Document of The World Bank Report No: ICR0000980 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-44340) ON A CREDIT IN THE AMOUNT OF SDR 6.2 MILLION (US$ 10.0 MILLION EQUIVALENT) TO THE REPUBLIC OF CAPE VERDE FOR A FOURTH POVERTY REDUCTION SUPPORT CREDIT June 29, 2009 Poverty Reduction and Economic Management 4 Country Department AFCF1 Africa Region CURRENCY EQUIVALENTS (Exchange Rate as of June 26, 2009) Currency Unit = Escudo (CVE) US$ 1.00 = CVE 78.5 FISCAL YEAR January 1 ­ December 31 ABBREVIATIONS AND ACRONYMS AFDB African Development Bank ADR Alternative Dispute Resolution APR Annual Performance Review BDEO Base de Dados Estatisticos e Operacionais (Statistical Data Base) BSG Budget Support Group CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment CPAR Country Procurement Assessment Review CWIQ Core Welfare Indicators Questionnaire DECRP Documento Estratégico de Crescimento e Redução da Pobreza (Growth and Poverty Reduction Strategy), also referred to with the English acronym GPRSP DGP General Directorate for Planning ESW Economic and Sector Work EU European Union FMS Financial Management System GDP Gross Domestic Product GPRSP Document for Economic Growth and Poverty Reduction (PRSP) HIV/AIDS Human Immune-deficiency Virus/Acquired Immune Deficient Syndrome IDA International Development Association IFMIS Integrated Financial Management and Information System IMF International Monetary Fund INPS Instituto Nacional da Previdencia Social (National Institute for Social Protection) JSAN Joint Staff A Advisory Note MCA Millennium Challenge Account MDGs Millenium Development Goals M&E Monitoring and Evaluation MOFP Ministry of Finance and Planning MOU Memorandum of Understanding MTEF Medium-Term Expenditure Framework NGOs Non Governmental Organizations NOSI Nucleo Operacional du Sociedade da Informacao (Operational Nucleus for Information Systems) PDO Project Development Objective PEM Public Expenditure Management PER Public Expenditure Review PFM Public Financial Management PRSC Poverty Reduction Support Credit PRSP Poverty Reduction Strategy Paper PSI Policy Support Instrument STAD Secretariado Tecnico de Apoio ao Desenvolvimento (Technical Secretariat for Development Assistance) TdC Tribunal de Contas (Independent General Audit Office) TF Trust Fund TTL Task Team Leader VAT Value-added Tax Vice President: Obiageli K. Ezekwesili (AFRVP) Country Director: Habib Fetini (AFCF1) Sector Director: Sudhir Shetty (AFTPM) Sector Manager: Antonella Bassani (AFTP4) Task Team Leader: Manuela Francisco (AFTP4) ICR Primary Author: Karen Hendrixson (Consultant) CAPE VERDE IMPLEMENTATION COMPLETION AND RESULTS REPORT (ICRR) CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Program Performance in ISRs H. Restructuring 1. Program Context, Development Objectives and Design ............................................ 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 5 3. Assessment of Outcomes .......................................................................................... 18 4. Assessment of Risk to Development Outcome ......................................................... 22 5. Assessment of Bank and Borrower Performance ..................................................... 23 6. Lessons Learned........................................................................................................ 27 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........... 28 Annex 1 Bank Lending and Implementation Support/Supervision Processes.............. 29 Annex 3. Stakeholder Workshop Report and Results ................................................... 31 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 32 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 33 Annex 6. List of Supporting Documents ...................................................................... 34 MAP # 33383 A. Basic Information POVERTY Country: Cape Verde Program Name: REDUCTION SUPPORT CREDIT IV Program ID: P106502 L/C/TF Number(s): IDA-44340 ICR Date: 06/29/2009 ICR Type: Core ICR REPUBLIC OF CAPE Lending Instrument: DPL Borrower: VERDE Original Total XDR 6.2M Disbursed Amount: XDR 6.2M Commitment: Implementing Agencies: Ministry of Finance and Economic Planning Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/20/2007 Effectiveness: 09/30/2008 Appraisal: 04/17/2008 Restructuring(s): Approval: 07/08/2008 Mid-term Review: Closing: 12/31/2008 12/31/2008 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating: Performance (if any) Potential Problem No Quality at Entry None i Program at any time (QEA): (Yes/No): Problem Program at any Quality of No Satisfactory time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 45 45 Health 15 15 Other social services 10 10 Sub-national government administration 30 30 Theme Code (as % of total Bank financing) Administrative and civil service reform 17 17 Injuries and non-communicable diseases 16 16 Managing for development results 17 17 Public expenditure, financial management and 33 33 procurement Social safety nets 17 17 E. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Obiageli Katryn Ezekwesili Country Director: Habib M. Fetini Madani M. Tall Sector Manager: Antonella Bassani Antonella Bassani Program Team Leader: Manuela Francisco Manuela Francisco ICR Team Leader: Manuela Francisco ICR Primary Author: Karen L. Hendrixson F. Results Framework Analysis Program Development Objectives (from Project Appraisal Document) (i) Promote good governance: through public expenditure management reforms, civil service reform and decentralization, and improvement in the monitoring and evaluation system. ii (ii)Develop human capital, with a focus on health: strengthen capacity to deal with non- communicable diseases, improve management of health human resources, and increase financial sustainability of health services with special attention to contributory schemes. (iii) Improve social protection: decentralize and rationalize service delivery, improve management and planning instruments by implementing the social protection strategy, and support the implementation of the National Action Plan for disabled people. Revised Program Development Objectives (if any, as approved by original approving authority) Not applicable. (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : See Table 1 in the Main report. Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : See Table 1 in the Main report. Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) Indicator 2 : See Table 1 in the Main report. Value (quantitative or Qualitative) Date achieved Comments (incl. % iii achievement) G. Ratings of Program Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 12/16/2008 Satisfactory Satisfactory 9.46 H. Restructuring (if any) Not Applicable iv 1. Program Context, Development Objectives and Design 1.1 Context at Concept Review1 Despite its small size (population around half a million) and remote archipelago nature (10 islands on the west coast of Africa), Cape Verde's solid economic performance (GDP per capita of US$2,705 in 2007) and successful public programs had increased access to education and health care paving the way for Cape Verde's graduation from least developed status in January 2008. Poverty declined from 37 to 27 percent between 2001 and 2007, 2 and the human development index increased from 0.72 in 1990 to 0.75 in 2006. Other positive characteristics included high adult literacy rates (approximately 84 percent in 2006) and the third highest life expectancy at birth (71) in Africa. The country was considered to be on track to meet the MDGs by 2015 owing to Cape Verde's high growth and strong performance on several social indicators.3 This economic and social progress was accompanied by political openness, including the adoption of a multi-party system in 1991, followed by three national elections and two orderly changes in government, and a free press and media. Cape Verde's strong economic performance and good governance attracted sizeable inflows of external finance for investment and development. The country also signed a compact with the US Millenium Challenge Corporation (MCC) in 2005, providing grant financing over five years of around US$110 million. Nonetheless, Cape Verde's overall economic progress masks important geographic variations. Rural areas generally lag behind national averages, and the more isolated rural islands (such as Fogo, Brava, and Santo Antão) have significantly higher rates of poverty. Moreover, rural poverty in these isolated islands is more entrenched owing to high transport costs, limited access to quality education and health care, isolation due to bad roads, and low agricultural productivity. In order to sustain economic growth, alleviate these inequalities and enable the poor to engage in the opportunities made possible by the country's economic growth, the Government of Cape Verde developed an integrated set of poverty interventions. These measures were set forth in Cape Verde's Growth and Poverty Reduction Strategy Paper (GPRSP, subsequently known as GPRSP-I), which was completed in November 2004. To support the GPRSP-I, the Bank developed over 2004-07 a series of three one-tranche Poverty Reduction Support Credits (PRSC- 1-3). This series of operations was implemented in the context of a harmonized and coordinated budgetary support effort with Cape Verde's other key development partners (this harmonized effort is discussed below in Section 2.2 "Major Factors Affecting Implementation"). 1 Preparation of the operation started in Q2 CY07 and, while all prior actions were implemented by end CY07, the operation was appraised in April 2008 and submitted for Board approval in July 2008 due to lack of IDA resources in FY08. 2 These estimates are based on changes over time between 2001 and 2006 in an asset index of well-being, with corrections for changes in inequality over time. 3 MDG education targets have already largely been met, and health indicators are on track, with the exception of immunization rates where more efforts are needed. Meeting the provision of water and sanitation will entail significant investment, but urbanization will facilitate meeting this goal. 1 Strong economic growth and important social gains were made under PRSC-1-3. 4 Annual average GDP growth was an estimated 8 percent from 2005-2007, and unemployment fell to 18.3 percent in 2007, down from 24.4 percent in 2005. Inflation reached 5.4 percent in 2006, but dropped to an estimated 4.4 percent in 2007. Fiscal policy was consistent with macroeconomic sustainability and debt sustainability. Significant policy reforms were enacted, including an overhaul of the non-contributory pension scheme, which enabled an increase in the number of beneficiaries, and a revision of the Local Finance Law, leading to an increase in central Government transfers to the local level. A number of important social gains were also made, including, inter alia, improved service delivery for the poor through improvements in infrastructure (e.g., restoration of houses and building of schools), and expansion of access to basic services such as primary education. 5 Despite these gains, Cape Verde still faced a number of challenges as this prior series of operations drew to a close. The country remained highly dependent on remittances from the Cape Verdean Diaspora (accounting for 9.2 percent of GDP in 2007). Agriculture (accounting for 5.6 percent of GDP in 2007) was severely constrained by the scarcity of water, lack of rainfall, soil type, and problems with inter-island means of reliable transport. Industrial growth was constrained by high factor costs and an absence of economies of scale. The country also remains highly dependent on oil imports (including for water desalination, which accounts for about 75 percent of the water supply). Moreover, despite the country's notable economic and social gains, income inequality had risen and rural-to-urban migration to flee entrenched poverty was putting pressure on basic services. Finally, there was a potential risk of environmental damage if large-scale tourism, industry, and construction were not adequately managed. Furthermore, some of the ongoing reforms in the country, some of which supported by the first series of PRSCs and the PRSC-4, were complex and lengthy (as noted by the authorities in Annex 4). They required consensus across many stakeholders, and were subject to political interference at the times of elections. Moreover, some of the laws that supported the reforms required approval of two-thirds of the seats.6 In addition, lack of institutional capacity in some areas, and high turnover of senior officials reduced the pace of reforms. It was in this context that the PRSC-4 was developed as a stand-alone operation to both contribute to Cape Verde's efforts to reach the MDGs and to support the last year of the GPRSP- I implementation as the GPRSP-II was concluded by end May 2008 and this operation was approved by the Board on July 8, 2008.7 PRSC-4 was a single tranche credit of SDR 6.2 million (US$10 million equivalent), available upon credit effectiveness (August 2008). As such it both bridged two series of operations ­ PRSC-1-3, in support of the GPRSP-I, and the PRSC-5-7, which is being designed to support the GPRSP-II ­ and enabled the policy dialogue between the 4 Discussed in the ICRR for PRSC1-3. 