Download Report - Independent Evaluation Group - World Bank

29utilized. The ICR discusses compliance with the tranches conditions only. There wereno issues regarding compliance with fiduciary safeguards.OUTCOME6.24 Moderately Satisfactory. Achievements were mixed: satisfactory in macroeconomicmanagement until the political crisis, moderately satisfactory in privatization,business climate, and public financial management, and unsatisfactory in public resourcemanagement. In governance, the measures taken after the crisis could not have anymeasurable impact by Credit closing and corruption remains pervasive, especially in thejudiciary. 33 The progress recorded in growth was wiped out in 2002, revealing the factthat reforms remained hostage to the fragile political and social environment. Povertywas slightly reduced in urban areas thanks to the increase in FDI but the situationstagnated or worsened in rural areas. Here again, the crisis of 2002 wiped out whateverbenefits had been gained. However, the budgetary support provided by the Creditprevented the crisis from having worse consequences on poverty.6.25 Despite the disappointing results, achievements under SAC-II consolidated thetransition to a market economy initiated under SAC-I, by laying the foundations for aPSD-driven growth. The main achievement of the SAC-I/SAC-II program may becharacterized as having arrested the “dirigisme” of the previous decades, with little riskof reversal. In sum, the two SACs set the stage – but not much more - for thegovernment, after the 2002 crisis, to embark on a more resolute policy of growth cumpoverty reduction. 34 The rating is justified on the basis of this conclusion.INSTITUTIONAL DEVELOPMENT6.26 Modest. Little was achieved in raising the capacity to formulate and implementpolicies. Some of the units created were dissolved or were largely ineffective, such as inpublic resources management. In PSD and privatization, GOM remains dependent onexternal assistance, and the regulatory authorities remain weak and reportedly receivetechnical support from the enterprises under their oversight. In the fisheries sector, thereis no effective competition and, in the area of facilitating the creation of businessenterprises and judicial processes, institutional capacity was only slightly improved. Ingovernance and financial management, a new institutional set-up was in place only afterCredit closing. Only in two areas was capacity strengthened: in mining, with theestablishment of a fully functioning cadastre and in public finance, with the long-awaitedmerger of the ministries of finance and budget. Overall, institutional capacity remainsvery weak.SUSTAINABILITY6.27 Likely. There was no reversal in policies, despite the crisis. Several positivefactors concurred to reduce the risk of reversal: the government emerging from the crisis33 Under the decree requiring high officials to declare their assets, there are important remaining exceptions.34 In parallel to this PPAR, IEG-CR undertook a Country Assistance Evaluation (CAE) covering Bank assistance toMadagascar over 1994-2004.