monitoring Partially done. Data has been collected in first phase of study. Second system to ensure that FDA investments specifically phase, to design system on the basis of this data in progress firther the objectives of the program before end 1995 Environmental screening Done (9) Officially establish EMU in MOA under TORs acceptable to Bank Livestock (10) Increase the number of private veterinarians to Done the number is 295 now. 140, covering 60% of cattle and 45% of sheep (11) Transfer the responsibility for all Al and bull Mostly done, 92% of Al and 83% of bull stations had been transferred stations to cattle breeders associations by end of 1997 (12) Reduce public expenditure on Al transferred to Done 25% (13) Transfer responsibility for herd books to the Done cattle breeders associations (14) Present texts for quality norms for animal feed to In progress, texts are in process of being promulgated the Government Council (15) Present an action plan on producer group In progress. Transfer of costs will be made through creation of health participation in the costs of disease control and take nuclei and control of animal movements. Programs have been initial steps to implement it prepared and legislation is being evaluated. (16) Take initial steps to implement strategy for range Various steps have been taken, such as extending monitoring system improvement for vegetation to seven pastoral zones; preparation and implementation of, presently, four projects; introduction of stall feeding to relieve grazing areas and promulgation of law for dryland development, including pastoral improvement 4. Agricultural education and training! (17) Undertake at least six training sessions for 30 Done, since December 1994 trainers to begin training program for ag employers and workers (18) Create training-employment departments within Done in September 1994 the agricultural education and training establishments 24  (19) Introduce three training programs for farm Done in October 1994 managers based on results from "observatories" in ITA Sidi Mohammed, IAV Agadir and ITH Meknes (20) Take initial steps to implement a strategy for In progress, strategy prepared by DERD but will now have to be part higher education of overall strategy being prepared by National Commission on Higher Education Forestrv (21) Hold discussions with Ministry of Interior on Some progress, texts to modify law will be presented to SGG in the granting local collectives only the net revenue from framework of a new forest law under elaboration sales of forest products, after appropriate costs have been deducted (22) Develop proposal and submit decree on new user Not done but forest law will also address user fees fees to SGG Plant protection (23) Develop and implement a plan to address the Not done, plan has been prepared but not funded problem of disposal of storage of old and deteriorating pesticides (24) Implement decentralization program to disperse Not done for lack of funding for new equipment crop protection equipment to regional centers throughout the country Small-scale irrigation (25) Apply SMSI selection criteria systematically for Done for the larger schemes, cannot be applied to scattered all rehabilitation projects perimeters. (26) Adopt principle of creating water user Done for larger schemes, cannot be applied to scattered rehabilitation associations in all perimeters selected for rehabilitation 5. Extension Services (27) Prepare plan for reorganizing extemal services, Not done, discussions on future of CTs are under way in MOA agree with bank and submit plan to SGG Infrastructure Partially done. MOPW has started to implement program over nine (28) Before June 30, 1995, MOA with MOPW and years for 10,000 km tracks on the basis of rolling three-year plans. local collectives, to prepare and then update, rolling MOA priorities are partial met in this program. A recently created plans for a five-year program on farm to market roads MOA-MOPW committee deals in part with road programming Reasearch Done, December 1994 (29) Publish regulation on application of the new statute for research scientists to align their salaries with those under the statute for higher education (30) Establish Government accountant positions in Done, September 1994 Tangiers, Oujda and Agadir. Land Policy (31) Re-open inter-ministerial discussion on giving Done and registration of holdings has started individual titles to users of collective land (32) Prepare and submit to SGG, necessary legislation Done, legislation is with SGG fQr rural land leases 25  Table 6: Key Indicators for Project Operation No key