Download Report - Independent Evaluation Group - World Bank
Download Report - Independent Evaluation Group - World Bank Download Report - Independent Evaluation Group - World Bank
15SUSTAINABILITY4.14 Likely. There was no reversal in policies. Moreover, the initial steps taken underSAC-I permitted to arrive at a consensus on the content of SAC-II. From then on, itbecame clear that it would have been very difficult for any government to backtrack onreforms.BANK PERFORMANCE4.15 Satisfactory. The key conditions for opening the economy were well identifiedand prioritized. In that sense, quality at entry was satisfactory, but, at preparation, theBank overestimated GOM’s commitment, a shortcoming which affected also thePAIGEP and the PATESP. The Bank correctly made the processing of the projectconditional on actual progress, given the country’s prior record. It was also right, afterdisbursement, to insist on pursuing the agenda before launching the appraisal of SAC-II.This period provided the Bank with the necessary insight into GOM’s priorities andconstraints and thus helped clarify the content of SAC-II. However, the Bank did notseize the opportunity to deepen the dialogue on the conditions amenable to widening thetax base, raising revenue, and redirecting resources to the social sectors. It became tooabsorbed by the privatization of the large PEs.BORROWER PERFORMANCE4.16 Moderately Satisfactory. Performance varied according to components anddegrees of commitment and ownership. Discipline was demonstrated in macro-economicmanagement and in curbing inflation and there was some commitment to liberalize thePSD framework. But GOM was unable to overcome the obstacles to privatization and toinitiate a program to improve public services and start tackling poverty reduction.5. The Private Sector Development and Capacity BuildingProject (PATESP)BACKGROUND5.1 The project had its origin in the economic and sector work by the Bank and IFC inthe early 1990s, 13 which had identified the obstacles to private sector-led growth andhighlighted the need to improve the general business environment and strengthen themanagerial, technical, and financial capacity of existing enterprises. Also, in 1994-95,the private sector had become increasingly vocal in demanding reforms and progress inprivatization. With the new leadership in place in mid-1996, the stage was set to design aproject aimed at supporting the PSD components of the reform program. The newclimate had allowed setting clearer objectives for PSD under SAC-I. 1413 Madagascar: New horizons – Building a Strategy for Private Sector, Export-led Growth. A Private SectorAssessment, Report No. 14385-MAG, May 31, 1995.14 SAC-I and the PATESP were approved by the Bank Board two months apart in March and May 1997.
16OBJECTIVES AND DESIGN5.2 The objective was to support accelerated export-led growth, specifically by:(i) designing and implementing reforms in market deregulation, de-monopolization andcompetition, PE divestiture, and the tax system to address major constraints to increasedprivate investment, efficiency, exports, and job creation; (ii) fostering an improvedgovernment-private sector dialogue; and (iii) strengthening capacities and skills of privatefirms and associations. The Credit supported two reform programs:5.3 The Economic Policy Reform Program, consisting of: (i) design andimplementation of reforms in the business environment and private sector incentives;(ii) support to privatization, including the establishment of the PC and its TechnicalSecretariat, the Privatization Trust Fund, the Social and Regional Development SupportFund, a Retraining Fund to finance the training and redeployment of employees affectedprivatization (later institutionalized under the name Programme d'Action Sociale etEconomique pour la Réinsertion Professionnelle - PASERP), 15 and the ArbitrationCommission; and (iii) tax reform (modernization of the VAT and strengthening of thefiscal and customs administrations - component to be monitored by the Fiscal AffairsDepartment of the IMF).5.4 The Private Sector Capacity Building Program, consisting of: (i) establishment ofa Private Sector Support Fund (PSSF) to provide private firms and business associationsaccess to support services, international data, and market sources; (ii) TA and othersupport to the CRC; (iii) establishment of a Seminars Fund to finance seminars betweenGOM and the private sector on competitiveness; and (iv) establishment and operation ofa FDI match-making scheme through the creation of a Match-making Fund.RELEVANCE OF OBJECTIVES AND DESIGN5.5 The objective was highly relevant and consistent with Bank strategy. In additionto strengthening GOM’s capacity to carry out the reforms, the project aimed at raising thecapacity of domestic firms by exposing them to foreign operators and world markets.However, it attempted to tackle too many different aspects of privatization and PSD, and,as a result, its design was overly complex: activities were spread over several entities,some functioning, others existing on paper only, and still others to be created;conventions were required to make some proposed funds operational; procedure manualsand implementation plans were to be drafted, etc. All these proved to be a constraint to arapid start of the project.IMPLEMENTATION AND ACHIEVEMENTS5.6 Effectiveness of the Credit was delayed by 9 months, from May 1997 to February1998 (against one month expected at appraisal), to satisfy the several conditions relating15 The inclusion of a Retraining Fund, with SDR2.3 million, was decided at negotiations, without a precise institutionalset-up. It was institutionalized in October 1997 as Programme d'Action Sociale et Economique pour la RéinsertionProfessionnelle (PASERP), effectively established in October 1998, and became operational only in April 1999. It wasa follow-up to the Programme de Réinsertion Professionnelle (PRP) established under EMSAP.
