Document o f The World Bank FOR OFFICIAL USE ONLY ReportNo. 29061-MLI REPUBLICOF MALI Joint World Bank-IMF StaffAssessment of the PovertyReductionStrategy Paper AnnualProgressReport May 26,2004 Africa Region PREM4 This document has restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. FOROFFICIALUSEONLY INTERNATIONAL DEVELOPMENTASSOCIATION AND THE INTERNATIONAL MONETARYFUND REPUBLICOF MALI Joint StaffAssessment of the Poverty ReductionStrategy Paper Annual ProgressReport Prepared by the Staffs of the IntemationalDevelopment Association andthe Intemational Monetary Fund Approved by Callisto Madavo and GobindNankani (IDA) and SiddharthTiwari and MartinFetherston (IMF) May 26,2004 I.OVERVIEW 1. Mali's first annual Poverty Reduction Strategy Paper (PRSP) ProgressReport presents a frank assessment o f implementationo f the PRSP. The Progress Report (hereafter the Report): (i)highlightsMali'smacroeconomicandpolicyoutcomes, strategiesandsector-specific poverty reduction activities during 2002-2003; (ii) reviews the overall context inwhichthe strategy was beingimplemented;and (iii) provides recommendationsbased on an assessment o f strengths and weaknesses noted duringimplementationo f the strategy. 2. The Report was prepared through the same broad participatory approach adopted for preparing the PRSP itself. Inparticular, it draws on the work o f 13 thematic working groups, each with broad-based representation, that address the implementation, monitoring and evaluation of the PRSP. The Report notes some difficulties, however, with the organization, operation, and motivation o f these groups. It recommends, appropriately, that they be given clearer direction at national and regional levels by the PRSP Technical Secretariat and Coordination Department. Preparation o f the Report also involved consultationwith Mali's development partners on the first draft and dissemination o f a revisedreport duringthe donors round table meeting inMarch 2004. Donors now consider the PRSP as providing the main basis for their support for Mali. Coordination among donors appears to be particularly effective in sectoral areas, including health and education. This coordination takes place on three levels- through a Mali-Partners Joint Committee (the decision-making body), a Technical Committee, and a Joint Secretariat. 3. The staffs consider that the first year implementation ofthe PRSP was broadly successful, and that overall achievements are encouraging. Inthe wake of the C6te d'Ivoire crisis, the authorities took measures to maintain economic stability, improve macroeconomic management and strengthen sector policies and poverty reducing programs. They also accorded a high priority to social sector programs (notably health and education), thereby makingprogress inextendingbasic social services to the population. The Report indicates that developments in This document hasa restricteddistributionandmay be usedby recipients only in the performance of their official duties. Its contents may not be otherwise disclosed !withoutWorld Bank authorization. - the first year warrant no fundamental changes inthe poverty reduction strategy. Nonetheless, the Report acknowledges the needfor some adjustments to increase the prospects of attaining the objectives set for 2006. The objectives requiring particular attention relate to growth, devolution of sector program activities, diversification of exports, andthe monitoring and evaluation system. 4. The staffs agree with the authorities' points regarding major shortcomings and challenges o fthe PRSP implementation. These include the needto: (i) strengthenlinks betweenpolicies and budgetary resource allocations on the one hand, andthe priorities of the PRSP on the other; (ii) servicedeliverytothepoorersegmentsofthepopulation,whoaretobeidentified target using consumption data from the household survey; (iii) enhance absorptive capacity of the public andprivate sectors so as to improve implementation ofpoverty-reducing programs, particularly inrural areas; (iv) strengthenmonitoring and evaluation frameworks andthe statistical informationsystem; and (v) further develop the strategy and action plan for high and sustainable pro-poor growth. 5. Inbroadterms, the Reporttakes into accountrecommendationsofthe February 2003 Joint StaffAssessment (JSA) of the PRSP. Yet some recommendationsmerit greater attention, inparticular: (i) deepening the poverty analysis usingthe 2001household survey data, and incorporating the findings of a poverty and social impact analysis (PSIA) o fthe cotton sector reforms; (ii) greater prioritizingamong policies andprograms, and formulating budget scenarios under alternative growth patterns; and(iii) developingthe governance and anti-corruption further action plans. 6. The Report presents recommendationsbasedon lessons learnedduring the first year. The recommendations pertain to implementation of sector policies and strategies (interventions targeting the poor, the decentralization process, structural reforms). They also pertainto the institutional framework, to methods, tools, and indicators for monitoringimplementation of the PRSP, and to mobilization of additional financial resources. Inaddition to identifying weaknesses and constraints, the next progress report should specify the corrective measuresto address the weaknesses, and provide informationon implementation status ofthe measures. 