Document of The World Bank Report No. 106922‐ML...2011. By 2013, the poverty rate was estimated at...
Transcript of Document of The World Bank Report No. 106922‐ML...2011. By 2013, the poverty rate was estimated at...
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Document of The World Bank
FOR OFFICIAL USE ONLY
Report No. 106922‐ML
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROGRAM DOCUMENT
FOR A PROPOSED DEVELOPMENT POLICY CREDIT
IN THE AMOUNT OF EURO 46.9 MILLION (US$50 MILLION EQUIVALENT)
TO THE
REPUBLIC OF MALI
FOR THE
FIRST POVERTY REDUCTION AND INCLUSIVE GROWTH SUPPORT OPERATION
May 02, 2017
Macroeconomics and Fiscal Management Global Practice 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.
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‐ ii ‐
GOVERNMENT FISCAL YEAR January 1st – December 31
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of March 31, 2017)
Currency Unit CFA Franc (CFAF) US$1.00 = CFAF 614 US$1.00 = Euro 0.93624192
WEIGHTS AND MEASURES
Metric System
ABBREVIATIONS AND ACRONYMS
ACDP Agricultural Competitiveness and Diversification Project
AEDD Environment and Sustainable Development Agency
AGEFAU Agence de Gestion du Fonds d’Accès Universel (Agency in charge of Managing the Universal Access Fund)
AMRTP Autorité Malienne de Régulation des Télécommunications et des Postes (Malian Regulator of Telecommunications and Post)
BCEAO Banque Centrale des Etats de l’Afrique de l’Ouest (Central Bank of West African States)
CCS‐SFD Cellule de Contrôle et de Surveillance des SFD (Unit in charge of MFI oversight)
CFAF CFA Franc
CPF Country Partnership Framework
CREDD Cadre Stratégique pour la Relance Economique et le Développement Durable (Strategic Cadre for Economic Recovery and Durable Development)
CSCOM Centres de Santé Communautaires, (Community Health Centers)
CSCRP‐3 Third Growth and Poverty Reduction Strategy Paper
CSO Civil Society Organizations
DNACPN Direction Nationale de l’Assainissement et du Contrôle des Pollution et des Nuisances
(National Directorate of Sanitation and Control of Pollution and Nuisances)
DPO Development Policy Operation
DSA Debt Sustainability Analysis
ECF Extended Credit Facility
EIA Environmental Impact Assessment
ESNP Emergency Safety Nets Project
EU European Union
FDI Foreign Direct Investment
GBDTAP Governance and Budget Decentralization Technical Assistance Project
GDP Gross Domestic Product
GoM Government of Mali
GRS Grievance Redress Service
GSCM General Secretaries Coordination Meeting
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‐ iii ‐
ICC Improving Investment Climate
ICT Information and Communications Technology
ICT‐PA ICT Policies and Applications
IDA International Development Association
IFC International Finance Corporation
IMF International Monetary Fund
JMM Joint Ministerial Meeting
MEF Ministry of Economy and Finance
MFI Microfinance Institutions
MSAHRN Ministry for Solidarity, Humanitarian Action and Reconstruction of the North
NDR National Directorate of Roads
NEPP National Policy for Environmental Protection
NPL Non‐performing Loans
ODA Official Development Assistance
PDA/RN Programme de Développement Accéléré des Régions du Nord (Program for the Accelerated development of the Northern Regions)
PDO Program Development Objectives
PEFA Public Expenditure and Financial Accountability
PFM Public Financial Management
PRED Plan for Sustainable Recovery of Mali
PREM Plan de Réforme de la Gestion des Finances Publiques au Mali (Public Finance Management Reform Plan in Mali)
PRIGSO Poverty Reduction and Inclusive Growth Support Operation
RAMED Régime d'Assistance Médicale (Medical Assistance Regime)
RFINA Roadmap for Financial Inclusion and Needs Assessment
RMF Road Maintenance Fund
RMP Rural Mobility Project
SCD Systematic Country Diagnostic
SDR Special Drawing Rights
SFD Systèmes Financiers Décentralisés (Micro Finance Institutions ‐ MFI)
SNSPS Support for the National Social Protection Strategy
TA Technical Assistance
ULGSP Urban Local Government Support Project
UN United Nations
VAT Value‐Added Tax
WAAPP West Africa Agricultural Productivity Program
WAEMU West African Economic and Monetary Union
WBG World Bank Group
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‐ iv ‐
Regional Vice President: Sr. Global Practice Director:
Country Director: Practice Manager: Task Team Leader:
Co‐ Task Team Leader:
Makhtar Diop Carlos Felipe Jaramillo Soukeyna Kane Lars Moller Arsène Kaho Johannes Hoogeveen
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‐ v ‐
REPUBLIC OF MALI
FIRST POVERTY REDUCTION AND INCLUSIVE GROWTH SUPPORT OPERATION
TABLE OF CONTENTS
1. INTRODUCTION AND COUNTRY CONTEXT ...................................................................................... 1 2. MACROECONOMIC POLICY FRAMEWORK ....................................................................................... 2
A. RECENT ECONOMIC DEVELOPMENTS ................................................................................................................ 2 B. MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY ............................................................................... 6 C. IMF RELATIONS ................................................................................................................................................... 8
3. THE GOVERNMENT’S PROGRAM .................................................................................................... 9 4. PROPOSED OPERATION ................................................................................................................ 10
A. LINK TO GOVERNMENT PROGRAM AND OPERATION DESCRIPTION ............................................................... 10 B. LESSONS LEARNED ............................................................................................................................................ 10 C. PRIOR ACTIONS, RESULTS AND ANALYTICAL UNDERPINNINGS ....................................................................... 11 D. LINK TO CPF, OTHER WORLD BANK OPERATIONS AND THE WBG STRATEGY .................................................. 18 E. CONSULTATIONS, COLLABORATION WITH DEVELOPMENT PARTNERS ........................................................... 19
5. OTHER DESIGN AND APPRAISAL ISSUES ........................................................................................ 19 A. POVERTY AND SOCIAL IMPACT ......................................................................................................................... 19 B. ENVIRONMENTAL ASPECTS .............................................................................................................................. 21 C. PFM, DISBURSEMENT AND AUDITING ASPECTS ............................................................................................... 22 D. MONITORING, EVALUATION AND ACCOUNTABILITY ....................................................................................... 24
6. SUMMARY OF RISKS AND MITIGATION ........................................................................................ 24
LIST OF TABLES
Table 2‐1: Key Macroeconomic Indicators, 2013–2019 .................................................................................................. 4 Table 2‐2: Key Fiscal Indicators, 2013–2019 .................................................................................................................... 5 Table 2‐3: External Financing Requirements, 2014‐2019 ................................................................................................ 6 Table 2‐4: External Debt Stock Composition at Year‐End, 2015 ...................................................................................... 8 Table 6‐1: PRIGSO1 Risk Rating ..................................................................................................................................... 25 LIST OF ANNEXES ANNEX 1: POLICY AND RESULTS MATRIX .................................................................................................... 27 ANNEX 2: LETTER OF DEVELOPMENT POLICY ............................................................................................. 30 ANNEX 3: LETTER OF DEVELOPMENT POLICY – UNOFFICIAL TRANSLATION .............................................. 40 ANNEX 4: FUNDS RELATIONS ANNEX ......................................................................................................... 48 ANNEX 5: ENVIRONMENT AND POVERTY/SOCIAL ANALYSIS TABLE ........................................................... 49 ANNEX 6: ANALYTICAL UNDERPINNINGS FOR PRIGSO1 ............................................................................. 51
The First Poverty Reduction and Inclusive Growth Support Operation is prepared by a team consisting of Arsène Kaho (Task Team Leader, GMFDR) and Johannes Hoogeveen (Co‐task Team Leader, GPV07), Jose Lopez‐Calix and Michel Rogy (AFCW3), Caroline Plançon (GSURR), Aly Sanoh (GPV07), Remileku Rakiatu Cole (GFADR), Daniel Pajank (GFMDR), Philippe Leite (GSPDR), Cheick Diallo, Charles Hurpy (GTIDR), Serge Menang Evouna (GENDR), Mahamadou Sissoko, Tahirou Kalam (GGODR), Sachiko Morita (LEGAM), Faly Diallo (WFALA). The operation benefited from guidance provided by Paul Noumba, Paloma Anos Casero, Lars Moller, Pablo Fajnzylber, and Paola Ridolfi. The document was peer reviewed by Rob Swinkels (GPVDR), Souleymane Coulibaly and Jean‐Pierre Christophe Chauffour (GMFDR).
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‐ vi ‐
SUMMARY OF PROPOSED CREDIT AND PROGRAM
REPUBLIC OF MALI
FIRST POVERTY REDUCTION AND INCLUSIVE GROWTH SUPPORT OPERATION
Borrower: The Republic of Mali.
Implementation Agency: Ministry of Economy and Finance.
Financing Data: An IDA Credit in the amount of equivalent US$50 million on standard IDA terms (a maturity of 38years including a grace period of 6 years).
Operation Type: First in a programmatic series of two development policy operations; single‐tranche
disbursement.
Pillars of the Operation
and Program
Development
Objective(s):
The proposed operation is structured around two pillars: (i) fostering inclusive growth and (ii)
supporting pro‐poor decentralized transfers and social protection.
Result Indicators:
Fostering inclusive growth 1. Increase in the coverage ratio of the communal cadastral map for Bamako District and the
Cercle de Kati. Baseline 2015: 0%. Target 2018: 20%. 2. Increase in the percentage of agricultural subsidies allocated through e‐vouchers (as opposed
to paper vouchers). Baseline 2015: 0%. Target 2018: 20%. 3. Decrease in the average tariff per minute for personal domestic calls. Baseline 2015: CFAF
108. Target 2018: CFAF 90. 4. Increase in the number of localities benefiting from extension projects of telecom services.
Baseline (2015): 0. Target (2018): 16. 5. Reduction in the average monthly price per Mbit/s of wholesale international capacity link
from capital city, Bamako, to Europe. Baseline (2015): US$550. Target (2018): US$350.
6. Reduction in the non‐performing loans ratio of all microfinance institutions (PAR90). Baseline
(2014): 8.8%. Target (2018): 4.5%.
7. Increase in the execution rate of maintenance needs for priority rural roads. Baseline (2015): 15%. Target (2018): 40%.
Supporting pro‐poor decentralized transfers and social protection 8. Increase in the percentage of budgetary resources allocated to the three poorest regions in
total budgetary resources transferred to regions. Baseline 2014: 15%. Target 2018: 25%. 9. Increase in the local authorities’ own‐resources in percentage of GDP. Baseline (2015): 0.39%.
Target (2018): 0.50%. 10. Increase in the number of households receiving cash transfers. Baseline (2015): 65,000. Target
(2018): 150,000.
Overall risk rating: Substantial.
Climate and disaster risks:(i) Are there short‐ and/or long‐term climate and disaster risks relevant to the operation (as
identified through the SORT environmental and social risk‐rating tool)? Yes: No
Operation ID: P157900
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‐ 1 ‐
IDA PROGRAM DOCUMENT FOR A PROPOSED
FIRST POVERTY REDUCTION AND INCLUSIVE GROWTH SUPPORT OPERATION
TO THE REPUBLIC OF MALI
1. INTRODUCTION AND COUNTRY CONTEXT
1.1 This program document presents the first Poverty Reduction and Inclusive Growth Support Operation (PRIGSO) in the amount of US$50 million equivalent to the Government of Mali (GoM). The series is designed to support the implementation of the Growth and Poverty Reduction Strategy Paper for the period 2016‐2018, known as the “Cadre Stratégique pour la Relance Economique et le Développement Durable du Mali” (CREDD). The CREDD, the 2015 Systematic Country Diagnosis (SCD) and the FY16‐FY19 Country Partnership Framework (CPF) for Mali are all closely aligned. The PRIGSO series supports the policies defined in the CREDD by fostering inclusive growth and supporting pro‐poor decentralized transfers and social protection. This is the first credit in the proposed series, which consists of two single tranche credits. 1.2 Mali’s political environment stabilized with the Peace Agreement signed in May and June 2015 but remains affected by continued security challenges. In spite of the Peace Agreement security risks are no longer limited to northern Mali. Managing these risks and its impact on e.g. investor confidence takes considerable political attention and budgetary resources. Security spending increased to 14.9 percent of 2015 budget, a level at which it is expected to stay for the years to come. The economic impact of these security risks remains manageable, however, as most economic activity is in the south of the country where it is possible to continue with business as usual. In addition to security risks, the economy being undiversified also exposes the country to downside risks associated with commodity (gold) price shocks and weather variation (agriculture). Governance risks and popular dissatisfaction with the ability of the authorities to implement the Peace accord and improve service delivery is another risk factor, though its intensity remains difficult to gage. 1.3 The macroeconomic outlook remains solid provided downside risks do not materialize. Growth has been robust since 2014 and remained above potential level. Looking forward, inflation is expected to remain subdued owing to continued low global inflation, normal food output growth, and a consistent monetary policy stance. The fiscal position will deteriorate in the short term due to substantial increases in capital expenditure in compliance with the commitments made by the Government in the Peace Agreement. In the medium term, however, it is expected to strengthen owing to improved domestic revenue mobilization and the maintenance of greater discipline in recurrent expenditure. In the same vein, the current account deficit is expected to widen in the short term under the pressure of higher public investment and increased final consumption, before reversing to lower levels – though sizeable – as a result of the fiscal consolidation and expected tighter monetary policy. 1.4 Poverty has been declining, but human capital indicators remain low. As few people live in the north, poverty is largely driven by developments elsewhere in the country. Prior to the 2012 security crisis, poverty declined from 55.4 percent in 2001 to 48.4 percent in 20111 through a combination of growth and reduced inequality driven by increased agricultural productivity in cereals. Poverty is expected to have increased between 2011 and 2013 as a result of spillovers from the 2012 political crisis and poor rains in
1 Based on US$1.90 a day international poverty line, harmonized to be comparable with other countries in the region, particularly Niger and Chad.
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‐ 2 ‐
2011. By 2013, the poverty rate was estimated at 50.9 percent. From that time onward poverty is believed to be on a slightly downward trajectory thanks to positive per capita growth rates. Other dimensions of poverty and indicators of human capital, remain truncated. Malnutrition is a major challenge (28 percent of children are stunted), health services are inaccessible and of poor quality and the average number of years of formal education of the adult population is 2.4 years. 1.5 The PRIGSO series takes a new approach to budget support in Mali. The previous development policy operations (DPO) series supported the authorities’ efforts to address the twin challenges of fiscal consolidation while also tackling governance problems by focusing on strengthening Public Financial Management (PFM) and Governance. Past reforms included efforts to improve budget transparency, strengthen fiduciary and establishment of controls, and improve public investment management, as well as actions to reduce opportunities for corruption, accelerate public procurement and build local government financial management capacity. The present series, by contrast, aims to sustain the foundations for inclusive economic growth, decentralization and protection of the most vulnerable. Support to governance and PFM reforms is now pursued through an active policy dialogue in the context of the annual Country Policy and Institutional Assessment.
1.6 The operation has two development objectives: (i) foster inclusive growth and (ii) support pro‐poor decentralized transfers and social protection. The operation supports the first objective through a set of mutually reinforcing reforms that should lead to increased revenue of poor rural households following reforms in the provision of agricultural subsidies, the micro‐finance sector, and the legal and institutional framework of rural land. This objective is also supported by improved maintenance of rural roads, an expansion of the mobile phone network, and increased competition in the telecommunications sector. The second objective is supported by increasing the coverage and reducing the fragmentation of the social protection system and by funding accelerated decentralization. This is an important element of the Peace Agreement as reflected by the commitment to almost double the share of spending by non‐central entities (collectivités territoriales) from approximately 16 percent of the budget in 2016 to 30 percent in 2018. As governance remains an area of concern, the Authorities have been notified that good governance is an important prerequisite for the PRIGSO series as is maintaining macro‐economic stability.