- Page 1: Document ofThe World BankReport No.
- Page 5 and 6: iiiContentsPrincipal Ratings.......
- Page 7: vSustainability....................
- Page 11: ixKey Staff ResponsibleProject Task
- Page 15 and 16: xiiiSummary1. This is the Project P
- Page 17 and 18: xvcountry conditions that had been
- Page 19 and 20: 2growth for the first time in decad
- Page 21 and 22: 4Under Economic Management:• Tech
- Page 23 and 24: 6Decentralization reform component
- Page 25 and 26: 83.15 Decentralization. Assistance
- Page 27 and 28: 10had characterized the Bank team a
- Page 29 and 30: 124.6 Inflation and credit to GOM w
- Page 31: 14Table 4.2: Budget Allocations to
- Page 35 and 36: 18supervision, the Bank advised on
- Page 37 and 38: 20SUSTAINABILITY5.16 Likely. There
- Page 39 and 40: 22ownership of its non-oil operatio
- Page 41 and 42: 24second after completion of 50 per
- Page 43 and 44: 26the sale of SOLIMA and of its sub
- Page 45 and 46: 28identifying weaknesses in tax adm
- Page 47 and 48: 30showed commitment to pursuing ref
- Page 50 and 51: 33 Annex AAnnex A. Basic Data Sheet
- Page 52 and 53: 35 Annex APRIVATE SECTOR DEVELOPMEN
- Page 54: 37 Annex ASECOND STRUCTURAL ADJUSTM
- Page 57 and 58: 40 Annex Bbeneficiary of Malagasy a
- Page 59 and 60: 42 Annex CGENERAL CONDITIONS AND DE
- Page 61 and 62: 44 Annex CADDITIONAL MEASURESAdditi
- Page 63 and 64: 46 Annex DMr. Charles Andrianaivoja
- Page 65: 48 Annex EComments from the Governm
16OBJECTIVES AND DESIGN5.2 The objective was to support accelerated export-led growth, specifically by:(i) designing and implementing reforms in market deregulation, de-monopolization andcompetition, PE divestiture, and the tax system to address major constraints to increasedprivate investment, efficiency, exports, and job creation; (ii) fostering an improvedgovernment-private sector dialogue; and (iii) strengthening capacities and skills of privatefirms and associations. The Credit supported two reform programs:5.3 The Economic Policy Reform Program, consisting of: (i) design andimplementation of reforms in the business environment and private sector incentives;(ii) support to privatization, including the establishment of the PC and its TechnicalSecretariat, the Privatization Trust Fund, the Social and Regional Development SupportFund, a Retraining Fund to finance the training and redeployment of employees affectedprivatization (later institutionalized under the name Programme d'Action Sociale etEconomique pour la Réinsertion Professionnelle - PASERP), 15 and the ArbitrationCommission; and (iii) tax reform (modernization of the VAT and strengthening of thefiscal and customs administrations - component to be monitored by the Fiscal AffairsDepartment of the IMF).5.4 The Private Sector Capacity Building Program, consisting of: (i) establishment ofa Private Sector Support Fund (PSSF) to provide private firms and business associationsaccess to support services, international data, and market sources; (ii) TA and othersupport to the CRC; (iii) establishment of a Seminars Fund to finance seminars betweenGOM and the private sector on competitiveness; and (iv) establishment and operation ofa FDI match-making scheme through the creation of a Match-making Fund.RELEVANCE OF OBJECTIVES AND DESIGN5.5 The objective was highly relevant and consistent with <strong>Bank</strong> strategy. In additionto strengthening GOM’s capacity to carry out the reforms, the project aimed at raising thecapacity of domestic firms by exposing them to foreign operators and world markets.However, it attempted to tackle too many different aspects of privatization and PSD, and,as a result, its design was overly complex: activities were spread over several entities,some functioning, others existing on paper only, and still others to be created;conventions were required to make some proposed funds operational; procedure manualsand implementation plans were to be drafted, etc. All these proved to be a constraint to arapid start of the project.IMPLEMENTATION AND ACHIEVEMENTS5.6 Effectiveness of the Credit was delayed by 9 months, from May 1997 to February1998 (against one month expected at appraisal), to satisfy the several conditions relating15 The inclusion of a Retraining Fund, with SDR2.3 million, was decided at negotiations, without a precise institutionalset-up. It was institutionalized in October 1997 as Programme d'Action Sociale et Economique pour la RéinsertionProfessionnelle (PASERP), effectively established in October 1998, and became operational only in April 1999. It wasa follow-up to the Programme de Réinsertion Professionnelle (PRP) established under EMSAP.
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