Document of The World Bank Report No: ICR00004189 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A CREDIT AND GRANT (IDA-54620, IDA-H9540, IDA-57480 ) IN THE AMOUNT OF US$ 113 MILLION TO THE REPUBLIC OF MALI FOR THE FIRST AND SECOND RECOVERY AND GOVERNANCE REFORM SUPPORT OPERATIONS (RGRSO 1 and 2) November 27, 2017 Macroeconomics and Fiscal Management Global Practice AFCW3 Country Management Unit Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective September 11, 2017) Currency Unit = Communauté financière d'Afrique Franc (CFAF) CFAF 1.00 = US$ 0.0018 US$ 1.00 = CFAF 547.34 GOVERNMENT FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ARMP Autorité de Régulation des Marchés Publics CFAF CFA Franc CPF Country Partnership Framework CREDD Cadre Stratégique pour la Relance Economique et le Développement Durable DPO Development Policy Operation EDM Electricité du Mali EITI Extractive Industry Transparency Initiative GDP Gross Domestic Product GoM Government of Mali IDA International Development Association IMF International Monetary Fund MEF Ministry of Economy and Finance ODA Official Development Assistance PDO Program Development Objectives PEFA Public Expenditure and Financial Accountability PFM Public Financial Management SCD Systematic Country Diagnostic SDR Special Drawing Rights TA Technical Assistance UN United Nations WAEMU West African Economic and Monetary Union Senior Global Practice Director: Carlos Felipe Jamarillo Director: Paloma Anos Casero Practice Manager: Lars Christian Moller Project Team Leader: Arsene Richmond Kaho ICR Team Leader: Olivier Beguy, Arsene Richmond Kaho ICR Primary Author: Richard J. Carroll ii REPUBLIC OF MALI FIRST AND SECOND RECOVERY AND GOVERNANCE REFORM SUPPORT CREDITS (RGRSO 1 AND 2) CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Program Performance in ISRs H. Restructuring 1. Program Context, Development Objectives and Design ................................................ 1 2. Key Factors Affecting Implementation and Outcomes .................................................. 9 3. Assessment of Outcomes .............................................................................................. 20 4. Assessment of Risk to Development Outcome ............................................................. 24 5. Assessment of Bank and Borrower Performance ......................................................... 25 6. Lessons Learned............................................................................................................ 27 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners............... 28 Annex 1 Bank Lending and Implementation Support/Supervision Processes.................. 29 Annex 2. Beneficiary Survey Results ............................................................................... 31 Annex 3. Stakeholder Workshop Report and Results ....................................................... 32 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR ......................... 33 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders ........................... 34 Annex 6. List of Supporting Documents .......................................................................... 35 iii A. Basic Information Program 1 Mali - First Recovery and Governance Country Mali Program Name Reform Support Credit (RGRSO-1) IDA-54620, IDA- Program ID P145275 L/C/TF Number(s) H9540 ICR Date 11/24/2017 ICR Type Core ICR Lending Instrument DPL Borrower REPUBLIC OF MALI Original Total XDR 40.70M XDR 40.70M Disbursed Amount Commitment US$ 56.88M Implementing Agencies: Ministry of Economy and Finance Cofinanciers and Other External Partners Program 2 ML- Second Recovery & Governance Reform Country Mali Program Name Support Credit (RGRSO-2) Program ID P151409 L/C/TF Number(s) IDA-57480 ICR Date 11/24/2017 ICR Type Core ICR Lending Instrument DPL Borrower REPUBLIC OF MALI Original Total USD 50.00M Disbursed Amount USD 48.73M Commitment Implementing Agencies: Ministry of Economy and Finance (MEF) Cofinanciers and Other External Partners: n.a. B. Key Dates Mali - First Recovery and Governance Reform Support Operation (RGRSO-1) - P145275 Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/18/2013 Effectiveness: 02/18/2015 Appraisal: 04/08/2014 Restructuring(s): Approval: 11/18/2014 Mid-term Review: Closing: 06/30/2015 06/30/2015 iv Mali- Second Recovery & Governance Reform Support Credit (RGRSO-2) - P151409 Revised / Actual Process Date Process Original Date Date(s) Concept Review: 06/23/2015 Effectiveness: 12/31/2015 Appraisal: 09/30/2015 Restructuring(s): Approval: 12/10/2015 Mid-term Review: Closing: 12/31/2016 12/31/2016 C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating Outcomes Moderately Satisfactory Risk to Development Outcome Significant Bank Performance Moderately Satisfactory Borrower Performance Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating Bank Ratings Borrower Ratings Quality at Entry Moderately Satisfactory Government: Moderately Satisfactory Moderately Satisfactory Implementing Moderately Satisfactory Quality of Supervision: Agency/Agencies: Overall Bank Moderately Satisfactory Overall Borrower Moderately Satisfactory Performance Performance C.3 Quality at Entry and Implementation Performance Indicators Mali - First Recovery and Governance Reform Support Operation (RGRSO-1) - P145275 Implementation QAG Assessments Indicators Rating: Performance (if any) Potential Problem Quality at Entry Program at any time No None (QEA) (Yes/No): Problem Program at any Quality of No None time (Yes/No): Supervision (QSA) DO rating before Closing/Inactive status v ML - Second Recovery & Governance Reform Support Operation (RGRSO-2) - P151409 Implementation QAG Assessments Indicators Rating: Performance (if any) Potential Problem Quality at Entry Program at any time No None (QEA) (Yes/No): Problem Program at any Quality of No None time (Yes/No): Supervision (QSA) DO rating before None Closing/Inactive status D. Sector and Theme Codes Mali - First Recovery and Governance Reform Support Operation (RGRSO-1) - P145275 Original Actual Major Sector Public Administration Other Public Administration 29 29 Central Government (Central Agencies) 57 57 Energy and Extractives Mining 14 14 Major Theme/Theme/Sub Theme Public Sector Management Public Administration 79 79 Transparency, Accountability and Good 79 79 Governance Public Finance Management 22 22 Public Expenditure Management 22 22 ML- Second Recovery & Governance Reform Support Operation (RGRSO-2) - P151409 Original Actual Major Sector Public Administration Central Government (Central Agencies) 78 78 Energy and Extractives Other Energy and Extractives 11 11 Mining 11 11 vi Major Theme/Theme/Sub Theme Public Sector Management Public Administration 79 79 Municipal Institution Building 11 11 Transparency, Accountability and Good 79 79 Governance Public Finance Management 22 22 Public Expenditure Management 22 22 E. Bank Staff Mali - First Recovery and Governance Reform Support Operation (RGRSO-1) - P145275 Positions At ICR At Approval Vice President: Makhtar Diop Makhtar Diop Country Director: Soukeyna Kane Paul Noumba Um Practice Lars Christian Moller Miria Pigato Manager/Manager: Task Team Leader: Arsene Richmond Kaho Sebastien Dessus Olivier Beguy, Arsene Richmond ICR Team Leader: Kaho ICR Primary Author: Richard Carroll ML- Second Recovery & Governance Reform Support Credit (RGRSO-2) - P151409 Positions At ICR At Approval Vice President: Makhtar Diop Makhtar Diop Country Director: Soukeyna Kane Paul Noumba Um Practice Lars Christian Moller Seynabou Sakho Manager/Manager: Sebastien Dessus, Co-TTL Arsene Task Team Leader: Arsene Richmond Kaho Kaho Olivier Beguy, Arsene Richmond ICR Team Leader: Kaho ICR Primary Author: Richard Carroll vii F. Results Framework Analysis Program Development Objectives (from Program Document) The first Program Development Objective (PDO 1) is to deepen executive accountability and transparency; the second Program Development Objective (PDO 2) is to improve public finance performance. Revised Program Development Objectives (as approved by original approving authority) Not revised. Indicator(s) Mali - First Recovery and Governance Reform Support Operation (RGRSO-1) - P145275 Original Target Formally Actual Value Baseline Values (from Revised Achieved at Indicator Value approval Target Completion or documents) Values Target Years ML- Second Recovery & Governance Reform Support Operation (RGRSO-2) - P151409 Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years I. Deepening Executive Accountability and Transparency Share of directors of projects, programs, public agencies and state-owned Indicator 1: enterprises recruited through a competitive process by external posting of vacancies. Value (quantitative or n.a. 100% 100% Qualitative) Date achieved 2013 2016 12/31/2016 Comments Target achieved. (Ministry of Civil Service). All directors of projects, (incl. % programs, public agencies and state-owned enterprises have been recruited achievement) through a competitive process by external posting of vacancies. PEFA 18-IV: Existence of payroll audits to identify control weaknesses Indicator 2: and/or ghost workers. Value (quantitative or C B C Qualitative) Date achieved 2010 2016 October 2016 Target not achieved. (PEFA Secretariat). A census of civil servants was conducted in 2014 for all central government entities and local Comments government. The power to modify files and payrolls is restricted, and any (incl. % change results in an auditable trace. Control measures are in place but not achievement) sufficient to ensure the integrity of the data. Thus, the census has not significantly reduced the fiduciary risks related to the effectiveness of viii payroll controls. Number of local governments’ accounts to be judged every year by the Indicator 3: Audit Section of the Supreme Court. Value (quantitative or 0 >250 402 Qualitative) Date achieved 2013 2016 12/31/2016 Comments Target achieved and exceeded. Value exceeds last supervision value of (incl. % 370. (Supreme Court Audit) achievement) Proportion of demands of information addressed to MEF regarding public Indicator 4: finance in accordance with Transparency code provisions which were satisfactorily addressed. Value (quantitative or n.a. >75% Not available Qualitative) Date achieved 2013 2016 12/31/2016 Comments No available information to determine target achievement. (Ministry of (incl. % Economy and Finance). The Ministry of Finance did not keep records of achievement) this indicator. Proportion of assets declarations submitted in time to the Supreme Court. Indicator 5: Baseline 2013: n.a.; Target 2016: > 75%. Value (quantitative or n.a. >75% 100% Qualitative) Date achieved 2013 2016 12/31/2016 Comments Target achieved in target year. (Supreme Court). All assets declarations (incl. % have been submitted in time during the program implementation. However, achievement) the law prohibiting illicit enrichment has been suspended. Number of audit reports on non-lethal military equipment and airplane Indicator 6: acquisitions published. Value (quantitative or 0 2 2 Qualitative) Date achieved 2013 2016 12/31/2016 Target achieved. (Auditor General Office and Audit Section of the Comments Supreme Court). With the support of the program, Auditor General Office (incl. % and Audit Section of the Supreme Court have prepared and published the achievement) audits on non-lethal military equipment and airplane acquisitions. Number of EITI reports validated, published in time and according to most Indicator 7: recent EITI standard. Value (quantitative or 1 1 1 Qualitative) Date achieved 2013 2016 12/31/2016 Comments Target achieved. (EITI Secretariat). Mali 2015 annual progress report has (incl. % been published in June 2016. achievement) ix Proportion of mining conventions audited for compliance with respect to Indicator 8: the mining code. Value (quantitative or 0% >75% 100% Qualitative) Date achieved 2013 2016 12/31/2016 Comments Target achieved and exceeded. (Ministry of Mines). All mining (incl. % conventions have been audited for compliance with respect to the mining achievement) code. Indicator 9: Budget Law annexes on electricity subsidies published. Value (quantitative