Document of The World Bank Report No: ICR3037 · The overarching project development objective of the DPO is to strengthen state transparency and accountability, thereby addressing

Document of The World Bank

Report No: ICR3037

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H8210)

ON A

CREDIT

IN THE AMOUNT OF SDR 3.3 MILLION (US$5.0 MILLION EQUIVALENT)

TO THE

UNION OF THE COMOROS

FOR AN

ECONOMIC REFORM DEVELOPMENT POLICY GRANT

June 16, 2014

Poverty Reduction and Economic Management 1 Country Department AFCS2 Africa Region

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CURRENCY EQUIVALENTS

Exchange Rate as of December 31, 2013

Currency Unit = Comorian Franc (KMF) 1.00 KMF = US$ 0.0028 US$ 1.00 = 356.4 KMF

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AfDB African Development Bank CCA Climate Change Adaptation CREF Cellule des Réformes Economiques et Financières CNLPC Commission Nationale de Lutte pour la Prévention de la Corruption DCPT Public Accounting and Treasury DGCPT Direction Générale de la Comptabilité Publique et du Trésor DPL Development Policy Lending DPO Development Policy Operation DRM Disaster Risk Management DRR Disaster Risk Reduction GDP Gross Domestic Product GNP Gross National Product EC European Commission ECF Extended Credit Facility EGRG Economic Governance Reform Grant EGTA Economic Governance Technical Assistance ERG Economic Reform Development Policy Grant EPCA Emergency Post Conflict Assistance ESRP Electricity Sector Recovery Project ERG Economic Reform Grant EU European Union FAO Food and Agricultural Organization GFDRR Global Facility for Disaster Reduction and Recovery GISE Gestion Intégrée des Salaires et Effectifs (Computerized Civil Service

Management System) FDI Foreign Direct Investment HIPC Heavily Indebted Poor Countries IBRD International Bank for Reconstruction and Development

ICRR Implementation Completion and Results Report IDA International Development Association IFC International Finance Corporation IMF International Monetary Fund ISN Interim Strategy Note LDP Letter of Development Policy LOFE Loi des Operations Financières de l’État MAMWE Gestion de l’Eau et l’Electricité aux Comores (Water and Power Utility in

Comoros) MDAs Ministries, Departments and Agencies MOF Ministry of Finance NGOs Non-Government Organizations PEFA Public Expenditure and Financial Assessment PFM Public Financial Management PRGSP Poverty Reduction and Growth Strategy Paper PV Present value SDR Special Drawing Rights SOE State Owned Enterprises UNDP United Nations Development Program

Vice President: Makhtar Diop Country Director: Mark R. Lundell Sector Manager: John Panzer

Task Team Leader: Maria Teresa Benito-Spinetto ICR Team Leader: Maria Teresa Benito-Spinetto

UNION OF THE COMOROS Economic Reform Development Policy Grant

CONTENTS

DATA SHEET .................................................................................................................... ii A. Basic Information ........................................................................................................... ii B. Key Dates ....................................................................................................................... ii C. Ratings Summary ........................................................................................................... ii D. Sector and Theme Codes ............................................................................................... iii E. Bank Staff ...................................................................................................................... iii F. Results Framework Analysis ......................................................................................... iv G. Ratings of Program Performance in ISRs ..................................................................... vi H. Restructuring (if any) .................................................................................................... vi 1. Program Context, Development Objectives and Design ................................................ 1 2. Key Factors Affecting Implementation and Outcomes .................................................. 9 3. Assessment of Outcomes ............................................................................................. 15 4. Assessment of Risk to Development Outcome ............................................................. 20 5. Assessment of Bank and Borrower Performance ......................................................... 21 6. Lessons Learned............................................................................................................ 23 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners............... 24 ANNEXES Annex 1: Bank Lending and Implementation Support/Supervision Processes ................ 25 Annex 2: Beneficiary Survey Results ............................................................................... 26 Annex 3: Stakeholder Workshop Report and Results ....................................................... 27 Annex 4: Summary of Borrower's ICR and/or Comments on Draft ICR ......................... 28 Annex 5: Comments of Co-financiers and Other Partners/Stakeholders .......................... 29 Annex 6: List of Supporting Documents .......................................................................... 30 TABLES Table 1: Comoros Main Economic Indicators, 2010-2012 ................................................. 2 Table 2: ERDPG -Prior Actions Status ............................................................................. 10 Table 3 ERDPG - Anticipated Risks and Mitigation Factors ........................................... 13 Table 4: Anticipated and actual outcomes of the ERDPG ................................................ 16 MAP IBRD 33389

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DATA SHEET

A. Basic Information

Country: Comoros Program Name: Comoros Development Policy Grant 2

Program ID: P122941 L/C/TF Number(s): IDA-H8210 ICR Date: 06/16/2014 ICR Type: Core ICR

Lending Instrument: DPL Borrower: UNION OF THE COMOROS

Original Total Commitment:

XDR 3.30M Disbursed Amount: XDR 3.23M

Revised Amount: XDR 3.23M Implementing Agencies: Ministry of Finance Comoros Co-financiers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 06/28/2012 Effectiveness: - 12/17/2012 Appraisal: 10/15/2012 Restructuring(s): - - Approval: 11/29/2012 Mid-term Review: 03/18/2013 03/28/2013 Closing: 12/30/2013 12/30/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory Government: Not Applicable

Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: Not Applicable

Overall Bank Performance: Moderately Satisfactory Overall Borrower

Performance: Moderately Satisfactory

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C.3 Quality at Entry and Implementation Performance Indicators Implementation

Performance Indicators QAG Assessments (if any) Rating:

Potential Problem Program at any time (Yes/No):

No Quality at Entry (QEA):

None

Problem Program at any time (Yes/No):

No Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual Sector Code (as % of total Bank financing) Central government administration 76 76 Irrigation and drainage 12 12 Transmission and Distribution of Electricity 12 12

Theme Code (as % of total Bank financing) Administrative and civil service reform 12 12 Natural disaster management 12 12 Other accountability/anti-corruption 13 13 Other public sector governance 19 19 Public expenditure, financial management and procurement

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E. Bank Staff

Positions At ICR At Approval Vice President: Makhtar Diop Makhtar Diop Country Director: Mark R. Lundell Haleh Z. Bridi Sector Manager: John Panzer John Panzer Program Team Leader: Shireen Mahdi Noro Aina Andriamihaja ICR Team Leader: Maria Teresa Benito-Spinetto ICR Primary Author: Maria Teresa Benito-Spinetto

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F. Results Framework Analysis

Program Development Objectives (from Project Appraisal Document)

The overarching project development objective of the DPO is to strengthen state transparency and accountability, thereby addressing some of the underlying causes of fragility in Comoros. The Economic Reform Grant (ERG) supports implementation of Government-owned reforms spelled out in four of the Poverty Reduction and Growth Strategy Paper’s (PRGSP) six strategic axes, namely: (i) axis one, on economic stabilization and equitable growth, emphasizing improvements in fiscal policy and public financial management; (ii) axis two, on strengthening key sectors by focusing on institution-building and ensuring a broader role for the private sector, with this operation's focus on the electricity sector; (iii) axis three, on strengthening governance and social cohesion, focusing on improvements in core government personnel management systems, stepping up the fight against corruption and fostering transparency in the issuance of fishing licenses and agreements; and (iv) axis six, on promoting environmental sustainability and civilian security, emphasizing improved disaster risk management.

Revised Program Development Objectives (if any, as approved by original approving authority) (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Timely transmission of budget circular to Ministries, Departments, and Agencies (MDAs).

Value (quantitative or Qualitative)

Less than ten days average before the budget conference 2009-2011

At least six weeks before the start of the budget conferences, i.e. not later than July 31, 2013.

The Budget circular was transmitted in July 2013 for the preparation of the 2014 Budget Law.

