Document of The World Bank FOR OFFICIAL USE ONLY Report No. 74618-LR INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP STRATEGY FOR THE REPUBLIC OF LIBERIA FOR THE PERIOD FY13-FY17 July 1, 2013 International Development Association West Africa Country Cluster 1 Africa Region International Finance Corporation Sub-Saharan Africa Department Multilateral Investment Guarantee Agency Sub-Saharan Africa Department The document has a restricted distribution and may be used by recipients only in the performance of their duties. Its contents may not otherwise be disclosed with The World Bank’s authorization.  The date of the last Country Assistance Strategy Progress Report was June 2, 2011 CURRENCY EQUIVALENT as of June 18, 2013 Currency U = Liberian Dollar (LR$) US$1 = 74.5 REPUBLIC OF LIBERIA – FISCAL YEAR July 1 – June 30 ABBREVIATION AND ACRONYMS AAA Analytical and Advisory Activities ACE Africa Cable to Europe ADB African Development Bank AFREA Africa Renewable Energy Agency AfT Agenda for Transformation AIDP Agriculture and Infrastructure development project BEP Basic Education Project BOC Bureau of Concessions CARI Central Agriculture Research Institute CASA Conflict Affected States in Africa CEP Community Empowerment Project CRC Constitutional Review Committee CMU Country Management Unit CPIA Country Policy and Institutional Assessment CPS Country Partnership Strategy CSA Civil Service Agency CWIQ Core Welfare Indicator Questionnaire DSA Debt Sustainability Analysis DTIS Diagnostic Trade Integration Study ECF Extended Credit Facility ECOWAS Economic Community of West Africa States EU European Union EPAG Economic Empowerment of Adolescent Girls FAO Food and Agricultural Organization FDI Foreign Direct Investment GPOBA Global Partnership on Output-Based Aid GDP Gross Domestic Product GEF Global Environment Facility GOL Government of Liberia GPE Global Partnership for Education HD Human Development HIES Household Income and Expenditure Survey HIPC Highly Indebted Poor Countries HSSP Health Systems Strengthening Project IIU Infrastructure Implementation Unit ICT Information and Communication Technologies IDA International Development Association IDF Institutional Development Fund IEG Independence Evaluation Group IFAD International Fund for Agricultural Development IFC International Finance Corporation IITA International Institute of Tropical Agriculture JCAS Joint Country Assistance Strategy JCASCR Joint Country Assistance Strategy Completion Report KfW Kreditanstalt Für Wiederaufbau LACE Liberia Agency for Community Empowerment LCEAP Least Cost Energy Access Plan LDA Liberia Development Alliance LEC Liberian Electricity Corporation LEITI Liberia Extractive Industry Transparency Initiative LFS Labor Force Survey LIBRAMP Liberia Road Asset Management Project LICPA Liberian Institute of Certified Public Accountants LISGIS Liberian Institute of Statistics and Geo-information Services LNAP Liberia National Action Plan LRTF Liberia Reconstruction Trust Fund MCA Millennium Challenge Account MCC Monrovia City Corporation MoCI Ministry of Commerce and Industry MDGs Millennium Development Goals MDTF Multi Donor Trust Fund MoF Ministry of Finance MoGD Ministry of Gender and Development MIGA Multilateral Investment Guarantee Agency MoLME Ministry of Lands, Mines and Energy MMR Maternal Mortality Rate MRU Mano River Union MSMEs Micro, Small and Medium Enterprise MTEF Medium Term Expenditure Framework NIC National Investment Commission NLTA Non Lending Technical Assistance PAC Public Accounts Committee PBF UN Peace-building Fund PEFA Public Expenditure and Financial Accountability PER Public Expenditure Review PFM Public Financial Management PPP Public Private Partnership PREM Poverty Reduction and Economic Management PRS Poverty Reduction Strategy PRSC Poverty Reduction Support Credit PSDS Private Sector Development Strategy REDD Reducing Emissions from Deforestation and Forest Degradation RREA Rural Renewable Energy Agency SEZ Special Economic Zones SGBV Sexual and Gender-based Violence Sida Swedish International Development Cooperation Agency SMEs Small and Medium Enterprises SPF State and Peace Building Fund SPSP Social Protection Strategy and Policy SREP Scaling up Renewable Energy Program SSA Sub Saharan African Countries SSN Social Safety Nets STCRSP Smallholder Tree Crop Revitalization Support Project TFs Trust Funds UNMIL United Nations Mission in Liberia URIRP Urban and Rural Infrastructure Rehabilitation Project USAID United States Agency for International Development WAAPP West Africa Agriculture Productivity Project WAPP West Africa Power Pool WARCIP West Africa Regional Communications Infrastructure Project WASH Water, Sanitation and Hygiene WBG World Bank Group WBI World Bank Institute WDR World Development Report WSP Water and Sanitation Program WTO World Trade Organization YES Youth, Employment and Skills Project IBRD/IDA IFC MIGA Vice President:  Makhtar Diop Jean Philippe Prosper Michel Wormser Country Director/Manager  Yusupha B. Crookes Yolande Duhem Ravi Vish  Task Team Leaders  Inguna Dobraja Frank Douamba Stephan Dreyhaupt Coleen R. Littlejohn Frank Ajilore The Liberia CPS was prepared with the collaboration of a core team who worked closely with the Task Team Leaders and the Country Director: Errol Graham, Jariya Hoffman, Daniel K. Boakye, Michelle Rebosio, Anders Jensen, Alan Moody, Cari Votava, Kobina Daniel, Marieme Esther Dassanou, Kulwinder Rao, Clemencia Torres de Mastle, Zayra Romo, Deborah Isser, Emily Weedon, Keiko Inoue, Rianna L. Mohammed, Oliver Braedt, Sachiko Kondo, Raymond Muhula, Ismaila Ceesay, Winter Chinamale, Maxwell Druku Dapaah, Gary Fine, Richard James, Shubha Chakravarty, Waafas A. Ofosu-Amaah, Jenny Gold, Dawn Roberts, Chantal Richey, Flavio Chaves, Peter Darvas, Radhika Srinivasan, Sergiy Kulyk, Joel Hellman, Richard Anson and Luis Alvaro Sanchez. The team wants also to thank the Minister of Finance Amara Konneh and his team for the close collaboration in preparing the CPS. The consultations with civil society, private sector, the media, and other Development Partners provided very valuable feedback, which is incorporated in the document. Contents EXECUTIVE SUMMARY.............................................................................................................. I  I.  INTRODUCTION ................................................................................................................. 1  II.  COUNTRY CONTEXT ......................................................................................................... 2  Recent Developments and Fragility Context ..................................................................................... 2  Economic Context and Recent Economic Development .................................................................... 3  Poverty and Human Development Context ........................................................................................ 7  III.  DEVELOPMENT CHALLENGES AND GOVERNMENT AGENDA FOR TRANSFORMATION ................................................................................................................ 10  Peace, Justice, Security and Rule of Law ........................................................................................ 10  Economic Transformation ............................................................................................................... 11  Human Development........................................................................................................................ 12  Governance and Public Institutions................................................................................................. 13  Cross-cutting Challenges ................................................................................................................. 15  Agenda for Transformation – Government Response to Key Development Challenges.................. 16  IV.  LESSONS FROM PAST WORLD BANK EXPERIENCE ................................................. 17  V.  WBG COUNTRY PARTNERSHIP STRATEGY FY 13-17 .............................................. 18  Pillar I.  Economic Transformation............................................................................................ 20  Pillar II.  Human Development .................................................................................................... 26  Pillar III.  Governance and Public Sector Institutions.................................................................. 28  VI.  IMPLEMENTING THE CPS FY 13-17.............................................................................. 32  Financing Sources ........................................................................................................................... 32  Partnerships ..................................................................................................................................... 35  Monitoring and Evaluation .............................................................................................................. 36  VII.  RISKS TO CPS IMPLEMENTATION .......................................................................... 36  CPS ANNEXES ............................................................................................................................... 39  Annex 1: Liberia CPS (FY 13-17) Results Framework................................................................... 39  Annex 2: Liberia JCAS FY 09-12 Completion Report .................................................................... 48 Annex 3: Strategic Goals of the Agenda for Transformation ......................................................... 84 Annex 4: Debt Sustainability Analysis ............................................................................................ 85 Annex 5: Fragility and Resilience in Liberia and the Proposed Application of a Fragility Lens in WBG Operations .............................................................................................................................. 99  Annex 6: Development Partnerships in Support of Agenda for Transformation FY 13-17 .......... 108  Annex 7: Trust Fund Portfolio ...................................................................................................... 109  Annex 8: Women and Youth in Liberia ......................................................................................... 115  Annex 9: Governance Challenges and Opportunities................................................................... 122  Annex 10: Mainstreaming Capacity Development in the CPS ..................................................... 127  Annex 11: Liberia: Country Financing Parameters ..................................................................... 131  Annex B1: Liberia at a Glance ..................................................................................................... 132  Annex B2: Selected Indicators of Bank Portfolio Performance and Management ....................... 134  Annex B3: IFC Investment Operations Program .......................................................................... 135  Annex B4a: IDA Indicative Lending Program, 2013-2017 (in US$, millions) ............................. 136  Annex B4b: IDA/IFC Indicative AAA Program, 2013-2017......................................................... 137  Annex B5: Liberia – Social Indicators.......................................................................................... 138  Annex B6: Liberia – Key Economic Indicators ............................................................................ 140  Annex B7: Liberia – Key Exposure Indicators ............................................................................. 142  Annex B8: Liberia – Country Map................................................................................................ 143     REPUBLIC OF LIBERIA COUNTRY PARTNERSHIP STRATEGY (CPS) FY13-17 EXECUTIVE SUMMARY i. Liberia’s resurgence from one of the greatest economic collapses of modern times has been impressive. The protracted 14-year civil war cost the lives of 200,000 people and led to substantial losses in material wealth and social progress. Since 2003, with the support of development partners, including a robust United Nations peacekeeping mission (UNMIL), Liberia has maintained, peace and stability, revived state administration, improved governance, rebuilt some basic infrastructure and made progress on key human development indicators. Conditions for private sector engagement and investment improved and in 2006, the economy’s rate of growth outperformed most African countries. There has also been a marked reduction in poverty, from 63.8 percent in 2007 to 56.7 percent, based on analysis of the data from the 2010 Core Welfare Indicator Questionnaire (CWIQ) survey. The second post-conflict democratic elections in 2011 signaled to the world that Liberia is steadily making the transition from a post-conflict situation to long-term development. ii. Vast challenges remain going forward. With a population of about 4.2 million, Liberia ranks 174th out of 186 countries in the 2011 Human Development Index. Child malnutrition and maternal mortality rates (MMR) are among the highest in the world. Net school enrollment ranges from 32.4 percent in primary to 5.4 percent in senior secondary. Access to public electricity services, (1.7 percent), and potable piped water, (1 percent), rank amongst the lowest in the world. Ninety five percent of the nation’s primary, secondary and feeder roads remain unpaved, suffer from poor maintenance and are affected by heavy rainfall. iii. Delivering peace dividends to all will require tackling the “drivers of conflict” that underlie social fragility. Central to the delivery of a peace dividend for Liberians is the creation of sustainable jobs and improved services in transport, energy, water and sanitation, health and education. This entails reducing progressively the ‘enclave’ nature of Liberia’s extractive industries, plantation forestry and agriculture and broadening the economic base of the country, thus drawing more people, especially youth, into productive economic activities. In addition, the challenge of growth and broad-based prosperity calls for addressing other drivers of conflict that include (i) a fragmented society; (ii) limited trust in the state; and (iii) continued security risks. iv. In January 2013, the President of Liberia, H. E. Ellen Sirleaf Johnson, launched a new National Vision, Liberia Rising 2030. The vision seeks high and sustained growth, driven by a robust private sector, leading to middle-income status by 2030. To implement this vision, the Government also formulated a five-year medium term strategy, the Agenda for Transformation (AfT) that is structured around five pillars: Peace, Justice, Security and Rule of Law; Economic Transformation; Human Development and Governance and Public Institutions. The fifth Pillar groups several cross-cutting issues: gender equality, child protection, disability, youth empowerment, environment, HIV/AIDS, human rights and labor and. The AfT maintains continuity with the unfinished agenda of the previous Poverty Reduction Strategy (PRS), especially on peace, security and the rule of law and addressing the stress factors that drove the country i    repeatedly to conflict. The AfT also builds on the principles of the Paris Declaration, the Accra Action Plan and the New Deal for Engagement in Fragile States. v. The World Bank Group’s (WBG) CPS FY 13-17 supports selected elements of the AfT. The focus is on engagements that contribute to sustainable growth, poverty reduction and shared prosperity, while addressing deep-rooted causes of conflict and fragility. Each new operation will be "filtered" through a robust analysis of their potential impacts on fragility to assure maximum impact on these stress factors. vi. CPS results target improved access to services and opportunities throughout the country, as well as a more effective and credible state. The strategy supports narrowing the infrastructure gap that is binding growth nationwide and impeding effective delivery of key social services. Efforts in energy, transport and telecommunications infrastructure will help: (a) broaden the base of the economy, making Liberia’s growth more inclusive, and (b) connect and unify the nation by reducing the cleavages that still exist between the center and the periphery. Work will continue to help improve delivery of health and education and greater emphasis will be placed on youth employment generation, public financial management, civil service reform and natural resource governance management. Given the low baselines for access to all of these services in the country, despite the expected substantial gains, effective coverage will still remain low. However, the program will help set the institutional basis for continued and accelerated improvements afterwards, in line with the vision of the country for 2030. To enhance the credibility of intended efforts and show the population that there is a peace dividend, the CPS will work to deliver results both in urban and rural areas. vii. The CPS program foresees tight cooperation among development partners to enhance the effectiveness and transformational impact of national efforts. Liberia will continue to depend heavily on development partners1, therefore increased support and coordination will be crucial to ensure that all development priorities of the AfT are addressed in the next five years and beyond. IDA resources will be leveraged with multi-donor trust funds and the strategic use of Bank knowledge products. The selective focus of new lending on infrastructure complements the on- going program focus on service delivery. The programmatic series of development policy operations (DPO) in support of the Government’s ambitious reform program will provide a platform for the engagement of other development partners and will focus on: (i) improving transparency of the government operations; (ii) increasing accountability in the management of public assets and reducing opportunity for corruption; (iii) building capacity for equitable service delivery, and (iv) enhancing inclusive growth and employment including through tackling the land tenure and access to credit issues; and (v) improving human capital primarily through improving access to quality education. The Bank will partner with the UN in addressing the fragility drivers. viii. Both the AfT and the WBG’s CPS will be implemented under challenging conditions. Liberia’s security situation has been generally stable but remains sensitive to internal and regional political volatility. The upcoming midterm elections in 2014 and national elections in 2017 represent moderate to high risks at a time when UNMIL’s peace-keeping force of ten thousand soldiers and police begins downsizing to half that number by 2015. The economy will remain                                                         1  Liberia, in 2011, received US$ 185.39 per capita in Official Development Assistance (ODA)  ii    vulnerable to external shocks from fluctuating global commodity prices and the likely sluggish growth of the global economy. Finally, limited institutional and human resource capacity within the Government to implement and monitor reforms and priority programs outlined in the ambitious Agenda poses a significant risk. The CPS will directly address these constraints in all Bank operations and at sector levels over the next five years. iii    I. INTRODUCTION 1. The last World Bank Joint Country Assistance Strategy (JCAS) for Liberia, prepared together with the African Development Bank (ADB), covered FY09-FY11 and supported the priorities identified in Liberia’s first PRS. The JCAS Progress Report, presented to the Board on June 2, 2011, retained the key objectives of the program, revised the original results framework into a more realistic matrix and extended the JCAS to FY12 to align the Bank’s strategic planning process with that of the Government’s. Since the Bank was able to mobilize significantly higher levels of financing, both from IDA and Trust Funds, the lending program was adjusted in response to the Government’s request for increased funding for key infrastructure programs. A series of analytical studies by PREM, HD, SD and IFC were prepared to provide the analytical underpinning for Liberia’s second PRS, the Agenda for Transformation (AfT). 2. The new Liberia CPS, covering FY2013–FY2017, was prepared jointly with the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). The strategy reflects the World Bank Group’s commitment to exploit synergies internally, to generate the maximum development impact through innovative solutions, and externally to leverage WBG knowledge and technical expertise through other partners’ resources. The CPS has been developed and will be implemented in close coordination with development partners such as the African Development Bank (ADB), the European Union (EU), the United States Agency for International Development (USAID) and the Swedish International Development Cooperation Agency (Sida), all of whom were also designing their respective country assistance strategies. The World Bank also strategically partnered with the United Nations (UN) in the preparation of United Nations Development Assistance Framework (UNDAF) that is a more focused UN collective response to national priorities and will be implemented based on the “Delivering as One” concept. All development partner strategies are fully aligned with the Agenda for Transformation. 3. This CPS represents an agreement with the Government on the specific role the Bank will play in supporting Liberia’s development goal of reducing the sources of fragility and conflict in pursuit of sustainable growth and poverty reduction. The CPS is a results-oriented strategy that builds upon the AfT and a national Fragility Assessment, prepared by the GoL as part of Liberia’s participation in the New Deal for Engagement in Fragile States. The analysis defines underlying challenges linked to the country’s continuing fragility and conflict risks.   The CPS also draws on findings of the 2011 WDR Conflict, Security and Development and builds on the progress achieved and lessons learned during the implementation of the previous strategy. Most importantly, the CPS is based on the Government’s own definition of development challenges and solutions to “put the country on a path to sustainable and equitable growth and to create the right environment as Liberia transforms toward its long-term vision of becoming a more equal, just, secure and prosperous society”.2                                                         2 “Agenda for Transformation, Steps Towards Liberia Rising 2030”, Monrovia, January 2013. 1    II. COUNTRY CONTEXT RECENT DEVELOPMENTS AND FRAGILITY CONTEXT 4. Liberia has made considerable progress in the face of daunting challenges. Fourteen years of civil conflict destroyed key institutions, infrastructure and the economy. The conflict was largely precipitated by the prolonged exclusion and marginalization of a large part of the Liberian population from political power and the economic wealth from the country’s natural resources. Poor economic governance allowed public resources to be utilized for the benefit of a small group of political elite, which heightened inequality and social instability. A brutal civil war erupted in 1989. In 2003, Liberia signed a peace agreement that led to a transitional government, which, supported by a robust 15,000 strong United Nations peacekeeping mission, focused on consolidating peace and stabilizing the country. With the help of development partners, Liberia has revived state administration, rebuilt some basic infrastructure and improved conditions for private sector engagement and investment. This has been accompanied by a marked reduction in poverty. 5. The return to multi-party democracy in 2006 created the environment for long term reconstruction, a challenge assumed during President Ellen Johnson Sirleaf’s first administration. With the inauguration of her second term on the 16th of January 2012, Liberia completed its second post-conflict democratic elections. While the 2011 elections were considered generally free and transparent by international observers, widening political divisions, sporadic violence, and the boycott of the run-off elections by the opposition underscored the continued need for national healing and reconciliation. The President’s Unity Party (UP) controls 22 of the 73 seats in the House and 11 of the 30 seats in the Senate. Post-election, the UP forged a series of alliances with some opposition parties. 6. In 2012 the President established a Constitution Review Committee (CRC) to identify areas of conflict and propose amendments to address political exclusion, a key factor of fragility in Liberia. The Government has approved a National Policy on Decentralization and Local Governance, recognizing that decentralization offers an important opportunity for engaging local level communities in governance and service delivery. However, the implementation of this policy initiative is stymied by the fact that the current Constitution (1986) does not provide a legal framework for decentralization. The CRC will lead a national consultative process to validate the constitutional reform proposals; this will be a major challenge, given that many Liberians outside Monrovia lack the information and civic education to contribute to the debate. In the meantime, given that Liberia remains highly centralized, the state must act to increase its presence in rural areas through targeted interventions and actions to bring greater connectivity nationwide. 7. Liberia is committed to using regional cooperation to widen its market space, promote physical integration with the sub-region and confront security risks. The Government has renewed its commitment to enhanced regional cooperation and trade under the Manu River Union (MRU) and Economic Community of West African States (ECOWAS) protocols. Furthermore, the GoL sees the MRU as a platform for addressing issues of regional security, infrastructure and governance, given that Liberia remains vulnerable to political tensions and insecurity spilling over from neighboring countries (Cote d’Ivoire, Guinea and Sierra Leone) due to its highly porous borders and limited security presence. The planned phased drawdown of UNMIL from 2012 to 2015 challenges the government to assume many of UNMIL’s current responsibilities in an 2    environment of competing development needs, limited fiscal space and low public confidence in the Liberian security sector. 8. Liberia is investing in both national and international efforts around new approaches to support peace-building and state-building goals of countries emerging from conflict. The country is a pilot for the New Deal for Engagement in Fragile States and in collaboration with the US and Sweden, recently completed a Fragility Assessment3 that builds on a number of earlier analyses and lays out the main “conflict drivers” that continue to affect the country’s development (see Box 1). The national Peace-building and Reconciliation Program, designed with the support of the UN, will focus on strengthening the country’s resilience by tackling remaining fragility drivers and will serve as the programmatic framework for the implementation of Liberia’s Strategic Roadmap for National Healing, Peace-building and Reconciliation. Box 1: Liberia’s Remaining Conflict Drivers Liberia’s Fragility Assessment analyzes remaining conflict drivers around five Peacebuilding and Statebuilding Goals of the New Deal: PSG 1: Legitimate Politics -Foster Inclusive Political Settlements and Conflict Resolution: Liberia must not only recover its institutions and infrastructure, it must develop an entirely new social contract to replace the pre-conflict context in which there was an explicit marginalization of the majority by an elite minority. Deep cleavages between descendants of Americo-Liberian settlers and native populations, among native ethnic groups, between “youth” and elders, and, increasingly, between “haves” and “have-nots” have prevented the formation of a national identity and a shared understanding of citizenship. Overall, the Government remains highly centralized and decentralization will require integration of traditional systems and values. PSG 2: Security – Establish and Strengthen People’s Security: There is a culture of impunity and lack of accountability that continues to plague the security sector and Liberians remain unsatisfied with limited police presence and high rates of corruption among the ranks. Crimes such as mob justice, rape and robbery are still very present threats and domestic violence is a frequent occurrence in Liberia. While much of the work done has focused on increasing the size and quality of the Liberian security services, security has been less well defined in public security terms, including understanding individual and community security mechanisms, access to information, education and economic opportunities as critical components of well-being.  Regionally, Liberia’s borders remain porous with risk of illegal trafficking of people and arms.  PSG 3: Justice – Address Injustices and Increase People’s Access to Justice: Liberia continues to struggle with inefficient justice institutions that are plagued by corruption. A lack of harmonization continues to exist between the evolving statutory system and traditional systems of justice while the public lacks a clear understanding of its rights and responsibilities. There is a substantive   disconnect between how many rural Liberians perceive justice, in terms of group interests, and the much more individualistic statutory orientation – this is yet one more complicating factor in the center-periphery divide.     PSG 4: Economic Foundations – Generate Employment and Improve Livelihoods: The “concession economy” forms the backbone of the formal economy and mostly has benefitted foreign companies and the Liberian elite. Disputes over land ownership and   concessions management remain a major source of conflict, and communities often find themselves at the losing end of both revenue   sharing and land disputes. Given the lack of basic infrastructure, non-extractive production is almost entirely limited to subsistence agriculture and micro enterprises. Over 70% of the country’s population is under 35. However, employment opportunities are sufficient   for only a minority of these predominantly unskilled youth. As a result, most current and future young adults find little work, leading to   marginalization and sometimes to illicit activities.   PSG 5: Revenue and Services – Manage Revenue and Build Capacity for Accurate and Fair Service Delivery: While  economic shocks have been relatively well managed, service delivery remains dependent, in large part, on where one lives as the remote areas continue to face staggering gaps in service delivery. Overall, there remains inadequate coverage of basic social services throughout the country. Although serious efforts are being made to increase transparency of expenditure, including making information Eavailable CONOMIC CONTEXT AND RECENT ECONOMIC DEVELOPMENT at a county level, revenue generation continues to suffer from deficiencies in accountability mechanisms and corruption.                                                         3 Liberia’s Fragility Assessment, September 5, 2012. 3    9. Since the end of civil war, Liberia has made substantial progress in its economic recovery. Steady GDP growth before the global crisis of 2008/2009 peaked at over 9 percent in 2007. The path of growth weakened with the crisis but since then it has bounced back. The drivers of economic growth have been rubber and mining, with the support of foreign direct investment and to a lesser extent, from an expansion of construction activities and growth in services. Agriculture and services were the leading sectors up to 2010, but with the resumption of iron ore mining in 2012, the mining sector’s contribution to GDP has almost tripled (from 4.5 percent in 2011 to 12 percent in 2012). As a result, the share of the industrial sector has increased from 7 percent in 2008 to 16 percent of GDP in 2012. Services, including construction, retailing and hospitality, are the leading contributor to the economy, representing 46 percent of GDP in 2012. Figure 1: Composition of Liberia’s GDP (2008-2012) Composition of GDP (%)  100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 Agriculture and Fisheries Forestry Mining Manufacturing Services Source: IMF Country Report 10. Substantial gains have been made in improving the supporting macroeconomic environment. Public external debt fell following the achievement of the Heavily Indebted Poor Countries (HIPC) Completion Point in June 2010.4 In addition, inflation, which rose to 11.5 percent at end-2011 due to a sharp rise in food and fuel prices, dropped to about 5.5 percent at end-2012. In 2012, the Central Bank intervened in the exchange rate market through increased foreign exchange auctions to curb volatility and dampen speculation in the exchange markets by requiring licenses for all foreign exchange bureaus operating in the country. Monetary policy continues to target price stability through reducing exchange rate fluctuations. 11. The external balance has improved and remains sustainable despite the widening of the current account deficit of the balance of payments. In 2012, however, the terms of trade deteriorated due to a decline in export prices (rubber and iron ore) relative to import prices. The                                                         4 Liberia benefited from debt relief under the HIPC initiatives at the decision point and completion point. This triggered additional relief from the Paris Club creditors. It also carried out two operations of debt buy-backs from commercial creditors. As a result, its public external debt fell by US$4.5 billion (from US$4.6 billion in FY2004/05 to US$115 million in FY2010/11). 4    surge in capital goods imports related to investments in the concession sector, as well as income outflows significantly widened the current account deficit from 34 percent in 2011 to 52 percent of GDP in 2012. Continued strong inflows of foreign direct investment and donor transfers, coupled with private sector transfers, will finance the deficit and assure stability. Gross international reserves are expected to fall slightly to about 2.6 months of imports in 2012 (from 3 months in 2011). Table 1: Liberia-Selected Economic and Financial Indicators, 2009 -2014 Indicator 2009 2010 2011 2012 2013 2014 2015 Prel. Prel. Proj. Proj. Proj. Proj. Real GDP (% growth) 5.3 6.1 8.2 8.9 8.3 5.6 7.1 Consumer prices (annual average % growth) 7.4 7.3 8.5 6.6 5.6 5.0 5.0 Consumer prices (end of period %) 9.7 6.6 11.4 5.5 4.7 4.0 4.0 Exchange rate (end of period L$/US$) 68.3 71.4 72.2 .. .. .. .. Exports, f.o.b (US$ Million) 153 215 381 472 539 584 967 Imports, f.o.b (US$ Million) 574 674 1,010 1,347 1,565 1,652 1,570 Current account balance incl. grants (% of GDP) -28.8 -32.8 -34.1 -52.4 -65.0 -71.6 -45.6 Gross official reserves (US$ Millions) 312.2 391.0 416.0 372.0 412.0 440.0 466 Broad Money (% Change) 24.1 33.5 32.7 13.2 9.3 7.0 13.2 Revenues and Grants (% of GDP) 20.7 23.5 26.4 27.8 27.3 28.8 27.6 Tax Revenue 16.7 17.0 19.0 21.6 19.7 19.2 19.2 Non-Tax Revenue 1.9 5.5 4.6 4.6 5.2 7.3 6.6 Grants (% of GDP) 2.1 1.1 2.8 1.7 2.4 2.3 1.8 Expenditures (% of GDP) 21.9 23.1 27.0 31.0 33.3 35.4 33.8 Wages and salaries 8.1 9.3 9.8 11.3 11.0 10.8 10.2 Capital Expenditure (% of GDP) 3.0 2.6 5.2 4.1 7.8 11.0 10.7 Overall surplus / deficit (incl. grants) -1.2 0.5 -0.6 -3.2 -6.0 -6.6 -6.2 Identified Financing 1.2 -0.5 0.6 3.2 6.0 6.6 6.2 External -0.3 -0.3 0.3 0.9 5.5 6.6 6.4 Domestic including Central Bank 1.5 -0.2 0.3 2.3 0.5 0.0 -0.2 Public sector domestic debt (% of GDP) 26.1 24.0 20.6 17.6 15.7 14.4 12.8 Public sector external debt (incl. arrears US$ Mn) 1,678.0 1,679.9 113.9 166.0 286.7 435.1 589.1 Public sector external debt (% of GDP) 145.4 137.3 8.0 10.0 15.5 21.8 26.6 Debt service charge (% of GDP) 0.0 0.2 0.4 0.4 0.4 0.6 0.7 Nominal GDP(US$ Millions) 1,155.1 1,291.9 1,545.44 1,767.5 1,934.4 2,062.7 2,368.9 Source: IMF and Bank Staff Estimates 12. Notwithstanding the robust revenue collection in 2012, the overall fiscal deficit increased. Total revenue increased from 26.4 percent in FY2010/11 to 27.8 percent of GDP in FY2011/12 due to the strong performance of international trade taxes, thus offsetting lower external grants. Total expenditure climbed to 31 percent of GDP in FY2011/12 from 27 percent in FY 2010/11 reflecting sharp increased spending on wages and salaries, goods and services, and subsidies and transfers. Capital spending declined from 5.2 percent in FY 2010/11 to 4.1 percent of GDP in FY2011/12 despite unanticipated spending to rehabilitate ports and the road to the Mount Coffee hydropower plant. The overall fiscal deficit that increased from 0.6 percent in FY2010/11 to 3.2 percent of GDP in FY2011/12) was financed by drawing down of government deposits, short-term domestic borrowing from the Central Bank and concessional credit. Given the rapid growth of the economy and the significant share of concessional financing, debt sustainability is not at risk (see Annex 4: Debt Sustainability Analysis). 5    Medium-term Economic Outlook 13. Liberia’s natural resource sectors will continue to play a crucial role in the country’s economic development. The natural resource sector is expected to remain the mainstay of the economy during this CPS period, providing the largest contributions to growth and job creation both directly and indirectly. The discovery of oil from current prospecting efforts will further raise the importance of the natural resource sector to the Liberian economy. However, the sector carries inherent risks. At the macroeconomic level, substantial foreign exchange inflows from investments related to exploration and establishment of processing facilities and, subsequently, from commodity exports, could swell reserves and lead to substantial foreign exchange appreciation, thus increasing the risks of Dutch disease effects. These risks are relatively high for Liberia. The current low level of domestic productivity hinders competitiveness and huge infrastructure gaps in energy, ports, roads, information and communication technology (ICT) and water and sanitation, combined with the skills and regulatory deficits prevent the country from diversifying the economic base. Furthermore, the variability in commodity prices and the relatively high correlation between these prices could produce “boom and bust” cycles, increasing the risks related to macroeconomic management. 14. The importance and prospects of Liberia’s natural resource sector presents unique opportunities but also raises substantial challenges. Liberia has made some progress on natural resource governance, including the establishment of the Liberia Extractive Industry Transparency Initiative (LEITI) and the Bureau of Concessions; continuation of these efforts can help contain the risks of corruption and elite capture. Liberia’s political and economic governance systems (including financial management and procurement) need strengthening to effectively manage potentially large revenue inflows, which otherwise could become a major conflict driver. In addition, given Liberia’s history of land conflict, tensions between concessions and communities could pose considerable risks to align productive operation of concessions and the development of cohesive and conflict-free communities. 15. Liberia’s medium-term economic outlook is favorable but remains vulnerable to external shocks. The Liberian economy is projected to grow at an average annual rate of about 7 percent during FY2013-15 reflecting the continued positive external environment and increased foreign direct investment in the natural resource-based sectors, particularly iron ore mining, forestry and oil palm. Inflation is expected to decline and stabilize at around 5 percent of GDP. The fiscal deficit will increase to more than 6 percent of GDP in FY 2014/15 due to higher spending on infrastructure including energy and roads. As the Liberian economy remains dependent on primary exports as well as imported foods and fuel, it remains highly vulnerable to external economic shocks in the medium term. 16. A priority of the Government over the medium-term is to create adequate fiscal space to finance the implementation of an accelerated investment program. The annual budget for 2012/13, prepared in the context of the first medium-term expenditure framework (MTEF), envisages a substantial increase in capital expenditures to address binding constraints to growth. The public sector investment budget of US$243.8 million represents 36 percent of the total budget. Infrastructure spending (transport, ports, roads, airport, and communications) accounts for about 45 percent of total investment budget, followed by the sector investment programs (44 percent). The 6    remaining resources are allocated to youth development, capacity development and activities related to reconciliation and strengthening security. 17. The IMF and the World Bank will maintain close collaboration through a Joint World Bank-IMF work program and policy dialogue with the GoL. The program covers cooperation in a number of technical areas including: Debt Sustainability Analysis, strengthening of the PFM framework including the implementation of the Medium Term Expenditure Framework (MTEF), the conduct of the Public Expenditure and Financial Accountability (PEFA) as well as the strengthening of the capacity to compile the national accounts. The current three-year IMF program under its Extended Credit Facility (ECF) agreed in November 2012 focuses on three primary areas: (i) creating fiscal space for higher capital spending; (ii) strengthening the financial sector through reducing vulnerabilities and improving access to credit; and (iii) underpinning growth with structural reforms to improve public financial management, governance and the business environment 18. The Government’s medium-term development program has the support of the international community. The total cost of the AfT is estimated at about US$3.2 billion with priority investments in infrastructure, social and security sectors. Liberia, as many post-conflict countries, receives generous international development support with ODA in 2011 totaling US$ 718 million or US$ 185 per capita. However, additional donor mobilization efforts are necessary to support the ambitious investment agenda for the AfT. While the Government succeeded in attracting off-budget grants to finance some priority investment projects, including the rehabilitation of Mt. Coffee hydropower plant, additional fiscal space generated from external budget support grants is expected to be moderate. Therefore, to address the large infrastructure needs, particularly in transport and energy, external borrowing, including from IDA, will increase from 8 percent of GDP in 2011/12 to 22 percent in 2014/15.5 POVERTY AND HUMAN DEVELOPMENT CONTEXT 19. Although progress has been made in the last several years, poverty remains widespread in Liberia. With a 2011 per capita gross national income (GNI) of US$330, Liberia’s population is among the poorest in the world. In 2007, nearly two-thirds of Liberia’s population lived below the poverty line and almost half were living in extreme poverty. Nevertheless, based on analysis of the data from the 2010 Core Welfare Indicator Surveys (CWIQs), poverty is estimated to have fallen to 56.4 percent. The reduction in poverty resulted from: (i) economic growth, averaging nearly 7 percent between 2007 and 2010; (ii) a sharp reduction in inflation, particularly after 2008; (iii) improvements in domestic agriculture and (iv) income support to vulnerable groups under the Liberian Agency for Community Empowerment (LACE) program supported by the World Bank.                                                           5  IMF Country Report No.12/340, Liberia 2012 Article IV Consultation, November 2012.  7    Figure 2: Incidence of Poverty (2007 and 2010) Source: Staff calculations based on data from the 2007 and 2010 CWIQs 20. Poverty reduction has not been uniform throughout the country and the population remains highly vulnerable. Poverty rates and inequality were reduced in the rural areas but there was little or no improvement in the urban area, where the rural poor and illiterate are migrating to in search of education and employment opportunities. Vulnerability to poverty is strongly correlated with food insecurity; 34.3 percent of the population has been found to be food insecure. Furthermore, in addition to limited access to basic infrastructure and social services, being poor in Liberia also leads to a sense of economic exclusion, insecurity and inability to cope with potential risks. 21. Poverty alleviation requires not only a strong growth strategy but also complementary social policies. Poverty is strongly linked, not surprisingly, to unemployment. Despite the relatively robust economic growth, less than one-fifth of the labor force is in paid employment. Nearly 80 percent of the labor force is in vulnerable employment with the level at around 94 percent for rural women. The productivity of many of the “employed” is low and consequently they earn low wages, making them working poor. 22. Although poverty analysis does not suggest any significant difference in poverty rates between male and female-headed households, women tend to have unequal access to employment and other economic opportunities. According to the International Labor Organization (ILO) definition, the lower rate of unemployment for women reflects their greater engagement as unpaid family laborers. A World Bank study6 found that women comprise 56 percent of the informal non-agriculture sector and are significantly underrepresented in key emerging areas of the Liberian economy such as mining, construction, and services. Data from the 2010 Labor Force Survey (LFS) suggest that women earn substantially less than men across most sectors.                                                         6 Gender-Aware Programs and Women’s Roles in Agricultural Value Chains- A Policy Memorandum. May 2010. Prepared by PRMGE with the Ministry of Gender and Development (MOGD).   8    Table 2: Status of Employment and Vulnerability Urban Rural Total Status of employment Male Female Male Female Male Female Total Paid employee 40.5 14.2 17.2 4.4 27.5 8.7 18.1 Employer 3.8 2.5 1.1 1.2 2.3 1.8 2.0 Own-account worker 46.2 72.0 64.2 66.7 56.2 69.1 62.7 Member of producers’ cooperative 1.6 0.8 1.2 0.6 1.4 0.7 1.0 Contributing family worker 7.9 10.6 16.3 27.0 12.6 19.8 16.2 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Vulnerable employment 54.1 82.6 80.5 93.8 68.8 88.8 78.8 Source: Liberia Labor Force Survey, 2010. 23. Youth constitutes a third of the total population and nearly half of the total labor force in Liberia,7 presenting both opportunities and risks. A rapidly growing young population can benefit from growth if adequate opportunities for education and sustainable jobs are created. However, the so called “war generation” in Liberia grew up during the years of civil conflict practically without educational services. Less than 13 percent of the total labor force has some vocational training, and 60 percent have not attended any school. In addition, an estimated 50,000 young people will join the labor force every year which, coupled with projected population increases, will create significant labor market pressures. They also face inequality and social exclusion linked to deep-seated practices and norms. In rural Liberia, decision-making at a community level is based on long-standing arrangements granting power to either a specific family or ethnic group, which guides allocation of community resources and dispute resolution. Young people, especially from minority tribes or originally not from the community, find it difficult to obtain productive resources, farm land or employment. Figure 3: Population demographics 2010 and 2030 (estimate) Source: Liberia. Inclusive Growth Diagnostics, World Bank, June, 2012.                                                         7 Liberia’s National Youth Policy states that youth are those that are between ages 15-34. 9    24. The likelihood of Liberia achieving the majority of MDGs by 2015 is low; with the possible exception of the goals related to global partnerships and gender parity in education. Liberia still ranks 174th out of 186 countries according to the 2011 Human Development Index (HDI) and ending the extreme poverty by 2015 is unlikely. While the country has made progress in gross enrollment rates at all levels, it is unlikely that the MDG for universal primary completion by 2015 will be met. Notable progress has been made in reducing infant and under-five mortality rates; these have been almost halved, to 71 and 110 per 1,000 births respectively, over the last 20 years. Other key indicators, however, such as child malnutrition and maternal mortality rate (MMR) remain amongst the highest in the world, despite some progress on the latter, which has declined from close to 1,000 per 100,000 births in 2007, to an estimated 770 per 100,000 in 2010. Poor maternal health leads to poor nutrition of both mother and child - over one in ten children will die before the age of five. Approximately 40 percent of children under five are stunted. Access to sustainable water and sanitation continues to be limited. III. DEVELOPMENT CHALLENGES AND GOVERNMENT AGENDA FOR TRANSFORMATION PEACE, JUSTICE, SECURITY AND RULE OF LAW 25. One of the major challenges to building peace and enhancing security in Liberia is to overcome a history of exclusion, inequality and corruption. Deep divisions still exist between people of different tribes, between those of settler background and those that are more closely tied to Liberian traditions and between those who have some wealth and those who do not. Different groups of Liberians interpret their rights and the rights of others differently, which often leads to exclusion and discrimination at the community level. The lack of effective tools and systems to prevent, detect and prosecute corruption exacerbates these tensions. The complexity of addressing the remaining fragility drivers has been recognized in a recently completed Liberia’s Fragility Assessment (see Box 1). 26. The exit of UNMIL’s personnel and equipment calls for building and financing of the domestic capacity to provide security. Although the Liberian National Police (LNP) has been increased to a total of more than 4,000 trained personnel, the ratio of police to citizen (1 to 683) is below the UN recommended ratio of one police officer per 450 citizens. Public confidence in the Liberian security apparatus is low according to a survey that finds that 43 percent of Liberians believe the LNP is corrupt; 40 percent say the same of courts, and 64 percent believe they will have to pay for the police to investigate a crime.8 Although, the proposed Justice and Security Regional Hubs, supported by the UN, will help to provide coordinated security services in five locations outside Monrovia, the establishment of the first regional Hub in Gbarnga, Bong County suffered significant delays, both in establishing its infrastructure and the deployment of staff. 27. Limited fiscal space constrains the options that the Government has for rapidly scaling up the security apparatus to respond to these challenges. To assist the Government in                                                         8 R. Blair, C.Blattman and A. Hartman, “patterns of Conflict and Cooperation in Liberia: Results from a Longitudinal Study”, Yale University Innovations for Poverty Action, 2012. 10    addressing these challenges, the UN and the World Bank jointly prepared a Public Expenditure Review (PER)9 of Liberia’s security sector. The review constitutes the recognition by both institutions that business as usual is not an option as security sector development is critical to sustainable development in post conflict and fragile states. The PER estimated a US$86 million financing gap for the security sector over the next seven years based on its current model of service delivery and its current budget allocation of 5 percent of GDP to security. Since it is unlikely that the government will be able to absorb the full anticipated cost of security operations transfer from UNMIL, the report emphasizes the need for clear prioritization of the security functions within the limited resource envelope. ECONOMIC TRANSFORMATION 28. Economic diversification remains the greatest challenge to achieve inclusive economic growth. Past experiences suggest that foreign investments in the traditional export sectors (rubber, palm oil, forestry and mining) are unlikely to create substantial employment opportunities as these sectors are largely capital-intensive enclaves with little direct or indirect link to the rest of the economy. Liberia’s economy remains dependent on imported foods and fuel and vulnerable to commodity price shocks. Domestic agriculture could help to reduce food imports and be a source of considerable employment and poverty reduction, given that this sector is still the primary source of livelihood for two-thirds of Liberia’s population; over 330,000 households are engaged in agriculture, primary smallholder and subsistence farming. The production of domestic food supplies remains fairly stagnant due to low productivity, insecure land tenure and limited access to credit, infrastructure, extension services and markets. The manufacturing sector, accounting for only 9.6 percent of GDP, remains underdeveloped due to competition from cheaper imports and limited, unreliable as well as expensive electricity and water services. 29. Rebuilding basic infrastructure is necessary for enhancing growth, connecting people, uniting a nation, and reducing fragility. Good roads facilitate trade, enlarge markets and make it easier to deliver essential services throughout the country. Much remains to be done to connect the country internally and regionally. Most key routes alternate between sections in fair and poor condition, especially in the Southeast and Northwest of the country where most of the poor live. Likewise, the cost and limited availability of electricity are preventing diversification into industry and services. Liberia’s current power generation costs, at about US$0.55 per kilowatt hour, are among the highest in Africa while coverage is less than 1 percent of the total population, among the lowest in the world. It is estimated that addressing Liberia’s public infrastructure needs will require investments of between $350 million and $600 million per year over the next decade. 30. The connectivity gap in telecommunications remains large. Mobile density, which grew from 24 percent in 2009 to 57 percent in 2012, is close to the Africa regional average of 60 percent. The Internet sector has also witnessed some growth over the last few years; however, access is still well below the regional average. Liberia was recently connected to the Africa Cable to Europe (ACE) but the connectivity gap will not disappear without additional investment in a national backbone, coupled with a holistic approach dealing with demand stimulation, Internet ecosystem, ICT jobs and ICT applications.                                                         