5 Other significant reforms include an expansion in early education; a reduction in the percentage of teachers without pedagogical qualification; the opening of new early childhood development centers; the introduction of new insurance schemes for potentially vulnerable groups; the establishment of entities for the defense of children's rights; and a reduction in regional disparities in the number of doctors. 6 The party in power does not hold two-third of the seats. 7 Waiting for the GPRSP-II to initiate a new series of PRSCs would have led to the interruption of the dialogue with the authorities and other development partners on important reforms and impeded IDA to disburse for the budget of CY08. 2 Government and donors to continue while the Government prepared the GPRSP-II and an infrastructure master plan. 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) Like the PRSC-1-3 preceding it, PRSC-4's policy development objectives (PDOs), dialogue, and results-based framework were closely aligned with three of the GRSP-I's five pillars. These PDOs were: (i) Promote good governance: through public expenditure management reforms, civil service reform and decentralization, and improvement in the monitoring and evaluation system. (ii) Develop human capital, with a focus on health: strengthen capacity to deal with non- communicable diseases, improve management of health human resources, and increase financial sustainability of health services with special attention to contributory schemes. (iii) Improve social protection: decentralize and rationalize service delivery, improve management and planning instruments by implementing the social protection strategy, and support the implementation of the National Action Plan for disabled people. As with the first series of operations, PRSC-4 supported only three of the GPRSP-I's five pillars in accordance with the division of labor with other IDA and donor projects. 8 Due to the transitory nature of the operation, the authorities agreed to narrow the scope of PRSC-4 (compared to the PRSC-1-3) in that it excluded both the education component and the sub- component on justice. These were excluded because the donor dialogue had matured and support was being provided through other instruments. Key indicators were identified for the prior actions and they are detailed in Table 1 below. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification The PDOs and indicators were not revised. 1.4 Original Policy Areas Supported by the Program (as approved) As noted above, the objectives and policy areas supported by this operation corresponded directly to three of the five pillars in the Government's GPRSP-I. The key issues to be addressed in each of these areas were as follow: (i) Promote good governance. The 2003 CFAA, 2003 PER, and 2006 PER and CPAR identified critical weaknesses in the public expenditure management system, most notably large stocks of arrears, significant delays in closing and auditing accounts and poor planning among others. In addition, although public administration in Cape Verde provided quality services, the country's insularity created challenges to responsive 8 The pillars that were not supported by the PRSCs were Pillar 2 (Promote Competitiveness to Improve Economic Growth and Employment Creation) and Pillar 4 (Improve and Develop Infrastructure, Promote Land Use Planning and Protect the Environment). These were supported, however, by Bank and other donor projects and the Bank's 2005 Country Assistance Strategy was aligned with all five pillars. 3 service delivery and citizens perceived public administration as inefficient. Moreover, sustainability was at stake because the overall wage bill represented about 12 percent of GDP and more than 30 percent of public expenditure. Finally, there was continued need for a results-oriented M&E system to ensure data for monitoring progress and evaluating the impact of the poverty reduction strategy. Accordingly, a key policy area addressed by PRSC-4 was public expenditure management reform, including clearing the stock of arrears; increasing funding for priority sectors ; strengthening budget execution and reporting; strengthening external controls; and improving procurement policies and practices. The operation also focused on civil service reform and decentralization. Reform areas included approval of the law on civil service by the Council of Ministers; and advancing state reform and state restructuring. Development of a results-based monitoring and evaluation (M&E) system was also an area of focus with the objective of ensuring timely access to relevant data to monitor progress; evaluate the impact of the poverty reduction strategy; and make any program or other modifications as needed. (ii) Develop and upgrade human capital. While Cape Verde's health service coverage rate was good (72 percent) relative to other African countries and the country was on track to achieve the MDGs, these good indicators masked significant regional disparities that were based on an unsustainable financial framework. Accordingly, the Government's reform agenda focused on health outcomes and access to health services, principally in addressing inequities in health outcomes; strengthening the effectiveness of human resources in the health system; addressing the increase in non-communicable diseases through health prevention and promotion programs; and improving the efficiency of health financing. The operation focused on supporting the approval of a strategy for non- communicable diseases due to a significant increase in these incidence. Cape Verde lacks specialists and diagnostic equipment to diagnose and treat some non-communicable diseases, in particular in remote areas. As result, the country has to rely on medical evacuations, both within and outside the country, with important budgetary implications (evacuations represented 4.8 percent of the health budget in 2007). Furthermore, there is a limit on the number of evacuations to Portugal (300 patients per year) and thus an important objective of the government was to build capacity in dealing with non- communicable diseases. (iii)Improve the effectiveness and sustainability of the social protection system. Although Cape Verde had a relatively well developed social protection system and significant progress was made in reforming social security under PRSC-1-3, additional reforms were still necessary to increase efficiency, equity, and coverage, as well as to address specific gaps. The previous PRSC series focused primarily on the reform of the non-contributory pension system; as that was successfully implemented, PRSC-4 focused on the approval of a National Action Plan for Disabled People and the establishment of a Steering Committee to monitor its implementation. 4 1.5 Revised Policy Areas (if applicable) Not applicable. 1.6 Other Significant Changes There were no significant changes in design, scope and scale, implementation arrangements, or funding. 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance (supported by a table derived from a policy matrix) The matrix in Table 1 below lists the prior actions for PRSC-4 and their implementation status. These actions represented a sub-set of the Government's program of reforms as detailed in the harmonized joint matrix used by the Bank and Cape Verde's other budget support donors and the Government's Letter of Development Policy (LDP).9 They were selected because they were (i) deemed essential to the successful implementation of the Government's reform program; (ii) the Bank had a comparative advantage in supporting the Government in these areas and/or support was not being provided by other donors;10 and (iii) they excluded areas where the dialogue with the Government had matured, progress was satisfactory, or Bank support was being provided through other instruments (e.g., justice). As seen in Table 1 below, all of the nine prior actions were satisfactorily completed before program approval. In addition, most of PRSC-4's outcomes were met satisfactorily; the exceptions were the benchmarks regarding (i) the share of the 2008 budget devoted to education; and (ii) the number of procurement units that were made operational. (The specific PRSC-4 outcomes shown in the Table are discussed below in the context of the progress achieved under each policy area.) In addition to satisfactorily meeting most of the PRSC-4 outcomes, reform performance overall was also largely satisfactory in each of the key policy areas, although there were continued delays in implementing the Budget Framework Law and progress in the social protection area was limited. The most important policy results include the following: Macroeconomic Performance: Real GDP growth was an estimated 7.8 percent in 2007, primarily as a result of strong public and private investment directed towards infrastructure development and tourism. Although recent global economic events have led to a slowdown in the volume of FDI, tourism, and remittances,11 GDP growth in 2008 9 They exclude, for example, actions related to the environment. While the joint matrix includes numerous environmental policy actions and benchmarks, these were not used as prior actions because they were being addressed through the efforts of other budget support partners. 10 Austrian, Dutch and Spanish cooperations focus their dialogue on environmental issues. EU covers education and all other sectors but environment. World Bank and Africa Development Bank cover all sectors but environment and education. 11 Preliminary estimates indicate that tourism receipts declined by about 6 percent in 2008, compared to 2007, and FDI declined by 53 percent. Remittances fell by 17 percent in 2008 compared to the previous year. 5 is estimated to be 5.9 percent, down slightly from the previously projected 6.5 percent. Inflation ­ which is driven by the cost of imports, primarily food and fuel ­ edged upward, however, reaching 6.8 percent in 2008, compared to 4.8 percent in 2006 (and 0.4 percent in 2005). Government fiscal policy continued to be consistent with macroeconomic stability and debt sustainability, and higher than expected tax collection and continued expenditure control brought the 2008 fiscal deficit (including grants) down to 1.2 percent of GDP (versus a high of 5.0 percent of GDP in 2006). In addition, the domestic debt-to-GDP ratio was reduced from 33 percent in 2005 to 15.8 percent by end- 2008. External debt remained low at 41.5 percent of GDP. While the slowing in transfers and tourism flows led to an estimated widening of the external current account deficit in 2008 to 18.1 percent of GDP, no financing gap occurred and gross international reserves at end-2008 were estimated to be equivalent to 4.0 months of prospective imports (compared to 2.8 months at the end of 2005). The IMF's fifth PSI review was successfully completed in December 2008, and Cape Verde met all quantitative assessment criteria for end-December 2007 -- including exceeding some by wide margins -- and steady progress was made in implementing the structural assessment criteria. Since the closing of the operation, macroeconomic performance continued to be sound. Nonetheless, due to the high degree of integration of the Cape Verdean economy with the rest of the world, especially with the Euro area, growth is expected to decelerate as a result of a decline in external inflows. While remittances flows continue performing well (increase of 3 percent in 2008 and increase of 10 percent in the first quarter of 2009 compared to the same period in 2008), tourism and FDI flows have declined, especially FDI. Whereas tourism revenues increased 8 percent in 2008 they declined by approximately 30 percent in the first quarter of 2009 compared to the first quarter in 2008. FDI increased by approximately 4 percent in 2008 but decreased sharply in the first quarter of 2009 ­ by 65 percent compared to the first quarter in 2008. Reflecting the decline in tourism and FDI flows, international reserves are expected to decline from 4 months of prospective imports by end 2008 to 3.9 by end 2009. The Authorities plan to expand significantly public investment in infrastructure which will partially offset the decline in private consumption and investment and exports. As a result, government projects real GDP growth to stand between 4.7 and 5.7 percent.12 Due to the increase in the PIP envelope and lower-than-expected revenues the fiscal deficit is projected to reach 8.8 percent of the GDP, whereas the 2009 budget law projected a deficit of 5.5 percent. 