11. MACROECONOMIC AND STRUCTURAL REFORMS POLICY 7. The staffs broadly agree with the authorities' assessment of Mali's macroeconomic performance under the PRSP since 2002, andprospects for the period2004-2006. With growth over 2002-2003 averaging 4.7 percent under the old national accountsmethodology, and 5.1 percent underthe new one, Mali's recent performance has beenshort o f the PRSP goal under either approach(6.7 percent). Inpart, this lower-than-targeted growth reflects the setting of very ambitious objectives, which were difficult to achieve giventhe constraints that Mali i s facing (as indicated below). The crisis inC6te d'Ivo`ire also had a negative impact on growth over 2002- 2003, although the re-opening of the road link to Abidjan and improved transportation connectionsto other regional ports should support export growth inthe periodahead. Taking into account the agreedprojections for the period2004-2006, average growth for the entire period 2002-2006 would be about 5.5 percent, about one percentagepoint below the initial PRSP objective. - 2 - 8. The staffs agree withthe authorities' assessmentthat consumer price inflation can be expected to remain at 2.5 percent or less in2004-2006, well within the PRSP objective (under 3 percent). The extemal current account deficit (excluding official transfers) i s expected to be comfortably below the PRSP limit o f 8.9 percent. Mali's overall fiscal performance has also beenbetter than the PRSP objectives. Staffs are encouraged to note Mali's revenue performance, and welcome the authorities' prompt actions to absorb the impact o fthe crisis inCGte d'Ivoire, which ledto a small reduction inrevenues in2002 and 2003. However, staffs recommendthat the authorities pursue further improvementsintax administration, especially through staff training programs, combating tax evasion and fraud, and improving large taxpayers' compliance, and report on these inthe next progress report. A recent HIPC-Assessment and Action Plan noted significant improvements inpublic expenditure management since 2001,particularly in budgetformulation andreporting. Itconsideredthat further work was needed inapplying moderntools for monitoring the effectiveness o f internal controls, inimproving capacities for internal and external control, and incollecting complete data on foreign-financed expenditures. 9. Although monetary and financial policies are not addressed directly inthe Report, they have also supported the overall strengthand stability o f the macroeconomic framework. Monetary policy, conducted at a regional level by the West African Central Bank, has focused successfully on the maintenance of low inflation and the stability of the CFA franc to the euro. The financial condition o fMali's banking system improved slightly in2003, and microfinance institutions have continued to experience robust growth. The Report should have noted further reforms that are planned at the national level to strengthenthe performance and competitiveness o f the financial system. These include completing the privatization o f commercial banks; reinforcing bank surveillance; improving the legal and regulatory framework; promoting the development o f the microfinance sector while enhancing its supervision; and strengtheningthe financial condition of the civil service pension fund and the social security agency. 10. Behindthis broadpicture, Mali's recent andprojectedeconomic performance reflectsthe relatively narrow and vulnerable base o f economic activity, with the agriculture and gold sectors inparticular continuing to havea significant impact ontherate andvolatility of growth. Moreover, there appears to be only limitedscope for either sector to make a strong, sustained contribution to raisingthe trend growth rate. Nevertheless, although risks remain, the staffs agree with the authorities that an easing o f regional uncertainties, coupled with an ongoing recovery inthe global economy more generally, should contribute to the stronger growth projected for Mali inthe period ahead. 11. Inview ofthe risks faced bythe Malianeconomy, the nextprogress report should include an update o fthe sensitivity analysis inthe PRSP, and strategies to address the range o f adverse shocks to which the economy i s exposed. A key requirement i s to formulate a growth strategy and action plan, and vigorously implement the government's structural reform agenda. Reform o f the cotton sector, which has experienced a numbero f delays and setbacks, i s o f critical importance inthis regard. A fuller discussiono f implementation o f the plannedreforms and anticipated future actions would be desirable, giventhe impact o f this sector on the economy. The nextreport should also discuss measures to expand and diversify trade, as addressed inthe recent Diagnostic Trade Integration Study. - 3 - 12. Complementing the structural agenda would be continued pursuit o fthe sound macroeconomic policies noted above that have underpinnedthe general improvement inMali's economic performance over the past decade. Furthermore, while external financing provided significant support for implementation o f the PRSP (with grants, for example, averaging over 4 percent o f GDP in2002-03), total external financial assistance (inCFA franc terms) fell short o f the PRSP's overly optimistic projections. The Progress Report indicates that this shortfall explains the weak implementation rate o f investmentprograms inpriority areas, and calls for reform o f the process through which external support i s handledinMali. The next report should include an evaluation o fthe external financing outlook and its implications for long-term debt sustainability, areas that are not covered inthe current Report. Ina seminar on debt sustainability heldinBamako inAugust 2003, the authorities agreed on the need to increase the proportion o f grants inextemal financing inorder to keep external debt at a manageable level. While supporting Mali's initiatives to improve the efficiency and effectiveness o f external assistance, staffs also encourage the authorities to identifyandtackle problems encountered withinline ministries inexecuting their budgets, andto strengthengovemance inpublic expenditure management to international standards. 