or 0 1 1 Qualitative) Date achieved 2015 2016 12/31/2016 Comments (incl. % Target achieved. (MEF). achievement) II. Improving Public Finance Performance Funds released to local governments in accordance with signed Indicator 10: performance contracts (in % of total public expenditure). Value (quantitative or 0% >2.5% 0.2% Qualitative) Date achieved 2014 2016 12/31/2016 Target not achieved. (MEF). In addition to first two regions targeted, in 2016, the Government signed performance contracts with three other Comments regions, resulting in a total of five contracts in force. The budgetary (incl. % resources allocated in 2016 to each contract amounted to CFAF 2 billion. achievement) Compared with RGRSO1, the outcome indicator related to performance contracts was modified to reflect the direct contribution of such contracts to the transfers from the central government to local governments. Indicator 11: Average public procurement delays (working days). Value (quantitative or 94 <80 70 Qualitative) Date achieved 2013 2016 March 31, 2017 Comments st Target achieved. (MEF). Supervision on March 31 , 2017 indicated a (incl. % delay of 70 working days. achievement) Share of public investment projects in budget law selected by the Indicator 12: Investment Committee. Value Budget Law 2013 Budget Law 2017 (quantitative or 100% n.a. 100% Qualitative) Date achieved 2013 2017 12/31/2016 Comments Target achieved. (MEF). The investment committee is really operational (incl. % and evaluate all investment projects. achievement) x Indicator 13: Deviation in ODA budget execution. Value (quantitative or 16% <10% 3.4% Qualitative) Date achieved 2013 2016 12/31/2016 Comments (incl. % Target achieved and exceeded. (MEF) achievement) G. Ratings of Program Performance in ISRs Mali - First Recovery and Governance Reform Support Operation (RGRSO-1) - P145275 Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 07/13/2015 Moderately Satisfactory Moderately Satisfactory 56.88 H. Restructuring (if any) Not applicable. xi 1. Program Context, Development Objectives and Design 1. This Implementation Completion Results Report (ICRR) assesses the First and Second Recovery and Governance Reform Support Operation (RGRSO 1 and 2), to the Republic of Mali, approved in November 2014 and December 2015, respectively. This programmatic series provided total funding of US$113 million and supported the Government of Mali’s (GoM) efforts to (i) deepen executive accountability and transparency, and to (ii) improve public finance performance. This operation intended to help reposition the Malian economy on a strong and sustainable growth trajectory and address pressing governance issues. 1.1 Context at Appraisal 2. Mali is a relatively poor, landlocked, West African country. It has a population of nearly 18 million and a per capita gross domestic product (GDP) of US$760. The population has been growing rapidly at 3.0 percent and the fertility rate is 6.4 live births per woman. Malian’s have an average life expectancy of 57 years, for both men and women (United Nations, UN 2010-15). 3. Prior to appraisal of the first operation, Mali had suffered significant instability. And while the political situation has improved since 2013, there remains acute security concerns, mainly in the country’s North and center regions. In 2012, armed separatist groups occupied the Northern regions of Mali. In the same year, a military coup in March overthrew the elected Government. Constitutional order was restored with the formation and international recognition of a Transitional Government of National Unity. 4. In January 2013, with the help of international allies, 1 the Malian army restored the authority and integrity of the State in the northern regions of Mali . In August 2013, a new President was elected through fair and transparent elections, which were followed by legislative elections in December 2013. At the time of appraisal of the first operation, the North of Mali still faced recurrent violence with armed groups controlling some cities. Despite the security situation in the north the establishment of a UN peacekeeping force since July 2013 has improved stability, principally in Bamako, the capital city. Peace talks and negotiations on the decentralization framework for Northern regions were launched in July 2014 between the Government and separatist groups. These inter-Malian talks, conducted under the auspices of the Republic of Algeria, led to the signature of the peace and reconciliation accord of June 20, 2015 and the resumption of development partners’ support to the country. 1 Chadian army soldiers, French forces, the European Union Training Mission, as well as soldiers from several countries making up the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA). 1 5. The political crisis of 2012 had a significant social impact. 350,000 persons were internally displaced, occurring in successive waves to flee conflicts, reprisals and the imposition of harsh fundamentalist social rules in Northern Mali; the suspension of aid leading to an immediate freeze of most public investment projects; the destruction of physical assets and trade links in the North; and the complete disappearance of foreign tourist inflows. The economic slowdown that followed the security and political crises in 2012-13 led to an estimated 1.5 percentage point rise in the extreme poverty rate to 50.9 percent in 2013. 6. The re-establishment of a functioning government required the strengthening of executive accountability through better controls in the use of public financial resources and greater transparency. Governance indicators of political stability, rule of law and control of corruption significantly deteriorated in years leading up to appraisal. Between 2007 and 2012, according to the Worldwide Governance Indicators, the percentile rank of Control of Corruption dropped from 40 in 2008 to 25 in 2012; Rule of Law: from 46 to 30; Voice and Accountability: from 54 to 31. While corruption, rule of law and regulatory quality assessments continued to worsen in 2013, voice and accountability improved but remained far below pre-crisis levels. Trends in political stability and rule of law were likely contributing factors to the developments in the North, where the authority and legitimacy of the State have traditionally been weak. Recognizing its critical importance for peace and stability, the new President sworn in on September 2013 made the fight against corruption one of the top priorities – the other two being economic recovery, and return to normalcy and security in the Northern regions. 7. The Government faced twin challenges of moving the economy to a faster, sustainable growth trajectory while addressing serious governance issues. To help with these challenges, development partners pledged US$4.2 billion, or 40 percent of GDP at the May 2013 international conference “Together for a New Mali.� One third of total pledges had already been disbursed by end-2013. This surge in funding also increased the pressure on a public financial management system which already had weak capacity – even more so at the local level where capacity is weaker. 8. The RGRSO series was designed to help address these challenges and supported the objectives of the World Bank (WB) Group’s Interim Strategy Note (ISN) for FY14-15 (discussed by the Board on June 18, 2014). The operation included actions to improve transparency, strengthen fiduciary and establishment controls, reduce opportunities for corruption and inefficient subsidies, as well as to improve public investment management, accelerate public procurement and build local government budget management capacity. 9. The macroeconomic framework was adequate at the time of appraisal of both operations. GDP growth increased from 2.3 percent in 2013 to 7.0 percent in 2014, while inflation remained at less than 1 percent. The general government balance including grants remained compliant with the West African Economic and Monetary Union (WAEMU) convergence criterion at 2.4 percent and 2.9 percent in 2013 and 2014. The current account deficit increased from 2.9 percent in 2013 to 4.8 percent in 2014. At 2 the macroeconomic level, challenges still lie in the Authorities’ ability to manage unpredictable aid inflows from a fiscal and monetary perspective; and to adjust to the post aid boom to ensure fiscal sustainability. Given structural difficulties to rapidly enlarge the tax base, efforts were needed to focus on improving the efficiency of current public expenditure, including subsidies and tax exemptions. 10. During the implementation of the series, economic performance remained strong, but the fiscal deficit and current account balance widened. Good agriculture and services sector performances led to an estimated growth rate of 5.8 percent in 2016 against 6.0 per-cent in 2015 despite volatile security conditions. Regardless of the peace agreement signed in 2015, the North remains difficult to control and insecurity has also spread to the center and south regions. In this unfavorable context, economic activities remained defiantly strong sustaining the economic recovery observed in recent years. Inflation has dropped to -1.8 percent, despite strong growth, mainly due to falling food prices following the good agriculture production and low international oil prices. The latter and increased imports for public investment contributed to widen the current account deficit from 5.3 percent of GDP in 2015 to 7.3 percent in 2016. The overall fiscal balance (including grants) widened from -1.8 percent of GDP in 2015 to -3.9 percent in 2016 due to increased public spending, despite significant improvements in domestic revenues. The debt distress remains moderate however the public debt increased by 3 percent of GDP from 2014 to 2016. 11. The macroeconomic framework has been supported by a satisfactory implementation of the IMF Program. According to the most recent IMF review (June 2017), all continuous and end-December 2016 performance criteria (PCs) and indicative targets (ITs) were met. Revenue growth was slightly above target, supported mainly by measures to strengthen tax administration, broaden the base and increase compliance. The adjusted ceiling on net bank and market financing of the government was met with significant margin. The cumulative ceiling on new external debt on non-concessional terms was also met; and no external arrears were accumulated. However, the end- December structural benchmarks were missed but the authorities have taken actions in early 2017 to implement three of the planned reforms. Senior government officials have started transmitting their financial disclosures to the Supreme Court, pursuant to the law against unlawful enrichment. The bill prohibiting granting new discretionary exemptions was approved by the Parliament. The members of the anti- corruption commission have been nominated, and the commission is expected to become operational in June 2017. 3 Table 1: Key Macroeconomic Indicators, 2013–17 2013 2014 2015 2016 2017 Real economy Annual change in percentage, unless otherwise indicated GDP (nominal, CFAF Billions) 6,544 7,114 7,748 8,322 8,868 Real GDP 2.3 7.0 6.0 5.8 5.3 Contributions Consumption 2.9 6.1 5.6 3.7 4.2 Investment 1.1 2.8 1.6 4.6 2.3 Net exports -1.7 -1.9 -1.2 -3.0 -1.3 Imports 5.9 5.5 5.7 7.0 5.7 Exports 2.5 1.1 4.7 -1.9 4.6 GDP deflator 0.7 1.6 2.8 1.9 0.9 Consumer price inflation (average) -0.6 0.9 1.4 -1.8 1.6 Fiscal accounts Expenditures 19.7 20.0 20.9 22.2 24.0 Revenues 14.5 14.9 16.4 16.7 18.3 Grants 2.8 2.2 2.7 1.6 2.3 General Government Balance -2.4 -2.9 -1.8 -3.9 -3.5 Public Debt 26.4 27.8 30.2 30.7 31.8 Selected Monetary Accounts Credit to the government -2.7 0.8 1.6 8.7 6.3 Credit to the economy 11.7 18.7 19.9 18.8 12.5 Broad money (M2) 7.4 7.1 13.2 6.4 7.8 Balance of Payments Current Account Balance -2.9 -4.8 -5.3 -7.3 -8.4 Imports 39.9 38.0 39.6 39.5 41.2 Exports 24.9 22.5 24.0 22.9 23.1 Foreign Direct Investment 2.3 1.0 0.9 0.9 0.9 External Debt 21.5 21.0 22.6 24.9 25.3 Terms of Trade -16.6 5.5 18.6 16.7 -6.4 Other memo items GDP nominal in US$ (Billions) 13.2 14.4 13.1 14.1 15.1 Sources: Ministry of Finance, IMF and Bank staff estimates (2013-16) and projections (2017), June 2017. 