Date achieved 10/30/2012 07/31/2013 07/31/2013 Comments (incl. % achievement)

Met (100%). The Budget circular was transmitted in July 2013 for the preparation of the 2014 Budget Law.

Indicator 2 : Quarterly budget monitoring reports published, including data on social sectors not later than eight weeks after the end of the quarter.


Publication of less comprehensive quarterly reports, more than eight weeks after the end of the quarter.

Regular (i.e, no later than eight weeks after the end of the quarter) publication of

Second quarter of 2012 budget report published and included detailed information of

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quarterly budget monitoring reports, including data on social sectors expenditures.

social expenditures.


Partially met (25%). However, in April 2014, an annual execution report for the full 2013 year was published on the government finances website.

Indicator 3 : Number of timely consolidated cash balance statements of the Union government produced by the DGCPT.


None

At least three timely consolidated cash balances by September 2013.

None


Not met (zero %). The Treasury has not produced any cash balance statements.

Indicator 4 : Reflect existing information on staffing and wages in civil services disclosed to public.


Limited information on total wages disclosed to the public.

Publication of six bi-monthly reports.

One bi-monthly report published

Date achieved 10/30/2012 12/31/2013 08/30/2013

Comments (incl. % achievement)

Partially met (25 %). Information on staffing and wages in civil services are not done systematically. Data for July and August 2012 was available to the public in August 2013, but it is no longer available. Data for January to August 2013 is available in the MoF website as part of the annexes for the 2014 budget.

Indicator 5 : Public awareness of a legal basis for limiting corruption by high official, numbers of newspaper reporting on the existence of this legal basis.


None

At least five articles in the newspaper by September 2013.

Six communication campaigns including informing the government, civil society and press article have been done.

Date achieved 10/30/2012 09/30/2013 06/28/2013


Met (100%). Six communication campaigns including informing the government, civil society and press article were done already by June 2013. More recently, high government officials including the President of Republic have managed to declare their assets.

Indicator 6 : Public access to information on fishing licenses and agreements. Value (quantitative or None Information

available to the Updated and available on the

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Qualitative) public and updated at least once a year.

CREF site


Met (100%) Last updated for data for 2013 and available on the CREF website (www.cref-comores.org).

Indicator 7 : MAMWE’s overall collection ratio to the value of electricity sold. Value (quantitative or Qualitative)

32% 40% 58%


Met (100%). By March 2013, the collection ratio to value of electricity was already at 58%.

Indicator 8 : Mechanism for coordinating government’s responses to disasters.


Ad hoc and irregular.

Formal and systematic, at least two meetings of the national commission by end-September 2013.

The National Platform for Preventing and Reducing Disaster Risk in Union of Comoros met for a training workshop in June 2013.

Date achieved 10/30/2012 09/30/2013 06/30/2013


Partially met (50%). The National Platform for Preventing and Reducing Disaster Risk in Union of Comoros met for a training workshop in June 2013. However, meetings are not yet systematic.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

G. Ratings of Program Performance in ISRs

No. Date ISR Archived DO IP

Actual Disbursements (USD millions)

1 08/03/2013 Satisfactory Satisfactory 5.08 H. Restructuring (if any) Not Applicable

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1. Program Context, Development Objectives and Design

1.1 Context at Appraisal

1. At appraisal, the Government showed commitment to the reform process. The country had embarked on a sustained program for economic reforms. The Government successfully complied with the IMF Program and implemented the required measures to reach HIPC Completion Point in December 2012, one month after the conclusion of appraisal. This operation aimed at re-enforcing and deepening the government achievements following the HIPC completion point, particularly in areas that complemented the reform process supported by the HIPC. As the HIPC completion point supported major Public Finance Management reforms, this operation sought to reinforce the transparency of public resources. In the Comorian fragile context that was expected to reinforce transparency and accountability of resource allocation between Union and Islands governments while promoting national cohesion following nearly four decades of political instability. 2. Macroeconomic developments were judged positive. Economic growth reached 3 percent in 2012, the highest growth rate since 2006. This was the result of improved macroeconomic management combined with a favorable performance of the agricultural sector, substantial activity in construction and public works, robust remittances, and increased direct foreign investments. 3. Fiscal performance further improved in 2012. Spending controls became more effective, as simplified by a general restraint in the wage bill which stabilized at 8 percent of GDP (see Table 1). Revenues increased by 4 percent in 2012, mainly on account of the exceptional revenues from the Economic Citizenship Program. After clearing all wage arrears at end-2011, the government regularly paid civil service salaries. As a result, the domestic primary fiscal balance recorded a surplus of 3 percent of GDP. In addition, several Public Financial Management (PFM) reforms advanced, including the completion of the civil service census, the implementation of the new computerized wage management system, and parliamentary approval of PFM related reforms. These improvements allowed the country to complete the third IMF Extended Credit Facility (ECF) program review in June 2012 while the completion of the fourth review was approved by the IMF Board in December 2012.

4. Despite temporary deviation, inflation decreased in 2012, as a result of the fixed exchange rate regime and the concomitant fiscal consolidation. The Comoros maintains a peg against the euro under the Comorian franc zone monetary arrangement, and thanks to the fiscal consolidation, had maintained broadly stable inflation over the decade. Temporary deviations from a low trend reflected mainly movements in world prices of food (especially rice) and fuel imports, and domestic supply conditions in food crops. Inflation declined to 6.3 percent (down from 6.8 percent in 2011) despite strong growth in money supply (16 percent from beginning period) as only part of this increase was injected into the economy.

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5. The current account balance improved in 2012. The current account deficit decreased from 9 percent of GDP in 2011 to 3.8 percent of GDP in 2012. Increases in imports were offset by increases in transfers, mainly private ones, and increased donor’s budgetary assistance. Foreign exchange reserves increased from 6.7 to 7.1 months of imports of goods and services in 2012 from 2011.

Table 1: Comoros Main Economic Indicators, 2010-2012

6. The joint IMF-World Bank debt sustainability analysis available at appraisal indicated that Comoros remained in debt distress. At the end of 2012, the present value (PV) of the country’s public and publicly guaranteed external debt was projected at 31.8 percent of the GDP. Given the small export base, the PV of debt exceeded 200 percent of exports, and remains well above the 100 percent HIPC-threshold for most of the projection period.

At appraisal Actual2009 2010 2011 2012 2011 2012

(In percent of GDP, unless otherwise indicated)National Income and Prices Real GDP growth (% change) 1.8 2.1 2.2 2.5 2.2 3.0 Inflation (% change, annual average) 4.8 3.9 6.8 6.0 6.8 6.3Public FinanceDomestic Revenues (excl. grants) 13.9 14.3 16.1 18.2 16.1 19.3 Tax revenues 10.8 11.1 10.9 11.8 10.9 11.8 Non-tax revenues 3.1 3.2 5.2 6.4 5.2 7.6Grants 9.7 14.9 7.5 10.2 7.5 9.8Total expenditures (incl. net lending) 23.0 22.1 22.1 25.8 22.1 25.3 Current expenditures 18.1 16.4 16.6 17.1 16.6 18.4 of which: wages and salaries 9.0 9.2 8.5 8.0 8.5 8.0 Capital expenditures 4.7 5.7 5.4 8.3 5.4 6.8 Net lending 0.2 0.0 0.1 0.4 0.1 0.1Domestic primary balance -2.6 -1.6 1.6 2.2 1.6 3.0Overall balance (incl. grants) 0.8 0.9 -1.9 2.2 -1.9 2.9Financing gap 0.0 0.0 0.0 0.0 0.0 0.0External SectorImports of goods and services 47.7 49.9 50.2 52.0 50.2 53.9Exports of goods and services 14.5 15.7 16.2 16.8 16.2 14.9Current account balance -7.8 -5.4 -9.0 -6.9 -9.4 -3.8Gross reserves (months of imports) 6.8 6.4 6.7 7.2 6.7 7.1External debt External debt, NPV 1/ 46.2 38.9 30.9 31.8 33.1 8.4 External debt service (% of exports) 13.5 19.5 10.6 6.3 10.0 10.6 NPV of external debt (in% of exports) 329.7 308.0 201.0 202.7 203.9 56.5Source: IMF and World Bank staff estimates.1/ Actual 2012 reflects external debt ratio after full HIPC.