indicators for project operation were defined in the SAR for project operation Table 7: Studies Included in Proiect Livestock Develop a strategy for irnproving Completed Strategy is henceforth serving as ranges including: defining and basis for all new range allocating users rights, increasing the investments financial participation of producers in investrnents and range improvements, and channeling investments in range improvements exclusively through active producer organizations Livestock Study the establishment of a reference Completed Study has formed basis for sample for analyzing the economic legislation for rainfed land efficiency of different livestock development and user fees have systems been accepted by herdsmen Agricultural Education Develop and approve a strategy for In progress This exercise has been integrated higher education system in agriculture into a strategy study by the Minis- try of Education. No results yet Plant Protection Comnpile existing evaluation on the Completed Action Plan exists for safe storage disposal of pesticides into a single of degraded pesticides but lacks analysis to serve as basis for action funding. Final disposal, part of plan FAO regional study in progress Crop Production Determine regulation and Completed 22 norms published so far. standardization necessary for fertilizers Land Policy Examnine the financial and Completed Agreement signed with CNCA for institutional implications of a credit mechanism for funding window to facilitate land transfers indivisibility of holdings between co-heirs Agricultural Development Study on monitoring and evaluation 2nd phase Study expected to be completed Fund (FDA) of impact of capital grants under way early 1999 26  Table 8A: Proiect Costs (US$ rnillion) MOA budget 1994-1997 MOA budget 1994 to Ist semester 1996 AITEPTOALS ESTIATE ACT-UAsIATEST Apprasal Estimate ActuaMatest estimate ITEM ToTAL ETIT TOTAL NON-IRRIGATION 442 381 276 250 Agricultural Education 44 26 28 19 (DERD) Livestock, DE 56 49 35 30 Crop Production, DPV 56 89 35 60 Research, INRA 29 25 18 16 Plant Protection, DPVCTRF 19 17 12 11 Land Policy, DCFTT 64 56 40 42 Rainfed Land Dev't, 54 20 34 16 AGR/DAF Forestry, AEFCS 91 68 56 41 Planning, DPAE 13 15 8 7 Human Resources, DRH 7 5 4 3 Administration (DAAJ) 3 8 2 2 Public Enterprises, DEPAAP 6 3 4 3 IRRIGATION 436 490 273 281 Small Scale, 32 105 20 46 AGR/DAHA/DDGI Large Scale, ORMVAs 404 385 253 235 FDA Agric.Dev. Fund 115 59 72 39 TOTAL 993 930 621 570 Foreign Exchange 417 390 260 240 (42% as per SAR) Local costs 576 540 361 330 27  Table 8B: Project Financing Appraisal estimate 0(A) ctual/latet esti*eai (US$M) Source Local Foreign Total Local Foreign Total Costs costs costs Costs Government 400 295 695 N/A N/A N/A OtherDonors 68 45 113 N/A N/A N/A Bank, excl. ASIL 2 38 26 64 N/A N/A N/A Bank, ASIL2 70 51 121 31 22 53 TOTAL 576 417 993 330 240 570 Table 9: Economic Costs and Benefits Due to the large number and many different types of activities supported by the loan, no detailed economic cost benefit analysis was carried out at appraisal. Instead the economic justification was based on sirnilar types of activities or models. At completion, it was considered likely that most of the project supported activities would be sustainable. 28  Table 10: Status of Leeal Covenants Original Revised Covenant Present fulfillment fulfillment Description of Agreement Section type status date date covenant Comments Loan 3765 2.02(b) 1 NC Open Special Account MinFin could not reconcile SA with disb. procedures for this loan 4.01(b)(ii) 1 C 06/30/1996 - Furnish audit reports Final report received 5.01(a) 12 C 05/31/94 - Draft regulation introducing capital grants to encourage private sector investments in milk collection centers 5.01(b) 9 C 04/19/93 Establish environmental screening unit 5.01(c) 12 C 10/14/94 Govt Council to formally approve deregulation of domn marketing system for cereals (excl. bread wheat) upstream of mills. LA 5B 9 CP 01/18/95 MOA to furnish proposed With the partial loan Schedule ag. investm. Progr. For cancellation, the 1996 following FY interim budget was the last that was formally presented to and approved by the Bank. This would exhaust the remain loan SB 9 C 01/18/95 MOA to furnish detailed description of all activities to be carried out during following FY 5Cl(a) 9 C 12/31/95 MOA to furnish annual progress reports for Action Program 5CI(b) 9 NC 10/31/95 Govt to furnish Bank for its Due to partial cancell- review and cormnentsdraft ation, loan funds would plan & timetable for ag. support only FY94,95 and sector dev. & efficiency 1996 first semester improvement for FY96 and bugets, so MOA has not FY97. drafted dev action plan to cover FY96 & 97 5Cl(b) 9 CD 12/31/95 Plan to be finalized during Review of FY96 & 97 such review which shall plans not conducted since include examination of not relevant after partial tariffs applied to cereals loan cancellation. 