111. PROGRESSACHIEVEDINPRIORITYSECTORS InstitutionalDevelopmentand Improvementin Governanceand Participation 13. The Report highlightssignificant progress inimplementing measures to improve overall public sector performance. An Institutional Development Program and Action Plan has been prepared, aimed at capacity building inthe public sector to effectively support development and poverty reduction efforts. Progress has also beenmade inimplementingMali's devolution/ decentralizationpolicy, notably the adoption o f decrees to transfer competencies inhealth, education and water supply to local governments, the strengtheningo f capacities o f key personnel involved inthat process, and the operationalisation o f technical and financial arrangements supporting the local government structures. Inthis regard, sectoral ministries have increased their presence at the regional level to assist local authorities intaking over increased responsibilities. The authorities should continue efforts to make effective transfer o f competencies and resources from the central to the local governments, including revision o f the ongoing health and education sector projects as neededto ensure their coherence with Mali's devolution law. 14. The staffs welcome the analysis o fthe rehabilitation ofthejudiciary system, and measures against corruption and fraud. Giventhe current context, the staffs recommendthat such efforts be expanded to (i) highlighthowrecruitment andtraining processes affect the quality o f Mali's judiciary system, (ii) the impact o frecent reforms inthe financial audit review departments, and (iii) assess whether controls are now more systematic, effective, and function satisfactorily. The Report could have indicated that the Accounts Section o f the Supreme Court has transmitted to the legislature the draft laws o f executionbased on the audited accounts for the years 1997-2001. Additional information would have been useful inthe following areas: measures that the government intendsto take to address corruption; progress inimplementing the For more on Mali's economic performanceduringthe period 1992-2002, see the IMF's Ex PostAssessment of Performanceunderthe ESAFIPRGF-SupportedPrograms(Appendix Iinthe StaffReport for the 2003 Article IV Consultationwith Mali). - 4 - recommendations of the corruptionreport preparedby the World Bank at the request o f the former President; andthe place o fthe newly created General Auditor's Office inthe current institutional framework. The next progress report should discuss these issues. Sustainable Human Development and Improved Access to Basic Social Services 15. The Reportindicates that important progress has beenmade toward the year 2002 objectives for improving access to basic social services. Italso acknowledges, frankly, that results have fallen short o f objectives in several areas, and notes some persistent, underlying weaknesses in social sectors. As regards health, the Report notes significant improvements in health system coverage and inthe medical referral process. A medium-term expenditure framework (MTEF) was adopted to plan, manage and monitor health sector programs, and ensure greater focus on the poorest areas and population groups inthe country. As regards education, targets for gross enrollment rates at primary school level and for gross enrollment o f girls were achieved and evenexceeded (64.3 percent and53.7 percent, respectively), and budget allocations to education were increased. The availability o f resources from the Heavily Indebted Poor Country (HIPC) Initiativecontributedsignificantly to classroom construction (2467 built in 2001-2002) and to recruitment o f contractual teachers (1854 recruited and trained in2002, and 2450 students-teachers recruitedfor the 2002-2003 school year). 16. Staffs note that improvements inthe composition o f spendinghave been limited, andthat the actual allocationo fexpenditures did not reflect fully the priorities set forth inthe PRSP. Poverty reducing expenditures decreased by about 6.5 percent in2003, compared with a projected increase o f 21.7 percent, andthe ratio o f health sector expendituresbothto current expendituresandto total outlays fell short ofthe PRSP objectives in2002-03. Staffs encourage the authorities to rapidly improve budgetexecution insocial ministries. Inthe JSA o fthe PRSP, staffs encouraged the authorities to further clarify inthe progress report, the links between the allocation o f public expendituresand the PRSP objectives. The MTEFs developed for health and education are a significant step inaligning the budgetwith the PRSP, and are proving helpful in strengthening coordination inthe respective sector ministries. The authorities should develop additional sector MTEFs, and better link the sector MTEFsto the overall national MTEF. 17. Challenges remaininthe social sectors despite the progress made. Inthe health sector, for example, little correlation i s apparent betweenthe increasing number o f community health centers (CSCOM) and their usage by the population. This i s paradoxical inview o f the adequate participation of the population infinancing the health system through user fees for rehabilitation and functioning o f health facilities. Moreover, statistics reveal continued unmet health needs- childmortality, infant mortality rate, andmaternal mortality rates are high; vaccination rates and maternal deliveries assisted by health sector attendants are virtually stagnant; and large disparities exist between regions with respect to prenatal consultations and deliveries assisted by health sector personnel. Challenges extendalso to allocation o f HIPC resources. As noted above, the share o f health inthe national recurrent budgethas increased more slowly than expected (10.5 percent in2002 versus 10.7 percent targeted). This is due inpart to a weak absorptive capacity, as evidentinthe low disbursementrates (about 27 percent for IDA-financed components o fthe sector inthe first four- year implementation period). - 5 - 18. The staffs recommend that further assessmento fhealth sector outcomes be undertaken duringthe second year of implementation. The assessmentshouldfocus on quality o f service delivery, availability of essential drugs, accessibility and affordability o fhealth care, and on potential social and cultural barriers. Regionaldifferences insome indicators should also be taken into account, to help government take corrective measures duringthis second year o f implementation. The staffs look forward to measures to improve functioning o fthe CSCOMs, and to addressing the humanresource needs inthe sector, paying particular attention to linking the pipeline o fhealth students withthe dire needo fnurses. The staffs suggest the Ministryof Health fully integrate the medium-term expenditure framework into its operations, so as to strengthen management and monitoring o f sector programs. The next report should summarize the sector assessment, and discuss implementationprogress onmeasures identifiedto addressthe sector constraints. 