12 IMF projects a rate of 3.5 percent. 6 Table 1: PRSC-4 Prior Actions, Outcomes, and Indicators Base Year PRSC-4 (2006, unless 2008 Achieved Prior Action Outcome Indicator otherwise Benchmarks indicated) Pillar I: Promote Good Governance, Reinforce Effectiveness, and Guarantee Equity Public Finance Management Met. 2008 Education and Share of the Education ­ 24% Education ­ Met draft Budget Health sectors budget as % of Health ­ 6% 29%13 Health ­ 8% Law takes into have adequate GDP Social Protection Health ­ 8% Social Protection ­ 1% account, inter funding (within (education, ­ 1% Social alia, adequate the limitations health, and Protection ­ Not Met funding for the of the budget social 1% Education ­ 22.7% (Based on the priority sectors constraint) protection) third quarter accounts. Final 2008 (education and accounts are not available yet) health) Nonetheless, education expenditures increased in absolute terms: 2006: 5459 million CVE 2007: 5688 million CVE 2008: 5800 million CVE 2009 (budget): 6540 million CVE Met. Central Outstanding 64 16 Met: 16 Implementation government stock of of the plan for reduces the arrears (%) arrears stock of debt clearance towards the continued as private sector, evidenced by municipalities the reduction of and Institutes the outstanding stock to 40 percent Met. Audited Improved Number of 5 2 Met: 2 State General impact of years before Audited 2007 accounts are being Accounts for external presentation of finalized and are expected to be 2001-2005 controls the audited sent to the national Assembly end- submitted to accounts to June. Parliament the Parliament There was also notable progress with the municipal accounts. The auditing of the 2001-2005 accounts of the Municipality of Boavista were completed, and the following are under way (with financing secured): Sao Vicente (2001-2006) Sao Nicolau (2001-2006) Sao Filipe (2001-2006) 13 Note that the education benchmark for 2008 was set using preliminary data and assumed a 2 percent increase over the 27 percent achieved in 2007. This preliminary data was widely inaccurate, however, and subsequent data showed that the education sector's actual budget share in 2007 was only 24 percent -- producing a benchmark that was unrealistically high and would require a 5 percent increase in expenditures to be achieved. 7 Base Year PRSC-4 (2006, unless 2008 Achieved Prior Action Outcome Indicator otherwise Benchmarks indicated) Met. Decree Improve Number of 0 6 Not Met: 0 creating the procurement procurement Procurement systems units (UGAs) Secondary legislation on the Regulatory through in place and Procurement Code has been Agency is enforcement of operational published. Four UGAS will be published laws, initiated once ARAP management regulations, is nominated. It is expected that and processes the four UGAs will be fully operational by the end of the year. The UGAs will be in the Ministries of Health, Education, Infrastructure and Finance (the UGA in the Ministry of Finance will handle procurement for the sectors without UGAs). In line with the current State Reform (that aims at rationalizing the State) the Authorities decided to implement four UGAs, instead of six. Civil Service and Decentralization Met. Minister Enhance Number of 0 1 Met: 1 of State reform effectiveness Institutes fully approves the and efficiency integrated The National Institute of diagnostic in the State with the Administration and Management report on State Administration University of (INAG) has been incorporated into restructuring Cape Verde the University of Cape Verde. The process has been launched for three other institutes (INIDA, INDP and INERF), and it is expected that they will be integrated with the University of Cape Verde by end-2011. Met. Council Professional Staff turnover 36%14 Reduced by Met of Ministers and merit- in senior 5% approves the based civil positions 29% of senior staff in 2008 draft Law on service created (non-mobility) Civil Service Monitoring and Evaluation Met. Extend Improved Number of STAD -1 STAD -4 Met NOSI Database capacity to staff with Sectors ­ 0 Sectors ­12 to STAD as monitor the training to INE- 6 INE- 20 54 sectoral technicians were evidenced by GPRSP monitor and trained (including training in (i) completion evaluate the MTEF and construction of of the GPRSP information systems). Also 3 installation; (ii) implemen- persons from STAD. training of the tation team; (iii) Almost all staff from INE have database been in constant training. contains project Staff from NOSI (1) and MCA (2) information to have also received training. allow budget performance evaluation 14 Not available at the time of the Board presentation. 8 Base Year PRSC-4 (2006, unless 2008 Achieved Prior Action Outcome Indicator otherwise Benchmarks indicated) Pillar III: Develop and Upgrade Human Capital Health Met. Strategy Measures to Number of 0 5 Met: 5 for non- control NCD interventions communicable have been on NCD Five intervention strategies were diseases implemented implemented during 2008, as approved by planned. Council of Ministers Pillar V: Improve the Effectiveness and Sustainability of the Social Protection System Social Protection Met. Action Children with Enrollment 2000: +10% Not ascertainable Plan for special needs rate of 2,044 Disabled receive better handicapped children15 The authorities have only recently People is education children started to monitor this indicator approved by services (under 15 and have estimated that public Council of years old) institutes have 1,508 children with Ministers and special needs. The 2000 baseline steering included both public and private committee has institutes and population of all been ages, and information of established enrollment in private institutes is currently not available. Under the policy area of "promote good governance," the following was achieved: Public finance management: As with the first PRSC series, there continued to be delays in adopting by the Council of Ministers the Budget Planning Law as there was little progress in adopting the draft Budget Framework Law and the Organic Law on the Court of Auditors (TdC) by the Parliament. This legislation is critical to establish the legal and institutional framework for the ongoing public finance management reform. Although the Budget Framework Law was approved by the Council of Ministers in 2006 (approval was a prior action for budget support in 2006), and was discussed in the Parliament in late 2007, there was a lack of agreement on the implementation of the timeframe. Likewise, while the legal framework to strengthen the mandate of the TdC and improve the transparency and accountability of public resources has been approved in general16, Parliament has not yet adopted the law and the concomitant implementation decrees. Internal controls also remained weak owing to the continued shortage of human resources at the General Inspectorate for Finances (IGF). 15 This figure does not cover children only as uncorrectly stated in the matrix of the Program Document (that was based on information available to the government and Bank at that time). It includes disabled population of all ages enrolled in school. 16 The law has been approved in the generality (generalidade), meaning the law as a whole, but has not been approved in the specificity (especialidade), meaning article by article. 9 There was also continued improvement in external controls, a focus of the PRSC-4, as the amount of time needed before the audited State General Accounts could be submitted to Parliament was reduced to two years; similarly, there was also notable progress in auditing several municipal-level accounts (see Table 1). Likewise, progress in arrears clearance -- which was also a key area of focus of PRSC-1-3 -- continued under PRSC-4, with the reduction of the outstanding stock of debt to 40 percent. Under the 2008 budget, a provision of CVE 1,289 million reduced the outstanding stock to 16 percent, meeting the PRSC-4 benchmark, with a complete clearance anticipated for end-2009. Elimination of these arrears is a key element of the public finance management reforms. Budget execution, has been strengthened through its deconcentration to sector ministries, which enabled line ministries and some institutions to commit and liquidate. In the beginning, following the deconcentration of the liquidation, ELECTRA faced some difficulties in collecting the payment of the bills, however, this was resolved shortly after. Progress in the area of procurement, advanced, although slowly (as it was under PRSC- 1-3). The national procurement law (a PRSC-3 prior action) passed by Parliament in July 2007 came into force in January 2008, creating the basis for transparent procurement transactions to be carried out by a designated procurement unit. A number of steps were taken towards the implementation of the law, including approval by the Council of Ministers of the text for the creation of the regulatory authority (the Regulation Entity for Public Acquisitions, ARAP), and the publication in December 2008 of the accompanying implementing regulations. The effective and full implementation of the Procurement Code will not be possible, however, until the Organic Law for the TdC is adopted by the Parliament. Moreover, ARAP is not yet operational, as the nomination of the management team has been delayed due to lack of qualified human resources. The PRSC-4 benchmark of establishing six operational Units for Procurement Management (UGAs) was not met but four UGAs will established once the management of ARAP is nominated. UGAs are expected to be fully operational by year-end. These entities will be established in the Ministries of Health, Education, Infrastructure, and Finance. Civil service reform and decentralization: The key areas of civil service reform under PRSC-4 were institutional restructuring and revising the law on civil service. In the area of institutional restructuring, the key recommendations in the report of the Commission for the Rationalization of the State (CRE) were initiated, including the redefinition and rationalization of the organizational structure of line ministries. In order to enable more coordinated expenditure planning and execution, the Government also created a new mandatory internal management structure for each ministry ­ the Office of Management and Budget (DGPOG) -- which harmonizes the central structures of ministries by integrating the functions of the Directorates for Administration and Finance and the Directorates for Studies and Planning. Other institutional restructuring efforts include the separation of research from policy implementation functions by transferring research institutions from line ministries to the University of Cape Verde. To this end, the National Institute of Administration and Management (Instituto Nacional de Administração e Gestão, INAG) has been incorporated into the University, to be followed by the transfer of three other entities