5C2(a) 12 CD 04/01/95 Govt to introduce tarriff Tariffs introduced May equvalents on cereals lower 1996 or equal to GATT proposal 5C2(b) 12 CD 04/01/95 Govt to set tarriffs on Tariffs lower than 90% of cereals lower or equal to GATT from the start 90% of GATT proposal 29  Status: C - Complied with CD - Compliance after Delay NC - Not Complied with SOON - Compliance Expected in Reasonably Short Time CP - Complied with Partially NYD - Not Yet Due Covenant Class 1. Accounts/audit 2. Financial performance/generate revenue from beneficiaries 3. Flow and utilization of Project funds 4. Counterpart funding 5. Management aspects of the Project or of its executing agency 6. Environmental covenants 7. Involuntary resettlement 8. Indigenous people 9. Monitoring, review and reporting 10. Implementation 11. Sectoral or cross-sectoral budgetary or other resource allocation 12. Sectoral or cross-sectoral regulatory/institutional action 13. Other 30  Table 11:- Compliance with Operational Manual Statements Statement number and title tDescribe and comment on lack of conmpliance Overall, there was compliance with applicable Bank Operational Manual Statements. Table 12: Bank Resources: Staff Inputs Stage of Planmed Revised Actual project cycle Weeks US$'000 Weeks US$'000 Weeks US$'000 Preparation to N/A N/A N/A N/A 44.3 146.5 Appraisal Appraisal N/A N/A N/A N/A 24.0 81.0 Negotiations through N/A N/A N/A N/A 15.7 47.0 Board approval Supervision 68 N/A - - 49.9 192.1 Conpletion 8 30 - - 13.9 55.4 TOTAL N/A N/A N/A N/A 147.9 522.0 Note: Records on staff inputs were not maintained in format required by table which explains the many N/As 31  Table 13: Bank Resources: Missions Sla~~~cot ~~Number ecaie mlret. Dvopn project cycle ~Month,'O Days, l StatTskills atibio cot T'ypes of : 00:u : 0:09 . 0: f: 0$0X;;V00;;3:pesnst rerecned 0 : Vi f;2 00 sta%tus objectivaX es Problenu Through appraisal N/A N/A N/A N/A - - Appraisal through N/A N/A N/A N/A - - Board approval Supervision: I June 1994 2 11 AE,E I I M,P 2 October 1994 4 6 AE,A,P,L S HS F 3 January 1995 2 14 AE,D S S F,P 4 July 1995 2 14 AE,JE S S P 5 April 1996 1 7 AE S S F,P 6 June 1996 1 10 AE S S F,P 7 January 1997 1 7 AE S U F,L,BC 8 January 1998 3 14 E,AE,IE, S U L,BC N/A: Not Available A: Agriculturist; AE: Agricultural Economist; D: Disbursement Officer; E: Economist; IE: Irrigation Engineer; P: Procurement Specialist; L: Livestock Specialist. b/ 1: Problem free or minor problems; 2: Moderate problems; 3: Major problems; S: Satisfactory; U: Unsatisfactory. C' B: Availability of Budget allocations; BC: Borrower Commitment; F: Availability of funds; L: Legislative Approval; M: Management. 32  ROYAUME DU MAROC DEUXIEME PRET AUX INVESTISSEMENTS DANS LE SECTEUR AGRICOLE (PISA II, PRET 3765-MOR) MISSION BIRD D'ACHEVEMENT, NOVEMBRE 1998 Aide-Memoire (version finale) Une mission de la Banque Mondiale composee de M. Harald Stier a sejourne au Maroc du 2 au 10 Novembre 1998 en vue de recueillir des informations pour la preparation du rapport d'achevement du deuxieme pret aux investissements dans le secteur agricole (PISA II). Avant meme la mission, les directives de la Banque pour la preparation de rapports d'achevement de projets, ainsi qu'un canevas des informations necessaires, avaient et6 fournis aux responsables (DPAIE) du PISA II au sein du Ministere de l'Agriculture, du Developpement Rural et des Peches Maritimes (MADRPM). La mission s'est entretenue avec toutes les directions du MADRPM concernees par le projet, ainsi qu'avec des representants des ministeres des Finances et des Affaires Generales du Gouvemement. Le temps n'a pas permis de visite sur le terrain. A Rabat la mission a axe les discussions sur les r6sultats des investissements physiques et leurs perennite, les mesures d'accompagnement du pret, ainsi que l'experience d'execution du pret, le dialogue avec la Banque, l'utilite du pret et les lecons a tirer pour ameliorer la performance de projets futurs. La mission tient a remercier les responsables du Gouvernement Marocain et des directions du MADRPM concernees, pour 1'accueil chaleureux de la mission et les echanges de vues fructueuses qui contribueront a mieux illuminer des lecons du PISA II. Un merci particulier est adresse aux responsables du pret au sein de la DPAE pour leur excellente