9 LIBERIA: Public Expenditure Review “Meeting the Challenges of the UNMIL Security Transition”, Document of the World Bank and the United Nations Mission in Liberia, January 2013.   11    31. The latest Enterprise Survey (2009) identified other important challenges to economic transformation, including corruption, crime, and lack of access to finance, as significant constraints to investment, limiting generation of jobs and income opportunities. Liberian enterprises, mostly small and micro, provide livelihood for the majority of working poor but lack access to finance due to weak capacity to prepare bankable project proposals, lack of collateral, in part due to inadequate land tenure and the high cost of borrowing. Other constraints include weak financial and banking system, undeveloped capital markets and lack of transparency in the regulatory system and dispute settlements. 32. Regional markets present an opportunity for diversification that is yet to be explored and fully utilized. Currently, Liberia’s trade with the rest of the (ECOWAS) members is below the average for the sub-region; 7 percent compared to 10 percent. The GoL is taking steps to increase cooperation and reduce barriers to regional trade with the goal of creating a single market by 2030. Regional infrastructure projects and institutions capable of partnering with neighboring countries are therefore becoming more important. HUMAN DEVELOPMENT 33. Despite some gains in recent years, inadequate and inefficient use of resources, weakness in sector governance and the lack of skilled personnel continue to affect equitable access to quality public education. Net enrollment at all levels range from 32.4 percent in primary to 5.4 percent in senior secondary. The relatively low allocation for public sector funds for education favors higher instead of primary education, partially as a result of overreliance on donor financing in basic education. Many parts of the country, especially hard-to-access areas, lack adequate facilities and teaching materials. Limited access to education and the dominance of an over-age population in the education system require immediate “second chance” programs. The 2010/2011 School Census shows that only 5 percent of students in government and community schools are in the right age-grade cohort. Liberia has the lowest rates of qualified teachers, student-teacher ratios and share of female teachers among a set of comparable Sub Saharan African (SSA) countries, and an effective teacher recruitment, training, and deployment system is yet to be put in place. Governance and accountability issues continue to plague the sector, including high wage costs due to overstaffing (or ghost-staffing), payroll irregularities, and weak financial management and procurement systems. 34. While access to health services is improving, continued strong reforms in health financing, human resources for health, and governance are needed to improve access, quality, equity and sustainability of health services. The maternal mortality rate is estimated to have declined from 1,000 to 770 per 100,000 births between 2007 and 2010, but remains one of the highest in the world. Malaria continues to be a major cause of morbidity and mortality in Liberia, and the number one cause of child morbidity. The allocation of resources is unequal across counties as is the quality of services. Physical access to health facilities remains a barrier; as 40 percent of population lives more than 5 km away from the nearest facility. Coverage of effective and low cost health interventions is still limited and there are not enough qualified and motivated skilled health workers, especially in rural areas. The dependency on donor funding, which over the past five years averaged three to four times the amount allocated in the national budget, raises questions of sustainability. Both government and development partner programs will have to focus 12    on strengthening health systems to ensure efficient and equitable use of resources and increasing quality of service provision. 35. Although more than half of the population lives in poverty, social protection interventions are inadequate for protecting the poor, promoting productive household investments, creating employment and reducing fragility. The share of the budget financing social programs is relatively substantial; the individual programs, however, are often small-scale, fragmented and uncoordinated. The main social safety net programs such as cash transfers, work for food and in-kind transfers are predominantly financed by development partners. Between 2008 and 2010, donors financed 94 percent of all Social Safety Nets (SSN) expenditures, spread across various government institutions, each with different implementation mechanisms. Approximately 50,000 of the extreme poor households in Liberia are labor-constrained. Extremely poor households who can work suffer from limited economic opportunities; vulnerable employment is estimated at 77.9 percent. Improved access to employment and livelihood opportunities is particularly critical for youth, which could not access basic social services during the long years of civil conflict and lack basic numeracy, literacy and life skills to join the labor market. Key challenges in the short- term will be to identify options for scalable programs, especially those that protect the poor and vulnerable or have the potential to create sustainable jobs. Maximizing the impact of such programs will require building synergies with the private sector and development partners through a more coherent approach. 36. Improving the health profile of the population is further handicapped by the population’s limited access to water and sanitation services, especially in rural areas, where only 51 percent of the population has access to improved sources of drinking water and 4 percent to improved sanitation versus 79 percent and 25 percent, respectively for the urban sector.10 Regular supply of quality water is also a serious issue; in 2011 a census of the 7,500 improved rural water points (mainly hand pumps) in Liberia showed that 29 percent were not functional. WASH (water, sanitation and hygiene) activities remain under-resourced; the estimated funding deficit to meet the MDGs and Liberia’s targets for water supply and sanitation is approximately US$75 million per year. GOVERNANCE AND PUBLIC INSTITUTIONS 37. Decentralizing government administration and transforming counties to harness their potential as engines of economic growth, reconciliation and service delivery will be a long- term effort. A centralized state structure rooted in traditional system of divide and rule has supported elite control of resources while largely isolating the rest of the country.11 This has resulted in high inequality across the country, encouraging tensions and undermining the legitimacy of the state. While key line ministries have moved ahead with their own de-concentration, comprehensive decentralization is constrained by the 1986 Constitution, which does not provide a legal framework for political decentralization and delegation of authority. In addition, even the initial actions of decentralization will be challenged by severe lack of basic physical infrastructure, human capacity and service delivery systems in the counties. The challenge for the authorities is                                                         10 Source: WHO/UNICEF Joint Monitoring Program, data for 2011. 11  Paul Richards (2010). “The Political Economy of War and Peace in Liberia”.   13    how to creatively increase the presence of the state, delivering services and improving prospects, while reforming the needed institutional and governance apparatus. 38. Strategies and plans have been developed for public sector modernization including civil service reform, but progress has been slow. Liberia lags behind the Sub-Saharan Africa (SSA) average in quality of public administration, scoring only 2.5 compared to the 2.9 SSA average in the Country Policy and Institutional Assessment (CPIA) for 2011. Limited public sector capacity has undermined the effectiveness of government for service delivery and policy formulation. During the conflict, many experienced and qualified professional staff left and the current civil service is plagued by a number of structural and institutional weaknesses including low pay, poor alignment between skills and functions, inadequate human resource management processes, weak payroll controls and political interference. The Governance Commission has formulated reorganization plans in consultation with over 16 ministries but implementation remains a challenge. 39. Although the Government has made progress in articulating the legal and regulatory framework for public financial management (PFM), implementation again is limited. The financial operations of many ministries and agencies are not fully aligned with the PFM and procurement laws. The compliance gap not only reduces efficiency but also creates opportunities for corruption. Moreover, organizational reforms and a strengthened public financial management system have yet to be extended to state –owned enterprises and autonomous agencies. The delays in the preparation and approval of the national budget adversely affect its alignment with policy commitments. Furthermore, considerable amounts of donor funding remain off budget, thereby reducing allocation efficiency. In addition, budget scrutiny remains limited because of weak internal controls. 40. While significant steps have been taken in passing laws and creating governance institutions12, additional efforts are needed to strengthen the ability of the government to detect, prevent and prosecute corruption. Weak governance structures and widespread corruption have been at the root of Liberia’s fragility; a score of 41 in the Corruption Perception Index (2012) still suggests a high level of corruption in the public sector. Global Integrity (2010) reports an implementation gap of 22 percent, rating governance in Liberia as “very weak”. This continues to hinder the growth of small and medium enterprises (SMEs); in 2009 over half of the firms interviewed reported that they were expected to give gifts to “get things done, to “get a government contract” or to “get an electricity connection”. Similar governance challenges are prevalent in social service delivery sectors. A recent report by the Coalition on Transparency and Accountability on Education (COTAE) found that numerous governance challenges in the education sector, including inadequate and substandard infrastructure and supplies, teacher absenteeism, and inadequate accountability mechanisms, significantly affect education outcomes.13  41. Liberia’s political and economic governance systems (including financial management and procurement) are not yet sufficiently robust to effectively manage potentially large                                                         12 Establishment of the Governance Commission (2007); Anti-Corruption Commission (2008), the Anti-corruption Law (2008); the Freedom of Information Act (2010), establishment of LEITI (2007) and transparency improvements in extractives sectors pursuant to the Extractives Industries Transparency Initiative (EITI) certification. 13 COTAE (2012). “Lifting Education: A National Call for integrity, accountability and Transparency in Procurement”. Monrovia, p. 10-16.  14    revenue inflows from the natural resource sector, including designing policies for equitable sharing of revenue from natural resources. The development of the extractive industry as an engine for broad-based growth has been hampered by governance issues, which stunted the development of the sector and turned resource wealth into an instrument for division and conflict. With increasing investments in natural resource exploration, lingering concerns over sharing of resource wealth - whether between mining companies and communities, or between government and the population at large - remain a threat to the sustainable development of the concession sector and Liberia’s stability. For example, concessions continue to absorb valuable agricultural land, displacing citizens, yet concessionaires utilize only a relatively small share of the allocated land.14 42. The need for land reform and improved land governance mechanisms are among the most sensitive and important constraints in achieving inclusive growth and reducing sources of conflict in Liberia. Land-related conflicts are sourced in poorly defined land tenure, land use and management, and related social, economic and environmental grievances. Less than 20 percent of total land in Liberia is held through private deed. Large-scale concession-granting of natural resources has triggered a new wave of land disputes, often in remote areas where state authority is weak. Some projections indicate that the State has issued longer term use rights over an area that corresponds with some 75 percent of the total Liberian land mass.15 Poor record keeping, lack of harmonization between statutory and customary land systems and limited capacity and access to judicial services all contribute to limited ability to resolve land disputes. CROSS-CUTTING CHALLENGES 43. Despite laudable efforts by the Government, significant barriers are still in place preventing gender equality in Liberia. The legal framework in Liberia provides strong equal protection measures for men and women. Liberia has had a National Gender Policy since 2009, a Rape Law which explicitly defines rape as a criminal act since 2006 and an inheritance law that establishes equal rights of inheritance since 2003. However, sexual and gender-based violence (SGBV) remains common in Liberia. For women and girls, the threat of violence impedes their movement for economic, educational and civic activities. Qualitative assessments have found that young women frequently cite potential sexual harassment from employers as a significant barrier to labor market entry. Women’s ability to participate in agriculture and start-up entrepreneurial activities is also constrained by their limited access to productive resources such as land, credit and knowledge. 44. Building human capital to respond to capacity deficits in both the public and private sector will be crucial to implementing the ambitious AfT. Liberia’s human capital was substantially depleted during the prolonged war and has resulted in serious mismatch between the supply and demand for skills. The report on Inclusive Growth Diagnostics16 shows that this is a binding constraint to inclusive growth. The need for skilled and semi-skilled workers extends beyond the civil service; the present and future needs of qualified medical personnel, engineers and other professionals are immense. Currently, the demand for skilled and, in some cases, even manual                                                         14 Global Witness (2011). “Curse of Cure: How Oil Can Make or Break Liberia’s Post-War Recovery”, 15 Paul de Witt, Land Rights, Private Use Permits and Forest Communities, report for the Land Commission of Liberia, April 2012. 16 Liberia. Inclusive Growth Diagnostics, Document of the World Bank. June, 2012. 15    labor cannot be met in the labor market. Both public and private sectors largely rely on foreign skills. More than a million people (over 60 percent of the labor force) have not completed primary school, literacy rates are well below regional averages and an additional 50,000 youth will join the labor force every year. This will require employing non-traditional approaches to education and skills building. 45. The quality and availability of statistics required for evidence-based policy decision making and results monitoring is very limited. The majority of data and results from censuses were destroyed during the civil war and thus baseline statistics are not available. The national accounts, price statistics and poverty data need further improvements in terms of availability, coverage and quality.17 While some statistical units in key ministries and agencies have been strengthened, the Liberia Institute of Statistics and Geo-Information Services (LISGIS), continues to experience acute shortages of properly trained personnel with technical expertise in the design of statistical tools and for developing statistical methodology. LISGIS also lacks experienced personnel to carry out data analysis. In addition, there are no statistical training programs at the university level in Liberia that prepare professional statisticians. The AfT, a results-focused strategy, will require a strong monitoring and evaluation system, including strengthening statistical capacity to track development outcomes. AGENDA FOR TRANSFORMATION – GOVERNMENT RESPONSE TO KEY DEVELOPMENT CHALLENGES 46. The AfT (2012-2017) is a 5-year development plan grounded on the goal of Liberia Rising 2030 to transform Liberia into a more prosperous and inclusive society as well as to achieve middle income country status by 2030.  The AfT follows the Lift Liberia Poverty Reduction Strategy (PRS), which guided Liberia through the initial phases of post-conflict recovery and emergency reconstruction. The goals of the first strategy were only partially met due to the enormous financial, institutional and human capacity constraints, with limited progress in delivering visible results for ordinary Liberians. 47. The AfT was developed through a country-wide national participatory process and is grounded on solid analytical work. The overall design of the AfT was enriched by extensive consultations in all 154 districts of Liberia, focusing on historical drivers of conflict and fragility and proposals to reconcile society and promote inclusive growth. This design delivered a strong focus on country-led results. The AfT was also informed by diagnostic studies, supported by the WBG and presented in a National Economic Forum in September of 2011. The Liberia Rising 2030 and Agenda for Transformation were launched in January of 2013 in a conference that included more than 500 delegates from all 15 counties. 48. The AfT builds on the gains achieved in the first PRS, setting out clear goals and addressing the remaining constraints for development so that Liberia can create wealth and                                                         17 GDP estimates using the expenditure approach are not available due to a lack of information on the informal sector, while sectoral GDP using the production approach is grossly under-estimated. The consumer price index (CPI) suffers from outdated goods and services in the consumption basket (based on 1964’s limited survey of Monrovia only and which was implemented in a rush). A new basket of goods and services needs to be reconstructed and their weights revised. Consumption data is available only for 2007.   16    inclusive growth. The AfT is built  around five strategic pillars that reflect Government key priorities. Pillar I - Peace, Justice, Security and Rule of Law; Pillar II - Economic Transformation; Pillar III - Human development and Pillar IV - Governance and Public Institutions. Pillar V covers cross cutting issues including gender equality, child protection, disability, youth empowerment, environment, HIV/AIDS, human rights and labor and employment. IV. LESSONS FROM PAST WORLD BANK EXPERIENCE 49. The World Bank Joint Country Assistance Strategy (JCAS FY09-12) supported the priorities identified in Liberia’s first Poverty Reduction Strategy (PRS I). The Bank program focused on: (i) rebuilding core state functions and institutions; (ii) rehabilitating infrastructure to jump-start economic growth and (iii) facilitating pro-poor growth. A JCAS Progress Report was presented to the Board on June 2, 2011; the key objectives of the program were retained, but the original results framework was revised into a more realistic one. The JCAS was also extended for another year to align the Bank’s strategic planning process with that of the Government’s. A JCAS completion report was prepared during FY 12 in parallel with an IEG Liberia Country Program Evaluation (2004-2012). 50. During the JCAS period, the Bank was able to mobilize substantially higher levels of financing than originally anticipated in order to address the massive reconstruction needs. The original envelope envisaged a total of US$ 338 million of IDA and Trust Funds (TFs) resources; this was augmented to US$ 727 million. TFs played a major role in complementing the limited IDA resources and helped to expand the Bank’s portfolio, especially in infrastructure. Regional and additional IDA allocations allowed the Bank to pro-actively respond to emerging priorities and opportunities - at the end of FY 12, the total project portfolio consisted of 15 projects, including 4 regional operations, for a total net commitment of US$ 370.6 million. 51. The JCASCR rated the performance of the WBG as moderately satisfactory given that good progress was achieved toward many program outcomes. Out of 27 JCAS outcome indicators, good progress was achieved in 12; five of which have been fully achieved and 7 partially achieved. Especially notable were the advances made in rehabilitating key infrastructure; significant progress was also made in strengthening public finance management, reducing the debt burden and elaborating a number of sector strategies. Less progress was made in civil service reform, strengthening the agriculture sector, land reform and skills development for youth. Capacity constraints at all levels of the government in planning, implementing, supervising and monitoring projects affected successful achievement of outcomes. The Bank enhanced its country presence by placing experienced sector and fiduciary staff in the country office; this has contributed toward improved sector dialogue and better implementation support, especially in fiduciary areas. The Stakeholder Survey undertaken in 2011 generally portrayed a positive image of the Bank’s role in Liberia, citing that the Bank is regarded as a “key and responsive partner”. 52. IFC supported activities led to significant improvements in the business and investment climate, including support to private participation in infrastructure. IFC’s technical advisory services supported the Government’s economic growth strategy and in 2010, Liberia was recognized as a Top Ten Global Reformers in Doing Business. IFC’s programming included: (i) proactive project development in infrastructure and several growth sectors (oil palm, rubber and 17    mining), (ii) increased investments and advisory services for direct impact on SMEs, and (iii) additional activities in the financial sector to increase financial inclusion for a wider segment of Liberians. IFC also provided catalytic investments to four financial institutions, including a micro- finance bank and a SME focused venture fund. 53. IEG’s Liberia Country Program Evaluation, 2004-2011 assessed the assistance program as both timely and well-aligned with the country’s goals. The evaluation concluded that considerable progress has been made, although uneven, across sectors. The evaluation cited: (i) impressive achievements in rebuilding core state functions; (ii) solid progress in rehabilitating transport, waste management and power infrastructure; (iii) modest results in agriculture, education and capacity-building. IEG in particular noted the importance of creating an integrated regime for natural resource management and recommended the Bank’s involvement in other areas critical to achieving long term peace, security and stability, such as employment generation. 54. The JCAS CR identified the following key lessons with implications for the design of the new Country Partnership Strategy:  Find the right balance between infrastructure and other sectors, while ensuring “strategic selectivity”. Where the Bank has provided effective support and where there is an unfinished strategic agenda, it is reasonable for the Bank to consolidate and scale-up the approaches and interventions to benefit underserved population groups with key services or to address “drivers of conflict”.  Adapt and apply a sound fragility lens in the design and implementation of the upcoming CPS. Liberia remains a fragile state and Bank project teams will have to focus on screening the project activities against a potential escalation of conflict.  Ensure that capacity development is at the heart of project preparation, implementation and is monitored at a project, portfolio level and sector level in coordination with government and other development partners.  Ensure that the design and implementation of the CPS results matrix continues the strategic results-based approach and is closely aligned with the AfT results framework.  Promote sound procurement procedures, as well as expedited ones, supported by effective and sustainable approaches to capacity development and implementation support.  Ensure strong presence and continuity of experienced Bank staff in the Liberia Country Office to enable the Bank to provide effective support to counterparts while gradually building the government’s own capacity. V. WBG COUNTRY PARTNERSHIP STRATEGY FY 13-17 55. In the coming years Liberia will continue transitioning from fragility to stability while transforming the country’s economy and institutions. The AfT highlights the urgency of sustaining the recent gains by resolving the underlying drivers of conflict. The CPS will contribute to the Government’s agenda by addressing major infrastructure gaps which will promote growth and physically unite the country by supporting increased economic opportunities and by promoting capable and accountable institutions that are closer to citizens. Recognizing the government’s primary role in providing security and reconciling the nation, and the Bank’s mandate and limited resources, the CPS will focus on those aspects of enhancing growth and reducing fragility that 18    reflect the comparative advantage of the Bank and are linked to a wider range of activities of the Government and other development partners. Working in close partnership with the UN family will be an essential component of the CPS. 56. The overarching objective of the CPS is to support the Government’s Agenda for Transformation to contribute to sustained growth, poverty reduction and shared prosperity, while exiting fragility and building resilience. Prosperity can be broad-based if growth generates jobs and economic opportunities for all segments of the population. To spur and maintain this type of growth, critical constraints, including the substantial infrastructure deficit (energy and roads), private sector lack of access to credit and skills, and limited access and poor quality of education and training need to be addressed. This will ensure that a wide cross-section of Liberians, especially the less well-off, have the education and skills to take advantage of the emerging economic opportunities. 57. The CPS Pillars are aligned with the Pillars of the AfT: i): Economic Transformation to reduce constraints to rapid, broad-based and sustained economic growth to create employment; ii) Human Development to increase access and quality of basic social services and reducing vulnerability; and iii): Governance and Public Sector Institutions to improve public sector and natural resources governance. The themes of capacity development and gender equity will be mainstreamed throughout the portfolio. 58. Based on lessons learned from previous JCAS and the IEG evaluation, the following strategic approaches will guide CPS design and implementation during the next five years: i) Selectivity. The majority of new IDA operations during the CPS period will concentrate on infrastructure, especially energy and transport. Through the current portfolio the Bank will continue to be involved in human development and governance and, by leveraging scarce IDA funds with development partners’ resources, develop a few new lending operations that will support the government’s other priorities. ii) Flexibility with a long-term engagement perspective is embedded in the design of the CPS. Flexibility will be needed in order to allow for appropriate responses to changing country circumstances or to take advantage of evolving development opportunities, including new provisions of OP 10.00 for projects in situations of urgent need of assistance or capacity constraints, additional financing and project restructuring. The midterm CPS Progress Report will take stock of the evolution of the lending program and, based on analytical work and availability of IDA 17 resources, adjust the lending and AAA program. Complementarity, comparative advantage and responsiveness to the client will determine specific interventions. iii) Donor leveraging and investing in partnerships. Most of the investment operations of the current portfolio involve development partners’ contributions leveraged by limited IDA 16 resources. The number of multi-donor trust funds has increased over the last several years as a result of development partners increasingly joining efforts with the Bank in addressing priorities of the government, especially in infrastructure and governance. The Bank will explore options and focus technical assistance in designing operations that could also involve co-financing from the Government’s public investment program. Building on the successful example of the Security 19    Public Expenditure Review (PER), the Bank will continue policy discussions and collaboration with various stakeholders on issues of fragility and peace building. iv) Application of a Liberia-tailored fragility lens in CPS activities. The fragility lens will be less a tool than a process by which sector teams will work with conflict specialists to design an operation so that the activities take into account risks associated with fragility and conflict drivers and include adequate risk mitigation measures. Project design will have to be flexible enough to allow for changes if negative impacts are found. The process will involve assessing factors such as location, gender, youth and ethnic inclusion in addition to evaluating issues such as limited trust in the state, mechanisms for conflict resolution and employment generation. A fragility analysis will be prepared at the project concept stage and followed through the project cycle. PILLAR I. ECONOMIC TRANSFORMATION Basic Infrastructure 59. The CPS supports the efforts of the Government to reduce the infrastructure gap and increase access and connectivity. The focus will be on roads, energy, and communication, sectors that are vital to the economic development and state and peace building agenda facing Liberia. In each of these sectors, the strategy is to combine the delivery of results both in rural and urban areas by building infrastructure and increasing access. Improvements in road and electricity infrastructure will facilitate improved access to key social services including health and education for the poorest Liberians. Integration into and with the region will be a long-term goal. The efforts under the CPS will be informed by the experiences of the WBG in the country and region. Risks will be carefully evaluated and mitigating measures provided for. It is expected that these investments will impact the population, both urban and rural, through infrastructure construction and maintenance, through processes of decision-making and participation, and most significantly, through their outcomes, which contribute to economic growth and employment, governance and public security. These wide-ranging effects can in turn increase Liberia’s stability and resilience. 20    CPS Pillar I Outcomes and Indicators* Outcomes Indicators Increased access to ‐ Number of people in urban and rural areas provided with access to electricity by household connection reliable and increase from 14,270 to 50,000 affordable energy. ‐ Cost of electricity decreases from 0.55 to 0.41 USD /KWH ‐ System Average Interruption Frequency Index (SAIFI) for customers in Monrovia decreases from 20 to 15per month Increased access to ‐ Share of rural population with access to an all season road increases from 5% to 10% reliable ‐ Share of roads in good and fair condition as a share of total classified roads increases from 15% to 35% transportation ‐ Travel time along major corridor decreases: Monrovia to Guinea border from 12 to 6 hours, Monrovia to services Buchanan from 5 to 3 hours ‐ Share of qualified national staff in key competency areas at central level in the transport sector increases from 10 % to 75% Increased access to ‐ Access to Internet Services (number of subscribers per 100 people) increases from 1.7 to 3 telecommunications ‐ Volume of available international Capacity; International Communications (Internet, Telecoms, and Data) services bandwidth (Gbit/s) increase from 0.07 to 1.12 Improved ‐ Area under new technologies by WAAPP increases from 0 ha to 72,000 ha management and ‐ Area of smallholder tree crop farms rehabilitated, replanted or planted under STCRSP increases from 0 ha productivity in to rehabilitation of 3,700 ha, replanting of 1,250 ha and new planting of 850 ha agriculture, forestry ‐ Total annual net economic benefit from targeted fisheries increases from US$3.9 million to US$8 million and fisheries ‐ Number of strengthened Cocoa Farmers Organizations (FOs) increases from 0 to 43 ‐ Fishing vessels observed by aerial/surface patrol or by radar and satellite monitoring that are committing a serious infraction in targeted fisheries decreases from 45% to 33 % ‐ National REDD+ strategy is prepared and validated by national stakeholders Improved enabling ‐ Domestic for-profit businesses registered on the Ministry of Commerce’s Liberian Business Registry environment and (excluding NGOs, branches/ subsidiaries, foreign corporations and foundations) increases from 6,171 to increased access to 8,000 finance for Liberian ‐ Total commercial bank loans given to firms increases from 216 M to 500 M USD SMEs ‐ Amount invested within 3 years of completion of IFC investment climate reform project by local and international firms increases from 71 M to 91 M USD *Related WBG instruments are reflected in the Results Matrix (Annex 1) Energy 60. The CPS will contribute to the increase in the generation of and access to affordable and reliable electricity for businesses and households, in addition to improving access to alternate renewable generation methods in rural areas. Over 50,000 urban and rural clients will be connected to electricity up from roughly 14,270 today providing additional opportunities for households, small businesses, schools and hospitals. Quality improvements will be measured by a decrease in average interruptions. A Least Cost Energy Access Plan (LCEAP) will provide the road map and investment plan for the national expansion of the sector (generation and transmission/distribution) until 2030. Work will begin to extend the national energy grid connecting Monrovia to much of the rest of the country and the country itself to the rest of West Africa. This will be essential for integrating Liberia’s national power system into a unified regional electricity market and is part of the Bank’s Regional Integration Assistance Strategy for West Africa. 61. Instruments. The Bank is financing 10 MW of less expensive heavy fuel oil (HFO) power generation, which will come on-line in time to compensate for the reduced production capacity from the soon to be rehabilitated Mount Coffee Hydro plant in the dry season. In addition, current support to the sector consists of one national IDA operation and 2 trust funds (GPOBA and Lighting Africa) providing access to electricity to the poorest households in Monrovia and rural Liberia. In the CPS period, two additional IDA operations will support increased generation, transmission and 21    distribution, beginning with the line from Monrovia to Kakata, the first part of the country’s main economic growth corridor-triangle. A second line will be defined upon completion of the Bank supported LCEAP. The Scaling-up Renewable Energy Program (SREP), approximately US$50 million in grant, will be implemented by the Bank and the ADB and will focus on increasing access to mini-hydro and bio-mass on grid generated energy in rural areas. 62. The West Africa Power Pool (WAPP) project will interconnect Cote d’Ivoire, Liberia, Sierra Leone and Guinea into the WAPP Energy system and will develop the hydropower resources in the sub-region. The regional context of the project will have a transformational impact in the national power systems by building, for the first time in Liberian history, the energy backbone of the country outside Monrovia. In addition, the WAPP project will physically integrate the electricity systems of Liberia, Cote d’Ivoire, Guinea and Sierra Leone thus increasing electricity supply, making better use of generation resources, and improving system reliability, both in terms of supply adequacy and security. 63. IFC plans to work with mining and agriculture concessionaires on the provision of power needs through co-investment with an Independent Power Producer (IPP). In the future the same IPP could increase its capacity and then have an off-take agreement - possibly backed by MIGA - to supply power to local communities in a rural electrification program; two mining companies have indicated interest in this initiative. As part of the Bank’s knowledge work, the energy program will continue to strengthen the governance of the sector and build institutional and human capacity in the Ministry of Land, Mines and Energy and the Liberian Electricity Corporation, in coordination with other development partners. Previously, the WBG provided advisory service and guidance on the development and tendering of a private sector Management Contract (MC) for the Liberia Electricity Corporation; during the CPS period the geographical area of the MC will be extended nationally to continue to strengthen LEC’s capacity to deliver increasing number of household connections to electrical grid beyond Monrovia. 64. Development partners are coordinating their response to address the energy needs of Liberia. Norway, Germany and the European Investment Bank are co-financing the rehabilitation of the Mount Coffee Hydro, expected to generate approximately 80 MW in the rainy season by end 2016. The HFO generation capacity needed to provide the backup for Mount Coffee in the dry season is also being supported by JICA (10MW) and the GoL self-financing of 18MW; an additional 10MW is under negotiations with the Arab Bank. The WAPP is also supported in Liberia by the ADB and the EIB. Major investments will be needed in creating additional transmission and distribution. In addition to the Bank’s funding, support will be provided by USAID, Norway, Japan and the European Union, which is already financing a cross border project with the Ivory Coast. Transport 65. More Liberians will have increased access to reliable transport services. The share of total roads classified as in good and fair condition will increase from the current 15 percent to 35 percent. Efforts during the CPS period will be focused on completing rehabilitation and reducing travel time in key transportation corridors from Monrovia to Buchanan, Monrovia to Ganta and a part of the South East corridor from Ganta to Harper. The completion of these major corridors will increase access to local and regional markets and begin to physically unite the country internally and with neighboring Ivory Coast and Guinea. Capacity development milestones include the 22    establishment and successful functioning of an independent Road Agency, which will be responsible for maintaining the nation’s road network. 66. Instruments. Current interventions consist of four projects, with a total net commitment of over US$400 million. Three additional transport operations are included in the CPS period; two are additional financing for both URIRP (Urban-Rural Infrastructure Rehabilitation) and LIBRAMP (Liberia Asset Management Program). The third project will co-finance, along with the ADB and the GoL, portions of the South East Corridor connecting the country’s poorest regions. The Banks’s transport portfolio will continue to be co-financed by the Liberia Reconstruction Trust Fund (LRTF), established in 2006 and recently confirmed as the GoL’s preferred channel for donor funding in transport and energy. IFC, together with the National Investment Commission (NIC), is developing a Liberian private sector scan to determine the most viable economic sectors that would attract foreign direct investment. Water transportation has been identified as a potential investment opportunity and IFC will support NIC to identify a potential investor through the NIC-IFC leasing program. A multi-sector transport development plan will be prepared, including a transport sector investment plan. The Bank’s continued AAA program will focus on technical assistance to the Ministry of Public Works to build specific sector capacity needed for the establishment of an independent Road Agency. 67. The Bank’s transport portfolio is strongly coordinated with other development partners, including those supporting the LRTF: the European Union, Norway, Sweden, United Kingdom, Germany and Ireland. Other key development partners supporting the sector include GiZ, ADB and the Kuwaiti Fund. Together with Sweden, their programs support the rehabilitation of the country’s secondary and farm to market roads. It is expected that the future Millennium Challenge Account (MCA) program will also focus heavily on basic infrastructure; however, the MCA financing will only become available towards the end of the CPS period. Telecommunications 68. During the CPS period, there will be increased and improved access to affordable internet services. The CPS envisions that access to internet will rise in the short term from 1.7 to 3 internet subscribers per hundred people and that the retail costs of internet services will decrease from US$ 1500 to US$ 800 monthly. Investments in building the national fiber optic backbone will be essential for reaching the access targets. 69. Instruments. The ongoing West Africa Regional Communications Infrastructure project (WARCIP) brought high quality internet to Liberia; the service was launched in early 2013 for Monrovia. The Bank’s technical assistance in FY 14 will focus on the identification of best approaches to i) close the connectivity gap and stimulate demand by creating relevant ICT applications; ii) develop an action plan for creating ICT skills in the Liberian labor market and iii) support to the Government to operationalize the ICT4D strategy. The study will also identify options to finance the national backbone, including potential financing from both donors and the private sector. IFC will explore possibilities to partner with the private sector in extending the national backbone outside Monrovia. 23    Agriculture and Forestry 70. The CPS will contribute to the improved management and productivity in agriculture, forestry and fisheries. A vibrant domestic agriculture sector will help to reduce the food import bill, thereby contributing to improved food security and poverty reduction. CPS interventions include pilot partnerships between concessions and smallholders that will link smallholders to improved techniques, inputs and markets. Aproximately 5000 hectares of small farmer’s land will be rehabilitated, replanted or newly planted with crops including coffee, cocoa, palm oil and rubber. The joint IDA/IFC emphasis on tree crops builds on the findings of the (2008) Diagnostic Trade Integration Study (DTIS), currently being updated, that suggested that more priority be given to tree crops given their potential to enhance the income of some 450,000 households, mostly poor. For the first time in decades, long term credit will be available to approximately 100,000 small holders. In addition, it is expected that total net economic benefits from target fisheries will increase from US$3.9 million to US$8 million as a result of higher local fish production and tightened control of illegal fishery. Box 2: Liberia and Climate Change Liberia, like many developing countries, is strongly predisposed to severe negative impacts of climate change and variability due to its fragile economy, weak resilience and low adaptive capacity. The 2012 Climate Change Vulnerability Index ranks Liberia as one of the countries at high risk. Some of the climate related vulnerabilities include: (i) rising sea levels of the coastal areas; displacement of people from Monrovia and Buchanan (important cities for the growth and development of Liberia’s economy) is already increasing; ii) wide ranges of changes in rainfall which could result in inundation of about 95 km2 of the coastal area and/or between 1 and 25% reduction in mean annual total runoff of the St. Paul River Basin1 , expected in the 2020s, which will affect the production of hydroelectricity from the Mount Coffee hydropower plant and reduce the supply of raw water to Monrovia; and (iii) increasing rainfall and flooding due to sea-level rises may lead to about 10 – 20% increase in the country’s vulnerabilities to epidemics of malaria, cholera and diarrheal diseases. The Republic of Liberia ratified the United Nations Framework Convention on Climate Change (UNFCCC) in 2002, and has signed the Kyoto protocol. There is no dedicated climate change policy or strategy in place. 71. Instruments. The current IDA portfolio in Liberia consists of 2 regional projects (agricultural and fisheries) and two national agricultural projects, the Small Holders Tree Crops, approved in FY 12 and the agricultural component of the AIDP, the Agricultural and Infrastructure Development Project (FY 08). An Agriculture Sector “Landscape” Diagnostic will be prepared in FY 14. Work in the forestry sector in Liberia will continue through trust funds and analytical work. The Bank will remain engaged in the sector through the involvement in the REDD plus agenda, which will support the preparation and validation of a strategy to reduce emissions from deforestation and forest degradation. The implementation of this strategy will help to reduce the vulnerability of Liberia to climate change. Policy dialogue will be continued to follow up on the recommendations to address serious governance issues stemming from Forestry Sector Diagnostic prepared in FY 13. 72. During the CPS period, the agricultural sector will receive substantial assistance from other development partners. USAID, the ADB, FAO, EU, IFAD, Japan, China and Germany, all have programs supporting the agricultural sector's investment program (LASIP) and the Food Security and Nutrition Strategy. Programs support agricultural commodity value chains for staples such as rice and cassava, vegetable and small livestock diversification and promotion of small holder tree crops schemes. The principal external support to the Liberia Forest Sector comes from 24    the European Union, DfID, USAID, FAO and Flora and Fauna International. The EU and DfID are supporting Voluntary Partnership Agreement (VPA) implementation, including supporting institutional capacity building in the Forestry Development Agency. The objective of the program is to assist the regulation of the domestic market and the integration of many existing (and informal) small forest and forest-resource dependent enterprises into formal and regulated trade and commerce. USAID recently concluded the Land Rights and Community Forestry program and will support a follow-up program called PROSPER (People, Rules and Organizations Supporting the Protection of Ecosystem Resources), which will focus on support to community management of forest resources. Private Sector Development 73. WBG interventions will focus on improving the business-enabling environment and increasing access to finance for businesses. Through its Conflict Affected States in Africa (CASA) Initiative, IFC will continue the delivery of advisory service programs to improve the investment climate, focusing on the lagging indicators tracked by the World Bank Group’s Doing Business Report. It is expected that the number of days on average to start a business will be reduced from 6 to 4 and that, by the end of the CPS period, more that 1800 new domestic businesses will be registered on the Ministry of Commerce’s Liberian Business Registry. With respect to increased access to credit, it is expected that total commercial loans given to firms by Liberian based banks will increase to US$500 million from the current US$ 216 million during the CPS period. 25 percent of those firms will be owned by women. The gender aspects of these results will be better reflected in the CPSPR: currently accurate base-line data is not available. 74. Instruments. A Private Sector Development Strategy (PSDS), developed with support from the World Bank and IFC will result in a cohesive strategy and action plan for diversification of the local private sector. The PSDS will leverage the results of other knowledge products, such as the ongoing Diagnostic Trade Integration Study (DTIS) update, which will assess the constraints to the integration of the domestic private sector into global value chains. Besides support for improving the investment climate and a strengthened public private dialogue, the IFC will take the lead in developing financial sector infrastructure such as a collateral registry and a credit information sharing system, while the World Bank will provide longer-term support for institutional capacity development in areas such as bank supervision, credit assessment, reporting and enforcement. The Financial Sector Assessment Program, which has never been done in Liberia, could be undertaken to inform the development of a Financial Sector Development Strategy. 75. The WBG will continue to support private sector participation in rebuilding infrastructure by assisting the Government of Liberia in developing integrated scenarios for power and transport investments that better link concessions with the rest of the economy. Based on those scenarios, specific projects could be identified to connect mining concessions to the transmission network thus increasing the possibility of connecting small businesses and secondary towns to the grid at a lower cost. 76. The CPS also provides for technical assistance from the WBG to develop private-public partnerships (PPP) for utilities management and development, particularly electricity. The assistance would include a review of the regulatory systems and the design of options to make 25    power sector attractive for private sector investment. Technical Assistance will be provided to enhance GoL's ability to manage existing assets in a more productive manner structure, advise on tariff structure, ensure compliance of tendering processes and dispute resolution and develop best practice models for project management and oversight. MIGA could provide private sector utilities investors with termination guarantee credit enhancement, regulatory risks coverage and other investment risk mitigation instruments. PILLAR II. HUMAN DEVELOPMENT 77. The CPS continues support for improved outcomes in education, health and social protection. The improved outcomes will be delivered through increased access and quality of basic social services, and from strengthening systems and human capacity to deliver those services. The investments in infrastructure for greater connectivity should ease service delivery covering gradually a greater share of the population and favor job creation and generate income opportunities. Better provision of quality social services and building social safety net to address the needs of extreme poor will allow Liberia to progress towards the MDGs, increase trust in the state and its ability to create opportunities for all Liberians. The CPS will also promote direct creation of employment through targeted programs focused on the young and eventually mainstreaming job creation in all operations. CPS Pillar II Outcomes and Indicators* Outcomes Indicators Improved conditions for ‐ Number of children attending primary school in ‘improved’ facilities as defined by technical learning and assessment increases from 4,590 to 8,910 management capacity in ‐ Number of Grade 1-9 students benefitting from school grants, learning materials, supplementary basic education readers under GPE Basic Education Project increases from 0 to 591,000 ‐ Number of schools single signatories to own bank account increases from 0 to 2,500 Improved capacity of ‐ Knowledge score of medical residency students according to key curriculum benchmarks by health service delivery in Health -Systems Strengthening Project increases from 60 to 75 selected secondary-level health facilities Improved protection of ‐ Number of work days created under YES project increases from 1.12 million to 1.8 million poor and vulnerable households *Related WBG instruments are reflected in the Results Matrix (Annex 1) 78. The CPS will continue to improve education quality while strengthening management capacity within the sector. Over 5,000 new students will attend improved facilities; 40 new schools will be constructed in isolated areas according to improved school construction standards to improve access to education, especially for girls. Students will have access to better textbooks; teachers will be supported through training and methodological material and, for the first time, approximately 600,000 students will benefit from school grants, all of which will strengthen school- based management. The school grants, based on a formula of school remoteness and numbers of pupils enrolled, will improve the environment for teaching and learning. Strengthening governance through better procurement practices at a local level will also be emphasized. While most activities 26    will continue to focus on basic education level, quality enhancement of post-basic education will ensure a tighter linkage between human resources and labor market demands. 79. The CPS will focus on enhancing capacity of the public health sector to deliver quality service, especially targeting the maternal and child mortality MDGs. Better health outcomes will be reached by: a) improving the quality of care for services with proven effectiveness; (b) increasing the availability of qualified graduate physicians (pediatricians, obstetricians, general surgeons, and internal medicine specialists, with cross-cutting focus on anesthesiology); (c) enhancing the clinical competencies and motivation of mid-level cadres (nurses, midwives, and physician assistants), and (d) improving provider accountability mechanisms related to both the achievement of results, and health worker performance at selected facilities. In total, seven hospitals will be included in the graduate medical residency program (GMRP); all but one are located outside of Monrovia. At least 10 percent of all maternal and child deaths will be audited as part of a national campaign, led by the Ministry of Health and WHO. 80. CPS support to social protection will focus on increasing resilience among poor and vulnerable households, in line with the Government’s Liberia Youth Employment Program (LYEP) and Social Protection Strategy and Policy (SPSP). A multi-sector Bank team is supporting the Government in developing the LYEP to improve employability and employment of 15 to 34 year-olds, focusing on a diverse group of young Liberians. Design will also be informed by results and lessons learned from the Bank’s current operations, including 3 ongoing investment operations financed by IDA and TFs. In its final phases, the ongoing operations will begin to engage communities, particularly in remote and typically marginalized areas, by helping young people to engage in longer-term productive activities through extended training package, including literacy, numeracy and business skills, and by linking them to local markets thus providing for more sustainable livelihoods. Extension and scaling up of the current Economic Empowerment of Adolescent Girls (EPAG) project will continue building on a very successful skills-to- employment model, which will be extended to include boys along with adolescent girls. 