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Rationale for Bank Assistance

7. This operation, a stand-alone single tranche DPO, was aimed to strengthen state transparency and accountability. The reforms supported by this operation were structured around two broad policy pillars: (i) fostering public transparency and accountability, covering PFM, civil service management, anti-corruption and fisheries reforms; and (ii) addressing economic and social vulnerability emanating from both the weak performance in the energy sector and the weak natural disaster risk management. These policy clusters are aligned with the strategic objectives spelled out in the country’s Poverty Reduction and Growth Strategy Paper (PRGSP). As a result, this operation supported the implementation of Government-owned reforms. This operation was originally expected to be the second part of a programmatic series of two DPOs. However, due to delays in the reforms supported by the first operation and delay in implementation of the IMF program, the second operation was de-linked from the first one.

8. The four axes of the PRGSP supported by the Economic Reform Development Policy Grant (ERG) were: (i) axis one, on economic stabilization and equitable growth, emphasizing improvements in fiscal policy and public financial management; (ii) axis two, on strengthening key sectors by focusing on institution-building and ensuring a broader role for the private sector, with this operation’s focus on the electricity sector; (iii) axis three, on strengthening governance and social cohesion, focusing on improvements in core government personnel management systems, stepping up the fight against corruption and fostering transparency in the issuance of fishing licenses and agreements; and (iv) axis four, on promoting environmental sustainability and civilian security, emphasizing improved disaster risk management. 9. The operation built on the momentum of the HIPC process and supported specific implementation steps beyond the HIPC triggers. The operation supported continued efforts toward fiscal stabilization and improved public service delivery. The operation was designed to foster public sector transparency and accountability, with a particular focus on the budget and the management of the civil service. It has also helped in advancing the government’s anti-corruption strategy and promoting transparency in the government issuance of rights to exploit the country’s fisheries sector, one of its most important economic activities. It aimed to help alleviate economic and social vulnerability by (i) taking steps to improve energy sector performance, mitigating one of the main sources of risks to the private sector, and (ii) supporting the shift from a response-oriented approach to disaster risk management towards a preparedness-oriented approach by fostering governmental cooperation at the national and regional (Island) level.

1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved)

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10. The overarching project development objective of the DPO is to strengthen the transparency and accountability of PFM, thereby addressing some of the underlying causes of fragility in Comoros.

Key Outcome Indicators:

Improving public financial management

• Timely transmission of budget circular to sector Ministries, Departments, and Agencies (MDAs) at least six weeks before the start of the budget conferences, i.e. not later than July 31, 2013.

• Availability of public information of budget execution through the regular (i.e., not later than eight weeks after the end of the quarter) publication of quarterly budget monitoring reports, including data on social sectors expenditures.

• Improvement in cash management with at least three timely consolidated cash balances of the Union government produced by the DGCPT (Direction Générale de la Comptabilité Publique et du Trésor) by September 2013.

Improving public sector efficiency and accountability

• Availability of public information on staffing and wages in the civil service through the publication of six bi-monthly reports.

Strengthening governance and anti-corruption

• Availability of public information on the legal basis for limiting corruption by high officials, with at least five articles in the media reporting on the existence of this legal basis by September 2013.

Strengthening the economic governance of the fisheries sector

• Availability of public information on fishing licenses and agreements issued by the government, with annual disclosure to the public.

Improving reliable availability of electricity • Overall collection rate of MAMWE’s (Gestion de l’Eau et l’Electricité aux

Comores -Water and Power Utility in Comoros) electricity sales to reach at least 40 percent in the first semester of 2013.

Improving coordination of government bodies involved in natural disaster risk prevention and management (DRM)

• Governmental DRM coordination mechanisms made formal and systematic, with at least two meetings of the national Disaster Risk Management (DRM) commission by end-September 2013.

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1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification

11. The DPO and Key Indicators were not revised.

1.4 Original Policy Areas Supported by the Program

12. The program had two main pillars: fostering public sector transparency and accountability, and addressing economic and social vulnerabilities. Policy areas under the first pillar focused on: (i) improving public financial management; (ii) improving public sector efficiency and accountability; (iii) strengthening governance and anti-corruption; and (iv) strengthening the economic governance of the fisheries sector. Policy areas under the second pillar focused on: (i) improving reliable available electricity; and (ii) improving coordination of government bodies involved in natural disaster risk prevention and management.

Pillar I: Fostering Public Sector Transparency and Accountability

Improving public financial management (PFM)

13. The program supported the Government’s adoption of a PFM Action Plan for 2010-2012 to support implementation of the country’s PFM strategy. This strategy was articulated around four objectives: (i) modernizing the legislative and regulatory framework and strengthening institutional capacity; (ii) rationalizing budget preparation; (iii) strengthening budget execution; and, (iv) increasing transparency through improved internal and external controls. The authorities implemented the majority of the action plan with the help of the Bank funded Economic Governance Reform Support Grant. These efforts led to improvements in the implementation of the legislative and institutional framework, the budget execution process, and improved the transparency of the budget process. A new PFM Law was promulgated in August 2012 by the National Assembly (Loi des Opérations Financières de l’Etat) (prior action 1), and quarterly execution reports were issued for the last quarter of 2011 and first and second quarters of 2012. 14. The new PFM Law represented a significant improvement over the previous one as it provided more clarity in the roles and responsibility of the Federal government and autonomous Islands in the management and accountability of public finances. Despite this significant improvement in the legal and institutional framework for PFM, the remaining challenge was to ensure its implementation. The Government had taken steps in this direction, such as, creating a new Directorate of Public Accounting and Treasury (DCPT) and appointing by decree the new Director General of Public Accounting and Treasury (part (i) of prior action 3). With the Government reshuffle in mid-2013, the position of the DCPT was unfilled for more than 6 months. However, the Government appointed the new DCPT in February 2014.

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15. The Government has also improved transparency in PFM by producing and publishing quarterly budget execution reports. Quarterly budget execution reports for the last quarter of 2011, the first quarter and the second quarter of 2012 were published on the website of the Policy Coordination Unit (CREF) of the Ministry of Finance (http://www.cref.gouv.km). Until then, the budget execution reports did not include data on public spending in social sectors and were not made publicly available. The budget execution report for the second quarter included, in its annex, detailed information on social spending (prior action 2).

Improving public sector efficiency and accountability 16. The program supported reforms to improve the efficiency and accountability of the public sector focusing, in particular, on the civil service wage bill. During the period 1999-2008, the number of civil servants had doubled to about 12,000 individuals and the wage bill had increased from 6.2 percent to 9 percent of GDP. In 2009, civil service wages and salary expenditures were equivalent to 65 percent of domestic revenues. This largely reflected a disorderly process of decentralization agreed in 2001 to resolve tensions between the Union and the Islands. At the time, many central administrative entities were simply duplicating the administrative entities present in the autonomous Islands (with the Union and each Island having a President, Cabinet and National Assembly). 17. The Government set the basis for a reform of the civil service sector. The authorities conducted a civil service census from June through October of 2011. The information provided by the Census was then systematically used in the GISE (Gestion Intégrée des Salaires et Effectifs /Computerized Civil Service Management System), the Government’s computerized wage payment system implemented in 2010. Since July 2011, most civil service wages were paid through GISE. This would inter alia entail implementation of the organic frameworks (“cadres organiques”), including organigrams and staffing of all ministries, aimed at streamlining the civil service and making the wage bill consistent with a sustainable medium term fiscal framework. Moreover, the authorities prepared and disclosed on the Government website (www.cref-comores.org) an exhaustive and detailed list of civil servants per department at the Union and at the Islands’ level, on a monthly basis, covering the period from July to August 2012. It also included detailed wage bill data and information on recruitment by gender (prior action 4). These GISE generated reports provided updated information on wage payments and arrears, with the same level of breakdown, and allowed identification of all changes in staffing due to factors such as recruitment, retirement, death, and transfers within different entities. By providing public access to this information, the reform helped promote a public debate surrounding these critical issues. The open dissemination of the data set the foundation for enhanced dialogue and trust-building between the Islands and Union governments, by allowing them to collectively track each other’s progress towards improved wage bill management and negotiate the necessary steps forward.

