Document of The World Bank Report No: ICR00004113 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H8090; IDA-H8910; AND IDA-D0250) ON GRANTS IN THE AMOUNT OF SDR 50.6 MILLION (US$76 MILLION EQUIVALENT) TO THE REPUBLIC OF BURUNDI FOR THE SIXTH ECONOMIC REFORM SUPPORT GRANT (ERSG VI) SEVENTH ECONOMIC REFORM SUPPORT GRANT (ERSG VII) AND EIGHT ECONOMIC REFORM SUPPORT GRANT (ERSG VIII) June 26, 2017 Macroeconomics and Fiscal Management Global Practice Country Management Unit AFCE1 (East Africa 1) Africa Region CURRENCY EQUIVALENTS Currency Unit = Burundi Franc (BIF) US$ 1.00 = BIF 1714 FISCAL YEAR ABBREVIATIONS AND ACRONYMS BOD Budget Orientation Document CAS Country Assistance Strategy CNDD-FDD National Council for the Defense of Democracy (Comité National pour la Défense de la Démocratie) CSLP Poverty Reduction Strategy Papers - PRSP (Cadre Stratégique de Croissance et de Lutte Contre la Pauvreté) CWSs Coffee Washing Stations DPG Development Policy Grant DPO Development Policy Operation DNMP National Directorate for Public Procurement ( Direction Nationale des Marchés Publics) EITI Extractive Industries Transparency Initiative EMSP Economic Management Support Project ERSG Economic Reform Support Grant FBU Burundi Franc (Franc burundais) GDP Gross Domestic Product GoB Government of Burundi HRMIS Human Resource Management Information System ICRR Implementation Completion and Results Report IDA International Development Association IGE State General Inspectorate (Inspection Générale de l’Etat) ISABU Institute for Agronomic Sciences of Burundi ( Institut des Sciences Agronomique du Burundi) HCR United Nations High Commissioner for Refugees (Haut-Commissariat des Nations- Unies aux Réfugiés) MTEF Medium-Term Expenditure Framework PER Public Expenditure Review PETS Public Expenditure Tracking Survey PFM Public Finance Management PRSP Poverty Reduction Strategy Paper PSD Private Sector Development PSIA Poverty and Social Impact Analysis SCEP Service in charge of Public Entreprises (Service Chargé des Entreprises Publiques) SOSUMO Moso Sugar Company (Société Sucrière de MOSO) ii Regional Vice President: Makhtar Diop Country Director: Bella Bird Senior Global Practice Director: Carlos Felipe Jaramillo Global Practice Director: Paloma Anos Casero Practice Manager: Abebe Adugna Dadi Project Team Leaders: Jean-Pascal N. Nganou/Mamadou Ndione ICR Team Leader: Jean-Pascal N. Nganou iii REPUBLIC OF BURUNDI ECONOMIC REFORM SUPPORT GRANTS Table of Contents A. Basic Information .......................................................................................................... vi B. Key Dates ..................................................................................................................... vii C. Ratings Summary ......................................................................................................... vii D. Sector and Theme Codes (as % of total Bank financing) ............................................. ix E. Bank Staff ...................................................................................................................... xi F. Results Framework Analysis ........................................................................................ xii G. Ratings of Program Performance in ISRs .................................................................... xv H. Restructuring ................................................................................................................ xv 1. Program Context, Development Objectives and Design ............................................ 1 1.1 Context at Appraisal ......................................................................................... 1 1.2 Original Program Development Objectives (PDO) and Key Indicators ............... 3 1.3 Revised PDO and Key Indicators, and Reasons/Justification .............................. 3 1.4 Original Policy Areas Supported by the Program................................................. 4 1.5 Revised Policy Areas ............................................................................................ 6 1.6 Other significant changes ...................................................................................... 7 2. Key Factors Affecting Implementation and Outcomes .............................................. 7 2.1 Program Performance ........................................................................................... 7 2.2 Major Factors Affecting Implementation: .......................................................... 10 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization .... 11 2.4 Expected Next Phase/Follow-up Operation ........................................................ 12 3. Assessment of Outcomes .......................................................................................... 13 3.1 Relevance of Objectives, Design and Implementation ....................................... 13 3.2 Achievement of Program Development Objectives ........................................... 15 3.3 Justification of Overall Outcome Rating ............................................................ 19 3.4 Overarching Themes, Other Outcomes and Impacts .......................................... 19 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ... 20 4. Assessment of Risk to Development Outcome ......................................................... 20 5. Assessment of Bank and Borrower Performance ..................................................... 22 5.1 Bank Performance ............................................................................................... 22 5.2 Borrower Performance ........................................................................................ 22 6. Lessons Learned........................................................................................................ 23 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........... 24 Annex 1. Triggers and Prior Actions ............................................................................ 26 Annex 2. Comparing Indicators in ERSG VI, VII and VIII Program Documents ....... 29 Annex 3. Bank Lending and Implementation Support/Supervision Processes............. 31 iv Annex 4. Beneficiary Survey Results ........................................................................... 34 Annex 5. Stakeholder Workshop Report and Results ................................................... 35 Annex 6. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 36 Annex 7. List of Supporting Documents ...................................................................... 37 MAP .............................................................................................................................. 38 v Data Sheet A. Basic Information Program 1 Burundi Sixth Economic Reform Country Burundi Program Name Support Grant - First Operation in the series of 3 Program ID P127080 L/C/TF Number(s) IDA-H8090 ICR Date 06/26/2017 ICR Type Core ICR GOVERNMENT OF Lending Instrument DPL Borrower BURUNDI Original Total XDR 16.50M Disbursed Amount XDR 16.50M Commitment Implementing Agencies Ministry of Finance and Economic Development Planning Cofinanciers and Other External Partners N/A Program 2 BURUNDI - ECONOMIC Country Burundi Program Name REFORM SUPPORT GRANT VII IDA-H8090; Program ID P144612 L/C/TF Number(s) IDA-H8910 ICR Date 06/26/2017 ICR Type Core ICR GOVERNMENT OF Lending Instrument DPL Borrower BURUNDI Original Total XDR 17.00M Disbursed Amount XDR 17.00M Commitment Implementing Agencies Ministry of Finance and Economic Development Planning Cofinanciers and Other External Partners N/A Program 3 vi Eight Economic Country Burundi Program Name Reform Support Grant 8 IDA-D0250; Program ID P150941 L/C/TF Number(s) IDA-H8090 ICR Date 06/26/2017 ICR Type Core ICR MINISTRY OF Lending Instrument DPL Borrower FINANCE Original Total XDR 17.10M Disbursed Amount XDR 17.10M Commitment Implementing Agencies Ministry of Finance and Economic Development Planning Cofinanciers and Other External Partners N/A B. Key Dates Burundi - Sixth Economic Reform Support Grant VI- First Operation in the series of 3 - P127080 Revised / Actual Process Date Process Original Date Date(s) Concept Review: 07/18/2012 Effectiveness: 11/12/2012 12/28/2012 Appraisal: 09/13/2012 Restructuring(s): Approval: 10/23/2012 Mid-term Review: Closing: 12/31/2013 12/31/2013 Burundi - Seventh Economic Support Reform Grant VII - P144612 Revised / Actual Process Date Process Original Date Date(s) Concept Review: 09/10/2013 Effectiveness: 16/12/2013 Appraisal: 10/09/2013 Restructuring(s): Approval: 11/27/2013 Mid-term Review: Closing: 12/31/2014 12/31/2014 Burundi - Eight Economic Reform Support Grant VIII - P150941 Revised / Actual Process Date Process Original Date Date(s) Concept Review: 09/05/2014 Effectiveness: 02/05/2015 03/03/2015 Appraisal: 11/24/2014 Restructuring(s): Approval: 01/13/2015 Mid-term Review: Closing: 12/31/2015 12/31/2015 C. Ratings Summary vii C.1 Performance Rating by ICR Overall Program Rating Outcomes Modest Risk to Development Outcome High Bank Performance Satisfactory Borrower Performance Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating Bank Ratings Borrower Ratings Quality at Entry Moderately Satisfactory Government: Moderately Satisfactory Implementing Satisfactory Moderately Satisfactory Agency/Agencies: Quality of Supervision: Overall Bank Overall Borrower Moderately Satisfactory Performance Performance Unsatisfactory C.3 Quality at Entry and Implementation Performance Indicators Burundi Sixth Economic Reform Support Grant - First Operation in the series of 3 - P127080 Implementation QAG Assessments Indicators Rating: Performance (if any) Potential Problem Quality at Entry Program at any time No None (QEA) (Yes/No): Problem Program at any Quality of No None time (Yes/No): Supervision (QSA) DO rating before Closing/Inactive status Burundi – Seventh Economic Reform Support Grant VII - P144612 Implementation QAG Assessments Indicators Rating: Performance (if any) Potential Problem Quality at Entry Program at any time No None (QEA) (Yes/No): Problem Program at any Quality of No None time (Yes/No): Supervision (QSA) DO rating before Satisfactory Closing/Inactive status Burundi - Eight Economic Reform Support Grant VIII - P150941 Implementation QAG Assessments Indicators Rating: Performance (if any) viii Potential Problem Quality at Entry Program at any time No None (QEA) (Yes/No): Problem Program at any Quality of No None time (Yes/No): Supervision (QSA) DO rating before Closing/Inactive status D. Sector and Theme Codes (as % of total Bank financing) Burundi - Sixth Economic Reform Support Grant VI- First Operation in the series of 3 - P127080 Original Actual Major Sector Agriculture, Fishing and Forestry Agricultural Extension, Research, and Other Support 8 8 Activities Public Administration Central Government (Central Agencies) 67 67 Industry, Trade and Services Other Industry, Trade and Services 17 17 Agricultural markets, commercialization and agri-business 8 8 Major Theme/Theme/Sub Theme Private Sector Development Business Enabling Environment 17 17 Regulation and Competition Policy 17 17 Public Sector Management Public Administration 21 21 Administrative and Civil Service Reform 17 17 E-Government, incl. e-services 8 8 State-owned Enterprise Reform and Privatization 16 16 Transparency, Accountability and Good Governance 21 21 Public Finance Management 21 21 Public Expenditure Management 21 21 Burundi – Economic Reform Support Grant VII - P144612 Original Actual Major Sector Agriculture, Fishing and Forestry Other Agriculture, Fishing and Forestry 14 14 ix Public Administration Central Government (Central Agencies) 43 43 Energy and Extractives Mining 14 14 Social Protection Social Protection 14 14 Industry, Trade and Services Other Industry, Trade and Services 15 15 Major Theme/Theme/Sub Theme Private Sector Development Business Enabling Environment 17 17 Regulation and Competition Policy 17 17 Jobs 4 4 Job Creation 4 4 Public Sector Management Data Development and Capacity Building 4 4 Data production, accessibility and use 4 4 Public Administration 21 21 Administrative and Civil Service Reform 17 17 Transparency, Accountability and Good Governance 21 21 Public Finance Management 21 21 Public Expenditure Management 21 21 Social Development and Protection Social Inclusion 4 4 Other Excluded Groups 4 4 Social Protection 4 4 Social Safety Nets 4 4 Urban and Rural Development Rural Development 14 14 Rural Infrastructure and service delivery 14 14 Burundi - Eight Economic Reform Support Grant VIII - P150941 Original Actual Major Sector Public Administration Central Government (Central Agencies) 50 50 Energy and Extractives x Mining 20 20 Social Protection Social Protection 15 15 Industry, Trade and Services Agricultural markets, commercialization and agri-business 15 15 Major Theme/Theme/Sub Theme Environment and Natural Resource Management Environmental Health and Pollution Management 7 7 Air quality management 7 7 Soil Pollution 7 7 Water Pollution 7 7 Public Sector Management Public Administration 21 21 Administrative and Civil Service Reform 17 17 State-owned Enterprise Reform and Privatization 16 16 Transparency, Accountability and Good Governance 21 21 Public Finance Management 21 21 Public Expenditure Management 21 21 Social Development and Protection Social Protection 4 4 Social Safety Nets 4 4 E. Bank