12. There was substantial analytic work to support the program. The analytical basis for the individual prior actions and the choice of the sectors of intervention were sound and well-documented (Table 5). Furthermore, the SCD identified key obstacles to poverty education in the long run,2 while according to analytical works, in the short run, poverty reduction efforts needed to focus on (i) restoring security in the north; (ii) increasing the incomes of the rural poor; and (iii) redistributive efforts to reduce extreme vulnerability. However, if governance problems are not addressed insecurity is likely to persist, service provision would stay inadequate and levels of human capital would be too low to realize “between-sector� economic transformation and a demographic transition. 2 World Bank (2015), “Republic of Mali: Priorities for Ending Poverty and Boosting Shared Prosperity�, Report 94191-ML, Washington D.C. 4 The analytical works thus underlined the need to strengthen public financial management for higher and better public expenditure efficiency, and to foster transparency for greater executive accountability and allocation of public resources to pro-poor interventions, at the central and local levels. Thus, the team considers that the individual prior actions were well appropriate to contribute tackle the issues faced by the country during the appraisal of the first operation. 1.2 Original Program Development Objectives (PDO) and Key Indicators 13. The first Program Development Objective (PDO 1) was to deepen executive accountability and transparency; the second Program Development Objective (PDO 2) was to improve public finance performance. Table 2 provides the original and revised PDO indicators. 1.3 Revised PDO and Key Indicators, and Reasons/Justification 14. The PDO was not revised, but there were a number of modifications to the key results indicators as described in Table 2. Several indicators were changed during the preparation of the second operation: (i) two indicators were reformulated and; (ii) one was replaced. Most of the changes were made to better specify the indicator and/or to adjust the targets. None of the targeted improvements in indicators were adjusted to make them easier to achieve. Table 2: PDO Indicators and Revisions RGRSO 1 RGRSO 2 Change Deepening Executive Accountability and Transparency 1. Proportion of directors of projects, 1. Share of directors of projects, Minor change in programs, public agencies and state-owned programs, public agencies and state- wording enterprises recruited through a competitive owned enterprises recruited through a process by external posting of vacancies. competitive process by external Baseline 2013:0%; Target 2015: 100%. posting of vacancies. Baseline 2013: Source: Ministry of Civil Service. n.a.; Target 2016: 100%. 2. PEFA PI-18: effectiveness of payroll 2. PEFA 18-IV: Existence of payroll Minor changes controls: Baseline 2010: C+; Target 2014: audits to identify control weaknesses in wording and B+. Source: PEFA secretariat. and/or ghost workers: Baseline 2010: target to track C; Target 2016: B. new baseline 3. Number of regional governments’ 3. Number of local governments’ Change from accounts to be judged every year by the accounts to be judged every year by regional to local Audit Section of the Supreme Court: the Audit Section of the Supreme governments and Baseline (2013): 0; Targets: 2014: 4; 2015: Court: Baseline (2013): 0; Target increase in target 6. Source: Supreme Court. 2016: > 250. level. 4. Proportion of demands of information 4. Proportion of demands of Minor change in addressed to MEF regarding public finance information addressed to MEF wording to be which were satisfactorily addressed. regarding public finance in accordance more specific to Baseline 2013: 0%; Target 2015: 75%. with Transparency code provisions Transparency Sources: Budget Monitoring Group; and which were satisfactorily addressed. code Ministry of Economy and Finance. Baseline 2013: n.a.; Target 2016: > 75%. 5. Proportion of assets declarations 5. Proportion of assets declarations No change submitted in time to the Supreme Court. submitted in time to the Supreme Baseline 2013: 0%; Target 2015: 75%. Court. Baseline 2013: n.a.; Target 5 Source: Supreme Court 2016: > 75%. 6. New: Number of audit reports on New indicator non-lethal military equipment and added for airplane acquisitions published. RGRSO 2 Baseline 2013: 0; Target 2014: 2. 6. Number of EITI reports validated, 7. Number of EITI reports validated, Target year published in time and according to most published in time and according to changed, recent EITI standards: Baseline (2013):1; most recent EITI standards: Baseline otherwise no Target 2014:1. Source: EITI secretariat. 2013: 1; Target 2016: 1. change 7. Proportion of mining conventions 8. Proportion of mining conventions No change, audited for compliance with respect to the audited for compliance with respect to target for 2016 mining code. Baseline (2013):0%; Target the mining code. Baseline 2013: 0%; set at >75% 2015:25%. Source: Ministry of Mines. Target 2016: >75%. 8. Government subsidies to EDM (FCFA Not continued in Billions). Baseline (2013): 57.5; Targets: RGRSO 2 2014 <50.0; 2015 <20.0; Source: Ministry of Economy and Finance. 9. New: Budget Law annexes on Indicator added electricity subsidies published. for RGRSO 2 Baseline 2015:0; Target 2016: 1. 9. Proportion of public funds released to 10. Funds released to local Indicator local governments (in % of public governments in accordance with changed to link expenditure); Baseline (2013):10%; Target signed performance contracts (in % of to signed 2015:15%. Source: Ministry of Economy total public expenditure); Baseline performance and Finance. (2014): 0%; Target 2016: >2.5%. contracts along with lower target for 2016. 10. Average public procurement delays 11. Average public procurement No change, (working days). Baseline (2013): 94. delays (working days). Baseline 2013: except target Targets: 2014: 90, 2015: 80. Source: 94; Target 2016: <80. added for 2016. Ministry of Economy and Finance. 11. Share of public investment projects in 12. Share of public investment No change budget law selected by the Investment projects in budget law selected by the Committee: Baseline: Budget Law 2013: Investment Committee: Baseline: 0%; Target: Budget Law 2016: 100%. Budget Law 2013: n.a.; Target: Source: Ministry of Economy and Finance. Budget Law 2017: 100%. 12. Absolute value of relative deviation in 13. Deviation in ODA budget Minor change in ODA budget execution. Baseline execution. Baseline 2013: 16%; wording and 2013:12%; Targets: 2014: 9%; 2015: 7%. Target 2016: <10%. baseline and Source: Ministry of Economy and Finance. target revision. 1.4 Original Policy Areas Supported by the Program: 15. The RGRSO series had two policy Pillars: Deepening Executive Accountability and Transparency, and Improving Public Finance Performance which are described in detail below. These pillars aimed at mitigating a harmful lack of governance in the context of a fragile state. Pillar I: Deepening Executive Accountability and Transparency 6 16. The re-foundation of the State of Mali. In the face of declining governance, the Government committed to strengthen both transparency and controls in the use of public resources (human, financial, mineral), with a view to restore State legitimacy through greater executive accountability. 17. The RGRSO series supported the Government efforts to promote open and transparent recruitment processes for civil servants through the revision of the legislative framework and conduct of a census of public sector employees. The series (RGRSO1) supported the adoption and enactment of the Law on the fundamental principles for creating, organizing, managing and controlling public services, which required that all directors of projects, programs, public agencies and state-owned enterprises be recruited through a competitive process by external posting of vacancies. RGRSO 2 further supported conducting a census of public sector employees. A transparent and competitive selection process has been reinforced through the adoption of the Decree No. 2014-0764 / P-RM in October 2014, which frames inter alia the recruitment process.. 18. The RGRSO series supported the Government’s measures to strengthen the capacity of the Supreme Court to conduct external audits, of local governments’ accounts in particular. External audits remained weak and arrangements for scrutiny of public finance (at central and local levels) and follow-up by the executive are not operational. The Government adopted a draft organic law whose adoption by Cabinet was supported by RGRSO1, which brings together in a single text all the provisions applicable to the Supreme Court regarding its organization, operation, and procedures. In particular, the provisions enhance the capacity, competency and autonomy of the Audit Section as the supreme audit institution. 19. The adoption of a Transparency Code (2013) by the National Assembly aimed to improve budget transparency and strengthen executive accountability. Thus, the series supported under RGRSO1 the adoption of the implementation decree of the Transparency Code. RGRSO 2 supported the adoption by the Government of the draft implementation decree of the Law against Illicit Enrichment and template for assets declaration. 20. The RGRSO supported the Government decision to publish all ongoing mining exploitation contracts, within the Extractive Industry Transparency Initiative (EITI) framework, for which Mali was declared compliant in 2011. The purpose was to promote the development of the extractive industry (accounting for 68.7 of export revenues pre-appraisal), while reducing opportunities for corruption. Mali’s extractive sector is dominated by gold, but potential for development of other mineral resources including bauxite, iron ore, diamond, limestone, manganese, nickel, petroleum, phosphates, tin, uranium and petroleum, is promising and exploration has started for some. This has put pressure on the authorities to transparently monitor and report developments in these sectors. 21. The series supported the Government to develop a recovery plan to eliminate the need for subsidies by 2018 for the state-owned electricity utility (Energie du 7 Mali, EDM). Electricity subsidies to amounted to FCFA 57.5 billion (1.0 percent of GDP) in 2013. The government also wanted EDM to accommodate rapidly growing demand. Subsidies compensated for large losses (a negative net result of FCFA 38.6 billion in 2013) in the absence of sufficient tariff adjustment since 2003. Between 2003 and 2013, there were 2 tariff decreases and 3 tariff increases, cumulatively leaving nominal tariffs in 2013 about 3 percent below their 2003 level. Meanwhile, consumer prices increased by 46 percent and oil prices tripled. Operational subsidies received by EDM are not targeted to the poor and complicate budget management in the face of unpredictable oil prices and climate shocks. Only 5 percent of the poor have access to electricity, and it can be conservatively estimated that at least 90 percent of electricity subsidies go to non-poor households. Moreover, EDM’s precarious operational and financial situation prevents proper maintenance and discourages EDM to invest in additional capacity. Thus, it proved difficult for the Government to substantially decrease the amount of subsidies to EDM. Pillar II: Improving Public Finance Performance 22. The RGRSO series supported the Government’s efforts to improve public finance performance through: (i) larger transfers to local governments and accelerated investment budget execution; (ii) improved public investment selection, implementation and evaluation; and (iii) better integration of domestic and foreign financed government budgets. 23. Performance contracts between the Regional Councils of Segou and Sikasso and the Ministry of the Decentralization and State Reform were intended to improve service delivery and ensure national cohesion. These contracts help overcome the weak capacity of local governments to deliver services. The contracts are meant to engage signatories in a mutually-accountable relationship based on a clear division of responsibilities in the design, financing, development, and monitoring and evaluation of multi-year investment projects within the overall legal framework for decentralization. 