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http://www.cref.gouv.km/


Strengthening governance and anti-corruption

18. The program supported the Government’s efforts to combat corruption and strengthen governance. In August 2011, the National Anticorruption Commission was established and several of its members designated. The law establishing the Commission Nationale de Prévention et de Lutte contre la Corruption (CNLPC) was adopted 3 years earlier and promulgated by Presidential decree in June 2011. The law established the CNLPC and defined its mandate, composition and prerogatives. It also established various forms of corruption offences to be incorporated into the Penal Code, and prescribed the corresponding criminal sanctions. The CNLPC is responsible for the implementation of the national strategy to combat corruption. It conducts investigations and acts as an advisory body on the subject. It also sensitizes the public on the adverse consequences of corruption and mobilizes support to combat it. The CNLPC has the authority to collect, file and analyze declarations of assets. The CNLPC is also responsible for submitting an annual report on its activities to the President and to the National Assembly. 19. The law also established the obligation for a certain category of senior officials and heads of institutions to declare their assets on an annual basis. In this context, the President signed in September 2012 the decree on declaration of assets (prior action 5). The law targets the President, elected officials, judges and magistrates, as well as heads of institutions. Despite the fact that the CNLPC code of ethics is still under preparation, the adopted national strategy to combat corruption (September 2012) and the internal rules of the CNLPC are key to step up the fight against corruption. To its credit, the CNLPC has already completed its investigation into five separate complaints involving various enterprises and agencies, the results of which have been forwarded to the judicial authorities for action. To date the judicial authorities have not acted on any of those cases. The internal rules governing the procedures and practices of the CNLPC, as well as the code of ethics, are still work in progress. The CNLPC is counting on donors and other external partners for assistance both in terms of training and equipment support in its new role.

Strengthening the economic governance of the fisheries sectors

20. The program supported Government efforts to strengthen economic governance of the fisheries sector through a more systematic disclosure of fishing agreements, licenses and related revenues. Lack of transparency and monitoring of fishing agreements, licenses and related revenues undermined the sector’s governance. The tuna fisheries sector was an important source of public revenues and financial transfers. Information on the three existing fishing agreements in force in 2012, including information about the related fishing licenses and payments, were not made systematically available to the public, with the exception of the agreement with the EU. During the project period, systematic disclosure of fishing agreements, licenses and related revenues contributed to a better monitoring by the public sector and stakeholders.

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21. The authorities have undertaken an inventory of the existing agreements and requested authorization from relevant parties to disclose the agreements, subject to written consent of the parties. With a view to improve transparency, the authorities have disclosed on the Government website (http://cref-comores.org/pubs/Protocoles/) the contents (including payments) of all existing fishing agreements and fishing licenses issued (foreign and nationals, in the context of a fishing agreement or not) which were in force in the previous 12 months and which have no confidentiality provisions, or which have confidentiality provisions but for which written authorization to disclose by the necessary parties have been obtained (prior action 6).

Pillar II: Addressing Economic and Social Vulnerabilities

Improving reliable availability of electricity

22. The program supported the Government in its efforts to address economic and social vulnerabilities through improvements in the reliability of available electricity. Electricity supply in the capital Moroni was very unreliable, with six hours of planned interruption of service each day, and frequent unplanned load shedding. For the last couple of years, in the rest of the Island of Grand Comores, users only benefited from five hours of supply once every three days. In Moheli, power availability was slightly better with 12 to 18 hours per day, but available only to a very small number of clients. The impact of this situation with regard to socio-economic and fiscal vulnerability were dramatic: (i) small businesses, which couldn’t afford very costly individual generators, lost as much as five hours of production daily due to idling of electricity powered equipment; (ii) the quality of social services was negatively affected, particularly health services supplied by small health facilities outside of Moroni which couldn’t afford individual generators; (iii) long load shedding or discontinuation of power supply services affected disproportionately vulnerable social groups in rural and semi-rural areas which were in the lower income brackets and received electricity only a few hours a week, when available; and, (iv) large subsidies ($18.7 million) to the state-owned enterprise, MAMWE, diverted scarce budgetary resources from other priority uses, including social services. 23. The poor availability of electricity was mainly due to the inability of MAMWE to pay for the fuel and maintenance of their equipment. The revenue collected by MAMWE was well below operating costs, and as a result the utility was heavily dependent on Government financial support to purchase fuel. To improve the commercial performance of MAMWE, the Cabinet adopted on August 15, 2012, a comprehensive action plan to reorganize MAMWE’s commercial function (prior action 7). The action plan defined the actions to be undertaken at operational level, the implementation schedule, the responsibilities for implementation, as well as the cost of the equipment and services required for implementation in order to provide adequate technical documentation to start the process of implementation of The Plan. The Plan aimed at reducing power thefts and non-payments by at least 1/3 through: (i) the inspection of the distribution system and the disconnection of illegal connections, with the support of police forces; (ii) the establishment of a commercial system increasing the accountability of MAMWE staff for

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the billing and collection of bills in assigned areas; (iii) the reinforcement of sanctions of delinquent staff; and (iv) the development of an efficient client database to monitor individual consumption and ensure the integrity of the billing cycle. The next step would be the timely implementation of the plan and the establishment of an effective implementation monitoring mechanism.

Improving coordination of government bodies involved in natural disaster risk prevention and management

24. The program also addressed economic and social vulnerabilities by supporting the Government effort for improving coordination of government bodies involved in natural disaster risk prevention and management. Comoros had been highly vulnerable to natural disasters such as tropical cyclones, excessive rainfall (which causes landslides), and volcanic eruptions from the active volcano, Karthala, on the main Island of Grand Comoros. Although there had not been any formal national policy on disaster risk reduction (DRR), there were key policy instruments which addressed vulnerability and resilience to natural disasters, such as the Poverty Reduction and Growth Strategy Paper (PRGSP) adopted in 2009. Furthermore, the authorities had been committed to adopting and implementing a comprehensive Disaster Risk Management (DRM) agenda. 25. A National Platform for DRM and Climate Change Adaptation (CCA) was created by ministerial decree (Arreté ministeriel) on September 15, 2012 (prior action 8). This platform took into account Union and Islands government structures as well as the mandate of the Direction Générale de la Protection et de la Sécurité Civile. The authorities were committed to further strengthen the country’s capacity in the DRM and CCA area, by preparing an integrated National Strategy for Disaster Risk Management and Climate Change Adaptation that would include clear short and medium term provisions to address the impact of disasters and climate change on social outcomes.

1.5 Revised Policy Areas (if applicable)

26. Policy areas were not revised.

1.6 Other significant changes

27. No other significant changes occurred.

2. Key Factors Affecting Implementation and Outcomes

2.1 Program Performance 28. The program was supported by a single tranche operation. The Economic Reform Development Policy Grant approval was subject to the implementation of eight prior actions (see Matrix below). All prior actions were satisfactorily met before Board approval on November 29, 2012; although prior action 3 suffered from setbacks. The operation became effective on December 17, 2012, and closed on December 30, 2013.