81. Instruments. Two new IDA HD operations are currently planned for the CPS period. First, a FY 13 health sector project will be a follow-up to the project closed in FY12. 18 The second operation, programed for FY 15, will build on lessons learned from the ongoing Youth Employment and Skills (YES) Project, Community Empowerment Project (CEP) and the EPAG project, and will address the mismatch of supply and demand in the labor market. IDA funding may be accompanied by a Japanese Social Development Fund grant. Programmatic AAA in human development will continue to assist the Government in analyzing links between post-basic education and skills for employment and in designing programs that will support job creation, especially for youth. In addition, efforts will be made to help the Government in using their own resources allocated to employment programs in a more effective manner. The analytical work to explore the options of creating social safety net to address the needs of the extreme poor will be undertaken. Outcomes expected from new programs will be defined in the CPS Progress Report.                                                         18 The new health operation is a follow-up to the Health Systems Reconstruction Project (HSRP) that closed in FY 12. Over the course of the project, 212 health facilities were constructed, renovated and/or equipped, and 895 health workers have been trained. In addition, a Bank supported the formulation of a National Health Strategy and Plan and a comprehensive Health Financing Policy and Plan. 27    82. The Global Partnership for Education Grant, of which US$ 32 million out of US $ 40 million remain undisbursed, will support the outcomes in education sector. Knowledge work in the education sector will inform the Government on policy options for improving post-basic education, particularly addressing the needs in the transport, energy, agriculture, health, and education sectors, including opportunities to establish linkages for Liberian universities with the new WB funded regional program, the African Centers for Excellence. 83. Additional funding for the Emergency Monrovia Urban Sanitation Program in FY 14 from the LRTF will continue to support the Monrovia City Corporation (MCC) in providing environmentally sustainable waste collection services. The Bank’s Water and Sanitation Program (WSP) will continue to provide technical assistance to sector institutions, including technical assistance to increase the commercial capacity of the Liberian Water and Sewage Corporation. 84. A large number of development partners are supporting the social sectors, which requires close coordination and collaboration. In education, UNICEF, USAID and UNESCO, together with the WB, have been primarily supporting basic education. The EU, however, will prioritize secondary education in their new planning cycle which begins in 2014. China has also committed to supporting the re-construction of several technical education centers. Primary health care is also the focus of the majority of development partners, including USAID, EU, WHO and the pool fund, supported by UNICEF, UNHCR, DfID and Irish Aid. The EU is providing significant budget support to the health sector (approx.US$ 45 million over a three-year period). ADB is investing in improving water systems in Monrovia, and, together with USAID, DfID, UNICEF and Irish Aid, building water systems in counties. A large number of small social safety net programs will require thorough assessment to determine the best ones. For example, the first Cash Transfer program for labor constrained households in two counties, piloted by UNICEF with the EU funding, could possibly be scaled –up. PILLAR III. GOVERNANCE AND PUBLIC SECTOR INSTITUTIONS 85. The CPS supports efforts to consolidate the governance efforts of the recent past and create the new institutions that will transform the economy and society profiting from increasing resources and weakening the drivers of conflict and frailty. The focus will be on four specific areas. The first maintains attention on improving financial management, beginning with improved compliance with current norms and tracking progress continuously. The focus of the second area will be on improving the quality of the civil service. The third addresses thorny land issues that have been drivers of conflict that must not remain unattended. Lastly, sharpened attention will be given to improving the governance of the natural resource sectors to prepare for using the increased revenues in a transparent and productive manner. Work in the two other pillars equally supports the governance improving efforts, especially because they are programed to contribute to the enhanced legitimacy and presence of the state through greater connectivity, increased employment opportunities and better service delivery. The WBG will encourage through its interventions attention to local development and community participation, while more decentralized and participatory structures emerge. 28    CPS Pillar III Outcomes and Indicators* Outcomes Indicators Improved public financial ‐ Extent of unreported government operations (PEFA PI-7 Score) improves from D+ to B management ‐ Scope, nature and follow-up of external audits (PEFA PI-26 Score)improves from D+ to C+ Improve land ‐ Deed registry completion increases from 0% to 80 % administration *Related WBG instruments are reflected in the Results Matrix (Annex 1) 86. Strengthened financial management, measured by improved scores in future Public Expenditure and Financial Accountability (PEFA) assessments, will continue be an important area of Bank support during the CPS period. Priority attention will be given to areas with the weakest performance as measured under PEFA, such as budgetary planning and budget credibility, budget execution, including procurement and accounting systems, and financial reporting as well as external audit and legislative scrutiny. In addition, the CPS seeks to contribute, through technical assistance and with close coordination with the IMF, to improvements in the institutional capacity for planning and implementing the public investment program with a view to strengthening national public investment practices. The Bank will also assist the Ministry of Finance in the implementation of a gender expenditure tracking system. 87. Instruments. A series of programmatic budget support operations and a FY 12 Public Financial Management IDA operation will continue to support the Government’s reform agenda during the CPS period. A public administration focused IDA operation is programmed for FY 14 to deepen the reform process in the civil service. The Bank will continue to provide support to the Government’s efforts to develop an affordable, independent, responsive and accountable civil service. Three key areas will be emphasized: i) strengthening the institutional capacity for public sector management ii) human resource management and pay reform and iii) in-service training and capacity -building across the civil service. Concrete results and outcomes will be identified in the CPS progress report. 88. It is expected that there will be two additional IDA operations in the area of natural resource management, including land administration. The CPS program will deepen its engagement on land issues, which have been identified as one of the chief sources of conflict in Liberia today. Longer- term Bank efforts to strengthen land administration systems will be complemented by a program designed to build capabilities for inclusive and equitable citizen engagement in land and natural resource management. Bank budget support will also finance the finalization of crucial new policies and laws for land rights to provide clear distinction between the different classes of land and security of tenure. The Bank will also continue to support alternative dispute mechanisms within the official justice system; this is currently supported by the State and Peace-building Fund allocation. An additional SPF support will be sought to not only address information asymmetries that limit meaningful citizen-state-investor engagement, but also document emerging local capabilities for effective citizen engagement on land and natural resource management. Across the full range of instruments, opportunities will be identified to strengthen demand-side accountability by integrating open knowledge and collaborative governance approaches. This will help to ensure that government and non-government stakeholders are connected to the “how” of reform and that 29    non-state actors can mobilize for collective action and deploy social accountability processes to guide and support progress toward development objectives. 89. Given the growing critical importance of improved transparency and accountability in the natural resource sector, the Bank, together with other development partners, will increase its reform support to improve natural resource governance. CPS support for the Government’s agenda will center on (i) transparency, (ii) consistency and (iii) regulatory clarity in the management of natural resources. On transparency, the Bank will continue supporting the work of the Liberia Extractive Industry Transparency Initiative to produce and publish audited reports of payments and receipts from the natural resource sectors. WBI’s collaborative efforts with SEGOM and AFTPM on extractives procurement monitoring, and the work of the IMF on expenditure tracking will complement these efforts. While encouraging oil exploration results are being recorded, no commercial oil discovery has yet been declared. Thus in the short term, the Bank will support Liberia’s on-going reform of the legal and regulatory framework for oil and gas exploration and assist Liberia in building its capacity to negotiate fair contracts with investors. In the event that a commercial oil discovery is declared, the Bank’s support will focus on building institutional capacity to regulate and monitor oil and gas operations, assess and collect taxes and royalties, and manage and invest petroleum revenues. The policy dialogue will seek to bring best practices available into the design of model contracts for concessions that ensure consistency of treatment for all concessionaires. Support to improve regulatory clarity will be provided through a series of Development policy operations and complementary technical assistance provided by the Bank or other partners. 90. Donor support in Governance and public sector modernization is organized by specific themes, including civil service reform (USAID, ADB, EU and Sweden), all of which will either support a MDTF managed by the Bank or provide parallel funding, such as is currently the case with the PFM MDTF. Natural resource governance, including land, is supported by UNHABITAT, USAID, the Millennium Challenge Account, UNDP, AusAid, DfID, the EU, Japan, Norway and Sweden. The Bank will also work closely with the UN Peace-building fund and the Justice and Security Board in continuing the dialogue on strengthening the justice system through alternative dispute mechanisms. Cross-cutting Themes 91. The CPS is drawing on various gender-integrated diagnostic studies, done by the Bank and other development partners, to mainstream gender through its program. Examples include: a 2009 Gender Assessment conducted by USAID, a 2012 UNICEF study on women and children, and a Gender Profile done in FY 13 by the African Development Bank. The selective mainstreaming includes economic empowerment of women, increasing girl’s access to education, health programming focused on MDG’s 5 and 6, tracking of gender expenditure in the budget and the scaling-up the current Economic Empowerment of Adolescent Girls (EPAG), which is serving as a model for components of the Government’s National Youth Employment Program. The Bank will also work on strengthening the institutions in charge of gender policy and implementation. Technical and advisory services will continue to support the Ministry of Gender and Development and the newly funded Adolescents Girls Unit AGU) funded by an IDF grant whose objective is to support the development of a platform for government, civil society organizations and local communities to work better together on adolescent girls issues. 30    92. Capacity development will be mainstreamed both in terms of supply- side considerations related to policies, staffing skills and organizational systems and for demand-side issues pertaining to local stakeholder participation in and ownership of development processes. Supply-side constraints are aggravated by existing institutional inadequacies that occasionally encourage patronage and inefficiency. In the short to medium term, human capacity development in the public sector will need to use innovative capacity- building mechanisms and be matched with a concurrent government agenda to absorb trained personnel. 93. Institutional strengthening and human resource capacity development will be mainstreamed in current and new operations. Key capacity development objectives will be prioritized by addressing organizational and human capacity constraints in critical sectors, such as transport, energy, health, education. Other priorities reflect the need to address pervasive capacity issues across sectors, including increasing local stakeholder participation, oversight, and social accountability in the development and implementation of basic services and economic opportunities, improving the compatibility of local social norms and customs with the country development objectives, and increasing the operational efficiency of local government for improved service delivery. The on-going training programs for procurement and financial management are good examples of capacity development initiatives that aim to strengthen not only project implementation, but also support institutional strengthening at ministry and sector levels. Lastly, these interventions will be monitored across the portfolio to help ensure the achievement of targeted development outcomes. 94. Increased transparency and accountability of public and private institutions will be a priority. Focused capacity development technical assistance will address: improving effectiveness of corruption prevention systems, including implementation of a newly enacted (May 2013) law on anti-money laundering, strengthening the existing Asset Disclosure System, ongoing work with Civil Society on transparency initiatives, and assistance for Stolen Assets Recovery Mechanism, all funded by Bank BB and TFs. In the FY 12 approved PFM operation, where $5 million IDA leveraged a $23 million MDTF, a grant fund will be available for non-state actors active in the area of budget transparency, contract monitoring and natural resource governance. Other support will permit CSOs to begin to adapt and use technology to support citizen engagement within the spirit of the Access to Information Law. The Open Government Partnership of which Liberia is a member will be a useful platform in this regard. In addition, CSOs and the media will be invited to support the implementation of the CPS itself via periodic briefings on project implementation and the expansion of new instruments of accountability such as the External Implementation Status Report (E-ISRs) and other social accountability activities in the sectors. 95. The Bank will also begin to engage with the government to increase the country’s capacity to develop and strengthen national capacity in Disaster Risk Management with particular focus on emergency preparedness. More specifically, this capacity development intervention, funded by a technical assistance Grant in the amount of US$544,500, under the World Bank’s Global Funds for Disaster Risk Reduction (GFDRR), aims to support the Government to establish effective and functional legal and institutional framework for disaster risk management. This framework will include links with climate change adaptation and risk management by: (i) strengthening risk identification mechanisms, (ii) enhancing information and knowledge management for DRM; (iii) reducing underlying risk vulnerability factors by improving risk 31    management application at various levels and (iv) strengthening disaster preparedness and emergency response and recovery practices. 96. In line with IDA’s Managing for Results agenda, IDA will leverage internal and external financing to strengthen Liberia’s capacity to produce credible development statistics for use in evidence-based policy making. The national statistical systems comprising the Liberia Institute of Statistics and Geo-Information Services (LISGIS) and other ministries and agencies involved in the production of statistics will be strengthened in terms of data collection and analysis. One of the main results of this support will be the implementation of a National Strategy for the Development of Statistics and a program for data collection, including the Household Income and Expenditure Survey (HIES), which will be funded by a MDTF administered by the Bank. Using another joint UN- WB trust fund, the Bank will continue to help the Government to build country systems in results management (monitoring system, learning from feedback and operational adjustment, rewarding for performance) and risk management (FM, procurement, safeguards). VI.IMPLEMENTING THE CPS FY 13-17 FINANCING SOURCES 97. The IDA allocation for the lending program for the CPS period is expected to be about US$ 308 million. The CPS period will encompass the remaining years of IDA 16 and the full IDA 17 allocation, which is assumed to be at least equal to that of IDA 16. Annual allocation for IDA cycles are indicative only, with actual allocations determined by: (i) total IDA resources available, (ii) the country’s performance rating; (iii) the performance and assistance terms of other IDA borrowers; (iv) the terms of IDA's assistance to country (credit and blend terms for PNG) and; (v) the number of IDA-eligible countries. 98. The majority of available IDA financing during the CPS period will focus on investment in the energy and transport sectors, in response to the Government’s request. Doing so will also build on successful interventions during the previous JCAS period and maximizing the impact these investments will have had on removing binding constraints for economic growth and well- being of population. In addition, a series of Development Policy Loans, of approximately US$ 10 million a year will be programmed to support Economic Transformation, Human Development and Governance and Public Institutions Pillars of the AfT. The remainder of IDA’s financing will support building institutional and human capacity essential for the successful implementation of the country’s long-term vision. The CPS Progress Report will revisit the sector allocations at midterm. 32    Table 3: IDA Indicative Lending and IDA/IFC Key AAA Program, 2013-17 IDA Lending Key AAA AfT Pillars FY 13 FY 14 FY 15 FY 16/17 FY 13-17 Pillar I - Peace, Youth Vulnerability Study Justice, Security Decentralization Diagnostics and Rule of Law Political Economy Notes Pillar II - AF - Liberia AF –Liberia Transport Project AF - Accelerated PSD Programmatic AAA and TA (joint Economic Road Asset Urban and (Ganta to Harper Electricity with IFC) Transformation Management Rural road) Expansion DTIS Update Project Infrastructure Agriculture PER (CPS Pillar I) Project(LACEEP) (LIBRAMP) Rehabilitation Transport Sector PER Project Urban Policy Note Liberia- (URIRP) ICT Backbone Feasibility Study and TA Accelerated IFC AS to identify Investors in Water Electricity Transportation Expansion Agriculture Sector “ Landscape” Project(LACEEP) Diagnostic Pillar III - Human Liberia Health Youth Higher Education Strategy Development Systems Employment/SSN Health Financing Note (CPS Pillar II) Strengthening Poverty Note Project HD Programmatic AAA and TA - Skills for Jobs Poverty Assessment IFC AS Education for Employment Pillar IV - Poverty Poverty Poverty reduction Poverty reduction Policy Note on Extractive Industries Governance and reduction reduction Support Credit Support Credit Governance Public Institutions Support Credit Support Credit TA on Oil Sector Governance Land Natural Resource Programmatic AAA in Natural Resource (CPS Pillar III) Management Civil Service Administration Management Efficiency and Value for Money in Budget Reform Project Governance Execution Project Land Sector TA Public Investment Program TA PREM Policy Notes 99. The current IDA portfolio consists of 17 approved projects, including 4 regional projects, for a total commitment of US$559.8 million. Infrastructure accounts for almost 85 percent, followed by social sectors (4 percent), agriculture and environment (5 percent) and economic management (6 percent). The portfolio is relatively new with an average age of 2.3 years. It is also healthy, of the ten national IDA projects that are disbursing, seven are rated satisfactory and three moderately satisfactory in achievement of their development objectives. Five of the ten projects have a satisfactory rating in Implementation Progress while the rest are rated moderately satisfactory. Disbursements (26.8 percent for FY 13) have been above the Africa Region’s average, and there are no problem projects in the portfolio. 33    Figure 4: Liberia Portfolio by Sector Liberia Country Portfolio 3% 1% Transport 6% 1% Energy 5% 4% Communication 42% Solid Waste Management Agriculture Education/Health 38% Social Protection Economic Management /Governance 100. The IFC’s current and future portfolio of investments and advisory services will be essential in delivering the agreed CPS agenda, which will be complemented by a joint Business Plan elaborated by IDA and IFC. The current IFC portfolio comprises US$ 7million in equity, US$13million credit and trade lines in four (4) Liberian banks; US$13million seed investment in the West Africa Venture Fund for direct on-lending to, or equity in SMEs and US$10million debt financing to a rubber producer. A robust pipeline of potential new IFC investments signals an average of US$60-80 million per year over the time period of this CPS. Priority sectors for new IFC investments during the CPS period will be agribusiness, power and infrastructure, financial services and mining while advisory resources will include strategic engagement in education for employment, agriculture, finance and private sector development. Table 4: Current IFC Investment Portfolio (US$ million) Current Investments Equity Debt Trade Line Fund Total 1 Liberia Bank for Development and Investment 0.3 - 2.0 - 2.3 (LBDI) 2 Salala Rubber Corporation - 10.0 10.0 3 Access Bank (Microfinance bank) 1.3 1.3 4 Ecobank Liberia - 3.0 6.0 - 9.0 5 Guaranty Trust Bank - - 4.0 4.0 6 West Africa Venture Fund - - - 13.5 13.5 7 Cemeco/Heidelburg US$ 110.0 at Group Level - - - - 0.0 8 Hummingbird 5.4 - - - 5.4 Total 7.0 13.0 12.0 13.5 45.5 101. The resource envelope will also include a strategic use of multi-donor and bilateral trust funds, and of grant resources available through global programs. Trust Funds will continue to be an important source of funding to achieve strategic results of the CPS. Given the limited IDA envelope relative to Liberia’s substantial investment needs, attempts will be made to use IDA credits to leverage donor grants through co-financing or pooled arrangements. The Bank has established a good track record in the use of Multi-donors funds for infrastructure and efforts will 34    be made to build on this record. At the end of FY 12, the country program had 60 active trust funds (both Bank and Recipient executed) with a net commitment of US$ 276.5 of which US$ 198.7 million was still to be disbursed. The Bank will seek possibilities to consolidate the trust fund portfolio and directly link it to the CPS strategic themes and lending program. PARTNERSHIPS 102. According to OECD-DAC statistics for 2011, Liberia remains heavily dependent from financial aid of development partners. In 2011 the total ODA disbursements for Liberia were more than US$ 717 million, of which US$ 490 million were provided by bilateral partners and US$ 227 by multilateral partners. Together with the European Union and the United States, the WBG continues to be one of the most significant development partners. In 2011 the ODA per capita was US$ 185 and almost 70 percent of the total ODA to Liberia was directed to the health, education and other social sectors, including humanitarian aid. Figure 5: Top 10 Donors in 2011 (disbursements, in million USD) 19 29.86 29.7 United States 30.18 Germany 149.86 EU Institutions 41.29 IDA 44.11 Sweden Belgium 44.52 104.04 Japan AfDF 58.79 Norway 83.22 Source: Aidflows, World Bank, OECD and Asian Development Bank database 103. Despite the multiplicity of players, the collaboration amongst development partners has improved significantly. There are active donor working groups, often co-chaired with the Government, in several priority sectors, including energy, transport, agriculture, forestry, land, justice and peace, health and education. Bank operations have been and will continue to be closely coordinated and, in many cases, co-financed with other donors using multi-donor trust funds. Given the growing presence of non- traditional donors, such as China, the country team will explore the possibility of parallel or joint financing of major infrastructure projects in addition to more opportunities for south-south learning exchanges. Building on the already existing close partnership with the UN in Liberia, the country team will continue exploring opportunities to further align or complement activities, especially in areas fostering reconciliation. 104. The Government is committed to create a new Aid Policy Framework, including the establishment of the Liberia Development Alliance (LDA). The LDA is a successor coordination                                                         19  Aidflows, World Bank, OECD and Asian Development Bank database. 35    platform to the Liberia Reconstruction and Development Committee (LRDC), and it will oversee the implementation of the AfT. The LDA will be the Government’s most strategic forum for working with development partners, civil society and private sector in addressing key development issues in Liberia. This forum, chaired by the President, will promote high level strategic coordination and policy dialogue to ensure the alignment of partner programs with Liberia’s development strategy. 105. Liberia was a key participant in the creation of the New Deal and is a pilot country for its implementation. Liberia’s Vision Liberia Rising 2030 and the AfT are aligned with the Principles of New Deal in Fragile States and Liberia’s new Aid Policy Framework intends to strengthen mechanism of coordinating development partners. The New Deal and the five Peace and State- building Goals (PSG) present an opportunity to enhance the way that the international community engages in conflict and post-conflict countries. The World Bank in Liberia, in close cooperation with international development partners and the UN, will continue to have a central role in advocating for enhanced transparency, strengthening of national capacities and improved timeliness of aid in order for funding to achieve better results. For example, the continuous work in building sustainable national financial management and procurement capacity will directly support the PSG of strengthening country systems. MONITORING AND EVALUATION 106. The CPS has been selective in choosing outcome indicators and, to the extent possible, the outcomes, outputs and indicators from the AfT, have been used. Liberia’s statistical capacity is very limited, therefore, the outcomes and outputs have been carefully chosen to ensure that they are measureable and progress can be monitored and assessed. A joint UN-WB trust fund is supporting the development of a monitoring and evaluation system for the AfT, which in turn will be used to monitor CPS strategic activities. Since the bulk of results are to be produced by on- going projects and AAA, the CPS Progress Report will update the results framework to reflect changes and advances in the implementation and adequacy of the program. The Bank continues to provide support for improving statistical capacity, including a new MDTF to support the implementation of the first comprehensive Household Income and Expenditure Survey to provide a robust basis for measuring GDP, inflation and poverty. This should facilitate a much stronger link and alignment between, on the one hand, the national M&E and statistics system; and, on the other, the Bank’s projects and activities as outlined in the CPS. 107. The CPS will improve monitoring and evaluation. The Bank will take stock of the current mechanisms that capture results in projects and take actions to ensure quality design and avoid past difficulties in compiling reliable and comparable data for outcome monitoring. If necessary, the results framework of the on-going projects will be revisited. Projects will be required to report results quarterly, and the use of surveys will be promoted and made systematic to report on progress achieved with Bank-financed operations. Through using the fragility lens, project interventions will be monitored to ensure a do-no-harm approach. VII. RISKS TO CPS IMPLEMENTATION 108. The current security situation in Liberia remains fragile but stable, manifesting itself in random outbreaks of violence mainly related to land disputes and elections. Regional 36    instability also continues to have spill-over effects, with increased risk due to the gradual UNMIL drawdown. There have been incidents of armed violence in the border areas with Ivory Coast where Liberia ex-combatants continue to cross over to participate in sporadic fighting. To help mitigate the security risks, UNMIL is providing support to expand the training and strengthen the presence of local police forces, especially along the south-east border. At present, the Liberian security forces do not have the capacity to adequately deal with these situations. Close coordination with UNMIL will continue, particularly since the new investment operations will increasingly target rural areas. The Liberia Country office will also work with UNMIL and the Bank’s regional security team with respect to standard security procedures for staff and visiting missions. The Bank will continue to cooperate with the UN family on issues critical to sustained peace, such as youth employment and land administration, through close coordination in the implementation of the UN’s Peace Building Fund (PBF) and the Bank’s State and Peace-building Fund (SPF). The CPS program will also contribute to increased security by supporting a national and regional connectivity agenda in energy, transport and telecommunications. 109. Political risks associated with the national elections in 2017 and the upcoming parliamentary elections in 2014 are moderate to high. It is expected that succession and generational change rhetoric will increasingly become a key part of the political discourse as elections approach. The already tense relationship between the Executive and Legislative may further deteriorate, making it increasingly difficult to reach agreement on critical reform issues. Effectiveness delays in Bank operations, due to the delay in legislative ratification of bank credits, have been one of the major problems facing the portfolio in Liberia. The mitigation measures will include: i) strengthened communication with the Legislature; ii) continued support for training the legislative branch of the Government and iii) assistance, if needed, to the Ministry of Finance in communicating to the Legislature the Bank’s lending program and the outcomes it intends to reach. The Bank will also work with non-state actors to support the implementation of the CPS and will continue public information events such as quarterly media briefings focusing on sector specific operations. 110. Macro-economic risks are non-trivial but manageable. Liberia is heavily dependent on primary exports, including rubber, iron ore, oil palm and timber and on imported fuel and food. In the medium-term, much of the investments to drive economic growth will come from foreign investors leaving the country vulnerable to risks from external shocks to global commodity and financial markets. There are also risks of fiscal slippage as the Government may not fully realize its borrowing program, which could put pressure on attaining goals set in the AfT and supported by the Bank’s program. Some of these risks will be mitigated through the continuance of prudent fiscal and macroeconomic management (on which the Government has a good track record) with the support from the IMF through the recently agreed Extended Credit Facility arrangement. In addition, there is ongoing efforts (supported by the World Bank and other donors) to broaden the base of the economy and diversify exports through investments in agriculture and small and medium enterprises. 111. Limited capacity in the public and private sector to design and implement reforms and projects will be a significant challenge for CPS implementation. The government continues to rely on donor funded short term consultants to perform critical functions, and foreign technical labor will continue to play an important role in investment activities. Limited public sector capacity and significant centralization in decision making could lead to delays and, subsequently affect 37    project implementation. Government is aware of capacity constraints and intends to allocate a significant part of its own budget for capacity building measures. Several ongoing and planned operations in public financial management, public sector reform as well as specific sector operations will help to bridge the capacity gap. The innovative programs in strengthening procurement and financial management skills will continue through the CPS period. In addition, the WBG, in coordination with other donor partners, will analyze and address capacity development issues in each sector to support institutional and human capacity building required for the implementation of the AfT. 112. Notwithstanding the substantial progress made in improving economic governance in general and the fiduciary system in particular, weaknesses that present opportunities for corruption and the diversion of resources from their intended purpose remain. For example, while the IFMIS has streamlined many of the financial operations, it has not been rolled out to all ministries and furthermore it appears that the internal audits units are not yet sufficiently robust to address internal control weaknesses. To help mitigate the fiduciary risks, the World Bank through the Integrated Public Financial Management Project is supporting the roll-out of the IFMIS to other ministries and agencies and to expand its coverage to donor resources. In addition, the World Bank is also strengthening financial management and procurement through advanced professional programs as well as in-service training. During the CPS period, the Bank will strengthen efforts to support governance reforms, especially in the natural resource sector in addition to addressing governance and transparency issues at the level of each Bank operation. The ongoing support to non-state actors on issues such as access to information, budget transparency and contract monitoring will continue. Special attention will be given to promoting effective processes of consultation and grievance mechanisms. The Bank will also continue its ongoing engagement with the Open Government Partnership of which Liberia is a member, and support country level engagement. 113. Donor fatigue will be a risk in the medium term, although low to moderate, given the strong international political support enjoyed by the current president. In the short and medium term, Liberia’s reconstruction and political stability will continue to depend on significant donor engagement, especially given the limited fiscal space and the enormous costs associated with energy and transport investments. This risk involves two factors; the first concerns the uncertainties of the global economy and the ability of development partner’s to maintain current levels of financial support. The second relates to the expectations of development partners with respect to the GoL’s capacity to address major issues, many of which are related to fragility: land use, governance, extreme centralization, and transparency and efficiency in the use of natural resources. Although the merger of the Ministry of Planning and Economic Development with the Ministry of Finance has created additional complexity to donor coordination, the establishment of the LDA signals the Government’s ownership of its development program and its intent to strengthen the collaboration with development partners and private sector. This will involve increased efforts in mobilizing donor funding to finance the ambitious AfT. The Bank will continue to play an active role in promoting government ownership and harmonization among development partners in addition to providing support to the GoL in organizing donor conferences or reaching out to potential donors to replenish the LRTF. 38    CPS Annexes ANNEX 1: LIBERIA CPS (FY 13-17) RESULTS FRAMEWORK Country Issues and Bank Program and Development 1 CPS Outcomes3 Milestones4 Development Goals Obstacles2 Partners5 Pillar I- Economic Transformation (aligned with the AfT Pillar II) Energy: Make affordable Entire infrastructure for 1. Increased access to reliable  Connections to electricity grid in Ongoing activities: electricity available to generation and and affordable energy. Monrovia (number) Electricity System Enhancement Project (LESEP) industry, MSMEs and distribution of electricity Baseline: 5,158 (P120660), West Africa Power Pool (WAPP) households in urban areas and destroyed and limited 1. People in urban and rural Target: 16,000 (P113266) improve access to alternate access to the population. areas provided with access to Data source: LEC data System generation methods The customer base is electricity (by number of Trust Funds: elsewhere. limited with only 1.6 connections)  Transformers and auxiliary services GPOBA(P110723) percent connected Baseline: 14,270 supplied (number) GEF: Lighting Africa (P124014) nationwide. The high cost Target: 50,000 Baseline: 0 AFREA - Catalyzing New and Renewable Energy of electricity poses a Data source: LEC data system Target: 375 In Rural Liberia (P118460) major hurdle to the Data source: LEC data system expansion of electricity 2. Cost of electricity AAA: service. Tariffs in Liberia Baseline: 0.55 USD/KWH  Lightning Africa approved solar Managing the Oil Era (P132531), Liberia Energy are among the highest in Target: 0.41 USD KWH lanterns in use (number) Policy Economic and Sector Work (P118478), the world and the highest Data source: LEC bills to Baseline: 0 Energy Sector TA (P133196) in Sub-Saharan Africa at customers Target: 20,000 above US$ 0.50 per/kWh, Data source: RREA data system Planned activities: since s fuel cost represents 3. System Average Interruption Electricity System Accelerated Expansion Project > 80% of total cost of Frequency Index (SAIFI) for  SREP strategy and investment plan (LACEEP) (P133445), with AF for FY 16 electricity. customers in Monrovia for rural energy submitted to the Poverty Reduction Support Credit (P127317), (Number/month)6 Renewable Energy Program (SREP)(P143092) Cabinet(Yes/No) Baseline: 20 Target: 15 Baseline: No IFC: AS/IS Power to Mines (P2M) Data source: LEC data system Target: Yes Data source: RREA data system Development partners: Norway, KfW, ADB, EU, Japan, EIB, Arab                                                         1 Longer-term or higher-order development objectives, i.e. PRS objectives, and identified in the Agenda for Transformation. Usually not achievable in the CPS period nor solely addressed by the CPS program. Only those to which CPS outcomes will contribute are included. In the AfT Main Document defined as the Sector Goals. . 2 Critical issues and obstacles to achieving country development goals, providing the logical link to CPS outcomes. These are taken from AfT Main Document. 3 Country results deemed achievable in the CPS period and which the Bank expects to influence through its interventions. Indicators of each outcome are included, with baselines and targets and data sources. Sector-specific indicators for CPS outcomes related to capacity development and gender are listed in the relevant sectors. Baselines are dated 2012 and targets are for the end of the CPS period. 4 Progress markers of CPS implementation; outputs, actions, or outcomes expected to be realized during CPS implementation. 5 Ongoing and planned lending, grants, and guarantees; analytical and advisory activities. Includes IBRD, IDA, IFC, and MIGA. Partners included if co-financing or other support of same CPS outcome.  6 The System Average Interruption Frequency Index (SAIFI) is commonly used as a reliable indicator by electric power utilities. SAIFI is the average number of interruptions that a customer would experience and it measure service quality.  39  Development Bank Transport: Ensure that Institutional and 2. Increased access to reliable Ongoing activities: Liberians nationwide have managerial capacity in the transportation services  Roads rehabilitated or maintained Road Asset Management Project (LIBRAMP) reliable, safe, affordable and road sector is limited. (km)9 (P125574), efficient transport services Roads and bridges are 1. Share of rural population Baseline: 0 Urban and Rural Infrastructure Rehabilitation through a guiding framework domestic arteries for with access to an all season Target: 309 Project (URIRP) (P113099), Agriculture & and strategic policy and delivery of public services road (%)7 Data source: IIU/ monthly progress Infrastructure Development Project (AIDP) infrastructure investment. and nearly all economic Baseline: 5 reports by independent monitoring (P104716) activity. Road network Target: 10 consultant condition is quite patchy; Data source: IIU (based on all Trust Funds: many key routes alternate seasons roads against map of  Rate of completion of Monrovia- Liberia Reconstruction Trust Fund (LRTF) between sections in good, human settlements) Guinea corridor (%) (P110272) fair, and poor condition, Baseline: 0 which adversely affects 2. Roads in good and fair Target: 50 AAA: national connectivity. condition as a share of total Data source: technical audit and project Multi-modal transport study Most road rehabilitation is classified roads (%) 8 progress reports Updated DTIS based on gravel and with Baseline: 15 the country’s six months Target: 35  Unsafe bridges replaced/ copious rainy season, Data source: annual survey by rehabilitated Planned activities: that network has been IIU/MPW Baseline: 0 South-East Corridor (Ganta-Zwedru), almost impossible to Target: 11 Additional Financing URIRP maintain sufficiently. 3. Travel time along major Data source: IIU/monthly progress Transport costs remain corridors: reports from independent monitoring Transport Sector PER high, averaging $.20 per Baseline: Monrovia to Guinea consultant ton kilometer, due to poor border – 12, Monrovia to IFC: AS/NIC leasing program to identify potential road conditions and at Buchanan – 5 hours  Road Authority established(Yes/No) Investors in water transportation times unusable bridges. Target: Monrovia to Guinea -6 Baseline: No hours, Monrovia to Buchanan - 3 Target: Yes hours Development Partners: Data source: review of legal documents EU, Sweden, ADB, KfW, Irish Aid, Norway, GIZ, Data source: travel survey that establish Road Authority Japan, Kuwait Fund Capacity-development/gender 4. Share of qualified national staff in key competency areas at central level in the transport sector (% ) Baseline: 10 Target: 75 Data source: IIU self- assessment assisted by the Bank                                                         7 This indicator is measured as the proportion of rural people who live within 2 kilometers (typically equivalent to a 20-minute walk) of an all-season road. This indicator is also known as Rural Access Index (RAI). 8 This indicator measures the percentage of the total classified road network that is in good and fair condition depending on the road surface and the level of roughness. 9 This includes targets for rehabilitation of primary rural roads of 301km and non-rural roads of 8 km and road maintenance of 249 km of rehabilitated sections.  40  ICT: facilitate universal The absence of broadband 3. Increased access to  Retail price of internet services (per Ongoing activities: access, transparency, and access compels ISPs to telecommunications services Mbit/s per Month)(USD) West Africa Regional Communications reliable, low-cost postal, provide limited and poor Baseline: 1,500 Infrastructure Project (WARCIP-P 116273) telecom & ICT services quality services at high 1. Access to Internet Services Target: <800 nationwide. cost via satellite link. The (number of subscribers per Data source: Liberia AAA: submarine fiber-optic 100 people) Telecommunications Authority estimate Back bone feasibility study cable around West Africa Baseline: 1.7 of retail price nation-wide has reached Liberia, Target: 3 making for a huge Data source: Liberia  Feasibility Study, including Planned Activities: potential improvement in Telecommunications Authority list financial management on internet service but this potential of customers against estimate of backbone infrastructure, submitted IFC: Potential Co-Investment for national remains limited in the total population to the Cabinet(Yes/No) backbone with the telecom company absence of a fully Baseline: No functioning fiber optic Target: Yes Development Partners: backbone infrastructure in 2. Volume of available Data source: Liberia USAID the country. international capacity: Telecommunications Authority International Communications (Internet, Telecoms, and Data) bandwidth (Gbit/s) Baseline: 0.07 Target: 1.12 Data source: Liberia Telecommunications Authority records Agriculture: To promote Gap of access to 4. Improved management and  Foundation seeds produced through Ongoing activities: competitive, sustainable and technology, information productivity in agriculture, WAAPP support (t) Agriculture & Infrastructure Development Project modern agriculture and on modern methods and forestry and fisheries Baseline: 0 (AIDP) (P104716), Smallholder Tree Crop fisheries to contribute to job mechanization, as well as Target: 200 Revitalization Support Project (STCRSP) creation and poverty finance and infrastructure Data source: annual reports by Africa (P113273), reduction to purchase equipment 1. Area under new technologies Rice and the International Institute of West Africa Agricultural Productivity Program APL and for processing crops by WAAPP (ha)10 Tropical Agriculture (IITA) based on (WAAPP-1C) (P122065), West Africa (i.e. storage, processing, Baseline: 0 survey data from the Liberia Central Regional Fisheries Program (P106063) transporting, etc.) between Target: 72,000 Agricultural Research Institute (CARI) large and smallholder Data source: Annual survey by Trust Funds farmers limits agriculture WAAPP Secretariat  Long term credit13 delivered to oil Food Price Crisis Response (P112083)(under productivity and food palm and rubber out-growers under AIDP) security in counties. 2. Area of smallholder STCRSP (USD) Support to Development of Small Forest Enterprises Baseline: 0 – Income Generation to Youth in Africa (CHYAO) tree crop11 farms Old age and low Target: 100,000 (under EXPAN) (TF099452) rehabilitated, productivity characterizes Data source: Contracted concessionaires replanted or planted under tree crop plantations, reports STCRSP (ha):                                                         10 New technologies could amongst others be improved genetic material, new methods in use of fertilizer use and new techniques in irrigation. 11 Tree crops include: palm oil, rubber, coffee and cocoa. 13 Credit delivered as in-kind through concessionaires  41  particularly on Baseline: 0 AAA: smallholder farms. A Target: Rehabilitation 3,700, Sustainable Livelihoods Approach to Define Land large proportion of rubber Replanting 1,250 New Planting  Patrol days at sea per year in Tenure Priorities in Post-Conflict Liberia and oil palm plantations 850 targeted fisheries (P103693), are now at the end of their Data source: STCRSP Contracted Baseline: 0 Policy Notes (P133196) productive life, concessionaires and service Target: 60 necessitating replanting. providers reports Data source: monthly reports from Planned Activities: Bureau for National Fisheries High importation of 3. Total annual net economic AF for Regional Fisheries Program in partnership fishery product with low benefits from targeted with IFC nutritious outcomes. fisheries (USD)  Quantitative analysis of land use in Programmatic AAA – Natural Resource Baseline: 3.9 M USD forested and mixed agricultural Management Target: 8 M USD lands prepared and validated by the Agriculture Sector “Landscape” Diagnostic Study Data source: Economic model National Climate Change Steering based on fish landings, effort and Committee (NCCSC) (yes/no) Baseline: No IFC: AS/IS Co-investing with existing plantations price data from the Bureau of Target: Yes to strengthen the capacity of small-holders National Fisheries Data source: Report from validation workshop Development Partners: Capacity-development/gender FAO, WFP, USAID, IFAD, SIDA, ADB, GIZ 4. Cocoa Farmers Organizations (FOs) strengthened (number12) Baseline: 0 Target: 43 Data source: Report of service providers/CAO supervision reports 5. Fishing vessels observed by aerial/surface patrol or by radar and satellite monitoring that are committing a serious infraction in targeted fisheries (%) Baseline: 45 Target: 33 Data source: monthly reports form Bureau for National Fisheries 6. National REDD+ strategy is prepared and validated by national stakeholders (yes/no) Baseline: No                                                         12 Main areas of strengthening are: cocoa & coffee rehabilitation technologies, post-harvest handling, bulking, storage, collateral management, marketing, negotiation skills, accounting and financial management 42  Target: Yes Data source: Report from validation workshop Private Sector A large proportion of 5. Improved enabling  Procedures to comply with business Ongoing activities: Development: Transforming businesses in Liberia environment and increased regulation related to business AAA: the economy to meet the operate in the informal access to finance for entry16 demands of Liberians through sector (which restrict their Liberian SMEs Baseline: 5 Financial Sector NLTA (P129028), Private Sector the development of the ability to grow as they are Target: 2 Strategy & Dialogue (P131782), domestic private sector. unable to enforce their 1. Domestic for-profit businesses Data Source: Capital Market Strategy and Regulation (P125294), legal rights or have access registered on the Ministry of http://www.doingbusiness.org/data/ Non-bank financial institutions regulation and to legal protections), and Commerce’s Liberian exploreeconomies/liberia/starting-a- supervision Framework (P126368), Public are also restricted in the Business Registry (excluding business expenditure review (P127135), Policy Notes type of financing and NGOs, branches/ subsidiaries, (P133196), Diagnostic & Trade Industry States other goods and services, foreign corporations and  Days it on average takes to comply Update (P133205) both public and private, foundations) (% of which are with business regulations related to they are able to access. owned by women) business entry (number) IFC: AS insolvency courts and debt recovery, Baseline: 6,171 (32%) Baseline: 6 Finance leasing, SME development and linkages, The costs of accessing Target: 8,000 (32%) Target: 4 Business Regulations (Support for Business financing for micro and Data Source: MoCI, Liberian Data Source: Registry, Doing Business Advisory, Inspections, small businesses are high, Business Registry, analysis http://www.doingbusiness.org/data/ Legal Framework for SEZ) and the reach and quality conducted by Building Markets’ exploreeconomies/liberia/starting-a- of financial services Sustainable Marketplace Initiative. business Planned Activities: inadequate. Poverty Reduction Support Credit I (P127317) Small business owners are 2. Total commercial bank loans often not financially given to firms (USD)(% of  Entities receiving advisory services Joint (with IFC) Programmatic AAA in Private literate. which are given to women) on commercial court and alternative Sector Development Baseline: 216 million14 15 dispute resolution. Small businesses lack the Target: 500 million (25%) Baseline: 0 Development Partners: resources (e.g. training) to Data source: Central Bank of Target: 4 (judiciary, bar association, ADB, Sweden, USAID, EU, Germany, WFP, FAO, access goods and business Liberia quarterly and annual private-sector organizations, general UNDP services which would reports public) improve their Data Source: IFC records on advisory competitiveness and 3. Amount invested within 3 services provided productive capacities years of completion of IFC investment climate reform The cost and risk of project by local and  Entrepreneurs that receive training international firms under IFC SME development domestic and foreign Baseline: 71 million project ( number of women) investment is high due to                                                         14 November 2011 figure, based on exchange rate of L$71/1US$) 15  Baseline will be established by SME Banking Diagnostic Study. Target is a minimum requirement  16  This refers to the number of procedures to incorporate and register a new commercial and industrial firm in Liberia with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.   