ICRR 10827
                                                                                             Report Number : ICRR10827
                   ICR Review
                   Operations Evaluation Department




1. Project Data:                                            Date Posted : 03/12/2001
            PROJ ID : P056376                                                   Appraisal                Actual
       Project Name : Second Fiscal                         Project Costs 2                      2.0
                       Restructuring &                             US$M )
                                                                  (US$M)
                       Deregulation Technical
                       Assistance Project
             Country : Malawi                         Loan/         US$M ) 2
                                                      Loan /Credit (US$M)                        2.0
           Sector (s): Public Financial                       Cofinancing
                       Management                                   US$M )
                                                                   (US$M)
        L/C Number : C3147
                                                          Board Approval                         99
                                                                     FY)
                                                                    (FY)
Partners involved :                                         Closing Date 06/30/2001              06/30/2001

Prepared by :          Reviewed by :                  Group Manager :     Group :

2. Project Objectives and Components
 a. Objectives
 The project aimed to finance technical assistance to help (i) implement policy reforms, including the medium term
expenditure framework, an audit and review of the development budget, reform of expenditure control procedures
and systems, and implementation of civil service reforms; (ii) evaluate the impact of structural reforms on Malawi's
economy; and (iii) develop the agenda for the next round of macroeconomic and sectoral policy reforms .
 b. Components
 The project accompanied the $ 90 million FRDP II stabilization and structural adjustment loan . The $2 million project
funds were to be used to finance technical advisors (50%), training (25%), office equipment (15%) and contingencies
(10%).
 c. Comments on Project Cost, Financing and Dates
 The project was approved on Dec 3, 1998. It is presently still disbursing and is expected to close on schedule on 30
June, 2001.
3. Achievement of Relevant Objectives:
 The project financed four studies - covering power sector policy, financial sector regulation, temporary employment
 permits, and access to industrial land and infrastructure - that made useful contributions to developing and
 implementing policy reforms in the respective sectors . Consultancy services assisted in the process of contracting
 out government functions and the project provided training and software to support implementation of the Medium
 Term Expenditure Framework. The proposed study to evaluate the impact of structural reforms on the
 manufacturing sector was dropped when the Bank covered this issue as part of its AAA program . The ICR states
 that $0.5 million was allocated for training, although no details are provided . The ICR does not state whether the
 audit of the development budget was carried out or whether the project contributed to developing the next round of
 economic and sector policy reforms .
4. Significant Outcomes/Impacts:

5. Significant Shortcomings (including non-compliance with safeguard policies):



6. Ratings :               ICR                    OED Review                   Reason for Disagreement /Comments
              Outcome :    Satisfactory           Satisfactory
    Institutional Dev .:   Not Rated              Substantial
        Sustainability :   Likely                 Likely
   Bank Performance :      Satisfactory           Satisfactory
      Borrower Perf .:     Satisfactory           Satisfactory
        Quality of ICR :                               Unsatisfactory
NOTE:
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
7. Lessons of Broad Applicability:
(1) For reforms restructuring the government, civil service, and budget to succeed, they must have political
leadership and be based on fundamental decisions about the role of the public sector .
8. Assessment Recommended?               Yes    No
         Why? The project can be audited can be part of a package of audits of FRDP I, FRDP II, and FRDP TA II,
which would review the Bank's experience with adjustment lending in Malawi since the landmark 1994 change in
government.
9. Comments on Quality of ICR:
The ICR reviewed was still in draft state and covers both the FRDP II and the FRDP TA II . It omits several pieces of
information - i.e. whether the audit of the development budget was carried out, details on training provided,
contribution to civil service reforms . A separate summary of assessments for this project is not provided .