by end-2011. In addition, the Government's inspection function is being improved through the establishment of a new inspection unit. 10 In the area of civil service reform, the Council of Ministers adopted a revised Basic Law on Civil Service (Lei de Base da Função Pública) in January 2008. The Law included a number of changes that would create a more professional and merit-based civil service. While adoption of the Basic Law met the trigger requirements, submission to Parliament has been delayed to ensure that the accompanying secondary legislation and comprehensive fiscal impact assessment of wage reform implementation is first completed. Staff turnover in senior positions has also been reduced from 36 to 29 percent, exceeding the PRSC-4 benchmark. Finally, in the area of decentralization (an area that is part of the broader dialogue with the authorities but was not covered by this operation in particular), the Framework Law on Decentralization ­ an issue still outstanding from the previous PRSC series -- was revised and resubmitted to Parliament to reflect the newly reached consensus that decentralization would not include political regionalization but would strengthen the regions as planning units and inter-municipal cooperation. Nonetheless, municipal elections and the preparation of the finance law have to date prevented the inclusion of this law on the National Assembly's agenda. Strengthening municipal management capacity and communication, another element of decentralization, continued through the implementation of a "Municipal Information System" in twelve municipalities in 2008. Monitoring and Evaluation: In order to avoid duplication, program performance in the area of M&E is reviewed below in Section 2.3 Monitoring and Evaluation Design, Implementation, and Utilization. Under the policy area of "develop and upgrade human capital" the following outcomes were achieved: Education: Owing to the significant progress made in the education sector under PRSC- 1-3, education was no longer an explicit component under PRSC-4. Nonetheless, it remained an important element of the Government's poverty reduction program and PRSC-4 continued to monitor outcomes in this sector. As noted above, education spending as a share of the 2008 budget was 23 percent, 17 apparently below the benchmark goal of 29 percent. In fact, however, the benchmark itself was set inappropriately high, using inaccurate preliminary data. It had been set by assuming a two percent increase in expenditures over the 27 percent allocated in 2007; subsequent data, however, showed that actual expenditures were 24 percent. While preliminary data (through the third quarter accounts) indicate that education expenditures did not increase in their budget share by 2 percent, the actual shortfall is not as significant as seemingly indicated by the benchmark. Moreover, the outcomes related to education sector financing under PRSC-4 were positive by a number of other measurements. Education expenditures actually continued to rise in real terms, growing from 5,688 million CVE in 2007 to 5,800 million CVE in 2008, with 6,540 million CVE budgeted for 2009. Other key outcomes include (i) decline 17 Based on third quarter accounts. Final 2008 accounts are not yet available. 11 in the failure rate in secondary education, from 8.4 percent in 2006/7 to 8.2 percent in 2007/8; (ii) increase in the number of primary school teachers with pedagogical training (from 73 percent in 2004 to 84.6 percent in 2007/8) and; improvement in the access of students to secondary school thanks to the effective management of supporting programs (the number of students receiving support rose from 14,976 in 2006/7 to 15,900 in 2007/8. Health financing: Substantial progress was made in the area of health financing and strengthening the financial sustainability of the health services. Health sector expenditures accounted for 8 percent of the 2008 budget, meeting the PRSC-4 benchmark. A Public Expenditures Tracking Survey was also prepared in 2008 enabling the in-depth identification of the flow of funds from the central level toward every health unit.18 In the 2008 budget, each regional health directorate was able to develop its own budget, which included the resources generated by that directorate. As a result, budgeting management and expenditures tracking were significantly improved. In addition, updated health tariffs and recovery cost fees were implemented in every facility and are producing positive outcomes. Health resources: The availability of health personnel at the decentralized level continued to improve under PRSC-4: for example, 4 specialists, 17 general practitioners, 4 nurses, and 27 technicians were deployed in the second quarter of 2008. The Ministry of Health still needs, however, to produce a multi-annual action plan that links planning with output and appropriate personnel deployment, and addresses the issues of motivation, incentives, and performance management. Priority health programs: Additional progress was made in the area of priority health programs, with routine immunization coverage rising to 80.3 percent in 2007, up from 73.6 percent in 2006.19 There were also a number of successful interventions in the area of maternal health, including the distribution of emergency obstetrical care kits and the introduction of obstetrical registers, contributing to a stable maternal mortality rate of 42/100,000 live births. The Integrated Management of Child Illnesses pilot program was efficiently introduced and the end of the pilot phase in mid-2008 laid the groundwork for the national scale-up of the program. Less positively, a new national immunization plan launched in 2007 was stalled owing to insufficient financing by WHO for new antigens. Capacity to deal with non-communicable diseases (NCDs): Cape Verde's capacity to handle NCDs was strengthened under PRSC-4. The Council of Ministers approved a new national strategy on NCD in December 2007, and five intervention strategies were implemented in 2008. These were: (i) approval of protocols to prevent chronic diseases (diabetes, alcoholism and hypertension); (ii) raise awareness through media (TV and radio) on means to prevent those diseases; (iii) preparation of a plan for mental health; (iv) training nurses on cancer prevention; and (v) signature of a protocol for hemodialysis treatment. In addition, a national field survey is being finalized and its results will enable the development of new clinical protocols of care for high blood 18 The survey was financed by the PRSP Trust Fund. 19 This improvement corrected previous data and was realized through new population projections provided by the National Statistics Institute (INE). 12 pressure, diabetes, and rheumatic fever, as well as the basis for training personnel to use these protocols. There was slower progress, however, in the policy area of "improve the effectiveness and sustainability of the social protection system," as follows: Decentralization: The replacement of the existing operational and legal framework for the decentralization of social protection services with a new decree was not completed because it was dependent on Parliament's adoption of the Framework Law on Decentralization, which has still not occurred, first owing to the political debate surrounding it (the Law was approved by the Council of Ministers in November 2007, and parliamentary adoption was expected in 2008) and then because of the Municipal elections.20 A TOR was developed, however, for a legal consultant to prepare a draft Decree that is consistent with the decentralization law that was sent to Parliament. In addition, the annual update of the Social Map (Carta Social) ­ which was a significant achievement of the prior set of operations -- was delayed until 2009, owing to a lack of funds. Disability: Under the PRSC-4, the Council of Ministers approved a National Action Plan for Disabled People in November 2007 and a steering committee to guide implementation of the plan was established. Although the process of hiring a Coordinator for the National Action Plan was not completed, the outcome of improving the education of children with special needs is not ascertainable, with more than 1,500 students enrolled in public institutions in 2008 (data for private institutions are not available). In addition, specialized teacher training was established in several municipalities, including programs in Braille and sign language, and several dedicated teaching rooms were established for children with special needs such as auditory deficiencies. 2.2 Major Factors Affecting Implementation: PRSC-4 continued to be characterized by the same strengths that informed the first series of operations. These were: Government ownership; sound background analysis; strong and focused program design; and highly effective donor coordination. These are each discussed in turn. Government Ownership: The design of PRSC-4 was embedded in a three-year matrix 21 developed by the authorities and budget support donors and was prepared following extensive consultation with various stakeholders under the Government's leadership. PRSC-4 supported reform measures that were integral to the GPRSP-I, which itself was built on a well-articulated set of strategies and priorities that addressed Cape Verde's main development challenges.22 The 20 The adoption of the Framework Law on Decentralization was originally anticipated under the first PRSC series, but was delayed by the political debate as to whether or not a regional administrative and/or local Government level should be created. 21 The joint policy matrix between the budget support partners was developed in the context of PRSC-2. 22 These inputs included the Major Planning Options (GOP), the National Development Plan (NDP), and the Interim Poverty Reduction Strategy Paper (2002). 13 GPRSP-I received a positive assessment through a joint IMF/IDA Staff Advisory Note in April 2005. Soundness of Background Analysis: PRSC-4 was informed by the conclusions and recommendations of a wide variety of analytical work. Much of this work provided the analytical basis for the design and focus of the reform program supported by the first PRSC series, 23 and was supplemented by additional subsequent analysis; for example, the public expenditures agenda was designed based on the high priority actions identified in both the 2003 and 2006 PER and CFAA action plans. Similarly, the integrated CFAA/CPAR in FY03, PER (FY06) and PER (FY08) provided the underpinning for public financial management reforms. Furthermore, the ICRR for PRSC1-3 provided useful information on lessons learnt. Strength and Focus of Program Design: PRSC-4 supported a small and strategic subset of the GPRSP policy and reform agenda; was built closely on the first PRSC series; and focused on the reforms proposed under the GPRSP-I that were still not completed or which emerged as priorities for the Government since undertaking the implementation of its poverty reduction program. As noted, PRSC-4 was embedded in the three-year Joint Matrix covering the 2007-09 period, thus ensuring its cohesiveness with the operations that preceded it. The design was also prepared following extensive consultation with various stakeholders under the Government's leadership. This consultative and harmonized approach both minimized the burden on the Government's limited capacity, and ensured Government ownership of the supported reforms. Finally, the PRSC-4 explicitly incorporated the lessons learned from the three previous operations.24 This operation was consistent with the Bank's FY05-08 assistance strategy for Cape Verde as outlined in the 2005 Country Assistance Strategy (CAS).25 The CAS was aligned with all five pillars of the GPRSP-I, and the PRSC-4 (like PRSC-1-3) supported three of those pillars. The use of the PRSC instrument enabled the Bank to consolidate its lending operations and engage in policy and technical dialogue in these three areas, 26 and was complemented by Bank support through ongoing investment operations in the areas of energy, transport, private sector development, and HIV/AIDS. Finally, this operation contributed to the outcomes of the CAS, notably: (i) improved transparency of public expenditure and empowerment of oversight institutions; (ii) clarified framework for municipalities; (iii) improved ability to manage public 23 The analytical work supporting the first PRSC series include a Public Expenditure Review (PER, FY04); a Country Financial Accountability Assessment (CFAA, FY03); a Country Procurement Assessment Report (CPAR, FY04); a Development Policy Review (DPR, FY05); a Poverty Assessment; a Study on the Role of the State; and a study on the likelihood of achieving the MDG goals, among others. Notably, the assessments underlying the reform program supported by the PRSCs were also used by the other budget support donors as the analytical basis for their assistance, thereby ensuring a complementarity in approach among the budget support partners. 