43  land ownership issues Target: 91 million Baseline: 843 (416) (including security of Data Source: NIC records Target: 2,800 (840) tenure, and enforceability Data Source: IFC records of number of of leases) participants in consultative workshops, training events, seminars and conferences Cost of trading across the under IFC SME development project borders is high because of administrative hassle and regulation Pillar II: Human Development (aligned with the AfT Pillar III) Education: Assure equitable Primary school enrolment, 6. Improved conditions for  Procurement of textbooks and Ongoing activities: access to free basic performance and reading learning and management teacher guides for grades 5-9 Community Empowerment Project II education outcomes are low, capacity in basic education verified by September 2013 under (CEPSII)(P105683), especially among GPE_BEP (%) Youth, Employment, Skills Project (P121686), disadvantaged 1. Children attending primary Baseline: 0 communities. school in ‘improved’ facilities Target: 85 Trust Funds: as defined by technical Data source: County Education Offices Global Partnership for Education Grant for Basic Incentives for new assessment17 (number) warehouse reports Education (GPE_BEP) (P117662), students to engage in Baseline: 4,590 Economic Empowerment of Adolescent Girls and learning are often low Target: 8,910  Schools constructed according to Young Women in Liberia (P110571), given the weak Data source: technical assessment standardized school construction IDF- Adolescent Girls Unit, Ministry of Gender and environment for learning 3 months after completion of guidelines under GPE_BEP (%) Development IDF (P130797) in schools. construction work Baseline: 0 Target: 35 AAA: Weak management at the Capacity-development/gender Data source: Division of Education Identifying the links between exclusion and youth central and school levels, Facilities verification reports violence in Liberia and Sierra L (P125926), lack of nearby schools, 2. Grade 1-9 students benefitting Enhancing Economic and Social Resilience among inadequate number of from school grant, learning Liberia’s Lost Generation of Youth (P129514), qualified teachers, weak materials, supplementary Higher Education Diagnostics & Strategy curriculum, and shortage readers under GPE_BEP (P132414), Policy Notes (P133196) of core textbooks have X number, of which are hampered the quality of female (%) secondary education and Baseline: 0 (0%) Planned Activities: contributed negatively to Target: 591,000 (44%) Poverty Reduction Support Credit 1(P127317) the progression of Data source: Project supervision secondary school students, report on deliveries of learning HD Programmatic AAA Skills for Jobs especially girls. environment improvements Poverty Assessment 3. Schools single signatories to IFC: AS for Education for Employment (E4E) and own bank account (number) vocational training Baseline: 0 Target: 2,500 Development Partners: Data source: NGOs school USAID, UNICEF, Open Society Foundations,                                                         17 ‘Improved’ is intended as schools that (i) function during the rainy season, (ii) have access to water and sanitation facilities, and (iii) are furnished.  44  surveillance reports European Union Health: Increase access and -Inadequately skilled 7. Improved capacity of health  Maternal, and child death audits Ongoing Activities: utilization of quality health health workers service delivery in selected carried out routinely by target PBF services and deliver them -Low skilled-birth- secondary-level health facilities hospitals according to national AAA: closer to communities. attendants to population guidelines Health Financing (P128825), ratio Baseline: 0 Enhancing Economic and Social Resilience among -Limited access to health Capacity-development/gender Target: 10 Liberia’s Lost Generation of Youth (P129514), facilities by some Data Source: Quality checklist/ death Identifying the links between exclusion and youth population 1. Knowledge score of medical audit reports violence in Liberia and Sierra Leone (P125926) -Weak referral system residency students according -Low coverage with to key curriculum benchmarks  In-Service Training sessions in Planned Activities: preventive interventions by HSSP Obstetrics, Pediatrics, Surgery, Health Systems Strengthening Project Baseline: 60 Internal medicine carried out on a (HSSP)(P128909), -Low quality of care and Target: 75 quarterly basis in project target Poverty Reduction Support Credit I(P127317) poor client responsiveness Data source: Knowledge test/ facilities to available services tracer vignettes Baseline: 0 Target: 42 Development Partners: Data source: Reporting invoices for USAID, UNICEF, DfID, WHO, EU Quantity indicators by the Graduate Medical Residency Program Council Social protection: Develop Poor quality and limited . 8. Improved protection of poor  Persons trained in basic life skills Ongoing Activities: and implement policies and access to essential social and vulnerable households under YES (number) (disaggregated Community Empowerment Project II operational systems to protect services at the national by gender, youth) (CEPSII)(P105683), Youth, Employment, Skills the most vulnerable groups; and county level and high Baseline: 28,000 (50% women, 65% Project YES)(P121686) increase employment rates of vulnerable Capacity-development/gender youth) readiness especially for youth employment Target: 45,000 (50% women, 75% youth) Trust Funds: 1. Number of work days created Data source: project reports on training Economic Empowerment of Adolescent Girls and Limited technical and under YES (number) Young Women (EPAG)(P110571) vocational training (disaggregated by gender, opportunities to prepare youth)18 AAA: youth for employment Baseline: 1.12 million (50% National Youth Employment Program (P143532) women, 65% youth) Target: 1.8 million (50% women, Planned Activities: 75% youth) JSDF Youth and Community Empowerment                                                         18 In CPS period, the transport sector projects will generate 987,000 person-days of employment. 45  Data source: project reports on Project, public works number of working Youth and Skills Project days SPF/ Korean TF/ Nordic TF Strategic Program, HD Programmatic AAA Skills for Jobs Poverty Assessment IFC: AS for Education for Employment (E4E) and vocational training. Development Partners: UNICEF, WFP, EU, SIDA, USAID Pillar III - Governance and Public Institutions (aligned with the AfT Pillar IV) Public Financial Concerns about weak . 9. Improved public financial  Timeliness of submission of audit Ongoing Activities: Management including processes and systems to management reports to legislature. Economic Governance & Institutional Reform Procurement: Strengthen manage revenues, lack of Baseline: C Project (EGIRP) (P107248), Integrated Public public institutions to ensure comprehensiveness in Target: C+ Financial Management Reform Project (P127319), that revenues and government budgeting and expenditure Capacity-development/gender Data source: PEFA assessment report assets are well managed, free management, weak Trust Funds: from corruption and procurement practices, 1. Extent of unreported  Annual technical audits of large- Strengthening Accountancy Program at the monitored granting concessions, government operations (PEFA scale mining operations conducted University of Liberia IDF (P126907), The Liberian combined with ineffective PI-7 Score) by MLME and BOC (Yes/No) Institute of Certified Public Accountants IDF processes for control of Baseline: D+ Baseline: No (LICPA)(P119435), PFM Strengthening & Reform corruption and limited Target: B Target: Yes Coordination IDF (P123361), Liberia Reform Plan transparency, oversight, Data source: PEFA assessment Data source: xx (P130095), and management capacity report PAC Capacity Building Project (P127678 ) in the government and private sector. 2. Scope, nature and follow-up  Qualified financial management and AAA: . of external audits – PEFA PI- procurement specialists graduated Customs Assessment Trade Toolkit, 26 (PEFA Score) from intensive training working in Policy Notes (P133196) Baseline: D+ Government service Target: C+ Baseline: 95 Planned Activities: Data source: PEFA assessment Target: 25319 Poverty Reduction Support Credit 1(P127317) report Data source: reports from training (P123196), institutions against CSA payroll Public Sector Modernization Project (P 143604)  Annual IPSAS-compliant financial Development Partners: statements of government submitted IMF, EU, ADB, USAID, SIDA, UNDP                                                           46  to audit within 3 months of the end of the fiscal year. Baseline: No Target: Yes Data source: MoF/GAC annual report Land administration: Record and management 10. Improve land administration  Deeds digitized and filed in Ongoing Activities: Develop comprehensive system at the national and National Archives (number) Reengagement and Reform Support Program national land tenure and land local levels not functional Capacity-development Baseline: 0 (RRSP4)( P123196) use system that will provide and thus available to Target: 50,000 equitable access to land and verify claims and expedite 1. Deed registry completion (%) Data source: National Archives records Trust Funds: security of tenure so as to land transactions. Baseline: 0 Rehabilitation and Reform of Land Rights and facilitate inclusive, sustained Target: 80  National Land Policy prepared in a Related Land Matters SPF (P117010), growth and development, Data source: National Archives consultative manner and submitted ensure peace and security and records against estimate of total to the Cabinet (Yes/No) AAA: provide sustainable deeds provided by field surveys Land Governance Assessment Framework management of the Baseline: No (P143348), Justice and Natural Resources environment. Target: Yes (P144406) Data source: Land Commission Planned Activities : Land Administration Project  Land Agency established (Yes/No) Poverty Reduction Support Credit I(P127317) Baseline: No Target: Yes SPF/ Korean TF/ Nordic TF Strategic Program, Data source: Draft policy document, Programmatic AAA – Natural Resource reports of consultations and confirmation Management of submission to Cabinet Development Partners : USAID, UN Habitat, SIDA 47  ANNEX 2: LIBERIA JCAS FY 09-12 COMPLETION REPORT INTRODUCTION This report assesses the World Bank Group’s Joint Country Assistance Strategy (JCAS) over the period FY09 – FY121. Four main topics are covered: i) a review of Government of Liberia’s (GoL) progress towards achieving its country goals as defined in its first full Poverty Reduction Strategy (PRS-I: mid- 2008 to end 2011); ii) a self–evaluation of the of Bank-group supported program, which was aligned with the PRS-1, iii) an assessment of the performance of the World Bank in designing and delivering the JCAS program; and iv) a summary of key lessons and recommendations which will inform the design of the new five year Country Partnership Strategy (JCPS) for FY13 - FY17. SUMMARY OF MAIN FINDINGS 1. Progress toward Country Objectives: PRS 1 was designed during a critical period of post conflict recuperation, during which the GoL faced multi-faceted implementation challenges, including severe capacity constraints and the external shocks of the global fuel and food price crises. Notwithstanding these challenges, a recent independent evaluation of the PRSI highlighted a mix of outcomes, mostly positive, especially in terms of tangible deliverables and lessons learned. 2. Progress towards expected CAS results: The contribution of the World Bank Group’s program with respect to expected results is rated as moderately satisfactory given that good progress was noted in most outcomes outlined in the JCAS. Of the 12 outcomes, 5 (or 42 percent) have been achieved and 7 (or 58 percent) have been partially achieved. The assessment of these 12 outcomes was measured by 27 outcomes indicators, as follows: 12 (or 44 percent) have been achieved; 12 (or 44 percent) have been partially achieved; and 3 (or 12 percent) were not achieved. The assessment highlights specific examples of good progress and the reasons for shortfalls, largely due to severe capacity constraints at all levels in government in addition to inadequate project design and implementation support. 3. WBG Performance: The Bank’s performance is rated as moderately satisfactory; the WBG delivered a stronger than anticipated non-lending and grant/lending program in response to Government’s request for additional operations to confront the ongoing complexities of post conflict recuperation. The design and implementation of the program demonstrated substantial success in not only contributing towards the achievement of the 12 JCAS outcomes, but also in the delivery of quality analytical work and technical assistance combined with strong portfolio performance. This progress reflected the dedication and effectiveness of the Bank Country Team working in close partnership with its Government and other counterparts to strengthen country dialogue and aid coordination. The detailed assessment also highlights some shortcomings which hampered, in some cases, the delivery of key activities planned for the JCAS period.                                                         1 The Joint CAS for FY 09-11 (Report No. 47928), prepared jointly with the African Development Bank (ADB) was approved by the WB’s Board on March 30, 2009 and was extended to include FY 12 as recommended by the CAS progress report (Report No. 59772-LR), presented to the Board on June 2, 2011. The ADB prepared its own progress report in April, 2011, and extended its support to the end of 2012. Given different time frames, World Bank management decided that this completion report would focus on the WB-supported program, and would be shared with the ADB and other donor partners. 48  4. Lessons learned: The self-assessment generated six key lessons and associated recommendations which will inform the new Country Partnership Strategy (CPS), which will support the PRS II, the Agenda for Transformation (AfT). It is hoped that these lessons learned will also contribute to improving and strengthening WBG programming in other fragile and conflict affected countries. Those lessons include the need to:  Adapt and apply sound post-conflict and fragile country lens and approaches in the design and implementation of the upcoming CPS, supported by relevant expertise and governance lens: Liberia remains a fragile state and it will be important that Bank project teams internalize and effectively apply the relevant findings from a large number of thematic/sector studies, relevant lessons from portfolio implementation, as well as adapting the relevant messages of the 2011 WDR on Conflict, Security and Development. Increased attention needs to be given to issues of inclusion (geographical/ethnic), as well as youth empowerment/employment, gender, land, capacity building and transparency.  Find the right balance between infrastructure and other key sectors, while ensuring “strategic selectivity”. Where the Bank has provided effective support and where there is an unfinished strategic agenda, it is reasonable for the Bank to consolidate and scale-up the approaches and interventions to benefit underserved population groups of key services.  Ensure that capacity development is at the heart of project preparation, implementation and be monitored are a project and portfolio level in coordination with government and other development partners.  Ensure that the design and implementation the new CPS results matrix is driven by an outcome- oriented results framework, following the outcomes of the AfT which the CPS will align as much as possible.  Promote sound and expedited procurement procedures, supported by effective approaches to capacity development, implementation assistance and monitoring of procurement procedures and activities. Proposed case studies of procurement problems in Liberia during the current JCAS could inform the Bank’s modernization strategy as applied to conflict affected and fragile states.  Ensure strong presence, continuity, capacity and effectiveness of experienced Bank Staff in the Liberia Office to enable the Bank to be effective in delivering the new CPS , including effective portfolio management, implementation assistance and monitoring, especially considering the country’s post-conflict transition and the strong commitment of GoL to key reforms. PROGRESS TOWARD ACHIEVING COUNTRY GOALS Country Context 5. The World Bank reengaged in Liberia in 2004 after more than a decade of conflict during which a quarter of a million people perished and per capita GDP contracted from us$890 (1980) to us$190 (2010): virtually all public infrastructure and services were decimated, and the external debt for a country of 3.6 million people exceeded us$4.7 billion. 6. Prior to and during the formulation and implementation of the JCAS, the country confronted a very challenging environment, in terms of complex socio-economic and political factors, both internal and external. Nevertheless, during the JCAS period, the GoL maintained prudent fiscal policies against the backdrop of rising food and fuel prices and a highly dollarized economy. Liberian economy has recovered steadily since the global economic crisis in 2008/09. The economy has stabilized—with inflation falling back to single digit percentage and GDP growing by an average of 7.3 percent between 2006 and 2009, 49  and by nearly 7 percent in 2011, reflecting prudent management of fiscal and monetary policies and some improvements in the external environment. A projected fiscal deficit of 1.4 percent of GDP for FY12 underscores the government’s intent to maintain prudent macroeconomic policies after reaching HIPC completion point in June 2010. External debt now stands at about US$90 million, or about 9.5 percent of GDP. The economy is projected to grow at an average annual rate of 7 percent during 2012-17. 7. This growth will be dependent on a favorable external environment and increased foreign direct investment in the natural resource-based sectors, extractive industry, agribusiness and forestry. Revenues from the mining sector are projected to increase substantially from 2012. Notwithstanding the good performance of the export sector, the economy will remain vulnerable to external shocks given the volatility of commodity prices, undiversified structure of the economy, limited local private sector, and dependence on imported foods and fuel. 8. The political situation of the country is going through a critical transition stage, and highlights the importance of addressing adequately key underlying issues. In October of 2011, Liberia held its second democratic election since the end of the conflict in 2003; the incumbent president was elected for a second term. During the campaign, however, there was much discussion about the perceived weaknesses of the government to deliver tangible improvements in living standards during the first administration. Liberia’s social indicators remain among the poorest of the world. Unemployment, especially among youth, is a major problem. While the Labor Force Survey of 2010 records an unemployment rate of 3.7 percent, a more relevant measure is the level of vulnerable employment which was at nearly 80percent in 2010. Many stakeholders report that corruption at all levels continues to be a pervasive problem; at the same time, Government is endeavoring to intensify appropriate anti-corruption and governance measures. Some of the social fragility and exclusion issues which contributed to the conflict are lingering, and GoL needs to intensify its on-going actions to address them in constructive and tangible ways. 9. Going forward, Liberia’s medium-to-long term prospects are good, taking into account its rich potential in natural resources/commodities, but daunting challenges remain because of the massive amounts of financing needed to reconstruct a country’s state institutions, economy and human capital and the need to address the historical and present drivers of conflict. The recent global crisis affected the country’s near-term outlook, including another rise in food and fuel prices, and highlighted its economic and social fragility, as the country endeavors to move from the transitional post-conflict recovery phase to laying the foundations for long-term development for all Liberians. Results of Independent Assessment of PRS I 10. Liberia launched its first full 3 year PRS entitled “LIFT LIBERIA” in July 2008 at a time when the country confronted a very challenging environment, in terms of complex socio-economic and political factors, both internal and external. The country had barely begun to recover from more than a decade of conflict during which a quarter of a million people perished and per capita GDP contracted from US$890 (1980) to US$190 (2010). Virtually all public infrastructure and services had been decimated, and the external debt for a country of 3.6 million people exceeded $4.7 billion. 11. “LIFT LIBERIA”, which was widely consulted nationally, set out the government’s priorities in four pillars: i) Peace and Security; ii) Economic Revitalization; iii) Governance and Rule of Law and iv) Infrastructure and Basic Services. In addition, six priority cross-cutting themes, mainstreamed through the pillar strategies, included: gender equity, peace-building, environmental issues, HIV and AIDS, children and youth, and monitoring & evaluation. Between mid 2008 and December, 2011, over 400 outputs (66 percent of those planned) were delivered as a result of LIFT LIBERIA according to an independent 50  evaluation commissioned by the GoL. These outputs concentrated on designing sector strategies and legal frameworks, restoring and starting to build capacity in state institutions, and building or rebuilding parts of war-torn infrastructure. 12. The independent evaluation highlighted some important lessons which informed the design of the Agenda for Transformation, which in turn is the first five year plan of a longer term National Visioning Strategy 2030 whose goal is that “Liberia become a “middle income” country by 2030 characterized by sustainable and inclusive economic growth with improved quality of life for each citizen where the gap between the ‘haves’ and the “have-nots” is drastically reduced”. These lessons, which are also relevant for the design of the WBG’s next country strategy, highlight the need to:  Align national budget allocations to the national development plan;  Strengthen the weak coordination mechanisms around donor assistance in terms of alignment and harmonization;  Enhance the weak policy coordination (cross-sectoral) within the Government,  Re-orient the focus from processes and deliverables toward development results, while ensuring inclusive approaches;  Strengthen and re-focus monitoring on strategic outcomes and evaluation, supported by clear baselines, targets and results-focused indicators DEVELOPMENT OUTCOMES AND PERFORMANCE OF THE JCAS PROGRAM Program Overview 13. The Development Objectives defined in the JCAS focused on the following three strategic themes: (i) Rebuilding core state functions and institutions (aligned with PRS Pillar 3); (ii) Rehabilitating infrastructure to jump-start economic growth (aligned with PRS Pillar 4); (iii) Facilitating pro-poor growth (aligned with PRS Pillar 2). In addition, the JCAS prioritized three major cross-cutting themes: capacity development, gender mainstreaming and environmental sustainability. A JCAS Progress Report was presented to the Board in June, 2011; the review took stock of progress, identified key constraints, and presented an updated results matrix for the remaining period including the one-year extension which will allow the new 3 year JCAS and the 5 year PRS II to come into effect simultaneously in FY 13. 14. Performance of the WBG is rated Moderately Satisfactory based on good progress in the achievement of the 12 outcomes, measured by 27 outcome indicators, which were defined in the CAS and are reviewed below in Table 1. Each of these outcomes were linked explicitly to selected outcomes of the PRS, and therefore, contributed to the achievement of some of the PRS outcomes and outputs cited in the Government’s PRS final assessment report. Of the 12 outcomes: 5 (or 42 percent) have been achieved and 7 (or 58 percent) have been partially achieved. The assessment of these 12 outcomes was measured by 27 target outcomes indicators, as follows: 12 (44 percent) have been achieved; 12 (44 percent) have been partially achieved; and 3 (12 precent) were not achieved. Annex 1 provides a detailed assessment of status and self-evaluation by pillar, outcome area, outcome indicator, together with lessons and suggestions for the WBG CPS (FY12 – FY17). 15. During the CAS period, strong performance was especially noted in:  Supporting the rehabilitation of key infrastructure, including: i) enhancing access to sanitation in Monrovia (with a successful model which can be scaled-up to other urban areas); ii) achieving significant progress in the initial phases of rehabilitating key segments of primary roads; iii) 51  supporting GoL’s energy sector through the delivery of a high quality energy sector options study and the mobilization of substantial funding for priority energy investments and iv) rapidly responding to the government’s request for a Bank-financed regional telecommunications operation which is financing Liberia’s share of the Africa Cable to Africa (ACE) which will connect Liberia to the world via high speed internet by end FY12.  Providing high quality knowledge services through demand-driven, responsive and high quality economic and sector work to address strategic issues and provide relevant advice; these included support for the elaboration of sector strategies in energy, health, education and social protection in addition to providing the analytical backing for the design of the AfTR and its results based matrix.  Key interventions in development of Human Capital. An important operation during the JCAS period was the Health Systems Reconstruction Project (HSRP). Over the course of the project, 212 health facilities were constructed, renovated and/or equipped, and 895 health workers have been trained- exceeding the target of 300. In addition, a Bank supported a National Health Strategy and Plan and a comprehensive Health Financing Policy and Plan (2011). These documents provided inputs for that sector’s participation in the Agenda for Transformation. Table 1: Liberia CAS: Overview of Program Performance: Achievements of CAS Outcomes by Theme Theme and Outcome Implementation Status (as of mid-April, 2012) (No. of Outcome Indicators: 27) * Theme 1: Rebuilding core state functions and institutions Partially Achieved (5) Outcome 1: Improved Budget Efficiency and Revenue Administration Achieved (3) Outcome 2: Increased professionalization and improved HR Partially Achieved (2) management of the civil service Theme 2: Rehabilitating infrastructure to jump-start economic Partially Achieved (9) growth Outcome 3: Improved access to key transport infrastructure and services Partially Achieved (2) Outcome 4: Improved access to sanitation services (in Monrovia) Achieved (1) Outcome 5: Improved access to reliable , sustainable and affordable Achieved (2) energy services Outcome 6: Improved access to basic education Partially Achieved (4) Theme 3: Facilitating pro-poor growth Partially Achieved (13) Outcome 7: Improved agriculture and natural resources management to Partially Achieved (3) generate pro-poor growth Outcome 8: Enhanced forestry governance Achieved (1) Outcome 9: Adoption of policy framework for land tenure reform Partially Achieved (1) Outcome 10: Enhanced mining governance Partially Achieved (3) Outcome 11: Enhanced business and investment climate Achieved (2) Outcome 12: Increased access to social protection and social services in Partially Achieved (3) the face of shocks * See Annex 1 for the specific ratings for each of the 27 outcome target indicators (12 were achieved; 12 were partially achieved and 3 were not achieved). 52  16. One of the principal reasons for the partial achievement of the 8 outcomes was, and remains, severe capacity constraints in Government at all levels (managerial, technical, national and especially local levels) in planning, implementing, supervising and monitoring policies, projects and contracts. Capacity constraints were especially seen in procurement, and weak coordination mechanisms within government. In retrospect, the Bank could have been more responsive to more effectively addressing these severe capacity constraints during design and implementation, especially considering the fragile country situation, through stronger emphasis in capacity building interventions, simplification of procurement requirements, and added and timelier implementation assistance, with emphasis on ensuring sufficient experienced Bank staff based in the Liberia office. 17. A second factor involves the formulation of the JCAS results matrix itself with respect to, in some cases, unrealistic expectations of the amount of time and capacity required to make a smooth transition toward re-establishing basic systems and procedures for managing a country-driven development agenda with an outcome orientation, in a post-conflict and fragile country. Examples of these include the outcomes involving: civil service reform, agricultural production and productivity and institutional capacities, adoption of the land policy and skills development for youth. In most of these examples, however, important groundwork has been laid and will be further addressed in the next CPS. Highlights by Theme/Pillar Theme 1: Rebuilding of core state functions and institutions (aligned with PRS Pillar 3) 18. Outcome 1: Improved budget efficiency and revenue administration: Achieved. While the specific target indicators, somewhat narrowly defined, have been achieved, it is recognized that the reforms/actions are in their early stages, but that there is political will to continue in the right direction. A new Public Financial Management (PFM) law was approved in August 2009, budget preparation and execution have improved steadily under the new budget management framework, and a new budget classification system and chart of accounts introduced in line with IMF Government Finance Statistics (GFS) and Classification of Functions of Government (COFOG). The government adopted the international public sector accounting standards although key elements of the Standard are yet to be fully complied with. PFM transparency is improving: quarterly expenditure reports are posted on the MOF website and there has been a significant decrease in direct contracting in public procurement. Improved procurement plans for five key spending ministries are contributing to improved budget execution. The Integrated Financial Management Information System (IFMIS) has been designed, equipment procured and the system was launched in July 2011. An internal audit strategy, designed by the government and approved by Cabinet has been formally adopted and is now being implemented. Beginning in June, 2011, the Integrated Tax Administration System (ITAS) has been gradually introduced in phases, beginning with tax roll and tax identification numbering. Since mid-2011, there has been good progress in capturing collected revenue in the rolling out of the ITAS (exceeding the CAS target of 50 percent, and steadily increasing), while recognizing that further ITAS modules are being implemented during 2012, which are expected to generate the full benefits. Once completed, the ITAS is expected to play an important role towards enabling enhanced revenue administration and mobilization. Over time, this will contribute toward increased financing for required public expenditures. 19. Outcome 2: Increased professionalization and improved HR management of the civil service: Partially achieved. Most of the expected milestones in support of this overall outcome have been achieved, and the pending ones are showing substantial progress. The overall program performance of the Senior Executive program (SES) has been rated moderately satisfactory, based on the evidence 53  provided in the project’s ICR. There is improved operational clarity covered by the first phase of mandates and functional reviews (MFRs) of 17 Ministries. About 75 percent of civil servants have biometric records and this increases transparency in hiring process, payroll management and employee identification and authentication through the Personnel Action Notice (PAN). Increased alignment of job grades with pay levels has been achieved through introduction of the 10-grade system outlined in the pay and employment strategy. Delay in installing the Human Resources Management Information System (HRMIS) was due to the delay in launching the IFMIS by MOF. 20. With Bank assistance, a pension strategy has been drafted and is awaiting Cabinet approval. Little progress has been made toward implementation of the pay reform, establishment controls, and in linking compensation and promotion to a performance based system, due to: low government revenue base, inadequate capacity for performance appraisal and weak Human Resource Management systems with the Civil Service. The Liberia Institute of Public Administration (LIPA) has developed and initiated implementation of various training modules for public access (for a modest fee) and for core Government specialists (e.g., training of the first batch of procurement officers in 5 highest spending ministries was completed in 2011). As part of implementing is strategy for supporting civil service reforms, the Bank has intensified policy dialogues, increased donor coordination, and supported the emergence of the critical consensus needed for reforms among various constituencies within the government. Theme 2: Rehabilitating infrastructure to jump-start economic growth (aligned with PRS Pillar 4) 21. Outcome 3: Improved access to key transport infrastructure and services: Partially achieved: Despite a series of implementation delays and cost overruns at the beginning of the CAS period, the Bank has played a key role in supporting the initial phases of rehabilitating basic transport infrastructure and establishing strengthened institutional arrangements and capacities to strengthen Liberia’s road transport systems. This includes a draft Transport Master Plan and a draft strategic plan for establishing a proposed Roads Authority. The major shortfall refers to the delay in constructing the Monrovia – Ganta corridor (involving nearly 300 kms), largely due to unforeseen and protracted delays in the road planning, procurement, and contract management processes (ref. LIBRAMP Project). Nevertheless, various roads have been rehabilitated; including Monrovia city streets (24 kms.), Cotton tree-Bokay town (25 kms.) and work is progressing very satisfactorily on the rest of the Buchanan corridor (83 kms.) Also, a Landlord Port Authority was established in 2010 and GOL signed a Public and Private Partnership concession contract with one of the world’s largest port terminal operators. The productivity targets for the port have been exceeded their original target (8 moves /hour per crane vs. an estimated actual of 16 moves per crane in 2011). 22. Outcome 4: Improved access to sanitation services (in Monrovia): Achieved: The Monrovia City Corporation (MCC) managed the design and construction of two transfer stations, as well as sanitary landfill disposal cells and now collects and disposes of about 60 percent solid waste in the city. Accordingly, Bank assistance has provided effective capacity development to the Monrovia City Corporation (MCC) to enable it to establish sound management and enhanced sanitation services, as well as helping to create the policy and institutional framework for a solid municipal government. In addition, trust funds have enabled the Bank to provide technical and policy advice in the form of a Policy Note on Decentralization and the fiscal intergovernmental relations status of the capital city, which is provided valuable contributions to the drafting of a new Local Government Bill. 23. Outcome 5: Improved access to reliable, sustainable and affordable energy services: Achieved. This assessment recognizes two aspects: some key additional milestones were achieved (e.g., strategic 54  and feasibility energy sector studies, effective donor partnerships), and second, significant funding was mobilized by the end of FY12, which is now providing a solid base for the ambitious sector programs in the AfT. The WBG, in partnership with other donors, helped the Government re-establish the Liberia Electricity Corporation (LEC) under the framework of an Emergency Power Program (EPP) and facilitated the signing of a five-year contract for the management of LEC, which in turn led to a US$50 million investment package. This public-private partnership (PPP) and funding will enable delivering electricity services to more than 30,000 new customers by 2015, including poor households, with more affordable electricity rates and reduced theft of electricity. The Bank also supported pilot initiatives of the Rural and Renewable Energy Association (RREA), in addition to supporting the achievement of a major regional milestone for Liberia’s energy sector --- the approval of the West African Power Pool (WAPP) transmission interconnection project between Côte d’Ivoire, Liberia, Sierra Leone, and Guinea. Good progress has been made toward completing (in 2012) key studies for the Mount Coffee Hydropower Plant rehabilitation, thereby paving the way for mobilizing finance and launching this cornerstone project and the accompany investments in transmission and distribution. While there was a slight shortfall in meeting the target of household electrical connections (832 vs. 1,000), there was significant progress (more than foreseen) in mobilizing additional energy sector funding toward achieving solid outcomes. 24. Outcome 6: Improved access to basic education: Partially Achieved. Following completion of an Education Sector Plan (2010-2020) by the Ministry of Education, with active support from the Bank, a US$40 million grant was approved by the Education for All- Fast Track Initiative Grant for Basic Education which is supporting targeted interventions for expanding access to basic education in rural areas and improving the classroom learning environment. There was a lack of clear definition of outcome targets for education in the CASPR and the shortfalls in key output targets reflect problems in initial project design and management and planning weaknesses in the Ministry of Education. The project was restructured in FY 13 and policy dialogue was expanded to include an in-depth discussion on post-basic education and training reform, with a particular focus on skills development and the development of a Higher Education Strategic Plan. It should be notes, however, that over 80 classrooms were constructed through Bank support to the Liberia Agency for Community Empowerment. Theme 3: Facilitating pro-poor growth (aligned with PRS Pillar 2) 25. Outcome 7: Improved agriculture and natural resources management to generate pro-poor growth: Partially Achieved. The Government, with the support of the West Africa Regional Fisheries Program (WARFP), has made significant progress to date in establishing a sustainable and profitable fishing sector, with strong community-level partnerships which are helping to ensure that these benefits are widely shared and that illegal fishing activity is monitored and controlled. Less progress was made on the two agricultural sector indicators regarding included increased crop yields and production in key cash and export crops, focusing on smallholder farmers. Factors included: severe capacity constraints in the implementation at all levels; unrealistic design and targets in the Bank-financed Agricultural Infrastructure Development Project (AIDP), and fragmented ownership of the project between two ministries. Good progress has been made, however, with respect to strengthening the capacity of women groups in agricultural value-chain development. The regional West Africa Agricultural Productivity Project (WAAPP), approved in FY 11, will continue to build needed capacity in the MOA and to contribute to enhanced rice, cassava yields and cocoa targets, despite the shortfall in meeting these targets in the present JCAS. The recently approved Small Holder Tree Crops Project will begin to target small farmers whose assets were decimated during the war. 26. Outcome 8: Enhanced forestry governance: Achieved: All previous forestry concessions have been cancelled and commercial logging within the concession framework is commencing. The Bank 55  continues to support the government’s “three C’s” approach to the forestry sector (commercial, conservation, and community forestry) with a goal to achieving accountability, transparency, security and social responsibility. Progress has also been made in forestry governance and institutional capacity building. The Chain of Custody, supported until December 2011 by the Bank through the PROFOR and FLEG Trust Funds, ensures that only legally harvested logs from the forestry concessions are exported and that respective taxes and fees are collected. Nineteen forestry concessions have been approved and registered in the Chain of Custody. Ten community economic development sites have been established around Protected Areas with World Bank support. Nevertheless, governance issues in the forestry sector, including addressing broader community-based forestry concerns, continue to be a challenge as evidence in the problems with the Private Use Permits in FY 12. 27. Outcome 9: Adoption of policy framework for land tenure reform: Partially achieved: As a result of a Bank land policy study, completed in 2008, a high level Lands Commission was established to address vital land policy and land administration issues, as part of a longer term agenda. Bank support has allowed the Commission to develop the principal policies and draft laws which have informed the design of a Policy Framework for Land Tenure Reform. The adoption and implementation of a sound land policy is key to many sectors in the country, including enhanced private sector environment, and the establishment of peace and security throughout the country. After the 2011 elections, there has been a renewed urgency to adopt a clear policy framework for registration of transactions in land and providing for greater security of tenure, particularly in areas where investment would be predicated on the award of concessions. That framework, referred to above, is still currently being discussed at a national and community level. 28. Outcome 10: Enhanced mining governance: Partially achieved. Liberia was the first African country to be EITI compliant (Extractive Industries Transparency Initiative) in 2009, two years ahead of schedule. Over the past two years, the government has used standard mineral development agreements (MDAs) and bidding documents in line with international good practices. The Extractive Industries Technical Advisory Facility has supported advisory services on several iron ore and related infrastructure negotiations as well as proposed changes to the mining concessions agreement structure and negotiation procedures. More importantly, the advisory work has provided a basis for a reform of the Mines and Minerals Act, which is currently being launched. The Bank is reviewing the forest, mining, and petroleum and fishery sectors to identify gaps as per the EITI and value chain approach. The World Bank Institute (WBI) has also carried out consultations on social accountability issues and mechanisms for Liberia, which is providing GoL further tools. The focus on mining governance also needs to be broadened to address the concerns of the artisanal mining sector, which comprises a large portion of the rural population. 29. Outcome 11: Improved business and investment climate: Achieved: In 2010, Liberia was recognized as a Top Ten Global Reformer and ranked 150 out of 183 economies in 2011 on ease of doing business, up from 170 out of 178 in 2007. A state-of-the-art Business Registry was recently launched and allows a business to complete registration 48 hours from submission of complete documentation. Through satellite offices in Ganta and Buchanan as well as its online portal, investors can formalize their businesses without going to Monrovia. IFC also provide technical expertise for the design and implementation of a modern commercial code, which is now law; a Commercial Court was also established; and training courses for judges, magistrates and public defenders have been provided. An IFC-supported project is expected to significantly improve the investment climate, ensure greater transparency and security for commercial transactions, substantially improve access to finance and inspire greater confidence in Liberia as an investment destination. The WBI, together with the Carter Center and the International School of Transparency of the University of Cape Town, are facilitating knowledge 56  exchanges and showcasing international good practices on “Right to Information” implementation issues with the Liberia Parliament. 30. IFC also supported the establishment of a commercial microfinance bank—Access Bank Liberia (ABL); ABL now has five additional branches and manages 28,000 accounts, exceeding JCAS expectations. In addition, and in recognition of the capital constraints of Liberian SMEs, IFC supported the launch of several initiatives including: i) the West Africa Venture Fund (“WAVF”) to provide risk capital, ii) the Global Trade Finance Program; and iii) the expansion of their Advisory Services Phase III Program which prioritizes the development of financial services infrastructure such as a Credit Reference System and a Secured Transactions Registry, in order to permit the collateralization of movable assets. IFC has also given high priority to providing capacity building for Liberia’s private sector, as reflected by IFC’s extensive advisory services. 31. Outcome 12: Increased access to social protection and social services in the face of shocks: Partially achieved. Bank-supported activities have contributed to building community physical and social capital and enhanced institutional capacities for social protection of vulnerable groups. The three indicators in the CAS matrix have been partially achieved: 1,240,000 person days of temporary employment created (from a target of 2,480,000); 20,000 beneficiaries of community works programs (out of a target of 45,000); and the launching of a skills development and certification programs, which will train 1,200 of the 4,500 beneficiaries before end FY12. It should be noted that the Bank transport team calculated jobs created by the Bank supported transport operations to be approximately 1.5 million person days during the JCAS period. In addition, Bank support for the Liberia’s Agency for Community Empowerment (LACE) has successfully enhanced community access to basic services and has resulted in the institutionalization of effective participatory procedures and accountability mechanisms and is contributing to the formation of community level social capital during a delicate post-conflict transition period. Cash-for-work activities have been scaled-up through the Youth, Employment, and Skills (YES) Project. Other Important Achievements/Outcomes 32. Cross cutting issues: Capacity Development, Gender and Environment. The implementation of the JCAS provided strategic support to these three cross-cutting themes and to other several key areas (i.e., health and telecommunications). The assessment of their results, although not included in the JCAS results matrix, merit highlighting. 33. Capacity Building (CB): A dual track approach (short and long term) with respect to CB support was given throughout the portfolio. Short term measures were embedded in the project implementation of Bank-supported projects and included provision of technical assistance (mostly foreign, including support through the Senior Executive Service Program and the establishment of several project management units (PMUs) servicing the implementation requirements of various ministries to accelerate implementation and to enhance governance. Examples of where this has been effective include: the Infrastructure Implementation Unit (IIU) which will evolve into a Roads Agency; the Project Financial Management Unit (PFMU) of Ministry of Finance which provides FM services to several operations covering several ministries and Monrovia Municipal Corporation whose core team has been trained and has now set up the basic systems of a municipal government. The Bank also began to give more priority to strengthening procurement capacity, not only in Bank supported operations, but also for the execution of the entire national budget through technical assistance provided under the Economic Governance and Institution Reform Project (EGIRP) and Programmatic Development Policy Operations 57  (in 2010 and 2011), as part of a priority of Bank programming in governance and transparency in FY 12 and beyond. 34. Medium to long term capacity development measures including support for the following: i) design and implementation of a civil service reform strategy, ii) a program with the Liberia Institute of Public Administration (LIPA) to train civil servants in various “core” areas, iii) support to the Financial Management Training School; the graduates of these last two are then are placed in different ministries, iv) the establishment of an independent General Auditing Commission (GAC) which has produced audits of government accounts for the first time in twenty years and v) the establishment of a procurement training program in FY 12. 35. In addition, World Bank Institute (WBI) capacity development activities have drawn on South- South platforms for regional knowledge exchanges and access to technical know-how on four governance-related themes: access to information, procurement and contract monitoring, particularly in the area of extractive industries, parliamentary strengthening and social accountability. WBI also provided very much appreciated capacity building technical assistance to the Ministry of Planning and Economic Development, involving all Government ministries, in applying a results-focused approach to formulating its National Capacity Development Strategy (2011) and in the preparation of the Agenda for Transformation. 36. Gender: During the JCAS period, the Bank, with various partners, supported two pilot programs focusing on the economic empowerment of 2,500 adolescent girls and young women, aged 16 to 27 in Monrovia and Kakata and of 1,000 women in 10 communities in Ganta, Nimba County who involved in the production, processing and marketing of cassava products. Lessons learned from these programs have been reflected in the Government’s national visioning document: “Liberia Rising 2030” and its “Agenda for Transformation”, especially with respect to inclusive development. The GoL and the Bank also prepared a Policy Memorandum on Gender and Agricultural Value Chains with a goal to supporting programs on gender issues in agricultural and rural development. MOA is working on the adoption and scaling-up of the recommendations in its programs/projects involving value chain development. Nevertheless, there is not a sense of gender mainstreaming in the CAS; having specific gender related interventions is not a substitute for this. 37. Environmental Sustainability: Environment was highlighted explicitly as a separate theme in the JCAS, but was not addressed in the CASPR. During the JCAS period the Bank addressed environmental issues somewhat modestly, mainly through mainstreaming relevant activities and safeguard policies in Bank-supported projects being implemented by key sectors/ministries, in line with Bank operational guidelines. These included: roads and sanitation services (Ministry of Public Works); forestry concessions (Forest Development Authority); mining concessions and governance, and energy investments (Ministry of Lands, Mines and Energy), and modest support through the Global Environmental Facility. WORLD BANK GROUP PERFORMANCE 38. The World Bank Group’s performance during the JCAS period is rated as moderately satisfactory. Thirty five active projects (ranging from US$ 20,000 to US$ 46 million with a total of US$ 76.5 million to disburse) contributed to JCAS results. During the planning period, the Bank successfully delivered a stronger than anticipated non-lending and grant/lending program, especially in the infrastructure sector (i.e., roads and energy) and advisory services. The design and implementation of the program demonstrated substantial progress in contributing towards the achievement of the twelve 58  CAS outcomes. Quality non-lending work responded very well to GoL requests, enabling Government to solidify its macro-economic management performance, develop sector strategies and help underpin the design of the National Vision (2030) and the AfT. The Bank also enhanced its country presence, capacity and much needed implementation assistance with experienced sector and thematic staff, who have contributed towards improved macro-economic, financial and public expenditure management, planning and project execution, and improvements in the procurement processes. Moreover, a stakeholder survey, done in mid-2011, regarding perceptions about the Bank’s role, effectiveness and impact portrayed very positive views and suggested some useful recommendations. During the consultation meetings of the draft CAS CR, there was consistent positive feedback provided by a wide range of stakeholders (government, donor, and civil society) that the Bank is “a key and responsive partner”. 39. JCAS Design: IDA financing in the JCAS focused on accelerating the rehabilitation of destroyed infrastructure, especially the transport/primary roads system. Given the huge post-war needs, the national IDA resources were complemented with numerous Trust Funds. These were used selectively, and in some cases, as opportunities, to help leverage existing resources and mobilize additional funds where there were financing gaps. This also allowed the Bank to pro-actively respond to emerging GoL priorities during implementation to support strategic lending and non-lending activities. The roads, energy and regional telecommunications programs are good examples. Although the JCAS was criticized by some sectors as being an “infrastructure” JCAS, other sectors were not neglected during this period: health was supported by a new emergency operation which was approved immediately before the JCAS period; the education sector mobilized a $40 million EFA grant as part of the Fast Track Initiative (FTI); the agenda of social protection advanced with analytical work as well as trust and IDA funded public employment and school feeding programs. 40. The twelve outcome areas of the JCAS, outcome indicators and milestones were generally aligned to PRS I objectives. The indicators and milestones had a strong output orientation, reflecting the relatively weak result-focus of the PRS I actions which the Bank was supporting through on-going and upcoming investment projects. Given the pressure on GoL to deliver tangible improvements in its early post-conflict stage, and capacity issues, GoL’s output focus and weak M&E system to generate outcome data is understandable. By the time the Bank prepared the CAS PR, there were some modest improvements introduced to the results framework. More ambitious changes with a stronger outcome orientation would not have been realistic given capacity issues and also given that the last year of the JCAS was an election period, with inevitable changes in government that slowed down implementation. 