organisation de la mission. Cet aide-memoire resume les conclusions preliminaires de la mission. L'aide-memoire n'entend pas faire un bilan des acquis du PISA II. Ceci se fera dans le rapport final d'achevement. Ici, la mission souhaite plut6t souligner des problemes et difficultes qu'elle a pu soulever, afin de les verifier et provoquer la discussion dans les reunions finales avec les collegues marocains. Les Objectifs du Pre Le premier PISA a suivi une periode de reformes macro-economiques appuyees par la Banque par un pret a l'ajustement (PAS) et deux pr&s pour l'ajustement du secteur agricole (PASA I & II). I1 a ete formule dans un contexte oii d'importantes reformes avaient et6 entreprises (reduction de subventions et d6ficit budgetaire, liberalisation des prix et des regimes de commercialisation et de commerce) sans pour autant etre toutes terminees. L'accent devait alors etre remis sur la relance des investissements publics et de les rendre plus efficace pour mieux soutenir les investissements prives incites par  l'environnement economique favorable cree. En meme temps, il fallait continuer les reformes et les etendre dans les sous-secteurs. Alors, les PISAs, bases sur 1'examen detaille des depenses du secteur agricole, ont forme une base caract6ristique pour la strategie de la Banque pour l'assistance sectorielle pour l'agriculture au Maroc. Le PISA I a, avec succes, finance une partie du budget du Ministere de l'Agriculture 1991-92 et appuye d'importantes reformes des procedures budgetaires et sous-sectorielles. Le PISA II devait continuer cet effort dans le meme contexte. L'objectif formul6 du PISA II etait (i) de fournir un transfert general de ressources au secteur agricole en soutien a un programme bien concu d'investissements s6lectionnes dans le budget du Ministere de l'agriculture et; (ii) de soutenir le renforcement de reformes sectorielles et sous- sectorielles complementaires en mettant l'accent sur les operateurs prives. Evaluation des Objectifs L'objectif de transfert general de ressources au secteur agricole parait ne pas clairement exprimer ce qu'on pourrait en realite esperer de ce pret. En fait, il s'agit d'un remboursement de d6penses sur des lignes budgetaires convenues sans additionalite directe. Cependant, il faut noter qu'ert 1995 le PISA II n'a pas vu de reduction globale. du budget (mais une reallocation du non-irrigue vers I'irrigue) tandis que le budget globale du MARDPM a ete reduit de 15 % (credits de paiement neufs). En fait le PISA II 6tait le seul projet Banque en agriculture a rie pas subir de reduction en 1995. Pour les anrnes suivantes, les lignes budgetaires financees par le PISA paraissent avoir subi leur part de coupes budgetaires, a l'instar d'autres investissements, sinon plus. En effet, les contraintes budg6taires ont ete indiquees par les responsables marocaines, comme une cause majeure pour I'annulation d'une grande partie du pret d6but 1996 et sa ferneture prematuree. Contrairement aux objectifs, le prat a eu peu d'impact sur les priorit6s budgetaires, n'a pas fourni des ressources additionnelles aux investissements prioritaires et n'a pas facilite 1'execution des investissements vises. Aussi pour le Fonds de Developpement Agricole (FDA), le pret n'a fait que rembourser des subventions aux investissements prives dans le secteur sans additionalite et avec peu d'effet sur les priorites. L'objectif de soutenir le renforcement de reformes sectorielles, d'autre part, est clair et pertinent et constitue la justification principale de ce type de projet hybride. D'importantes reformes ont e r6alisees, a divers degres, dans le cadre du pret comnme la liberalisation des echanges interieurs et exterieurs et un grand nombre de reformes sous- sectorielles. A ce stade preliminaire, on peut estimer qu'environ deux tiers des mesures d'accompagnement ont et& realisees. L'impact de ces mesures d'accompagnement sur le developpement est aussi mitige par le fait que dans une partie d'entre elles la condition 6tait la soumission d'un projet de legislation (p.e. au SGG), ce qui a ete fait, mais n'a pas encore ete approuve par les autorites competentes. En fait, le changement de la l6gislation est un long processus qui n'arrive peut-etre pas a realisation pendant la p6riode d'un projet relativement court. Ceci n'emp6che pas qu'il faut l'initier, meme si son impact ne peut pas encore se mesurer en fin du projet. Plusieurs des interlocuteurs de la mission ont exprime l'importance qu'ils attachaient a mettre des propositions de reformes conmne 2  mesures d'accompagnement a un pret, meme si ce n'6tait que pour