24 These were: (i) enhance Government ownership and donor coordination through the use of budget support; (ii) better link sectoral and cross-cutting issues; and (iii) find ways to provide technical assistance at short notice for capacity building. 25 The first PRSC and the CAS were presented to the Board simultaneously, indicating their close alignment. 26 The CAS identified the PRSCs as a strategic lending instrument to (i) provide predictable resource flows, particularly important given Cape Verde's reliance on donor financing; (ii) strengthen public administration and public expenditure management systems; and (iii) help harmonize donors and reduce the potential distortions and transaction costs of external assistance. 14 sector reform across institutions; and (iv) improved sustainability, access, and quality of health services. Program design included a policy matrix in which the result indicators were closely linked to the supported policy actions, and the indicators themselves were drawn directly from the GPRSP and the CFAA/CPAR action plan, reflecting the close alignment between the Bank's operations and the Government's priorities. The joint matrix used by the budget support partners was governed by the principles of simplification (fewer triggers and fewer activities) and harmonization (a common matrix used by all the partner donors). Accordingly, the joint matrix was used by the budget support partners as the basis for dialogue and disbursement in their respective operations (discussed further below). The joint matrix contained three overarching general assessment indicators (requiring positive assessments in the macroeconomic, poverty reduction, and public finance spheres), 22 medium-term objectives and 26 indicators, reflecting the fact that it spanned many sectors. The PRSC-4 operation is a subset of the Joint Matrix, thus the number of prior actions was limited to nine (see Table 1 above). Effectiveness of donor coordination: Effective donor coordination continued to be a key hallmark of the PRSC-4. The strong coordination between the Bank, the Netherlands, and the EU that began with the initial preparation of PRSC-127 was formalized in the context of PRSC-2 with the signing of a Memorandum of Understanding (MOU) agreement governing the improved harmonization among the Budget Support Group (BSG) donors and the Government.28 The BSG carried out joint appraisal and supervisory missions during PRSC-2 and PRSC-3; adopted a joint policy matrix (as discussed above); conducted bi-annual review missions; and jointly prepared and discussed Aide-Memoires following each mission. Beginning with PRSC-3, the BSG was expanded to six donors.29 This close cooperation and supervision continued and harmonization was further strengthened during PRSC-4. The BSG was again expanded when the Portuguese Cooperation joined, first as an observer in December 2007 and then as a formal member in 2008. PRSC-4 was prepared in close coordination with the other budget support partners, following the MOU signed with the Government. Finally, PRSC-4 was prepared in close coordination with the IMF and IMF's PSI reviews. To ensure consistent dialogue and advice to the Cape Verdean authorities, the Bank's and Fund's work was also closely coordinated in the areas of operational overlap (e.g., addressing fiscal risk). 27 At that time, the Netherlands and the EU were also preparing budget support operations and these two donors and the Bank all used the same analytical basis (including the findings of the PERs, the CFAA, and the CPAR) for harmonizing their policies and operations. Additionally, the Bank and the Netherlands ­ in consultation with the EU ­ carried out joint pre-appraisal, technical, and appraisal missions during the initial preparation of the PRSC series to ensure harmonization of budget support, particularly in the areas of overlapping fiduciary requirements. 28 The "Partnership Framework between Budget Support Partners and the Government of Cape Verde for the Provision of Budget Support" agreement was signed in April 2005. Under this framework, the parties agreed to conduct joint reviews; to harmonize indicators and prior actions; and to synchronize budgetary assistance with Government budget cycles in order to reduce the Government's transaction costs associated with this assistance. 29 When the African Development Bank (AfDB), Austria, and Spain joined the group (first informally, by participating in the discussions, and then formally, through signing the MOU). The first joint mission of all six budgetary partners took place in December 2006. 15 Relevance of Risks Identified and Mitigation: The risks were correctly identified for this operation. For PRSC-4, three possible risks were identified and appropriate mitigating measures were implemented. These were: Capacity weaknesses could slow reform progress: The limited number of technical staff and the high turnover of senior staff in several key ministries were recognized as a potential risk; indeed, these capacity weaknesses had already affected implementation progress under PRSC-1-3. Accordingly, a number of offsetting measures were incorporated into PRSC-4. In the short term, this risk was mitigated by: (i) technical advice from the PRSC team; (ii) the provision of US$3.5 million by the budget support partners to finance capacity building and technical support; and (iii) provision of a technical assistance Trust Fund (TF) by the Bank targeted at key shortcomings.30 In the medium- to long-term, this risk was to be offset by the PRSC-4 component on civil service reform; accordingly, PRSC-4 included a prior action on "Council of Ministers approves the draft Law on Civil Service," with the expected outcome of creating a professional and merit-based civil service. Decline in external concessional support could occur at a faster pace than expected: This decline was anticipated to result from Cape Verde's graduation to middle-income status in January 2008. To offset this reduction in support, the Bank took a lead role in helping to harmonize and secure resources to guard against a slowdown in reforms or fiscal slippages resulting from the domestic financing of these reforms. In any case, this risk did not transpire as concessional assistance did not fall in 2008. Fiscal risk from the accumulation of contingent liabilities: This accumulation could emerge if public or semi-private companies were not run efficiently. This risk was chiefly mitigated through PRSC-supported dialogue on fiscal risk, although a number of previous measures undertaken in PRSC-1-3 also to some extent addressed this risk.31 In addition, the fiscal risks emerging from the energy sector were at the center of the IMF's PSI program with Cape Verde. Although ELECTRA did incur some tariff deficits from the non-payment of bills, Cape Verde's 2008 fiscal performance was in line with the Government program supported under the PSI arrangement with the IMF. Risks stemming from the global crisis: The impact of global crisis in the Cape Verdean economy is expected to be moderate thanks to sound macroeconomic policies which have helped to build fiscal space and international reserves. The country will face, however, lower economic growth, due in part to a decline in external demand and foreign direct investment. Mitigation measures 30 The Bank established two PRSP Trust Funds under PRSC-1-4; each totaled nearly US$500,000. Activities financed by the TFs included: (i) assisting the Government in designing and implementing appropriate M&E tools; (ii) capacity building for strategic planning in education testing, social protection, and health financing; and (iii) improving governance through a more strategic use of human resources in civil service and targeted assistance to the Court of Auditors. 31 Control of contingent liabilities was a key focus of the PFM reforms undertaken in the first PRSC series. Other mitigating measures included an inventory of existing contingent liabilities; a plan for settlement of arrears and prevention of contingent liabilities; and revision of the automatic pricing mechanism for petroleum products. 16 pursued by the Government are continued fiscal discipline, a cautious monetary policy and close monitoring of external financial developments. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: M&E Design: As originally designed, M&E under the GPRSP-I was a national integrated approach that was to be built on existing systems and information technology platforms that were well advanced. This intended approach was overly ambitious, however, and M&E implementation was not adequate to its design for much of the PRSC-1-3 period. 32 During preparation of the PRSC-4, work proceeded on M&E design in the form of a final report towards setting up an institutional framework for a M&E system for the GPRSP-II. The findings of this report will also be used by the General Directorate of Planning (DGP) and the Technical Secretariat for Development Assistance (STAD) to develop a needs assessment which will serve as the basis for designing a M&E capacity building program. M&E Implementation: While M&E implementation was weak under the previous series of operations, it began to strengthen near the end of the series, and this improvement continued under PRSC-4. Despite some delays, the results of the QUIBB 2007 survey were made available in 2008, thereby providing data which will be important to the elaboration of the first GPRSP-II progress report. Building on the successful implementation of the Social Map (Carta Social)33 under PRSC-3, a consultancy for establishing a comprehensive M&E system for the Social Map was also launched. Moreover, M&E has become a top Government priority: it is strongly reflected throughout the GPRSP-II, and the M&E pilot project outlined in the program contains a wide range of output and input indicators that can be monitored as program implementation proceeds.34 M&E staffing and capacity building also improved in a number of ways. Staffing at the STAD ­ the institution responsible for producing progress reports and evaluating the global and sectoral impact of poverty reduction efforts -- improved through the hiring of an economist, as well as through ongoing collaboration with the National Statistical Institute (INE) for the hiring of a new statistician. As detailed in Table 1, M&E training met the benchmarks for 2008, including the provision of training to 54 sectoral technicians as well INE staff, STAD and NOSI.35 The DGP, however, continued to suffer from both human resource constraints and limited M&E training (only two staff members have been exposed to some basic M&E training). 32 As noted in the ICRR on PRSC-1-3: PRSC "program design...overestimated the adequacy of M&E capabilities. Beginning with the CAS, Cape Verde's capability, willingness, and sense of urgency to develop an effective and integrated M&E system was overestimated, and the inadequacy of Government efforts to establish the M&E system quickly became apparent by PRSC-2." 33 The Carta Social is a geo-referenced database of all social infrastructure and services that fall under the mandate of the Ministry of Labor, Family and Solidarity (e.g., preschools and day-care centers, hospices, centers for the handicapped). Creation of the Carta Social was a condition of PRSC-1, as it was needed for the efficient use of available facilities and rational planning of investments. 34 The range of indicators is so extensive, in fact, that the Joint IDA-IMF Staff Advisory Note on the GPRSP-II notes that it "could benefit from some streamlining." 