41. The seven risks identified in the JCAS were appropriate and remain relevant as do the mitigation measures, which were also confirmed in the CAS PR. Liberia remains a fragile state and a divided country, politically and culturally, because of lingering historical and post-conflict tensions whose root causes have not been sufficiently addressed. UNMIL will continue their gradual withdrawal of their peacekeeping forces and put stronger emphasis on helping the national police develop an integrated security and contingency plan. Overall, the Bank has taken a proactive role to managing the risks identified in the JCAS, including providing additional and timely macro-advisory, budgetary support, and food response support during the fuel, financial and food crisis. The Bank non-lending activities are playing an important role in deepening the understanding of the complex issues and post-conflict fragility facing Liberia. 42. JCAS Implementation: The Country Team delivery of the JCAS, in close partnership with Government counterparts and other stakeholders, was satisfactory. The program was comprised of a sound mix of complementary instruments, involving AAA/knowledge and advisory services, program financing from multiple sources including modest amounts of budget support. Donor coordination 59  mechanisms have been strengthened over the JCAS period as evidenced by the new FY 12 PFM operation which combines IDA and multi-donor trust fund, one of whose contributors is USAID. During the JCAS period the team adapted well in response to additional requests from Government and other stakeholders by mobilizing substantial additional resources in the form of strategic non-lending, budget support, trust funds and investment projects. The additional supporting operations and non-lending generally were well aligned with the PRS and original JCAS objectives and results framework, and principles of engagement, as were the four 4 regional programs. 43. Table 2 shows the summary comparison of the original JCAS Plans funding (IDA + Trust Funds), compared to the Actual Funds (IDA + TF) for the JCAS period (i.e., US$ 338M vs. US$727.0 M). Several points merit highlighting: the largest share of total funding was provided to infrastructure projects; there was a substantial increase in financing support during the original three years (25 percent increase), mostly arising from various trust funds. 2 A total of US$ 20M was provided as budget support, which signaled to GoL and other Development Partners, the Government’s good performance in macro-economic management and enhanced governance in PRS implementation. In addition, the IFC program net commitments totaled US$16.4 M for the 3 year period, in addition to a substantial program of advisory services (totaling US$ 10 M through FY14). M. Annex 2 provides further details of the planned and actual funding, including the changes in the lending program. Table 2: Summary of IDA and TF Funding (Planned and Actual) (US$ M) JCAS Plans (IDA Program + Trust Funds) Delivered (IDA + Trust Funds) Total IDA and TF (FY09 – 11) 298.00 FY09 – 11 496.5M Total IDA and TF (FY09 -12) 338.00 FY09 – 12 727.0M 44. Responding to the specific needs of the GOL, the Bank group also increased the amount of non- lending activities originally planned in the CAS. PREM, HD, SD, FPD, and IFC staff have completed a number of high quality and demand-driven analytical studies and Policy Notes, and the World Bank Institute (WBI) has provided demand-driven technical assistance. This collective work has evolved into important vehicles for informing the government’s longer term visioning document, Liberia Rising 2030, as well as GoL’s formulation of the AfT. This support contrasts the preparation of PRS I, where the Bank was much less involved. Key findings of the Bank’s and other strategic studies (see below) were presented in a national Economic Forum last September, which are helping to underpin the design of the PRS 2, which is expected to be launched in July 2012. Many of these studies have comprised country case studies and innovative methodologies which also are providing useful inputs and forward-thinking ideas for supporting other country level studies and services (e.g., infrastructure investment options; growth diagnostics; social fragility; land tenure). Also, in FY 12 the Bank team finished an updated Poverty Assessment and a social-sector Public Expenditure Review. The above analytical and advisory services are consistent with one of the core components of the WB’s Africa Region Strategy (Africa’s Future and the WB’s Support to It, 2011). See Annex 3 for further details. 45. Portfolio Performance: Performance of the Bank portfolio is rated as satisfactory. Annex 4 highlights some key portfolio indicators during the JCAS period, which show a generally favorable and consistent performance and trends. Annex 5 lists the WB-supported portfolio of projects at the beginning                                                         2 Trust Funds have been and will continue to be a very important source of program financing for the rest of the CAS period and beyond. At present, the Liberia Country Program has a large portfolio of approximately 56 trust funds, including the Liberia Reconstruction Trust Fund (LRTF); it is a Bank-administered multi-donor trust fund which has signed pledges to date for about US$171 million and has thus far in the CAS period committed US$145 million.   60  of the JCAS period, with commitments totaling US$161 M (and an undisbursed balance of US$76.5 M). They also made important contributions to the development goals and outcomes of the JCAS; although they were not highlighted in the CASPR (Annex 1 provides some selected details). As of end March, 2012, there were 8 national IDA projects with a total net commitment of US$ 250.7 million, of which US$ 154.0 million is undisbursed. In addition, there are 3 active regional projects (Telecommunication, Agricultural Productivity and Fisheries) with a total net commitment of US$ 45.6 M of which US$ 26 M remains undisbursed. Two other projects were approved in FY 12, the Small Holder Tree Crops and the West Africa Power Pool; both were not effective as of the end of the extended CAS period. 46. Disbursements have been healthy during the JCAS period, and above the average for the Africa region. At the end of March 2012, the IDA portfolio has no problem projects, net commitments at risk or over-age projects. There are several projects which show marginal satisfactory ratings. The development objective ratings (DO) show 80 percent of projects as rated satisfactory and 20 percent as marginally satisfactory. Implementation performance ratings (IP) show 46 percent of projects rated satisfactory and the remainder 54 percent as marginally satisfactory. The slightly better than average performance for the Africa Region is attributed largely to a combination of factors: satisfactory design of projects; reliance on PMUs and technical assistance (mostly foreign); effective and efficient supervision and implementation assistance by task teams; an increased number of experienced Bank staff posted in the Monrovia office as of late FY 11; and a positive and effective working relationships with Government counterparts. 47. Three country portfolio performance reviews (CPPRs) were carried out: February, 2010 (the first since the end of the war); June, 2011; and April 2012. The agenda, content and emerging action plans addressed strategic issues at portfolio and project levels, and were well participated and received by GoL counterparts. Major portfolio issues have been related to weaknesses in Ministry/agency capacity, poor but steadily improving performance in procurement, contract and financial management, and monitoring and evaluation systems. Two of the CPPRs were also major capacity development (CD) events, including a four day training course on M&E (2010) by AFTDE and a one day workshop on CD (2011) by WBI. The overarching theme for the 2012 CPPR was to update and intensify strategies and project and portfolio-level priority actions which would enhance results-focused performance. There is also agreement to strengthen systematic follow-up, in close collaboration with MOF’s Aid Management Unit team, focusing on the above mentioned cross-cutting issues. While there were delays in the completion and dissemination of the final CPPR reports (2010 and 2011), each project team did have their agreed action plans arising from both exercises and key actions have been tracked in each mission aide memoire. Issues of effectiveness delays have arisen as of FY 12 given that the Liberian parliament now has to ratify Bank credits due to the fact that the Bank’s post HIPC portfolio now is 100 percent credit. 48. The major complaint by several GoL officials is their perception that the Bank is “slow” in its procurement processing due to cumbersome and complex procurement review and oversight procedures. Since 2011, the Bank has introduced a procurement tracking system, and is endeavoring to simplify and expedite its procurement review processes in line with the Bank’s fragile country considerations (without compromising key fiduciary standards), as well as to provide increased procurement implementation assistance. At the beginning of the CAS period, there was the equivalent of 1 procurement staff member available to support the procurement reviews; by mid-2011, the Bank has increased its procurement capacity to 2.5 procurement experts to support the large and growing procurement requirements and to ensure that this added support translates into more timely procurement reviews, tracking, and implementation assistance to executing agencies. The Bank’s expanded and nearby country presence needs to be continued and effectively utilized with available instruments and staff, including systematic and timely follow-up on agreed actions (following CPPRs, mid-term reviews, and 61  supervision missions). Care also needs to be taken by the Bank in frequent changes of TTLs (e.g., the transport TTL was changed 3 times in the space of 1 year). 49. In mid-2011, the Board approved a comprehensive CAS Progress Report. The revised results framework continued to focus on SMART outcome and output indicators and key milestones, and also reflected relevant changes in the portfolio. Generally, the CAS PR revised upwards targets for indicators and milestones, except in the agricultural sector, given its project delays and capacity constraints. Nevertheless, the CASPR did not anticipate the extent of pre- and post-election slow-down in the government, which, together with capacity constraints, continued to affect portfolio performance to a certain degree. 50. Donor Coordination/Partnership: The Bank has played an important role in promoting donor coordination in Liberia over the present JCAS period. At the sector level, the Bank has taken an active role in various sector working groups, especially agriculture, education, energy and public financial management (PFM), and in transport, where the Bank administers the Liberia Reconstruction Trust Fund (LRTF). In several operations of the LRTF, the Bank is using IDA to co-finance with donors, which also is contributing to enhanced coordination and partnership in line with the Paris agenda. The Bank and UNDP carried out joint analytical work on the security sector (early 2012), and in 2012, together worked on a successful proposal to fund a joint M&E technical assistance initiative to strengthen GoL’s revamped national M&E system. While the Bank prepared the CAS as a joint effort with the ADB, the implementation and monitoring aspects of the JCAS did not involved active coordination. Recently, the ADB has established a country office in Monrovia, and this is now enabling more active communication and collaboration at the operational level. The CPPR of 2011 also gave attention to discussing strategies and mechanisms for enhancing donor coordination, partnership, and effectiveness, and where the Bank committed itself to “walking the talk”, and thereby providing a positive example to other donors. 51. Stakeholder Survey and Participation: The Bank completed an independent stakeholder survey in 2011. The overall results revealed a positive perception of the Bank’s role, priorities (re-emphasizing rehabilitation of war-torn infrastructural investments and basic services, and also strong demand for strengthening governance, including anti-corruption measures) and overall effectiveness. Bank procurement procedures were again perceived to be “slow”. Stakeholders requested the Bank to expand its involvement in a broad range of sectors/themes. This highlights the challenge of ensuring that the WBG applies carefully the selectivity criteria for its next JCPS. 52. Relations with Civil Society: During the JCAS period, the Country Team took steps to strengthen its partnership with diverse civil society groups, especially in the area of governance and transparency. WBI and several NGOs are working together to improve social accountability and increase demand for good governance in several areas: increased access to information, contract and procurement monitoring, budget transparency, anti-corruption and third party monitoring of Bank projects through External Implementation Status Reports. This work is still in the early stages, and is expected to be expanded during the next CPS, as part of strengthening a challenging governance agenda. KEY LESSONS LEARNED AND RECOMMENDATIONS FOR THE NEW JCPS 53. The following section highlights six key lessons and related recommendations for the new CPS, which arise directly from the above self-assessment. The design of the JCPS will also benefit from the guidance from IEG’s comprehensive evaluation of the Bank’s country assistance program for Liberia, from 2004 to 2011, completed in FY 12. Annex 1 also provides additional lessons learned and 62  recommendations according to specific themes and sectors and which have emerged from the CASCR self-evaluation exercise. The lessons are summarized as follows: (i) Adapt and apply a sound post-conflict and fragile country lens and approaches in the design and implementation of the upcoming CPS, supported by relevant expertise and governance lens: Liberia remains a fragile state and it will be important that Bank project teams internalize and effectively apply the relevant findings from a large number of thematic/sector studies, relevant lessons from portfolio implementation, as well as adapting the relevant messages of the 2011 WDR on Conflict, Security and Development. For the new CPS it would be useful to develop, with the help of the Hub in Nairobi, an operational conflict/fragility “filter” which can be applied to all on-going and proposed activities. Increased attention needs to be given to issues of inclusion (geographical/ethnic), as well as youth empowerment/employment, gender, land, capacity development and transparency. (ii) In the new CPS it will be important to find the right balance between infrastructure and other key sectors, while ensuring “strategic selectivity”. The Africa Strategy: knowledge products, partnership and financing will again be the framework for decisions on the design on the next CPS with special attention given to maximizing synergies within the WBG and other development partners, in alignment with Government’s AfT. Where the Bank has provided effective support and where there is an unfinished strategic agenda, it is reasonable for the Bank to consolidate and scale-up the approaches and interventions to benefit underserved population groups of key services (e.g., expanded access to sanitation in other urban areas, expanded rehabilitation of road infrastructure system, land tenure security and administration). (iii) Capacity development must be at the heart of project preparation, implementation and be monitored are a project and portfolio level in coordination with government and other development partners. The CAS design correctly identified the importance of addressing Liberia’s severe capacity constraints in the scope, content and implementation progress of the JCAS program. Bank-supported CD activities were based on a dual track approach, involving short and medium term measures, although focusing on traditional supply driven approaches, with limited orientation toward measureable results. This has included reliance on Project Management Units (PMUs), with external consultants and differential incentives. A key lesson for the JCPS is to balance inputs for project implementation with sound CD approaches that support actions by the government and other country actors to develop institutional capacities in the country, and which can be measured by intermediate capacity outcomes. Individual project CD should be more intentional in shifting increased responsibility to the Liberian counterparts in all phases of Bank-supported activities. There is also a need to re-assess the role and incentive structure of PMUs to promote enhanced sustainability and integration with Ministry structures and staff. (iv) Pursue sound approaches to the design and implementation of an outcome-oriented results framework for the AfT and the CPS, supported by timely assistance and proactive follow up by management and technical staff. The WBI results-focused assistance provided to the design of the AfT helped avoid the output orientation experienced by PRS 1 and the JCAS through helping to support GoL’s on-going efforts to formulate realistic and attainable outcome indicators and targets and to align GoL’s new Medium Term Expenditure Framework (MTEF) with the AfT strategic objectives and outcomes, supported by sound priority interventions. Ideally, the CPS results framework will reflect the AfT framework in selected sectors. The Bank should also assist GoL to institutionalize results management systems and to strengthen statistical capacity in order to strengthen government accountability and to facilitate the adequate measurement of impact and results of activities in articulated priority areas. 63  (v) Promote sound and expedited procurement procedures, supported by effective approaches to capacity development, implementation assistance and monitoring of procurement procedures and activities. Case studies of procurement problems in Liberia during the JCAS could inform the Bank’s modernization strategy as applied to conflict affected and fragile states. While the Bank reflects upon procurement policy, it is also imperative that the CPS find more effective approaches to enhancing procurement policies and building procurement capacity at the national and sub-national levels, including private sector contractors, while meeting short-term fiduciary and implementation requirements (e.g., twinning approaches. It is also important to strengthen the procurement modules imparted by the Liberia Institute of Public Administration and other relevant entities, civil service reform to recognize procurement officers as an adequately compensated career stream). (vi) Ensure strong presence, continuity, capacity and effectiveness of experienced Bank Staff in the Liberia Office to enable the Bank to be effective in its CPS portfolio management, implementation assistance and monitoring, especially considering the country’s post-conflict transition and the strong commitment of GoL to key reforms. At the beginning of the JCAS period, the Bank Group’s Monrovia office had limited staff presence, in both technical aspects and experience. This constrained the Bank’s and IFC’s capacity to provide timely, effective and continuous policy and technical advice and implementation assistance and in-depth engagement with civil society in fostering their social capital and contributions to enhanced governance. The IEG GAC report (2011) correctly recognized that engaging in the rebuilding of post-conflict states is labor-intensive and requires experienced staff in the field. By mid FY 11, adequate staffing was completed in the country office but it has since lost several key members due to transfers. A related key lesson is the importance of adequate number, composition, experience and continuity of key staff. In the case where there has been turnover of staff in a key sector (e.g., infrastructure portfolio), it is important to ensure institutional memory is well captured. 64  ATTACHMENT 1 LIBERIA: CAS COMPLETION REPORT Summary of CAS Program Self-Evaluation 1 2 CAS Outcome and Outcome Status and Evaluation Summary Lending and Non-Lending Lessons and Suggestions for the Indicators Activities that Contributed to the new CPS Outcome THEME 1: REBUILDING CORE STATE FUNCTIONS AND INSTITUTIONS Outcome 1: 1.) Delays in legislative approval of the Improved efficiency of budget Achieved. national budget (and ratification of IDA preparation and execution and credits) have meant delays in effective enhanced revenue administration service delivery across government. Consideration should be capacity building Legal Framework: initiatives for and increased dialogue with 1.1 A legal framework for PFM exists 1.1: Achieved: the Liberian legislature, especially with that forms the foundation for budget (a) GoL prepared, approved and Integrated Financial Management key committees such as the House Ways management and accountability for commenced satisfactory implementation Information System (IFMIS): and Means. public finances. of the PFM Law (August 2009), including Approved in FY09 being on track toward introducing the Closing Date: (extended to March 31, 2) Given the strong commitment from the Medium Term Expenditure Framework 2012; GoL to introducing a medium-term budget (MTEF) for 2012/13 budget cycle. Latest Ratings: DO/IP: Satisfactory framework, there is a need to sequence (b) For the past two years GoL has reform actions and to adopt a process that prepared and used a budget framework Economic Governance and Institutional includes a step-by-step approach, building paper which has enhanced progressively Reform (EGIRP) Project on achievements made with support of the standard and quality of ministry-level Approved: FY08); donor coordinated technical assistance. budget formulation process and Closing: December 31, 2013. Given the generally limited capacity submissions. There has been increased Ratings: DO: MS; IP: MS within the public sector in post conflict alignment of the budget with the PRS countries such as Liberia, it is important priorities (improving from 60% in FY08 Budget Support Operations (DPOs) to be selective in the choice of policy and to about 80% of total public expenditure (approved each year since FY08, with institutional reforms to be undertaken at allocations in FY12). Recently, GoL has consistent rating of satisfactory: this particular stage in the country’s prepared a draft MTEF, and taken steps to 2nd Reengagement and Reform Support transition. Operations that are simple in align it (and component submissions by Program: design and have fewer manageable actions ministries and agencies) with the strategic Amount: US$4.0M are likely to be more effective than                                                         1 It should be noted that the CASCR endeavored to assess the overall CAS period, and hence took into account the relevant information provided in the CAS PR, consolidating the relevant outcomes and performance information as outlined in the original CAS (Annex 1 (a), the PR (ref. Annex 1 (b)). In some instances, some outcome indicators were added in the CR because they were not shown in the original CAS and CAS PR, in order to provide a better basis for carrying out an outcome-focused assessment. The basis for including the outcome indicators were based on inputs from the relevant TTLs, based on the sector strategies being pursued by the Bank. Under the assessment, relevant milestones were included which reflected progress toward the stated outcomes; hence not all milestones which were included in the CAS PR are included here, in order to keep an outcome focus in the assessment. Additional notes are provided in the table where other adjustments were made, consistent with an outcome focus in the assessment. It should also be noted that the original CAS and CAS PR did not include baseline and specific targets for many of the outcome indicators. 2 The main sources of the evaluation data and other qualitative evidence were provided by the relevant Bank TTLs and reflect information from WBG systems (including latest ISRs). 65  priorities and outcomes outlined in the Approved: May 2009 operations that attempt broad coverage. proposed PRS 2; Closed: June 2010 (c) MOF has established two key budget Rating: Satisfactory 3) It is important to carefully choose prior management and accountability actions that are likely to open the door for instruments which are in the early stages 3rd Reengagement and Reform Support other important policy and institutional of being fully operationalized: integrated Program: reforms. For example, the completion of financial management information system Amount:US$11.0m assessment of the legal framework for (IFMIS) (launched in mid-2011); and an Approved: September 2010 land to determine amendments required to internal audit strategy, with on-going Closed: June 2011 existing laws is an important first step to actions to staff the internal audit Rating: S the modernization of the land laws to secretariat. create an effective legal framework for EGIRP (FY08, component: Strengthening addressing land disputes. 1.2 Achieved: Revenue Management). (a) GoL budget outturns have improved 4) Automation of the revenue system is Budget Credibility: steadily. The expenditure deviation for 4th Reengagement and Reform Support not only about providing supply and 1.2 Aggregate expenditure out-turns FY 2010/11 was 8% due to government Program: installation of a new system. It is about a compared to the original approved actions to accelerate implementation of Amount: US$5.0 M change management which requires 2-3 budget for five ministries3 decrease pubic investment program during mid- Approved: Oct., 2011 years; from -25 % in 2009/10 to -12 % in year. A cash budget system remains in Closing: June, 2012 2011/12 (WB) place. There are on-going actions to help Rating: S (cancelled in FY 13) 5) Donor coordination was key in sustain these improved expenditure out- preparing the new PFM operation which turns. Integrated Public Financial Management will be effective at end of current FY and (b) MOF has introduced and used reliable Reform Project will be important to strengthen in future quarterly expenditure reports regularly Amount: US$ 5.0 M budget support operations to support (since FY09), and in 2011 published after Approval: Dec. 15, 2011 GoL’s efforts to consolidate and deepen 6 weeks (compared to 3 months in 2007); Closing: June, 2016 the reforms in public financial (c) Budget execution still needs further management and procurement, and improvement, especially to ensure timely Non-Lending: relevant policy priorities of the preparation of procurement plans for forthcoming PRS 2. major programs/projects, which now Public Expenditure Management and forms a requirement in the budget Financial Accountability Review (2008); process). Poverty Assessment (2009); Capital budget spending was weak as a Employment and Pro-Poor Growth result of lack of integration of (2010); procurement planning in the budget Strategic Policy Options for process, but this is being progressively Liberia’s Medium Term Growth and resolved through improved budgetary Development Strategy and Liberia Rising planning and expenditure commitment 2030 (2011); process using the IFMIS; and Growth Diagnostic (2011); (d) As stated above, in early 2012, MOF, Public Expenditure Review Notes (FY working with all Ministries and agencies, 2012); has prepared its first MTEF, and endeavored to align it with the PRS 2. This is contributing to enhanced                                                         66  credibility of the budget content and process. 1.3 Achieved. (a) Progress in capturing revenue in SIGTAS is proceeding well, after some initial delays. No. of taxpayers registered Revenue Administration with TIN is about 139 (out of 468 large 1.3 50% of collected revenue captured tax payers, which contribute about 80% of in the Integrated Tax Administration taxes) and 188 (out of 1,179 medium System/ITAS (WB) taxpayers), thus implying achievement of the 50 percent target of collected revenue captured in ITAS, due to the large tax payers. At the same time, Government has delayed government decisions on key issues and availability of additional funding for the change requests to the ITAS to ensure the full potential benefits of ITAS. (b) As of November, 2011 a tax roll and tax identification number (TIN) module was launched at the Large Taxpayer Unit (LTU) and the Medium Taxpayer Unit on June 6 and September 1, 2011, respectively, while implementation of the tax roll and TIN at the Small Taxpayer Unit is planned for December 2011. Introduction of SIGTAS core modules (tax assessment, payments, audit and reporting) has been delayed, and likely to begin in the second half of 2012. The additional actions will help ensure the full potential benefits. Outcome 2: (1) Emergency Senior Executive Service (1) Need for more realism in defining Increased professionalization and 2. Partially Achieved: Much of the work Project targets, especially in conflict affected, improved HR management of the civil has focused on formulating and approving Amount: $2.30 M; fragile states. All the CAS targets for service ( 2008) ) and implementing a civil service Approval: October 2007; Civil Service reforms program were reform strategy, using the SES to help Closed: June 2011. unrealistic, when even an accounting of meet immediate needs and transition to ICR Rating: proposed to be Moderately who the civil servants were was lacking in enhanced CS capacity, and developing Satisfactory addition to the lack of attention to M&E 67  the tools to professionalize (and by GoL to ensure that the activities under depoliticize) the Civil Service: Job (2) Economic Governance and implementation were adequately descriptions, job grades covering all jobs Institutional Reforms Project (EGIRP): monitored. core and generic jobs in the Civil Service, Approved: May 13, 2008 Employee Biometrics Identification Effective: May 2008; Recommendations: System, Human Resources Management Closed: August 31, 2011; Additional The new CPS should consolidate and Information System, pension strategy, pay financing effective April 2011- December deepen on-going key civil service reforms and grading strategy and mandates and 31, 2013. and public sector reforms generally functional reviews in 17 ministries Ratings: toward increased professionalization and DO: Moderately Satisfactory (MS) improved HR management of the civil 2.1 Partially Achieved: IP: Moderately Satisfactory service at both central and decentralized a) SES was fully operational (with 98 staff levels. Civil Service Professionalization at post by end of 2011). They were (3) LICUS Civil Service Reform Project; 2.1 All core positions filled by deployed in 28 ministries and agencies Approved: 2007 Need to move from de jure systems competitive selection and 15 counties countrywide. 100 % are Effective: September 2007; Completion reforms (HRMIS, job descriptions etc) to building ministry/agency capacity, and 77 date: December 30, 2011; actual employment of the rules/tools in % are rated satisfactory and critical Ratings: the management of public sector. Key contributions to their organizations (based ‐ DO: S issues here include: pay reform, pension on survey results); ‐ IP: S reforms, HR and performance b) CS positions are routinely advertised management, and overall restructuring and selection carried out in a more and institutional building. transparent manner, and entry into the payroll is through the Personnel Action Notice process controlled by the Civil Service Agency (CSA); c) A total of 17 Ministries formulated restructuring plans and six Ministries and agencies began some implementation of these new plans (e..: Civil Service Agency, Governance Commission, Ministries of Agriculture, Public Works, Health and Social Welfare, Information and Tourism); d) Steady progress in preparing a system of performance evaluation based on merit and linked to compensation and promotion systems, expected to be completed and approved by end of 2012; delay is due to the complex nature of the exercise involving numerous entities as well as weak capacity for performance management within the Civil Service Agency 2.2: Partially Achieved: a) Progress toward pension reform (including establishment of a pension 68  working group and design of an initial contributory pension scheme, dissemination of pension laws and HR Management of Civil Service dialogue sessions on pension reform). 2.2 Full account of Civil Service Bank funded Pension reform strategy was Pensioners (WB) completed, and now awaits Cabinet consideration. b) Census of pensioners was completed in October 2011; Data cleaning is underway with a report expected in February 2012. c) There is partial progress in the migration of employee data to the HRMIS module of the IFMIS. It is expected that this will be completed by the first half of 2012. Delay is due to difficulty in collecting and corroborating data from civil servants as well as difficulty of collecting employee data in outlying districts given poor infrastructure. THEME 2: REHABILITATING INFRASTRUCTURE TO JUMP- START ECONOMIC GROWTH Outcome 3: Emergency Infrastructure Project (FY06) 1. The use of Output and Performance Improved access to Transport Partially Achieved Agriculture and Infrastructure based Contracts (OPRC) over traditional infrastructure Development Project (FY08) input contracts was introduced to Liberia Urban and Rural Infrastructure during the CAS period. The Design and 3.1 20% reduction in travel time between 3.1 Partially Achieved Rehabilitation Project (FY09) Build approach worked successfully on (a) Monrovia – Ganta and (b) Cotton Cotton Tree - Bokay Town road (15 kms + Amount: US$ 100.2 M (includes several projects (Bokay Town to Cotton Tree – Buchanan by 2011(WB) additional 10 km) section have been additional financing) Tree, Vai Town Bridge and Monrovia City completed. Travel time on this section has Ratings: Streets) but more awareness on the been reduced by about 50%. Bokay Town DO: Satisfactory benefits of the model needs to be created to Port of Buchanan (56.5km) will be IP: Moderately Satisfactory within GoL and some donors before it is completed by June 2013, due to the completely endorsed. More time is required procurement processes. Liberia Road Asset Management Project needed up front for the initial phases of (FY11) procurement for example given but this Over all, the travel time between Cotton Amount: US$ 258.8 M has clashed to a certain extent with the Tree –Buchanan has been reduced by over (includes LRTF, additional financing and political need of the GoL to produce 20%. Construction will be completed on GoL contribution) quicker results to their people. GoL schedule in early June, 2013. Ratings: capacity to monitor these contracts also ‐ DO: S needs to be increased as does their The works on Monrovia-Ganta road ‐ IP: S capacity to lead donor coordination efforts corridor have been delayed due to in the infrastructure sector. unforeseen procurement delays and Non-lending support was provided 69  overall capacity issues. Given the through financing (through Bank- procurement process which is in the early supported projects) and helping to guide Recommendations for further Bank stages, it will take up to 3 years to several strategic studies to help guide support: complete the above road corridor investment priorities and institutional (covering almost 300 kms). reforms (e.g., transport master plan; roads The focus of Bank support needs to authority; road maintenance fund); include a sound balance between In addition, some of the road infrastructure financing and supporting infrastructure works which have been institutional reforms and capacity building completed with WB financing include to ensure long-term sustainability. (and are generating socio-economic Transport sector is hampered by limited benefits, although not yet documented): capacity in the Government and the - Monrovia – Buchanan corridor (83 kms private sector to deliver and manage of roads repaired, up to the international expanded infrastructure. airport); - New Vai Town Bridge (in Monrovia) constructed; - 24 kms. of specified Monrovia City streets rehabilitated. In addition, through the Bank-financed Roads Infrastructure Project, Government has prepared a draft strategy for establishing an autonomous Roads Authority and a road maintenance fund; these institutional reforms are intended to help ensure efficiency and sustainability of roads system. The next steps are being worked out to operationalize these proposals (in a phased manner) 3.2 Achieved Productivity of the Monrovia Port has increased from 3 moves/hr per crane in 2008 to 16 moves/hr per crane in 2011. 3.2 Productivity of the Monrovia port This has been enabled through the increased from 3 moves/hr per crane in establishment of a Port Authority (2010) 2008 to 8 moves/hr per crane in 2011 and the promotion of a public private (WB) partnership (PPP) concession contract with one of the world’s largest port terminal operators. Outcome 4: Achieved Emergency Monrovia Urban Sanitation The importance of governance aspects Improved access to sanitation services (EMUS) Project. cannot be overstated in infrastructure (in Monrovia) FY11 (additional financing) operations, especially in conflict Amount: US$ 22.4 M affected/fragile states EMUS Project, Number of people with access to It is estimated that 360,000 people in (additional financing) which was planned as an emergency municipal solid waste services (in Monrovia have access to solid waste Ratings: operation, has also made a major Monrovia) increases from 0 (2009) to services (as of end-November 2011). As ‐ DO: S contribution to the rebuilding of a 334,000 (WB) of early 2012, it is estimated that the MCC ‐ IP: S municipal government. Again however, 70  is collecting and disposing 60% of the initial expectations that the municipality Note: The CAS PR dropped reference to city’s solid waste (from 0% in 2009). Liberia: Institutional Support to Monrovia would pick up the entire cost of service the water supply sub-component, (CMU briefing note for RVP, April, 2011). City Corporation (TF funded by the Cities provision was too ambitious a goal. which was in the original JCAS, and Alliance (US$50,000) which was handled by AfDB (and This achievement is due to successful (approval in FY12) Recommendation for new CPS. required some restructuring). public-private partnerships (PPPs) launched by the City Council for door-to- The TF activity provides advice to the It is recommended that under the next door collection, transportation and Monrovia City Corporation (MCC) in the JCPS, a follow-up to EMUS operation disposal of waste, as well as management form of a Policy Note on decentralization take place, which builds on achievements, of the city landfill. PPPs involve private and the fiscal intergovernmental relations and sustains the investments under contractors as well as small community- status of the capital city. It is providing EMUS. Bank support could also be based enterprises, and have been tendered substantive inputs into the formulation of extended to other urban areas, building on competitively creating a set of incentives a new Local Government Bill under the the successful experience and model for increased service coverage. newly adopted Decentralization Policy. followed in Monrovia. The TA commenced in October 2011 and A communication campaign has also been is expected to be finalized by June 2012. initiated in order to sensitize the The TA is expected to help augment the population about available services and ability of the capital city to generate methods for safe handling of waste. The resources to fund the delivery of basic campaign is expected to increase the services. customer base for the service. The Bank-supported project is also supporting the Monrovia municipality, which has the functional mandate to provide waste services. Following the results of a financial and an organizational audit and a subsequent needs assessment, a capacity building program for the municipality has been developed and is currently taking place. In addition to activities for enhanced revenue collection, financial and organizational management, the capacity building program includes extended on-the-job training for technical staff of the Solid Waste Department. Collectively, the above achievements are providing a solid foundation for achieving in the short to medium term a successful model of solid waste service delivery in Monrovia, and perhaps other urban areas. Outcome 5: Improved access to Achieved Non-Lending: 1) It is not clear why the GoL did not give reliable, sustainable and (1) Close donor coordination leading to a the energy sector the same attention and affordable energy services (in clear energy strategy by the Government support as transport in PRS 1. Monrovia) of Liberia to move forward with a Nevertheless, the GoL now realizes, Management Contract for the power through Bank supported analytical work 71  5.1 Number of connections to the 5.1: Achieved utility. and through practical logic, that the lack electricity grid increased from 350 in 5,158 connections to the electricity grid. (2) Advisory services provided by IFC to of affordable energy is one the most 2006 to 4000 by 2012 (WB) the Government of Norway in support of binding constraints to growth, and the the structuring of the Management sector is now the number one priority in Contract. the PRS 2 and the Bank has been asked to 5.2 Number of household connection to 5.2: Partially Achieved (3) Options for the Development of focus most of its financing on energy the electricity grid increased to 1000 – 832 connections to households (and on Liberia’s Energy Sector (2011). generation and transmission and by 2012 (WB). track to achieve the target by mid-2012). distribution. This is a similar situation to Financing: PRS 1 and the request to prioritize Other Key Outcomes: The management 1) Financing provided by the transport- and basically major regional contract that was put in place through a Government of Norway in support of the and national trunks. coordinated donor effort on 1 July 2010 Management Plan has proven essential in turning around The Bank was successful, in both Liberia Energy Corporation (LEC), 2) An investment package financed by the answering the GoL priority as well as in including improving LEC’s financials and World Bank, GPOBA, the Government of diversifying the portfolio through by the capacity of staff at LEC, and making Norway, and USAID. The supporting responding to GoL requests for assistance good progress on electricity connections. World Bank operation is entitled “Liberia in other sectors as opportunities, In addition, substantial energy Electricity System Enhancement Project”: including funding opportunities , became investments have been mobilized during Amount: US$ 10 million available. 2011 and 2012, positioning Liberia to Date Approved: 30 November 2010 expand access to energy by private sector Closing Date: June 16, 2014 Complementing IDA availability will and households (including an additional Add’al Financing: US$ 22 M (Jan., remain key to increasing Bank impact in 30,000 households by 2015). 2012) Liberia but planning for this in the next LEC is also on track to: achieve more Ratings: CPS should be less a challenge given the affordable power tariffs for Liberian - DO: Satisfactory intense work in preparing the PRS 2 and citizens (reduce by 15% by 2015); and - IP: Satisfactory its emphasis on outcomes instead of reduce commercial losses, largely due to (3) Catalyzing New and Renewable inputs. theft of electricity (12% by 2014). Energy Project Amount: US$ 2.0 M Approved: Dec., 2010 Closing: Sept., 2012 1. Non-Lending: a) Public 1. Severe capacity constraints for project Outcome 6: Improved Access to Basic Partially Achieved Expenditure Review, education planning, implementation, and monitoring Education: sector (Jun 2009); should be expected in post-conflict re- b) Education Country Status Report engagement. Capacity building for the 6.1: A coherent and comprehensive 6.1: Achieved: (completed Dec 2010); implementing agency (MOE) should be an Education Strategic Plan (ESP) The ESP 2010-20 was developed and c) Early Grade Reading/Math integral component of project design. In developed subsequently endorsed by the Global Assessment (Dec 2010); d) Early this case, Rapid Results Approach was (Baseline: none; Target: ESP) Partnership for Education (formerly FTI) Childhood Development policy note applied appropriately. in 2010, which led to a US$40 million and dialogue (Jun 2011); e) Post- Nevertheless, in the case of the MOE, it grant for basic education. basic education and training/PBET is also clear that more support should be reform background note (ongoing given to change management and the decision to restructure the GPE/FTI Grant 6.2: Annual work plans for key sector 6.2: Achieved f) TA: Rapid Results Approach for Basic Education responds to this activities developed (Baseline: none; Annual and quarterly work plans coaching (ongoing) need but also needs to be complemented Target: AWPs, starting in CY11) developed for sub-components under by frank policy dialogue with the GPE/FTI Grant for Basic Education 2. GPE/FTI Grant for Basic government combined with including Project. Also, MoE (in 2009/2010) Education Project Amount: sector reforms in future budget support 72  developed an Education Management US$ 40 M Approved: FY11 operations. Information System (EMIS) for enhanced Closing: Jan. 2014 planning and monitoring. Ratings: -- - 3. Donor coordination is critical in the 6.3: Access to basic education improved DO: MU education sector and, given that most through launch of school construction 6.3: Partially Achieved * - IP: Unsatisfactory donor support goes to basic education, the (Baseline: 0; Target: 164 classrooms by Forty sites selected and technical decision of the team to work with the GoL end FY12 drawings for ECD centers, 3- and 6- Project was restructured in FY 13. on post-basic education is strategic and classroom primary schools, and lower will provide important inputs to an overall secondary schools completed. Delay due capacity building strategy – both for to MOE’s inexperience with large young people who have not had any procurement contract. 80 classrooms access to education and for those leaving were built through Bank supported LACE primary school. project- CEPS II. 6.4: Learning conditions improved through launch of procurement of learning 6.4: Partially Achieved * materials for grades 5-9 Grades 5-9 curriculum is complete. (Baseline: 0; Target: 1,000,000 textbooks Bidding documents for grades 7-9 and 20,000 sets of teacher guides by textbooks now under preparation. Delay end of FY12) due to lack of clarity from MOE on status of curriculum. Note: The CAS did not include education in the original results framework. The CAS PR updated results framework added a general reference to “basic education”, showing only 2 milestones (see *). For purposes of the CR, 4 key outcomes are shown to reflect the focus of the Bank’s contributions to the education sector. THEME 3: FACILITATING PRO- POOR GROWTH Outcome 7: Improved agriculture and natural resources to generate pro-poor Partially Achieved Non-Lending: 1). In a conflict affected, fragile situation, growth 1. Diagnostic Trade Integrated Study the Bank offers the possibility of using OP Completed June 2008, and published in 8.0 for rapid preparation. Caution should 7.1 Yields of rice increased from 700 7.1 Not Achieved, due to unforeseen March 2009 under the Integrated be used however in multi-sectoral kg/ha to at least 1,000 kg/ha/year project implementation delays, associated Framework (involving several other donor operations which are complicated even in among beneficiary farmers by 2016 capacity issues and absence of data partners, such as IMF, UNDP, and WTO). countries not suffering from severe (WB) monitoring system. The relevant activities capacity constraints. Assigning are due to commence early 2012 and the 2) Agricultural public expenditure responsibilities across several ministries recently launched WAAPP (2011) also analysis (arrangements completed in in this environment (as in the case of will contribute toward these outcome being launched in early 2012). AIDP) weakens clear ownership and indicators. contributes to delayed implementation. Lending: Attend to the basics, adapt to realistic 7.2 Achieved. Vessels without license capacities, sequence the approach, and 7.2 Number of industrial vessels observed reduced from 83% (in 2008) to 1) Agriculture Infrastructure Development aim for simplicity are key for operations fishing without a license reduced by 25% 45.4% (in 2011) Project (AIDP) prepared in emergencies. Amount: US$ 5 M (agric.component) 7.3 Metric tons of cocoa sites increased Not Achieved: This outcome status is due Approved: July 31, 2007 2) Less emergency relief and more private 73  from 3,000 in 2007 to 4,000 tons by to unforeseen processing delays, capacity Closing: Oct. 13, 2013 sector and SME strengthening long term 2010 (WB) issues and unrealistic project indicators. Ratings: approach should drive future support in The support to the cocoa sector will now - DO: MU (agric. component) the agriculture sector in Liberia. At the be provided through the proposed - IP: MU (agric. component) end of the present CAS period, the Bank smallholder tree crop Project (FY12), is supporting MoA efforts to promote which will revise the target indicators to 2) West Africa Agricultural Productivity smallholder-driven strategies and be more realistic Project (WAAPP) investments in tree crop development, Amount: US$ 14.0 M which will help contribute to pro-poor Approved: March 24, 2011 agricultural growth and enhanced resource Closing: June 30, 2016 management. Results will be seen in the Ratings: next CPS period. ‐ DO: S ‐ IP: S 3) West Africa Regional Fisheries Project (WARFP) Amount: US$ 12.0 M Approved: October 15, 2009 Closing: December 31, 2017 Ratings: - DO: MS - IP: MS 4) Food Price Crisis Response Trust Fund Amount: US$ 3.0 M Approval: May 29, 2008 Closing: October 31, 2013 Ratings: ‐ DO: MU ‐ IP: MU Outcome 8: Enhanced Forestry Achieved DFSMP 1) GoL forest institutions still lack Governance Amount: US$ 2.0 M capacity to directly implement donor- Approval: September 6, 2006 supported and public sector programs All illegal concessions cancelled and no All illegal concessions have been Closing: December 31, 2011 without substantial external technical commercial logging outside of concession cancelled and logs from 1.13 million ha of Ratings: support. Greater attention is needed to framework (WB) concessions are controlled, monitored and - DO: S ensure institutionalization of strategic (note: taken from Annex 1(a) of the CAS legally exported. Revenues related to the - IP: S programs, while providing appropriate PR) legal concessions timber harvesting and capacity development. Some operations exports are being monitored, accounted GEF Supported Projects: would have benefitted from a stronger TA for and captured by GoL. - SAPO component to ensure effective capacity Illegal logging is occurring outside - COPAN: DO: S; IP: MS transfer and implementation support. The concessions, by the informal sector - EXPAN Bank’s field presence of an experience (chainsaw milling), to meet domestic sector specialist has played an important demand. Timber volumes harvested by Non-Lending Support from: role in providing TA, building capacity of informal are thought to significantly - FLEG key counterparts and deepening the policy greater than by formal sector. Initial - PROFOR dialogue. regulations are in place to formalize 74  chainsaw millers and timber fees are starting to be collected. Recommendations: Priorities going forward include: (a) community capacity strengthening and developing and regulating the domestic timber and wood products market; (b) support to the implementation of the Community Rights Law to secure community access to forest resources, which will be critical for resolving forest land tenure ambiguities, to long term sustainability of forest management, to regulating domestic market, to implementing VPA and REDD+, and for equitable growth in sector. Outcome 9: Adoption of Policy Partially Achieved Non-Lending: Although the Bank-supported project in framework for land tenure reform The Bank, in close collaboration with Land Policy Study (finalized in October the sector is still under implementation, Government and other key stakeholders, 2008) one may draw the following lessons: prepared a land policy study. This work Technical Advice to the Land Commission has provided a major input to the 1) In Liberia, achieving the level of formulation of a draft land policy and land Financial Support SPBF, US $ 3 M: consensus that can lead to politically law and to the establishment and Land Sector Reforms: Rehabilitation and viable solutions and rolling out legal and functioning (supported by Bank Reform of Land Rights Registration and institutional reforms will require time and financing) of a Liberian Lands Related Matters resources but not addressing the issue of Commission which is managing the land Approval: October, 22nd, 2009 land adequately is to ignore one of the policy process. Closing: April 30, 2013 main drivers of conflict, historically and The Bank also has played a catalytic role currently, in Liberia. It is important that in promoting coordinated support by the institutions responsible for carrying several other donors which are providing out land related activities are adequately important funding to support the land resourced and empowered to carry out policy process and institutional reforms. their mandates. The policy framework for land tenure is still being revised and negotiated with Recommendations stakeholders by the Land Commission. A It is recommended that the Bank deepen strategy document (Reform of Liberia’s ongoing support in the next CPS. The Civil Law Concerning Land: A proposed possible instruments to deliver Bank strategy) was prepared by the Lands support could include a mix of technical Commission in February 2011, with Bank assistance, budget support (as a support. Policy statements are being subcomponent), and investments to drafted as a basis for preparation of draft strengthen line agencies associated with laws that are planned to be presented to policy dialogue supported through MDBS Legislature by end of FY. to ensure sound reform implementation. Outcome 10: Enhanced Mining Partially Achieved Governance: 1) EGIRP Lending Despite the optimism after Liberia became Amount: US$ 0.496 M the first African country to be EITI 10.1 Achieve Extractive Industries 10.1 Achieved Approval: FY08 compliant, it is now clear that there is a 75  Transparency Initiative (EITI) compliant Liberia became EITI compliant in 2009 Additional in FY10: US$ 1.6 M need to incentivize the EITI process by status by 2011 a) All new mining licenses (all types) are Closing: 12/31/2013 expanding its scope beyond annual issued through MCMS. Ratings: reconciliation reports and turning it into - DO: MS; - IP: MS playing a key role in promoting enhanced b) There are sound standard mining EI governance involving revenue development agreements and bidding 2) Extractive Industries Technical monitoring, post contract review, and even documents for mining tenders and new Advisory Facility Grant (EI-TAF Grant) revenue management). Focus on mining agreements. Amount: US$ 1.0 M governance has not extended to building monitoring capacity for not only c) Two reports published on revenues of contracts/concessions, but also the the mining sector (as well as forestry, oil operations. and agriculture sectors) Recommendation: In new CPS, Bank d) Bank is providing advisory support to should strengthen technical assistance GoL ‘s reform of the Mines and Minerals with focus on capacity building for Act (in process) negotiation, contract management and monitoring of EI projects, and local procurement. A strong link to IFC could 10.2 Partially achieved: be achieved through their expected 10.2 All industrial scale mining operations a) Ministry has significant capacity involvement in an ongoing mining inspected twice a year by Ministry of shortages at the Mine Inspection operation and their advisory services Lands, Mines and Energy (WB) Office which are being addressed program. under the EGIRP b) All industrial scale-mining operations were inspected twice a year by Ministry of Lands, Mines and Energy. A skeleton staff of mine inspectors is visiting mines. Inspection equipment was only recently delivered, and capacity- building activities will be carried out in 2012. 