Staff Burundi Sixth Economic Reform Support Grant VI - First Operation in the series of 3 - P127080 Positions At ICR At Approval Vice President: Makhtar Diop Makhtar Diop Country Director: Bella Deborah Mary Bird Philippe Dongier Global Senior Practice Carlos Felipe Jaramillo N/A Director Practice Abebe Adugna Dadi Albert G. Zeufack Manager/Manager: Task Team Leader: Jean-Pascal Nganou Jean-Pascal Nganou ICR Team Leader: Jean-Pascal Nganou ICR Primary Author: Xavier De La Renaudiere Burundi – Seventh Economic Reform Support Grant VII - P144612 Positions At ICR At Approval Vice President: Makhtar Diop Makhtar Diop xi Country Director: Bella Deborah Mary Bird Philippe Dongier Global Senior Practice Carlos Felipe Jaramillo N/A Director Practice Abebe Adugna Dadi Albert G. Zeufack Manager/Manager: Task Team Leader: Mamadou Ndione Mamadou Ndione ICR Team Leader: Jean-Pascal Nganou ICR Primary Author: Xavier De La Renaudiere Burundi - Eight Economic Reform Support Grant VIII - P150941 Positions At ICR At Approval Vice President: Makhtar Diop Makhtar Diop Country Director: Bella Deborah Mary Bird Philippe Dongier Global Senior Practice Carlos Felipe Jaramillo Marcelo Giugale Director Practice Abebe Adugna Dadi Albert G. Zeufack Manager/Manager: Task Team Leader: Mamadou Ndione Mamadou Ndione ICR Team Leader: Jean-Pascal Nganou ICR Primary Author: Xavier De La Renaudiere F. Results Framework Analysis Program Development Objectives The program aims to: (i) promote greater efficiency and transparency in public spending; (ii) improve conditions for private investment and promote greater private participation and market access in the export and services sectors; and (iii) Decrease vulnerability of households to shocks through an improved social protection system. Revised Program Development Objectives (as approved by original approving authority) No substantive changes were made in the definition of the program’s objectives. However, simpler words and shorter sentences were used in the ERSG VII and VIII Program Documents to describe essentially the same objectives: a) The ERSG VII version reads as follows: (i) strengthening public finance management and budget transparency; (ii) promoting private sector development and economic diversification; and (iii) strengthening safety nets systems. b) The ERSG VIII documents use the same wording for objectives (i) and (ii), but the third objective is replaced by a more specific reference to: “strengthening safety nets systems”. For the evaluation, the ICRR uses the revised PDOs. Indicator(s) xii Burundi - Economic Reform Support Grant VI-VIII Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Values documents) Target Years Indicator 1: Gap (in amount) between budget ceiling in MTEF & approved budget Value BIF 6.7 billion 17.3% of BIF 3.5 billion 10% 12% (quantitative or budget of budget Qualitative) Date achieved 12/31/2011 12/31/2015 02/28/2015 Comments Rate of achievement: 73% (incl. % achievement) Indicator 2: Gap (months) between effective budget presentation to Parliament & legal delay Value Two months 0 month 1 month (quantitative or Qualitative) Date achieved 10/23/2012 12/31/2015 02/28/2015 Comments Rate of achievement: 50% The draft budget has to be presented to Parliament every (incl. % year on October 01 achievement) Indicator 3: PEFA Indicator PI19-iii on public access to public procurement information Value D B D (quantitative or Qualitative) Date achieved 03/15/2012 12/31/2015 02/28/2015 Comments Rate of achievement: 0% (incl. % achievement) Share of public procurement contracts (value) awarded on sole source basis in Indicator4 : previous year Value 6.14% (2014 5% Not to exceed 10% (quantitative or procurement audit) Qualitative) Date achieved 12/31/2011 12/31/2015 02/28/2015 Comments Rate of achievement: 100% (incl. % achievement) Indicator 5: Number of joint IGE-Ministerial inspection investigations conducted yearly Value 0 3 1 (quantitative or Qualitative) Date achieved 03/31/2012 12/31/2015 02/28/2015 Comments Rate of achievement: 33% (incl. % achievement) Indicator 6: Share of communes where budget information tables are available Value 26.5% 50% 100% (quantitative or Qualitative) Date achieved 03/31/2012 12/31/2015 02/28/2015 Comments Rate of achievement: 200% xiii (incl. % achievement) Share of civil servants whose profiles have been updated in the payroll & HR Indicator 7: management system (excluding security forces) Value 46% 76% 52% (quantitative or Qualitative) Date achieved 03/31/2012 12/31/2015 12/31/2015 Comments Rate of achievement: 20% (incl. % achievement) Indicator 8: Number of days to register a business at the new “Guichet Unique” Value 32 5 5 (quantitative or Qualitative) Date achieved 12/31/2011 12/31/2015 12/31/2015 Comments Rate of achievement: 100% (incl. % achievement) Indicator 9: Number of days to obtain a construction permit at the new “Guichet Unique” Value 137 90 99 (quantitative or Qualitative) Date achieved 03/31/2012 12/31/2015 12/31/2015 Comments Rate of achievement: 81% (incl. % achievement) Indicator 10: Estimated value of tax exemptions as share of total tax revenue Value 23.8% 15% 17% (quantitative or Qualitative) Date achieved 12/31/2012 12/31/2015 12/31/2015 Comments Rate of achievement: 78% (incl. % achievement) Indicator 11: Number of publicly owned coffee washing stations sold Value 0 26 0 (quantitative or Qualitative) Date achieved 12/31/2011 12/31/2015 12/31/2015 Comments Rate of achievement: 0% (incl. % achievement) Percentage of budget allocated to construction/ maintenance of feeder roads & small Indicator 12: irrigation Value 2.2% 3% 2.9% (quantitative or Qualitative) Date achieved 12/31/2012 12/31/2015 12/31/2015 Comments Rate of achievement: 88% (incl. % achievement) xiv Indicator 13: Number of state tea processing factories sold Value 0 1 0 (quantitative or Qualitative) Date achieved 04/30/2012 12/31/2015 12/31/2015 Comments Rate of achievement: 0% (incl. % achievement) Indicator 14: Number of benchmarks met for EITI membership Value 0 9 0 (quantitative or Qualitative) Date achieved 12/31/2011 12/31/2015 12/31/2015 Comments Rate of achievement: 0% (incl. % achievement) Percentage of extremely poor households covered by at least one of the main safety Indicator 15: nets programs Value 35-50% (Average 28% (average 2010-12) (quantitative or 2013-2014 Qualitative) Date achieved 09/30/2012 12/31/2015 Comments Rate of achievement: 100% This indicator displays a substantially improving trend. (incl. % achievement) Poverty rate data & detailed poverty map available based on new household Indicator 16: consumption survey 2006 CWIQ Survey Updated household Updated 2013-2014 Value (Poverty rate: 68.7%; survey and poverty Survey (Poverty rate: (quantitative or Extreme poverty rate: map 64.9%. Extreme Qualitative) 46.0%) poverty 38.7%) Date achieved 09/30/2012 12/31/2015 12/31/2015 Comments Rate of achievement: 100% Revised poverty statistics and map were derived using the (incl. % new household survey achievement) G. Ratings of Program Performance in ISRs BURUNDI - ECONOMIC REFORM SUPPORT GRANT VII - P144612 Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 07/20/2014 Satisfactory Satisfactory 26.13 H. Restructuring Not applicable xv 1. Program Context, Development Objectives and Design 1. This Implementation Completion and Results Report (ICRR) assesses the results of a programmatic series of three Development Policy Grants (DPG) to the Republic of Burundi. The new Economic Reform Support Grant (ERSG VI, VII and VIII) series was intended to help implement the second Poverty Reduction Strategy, adopted by the Government of Burundi in 2012, and to support the country through its transition from a post-conflict situation to a more stable and growing economy through: (i) strengthening public finance management and budget transparency; (ii) promoting private sector development and economic diversification; and (iii) strengthening safety nets systems. The first operation (ERSG VI) of $25 million was approved by the World Bank’s Executive Directors on October 23, 2012; the second operation (ERSG VII) of $26 million was approved on November 27, 2013; and the third operation (ERSG VIII) of $25 million was approved on January 13, 2015. 1.1 Context at Appraisal 2. Burundi is one of the poorest countries in the world, with a very high population growth rate and population density, and few natural resources. In 2012, the population growth rate was about 3.2 percent. At 421 habitants per square kilometer, the population density was the second highest in Sub-Saharan Africa (behind Rwanda). After a 10-year civil war that ended in the early 2000s, the country’s GDP per capita was estimated at US$140. Unlike other post-conflict countries, Burundi did not experience a substantial post-conflict growth momentum after the end of hostilities. As a result, its GDP per capita remained the lowest in the region and close to 67 percent of the population lived under the national poverty threshold. 3. In 2011-2012, when ERSG VI was under preparation, three major considerations justified a new programmatic series of DPGs. First, the ERSG series was part of the Bank’s strategic engagement with Burundi, which emphasized the strengthening of public finance management, improvements in the business climate and access to quality social services, three priorities of the FY9-FY12 and FY 13-FY16 CAS. Since 2005, the Government of Burundi also focused its reforms on improving public finance management, fostering private sector development and improved access to health and education services. Through five DPGs, the Bank supported those priorities and contributed to rebuilding national institutions. The Ministry of Finance and the country’s financial management information systems were among the main beneficiaries of this institution/capacity building program. Second, at the time of ERSG VI, Burundi’s economic performance was improving and the macroeconomic framework was adequate. The country had experienced 6 years of stable economic growth (averaging 4.45 percent), and although the growth of the per capita GDP was poor (slightly above 1 percent), it was at least positive. Generally sound macroeconomic policies had encouraged donors to increase their assistance and official grants (both budget support and project financing) went up from an average of 7.8 percent of GDP in the early 2000s to about 14 percent in 2006-2011. Third, in 2012, the Government was ready to accelerate economic reforms. It had approved a second PRSP, which emphasized its commitment to good governance and 1 the fight again corruption. The new strategy supported private sector growth and major improvements in public finance management but was also much more focused on poverty reduction, shared prosperity and social protection. 4. By the time ERSG VII and VIII were appraised, the country’s macroeconomic performance continued to be adequate. Following a slight decline to 4 percent of GDP in 2012, the rate of growth increased to 4.5 and 4.7 percent in 2013 and 2014, despite a sharp decline in agricultural production due to poor climatic conditions in 2013. The government also made the appropriate fiscal adjustments. A significant decline in current expenditures, including the wage bill, reduced the fiscal deficit (including grants) to less than 2 percent of GDP in 2013. Perhaps more importantly, improvements in the structure of public expenditures, in support of social sectors, contributed to substantial improvements in the country’s social indicators. At the same time, the political stabilization process continued, at least until 2015, when a new political crisis erupted a few months after the approval of ERSG VIII. Table 1 summarizes economic developments from 2006 to 2015. Table 1. Selected Economic Indicators 2006-2012 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Real Sector (annual percentage change, unless otherwise indicated) GDP at market prices 5.4 4.8 5.0 3.5 3.8 4.2 4.0 4.5 4.7 -3.9 Agriculture 3.1 -8.8 -2.1 3.0 3.9 4.4 5.5 0.8 3.3 -3.0 Industry 5.4 8.2 -1.4 4.9 4.9 5.9 4.1 11.2 8.0 -13.6 Services 7.4 20.1 13.3 3.5 3.6 3.6 2.7 4.7 4.4 1.0 Population growth rate 3.5 3.5 3.4 3.4 3.4 3.3 3.2 3.0 3.0 3.0 Real per capita GDP growth 1.9 1.3 1.6 0.0 0.4 0.9 0.8 1.5 1.7 -6.9 Nominal GDP per capita (in 162.4 157.3 179.4 194.8 219.2 228.7 234.2 269.8 294.8 276.7 US$) Annual average Inflation (%) 2.8 8.3 24.1 11.0 6.4 9.7 18.0 7.9 4.4 5.5 Gross Domestic Investment 22.0 23.6 26.7 23.2 30.5 27.6 28.4 28.7 24.3 5.7 Public 7.3 10.1 22.4 18.9 22.0 15.6 13.4 12.7 14.3 5.3 Private 14.7 13.5 4.3 4.3 8.5 12.0 15.0 16.0 10.0 0.5 Fiscal Accounts (in % of GDP, unless otherwise indicated) Current revenue 11.9 11.9 11.4 12.1 13.9 15.4 14.8 13.3 13.7 12.1 Current expenditures 16.9 17.7 18.7 19.9 18.9 24.4 22.2 18.6 18.8 18.8 Wage and salaries 6.9 7.6 8.1 8.4 9.0 9.4 8.1 7.0 6.6 6.7 Capital expenditures 7.2 10.1 22.4 18.9 22.1 15.6 13.4 12.8 11.4 7.8 Overall fiscal balance (excl. -12.2 -15.9 -29.7 -26.6 -27.1 -24.7 -20.8 -18.1 -16.4 -14.6 grants; commitment basis) Overall fiscal balance (incl. -7.3 -3.9 -2.3 -5.3 -3.6 -4.0 -3.7 -1.7 -3.4 -5.6 grants; commitment basis) Grants 13.4 13.0 15.0 10.4 17.0 14.8 17.1 16.4 13 9.0 Total public debt to GDP 118.8 120.8 96.3 43.3 38.4 32.9 35.1 31.5 32.3 38.0 Balance of Payments (in % of GDP, unless otherwise indicated) Current account balance -25.1 -12.8 -4.3 -10.2 -12.5 -12.8 -17.5 -19.1 -15.2 -14.7 (including official transfers) Current account balance -38.5 -25.8 -19.3 -20.6 -29.5 -27.6 -34.6 -35.5 -28.2 -23.7 (excluding official transfers) External public debt to GDP 101.2 104.3 82.1 26.2 21.2 17.8 20.5 18.4 17.9 17.9 Source: Burundian Authorities; World Bank and IMF estimates 2 1.2 Original Program Development Objectives (PDO) and Key Indicators 5. The original Program Development Objectives specified in ERSG VI were: (i) Promote greater efficiency and transparency in public spending; (ii) Improve conditions for private investment and promote greater private participation and market access in the export and services sectors; and (iii) Decrease vulnerability of households to shocks through an improved social protection system. 