35 NOSI is the Operational Nucleus for Information Systems (the national agency for the coordination of governmental IT operations). 17 M&E Utilization: Some areas of M&E utilization remained weak under PRSC-4 and the M&E framework needs further improvement before effective utilization can occur. As noted in the 2008 Joint IDA-IMF Staff Advisory Note, the GPRSP-II lacks links between the sectoral strategies and the clear and measurable indicators needed to monitor and evaluate the program's implementation. In addition, the indicators for the GPRSP-II, the Transformation Agenda, and the General Joint Matrix for Budget Support need to be better aligned, before effective M&E utilization can occur. Institutional collaboration and coordination also needs to be strengthened, both between agencies and within the Ministry of Finance. Utilization in the education sector is also weak; statistical annuaries for 2006 and 2007 were not available owing to the weaknesses in the M&E system and the lack of a systematic approach for following planned actions and GPRSP-I indicators. 2.4 Expected Next Phase/Follow-up Operation (if any): PRSC-4 will be followed by a second three-year series of PRSCs designed in support of the Government's GPRSP-II. The first of this second series (PRSC-5) is currently under preparation and is scheduled for Board presentation in the first quarter of FY10. This proposed second series is anticipated to cover 2009-2011, and will focus on two policy areas: good governance (including fiscal policy, PFM, procurement, M&E, and statistics and state modernization), and competitiveness and growth (including human capital, trade, tourism, financial services, tax, land management, and energy issues). 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) As with the previous series of operations, the objectives, design, and implementation of this operation were highly relevant to Cape Verde's development priorities as expressed in the GPRSP-I. The support provided through this operation in particular, and the PRSCs in general, was appropriate to country circumstances in that it was consistent with Cape Verde's level of institutional, economic, and political development;36 was warranted by the country's strong and sustained performance in recent years; and was consistent with recommendations of core diagnostic work (PER, CFAA, CPAR). Finally, the PRSC-4 was closely aligned with the GPRSP-I objectives and supported the implementation of the final year of that program; in addition, the reforms supported by this operation and the preceding series laid the framework for the country's next stage of poverty reduction through the GPRSP-II. As noted, the PRSC-4 was also highly consistent with the Bank's assistance strategy for Cape Verde as outlined in the CAS. A single stand-alone operation was appropriate as a bridge between the PRSC-1-3 and the subsequent PRSC-5-8, as it supported the Government's final 36 The provision of budget support through a harmonized framework was particularly appropriate to Cape Verde, given the country's small size, because such a framework reduced the transaction costs inherent to dealing with multiple donors. It was also appropriate because Cape Verde's small open economy is vulnerable to external shocks, and there was a risk that foreign assistance inflows could cause distortions in public administration if they were not properly channeled through Government systems (or at least harmonized with them). 18 year of implementation of the GPRSP-I, while enabling the new series of operations to be based on the forthcoming GPRSP-II and the Country Partnership Strategy for FY09-12 (presented to the Board in April 2009). 3.2 Achievement of Program Development Objectives (including brief discussion of causal linkages between policy actions supported by operations and outcomes) PRSC-4 had the following three PDOs : (i) Promote good governance: through public expenditure management reforms, civil service reform and decentralization, and improvement in the M&E system. (ii) Develop human capital with a focus on health: strengthen capacity to deal with non- communicable diseases, improve management of health human resources, and increase financial sustainability of health services with special attention to contributory schemes. (iii) Improve social protection: decentralize and rationalize service delivery; improve management and planning instruments by implementing the social protection strategy; and support the implementation of the National Action Plan for disabled people. As discussed in detail in Section 2.1 (Program Performance) above, PRSC-4 made commendable progress in meeting these objectives, with the notable exception of procurement, as the effective and full implementation of the Procurement Code will not be possible until the Organic Law for the TdC is adopted by Parliament. Linkage between the Bank's interventions and outcomes: As budgetary assistance, the PRSC-4 funds did not earmark specific activities to be financed, so it is not possible to establish a direct causal linkage between the Bank's assistance and specific outcomes. Moreover, it is not possible to disaggregate the impact of this operation from that of other Bank projects, other donor efforts, and Government initiatives.37 However, the operation did enable the Government to finance activities that were directly supportive of poverty reduction, such as improving the availability of health personnel at a decentralized level. Perhaps more importantly, the Bank continued to play a key and catalytic role in coordinating the BSG. This operation enabled a continuation of the ongoing policy dialogue between the BSG and the Government that helped to ensure that the operation's objectives were met and that continued progress on poverty reduction can take place under the GPRSP-II. 37 For example, the activities supported by PRSC-4 also complemented other interventions to reduce rural poverty, such as the US-financed MCC ($110 million) and the Bank-financed transport project, both of which finance rural infrastructure. 19 3.3 Justification of Overall Outcome Rating Rating: Satisfactory This operation is rated satisfactory. The credit's objectives, design, implementation, and outcomes were highly relevant to Cape Verde's development priorities, and country circumstances and were highly consistent with the Bank's strategy and goals as outlined in the CAS. These outcomes are also highly relevant to Cape Verde's and the Bank's medium-term development priorities in that the reforms achieved under PRSC-4 (and previous series of operations) have laid the framework for the next stage of poverty reduction in the context of the GPRSP-II. As discussed, solid progress was made in meeting the operation's development objectives, and key outcome targets were satisfactorily achieved. Finally, satisfactory progress is being made in strengthening the Government's M&E capacity to monitor efforts to address poverty, which was a weakness of the previous series of operations. 3.4 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development Poverty: It was anticipated that the PRSC-4 would have a significant and positive impact on poverty reduction by helping the government make a more efficient use of its resources, improving civil service performance and implementing more rigorous procedures for resources allocation and monitoring. In particular: (i) the strengthening of public expenditure management would enhance efficiency, transparency, and accountability in public resource use; (ii) the expansion of health infrastructure, particularly in remote areas, would increase access to quality health services for the poor; and (iii) basic social protection to the poor would be strengthened and extended. In addition, it was anticipated that the PRSC-4 would result in either improved overall well- being of vulnerable people as a result of better governance and more efficient and equitable government services, and in gains for specific groups such as disabled children, because of efforts to offer them basic services adapted to their needs. As the disabled are disproportionally represented among the poor, providing them with greater access to education should contribute to increase their chances to escape poverty. As a stand-alone operation, it is difficult to measure the impact of the PRSC-4 per se on poverty. In general, the rapid growth that occurred in Cape Verde since the early 1990s has led to a significant decline in poverty (the share of the population with consumption under the poverty line fell to 26.6 percent in 2007, down from 36.7 percent in 2001-02.38 This economic growth 38 Based on data obtained from two household surveys: the 2007 Core Welfare Indicators Survey (CWIQ) and the 1988-80 and 2001-02 IDRF survey (Inquerito As Despensas E Receitas Familiares) 20 continued during the period of the PRSC-4 implementation (real GDP per capita stood at 3.4 percent in 2008).39 In addition, the PRSC-4 focus on ensuring adequate funding for education, health and social protection impacted on poor's access to health care and vulnerable groups' access to education. As noted above, there were measureable improvements in the availability of health personnel at the decentralized level, which benefited particularly the rural poor. Continued improvements in teacher training and primary school enrollment also tend to benefit the poor. Finally, increases in routine immunization coverage probably benefitted the poor disproportionately as this group tends to have the lowest rates of immunization. Gender and Social Development : During the period of implementation of the PRSC-4 gender parity was achieved for boys and girls in terms of access to primary and secondary school. In the area of maternal health, interventions such as the distribution of emergency obstetrical care kits and the introduction of obstetrical registers contributed to a stable and low maternal mortality rate. Nonetheless, the PRSC-4's impact on the poor in the area of social protection was probably limited as there were few measures implemented in this area. The official decentralization of social protection services that was envisioned by the authorities as a result of the Framework Law on Decentralization has still not occurred owing to continued delays in the Law's passage; nonetheless, many of these services have been effectively decentralized as the Government has subcontracted them out through ten agreements with NGOs to provide services at the local level. In addition, an update of the Social Map ­ which identifies the providers of social protection services and thereby creates the conditions for the improved efficiency of service delivery ­ was not completed in 2008, thus somewhat undermining its effectiveness and reliability. On the other hand, implementation of the PRSC-4 can be linked to an increase in the school enrollment rate of handicapped children under the age of 15, as well as the introduction of specialized teacher training programs in the context of the Action Plan for Disabled People. (b) Institutional Change/Strengthening Substantial institutional strengthening occurred under the prior series of operations.40 As a one- year, stand-alone operation, PRSC-4 was not likely to have a profound impact on institutional strengthening, but a number of positive institutional changes did occur. For example, the institutional rationalization is occurring through the separation of research functions from policy functions, through the transfer of research institutions from line ministries to the University of Cape Verde. To strengthen the inspection function of Government, a new inspection unit is also being established under the Prime Minister to enhance the quality of inspections and rationalize work (including reducing the number of inspections per sector). Furthermore, the focus on strengthening external controls has reinforced the role the Court of Auditors, significantly improving the transparency and accountability of public resources. Finally, the draft law on Civil 39 There is no poverty data for the period after 2007. 