2. MACROECONOMIC POLICY FRAMEWORK
A. RECENT ECONOMIC DEVELOPMENTS
2.1. Growth remained robust in 2016 at 5.4 percent after reaching 6.0 percent in 2015 and peaking at 7.0 percent in 2014. Food crop2 (19.7 percent), trade (15.8 percent), livestock (9.3 percent) and transportation (8.4 percent) remained the principal components of Mali’s gross domestic product (GDP). The tertiary sector led GDP growth, growing by 7.4 percent, driven by renewed dynamism in telecommunications while the growth of the primary sector slowed down but remained solid at 5.1. On the demand side, private consumption and public investment supported economic activity. Private consumption grew by 5.3 percent fueled by income earnings in rural areas and stable food prices in urban areas. Public investment rose by 36.6 percent reflecting the government’s efforts to bridge infrastructure gaps including in‐vestments related to the Peace Agreement, and increased acquisition of defense equipment.
2 This production includes mainly the following cereals: rice, maize, millet, and sorghum.
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2.2. In 2016, the current‐account deficit further deteriorated to 7.7 percent of GDP compared to 7.3 percent in 2015. Despite the positive impact of the decline of oil prices, imports of goods and services rose sharply by 11.2 percent as a result of higher domestic demand (notably public investments and private consumption), and the depreciation of the CFA Franc against the US dollar. The current‐account deficit was financed by capital and financial account surpluses, mainly in the form of debt (3.7 percent of GDP), foreign aid (1.4 percent of GDP) and foreign direct investment (0.9 percent of GDP). Nonetheless, Mali’s foreign assets imputed at the community Central Bank – Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO) – depleted by 46.7 percent. By the end of 2015, Mali’s reserves at the BCEAO were equivalent to 0.8 months’ worth of imports. 2.3. Inflation remained subdued at ‐1.6 percent, thanks to good crop production and declining international petroleum prices. This performance is well below the convergence criterion of 3 percent of West African Economic and Monetary Union (WAEMU) of which Mali is a member State. Low inflation is also attributable to the exchange rate and monetary policies managed by the BCEAO. For all WAEMU member states, monetary policy is independently run at the Union level by the BCEAO. The exchange rate of the Union’s currency is pegged to the Euro. The BCEAO has established a strong track record in in keeping inflation under control as well as in protecting balance of payments of its members from major disruptions. In its 2016 annual review, the International Monetary Fund (IMF) acknowledged the adequacy of the current monetary stance while recognizing the need to enhance monetary transmission mechanisms. Given the low degree of economic integration in WAEMU, asymmetric shocks can only be addressed through fiscal policies. Consequently, shocks continue to pose significant risks to budget execution, public investments in particular. 2.4. The overall fiscal deficit widened from 1.8 percent of GDP in 2015 to 4.3 percent of GDP in 2016 due to substantial increases in public investment in spite of significant improvements in domestic revenues. Tax revenue accounted for 14.9 percent of GDP, up 0.9 percent of GDP compared to 2015. Nonetheless, tax revenues remain well below the WAEMU convergence criterion of 20 percent. The marked improvement in tax collection stemmed primarily from increased fuel taxation – as the authorities have taken advantage of the drop in import petroleum prices to remove the implicit subsidy by keeping the retail prices roughly unchanged3 –, as well as implementation of reforms to broaden the tax base and reduced tax exemptions. 2.5. Total expenditures and net lending rose sharply to 23.2 percent of GDP compared to 20.9 percent in 2015 to accommodate the Government’s commitments under the Peace agreement. On current expenditure, wages and salaries increased to 5.0 percent of GDP against 4.6 percent in 2015, but remained within the WAEMU convergence criterion of 35 percent of the fiscal revenues. Capital expenditure increased even faster to 9.3 percent of GDP compared to 7.3 percent in 2015, reflecting the Government’s efforts to bridge infrastructure gaps including in‐vestments related to the Peace Agreement, and increased acquisition of defense equipment. The share of the budget dedicated to defense and security remained high at 15.2 percent in 2016 and slightly above public spending in the agricultural sector (14.3 percent). 2.6. Recovery benefited from a higher money supply growth at 18.9 percent, compared to 13.2 percent in 2015. This increase reflected a 22.0 percent increase in credit to the economy. At the same time,
3In case oil prices go back up, the GoM is considering to implement the pass‐through mechanism of international prices to
domestic prices proposed by the IMF so as to contain at a sustainable level the amount of the subsidy. Under the existing pricing system, changes in international fuel prices are passed on to consumers on a discretionary basis, with the authorities adjusting excise taxes on fuels to limit changes in domestic prices. The authorities plan to reform this system by implementing an automatic pricing mechanism that will guaranty a higher pass‐through of international fuel prices to domestic petroleum product prices.
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‐ 4 ‐
total net foreign assets, principally in the form of BCEAO reserves, dropped by 46.7 percent. Mali’s commercial banks finance purchases of government debt securities in Mali and other WAEMU countries, while also increasing commercial lending to support the incipient recovery. Overall, during the first semester of 2016, they slightly increased their credits to the Government.
Table 2‐1: Key Macroeconomic Indicators, 2013–2019
2013 2014 2015 2016 2017 2018 2019
Real economy Annual change in percentage, unless otherwise indicated
GDP (nominal, CFAF Billions) 6,544 7,114 7,748 8,285 8,870 9,401 9,923
Real GDP 2.3 7.0 6.0 5.4 5.3 4.8 4.7
Contributions
Consumption 2.9 6.1 5.6 18.6 4.8 2.4 3.6
Investment 10.0 7.5 25.2 ‐4.9 3.9 3.6 2.0
Net exports ‐10.6 ‐6.5 ‐24.8 ‐8.3 ‐3.4 ‐1.2 ‐0.9
Imports 25.9 10.7 44.0 9.8 4.7 2.0 1.6
Exports 11.4 ‐0.4 13.8 ‐0.5 4.1 3.2 2.6
GDP deflator 0.7 1.6 2.8 1.5 1.7 1.1 0.8
Consumer price inflation (average) ‐0.6 0.9 1.4 ‐1.6 0.8 1.2 1.6
Fiscal accounts Percent of GDP, unless otherwise indicated
Expenditures 19.7 20.0 20.9 23.2 23.5 23.1 23.0
Revenues 14.5 14.9 16.4 16.8 17.4 17.6 18.0
Grants 2.8 2.2 2.7 2.0 2.0 2.0 1.9
General Government Balance ‐2.4 ‐2.9 ‐1.8 ‐4.3 ‐4.1 ‐3.5 ‐3.0
PPG 26.4 27.3 30.9 29.7 30.0 30.7 31.6
Selected Monetary Accounts Annual percentage change, unless otherwise indicated
Base Money 1.3 ‐3.7 14.6 18.9 14.4 8.2 5.6
Credit to the economy 11.7 18.7 19.9 22.0 12.7 6.6 6.5
Broad money (M2) 7.4 7.1 13.2 18.9 14.4 8.2 5.6
Balance of Payments Percent of GDP, unless otherwise indicated
Current Account Balance ‐2.9 ‐4.7 ‐7.3 ‐7.7 ‐6.8 ‐5.3 ‐5.3
Imports 39.9 38.0 38.9 40.4 39.6 36.4 35.4
Exports 24.9 22.5 22.0 21.7 22.1 21.3 20.7
Foreign Direct Investment 2.3 1.0 0.9 0.9 0.9 0.9 0.8
External Debt 21.5 21.0 23.4 22.6 23.0 23.7 24.6
Terms of Trade ‐16.6 5.4 21.2 4.4 4.5 3.8 ‐1.2 Other memo items
Per Capita GNI (in US$ Atlas Method) 820 820 790
GDP nominal in US$ (Billions) 13.2 14.4 13.1 14.1 15.1 16.0 17.0
Sources: Ministry of Finance, IMF and World Bank staff estimates (2013‐2015) and projections (2016‐2019), October 2016.
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Table 2‐2: Key Fiscal Indicators, 2013–2019 (In % of GDP, unless otherwise indicated)
2013 2014 2015 2016 2017 2018 2019 Overall Balance ‐2.4 ‐2.9 ‐1.8 ‐4.3 ‐4.1 ‐3.5 ‐3.0
Primary balance ‐1.9 ‐2.3 ‐1.2 ‐3.6 ‐3.4 ‐2.9 ‐2.3
Total Revenue and Grants 17.4 17.1 19.1 18.9 19.4 19.6 20.0
Tax Revenues 12.3 12.5 14.0 14.9 15.3 15.5 16.0
Taxes on goods and services 6.6 6.3 7.9 8.3 8.6 8.4 8.7
Direct taxes 3.9 4.6 4.3 4.7 4.8 5.1 5.3
Taxes on international trade 1.7 1.6 1.8 1.9 2.0 1.9 2.0
Nontax revenue 0.6 0.7 0.7 0.7 0.8 0.8 0.8
Special funds and annexed budgets 1.7 1.6 1.8 1.3 1.3 1.3 1.3
Grants 2.8 2.2 2.7 2.0 2.0 2.0 1.9
Total expenditure and net lending 19.7 20.0 20.9 23.2 23.5 23.1 23.0
Current expenditures 12.2 11.9 11.9 12.6 12.7 12.5 12.5
Wages and salaries 4.4 4.4 4.6 5.0 5.1 4.9 4.9
Goods and services 3.7 3.4 3.4 3.6 3.4 3.6 3.6
Interest payments 0.5 0.6 0.6 0.7 0.7 0.6 0.7
Transfers and subsidies 3.6 3.5 3.3 3.4 3.5 3.4 3.3
Capital expenditures 6.0 6.5 7.3 9.3 9.6 9.4 9.3
Externally financed 2.5 2.7 3.6 3.4 3.4 3.6 3.9
Domestically financed 3.5 3.8 3.7 5.9 6.2 5.8 5.3
Special funds and annexed budgets 1.7 1.6 1.8 1.3 1.3 1.3 1.3
Net lending ‐0.1 ‐0.1 ‐0.1 0.0 0.0 0.0 0.0
Variation of arrears 0.1 ‐0.7 ‐0.5 ‐0.3 ‐0.2 ‐0.1 ‐0.1
Adjustment to cash basis ‐0.1 1.2 ‐0.9 0.2 0.2 0.0 0.0
General Government Financing 2.4 2.5 3.2 4.3 4.1 3.3 2.7
External financing (net) 1.6 1.0 1.9 1.9 1.8 2.4 2.6
Domestic financing (net) 0.8 1.5 1.3 2.4 2.3 0.9 0.1
of which: privatization 0.8 0.0 ‐0.1 ‐0.2 ‐0.1 0.0 0.0
Financing gap 0.0 ‐0.1 0.0 0.0 0.0 0.3 0.3
Sources: Ministry of Finance, IMF and World Bank staff estimates (2013‐2015) and projections (2016‐2019), October 2016.
2.7. Efforts to address Mali’s financial sector weaknesses are ongoing with uneven results. The capital to risk‐weighted assets ratio of Banks rose moderately to 15.3 percent in June 2016 compared to 14.8 percent in December 2015. Outstanding non‐performing loans remained high, increasing from 14.5 percent of total loans in December 2015 to 15.8 percent in June 2016. Domestic credit is concentrated in a limited number of economic sectors. As of June 2016, wholesale and retail trade, hotels and restaurants (43.5 percent), manufacturing (13.2 percent), and transportation, warehouses, communications (10.6 percent)
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are the main borrowing sectors from the financial system. Banks remained highly liquid, even though the ratio of liquid assets to total assets slightly declined from 51.7 percent in December 2015 to 49.9 percent in June 2016. Finally, the currency‐to‐deposit ratio continued narrowing from 22.3 percent in December 2015 to 18.2 percent in June 2016, denoting steady financial deepening.
Table 2‐3: External Financing Requirements, 2014‐2019
(In % of GDP) 2013 2014 2015 2016 2017 2018 2019
Financing requirements ‐7.1 ‐7.5 ‐8.8 ‐7.2 ‐6.9 ‐6.3 ‐6.5
Current account deficit ‐2.9 ‐4.7 ‐7.3 ‐7.7 ‐6.8 ‐5.3 ‐5.3
Long term debt amortization ‐0.9 ‐1.0 ‐1.2 ‐0.7 ‐0.9 ‐0.6 ‐0.6
Other short term capital outflows ‐3.3 ‐1.9 ‐0.3 1.2 0.8 ‐0.3 ‐0.6
Financing sources 7.1 7.5 8.8 7.2 6.9 6.3 6.5
FDI and portfolio investment (net) 2.3 1.0 0.9 0.9 0.9 0.9 0.8
Capital grants 1.6 1.3 2.3 1.4 1.4 1.3 1.3
Long term debt disbursements 1.8 2.7 3.9 3.4 3.5 3.8 4.1
Change in reserves 0.6 2.2 1.4 0.9 0.7 0.0 ‐0.1
IMF credit (net) 0.3 0.1 0.0 0.3 0.2 0.2 0.2
HIPC Initiative assistance 0.4 0.2 0.2 0.2 0.2 0.2 0.2
Sources: Ministry of Finance, IMF and World Bank staff estimates (2014‐2015) and projections (2016‐2019), October 2016.
B. MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY
2.8. The macroeconomic outlook is positive provided the security situation does not deteriorate and favorable climatic conditions continue to prevail. This outlook is based on a number of assumptions. First and foremost, a stabilization of the security situation, particularly in the central and southern regions which account for 95 percent of the country's population and almost all its production capacity. This would ensure a more predictable trajectory for Mali’s military expenditures, as foreseen in the 2015‐2019 programmatic military law4. Additionally, stability would allow donors to deliver on their commitments of Official Development Assistance, as announced at the Paris Conference. Second, gold production, Mali’s main export product, is expected to decline steadily while terms of trade are contemplated to be positive throughout 2017‐2018 and negative in 2019; and rainfall shocks are avoided enabling sustained agricultural production. Third, it foresees improved domestic revenue mobilization resulting from improvements in tax compliance and administration as well as a broadening of the tax base. This would allow to progressively increase the share of public investment financed from domestic resources, in anticipation of a decline in
Official Development Assistance (ODA) from 2016 onward5 while keeping domestic financing needs at low levels. And fourth, monetary and exchange rate policies continue to be set at the regional level and consumer price inflation is maintained below 3 percent. 2.9. Under these assumptions, GDP growth is expected to decline over the period 2017‐2019, from 5.3 to 4.7 percent, driven by slower growth in agricultural output, though remaining above its long run
4 In order to address pressing security challenges, the GoM adopted in 2015 the law for military orientation and planning which raised security and defense outlays from 3.3 percent of GDP in 2015 to 3.8 percent in 2016. 5 The macroeconomic framework retained in the IMF ECF imposes a ceiling on foreign non‐concessional borrowing. In parallel, authorities will continue to strengthen their public investment management capacity.
