Download Report - Independent Evaluation Group - World Bank

17to the complex institutional set-up mentioned above. In this context, pressure fromvested interests and political interference became additional causes of delay. Beforeeffectiveness, QAG had conducted a quality at entry assessment, rated as marginal. Ithad noted the over-complexity of the project, the questionable commitment of theauthorities, the lack of readiness for implementation, the inadequate risk assessment, andthe mismatch between the capacity of the entities responsible for implementation and thetasks expected from them. The assessment had concluded by recommending to reducethe number of components and to sharpen the focus of intervention.5.7 The project was restructured in July 1998, without changes in objectives. Threecomponents were dropped, none of them having started by then: (i) the tax reform on thebasis of an improved dialogue in preparation of SAC-II (which by then had an increasedfocus on liberalization and privatization); 16 (ii) the Match-making Fund on the basis ofnegligible success and impact; 17 and (iii) the Seminars Fund on the basis of the need for asharper focus. The ICR notes that, in retrospect, quality at entry was indeed marginallysatisfactory. IEG concurs with this assessment. The restructuring led to a much leanerproject, and, as preparation of SAC-II progressed, its focus improved and narrowed. Itbecame the main vehicle to provide support to PSD and to the privatization of theincumbent companies in telecom, air transport, and petroleum. The PATESP agenda wasincreasingly driven by the requirements to meet the conditions for tranche release underSAC-II.Achievements under the Economic Policy Reform Program5.8 Market Liberalization and Private Sector Incentives. A Facilitation Center wascreated to facilitate access to information and simplify business creation and registrationprocedures, but remained largely non-operational. 18 Procedures for obtaining workpermits and visas were simplified. In the mining, telecom, air transport, and petroleumsectors, the primary and secondary legislation was completed (competitive licensingaward, technical standards, price adjustment mechanisms) and the capacity of theregulatory bodies was strengthened in licensing procedures, compliance withinternational standards, and monitoring.5.9 Public Enterprise Divestiture. The privatization program was to be implementedin three phases over five years (1997-2002), covering 120 PEs. In phase I (1997-98), 46PEs would be privatized or liquidated. 19 Assistance consisted mainly of financinginternational experts to the PC and its Technical Secretariat to design privatizationstrategies and prepare transactions. From the onset, Bank missions also played asignificant role in advising on the structure and sharing of responsibilities between the PCand its Secretariat, since these were the key actors in the divestiture process. During16 There had also been a disagreement on the modalities of a bonus incentive scheme linked to tax collection, whichwere a condition of disbursement under that component.17 Despite a pilot phase prior to appraisal which had been characterized by the Bank team as a complete success.18 A fully functioning “one stop shop” was established only in 2003 under the successor project, the Private SectorDevelopment Project-II (PSDP-II), approved by the Board in August 2001, (Cr. 3567-MAG).19 Out of these, there were 11 large companies dominating major sectors, 30 smaller ones slated for divestiture, and 5slated for liquidation.