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Table 2: ERDPG -Prior Actions Status

Pillar 1 – Fostering public transparency and accountability

Prior Actions from Legal Agreement/Program Document

Status

A. Improving public financial management

Prior action 1. The Recipient has adopted and promulgated its Public Financial Management Bill (Loi des Opérations Financières de l’Etat - LOFE) in form and substance satisfactory to the Association.

Met. Voted and promulgated in August 2012 by the National Assembly (Loi des Opérations Financières de l’Etat).

Prior action 2. The Recipient has published its quarterly budget execution reports, for at least two quarters, including information on spending in social sectors and otherwise in form and substance acceptable to the Association, on a public website or in a newspaper of national coverage.

Met. Quarterly budget execution reports for the last quarter of 2011, the first quarter and the second quarter of 2012 were published in the website of the Policy Coordination Unit (CREF) of the Ministry of Finance (http://www.cref.gouv.km). The budget execution report for the second quarter included in its annex detailed information of the social spending.

Prior action 3. The recipient has adopted the decree on the new treasury administration reform and the reform of the treasury administration is being implemented, with: (i) the appointment of the Director General of the Public Accounting and Treasury, and (ii) the appointment of the Recipient’s Paymaster General of the Union of Comoros.

Met. A new Directorate of Public Accounting and Treasury (DCPT) and the appointment by decree (Decree No.12-047/PR of February 29, 2012) of the new Director General of Public Accounting and Treasury were adopted.

B. Improving public sector efficiency and accountability

Prior action 4. The Recipient has prepared and disclosed on a public website or in a newspaper of national coverage, at least one bi-monthly report covering the period from July to August 2012 on recruitments (each including an update on wage payments and arrears and otherwise in form and substance satisfactory to the Association) in the central and Autonomous Islands’ governments, by ministry and commissariat and

Met. The authorities prepared and disclosed on the government website www.cref-comores.org an exhaustive and detailed list of civil servants per department at the Union and at the Islands level, on a monthly basis, covering the 2 month period from July to August 2012. It also includes detailed wage bill data and information on recruitment by gender. These GISE-generated reports provide updated information on the situation on wage payments and arrears.

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by gender.

C. Strengthening governance and anti-corruption

Prior action 5. The Recipient has adopted a decree requiring key officials to submit an annual asset declaration under conditions which strike a balance between individual rights to privacy and the overriding need to access information relevant to combating corruption and avoiding conflicts of interest.

Met. The decree on declaration of assets, Decree # 12-183, was signed by the President on September 15, 2012.

D. Strengthening the economic governance of the fisheries sector

Prior action 6. Subject to the Recipient’s pre-existing confidentiality obligations, the recipient has disclosed the list of all fishing agreements and all fishing licenses in force during the previous twelve months, (including for each agreement and license, information in form and substance satisfactory to the Association, on its cumulated duration and all related fees paid per category and access regime) on a public website and in a newspaper of national coverage.

Met. The authorities have disclosed on the Government website http://cref-comores.org/pubs/Protocoles/ the contents (including payments) of all existing fishing agreements and fishing licenses issued (foreign and nationals, in the context of a fishing agreement or not) which were in force in the previous 12 months.

Pillar 2 : Addressing economic and social vulnerabilities

E. Improving reliable availability of electricity

Prior action 7. The Recipient (through its Minister responsible for energy) has approved a comprehensive action plan, in form and substance satisfactory to the Association, for the reorganization of state own enterprise MAMWE’s commercial function.

Met. The Cabinet adopted on August 15, 2012 a comprehensive action plan for reorganization of MAMWE’s commercial function.

F. Improving coordination of government bodies involved in natural disaster risk prevention and management

Prior action 8. The Recipient has established the national platform for disaster risk management, in form and substance acceptable to the Association.

Met. The National Platform for DRM and Climate Change Adaptation (CCA) was created by ministerial decree (Arreté ministeriel) on September 15, 2012.

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2.2 Major Factors Affecting Implementation:

Adequacy of government’s commitment

29. The Government commitment to reform has been strong. Since elections in May 2011 and the assumption to power of President Ikililou Dhoinine, the country has been enjoying greater stability and renewed efforts to pursue reforms. The Government embarked on an ambitious reform program supported by the IMF, the World Bank and the European Union and reached HIPC Completion Point in December 2012. The successful completion of HIPC and the development of this operation are examples of the Government’s commitment to reforms. 30. There were, however, a few areas where, despite government efforts, the intended outcome was not fully achieved. For example, the quarterly budgetary monitoring reports for 2013 became only one annual report. Also, the information disclosure on staffing and wages in civil services were not done as systematically as expected. Although these reports were used by the authorities in the management of civil service and PFM, the fact that they were not systematically disclosed undermined somehow the efforts to ingrain a more transparent management of the public resources. Likewise, the National Platform for Preventing and Reducing Disaster Risk did not meet as often as planned. As the country moves to the next level of reforms, particularly in PFM, the government is facing increasing institutional resistance to change. Nonetheless, this DPO served well to maintain government commitment for the reform after HIPC completion and, although slowly, paved the way for the programmatic support provided in 2014.

Soundness of background analysis

31. The operation’s design drew on country-specific analytical work and findings from ongoing technical assistance in the Comoros. These included, in the PFM area, the 2007 Public Expenditure and Financial Assessment (PEFA), the Debt Management Performance Assessment report completed and disclosed in June 2012, as well as lessons from the diagnostic and dialogue supported by trust funded (LICUS and IDF) technical assistance in 2006 and 2008, respectively. With regard to civil service reform, the policy dialogue benefited from a 2005 diagnostic of the civil service wage bill and EGTA-funded analytical support to the development of integrated civil service management software. A political economy analysis on civil service recruitment was completed in August 2012, highlighting the importance of transparency in recruitments and wages to underpin efforts to improve HR and wage bill control against the background of inter-Island conflicts over shared public resources. This analysis also underscored the role of the media on the demand side of transparency. In the Energy sector, a short and medium term Diagnostic and Sector Review of the power and petroleum sectors was undertaken with Bank support and completed in August 2012, along with a political economy analysis of Governance issues in the power sector. These studies were coordinated with a long term Energy Sector Study funded by the EU.

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32. The operation’s design also drew on a number of analytical pieces on fragility and conflict such as the Africa Region Research paper on “Avoiding Fragility Trap in Africa”, a review of PDOs in fragile environments and the World Development Report 2011 on Conflict and Fragility. These documents stressed three areas of relevance for the operation: (i) the importance of transparency in the use of public resources; (ii) identification of early wins on social and economic developments to support the momentum of stability; and, (iii) continuity in the support of reforms. 33. This DPO was an integral part of the ISN (April 29, 2010) and a key component of a broader package of assistance. Although the ISN covered the years of 2010-12, this operation is consistent with the planned support aimed at tackling the underlying causes of fragility (political, economic and environmental) by strengthening government capacity and accountability and reducing social vulnerabilities. This operation addressed some of these issues alongside other Bank operations (Economic Governance TA (EGTA), Electricity Sector Recovery Project, Community Development Support Project) and donor operations (UNDP-WB grant from the Global Facility for Disaster Reduction and Recovery (GFDRR).

Assessment of the operation’s design 34. The scope of reforms supported by this operation was appropriate. It covered critical areas of reform as envisaged in the ISN and the government’s own reform agenda as stated in their PRGSP (see section 1.2). The DPO reforms also complemented and strengthened Comoros’ effort to achieve the HIPC Completion Point.

Relevance of the risks identified at appraisal and effectiveness of mitigation measures 35. Risks were identified in the PDO, and were mostly mitigated but resulted in a partial implementation of objectives.

Table 3 ERDPG - Anticipated Risks and Mitigation Factors

Risks identified at appraisal Mitigation Factors Political risk 2013 was a year of political stability. The

international community supported the constructive dialogue between the Union and the Island governments and carried on their assistance in support of the ongoing reform agenda.