10.3: Partially Achieved Inspection program is being initiated as a 10.3: All industrial scale mine production regular activity, while technical assistance subjected to technical audit at least once a is being provided (e.g., Bank staff year by MLME and BOC (WB) accompanied inspection of Arcelor-Mittal mine in May 2011) The BOC and MLME do not yet have the capacity to audit all operations, and the Bank is providing support to build audit capacity in a realistic time-frame. Outcome 11: Improved Business and Achieved Non-Lending: Investment Climate There is a need to address more 76  1) IFC Advisory Services in Liberia: proactively and effectively the severe 11.1 3-4 reforms related to Doing 11.1 Achieved: a) Phase II (2007 – 2010) deficit of human capacity (public & local Business indicators per year (IFC) a) Liberia was recognized as a Top Ten b) Phase III (2011 – 2013) (which is private sector), which pose serious Global Reformer (in 2010, for focusing on providing TA and resources challenges to successful completion of business development); Liberia has for rational and coherent support for reform programs/initiatives in private enhanced its ranking on the ease of sustainable SME development) sector development. This highlights the doing business (ranked 150 out of need for the GoL to develop a more 183 economies in 2011, up from 2) Private Sector Development Strategy coherent private sector development 170 out of 178 in 2007) for Liberia (2011) strategy. b) IFC is supporting improvements in the regulatory environment (e.g., 9 laws Lending: comprising code drafted and passed in 2010 and 2011) and supports 1) LBDI (44 year old equity investment) investment generation through direct support to sector ministries 3) Salala Rubber Corporation and a public-private dialogue Amount: US$ 10 M through the Liberian Better Approved: mid 2008 Business Forum. Liberia is also conducting sector scans to inform 4) Access Bank the creation of an Investment Amount: (18% equity investment) Promotion Strategy. Approved: September, 2008 c) Supported launching (April 2011) of a state-of-the-art Business Registry which allows a business to complete registration 5) Ecobank in 48 hours from submission of complete (Tier 2 Facility - US$3 M, Trade Facility - documentation. $6M) d) Supported redrafting of an enhanced Approved: June 2010 Investment Code (May, 2010) 6) Guarantee Trust Bank (Trade Finance - US$ 4 Million) 11.2 Achieved: Approved: August, 2011 a) IFC supported the establishment 11.2 Increased access to micro-credit for (2009) of a commercial micro-enterprises (IFC,ADB) microfinance bank—Access Bank 7) West African Venture Fund (for Liberia Liberia (ABL). ABL went on to and Sierra Leone) establish five additional branches Amount: US$13,5 M and TA fund of $2 and now manages 28,000 accounts M, split evenly among the 2 countries) b) IFC worked to set up the West Africa    Venture Fund (“WAVF”) to provide risk capital and advisory services to SMEs (WAVF was launched in April 2011); c) IFC has supported the development of financial services infrastructure, such as a Credit Reference System and a Secured Transactions Registry, which enables the collateralization of movable assets, 77  as well as various initiatives that will permit banks to develop appropriate financing products for SMEs and agribusinesses. d) IFC has helped to develop a completed SME policy Outcome 12: Increased access to social Non-Lending: Supporting post-conflict development in a protection and social services in the face Partially Achieved country with a youth-oriented population of shocks 1) “What’s Next? A way forward in youth profile warrants the Bank’s concerted and programming: Identifying the links adequate attention to working closely with Employment generation between excluded youth and violence in Government and key stakeholders to 12.1 2,440,000 person days of 12.1 Partially achieved. 1,240,000 Liberia and Sierra Leone.” formulate sound strategies and programs temporary employment created person days of temporary employment 2) Societal Dynamics and Fragility: with a strong vulnerable youth orientation. through labor intensive works created through labor intensive works (as Liberia Case Study This support should include strong multi- (1,800,000 from YES, and 680,000 of end-Nov. 2011; 3) Social Protection Diagnostic Review sector linkages, in support of promoting from Fishtown-Harper Road) Procurement delays have contributed to funded by the Rapid Social Response enhanced social cohesion and change. delays in construction activities. Multi-Donor Trust Fund The Bank is currently carrying out Note: Approximately 1.5 million person analytical work involving Liberian’s days of employment were created Lending/Trust Funds: youth (vulnerabilities, on-going programs, through Bank financed transport and sequencing of interventions) which projects during CPS period. 1) The Cash-for-Work Temporary can serve as inputs to enhancing strategic 12.2 Partially Achieved: Employment Project (CfWTEP) (funded support for Liberia’s youth sector in the Cash for work program is made by the Global Food Price Crisis Trust upcoming CPS. Social Service Delivery: operational; Fund (GFPCTF). 12.2 45,000 beneficiaries of 7,770 women benefited with temporary Amount: US$ 3.0M . Community Works Program employment; Approved: 29 May, 2008 78 social service sub-projects completed, Closes: July, 2012) and reflect beneficiary priorities and procurement delays; 2) Community Empowerment Project II 20,000 beneficiaries of CEP II (as of end- (CEP II); Nov., 2011), and reflect enhanced USD5 million from IDA and EUR8.5 operational procedures million in co-financing (managed by the School Feeding: Bank). 61,590 children benefitted from school Approved: June 2007 feeding, with 43% being girls; Closes: June 2012 Ratings: 2,480 girls received take-home rations; ‐ PDO: MS IP: MU underachievement due to poor road conditions that hindered access in two 3) YES Project of five target counties (funded by the African Catalytic Growth Fund (ACGF) and the Crisis Response Other Key Achievements: Window, which contribute USD10 million A cash-for-work program implemented by and USD6 million respectively). the Liberia Agency for Community Approved: June 2010 Empowerment (LACE) benefitted 17,000 Closes: June 2013. people, including groups located in Ratings: marginalized urban areas, where unrest is ‐ PDO: S a significant threat. ‐ IP: MS 78  To date, under the first and second CEP, 4) Economic Empowerment of Adolescent LACE has completed 178 infrastructures, Girls (EPAG) including schools, health clinics, markets, Amount: US$ 5.2 M bridges and culverts, and improved water Approved: Sept. 2008 and sanitation sites, throughout Liberia’s Closing: Dec., 2012 15 counties. Based on LACE’s success in completing the first CEP, the European 5) The Emergency Food Support for Union co-financed this second Vulnerable Women and Children Project intervention to allow the construction of (implemented by WFP) an additional 185 sub-projects through the Amount: US$3 million through the CEP II. In addition, approximately 3,000 GFPCTF community members and local Approved: May 2008 government authorities also have received Closed: December 2010. training from LACE on project ICR Rating: Satisfactory management, as well as conflict resolution and reconciliation. These cash-for-work activities have been scaled-up through the Youth, Employment, Skills (YES) Project, which is comprised of two complementary components. The first focuses on employment generation through temporary community works activities; to date, 14,000 community workers have participated in the Project. The second focuses on improving youth employability through skills development. 12.3 Not achieved, due to delay in start- up of YES Project. Partial achievement is expected by end of June 2012 (1,200 persons expected to be trained, out of a target of 4,500). Skills development 12.3 4,500 persons participating and completing skills development programs and receiving certification 79  ATTACHMENT 2 Liberia CAS CR: Planned Lending Program and Actual Deliveries (FY09-FY12) (US$ M) CAS Plans (March, 2009) – (a) Status (as of June, 2012) (Indicative IDA Program + Trust Funds) (Actual IDA Program + Trust Funds) (b) FY Project US$ (M) Actual/Dropped/Forwarded to other FY/Additional Funding US$ (M) FY 09 Budget Support 4.0 - Reengagement and Reform Support II (Budget Support) 4.0 Urban and Rural Infrastructure 67.3 - LR-Urban and Rural Infrastructure Rehabilitation Program (URIRP) 44.0 Rehabilitation I Additional Actual Projects/Financing: -Emergency Infrastructure Rehabilitation Project (EIRP) Add Fin 8.2 -Agriculture and Infrastructure Development Project (AIDP) A F ( AF-IDA 29.1 US$16 US$13.1 M (TF) -Rehab. & Reform of Land Rights Registration Project (TF) 2.9 -Liberia Extractive Industries Technical Advisory Facility Project (TF) 1.0 -Integrated Financial Management Information System (TF) 3.7 -Commercial Debt Reduction Program for Liberia (TF) 39.0 SubTotal for FY09 71.3 Actual Sub Total for FY09 131.9 FY 10 Urban and Rural Infrastructure 8.5 - LR-Urban and Rural Infrastructure Rehabilitation Program (URIRP) - 29.2 Rehabilitation (Additional Financing) Add Fin (IDA 20M and 9.2 from LRTF) Growth/Agriculture (includes US$20 M 32.0 - West Africa Regional Fisheries Program (includes Regional IDA of 8.7 regional funding) US$8.7 M) Budget Support 5.0 Additional Actual Projects/Financing: - Co-financing of Liberia Community Empowerment Project (TF) 10.8 - Youth, Employment and Skills Project (YES) (CRW and African Growth 16.0 Catalytic Fund*) -Liberia Rural Energy (TF) 1.4 Forwarded to FY11: Budget Support SubTotal for FY10 45.5 Actual SubTotal for FY10 66.1     80  FY 11 Urban and Rural Infrastructure 20.2 Rehabilitation II Energy (includes US$140 M Regional IDA 155.0 - LIBERIA Electricity System Enhancement Project (LESEP) 10.0 funding) Budget Support 6.0 - Re-Engagement and Reform Support Program III (Budget Support) 11.0 Additional Actual Projects/Financing: -West Africa Agric Productivity Project (includes Reg IDA of 4.M) 6.0 Forwarded to FY12: Small Holder Tree Crop -Liberia Road Asset Management Program (LIBRAMP) (includes 108.9 M from LRTF and 67.7 M from IDA). 176.6 Revitalization (US$ 10 M) -Basic Education –EFA-ETI 40.0 Forwarded to FY12: West Africa Power -West Africa Regional Connectivity Program (includes Reg. IDA of 17M) 25.5 Pool – US$8.6 M plus regional ) -Emergency Monrovia Urban Sanitation (EMUS) (includes 18.4 M from LRTF and 4 million from IDA) ) 22.4 - Economic Governance and Institutional Reform Project (EGIRP) 7.0 SubTotal for FY11 181.2 Actual Subtotal for FY 11 298.5 FY 12 Per CAS PR 40.0 -Re-Engagement and Reform Support Program IV 5.0 -Integrated Public Financial Management Reform Project (IDA 5M and 28.5 Transport 35.0 22M- MDTF) WAPP -LESEP AF (22M IDA and 10M GPOBA) 32.0 Small Holder Tree Crop - Small Holder Tree Crop Revitalization 15.0 DPO 5.0 - West Africa Power Pool – CSLG (includes136.4 regional IDA) 150. Actual and Proposed SubTotal for FY12 230.5 Planned Total: FY 9-11 298.0M Actual Totals: FY 9-11 496. 5 Planned Total: FY 9-12 338.0 M Actual Totals: FY 09-12: 727.0 81  ATTACHMENT 3 CAS CR: Planned Non lending Services and Actual Deliveries FY CAS PLANS (March 2009) Status/Additional Products * FY09 Land Tenure and Sustainable Development Actual/Completed (early FY09) (from FY08) Diagnostic Trade Integration Study Actual/Completed Oil Palm Sector Study Dropped Policy Note on Pro-poor Growth Forwarded to FY10 PEMFAR Dropped FY10 Policy notes (e.g. macro, fiscal Actual and Partial: Policy Note on Pro-poor Growth decentralization, agriculture, and social protection) Women’s Economic Empowerment (WB) Education Sector Assessment Completed Poverty Assessment (WB) Partial: Poverty Assessment: Background paper and workshop delivered Energy and Electricity Strategy Completed in FY11 EITI ++ Scoping Study Forwarded to FY11 Additional Non lending/Products: FY11 None were programmed EITI + Scoping Study PRS II Technical Assistance (Macroeconomic Framework for National Vision and Making Strategic Policy Tradeoffs; various policy notes listed below; Results Framework TA by WBI): In Process and Completed in FY12 (2nd Quarter) Policy Notes: (initiated and completed by end 2011) - Growth Diagnostics Study - Prioritizing Infrastructure for Economic Diversification - Leveraging Natural Resource Concessions - Private Sector development in Liberia - Political Economy and Exclusion in Liberia - Social Protection in Liberia - Fragility and Social Structure (to be completed FY12) Agro-Industrial Development Policy: In Process and to be completed in FY12 FY12 The JCAS was extended for FY12, and FY12: Additional Products therefore none were programmed. - Options for the Development of Liberia’s Energy Sector - Security Expenditure Review (with UNMIL) - Social sector expenditure review - Sector Policy Briefing Notes for post-election - PRS II Technical Assistance- PREM and WBI - Water point mapping - WSP - Public Expenditure Review (including PEFA, begin in 4th Quarter) (WB/AfDB) - Poverty Assessment Update - Public Debt Management Reform Plan Design -NLTA in design of anti- money laundering law -Social Protection Strategy * Note: Some additional non-lending activities by the WBG, including IFC, are shown in Annex 1 (column 3)   82    ATTACHMENT 4 Liberia World Bank Portfolio and Pipeline (Including Trust Funds): Source (JCAS Report, 2009)       83      ANNEX 3: STRATEGIC GOALS OF THE AGENDA FOR TRANSFORMATION Pillar I Pillar II Pillar III Pillar IV Goal - to create an atmosphere of Goal - to transform the economy to Goal- to improve quality of life by Goal – in partnership with citizens, create peaceful co-existence based on meet the demands of Liberians through investing in more accessible and higher transparent, accountable and responsive public reconciliation and conflict resolution development of the domestic private quality education; affordable and institutions that contribute to economic and by providing security, access to sector –using resources leveraged from accessible healthcare; social protection social development as well as inclusive and justice, and rule of law to all. FDI. for vulnerable citizens, and expanded participatory governance systems. access to healthy and environmentally friendly water and sanitation services.  Engage with citizens to ensure equitable,  Maintain the current security  Promote and sustain private sector peaceful, transparent and inclusive democratic situation and the nation’s territorial development through enhanced  Assure equitable access to free basic institutions and enhanced political governance integrity and ensure their economic competitiveness and education and improve quality and at national and local levels; sustainability during and after diversification, increased value accessibility of secondary, tertiary and  Continue building independent, accountable, UNMIL withdrawal; addition and improved administrative vocational education; merit-based and performance oriented, well-  Engage civil society and and policy environment;  Increase access and utilization of structured public sector with improved service development partners to support the  Increase access to reliable and quality health services and deliver them delivery; most critical transition from a affordable energy, transport, and ICT close to communities;  Strengthen public institutions to ensure fragile post-conflict nation to a services;  Develop and implement policies and revenues and government assets are well stable, unified one with a vibrant  Maintain fiscal, monetary, trade and operational systems to protect the most managed., free from corruption and future;  exchange rate policies that entrench vulnerable groups; increase monitored;  Increase equitable access to macroeconomic stability and support employment readiness, especially for  Develop comprehensive national land tenure, justice, particularly for remote and efficient public expenditure youth; including land use system, that will provide marginalized population; increase management;  Expand equitable access to equitable access to land and security of tenure consistency between traditional and  Promote competitive and modern sustainable water and sanitation so as to facilitate inclusive, sustained growth statutory legal systems;  agriculture and forestry to contribute services and improve sector capacity to and development, ensure peace and security  continue to address the key to reducing poverty; govern and operate service provision. and provide sustainable management of the sources of conflict and insecurity to  Promote sustainable, transparent and environment; maintain a secure and safe well-managed exploitation of  Improve the negotiations, management and environment for sustainable Liberia’s mineral resources. monitoring of concessions to ensure they economic growth and development.  contribute effectively to broad based economic and social development Pillar V Goal: mainstreaming cross cutting issues across all sectors for society’s overall productivity and well-being with particular emphasis on the vulnerable segment of the country’s population.  Improve the socio-economic and political status of women, ensure protection of children’s rights, improve access to equitable opportunities for disabled, empower young people as full participants in all aspects of Liberian society;  Improve management of environment; reduce spread of HIV/AIDS and mitigate its impact on persons living with AIDS; combat human rights abuses and advance welfare of all Liberians, irrespective of sex, ethnicity etc.; promote sustainable creation of decent jobs for Liberians. Capacity development is an integral part of sectoral pillars. 84      ANNEX 4: DEBT SUSTAINABILITY ANALYSIS INTERNATIONAL MONETARY FUND AND INTERNATIONAL DEVELOPMENT ASSOCIATION LIBERIA JOINT IMF/WORLD BANK DEBT SUSTAINABILITY ANALYSIS1 (Approved by Sean Nolan and Chris Lane [IMF] and Marcelo Giugale and Jeffrey D. Lewis [World Bank]) November 2, 2012 Summary: The Debt Sustainability Analysis, which incorporates an increase in borrowing and public investment, indicates that Liberia continues to have a low risk of debt distress. The macroeconomic assumptions are underpinned by developments in the iron ore sector. In the near term, foreign financed investment provides a boost to growth and leads to a widening of the current account deficit. Going forward, an increase in iron ore exports and a winding down of import-intensive investments support a narrowing in the current account. Consistent with the Government of Liberia’s debt management policy, the DSA assumes a ceiling on annual foreign currency borrowing of 4 percent of GDP in present value terms to support public investment, particularly in energy and transportation infrastructure. The projected present value of the external debt stock would remain low and sustainable with all debt indicators below the policy-related thresholds. I. KEY ASSUMPTIONS UNDER THE BASELINE SCENARIO 1. Liberia has recorded solid macroeconomic performance and is increasing external borrowing for key public investment projects while maintaining low debt vulnerabilities. Having achieved HIPC completion point in June 2010, and successful completion of the three-year IMF Extended-Credit Facility (ECF) Arrangement, the authorities are now focused on scaling-up much needed public investment, especially in energy and transport infrastructure. Increasing foreign currency borrowing to 4 percent of GDP in PV terms is in line with maintaining low debt vulnerabilities while providing room for higher public investment. External debt would rise to 27 percent of GDP in 2014/15, from 10 percent of GDP in 2011/12. Central government domestic debt at 17.6 percent of GDP in                                                         1 The LIC-DSA incorporates the following general assumptions: (i) the discount rate is fixed at 4 percent; (ii) the exchange rates are based on WEO assumptions; and (iii) the risk of debt distress based on country-specific policy- dependent thresholds, based on the country’s CPIA index, which for Liberia is 3.0. All data refers to the fiscal year which runs from July to June. 85    2011/12, of which 95 percent is foreign currency denominated, is expected to gradually fall to 12.8 percent by 2014/15.2 2. The key change in the baseline scenario compared with the previous DSA is a revision to the underlying level of GDP in line with new national accounts estimates (Box 1). Nominal GDP has been revised upwards by close to one third based on survey data which takes better account of the services sector. Growth rates between 2008 and 2012 have also been revised upward, by an average of 1.5 percentage points, because the services sector is estimated to be significantly faster growing than most non-service sectors. Overall, growth prospects in the medium-term are 1.4 percentage points higher on average than in the previous DSA, mostly related to faster than expected growth in the services sector and higher public investment in line with the authorities’ draft second poverty reduction strategy (PRS2) (Boxes 2 and 3). This higher investment is financed through external borrowing in line with the agreed debt limit resulting in larger fiscal deficits in the near term. The current account is also expected to be larger than the previous DSA, by close to 5 percentage points of GDP on average in the medium term, related to lower export growth in the commodities sector. 3. There are significant risks to the baseline scenario, particularly around developments in the concessions sector and in commodity prices. The baseline scenario takes a cautious approach on the prospects for the initiation in iron ore production and only includes operations for one concession over the projection period. As a result economic growth, exports and fiscal revenues are relatively conservative estimates. At the same time, a decline in commodity prices, particularly in the iron ore sector, could have a significant impact on investment, the external position and revenues.                                                         2 Liberia is a highly dollarized economy. The de jure exchange rate regime is classified as ‘managed float’. For more information see Article IV Consultation and the new ECF Arrangement, Informational Annex (2012).  86    Box 1. Key Baseline Macroeconomic Assumptions Real GDP growth in the non-mining sector is assumed to accelerate in the next few years, supported by the public investment program and services sector. Real annual growth including the mining sector is expected to average 7 percent between 2012/13 and 2015/16 as production capacity in the mining sector increases. Growth then fluctuates around an average rate of 6 percent, ending at 5.5 percent at the end of the projection period. There are potential upsides to the growth projection if additional iron ore concessions begin production, ongoing petroleum exploration identifies commercially viable oil deposits, and the government succeeds in securing financing for the more ambitious development program. Inflation in local currency (GDP deflator index) is expected to be 6 percent on average in 2012/13 and then averages 5 percent from 2014 onwards. The merchandise trade deficit widens sharply over the next four years due to a strong increase mining- related imports. However, the strong pick-up in iron ore production in 2015 supports a gradual decline in the trade deficit. Export growth in the near term is lower than in the previous DSA, due to lower commodity prices, particularly for rubber and iron ore. From 2012/13 to FY14/15 export growth accelerates to a peak of 23 percent due to the initiation of iron ore exports. Exports of goods and services then slow, growing at an average of 4 percent from 2016/17 to 2029/30. Import growth, largely driven by imports of capital goods related to the iron ore sector, is partially offset by lower imports by UNMIL as a result of the expected drawdown. Between 2012/13 and 2015/16 import growth in goods is 13 percent, while services imports fall by average of 10 percent. From 2018/19 onwards these effects are phased out and the average annual growth in goods and services is expected to be 5 percent. The current account deficit of the balance of payments widens to 64 percent of GDP in 2013/14 in line with investment in the iron ore sector. Following this, the current account deficit narrows rapidly to 32 percent of GDP in 2015/16. Beyond this the current account narrows averaging 15 percent of GDP. Tax revenues are projected to remain stable at around 19.5 percent of GDP during the projection period. The external borrowing policy was agreed in the IMF ECF-supported program with annual external borrowing up to 4 percent of GDP in NPV terms on average between 2012/13-2014/15. The Government’s Agenda for Transformation (PRS2) places emphasis on addressing the large infrastructure needs, particularly in the energy and transportation sectors. Part of this investment is expected to be financed through external borrowing raising external debt to GDP from 8 percent of GDP in 2011/12 to 22 percent of GDP in 2014/15. Beyond this, borrowing is expected to gradually stabilize at 2 percent of GDP in 2022/23. All new external borrowing is assumed to be on concessional (IDA) terms. Domestic borrowing, supplied through a planned Treasury bill market, is assumed constant at 1 percent of GDP per year beginning in 2016/17. External grants (excluding UNMIL) are expected to progressively decline from 21 percent of GDP in 2012/13 to about 17 percent in 2015/16. Beyond this, grants are projected to decline to 10 percent of GDP by the end of the projection period. 87    Box 2. Liberia: Agenda for Transformation (2012–17) The Agenda for Transformation is a five-year development plan that underpins Vision 2030 to achieve middle-income status by 2030. The plan focuses on investments in five strategic pillars—at an estimated cost of US$3.3 billion over the five-year period—to increase productivity, boost economic growth, and improve social inclusion, particularly among youth. The pillars are:  Economic transformation, particularly rehabilitating the hydropower plant, roads, and ports, and updating information and communications technology;  Human development especially education and health;  Peace, security, and the rule of law;  Governance and public institutions to modernize the public sector and enhance transparency and accountability; and,  Cross-cutting issues focussed on youth skills, child protection, gender equality, and human rights. Financing the investment program  The government plans to cover 12–15 percent of investments with its own resources and is planning a pledging donors’ conference in late 2012 to secure loans and grants. Liberia: Agenda for Transformation Costing Summary (million US dollars) FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Five year Pillar 1. Economic Transformation 594.1 532.4 439.4 354.9 267.8 2,188.6 Pillar 2. Human Development 87.2 100.9 120.8 121.1 128.9 558.9 Pillar 3. Peace, Security, and Rule of Law 73.1 90.3 92.1 77.1 73.0 405.6 Pillar 4. Governance and Public Institutions 40.3 16.5 14.5 14.1 10.0 95.5 Pillar 5. Cross-cutting Issues 19.5 28.7 22.5 22.1 19.2 111.9 Total 814.2 768.9 689.3 589.2 498.9 3,360.5 Source: Ministry of Finance, Agenda for Transformation (As of August 30, 2012). 88    Box 3. Liberia: Assessing the impact from scaling up investment A dynamic economic model, calibrated to Liberia specifics, was used to simulate the macroeconomic impact of scaling up infrastructure investment and improving project efficiency.1 As the model focuses on identifying the return from public investment relative to a stable long-term trend and other modeling differences, the estimates are not directly comparable to the underlying macroeconomic framework used in the DSA. Starting from Liberia’s low base of investment of close to 3 percent of GDP, a 5 percentage point of GDP increase in investment over a seven year period was modeled. Liberia: Real Per Capita Income Growth (Percentage change, y.o.y) 6.0 6.0 5.0 5.0 4.0 4.0 3.0 3.0 2.0 2.0 Low efficiency Baseline High efficiency 1.0 1.0 1 5 9 13 Sources: IMF staff calculations. Estimates suggest public investment would contribute an additional 1 percentage point each year to real GDP per capita over ten years. The growth effect peaks 3-4 years after the initial investment and then gradually declines over time. The estimate assumes an efficiency rate of public investment of around 60 percent. Assuming an improvement in the efficiency rate to 80 percent, consistent with improved project selection and strengthened execution capacity, real per capita income growth could potentially increase by an additional half percentage point over the medium term. Given the caveats associated with this exercise, the simulation should be seen as an approximation rather than a forecast. 1/ The average for low income countries. The efficiency rate measures the rate at which executed public investment translates into productive capital. For more details see Buffie, E. A. Berg, C. Patillo, R. Portillo, and L. Zanna, 2012, “Public Investment, Growth, and Debt Sustainability: Putting Together the Pieces.” IMF WP No. 12/144 89    II. EXTERNAL DEBT SUSTAINABILITY 4. Following HIPC debt relief, Liberia’s external debt is forecast to rise steadily, due to increased new concessional borrowing to fund infrastructure development. (Tables 1 and Figure 1). In the medium term, the PV of debt-to-GDP ratio is projected to rise steadily from 10.7 percent in 2012/13 to 16.1 percent by 2014/15, reaching 19.8 percent by 2018/17 and gradually declining thereafter. Debt service increases moderately over time, peaking in 2021/22. Due to the concessional nature of debt together with rising exports and revenues from iron ore production, debt and debt service indicators remain well below the country-specific debt burden thresholds. These thresholds are based on an assessment of country policies and institutions compiled annually by the World Bank (CPIA)3. 5. The sensitivity analysis shows that the debt indicators remain within sustainable limits (Figure 1 and Tables 2a and 2b).  PV of external debt-to-GDP ratio. Under the alternative scenario of less favorable borrowing terms the PV of external debt-to-GDP rises close to, but remains below, the 30 percent threshold. Given that the majority of debt is expected to be contracted on fixed interest rates, the impact of this scenario is likely to be more limited. The historical scenario shows that if key macroeconomic variables return to their average between 2004/05 to 2011/12 debt reaches close to the threshold of 30 percent of GDP towards the end of the projection period. However, as noted in the previous DSA the risk associated with this scenario is low due to very unreliable historical data following the end of an extensive period of political and social instability.4 In addition, the historical scenario is relatively less severe than the previous DSA due to the revision to GDP data and higher private external financing flows.  PV of external debt and debt service-to-exports ratio. The PV of external debt-to-exports ratio is most sensitive to the historical scenario, interest rate shock and export growth shock but remains below the threshold of 100 percent. The debt service ratio remains well below the threshold of 15 percent in all scenarios.  PV of external debt and debt service-to-revenue ratio. The PV of external debt-to-revenue ratio is slightly sensitive under alternative and stress scenarios showing some sensitivity to exports and less favorable borrowing terms. Both the debt and debt service-to-revenue ratios are well below the policy thresholds in all scenarios throughout the projection period.                                                         3 See Classification of Low-Income Countries for the Purpose of Debt Limits in Fund-Supported Programs: 2011 Update (IMF, 2011). With a CPIA rating below 3.25 on average for the past three years, Liberia is classified as a “weak” policy performer. This implies debt burden thresholds of 30 percent for the PV of debt-to-GDP ratio, 100 percent for the PV of debt-to-exports ratio, 200 percent for the PV of debt-to-revenue ratio, 15 percent for debt service-to-exports ratio, and 18 percent for the debt service-to-revenue ratio. 4 The historical scenario relies on averages between 2004/05 to 2011/12.  90      III. PUBLIC SECTOR DEBT SUSTAINABILITY 6. Following the resumption of new borrowing after debt relief, the baseline scenario of all public debt indicators will rise moderately (Figure 2, Table 3). Under the baseline scenario the PV of public debt-to-GDP rises slightly to 25 percent of GDP and remains broadly stable. The PV of debt-to-revenue ratio rises to a peak of close to 90 percent of GDP and then follows a slight downward path towards the end of the projection period. The PV of debt service-to-revenue ratio follows a similar trajectory, rising to 5 percent of GDP over the projection period. 7. Alternative and shock scenarios highlight the potential risks associated with a lower GDP growth (Table 4). Under the alternative scenario of a shock to GDP growth in 2013/14 and 2014/151 the PV of debt-to-GDP ratio will increase from 10.8 percent in 2010/11 to about 90 percent by the end of the projection period. The PV of the public debt-to-revenue ratio also deteriorates under the growth shock scenario, reaching close to 300 percent by the end of the projection period. However, the debt service-to-revenue ratio will remain reach around 15 percent under an alternative scenario of lower GDP growth. IV. CONCLUSION 8. The increase in debt in Liberia to finance much needed public infrastructure investments is consistent with maintaining low debt vulnerabilities. The authorities are committed to borrow only for investment and to maintain debt sustainability. The underlying macroeconomic assumptions and DSA results were discussed with the authorities. In the baseline scenario, which assumes new foreign currency borrowing of 4 percent of GDP on concessional terms, increased investment, and moderate rates of growth, all external debt burden indicators remain below their policy-dependent thresholds. While there are risks to the baseline, particularly from adverse changes in commodity markets, the key debt and debt service indicators remain below the indicative thresholds.                                                         1 Defined as a one-standard deviation shock to average GDP growth between 2004/05-2011/12, implying growth of -2.7 percent in both FY14 and FY15. 91    Figure 1. Liberia: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2013-2033 1/ a. Debt Accumula tion b.PV of debt-to GDP ra tio 8 53 35 7 52 30 6 51 50 25 5 49 20 4 48 3 15 47 2 46 10 1 45 5 0 44 2013 2018 2023 2028 0 Rate of Debt Accumulation 2013 2018 2023 2028 Grant-equivalent financing (% of GDP) Grant element of new borrowing (% right scale) c.PV of debt-to-exports ra tio 250 d.PV of debt-to-revenue ratio 120 100 200 80 150 60 100 40 50 20 0 0 2013 2018 2023 2028 2013 2018 2023 2028 e.Debt service-to-exports ratio f.Debt service-to-revenue ra tio 16 20 18 14 16 12 14 10 12 8 10 8 6 6 4 4 2 2 0 0 2013 2018 2023 2028 2013 2018 2023 2028 Baseline Historical scenario Most extreme shock 1/ Threshold Sources: Country authorities; and staff estimates and projections. 1/ T he most extreme stress test is the test that yields the highest ratio in 2023. In each figure it corresponds to a terms shock where public sector loans are on less favourable terms. 92          Table 1.: External Debt Sustainability Framework, Baseline Scenario, 2010-2033 1/ (In percent of GDP, unless otherwise indicated) Actual Historical 6/ Standard 6/ Projections Average Deviation 2013-2018 2019-2033 2010 2011 2012 2013 2014 2015 2016 2017 2018 Average 2023 2033 Average External debt (nominal) 1/ 140.4 8.1 10.1 15.7 22.1 27.0 30.7 34.1 35.3 32.1 25.0 o/w public and publicly guaranteed (PPG) 140.4 8.1 10.1 15.7 22.1 27.0 30.7 34.1 35.3 32.1 25.0 Change in external debt -131.2 -132.3 2.1 5.6 6.4 4.9 3.7 3.4 1.2 -0.9 -1.3 Identified net debt-creating flows -17.7 -22.1 1.5 3.4 3.9 4.1 3.6 3.0 1.5 -0.6 0.1 Non-interest current account deficit 30.9 33.4 43.8 28.0 10.2 57.5 64.0 51.4 31.6 24.1 20.6 11.9 13.2 13.8 Deficit in balance of goods and services 99.0 94.9 91.6 90.2 86.5 63.7 39.0 30.7 27.5 19.5 17.8 Exports 41.5 44.7 45.5 44.0 42.8 47.3 50.7 47.9 45.7 38.5 28.1 Imports 140.5 139.6 137.2 134.2 129.3 111.0 89.6 78.6 73.1 58.0 45.9 Net current transfers (negative = inflow) -82.2 -74.1 -60.5 -92.4 39.6 -48.5 -40.5 -31.5 -25.2 -22.5 -20.5 -16.3 -10.1 -14.6 o/w official -28.5 -28.3 -24.6 -21.2 -20.0 -18.5 -17.3 -16.8 -15.9 -12.5 -7.6 Other current account flows (negative = net inflow) 14.1 12.6 12.7 15.8 18.1 19.3 17.8 15.9 13.6 8.8 5.5 Net FDI (negative = inflow) 2/ -29.1 -36.3 -41.2 -24.8 11.9 -53.5 -59.2 -46.2 -26.8 -19.8 -17.1 -11.0 -12.0 -12.5 Endogenous debt dynamics 3/ -19.5 -19.2 -1.1 -0.6 -0.8 -1.1 -1.3 -1.4 -2.0 -1.5 -1.1 Denominator: 1+g+r+gr 1.1 1.2 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 Contribution from nominal interest rate 0.0 0.1 0.1 0.1 0.2 0.2 0.2 0.3 0.3 0.2 0.2 Contribution from real GDP growth -14.4 -8.7 -0.6 -0.8 -1.0 -1.3 -1.5 -1.6 -2.2 -1.8 -1.3 Contribution from p rice and exchange rate changes -5.1 -10.6 -0.6 … … … … … … … … Residual (3-4) 4/ -113.5 -110.2 0.6 2.2 2.4 0.8 0.2 0.4 -0.3 -0.3 -1.4 o/w exceptional financing -9.0 -3.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 PV of external debt ... ... 7.9 10.6 13.8 16.1 17.8 19.3 19.8 18.0 14.3 In percent of exports ... ... 17.3 24.2 32.1 34.0 35.1 40.3 43.3 46.8 51.0 PV of PPG external debt ... ... 7.9 10.6 13.8 16.1 17.8 19.3 19.8 18.0 14.3 In percent of exports ... ... 17.3 24.2 32.1 34.0 35.1 40.3 43.3 46.8 51.0 In percent of government revenues ... ... 30.2 42.7 51.9 62.4 73.0 79.1 82.7 76.2 63.1 Debt service-to-exports ratio (in percent) 0.0 0.7 1.0 1.1 1.5 1.6 1.6 1.8 1.8 1.9 2.2 PPG debt service-to-exports ratio (in percent) 0.0 0.7 1.0 1.1 1.5 1.6 1.6 1.8 1.8 1.9 2.2   PPG debt service-to-revenue ratio (in percent) 0.0 1.3 1.7 1.9 2.4 2.9 3.4 3.6 3.4 3.0 2.8 Total gross financing need (M illions of U.S. dollars) 22.4 -37.2 50.0 82.6 107.9 131.3 137.2 134.2 119.9 68.4 162.4 Non-interest current account deficit that stabilizes debt ratio 162.1 165.7 41.7 51.9 57.6 46.5 27.9 20.7 19.4 12.8 14.5 Key macroeconomic assumptions Real GDP growth (in percent) 5.7 7.2 8.5 5.0 7.7 8.6 6.9 6.4 6.1 5.6 7.1 6.8 5.8 5.4 5.8 GDP deflator in US dollar terms (change in p ercent) 1.9 8.2 7.6 7.6 3.3 2.9 1.0 4.2 3.5 0.1 1.1 2.1 1.9 5.0 2.3 Effective interest rate (percent) 5/ 0.0 0.1 1.2 0.4 0.7 1.5 1.2 1.0 0.9 0.9 0.8 1.1 0.8 0.8 0.8 Growth of exports of G&S (US dollar terms, in percent) -8.4 25.0 18.9 17.6 15.8 8.0 5.1 22.5 17.5 0.0 3.3 9.4 4.2 5.6 4.8 Growth of imports of G&S (US dollar terms, in percent) -7.6 15.2 14.7 41.9 68.6 9.3 4.0 -4.8 -11.4 -7.2 0.8 -1.6 4.9 5.0 4.9 Grant element of new public sector borrowing (in percent) ... ... ... ... ... 46.9 48.0 48.2 50.2 52.3 52.3 49.6 52.3 52.3 52.3 Government revenues (excluding grants, in percent of GDP) 22.5 23.6 26.1 24.9 26.5 25.8 24.4 24.4 23.9 23.7 22.7 24.4 Aid flows (in M illions of US dollars) 7/ 13.0 40.3 28.3 148.8 181.7 183.0 189.2 254.8 238.8 256.6 538.8 o/w Grants 13.0 40.3 28.3 44.8 46.7 40.0 39.2 109.8 118.8 175.6 388.8 o/w Concessional loans 0.0 0.0 0.0 104.0 135.0 143.0 150.0 145.0 120.0 81.0 150.0 Grant-equivalent financing (in percent of GDP) 8/ ... ... ... 5.6 6.1 5.4 4.9 7.2 6.5 5.3 5.1 5.4 Grant-equivalent financing (in percent of external financing) 8/ ... ... ... 60.7 59.8 58.2 59.9 72.9 76.0 84.9 86.7 84.4 Memorandum items: Nominal GDP (M illions of US dollars) 1223.5 1418.7 1656.4 1850.9 1998.5 2215.8 2431.2 2571.8 2784.3 4113.8 9109.6 Nominal dollar GDP growth 7.7 15.9 16.8 11.7 8.0 10.9 9.7 5.8 8.3 9.1 7.8 10.7 8.2 PV of PPG external debt (in M illions of US dollars) 129.2 193.6 270.6 351.1 425.5 489.2 543.2 731.4 1286.9 (PVt-PVt-1)/GDPt-1 (in percent) 3.9 4.2 4.0 3.4 2.6 2.1 3.4 1.0 0.8 1.0 Sources: Country authorities; and st aff estimat es and projections. 0 1/ Only includes public sect or external debt due t o lack of dat a availability of private debt . Fiscal year basis. 2/ Includes privat e financing flows, including for iron-ore relat ed invest ment which was included in FDI in t he previous DSA. 3/ Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, wit h r = nominal interest rat e; g = real GDP growt h rat e, and ρ = growth rate of GDP deflat or in U.S. dollar terms. 4/ Includes except ional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For project ions also includes contribut ion from price and exchange rat e changes. 5/ Current -year interest payments divided by previous period debt st ock. 6/ Hist orical averages and standard deviat ions are from 2004/05 to 2011/12 due to dat a availability. 7/ 8/ Defined as grants, concessional loans, and debt relief. 93  Grant-equivalent financing includes grants provided directly to t he government and t hrough new borrowing (difference between t he face value and the P V of new debt ).       Table 2a.Liberia: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2013-2033 (In percent) Proje ctions 2013 2014 2015 2016 2017 2018 2023 2033 PV of de bt-to GDP ratio Baseline 11 14 16 18 19 20 18 14 A. Alternative Scenarios A1. Key variables at their historical averages in 2013-2033 1/ 11 14 16 17 18 19 23 27 A2. New public sector loans on less favorable terms in 2013-2033 2 11 16 20 24 27 29 29 26 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2014-2015 11 14 16 18 19 20 18 14 B2. Export value growth at historical average minus one standard deviation in 2014-2015 3/ 11 15 22 23 25 25 22 16 B3. US dollar GDP deflator at historical average minus one standard deviation in 2014-2015 11 13 15 17 19 19 17 14 B4. Net non-debt creating flows at historical average minus one standard deviation in 2014-2015 4/ 11 22 21 22 23 24 21 15 B5. Combination of B1-B4 using one-half standard deviation shocks 11 7 -5 -2 0 1 3 8 B6. One-time 30 percent nominal depreciation relative to the baseline in 2014 5/ 11 19 23 25 27 28 25 20 PV of de bt-to-e xports ratio Baseline 24 32 34 35 40 43 47 51 A. Alternative Scenarios A1. Key variables at their historical averages in 2013-2033 1/ 24 32 33 34 39 42 60 95 A2. New public sector loans on less favorable terms in 2013-2033 2 24 37 43 47 57 63 76 93 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2014-2015 24 32 33 35 40 43 46 50 B2. Export value growth at historical average minus one standard deviation in 2014-2015 3/ 24 36 60 60 67 71 74 72 B3. US dollar GDP deflator at historical average minus one standard deviation in 2014-2015 24 32 33 35 40 43 46 50 B4. Net non-debt creating flows at historical average minus one standard deviation in 2014-2015 4/ 24 51 43 43 49 52 55 54 B5. Combination of B1-B4 using one-half standard deviation shocks 24 17 -12 -5 -1 3 9 33 B6. One-time 30 percent nominal depreciation relative to the baseline in 2014 5/ 24 32 33 35 40 43 46 50 PV of de bt-to-re ve nue ratio Baseline 43 52 62 73 79 83 76 63 A. Alternative Scenarios A1. Key variables at their historical averages in 2013-2033 1/ 43 51 61 71 76 81 98 118 A2. New public sector loans on less favorable terms in 2013-2033 2 43 60 79 99 112 121 123 115 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2014-2015 43 52 63 73 80 83 77 64 B2. Export value growth at historical average minus one standard deviation in 2014-2015 3/ 43 55 86 96 102 105 94 70 B3. US dollar GDP deflator at historical average minus one standard deviation in 2014-2015 43 50 60 70 76 79 73 60 B4. Net non-debt creating flows at historical average minus one standard deviation in 2014-2015 4/ 43 83 80 90 96 99 89 67 B5. Combination of B1-B4 using one-half standard deviation shocks 43 27 -19 -9 -1 4 12 35 B6. One-time 30 percent nominal depreciation relative to the baseline in 2014 5/ 43 73 87 102 111 116 107 88 94        Table 2b.Liberia: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2013-2033 (continued) (In percent) Debt service-to-exports ratio Baseline 1 2 2 2 2 2 2 2 A. Alternative Scenarios A1. Key variables at their historical averages in 2013-2033 1/ 1 1 1 1 2 1 1 2 A2. New public sector loans on less favorable terms in 2013-2033 2 1 2 2 2 3 3 3 5 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2014-2015 1 2 2 2 2 2 2 2 B2. Export value growth at historical average minus one standard deviation in 2014-2015 3/ 1 2 2 2 3 3 3 3 B3. US dollar GDP deflator at historical average minus one standard deviation in 2014-2015 1 2 2 2 2 2 2 2 B4. Net non-debt creating flows at historical average minus one standard deviation in 2014-2015 4/ 1 2 2 2 2 2 2 3 B5. Combination of B1-B4 using one-half standard deviation shocks 1 1 2 1 1 1 2 1 B6. One-time 30 percent nominal depreciation relative to the baseline in 2014 5/ 1 2 2 2 2 2 2 2 Debt service-to-revenue ratio Baseline 2 2 3 3 4 3 3 3 A. Alternative Scenarios A1. Key variables at their historical averages in 2013-2033 1/ 2 2 3 3 3 3 2 3 A2. New public sector loans on less favorable terms in 2013-2033 2 2 2 3 4 5 5 4 6 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2014-2015 2 2 3 3 4 4 3 3 B2. Export value growth at historical average minus one standard deviation in 2014-2015 3/ 2 2 3 4 4 4 3 3 B3. US dollar GDP deflator at historical average minus one standard deviation in 2014-2015 2 2 3 3 3 3 3 3 B4. Net non-debt creating flows at historical average minus one standard deviation in 2014-2015 4/ 2 2 3 4 4 4 3 3 B5. Combination of B1-B4 using one-half standard deviation shocks 2 2 2 2 2 2 2 1 B6. One-time 30 percent nominal depreciation relative to the baseline in 2014 5/ 2 3 4 5 5 5 4 4 Memorandum item: Grant element assumed on residual financing (i.e., financing required above baseline) 6/ 48 48 48 48 48 48 48 48 Sources: Country authorities; and staff estimates and projections. 1/ Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows. 2/ Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline. 3/ Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels). 4/ Includes official and private transfers and FDI. 5/ Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent. terms 6/ Applies to all stress scenarios except for A2 (less favorable financing) in which the95   on all new financing are as specified in footnote 2.       Figure 2.Liberia: Indicators of Public Debt Under Alternative Scenarios, 2013-2033 1/ Baseline Fix Primary Balance Most extreme shock Growth Historical scenario 100 PV of Debt-to-GDP Ratio 80 60 40 20 0 -20 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 400 PV of Debt-to-Revenue Ratio 2/ 350 300 250 200 150 100 50 0 -50 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 18 16 Debt Service-to-Revenue Ratio 2/ 14 12 10 8 6 4 2 0 -2 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in 2023. 2/ Revenues are defined inclusive of grants. 96        Table 3.Liberia: Public Sector Debt Sustainability Framework, Baseline Scenario, 2010-2033 (In percent of GDP, unless otherwise indicated) Actual Estimate Projections 5/ Standard 5/ 2013-18 2019-33 Average 2010 2011 2012 Deviation 2013 2014 2015 2016 2017 2018 Average 2023 2033 Average Public sector debt 1/ 142.8 10.0 11.7 17.1 23.4 28.0 32.6 36.9 38.8 38.3 32.4 o/w foreign-currency denominated 142.7 10.0 11.7 17.1 23.4 28.0 31.6 35.0 36.1 32.6 25.2 Change in public sector debt -131.4 -132.8 1.7 5.4 6.2 4.6 4.6 4.3 1.9 -0.4 -1.3 Identified debt-creating flows -37.6 -133.0 1.8 4.8 5.4 3.9 4.2 4.7 0.2 -1.6 -1.4 Primary deficit -0.5 0.4 3.1 -0.3 2.1 5.9 6.5 6.0 6.5 6.1 2.6 5.6 0.6 1.1 0.9 Revenue and grants 23.5 26.4 27.8 27.3 28.8 27.6 26.0 28.7 28.2 27.9 27.0 of which: grants 1.1 2.8 1.7 2.4 2.3 1.8 1.6 4.3 4.3 4.3 4.3 Primary (noninterest) expenditure 23.0 26.9 31.0 33.2 35.3 33.6 32.5 34.8 30.8 28.5 28.1 Automatic debt dynamics -3.9 -21.4 -1.3 -1.0 -1.1 -2.1 -2.3 -1.4 -2.3 -2.1 -2.5 Contribution from interest rate/growth differential -17.6 -11.7 -0.9 -0.9 -1.1 -1.5 -1.8 -1.9 -2.6 -2.2 -1.8 of which: contribution from average real interest rate -2.8 -2.1 -0.1 0.0 0.0 -0.1 -0.2 -0.2 -0.2 0.0 -0.1 of which: contribution from real GDP growth -14.8 -9.6 -0.8 -0.9 -1.1 -1.4 -1.6 -1.7 -2.4 -2.1 -1.7 Contribution from real exchange rate depreciation 13.8 -9.7 -0.4 -0.1 0.1 -0.6 -0.5 0.5 0.3 ... ... Other identified debt-creating flows -33.2 -112.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Privatization receipts (negative) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Recognition of implicit or contingent liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Debt relief (HIPC and other) -33.2 -112.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other (specify, e.g. bank recapitalization) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Residual, including asset changes -93.8 0.2 -0.1 0.6 0.9 0.7 0.4 -0.5 1.7 1.2 0.1 Other S ustainability Indicators PV of public sector debt ... ... 9.5 12.0 15.0 17.0 19.6 22.0 23.3 24.2 21.7 o/w foreign-currency denominated ... ... 9.5 12.0 15.0 17.0 18.6 20.1 20.6 18.6 14.6 o/w external ... ... 7.9 10.6 13.8 16.1 17.8 19.3 19.8 18.0 14.3 PV of contingent liabilities (not included in public sector debt) ... ... ... ... ... ... ... ... ... ... ... Gross financing need 2/ -0.3 0.9 3.6 6.4 7.1 6.9 7.4 7.2 3.7 1.8 2.5 PV of public sector debt-to-revenue and grants ratio (in percent) … … 34.1 44.0 52.1 61.8 75.6 76.8 82.5 86.6 80.5 PV of public sector debt-to-revenue ratio (in percent) … … 36.3 48.3 56.7 66.1 80.6 90.3 97.2 102.3 95.6 o/w external 3/ … … 30.2 42.7 51.9 62.4 73.0 79.1 82.7 76.2 63.1 Debt service-to-revenue and grants ratio (in percent) 4/ 0.9 1.6 1.8 1.9 2.4 3.4 3.6 3.7 3.9 4.6 5.0 Debt service-to-revenue ratio (in percent) 4/ 1.0 1.8 1.9 2.1 2.6 3.6 3.8 4.4 4.6 5.4 5.9 Primary deficit that stabilizes the debt-to-GDP ratio 130.9 133.2 1.4 0.5 0.2 1.4 1.9 1.8 0.6 1.0 2.5 Key macroeconomic and fiscal assumptions Real GDP growth (in percent) 5.7 7.2 8.5 5.0 7.7 8.6 6.9 6.4 6.1 5.6 7.1 6.8 5.8 5.4 5.8 Average nominal interest rate on forex debt (in percent) 0.0 0.1 1.1 0.4 0.5 1.4 1.2 1.0 0.9 0.8 0.8 1.0 0.8 0.8 0.8 Average real interest rate on domestic debt (in percent) 3.0 -7.5 -6.5 -5.8 6.3 -4.8 ... ... ... 17.1 11.2 7.8 6.7 3.0 6.1 Real exchange rate depreciation (in percent, + indicates depreciation) 5.4 -7.4 -4.7 -4.3 4.4 -0.9 ... ... ... ... ... ... ... ... ... Inflation rate (GDP deflator, in percent) 0.4 11.4 9.7 10.1 4.3 6.0 4.3 7.6 6.8 3.3 4.2 5.4 5.1 8.2 5.5 Growth of real primary spending (deflated by GDP deflator, in percent) 0.1 0.2 0.3 0.2 0.4 0.2 0.1 0.0 0.0 0.1 -0.1 0.1 0.0 0.0 0.1 Grant element of new external borrowing (in percent) ... ... ... … … 46.9 48.0 48.2 50.2 52.3 52.3 49.6 52.3 52.3 ... Sources: Country authorities; and staff estimates and projections. 1/ The public sector comprises the central government, the Central Bank of Liberia (CBL), public enterprises and other official entities. 2/ Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period. 3/ Revenues excluding grants. 4/ Debt service is defined as the sum of interest and amortization of medium and long-term debt. 5/ Historical averages and standard deviations are derived over 2004/05 to 2009/10. 97        Table 4.Liberia: Sensitivity Analysis for Key Indicators of Public Debt 2013-2033 (In percent of GDP, unless otherwise indicated) Projections 2013 2014 2015 2016 2017 2018 2023 2033 PV of Debt-to-GDP Ratio Baseline 12 15 17 20 22 23 24 22 A. Alternative scenarios A1. Real GDP growth and primary balance are at historical averages 12 8 5 1 -3 -4 -6 -8 A2. Primary balance is unchanged from 2013 12 14 16 18 21 25 47 79 A3. Permanently lower GDP growth 1/ 12 16 19 23 28 31 49 109 B. Bound tests B1. Real GDP growth is at historical average minus one standard deviations in 2014-2015 12 19 28 36 44 49 69 93 B2. Primary balance is at historical average minus one standard deviations in 2014-2015 12 10 8 12 14 16 18 17 B3. Combination of B1-B2 using one half standard deviation shocks 12 10 7 13 19 23 37 53 B4. One-time 30 percent real depreciation in 2014 12 19 19 20 22 23 25 24 B5. 10 percent of GDP increase in other debt-creating flows in 2014 12 25 26 29 31 32 31 26 PV of Debt-to-Revenue Ratio 2/ Baseline 44 52 62 76 77 82 87 80 A. Alternative scenarios A1. Real GDP growth and primary balance are at historical averages 44 29 16 4 -10 -13 -21 -28 A2. Primary balance is unchanged from 2013 44 50 59 71 72 89 168 293 A3. Permanently lower GDP growth 1/ 44 54 68 89 95 109 172 380 B. Bound tests B1. Real GDP growth is at historical average minus one standard deviations in 2014-2015 44 66 101 137 147 169 239 335 B2. Primary balance is at historical average minus one standard deviations in 2014-2015 44 36 31 45 49 56 64 65 B3. Combination of B1-B2 using one half standard deviation shocks 44 34 25 51 65 80 129 194 B4. One-time 30 percent real depreciation in 2014 44 64 68 78 77 81 88 87 B5. 10 percent of GDP increase in other debt-creating flows in 2014 44 87 96 110 108 113 112 98 Debt Service-to-Revenue Ratio 2/ Baseline 2 2 3 4 4 4 5 5 A. Alternative scenarios A1. Real GDP growth and primary balance are at historical averages 2 2 3 2 1 0 1 -1 A2. Primary balance is unchanged from 2013 2 2 3 3 4 4 7 14 A3. Permanently lower GDP growth 1/ 2 2 4 4 4 5 8 17 B. Bound tests B1. Real GDP growth is at historical average minus one standard deviations in 2014-2015 2 3 4 5 6 7 10 16 B2. Primary balance is at historical average minus one standard deviations in 2014-2015 2 2 3 2 3 3 4 4 B3. Combination of B1-B2 using one half standard deviation shocks 2 2 3 2 3 4 6 10 B4. One-time 30 percent real depreciation in 2014 2 3 5 5 5 5 6 7 B5. 10 percent of GDP increase in other debt-creating flows in 2014 2 2 5 5 5 5 6 6 Sources: Country authorities; and staff estimates and projections. divided 1/ Assumes that real GDP growth is at baseline minus one standard deviation 98   by the square root of the length of the projection period. 2/ Revenues are defined inclusive of grants.       