6. Key outcome indicators. Annex 2 lists the indicators as presented in the Program Documents of ERSG VI, ERSG VII and ERSG VIII. 1.3 Revised PDO and Key Indicators, and Reasons/Justification 7. No substantive changes were made in the definition of the program’s objectives. However, simpler wording and shorter sentences were used in the ERSG VII and VIII Program Document to describe essentially the same objectives: a) The ERSG VII version reads as follows: (i) strengthening public finance management and budget transparency; (ii) promoting private sector development and economic diversification; and (iii) improving protection of vulnerable groups. b) The ERSG VIII document uses the same wording for objectives (i) and (ii), but the third objective is replaced by a more specific reference to: “strengthening safety nets systems.” For the evaluation, the ICRR uses the revised PDOs in ERSG VIII. 8. Many more changes were made in the Outcome/Results Indicators. Annex 2 compares the indicators listed in the three Program Documents of the series, and provides comments on changes made and their justification. The following paragraphs describe the main changes made in each category (public finance management, private sector development and social safety nets). Public Finance Management a) First, the reference to joint inspections of the State General Inspectorate (IGE) was dropped in ERSG VII and VIII indicators. The IGE felt that most of the existing ministerial inspection units needed intensive training programs before joint missions could be organized. b) Second, the share of civil servants whose profiles have been updated in the payroll and HR management system was replaced by: the share of civil servants managed within HRMIS with biometric information. The goal is the same: improve the quality of the information system and avoid fraudulent payment to ghost civil servants. 3 Private Sector Development a) First, the number of publicly owned coffee washing stations sold (ERSG VI) or the share of the private sector in the ownership of coffee stations (ERSG VII) were replaced by: the share of the coffee growers in the ownership of coffee washing stations. Coffee growers were opposed to the privatization strategy as initially conceived and wanted to participate in the ownership and management of washing stations. A new strategy was prepared and approved which was expected to encourage coffee growers to own washing stations. Progress of that ownership became the main indicator. b) Second, the number of state tea processing factories sold (ERSG VI) was dropped. The government and the Bank realized that the privatization of the tea sector should be postponed until the reform of the coffee sector is completed. Social Safety Nets a) First, the percentage of the extremely poor households covered by at least one of the main safety nets programs (ERSG VI) was replaced by: the existence of a comprehensive social safety strategy (ERSG VII), and then by the percentage of provinces with social protection committees established and functional (ERSG VIII). These changes reflected the progress made in developing a social protection program. The review of existing safety net systems had shown their main weakness: too many initiatives often poorly targeted, which covered a large number of households but did not provide a coordinated response to the special needs of the most vulnerable segments of the Burundian population. Consequently, the most urgent priority became first to design a comprehensive social protection strategy and then to initiate implementation of the strategy by creating a local institutional structure capable of evaluating the special needs of the target population. b) Second, Poverty rate data and a detailed poverty map available based on a new household consumption survey (ERSG VI) was replaced by the percentage of provinces with a woman appointed as responsible of the local social protection committee (ERSG VIII). A new household consumption survey had been completed and provided the database necessary for implementation of a new strategy. The government and the Bank felt that the role of women in social protection had to be reinforced, as gender was one of the main poverty and vulnerability issues that needed to be addressed in priority through adequate representation. 1.4 Original Policy Areas Supported by the Program 9. The original policy areas supported by the ERSG series were: 1. Public finance management and budget transparency 10. Public finance management reforms were intended to strengthen strategic and budget planning to improve the quality of public spending, reinforce transparency and efficiency of public financial management, procurement and controls, and improve the management of the public wage bill. 4 (a) Strategic and budget planning. The Government of Burundi adopted and used effectively a central MTEF under ERSG IV-V. The goal of ERSG VI in this area was to consolidate the link between strategic policy objectives and budget allocations through three main measures: (i) improving the reliability of macroeconomic and revenue projections in order to set credible spending caps; (ii) validation of multi-year inter-sector allocations reflecting the objectives of the PRSP; and (iii) empowering line ministries to propose intra-sector allocations based on their own strategies. In other words, better forecasting and central planning of available resources would be combined with the beginning of a more decentralized decision-making process at the sector level. (b) Transparency and efficiency of public financial management, procurement and controls. Improving public access to financial information and effective control mechanisms are the main conditions for effective public spending: (i) a culture of access to information is expected to improve transparency of public finance management; and (ii) this includes the publication of comprehensive audits of the procurement system, and the publication of summary budget tables to enable citizens to obtain information on sector budget allocations in their communes (budgets-citoyens). (c) Improving the management of the wage bill. The rapid growth of the public wage bill (about 9.4 percent of GDP and 39 percent of current expenditures in 2011) is a major concern. The rollout of software for human resource management under ERSG IV has already produced significant savings. A center for payroll processing and career management was to be established and the government needed to validate the census of public employees in order to update the computerized database. 2. Private sector development, promotion and economic diversification 11. Private sector reforms aimed at improving the legal and regulatory framework, increasing agricultural productivity, and promoting economic diversification through restructuring of export and services sectors and promoting the development of the mining sector. (a) Modernizing the legal and regulatory framework. Previous measures aimed at stimulating private investment created a very generous system of tax exemptions that, per investor motivation surveys, had little influence on investment decisions. Tax exemptions were therefore to be identified and reduced. The investment climate assessments emphasized the importance of reducing the time and cost of business start-ups and construction permits. The ERSG VI program therefore envisaged the creation of one-stop shops (Guichets Uniques) in order to reduce the time necessary to register a new business and obtain construction permits. (b) Agricultural productivity and economic diversification through restructuring of export and services sectors. Key elements of that reform included: (i) accelerating the privatization of state assets in the coffee sector; (ii) encouraging the new owners of washing stations to improve input distribution, promote the rehabilitation of ageing coffee plants and introduce modern processing techniques; and (iii) eventually extending the privatization process to the tea sector. 5 (c) Development of the mining sector. Burundi possesses large mineral deposits (nickel, coltan and cobalt) which until now have not been exploited. In this area, the ERSG VI program envisaged: (i) the adoption of a new mining code more consistent with international practices; and (ii) creating a commission that would implement an action plan toward membership of the EITI initiative, a move that would encourage foreign investment in the mining sector. 3. Strengthening social safety nets 12. The goal of the ERSG series in that area was to build the foundation of a national social safety nets program. Burundi is characterized by extreme vulnerability to external and domestic shocks and 60 percent of the population is confronted with food insecurity. Both the government and the donor community have implemented a variety of social protection programs, but most of these initiatives are short-term and poorly coordinated. In this area, the ERSG VI program envisaged: (a) The creation of a task force for a comprehensive assessment of existing safety nets; and: (b) The completion of a household expenditure survey and a national poverty map that will provide invaluable information for social protection targeting. 1.5 Revised Policy Areas 13. No major changes were made in the selection of policy areas to be addressed in the context of the second (ERSG VII) and third (ERSG VII) operations. 14. With respect to public finance management, a few changes were made in the selection of policy areas to be addressed in the context of the second (ERSG VII) and third (ERSG VIII) operations. Like ERSG VI, ERSG VII and VIII were focused on strategic planning, transparency and the management of the wage bill. Reducing/streamlining tax reductions was added as a major theme of the PFM reforms proposed in ERSG VII and VIII. Tax revenue was a low 12.4 percent of GDP in 2013 and tax exemptions alone accounted for 5 percent of GDP. Action was needed to prepare the country for a substantial decline in foreign grants (17.1 percent of GDP in 2012), an extremely high level justified by the post-conflict status of the country. 15. With respect to private sector development, ERSG VII and VIII, like ERSG VI, were focused on agricultural productivity and restructuring of the export sector, and development of the mining sector. ERSG VI and VII, however, gave priority to improving the legal and regulatory framework (creation of guichets uniques for construction permits and business registration). As these guichets uniques had been established and had helped reduce processing delays, ERSG VIII did not mention that theme. With respect to the reform of the export sector, substantial changes were made in the context of ERSG VII and VIII. First, delays in implementing the privatization strategy of the coffee sector encouraged the government and the Bank to drop any reference to the (premature) reform of the tea sector. Second, as coffee growers complained that the coffee privatization 6 strategy did not take into account their desire to participate, ERSG VIII emphasized the need to prepare and adopt a more inclusive strategy that would support participation of coffee growers in the ownership of washing stations. 16. With respect to social protection, ERSG VI, VII and VIII were focused on the reform of safety nets systems. However, while ERSG VI gave priority to the creation of a central institutional system, ERSG VII emphasized the need for a national social protection strategy and ERSG VIII the need for provincial and local institutional mechanisms. 1.6 Other significant changes Not Applicable. 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance 17. The programmatic series consisted of three single-tranche Development Policy Operations totaling $76 million that were disbursed upon effectiveness. Table 2 provides key milestone dates for the DPG series. Table 3 lists all the prior actions for each of the three DPGs. All the prior actions were completed prior to the operation’s approval. Table 2. Key Dates of the DPO series Operation Approval Effectiveness Disbursed Amount Closing Date ERSG VI 23/10/2013 13/02/2012 US$26 million 31/12/2013 ERSG VII 27/11/2014 16/12/2013 US$25 million 31/12/2014 ERSG VIII 13/01/2015 03/03/2015 US$25 million 31/12/2015 Table 3. Prior Actions for the DPO series DPO 1 (ERSG VI) DPO 2 (ERSG VII) DPO 3 (ERSG VIII Priority 1: Strengthening public finance management & budget transparency The Recipient has adopted and The Recipient has adopted and The Recipient has published, on the submitted to Parliament, for submitted to its parliament the official government website, the information purpose only, the 2013- 2014-2016 Budget Orientation itemized list of tax exemptions 15 Medium Term Expenditure Document (BOD) and the granted in 2013 and the first Framework (MTEF) and the budget budget framework letter semester of 2014, and has framework letter consistent with the consistent with the BOD for eliminated, under the 2014 revised MTEF for the preparation of its 2013 the preparation of its 2014 budget law, the value-added tax budget law. budget law. exemptions on imports and tax Status: Completed. Status: Completed. credits. Status: Completed. 