24. The program also addressed the long delays in procurement processes. These delays slow down economic growth, create suspicion and force contractors to add risk premia in anticipation of bribes and unpredictable payment dates. 25. To improve the use of the high levels of official development assistance to Mali (pledged in 2013) the program supported the preparation of a medium term external resource framework. A total amount of US$4.2 billion (40 percent of GDP) was pledged for 2013-14, combining new financing with renewed commitments and merging aid and military assistance. Out of the pledged US$4.2 billion, a total of US$3.1 billion was disbursed in 2013-14. The Government intended for all Development Partners (DPs) to adopt national public accounting norms when pledging, committing and disbursing aid, in order to facilitate the integration of domestic and foreign financed budgets. 8 1.5 Revised Policy Areas 26. The original electricity tariff reform was scaled back. This risk was identified in RGRSO 1, and the Malian authorities decided that more progress in governance of the electricity utility was needed to create the political opportunity to raise tariffs. To mitigate this reform scale back, the government invested in capacity to reduce average production costs, and increase transparency of EDM. The Government also outsourced the procurement and supply of fuel in 2015, in light of strong perceptions of poor governance in this area.3 To promote transparency in public resource allocation, and in order to build public consensus on the need for a progressive alignment of tariffs to costs, the authorities included an annex on the policy rationale for public subsidies to the electricity utility in the project Budget Law 2016 submitted to the National Assembly. This annex became the new prior action for RGRSO 2 and reports the evolution of past and projected subsidies, their estimated distribution within the population, and measures of the utility’s economic efficiency. The rationale is that this information would raise public awareness on the consequences of subsidies on equity and the opportunity costs in the use of public resources. 1.6 Other significant changes Not applicable. 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance 27. The RGRSO series provided total financing of US$ 113 million for the two operations and achieved significant progress toward the PDO, but with delays. Table 3 provides key milestones for the programmatic series. All prior actions (Table 4) were completed as required before the RGRSO 1 and 2’s Board approval. There was a long lag time between appraisal and board for RGRSO 1, because of the delay of the first review of the ECF arrangement, initially scheduled in June 2014. The review was postponed following the discovery of serious lapses in PFM practices incompatible with the authorities’ commitment to sound PFM (though not specifically part of the RGRSO program.)4 3 In 2014, EDM procurement of fuel amounted to FCFA 70 billion, or 44 percent of EDM total operational costs and 1.2 percent of GDP. Conversion to heavy fuel also intended to reduce risks of diversion of fuel to non-intended uses. 4 The government bought a presidential plane for CFAF 19 billion ($40 million or 0.3 percent of GDP) off- budget. In addition, it guaranteed the commercial bank debt of a private supplier up to CFAF 100 billion ($200 million or 1.7 percent of GDP) to buy supplies other than weapons and ammunition for the army with single source contracts. This led off-budget spending by the Ministry of Defense in an amount of 0.8 percent of GDP in 2014. It also created the opportunity for overbilling by the Malian supplier. Donors 9 Table 3: Basic Data for the RGRSO Series Operation Approval Effectiveness Disbursed Closing Date Date Amount (million) Date RGRSO 1-IDA 54620 11/18/2014 02/18/2015 US$56.88 06/30/2015 (credit), IDA H9540 (grant) RGRSO 2-IDA 57480 12/10/2015 12/31/2015 US$48.73 12/31/2016 (credit) Table 4: Prior Actions of the Recovery and Governance Reform Support Operation RGRSO 1 Prior Action RGRSO 2 Prior Actions 1. The Recipient, through the Council of 1. The Recipient, through the Ministry of Civil Ministers, adopts the draft Law on the Service, has conducted a census of public fundamental principles for creating, sector employees. organizing, managing and controlling public services. 2. The Recipient, through the Council of 2. The Audit Section of the Supreme Court has Ministers, adopts the draft Law on the completed the audit of at least one hundred organization, functioning and procedure of local governments’ accounts from at least six the Supreme Court strengthening the regions, including the Bamako District, and autonomy and capacity of the Audit Section issued the appropriate opinions. of the Supreme Court. 3. The Recipient, through the Council of 3. The Recipient, through the Council of Ministers, adopts the draft implementation Ministers, has adopted the draft Decree on the decree of the Transparency Code. implementation of the law on the prevention and sanctioning of illicit enrichment which includes an annex with a template for asset declaration. 4.The Recipient enacts the Budget Law for 4. The Recipient, through the Prime Minister’s 2014 including in the budget, inter alia, a office, has published the two transaction audits budget line for financing extractive industry conducted by the Auditor General Office and transparency initiative activities. by the Audit Section of the Supreme Court on the acquisition, in 2014, of equipment, including an airplane 5.The Recipient, through the Council of 5. The Recipient, through the Ministry of Ministers, adopts the draft implementation Mines, has published the current mining decree establishing performance contracts exploitation contracts. between the State and Regional Governments. 6.The Recipient implements measures to 6. The Council of Ministers, through the reduce delays in public procurement. General Secretariat of the Government, has submitted to the National Assembly the draft Annex on the policy rationale for public (including the World Bank and the EU) delayed their budget support totaling $200 million (1.7 percent of GDP) in reaction to this lapse in PFM. 10 subsidies to the electricity utility, as part of the draft 2016 Budget Law. 7. The Recipient enacts the Budget Law 7. The Recipient, through the Ministry of the 2014 including in the budget, inter alia, a Decentralization and State Reform, has signed budget line for financing public investment two performance contracts with the Regional projects feasibility studies. Councils of Segou and Sikasso. 8. The Recipient has adopted, (i) through the Council of Ministers, the decree on the procurement code that, inter alia: (a) integrates most recent WAEMU directives; (b) reinforces the powers of the independent Procurement Regulatory Authority in terms of dispute settlement; and (c) revises the treatment of simplified contracts; and (ii) through the Minister of Finances, its regulation. 9. The Recipient, through its Secretary of Aid Harmonization, has timely published, within the budget preparation cycle, a medium term external resource framework acceptable to the Association. Details of Program Performance Pillar I: Deepening Executive Accountability and Transparency 28. Audits were conducted in response to the uncovering of severe public financial management irregularities in the procurement of non-lethal military expenditures. With program support, the Government conducted and published two transaction audits on acquisition of equipment in 2014 (prior action 1). The Government committed the two major oversight institutions to conduct audits on these transactions. These audits increased the transparency of non-lethal military expenditures, however, they did not have a significant impact because they have not led to prosecutions or administrative and/or judicial sanctions against those involved in the misuse of public funds. The positive effects of the Transparency Code (see below) are also reduced. 29. The Law on the fundamental principles for public services and the civil service census were important achievements... The new law was necessary for the management of public services and is expected to improve public sector management. The 2014 census updated the 2003 census and aimed to reduce the significant fiduciary risks related to the effectiveness of payroll controls (Public Expenditure and Financial Accountability - PEFA, 2011), complementing the recent integration of payroll and personnel data bases. While the census of 2003 did not uncover large numbers of “ghost workers�, the census conducted from October 2014-March 2015 recorded the absence of more than 13,000 officials from central and local governments and the security sector, leading to their suspension from the payroll following the validation of the report’s conclusions by the Prime Minister. According to the 2016 PEFA, a significant evolution has been observed in Mali regarding (i) competitive procurement methodologies (including recruitment), and (ii) transparency through better public access to 11 comprehensive, reliable and timely information. The websites http://www.dgmp.gov.ml and http://www.armds.gouv.ml are operational. They contain information, documents and statistics on public procurement including recruitments, the laws and regulations, procurement plans, calls for tenders, provisional allocations, annual activity reports, annual audit reports, etc. 30. …but implementation of civil service reforms had shortcomings in a couple of other areas. Despite the accomplishments, the PEFA (18-IV) target was not met (remaining at C level). The PEFA report also states that the control measures that are in place are not sufficient to ensure the integrity of the data. The civil service census has also not been published and has not yet led to a significant reduction in the fiduciary risks related to the effectiveness of payroll controls. Thus, while there was progress in civil service reform, these deficiencies will need to be addressed to achieve the full intended impact of the reforms. 31. The capacity of the Audit Section of the Supreme Court through a range of actions. These included increased staffing, a specific budget allocation to enhance the financial autonomy of the section, creation of regional audit entities, and the enlargement of competencies to cover the evaluation of public policies. RGRSO 2 supported the Supreme Court’s Audit Section in completing audits of at least one hundred local governments’ accounts from at least six regions in 2014 and issuing appropriate opinions. As the authorities intend to accelerate fiscal decentralization, it is therefore critical to strengthen external controls of local governments’ public financial management. Compared with the proposed trigger in RGRSO 1, the prior action was revised to reflect the higher ambition of the Audit Section to cover all the major local governments in the six southern regions (Segou, Sikasso, Kayes, Mopti, Koulikoro and the Bamako District). Accounts in the northern regions were destroyed during the 2012 crisis. 32. The Transparency Code clarifies the institutional responsibilities, format and frequency for the publication of information related to public finance (central and local levels). It also includes responsibilities for audits, public contracts (including for natural resource management) and procurement, public private partnerships, as well as access rights to such information and related obligations for the administration. The Code stipulates legal obligations for officials (all civil servants and elected officials) to declare their assets (including that of their families), and to denounce any fraud in the management of public resources they could be made aware of through their official functions. The main limitation of the assets declarations is that, the law did not require that these declarations are made public. Furthermore, the Government has suspended this law in October 2017, raising concerns on the sustainability of this achievement. To maximize transparency, the Government should cancel the suspension of the law and revise it to make public asset declarations. 