ANNEX 5: FRAGILITY AND RESILIENCE IN LIBERIA AND THE PROPOSED APPLICATION OF A FRAGILITY LENS IN WBG OPERATIONS INTRODUCTION The following fragility and resilience analysis is based on the Liberian Agenda for Transformation (AfT) and the analytical work done by the government to support it. Moreover, it was informed by the Country-Led Fragility Assessment carried out for the New Deal in addition to inputs from an analysis conducted by the Social Development Department (SDV) of the WB in the period 2010-2011. The SDV analysis was deepened through consultations with Liberian academics, civil society representatives and communities across seven counties in addition to various pieces of analytical work from both inside and outside the Bank. This analysis is based on the understanding that the stresses that can make a country fragile are largely rooted in society. Therefore, to understand fragility it is important to recognize which social groups exist, how these form and allocate resources (including power and respect), how different groups relate to each other and how these groups and institutions interact. The focus of this analysis is on identifying longer-term issues and trends that can affect or be affected by development programming. This document first analyses the sources of fragility and resilience in Liberia and their potential impacts on development. Second, it provides a ‘Country Level Conflict and Fragility Filter’, i.e. a set of questions aimed at identifying risks for the country portfolio that are related to conflict and fragility. Finally, the paper outlines a process for applying the conflict lens to projects, as well as sample questions on conflict and fragility for specific sectors. A BRIEF HISTORIC OVERVIEW Liberia was founded in 1822 by freed American slaves, supported by the American Colonization Society who set up a system of governance largely modeled after the one of the United States. For approximately the first century of Liberia’s existence, the settler community dominated the country’s society and government. During this period, systems of governance and resource extraction largely benefitted the settler community and formally excluded native populations. The political dominance of the settler community came to an end with a coup organized by Master Sergeant Samuel Doe from the Krahn tribe against then-President Tolbert in 1980. After an unsuccessful coup attempt against him in 1985, Doe surrounded himself with people from his own ethnic group. He alienated and sometimes persecuted and killed those who he believed were from competing groups. Doe’s actions led to the start of the first Liberian Civil War in 1989. The 1989 war began when Charles Taylor, launched a rebellion aimed at toppling Doe’s government. Taylor also used ethnicity as a way to mobilize individuals, ultimately creating a situation where many members of ethnic groups, targeted by Doe, mobilized against Doe’s government, his ethnic group and other ethnic groups perceived to be allied with Doe. President Doe’s assassination in 1990 by a former Taylor ally Prince Johnson, led to a power struggle between Taylor’s National Patriotic Front of Liberia (NPFL), Johnson’s Independent National Patriotic Front of Liberia (INPFL) and supporters of former President Doe. The 99        fighting continued until the Abuja Accord in 1996. The first Liberian civil crisis left approximately 200,000 Liberians dead and displaced a million others into refugee camps abroad. The Abuja peace accords led to elections in mid-1997 that saw an overwhelming victory of Charles Taylor, gaining 75 percent of the votes. Taylor dismissed many ethnic Krahn that had been brought into public service by former President Doe. Moreover, he was accused for playing a crucial role in the Sierra Leone civil war by supporting the rebellious Revolutionary United Front (RUF). A rebellion against Taylor that was initiated by the Liberians United for Reconciliation and Democracy (LURD) in 1999 started the Second Liberian Civil War that left over 100,000 civilians dead and led to the displacement of up to 1 million Liberians. LURD invaded Liberia from Guinea and was joined by various dissident groups mainly consisting of ethnic Mandingo and Krahn. The involvement of the Sierra Leone RUF, which supported Taylor, led to a complex three-way conflict with Guinea and Sierra Leone. The war ended with LURD declaring a ceasefire, ECOWAS sending peacekeepers, and Taylor resigning in summer 2003. SOURCES OF RESILIENCE Liberians have now lived for 10 years without large scale conflict or violence. This time threshold is very significant, as history has proven that about half of post-conflict states relapse into violence within 10 years. The stability was in part a result of the relatively successful implementation the first Liberian Poverty Reduction Strategy (PRS 2008-2011), which specifically focused on expanding peace and security as one of its four broad objectives. An important condition for stability was the successful reestablishment of capable security institutions, in particular the Armed Forces of Liberia (AFL) and the Liberia National Police (LNP). The security provided by these institutions increased confidence in the state and allowed the citizens of Liberia to return to their homes and farms, start businesses, and build up their livelihoods. In fact, most of the internally displaced people and refugees could return to their livelihoods or relocate within the country. The process of national reconciliation was more complicated and the second poverty reduction strategy, the Agenda for Transformation, 2012-2017 puts stronger emphasis on it. President Ellen Johnson Sirleaf has established the National Peace and Reconciliation Initiative, a new commission, which drives the country’s reconciliation agenda and provides a forum for people to air their grievances. Relations across groups have become more constructive and stable, as many Liberians realize the importance of working together for advancing the country and each citizens’ future. Thus, the sustained peace and internal security is also partly connected to a newly found resilience that is grounded on the peace dividend. As pointed out by the AfT, “Liberians have been able to achieve a level of reconciliation that has allowed society to function peacefully”. Resilience has also been fostered by Liberia’s economic growth. In the past years, Liberia’s economy significantly recovered and poverty reduced; the proportion of population living below the poverty line declined from about 63.8 percent in 2007 to 56 percent in 2010. This was supported by improved macroeconomic stability, with inflation decreasing from 8.5 percent in 2011 to 6.2 percent in 2012, essentially balanced budgets and a significant reduction in external 100        debt. Significant support by international donors has played a major role; Liberia is one of the countries the highest per capita official donor aid (ODA) in the world. The Liberian government, supported by international donors and technical assistance, has also had significant success in establishing basic governance mechanisms. A key priority of the government’s transformation agenda has been to bring the state closer to the population and improve the delivery of basic services. Surveys have revealed that in 2010, perception of many Liberians was that the economic situation of their community was the same or better than a year before and solely 8.9 percent of households perceived themselves as ‘poor’, down from 9.7 percent in 2007 (Liberia Poverty Note, 2012). Another source of resilience is grounded in Liberia’s thriving civil society. Women in Liberia have played a positive and prominent role. Women’s organizations or women-led organizations are strong advocates against violence and in favor of tolerance. Their role was essential in peace negotiations and continues to be in the present, with a large percentage of government institutions and civil society organizations being led by women. Although this is more pronounced in urban areas, women in rural areas also play a role in decision-making and mediation of conflicts, often participating actively in the life of communities. In addition, Liberians meanwhile enjoy a multi-party democracy that provides for political debate and is based on typically high participation rates in elections. Finally, the country’s media landscape is independent and vibrant. Liberia’s government is committed to increasing the resilience of its society and it was evident in the preparation and launching f the Agenda for Transformation. Liberia also endorsed the New Deal for Engagement in Fragile States at the Fourth High Level Forum on Aid Effectiveness in 2011 and the government of Liberia is committed to move towards the New Deal’s five Peacebuilding and Statebuilding Goals (PSG). However, the challenges are enormous - consolidating gains, promoting more inclusive growth and addressing the underlying fragility drivers that could lead to renewed conflict.   SOURCES OF FRAGILITY Society divided along several fault lines Liberia does not yet have a clear, shared national identity or a shared understanding of citizenship. Key divisions between people of different cultures and ages are based on different understanding of power, respect, and possession of wealth, as well as different interests. Four key divisions underlie sources of fragility.  The history of the foundation of Liberia has led to a lack of understanding between those of settler culture and those of native culture. Americo-Liberian settlers brought with them the Christian religion, a US-inspired governance model as well as norms about appropriate (‘civilized’) behavior. Native Liberians have largely kept their traditions, including their beliefs about who should be given power and respect, their membership and support of traditional societies, and their community governance practices. These two different cultures have different forms of governance and support different ways of allocating resources, which has led to partial mistrust between the communities and a lack of coherence between traditional and formal structures. The history of government dominance by the settler community has also contributed 101        to a lack of trust, as many native Liberians continue to believe that the government supports the interests of settlers.  Divisions also exist between native Liberian groups. Specifically, many challenge whether the Mandingo ethnic group should be considered Liberians, claiming that many Mandingo are from Guinea and should not have the same rights as other groups. Some of the reasons for this divide are: (i) the traditional governance structures in many native communities are tied to local cultural practices and the Mandingo do not follow these practices and (ii) the Mandingo live all over Liberia and are not a majority in any one county. The questions over the rights of the Mandingo have often led to conflicts over land; perceptions among the Mandingo that they are discriminated by government officials that question their identity; and to other conflicts in communities where the Mandingo live together with others.  There is also a divide between those considered ‘citizens’ and those considered ‘strangers.’ In many Liberian communities, there is a belief that those who are born in a community and who descend from a specific family or ethnic group are ‘citizens,’ and that those who are newcomers or descend a different family or ethnic origin are ‘strangers.’ Citizens and strangers have different rights: many believe that community chief and elders must be citizens; that land and other resources are allocated first to citizens and then to strangers; that the conflict- resolution mechanisms rooted in the traditions of citizens are the ones that should be followed. Although the division between citizens and strangers is often accepted in communities and is not a source of fragility per se, it can become problematic if: (i) groups of strangers who stay in a community for multiple generations and younger generations do not see themselves as strangers; (ii) when conflicts arise between citizens and strangers and strangers do not believe conflict resolution mechanisms are fair; and (iii) when resources are allocated in a way that do not seem fair to one group or another.  There is a volatile division between youth and elders in Liberia. In Liberian society, the concept of “youth” refers both to an age group and to persons that are not considered to be decision-makers at the community level. In many cases, a young person who is considered to have experience and knowledge is not considered a youth despite their age, while a person who is older but is not regarded to have experience or knowledge remains a youth. Conflicts between youth and elders can arise when: (i) the elders make decisions that are considered to be unfair towards youth; or (ii) youth see that they will not be able to successfully make the transition into becoming elders or decision-makers. This sense of injustice can and has led to violence and trying to obtain power and respect in alternative ways, such as by joining armed groups or engaging in criminal activities. The AfT specifically recognizes that inter alia “political ostracism—especially of volatile youth—can cause crime, violence and political instability.” The division between settlers and natives is related to a broader emerging division between urban and rural areas. Wealth and power is concentrated in Monrovia, largely because government is centralized and based in the capital city, as are most businesses. For much of Liberia’s history, the service delivery has been better around Monrovia. Those from rural areas who have been able to acquire education have therefore stayed in Monrovia, and many have adopted urban customs and norms. 102        Weak institutions and lack of trust in the government Although Liberia has made great strides in improving governance, the state still cannot meet the needs and expectations of its citizens in terms of provision of services. While school enrollment and health status has improved, social indicators and quality of services remain low. Most Liberians have difficulties accessing justice; the perception among many is that the formal justice system is in favor of those who can afford it. Therefore they entrust decisions to local elders. However, young people or those that are not originally from community often have difficulties obtaining justice from local elders. This sometimes leads to violence as the quickest way to get a sense of justice. The concentration of power in the Presidency reduces influence that local actors can have on local decisions. The President of Liberia is responsible for the nomination of most formal local officials, including mayors, county superintendents, and district commissioners. Also paramount chiefs that are elected locally need the approval of the President. As pointed out by the government’s 2012 New Deal Fragility Assessment, “Liberia will continue to be fragile until it makes more concerted progress in reducing the divide between the center and the periphery” (2012 New Deal Fragility Assessment). The lack of understanding of the state institutions and perceived impunity of those thought guilty of corruption have increased opposition to the government. The government has been accused of not doing enough to eliminate corruption, which has led to multiple changes in the Cabinet. A lack of understanding of the decisions making process has reinforced the perception that government resources are only used to benefit those living in Monrovia or those from the “home” areas of powerful politicians. Legal pluralism and competing governance institutions often lead to misunderstandings and could indirectly exacerbated conflicts. Several parts of the formal government officially interact with traditional systems of governance: a key contact point between systems are town chiefs, who represents both the state and local customs in a community, which often leads to choosing the system that benefits them. This potentially results in unfair outcomes and in the perception that the state cannot provide justice. Particularly, the considerable discrepancies of norms with regard to land ownership and land transfer are a major source of conflicts. Land-related conflicts are exacerbated by deficiencies in administration and arbitration mechanisms as well as a plurality of partly competing regulations. Land conflicts are aggravated by the lack of coherence between formal and traditional land use and dispute resolution systems, the patchy implementation of the safeguards that exist for communities, and the limited capacity of communities to exercise their rights. Moreover, land rights remain poorly defined with many rural lands having overlapping and unresolved ownership. Poor record keeping, lack of harmonization between statutory and customary land systems and limited access to judicial services prevent the effective resolution of land disputes and land conflicts have been cited as the most likely source of violence. Continuing security concerns As a result of large number of people suffering from the civil war trauma, there is a sense of “normalization of violence” in Liberia. Sometimes, even small disagreements are settled with violence and physical abuse. Sexual abuse is widespread, particularly in schools, a 103        phenomenon that has become known as “sex for grades.” Ongoing conflicts in communities highlight the risk of “spill-overs” and renewed large-scale violence. Trauma transforms societal relationships and can lead people to “isolate themselves” or to “harden distinctions”, hampering social cohesion across group, which, in turn, could become a threat for peace in the long-term.   Regional instability and related dynamics including widespread trafficking, displacement and conflicts in neighboring countries pose security threats for Liberia. The West Africa region as a whole remains fragile. A weak regional security system, especially along the border with Cote d’Ivoire, have facilitated cross-border trafficking of arms and people. As pointed out by the AfT, “Liberia has repeatedly seen evidence that regional instability quickly tends to spill over, in terms of refugees and violence.” Indeed, approximately 65,000 Ivorian refugees still remain displaced in the eastern part of Liberia, some of which are suspected to be armed mercenaries. Fragility and Resilience Lens  Introduction This section aims to provide guidance to the Liberia Country Team on how to ensure that the country’s portfolio is strengthening resilience in Liberia and helping to put in place mitigation measures to prevent fragility. Section 1 aims at providing guidance in the design of the country portfolio; Section 2 provides an example of accounting for fragility and resilience in the design and supervision of project activities, and Section 3 explains how a conflict lens will be implemented throughout the portfolio. SECTION 1: COUNTRY LEVEL GUIDANCE The country team needs to answer four basic questions to understand whether or not its portfolio is reducing the impact of drivers of fragility and building resilience: 1) Is the Bank portfolio benefitting the different social, political, and economic groups in the country? Is there a perception that groups are getting their fair share? 2) Is the Bank’s portfolio helping to further strengthen the government’s capacity to deliver? In particular, is Bank programming directly or indirectly helping to increase trust in the state? 3) Do Bank activities consider the factors that led to increased security in the country? Does the Bank support increased security (through partnerships, AAA or projects)? Are activities in the portfolio designed with an understanding of continued security risks in Liberia, and are there specific efforts to ensure that Bank projects do not promote continued violence (GBV, domestic, violence related to theft, etc.)? The sections below outline more in-depth questions: Addressing fragmentation of the society Potential questions:  Do Bank activities as a whole consult and include the opinions of a wide range of stakeholders? 104         Are grievance redress mechanisms and participation mechanisms made so that they are inclusive of the different social, political, and economic groups?  Are there efforts made to communicate in appropriate forms and languages throughout Liberia?  Do projects benefit equally or fairly the different groups in the country? Potential response: Consider communicating clearly to the whole population about priorities and allocation of resources. Consider regular consultations throughout the CPS period to help see if priorities of different groups have changed. Consider including grievance redress mechanisms, participations mechanisms, and communications mechanisms in key projects that are designed to include a wide range of stakeholders. Strengthening institutions and building trust. Potential Questions:  Do Bank activities help increase the capacity of government? Consider whether too many projects working with low capacity agencies overwhelm their capacity. Also consider direct capacity building efforts and whether these are building longer-term capacities. Consider whether salaries paid by projects are appropriate/sustainable.  Are Bank activities perceived to be transparent? Consider access of beneficiaries to the Bank, whether CSOs understand how to get access to documents, etc. Consider specific efforts within projects to promote transparency and whether these are resulting in better understanding of Bank initiatives.  Do Bank activities promote mutual understanding between the state and citizens? Are there mechanisms for citizens to provide feedback to the government in Bank projects? Does the government make specific efforts to communicate with citizens in Bank projects? Are the institutions supported by the Bank structured and staffed in a way that citizens understand, and that facilitate the Government in providing services to citizens? Are civil servants working on Bank projects held accountable for their performance? Consider whether the state is making an effort to communicate with all citizens geographic distribution, age (youth vs. non-youth), local minorities vs. majority (look at this at the community/local level, gender. Potential response: Consider strengthening country systems and building state capacity to use its own systems. Consider whether portfolio fragmentation reduces state capacity. (Reduce projects if this is the case, balance whether potential beneficial effects on sectors justify weakened overall state capacity due to overstretch.) Consider mainstreaming transparency and citizen participation in all key projects. Understand the constraints for citizens to provide feedback to the government on projects and design mechanisms that enable citizens to provide feedback. Help the government design a strategy for communicating with citizens so that they are aware of government activities and priorities, and such that citizens can provide inputs to these activities and priorities. Engage government in policy dialogue on the design of relevant, decentralized institutions. Creating a more inclusive economy Potential questions:  Does job creation resulting from Bank interventions benefit those traditionally excluded/vulnerable? Consider job creation projects as well as all jobs that come from Bank 105        projects, including consultants hired by projects, workers hired by contractors, etc.) Look at geographic distribution (urban/rural, distance from Monrovia), age (youth vs. non-youth), local minorities vs. majority (look at this at the community/local level – what percentage of those benefiting are from the same ethnic group), gender.  Does the Bank portfolio support sectors traditionally tied to the ‘concession’ economy? Are these efforts balanced with efforts to support less exclusive economic activities? Consider the tradeoffs between supporting sectors that provide income to the government vs. those that can promote more equitable distribution of resources. Consider indirect support: i.e., do Bank education/skills development efforts focus on providing skills for sectors that are part of the concession economy? Do Bank governance efforts support more clarity/predictability for these sectors vs. supporting the rights of communities?  Will implementation of the Bank portfolio lead to the growth of sectors that are more inclusive in the medium term? Potential response: Prioritize activities that support inclusion/skills development of vulnerable/excluded individuals to allow them to obtain jobs outside the concession economy. Support directly sectors that have high growth potential outside the concession economy. Support activities to ensure the concession economy is transparent and does not ‘do harm’, such as by supporting the rights of local communities, promoting the transparency of land deals, etc. Support to strengthening overall security and stability Potential questions:  Are beneficiaries of Bank projects safeguarded from security risks while participating in project activities? Consider whether projects benefitting particularly vulnerable individuals, such as women and children, increase their chance of being victims of violence. Consider specifically projects in HD sectors, projects aiming to reduce corruption, projects working on land issues.  Is the Bank adequately responding to regional instability by prioritizing the vulnerable counties, including border areas? Potential response: Consider including specific geographic areas that are more vulnerable in project. Include information about violence in capacity-building efforts throughout the portfolio. Monitor security risks to project beneficiaries and create mechanisms for getting feedback and safeguarding them from violence. Ensure that those working on Bank-funded projects receive information about gender-based violence, sexual exploitation and abuse. SECTION 2: OPERATIONALIZING THE FRAGILITY LENS This fragility “lens” continues to be fine-tuned and the CMU will continue to work with SDV and the Nairobi Hub in preparing for its operationalization. Nevertheless, several measures can be considered to advance the implementation of the Fragility Lens: ‐ Familiarizing sector staff with the fragility drivers so that TTLs have sufficient background on the Liberian context as they begin to work on the Liberia portfolio. Annual combined CPPRs/Country Team meetings will be used as a forum for this discussion and training. This will ensure shared understanding with the Government counterparts that will help during project implementation. The CMU will begin to organize these trainings together with the 106        staff from the Nairobi Hub and DC based staff working on Fragile and Conflict Affected States. ‐ Preparation of sector specific questionnaires. The analysis would start at project concept stage and inform project design; implementation would be monitored as part of the throughout the project life cycle. The project level fragility and resilience lens is meant to provide an example of how the different issues presented apply at the project level. However, every project will need to assess the issues individually since not all the fragility drivers affect every project. Through consultative process, project teams should try to understand how their projects could potentially decrease fragility and strengthen resilience. During mid- term reviews, project teams could review their assessment and make adjustments if necessary. Sample Guide to a Fragility Analysis in Transport Operations  Do the policies, strategies and infrastructure promoted by the roads sector consider the existing divisions between groups? Does the roads sector address the needs of the different groups (ethnic, gender, region, etc.)? Would there be real or perceived gains by specific groups if these policies strategies and infrastructure were in place? How can policies, strategies and infrastructure design be formulated to make relations between groups better or more equitable?  In what ways would the project affect access to and control of resources such as land, trade routes, and natural resources across population groups? What would be likely outcomes of such access on the relationship between groups?  Will the roads project generate employment? Who will decide who will obtain employment? What mechanisms can be put in place to ensure both short term benefits (in terms of employing those that could reignite violence) and long term benefits (in terms of equity in employment benefits, management of expectations)? Is there competition for roads sector employment? If so, what mechanisms are in place to ensure that jobs are distributed fairly?  Are there communications strategies in place that can make the process for decision-making regarding prioritization of initiatives and job allocation transparent?  Will procurement of goods and services result in a specific social, ethnic, or geographically defined group benefitting more than other groups? Are there mechanisms to ensure that those interested in providing these services have adequate information and capacity to bid for these services? Is the process perceived as fair and transparent? ‐ The CMU, with the support of the Justice 4 Poor is preparing a strategic initiative proposal for the State and Peace Building Fund and the Korean Trust Fund in order to address some of the major cross-cutting fragility issues, in particular issues of conflict resolution, land and youth employment/empowerment. The TFs can be used for: i) pilot activities to develop lessons to inform IDA/IFC operations; ii) pilot activities to test innovative approaches that can be scaled up; iii) mobilize urgent technical assistance; iv) set up matching grants for resilience activities; iv) develop projects to address fragility and v) support strategic interventions to influence portfolio or stand-alone projects. ‐ The operationalization of the Fragility and Resilience Lens will be coordinated by a dedicated CMU staff that will work with a multi-sector team (including preparation of the SPF proposal) in analyzing country situation, adapting project design and review process in order to reflect and address fragility. Project concept notes and PADs will be required to have a dedicated section on fragility and how their project addresses any relevant factors or, at minimum, does not harm. ‐ The initial stages of the implementation process will be closely coordinated with CCSD and Nairobi Hub. 107        ANNEX 6: DEVELOPMENT PARTNERSHIPS IN SUPPORT OF AGENDA FOR TRANSFORMATION FY 13-17 Pillar I Pillar II Pillar III Pillar IV Peace, Security and Rule of Governance and Public Law Economic Transformation Human Development Institutions Macroeconomi Modernization Food Security Private Sector Development Development Public Sector Reconciliation Rule of Law Governance Governance Agriculture Justice and Protection Sanitation Water and Economic Education Peace and Security Political Forestry Mineral c Issues Judicial Reform Health Social Infrastructure Partner ICT Energy Roads AfDB China EU France United Kingdom Germany Ireland Norway Sweden Japan United States WBG IMF UN- UNDAF 108        ANNEX 7: TRUST FUND PORTFOLIO Trust Funds will continue to be a very important source of funding for the CPS period to maximize the delivery of World Bank interventions on the ground. This Annex provides information and a brief analysis of active and possible future trust funds supporting the World Bank’s program in Liberia. In addition, there is a brief description of the infrastructure projects supported by the largest multi-donor trust fund, the Liberian Reconstruction Trust Fund (LRTF), which will continue to play a significant role in co-financing GoL priorities in the next five years. Current TF Portfolio. As of May 3rd, 2013, Bank systems report a total of 70 active trust funds with a total net TF commitment of US$ 265,928.49 of which US $ 189, 613.43 is left to disburse. These trust funds vary by user, source and purpose:  23 projects will close in FY 13 and 14, providing an opportunity to consolidate and strengthen on-going efforts to link most TFs to current or new WBG operations;  14 of the 70 trust funds are managed by IFC, with the majority supporting their advisory services for private sector development;  53 (76 percent) are recipient executed, 15 (21 percent) are Bank executed and 2 are jointly executed;  Approximately 13 of 70 trust funds are being used to fund sector analytical work or technical assistance thus complementing Bank budget or supplementing the country program. Examples include the Security Sector PER, the IEG Country Program Evaluation and the DTIS update;  6 Institutional Development Grants are designed to build capacity in government agencies;  10 child TFs are being used to cover supervision costs of major multi-donor trust funds such as the LRTF, GPE and the GPOBA. Generally, there are two child TFs for each MDTF funded project, one for the project itself and one for the corresponding supervision costs, thus augmenting the number of total TFs in the portfolio. Going forward, increased attention will be given to ensure that the trust fund portfolio is consolidated and directly linked to the CPS strategic themes and lending program. This will reduce fragmentation arising from the multiplicity of small trust-funded activities which in the previous CAS period, was very resource-intensive to manage, given the lack of capacity in the ministries and the additional burden of reporting and other administrative overhead. Since the JCAS progress report, greater effort has been made to link trust funds with IDA operations, given the limited IDA budget, relative to the needs of reconstruction and capacity building in the country. Greater consolidation of the TF portfolio will also be achieved by invoking management authority to not approve new TF proposals unrelated to the highest strategic priorities of the country program. 109        A number of Trust Funds are directly linked to current WBG operations or support evidence based analytical work and plays catalytic role for the GoL and development partners. Net Linked to Building Commitme current Evidence Major Active TFs in Liberia nt in US WBG Base for millions Operations Partners 7 The State and Peace-building Fund to supports3 initiatives related to civil service reform and work with the Ministry of Justice (MOJ) “to increase citizen access to   alternative dispute resolution.” The Nordic Trust Fund for the Justice for the Poor program on justice and natural 0.25   resource governance. The Global Partnership for Education Catalytic Fund is the primary source of Bank 40  support to improved access and quality in primary education. The multi-donor Liberia Reconstruction Trust Fund supports major priority 179.3  infrastructure projects. Institutional Development Grants (6) for capacity building activities in various 2.4  government agencies. MDTF to implement public financial management reform 18.95  Health Results Innovation Trust Fund (HRITF) grant to pilot results based financing. 6.0   The Global Facility for Disaster Risk Reduction for climate change adaptation, 0.54   community resilience, and disaster risk reduction. The GPOBA (Global Partnership on Output-Based Aid) to finance electricity 10.5   connections for poor rural households in Monrovia. The global multi-donor Water and Sanitation Program (WSP) to finance a water and 0.74   sanitation investment plan sector plan and strengthen institutional capacity in the sector. FCP REDD+ Readiness Grant 3.6   Africa Catalytic Growth Fund is supporting the Youth Employment Services program 10.0   Umbrella Facility for Gender Equality (UFGE) to continue EPAG (Economic 1.86   Empowerment of Adolescent Girls) Initiative of the Ministry of Gender Liberia Reconstruction Trust Fund (LRTF). The Liberia Reconstruction Trust Fund was established as a World Bank-administered, multi-donor trust fund to pool donor resources and support the Government of Liberia in improving country’s basic infrastructure. The Oversight Committee (OC) is responsible for overseeing and supervising the performance of the LRTF. The OC meets on a regular basis and is co – chaired by IDA and the Government. The OC comprises representatives of the Government and Donors (World Bank, European Union, Sweden, Norway, Germany, Ireland and United Kingdom). The OC acts collectively and, to the extent practicable, makes decisions by consensus. Going forward, the GoL has endorsed the LRTF as their preferred financing mechanism for major infrastructure projects, especially transport, energy and ICT. 110        LRTF status as of January 31, 2013, in US million) Contributions Received Cash Contributions 156,894,081 Investment Income 2,724,707 Total Receipts (Note 1) 159,618,7883 Future Cash Contributions as per signed Administration Agreements Approx 19,476,750 (Note 2) Total LRTF Approx. $179,095,538 Project Commitments EMUS ($18,400,000.00) URIRP ($9,200,000.00) URIRP II (Additional Financing) ($27,000,000.00) LIBRAMP ($108,900,000.00) Total project commitments ($163,500,000.00) LRTF Administration and Projects Preparation and Supervision Costs LRTF Administration (75,127) Total Non-Project Disbursement – Admin Costs (Note 3) (1,538,941) EMUS Appraisal and Supervision (926,486) URIRP I Supervision and II Supervision (286,810) LIBRAMP Supervision (1,117) Total Costs (3,504,481) Available amount for future commitments 12,091,0572 Note 1: This amount includes all donor contributions to date plus investment income (US$2,724,707). The first tranche of the European Commission (EC) for EUR 30 million (US$39,807,000) and the additional contribution by KfW for EUR 25 million (US$33,110,500 million) were deposited in December, 2010. A DfID contribution of GBP 5 million (US$7,850,000) was deposited in December 2011 and the second tranche of the European Commission (EC) for EUR 15 million (US$19,830,000) in January, 2012. GBP 1.75 million was received from DfID on May 29th, 2012. This report also includes the new Sida contribution of SEK 49,000,000; whose administration agreement amendment was signed on November 5, 2012. Note 2: This amount represents the EUR 15 million pending from the European Union. Note 3: This includes the Administration Cost Recovery Fee, as per the Administration Agreements, Annex 2 and paragraph 3. The LRTF currently supports three projects: the Emergency Monrovia Urban Sanitation (EMUS), the Urban and Rural Infrastructure Reconstruction Project (URIRP), and the Liberia Road Asset Management Project (LIBRAMP). Emergency Monrovia Urban Sanitation (EMUS) project. EMUS project is co-financed by LRTF (US$ 18.4 million) and IDA (US$ 4 million). The objective of project is to assist the Monrovia City Corporation (MCC) to provide solid waste services and increase the volume of collected and disposed waste. The solid waste collection and disposal component provides 111        technical assistance to strengthen both primary collection through community- based organizations (CBEs) and secondary collection system in addition to a state of the art land fill center located outside Monrovia. The project, which is now 99 percent disbursed, also provides technical assistance to MCC in order to strengthen the city’s capacity to administrate revenue administration, financial management, and the technical oversight related to the provision of solid waste services in Monrovia. The project is progressing well and, on average, 320 tons of waste is being collected every day, which is close to the end-of project target of 330t/day. MCC obtained additional funding from the Gates Foundation, which allowed increasing the number of CBEs, to cover about 70 percent of the city of Monrovia and employ approximately 900 people. LRTF members are now considering a US $ 7.2 additional finance which would extend EMUS Project 2 years and allow scaling up a successful program. Urban and Rural Infrastructure Rehabilitation Project (URIRP). URIRP I initially was financed by LRTF. US$9.2 million) to rehabilitate 15 km section of road to Buchanan (the second largest city in Liberia). Additional financing from LRTF of (US $ 27 million) and IDA (US$ 20 million) are financing the rehabilitation of the remaining portion of the Buchanan road as well as the construction of a new 130m length bridge over the Mechlin River. The contractor has employed over 740 Liberian staff, of which 85 percent are from the local communities and is investing in training local communities in skilled and semi- skilled jobs. Liberian Road Asset Management Project (LIBRAMP). LIBRAMP is co-financed by initial IDA credit (UD$ $67.7 million) and by LRTF grant (US$108.9 million), in addition to a government contribution of US$72.8 million. On September 18th, 2012, IDA additional financing (US$ 50 million) was approved, bringing the total project cost to US$299.4 million. The objective of LIBRAMP is to support the Liberian Government’s efforts to reduce transport costs along the road corridor from Monrovia to the Guinea border, one of the principal trade routes of the country. The major component entails t h e design, rehabilitation and maintenance for 10 years of the Monrovia (Red Light) Ganta-Guinea border road, a total of 249 kilometers. The additional financing will scale up the road construction work and help to design a multi-modal transport plan along with the Strategic Investment plan for transport sector. The project also supports building capacity in the Ministry of Public Works in areas of in contract management, performance and environmental monitoring and comprehensive road asset management. 112        Trust Fund Name Net Grant Program Grant Donor Name Trust Amount Source Closing Fund # (in US$ Date thsd) TF010460 Africa Schools Liberia 300.00 IFC 6/30/2014 MULTIPLE DONORS TF010544 Liberia; Public Expenditure Review of the Security Sector 130.00 FCP 7/31/2013 MULTIPLE DONORS TF010792 Liberia: Strengthening Governance - Civil Service Reforms 2,000.00 SPBF 3/30/2014 MULTIPLE DONORS TF011128 Vulnerable Youth: Enhancing Economic and Social Resilience 240.00 RSR 6/30/2013 MULTIPLE DONORS TF011297 GPOBA: Liberia Monrovia Improved Electricity Access Project 10,000.00 GPOBA 6/16/2014 IFC Liberia: Strengthening Governance - Improving Access to Justice and TF011340 Enhancing Accountability 1,500.00 SPBF 3/31/2014 MULTIPLE DONORS TF011498 Liberia Country Program Evaluation (CPE) 100.00 IEGE 12/31/2012 NORAD TF011571 Liberia HRITF Impact Evaluation 1,500.00 HRBF 12/30/2017 MULTIPLE DONORS TF011753 GPOBA W3 SUP Liberia Electricity Access 497.71 GPOBA 1/31/2015 IFC Additional Financing for Liberia Electricity System Enhancement Project TF011962 : Lighting Lives in Liberia 1,454.54 GEFIA 12/31/2014 MULTIPLE DONORS TF012105 Liberia Will Rise Again Diaspora Engagement Program 443.00 IDF 1/31/2016 IBRD Liberia Integrated Public Financial Management Reform Multi-Donor TF012355 Trust Fund - Enhanced Supervision 250.00 AFRQK 6/30/2016 MULTIPLE DONORS Liberia Integrated Public Financial Management Reform Multi Donor TF012390 Trust Fund Program 6,993.56 AFRQK 6/30/2016 MULTIPLE DONORS TF012429 Liberia Road Asset Management Project - Supervision Budget 300.00 LRTF 6/14/2013 MULTIPLE DONORS PPIAF LIBERIA: Developing Cost Recovery Mechanisms in Private TF012449 Sector Provision of Solid Waste Management 368.95 PPIAF 6/30/2013 MULTIPLE DONORS Program Management and administration for Liberia Int. Public Financial TF012454 Management 117.78 AFRQK 6/30/2016 MULTIPLE DONORS TF012494 Strengthening Accountancy Program at the University of Liberia 466.00 IDF 6/29/2015 IBRD TF012530 Liberia FCPF Readiness Grant 3,600.00 FCPFR 5/30/2015 MULTIPLE DONORS TF012541 Liberia PAC Capacity Building Project 361.20 IDF 8/3/2015 IBRD TF012608 Adolescent Girls Unit, Ministry of Gender and Development 169.28 IDF 11/14/2015 IBRD TF012746 Technical Assistance for EPAG scale-up 200.00 GENTF 6/30/2014 MULTIPLE DONORS TF012915 Liberia Youth Employment Skills Project (YES) - P121686 (FY13 SPN 90.00 ACGF 6/30/2013 MULTIPLE DONORS Budget) TF012983 Liberia - Post-Basic Education: Diagnostic Notes and Higher Education 118.89 NPEF 12/31/2012 Norway - Ministry of Strategic Plan (Phase III) Foreign Affairs TF013107 Liberia Gender and Private Sector Development 200.00 IFC 6/30/2013 MULTIPLE DONORS TF013160 Liberia HRBF design - Bank executed 310.00 HRBF 6/30/2013 MULTIPLE DONORS TF013252 Secured Transactions Registry 500.00 IFC 6/30/2014 MULTIPLE DONORS TF013274 Liberia HRBF design - Recipient executed 850.00 HRBF 6/30/2015 MULTIPLE DONORS TF013471 Liberia - MDB Programming Funds 186.60 CSCFIA 10/31/2014 MULTIPLE DONORS TF013497 Liberia: Strengthening Disaster Risk Management in Liberia (GFDRR: 544.50 GFDRR 6/30/2016 EU-Commission of the ACP/EU W2) European Communities TF013786 Liberia _DTIS Update 190.00 EIF 8/20/2013 (UNOPS) TF013809 Liberia: Economic Empowerment of Adolescent Girls and Young Women, 1,856.33 GENTF 5/30/2014 MULTIPLE DONORS Round 3 Activities TF013840 Liberia Insolvency and Debt Recovery Project 50.00 IFC 2/28/2015 MULTIPLE DONORS TF013882 Liberia PSD Strategy & Dialogue 300.00 IFC 2/28/2015 MULTIPLE DONORS TF013989 Communities and Natural Resource Governance in Liberia 125.00 NTF 11/30/2014 MULTIPLE DONORS 113        TF014274 Liberia SME Conference 75.00 IFC 6/30/2013 MULTIPLE DONORS TF014334 Trade Facilitation Trust Fund 45.00 TFF 8/30/2013 MULTIPLE DONORS TF014351 RSPO Liberia 50.00 IFC 2/28/2013 MULTIPLE DONORS TF014486 Supervision of EPAG round 3 activities 50.00 GENTF 5/30/2014 MULTIPLE DONORS TF014656 Strengthening the Framework for Results-Based Management in Liberia 100.00 FCP 8/31/2013 MULTIPLE DONORS TF091742 LRTF ADMINISTRATION 844.00 LRTF 8/31/2020 MULTIPLE DONORS GEF MSP - LIBERIA: GRANT FOR CONSOLIDATION OF LIBERIA TF092010 PROTECTED AREA NETWORK PROJECT (COPAN) 750.00 GEFIA 11/30/2012 MULTIPLE DONORS TF092332 FOOD PRICE CRISIS AGRICULTURAL PRODUCTIVITY SUPPORT 3,000.00 GFCRP 10/31/2013 IBRD LIBERIA: GRANT FOR THE ECONOMIC EMPOWERMENT OF TF092541 ADOLESCENT GIRLS 3,108.07 GENTF 12/31/2012 MULTIPLE DONORS TF094060 Emergency Monrovia Urban Sanitation Project (EMUS) 18,400.00 LRTF 12/31/2013 MULTIPLE DONORS TF094143 EMUS APPRAISAL AND SUPERVISION 1,100.00 LRTF 12/31/2013 MULTIPLE DONORS Land Sector Reforms: Rehabilitation and Reform of Land Rights TF094864 Registration Project 2,982.00 SPBF 4/30/2013 MULTIPLE DONORS TF095174 AFREA - Liberia Rural Energy (Phase 1) 1,531.39 ESMAP 3/31/2014 MULTIPLE DONORS LIBERIA - Urban and Rural Infrastructure Rehabilitation Project - TF095343 Supervision Budget 370.00 LRTF 6/30/2014 MULTIPLE DONORS TF097110 Youth, Employment, Skills Project 10,000.00 ACGF 6/30/2013 MULTIPLE DONORS TF097456 Liberia - Basic Education Project 40,000.00 EFAFTI 6/29/2015 MULTIPLE DONORS TF097529 The Liberian Institute of Certified Public Accountants (LICPA) 463.15 IDF 12/6/2013 IBRD Biodiversity Conservation through Expanding the Protected Area TF097657 Network in Liberia (EXPAN) 950.00 GEFIA 6/30/2014 MULTIPLE DONORS TF098040 Urban and Rural Infrastructure Rehabilitation Project 27,000.00 LRTF 6/30/2014 MULTIPLE DONORS TF098114 Liberia FTI Grant Supervision Fund 347.30 EFAFTI 12/31/2013 MULTIPLE DONORS Support to development of small forest enterprises income generation for Italy - Ministry of TF098381 Youth in Liberia 20.00 ICHYAO 12/31/2013 Foreign Affairs Liberia 10056 Capital Markets Strategy and Legal and Regulatory TF098561 Framework 229.10 FIRST 12/31/2013 MULTIPLE DONORS TF098612 Conflict Affected States in Africa/ Liberia Commercial Court & Code 9.25 IFC 2/28/2013 MULTIPLE DONORS TF099015 AGI: Liberia - Grant for the Economic Empowerment of Adolescent Girls 2,044.61 GENTF 4/2/2013 MULTIPLE DONORS TF099017 Liberia: Electricity System Enhancement Project 2,000.00 ESMAP 12/31/2013 MULTIPLE DONORS Republic of Liberia: Strengthening National Account and Price Statistics TF099092 Project 400.00 TFSCB 9/5/2013 MULTIPLE DONORS TF099376 Business Operations Liberia 320.00 IFC 2/28/2015 MULTIPLE DONORS TF099377 IC program management & support Liberia 800.00 IFC 2/28/2015 MULTIPLE DONORS TF099378 Public-Private Dialogue Liberia 500.00 IFC 2/28/2015 MULTIPLE DONORS TF099379 Tax Administration Liberia 1,000.00 IFC 2/28/2015 MULTIPLE DONORS TF099380 Trade Logistics Liberia 560.00 IFC 2/28/2015 MULTIPLE DONORS TF099405 Liberia: PFM Strengthening and Reform Coordination Project 495.00 IDF 6/30/2014 IBRD TF099432 Liberia: # NBFI Regulatory and Supervision Framework 300.40 FIRST 9/30/2013 MULTIPLE DONORS Support to development of small forest enterprises income generation for Italy - Ministry of TF099452 Youth in Liberia 380.00 ICHYAO 12/31/2013 Foreign Affairs TF099512 Investment Generation Liberia 490.88 IFC 2/28/2015 MULTIPLE DONORS TF099588 Liberia Road Asset Management Project 108,900.00 LRTF 6/30/2020 MULTIPLE DONORS Total 265,928.49 114        ANNEX 8: WOMEN AND YOUTH IN LIBERIA Women Legal framework: The legal framework in Liberia provides strong equal protection measures for men and women under the law. Liberia is the first African nation to develop a National Action Plan (LNAP) for the implementation of UN Security Council Resolution 1325. Liberia has had a National Gender Policy since 2009, a Rape Law which explicitly defines rape as a criminal act since 2006, and an inheritance law that establishes equal rights of inheritance since 2003. In 2008, the Government passed a new Domestic Relations Law, which sets the minimum legal age for marriage at 18 years for women and 21 years for men. A Children’s Law passed in 2011 instituted a birth registration system that will facilitate efforts to provide basic social services to vulnerable populations the law also established education, health, and freedom from exploitation and abuse as rights for male and female children. Liberia received a UN award in 2010 for its commitment and progress toward achieving MDG 3 (Gender equity and women’s empowerment). Nevertheless, various reports have found uneven and incomplete implementation of these strong gender laws,12 especially outside Monrovia. The limited success in enforcing statutory laws is often due to inadequate resource for enforcement or a failure to appreciate the importance of non-formal customary laws. For example, while current land laws strongly protect women’s land rights, most people’s primary access to land is through customary tenure, which remains discriminatory toward women. Political participation. Although women’s representation in the legislature fell in the 2011 elections to just 12.5 percent (down from 14 percent in the previous term), women play an active role in the country’s politics. Women’s participation in the executive branch is somewhat higher than in the legislature, with 24 percent of cabinet positions and the Presidency. The Ministry of Gender and Development (MOGD) takes the lead in implementing policies and reforms, tracking progress on women’s issues, and implementing a limited number of stand-alone interventions. Attention to gender within the Government of Liberia has grown impressively, both across ministries (through gender focal points and inter-ministerial coordinating bodies) and down to the county level, where 33.6 percent of county superintendents are women. A thriving civil society, including many active women’s groups often supported by international donors, continue to exert influence in areas of peace-building, SGBV, voter registration, land rights, and economic empowerment. However, the persistent inequalities between Monrovia and the rest of the country, as well as between Americo-Liberians and indigenous Liberians, apply equally well to women, with women from up-country areas experiencing lower rates of inclusion and access to service delivery, economic opportunities and political power than their urban and Americo-Liberian counterparts.                                                         1 The Africa Centre for the Constructive Resolution of Disputes (ACCORD). “Addressing Sexual and Gender Based Violence in Liberia”. Conflict Trends, Issue 3, 2009. 2 USAID “Gender Assessment- Liberia”. May 2009.  115        Poverty and Employment. Although recent poverty analysis3 does not suggest any significant differences in poverty rates between male- and female-headed households, women tend to have unequal access to employment and other economic opportunities. The 2010 Labor Force Survey (LFS), which asked about a broad range of economic activities, found only small differences in labor force participation for men and women (50.6 percent for men and 46.5 percent for women). The LFS also found that although women have roughly equal rates of employment as men, they are very under‐represented in terms of paid employment; only 24 percent of paid jobs are held by women. Furthermore, the graph below shows that labor force participation rates diverge for men and women at about age 30 and never come back together.4 In terms of occupational segregation, women are overrepresented in the informal non-agriculture sector and are significantly underrepresented in key emerging areas of the Liberian economy such as mining, construction, manufacturing and services. Data from the 2010 LFS suggest that women earn substantially less than men across most sectors. Source: 2010 LFS Education. Levels of education and literacy in Liberia are extremely low for everyone, but only marginally worse for females than males (see Table 1). A recent Public Expenditure Review conducted by the World Bank5 found that the gender gap in access to all levels of education is narrowing and that Liberia is likely to meet the MDG of gender parity in access to primary and secondary education by 2015. Liberia is one of ten countries globally that showed significant progress towards gender parity in primary enrollment. Even in higher education, female students are quickly catching up with their male counterparts, registering a six percentage point increase between 2009/10 and 2011/12, from 33 percent to 39 percent. Girls’ enrolment percentage by level of schools (%) Pre-primary 48.0 Primary 46.5 Junior High 43.5 Senior High 41.8 Source: Baseline Statistics for Gender, MOGD 20116                                                         3 The World Bank. “Poverty Note: Tackling the dimensions of poverty”. June 2012. 4 From page 27 of the Report of the 2010 Labor Force Survey. Liberia Institute of Statistics and Geo‐ Information Services (LISGIS). 5 The World Bank. Liberia Social Sector’s Public Expenditure Review. Report No. 70980-LR. June 2012. 6 Ministry of Gender and Development (MOGD) and Liberia Institute of Statistics and Geo‐ Information Services (LISGIS). “Report on Baseline Statistics on Gender”. 2011. 