19. As regards educationand literacy,the quality ofMali's education systemremains poor, despitethe accelerated implementationo fthe sector investmentprogram (supported bythe World Bank and other development partners) and improvements instudent-teacher ratios, and wide regional disparities inaccess to schooling persist. Absence o f a regional breakdown of the other sector indicators hindersa fuller appreciation o fregional disparities, and hence implementation o f specific measures targeted at the poorest areas and population groups. Challenges to meeting the educationobjectives include insufficient classrooms and teaching personnel inteachers training colleges, which largely explain why the objective o f recruiting and training 2500 teachers a year has not yet been achieved. 20. The staffs recommendthat the government pay greater attention inthe coming months to measures aimed at improving quality, decentralizationo f educationmanagement, and cross sector thematic issues. Suchmeasures should be implemented quickly so as to ensure an impact by the start o f the next school year. The next progress report should discuss the implementation status o f these measures. Developmentof Basic Infrastructureand Supportto ProductiveSectors 21. As regards infrastructuredevelopment and support to productive sectors, the Report indicates that measures were taken by the Government to improve the economic environment, including adjustments ininstitutional arrangements and structural measures, which would benefit roads, airports, and rail infrastructures. Private sector approaches inthese and other infrastructure sub-sectors are yielding substantial gains, although insome cases the achievements are not as rapid as desired. Inthe power sector, coverage o f electric power distribution has been steadily increasing in2001 (9.3 percent) and 2002 (12 percent), including coverage by the private electricity supplier, although significant gains are yet to be seen inrural areas. Inthe telecommunications sector, however, despite the introduction o f competition, telephone density remains below international norms and phone penetrationinrural areas remains weak. Steady progress toward privatization o f the state company inthe next year will be important for improving telecommunication indicators. The staffs encourage the authorities to continue the pursuitof, andwhere possible to accelerate, private sector approaches to infrastructure development and maintenance. - 6 - 22. Giventhat poverty inMaliremains largely rural, andthat a majority o fthe population derives its income from agriculture, the staffs would have likedto see a more comprehensive coverage o f support services to the productive sectors, particularly inrural areas. The objectives and results achieved inkey sub sectors, notably cotton (as discussed above), irrigation, and agriculture services, deserved a more in-depthassessment inlight o f future challenges. As regards irrigation, further discussion o fthe mechanisms neededto develop 50,000 hectares between 2003 and 2007 would have beenuseful. The next progress report should more fully discuss measures aimed at rural development, including implementationo f the cotton sector reform program. 23. The staffs recommend improvingthe statistical information base for the rural sector, such as the number o f hectares developed inthe 50,000 hectare program, and the estimated 2003/2004 harvest for rice and cotton. Since dry cereals are consumed by 80 percent o f Mali's population, statistics on their production would also be useful to monitor food self-sufficiency. Similar attention should also be paidto statistics on livestock production, forestry, and the productiono f fruits and vegetables, giventheir significant impact on the livelihood o fthe poor. Iv. MONITORING IMPLEMENTATIONOF THE POVERTY REDUCTION STRATEGY 24. Elaboration o f Mali's poverty reduction strategy was based on information relating to access to basic social services, since the monetary component o fthe household survey (the EnquZte malienne pour 1'e'valuation de lapauvrete', EMEP) was not yet finalized. The full survey data, which became available inNovember 2003, augment the information base for analyzing poverty determinants inMali. The staffs recommend that highpriority be given duringthe second year implementationto undertakingpoverty analysis usingthe full EMEP data. This would enable refiningo fthe poverty reduction strategy and action plan. Subsequently, the PRSP should be augmented with policies formulated to address two key objectives: (i) targeting increases inaccess to basic social services to the poorest segments o f the population, and (ii) enhancing their income-earning prospects. The nextprogress report should include the updated poverty strategy. 25. Overall, some progress has been made inmonitoring the implementation o f the strategy, inparticular, the establishment ofquantitative indicators for priority sectors (see Annex 6). The Report also highlightsthe prospects o f reaching the MDGs (see Annex 9) given current trends. The institutional framework for preparing the Reporthas been defined, inline with the same approach adopted for preparationo fthe PRSP. The staffs welcome the strong participation o f line ministriesinpreparation o f the Report. 26. The Reportis very frank inits assessment o fdifficulties faced with the PRSP's institutional framework for monitoring and evaluation (M&E). The staffs recommend the following two actions to improve the M&E system: first, streamline the number o f institutions withM&Eresponsibilitiesand clarify their roles; and second, assess internal dysfunctions in each institution and take corrective measures. Inparticular, the PRSP thematic groups should be revitalized andthe functioning of the department incharge o f poverty analysis improved. In addition, the authorities should strengthenthe national statistical system and performance-based management mechanisms within the government, as both measures are essential to the gradual implementation of more integrated methods, tools and indicators. - 7 - 27. The staffs note that the authorities should draw on the lessons learned duringthe first year o f implementation to adjust priorities or revise targets for subsequent years. For instance, the poverty reductiontarget for 2006 remains linkedto very ambitious economic growth projections, even