33. In improving transparency in the mining sector, the series provided support under RGRSO 1 for the adoption of the 2014 Budget Law including financing of 12 EITI activities. RGRSO 2 supported the publication on the Ministry of Mines website5 of all existing mining exploitation contracts. 6 This action is fully consistent with the implementation of the Transparency Code and with the new EITI standards, and was expected to encourage greater compliance with fiscal and environmental regulations of the mining code. Compliance was assessed through the 2016 technical, financial and environmental technical diagnostic of all ongoing exploitation contracts. This validation study, showed to the EITI Board that Mali has made meaningful progress in implementing the 2016 EITI Standard and is currently compliant. Furthermore, the Government continues to pursue the efforts of transparency in this sector by regularly publishing the EITI Report7. 34. The series attempted to address the excessive reliance by the electricity sector on public subsidies. In 2014, the authorities put in place a Task Force jointly chaired by the Ministers of Energy and Budget with the aim to identify and implement key actions to address the sector’s subsidy practices. The initial prior action that would have resulted in higher electricity tariffs was postponed because of the politically fragile conditions in 2014, in favor of a weaker action of including an annex on the policy rationale for public subsidies to the electricity utility in the 2016 project Budget Law submitted to the National Assembly. That said, there was progress in reducing electricity subsidies. Total subsidies fell from a baseline of CFAF 50 billion to CFAF 33 billion by 2016 (IMF). 35. The financial situation of EDM continues to be difficult with losses on average of 49 FCFA (about 9 US cents) for each kWh sold . These losses translated into a cash deficit of more than CFAF31 billion in 2016. In response, the World Bank is supporting the Government with the implementation of a revenue protection program, which aims to improve the operational and commercial performance of the EDM through the installation six thousand (6,000) smart meters among the largest consumers (accounting for nearly 40 percent of EDM revenues). The Government is also initiating a study on tariffs to restore the financial balance of the company. The results of this study are expected to be implemented after the presidential election planned in July 2018. Pillar II: Improving Public Finance Performance 36. The series attempted to make progress in performance contracts with Subnational Governments to improve service delivery at local level, However, budgetary allocations to these contracts were modest. RGRSO 1 supported the adoption of the draft implementation decree, establishing performance contracts between the State 5 www.mines.gouv.ml. 6 Compared with the proposed trigger in RGRSO1, the prior action was revised to specify Government’s intentions to primarily focus on ongoing exploitation and reflect the fact that there is no petroleum exploitation. 7 The 2016 EITI report has been published in July 2017. 13 and Regional Governments. RGRSO 2 supported the signature of such contracts between the State and two Regional Governments, Sikasso and Segou. The GoM plans to strengthen this approach through the transfers target of 30 percent of central government budget to local governments by 2018 set forth by the Peace and Reconciliation Agreement. One problem with this measure is that the M&E of these contracts is not effective, because no report has been prepared making impossible to draw a conclusion on their contribution in improving service delivery in concerned localities. 37. Progress was made in the area of procurement efficiency. RGRSO1 supported measures to reduce delays in public procurement including the adoption of a procurement code and its regulation (arrêté d’application). The new code clarifies a number of clauses subject to various interpretations, integrates the most recent West African Economic and Monetary Union (WAEMU) Commission directives, reinforces the attributions of the independent Procurement Regulatory Authority (ARMP, Autorité de Régulation des Marchés Publics) in terms of dispute settlement, and revises the treatment of simplified contracts (for amounts below certain thresholds), which have been the source of important fiduciary risks through the deployment of procurement units in contracting institutions. Meanwhile, the procurement chain was computerized and all ministries were connected, giving private operators and concerned institutions the possibility to trace all active procurement files. 38. The series supported the preparation and publication of a Medium Term External Resource Framework (MTERF), with a view to strengthen aid predictability and integrate it with the national budget preparation cycle. The MTERF report is published annually on the website of the Ministry of Economy and Finance, through a questionnaire addressed to technical and financial partners. The report outlines disbursements and projections of aid. Furthermore, building on this, the Government is developing an interface between the datasets of the Direction for Planning and Development (public investment plan), the Direction of Public Debt (credits to Government), and the Ministry of Foreign Affairs (grants) should also contribute to the better integration of domestic and aid budgets. 2.2 Major Factors Affecting Implementation: Government Commitment and capacity 39. The government was committed to the implementation of the program, but there is the need to sustain these efforts to realize fuller impact of the reforms. Despite initial momentum to implement critical reforms to recover after the 2012 crisis, significant reform resistance has been observed. For instance, the reforms in the electricity sector were too challenging politically and had to be scaled back. This weaker performance can primarily be attributed to a number of exogenous shocks (insufficient electricity supply from external suppliers, technical incidents, difficulties to bill and collect in the Northern regions given security conditions), as well as the authorities’ decision not to implement the tariff increase retained for 2014 in the recovery plan, inducing a loss of FCFA 6.6 billion. 14 40. Nevertheless, the Government took advantage of the newly elected president context to push for reforms in key areas. The need for transparency and accountability was a priority for all government stakeholders who committed to a meaningful reform program by enacting regulations and laws. However, their implementation remains low to ensure an effective impact. In some areas, such as civil service reform, there has been a lack of follow through with the completed census, including a lack of payroll audits that would identify control weaknesses and/or ghost workers. 41. One political risk that did complicate program implementation was government turnover. The cabinet was reshuffled six times, including a change in the minister of Economy and Finance of three times in four years. This caused confusion at times in implementation, although the MEF still managed to carry out its role effectively. 42. Security Risks continued but did not distress the program. The risks identified during the appraisal of the first operation continue in Mali even though they did not actually materialize during implementation. The PD pointed out that lack of progress in the security situation in the North, and/or its extension to the South (through terrorist attacks) could distract government’s attention and divert resources from its governance reform agenda and recovery. There were reports of growing levels of insecurity also in southern regions, regular protests in Bamako and increasing crime levels in general. The series could not directly mitigate such risks or their impact, although the focus put on accountability, transparency, decentralization and public expenditure efficiency was intended to reduce security shocks indirectly through the improvement of the quality of service delivery and the strengthening of social cohesion. These factors did not hamper the program, in any case. Soundness of Background analysis and Technical Assistance Support 43. The program was supported by a substantial amount of Bank TA, with six separate Bank TA projects contributing to the design and implementation of the program: • Governance and Fiscal Decentralization TA (P112821) and the Urban Local Government Support Project (P116602) support Government efforts to build (Public Financial Management) PFM capacity, and to encourage demand for good governance interventions. • Post Compliance EITI Implementation (P143834) project supported greater participation from stakeholders in EITI activities • Legal and Technical Negotiations Support Project (P149445) strengthened negotiation and oversight capabilities (including support on mining code, cadaster, legal and technical diagnostic). • Energy Sector Support Project (P108440) to review the effectiveness and efficiency of public subsidies. 15 • Reconstruction and Economic Recovery Project (P144442) supported the recovery through improved basic infrastructure and socio-economic opportunities of communities impacted by the crisis in Mali. Prior Actions RGRSO 1 Triggers RGRSO 2 Analytical Underpinnings Deepening Executive Accountability and Transparency The Recipient, through the Council of Ministers, adopts the draft Law on the Conduct a census of the civil Mali: Policy Note on Governance fundamental principles for creating, service. Diagnostics (2012). organizing, managing and controlling public services. The Recipient, through the Council of The Audit Section of the Mali: Policy Note on Governance Ministers, adopts the draft Law on the Supreme Court carries out the Diagnostics (2012), World Bank; organization, functioning and procedure of the judgment of the five largest TA for governance and fiscal Supreme Court strengthening the autonomy local governments’ accounts. decentralization related reports and capacity of the Audit Section of the (since 2011). Supreme Court. Adopt the draft implementation decree of the The Recipient, through the Council of Law on Illicit Enrichment. Mali: Policy Note on Governance Ministers, adopts the draft implementation Diagnostics, (2012), World Bank; decree of the Transparency Code. Publish the transaction audits PEFA 2011. of off-budget expenditures incurred in 2014. The Recipient enacts the Budget Law for 2014 Publish the inventory of all including in the budget, inter alia, a budget existing mining and petroleum IETI reports. line for financing extractive industry contracts. transparency initiative activities. Improving Public Finance Performance In line with the electricity sector recovery plan, the Mali: Task Force report on recipient’s utility stabilizes Electricity Sector Recovery 2014- losses (net result) before 2020, March 2014. subsidies in 2014. Proceedings of the “Etats The Recipient, through the Council of Two performance contracts Généraux de la Décentralisation� Ministers, adopts the draft implementation are signed between the State (2013); TA for governance and decree establishing performance contracts and Regional Governments. fiscal decentralization related between the State and Regional Governments. reports (since 2011). The Recipient implements measures to reduce Adopt the revised procurement WAEMU Budget execution report delays in public procurement. code. (2013); IMF TA report (2014). The Recipient enacts the Budget Law 2014 including in the budget, inter alia, a budget IMF TA report (2011). line for financing public investment projects feasibility studies. Publish annually Medium Term External Resource SHA report (2013). Framework before April 30 and integrate it in joint budget 16 Prior Actions RGRSO 1 Triggers RGRSO 2 Analytical Underpinnings reviews and high-level quarterly meeting between Government and DPs. Assessment of the Operation’s Design, Risks Assessed and Their Mitigation 44. The series drew lessons from the ICRs for the five previous Poverty Reduction Support Credits (PRSCs). These lessons emphasized the need to account for country ownership and limited capacity in the selection of prior actions, in particular for sensitive sectors such as electricity and cotton. They also brought out the importance of close supervision and technical assistance to address bottlenecks and delays in implementation. Taking this into account, the RGRSO series concentrated on two main policy areas, anti-corruption (transparency and accountability actions) and decentralization (performance contracts and local government audits), which the government considered priorities, and where capacity was supported through technical assistance and investment projects. Cotton had been high on the agenda of past Development Policy Operations (DPO) but did not meet expectations, and was not considered in the RGRSO, mainly because the Government did not include it in the Government Action Plan (GAP) 2013-18. The RGRSO series did address electricity sector reform in light of its high priority in the plan. 45. The RGRSO series also built on successful authorities’ efforts initiated in 2013 with the support of the previous DPO. It built on the satisfactory implementation of key reforms such as the computerization of all central government transactions; the implementation of a risk-based approach for internal controls in the Ministries of Health and Education; the adoption of the Budget Transparency Code; and the establishment of a selection committee for public investment projects. 