souligner son importance. Formulation du Pret La formulation de PISA II a suivi les grandes lignes du modele PISA 1. Neanmoins, l'execution du PISA I, dans l'ensemble, s'est d6roulee de maniere satisfaisante. Ce qui ne marchait pas dans le PISA I etait en principe la pour servir de le,on pour la formulation du PISA II. L'idee des PISAs etait de foumir des ressources au Ministere de l'Agriculture en finan,ant une tranche de son budget d'investissement ou les projets sont choisis selon des criteres objectifs et transparents a convenir avec la Banque. Ce financement par la Banque serait complet& par des mesures d'accompagnement et offrirait une voie de dialogue sectoriel et sous-sectoriel tres appreie des services du MADRPM et un appui a leurs propositions de reformes. Les regles de la Banque exigent l'identification des investissements finances ce qui rendait n6cessaire l'identification et selection des lignes budgetaires specifiques pour tout financement. Ce besoin d'une comptabilite et traitement speciale deja rendait la vie plus difficile pour les services du ministere dans le premier PISA. Grace aux complaintes des auditeurs du PISA I, les proc6dures de decaissements pour le PISA II etaient modifiees et multipliaient les manipulations necessaires des pieces justificatives par les services du MADRPM. Des manuels de decaissement ont 6te pr6pares et les agents comptables ont ete form6s mais malgre cela, les nouvelles procedures ont cause des retards et meme le refus des agents comptables assignataires a viser les documents necessaires. Il faut voir aussi que ces lignes budgetaires sont deleguees sur quelques 170 intervenants dans les services exterieurs (sous-ordinateurs) et les marches individuels ne representent souvent que des sommes trop petites pour motiver les agents a des efforts suppl6mentaires. Un autre probleme enonce par quelques directions, etait le manque de financement lie a certaines mesures qu'il aurait fallu pour leur realisation pratique. Ceci demontre peut-&re le manque d'influence que le PISA II a eu sur le budget, tant qu'il s'agit de transfert de ressources au Ministere de l'Agriculture et tant qu'il s'agit de priorit6s i l'interieur du budget. Un autre feu d'alerte pour de futurs problemes d'execution du pret, est constitue par les difficultes de negociations qui n'ont pas abouti a Washington entre les equipes plut6t techniques et qu'il a fallu l'intervention a plus haut niveau pour finaliser l'accord. Ce genre d'accords imposes au technicien a souvent tendance a reduire leur adh6rence au projet, ce qui a un effet negatif sur leurs engagements et efforts pour mener a bien le projet. Execution du PrMt Alors que le programme d'execution du pr&t 6tait prevu pour 1994, sa mise en vigueur a ete retardee jusqu'au 13 mars 1995 par I'approbation par le Conseil du Gouvemement des instruments pour la d6regulation du systeme de commercialisation des c6r&ales (ble tendre except6) en amont des minoteries, et puis par l'avis juridique et la publication du decret ratifiant l'accord de pret. Neanmoins, les investissements et la realisation des mesures ont commence comme prevu. A cause du retard de mise en 3  vigueur du pr8t, son financement pour cette annee devait etre r6troactif (maximum 10 % du pret total, selon les regles de [la Banque) pour toute l'annee plutot que pour le deuxieme semestre prevu a l'evaluation. Donc, au lieu de financer quelques $28 M en 1994, le pret n'a finance que $12 M (=10 % du pret). Pour faciliter ce decaissement, la totalite de ce montant etait d6caiss& sur des depenses FDA, oui les procedures etaient mieux maltris6es. Malgre cela, les premiers decaissements n'ont eu lieu que dans le deuxieme semestre de 1995. Alors que le budget PISA II pour 1995 etait en ligne avec ce qui etait prevu, meme 8 % de plus, la partie non-irrigation a vu son budget diminue de 14 %, mais la plupart de ces directions, A l'exception de la DAF (+110 %) et la DPV (+25 %), ont souffert beaucoup plus et ont vu leur budget reduit d'un tiers. Ces faits indiquent quton ne peut pas s'attendre a une experience (reelle ou percue) homogene des directions participant au PISA II. Dans le deuxieme semestre de 1995 la Banque et le Gouvemement marocain ont examine l'ensemble du portefeuille de prets et pour r6duire le retard de decaissements par rapport aux prets accordes (et, entre autres economiser sur les frais d'engagement) une partie importante des prets, dont $61 M (50 %) pour le PISA II en janvier 1996, a e annulee. Il est important de savoir que cette annulation provenait des gestionnaires de 1'ensemble du portefeuille du c6te Banque aussi bien