Download Report - Independent Evaluation Group - World Bank

39 Annex BAnnex B: Actions Prior to SAC-I (Credit No. 2937)Actions taken for Project Preparation.1. The Government took key actions prior to discussions on the adjustmentoperation:• flotation of the FMG in 1994;• elimination of subsidies on flour and rice;• appointment of independent administrators to the two state-owned banks;• lowering the maximum tariff from 50 percent to 30 percent;• (reorienting expenditures to primary education, basic health services, and social fundcommunity projects;• inviting a formally-constituted private sector group to participate in policydiscussions and draft an incentives framework for private sector development; and;• appointing an Independent Commission for Privatization to draft the privatizationlaw.Conditions of Presentation of the Credit for Approval and Tranche Release2. The following conditions were met prior to Board presentation:• liberalizing entry, work permit and residence requirements for investors, and visas fortourists and abolishing exit visas for nationals and foreign residents;• granting foreign managerial and technical staff automatic work permits and rights ofresidence for their families subject only to a valid employment contract;• allowing foreign investors access to land tenure through 99-year mortgageable leasesto be approved within 2 months of application;• removing the requirement for prior authorization to invest and integrating the fiscalincentives of the investment code into the tax code;• abolishing prior approval for equity capital contributions by foreign investors (abovea threshold of 20 percent of a company's authorized capital);• appointing experienced negotiators to design and carry out the divestiture of the twostate owned commercial banks;• ending the monopoly in telecoms and selecting at least one company based on aninternational competitive bid for cellular operation;• liberalizing air access by allowing regional airlines from Eastern and Southern Africaand the Indian Ocean access to all Malagasy airports, allowing new airlines to operateon other international routes, canceling the designation of Air Madagascar as the sole