46. The Program Design benefited from focusing on a small set of issues related to transparency and accountability. The program focused on civil service recruitment and census, audits by the Supreme Court, the Transparency Code (asset declaration), and publishing mining contracts under Pillar 1 (Deepening Executive Accountability and Transparency). Under Pillar 2 (Improving Public Expenditure Efficiency), the program focused on electricity subsidies, procurement delays, performance contracts between State and Regional governments, and publishing a Medium-Term External Resource Framework. The program was feasible despite limited implementation capacity and political instability in Mali. It was appropriate for the program to include reform electricity subsidies, because, despite political challenges, it was a priority issue for the economy (in 2013, the government was spending more on electricity subsidies than on health expenditures). 47. The procurement scandal during program preparation, though not part of the RGRSO program, strengthened the hand of reformers, but also indicated that anti-corruption measures could be strongly opposed by entrenched officials. The 17 scandal resulted from the discovery by two independent agencies in May 2014 of substantial off-budget expenditures (2.0 percent of GDP). This case involved severe public financial mismanagement lapses in the procurement of non-lethal military expenditures and the issuance of guaranties to private operators, leading to the resignation of the Minister of Finance. The incident had a significant effect on the program implementation through procurement reform. In September 2014, a decree was adopted to limit the use of the “national interest� Article 8 clause in the Procurement Code (notably via the inclusion of a positive list of goods and services eligible to a restricted bidding process), and to strengthen external ex-post fiduciary controls (by the General Controller of Public Services) on military expenditures. Transaction audits of such off-budget expenditures were conducted by the Auditor General and by the Audit Section of the Supreme Court. The Government committed to publish both (the RGRSO2 trigger and later prior action 1), creating an important precedent on transparency practices. The result was demonstrated with the publication of transaction audits in 2014 and improved transparency of procurement practices. 48. Macroeconomic risks. As assessed during appraisal, Mali continued to face macroeconomic risks related to commodity prices and climate shocks. Given Mali’s limited fiscal buffers, the PD indicated that such risks could affect budget execution, and, in particular, domestically financed public investment, possibly generating the accumulation of expenditure arrears. However, Mali’s fiscal situation and management remained sound during the crisis and benefited from i) the stabilizing effect of WAEMU membership; ii) PFM reforms undertaken in recent years; and iii) continued economic and financial surveillance from the IMF. Mali benefits from the pooling of WAEMU foreign currency reserves to cover its balance of payments needs during economic downturns, including debt service obligations. At the time of the ICR, macroeconomic risks did not translate into a deterioration of the macroeconomic framework. 49. Risk from the technical design of the program was moderate. The technical content and the existing national implementation procedures of the supported governance and economic recovery reforms were fairly complex. The risk was mitigated because the design of prior actions was informed by adequate analytical work and Bank TA that covered all the sectors targeted by the series. 50. Risks related to institutional capacity for implementation and sustainability were rated moderate. One design feature to reduce this risk was the limited number of ministries (Economy and Finance, Civil Service, Mines, Justice, and Territorial Administration and Decentralization) and institutions (Audit Section of the Supreme Court) in charge of the implementation of the supported reforms. This helped reduce coordination challenges. Capacity was built through technical assistance by the Bank (described above) and other development partners (DPs) in the sectors of public financial management, governance, decentralization and energy and further reduced this risk. One risk that was initially underestimated was related to electricity reforms as evidenced by the scaling back of the reform from actual subsidy reduction to merely reporting on the rationale for subsidies. In addition to political opposition several exogenous shocks made tariff reform more difficult, including insufficient electricity supply from external 18 suppliers, and difficulties to bill and collect in the Northern regions given security conditions. Although the signing of the Peace and Reconciliation Agreement in June 2015 with armed groups occupying northern regions of the country entailed a government reshuffle, this did not damage the capacity of implementing agencies to ensure the completion of prior actions. 51. Fiduciary risks were rated substantial, but the program contributed to their mitigation. One of the series’ primary objectives was to improve fiduciary controls. Fiduciary risk was mitigated to some extent through the contribution of a set of reforms in audit, procurement efficiency and in strengthening controls on budget execution and transparency. Promotion of the Transparency Code also helped control fiduciary risks by requiring public officials to declare assets and thereby reveal potential conflicts of interest. Unfortunately, the code did not oblige to make public the asset declarations and asset declaration was also recently suspended. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: Design 52. The results framework contained relevant PDO indicators which were adequately linked to the prior actions of the series. The indicators were monitorable, and measurable within the timeframe of the series. The expected results in the program results framework could be directly attributed to the set of actions supported by the RGRSO series including: (Pillar I) i) the recruitment process of high-level civil servants, ii) the effectiveness of payroll controls, iii) the judgment of local governments’ accounts, iv) access to information at the MEF, v) assets declaration, vi) conventions’ compliance with the mining code, vii) the publication of audit reports, viii) EITI reports, and ix) the Budget Law annex on electricity subsidies; and (Pillar II) x) transfers to local governments through performance contracts, xi) public procurement delays, xii) the selection of public investment projects, and xiii) budget execution related to aid predictability. 53. An important change to an indicator in the results framework was made to reflect the revision of the electricity reform under the program. It was modified (from RGRSO 1) from a cap on electricity subsidies to the publication of the annex on electricity subsidies, to reflect the new, less ambitious, policy taken by authorities. Implementation and Utilization 54. The MEF carried out its responsibility for overall coordination of supervision and monitoring of the reform program across the relevant ministries, departments and agencies. The results framework identified the institutions responsible to provide the data to monitor outcomes. Capacity to improve access to public finance information, and assets declaration, was improved at the MEF and at the Audit Section of the Supreme Court, respectively. The PEFA, covering fiscal years 2013-2015 was finalized and made public in 2016 which complemented the results framework and helped in the assessment of the program. An ISRR was not done for RGRSO 2, but the 19 results data were available at the ICR stage, with the exception of the indicator for MEF information requests on public expenditures (related to the Transparency Code). 2.4 Expected Next Phase/Follow-up Operation: 55. The First Poverty Reduction and Inclusive Growth Support Operation is the first operation in the next series of DPOs for Mali. The main areas of follow up to the RGRSO series is in support for decentralized transfers, increasing own resources of local governments and improving balance sheets of all microfinance institutions. These measures are helping sustain and deepen some of the RGRSO supported reforms. The Bank is continuing the policy dialog in other areas of the RGRSO reform program. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Overall rating: Substantial 56. Objectives. Coming out of a post conflict environment, the objectives of improved accountability and transparency were high priorities and substantially relevant. These objectives continue to be substantially relevant and are aligned with the 2016-19 Country Partnership Framework (CPF). Several of the reform areas (audits, electricity subsidies, performance contracts) still need stronger follow up to be sustained, but accountability and transparency continue to be high priorities of the government. 57. Design. The design of the program was also substantially relevant and pursued national priorities improving transparency through the Transparency Code and audits of agencies and local governments, budget execution and other areas. The focused nature of the program design facilitated timely implementation. The results framework was appropriate and contributed to the assessment of the PDO achievement and the outcomes of the prior actions. It was appropriate to attempt electricity tariff reform even though it did not succeed. This reform, however, remains relevant and the RGRSO program helped put it on the government agenda by supporting a publicly available analysis of the costs of the subsidies. The one weakness was that the program design was too short of a duration to fully implement some of the deeper reforms. 58. Implementation. The implementation of the program was also substantially relevant with the program adjusted where needed to reflect changing circumstances. The large amount of Bank TA was key to successful implementation because each program area had important TA support. In particular, the electricity reform originally envisioned was not politically feasible and so the trigger was scaled back to reflect the political context. Otherwise the program was implemented as originally intended. 