qu'au Maroc et les ex6cutants devaient accepter de voir leurs budgets reduits. Avec cette annulation du pret de moitie, on avait en fait clos la partie financement de lignes budgetaires car la totalite du pret restant pouvait theoriquement etre decaiss6 contre des engagements faits des budgets 1994, 1995 et premier semestre 1996 (y inclus les reports de paiements de 1996 a 1996/97). Dans le cadre du PISA H, il restait donc aucun interet, sinon academique, pour un dialogue sur les budgets 1996 et 1997 qui faisait partie du pret original et pas de stimuli pour la preparation d'un plan d'action pour ces ann6es comme prevu a 1'evaluation. Tout interet pour le PISA II se trouvait donc dans le passe et il s'agit maintenant de rassembler les pieces justificatives pour les d6caissements, travail qui n'inspirait personne. Comme il a ete exprinm plus haut, il ne s'agit pas de faire le bilan detaiIle du pret ici. La DPAE doit encore foumir les informations A ce sujet, demandees par la Banque. N6anmoins, pour garder un peu 1'equilibre, il faut rappeler que, d'une maniere generale, les investissements ont ete execut6s de maniere satisfaisante et a temps pour les ann6es 1994, 1995 et le premier semestre 1996 que le PISA II a fini par financer, compte tenu des restructurations budgetaires mentionnees plus haut. Seulement, en ce qui conceme les decaissements, la partie FDA va largement d6passer les 35 % prevus et atteindra plut6t les 60 %, grace surtout au fait que le FDA representait le total de d6caissements pour 1994. D'importantes reformes ont aussi ete entreprises dans le cadre du PISA I et deux tiers du programme de reforme a e r6alise. I1 n'a pas e possible pour la mission d'evaluer l'impact, ni du programrne physique d'investissement, ni du programme de reformes. Generalement, l'organisation pour ce faire n'existe pas dans le MARDPM. Le modeste programme prevu dans le DPAE s'est vu couper le budget et pour le FDA une etude est en cours. La mission a tout de meme demande certains indicateurs aux directions interessees par le PISA II. La DPAE s'est chargee de leur collecte. 4  Problemes d'execution Le temps ne permet pas de decrire en detail tous les problemes d' execution du pr&t et la mission se contentera d'une enum6ration pour la discussion. Passation de marches: Alors que des documents mod&les avaient ete prepar6s (conformes aux directives de la Banque) et convenus avec le MADRPM dans le cadre de PISA I, leurs adoptions ont ete tres limitees. Dans un atelier special sur les march6s, il a et convenu que ces documents, avec une legere mise A jour, seraient utilises pour le PISA II par toutes les entites du MADRPM. Un grand nombre des responsables des services MARDPM ont exprime la difficulte d'appliquer les directives de la Banque, n'ayant pas e informes de l'accord du Gouvernement marocain a ce faire. Pour remedier a cette situation, une copie de cet accord a ete circulee dans les services du MADRPM. Toutefois, il semble qu'une certaine reticence de la part de la Commission centrale des marches en ce qui conceme les directives de la Banque, a empeche I'application uniforme de ces modeles. Une r6vision des reglements de passation de marches vient d'etre approuvee par les autorites marocaines, selon les rapports en tenant compte des directives de la Banque, ce qui reste a v6rifier. Decaissements: Le probleme de decaissement a deja ete enonc6 plus haut. On peut ajouter que les difficultes de decaissements etaient anticipees lors de l'evaluation et de gros efforts ont e exerces par la Banque et les responsables marocains pour y trouver des solutions. La solution trouvee par le Ministere des Finances et utilisee pour le pret avait l'avantage de resoudre les problemes d'audit (voir plus haut) mais la Banque et la DPAE ont prevu qu'en raison de la multiplicite des intervenants et la longueur du circuit de paiement, il y aurait des retards. Fiches de projet et applications de criteres objectives de selection: Le rapport d'evaluation affirme que des fiches de projets analytiques ont e preparees et analysees pour conformite avec les criteres de choix convenus. La mission n'a pas pu revoir ces fiches mais la difficulte de les pr6parer a e indiquee vu que souvent les lignes budgetaires financees representaient des petites sommes et non pas des projets. Aussi dans beaucoup de services exterieurs les agents ne comprennent pas I'application des criteres et la methodologie d'evaluation. Suivi & evaluation: Du tres bon travail a e fait par la DPAE et MADRPM pour le suivi physique et financier. Quand il s'agit d'evaluation d'impact et indicateurs de developpement on s'est heurte a beaucoup de problemes de m6thodologie, de focus, collecte et traitement d'information et sans oublier un manque de fonds. Ce manque de fonds, en fait est malheureux car il indique ou bien un manque de priorite donnee par les autorites marocaines, ou bien un manque de confidence a ce qu'on pourra obtenir avec des ressources raisonnables. Le pret a fait l' objet de deux rapports d' execution l'un en mars 1997 (couvrant l'annee 1995) et l'autre en avril 1998 (jusqu'a la fin du projet). 