PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB7384 Project Name Economic Governance Technical Assistance - AF Region AFRICA Country Comoros Sector Central Government administration (80%); Sub-national Government administration (20%) Project ID P144381 Parent Project ID N.A. Borrower(s) Union of Comoros, Economic and Financial Reforms Technical Unit (CREF) Implementing Agency Economic Governance Project (ABGE) Implementation Unit Environment Category [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined) Date PID Prepared September 2, 2013 Date of Appraisal September 16, 2013 Authorization Date of Board Approval November 12, 2013 1. Country and Sector Background. The Government of the Union of the Comoros officially adopted the country’s Poverty Reduction and Growth Strategy Paper - PRGSP (2010-14) in September 2009, confirming a new commitment to reform. The Comoros reached the HIPC Completion Point on December 20, 2012. It represents an important milestone for the Government and confirmed its commitment to implementing the PRGSP. In support of its PRGSP, Government finalized a comprehensive Public Financial Management (PFM) Reform Strategy for the period 2010-19 and adopted a detailed Action Plan for 2010-12. The PFM Reform Strategy is organized around four pillars: (a) modernizing the legislative and regulatory framework and strengthening institutional capacity; (b) rationalizing budget preparation; (c) strengthening budget execution; and (d) increasing transparency through improved internal and external controls. A new detailed action plan for 2014-2017 is under preparation with the objective of introducing program budgeting by 2018. At the request of the Government, the World Bank approved on January 31, 2011, an Economic Governance Technical Assistance Project (ABGE) to: (a) increase the efficiency, accountability, and transparency of public financial management; and (b) improve the management of human resources and wages within the civil service. The original amount allocated to the ABGE Project is US$1.8 million (equivalent SDR 1.2 million). 2. Objectives The objectives of the Additional Financing are to: (a) address the additional financing needs related to the strengthening of the public finance, legal, institutional and organizational 1 framework, (b) develop a comprehensive strategy reform of the civil service; (c) finance additional demand-driven activities to support the development of leadership skills, consensus building, change management; and (d) finance operational costs. 3. Rationale for Bank Involvement Government is committed to pursue the implementation of the 2010-19 PFM Reform Strategy and recently reconfirmed its endorsement Project’s objectives. However, additional urgent and targeted actions are needed to sustain the achievements in both public finance management and civil service reforms and help Government tackle softer aspects of reforms. The proposed change will increase the Project commitment/engagement to support PFM and civil service management reform. 4. Description The Additional Financing will cover the following components and sub-components:   Component 1. Rationalizing PFM institutional frameworks and processes. - Subcomponent 1.1: Clarifying the legal and institutional framework of public finances - Subcomponent 1.2: Strengthening the budgetary process - Subcomponent 1.3: Supporting gradual computerization of public finances  Component 2. Supporting civil service reforms. - Subcomponent 2.1: Physical census of the civil servants - Subcomponent 2.2: Preparation of the comprehensive reform strategy for civil service management  Component 3. Demand-driven Facility  Component 4. Project Management and External Audit 5. Financing BORROWER/RECIPIENT 0.0 International Development Association (IDA) 3.5 TOTAL 3.5 2 6. Implementation Institutional implementation arrangements of the original Project will be maintained under the Additional Financing. The existing implementation arrangements include a Project Steering Committee and a Project Coordination Unit. The implementation period is expected to run through the proposed two-year and a half, starting in January 2014. The closing date will be extended from December 31st, 2013 to June 30th, 2016.. 7. Sustainability. The Project has supported key public sector reforms and will continue to support the capacity building of strategic stakeholders in Comoros’s public administration (Direction nationale de la comptabilité publiques et du Trésor, Agence de régulation des marchés publics, etc.). The project will focus on selected activities and organizations with high and long term effect on the overall public sector management. The successful implementation of the IFMIS (on both technical and change management) should improve public sector performance with an expected significant leverage on all sectors. Sustained effort for improved budget practices will help increase the fiscal space created during the last two years and lead to better resources allocation and financial sustainability while contributing to increase services delivery in the medium and long term. 8. Lessons Learned from Past Operations in the Country/Sector Low Capacity of a small island Country. Comoros’ public budget, although sharing many features similar with other small island nations - such as high wage bills and low capital expenditure - has its own specificities, including low tax revenues, significant (and often fluctuating) decentralization arrangements and political and geographic fragmentation. This further limits the amount of public resources and undermines the capacity to implement a governmental program that fosters private sector’s development and protects the disenfranchised and low income groups. Furthermore, the country is very vulnerable to external shocks given its dependence on limited exports, large imports and other variables beyond government’s control such as remittances and donor assistance. Comprehensiveness of the budget is the great issue and slows down overall PFM reforms . Budget comprehensiveness has yet to be achieved. Basics accounting and financial management still need to be updated and strengthened to address the poor quality of financial information that do not allow relevant performance analysis. 3 9. Safeguard Policies (including public consultation) Safeguard and Exception to Policies Safeguard policies triggered: [ ]Yes [ X ] No Environmental Assessment (OP/BP 4.01) [ ]Yes [X] N0 Natural Habitats (OP/BP 4.04) [ ]Yes [X ] No Forests (OP/BP 4.36) [ ]Yes [X ] No Pest Management (OP 4.09) [ ]Yes [X ] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [X ] No Indigenous Peoples (OP/BP 4.10) [ ]Yes [X ] No Involuntary Resettlement (OP/BP 4.12) [ ]Yes [X ] No Safety of Dams (OP/BP 4.37) [ ]Yes [X ] No Projects on International Waterways (OP/BP 7.50) [ ]Yes [X ] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [X ] No The proposed Additional Financing includes small rehabilitation works of existing buildings, which do not trigger the Bank’s Safeguard Policies. 10. List of Factual Technical Documents The World Bank (2013), PFTAC, Planning Public Financial Management Reforms in Pacific Island Countries, Guidance Note. Cabinet Limpiko (2013), Evaluation PEFA répétée 2013, Analyse du système de gestion des finances publiques. 11. Contact point Contact: Anne-Lucie Lefèbvre Title: Sr Public Sector Specialist. Tel +261 20 22 560 39 Tel: 5339+6035 Fax: +261 20 22 333 38 Email: alefebvre@worldbank.org Location: Antananarivo, Madagascar (IBRD) Borrower/Client/Recipient Name: Union of Comoros Contact: SEM. Mohamed Ali Soilihi Title: Vice-President, in Charge of the Ministry of Finance, Economy and Budget Tel: Email: zainabaomar@yahoo.fr 4 Name: Cellule Chargée des Reformes Economiques et Financières (CREF)/Technical Unit in Charge of Financial and Economic Affairs Contact: Mr. Oubeidi Mze Chei Title: Special Advisor to the PResident Tel: +2697633004 Email: aboubeidi@yahoo.fr Implementing Agencies Name: Economic and Governance Project (ABGE) Contact: Mrs. Moinafatima Charani Title: Coordinator, ABGE Tel: +2637739900 Email: moinacharani@yahoo.fr 12. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Email: pic@worldbank.org Web: http://www.worldbank.org/infoshop 5