3.2 Achievement of Program Development Objectives Overall rating: Moderately Satisfactory 20 59. Overall, of the 13 results indicators, 10 targets were achieved, two were not achieved and data for one was not available (Table 6). The assessment of the achievement of objectives in this section is divided between the two parts of the PDO. Table 6: Summary of Targets Achieved/Not Achieved by PDO Component Achieved Not Not Total Achieved Available Deepening Executive Accountability and 7 1 1 9 Transparency Improving Public Finance Performance 3 1 0 4 Total 10 2 1 13 PDO 1: to deepen executive accountability and transparency—Substantial/Modest achievement 60. Of the nine PDO indicators for this part of the PDO, seven targets were achieved, one not achieved and one was not available, which supports a rating of substantial achievement of PDO 1. The target of 100 percent for competitive recruitment of directors of projects, public agencies and SOEs was reached which is consistent with greater transparency and which ensured that the more qualified candidates would become directors and this should improve executive accountability. 61. There was progress in transparency as the target for public officials submitting assets declaration to the Supreme Court reached 100 percent, but there are concerns. This achievement allowed improved transparency of public executives because potential conflicts of interests in officials carrying out their responsibilities could be determined. There are two concerns that weaken the impact of this measure: i) these declarations were not made public; and ii) the office in charge of these declarations has been recently suspended. Both actions have to be remedied in the near future for real transparency improvements to be sustained. On the LG level, the number of local government accounts certified by the Audit Section of the Supreme Court reached 402, exceeding the target of >250. This also contributed to transparency and accountability, complementing the efforts at the central government level. 62. The issue of audits of non-lethal military equipment was also addressed as the two targeted audit reports were published. In the mining sector, transparency was also improved by publishing the EITI report on time, which met the program target. 100 percent of mining conventions were also audited for compliance with the mining code which exceeded the target of >75 percent. Thus, the public could see what the scope of mining activities is and what the terms of leasing agreements are, which is evidence of improved transparency and accountability. 21 63. The budget Law annexes on electricity subsidies were also published, thus meeting the revised indicator target. While this was an important step forward, the larger objective of stabilizing EDM’s losses before-subsidies in 2014 to 2013 levels, which had been retained in RGRSO 1 as a trigger for RGRSO 2 (with a related indicator in the results framework concerning subsidies to EDM), was not met. Total losses amounted to CFAF 56.6 billion. In retrospect, this weak performance can primarily be attributed to a number of exogenous shocks including insufficient electricity supply from external suppliers, technical incidents, difficulties to bill and collect in the Northern regions given security conditions, but also to the authorities’ decision not to implement the tariff increase retained for 2014 in the recovery plan (leading to a loss of CFAF 6.6 billion). On the positive side, electricity subsidies were reduced from CFAF 50 billion to CFAF 33 billion in 2016 (IMF). The amount of direct subsidies has continued to decline in 2017. 64. Two other areas of the program that were not strong concerned the payroll audits and monitoring the demands for information from the MEF. In the latter case, it is important to measure this indicator because it affects compliance with the Transparency Code which the GoM had implemented to improve transparency in government. Regarding the payroll audits, the PEFA 18-IV indicator target was B, whereas the achievement was only C (October 2016), which was also the baseline value in 2010. Satisfactory implementation of a new civil service census was considered as a key factor to remedy the lack of payroll audits and improve the rating of the PEFA indicator 18-IV to B. However, the census, carried out by the GoM, did not include a complete audit of the payments system, so the rating for the related indicator remained at the C level. PDO2: to improve public finance performance—Substantial/Modest achievement 65. This second component of the PDO achieved concrete results. The average public procurement delays fell from a baseline of 94 days to 70 days (March 2017) which met the target of <80 days. This was an important achievement because government activities were implemented in a timelier way (in terms of the procurement process), which improved public expenditure efficiency. All public investment projects in the budget law underwent review and were selected by the Investment Committee, thus, the target of 100 percent was met. This process means that investment projects have to meet higher levels of cost-benefit analysis than was previously the case. Successful implementation of the program in this area was supported by accompanying Bank TA (Governance and Fiscal Decentralization-P11281). The deviation in budget execution was greatly reduced from a baseline of 16 percent in 2013 to an actual of 3.4 percent by December 2016. 66. The one target not met under this part of the PDO was funds released to Subnational Governments in accordance with signed performance contracts. The latter was expected to be greater than 2.5 percent of total public expenditure. The realization, however was only 0.2 percent. Despite the Government commitment, the low 22 capacity of Subnational Governments to deal with this new approach delayed the process, therefore prevented reaching the targeted results. In 2016, the Government signed performance contracts with three other regions. CFAF 400 million were planned per year and per contract, typically of a 5-year duration. Compared with RGRSO1, the outcome indicator related to performance contracts was modified to reflect the direct contribution of such contracts to the transfers from the central government to local governments. Pillar 2 anticipated high-order results including the maintenance of high levels of public investment combined with lower overall deficits, which did not materialize. 67. Additional evidence from the recent PIMA (Public Investment Management Assessment) indicates some improvement of the environment for PFM. For example, a technical committee for the selection of programs and investment projects has been effective since 2014. A public investment planning and monitoring and evaluation procedure manual is established and provides a tool for the selection of projects submitted by sector ministries. It clearly specifies the roles and responsibilities (at national and regional levels) as well as the procedures to be followed at each stage of the public investment management cycle (identification, preparation / formulation, ex-ante evaluation, implementation / monitoring-evaluation, and ex-post evaluation). 3.3 Justification of Overall Outcome Rating Ratings: Moderately Satisfactory 68. The program achieved important results in term of transparency, accountability and public finance performance, but a number of concerns bring the program’s outcome rating down to moderately satisfactory. On the positive side, the resumption of political stability with the election of a new President, allowed the government to implement critical reforms to strengthen transparency, accountability and the public expenditure efficiency at a good pace. For the first time in Mali there was the requirement of the declaration of assets, the recruitment of higher officials through an open and competitive process, the certification of accounts of more than half of subnational Governments and the publication of all mining conventions. Furthermore, the PFM performance also has been improved thanks to the systematic evaluation of all investments projects, the reduction by 25 percent of the procurement delay and the regular publication of a MTERF, which improves aid predictability. As a result, the 2016 PEFA assessment, which covers the period 2013-2015, showed significant progress. These efforts allowed to reach 10 out of 13 indicator targets, which is relevant to program assessment. However, the Government did not pursue reforms in the electricity sector because of its high political sensitivity. Measures that fell short because of inadequate follow up are important ones: the small amount of resources that were transferred through performance contracts (which links to better service delivery at the local level) and the lack of adequate payroll audits (necessary to give full impact to the civil service reform). These shortcomings suggest a moderately satisfactory rating for outcome. 3.4 Overarching Themes, Other Outcomes and Impacts 23 (a) Poverty Impacts, Gender Aspects, and Social Development 69. The program has helped lay the groundwork for pro-poor programs through strengthening of accountability and expenditure efficiency. However, poverty impacts are limited in the short-run, because several of the reforms will require further deepening and follow up to produce measurable benefits for the poor. Once political instability subsided and the new government was in place in 2013, the essential next step to a functioning government was to establish fundamental accountability and transparency. Efforts such as expanding audit capacity, publishing mining contracts, more efficient procurement were all expected to lead to, among other things, reduced corruption and thereby protect public resources for important activities in education and health. The program design included a higher level of central government transfers through performance contracts with the State and Regional governments. While this arrangement may produce pro-poor benefits in the future, during the program period, these transfers were well below target. Another area that could also produce more resources for pro-poor activities would be the reduction in electricity subsidies which do not benefit the poor. The program design recognized this potential benefit, but was not able to achieve electricity subsidy reform. The program design did not have gender specific activities or performance indicators. (b) Institutional Change/Strengthening 70. The Transparency Code represented a major step forward under the program, but other initiatives will require sustained reform efforts. Recruitment to public office required asset declaration and regular business operations required the MEF to respond to questions from civic society. However, in practice this rule is not yet fully effective. Other areas require more follow up to constitute sustained institutional change. The civil service census was a good first step to improve human resources management of both the central and local governments by developing a database on staff’s geographical and institutional distribution and its skills and gender profile, among other characteristics. However, this census still has to be published and the payroll audit has to be done regularly to realize fuller impact of the reform. (c) Other Unintended Outcomes and Impacts Not applicable. 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable. 4. Assessment of Risk to Development Outcome Ratings: Substantial 24 71. The ICR assesses the risks to the development outcome as substantial because it will take another round of deeper reforms to secure the expected benefits from the operation and because of the risk of further political instability. The continued carrying out of audits, a substantial increase in performance contracts with local governments and continued progress on electricity subsidies will be necessary to claim sustainable gains from the program. Meeting most of the program targets so far is encouraging, which keeps the risk level at “significant.� The political and climate risks identified in the PD remain. There still seems to be significant opposition to reforms, for example in electricity subsidies, but other areas as well. Yet, the PD was right in pointing out that “not addressing frontally Mali’s governance agenda could entail even larger risks of missing the opportunity provided by the large foreign financial and military assistance to sustainably recover economically and politically.