7 The Recipient has issued a decree The Recipient has published, The Recipient has issued medium- outlining the conditions for fiscal the 2013 Citizen Budget in term expenditure frameworks for policy formulation and budget French and Kirundi the agriculture, education, and preparation and the rules for budget highlighting information on health sectors that do not exceed by discipline and transparency. sectoral budget allocations on approximately one percent the Status: Completed. a Government website and has projected budget for the respective disseminated it to the 17 sectors as detailed in the central communes. medium-term expenditure Status: Completed. framework for the preparation of the 2015 budget law. Status: Completed. The Recipient has published, on the The Recipient has updated and The Recipient has published, on the website of its ministry in charge of consolidated the civil servant official government website, finance, current public procurement database (HRMIS) and has detailed budget information and decisions by the National Directorate implemented the career actual expenditure for 2013 in for Public Procurement (DNMP) module. downloadable excel format. (listing the selected firms, contract Status: Completed. Status: Completed. amounts and the method of procurement) and the 2011 DNMP Activity Report, with the exception of contracts, which pursuant to the Recipient’s law, are of a secret nature or contracts with a value below the thresholds requiring DNMP review. Status: Completed. The Recipient has established, The Recipient has published, on the through a joint ministerial ordinance official government website, the by the ministry in charge of finance independent audit reports of the and the ministry in charge of public public procurement contracts administration, labor and social awarded in 2011-2012, and has security, a center for government prepared an action plan to address payroll processing and career the identified weaknesses. management and has appointed a Status: Completed. director for the said center. Status: Completed. The Recipient has identified the civil servants with no biometric information, adopted an action plan for completion of the biometric census, and designated a unit for permanent collection of biometric information. Status: Completed. Priority 2: Promoting private sector investment & economic diversification. The Recipient has established and has The Recipient has established The Recipient has adopted a rendered operational a guichet unique and rendered operational a revised coffee privatization strategy (one-stop shop) for the registration of guichet unique (one-stop shop) that aims to be more inclusive and business entities. for construction permits. is acceptable to the farmers’ Status: Completed. Status: Completed. organizations. Status: Completed. The Recipient’s Inter-ministerial The Recipient has increased its The Recipient’s Council of Committee for Privatization has allocation for feeder roads and Ministers has adopted the decision authorized the SCEP to launch the irrigation under the 2013 to comply with the EITI. third phase for the sale of 76 state- Status: Completed. 8 owned washing stations in the coffee Budget Law in line with the sector. 2013-2015 MTEF. Status: Completed. Status: Completed. The Recipient has promulgated The Recipient has published, on the a mining code acceptable to official government website, the Association. mining contracts awarded since the Status: Completed. adoption of the mining code in October 2013. Status: Completed. Priority 3: Strengthening Social Protection to reduce vulnerabilities The Recipient has finalized a The recipient has operationalized household expenditure survey the provincial committees to to update the National improve the targeting of the Social Vulnerability Assessment. Safety Nets programs. Status: Completed. Status: Completed. The Recipient has increased the allocation for social protection in the 2014 revised budget law from its previous allocation in the 2013 budget law. Status: Completed. 18. Annex 1 shows how triggers and prior actions evolved over time based on the implementation experience of each of the three DPGs. Out of the ten indicative triggers identified under ERSG VI for ERSG VII, seven were converted into prior actions for ERSG VII and one (on procurement reforms) became a trigger for ERSG VIII. Another trigger for ERSG VII (tea sector reform) was dropped because of problems encountered in the reform of the coffee sector. It was replaced by two triggers for ERSG VIII (privatization of the coffee sector, and design of a productivity program for the same coffee sector). Finally, one trigger (social protection) was dropped, although the measure had been implemented by the government. With respect to triggers for ERSG VIII, eight of the nine indicative triggers identified under ERSG VII were converted into prior actions. The program was also strengthened by the introduction of two new prior actions emphasizing transparency in the budget and in the mining sector. One trigger (program to improve productivity of the coffee sector) was dropped but became the main objective of a Bank- financed investment project under preparation. 19. To conclude, comparing the prior actions of ERSG VII and VIII with the triggers envisaged in the previous operation would show only a limited number of important changes. First, instead of launching the privatization process for the remaining coffee washing stations, the government revised its coffee strategy to make it more inclusive and acceptable to farmers’ organizations. Second, problems encountered in the coffee sector led to postponing the adoption of a strategy for the reform of the tea sector. 20. A long-term issue is the sustainability of the measures introduced as prior actions. The main purpose of these prior actions was not only to achieve short-term improvements in the country’s performance, but also to gradually build-up the capacity of the government to create a much stronger and sustainable policy and institutional 9 framework for the management of the country’s economic and social future. Following the political crisis of 2015 (see 2.2 below), implementation of many of the policies and practices recently adopted by the government was suspended. It is not clear when it will be possible to reactivate the policy reform process of the last ten years. 2.2 Major Factors Affecting Implementation: 21. The overall implementation of the series was adequate during the first three years (2012-2014), but the crisis of 2015 had a strong negative impact on outcomes and sustainability. Most of the risks of the program (political, macroeconomic, exogenous factors, and institutional capacity) were clearly identified in the Program Documents of ERSG VI, VII and VIII. Unfortunately, most of them did materialize and had a significant influence on implementation and results. a) Political risk. Burundi is a post-conflict country where old conflicts continue to have an impact on policies and performance. Most of the recent cases of political conflicts were linked to the fairness of the electoral process. In 2010, the results of local elections were challenged by thirteen opposition parties, which boycotted legislative and presidential elections. Sporadic local attacks caused losses of life. Two major opposition parties, however, agreed to participate in the legislative elections. One could, therefore, hope that a more effective political dialogue would help restore a more peaceful environment. Political disturbances resumed in 2014 and culminated in 2015, when President Nkurunziza announced his intention to seek a third mandate. Both the President of the African Union and most of the large donors operating in Burundi criticized the decision. In May 2015, an attempted coup failed to unseat the government. In June, legislative elections gave the ruling party (CNDD-FDD) 77 of the 100 seats of the National Assembly, and in July, President Nkurunziza was reelected. Political disturbances continued during most of the following months. While in 2010, the government was able to stabilize the situation, the political crisis of 2015-2016 lasted much longer, leading to the emigration of 400,000 refugees (recent HCR estimate). An ongoing political dialogue with a mediator (the Ugandan President Museveni) and a facilitator (the former Tanzanian President Mpaka) progresses slowly. b) Macroeconomic risk. The success of the reform process depends on macroeconomic stability, including sound implementation of ongoing IMF programs. The suspension of budget support by the European Union and major bilateral donors had dramatic consequences for a country, which largely depends on donor contribution for the financing of its public expenditure program. The successful implementation of the overall ERSG VI- VIII program until the end of 2014 was then largely compromised by the lack of resources and (probably) the need to allocate more funds to security and defense at the expense of priority economic and social sectors. The economic consequences of the crisis are serious. Burundi’s GDP contracted by 3.9 percent in 2015 and the macroeconomic environment since then has not been favorable to the privatization of export crop processing facilities, the development of the mining sector and the promotion of investment in large and small private enterprises. The crisis has also been a major obstacle to the resumption of an effective policy dialogue with the Bank and other donors. 10 c) Exogenous factors. Burundi’s economy is extremely vulnerable to adverse climatic changes and fluctuations of international prices. Poor weather conditions led to a sharp decline in agricultural production in 2013. However, the main factor that affected the country’s economic performance and implementation of the program was the gradual decline in development assistance. Foreign grants, which peaked at 17.1 percent of GDP in 2012, dropped to 16.4 percent in 2013, 13 percent in 2014 and 9 percent in 2015. First the donor community felt that after almost 10 years of massive assistance to a poor post- conflict country, the government should adjust its fiscal policies to become less dependent on foreign aid. Second, the political crisis led the European Union and major bilateral donors to suspend budget support until the successful completion of the ongoing dialogue with the opposition could restore a more favorable political environment. d) Institutional capacity. The reform process introduced by all the ERSG DPOs supported by the Bank over the past ten years involved the creation of new institutions, the introduction of new management instruments and the training of specialists. So far, the building of national and local capacity has been slow but effective. Major progress was made within the ministry of Finance and in the social sectors. However, much remains to be done in many other areas. For instance, the institutions responsible for the privatization of public enterprises produced useful audits but never had the resources necessary to evaluate complex sector policy issues, including the many factors that blocked for a long time the privatization of the coffee and other export sectors. It should be noted, however, that the Bank was also overoptimistic about the possibility of privatizing the coffee, tea and sugar sectors in only three years. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 22. The program’s development objectives were clear, the focus of the different components was well described and the selection of results indicators was generally appropriate. More specific comments on the design, implementation and utilization of M&E arrangements are presented below. a) Design 23. The program documents included a clear presentation of the development objectives, the results indicators, the policy areas and the prior actions. As mentioned in Section 1.3, several indicators were modified to take into account the new objections of important stakeholders (coffee growers)1 to the initial strategic objectives of the program. The result was a more realistic set of objectives and indicators, which was used by the government and the Bank to monitor the program. Unfortunately, while the staff of the Ministry of Finance was fully familiar with the details of the program, a few other ministries did not always seem to understand the importance of agreed indicators to 1 Before the launching of the series, a Poverty and Social Impact Assessment (PSIA) had analyzed the reaction of coffee growers to the first two rounds of the privatization process, and had concluded that coffee growers were gaining more in areas where washing stations had been privatized. Later on, however, coffee growers became more ambitious. Getting additional benefits was not enough. They wanted to become a major actor in the coffee processing chain by owning a number of washing stations. 