though, as discussed above, the growth rate achieved inthe first year was much less than targeted. The staffs recommend further work to identify policies and measures that would help Mali achieve the desiredlevel o f GDP growth, and to understand more fully the mechanisms linking growth and poverty outcomes. The next progress report should include updated PRSP targets. V. CONCLUSIONS 28. The staffs agree that, on the whole, the Report provides a balanced and frank assessment o f Mali's progress toward PRSP objectives, and o f shortcomings and weaknesses that have been revealed or accentuated duringthe first year o fthe PRSP's implementation. Onthe positive side, the Report notes the improvement inMali's macroeconomic performance in2003, withinflation falling, fiscal and current account positions strengthening, and growth pickingup-although remaining below the objective o f 6.7 percent. Progress i s also evident relative to the three principal axes o f the PRSP. A range o f measures have beenimplementedto strengthen institutions and governance, directed inparticular at supporting the devolution and decentralization process, improving public expenditure management, and rehabilitating the judicial system. Access to health, education, and other social services has also improved, although, as the Report acknowledges, significant regional disparities, quality deficiencies, and other concerns remain. With private sector participation, there have been gains ininfrastructure development, including extension o f electric power distribution and institutional reforms to support rail, road, and airport development. 29. Despite these important areas o f progress, however, Mali continues to face major challenges regarding growth and poverty reduction. The Report appropriately identifies a number o fpolicy reforms and other measures that are neededto tackle these challenges, andthis JSA offers further recommendations inthis regard. Key areas include: (i) carrying out the poverty analysis with the new household data inorder to fine tune the monitoring and evaluation systemand helpprioritize public policy actions; (ii) deepening the analysis o f sources o f growth and their distributional implications, which would also help with prioritization and with mainstreamingthe poverty reduction strategy with sectoral programs; (iii) improving the integration o f the PRSP with sectoral ministry budgets and policies, and with the overall budgetary process; (iv) strengthening the implementation o fthe decentralization program to ensure that it allows for concrete gains in service delivery and improved governance. The staffs o fthe Bank and Fundconsider that the country's efforts toward implementation o fthe strategy provide sufficient evidence for its continuing commitment to poverty reduction, and therefore the strategy continues to provide a sound basis for Bank and Fundconcessional assistance. The staffs recommendthat the respective Executive Directors o fthe IMF and World Bank reachthe same conclusion. - 8 - REPUBLIC OF MALI ONE PEOPLE-ONE GOAL-ONE FAITH REPORT OFTHEFIRSTYEMOFIMPLEMENTAIlON OFTHEPOVERTYREDUCTIONSIRCITEGYPAPER [PRSPI FinalVersion April 2004 Mali-1st PRSPProgressReport improvedenglishfinal.doc mai 24,2004 (4:49 ) -Report the first year of implementationof Mali's PovertyReductionStrategyPaper (PRSP. SUMMARY ACRONYMS AND ABBREVIATIONS..................................................................... 3 SUMMARY....................................................................................................... 4 INTRODUCTION................................................................................................ 6 CHAPTER I: Backgroundon the implementation of the Poverty Reduction Strategy Paper (PRSP) in Mali.................................................................................. 7 CHAPTER II: Macroeconomicoverview: 2002/2003 mid-term achievements and outlook .................................................................................................... 11 CHAPTER Ill: Progressachieved in the implementation of sector policies. strategies. and actions for reducing poverty ............................................................... 16 CHAPTER IV: Difficultiesencountered.weaknesses observed and recommendations ......26 CONCLUSION................................................................................................. 30 ANNEXES...................................................................................................... 31 2 -Report the first year of implementation ofMali's PovertyReduction Strategy Paper (PRSP- ACRONYMS AND ABBREVIATIONS ABEDA :Arab Bank for EconomicDevelopment in Africa ADM : Airports of Mali AGETIER : InfrastructureWork and Rural EquipmentImplementingAgency AMADER : MalianAgency for the Developmentof Rural Electricity ANICT : National InvestmentAgency of TerritorialCommunities AU: African Union BSI :Special InvestmentBudget CAN :African Nation'sSoccer Cup Competitions CAP PrivatizationSupport Department CCC : Center of Communal Council CMDT : MalianTextile DevelopmentCompany CRT: Telecommunication RegulatingCommittee(TRC) DNR : National Office of Roads ECOWAS: Economic Communityof West African States EDM : Malian ElectricityCompany ESlP : EducationSector Investment Program CFAF : Franc of the African FinancialCommunity FASR : EnhancedStructuralAdjustment Facility FCC :Fixed Capital Consumption FDI: Foreign Direct Investment FER : Fund for Rural Electrification FlCT :Territorial Communities' InvestmentFund MTEF: Medium Term Expenditure Framework PRGF: Poverty Reductionand Growth Facility GDP: Gross Domestic Product GSR: Gross Schooling Rate HICP: HarmonizedIndex of Consumer Price HIPC: Highly IndebtedPoor Countries HUICOMA : Malian Cottonseed Oil ProducingCompany IDA : InternationalDevelopmentAssociation IDP : Institutional DevelopmentProgram IMF: International Monetary Fund MDGs: Millennium DevelopmentGoals MSPE: Malian Survey of Poverty Evaluation NEPAD : New Partnershipfor Africa's Development NICTs: New Informationand CommunicationTechnologies NPP : National Population Policy ODA: Official DevelopmentAssistance OSHD/PRM :Observatoryof Sustainable Human Developmentand Poverty Reduction in Mali PASAOP : Support