Opposition to reforms risk Link to the political risk was the opposition to reforms due to lack of full disclosure of measures related to PFM, civil service management, fisheries and fighting corruption in a weak environment. However, this risk was somehow mitigated through increased transparency and technical assistance, namely through the support of change management and leadership program through the economic

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governance project and the rapid result initiative through the World Bank Institute.

Implementation capacity risk It is a persistent problem which both donors and government are tackling through: (i) providing parallel technical assistance and capacity building to interventions; (ii) coordination of interventions and (iii) focusing reform agenda in a limited number of implementation measures.

Sustainability of reforms risk This risk materialized partially. After the HIPC process, which was a catalyst of reform, the momentum waned a little bit. The measures to recover it are being taken now through the new DPO which is addressing reforms to move the agenda forward.

Macroeconomic risk The macroeconomic environment was challenging, but the economy performed relatively well in 2013. GDP growth is still projected at 3.5 percent and inflation at less than 3 percent, although the fiscal finances remained fragile. Comoros continues to face macroeconomic vulnerabilities due to a slowdown in transfers and unexpected increases in fuel and food prices.

Fiduciary risks The mitigation of the fiduciary risks was intended through the focus of the operation on improvements on fiduciary standards and continued assistance in PFM and public administration reforms. However, fiduciary risks are still significant and the PEFA report of 2013 identified areas of fiduciary weaknesses for future action.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:

Rating: Moderately Satisfactory

M&E design

Rating: Moderately Satisfactory 36. The design of the indicators to monitor DPO progress was adequate. The selection of the indicators was designed in collaboration with the Government of the Union of Comoros and other donors, including the IMF, AfDB, EC, the French Government and the Arab Funds. Indicators were also selected to complement indicators in other Bank operations, such as the IDA-supported Economic Governance TA (EGTA). The next steps in the prior actions envisaged in the PDO were also relevant and the triggers for next steps were formulated and designed in the same manner.

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M&E Implementation and utilization

Rating: Moderately Satisfactory 37. The Economic and Financial Reforms Unit (CRFF) was identified as the responsible authority to monitor reforms, report progress and coordinate actions with all ministries and entities, including at the Island level. CRFF was expected to provide quarterly updates to the IDA on progress of indicators, however this materialized only for a few indicators and not with the expected frequency. The Bank conducted regular supervision in collaboration with the government to ensure continued implementation of the program. Given Comoros’ weak national monitoring system, the Bank, the AfDB and the EC, gave support to strengthen and develop their capacities to design, implement, monitor, and evaluate their development and poverty reduction strategy. The Government’s Annual Progress Report on the PRGSP was shared with the Bank on a timely basis.

2.4 Expected Next Phase/Follow-up Operation (if any): 38. This Economic Reform Grant was a stand-alone operation and did indicate the possibility of a follow up operation. It listed possible triggers for a follow up operation. It acknowledged that going forward, sustained engagement by the Bank, IMF and donors would remain critical to supporting reforms in the post-HIPC period. A follow up programmatic DPO, the Comoros Economic Governance Reform Grant (EGRG), was approved by the World Bank Board on April 29, 2014. The new operation is the first of this kind for the Union of the Comoros. It builds on the reforms sustained as part of the HIPC process and previous operations and seeks to provide a longer term engagement that maintains government focus around few and relevant key constraints.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation


39. Objectives (Rating: Satisfactory). The overarching objective of this operation, to strengthen state transparency and accountability to address underlying causes of fragility, still is very relevant to the current country and global priorities. Comoros widespread poverty and unemployment continue to be a big challenge despite progress in economic management. In this post-HIPC scenario, continued support focusing on macro-economic stability, strengthening governance through PFM and public sector reforms continue to be highly relevant to the Bank’s current ISN. 40. Design (Rating: Satisfactory).The design was appropriate and relevant. It supported the implementation of core reforms in Comoros’ PRGSP covering the period 2010-14. The two main pillars of focus, namely, fostering public transparency and accountability, covering PFM, civil service management, anti-corruption and fisheries;

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and, addressing economic and social vulnerability emanating from weak performance in the energy sector and weak natural disaster risk management, are still at the center of the areas addressed by the PRGSP. The design could have benefited from a more active inclusion at the design stage of Island government authorities to promote faster implementation of reforms. 41. Implementation (Rating: Moderately Satisfactory). The Economic and Financial Reform Unit (CREF) was responsible for monitoring the reforms, reporting progress and coordinating actions with all ministries and entities, including at the Island level. Although they were instrumental in providing information, improvements could have been made to maintain the flow of information throughout the implementation period as reporting was sporadic and not always complete.

3.2 Achievement of Program Development Objectives


42. Program Development Objective achievements are summarized in the table below. Progress was made in seven out of the eight DPO areas, with four fully met and three partially met. Therefore, the overall rating for the achievement of the development objectives is rated moderately satisfactory.

Table 4: Anticipated and actual outcomes of the ERDPG

Anticipated Result Actual Outcome Improving public financial management Indicator1: Timely transmission of budget circular to Ministries, Departments, and Agencies (MDAs)

The Budget circular was transmitted in July 2013 for the preparation of the 2014 Budget Law according to the indicator target to transmit it at least six weeks before the start of the budget conferences, i.e. not later than July 31, 2013.(Rating: Satisfactory).

Indicator 2: Quarterly budget monitoring reports published, including data on social sectors not later than eight weeks after the end of the quarter

Instead of quarterly execution reports, one annual report was published on April 2014 for the year 2013. 1 The indicator target called for regular reports, not only one annual report (Rating: Moderately Satisfactory).

Indicator 3: Number of timely consolidated cash balance statements of the Union government produced by the DGCPT

The Treasury hasn’t produced any cash balance statement. The indicator target was at least three timely consolidated cash balances by September 2013. (Rating: Unsatisfactory)

Improving public sector efficiency and accountability Indicator 4: Reflect existing information on Information on staffing and wages in civil services

1 Available at: http://www.finances.gouv.km/v1/files/Budget2013/Execution%Budget%202013.pdf

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staffing and wages in civil services disclosed to public

are not done systematically. July-August 2012 was available to the public in August 2013, but is no longer available. Data for January to August 2013 is available in the MoF website as part of the annexes for the 2014 budget. The indicator target was for the publication of six bi-monthly reports. (Rating: Moderately satisfactory)

Strengthening governance and anti-corruption Indicator 5: Public awareness of a legal basis for limiting corruption by high official, numbers of newspaper reporting on the existence of this legal basis

Six communication campaigns including informing the government, civil society and press article were done already by June 2013. More recently high government officials including the President of Republic have managed to declare their asset and fill out the form. This surpassed the target of at least five articles in the newspaper by September 2013. (Rating: Satisfactory)

Strengthening the economic governance of the fisheries sector Indicator 6: Public access to information on fishing licenses and agreements

Information for 2013 on fishing licenses and agreements were last updated in January 2014 and it is available on the CREF website (http://www.cref.gouv.km). This met the target of having the information available to the public and updated at least once a year. (Rating: Satisfactory)

Improving reliable availability of electricity Indicator 7: MAMWE’s overall collection ratio to the value of electricity sold

By March 2013, the collection ratio to the value of electricity sold was already at 58 percent, over the target of 40 percent by September 2013. This is one step in the right direction towards improving the commercial operation of the sector, a pre-requisite to improving supply.(Rating: Highly Satisfactory)

Improving coordination of government bodies involved in natural disaster risk prevention and management (DRM) Indicator 8: Mechanism for coordinating government’s responses to disasters

The National Platform for Preventing and Reducing Disaster Risk in Union of Comoros met for a training workshop in June 2013. However, meetings are not held systematically. The target called for at least two formal and systematic meetings of the national commission by end-September 2013. (Rating: Moderately Satisfactory)

Public Financial Management

43. Comoros took important legal and institutional steps towards improving public financial management, i.e., the adoption of the Public Financial Management Bill in 2012 and the achievement of targets as mentioned in the matrix above. However, the next step is to bring legislation into concrete actions. This will be more difficult and calls for strong political will. For example, Comoros continues to operate with four parallel treasuries at the Union and Island levels which make it very difficult to have a clear assessment of their finances. Furthermore, implementation of the PFM law has been slow. The 2013 PEFA report emphasizes the need to accelerate the implementation of the law to improve transparency and fiscal coverage. The recently approved

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programmatic DPO, the EGRG, supports efforts to improve treasury management by effectively making operational the Directorate of Public Accounts and Treasury. For example, one of the prior actions of EGRG was the identification in the 2014 Budget Law of a dedicated budget line for the DGCPT and the appointment of key DGCPT staff.