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historical level of 4.5 percent. All economic sectors are expected to contribute positively to growth, albeit, in varying degrees. The tertiary sector will constitute the main driver of domestic activity over this period owing to the continued dynamism of telecommunications and transport industries and, to a lesser extent, to the development of trade and financial services. The main responses of the authorities to the declining
GDP growth trend are twofold: (i) further modernizing the business environment to encourage private sector development and improving competitiveness; and (ii) undertaking structuring investments and priority sustainable development spending. 2.10. The current account deficit is projected to narrow down from 7.7 percent of GDP in 2016 to 5.3 percent in 2019. This tilt will be driven by a gradual fiscal consolidation leading to substantial reduction in imports. The deficit would be contained at lower levels but would remain sizable in a foreseen context of weakening terms of trade and sustained final consumption. It would be financed essentially by financial inflows in the form of debt, official aid, and FDI. Mali’s imputed reserve at the BCEAO would continue to decline but then start to recover over the medium term as import growth decreases and the Central Bank tightens monetary policy. 2.11. The fiscal position is expected to strengthen from ‐4.3 percent of GDP in 2016 to ‐3.0 percent in 2019 as the fiscal consolidation is phased in pursuant to the tax reform program agreed with the IMF. The fiscal deficit will progressively narrow down as a combined effect of reduced expenditure and improvements in tax collection. Total expenditure as share of GDP will slightly decrease to 23.0 percent by 2019 as a result of the reduction in temporary expenditures related to the Peace Agreement and the maintenance of a tighter discipline regarding recurrent expenditure, notably wages and salaries. Domestic resource mobilization is similarly expected to improve significantly with tax revenue increasing from 14.9 to 16.0 percent of GDP due to increased direct and indirect tax collection and tax exemption streamlining. 2.12. The implementation of the Government’s macroeconomic program should minimize the risk of external debt distress. A Joint World Bank‐Fund Debt Sustainability Analysis (DSA) was conducted in September 2016. By the end of 2015, Mali’s external and domestic public debt stood at 22.6 percent and 7.1 percent of GDP, respectively. Mali’s external debt is entirely official, and its bulk (80.0 percent) is held by multilateral creditors, the International Development Association, and the African Development Bank in particular. Most of the domestic public debt is held by the banking sector. Accounting for developments in 2014 and 2015 (moderate external borrowing on concessional terms, good export receipts) and medium term prospects (a return to a steady state 5 percent of GDP growth and a progressive decline in gold net export receipts with declining reserves), the DSA continues to assess Mali’s external risks of debt distress as “moderate”. However, debt sustainability remains vulnerable to a tightening of financial conditions, lower remittances, lower foreign direct investment, or to an export shock due to the preponderance of gold in exports. Consequently, the Government’s ongoing efforts to diversify the country’s export structure from gold (through the export of other minerals and commercial agriculture) would reduce Mali’s exposure to these risks. In the same vain, improving Mali’s public investment management framework, expected to raise economic returns on debt‐financed public investment, would increase its resilience. The risk to the broader public debt sustainability was also assessed as moderate, in the absence of unsustainable revenue or expenditure trends, including the wage bill. 2.13. Overall, Mali’s macroeconomic framework is assessed as adequate for the purpose of the proposed operation. Authorities have built a solid track record of sound macroeconomic management, even under very volatile circumstances. To preserve its record, the GoM continues to maintain a prudent fiscal management stance by improving domestic revenue mobilization, containing current expenditure growth, and boosting capital spending while managing public debt conservatively. Any additional fiscal
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space created is committed to agriculture and irrigation, as well as to strengthening the capacity of defense and security forces all meant to increase resilience to climatic and security shocks. The credibility of the macroeconomic framework is supported by the external anchor of the WAEMU, and its monetary and reserve management policies, and a conducive external environment supported by favorable gold and cotton prices. Overall, this outlook provides adequate conditions for the proposed operation to meet its objectives, and justify the use of the International Development Association (IDA) resources.
Table 2‐4: External Debt Stock Composition at Year‐End, 2015
USD (Billions) Share of total debt Percentage of GDP
Multilateral 2.3 78.9 17.9
IMF 0.1 4.6 1.0
World Bank/IDA 1.2 41.5 9.4
African Development Bank 0.4 14.4 3.3
Islamic Development Bank 0.2 6.6 1.5
Others 0.3 11.8 2.7
Official Bilateral 0.6 21.1 4.7
Paris Club official debt 0.1 2.8 0.6
Non‐Paris Club official debt 0.5 18.3 4.1
Total 2.9 100.0 22.6
Sources: Ministry of Finance, IMF and World Bank staff estimates, October 2016.
Figure 2‐1: Debt sustainability analysis, 2015‐2035
Source: Joint World Bank‐IMF DSA, October 2016.
C. IMF RELATIONS
2.14. The IDA is collaborating closely with the IMF on macroeconomic, fiscal, and growth‐related policy issues. The IMF leads the dialogue on macroeconomic management, tax policy and revenue administration, and monetary policy, while the World Bank takes the lead on sectoral reforms, business environment, decentralization and pro‐poor expenditure. The World Bank and the IMF share joint responsibility for the poverty reduction strategy and debt management. The World Bank also takes the lead in the exchange of information and collaboration on local development in Mali. This DPO and an Extended Credit Facility (ECF)
10
20
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60
2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
Public Debt Sustainability
Debt to GDP‐Baseline GowthPrimary balance Depreciation (real)
Threshold
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2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
External Debt Sustainability Analysis
Debt‐to‐Export Baseline Historical scenario
Most extreme shock ‐ Terms Threshold
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are being prepared through close coordination between the IMF and World Bank teams. The sixth review of the program was concluded in December 2016, with a broadly satisfactory implementation as all performance criteria for end‐June 2016 have been met, in some cases with wide margins. The program’s indicative targets were also met with margins, including that on the basic fiscal balance. The overall fiscal deficit through June 2016 was significantly lower than envisaged in the program, reflecting mainly budget under‐execution. On structural reforms, three out of four structural benchmarks have been met, with those benchmarks related to tax administration and budget rules all observed. The benchmark on transmitting to the Supreme Court senior government officials' financial disclosures to comply with the law against unlawful enrichment was not observed, although progress has been made toward implementing the measure. The Government and the IMF agreed to reprogram this benchmark. The IMF and the authorities reached an agreement on the fiscal program for 2017 in line with the program’s initial targets. The program targets an overall budget deficit of about 4 percent of GDP with tax revenues projected to increase by 0.4 percent of GDP, supported by continued broadening of the tax base and reduction of tax exemptions. The program’s structural component includes measures to support revenue mobilization and strengthen public financial management and governance. The authorities agreed to implement legislation to forbid the granting of discretionary tax exemptions – i.e. based on letters issued by ministers –, starting January 1, 2017. The Government also agreed to establish and make operational the commission against corruption and unlawful enrichment.
3. THE GOVERNMENT’S PROGRAM
3.1. The CREDD 2016‐2018 is Mali’s framework for the design, implementation and monitoring of development policies and strategies at national and sectoral level. The CREDD reflects priorities as formulated in prevailing strategic frameworks including the Cadre Stratégique pour la Croissance et la Réduction de la Pauvreté (CSCRP 2012‐2017), Plan pour la Relance Durable du Mali (PRED 2013‐2014), Programme d’Actions du Gouvernement (PAG 2013‐2018), and the Programme de Développement Accéléré des Régions du Nord (PDA/RN)6. The core objective of the CREDD is attaining the Sustainable Development Goals by 2030. The CREDD comprises two prerequisite axes, three strategic axes, 13 priority areas and 38 specific goals. Each objective comprises three components: (i) inclusion within the performance budget; (ii) measures for institutional modernization; and (iii) quick wins.
Under the first prerequisite axis the Government sets out to promote Peace, Reconstruction of the North and Security. The Authorities are committed to implementing the 2015 Peace and Reconciliation Agreement, to ensuring security across Mali’s territory, and to contributing to a balanced development in all regions in the country.
Under the second prerequisite axis the Government commits to Macroeconomic Stability. To this end the Authorities intend to improve budgetary planning, public finance management and to ensure to solvability of the financial sector including the micro finance sector.
Promoting Inclusive and Sustainable Growth is the first strategic axis of the CREDD. The Authorities commit to developing selected agricultural (including livestock and fisheries) supply chains and to
6 The PRED was adopted by the transition government in May 2013 with the view to prevent the deterioration of human development indicators following the 2012 security and political crises. It included a subset of CSCRP priority programs envisaged to be implemented in 2013‐2014 and financed by donor pledges made at the Brussels Conference. However, the new Government elected in August 2013 laid down, two months later, in the PAG its orientations and priorities for the period 2013‐2018 and drew up the PDARN, designed as an operationalization plan of PRED for the northern regions of the country most affected by the security crisis.
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promoting family farming. The focus is on food security, improved nutrition as well as developing infrastructure and diversifying the economy.
Access to Basic Social Services is the second strategic axis of the CREDD. The Authorities commit to improving education at all levels (including skills training), to improving the health of the population and to enhancing access to water and sanitation and to expanding social protection.
Institutional Development and Good Governance constitutes the third strategic axis. Improving transparency, fighting corruption and promoting coordination and planning across the administration are priority areas under this axis.
4. PROPOSED OPERATION
A. LINK TO GOVERNMENT PROGRAM AND OPERATION DESCRIPTION
4.1. The PRIGSO series comprises two single‐tranche budget support credits to be disbursed during the 2016 and 2017 calendar years – PRIGSO1 and PRIGSO2. Current programming under IDA17 envisages US$80 million equivalent for the two operations combined. The amount for PRIGSO1 will be US$50 million equivalent. The PRIGSO is designed around two pillars: (i) fostering inclusive growth; and (ii) supporting pro‐poor decentralized transfers and social protection. These two pillars build on the ongoing reform program of the Government of Mali as well as the CPF agreed between the World Bank and the authorities in October 2015. 4.2. The proposed operation is aligned with the CREDD. The CREDD 2016‐2018 identifies two prerequisites (i) peace, security and reconstruction in the North and (ii) macro‐economic stability along with three priority areas: (i) inclusive and sustainable growth; (ii) access to basic socio‐economic services; and (iii) institutional development and governance. Within these there are 13 Priority Areas identified. Policy reforms supported by the PRIGSO can all be mapped to CREDD priority areas. The proposed series encompasses the first two broad headings of the CREDD by supporting selected policy actions in line with seven specific objectives of the strategic document based on their value‐added to the development agenda of Mali and their potential synergetic effects among high priority sectors for the Government.
B. LESSONS LEARNED
4.3. The design of the PRIGSO series is informed by lessons learned from the previous DPO series, the SCD and CPF for 2016‐2019, by other projects and analytical work as well as by policy dialogue with the authorities conducted by the World Bank and other development partners. Among the key lessons are:
A selective policy focus, with a stable and predictable level of support for the annual reform and budget program. This includes: (i) a focus on key sectors of policy reform directly linked to the SCD to ensure greater impact on the binding constraints to reduce poverty; (ii) a series of annual programmatic development policy operations linked to specific sector reforms; and (iii) integration of policies and measures complementary to ongoing sector operations and tailored technical assistance (TA) to monitor implementation of reforms.
Increasing agricultural productivity is imperative to long‐term economic transformation. Stimulating agricultural productivity is a long term proposition that requires strong government coordination, commitment and a clear vision of how growth is to be achieved. A broad set of policy and institutional reforms, including politically‐sensitive reforms on land
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policy and administration, as well as significant institutional building of key agencies and private sector engagement is necessary to improve agricultural productivity in a way that can contribute to growth.
Aspects of governance, transparency and PFM can be handled through the regular dialogue. Informed by the SCD, the IEG assessment of previous DPO series as well the consultations held in preparation for the CPF, it was realized that the next DPO series should shift focus to sectoral policy issues. It was equally realized that there exists policy space to do so, as support to governance and PFM reforms can be pursued through an active policy dialogue in the context of the annual Country Policy and Institutional Assessment.
Government commitment and ownership is critical to the performance of the program, particularly for reforms in areas with strong entrenched interests or that are politically sensitive. The still fragile political environment and the deteriorating security situation in the north of the country as well as associated challenges are likely to divert the Government attention and resources from the reform agenda. This risk is also increased by the frequent turnover of key counterparts in the Government which may hamper ownership and readiness to implement the proposed policy reforms – the President reshuffled the government five times since assuming power in 2013.
C. PRIOR ACTIONS, RESULTS AND ANALYTICAL UNDERPINNINGS
Pillar 1: Fostering inclusive growth Improve access to land
Prior action #1: The Recipient has enhanced security of land tenure through the promulgation of the Rural Land Act, dated April 11, 2017. Trigger #1: The Recipient, through the Council of Ministers: i) Adopts the application decree for the Rural Land Act, including the operationalization of the rural land
commissions; ii) Amends the draft Domains and Land Act in light of the adopted Rural Land Act. Expected result for Prior action #1 and Trigger #1. The coverage ratio of the communal cadastral map for the Bamako District and the Cercle de Kati increases from 0% in 2015 to 20% in 20187.
4.4. Clarity on land rights is key to fostering agricultural development and the country’s economic attractiveness for investors. In rural areas security of tenure is a key element to facilitating the dynamism of primary sector development. Conflicts over land use are frequent, in urban and peri‐urban areas as well as in rural areas, particularly around irrigated areas and in areas where the interests of pastoralists and farmers collide. Securing access to land is expected to lure investment from private companies and smallholders alike. Agricultural productivity is expected to increase as a result, thus leading to higher revenues for farmers. 4.5. Land legislation is inadequate and poorly harmonized. Several pieces of legislation exist (domains and land act, mining act, forest act, water act, agricultural act, etc.) with provisions that are at times incomplete or conflicting or simply unenforceable. Implementing legislation for these acts is often missing. In the face of these challenges the Authorities have taken steps to review and improve the existing legal
7 Ratio of the number of communes with cadastral map to total number of communes.
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and institutional framework, including the adoption of two roadmaps for the reform of rural land and urban land acts, a rural land policy, and the submission of a draft agricultural land act at the National Assembly. 4.6. PRIGSO1 supports the promulgation by GoM of the Rural Land Act. The law provides a precise definition of the agricultural land system in Mali and integrates three components: agricultural lands of the state; agricultural lands of local authorities; and agricultural lands owned by individuals. It also clearly states the conditions of access to agricultural land and includes specific provisions to safeguard agricultural land rights as well as agricultural land management bodies. Finally, it lays down a mechanism for managing and resolving rural land disputes and conflicts. 4.7. The second operation of the proposed DPO will support policy reforms to facilitate access to rural and urban land. A first measure will provide for the adoption of the application decree of the Rural Land Act, including the operationalization of rural land commissions. A second reform will amend the Domains and Land Act in light of the adopted Rural Land Act. Improve the provision of agricultural subsidies to poor households
Prior action #2: The Recipient has, through the Ministry of Economy and Finance, Ministry of Agriculture and Ministry of Livestock and Fisheries, introduced an e‐voucher scheme for the distribution of agricultural inputs subsidies, through the adoption of a revised procedures manual, dated October 2016, governing the modalities of distribution of such subsidies. Trigger #2: The Recipient, through the Ministry of Agriculture, implements the e‐voucher scheme to deliver agricultural input subsidies to beneficiaries in at least two regions. Expected results for Prior action #2 and Trigger #2. The percentage of publicly funded agricultural subsidies allocated through e‐vouchers (as opposed to paper vouchers) increases from 0% in 2015 to 20% in 2018.