11 evaluate the performance of their sectors. Assuming that the supervision of the program belonged essentially to the Ministry of Finance, they were not eager to participate in systematic reviews of program implementation. b) Implementation 24. The government continued to rely on the same institutions and the same planning and information systems that helped implement and monitor previous ERSG operations. The main institution is the Ministry of Finance and Economic Development Planning, which monitors budget planning, budget execution and other PFM reforms, with the help of integrated financial information systems that have been developed in the context of previous DPGs. The Ministry of Finance also monitors the other components of the program (private sector development, reform of coffee sector and social protection), in cooperation with more specialized entities (Governance and Privatization, SCEP, Commerce, Agriculture, Social Sector agencies). Within the Ministry of Finance, a technical support unit (“cellule d’appui”) plays an effective coordinating role and is the main interlocutor of donor agencies on policy reforms and program implementation. During ERSG VI-VII-VIII, a number of key sector ministries were encouraged to assume a more assertive role in the design of sector strategies, in decisions concerning intra-sector budget allocations and in implementation of the program, with limited success so far. For instance, they hired or trained specialists able to prepare and implement sector MTEFs, but were generally unable to use these new instruments to improve sector strategies and influence budgets. c) Utilization 25. The Ministry of Finance and its cellule d’appui work under considerable pressure, as frequent missions from the development partners visit the country to discuss at the same time implementation of ongoing reforms and the outline of future reforms and support programs. For several years, this arrangement proved to be effective. The review of ongoing operations, combined with the identification of future programs, created a strong incentive for sound implementation and good monitoring of agreed reforms at least until the 2015 crisis created an environment in which implementation of ongoing reforms lost its priority. The fact that all the monitoring instruments were designed and controlled by the Ministry of Finance did not lead to systematic involvement of other ministries in the monitoring process. 2.4 Expected Next Phase/Follow-up Operation 26. In 2015, when all the ERSG VIII prior actions were completed, the Bank was ready to identify and prepare a new DPG aimed at consolidating progress achieved in PFM, completing implementation of the newly designed coffee strategy, supporting the extension of the social protection component of the program, and addressing other high priority policy reform and development issues. However, the suspension of budget support by several donors, the subsequent cancellation by the government of an Article IV consultation with the IMF and the fact that the World Bank was not ready to consider new DPGs at this stage weakened the capacity of the Bank and other institutions to engage a 12 strong policy dialogue with the government. The ICR mission was well received, but was not given a great deal of recent fiscal data. Severely constrained by the scarcity of external funding, the government now gives the highest priority to short-term security and fiscal issues and, at this stage, is less ready to listen to foreign advice on long term economic and public finance management issues. The government, however, should be encouraged to reflect on its own development policy priorities, as a basis for effective discussions with the donor community on possible next steps. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation a) Relevance of Objectives: High 27. The PDOs of the ERSG VI-VIII series are fully consistent with: (i) the objectives of the country’s poverty reduction strategy (second CSLP approved by the government in 2012); and (ii) the priorities of the most recent country assistance strategy of the Bank (FY13-FY16 CAS). 28. The public finance management and budget transparency objectives of the ERGS series were – and still are – sound and fully justified. Despite the lack of capacity in a number of key institutions, past experience had shown a genuine desire to learn new techniques and improve performance on the part of management and staff in the Ministry of Finance and a few other government agencies. In addition, the donor community, which, in 2010, financed 57 percent of total public spending, was expected to reduce its financial support, assuming that the country would gradually emerge from its post-conflict status. The government revenue-GDP ratio, however, was very low, averaging 14 percent since 2010. It was therefore essential to improve the countr y’s tax collection performance and the allocation of public spending. It was also essential to control the growth of the civil service wage bill, in order to further increase, or at least maintain, the share of priority economic and social sectors in total planned and executed public expenditures. Improving the quality of public spending was also critical through close involvement of the Parliament in budget planning and provision of systematic information to the local population on social sector allocations concerning their areas (“budget-citoyen”). 29. The private sector development and economic diversification objectives of the series were and remain relevant today. After 12 years of civil war and economic recession (1993-2005) and seven years of slow recovery, it was necessary to accelerate the rate of growth of the country’s GDP (and per capita GDP) through a variety of policy reforms, including private sector investment, improved productivity in agriculture, strong support for the agricultural export sectors (including coffee, tea, and sugar) and mining development. The success of the privatization of 41 coffee washing stations in 2009 and 2012 seemed to justify another push for the sale of the remaining government-owned coffee processing facilities and for extending the reform to tea and sugar. 30. The social protection objectives of the series were modest but well-conceived. Surveys of household expenditures and food consumption at the time had shown that about 13 two thirds of the population still lived under the national poverty threshold and suffered from malnutrition. Past initiatives to feed and support the poor and the most vulnerable had achieved some results but were poorly coordinated. The creation and management of effective safety nets was a complex undertaking, and it made sense to develop (gradually) a modest institutional framework and initiate the preparation of a more comprehensive social protection strategy. 31. A weakness in the program design was insufficient consideration of the time required to initiate and complete major reforms. The ERSG VI program document assumed that it should be possible to complete the privatization of coffee washing stations in 2012-2013, to develop a comprehensive strategy for the reform of the tea sector in 2013, and to do the same for the sugar sector in 2014. All these activities were clearly of high priority, but the Bank knew how difficult it had been to launch the first and second round of privatizations in the coffee sector. In retrospect, initiating similar reforms in two other sub-sectors was probably too ambitious. b) Relevance of Design: Modest 32. The design of the public finance management and the social protection components of the series considered some of the lessons of previous ERSG DPGs, in particular the need for a slow step-by-step approach to the reform process, taking into account the limited institutional capacity available in the country. The ERSG VI-VIII series built on progress achieved during previous ERSG programs in terms of budget planning and monitoring, introducing the MTEF process, encouraging sector ministries to develop their own strategies, and improving existing public finance and civil service information systems. All the prior actions of the PFM component of the ERSG VI-VIII series represented a systematic effort to upgrade existing systems, moving from central to sector MTEFs, publicizing budget allocations, not only on the website of the Ministry of Finance but also at the provincial and communal level, creating a center for payroll processing, consolidating civil service database and introducing biometric identification techniques to identify and eliminate fraud. The social protection component did not build on a long previous experience and, as a result, had only modest goals: to complete ongoing diagnostic studies on poverty and to create the embryo of a central and local social protection institutional system. The design of the private sector development component was less realistic, as it initially planned to complete in one year the privatization of the coffee sector before attempting to privatize the tea and the sugar sectors in the following two years. 33. One could argue that there was a certain disconnect between the very broad description of the program’s objectives and the selection of some of the prior actions. For instance, the goal of the PSD component in ERSG VII and VIII was to promote not only private sector development but also economic diversification, but in fact, most of the sector-specific prior actions or triggers concerned measures aimed at further stimulating growth in traditional production and export sectors (coffee, tea and sugar). The only comparatively new sector supported by the series was mining, which truly could eventually provide a major long-term development opportunity for a country, whose economy still mainly depends on the performance of agriculture. One could also argue that another 14 diversification element of the PSD program was moving from state-owned institutions and enterprises to private sector-led strategies. c) Relevance of Implementation: Modest 34. The success of program monitoring and implementation relied essentially on the leadership of the Ministry of Finance. Thanks to the good work of a competent cellule d’appui, which fully understood the policy orientations of the ERSG series, the government was able to monitor implementation of most of the components of the program. Other ministries, however, were not sufficiently involved in these reviews. They were more interested in the success of specific investment projects in their sectors than in the implementation of broad reform programs supported by Bank-financed DPOs. 3.2 Achievement of Program Development Objectives Overall Rating: Modest 35. The ERSG series made modest progress towards achieving the PDOs. Although the Government made good progress during the first three years of the program (2012-2014), the political crisis of 2015 had a detrimental impact on such progress and sustainability of results. Objective 1: Strengthening public finance management and budget transparency 36. Modest. Two of the seven PFM indicators were fully met; four were only partly met and one was not met. Until the end of 2014, all the prior actions were completed and the accumulation of these actions created systems, procedures and practices that represented a significant effort to improve and modernize public finance management. A detailed review of PFM results indicators would show that: a) The Parliament was more involved in the budget debate: the gap between effective budget presentation and the legal delay was reduced by half. b) The MTEF mechanism gained recognition. The gap between the MTEF and the budget declined from 17.3 percent to 12 percent. The gap between sector MTEFs in education, health and agriculture and the approved budget also declined from 31.9 percent to 13 percent. c) The estimated value of tax exemptions declined modestly from 23.8 percent to 17 percent of total tax revenue. d) No progress was made with respect to the PEFA indicator on public access to procurement but the share of contracts awarded on a sole source basis remained below the legal limit of 10 percent. 15 e) Limited progress was made in terms of updating the human resources management system and using biometric information, but the size of the wage bill declined significantly from 8.1 percent of GDP in 2012 to 6.6 percent in 2013. f) Only one joint mission with another ministerial inspection unit was organized by IGE, but this initiative was replaced by training programs for ministerial inspections with the support of IGE. g) A major transparency initiative was the publication of summary budget tables (budgets-citoyen) in all the communes, leading to animated discussions between central government staff and local community representatives at the provincial level. 