Public Sector Efficiency and Accountability

44. In this operation the initial means to improve public sector efficiency and accountability was to start addressing civil service reform through a more systematic public disclosure of existing information on staffing and wages. Information was published in August 2013 reflecting data from 12 months earlier, but no further information has been disclosed since then. However, the government has moved forward on other fronts: it has updated the civil service payroll drawing on the civil service census, and is moving on the use of a new computerized payroll system.

Governance and Anti-corruption

45. Regarding the anti-corruption agenda, the country has created an Anti-Corruption Commission (Commission Nationale de Prévention et de Lutte contre la Corruption). The Government has issued the Decree no. 12-183/PR dated September 15, 2012 that requires mandatory asset declaration for public officials in order to increase accountability. Such an asset declaration initiative suffers from a lack of compliance with the targets of the measure. As of late 2013, 30 percent of the government officials have complied with the dispositions of the decree and filed an asset declaration. The names of the compliant public officials have been published in the country’s official gazette. It is expected that by 2015, 80 percent of government officials concerned by the measure will undertake asset declarations. The new DPO (DGRG) continues to support efforts in this area.

Strengthening the economic governance of the fisheries sector 46. The disclosure of fishery agreements, fishing licenses and related revenue information through government sites and local newspapers has contributed to improved transparency and accountability for the sector. Not only was the information published in Comoros, but it has been disseminated by some NGOs, such as Transparentsea. This will also contribute to improve management of the fisheries resources where all sectors involved (stakeholders, fishing agreement signatories and neighboring coastal countries) will get the same information. The DGRG continues to support efforts to enhance transparency in the management of the fisheries resources. It is expected that by 2015 access to information on revenues and its use will be regularly documented and disclosed.

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Improving reliable availability of electricity

47. The adoption of a comprehensive action plan for reorganization of MAMWE’s commercial function by the Cabinet on August 15, 2012 was a necessary step for improving the commercial performance of MAMWE. By March 2013, the collection ratio to the value of electricity sold was already at 58 percent, improving the commercial operation of the sector, a pre-requisite for increasing energy supply. The next step will be the timely implementation of the plan and the establishment of an effective implementation monitoring mechanism. The World Bank financed Electricity Sector Recovery Project (ESRP) builds on previous sector re-organization supported under the DPO2 and will help implement the reform by funding senior experienced managers to work with the existing management to significantly improve billing, collection and overall operational management. The DGRG complements the ESRP by supporting the Government efforts to improve performance in this sector.

Improving coordination of government bodies involved in natural disaster risk prevention and management

48. The National Platform for Preventing and Reducing Disaster Risk in Union of Comoros met for a training workshop in June 2013. The workshop recognized the importance of conducting more regular meetings for monitoring the progress of activities and strengthening the capacity of its members. However, meetings have not been held systematically.

3.3 Justification of Overall Outcome Rating (combining relevance and achievement of PDOs)


49. Combining relevance and efficacy of the achievement of the objectives, the operation’s overall outcome rating is rated moderately satisfactory. The objectives of the operation were and remain very relevant to the current country and global priorities as shown by the reform agenda supported by the new DPO series. Progress was moderately satisfactory or better in seven out of the eight DPO indicators. The unmet indicator was related to PFM where the Treasury failed to produce cash balance statements.

3.4 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above)

(a) Poverty Impacts, Gender Aspects, and Social Development 50. The operation is expected to have a positive poverty and social development impact in the medium to longer term. Improvements in PFM are expected to benefit the poor through a reduction in fiscal leakages and greater focus on poverty reduction expenditures. The MAMWE Commercial Action Plan could also have a positive social impact. The improvement in the collection performance of MAMWE is expected to

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reduce subsidies from the Government, allowing public resources to be allocated towards development spending in the medium term. But as reforms in this area move forward, there might be some potential redistributive impacts that would need to be addressed. Removing economic governance constraints to fisheries, energy sector development and addressing disaster management vulnerabilities will also enable the government to move forward with its implementation of its PRGSP and focus scare resources on priority social sectors expenditures and disaster risk management. 51. Comoros GDP is estimated to have grown by 3.5 percent in 2013, up from 3 percent the previous year due to a strong agricultural performance, increase in construction and resilient remittances. Comoros’ medium term outlook is positive. Growth is expected to increase to 4 percent in 2014 and remain at that level through 2018 driven by macroeconomic stability and supported by investment in tourism and fishing while inflation should remain around 2.5 percent. GDP per capita in nominal dollars is expected to increase from $859 in 2012 to $1,236 in 2018.

(b) Institutional Change/Strengthening

52. This operation supported institutional reform mainly through public financial management, but despite significant improvement in the legal and institutional framework for PFM, there remain significant challenges for continued and deeper implementation. The most important challenge is to ensure the implementation of the newly adopted PFM law through the creation of a new Directorate of Public Accounting and establishment of a Single Treasury Account.

(c) Other Unintended Outcomes and Impacts (positive or negative, if any)

3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not Applicable

4. Assessment of Risk to Development Outcome

Rating: Substantial

53. The risk to development outcomes is substantial. It is mostly associated with the country’s vulnerability to external shocks, high risk of debt distress and potential political difficulties to implement reforms. Historically, difficult inter-islands relations over the use of public resources, within the context of weak governance, structural weaknesses in PFM and high politicization, have been at the root of the country's protracted fragility. This was reflected in the limited impact of some of the expected reforms and the pace at which others were implemented. The new DPO series proposes to address this challenge by identifying reforms which are endorsed by the Union and Island governments, providing technical assistance to facilitate the consensus, and by seeking to foster trust among the parties by improving transparency in the use of public resources.

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54. The country is highly vulnerable to external shocks (natural disasters, increases in international fuel and food prices, and slowdown in transfers), and potential political difficulties to continue implementing reforms. Government finances remain fragile, limiting the capacity of the authorities to respond to external shocks and maintain the country on a steady macroeconomic path.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase)


55. Bank performance in ensuring quality at entry is rated moderately satisfactory. Section 3.1 shows the relevance of objectives and design to the current country and global priorities and how it was designed to support the implementation of core reforms in Comoros’ PRGSP covering the period 2010-14. The operations’ identification and appraisal drew from existing analytical work (see section 2.2) and Bank lessons from the previous DPO (TA complementarity to budget support and importance to push for core institutional reforms in fragile states). In the PFM area, the DPO benefited from the diagnostic and dialogue supported by trust funded (LICUS and IDF) technical assistance in 2006 and 2008, respectively. With regard to civil service reform, the policy dialogue benefited from a 2005 diagnostic of the civil service wage bill and EGTA-funded recent analytical support to the development of integrated civil service management software. During identification 2 , preparation and appraisal, the Bank worked closely with the Government teams and donors (i.e., IMF, AfDB, EU and France) to identify areas of focus of the operation based on the Government’s own reform agenda. In the pillar “Fostering public transparency and accountability”, the Bank team worked with the Vice-presidency of Finance, the High Authority of Public Finance, the General Treasury and the Ministry of Justice. The operation benefited from analytical pieces, such as, the Africa Region Research paper “Avoiding Fragility Trap in Africa” (November, 2011), which stressed the importance of transparency in the use of public resources. The Bank Economic Governance Support Project team collaborated on issues of transparency and civil service reform. In the area of transparency and accountability in the fisheries sector, the Bank worked closely with the Comorian Fishing Authority. In the Energy Sector, the operation benefited from the Diagnostic and Sector Review of the power and petroleum sectors completed in August 2012 with Bank support and funded by the EU. The Bank worked closely with the Vice-presidency of Finance, Vice-presidency of energy and MAMWE to discuss reforms of the commercial function of this utility. Regarding implementation of the National Platform for Disaster Management, the Bank benefited

2 Please refer to Aide-memoire of May 23, 2012.

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from the collaboration with UNDP related to the Bank’s funding in this area through the department of “Global Facility for Disaster Risk Reduction (CFDRR)”, implemented in partnership with UNDP. In this area, the Bank worked with the Ministry of Defense and the Director General of Civil Protection.