� Development outcome would also be sustained by external factors as well, particularly, broadening the freedom of the press and movement toward stronger democratic process.8 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 72. The Bank helped design a program that made progress in terms of accountability and transparency. It was the right thing to attempt to reform priority areas such as electricity and civil service, however it should have been clear to the Bank team that these areas were not going to progress as rapidly as expected in the original program design. The results framework was of good quality with indicators well-selected to connect the PDO and the prior actions, however the team did not select an indicator for the effectiveness of the transparency code that was, or could be measured. The data regarding this indicator was not available during the appraisal and the implementation of the series. One other possible shortcoming was that the series as designed was of a rather short duration (a little over 22 months, from RGRSO 1 effectiveness to RGRSO 2 close) to be able achieve some of the more ambitious outcomes. (b) Quality of Supervision Rating: Moderately Satisfactory 73. The Bank recognized the political difficulties in implementing the original reforms in some areas and made some adjustments to protect the reform program. 8 According to the Freedom House index, freedom of the press in Mali has not yet recuperated from the 2013 political crisis and its level is poor. 25 While the results framework was appropriate, the M&E on the Bank side was delayed as the data was available only at the ICR stage. The Bank made good use of Bank technical assistance in the areas of governance, decentralization, extractive industries, energy and economic recovery. These operations were helpful in designing and implementing. The coordination with other Development Partners involved in budget supports was also strengthened during the implementation allowing the Government to reduce transaction costs. However, there is a need to develop a regular follow-up/dialogue with the client. (c) Justification of Rating for Overall Bank Performance Ratings: Moderately Satisfactory 74. With the quality at entry rated moderately satisfactory and implementation rated moderately satisfactory, the overall rating is moderately satisfactory for Bank performance. 5.2 Borrower Performance (a) Government Performance Ratings: Moderately Satisfactory 75. The MEF performed well in convening all parties (line ministries) to agree on a meaningful reform program. It was reported to the ICR team that the MEF created a kind of “positive competition� among line ministries that generated a good set of reforms. The MEF also helped press the reform agenda and was successful in most instances. The MEF’s handling of the procurement scandal in the military also helped restore confidence and create demand for greater transparency and accountability. (b) Implementing Agency or Agencies Performance Ratings: Moderately Satisfactory 76. For the most part, the implementing agencies (IAs) executed the reform program as planned, though there were some shortcomings. The Council of Ministers was central to the program implementation and was responsible for the Law on Public Services, the Law on Autonomy of the Supreme Court Audit, and the Transparency Code. The Ministry of Civil Service did carry out the civil service census, though the payroll audits were not carried out, which was an important follow up to maximize program impact. The Ministry of Decentralization and State and Regional Governments made progress with performance contracts, but fell well below target in terms of implemented contracts. The audit section of the Supreme Court conducted more than 400 audits in six regions which exceeded the program target. Also contributing to transparency and accountability, the Ministry of Mines published all mining contracts and the Secretary of Aid Harmonization office published the MTERF. 26 (c) Justification of Rating for Overall Borrower Performance Ratings: Moderately Satisfactory 77. With the Government performance is satisfactory, IA performance moderately satisfactory and the outcome rating also moderately satisfactory, the overall borrower performance is rated moderately satisfactory. 6. Lessons Learned 78. Lesson 1: The policy focus of a DPO needs to be selective with a stable and predictable level of support for the annual reform and budget program. The RGRSO focused on key sectors of policy reform directly linked to the analytical work (and the SCD) to ensure greater impact on the binding constraints to reduce poverty. A programmatic approach helps with a predictable support over many years. The integration of policies and measures complementary with ongoing sector operations and tailored technical assistance (TA) to monitor implementation of reforms is also important to successful reforms. 79. Lesson 2: Improving the performance of electricity sector is key to long-term economic transformation and requires a sustained engagement and consensus building. The operation design was appropriate to addressing the performance of the electricity sector even though achievement fell below expectations. This is a long-term effort and should not be abandoned because of slow progress. Adjusting tariffs in order to remove subsidies thus ensuring they become cost-reflective is unfortunately politically- sensitive. Rather than implement new electricity tariffs, it was evident that the program would have to take the smaller step of a strong communication on the importance of this reform and publishing methodology for a new tariff structure. 80. Lesson 3: An active policy dialogue is important to making progress in governance, transparency and PFM. In Mali, PFM reform needs strong support from Donors to be implemented successfully. For instance, the 2016 PEFA observed that only in the areas of PFM that had benefited from significant support and attention (such as external control) there was progress. Support to governance and PFM reforms could be pursued also through an active policy dialogue in the context of the annual Country Policy and Institutional Assessment. 81. Lesson 4: In a post conflict environment, while there is an urgent need for budget support, there can also be a push for meaningful, longer-term reform. The RGRSO series pushed for transparency reforms and was successful to a degree, even though there was still political instability and frequent turnover in the government as evidenced by meeting most indicator targets. Still, for the most challenging areas such as electricity subsidies, it can take considerably longer to build the political consensus. Carrying out gradual reforms over a longer period of time may produce better results over time, with the support of Bank management to such an approach. 27 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners 82. The Government indicated that Bank assessment reflects well the implementation of the series (Annex 4). They pointed out that the amount of electricity subsidies has decreased from around CFAF 50-60 billion a year at the start of the program to around 25 billion in 2017 while the previous draft ICR mentioned that the subsidy amounts had not been reduced. The IMF reported subsidies at CFAF 33 billion for 2016 and so the ICR acknowledges that reduction. Further, the Bank team acknowledges that the decision has been taken to reduce by 50 percent the electricity subsidies in the 2017 budget and that the authorities have made progress toward that goal. For the program the original target was a reduction of subsidies to CFAF 20 billion by 2016, which was not achieved (though the indicator had been dropped because there was a change to the trigger for electricity reform. One weakness in electricity financing is that the action to reduce subsidies was not accompanied by reforms that would increase the EDM revenues to offset the decrease of subsidies. (a) Borrower/Implementing agencies (b) Cofinanciers (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) 28 Annex 1 Bank Lending and Implementation Support/Supervision Processes (a) Task Team members RGRSO I and II Responsibility/ Names Title Unit Specialty Lending Sébastien Dessus Program Leader AFCW3 TTL Arsene Kaho Senior Economist GMFDR Co-TTL Maimouna Mbow Fam Lead Financial Management GG026 Specialist Jean-Charles Kra Senior Financial Management GG026 Specialist Mahamadou Bambo GGODR Sissoko Senior procurement Specialist Ruxandra Costache Senior Counsel LEGAM Fabrice Bertholet Senior Financial Analyst GEE03 Manuel Berlengerio Senior Energy Specialist GEE07 Michel Mallberg Senior Public Sector Specialist GG013 Celestin Adjalou Niamien Senior Financial Management GG026 Specialist Kristina Svensson Senior Mining Specialist GEEDR Aissatou Diallo Senior Finance Officer WFALA Supervision/ICR Olivier Beguy Senior Economist GMF08 TTL Arsene Kaho Senior Economist GMF01 TTL Richard Carroll Senior Evaluation Specialist ICR-Author (b) Staff Time and Cost RGRSO1 - P145275 Staff Time and Cost (Bank Budget Only) Stage of Project Cycle US$, Thousands (including Travel and Number of staff weeks Consultant Costs) Lending FY14 15.26 138,271 FY15 0.00 207 Total: 15.26 138,478 Supervision/ICR FY15 0.00 0.00 Total: Total lending & 15.26 138.478 supervision 29 RGRSO2 - P151409 Staff Time and Cost (Bank Budget Only) Stage of Project Cycle US$, Thousands (including Travel and Number of staff weeks Consultant Costs) Lending FY15 17.07 77,820 FY16 17.01 84,211 FY17 0.00 1,540 Total: 34.08 163,571 Supervision/ICR FY17 0.00 65 Total: 0.00 65 Total lending 34.08 163,636 &Supervision 30 Annex 2. Beneficiary Survey Results Not Applicable 31 Annex 3. Stakeholder Workshop Report and Results Not Applicable 32 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR Overall, the Bank assessment reflects well the implementation of both programs (RGRSC 1et 2). There is, however, a small observation with respect to EDM subsidies because the ICR mentioned that their amounts have not been reduced. This is not corroborated by budget figures since the amount of subsidies has decreased from around CFAF 50-60 billion a year at the start of the program to around 25 billion in 2017. 33 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders 34 Annex 6. List of Supporting Documents Financing Agreement-First Recovery and Governance Reform Support Operation, between the Republic of Mali and the International Development Association, November 25, 2014. Financing Agreement-Second Recovery and Governance Reform Support Operation, between the Republic of Mali and the International Development Association, December 11, 2015. Implementation Completion and Results Report on a Credit in the amount of SDR 33.4 million (US$50 million equivalent) to the Republic of Mali for a Recovery and Reform Support Credit, June 25, 2014 Implementation Status and Results Report, July 13, 2015, modified June 26, 2015 Program Document for a Proposed Development Policy Credit in the amount of SDR 23.3 million (US$36 million equivalent) and a Proposed Development Policy Grant in the Amount of SDR 17.4 million (US$27 million equivalent) to the Republic of Mali for a First Recovery and Governance Reform Support Operation, October 23, 2014. Program Document for a Proposed Development Policy Credit in the amount of Euro 44.6 million (US$50 million equivalent) to the Republic of Mali for a Second Recovery and Governance Reform Support Operation, November 11, 2015. Program Document for a Proposed Development Policy Credit in the amount equivalent to US$50 million equivalent to the Republic of Mali for a First Poverty Reduction and Inclusive Growth Support Operation, April 20, 2017. République du Mali Cellule d’Appui à la Réformes des Finances Publiques (CARFIP) Projet d’Assistance Technique pour la gouvernance et la décentralisation budgétaire (PAT) Crédit IDA : No 4914-ML Cadre de Mesure de la Performance de la Gestion des Finances Publiques du Mali – 2016 Selon la Méthodologie PEFA 2011 Rapport relatif à la notation des indicateurs de performance de haut niveau Jean-Marc PHILIP Eugène Mampassi Nsika, Sanoussi Toure, October, 2016. 35 36