40 These included, inter alia, establishment of a National Pensions Center; strengthening of the capacity of the National Statistics Institute; establishment of a Large Taxpayers Unit, supported by a modern IT system; improved treasury management at the Ministry of Finance; strengthening of the technical and vocational training sub-sector; and establishment of an Integrated Financial Management and Information System. 21 Service will promote a merit-based civil service and enhance public administration delivery quality. Finally, while the Macroeconomic Unit at the Ministry of Finance and Public Administration ­ which was one of the institutional-strengthening achievements under the previous series ­ got off to a weak start owing to a lack of resources and an over-extension of its responsibilities, its performance in macroeconomic monitoring and management improved under PRSC-4 and will strengthen Cape Verde's macroeconomic planning in the medium- to long-run. (c) Other Unintended Outcomes and Impacts (positive or negative, if any) Substantial progress has been made in deconcentrating budget execution to sector ministries, thanks to the very efficient financial integrated system in place. 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable. 4. Assessment of Risk to Development Outcome Rating: Moderate There are several risks to sustainability. These include: (i) a decline in the tourism, foreign direct investment, and remittances needed to fuel growth as a result of the global economic slowdown; (ii) the fiscal threat posed by ELECTRA; (iii) delays to pass into law several significant reforms needed to establish the basis of the legal and institutional framework needed for the ongoing MTEF and the PFM reform processes (e.g., Budget Framework Law); (iv) the negative economic and environmental threat posed by the Government's lack of a clear strategy on sustainable tourism development and for dealing with the significant scale of illegal sand extraction;41 and (v) capacity weaknesses. Despite these potential risks, the risk to development outcome for PRSC-4 is rated moderate. While the credit was a stand-alone operation, its reform measures were enacted as part of a progressive and integrated series of reforms that were sequentially introduced under the prior series of PRSCs. As such, PRSC-4's measures are integrated into a broader set of reform measures, thereby enforcing their sustainability. In addition, there are a number of factors that mitigate against the specific risks outlined above. They are: Cape Verde's strong record of fiscal discipline, proactive economic management and cautious monetary policy is supplemented by the buildup of foreign exchange reserves in recent years; the country's standing line of credit with the Central Bank of Portugal (equivalent to about one month of imports); and its access to budget support from the BSG. In addition, the Government has indicated its intent to continue with economic 41 While environmental governance is not part of the Bank program with the Government, it is closely monitored in the context of the BSG, and is thus part of the policy dialogue between the Government and its development partners. 22 monitoring under the IMF's PSI program until 2013.42 This monitoring will focus on reducing macroeconomic risks, providing a margin of safety against exogenous shocks, and addressing the prospects of a longer-term decline in highly concessional external support. Macroeconomic performance remained satisfactory in 2009, despite the global slowdown. The fiscal risks posed by ELECTRA will be mitigated by several factors, including the IMF's PSI program, which will continue to address the risk of contingent liabilities. In addition, an upcoming Bank energy project will focus on the financial sustainability of the energy sector, and a time-bound action plan will be articulated and implemented under the PRSC-5 to clear ELECTRA's arrears to suppliers within four years. The Government's commitment to continued poverty reduction through the GPRSP-II, which was finalized in mid-2008 and will cover the 2008-11 period, and which builds on the reforms enacted to date. The results-focused dialogue between the Government and donors, including the Bank, in the context of both the next series of PRSCs and other donor budgetary support to aid implementation of the next phase of the Government's poverty reduction program. The GPRSP-II's alignment with the budgeting process, thereby better ensuring that the program's poverty-related objectives can be financed. The development and implementation of a well-balanced infrastructure master plan, in the context of the GPRSP-II, to help ensure that tourism growth occurs in a sustainable fashion. The continued provision of external technical assistance from the Bank, the IMF, and other donors for capacity building. Finally, the continued use of the BSG and a joint policy matrix will continue to reduce transaction costs for the Government, helping it to offset capacity constraints and keeping free administrative resources that can be focused on further poverty reduction efforts. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory PRSC-4 was a well-designed operation that followed ­ and was highly integrated with ­ a series of credits that were developed in close cooperation with the GPRSP-I process and which were based on a highly participatory exercise. As noted in Section 3 above, PRSC-4 was highly consistent with Bank and donor priorities and was developed in close concert with the Government and the other BSG partners. The Program Document was closely linked to the harmonized donors' joint matrix which clearly specified the operation's medium-term objectives, policy measures and actions, indicators, and benchmarks. 42 The Cape Verdean authorities have requested an extension of the PSI for at least four more years until 2013 (i.e., a one-year extension of the current PSI followed by a new three-year program). 23 The prior actions were directly drawn from this matrix, and reflected areas where the Bank had a comparative advantage. These actions were appropriately limited in number, ensuring that they could be feasibly met in the short-term. The Program Document did not just specify the prior actions but also made explicit both the indicators and the outcome of each action, reflecting a clearly thought out and well-integrated series of policy measures. PRSC-4 also explicitly incorporated the good practice principles on conditionality into program design and implementation, 43 and as noted, this design also incorporated the lessons learned from the previous series of operations.44 The use of budgetary support through a harmonized donor framework was highly appropriate to country circumstances, as it both reduced the transaction costs and distortions inherent to international assistance to a small-size country, as well as improved the functioning of the national budget system. While PRSC-4 ­ like the operations preceding it -- was not fully aligned with the Cape Verdean budget cycle, this misalignment dates to the PRSC-1, and the 2006 elections prevented the realignment of this operation with the budgetary calendar. Consequently, the lack of alignment does not reflect a weakness in PRSC-4 program design; moreover, this non-alignment was mitigated by announcing the total amount of Bank support at the beginning of the preparation of the 2008 budget, enabling the Government to include this amount in its annual budget preparation. PRSC-4 was prepared in close coordination with the IMF and the IMF PSI reviews, and the Bank worked closely with the Fund in areas of operational overlap to ensure that consistent technical advice was provided to the authorities. Finally, there was strong staff continuity from the PRSC-1-3 operations, including at the team leader level, thus preserving the "institutional memory" associated with these operations, as well as the working relationships with the Government and other budget support donors. 45 (b) Quality of Supervision Rating: Satisfactory Supervision was carried out in the context of the BSG, including through: (i) the joint matrix between the BSG partners highlighting the main policy and result indicators supported by budget support; (ii) bi-annual joint review missions; and (iii) preparation and discussion of joint Aide- 43 These five principles ­ and the measures taken to ensure their incorporation into the program design ­ were set forth in the program document. They were: reinforce ownership; agree up front with the government and other financial partners on a coordinated accountability framework; customize the accountability framework and modalities of Bank support to country circumstances; choose only actions critical for achieving results as conditions for disbursement; and conduct transparent progress reviews conducive to predictable and performance-based financial support. 44 For example, the lesson regarding the need to find "ways to provide technical assistance at short notice for capacity building" was addressed through the up-front establishment of a second TF. Similarly, the Bank customized its support and dialogue to country circumstances; while the Labor Code was an originally identified as a policy area to be addressed by the operation, the Bank demonstrated flexibility by dropping this area once the Government achieved consensus on a Labor Code, even though some provisions of the Code were not optimal from a competitiveness standpoint. 45 The 11-member PRSC-4 team included seven staff members who had worked at a minimum on PRSC-3, and in some cases on the prior PRSCs as well. 24 Memoires. The use of the joint streamlined matrix (which included all Bank prior actions) provided a common basis for discussion, evaluation of progress, and disbursement; it also facilitated and strengthened coordination. The bi-annual joint reviews enabled consensus building and reduced transactions costs for the Government, and program reviews paid particular attention to results by closely monitoring indicators in the matrix. The quality and thoroughness of supervision was high, as evidenced by the highly detailed Aide-Memoires produced after each joint review mission. On the Bank side, the quality of supervision was aided by the continuity between the lending and supervisory teams, which ensured strong familiarity with the program objectives and anticipated outcomes. Under PRSC-4, the quality of donor harmonization and alignment continued to improve. There was a formal division of labor between the BSG partners, 46 and by end-2008, the six longstanding budget support partners (three multilateral and three bilateral) had completed seven joint missions together (supplemented by Portugal as an observer in 2007 and as a formal member in 2008). A review by the BSG partners of their performance concluded that all BSG members better adhered to the mutual obligations articulated in the MoU and were better prepared, thereby positively affecting the review process and the quality of engagement with the Government. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory PRSC-4 was a well-designed and implemented operation. It was highly relevant to Bank and Cape Verdean priorities and continued to build on the reform progress achieved under the previous PRSCs, notably in the areas of financial management, civil service reform and M&E. The continued harmonization of donor support and the further expansion of the BSG further improved the predictability of budgetary support to the Government and the Bank has continued to play a key role in harmonizing aid to Cape Verde through the BSG. The need for continued capacity building support was anticipated upfront, and was addressed through the establishment of a second Trust Fund. Finally, there was strong continuity in the PRSC team between this operation and the previous series of operations, aiding project execution and stability, and relations with the Government authorities and between the Bank and its BSG partners were excellent. As Bank performance for both quality at entry and supervision was rated satisfactory, overall Bank performance is rated satisfactory. 5.2 Borrower Performance Note: According to the ICRR Guidelines, if Government and the implementing agency are indistinguishable, particularly for DPL operations, a rating and justification is provided only for Overall Borrower Performance, as is done in Section (c) below. 