4.8. Since the 2008 food price crisis the Government of Mali has made food security a core objective of public policy. One of the key measures implemented was a fertilizer voucher scheme targeting primarily rice and maize producers in the high productivity areas of Sikasso and Segou. This policy has been successful and since 2008 the production of food grains, particularly of maize and rice, expanded from approximately 3.7 million tons in 2006/2007 to 6.5 million tons in 2012/2013. 4.9. Nevertheless, the scheme has room for improvement. The scheme absorbed 2.1 percent of government’s total expenditure in 2015 and relies on paper vouchers and public procurement of fertilizer. It is transaction heavy, taking up much of the human resources of extension services. Fertilizer is not always received in a timely manner by the farmers either. Within the Ministry of Agriculture questions have been raised as to whether subsidies should be targeted more towards poorer households, and whether better‐off households could be weaned off the subsidy. 4.10. This operation supports a pilot scheme using e‐vouchers. While questions are being raised about the efficiency of a paper based fertilizer voucher scheme, a pilot e‐voucher scheme implemented in North Mali by the West Africa Agricultural Productivity Program (WAAPP) has demonstrated promise. The e‐voucher approach starts by creating a data base comprising information on household characteristics as well as phone numbers, transfers subsidy vouchers electronically to households meeting pre‐specified characteristics. Fertilizer (or seed or animals depending on the voucher) are provided by the private sector. Vouchers can be for farm inputs but could also be for animals, vaccination or extension services. An assessment of the pilot e‐voucher scheme underscores the advantages it offers, including: reduced
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transaction costs by 20 percent and processing time from eight to two weeks, ability to target poor smallholder producers, traceability of the beneficiaries, and increased transparency in the distribution process of inputs. Hence, PRIGSO1 will support the adoption of the e‐voucher system by the Government to deliver agricultural inputs subsidies to beneficiaries, while the delivery of subsidies in two regions of the country through the e‐voucher scheme will be a trigger for PRIGSO2. The main constraint to an effective roll out of the e‐voucher scheme is the limited coverage of mobile network in rural areas, an issue tackled by the policy actions in the telecommunications sector proposed below. Increase competitiveness of and access to telecommunications
Prior action #3: The Recipient has, through the Ministry of Economy and Finance, issued a ministerial decision, dated October 17, 2016, establishing a commission in charge of awarding a 4G license to existing operators and, through the Ministry of Digital Economy and Communication, issued a ministerial order, dated March 30, 2017, creating the commission in charge of awarding a fourth mobile telecommunications license, through an open international bidding process. Prior action #4: The Recipient, has through the Office of the Prime Minister, facilitated the extension of the mobile telephone network to isolated areas, making operational the Universal Service Fund Management Agency (AGEFAU), through: i) Adoption of the decree of appointment of AGEFAU Director General; ii) Creation and provisioning of AGEFAU account; and iii) Adoption of a decree fixing the percentage rate and modalities of payment of compulsory contributions payable
to AGEFAU. Trigger #3: The Recipient awards a 4G license to existing operators including enhanced obligations in terms of wholesale supply and facility sharing and a fourth mobile telecommunication license through an open international bidding process offering market access conditions in line with international best practices. Trigger #4: The Recipient, through the AGEFAU, publicizes the financial statements of AGEFAU, including the amount of resources allocated to extension projects of telecom services. Trigger #5: The Recipient, through the Ministry of Digital Economy, Information and Telecommunications, awards a broadband license to exploit the excess capacity of the OMVS‐SOGEM network to a broadband operator selected through an open international bidding process. Expected results for Prior action #3 and Trigger #3. The average in tariff per minute for personal domestic calls decreases from CFAF 108 in 2015 to CFAF 90 in 2018. Expected results for Prior action #4 and Trigger #4. Number of localities benefiting from extension projects of telecom services increase from 0 localities in 2015 to 16 in 2018. Expected results for Trigger #5. Reduction of the average monthly price per Mbit/s of wholesale international capacity link from capital city, Bamako, to Europe from US$550 in 2015 to US$350 in 2018.
4.11. Information and Communications Technology (ICT) services bring significant benefits to poor households. Mobile telecommunication services can make essential services accessible (emergency calls), increase resilience to shocks (transfers), reduce transaction costs and improve market access (information), offer opportunities for financial inclusion (mobile savings and e‐banking) while also creating employment, including for sellers of phone credit and charging or repair services. To attain these benefits, mobile telecommunications services need to be affordable and accessible but according to a 2014 report by AMRTP, for approximately 44 percent of the localities and 22 percent of the population,
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telecommunications services are not available. It affects the most vulnerable, poor and isolated households especially. 4.12. The Government of Mali made important advances in improving the competitiveness of its telecommunications sector but several issues remain. Authorities have adopted a new legal and regulatory framework in 1998 and revised it in 2011. They privatized Sotelma and granted licenses to two additional global operators. However, one telecommunications license holder does not have an operational network yet, leaving a de facto duopoly between Sotelma / Malitel and Orange Mali. Mobile tariffs in Mali are the highest in absolute terms when compared to other countries in the WAEMU sub‐region8. Prices have not reduced sufficiently to allow for a massive expansion of broadband internet, further limiting the creation of opportunities associated with the use of ICT. Given the failure of the entrance of a 'third' operator, the most appropriate approach to strengthen competition is the selection of a new ("fourth") operator9. The attractiveness of Mali for another license holder will depend on the speed with which the authorities introduce a new license as a prospective investor can be expected to prefer to enter the market while it still is in its take‐off phase, which is the case for mobile broadband. 4.13. PRIGSO1 will support the establishment of the two commissions in charge of awarding a 4G license to existing operators and a fourth mobile telecommunication license through an open international bidding process. The authorization to operate 4G networks, granted to existing mobile operators as part of their telecommunication license, will allow them to deploy high speed broadband services in their respective mobile network and compete with the fourth mobile operator who would be granted the same 4G technology to provide mobile broadband services alongside to voice. The technology upgrade from the current 3G to the 4G will improve the quality of service of Internet for the final users for a limited investment. Together with the fourth license, this upgrade of technology on existing operators is expected to unleash the potential of Internet services and applications to all mobile subscribers (covered by the 4G network and subscribing to data plans), with cascading social and economic impacts. Due to the importance of the segment of mobile broadband for the new entrant, additional measures need to be implemented by the regulator (AMRTP) to enhance competition in the broadband sector, in particular with respect to decreasing the cost of international capacity by leveraging available regional excess fiber along the OMVS‐SOGEM network linking landlocked Mali to coastal Senegal and Mauritania served by several international submarine fiber optic cables. Consequently, attributing a broadband license to exploit the excess capacity of the OMVS‐SOGEM network are triggers for PRIGSO2. 4.14. Telecom services are not yet available across the nation, as operators prefer to invest where doing so is (most) profitable. To ensure people across the territory have access to ICT services, the Government has created a dedicated fund, financed through mandatory contributions from telecom operators. In March 2010, the Government of Mali adopted a comprehensive strategy for universal access but failed to implement it. On December 31, 2014, the fund owned CFAF 21.3 billion (US$40 million) but had not yet disbursed anything in support of improved access in rural areas. The prerequisites for the activation of the fund are being finalized with the creation of a dedicated management agency (the Agence de Gestion du Fonds d’Accès Universel – AGEFAU) benefitting from technical assistance from the World Bank to operationalize the universal access policy. Effective implementation of the universal access
8 The average tariff per minute for personal domestic mobile calls is CFAF 108 in Mali while it is, for other WAEMU countries, CFAF 60 in Benin, CFAF 88 in Burkina Faso, CFAF 78 in Côte d’Ivoire, CFAF 80 in Guinea Bissau, CFA 85 in Niger, CFAF 87 in Senegal, and CFAF 80 in Togo. 9 The third operating license was granted in February 2013, but the operator failed to launch operations to date, after delaying the launch date several times. The operations have been delayed due to difficulties encountered by the operator to secure the financing needed to build the network, and because of a pending legal dispute between shareholders of the company.
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strategy by operationalizing the AGEFAU is a prior action for PRIGSO1 as establishing the management bodies of the AGEFAU and fixing the amount of compulsory contributions are necessary steps to enable the disbursements of funds. Improve access to finance 4.15. The microfinance sector has been experiencing a crisis for over six years. The microfinance sector serves close to 1 million clients many of whom are located in rural areas. The sector plays an important role in providing financial services to underserved households, microenterprises and farmers. Microfinance institutions in Mali provide savings and credit services, and are licensed to mobilize deposits from their members. The sector is fragmented, with over 100 institutions, many of which are weakly managed, while the national monitoring and supervisory mechanism in place has been performing poorly due to insufficient resources. Two of the country's biggest institutions have ceased operations and a number of other small ones are technically bankrupt and must be liquidated. Since the 2012 security crisis, there has been a general loss of confidence in the sector, which has spilled over to the handful of remaining and viable institutions that concentrate about 85 percent of the sector’s assets. In 2014, the non‐performing loans ratio (PAR90) was 8.8 percent (against a maximum norm of 3 percent). To resolve this situation, nonviable institutions need to be closed and depositors compensated. Preliminary estimates suggest it involves about CFA 10 billion in deposits for about at least 100,000 depositors10.
Prior action #5: The Recipient has, through the Ministry of Economy and Finance, issued ministerial orders, dated August 31, 2016, withdrawing the licenses of those microfinance institutions that have been audited and needed to be liquidated pursuant to its micro finance sector emergency plan, dated March 2015. Trigger #6: The Recipient, through the Ministry of Economy and Finance, implements the micro finance sector emergency plan by: i) Liquidating at least two microfinance institutions whose licenses have been withdrawn; and ii) Completing the supervision program of the CCS/SFD. Expected results for Prior action #5 and Trigger #6. The non‐performing loans ratio of all microfinance institutions (PAR90) decreases from 8.8% in 2014 to 4.5% in 2018.
4.16. This operation supports the implementation of the Emergency Plan for the Microfinance Sector adopted by the Council of Ministers in March 2015. Among its six pillars11 the plan includes two measures that are critical for recovery of the sector: i) restructuring including through the closure of nonviable institutions and ii) reforming the national supervisory body (CCS‐SFD) by creating a structure with more independence and greater capacity. The Emergency Plan falls within a regional (WAEMU) effort to restructure and strengthen the microfinance sector. Implementation of one key measure of the Emergency Plan is supported by PRIGSO1, namely the withdrawal by the Government of the license of those microfinance intuitions that have been audited and need to be liquidated as per the findings of their financial difficulties (those under article 44). As a trigger for PRIGSO2, the Government will take the following actions: i) liquidation of at least two microfinance institutions (MFI) whose licenses have been withdrawn; and ii) completion of the full supervision program of the CCS/SFD.
10 In the absence of an insurance deposit scheme though there is an ongoing reflection led by the Central Bank to establish a deposit guarantee fund, the Government has put in place a pro‐poor compensation scheme funded by budgeted resources. 11 The Emergency Plan includes six pillars: i) restructuring of the sector; ii) implementation of the legal framework (that was reinforced in 2007 by WAEMU countries); iii) strengthening and providing more independence to the national supervisory body (CCS/SFD) and to the promoting body; iv) support to viable microfinance institutions, v) improving the microfinance enabling environment; and vi) expansion of microfinance services.
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Improve rural roads 4.17. Rural roads tend to be in poor condition. Defective physical infrastructure is an important reason why rural families find it hard to access markets. Particularly during the rainy season many rural roads become impassible. One reason for the poor access is that rural roads, unlike main roads and regional roads, tend not to be well maintained. Consequently 47 percent is in a poor state and only 5 percent in good condition. Maintenance financing of the primary road network is provided by the Road Authority (RA) through resources collected from different fees for road use – on petroleum products, the axle load and tolls. The Road Authority is responsible for administering the funds for road maintenance – commonly named Road Maintenance Fund (RMF). The execution of road maintenance is devoted to an implementing agency on the basis of annual maintenance programs defined beforehand.
Prior action #6: The Recipient has through the Ministry of Economy and Finance and the Ministry of Equipment, Transport and Regional Integration, issued an inter‐ministerial order, dated October 20, 2016, fixing the percentage of the Road Maintenance Fund to be allocated to the routine maintenance of priority rural roads. Trigger #7: The Recipient, through the Road Authority, publicizes the financial statements of the Road Fund, including the amount of resources allocated to the maintenance of priority rural roads. Expected results for Prior action #6 and Trigger #7. The execution rate of maintenance needs for priority rural roads increases from 15% in 2015 to 40% in 201812.
4.18. There are no financial resources specifically dedicated to the construction and maintenance of the rural road network. How much of the RMF is to be used to finance maintenance of rural roads is determined on an ad hoc basis and is at the discretion of the Road Authority. This lack of predictability jeopardizes the sustainability of rehabilitated rural roads, including those constructed by World Bank projects. PRIGSO1 will support Government’s efforts to preserve investments in rural roads by dedicating, via a legal text, a pre‐agreed percentage of the RMF to the maintenance of priority rural roads13. PRIGSO2 will support the publication of the financial statements of the Road Maintenance Fund, including the amount of resources allocated to the maintenance of priority rural roads. Pillar 2: Supporting pro‐poor decentralized transfers and social protection Increase the resources of local governments
Prior action #7: The Recipient has, through its Council of Ministers, advanced the decentralization process by provding in its 2017 budget edition, dated September 21, 2016, for the transfer of budgetary resources to local governments pursuant to the competencies and resources transfer plan. Trigger #8: The Recipient, through the Council of Ministers adopts the draft law creating a synthetic tax that simplifies and replaces a wide range of currently existing local taxes. Expected results for Prior action #7 and Trigger #8. (i) Percentage of budgetary resources allocated to the three poorest regions in total budgetary resources transferred to regions is expected to rise from 15% in 2014 to 20% in 2018. (ii) Local authorities’ own‐resources in percentage of GDP increases from 0.39% in 2014 to 0.50% in 2018.
12 Every year, based on an assessment conducted by the Regional Directorates, the National Directorate of Roads submits to the Road Maintenance Fund the maintenance needs for priority rural roads to be financed. These percentages account for the share of the needs effectively financed by the Fund. 13 The recommended pre‐agreed is 5 percent of the RMF. This allocation is expected to account for a small fraction of the increased total amount of the RMF to CFAF 68 billion in 2016 from CFAF 57 billion in 2015, thus preserving the allocations to other roads. It will however represent more than a tripling of the amount usually budgeted for rural road maintenance.
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4.19. Mali has a long history of attempts at decentralization dating back to the transition to democracy. When at the 1991 national conference the building blocks for Mali’s democratic system were agreed, political decentralization was a cornerstone of the new political system. Since that time, decentralization has served the dual objective of appeasing tensions in the north of the country, and stronger development and accountability via bottom up development. All past peace agreements, as well as the Agreement signed in May and June 2015, feature decentralization as a tool for peacebuilding and increased economic development of northern Mali. Despite its importance, decentralization has encountered resistance from a centralized and hierarchical bureaucracy which was quick to point out inefficiencies and the lack of accountability of some decentralized entities. As a consequence, some formal authority was decentralized but consolidation of decentralized governance has lagged, especially in the area of fiscal transfers. 4.20. Decentralized spending is estimated at 16 percent of the budget for 2016. It covers mostly salaries for teachers and health staff, as well as investment budgets for the health, education and water sectors. As the majority of teachers and health staff are appointed by the central level, decentralization is more the deconcentration of the decision to pay staff to the local level (engagement), a payment that is then effectuated by the central line ministry, than an actual decentralization of staffing decisions. Similarly, investment decisions remain largely controlled by the center as they are channeled through the Agence Nationale d'Investissement des Collectivités Territoriales. 4.21. This operation supports pro‐poor decentralization. Under the 2015 Peace Agreement the Government committed to allocating 30 percent of its budget to local authorities. This reflects a step change relative to current levels of spending and its implementation will necessitate the actual devolution of decision making powers. PRIGSO1 supports this objective through the allocation of budgetary resources to local governments in compliance with the Government competencies and resources transfer plan adopted by the Cabinet. PRIGSO2 will support a complementary action by the Government consisting in the adoption of the draft law creating a synthetic tax that simplifies and replaces a wide range of currently existing local taxes. Extend the coverage of social protection mechanisms
Prior action #8: The Recipient has adopted a unified vision of its social protection policy, through (a) adoption of a Presidential Decree, dated November 1, 2016, approving the National Social Protection Policy, along with its accompanying social protection action plans 2016‐2018; (b) adoption of a Presidential Decree, dated September 5, 2016, creating the National Council of Strategic Orientation of Social Protection (“National Council”), and issuance, through MSAH, of a ministerial order, dated March 23, 2016, creating the Unified Social Registry Steering Committee (“Steering Committee”); and (c) commencement of operations of both the National Council and the Steering Committee as evidenced by Minutes of Proceedings dated October 7, 2016 and September 29, 2016. Prior action #9: The Recipient has made provision in its 2017 budget edition, dated September 21, 2016, for budgetary allocations to expand the coverage of social safety net programs, including JIGISEMEJIRI and RAMED. Trigger #9: The Recipient, through the Ministry in charge of Social Protection: i) Creates a Unified Social Registry including a mechanism to integrate beneficiaries of various social safety net
programs; and ii) Makes free health care effective in CSCOMs for Jigisemejiri beneficiaries eligible to RAMED. Expected results for Prior actions #8‐9 and Trigger #9. Increase in the number of households receiving cash transfers (direct transfers, high‐labor intensive work, and income‐generating activities) from 65,000 in 2015 to 150,000 in 2018.