Programto Agricultural Offices and Farmer Organizations PNlR : National Programof Rural Infrastructures PRODEC :Ten-year Education DevelopmentProgram PRODEJ :Justice DevelopmentProgram PRSD : Poverty ReductionStrategy Document PRSP: Poverty ReductionStrategy Paper PTI :Three-year Investment Program SAP: StructuralAdjustment Program SDR :Office of Road Data SOTELMA : MalianTelecommunication Company TOFE: Table of Central Government FinancialOperations TOR : Terms of Reference WAEMU: West African Economic and Monetary Union 3 - Reportthefirst year of implementationof Mali's Poverty ReductionStrategy Paper (PRSP- SUMMARY Mali is implementing its Poverty Reduction Strategy Paper (PRSP) covering the period 2002-06, which was adopted in May 2002. The implementation is taking place in a context characterized notably by a downward trend in Official DevelopmentAssistance (ODA) and by the country's great vulnerability to exogenous shocks (drought, fluctuation in the terms of trade, and political crises in the region). Hence, the country has to take up important challenges in order to ensure strong, sustainableand poverty reducing growth. However, despite an unfavorable environment, in the past few years Mali has made significant progressat the political, social and economic levels. The political and social situation has greatly improved in the past decade. Since 1992 democratic elections (presidential, legislative, municipal, and communal) have been held in a consensual and calm political climate. They led to a change in government in 2002 in a stable sociopolitical environment. Institutionally, Mali has embarked since 1992 on a vast devolution and decentralization process that reflects the irreversible decision of the country's authorities to empower local population in the management of their development. This process has contributed to reshaping the administrative landscape of the country into 703 Communes, 49 Circles, 8 Regions, and 1 District, although the transfer of responsibilities and resources from the central Governmentto local communitieshas been slow. Moreover, some vast reforms are being undertaken as part of the modernization of the Administration, improvement of the judiciary system, good governance, and the fight against corruption. At the economic and financial levels, the International Monetary Fund (IMF) has supported Mali without interruption since 1992 in the framework of three (3) successive ESAFlPRGF arrangements. This has contributedto restoringmacroeconomic stability and the viability of public finance, and to deepen structural reform implementation. It is inthis context,that the levelof economicactivity, measuredbythe new series of ccmore comparable)) GDPs, grew by 3.9% in 2002 and 6.0% in 2003. However, projections are less optimisticfor 2004with real GDP growth of 4.7%. Concerning public finance and indebtedness, in recognition of the significant progress made by the Government in implementing reforms, Mali has become the 7`h country to reach the completion point under the enhanced Initiative for Highly Indebted Poor Countries (enhanced HlPC Initiative) after Bolivia, Burkina Faso, Mauritania, Mozambique, Tanzania, and Uganda. Moreover, the program for restructuring and privatizing the public enterprise sector, involvingthe cotton sector, transportation, and telecommunications is well advanced. Regarding the cotton sector, the restructuring of CMDT is expected to lead to the withdrawal of the company from the delivery of public service and the adoption by the Government of an Action Planfor the full liberalization of the cotton sector. Regarding the transportation sector, reforms undertaken concern the leasing of the Railway (effective since September 23, 2003), and the transfer of the management of the Airports of Mali (ADM) to a private licensee (on-going process). These reforms also 4 - Reportthe first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- concern the privatization of regular road maintenance (already achieved with the creation of AGEROUTE), and the establishmentof mechanismsfor users to finance maintenance. As regards the telecommunication sector, the authorities have undertaken institutional reforms that have resulted in the establishment of a legal framework conducive to sound competition among the different actors in the sector; the granting of a full operating license to a second enterprises in addition to the traditional operator, and the establishment of a unit in charge of preparingthe opening of the capital of SOTELMA to the private sector. At the level of social sectors, some progress has been made though there are still weaknesses. Among the improvements made we can note a large increase in budget allocations for the education and health sectors,which, relative to total current expenditure, rose from 27.02% to 30.28% and from 10.01% to 10.82%, respectively, between 2001 and 2003. They should reach 31.48% and 11.09% in the 2004 Finance Law. The trend is almost the same with respectto the allocations for these sectors in the total State Budget, At the level of education, the financial efforts have permitted a considerable increase in the overall gross enrolment rate at the primary level. The rate went from 62.5% in 2001 to 64.3% in 2002, with, as objectives, rates of 68.0% by 2003 and 83.0% by 2006. In health, we note an improvement in health coverage provided within a radius of 5 km. It rose from 41.0% in 2001 to 44.0% in 2002, with, as objectives, rates of 47.0% by 2003 and 50.0% by 2006. However, we can note, as weaknesses in these sectors, the low quality of the educational system, the quasi stagnation of the attendance rate in curative care centers (about 20%), problems related to the inadequacy (quantitative and qualitative), and low motivation of health staff. At the end of the first year of implementation of the PRSP, we can note that the different actors responsible in monitoring-evaluation are yet to embrace fully and correctly the role that has been assigned to them, a role which also deserves to be clarified and simplified. In addition, we can note a low level of integration between the Budget-programs of ministries and the strategies and objectives of the PRSP. Moreover, regarding financing, there is a need to mobilize