5  Gestion du pret: Une partie des difficultes emanent du grand nombre d'intervenants pour l'execution du pret et la difficulte a leur faire comprendre, ou accepter les nouvelles procedures attachees au pret (passation de marches, decaissements). Ceci reflete peut-etre un manque dans la formulation du pret mais aussi une penurie de ressources. I1 y a aussi un manque de continuite de supervision du c6te Banque (3 charge de projet pendant sa courte duree) ce qui a pose un proble-me pour le dialogue sur les r6formes et de coherence de poursuite de but. Interet des participants au projet: Le manque de ressources supplementaires a travers le pret, ou au moins plus ou moins garanties contre les coupes budg6taires, a certainement enleve une partie de l'interet que pourraient avoir les responsables du MARDPM et ses directions et services exterieurs pour le pret. Les procedures compliquees, demandant beaucoup de travail supplementaire sans gains apparents, n'ont pas servi a augrnenter cet interet. Ensuite, le dialogue avec la Banque sur des politiques sectorielles n'a pas et& r6alise comme l'auraient peut-etre souhaite beaucoup de directions, A cause du manque de continuite, et de ressources, de la partie Banque. Toujours, les interlocuteurs du MADRPM ont prefere des projets bien definis et geres par la direction, mais les directions sans projets ont souvent et satisfaites de pouvoir ouvrir un dialogue avec la Banque comme dans le cadre des PASAs I & II et PISA I. Fait a Rabat, le 9 novembre 1998 6  BORROWER'S CONTRIBUTION  'L:i:LB SETU A RCL ;AiSltttSt:tAAAt0Ad000000(PISA:A:0000 000 11000 PRE 00::0000:00tUS0H:m0000 3 d 765M OR)t00: 0 U}0CtS 0;0V : : S00RAPPORT D CHE VEENT::tCf\Fi Te:W:XT:f; S: !XX ;X t S X Novemr 1998::E:  SOMMAIRE INTRODUCTION: I) Programme dVinvestissement ........................1,.l II) Execution du pret: ....................... .. . . . . 2 1) Realisations physiques .................. .......,.2 2) Realisations financires .7 3) Mesures et reformes .8 4) Etudes. 8 5) Dcaissementct...8 III) Difficultes rencontrees :.. 10 Annexe Reformes et actions soutenues par le PISA II1 1  INTRODUCTION: Le pret PISA II, fait suite au ler pret d'investissement dans le secteur agricole (PISA I). Le montant de ce dernier s'eleve a 50 millions de dollars et a eu lieu durant les annees 1991 et 1992. Le PISA II quant a lui couvre la periode 1994-1997, le montant du pret a ete estime a 121 millions de $ puis r6duit a 60 millions de dollars en 1995 suite a la revision des montants des projets finances par la BIRD. Les objectifs principaux du pret sont de fourmir un transfert general des ressources au secteur agricole en soutien aux progranmmes bien conqu d'investissements publics en fmancant des investissements selectionrms dans le budget du Ministere de l'Agriculture et de la Mise en Valeur Agricole (MAMVA) ; et de soutenir le renforcement des reformes sectorielles complementaires en mettant laccent sur les operateurs prives. Le projet a deux composantes: un programme d'investissement et un programme d'action. La comnposante investissement finance des rubriques selectionnees dans le budget du MAMVA. Le programmne d'action se compose dune serie de reformes destinees a ameliorer 1'efficacite dinvestissements choisis ou d'operations dans le secteur. Ce pret qui vise a soutenir le programme d'investissement du MAMVA concerne les sous secteurs suivants: - L'Elevage, - L'Enseignement, la Fornation et la Recherche Agricole, - La Mise en Valeur en Bour, - La Production Vegetale, - La Protection des .Vegetaux, - Les Eaux et forets - La Petite et Moyenne Hydraulique, - La Programmation et les Affaires Economiques, - Le Fonds de Developpement Agricole. I- PROGRAMME D'INVESTISSEMENT: Les rubriques retenues pour etre fmancees par sous secteur sont: i- Elevage - Les intrants pour les campagnes de vaccination contre les maladies contagieuses et les equipements de laboratoire pour le progranmme de sante animale, - Le materiel de demonstration pour le programme de nutrition animale, - Les equipements et le materiel pour l'amelioration genetique, - Les amenliorations dans ram6nagement des parcours. 