46 Under the MoU between the BSG partners, there is a rotating chair with responsibility for assisting the coordinator on the Government side to prepare the program for the supervisory missions, while the Bank serves as the technical coordinator. 25 (a) Government Performance Rating: (See Note above) (b) Implementing Agency or Agencies Performance Rating: (See Note above) (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory Government performance was satisfactory. PRSC-4 supported the implementation of the last year of the GPRSP-I, which itself was built on a well-articulated, consistent, and analytical set of strategies and priorities that directly addressed the country's main development challenges. Government ownership was strong and the GPRSP-I had been developed through an intensive consultation process and was widely disseminated throughout Cape Verde. Moreover, the household survey, which provided much of the baseline information used to monitor results, benefitted from an information campaign considered best practice; the sectoral strategies were developed after open debate and consultations with both national and international stakeholders; and civil society was often included in specialized bodies (e.g., the GPRSP Coordinating Commission). Economic growth remained strong under PRSC-4, fiscal policy was consistent with macroeconomic stability and debt sustainability, and further progress was made on arrears clearance. Government relations with the BSG partners continued to be excellent, and the Government also exhibited a more focused approach during the PRSC-4 supervisory missions (as evidenced by the provision of a comprehensive briefing in May 2008 on the major areas of progress since the prior mission). There was also some improvement in M&E capabilities, offsetting an area of considerable weakness in Government performance under PRSC-1-3. Finally, GPRSP-II (2008) preparation was inclusive (although donors were not included in the validation process); drew on the lessons learned from the implementation of the first poverty program; and the Bank-Fund Joint Staff Advisory Note of the GPRSP-II concluded that it provides a comprehensive and integrated strategy for achieving its poverty reduction goals. Less positively, the automatic adjustment mechanism for petroleum products is still not applied as required by law; several pieces of legislation important to improving the public finance management legal framework have not yet been approved by the Parliament (e.g., the Decentralization Law, the Budget Framework Law, and the Organic Law on the Court of Auditors); and the quality of the secondary legislation needed for civil service reform remains an area of concern. Moreover, despite persistent capacity weaknesses, the Government did not take full advantage of the Bank's capacity-building TF. While this resulted in part due to problems in capacity absorption, it also reflects an inability within Government to reach a decision on priorities. For example, an activity on M&E and one on social protection were not implemented (even though TORs were well advanced) because some other activities were competing for those resources. 26 Justification for Rating: ICRR Guidelines (Appendix A) identify nine criteria for rating Government performance. Overall Government performance is rated satisfactory in accordance with these criteria: Government ownership and commitment to achieving the development objectives was broadly strong. The enabling environment included supportive macro, sectoral, and institutional policies. Stakeholders and civil society were consulted extensively at the beginning of the GPRSP- I development, and again in the formation of the GPRSP-II. The Government had adequate readiness for implementation and capacity. Fiduciary requirements were met satisfactorily. Most implementation issues were resolved on a timely basis. The relationships and coordination with the Bank and other donors through the BSG were excellent throughout. The GPRSP-II should provide a comprehensive framework for continued growth and poverty reduction and transition to the next series of operations. While Cape Verde's performance on the ninth criteria -- M&E arrangements, including the utilization of M&E data in decision-making and resource allocation ­ remains weak, there has been some improvement in both the Government's capability and commitment to effective M&E. 6. Lessons Learned A number of the lessons learned from the previous series of PRSCs are still applicable to this operation. They are: Budget support has been catalytic in harmonizing aid to Cape Verde and budget support continues to be highly relevant to the Cape Verdean context. The use of budgetary support enabled the Government to finance key parts of the GPRSP that would be difficult to finance through an investment loan or single sector development policy operation. An additional advantage is the ability to embed sector policy within cross- cutting issues such as civil service reform, improved expenditure management, and decentralization to increase the sustainability and impact on service delivery. Budgetary support proved to be a powerful instrument to unify donor assistance and dialogue around a core set of policy actions Specifically, the provision of harmonized budget support through the BSG clearly reduced (although not eliminated, owing to the size of the missions) transaction costs for the Government through a reduction in the number of visiting missions and country-specific reporting requirements. This is particularly important for a small country like Cape Verde where the public sector can be easily overwhelmed by aid and requests from donors. In addition, the following lessons can be added: Once established, a budgetary support group is itself a developmentally useful institutional mechanism for effectively addressing poverty reduction. Not surprisingly, the quality of coordination among budget support donors can ­ with good will ­ improve 27 over time: by the time that the six longstanding budget support partners had completed their sixth joint mission, the BSG members were better prepared and more clearly fulfilling their obligations under the MoU. Consequently, the improved harmonization had a positive impact on the quality of engagement and dialogue with the Government. Budget support is a sophisticated instrument which requires governmental capacity to design and implement reforms and to monitor their impact. The reliance on national systems also raises capacity issues at all stages of the budget cycle, which were compounded in the Cape Verdean context by the limited number of technical staff and the high turnover of senior staff in several core ministries. Offsetting these constraints requires a combination of capacity building and technical support.47 Greater focus should be given to M&E implementation and utilization. PRSC-4 ­ and the PRSC series that preceded it ­ has not yet resulted in a fully functioning M&E system in Cape Verde. Accordingly, more attention needs to be given up front to the measures needed to ensure the effective implementation of M&E.48 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies (b) Cofinanciers (c) Other partners and stakeholders 47 Accordingly, the FY09-12 Country Partnership Strategy for Cape Verde sets forth a broader menu of specialized technical assistance, including in the areas of procurement, central government internal audit skills, and municipal level technical and managerial capacity. 48 This lesson learned has already been incorporated into the design of PRSC-5, under which effective statistics and M&E are part of the set of prior actions, thereby elevating them to a higher level of importance. 28 Annex 1 Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Macroeconomics, Public Finance Manuela Francisco TTL, Country Economist AFTP4 Management Hélène Grandvoinnet Sr. Public Sector Specialist AFTPR Public Sector Management Public Administration and Tony Verheijen Sr. Public Sector Specialist AFTPR Decentralization Maurizia Tovo Lead Technical Specialist AFTH2 Social Protection & Labor Ghislaine Delaine Sr. Statistician AFTQK M&E Bourama Diaite Sr. Procurement Specialist AFTPC Procurement Eric Yoboue Sr. Procurement Specialist AFTPC Procurement Stéphane Legros Public Health Specialist WBIHD Health Luz Meza-Bartrina Sr. Counsel LEGAF Legal & Judicial Issues Wolfgang Chadab Sr. Finance Officer LOAFC Disbursement Judite Fernandes Language Program Assistant AFTP4 Team Assistant Supervision Macroeconomics, Public Finance Manuela Francisco TTL, Country Economist AFTP4 Management Hélène Grandvoinnet Sr. Public Sector Specialist AFTPR Public Sector Management Public Administration and Tony Verheijen Sr. Public Sector Specialist AFTPR Decentralization Maurizia Tovo Lead Technical Specialist AFTH2 Social Protection & Labor Ghislaine Delaine Sr. Statistician AFTQK M&E Bourama Diaite Sr. Procurement Specialist AFTPC Procurement Eric Yoboue Sr. Procurement Specialist AFTPC Procurement Stéphane Legros Public Health Specialist WBIHD Health (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY08 35 184.10 Supervision/ICR FY09 6 12.40 Total 41 196.50 29 Annex 2. Beneficiary Survey Results Not applicable. 30 Annex 3. Stakeholder Workshop Report and Results Not applicable. 31 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR "The Government has two comments: 1. The Reforms in place are very complex which demand efforts not only from the Government but also from all stakeholders, including the Parliament. Therefore, some of Reforms in place demand more time to be implemented. 2. We agree with the findings of the ICR." 32 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders "I have read the Implementation Completion Report that you sent me and agree with the findings. The working relationship we developed with the World Bank team in the framework of the joint reviews in Cape Verde in 2008 was excellent and efficient." 33 Annex 6. List of Supporting Documents (in chronological order) Joint Mission Budget Support Group, Aide Memoire, 29 June, 2007. Concept Note, Proposed Fourth Poverty Reduction Support Credit, November 12, 2007. Joint Mission Budget Support Group, Aide Memoire, 6 December 2007. Joint Mission Budget Support Group, Aide Memoire, 30 May 2008. Program Document, "Proposed Fourth Poverty Reduction Support Credit," Report No. 43495-CV, June 9, 2008. Joint IDA-IMF Staff Advisory Note of the Second Poverty Reduction Strategy Paper, Report No. 43927-CV, June 9, 2008. Corrigendum, Cape Verde ­ Second Growth and Poverty Reduction Strategy Paper and Joint IDA-IMF Staff Advisory Note, IDA/SecM2008-0429/1, July 2, 2008. Implementation Completion and Results Report, Cape Verde Poverty Reduction Support Credit 1, 2, and 3 (PRSC-1, PRSC-2, PRSC-3), Report No: ICR0000765, October 30, 2008. Joint Mission Budget Support Group, Aide Memoire, 12 December 2008. "Cape Verde: Country Partnership Strategy for the Period FY09-12," Report No. 47750- CV, March 25, 2009. Program Document (Concept Version), "Proposed PRSC V ­ Growth Support," April 13, 2009. 34 25°W 24°W 23°W This map was produced by the Map Design Unit of The World Bank. RIBEIRA The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank GRANDE Ribeira Grande Group, any judgment on the legal status of any territory, or any Vila das Pombas endorsement or acceptance of such boundaries. Ribeira da Cruz PAÚL Lajes Santo Antão 17°N (1803 m) Porto Novo 17°N PORTO NOVO Mindelo SÃO VINCENTE WIND Calhau São Pedro Madeiral Sal São Vicente Santa Luzia WA R Espargos SÃO NICOLAU D IS Ilhéu Branco Riberia Brava LAN SAL DS Ilhéu Raso Santa Maria Tarrafal Preguica São Nicolau Sal-Rei AT L A N T I C OCEAN Norte Norte BOA VISTA Boa Vista Povocão Velha Povocã Povocão Velha 16°N 16°N CAPE VERDE DS I SLAN W A R D TARRAFAL São Tiago LEE SANTA Maio CAP E V E RDE SANTA CRUZ Tarrafal MAIO Santa Cruz SELECTED CITIES AND TOWNS CATARINA Vila do Maio Santa Catarina NATIONAL CAPITAL Mosteiros Igreja Ilhéus Do MOSTEIROS São São Domingo Rombo 15°N RIVERS Mt. Fogo (2,829 m) SÃO 0 10 20 30 Kilometers MAIN ROADS PRAIA DOMINGOS Brava PRAIA DECEMBER 2004 Furna IBRD 33383 São COUNTY (CONCELHO) BOUNDARIES BRAVA Filipe SÃO FILIPE 0 10 20 30 Miles INTERNATIONAL BOUNDARIES Fogo 25°W 24°W 23°W