116        In spite of the positive trends in school enrolment, various challenges confront girls in particular in getting an education. Because many rural schools end at Grade 3, families often need to send students to Monrovia or to a larger town to continue their schooling at the secondary and even upper primary levels, often putting girls in particular into vulnerable and exploitative living situations. A second challenge is the apparently widespread phenomenon of teachers exchanging grades for sexual activities,7 which has been widely reported in the press. There is also some evidence89 that participation in the traditional initiation rites associated with secret "Sande" societies frequently lead to disruption or even early termination of girls' schooling, especially when the two are scheduled concurrently, complicated by the fact that Sande activities sometimes extend for months or even years. Finally, female adult illiteracy is high at 59 percent, compared to 31.4 percent of men. Although a Girls Education Policy has been under implementation since 2007, no policy to address gender gaps in adult illiteracy exists, nor do sector policies seem to identify adult illiteracy as a priority. Maternal health and fertility. Fertility rates have decreased from 6.2 in 2000 to 5.2 children per woman in 2007, but remain above the average for sub-Saharan Africa in spite of increasing access to family planning services. High maternal mortality, low contraceptive use, widespread early marriage and high adolescent fertility continue to pose challenges not only to women’s health, but also to poverty reduction efforts, as high fertility leads to larger households, which tend to be poorer. However, analysis suggests that secondary education in particularly is associated with delayed marriage and lower fertility in Liberia, indicating that as access to secondary education improves, fertility rates may decline more rapidly.10 Maternal mortality in particular continues to pose a grave threat in Liberia; at 770 deaths per 10,000 births,11 Liberia’ maternal mortality ratio is among the highest in the world. Most stakeholders agree that Liberia is unlikely to achieve MDG 5 (improved maternal health) by 2015. Limited access to transportation and cultural norms of when to seek care are frequently cited as primary obstacles for women to receive pre-natal and delivery care at health facilities. SGBV. In spite of the strong legal protections for women, sexual and gender-based violence (SGBV) remains astonishingly common in Liberia. Data from the 2007 Demographic and Health Survey (DHS) found that 44 percent of women aged 15–49 have experienced physical violence and up to 29 percent had experienced violence in the 12 months prior to the survey. Another 18 percent had experienced sexual violence, including forced sexual initiation. For women and girls, the threat of violence impedes their movement for economic, educational and civic activities: qualitative assessments have found that young women frequently cite potential sexual harassment from employers as a significant barrier to labor market entry. Government policies and programs to address SGBV include a specialized Women and Children’s unit in the Liberian National Police (LNP), a rape law and specialized court for sexual crimes since 2006, various monitoring and reporting efforts including a national GBV database maintained by the MOGD, a new children’s law, widespread Prevention of Sexual Abuse and Exploitation (SEA) campaigns                                                         7 UNICEF “Situation of Women and Girls in Liberia”. 2012., p. 78. 8 UNICEF “Situation of Women and Girls in Liberia”. 2012., p. 83. 9 The World Bank. Liberia Economic Empowerment of Adolescent Girls and Young Women Project: Girls’ Vulnerability Assessment. 2008. 10 The World Bank. “Poverty Note: Tackling the dimensions of poverty”. June 30, 2012. 11 World Health Organization. “Estimate of Trends in Maternal Mortality”. 2012. p.34 117        and awareness programs in schools. Several donors (including the Norwegian Refugee Council and the Carter Center) have coordinated efforts to provide training to police, legal professionals, and health professionals on how to handle SGBV cases. Efforts to encourage survivors to report rape appear to be working: the LNP indicates that rape is the most frequently reported violent crime. However, although access to justice has much improved in Monrovia, with the help of the specialized rape court and free legal aid clinics, the lack of infrastructure and courts in rural areas prevent many women from turning to the formal legal system. Instead, informal institutions such as the "Peace Huts" set up by the NGO WIPNET or traditional “Palava” huts remain the means of choice for many women to address not just SGBV but also a wide variety of legal issues. When they do report their crimes to the dedicated Women and Children's Section of National Police, too often the LNP lacks the resources to investigate or to pass the case along to the justice system.12 Bank program. The World Bank has a good track record of addressing gender-related issues throughout its portfolio, particularly in the realm of women’s economic empowerment. The 2009 JCAS highlighted gender as a cross-cutting theme and included strong commitments to integrating gender into operations, on which the Bank delivered. The Bank’s internal gender team (PRMGE) rated at least 50 percent of the operations in Liberia as "gender-informed" for FY10 and FY11. The 2009 JCAS was also explicit about being selective in its focus and largely avoided entering new sectors. With that in mind, the Bank focused its gender work on economic empowerment issues, including tailored interventions such as the donor-funded Economic Empowerment of Adolescent Girls and Young Women (EPAG) project and the UN-Women- funded Results Based Initiative. Through these initiatives, as well as a variety of technical and advisory services to Liberia’s Ministry of Gender and Development (MoGD), the Bank has developed a visible presence in Liberia in the area of women’s economic empowerment. In the new CPS cycle, the Bank will continue and seek to build upon this strong track record. Gender remains a cross-cutting issue in the new CPS and several measureable gender- related indicators are in the results matrix. The CPS will seek to broaden the gender equality focus to other sectors while remaining aligned with the Government’s PRS and keeping in mind the Bank’s comparative advantages and the Government’s limited implementation capacity. In addition, the Bank will continue to offer technical support and advisory services to MoGD, especially the new Adolescent Girls Unit, supported by an IDF grant. In developing operations for the new CPS cycle, Bank teams can draw upon various gender- integrated diagnostic studies conducted by development partners, including a 2009 Gender Assessment conducted by USAID, a 2012 UNICEF study on women and children, a 2012 Women’s Land Rights Study sponsored by USAID, and a Gender Profile from the African Development Bank that is in progress. In addition, the Bank itself has prepared a number of recent studies that can inform future operations, including a recent gender-informed Poverty Note, a study on the Human Opportunities Index (HOI) in Liberia, a qualitative gender assessment, a study on Societal Dynamics and Fragility in Liberia, and recent work on Youth Exclusion and Youth Violence in Liberia and Sierra Leone.                                                         12 The Africa Centre for the Constructive Resolution of Disputes (ACCORD). “Addressing Sexual and Gender Based Violence in Liberia”. Conflict Trends, Issue 3, 2009.  118        Youth Defining youth. The government of Liberia officially defines youth as individuals between the ages of 15 and 35 years. The twenty years age range of the youth category is meant to accommodate those young people who have missed educational and development opportunities during the fourteen-year civil war. The reverse effect of such a broad age range is that it makes the category of youth rather sizable and diverse. Youth constitutes a third of the total population and nearly half of the total labor force in Liberia. Youth problems are therefore national problems. Individual expectations and life experiences of young people on different spectrums of the youth continuum vary significantly. The population of Liberia distinguishes the “younger youth,” those between the ages of 15 and 24 years and the “older youth,” those in the upper range of the youth category. Younger youth are expected to pursue their education and contribute to community work. Their participation in community decision-making processes is rather limited. Unemployment is notably higher in this age range than in any other age category.13 Older youth take on significantly more responsibilities in their families and communities. Almost a quarter of young people between the ages of 25 and 35 do not describe themselves as youth14. Age is only one of several features that determine who is considered youth in Liberia. Physical characteristics, degree of responsibilities, socio-economic status and, most importantly, the type of work an individual does puts one in the category of youth. Community work – cleaning, refurbishing community roads and infrastructure, and building new structures – is the main responsibility of youth and is often unpaid or compensated with a meal. As long as an individual partakes in such work, despite one’s age, he or she is considered and treated as youth15. Financial stability, family ties and social standing can expedite or, on the contrary, impede one’s graduation from the category of youth. Within this fluid understanding of youth, age becomes simply a nominal attribute. By spending more time with non-youth, assuming more responsibilities beyond community work, and caring for other people, a young person can transition into adulthood. With such a change in one’s social status, youth acquire not only more responsibilities, but also more access to community resources and other opportunities. Youth is viewed as a stage of life and limitations that come with it are treated as expected and temporary. It is the inability to make the transition to adulthood due to lack of socio-economic opportunities and perception of unjust treatment that contributes to fragility and may drive rates of violence in Liberia. Employment. The rates of unemployment, particularly among youth, are exceptionally high in Liberia. Only 11 percent of young people have salaried positions. Youth recognize that their lack of skills, low education level, and relevant experience are impediments to employment. Youth employment statistics do not reveal a broader picture of youth economic participation, however. Youth constitute a significant part of an informal economy that sustains many people in Liberia. A majority (91 percent) of youth works in non-wage or salary positions, compared with 77 percent of those aged 35-64. 29 percent of youth work as a contributing family member compared with the older cohort (11 percent). Youth engage in commercial motorbike riding, petty trading or casual labor such as assisting with farming or gardening.                                                         13 Liberia Labor Force Survey, 2010 14 World Bank (forthcoming), The study on youth exclusion and youth violence. 15 In the study “Youth exclusion and youth violence in Liberia and Sierra Leone,” 11% of those older than 35 years, describe themselves as youth, because they continue associate with youth and engage in community work.   119        Generational shifts in employment patterns show that young people are much less likely to work in government jobs and instead work in public/state-owned and non-farm enterprises (construction, bank, private hospital/school, restaurant, etc.). With respect to location of work, youth tend to work less in factories/office workshops/shops, and more in farms or agricultural plots, market/bazaar and street stalls, or have a mobile work location. Such fluidity in the physical location of work is likely to contribute to youth vulnerability and the generally unstable work environment for youth. The overall attitudes and views to what constitutes a job may contribute to the perception of unemployment in Liberia. Youth aspire to salaried office jobs that are associated with more economic stability and social status. Other types of jobs, such as, for example, farming or unskilled labor positions are not held to the same regard and are not considered to be a “true” employment option. Expanding a notion of a job/employment in the population may help deal with the employment fragility in the context of a disproportionately large youth cohort and a slow economic growth that is unable to sufficiently meet youth employment needs. Geographical Location and Household Income. Young people, especially women, tend to live in Monrovia and other urban areas. But it is the young men who are disproportionately poor. Men tend to be the heads of household and to provide for a number of people and even families. An analysis of household income shows that a much larger share of young men who head a household belongs to the poorest two quintiles (45 percent) than women (34 percent). An even sharper gender disparity is evident when considering geographical location, with rural male heads of a household faring much worse economically than their urban counterparts. Despite high rates of youth unemployment and poverty, youth largely do not believe themselves to be poor. Almost 45 percent of youth describe their economic status as average (neither rich nor poor)16. Education. Basic education attainment is on the rise, but 1/5 of the population still does not have an opportunity to attend school and gender gap persists. While young women have attained primary education on par with their male counterparts, a much larger share have no education (35 percent versus 16 percent) and they especially lag behind in attainment of higher education. Illiteracy remains higher among women. Lack of financial means is the main reasons for students to drop out. For female youth, it is marriage and child rearing that force them out of schools and prevent them from returning back later in life. The barriers to education have changed over time: cultural norms are less of a constraint, particularly for female youth, but economic hurdles persist and youth disengagement from schooling is on the rise. Perhaps the most disconcerting issue on hand is that a growing share of youth appears who have no interest in school. Despite the fact that youth recognize the importance of education in securing jobs and improving their life situation, lack of employment opportunities and a strong believe that personal connections are more important for finding a job fosters apathy among youth and devalues education in Liberia. The disillusioned outlook of young people towards education and its role in improving their livelihoods is a common phenomenon in countries where access to education, along with the school-to-work transition, has not kept up with the relevance of and quality improvements in curriculum, skills training and pedagogy.                                                         16 World Bank (Forthcoming). The study on youth exclusion and youth violence in Liberia. 120        Community Participation and Decision-making. The category of youth implies a limited participation in the community, outside of community work, and decision-making process. It is with the transitioning to the category of adult or elder that one is granted more responsibilities and rights in the communities, increasing inclusion in the decision-making process in the community and improved access to resources. Youth do not consider such limited participation as exclusion as long as they have a youth representative who advocates on their behalf and they understand how decisions are made and community resources and benefits are distributed. Youth see such distribution of power, roles and responsibilities between youth and elders in their communities as part of African traditions and as an accepted sequence of events in life, where younger generations take time to gain more experience and knowledge, while the older generation guides them, exercises their authority and makes decision for the benefit of communities and all their residents. Young people are often unaware how decisions about community resources, additional benefits that become available or employment opportunities are made. Lack of sufficient knowledge about decision-making process, coupled with poor communication between youth and elders contributes to perception of injustice, unfairness and preferential treatment. Perception of nepotism, corruption and favoritism of elders and those in power among young people is very strong. Youth point to such practices as the cause of a stagnant community development and limited opportunities for young people. At the same time, youth blame individual leaders either in their communities or on national levels, rather than the structure and institutions of governance and decision-making for such conditions. Violence. Youth are described as the main perpetrators of violence in Liberia. There are different forms of violence that disrupt the daily community life and interpersonal relations. Gender- based violence, violence caused by rivalry or jealously, as a result of financial disputes or argument over a sports team witness high rates in Liberia. Such violence may disrupt relations, but is considered as a part of life and human interactions. Though normalized this violence does not challenge the stability of society. Violence as a response to perceived injustices, on the other hand, despite its low level and frequency, can trigger a violent response and serve as a source of fragility in the country. 121        ANNEX 9: GOVERNANCE CHALLENGES AND OPPORTUNITIES The Liberian government has undertaken a number of governance reforms since the election of President Ellen Johnson Sirleaf in 2005. But several challenges continue to contribute to a weak governance environment. The overall picture is therefore mixed: commitment to build strong institutions and limited progress in implementation. Liberia’s Country and Policy Institutional Assessment (CPIA scores) reflects this situation (Figure 1). Nevertheless, according to the 2011 Ibrahim Index of African Governance, Liberia is one of only two countries in the region with statistically significant improvements in overall governance quality over the past five years (Table 1).1Moreover, according to the Global Competitiveness Index (2012-2013), Liberia’s institutions rank strong (45 out of 144) and public trust in politicians is high (25 out of 125). Governance Challenges and Opportunities for Reform The central governance challenge confronting Liberia is how to strengthen its institutions, and harness the nascent state capacity to promote voice and accountability, political stability, government effectiveness and the rule of law. The government would have to focus on improving regulatory quality and control corruption in order to improve citizen confidence in the state. Strengthening the demand side governance will be an important part of the process. The impending natural resource boom could support, rather than erode, the peace dividends achieved to date, and ensure tangible human development outcomes. The foundational elements for a capable state already exist, but would have to be operationalized in order to lead to good governance outcomes: Liberia scores high on indicators of governance that show the availability of de jure instruments, and very low on those that demonstrate de facto existence of practices and institutional behavior. Voice and Accountability: The World Wide Governance indicators show a general stable trend in voice and accountability during 2005-2011.2 In 2010 the legislature enacted the Freedom of Information law. The Whistleblower Protection Act (2010) and the proposed Code of Conduct law are expected to significantly improve opportunities for citizens to demand accountability of public officials. The press remains largely free and vibrant, even if quality of reportage is mixed. Nevertheless, accountability of public officials is rare, and reports of the Auditor General have not been acted upon even when they have cited evidence of misappropriation. The President routinely asks government officials implicated in corruption to step aside, even though this has not always been the case. However, while the government has tried to bring citizens into discussions of major national policy questions including the Agenda for Transformation, National Vision 2030, and decentralization policies, there is still a sense that the majority of these documents were fairly completed before consultation, and that citizen input rarely changed the trajectory of the debate. The civil society has continued to force debate on major issues including the budget, resulting in greater understanding of budget issues as a result of the Open Budget Initiative undertaken by various civil society organizations. By and large, there is a sufficient                                                         1 Mo Ibrahim Foundation (2012). “2011 Ibrahim Index of African Governance”, Available on the web at: http://www.moibrahimfoundation.org/en/media/get/20111003_ENG2011-IIAG-SummaryReport-sml.pdf 2 For details see: “Worldwide Governance Indicators, 2002-2011” Available on the Web at: http://info.worldbank.org/governance/wgi/sc_chart.asp. Accessed March 4, 2013. 122        space for more active citizen participation, even if the level of engagement is somewhat undermined by the ability of the citizens to fully participate, in sometimes, complex debates. CPIA ratings for Liberia Public Sector Management and Institutions, 2011 3.5 3 2.5 Quality of 2 Property Rights 1.5 Liberia Public 1 & Rule‐based Administration 0.5 Governance 0 Sub‐Sahara Africa Average Quality of Efficiency of Budgetary & Revenue Financial Mobilization Management Source: CPIA (http://datatopics.worldbank.org/cpia/) Political Stability and Absence of Violence: Liberia remains generally stable with increasing political stability and limited violence.3 While the presence of the United Nations Mission in Liberia (UNMIL) continues to provide a secure post conflict environment, the violence immediately after the 2011 election suggested that latent grievances remain, and could be exploited for political reasons. But, it is also evident in inter –personal violence such as gender based violence or ethnic violence during sporting events among rival groups. There have also been border disputes among local communities as well as conflicts around land. Political risks associated with presidential succession and the upcoming midterm elections in 2014 will pose additional challenges. More importantly, the expected withdrawal of UNMIL is likely to create a vacuum which could pose both political and security challenges. In the meantime, the government is increasing effort to train the police and strengthen its capacity to deal with violence in the country. The recent construction of a security hub in Gbarnga (in South East Liberia) is one such example. The government has also endorsed the need for a national conversation on reconciliation in order to continue efforts in building united country. Government Effectiveness: Limited capacity of the public sector capacity undermines the effectiveness of the government in formulating and implementing policies, in spite of the progress in recent years. During the conflict, many experienced and qualified professional staff left the public service because salaries fell to very low levels. At the same time, the public payroll remained bloated with excessive numbers of unskilled staff added during successive                                                         3 Fordetails see: United Nations (2012). “Twenty-fourth progress report of the Secretary-General on the United Nations Mission in Liberia” , Available on the Web at” http://www.un.org/ga/search/view_doc.asp?symbol=S/2012/641 123        years of transitional governments. The current structure of the civil service is plagued by a number of structural and institutional weaknesses including low pay, poor alignment between skills and functions, inadequate human resource management processes, weak payroll controls and political interference. Consequently, even though a number of good policies have been formulated, implementation remains a challenge. For example, safeguards of the Public Financial Management Act are routinely violated due to the lack of sufficient systems for enforcing accountability (the 2012 PEFA documented a number of weaknesses in payroll control including poor reconciliation of the payroll and personnel databases, incomplete personnel database and personnel records and a lack of periodic reconciliation between payroll and the personnel database).4 Liberia’s scores in the Bertelsmann Transformation Index for 2010 ranks it as successful (with weaknesses) in its Management Index (31 out of 128 countries), ahead of all countries in West and Central Africa region except Ghana, Benin and Mali. Only 8 out of 128 ranked countries globally are fully successfully. Selected Governance Indicators for Fragile States, 2012 Indicator Sierra Liberia Central Guinea Cote Democratic Leone African d’Ivoire Republic of Republic Congo CPIA (out of 6) 3.3 3.0 2.8 2.9 2.9 2.7 Corruption 31 41 26 24 29 21 Perception Index ( out of 100)5 Global 2.82 3.71 N/A 2.90 3.36 N/A Competiveness Index ( out of 7) World Wide Governance Indicators (0-100) Voice and 40.8 38.0 16.4 23.5 15.5 8.0 Accountability Regulatory Quality 26.1 16.1 10 16.6 21.8 5.7 Control of 26.5 39.3 20.4 8.5 12.3 3.3 Corruption Open Budget Index 39 43 N/A N/A NA 18 Ease of Doing 140 149 185 178 177 181 Business ( out of 185) Sources: CPIA (http://datatopics.worldbank.org/cpia/); TI (www.transparency.org/research/cpi/overview); GCI (http://www.gaportal.org/global- indicators/global-competitiveness-index);WGI (http://info.worldbank.org/governance/wgi/index.asp);OBI(http://internationalbudget.org/what- we-do/open-budget-survey/); Doing Business (http://www.doingbusiness.org/) Ease of Doing Business: The Government of Liberia has incrementally designed policies to strengthen the country’s investment climate. These efforts have included improvement in business registration time, enactment of the commercial code and the establishment of the commercial court. However, the investment climate is far from sufficiently robust and a number of regulatory processes still undermine the performance of the private sector. Based on the Doing Business Report 2013 Liberia ranks 149 out of 185 in “Ease of doing Business”, especially in protecting investors, enforcing contracts and registering property. This indicates a five step                                                         4 IMF et al. (2012). “Liberia: Public Expenditure and Financial Accountability”, p.56-7. 5 The Corruption Perceptions Index scores countries on a scale from 0 (highly corrupt) to 100 (very clean).  124        improvement from its rank in the 2012 report. The last Enterprise Survey data for Liberia (2009) identified corruption, crime, electricity and access to finance as the major constraints to investment. Other constraints facing the investment climate are the weak financial and banking system, the undeveloped capital market, lack of transparency in the regulatory system and dispute settlements. Rule of Law: Emerging from conflict with weak legal and institutional, strengthening of the rule of law in Liberia remains a challenge. Liberia’s score of 2.5 in the 2011 CPIA report is slightly below the regional average of 2.8. The judicial system has faced a number of problems ranging from weak capacity to allegations of corruption. Citizen confidence in the judiciary is therefore is low. Courts tend to be physically too far from citizens, and have largely been out of reach for those who cannot afford legal fees. Nevertheless, specialized courts have been established to deal with crimes such as gender based violence and there is a plan to establish corruption courts following the successful establishment of the Commercial Courts. The rule of law in Liberia is undermined by both a weak judiciary and weak police capacity. The Liberia National Police is increasingly being expanded and skilled, but remains severely overwhelmed: weak investigation capacity, limited logistical resources, and low morale weaken police capacity. Control of Corruption: The inability of the government to control corruption remains a major challenge for the government. In 2009 over half of the firms interviewed reported that they were expected to give gifts to “get things done”, to “get a government contract”, and to get an electric connection. Up to 70 percent of the firms reported experiencing at least one bribe request. The government has enacted a number of laws to improve transparency and accountability. This includes the Public Financial Management Act, the Public Procurement and Concessions Act, the Freedom of Information Act and the Whistleblower Protection Act. The establishment of the Liberia Extractive Industries Transparency Initiative (LEITI) through an Act of Parliament in 2009 promised an era of transparency in management of resource revenues. In 2012 the President introduced Executive Order Number 38 establishing and Administrative Code of Conduct for the members of the executive. The General Auditing Commission has routinely audited government spending, but there has been very limited action on these reports. While results are mixed, specific actions targeting corrupt officials have been undertaken. This has mainly comprised suspensions by the appointing authority, and in some cases court action. However, Liberia’s score of 41 in the Corruption Perception Index (2012) still suggests a high level of corruption in the public sector. Strengthening demand side governance Governance remains a key pillar of the World Bank’s Country Partnership Strategy. This strategy is fully aligned with the government’s own priorities for governance and public institutions as outlined in the “Agenda for Transformation”. It recognizes the centrality of good governance to development as well as an end in itself. In addition to supporting the development of transparent public financial management institutions, independent, responsive and accountable Civil Service, and improved natural resource governance, the Bank will strengthen the demand side governance through increased collaboration with non-state actors by:  Supporting coalitions of non- state actors, including the private sector and legislature on broad themes such as access to information, budget transparency, contract monitoring, and natural resource governance. The CPS will continue the ongoing support for coalition formation on platform issues such as access to information, budget transparency 125        and contract monitoring. In Public Financial Management, for instance, a grant fund will be available for non-state actors active in this area. Initial discussions are underway to support the development of local level think tanks to improve evidence based advocacy through robust policy analysis.  Building civil society capacity in specific accountability platforms, especially the use of information technology in holding public officials accountable. The development of new forms of online and SMS enabled platforms for communications offers new avenues for engaging citizens. The Freedom of Information Act, signed into law in 2010 provides for the proactive disclosure of information in several areas, and mandates disclosure of all categories of information, not in the list of exemptions, to be made available upon request. In order to make these provisions of the law effective, systems and skills to better manage and share information will be required. In the short term the CPS support adaptation of technology to support citizen engagement within the spirit of the Access to Information Law. The Bank will continue its ongoing engagement with the Open Government Partnership of which Liberia is a member, and support country level engagement.  Engaging with coalitions built around initiatives to improve service delivery and increase value for money. The Bank will work with non-state actors to support the implementation of the CPS. Such efforts might involve for instance, periodic consultations with Civil Society on Bank program and briefings on project implementation. In addition to supporting the expansion of new instruments of accountability such as the External Implementation Status Report (E-ISRs), other social accountability activities in the sectors could be designed as part of Bank operations. For example, the ongoing GPE Basic Education Project has specifically identified the development of social accountability framework as a key project activity which will attempt to improve feedback from communities, schools and NGOs on provision of school grants and learning materials. It would also include greater and more systematic engagement with the Legislature as well as with the private sector. The CPS will explore opportunities provided by the Global Partnership on Social Accountability (GPESA) to engage with non-state actors.  Supporting the engagement of the Liberian Diaspora: The Bank will use an Institutional Development Fund Grant to support engagement with the Liberia Diaspora as critical partners in achieving the objectives of the AfT. Through a mixture of structured dialog, engagement in policy formulation process, investment roundtables the strengthening of this partnership will enable the diaspora to actively participate in policy formulation and implementation and offer it an opportunity to support the government’s program of economic transformation. 126      ANNEX 10: MAINSTREAMING CAPACITY DEVELOPMENT IN THE CPS The WBG portfolio mainstreams key capacity constraints to achieve the overarching objective of the CPS and to deliver the development results envisioned for each strategic theme. The recent institutional diagnostic exercise completed by Liberia in developing the Agenda for Transformation (AfT) laid important groundwork for the CPS to introduce catalytic and multi-stakeholder approaches to capacity development in selected areas to help address challenges related to trust, transparency, and demand for accountability among others. The need for a more systematic focus on capacity development within the CPS was asserted in the JCAS Completion Report and the Liberia Country Program Evaluation: 2004-2011 completed by IEG. A key emerging lesson was the need to “ensure that capacity development is at the heart of project preparation and implementation and monitored at a project, portfolio and sector level.” IEG called for “sector units to develop a more strategic vision and to provide a more systematic package of support” and recommended that a central person in the country office serve as the focal point for a more coordinated approach to capacity development across the WBG portfolio. Priority crosscutting capacity development objectives are defined in the CPS and will be systematically monitored across the portfolio. Nearly all projects include some supply-side capacity development activities related to human resource development and these are monitored as needed at the project level. However, responding to certain types of severe capacity constraints on either the supply or demand side has been emphasized in the CPS and will be monitored at the portfolio level in either of the following cases:  Addressing a capacity constraint in a specific sector is critically important for the achievement of the overall CPS objective. A failure to address institutional capacity needs in the designated sector(s) will threaten the achievement of targeted outcomes in other sectors. Additional interventions or partnerships could be warranted during the CPS period to address this risk.  The specific nature of the constraint is prevalent across sectors. Efforts to address a specific institutional capacity need are ongoing or warranted across sectors and themes within the current and planned WBG portfolio. The continued focus on systematic monitoring will help the country team, development partners, and other stakeholders to identify potential synergies in capacity development support, garner lessons learned, and adjust implementation as needed. A two-tiered approach is applied to assess priority capacity development results. Individual projects will always monitor relevant capacity development outcomes at the project level, but the achievement of the priority capacity development objectives will be tracked at the portfolio level. The following two-tiered system for monitoring supports a coordinated approach to managing key capacity development results without imposing an unrealistic M&E burden: 1. Formally tracked in the CPS Results Matrix. Targeted capacity development outcomes in specific sectors that play a critical role in the achievement of development outcomes across the portfolio are reflected in the CPS results matrix. Corresponding indicators with baseline and target values are included for monitoring. 127    2. Qualitatively assessed during the CPS period. Progress towards a priority capacity development objective that addresses capacity constraints across multiple sectors and themes will be assessed qualitatively across the WBG portfolio as part of the mid-term and final reviews of the CPS. To account for these outcomes, a central focal person or team will need to review project level data (where available) and/or collect data from relevant stakeholders during the CPS period. This qualitative assessment across the portfolio is intended not only to document results, but also to derive lessons learned and identify required changes to ensure a more coordinated approach in capacity building. In either case, prescribed assessment activities should help to build and rely on country systems to the extent possible. The crosscutting priority capacity development objectives for the Liberia CPS (FY13-17) include the following:  Strengthen the organizational arrangements and human capacity in the transport and energy sectors for developing key infrastructure. Severe limitations in staff skills and systems inhibit the effectiveness of sector institutions for developing the much needed transport and energy infrastructure in Liberia.  Improve transparency and accountability in the management of public revenues and expenditures. The lack of transparency and accountability in the use of public assets and revenues limits citizens’ trust in the state, which historically has served as a driver of conflict and, therefore, poses a risk for development outcomes across the WBG portfolio.  Increase local stakeholder participation and oversight in the development of basic services and economic opportunities. Local citizens and other non-state actors have little or no voice in planning and decision-making as part of the development process. The CPS mid-term review will assess the capacity development objectives and, if justified, will introduce changes or adjustments in prioritization or the proposed implementation approach. Further information on each of these priorities, including their corresponding institutional capacity constraints, the rationale for prioritizing WBG engagement to address them, and the proposed approach to assessment is summarized in the matrix below.   128    Priority Capacity Development Objectives in the Liberia Country Partnership Strategy  Objective 1:  Improve the organizational arrangements and human capacity in the transport and energy sectors for developing key infrastructure  Institutional capacity  Overview of change agents and change  Why this is a crosscutting priority for the CPS  Assessment at the CPS Level  constraints  processes  Severe limitations in staff  World Bank studies confirm that the lack of basic  In transport, an autonomous road authority will  The increased effectiveness of  skills and systems inhibit  infrastructure, especially energy and roads, is the  be established using a consultative multi‐ organizational arrangements is targeted  the effectiveness of sector  binding constraint to accelerating broad‐based,  stakeholder approach based on lessons learned  for both the transport and energy  institutions for developing  inclusive growth and that it also impedes the  in similar contexts. Learning opportunities will  sectors.  Indicators to be monitored in  the much needed  effective delivery of social services.  Establishing  be designed to provide national professionals  the CPS results matrix include the  transport and energy  basic infrastructure is essential to support  with the knowledge and skills needed for the  following:  infrastructure in Liberia  development efforts across sectors, and lending  sustainable planning and administration of road  Transport:   for energy and transport in current and planned  projects.    Road Authority established (Y/N)  operations comprises approximately 80 percent of  Data source: review of legal documents In the energy sector, WBG support will help to  the WBG portfolio.    that establish Road Authority develop the staff skills and systems needed for    Increased share of qualified national an efficient and financially viable Liberian  Electric Corporation and to strengthen the  staff in key competency areas (%) implementation capacity of the Ministry of  Data source: IIU self-assessment assisted Lands, Mines and Energy.      by the Bank   Energy:  System Average Interruption Frequency  Index (SAIFI) for customers in Monrovia  (Number/month)  Data source: LEC data system    Objective 2:  Improve transparency and accountability in the management of public revenues and expenditures  Institutional capacity  Overview of change agents and change  Why this is a crosscutting priority for the CPS  Assessment at the CPS Level  constraints  processes  The government has  The AfT noted that, fundamentally, “peace and  The process of establishing accountability  Targeted institutional capacity outcomes  limited ability to report on  national security will be threatened if governance  mechanisms in the management and oversight  should be monitored in the CPS results  and account for public  and public institutions do not deliver on their  of public revenues and expenditures will focus  matrix through the following indicators:  revenues and  promise of transparency” (p.39) and the recent  first in the key subsector of public financial   Extent of unreported government  expenditures, and  JCAS Completion Report called for “increased  management.  WBG support will help improve  operations (Transparency: PEFA PI‐7  accountability  attention” in the CPS to focus on issues of  compliance with PFM rules and systems and  Score)  mechanisms in the  transparency and governance.    strengthen the oversight capacity of the   Scope, nature and follow‐up of  management and    Legislature and non‐state actors through:  external audits (External scrutiny and  oversight of public  Transparently reporting on and accounting for  audit: PEFA PI‐26 Score)  129    institutions are still weak  public revenues and expenditures is central to   Learning and knowledge exchange to   Public Access to key fiscal information  or nonexistent. The lack  good governance and therefore a core objective  develop public sector staff skills and  (Transparency: PEFA PI‐10)  of transparency and  within the WBG portfolio.    systems  Data source: PEFA assessment report  accountability in the use  Strengthening strategic networks and coalitions  of public assets and  of CSOs to work together with government to  revenues limits citizens’  promote enhanced transparency and  trust in the state.     accountability     Objective 3:  Increase local stakeholder participation and oversight in the development of basic services and economic opportunities  Institutional capacity  Overview of change agents and change  Why this is a crosscutting priority for the CPS  Assessment at the CPS Level  constraints  processes  Local non‐state actors  As outlined in the Liberia Conflict and Fragility  Ministries, agencies, and/or commissions tasked  The country team should qualitatively  have limited  Filter, giving a voice to local individuals and groups  with the achievement of program results  assess whether stakeholder participation  opportunities to  as part of a demand‐driven development process  implement reforms in processes or structures to  is increasing as needed across each CPS  participate in decisions  is critical for reducing the divisions among  empower users and ensure that local  theme at the mid‐term and end of the  driving the development  subgroups of the population and increasing trust  stakeholders have a voice in program planning  CPS period.  Methods for this assessment  process.  The AfT  in the government.   and implementation.  Examples of such reforms  might include the following among  highlighted this as a cross‐ Cases across the WBG portfolio reflect the  could  include the formal inclusion of PTAs in  others:  sectoral problem and  ongoing push to create the institutional space for  school  management to ensure parent   Structured interviews with project  signaled it as a critical  local decision‐making and collective action to  participation  or the establishment of  leaders or other key stakeholders  issue for development  guide the achievement of development  community  committees  with diverse   Review of project data (where  activities involving  objectives.  For example, WBG support  highlights  representation   for  a   particular purpose (i.e.  relevant indicators have been tracked  women and/or youth and  the important role of communities in providing  planning local projects, resolving land disputes,  at the project level)  those related to the  leadership to youth and identifying employment  facilitating youth employment, etc.).  Targeted   Survey of stakeholders  community’s role in  opportunities for them, promotes the  intermediate capacity outcomes at the project   Service delivery scorecards  natural resource  engagement of parents and community leaders  level include the formation and/or functioning  management (p.131).    for strengthening school‐based management, and  of the stakeholder group.  Evidence that the  The JCAS Completion  organizes farmers to link them to marketing and  group has provided input to shape the local  Report called for the more  quality promotion opportunities for their crops.      development process signals an institutional  strategic engagement of  capacity outcome (increased stakeholder    local stakeholders,  participation).    concluding that  “increased attention  needs to be given to  issues of inclusion  (geographic and ethnic).”  130    ANNEX 11: LIBERIA: COUNTRY FINANCING PARAMETERS March 27, 2009 Item Parameter Remarks/Explanation Cost Sharing: 100% All projects are expected to be financed at 100%, Limits on the proportion of given the government’s extremely small budget and individual project costs that IDA inability to provide counterpart funding. In the near may finance. term, only when co-financing is available will IND’s share be less. Ownership of Bank-financed programs is being ensured through alignment of the Bank’s program and the PRSP and through ongoing dialogue. At the project level, ownership is being ensured through close supervision and capacity- building of government institutions. A significant proportion of projects are now government executed, primarily through the Special Implementation Unit within the Ministry of Public Works, and Project Financial Management Unite within the Ministry of Finance. Recurrent Cost Financing: No country- The Bank working closely with the IMF, would Any limits that would apply to the level limit monitor the fiscal situation, and public expenditure overall amount of recurrent management and public sector reform to ensure that expenditures that the Bank may recurrent cost financing is embedded in a credible finance. and sustainable government macroeconomic strategy. In determining Bank financing of recurrent costs in individual projects, the Bank will take into account sustainability issues at the sector and project levels, including a consideration of implied future budgetary outlays. Local Cost Financing: Yes The requirements for local cost financing are met. Are the requirements for IDA The Bank may finance local costs in any proportions financing of local expenditures met, required by individual projects. namely that: (i) financing requirements for the country’s development program would exceed the public sector’s own resources (e.g., from taxation and other revenues) and expected domestic borrowing; and, (ii) the financing of foreign expenditures alone would not enable IDA to assist in the financing of individual projects? Taxes and Duties: No Taxes and duties are considered reasonable. The Are there any taxes and duties that application of this general approach will be subject to the Bank would not finance? an ongoing monitoring of tax policy and how taxes are applied to Bank-financed projects. At the project level, the Bank will consider whether taxes and duties constitute an excessively high share of project costs. 131    ANNEX B1: LIBERIA AT A GLANCE 132    133    ANNEX B2: SELECTED INDICATORS OF BANK PORTFOLIO PERFORMANCE AND MANAGEMENT As Of Date 1/23/2013 Indicator* Fiscal year 2010 2011 2012 Portfolio Assessment Number of Projects Under Implementation a Number of Projects Under Implementation /a 11 9 11 b Average Implementation Period (years) Average Implementation Period (years) /b 2.9 2.8 2.2 a, c Percent of Problem Projects by Number Percent of Problem Projects by Number /a, c 0.0 0.0 9.1 a, c Percent of Problem Projects by Amount Percent of Problem Projects by Amount /a, c 0.0 0.0 1.8 Percent of Projects at Risk by Number a, d Percent of Projects at Risk by Number /a, d 9.1 0.0 36.4 Percent of Projects at Risk by Amount a, d Percent of Projects at Risk by Amount /a, d 2.3 0.0 56.6 e Disbursement Ratio (%) Disbursement Ratio (%) /e 25.4 36.2 27.2 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) Average Supervision (US$/project) Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number Proj Eval by OED by Number 29 Proj Eval by OED by Amt (US$ millions) Proj Eval by OED by Amt (US$ millions) 604.7 % of OED Projects Rated U or HU by Number % OED Projects Rated U or HU by Number 48.3 % of OED Projects Rated U or HU by Amt % OED Projects Rated U or HU by Amount 15.3 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 134    ANNEX B3: IFC INVESTMENT OPERATIONS PROGRAM     Liberia: IFC Investment Operations Program 2010 2011 2012 2013* Original Commitments (US$m) IFC and Participants 3.8 3.5 11.5 25.9 IFC's Own Account only 3.8 3.5 11.5 25.9 Original Commitments by Sector (%) - IFC Own Account Finance and Insurance 100.0 100.0 100.0 81.6 Oil, Gas and Mining 18.4 Total 100.0 100.0 100.0 100.0 Original Commitments by Instrument (%) - IFC Own Account Guarantee 8.0 86.0 100.0 86.5 Quasi-Equity 80.0 13.5 Equity 12.0 14.0 Total 100.0 100.0 100.0 100.0 *Data as of May 31, 2013   135    ANNEX B4A: IDA INDICATIVE LENDING PROGRAM, 2013-2017 (IN US$, MILLIONS)     AF - Liberia Road Asset Management Project (LIBRAMP) 50 FY 13 Liberia- Accelerated Electricity Expansion 35 Project(LACEEP) 10 Liberia Health Systems Strengthening Project 10 Budget Support AF –Liberia Urban and Rural Infrastructure 12 Rehabilitation Project( URIRP) FY14 10 Budget Support 2 Civil Service Reform Project FY13/14 129 Transport Project (Ganta to Harper road) 80 Budget Support 5 FY15 Youth Employment/SSN 10 Land Administration 9 AF - Accelerated Electricity Expansion 60 FY16 Project(LACEEP) 5 Budget Support Natural Resource Management Governance Project – 5 FY17 indicative 5 Budget Support FY15-17 179 TOTAL FY 13-17 308 136    ANNEX B4B: IDA/IFC INDICATIVE AAA PROGRAM, 2013-2017   FY Pillar I - Peace, Pillar II - Economic Pillar III - Pillar IV - Justice, Security Transformation Human Governance and and Rule of Law Development Public Institutions FY 13  Youth  TA on Private Sector  Higher Education  Policy Note on Vulnerability Development Strategy Strategy Extractive Study (joint with IFC)  Health Financing Industries    DTIS Update Note Governance  Agriculture PER  Poverty Note  TA on Oil Sector  Urban Policy Note Governance       FY 14  Political  Private Sector  HD  Programmatic AAA Economy Notes Development Programmatic in Natural Resource Programmatic AAA – SOE AAA and TA Management   Diagnostic (joint with (National Youth  TA on Efficiency IFC) Employment and Value for  Transport Sector PER Framework) Money in Budget  Multi-Modal Transport  IFC AS Execution Study Education for  Decentralization  TA for ICT Employment Diagnostics  IFC AS to identify (E4E)  Land Sector TA Investors in Water    Public Investment Transportation Program TA     FY 15    Private Sector  HD  Programmatic AAA Development Programmatic in Natural Resource Programmatic AAA (joint AAA and TA - Management with IFC) Skills for Jobs  PREM Policy Notes  Poverty Assessment  Poverty  Agriculture Sector “ Assessment   Landscape” Diagnostic  IFC AS  PREM Policy Notes Education for  IFC AS Strengthening Employment Capacity of Small-holders (E4E)     FY 16  Other AAA and  Other AAA and TA TBD   Other AAA and  PREM Policy Notes TA TBD  TA TBD   Other AAA and TA TBD  137    ANNEX B5: LIBERIA – SOCIAL INDICATORS   138    Continued 139    ANNEX B6: LIBERIA – KEY ECONOMIC INDICATORS 140    141    ANNEX B7: LIBERIA – KEY EXPOSURE INDICATORS   Actual Estimated Projected Indicator 2008 2009 2010 2011 2012 2013 2014 1015 1016 2017 Total debt outstanding and 3203 1850 113.9 148 183.3 301.3 447 598.0 753.3 901 3 disbursed (TDO) (US$m) 3 Net disbursements (US$m) .. 0 0 34 36 118 149 157 164 159 Total debt service (TDS) .. 64 6 3 11 12 15 17 18 19 3 (US$m) Debt and debt service indicators (%) b     TDO/XGS 1095.7 1049.3 46.0 33.7 33.8 48.6 66.6 53.8 60.6 71.3     TDO GDP 376.5 160.2 8.8 9.7 10.4 15.0 20.0 23.8 26.6 28.2     TDS/XGS .. .. .. 1.7 1.4 1.9 2.3 1.7 1.7 1.7     Concessional/TDO 0.0 7.4 50.9 36.9 47.5 56.4 61.7 51.4 41.9 34.6 IBRD exposure indicators (%)     IBRD DS/public DS .. .. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0     Preferred creditor DS/public .. .. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 c     DS (%)     IBRD DS/XGS .. .. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 c     IBRD TDO (US$m) .. .. 0 0 0 0 0 0 0 0          Of which present value of          guarantees (US$m)     Share of IBRD portfolio (%) .. .. 0 0 0 0 0 0 0 0 c     IDA TDO (US$M) 69 66 0 14 33 88 155 181 191 192 IFC (us$M)     Loans 1.0 11.5 3.3 3.0 11.5 20.9     Equity and quasi‐equity /c 0.0 1.1 0.5 0.5 0.0 5.0 MIGA     MIGA guarantees (US$m)   Note: Figures for IFC were updated as of 5/31/13. All other figures were last update on 1/31/13. 142    IBRD 33435R2 11°W 10°W 9°W 8°W 9°N 9°N LIBERIA GUINEA SIERRA To Irié LEONE To Voinjama Buedu Kolahun To Mt. Wuteve L O FA . Pendembu (1,380 m) ts M 8°N Vahun 8°N i e iz ng g To Ra i o no Kenema Gelahun g iz W Zorzor To o lo Lola . ya W ts be Yekepa Yekepa M nda G fa Via ba Nia of To im Nzérékoré N L Kongo GBARPOLU Gbalatuah Senniquellie To Danané To Ganta Karnplay Zimmi GRAND Bopolu Bo CAPE Gbarnga 7°N l Palala 7°N P au MOUNT St. Zeansue Zienzu BONG Yopie Sagleipie Tubmanburg Totota Bong Town Robertsport NIMBA CÔTE BOMI n Klay MARGIBI Botata Gloie Nu o D’IVOIRE Careysburg To hn Tapeta Tappita Toulépleu Kakata Jo St. Bensonville Tobli MONROVIA Harbel GRAND BASSA Guata Poabli Kola Town MONTSERRADO Hartford Gaamodebi Zwedru 6°N Babu 6°N RIVER CESS Buchanan Trade GRAND GEDEH Town Gonglee Dube Pyne tos Ce s Bokoa Cestos City SINOE Pelokehn Kopo Juazohn RIVER GEE AT L A N T I C OC EAN Sehnkwehn Kahnwia Kanweaken Fish Town Tawake Tawlokehn 5°N Greenville 5°N M GRAND A Nyaake Nana Kru RY K R U Barclayville LA Sasstown N LIBE R I A Grand Cess Plibo D To Tabou SELECTED CITIES AND TOWNS Harper COUNTY CAPITALS NATIONAL CAPITAL 4°N RIVERS MAIN ROADS This map was produced by the Map Design Unit of The World Bank. 0 20 40 60 80 100 Kilometers The boundaries, colors, denominations and any other information RAILROADS shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any COUNTY BOUNDARIES endorsement or acceptance of such boundaries. 0 20 40 60 Miles INTERNATIONAL BOUNDARIES 10°W 9°W 8°W JULY 2007