2- Education, formation et recherche a2ricole La construction de classes, de laboratoires et l'acquisition de materiel technique et pedagogique. 3- Mise en valeur en bour Parri les actions retenues on cite : I'pierrage, la construction de pistes d'acces pour les parcelles remembrees, les etudes liees au remembrement des terres agricoles et les services topographiques, le materiel inforrnatique et l'etablissement des cartes. 4- Production viOtale Les rubriques financees sont: les etudes, la promotion de la technologie (exemple : promotion des primeurs dans la zone c6tiere, distribution de rejets de palmiiers dattiers resistants aux mnaladies et materiels de plantation pour les demonstrations). 5- Protection v626tale Le PISA II finance la construction de structures de terrain (ateliers, hangars de stockage, station d'inspection rurale), le materiel technique (pulverisateurs, caniions, pompes), le conditionnement et l1'tiquetage ameliores des produits chimiques, la litterature technique et la formation portant sur le traitement des parasites migrateurs. 6- Les Eaux et forets et conservation des sols Dans ce sous secteur, le pret finance principalement la construction de structures de prevention des incendies et l'acquisition de moyens de communication pour les gardes forestiers.  2 7- Petite et movenne hydraulique Le PISA II finance les etudes de faisabilite, quelques travaux publics et quelques reparations a la suite d'inondations. 8- Pro2rammnation et affaires econoriques Dans ce domaine le PISA II finance reemploi de consultants pour les etudes agro-econorniques et une part de 1'equipement technique pour les donnees du recensement agricole. 9- Fonds de developpement agricole 1FDA Le FDA cree en 1986, foumnit des subventions pour le fmnancement d'une partie des investissements prives dans le secteur agricole. Le pret PISA II contribue au financement d'une partie des subventions destinees a: - L'equipement de petite et moyenne irrigation, - L'equipement de production vegetale (plants, arbres fruitiers, labours), - L'intensification de l1'levage (reproduction animnale et amelioration genetique). - L'amelioration fonciere. II) EXECUTION DU PRET: La coordination de l'execution du pret est assuree par la DPAE. Ainsi apres l'organisation des jourmnes d6tudes, la DPAE a mis a la disposition de lensemble des directions concemres par le pret, la documentation y afferente. ainsi que le manuel de decaissement qui donne les differentes etapes a suivre pour etablir les etats de decaissement. Par ailleurs, la DPAE a assure la coordination pour l'ensemble des missions effectuees par la Banque Mondiale aussi bien chez les directions centrales que chez les services exterieurs et a mis a leur disposition la documentation et les donnees demandees. En outre, elle a mis i la disposition des auditeurs du pret, la documentation relative a l'execution de ce pret, leur permettant ainsi de bien mener leurs missions d'audit en collaboration avec l'ensemble des intervenants. 1) REALISATiONS PHYSIOUES: a) TRAVAUX DE GENIE RURAL: Amenagements Hydro-agricoles: La situation des realisations physiques enregistr6es en date du 30 Juin 1997 au titre du projet PISA U, pour les lignes budgetaires relevant de la DAHA se resume comme suit: Travaux de la Petite Hydraulique: . Nombre d'op6rations prograrnmees : 59 . Superficie concemre : 8388 ha . Provinces concemres : 24 . Nombre d'operations achevees : 40 . Nombre doperations en cours dexecution : 19 Pirimktre Neckor: Les travaux dentretien programmes dans le cadre du Projet PISA II sont acheves. Reparations des Digits de Crues: . Nombre d'operations prograrnmmes : 87 . Superficie concernee : 16,692 ha . Provinces concernees : 9 . Nombre d'operations achevees : 64 . Nombre doperations en cours d'execution : 23 Moyen Sebou: L`etat davancement des travaux est le suivant: . Travaux d'amenagement foncier sont avances a 92% pour le secteur II et 15% pour le secteur III. . Travaux d'assainissement externes sont realises a un taux de 96%. . Travaux d'assainissement inteme du secteur II sont avances a un taux de 60%. Amenagement aI l'Aval des Barrages Ccillinaires: - Nombre d'operations programmres : 19 .Abreuvement de cheptel : 1l .Reseau dirrigation : 1207 ha - Nombre d'operations en cours : 2  3 Etudes: Achevement des etudes suivantes: - Etude de factibilite des perimetres de l'Oued Mikkes et Oued Ouergha. - Etude de pedologique au 1/15.000 de Guercif et Sangal. - Etude topographique d'Asfalou Bab Ouinder et M'Jara Amont. - Etudes p6dologiques au 1/15.000 de M'Jara (Lot Nl), Bab Ouinder (Lot N2) et Asfalou(Lot N