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4.22. There are different pathways through which social safety nets contribute to poverty reduction and enhancing productivity: (i) by affording households access to a regular and predictable income; (ii) by inducing better physical and human capital investments by addressing some of the market imperfections caused by constraints in obtaining credit, inputs, insurance, and from information asymmetries; (iii) by helping households to better manage risk ex ante, and cope with risk ex post, thereby decreasing the need for adverse coping mechanisms; and (iv) through the creation of community assets via public works that can protect households from adverse climate shocks. Predictable, multi‐annual social protection support to households has been shown to result in investments in human capital and assets. When transfers are provided over multiple periods to poor households, they are used to pay off debts, accumulate productive assets or to buy inputs (fertilizer). This enhances productive capacity and resilience such that eventually they no longer require support. Experience shows that these objectives are more effectively achieved when safety net support is combined with investments in livelihoods ‐as is done through the agricultural subsidy scheme14. 4.23. However, safety nets are underfunded and fragmented in Mali. Safety nets remain underfunded and rely heavily on external financing even though the SCD estimates that safety nets have the potential to reduce the number of poor significantly: less than 2 percent of GDP in perfectly targeted transfers in combination with 2 percent of growth per capita over the next 15 years (of the poorest households) is sufficient to eliminate poverty by 2030. Safety nets are also largely uncoordinated and do not reach the poor effectively. Institutions leading social protection in the country include the Commissariat à la Sécurité Alimentaire responsible for emergency response, MSAHRN for non‐crisis related programs, the Minister of Finance for JigisemeJiri (quarterly cash transfers) and the Ministry of Health/ANAM for RAMED (health insurance). Most social protection money is allocated to general (food) subsidies implemented through cereal banks and local authorities that reach the urban less‐poor, rather than the chronic poor in rural areas. These measures disturb the effective functioning of the market for cereals. To address this situation, the current safety net system needs to be better coordinated; and social safety nets need to be scaled up and reach national coverage. This is reflected in the National Social Protection Policy which has been formulated but not yet adopted. 4.24. Analytical underpinnings for the various prior actions and triggers are presented in annex 6.
D. LINK TO CPF, OTHER WORLD BANK OPERATIONS AND THE WBG STRATEGY
4.25. The proposed operation is closely aligned with the CPF FY16‐FY19 (Report number 94005‐ML, approved by the Board on December 10, 2015). The two of the CPF focus area on Create Economic Opportunities and Build Resilience are reflected in the PRIGSO series. In accordance with the CPF the policy reforms sought are complementary to operational activities that seek to improve productivity and resilience in rural areas, and particularly those in the livelihood zones where most of the poor live. 4.26. PRIGSO complements a number of World Bank investment projects and technical assistance programs. Policy actions supported under pillar 1 will enhance ongoing TA with respect to microfinance (RFINA) as well as in the telecommunications sector (ICT‐PA). The proposed reforms are also expected to
14 An internal evaluation of the JigisemeJiri , a World Bank supported social safety net operating in Mali indicates that about 70 percent of the transfer was used to buy food; around 10 percent to buy medicines and pay rent in urban settings, while in rural areas the transfer helped to cover the costs of education and hygiene products; and about 15‐20 percent of transfers were invested in household welfare using the cash to buy either small livestock or agriculture inputs such as herbicides, seeds and fertilizers. The preliminary results of the baseline survey of the external impact evaluation of the JigisemeJiri presented by IFPRI indicate that the Project displays good targeting for identifying the targeted households.
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bolster current World Bank’s projects in the areas of agriculture (WAAPP, ACDP, and PAPAM) and transport (RMP). As for the proposed measures under pillar 2, they complement ongoing projects and TA in the domains of decentralization (ULGSP and GBDTAP) and social protection (ESNP and SNSPS).
E. CONSULTATIONS, COLLABORATION WITH DEVELOPMENT PARTNERS
4.27. Consultations. The proposed operation was developed within the consultative framework existing in Mali, namely the PRSP framework developed over the years to design and monitor PRSP progress and budget development. This includes consultations with the Government and CSOs, undertaken during the preparation of the SCD and CPF FY16‐FY19, and around the design and monitoring of the CREDD. All the bills supported by the proposed operation have also followed the traditional consultation process involving public institutions, unions and civil society organizations active in the relevant sectors. More generally, Mali is known for its profound culture of meaningful consultations and “consensus politics”. 4.28. Collaboration with development partners. The World Bank is an important member of the harmonized aid architecture in Mali. As for budget support, the Government and a group of donors signed a Memorandum of Understanding in March 2006 and renewed it on July 1, 2010 to provide Mali with a harmonized framework. This group of donors including the African Development Bank, Canada, Denmark, the European Union (EU), France, Germany, the Netherlands, Sweden, and the World Bank have been instrumental from 2006 to promote joint approaches regarding policy matrices, disbursement calendars and annual reviews. The World Bank is also an active member of the Technical Group of donors in charge of steering the policy dialogue with the Government of Mali on economic and financial issues. The supported policy reforms have been subject to consultation within these coordination mechanisms to ensure coherence and complementarity with actions being implemented or contemplated by other development partners of Mali.
5. OTHER DESIGN AND APPRAISAL ISSUES
A. POVERTY AND SOCIAL IMPACT
5.1. The SCD highlights how poverty reduction in Mali has been associated with a rapid increase in the production of cereals following market liberalization, as well as sustained subsidies on fertilizer, increased remittances, improved off farm income opportunities (informal gold mining; telecom) and improved road connectivity. The SCD also notes that accelerated poverty reduction would require an increase in agricultural productivity in the semi‐arid zones, as well as an improved business environment. The SCD finally points to the significant contribution scaled up social protection could make to poverty reduction. 5.2. The measures supported by the proposed series operationalize the recommendations of the SCD. The expansion of the e‐voucher scheme enhances the efficiency, transparency and traceability of agricultural subsidies. Such subsidies have a demonstrated (and significant) positive effect on productivity according to analysis prepared for this operation. To ensure e‐vouchers reach households in the more isolated areas –where the poorest live, this DPO series supports mobile phone network extension and its upgrading through the prior action for the AGEFAU and the award of the 4G license/ introduction of a
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fourth operator. Better maintenance of rural roads, reform of the micro‐finance sector15 and measures in support of enhanced social protection complement these measures that are aimed at productivity enhance by on the one had ensuring market access, and on the other improving the ability of households to invest in productive assets. The latter is supported by impact evaluations of cash transfer schemes implemented under similar agro‐ecological circumstances to which team members contributed16. 5.3. Support to fiscal decentralization and the promulgation of the land act are also measures that indirectly support the core priorities of the SCD. Increased fiscal decentralization bears the premise of improved service delivery because by bringing decision making to the local level, local priorities can be better reflected and because more purchasing power at the local level may lead to more investment in rural areas. To ensure that the results of decentralization are carefully monitored the team has invested –in collaboration with the authorities in a CEQ analysis for 2015. This analysis considers the distributional impact of revenue collection and budgetary spending and serves will serve baseline against which future (more decentralized) budgets will be evaluated. In addition, the team has set up a high frequency monitoring system that assesses on a quarterly basis the quality of service delivery. The system monitors particularly households in northern Mali, and resources allowing, could be expanded to the remainder of the country. Yet even without doing so, the impact of increased decentralization should certainly be picked up by the Suivi Permanent17. 5.4. The adoption of the Rural Land Act and the revision of the Domains and Land Act are expected to reduce tenure uncertainty, a constraint highlighted in the SCD. The rural land act was developed following a participatory regional process and contributes to improving tenure security for particularly smallholder farmers and reducing land related conflict. The new Rural Land Act gives greater recognition to customary land rights, requires consent of family members for land transactions, promotes land administration (land holdings and transactions), promotes access of women and young people to agricultural land managed by government (irrigation schemes in particular) and supports the establishment of village land commissions. The latter is expected to strengthen the involvement of rural populations in agricultural land management. The new land act also supports the establishment of an amicable settlement procedure of agricultural land disputes prior to referral to the competent courts, a measure which is believed to enhance the ability of family farmers to access justice and reduce costs of conflict resolution. Enhancing tenure security, including of customary land and for secondary right holders like women and other family members, access to conflict mediation contributes to productivity enhancing investments and reduces the costs of protecting rights while improving community level land administration will provide more security for land transactions. 5.5. As none of the proposed measures is expected to have a negative impact on the poor, PSIA analyses were not commissioned. The team will, however, continue to follow closely the evolution of poverty in Mali, using various tools. The CEQ analysis and Suivi Permanent were already mentioned. In addition, the team works with the authorities in strengthening the household survey system. A revised
15 While liquidating one the two biggest MFI in bankruptcy (Jéméni) the GoM has put in place a pro‐poor compensation formula whereby the smaller depositors recovered 80 percent of their net deposits and the largest depositors received 35 percent. The Government envisage to apply the same formula to future liquidations. 16 See Quentin Stoeffler, Bradford Mills and Patrick Premand (2016) Poor Households’ Productive Investments of Cash Transfers: Quasi‐experimental Evidence from Niger. 17 The Permanent Monitoring System was put in place in January 2016, and ensures quarterly data collection from households, local authorities, school principals, directors of health centers and in markets. This device is used to assess the impact of aid projects on economic activities and security in northern Mali. As such it aims to be an observatory of recovery and development actions in this region.
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living standards survey was designed, in collaboration with the WAEMU Commission, and will be fielded in 2017. 5.6. The reforms which are included in the proposed operation are expected to have a positive impact on gender equality. Some gender issues are driven by an insufficient allocation of resources to key services. The proposed operation includes measures to foster inclusive growth and sectoral efficiency and support the resilience of poor and vulnerable populations through higher transfers at the decentralized level and larger coverage of social protection mechanisms. These measures will contribute to gradually correct gender disparities18 by easing girls’ and women’s access to basic social services and new economic opportunities.
B. ENVIRONMENTAL ASPECTS
5.7. Measures supported by the proposed operation are not expected to have any significant negative impact on the environment. Should the Rural Land Act and the revision of the Domains and Land Act be enforced following an inclusive participatory process, they would contribute to improving tenure security, particularly smallholder farmers and reducing land related conflict. Nevertheless, the team recognizes that the key challenges will stem from implementation provisions of these land reform measures in the field. The environmental and social negative impacts due to any poor implementation of the reform remain however uncertain. To reduce the risk of poor implementation, the Government, once adopted, will need to organize an inclusive nationwide awareness campaign. Specific simple and easy access guidelines will also have to be prepared in order to ensure ownership of the reform by stakeholders. The Government will finally need to strengthen the land reform monitoring and evaluation system by including Civil Society Organizations representatives. 5.8. The Government’s reform agenda builds on Mali’s robust environmental institutional framework. The backbone of this framework is the Constitutional Law of 1992 which states that: "Everyone has the right to enjoy a healthy environment. Environmental protection and promotion of quality of life is an obligation of all and the state". To this end, Mali adopted the National Policy for Environmental Protection (NEPP) in 1998, the main components of which are related to: (i) fighting against desertification; (ii) pollution prevention and control; and (iii) poverty reduction. In line with NEPP objectives, specific policies/strategies have been adopted such as: the National Plan of Environmental Action Plan, the National Strategy for Managing the Protected Areas, the National Policy for Adaptation to Climate Change, and the National Strategy of Management of Biodiversity. Furthermore, the CSCRP‐3 as well as many regional and local development action plans have been “greened” through a participative approach. In addition to traditional regulations governing the management of natural resources such as forests, water courses and basins, hygiene and sanitation, specific regulations are in place to enforce environmental assessment procedures19. The mining code also entails environmental and social sustainability provisions. The coordination of the policies and strategies, and the enforcement of the specific regulations are under the responsibility of the following institutions: (i) the inter‐ministerial committee for the coordination of cross‐sectoral environmental issues; (ii) the Ministry in charge of Environment; (iii) the National Directorate of Control of Pollution and Nuisances (DNACPN); (iv) the Environment and Sustainable Development Agency (AEDD); (v) the Sewage Treatment Plants Management Agency. Regarding the integration of environmental
18 Only 25 percent of adult women are literate, compared to 43 percent of men. Girls attend school less frequently than boys and are less likely to complete. The gender gap becomes particularly strong after the primary cycle, reaching around 20 percent at lower secondary school and 60 percent at tertiary. Women’s access to productive inputs such as agricultural credit, improved seeds or fertilizers is twice to three times lower than for men. 19 Decree No. 08‐346/P‐RM of June 26, 2008.
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aspects in sector policies, programs and projects, the DNACPN is responsible for the enforcement of Environmental Impact Assessments (EIA) and Environmental Audit procedures while the AEDD is responsible for the strategic environmental assessment; this is a source of inefficiency which needs to be solved. Finally, Mali’s Investment Committee is in charge of public investment project selection and includes as a full member the Environment and Sustainable Development Agency (AEDD), and retains environmental impacts as an essential criteria of selection. 5.9. Climate change remains at the top of the Government’s agenda. In July 2011 the Government of Mali adopted a National Strategy on Climate Change (SNCC) in consultation with public and private sector partners. The Government established an Institutional Framework on Climate Change headed by a National Committee. To implement the SNCC, Mali Climate Fund was created to combine financing from a range of sources. This Fund began in 2014 and remains the first public‐private fund in Africa to strategically leverage funds pilot and test interventions that can identify and scale resilience for the country at‐large, in the face of immense climate impacts. 5.10. However, environmental institutions are lacking expertise and funding. The Ministry of Environment and Sanitation and its line institutions have little leverage on the enforcement of environmental management/assessment regulations and procedures. On the one hand, there are few formal fora for inviting public input though the EIA regulation provides an adequate space to this end. On the other, without sound environmental standards and norms, the judicial system has no capacity to fairly handle complaints related to environmental matters. The World Bank supports the Government in addressing these weaknesses by strengthening the country’s environmental and social institutional capacity, notably through the ongoing Natural Resource Management in Climate Change Project within the Environment and Sustainable Development Agency and the Economic and Environmental Rehabilitation of Niger River under preparation. In addition, all other investments projects under implementation are involving the National Directorate of Control of Pollution and Nuisances in charge to enforce environmental and social regulations in Mali. Further, all new investment projects will integrate a subcomponent on environmental and social capacity building of the DNACPN and all other relevant stakeholders.
C. PFM, DISBURSEMENT AND AUDITING ASPECTS
5.11. The Government has adopted in 2016 a new integrated public finance management reform plan for the period 2017‐2021 (Plan de Réforme de la Gestion des Finances Publiques au Mali, PREM). The PREM draws on the lessons from the previous plan and addresses main issues highlighted in the 2016 PEFA assessment. The report reveals some progress being made in strengthening the PFM systems. Budget credibility and predictability is assessed as fairly satisfactory including notable improvement in overall budget discipline and strategic allocation of resources, reflecting the impact of PFM reforms initiated in 2010. Financial and budget records are reliable, exhaustive and produced in a timely manner. However, the report noted persistent weaknesses in internal and external controls and highlighted the disconnect between the Medium Term Expenditure Framework and the Public Investment Plan. The oversight function of the legislative branch and the supreme audit institution is hampered by the inadequate funding. In addition, despite that some actions of the PFM reforms were delayed because of the political crisis, the OP7.30 Assessment of 2012 confirmed the fiduciary environment had remained resilient and acceptable for the World Bank to process its operations. Finance laws, including for the year 2017, have been regularly published with all detailed tables and annexes, on the website of the Ministry of Economy and Finance20.
20 http://www.finances.gouv.ml/lois‐de‐finances/lois‐des‐finances‐2016.