37. Until the end of 2014, PFM reforms had a positive impact on the country’s economic and public finance indicators, including a lower civil service wage bill, a lower fiscal deficit excluding grants; mobilization of large amounts of external assistance; and controlled inflation. See Table 4 below. Table 4. Key economic and public finance indicators 2010 2011 2012 2013 2014 2015 (annual percentage change) GDP growth rate 3.8 4.2 4.0 4.5 4.7 -3.9 Annual average inflation 6.4 9.7 18.0 7.9 4.4 5.5 (in percentage of GDP) Current revenue 13.9 15.4 14.8 13.3 13.7 12.1 Current expenditures 18.9 24.4 22.2 18.6 18.8 18.8 Wages and salaries 9.0 9.4 8.1 7.0 6.6 6.7 Capital expenditures 22.1 15.6 13.4 12.8 11.4 7.8 Overall fiscal balance (excl. grants) -27.1 -24.7 -20.8 -18.1 -16.4 -14.6 Overall fiscal balance (incl. grants) -3.6 -4.0 -3.7 -1.7 -3.4 -5.6 Source: Burundian Authorities; World Bank and IMF estimates 38. An important consequence of better public finance management was a significant improvement in the structure of public expenditures, with the share of priority economic and social sectors in budget allocations increasing from 38.7 percent in 2008 to 43.7 percent in 2010 and 47.2 percent in 2014. See Table 5 below. The combination of higher allocations and better execution performance led to a significant increase in the share of priority sectors in actual spending: from 38.8 percent in 2008 to 46.4 percent in 2010 and 47.7 percent in 2014. 16 Table 5. Structure of budget allocations and actual spending (in % of total public expenditures) 2008 2010 2012 2013 2014 2015 Alloc/Exec Alloc/Exec Alloc/Exec Alloc/Exec Alloc/Exec Alloc./Exec. Education 22.6/24.0 25.3/28.9 26.2/27.3 28.5/28.3 28.7/30.4 27.3/N.A Health 7.7/7.4 9.8/10.4 8.8/9.2 9.5/9.7 9.7/9.8 9.8/N.A Agriculture 3.5/3.4 2.7/2.3 5.1/4.4 4.3/3.8 3.8/3.5 4.0/N.A Energy/Mining 1.2/0.8 2.6/2.3 3.2/2.9 3.2/3.2 2.8/2.4 4.0/N.A Transport/Public Works/ 3.7/3.2 3.3/2.5 2.0/2.2 1.7/1.7 2.2/1.6 1.3/N.A Equipment Total economic & social 38.7/38.8 43.7/46.4 45.3/46.0 47.2/46.7 47.2/47.7 46.4/N.A sectors Security/Defense 22.1/21.4 19.4/19.8 19.7/20.3 20.4/21.2 20.0/20.2 19.4/N.A Others 39.2/39.8 36.9/33.7 35.0/33.7 32.4/32.2 32.6/32.1 34.3/N.A Total other sectors 61.3/61.2 56.3/53.5 54.7/54.0 52.8/53.2 52.6/52.3 53.7/N.A Source: Burundian Authorities; World Bank and IMF estimates 39. Table 6 below shows that improvements in the structure of public expenditures is one of the factors that explain significant improvements in Burundi’s social indicators. Table 6. Main Social Indicators 2000 2010 2012 2014 2015 Primary education enrollment rate (net) 45.0% 94.0% 94.9% 95.6% 97.2% Primary education completion rate 24.0% 47.7% 68.5% .. 73% Secondary education enrollment rate (gross) 10.0% 24.1% 31.9% .. 53.7% Life expectancy (years) 51.5 56.8 58.0 59.1 59.6 Maternal mortality (for 100.000 live births) 1000 .. 800 .. .. Infant mortality (for 1000 live births) 100 96 86 .. .. Under-5 mortality (for 1000 live births) 165 98.8 139 84.6 81.7 Malaria prevalence for under-5 .. .. 47.4% 35.8% 54.4% Source : Government of Burundi ; WDI 40. Impact of the crisis. The crisis of 2015 and the suspension of budget support by major donors changed dramatically public finance management practices. Most of the initiatives aimed at empowering sector ministries were abandoned. Sector MTEFs are still prepared but have virtually no influence on public spending. Budget laws continue to give a high priority to economic and social sectors, but the scarcity and unpredictability of available resources means that most of the budget execution decisions are centrally managed and are not based on the budgets. Very little is known about the structure of actual public spending due to lack of data. 41. Transparency is one of the main victims of the crisis. The website of the Ministry of Finance no longer publishes quarterly public expenditure execution reports. Government accounts are no longer reviewed and audited by the Court of Accounts. They are no longer published and reviewed by the Parliament. The government claims that the budget-citoyen (citizen budget) initiative continues, but it is based on budget laws that no longer are the main public finance management document. 17 42. The dependency of Burundi on donor support and the fact that public spending has long been the driving force of the country’s economy means that the budget crisis had a major impact on economic performance. In 2015, GDP growth was negative (-3.9 percent). The government was unable to offset the decline of development assistance by increased domestic revenue. Capital expenditures declined from 11.4 percent of GDP in 2014 to 7.8 percent in 2015. So far, however, most of the key social indicators continued to improve. Second objective: Private sector investment and economic diversification. 43. Modest. It is true that the review of related indicators shows that the business environment improved. The number of days to register an enterprise declined from 32 to 5 and from 137 to 99 for the delivery of a construction permit. For three years (2012-2014), Burundi was viewed as one of the top ten performers in Doing Business reports. Improvements in the business environment had a positive impact on private investment and triggered a wave of formalization as the number of businesses registered annually tripled from less than 700 in 2010 to 2184 in 2014. 44. Little, however, was done in terms of sales of state-owned crop processing facilities. The sale of 41 coffee washing stations in 2009 and 2012 and the positive evaluation of benefits derived from these privatization measures in the Poverty Social Impact Analysis (PSIA) had no immediate impact on the sale of coffee washing stations and no tea processing factory was sold. The rate of achievement of results indicators was 0 percent in this area. The main positive result during the ERSG VI-VII-VIII period was the adoption of a new strategy aimed at promoting the participation of coffee growers in the ownership and management of coffee washing stations. Consequently, the results indicator was changed. The number of washing stations sold or the share of the private sector in the ownership of washing stations was replaced by the share of coffee growers in the ownership of these CWS, which increased to 18 percent. 45. A few other indicators improved. Budget allocations to feeder roads and small- scale irrigation projects and the quantity of fertilizers distributed increased. More importantly, the agricultural research institute, ISABU, was able to increase production and delivery of new coffee trees from 259,829 in 2012 to 3.6 million in 2014, paving the ground for a major project on the coffee sector competitiveness approved by the Bank in June 2016 (PAD report 1271). The rehabilitation of existing coffee plantations is essential to increase the country’s coffee production and improve the profitability of the sector for farmers, processing facilities and exporters. 46. The potential of mining remained untapped. The mining sector is still viewed as a promising sector for the diversification of Burundi’s economy, but no progress was made in negotiations between the government and EITI for future membership of Burundi. 47. Impact of the crisis. Results achieved in terms of business environment are largely intact. The number of days necessary to register a business or obtain a construction permit did not change. The number of enterprises registered annually declined to 1529 in 2015 but increased again in 2016. The most significant consequence of the crisis on 18 private sector development was the fact that a promising deal involving coffee growers, social impact investors and international coffee exporters could not materialize. A number of social impact investors were ready to help coffee growers mobilize the funds necessary to acquire a share in the ownership of 30 coffee washing stations and an international coffee exporter, which operates in Ethiopia, Tanzania, and Rwanda, was ready to create a company in Burundi. The crisis made this impossible. The main benefit of these negotiations is that the government now knows how it could give a new impetus to its coffee sector restructuring strategy, when conditions become more favorable. Third objective: Strengthening safety nets systems. 48. High. The two indicators of the safety net component were fully met. It is true that, in this area, the objectives of the programmatic series were relatively modest. It was mainly to develop a new social protection strategy, to produce data on poverty and vulnerability, to create a national institutional structure relying on provincial committees where women would play a significant role. A strategy was adopted. Household consumption surveys were updated. A vulnerability assessment was produced. All the provinces created social protection committees and women played a major role in more than 50 percent of these committees. The crisis had no negative impact on implementation of the component but increased the need for more assistance to the very poor. A social safety nets project was approved by the Bank in December 2016 (PAD report 1418). 3.3 Justification of Overall Outcome Rating Rating: Modest 49. Despite the substantial progress achieved on all fronts at the beginning of program implementation, the collapse of the public finance management component following the political crisis makes it impossible to improve the overall outcome rating above modest. Transparency was at the core of the PFM reform program and budget transparency has virtually disappeared: no budget execution reports, no audits of government accounts and public procurement contracts. Systems have been put in place and the staff of the Ministry of Finance should be able to resume the reform process when the political conditions are more favorable, but the momentum has been lost. With respect to private sector development, the business environment sub-component was not affected, but the privatization of the coffee sector could not be completed. The safety nets component was well implemented but like all the other sectors was affected by the general shortage of resources created by the political crisis. 3.4 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 50. All these themes were at the center of the ERSG VI-VII-VIII series. First, fighting extreme poverty and vulnerability was the principal goal of the safety nets component. The main result was the creation of a central and local institutional structure, 19 that became the main instrument of a Social Safety Nets project approved by the Bank in December 2016 (PAD report 1418), which provides cash transfers to extremely poor and vulnerable households. Gender issues were also addressed in this context to ensure adequate representation of women in the local committees responsible for implementation. Second, one of the main objectives of the public finance component was to improve the structure of public spending and increase the share of priority social sectors. PFM reforms also had a positive impact on the condition of the poor and on gender equality, mainly through improving access to health and education. With respect to the private sector component, business environment reforms probably had a positive impact on the condition of the poor, as it stimulated the development of small and medium-sized enterprises, which provide more jobs to the poor than larger domestic and foreign firms. (b) Institutional Change/Strengthening 51. Like all the previous DPOs approved by the Bank in Burundi, the ERSG VI- VII-VIII series was largely focused on strengthening local capacity and reconstructing institutions destroyed by a decade of civil war. Most of the capacity building activity performed during the series was aimed at the Ministry of Finance and public finance management systems. The staff of the ministry is now able to master new budget planning and monitoring techniques and does it competently. Efforts have been made to involve priority sector ministries in budget planning exercises. Three ministries now have planning units capable of preparing sector strategies and sector MTEFs. Their influence on decision-making processes remains limited, but they do have the technical expertise necessary to prepare sector MTEFs. So far, the political crisis did not affect significantly whichever progress was made in terms of institutional development within the Ministry of Finance and, to a lesser extent, in a few other sectors. New systems are in place and new expertise is available, even if it is not used as effectively as in previous years. Much will depend on how long the current crisis will last. Without major improvements in government policies in the not too distant future, much of what has been created will be destroyed again in a few years. (c) Other Unintended Outcomes and Impacts (positive or negative) None. 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 52. The only beneficiary survey conducted during implementation of the ERSG VI-VII-VIII series was the survey of coffee growers used in the PSIA of earlier coffee privatization schemes. Based on surveys of coffee growers and complementary discussions with focus groups involving coffee growers within and outside areas served by the recently privatized washing stations, the PSIA showed that past privatization measures had a positive impact on the income of the coffee growers concerned. 4. Assessment of Risk to Development Outcome Rating: High 20 53. The negative impact of the political crisis on the performance of the program illustrates the extreme fragility of what was built during ten years of policy and institutional reforms, notably in public finance management. What is particularly alarming is the fact that when budget support is no longer available, the government no longer feels committed to the reform process. However, it is possible to remain optimistic about the future. Specialists have been trained, local capacity has been developed and there is no shortage of support within the Ministry of Finance and a few sector ministries for the type of policy and institutional reforms introduced during implementation of the series. Like the crisis of 2010, the current political crisis may subside. Consequently, it is quite possible that, in a more stable political and economic environment, some of the new policies and practices would be resumed in the context of new programs strongly supported by the donor community. 