(b) Quality of Supervision


56. The quality of supervision of this operation is rated moderately satisfactory. There was one supervision mission in May 2013, combined with the identification mission of the next programmatic DPO series. This helped assess the status of the outcome indicators and informed the design of the new operation. The supervision mission was also done simultaneously with an IMF mission to assess the implementation of the fifth and sixth review of the IMF EFC supported program. At the same time, the supervision missions of the Economic Governance TA (EGTA) operation also helped to follow up on a continuous basis on the triggers related to PFM and economic governance. However, there was no ISR late in the year and the government could have benefited from more guidance from the Bank in a few areas, for example on following up with them to sustain the publication of reports required to comply with the M&E of the operation.

(c) Justification of Rating for Overall Bank Performance


57. Given that the Bank performance for quality at entry is rated moderately satisfactory, and quality of supervision is rated moderately satisfactory, the overall Bank Performance is rated moderately satisfactory.

5.2 Borrower Performance3


(a) Government Performance (see Overall Borrower Performance)

58. The Government overall performance for this operation is rated moderately satisfactory. Comoros has made good progress with the adoption of relevant PFM legislation and the establishment of institutions, as well as progress in the electricity and fisheries sectors (see Table 4). Section 3.2 explains in detailed the actual achievements of the anticipated outcomes. Despite the shortcomings in capacity, the Government still managed to fully or partially achieve all indicators but one (the government was not

3 According to the ICRR Guidelines, if Government and Implementing Agency are indistinguishable, only an overall rating is necessary.

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successful in producing cash balance statements as per indicator 3). The Government committed to move the agenda forward beyond HIPC related triggers and measures (section 2.2). Fiduciary issues related to the PDO were adequate during project implementation. The M&E arrangements were also adequate, but strengthening M&E continues to be a medium term goal supported by donors. Furthermore, the relationship and coordination with the Bank and other donors was highly satisfactory.

(b) Implementing Agency or Agencies Performance (see Overall Borrower Performance)

59. According to the ICRR Guidelines, if Government and Implementing Agency are indistinguishable, only an overall rating is necessary and coordination with the Bank and other donors was highly satisfactory.

(c) Justification of Rating for Overall Borrower Performance (see Overall Borrower Performance)

60. Given that the Government performance is rated moderately satisfactory, and as the Government and Implementing Agency are indistinguishable, the overall Borrower Performance is rated moderately satisfactory.

6. Lessons Learned

61. First, timely capacity assistance through adequate coordination with other sector operations and other donors is critical to improve Government’s capacity to implement reforms. The implementation of the reforms was facilitated by targeted technical assistance provided by the Bank, i.e., through the IDA-supported Economic Governance TA (EGTA) operation and in coordination with other donors. The AfDB provided support through a capacity building and technical assistance project and direct budget support. Donors routinely exchange information and coordinate missions to ensure congruency of policies and maximize aid effectiveness. 62. Second, although technical assistance is critical to support the implementation of reforms, it is not always sufficient for entrenching change in national processes. The design of reforms must also complement the existing capacities, be of relevance from a political economy perspective and be tailored to the existing practicalities. This is of particular relevance in fragile and low-capacity states. For example, transparency initiatives may need to draw on both modern (internet) and traditional (press, radio, notice boards) communication channels to be relevant and effective in establishing the demand for good governance. 63. Third, additional consensus may be warranted when implementing reforms that touch upon the power sharing between the Island governments and the Union. For example, the Bank may want to ensure that the Islands participate in relevant meetings to ensure that the reforms that the Union Government wants to pursue are understood among all key stakeholders. Better understanding should foster trust among the parties

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and help move the agenda forward. Also, the Bank needs to be more cautious and less ambitious on these reforms to take into account the political economy. 64. Forth, Bank supervision needs to follow up with the Government more closely regarding the steps they need to take to achieve the indicators supported by the operation. For example, during this operation, the government had information for publishing the execution reports, but it was not clear to them that they needed to do it after the DPO was disbursed, despite being part of indicator 2. A closer follow up might be sometimes needed for the full success of an operation.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/Implementing agencies

65. The Borrower received a French version of this draft document and provided several comments. The authorities concurred with the overall gist of this report which will provide important lessons for the implementation of the on-going programmatic DPL (see Annex 4). (b) Co-financiers (c) Other partners and stakeholders

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Annex 1: Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/ Specialty

Lending Marcelo R. Andrade Consultant AFTP1 Noro Aina Andriamihaja Economist AFTP1

Siaka Bakayoko Lead Financial Management Specialist AFTMW

Helene Bertaud Senior Counsel LEGAM Fabrice Karl Bertholet Senior Financial Analyst AFTG2 M. Ananda Covindassamy Consultant AFTG1 Bienvenu Rajaonson Senior Environmental Specialist AFTN1 Dieudonne Randriamanampisoa Senior Economist AFTP1

Renganaden Soopramanien Consultant LEGAF-HIS

Xavier F. P. Vincent Senior Fisheries Specialist AFTN1

Hajarivony Andriamarofara Senior Governance and Public Sector Specialist AFTP1

Anne- Lucie Lefebvre Senior Public Sector Specialist AFTP1

Supervision Noro Aina Andriamihaja Economist AFTP1 (b) Staff Time and Cost

Stage Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending/Supervision/ICR 52 243,643

Total: 52 243,643

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Annex 2: Beneficiary Survey Results

Not applicable

26

Annex 3: Stakeholder Workshop Report and Results

Not Applicable

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Annex 4: Summary of Borrower's ICR and/or Comments on Draft ICR

28

Annex 5: Comments of Co-financiers and Other Partners/Stakeholders

Not Applicable

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Annex 6: List of Supporting Documents

World Bank, Program Document for Economic Reform Development Policy Grant, Report No. 72392-KM, October 30, 2012.

World Bank, Comoros, DPO (P122941) Implementation Status Report, June 2013.

World Bank, Electricity Sector Recovery Project, report No.PAD553, August 7, 2013.

World Bank, Program Document for the Economic Governance Reform Operation, Report No. 81671-KM, March 27, 2014.

World Bank, Comoros ISN, April 2014.

World Bank, Avoiding the Fragility Trap in Africa, WPS5884, November 2011.

International Monetary Fund, IMF Country Report No.13/32, Union of the Comoros, Staff Report for the 2012 Article IV Consultation, Fourth Review Under the Three-Year Arrangement Under the Extended Credit Facility, February 2013.

International Monetary Fund, IMF Country Report No.13/371, Union of the Comoros, Sixth Review Under the Three-Year Arrangement Under the Extended Credit Facility, December 2013.

World Bank, BTOR – PREM - Mission to the Comoros - GAC TA (P143164), Economic Governance and Public Sector DPO (P101688), Economic Governance Technical Assistance - AF (P144381) and Statistical Support to Comoros (P146708), November 4 – 17, 2013.

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MAP IBRD 33389

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