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5.12. The World Bank has engaged a policy dialogue with the Government to address PFM and governance lapses as part of the efforts to improve the country’s CPIA score. The World Bank submitted to the Government a policy note highlighting the existing opportunities to strategically use the CPIA to improve governance and management of public finances, by implementing an institutional device dedicated to identify, steer and monitor the implementation of the policy reforms aimed at improving the country score. To this end, the World Bank supports the Ministry of Economy and Finance in the preparation of a written communication to the Council of Ministers to sensitize the entire Government on the need to set up this new institutional device. Finally, a government seminar will be organized on the CPIA to ensure greater ownership of the tools by the authorities and should lead to the formulation of concrete policy reforms. 5.13. The Central Bank of West African States (BCEAO) is the common Central Bank of WAEMU member state countries, including Mali. The latest assessment of the BCEAO was completed on December 2013. The assessment found that the bank continued to have a strong control environment and has, with the implementation of the 2010 Institutional Reform of the WAEMU, enhanced its governance framework. Specifically, an audit committee was established so far and progress is underway to strengthen its capacity with external expertise to oversee the audit and financial reporting processes; transparency has increased with more timely publication of the audited financial statements on BCEAO’s website. In addition, as planned, the Central Bank has adopted all the International Financial and reporting standards (IFRS) applicable to its operations except IFRS 1. As such, 2014 financial statements were prepared in compliance with IFRS. The 2014 financial statements of the Central Bank were audited jointly by two independent external auditors, with unqualified audit opinions, and published in the Central Bank website. 5.13. The Government revised the public procurement code. The public procurement code approved on September 25, 2015 and its amending decree approved by the Cabinet on September 29, 2016 represents significant progress in the modernization of the regulation of the public procurement. However, the adoption of other statutory instruments required for the effective implementation of the new code is still pending, making impossible the implementation of the new code – for instance the decree determining the conclusion and approval authorities of contracts remains unsigned. Moreover, in practice it is observed the non‐compliance with review deadlines in the procurement process by the various actors. The procurement process, particularly the contract award to certain thresholds still remains very long – on average more than 100 days. 5.14. Fiduciary risks have been contained in recent years throughout the strengthening of good practices in budget and public financial management transparency. Progress has been registered in several areas: (i) the comprehensiveness of budget documentation has improved, and budgets are published in a readily accessible manner; (ii) budget commitments and payment orders are now subject to deadlines; (iii) public contracts awards are published on the website, with extensive details on its content; (iv) a new public contracts code was approved; and (v) steps have been taken to accelerate implementation of investment projects. All these achievements are also in line with WAEMU directives. 5.15. Disbursement and Accounting. The Borrower is the Republic of Mali, represented by the Ministry of Economy, Finance and Budget. The credit will be released in one tranche of US$50 million upon effectiveness and provided the Association is satisfied (i) with the Program being carried out by the Recipient; and (ii) with the adequacy of the Recipient’s macroeconomic policy framework. The proposed operation will follow IDA’s disbursement procedures for development policy operations. Upon approval of the operation and effectiveness of the Financing Agreement, the proceeds of the credit will be disbursed by IDA into a dedicated account of the Government for budget support at the Central Bank (“BCEAO”) and
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which forms part of the country’s foreign exchange reserves. The proceeds of the credit will not be used to finance expenditures excluded under the Financing Agreement. The Borrower shall ensure that upon the deposit of the credit into said account, an equivalent amount is credited in the Borrower’s budget management system, in a manner acceptable to the World Bank. Based on previous experience, the execution of such transaction from the Central Bank to the Treasury (Ministry of Economy and Finance) does not require more than four (4) days. The Borrower will report to the World Bank on the amounts deposited in the foreign currency account and credited in local currency to the budget management system. Assuming that the withdrawal request is in Foreign Exchange, the equivalent amount in CFAF reported in the budgetary system will be based on the market rate at the date of the transfer. The Borrower will promptly notify the World Bank within thirty (30) days of transfer by fax or email that such transfer has taken place, and that proceeds have been credited in a manner satisfactory to the World Bank. 5.16. Auditing. The World Bank reserves the right to seek an audit of the dedicated account by independent auditors acceptable to the World Bank. If the World Bank at any time determines that any amount withdrawn under the World Bank credit has been used for expenditures excluded under the legal agreement, such amount shall be refunded promptly upon notice from the World Bank. The amount so refunded is credited to the loan account and cancelled.
D. MONITORING, EVALUATION AND ACCOUNTABILITY
5.17. The Ministry of Economy and Finance (MEF) will be responsible for overall coordination of supervision and monitoring of the reform program supported by the proposed series. The MEF will liaise with focal points in the Ministries, departments and agencies involved in the proposed series. The participating ministries, departments and agencies will furnish relevant information and documentation on implementation and monitoring of their respective programs to MEF, which will oversee progress in achieving program objectives. 5.18. Grievance Redress. Communities and individuals who believe that they are adversely affected by specific country policies supported as prior actions or tranche release conditions under a World Bank Development Policy Operation may submit complaints to the responsible country authorities, appropriate local/national grievance redress mechanisms, or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address pertinent concerns. Affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non‐compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service, please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org”.
6. SUMMARY OF RISKS AND MITIGATION
6.1. The overall risk rating for the proposed operation is substantial. In particular, political, risks could jeopardize the expected outcomes of the operation.
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Table 6‐1: PRIGSO1 Risk Rating
Risk Categories Rating
1. Political, governance and security risks High
2. Macroeconomic Substantial
3. Sector strategies and policies Moderate
4. Technical design of project or program Moderate
5. Institutional capacity for implementation and sustainability Substantial
6. Fiduciary Substantial
7. Environment and social Low
8. Stakeholders Low
Overall Substantial
6.2. Political, Governance and Security Risks are high. Lack of progress in the security situation in the North, and/or its extension to the South (through terrorist attacks) could distract Government’s attention and divert resources from its recovery and development agenda. The Government security apparatus has so far been unable to counter this trend and there is a real risk of growing divide within Mali’s population. The experience from 2012 shows how quickly public support for the Government can shift; reports of growing levels of insecurity in southern regions, regular protests in Bamako and increasing crime levels in general are all indications of the likelihood of such a shift. Moreover, in the political field, the presidential majority base at the National Assembly was recently eroded with the defection of several Members of Parliament from parties who have disassociated themselves from the ruling coalition. The proposed prior actions subject to these risks are: (i) the adoption of the Rural Land Act, (ii) the allocation of budgetary resources to local governments in compliance with the Government competencies and resources transfer plan adopted by Cabinet, and (iii) the allocation of budgetary funds to extend the coverage of social protection schemes. The proposed series does not directly entail measures to mitigate such risks or their impact, even if the focus put on poverty reduction and resilience is intended to generate buffers needed to absorb security shocks. 6.3. Fiduciary risks are substantial. In spite of progress made through the adoption of various regulations to improve PFM, recent procurement issues and the weaknesses reported on the compliance with the internal control rules as well as the external scrutiny and audits make evidence that fiduciary risks remain substantial. Mitigation measures includes the monitoring of continuous progress noted following latest IMF Safeguards Assessment of the BCEAO and the demonstrated commitment of the Government to implement other wide ranging reforms in the area of PFM. 6.4. Macroeconomic risks are substantial. An unexpected reversal in the downward oil prices trend and a drop in gold prices would both affect negatively fiscal accounts. A negative climatic shock would aggravate food insecurity, raise social spending needs and raise food inflation and would significantly reduce GDP growth –also in the non‐agricultural sectors. Given Mali’s limited fiscal buffers, such risks could affect budget execution, and, in particular, domestically‐financed public investment, possibly generating the accumulation of expenditure arrears. Policy actions exposed to these risks are those depending on budgetary allocations that could be cut in response the aforementioned shocks, namely the provision of budgetary resources to local governments, and the extension of the coverage of social protection schemes. However, Mali’s fiscal situation and management already remained sound during the crisis and should continue as such given the stabilizing effect of WAEMU membership and PFM reforms undertaken in recent years. Risks of contagion effects to the financial sector or to the balance of payments would continue to be moderate as the financial sector continues to be highly liquid and Mali benefits from the pooling of WAEMU
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foreign currency reserves to cover its balance of payments needs in bad times, including debt service obligations. 6.5. Institutional capacity risks are also rated substantial. There is a large number of ministries (Economy and Finance, Agriculture, Transports, ICT, and Solidarity, Social Protection) in charge of the implementation of the supported reforms, most of them being endowed with limited well‐qualified, in‐house resource personnel. This shortcoming may notably hinder the proper implementation of the e‐voucher scheme and the crafting of the synthesis tax for local governments in replacement of a wide range of currently existing local taxes. However, capacity enhancement is being provided through technical assistance by the World Bank and other development partners in the areas considered for policy reforms in the proposed series (MFI, ICT, agriculture, social protection, decentralization, transports, etc.). Monitoring and evaluation arrangements commonly in place in the Ministry of Economy and Finance are largely adequate and have proven their effectiveness during previous DPO series.
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ANNEX 1: POLICY AND RESULTS MATRIX
Prior actions and Triggers Results
Prior Actions under PRIGSO1 Triggers for PRIGSO2
Pillar 1: Fostering inclusive growth
Prior action #1: The Recipient has enhanced security of land tenure through the promulgation of the Rural Land Act.
Trigger #1: The Recipient, through the Council of Ministers: i) Adopts the application decree of the
Rural Land Act, including the operationalization of the rural land commissions; and
ii) Amends the draft Domains and Land Act in light of the adopted Rural Land Act.
Increase in the coverage ratio of the communal cadastral map for the Bamako District and the Cercle de Kati. Baseline (2015): 0%. Target (2018): 20%.
Prior action #2: The Recipient has, through the Ministry of Economy and Finance, Ministry of Agriculture and Ministry of Livestock and Fisheries, introduced an e‐voucher scheme for the distribution of agricultural inputs subsidies, through the adoption of a revised procedures manual governing the modalities of distribution of such subsidies.
Trigger #2: The Recipient, through the Ministry of Agriculture, implements the e‐voucher scheme to deliver agricultural input subsidies to beneficiaries in at least two regions.
Increase in the percentage of agricultural subsidies allocated through e‐vouchers (as opposed to paper vouchers). Baseline (2015): 0% Target (2018): 20%.
Prior action #3: The Recipient has, through the Ministry of Economy and Finance, issued a ministerial decision establishing a commission in charge of awarding a 4G license to existing operators and, through the Ministry of Digital Economy and Communication, issued a ministerial order creating the commission in charge of awarding a fourth mobile telecommunications license, using an open international bidding process. Prior action #4: The Recipient has, through the Office of the Prime Minister, facilitated the extension of the mobile telephone network to isolated areas, making operational the Universal Service Fund Management Agency (AGEFAU), through: i) Adoption of the decree of appointment of AGEFAU
Director General; ii) Creation and provisioning of AGEFAU account; and
Trigger #3: The Recipient awards a 4G license to existing operators including enhanced obligations in terms of wholesale supply and facility sharing and a fourth mobile telecommunication license through an open international bidding process offering market access conditions in line with international best practices. Trigger #4: The Recipient, through the AGEFAU, publicizes the financial statements of AGEFAU, including the amount of resources allocated to extension projects of telecom services. Trigger #5: The Recipient, through the Ministry of Digital Economy, Information
Decrease in the average in tariff per minute for personal domestic calls. Baseline (2015): CFAF 108. Target (2018): CFAF 90. Increase in the number of localities benefiting from extension projects of telecom services. Baseline (2015): 0. Target (2018): 16. Reduction in the average monthly price per Mbit/s of wholesale international capacity link from capital city, Bamako, to Europe. Baseline (2015): US$550. Target (2018): US$350.
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Prior actions and Triggers Results
Prior Actions under PRIGSO1 Triggers for PRIGSO2
iii) Adoption of a decree fixing the percentage rate and modalities of payment of compulsory contributions payable to AGEFAU.
and Telecommunications, awards a broadband license to exploit the excess capacity of the OMVS‐SOGEM network to a broadband operator selected through an open, international bidding process.
Prior action #5: The Recipient has, through the Ministry of Economy and Finance, issued ministerial orders withdrawing the licenses of those microfinance institutions that have been audited and needed to be liquidated pursuant to its micro finance sector emergency plan, dated March 2015.
Trigger #6: The Recipient, through the Ministry of Economy and Finance, implements the micro finance sector emergency plan by: i) Liquidating at least two microfinance
institutions whose licenses have been withdrawn; and
ii) Completing the supervision program of the CCS/SFD.
Reduction in the non‐performing loans ratio of all microfinance institutions (PAR90). Baseline (2014): 8.8%. Target (2018): 4.5%.
Prior action #6: The Recipient has, through the Ministry of Economy and Finance and the Ministry of Equipment, Transport and Regional Integration, issued an inter‐ministerial order fixing the percentage of the Road Maintenance Fund to be allocated to the routine maintenance of priority rural roads.
Trigger #7: The Recipient, through the Road Authority, publicizes the financial statements of the Road Fund, including the amount of resources allocated to the maintenance of priority rural roads.
Increase in the execution rate of maintenance needs for priority rural roads. Baseline (2015): 15%. Target (2018): 40%.
Pillar 2: Supporting pro‐poor decentralized transfers and social protection
Prior action #7: The Recipient has, through its Council of Ministers, advanced the decentralization process by providing in its 2017 budget edition, dated September 21, 2016, for the transfer of budgetary resources to local governments pursuant to the competencies and resources transfer plan.
Trigger #8: The Recipient, through the Council of Ministers adopts the draft law creating a synthetic tax that simplifies and replaces a wide range of currently existing local taxes.
Increase in the percentage of budgetary resources allocated to the three poorest regions in total budgetary resources transferred to regions. Baseline (2015): 15%. Target (2018): 25%. Increase in local authorities’ own‐resources in percentage of GDP. Baseline (2015): 0.39%. Target (2018): 0.50%.
Prior action #8: The Recipient has adopted a unified vision of its social protection policy, through (a) adoption of a
Trigger #9: The Recipient, through the Ministry in charge of Social Protection:
Increase in the number of households receiving cash transfers.
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Prior actions and Triggers Results
Prior Actions under PRIGSO1 Triggers for PRIGSO2
Presidential Decree, dated November 1, 2016, approving the National Social Protection Policy, along with its accompanying social protection action plans 2016‐2018; (b) adoption of a Presidential Decree, dated September 5, 2016, creating the National Council of Strategic Orientation of Social Protection (“National Council”), and issuance, through MSAH, of a ministerial order, dated March 23, 2016, creating the Unified Social Registry Steering Committee (“Steering Committee”); and (c) commencement of operations of both the National Council and the Steering Committee as evidenced by Minutes of Proceedings dated October 7, 2016 and September 29, 2016. Prior action #9: The Recipient has made provision in its 2017 budget edition, dated September 21, 2016, for budgetary allocations to expand the coverage of social safety net programs, including JIGISEMEJIRI and RAMED.
i) Creates a Unified Social Registry including a mechanism to integrate beneficiaries of various social safety net programs; and
ii) Makes free health care effective in CSCOMs for Jigisemejiri beneficiaries eligible to RAMED.
Baseline (2015): 65,000. Target (2018): 150,000.