21 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 54. The positive results achieved during the first three years of the program show that the initial design of policy reforms supported by the series was generally realistic and appropriate. The only reservation is about the plans for the privatization of agricultural export subsectors. The sale of 41 coffee washing stations in 2009 and 2012 was a success, which justified an extension of the reform in the context of the new series. However, it was unrealistic to expect that the coffee privatization program would be completed in one year and that the following two years would be used to develop a new strategy for the privatization of tea and sugar. (b) Bank performance in Ensuring Quality of Supervision Rating: Satisfactory 55. Flexibility was a key feature of the Bank supervision. Supervision of ongoing DPOs and preparation of follow-up operations (ERSG VI-VIII) were performed simultaneously and their conclusions were included in detailed aide-memoires that reviewed past performance, proposed adjustments to objectives and indicators, as necessary, and encouraged the government to accelerate implementation of agreed policy and institutional reforms. The most remarkable element of the Bank performance was its flexibility. Implementation of the coffee privatization scheme was disappointing as coffee growers began to challenge the design of the ongoing strategy. The government and the Bank, however, were able to take into consideration the objections of the coffee growers and negotiate a new strategy, which reflected their new aspirations. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 56. Although some components of the initial program were somewhat unrealistic, the design of the program was sound, supervision was adequate and the Bank showed its capacity to change its objectives and adapt its requirements, taking into account the views expressed by Burundian stakeholders, notably the main beneficiaries of the coffee sector privatization program. 5.2 Borrower Performance (a) Government Performance 22 Rating: Moderately unsatisfactory (Satisfactory in 2012-2014/Unsatisfactory thereafter) 57. The government did well initially, taking most of the necessary actions to implement PFM reforms, launch the development of the Sector MTEF mechanism, improve the structure of public expenditures, involve the Parliament and the communes in the discussion of budget priorities, adjust as needed its coffee sector privatization strategy, and initiate the preparation of a national social protection strategy. 58. The crisis of 2015 did not justify the extreme measures taken by the government to suspend implementation of major public finance management reforms, including measures aimed at creating transparency such as the publication of budget execution reports, audits of government accounts and audits of procurement contracts. (b) Implementing Agency or Agencies Performance Rating: Moderately satisfactory 59. The Ministry of Finance played a major role in implementing the PFM component and monitoring all the other components of the program. Its cellule d’appui proved to be increasingly efficient and still is doing its best to plan and implement what is left of the ongoing program following the political crisis of 2015. Other ministries were much less involved in implementation of the program. Education, health and agriculture were beginning to play a modest but positive role but needed much more time and technical support to develop their influence and their capacity. The Office of Public Enterprises (SCEP), which was responsible for privatization reforms, was always a weak institution, which was unable to give sound advice to the government and the donor community on how to implement effectively the privatization process of the coffee sector, in full consultation with the coffee growers and their associations. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately unsatisfactory See comments under (a) above. 6. Lessons Learned 60. First lesson. The implementation of the ERSG VI-VII-VIII series shows that budget support operations are and remain a powerful instrument to encourage governments to implement a wide variety of policy reforms, notably in fragile country contexts. However, it shows also the weakness of the instrument, when unpredictable changes in the political environment lead to sudden suspension of the reform process. 61. Second lesson. The combination of policy reforms and budget support is more effective and resilient when flexible technical assistance and/or investment financing 23 instruments are also available. Part of the success of the previous ERSG series (ERSG IV and V) was due to the availability of the Economic Management Support Project (EMSP), which helped finance technical support, training programs, audits, sector studies and other activities that proved to be necessary during implementation of the series. The government and the Bank understood the need for such complementary assistance in the context of the ERSG VI-VII-VIII series. Implementation of the private sector development component was facilitated by a small PSD project that played a major role in the negotiation of a new deal for the privatization of coffee washing stations. The government also commented that faster implementation of the coffee sector reform might have been possible, if the Bank-financed Coffee Sector Competitiveness Project of June 2016 had been in place at the beginning of the ERSG VI-VII-VIII series. 62. Third lesson. The role of sector ministries in implementation of development policy grants or credits was limited. The Ministry of Finance always is the main interlocutor of the Bank and other donors in the discussion of macroeconomic and public finance management reforms. Sector ministries, however, should be systematically consulted and involved not only during the preparation of the program but also during the implementation phase. They were involved at the beginning of the process. A reforms committee, headed by Finance, that included all the ministries and agencies concerned, was the principal instrument of the consultation process. What was missing was a more active participation of the relevant sector ministries in program monitoring, including systematic periodic reviews of the status of key indicators. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies 63. Only oral observations were provided by the government. The ICRR mission handed over to the government delegation an Aide-memoire, which summarized its views about the strengths and weaknesses, the achievements and the failures of the ERSG VI- VIII program. The government reviewed that Aide-Memoire but did not present written comments. The following paragraphs are based on oral observations made by the head of the Burundian team and some of his associates on the justification of the program, the government performance and the impact of the three operations. Three conclusions dominated the comments of the government. a) The priority reform areas of the ERSG series were consistent with the development goals of Burundi. For the government, the ERSG VI, VII and VIII was a sensible program. Consolidating what had been achieved since 2005 in terms of public finance management reform and private sector development was fully justified. Initiating a dialogue on social protection was urgently needed considering the rates of poverty, notably in rural areas. b) Recognizing the importance of the proposed program, the government showed ownership and commitment to reforms up to 2014. By and large, the program was well implemented during the 2012-2014 period. The government emphasized the progress made in better controlling public expenditures and gradually increasing the share of the budgets allocated to high-priority economic and social sectors. The Ministry of Finance used the 24 program to bring more discipline to the management of the sector budgets and did its best to encourage sector ministries to articulate their strategies and submit better budget proposals. Not only three sector ministries (Education, Health and Agriculture) began to prepare sector MTEFs, but the experience was extended to many other ministries. The government is very proud of the ‘budget citoyen’ (citizen budget) initiative and the involvement of communal representatives in the discussion of budget components concerning their community. The government feels that this is important to create a permanent dialogue with the population on a combination of technical and political issues. The government recognizes that the privatization of the coffee sector could not be fully completed. However, the share of coffee growers in the ownership of washing stations has increased and a broad agreement has been reached with all the parties concerned on how to mobilize multiple contributions from the business sector, impact investors and associations of coffee growers for the privatization of a much larger segment of the coffee processing industry. Burundi is also very proud that it was named one of the top ten reformers with respect to improving the local business environment. c) Reform reversal began following the failed military coup and the freeze of external budget support. It is true that the political crisis of 2015 had a strong negative impact on the program. The main cause, however, is not only the need for the government to review its priorities to deal with the most urgent political and security issues, it is also the negative reaction of the donor community which suspended budget support when the country needed it most. 64. Finally, political unrest and the suspension of budget support by major donors made it almost impossible to keep implementing most of the PFM reforms envisaged in the program and some of the PSD components of the program. Most of the ministries contacted during the ICR mission claim that they are doing their best to use the systems and instruments which the series and all the other Bank-financed DPOs made available to them over the past ten years. The risk, they feel, is that if the crisis continues, capacities will be lost and the commitment to the reform process will be weakened. (b) Cofinanciers Not Applicable (c) Other partners and stakeholders Not Applicable 25 Annex 1. Triggers and Prior Actions ERSG VII Triggers in ERSG VII ERSG VIII ERSG VIII ERSG VIII Prior ERSG VI Prior Actions Triggers in Triggers in ERSG Actions ERSG VI VII PFM and Budget Transparency Transmitted MTFF & Submitted to Submitted 2015 Prepared sector Issued MTEFs for MTEF to Parliament & Parliament for draft budget law MTEFs in 3 agriculture, organized pre-budget information to Parliament ministries consistent education & health debates. 2014-2016 before November with central that do not exceed Budget 2014. MTEF& BOD for (by 1%) projected Orientation preparation of 2015 sector budget in Document & budget law. central MTEF for budget preparation of 2015 framework budget law. letter for preparation 2014 budget. Publicized Disclosed itemized Published on itemized list of list of tax website itemized tax exemptions exemptions granted list of tax granted past year. past year. Budget exemptions of 2013 Budget document document specifies & first semester specifies estimate estimate of 2014. Eliminated in of exemptions in exemptions in % of 2014 budget VAT % of tax revenue. tax revenue. exemptions on imports & tax credits. Hired IGE conducted Published Published on independent\reputable training for independent audit of website firm for comprehensive ministerial public procurement independent audit audit of public inspection units & contracts awarded report of public procurement system. implemented joint 2011 & 2012 & procurement audit plan established action contracts awarded plan to address 2011-2012. Action weaknesses. plan to address weaknesses. Prepared summary tables Published Published on (easy to understand) 2013 Citizen website detailed including key sector Budget budget information budget information. highlighting & actual Disseminated them information on expenditures for widely. Posted them at sector budget 2013 in communal level to allocations on downloadable excel provide information on government format. sector budget allocations website. (schools & health centers) Disseminated in communes. it to 17 communes. Validated civil servant Updated & Audit of payroll Cleaned HRMIS Identified civil database following consolidated & human database using servants with no updating information on civil servant resource updated biometric biometric info. staff turnover since April database management civil servant census Action plan for 2007. (HRMIS) & system & database. completing implemented SIGEFI. biometric census. career module. Developed action Unit to collect 26 ERSG VII Triggers in ERSG VII ERSG VIII ERSG VIII ERSG VIII Prior ERSG VI Prior Actions Triggers in Triggers in ERSG Actions ERSG VI VII plan for biometric implementing information. recommendations. Private Sector Investment and Economic Diversification Established & rendered Established & operational a Guichet rendered Unique (one stop shop) operational a for construction permits. Guichet Unique (one stop shop) for construction permits. Issued regulations on mandatory preparation of municipal land- use plans. Increased (over previous Increased year) budget allocation allocation for for feeder roads & feeder roads & irrigation, in line with irrigation MTEF allocation. under 2013 budget law, in line with 2013-2015 MTEF. Adopted strategy for the Adopted strategy Launched Adopted revised reform of tea sector for the privatization of coffee privatization clarifying role & privatization of remaining CWS & strategy more responsibilities of state assets in initiated evaluation inclusive & regulatory agency. sugar production of offers. acceptable to company ---------------------- farmers’ SOSUMO. Designed & organizations. validated program to improve productivity of coffee sector. Council of Ministers Promulgated Created EITI Completed EITI Adopted decision to submitted to Parliament mining code commission with scoping study & comply with EITI. mining code consistent acceptable to adequate action plan for ------------------------ with best international the resources to necessary - practices. Association. implement action requirements for Published mining plan leading to pre-candidacy EITI. contracts awarded EITI membership. since mining code October 2013. Strengthening Social Protection Appointed task force to Updated social Adopted Operationalized oversee development of protection comprehensive provincial comprehensive social strategy. Began strategy of safety committees to protection strategy & implementation. nets with action plan improve targeting action plan. Task force Allocated proper of SSN programs. 