additional resources with development partners toward the attainment of PRSP objectives, particularly in priority sectors such as health, education, rural development, and basic infrastructures. To summarize, in order to remove constraints to the implementation of PRSP and the attainment of its objectives, the Government must continue to inform and negotiate with development partners to bring them to adhere fully to the priorities and strategies in the PRSP. This is the reason for holding a Round Table of Mali's Donors concerning the imolementationof the PRSP. 5 -Report the first year of implementationof Mali's PovertyReduction Strategy Paper (PRSP- INTRODUCTION The Malian Government decided to make the Poverty Reduction Strategy Paper, adopted on May 29, 2002, the unique framework of its medium term policies and strategies and the main negotiationdocument with all donors. The PRSP has been prepared in the context of a long participatory process that hinges on an institutional framework involving all stakeholders in the social and economic development of the country. In March 2003, the Government chose the same institutions for monitoring and evaluating the implementation of the PRSP.' The monitoring-evaluation of the PRSP has a dual function: 1) Over the short term, reports on the results obtained in the implementation of the PRSP in priority areas affecting poverty and growth, and measures the impact of these resultson poverty and growth in the medium term; 2) Over the long term, provides element permitting to assess the efficiency and effectivenessof the sector policies and strategies implemented to reduce poverty in Mali. Based on the above, this first annual monitoring-evaluation report provides information about the implementation of the policies, strategies and actions retained in the three (3) ... strategic areas of the PRSP, i.e.: Institutional Development,Improved Governance, and Participation ; Sustainable Human Development and strengthening of Access to Basic Social Services; Developmentof Basic Infrastructures and Support to Productive Sectors. The progress report is based on the available reports of thematic groups and on information collected through some reference documents (State Budget, Budget- programs, sector projects and programs, documents outlining areas where some development partners intervene.) In line with the terms of reference(TOR), the report comprises the following chapters: P Chapter I: Backgroundon the implementationof the Poverty Reduction Strategy Paper (PRSP) in Mali; P Chapter II : Macroeconomicoverview : 2002/2003 mid-term achievements and outlook 2004-06; P Chapter Ill: Progressmade in implementingsector policies, strategies, and actions toward reducing poverty; P Chapter IV: Difficultiesencountered,weaknesses observed, and recommendations. 'The PRSP monitoring-evaluationframework,as adoptedby the Governmentin March2003, i s attachedas Annex 3. 6 - Reportthe first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- CHAPTER I: BACKGROUND ON THE IMPLEMENTATION OF THE POVERTY REDUCTION STRATEGY PAPER (PRSP) IN MALI The year 2003 is the first year of implementationof the Poverty Reduction Strategy Paper (PRSP) in Mali, which was developed in a medium term framework for the period 2002- 06. The international, regional and national context of the first year of implementation of the PRSP is marked by a number of factors and events that greatly affected the development of the economic and social situation in Mali. 1.1 International Environment2 - The internationalenvironment remainsdominated by the following main factors: A - Liberalizationand qlobalization: The development of international trade has been characterized in the last decades by a series of measuresaiming to reduce tariff barriers and constraintsto free initiative, in order to speed up the liberalization of exchanges and the globalization of economies. This is accompanied and facilitated by a rapid development of the new information and communicationtechnologies(NICTs). Moreover,the internationalsituation has been characterized in the last years by: - volatility of the prices of main commodities, which negatively affects economic performances and makes it extremely difficult to plan development actions due to the uncertainexport receipts ; - increased sensitivity of world opinion to the issues of good governance, environmental protection, control of poverty and corruption, promotion of women, and populationgrowth control; - downward trend in bilateral as well as multilateral official development assistance (ODA); a trend not offset by an increase in private capital inflow. At the same time most developingcountries have increasedfunding needs to implement their poverty reduction strategy and achieve the Millennium Development Goals (MDGs), particularlythat of reducing by half extreme poverty by 2015. Years 1995 1996 1997 1998 1999 2000 2001 2002 ODA 541.3 491.2 428.9 347.3 354.5 359.7 349.9 Variation -9% -13% -19% +2% +I -3% Sources : 1)IntroductoryNoteto the 2004 FinanceLaw prepared by the Budget Departmentin September; 2) Semi-annual implementation report of multilateral surveillance in the WAEMU, situation in 2002 and outlook for 2003, adopted by the Council of Ministers on October l'', 2003. 7 - Reportthe first year of implementationof Mali's PovertyReductionStrategyPaper (PRSP- B - Economic situation in the Dollar zone: The United States of America will remain the main driving force behind the economic recovery that is emerging. Nevertheless, economic activity in the United States should slow down slightly with growth decliningfrom 2.4% in 2002 to 2.2% in 2003. C - Economic situation in the Euro zone: In the Euro zone, the low level of domestic demand is continuing to prevent a rebound in economic activity, despitethe strength of exports-even weakened by the rise of the Euro. Growth projections have been revised downward, with the Euro zone expected to grow by one half the rate expected in the United States, or 1.I % only. 1.2 - Regional Environment3 A -At the level of the African continent: In Africa, a growth rate of 4% is expected in 2003, under the combined effect of continued strict macroeconomic policy, the recovery in world economic activity, and the increase in