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ANNEX 2: LETTER OF DEVELOPMENT POLICY
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ANNEX 3: LETTER OF DEVELOPMENT POLICY – UNOFFICIAL TRANSLATION
Object: Letter of Development Policy Dear President Kim, 1. This Letter of Development Policy discusses economic trends in 2016 and outlooks for 2017‐2018. It also discusses the implementation of reforms in 2016 and the 2017 reform program to support economic recovery and reduce poverty. 2. This reform program aligns with the 2012‐2017 Strategic Framework for Growth and Poverty Reduction (Cadre Stratégique pour la Croissance et la Réduction de la Pauvreté 2012‐2017 ) adopted in December 2011, the 2013‐2014 Sustainable Recovery Project for Mali (Programme de Relance Durable du Mali 2013‐2014) adopted in April 2013, the 2013‐2018 Government Action Plan (Plan d’Actions du Gouvernement 2013‐2018 ‐ PAG), and, since 2016, the Strategic Framework for Economic Recovery and Sustainable Development (Cadre Stratégique pour la Relance Economique et le Développement Durable ‐ CREDD). CREDD’s objective is to achieve the Millennium Development Goals (MDGs) before 2030 by tapping into potential, improving resilience to achieve peace and security, and by promoting inclusive development to reduce poverty and inequalities. It is based on three pillars: i) inclusive and sustainable growth, ii) access to basic social services, and iii) institutional development and sustainability. 3. To achieve the objectives of this reform program, the Government requests financing from the World Bank in support of poverty reduction and inclusive development. This financing will be used for efforts to reduce poverty, improve the resilience of the most vulnerable populations, and promote inclusive growth. Key developments in 2016 Political, Social, and Economic Context 4. Mali is gradually recovering from the crisis in 2012 thanks to the restoration of security, the conclusion of negotiations in June 2015 for the Algiers Process initiated in 2014, and the return of financial and technical partners. 5. The French force known as Serval, later replaced by the regional Barkhane force, the European Union Military Training Mission (EUTM), soldiers from the Economic Community of West African States and the Republic of Chad, and the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) have supported the Government’s efforts to rebuild the Malian army and have helped to restore the State’s authority and integrity in the northern regions of Mali. The Government has adopted a framework act on military planning, which attests to the will of Mali’s senior political and military officials to equip the country with a defensive system capable of protecting its fundamental interests. 6. The Conference for the Development of Mali held in Brussels on May 15, 2013 and the five meetings that followed it were productive. They brought together 80 countries and 28 international organizations, which committed USD 4.4 billion (39% of the GDP). 66% of this amount has already been disbursed, of which 33% through the Government budget.
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7. The Agreement for Peace and Reconciliation in Mali (APRM) was signed in two phases, on May 15, 2015 and June 20, 2015 following inter‐Malian negotiations that began in 2014 with support from the international community and led by the Republic of Algeria. This agreement marks the beginning of a new era of lasting peace and reconciliation in Mali. Under the terms of the agreement, interim authorities have been deployed to some northern regions and will soon be deployed in the rest of the northern regions. In addition, the Conférence d’Entente Nationale (Conference on National Unity) was held in April 2017 and its conclusions were used to prepare a national charter. 8. The APRM includes provisions to create a Development Zone in the northern regions. This zone will follow a specific development strategy aimed at getting the northern regions on par with the rest of the country in terms of development indicators. The Government bases this strategy on the conclusions of the assessment of needs and of recovery and development priorities in the northern regions carried out jointly by the World Bank, the African Development Bank, and the Islamic Development Bank. A fundraising roundtable was held on October 22, 2015 in Paris in order to establish the Sustainable Development Fund, which will be the financial instrument of the specific development strategy. Macroeconomic Developments and Recent Reforms At the macroeconomic level 9. Economic recovery is being achieved by policies supporting agriculture and the consolidation of public finances through the payment of arrears to suppliers, moving Directors of Finance and Supplies under the Ministry of the Economy and Finance, and starting the programmatic budget preparation process. Despite a slight decline, real GDP growth remained healthy in 2016 at 5.3% versus 6% in 2015. Growth has been driven by improved agricultural production and a stronger tertiary sector. Thanks to adequate rainfall and inputs being available at the start of the growing season, agricultural production increased by 7.6% whereas the tertiary sector grew by 6.0%, primarily thanks to a thriving telecommunications industry. The secondary sector also grew by 5.1% after declining in 2015, driven by the recovery of the agro‐food and textile industries as well as increasing construction and public works projects. Thanks to a good crop year, the average consumer price inflation remained low at 1.0% versus 1.4% in 2015. 10. Regarding public finances, the total budget deficit (cash basis, including grants) represented 4.3% of GDP in 2016 versus 3.2% in 2015. Total expenditure and net lending totaled CFAF 1,919.6 billion (23.1% of GDP). The deficit of the basic budget balance was CFAF 170.4 billion (2.0% of GDP). 11. The current account deficit (including grants/dons) on the balance of payments dropped to 6.5% of GDP in 2016 versus 7.3% in 2015. This was due an increase in the value of gold exports and the drop in food imports thanks to strong agricultural production in 2015. The current account deficit was only partially financed by net capital inflows, primarily in the form of foreign aid and direct foreign investment. As a result, the overall balance of payments deficit was CFAF 106 billion, which was financed by foreign exchange reserves of the Central Bank of West African States (BCEAO). 12. The money supply increased 13.4%. This increase was due to lending to the economy and the Government, both of which increased by 8.7%. Commercial banks partially used advances from the BCEAO to finance the Malian economy and to purchase securities issued by members of the West African Economic and Monetary Union (WAEMU).
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Reforms Improving public management, transparency, and accountability 13. The Malian administration is in the process of becoming more modern and stable. This will allow it to implement innovative operational methods in all public services and institutions. In order to make skills and services more competitive, the Government has created new opportunities, such as training at the Ecole Nationale d’Administration, and established a competitive hiring process for senior positions in the public administration. The Government has also adopted a draft bill on the fundamental principles that will govern the creation, organization, management, and oversight of public services. This draft bill was adopted by the National Assembly and promulgated by Law 2014‐049 of September 19, 2014, which requires that candidates for senior positions have appropriate backgrounds while emphasizing equality, equity, and transparency. In addition, it introduces a formal hiring procedure for senior positions at public institutions, as well as projects and programs organized as administrative departments with a view to improve the efficiency of public employees and their skills. 14. The preparation and judgment of financial statements by public accounts are factors of transparency and accountability. The Auditing Section of the Supreme Court (Section des Comptes de la Cour Suprême) is the primary actor in this system. Despite the Government’s numerous efforts to improve the Auditing Section’s capacity to fulfill its jurisdictional duties, substantial reforms have yet to occur. Until the Auditing Section can be established as a Court of Auditors as called for by the WAEMU Directives, which is included in the constitutional reform bill under review by the National Assembly, the Government has adopted the draft organic bill that aims to strengthen the Auditing Section’s capacity to fulfill its jurisdictional duties more efficiently within the Supreme Court. 15. The right to access information is critical to development. This right is a fundamental aspect of good governance. It provides people with the means to play active roles in achieving development objectives. For this reason, the Government has encouraged the publication of budget information, including the list of taxpayers, yearly budgets, budget implementation reports, and procurement plans without this being a regulatory requirement. The Government adopted the Code on Transparency in Public Finance Management. For the application of this code, the Government adopted Decree 2014‐0607/P‐RM of August 13, 2014, which sets forth terms of access and publication of administrative information and documents relative to public finances in compliance with the current standard principles and requirements. 16. Economic and financial crime poses a major threat to stability and security. It undermines institutions, democratic and ethical values and justice, and it jeopardizes all aspects of development. In order to combat economic and financial crime, in 2013, the Government adopted the law to prevent and eliminate illicit enrichment. As part of this law, an office dedicated to combatting illicit enrichment has been created and staffed. 17. In order to ensure transparency of payments for the exploitation of natural resources, Mali adopted the standards of the Extractive Industries Transparency Initiative (EITI). The country is in compliance with EITI 2011. In order to promote this practice, the Government created a budget line in the 2014 finance law for the financing of activities related to the extractive industries transparency initiative. Improving the efficiency of public spending to promote economic recovery
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18. Given the recurrent and growing need for budget transfers to energy in Mali (to the electricity company EDM ‐ Electricité du Mali) due to the structural imbalance between the sales price of electricity and production costs, the Government adopted and applied a rate adjustment mechanism for electricity in 2013 while raising the electricity price by 7%. Despite this rate adjustment, financial viability remains a concern. The Government has adopted and implemented an action plan that aims to restore the financial viability of EDM while stabilizing its operational losses from 2014. To this effect, the Government is counting on assistance from World Bank services in the form of transfers to the most vulnerable segments of the population, which may need to be increased in the event that energy or food prices increase. 19. The primary objective of decentralization is achieving balanced development throughout the country. Other key objectives of decentralization are: (i) improving the delivery of public goods and services, (ii) improving governance, and (iii) meeting the demand for local autonomy. While local taxation exists, local governments rarely use this resource and this hinders their ability to fund the competencies transferred to them by the state. The Government has increased fiscal transfers to local governments through transfers, traditional transfer instruments, and new instruments such as state‐region contracts (contrats‐plans Etats‐Régions ‐ CPER), which all regions will have in 2017. CPER contracts are viewed as vital to regional economic development. They are a major component in the process of shoring up the decentralization reform foreseen in the Framework Document on the National Decentralization Policy (Document Cadre de Politique Nationale de Décentralisation ‐ DCPND), which is described in phase III of the National Support Program for Local Governments (Programme National d’Appui aux Collectivités Territoriales ‐ PNACT) and reiterated in the recommendations of the Government‐organized summit on decentralization held in October 2013. The Government adopted the decree implementing CPER contracts with a view to promote regional development in the country. 20. Delivering public services requires good planning at the administrative level. This requires determining needs that must be met through public procurement. Users of public services often feel that it takes too long to award public contracts. For this reason, the Government has taken action to improve the timeliness of procurement, such as reviewing the decree relative to the awarding and approval threshold for procurement contracts and the decree implementing the public procurement code. These actions have made the contracting authorities more accountable by: (i) raising the awarding and approval threshold for public contracts, (ii) shortening the deadlines given to public procurement actors, (iii) reducing the number of contract signatories, (iv) eliminating redundancies in the ex‐ante revue of bids, v) reducing the number of eligibility criteria, and (vi) revising certain articles to make them more precise and to improve procurement planning. This set of actions has reduced procurement timelines by at least 28 days, thereby improving the macroeconomic framework, services, and the execution of projects and programs. 21. Public investment projects are hindered by the poor planning of costs and activities. To remedy this situation, the Government has added a budget line in the 2014 finance law for the financing of feasibility studies on public investment projects in order to improve their quality. Outlooks for 2017‐2018 At the macroeconomic level 22. The Malian economy has resumed structural growth despite a continuing security crisis in the northern part of the country. Real growth will stabilize at 5.3% in 2017, the same rate as in 2016. Ongoing Government efforts in the agricultural sector should keep real GDP growth at around 5.0% in 2018. Consumer prices are expected to inflate by 0.8% in 2017, which is slightly less than in 2016.
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23. The current account deficit (grants included) on the balance of payments should level off at 6.7% of GDP in 2017 versus 6.5% in 2016. The entire current account deficit should be financed by net capital inflows, primarily in the form of external aid and direct foreign investment. As a result, the current accounts balance of payments should be positive, which will create a proportional increase in the foreign exchange reserves of the Central Bank of West African States (BCAEO). In 2018, the current account deficit (grants included) on the balance of payments should improve by 1.5% and reach 5.3% of GDP due to increased exports. It should be completely financed by direct foreign investment in the gold and telecommunications industries and by external loans. 24. The money supply should grow 13.5%, driven by lending to the economy and the Government in 2017‐2018. In the financial sector, the Government will continue efforts to consolidate the microfinance sector and reduce outstanding debt in the banking system. It will also implement shareholder restructuring of the new Malian Solidarity Bank (La Banque Malienne de Solidarité – BMS). 25. Regarding budget policy, the total budget deficit (cash basis, grants included) is expected to be 3.8% of GDP in 2017. The basic budget deficit is expected to be CFAF 86.3 billion, or 1.5% of GDP. The Government is committed to ensuring that budget execution adheres to budget rules. In 2018, the total budget deficit (cash basis, grants included) should improve to 3.6% of the GDP whereas the basic budget deficit is expected to be 0.9%. Reform Program Promoting inclusive growth 26. For many years, the agricultural sector has been the engine of the Malian economy, yet its potential is limited by structural problems that must be resolved. To do so, the National Assembly passed a law on agricultural land tenure, which will offer increased security to agricultural investments by strengthening land ownership rights in rural areas. The Government will (i) adopt a draft bill revising the code on public and private land, (ii) adopt implementing decrees for the law on agricultural land tenure and (iii) operationalize all local land tenure offices. 27. In order to improve the efficiency and transparency of agricultural subsidies, the Government adopted a system of electronic vouchers (e‐vouchers) for the distribution of public subsidies for agricultural inputs by revising, on October 21, 2016, the procedures manual that stipulates rules governing subsidy distribution. In addition, during the next crop year, the Government has opted to allocate subsidies to inputs through the system of electronic vouchers in at least two regions on an exclusive basis. 28. Telecommunications is one of Mali’s healthiest sectors. It accounts for a significant share of the country’s economic growth. With a view to stimulate competition and open the sector the more actors, the Government adopted two regulatory documents. On October 17, 2016, a public commission was created to issue 4G licenses to existing operators. On December 30 2017, a decree was adopted creating a public commission tasked with issuing a fourth mobile telecommunications license through an open international bidding process. It also operationalized the Universal Access Fund Management Agency (Agence de Gestion du Fonds d’Accès Universel ‐ AGEFAU) by:
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Appointing the General Director of the Agency by decree adopted by the Council of Ministers on September 13, 2016;
Holding the Agency’s first board meeting on March 29, 2015;
Setting by decree adopted by the Council of Ministers, the mandatory contributions of telecommunications operators to the Agency to be used to finance universal service;
Creating and funding the account of the Agency in April 2017.
29. The Government will successfully implement the abovementioned reforms by issuing a 4G license to operators whose licenses have expired and need renewing, and by issuing a fourth telecommunications license through an open international bidding process and by aligning market access conditions with current standard international practices. It will also issue a wholesale operator’s license in Mali to a wholesale operator selected through an open international bidding process in order to market the surplus capacity of the OMVS‐SOGEM network in Mali, Mauritania, and Senegal. The Government is committed to publishing the financial records of the AGEFAU, including the amount allocated to projects to expand telecommunications services. 30. Microfinance plays an important role in generating income and financing small and very small businesses. In consolidating this sector and under the emergency plan for the microfinance sector adopted in March 2015, the Government canceled, by decrees of August 31, 2016, the agreement on the 23 decentralized financial systems (Systèmes Financiers Décentralisés ‐ SFD), which must be audited and liquidated. It will then liquidate at least two DFS for which approval has been withdrawn and execute the audit of the SFD as planned. 31. To open up the main agricultural areas and give producers greater access to markets, the Government prioritizes building and maintaining rural roads, which are critical to moving local products and increasing producers’ incomes. For this reason, the Government adopted a decree on October 20, 2016 requiring that at least 5% of the road maintenance budget be allocated to rural roads. It will publish financial statements of the road maintenance budget, including the amount allocated to rural road maintenance. Supporting decentralized transfers to assist the poor and promote social protection 32. For several years, Mali has been pursuing an ambitious decentralization policy. This policy is a cornerstone of the crisis resolution phase occurring countrywide. To strengthen local governments, particularly their finances, the Government included in the 2017 finance law a transfer of budget resources to local governments in line with the governmental plan for the transfer of competencies and resources adopted by the Council of Ministers. In addition, to increase the own resources of local governments, the Government intends to adopt a draft bill to create a synthetic tax for local governments, which replaces current local taxes with subpar performance. 33. Poverty reduction is a pillar of the new Strategic Framework for Economic Recovery and Sustainable Development in Mali (Cadre Stratégique pour la Relance et le Développement Durable du Mali). The Government has undertaken several reforms to improve the social welfare of the poorest segments of society. The National Social Protection Policy (Politique Nationale de Protection Sociale) and its action plan were adopted on October 12, 2016 and the associated coordination mechanisms were operationalized, including the National Council on Strategy (Conseil National d’Orientation Stratégique) and the Steering Committee of the Unified Social Registry (Comité de Pilotage du Registre Social Unifié).