27 ERSG VII Triggers in ERSG VII ERSG VIII ERSG VIII ERSG VIII Prior ERSG VI Prior Actions Triggers in Triggers in ERSG Actions ERSG VI VII validated social safety funding (with & proposed nets assessment. private sector financing. participation). Finalized Carried out & Carried out & Increased allocation household disclosed results disclosed updated for social protection expenditure of PETS survey national in 2014 budget survey to (& beneficiaries’ vulnerability (over 2013 budget update assessment) in assessment. allocation). national social sectors. poverty profile. 28 Annex 2. Comparing Indicators in ERSG VI, VII and VIII Program Documents ERSG VI ERSG VII ERSG VIII Comments on main changes PFM. (i) Gap (amount) between PFM. (i) Gap between MTEF PFM. (i) Gap between MTEF PFM. As the government has budget ceilings in the MTEF & and budget (in % of budget). & budget in education, health shown its capacity to prepare approved budget. (ii) Difference between and agriculture (in % of sensible central MTEFs, ERSG (ii) Gap (months) between month of budget presentation budget) VIII focuses attention on sector effective budget presentation to to Parliament and legal (ii) Difference between month MTEFs that three priority Parliament and legal delay. month (October). of budget presentation to sectors have begun to prepare. (iii) PEFA indicator PII9-iii on (iii) Estimated value of tax Parliament and legal month The new indicator, therefore, public access to public exemptions in % of total tax (October). assesses the coherence of these procurement information. revenue. (iii) Estimated value of tax sector MTEFs with the final (iv) Share of public procurement (iv) PEFA indicator PII(-iii on exemptions in % of total tax allocations in the approved contracts (value) awarded on a public access to public revenue. budget. sole source basis in the previous procurement information. (vi) Share of civil servants In ERSG VI,, tax exemptions year (not to exceed 5%). (v) Share of communes where within HRMIS with biometric were criticized mainly for their (v) Number of joint IGE- budget information tables are information. impact on business environment Ministerial Inspection units’ available. (v) PEFA indicator PII(-iii on (discriminatory treatment). As investigation conducted yearly. (vi) Share of procurement public access to public aid inflows are expected to (vi) Share of communes where contracts (value) awarded on procurement information. decline, the analysis and budget information tables are a sole source basis. (iv) Share of communes where eventual reduction of tax available. (vii) Share of civil servants budget information tables are exemptions become an essential (vii) Share of civil servants (%) within HRMIS who are available. element of sound public finance whose profiles have been identified or registered in management in ERSG VII and updated in the payroll & HR biometric census database. VIII. management system (excluding As the instruments used to security forces). estimate the size of the civil service improve, the focus is no longer on registration but on bio- metric information to identify and control possible fraud. Because IGE believes that ministerial inspection units lack capacity, joint audit missions are replaced by training programs sponsored by IGE. PSD. (i) Number of days to PSD. (i) Number of days to PSD. (i) Number of days to PSD. To evaluate the impact of register a business at the new obtain a construction permit at obtain a construction permit at government action and spending Guichet Unique (one stop shop). the new Guichet Unique. the new Guichet Unique. on the rural sector, ERSG VIII (ii) Number of days to obtain a (ii) Number of days to register (ii) Number of days to register adds the quantity of fertilizers construction permit at the new a business at the new Guichet a business at the new Guichet distributed to the share of budget Guichet Unique (one stop shop). Unique. Unique. allocations to rural (iii) Estimated value of tax (iii) Percentage of budget (iii) Percentage of budget infrastructure. exemptions as a share of total allocated to construction/ allocated to construction/ As the government and the Bank tax revenues. maintenance of feeder roads maintenance of feeder roads recognize that the privatization (iv) Number of publicly-owned and small irrigation. and small irrigation. of the coffee sector is a complex coffee washing station sold. (iv) Share of private sector in (iv) Quantity of fertilizers enterprise, indicators concerning (v) Percentage of budget ownership of coffee washing distributed (in 1000 tons) the tea sector are eliminated in allocated to construction/ stations. (v) Share of coffee growers in ERSG VII and VIII. maintenance of feeder roads and (v) Number of EITI pre- ownership of coffee washing As coffee growers object to small-scale irrigation. candidacy steps completed. stations. aspects of the coffee strategy, (vi) Number of state tea (vi) (v) Number of EITI pre- indicators of ERSG VIII processing factories sold. candidacy steps completed. measure the share of coffee (vii) Number of benchmarks met growers, not the share of private for EITI membership. enterprises, in the ownership of washing stations. 29 Social Protection. (i) Social Protection. (i) Social Protection. (i) % of Social protection. As an Percentage of the extremely Existence of a comprehensive provinces with social assessment of existing safety poor households covered by at social safety strategy. protection committee nets has been completed, ERSG least one of the main safety nets (ii) Availability of household established and functional. VII is focused on the programs. consumption data & (ii) % of provinces with development of a new social (ii) Poverty rate data and a vulnerability assessment. woman as responsible of local protection strategy, and ERSG detailed poverty map available social protection committee. VIII on the creation of the local based on new household institutional framework for consumption survey. implementation of the strategy. 30 Annex 3. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members P127080 – Burundi Sixth Economic Reform Support Grant (ERSG VI) – First in a Series of 3 Responsibility/ Names Title Unit Specialty Lending Jean-Pascal N. Nganou Senior Country Economist GMF07 Task Team Leader Co-Task Team Aurelien Kruse Senior Economist GMF11 Leader Jacques Morisset Program Leader AFCF2 Sector Leader Senior Financial Management Bella Lelouma Diallo GGO025 Specialist Nneoma Veronica Nwogu Senior Counsel LEGAM Aissatou Diallo Senior Finance Officer WFALN Aurelien Serge Beko Economist GMF07 Rasit Pertev Senior Agriculture Specialist Javier Suarez Lead Economist GTC03 Laurent Olivier Corthay Senior Private Sector Specialist GTC07 Eric Mabushi Senior Operations officer CAFCS Kabemba Lusinde Consultant GTC07 Andrew Osei Asibey Senior Monitoring and Evaluation Spe. AFTDE Sulaiman Wasty Consultant GCFMR Robert Blake Consultant Ferdinand Bararuzunza Economist Aurore Simbananiye Team Assistant Maude Valembrun Language Program Assistant GMF08 Lydie Ahodehou Program Assistant GMF07 Senait Kassa Yifru Operations Analyst GPV01 P144612 – Burundi Seventh Economic Reform Support Grant (ERSG VII) – Second in a Series of 3 Responsibility/ Names Title Unit Specialty Lending Mamadou Ndione Senior Country Economist GMF01 Task Team Leader Jacques Morisset Program Leader AFCF2 Sector Leader Chiari Bronchi Practice Manager GGO13 Nneoma Veronica Nwogu Senior Counsel LEGAM Henri Joel Nkuepo Ferdinand Bararuzunza Economist Aurelien Serge Beko Economist GMF07 Evariste Niyonkuru Consultant GGO25 Nicola Carlene Woodroffe Consultant Johanna Michaela Weber Private Sector Specialist GTCCS Aissatou Diallo Senior Finance Officer WFALN Faly Diallo Finance Officer WFALA 31 Alex Kamurase Senior Social Protection Specialist GSP01 Rachel Berniche Perks Senior Mining Specialist GEEX2 Karima Laouali Ladjo Program Assistant GMF07 Maude Valembrun Language Program Assistant GMF08 Lydie Ahodehou Program Assistant GMF07 Pacifique Ndoricimpa Team Assistant AFMBI Lyse Kayambo Team Assistant AFMBI P150941 – Burundi Eight Economic Reform Support Grant (ERSG VIII) – Third in a Series of 3 Responsibility/ Names Title Unit Specialty Mamadou Ndione Senior Country Economist GMF01 Task Team Leader Jacques Morisset Program Leader AFCF2 Sector Leader Marco Larizza Senior Public Sector Specialist GGO16 Chiari Bronchi Practice Manager GGO13 Nadia Belhadj Hassine Belghith Senior Economist GPV01 Aurelien Serge Beko Economist GMF07 Nneoma Veronica Nwogu Senior Counsel LEGAM Gerard Joseph Mataban Jumamil Counsel LEGDF Chakib Jenane Senior Agribusiness Specialist GFA01 Kaliza Karuretwa Senior Private Sector Specialist GTCA1 Johanna Michaela Weber Private Sector Specialist GTCCS Senior Financial Management Bella Lelouma Diallo GGO025 Specialist Melance Ndikumasabo Senior Procurement Specialist GGO07 Faly Diallo Finance Officer WFALA Benedicte Leroy De La Briere Lead Economist GCGDR Alain-Desire Karibwami Senior Health Specialist GHN01 Moulay Driss Zine Eddine El Senior Economist (Health) GHN13 Idrissi Rachel Berniche Perks Senior Mining Specialist GEEX2 Karima Laouali Ladjo Program Assistant GMF07 Maude Valembrun Language Program Assistant GMF08 Lydie Ahodehou Program Assistant GMF07 Pacifique Ndoricimpa Team Assistant AFMBI (b) Staff Time and Cost P127080 – Burundi Sixth Economic Reform Support Grant (ERSG VI) – First in a Series of 3 Staff Time and Cost (Bank Budget Only) No. of staff weeks USD Thousands (including travel and consultant costs) FY13 45.61 249.70 Total: 45.61 249.70 32 P144612 – Burundi Seventh Economic Reform Support Grant (ERSG VII) – Second in a Series of 3 Staff Time and Cost (Bank Budget Only) No. of staff weeks USD Thousands (including travel and consultant costs) FY14 56.63 167.63 Total: 56.63 167.63 P150941 – Burundi Eight Economic Reform Support Grant (ERSG VIII) – Third in a Series of 3 Staff Time and Cost (Bank Budget Only) No. of staff weeks USD Thousands (including travel and consultant costs) FY15 28.31 210.60 Total: 28.31 210.60 33 Annex 4. Beneficiary Survey Results 34 Annex 5. Stakeholder Workshop Report and Results 35 Annex 6. Comments of Cofinanciers and Other Partners/Stakeholders 36 Annex 7. List of Supporting Documents World Bank (2012). Country Assistance Strategy for the Republic of Burundi FY 2013-2016. Report 72334. World Bank (2012). Burundi - Sixth Economic Reform Support Grant (ERSG VI) Program Document. Report 70931-BI. World Bank (2013). Implementation Completion and Results Report for ERSG IV and ERSG V. Report ICR 00002469. World Bank (2013). Burundi - Seventh Economic Reform Support Grant (ERSG VII) Program Document. Report 82249-BI. World Bank (2013). Burundi – Sustainable Coffee Landscape Project. Project Appraisal Document. Report 75889-BI. World Bank (2014). Burundi - Eight Economic Reform Support Grant (ERSG VIII) Program Document. Report 91614-BI. World Bank (2014). De L’Aide au Commerce: L’Integration Regionale Come Moteur de Croissance – First Burundi Economic Update. World Bank (2016). Burundi – Coffee Sector Competitiveness Project. Project Appraisal Document. Report PAD1271. World Bank (2016). Burundi – Social Safety Nets Project (Merankabandi). Project Appraisal Document. Report PAD1418. World Bank (2016). Foreign Exchange Market and Macro-fiscal Impacts in Burundi- Preliminary Findings. Macro-Fiscal Global Practice Economic Monitoring. Unpublished Internal Note. Republic of Burundi (2016). Bilan de Mise en Oeuvre du CSLP II: 2012-2015. 37 MAP 38