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34. The Government of Mali and the World Bank’s experiments with the social protection program Jigisemejiri were a success. For this reason, the Government included in the 2917 draft finance law budget lines for extending the Jigisemejiri and RAMED (medical assistance scheme for the economically underprivileged) social safety net programs. To strengthen the national social protection system, the Government is working to establish the Unified Social Registry (Registre Social Unifié ‐ RSU) – with a mechanism for including beneficiaries of various social safety net programs – and ensure free health care at Community Health Centers (CSCOM) to beneficiaries of the Jigisemejiri program who are eligible for RAMED. Other reforms underway or planned 35. The Government has started to implement other reforms. These reforms aim to attract direct foreign investment, as well as improve the investment framework and transparency of public procurement. The Government has passed a law creating a legal and regulatory framework for Public‐Private Partnerships (PPP) and a PPP unit. It also revised the code of public procurement and the delegation of public service in order to ensure it aligns with the provisions of the PPP law. An ethical charter on public procurement has also been adopted. 35. Reforms are also underway in the electricity sector. An institutional audit of the sector and of the company EDM is in progress and its findings will be used to update the recovery plan for this sector and will shape the institutional reform set to begin in 2017. In addition, the Government will ensure that adequate measures are taken to restore financial balance to the sector so that EDM can cover its operating costs and meet all its financial obligations. EDM will continue to take all necessary measures to improve its technical and commercial performance. It will upgrade and expand its distribution network to reduce technical losses. From a business standpoint, EDM will expand the use of smart meters for large customers and prepaid meters in order to shorten the billing cycle and improve billing and collection rates. In addition, EDM will continue to improve the fuel supply at its production centers. In collaboration with the Electricity and Water Regulation Commission (Commission de Régulation de l’Electricité et de l’Eau), the Government will help to determine a rate that will make it possible to cover the service costs of electricity and, at the right time, proceed with the gradual adjustment of rates in order to wean EDM off the Government subsidy. 36. The Government continues to strengthen the governance of public finance through in‐depth reforms, such as tax reform through the implementation of a plan to reduce tax exemptions, and VAT reform. In addition, based on lessons learned during the second Government Action Plan for the Improvement and Modernization of Public Finance Management (Plan d’Action Gouvernementale pour l’Amélioration et la Modernisation de la Gestion des Finances Publiques ‐ PAGAMGFP II), a new Public Finance Reform Plan in Mali (Plan de Réforme Finances Publiques au Mali ‐ PREM) for the 2017‐2021 period has been adopted. It will be implemented through a strategy that, in addition to the logical framework to be used to schedule actions for the 2017‐2021 period, identifies a limited number of change areas and targets defined according to specific criteria. In addition, the 2018 programmatic budget is in the process of adoption. Monitoring and Evaluation 38. The Ministry of the Economy and Finance is responsible for the overall coordination, supervision, and monitoring of the reform program implemented in the framework of CREDD. It will be in contact with the relevant people and departments at the ministries, directorates, and agencies involved in program
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implementation. The participating ministries, directorates, and agencies will supply information and documentation relevant to the implementation and monitoring of their respective programs to the Ministry of the Economy and Finance, which will supervise progress toward the program objectives. The main sources are: (i) the census from April 2009, (ii) household surveys conducted by the National Statistics Institute, (iii) statistics about the administration collected yearly by the planning and statistics offices of the line ministries, (iv) economic statistics from the National Office of Development Planning, and (v) budget data provided by the Ministry of the Economy and Finance. These sources will be used for the monitoring and evaluation of reforms underway, including those supported by aid for poverty reduction and inclusive growth. Very truly yours, Signed by Dr. Boubou CISSE
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ANNEX 4: FUNDS RELATIONS ANNEX
IMF Executive Board Completes Sixth Review Under Mali’s ECF and Approves US$25.8 Million Disbursement for Mali
Press Release No. 16/542 December 5, 2016 On December 2, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the sixth review of Mali’s performance under an economic program supported by an Extended Credit Facility (ECF) arrangement. The decision enables the disbursement of SDR19 million (about US$25.8 million), bringing total disbursements under the arrangement to SDR60 million (about US$ 1.3 million). The decision was taken on a lapse of time basis. The Executive Board also approved the authorities’ request for the modification of the ceiling on the continuous performance criterion on non‐concessional external debt. The ECF arrangement for Mali was approved by the Executive Board on December 18, 2013 for SDR 30 million (about US$40.7 million), see Press Release No. 13/524). On June 9, 2016, the Board approved a one‐year extension of the arrangement to December 17, 2017, as well as an augmentation of the resources available under the arrangement, bringing total amount of the arrangement to SDR 98 million (about US$132.8 million). Mali’s economy continues to grow at a strong pace, with a projected GDP growth of 5.4 percent for 2016 and 5.3 for 2017. Activity is being supported both by public capital spending and the regional Central Bank’s (BCEAO) accommodative policy. Inflation is projected to decline to 0.5 percent by end‐December and is expected to remain contained at 1 percent. This favorable outlook is, however, subject to downside risks stemming mainly from Mali’s fragile security situation.
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ANNEX 5: ENVIRONMENT AND POVERTY/SOCIAL ANALYSIS TABLE
Prior actions Significant positive or negative
environment effects
(yes/no/to be determined)
Significant poverty, social or
distributional effects positive or
negative (yes/no/to be
Operation Pillar 1: Fostering inclusive growth
Prior action #1: The Recipient has enhanced security of land tenure through the promulgation of the Rural Land Act.
YES YES
Prior action #2: The Recipient has, through the Ministry of Economy and Finance, Ministry of Agriculture and Ministry of Livestock and Fisheries, introduced an e‐voucher scheme for the distribution of agricultural inputs subsidies, through the adoption of a revised procedures manual governing the modalities of distribution of such subsidies.
NO YES
Prior action #3: The Recipient has, through the Ministry of Economy and Finance, issued a ministerial decision establishing a commission in charge of awarding a 4G license to existing operators and, through the Ministry of Digital Economy and Communication, issued a ministerial order creating the commission in charge of awarding a fourth mobile telecommunications license, using an open international bidding process.
NO YES
Prior action #4: The Recipient has, through the Office of the Prime Minister, facilitated the extension of the mobile telephone network to isolated areas, making operational the Universal Service Fund Management Agency (AGEFAU), through: i) Adoption of the decree of appointment of AGEFAU
Director General; ii) Creation and provisioning of AGEFAU account; and iii) Adoption of a decree fixing the percentage rate
and modalities of payment of compulsorycontributions payable to AGEFAU.
NO YES
Prior action #5: The Recipient has, through the Ministry of Economy and Finance, issued ministerial orders withdrawing the licenses of those microfinance institutions that have been audited and needed to be liquidated pursuant to its micro financesector emergency plan, dated March 2015.
NO YES
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Prior action #6: The Recipient has, through the Ministry of Economy and Finance and the Ministry of Equipment, Transport and Regional Integration, issued an inter‐ministerial order fixing the percentage of the Road Maintenance Fund to be allocated to the routine maintenance of priority rural roads.
NO YES
Operation Pillar 2: Supporting pro‐poor decentralized transfers and social protection
Prior action #7: The Recipient has, through the its Council of Ministers, advanced the decentralization process by providing in its 2017 budget edition, dated September 21, 21016, for the transfer of budgetary resources to local governments pursuant to the competencies and resources transfer plan.
NO YES
Prior action #8: The Recipient has adopted a unifiedvision of its social protection policy, through (a)adoption of a Presidential Decree, dated November 1,2016, approving the National Social Protection Policy,along with its accompanying social protection actionplans 2016‐2018; (b) adoption of a Presidential Decree,dated September 5, 2016, creating the NationalCouncil of Strategic Orientation of Social Protection(“National Council”), and issuance, through MSAH, of aministerial order, dated March 23, 2016, creating theUnified Social Registry Steering Committee (“SteeringCommittee”); and (c) commencement of operations ofboth the National Council and the Steering Committeeas evidenced by Minutes of Proceedings dated October7, 2016 and September 29, 2016.
NO YES
Prior action #9: The Recipient has made provision inits 2017 budget edition, dated September 21, 2016,for budgetary allocations to expand the coverage ofsocial safety net programs, including JIGISEMEJIRI andRAMED.
NO YES
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ANNEX 6: ANALYTICAL UNDERPINNINGS FOR PRIGSO1
Prior Actions Analytical Underpinnings Key Findings
Pillar 1: Fostering inclusive growth
Prior action #1: The Recipient has enhanced security of land tenure through the promulgation of the Rural Land Act.
“Mali priorities for ending poverty and boosting shared prosperity. Systemic country diagnostic”, Report No. 94191‐ML, World Bank, 2016.
“A systemic analysis of land markets and land institutions in West African cities: rules and practices, the case of Bamako, Mali”, Alain Durand‐Lasserve, Maÿlis Durand‐Lasserve, Harris Selod, Policy Research Working Paper 6687, 2013.
“Décentralisation, acteurs locaux et foncier : Fiches pays, Comité technique Foncier et développement”, Alain Rochegude, Caroline Plançon, 2009.
Competing demands for land by pastoralists and farmers present additional sources of risk for the welfare of rural population.
Mounting population pressure due to migration and population growth, land degradation and increasing non‐agricultural use put localized pressure on land tenure systems.
Difficulties in accessing land for development impairs private initiative.
The land registration system has to be reformed to improve security of tenure and to end land‐grabbing and speculation.
Prior action #2: The Recipient has, through the Ministry of Economy and Finance, Ministry of Agriculture and Ministry of Livestock and Fisheries, introduced an e‐voucher scheme for the distribution of agricultural inputs subsidies, through the adoption of a revised procedures manual governing the modalities of distribution of such subsidies.
“Note on the impact of fertilizer vouchers on production of maize and rice in Mali”, World Bank, 2016.
The existing fertilizer paper voucher scheme takes up 60 percent of extension officers staff time and almost 25 percent of the budget of the Ministry of Agriculture.
The e‐voucher system will increase agricultural productivity by easing access for producers to agricultural advice to improve the performance of their production systems and providing inputs timely in appropriate quantity and quality.
Prior action #3: The Recipient has, through the Ministry of Economy and Finance, issued a ministerial decision establishing a commission in charge of awarding a 4G license to existing operators and, through the Ministry of Digital Economy and Communication, issued a ministerial order creating the commission in charge of awarding a fourth mobile telecommunications license, using an open international bidding process. Prior action #4: The Recipient has, through the Office of the Prime Minister, facilitated the extension of the
“Bilan de la libéralisation du secteur des communications électroniques au Mali et options de réformes sectorielles”, Report No. AUS11566, World Bank, June 2015.
“Mali priorities for ending poverty and boosting shared prosperity. Systemic country diagnostic”, Report No. 94191‐ML, World Bank, 2016.
Penetration of mobile telephony service is important in Mali, but quality of service and coverage issues remain.
Competition intensity is relatively small in the sector, with an existing duopoly in which operators are not inclined either to reduce prices or to share infrastructure, and an entry of a third operator that is slow to materialize.
The mobile telephone market is a major sector of the economy in terms of contribution to GDP and employment.
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Prior Actions Analytical Underpinnings Key Findings
mobile telephone network to isolated areas, making operational the Universal Service Fund Management Agency (AGEFAU), through: i) Adoption of the decree of appointment of AGEFAU
Director General; ii) Creation and provisioning of AGEFAU account; and iii) Adoption of a decree fixing the percentage rate and
modalities of payment of compulsory contributions payable to AGEFAU.
Mobile networks enable the development of applications that have a direct impact on poverty reduction.
Prior action #5: The Recipient has, through the Ministry of Economy and Finance, issued ministerial orders, withdrawing the licenses of those microfinance institutions that have been audited and needed to be liquidated pursuant to its micro finance sector emergency plan, dated March 2015.
“Mali priorities for ending poverty and boosting shared prosperity. Systemic country diagnostic”, Report No. 94191‐ML, World Bank, 2016.
The microfinance sector reaches more depositors than the banking sector, but the majority of these institutions are in financial distress.
Providing deposits accounts to 1.15 million members, the microfinance sector is fragile, and 92 out of 126 institutions are in financial distress. Recovery of public confidence in the microfinance sector is critical to improving financial inclusion (in particular in rural areas) in Mali.
For households, micro‐entrepreneurs and poor farmers, financial access to savings, credit, and insurance products is seriously affected by the moribund microfinance sector.
Prior action #6: The Recipient has, through the Ministry of Economy and Finance and the Ministry of Equipment, Transport and Regional Integration, issued an inter‐ministerial order fixing the percentage of the Road Maintenance Fund to be allocated to the routine maintenance of priority rural roads.
“Document de stratégie nationale du transport rural au Mali”, Ministère de l’Equipement et des Transports du Mali, 2008.
“Etude sur le désenclavement rural du Mali”, Ministère de l’Equipement, des Transports et du Désenclavement du Mali, 2015.
In Mali, 85 percent of villages are not accessible by road passable in all seasons, 46 percent of municipalities in are not served by a road passable in all seasons, and 78 percent of rural population do not have access to a road passable in all seasons.
Rural transport remains the weakest link in the transport chain in Mali. Limited financial resources and management capacity as well as the lack of an adequate system of planning and programming are behind the poor development of the rural road network.
Pillar 2: Supporting Pro‐poor Decentralized Transfers and Social Protection
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Prior Actions Analytical Underpinnings Key Findings
Prior action #7: The Recipient has, through its Council of Ministers, advanced the decentralization process by providing in its 2017 budget edition, dated September 21, 2016, for the transfer of budgetary resources to local governments pursuant to the competencies and resources transfer plan.
“Mali priorities for ending poverty and boosting shared prosperity. Systemic country diagnostic”, Report No. 94191‐ML, World Bank, 2016.
“Réussir la décentralisation financière”, Report No 15/287, IMF, 2015.
“Fiscalité locale et décentralisation”, Report No 15/291, IMF, 2015.
“Geography of Poverty in Mali”, 88880‐ML, World Bank, 2014.
Decentralization and local governance reform, a priority for the government since the start of the Malian third republic in 1991, have progressed very slowly.
The 2015 Peace Accord puts emphasis on decentralization and partner support towards implementing it.
The litmus test on decentralization is whether actual resources will be transferred to local entities and whether service provision improves as a result.
In order to maximize local authorities’ resources, it will be necessary to establish a budgetary transfer device that is transparent, equitable, flexible and anchored on national resources.
The main source of funding for local governments in Mali remains the central government budget, while their own resources are low in face of the needs to finance their operating costs and investment.
Prior action #8: The Recipient has adopted a unified vision of its social protection policy, through (a) adoption of a Presidential Decree, dated November 1, 2016, approving the National Social Protection Policy, along with its accompanying social protection action plans 2016‐2018; (b) adoption of a Presidential Decree, dated September 5, 2016, creating the National Council of Strategic Orientation of Social Protection (“National Council”), and issuance, through MSAH, of a ministerial order, dated March 23, 2016, creating the Unified Social Registry Steering Committee (“Steering Committee”); and (c) commencement of operations of both the National Council and the Steering Committee as evidenced by Minutes of Proceedings dated October 7, 2016 and September 29, 2016.
“Mali Priorities for Ending Poverty and Boosting Shared Prosperity. Systemic Country Diagnostic”, Report No. 94191‐ML, World Bank, 2016.
“Priorities for ending poverty in Mali: education, health and social protection”, World Bank, 2015.
“Opportunities for social protection to address
poverty and vulnerability in a crisis context.
Mali”, World Bank, 2015.
The capacity of central government to identify the most vulnerable or to design location specific programs is limited.
In the absence of formal safety nets and low levels of household wealth, ordinary life events, such as illness or the death of a family member, often result in significant welfare shocks.
Social Safety Nets (SSNs) programs contribute to poverty reduction in the short‐term, directly through transfers of income and consumption goods and indirectly, as well as in the medium and long term by protecting or expanding the productive assets of households.
Predictable, multi‐annual social protection support to households has been shown to result in investments in human capital and assets.
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Prior Actions Analytical Underpinnings Key Findings
Prior action #9: The Recipient has made provision in its 2017 budget edition, dated September 21, 2016, for budgetary allocations to expand the coverage of social safety net programs, including JIGISEMEJIRI and RAMED.