the prices of some commodities (coffee, cacao, cotton, gold, oil). Looking forward, the speeding up of the economic integrationin the Continent reflected in the creation of the African Union (AU) and the implementation of the New Africa Development Partnership (NEPAD) will create favorable conditions for stronger economic growth on the Continent. B-At the levelof the WAEMU: Economic growth within the Union was 1.7% in 2002, against 3.9% in 2001, and is projected at 3.9% for 2003. This low growth is primarily due to the on-going crisis in C6te d'lvoire and bad weather conditions, which affected agriculture and livestock productionin Sahelian countries in 2002. However, in view of the good rainfall in 2003, prospects are better for the 2003/2004 campaign. Growth in 2002 took place in a context marked by a moderate increase in prices, Average annual inflation within the Union was 2.9% in 2002, down from 4.1% in 2001. The convergencecriterionin the WAEMU is for inflationto be kept of 3%. 1.3 National Environment4 - In Mali, the nationalsituation reflectsdevelopmentsat the social and political levels as well as at the economic and financial levels. Sources : 1) Introductorynote of the 2004 Finance Billdevelopedby the NationalOffice of Budget in September 2003 ; 2) Semi-annual implementation report of multilateral supervision within WAEMU, situation in 2002 and outlookfor 2003, adopted bythe Cabinet in its meetingof Wednesday October Is', 2003. Sources : 1) Reportof the thematic Group ((Macroeconomicframingand growth)) of PRSP, authenticated in July 2003; 2) Introductorynoteof the 2004 Finance Billdevelopedby the NationalOffice of Budget in September 2003; 3) Semi-annual implementation report of multilateral supervision within WAEMU, situation in 2002 and outlookfor 2003, adopted by the Cabinet in its meetingof Wednesday October Is', 2003. 8 - Report the first year of implementationofMali's PovertyReductionStrategyPaper (PRSP - A - Social and political developments: The current Malian context is characterized by a remarkable political and social stability in a region confrontedto social and political unrest and armed conflicts. Concerningpolitical developments, Mali held general elections in 2002 (presidential in May and legislative in July) in a consensual and calm environment. They led to the election of a new President, the installation of a new National Assembly in September 2002, and the formation of a Governmentwith broard representationin October2002. To implement his vision, which is:ccto ensure the well-being of all Malian women and men and make Mali a model of good governance)),the President sent to the Prime Minister a letter on policy guidelines, which served as a framework for the Government General Policy Statement that the Head of the Government presented to the Parliament. The PRSP is the foundation for the implementation of the priorities and measures defined in these documents, which are the referencefor government action. Concerning institutional developments, Mali has embarked since 1992 on a vast decentralization and devolution process that reflects the irreversible decision of the authoritiesto empower populations in the managementof their development. This process resulted in the organization of the country in 703 Communes,49 Circles, 8 Regions and 1 District: Bamako (which has a status of a region) and local elections are scheduled for April 2004. However, there have been some delays in the transfer of responsibilities and resources to local governments. Moreover, some vast reforms are being undertaken as part of the modernization of the public administration, the improvement of the judiciary system, good governance, and the fight against corruption. B - Economicand financial developments: At the economic and financial level, since 1992, Mali has implemented with the support from Bretton Woods institutions, structural adjustment programs (SAP) aimed at restoring macroeconomic balances and fiscal sustainability. Furthermore, in recognition of the significant progress made by the Government in the implementation of macroeconomic and structural policies, Mali's creditors-in particular the International Monetary Fund (IMF), the International Development Association (IDA)-decided, on March 7, 2003, to grant the country debt relief amounting to US$ 675 million under the enhanced lnitiaitve for Highly Indebted Poor Countries (enhanced HlPC Initiati~e)~.Hence, Mali became the 7fh country to reach its completion point under the initiative after Bolivia, Burkina Faso, Mauritania,Mozambique,Tanzania, and Uganda. The resources made available through this initiative will be allocated to key programs promoting poverty-reducinggrowth that are defined in PRSP. In addition, the country has undertaken many reforms in the economic and financial areas, as evidenced by the macroeconomicframework described in the next chapter. The World Bank's (IDA) contribution is U S $ m millioncorresponding to 50% of the debt service over the 2000-2014 period, that of IMF is approximately US$ amillion, or 38% of reduction of the debt service of the reinforced initiative from 2000 to 2008. The other creditors shall also provide their required share under this alleviation effort (Source: Partenariat Mali- Banque Mondiale 2002, published in 2003, page 6). 9 - Reportthefirst year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- CHAPTER II: MACROECONOMIC OVERVIEWOF THE IMPLEMENTATION OF THE PRSPAND OUTLOOK The PRSP is henceforth the harmonized framework serving as a basis to sector policies and strategies. It definesthe main strategies and targetsto be reached by 2006. Mali continues to benefit from the adjustment measures implemented in the context of the program supported by the Poverty Reduction and Growth Facility (PRGF) aimed at improving the economic, financial and institutional environment. Nevertheless, short term economic development still heavily depends on weather conditions, which determine the production of the primary sector, and in particular the production of agriculture, livestock, fishing, and forestry. In addition to the weather conditions, the crisis in Cbte d'lvoire is likely to have a negative impact of the development objectives in the short and medium terms. The crisis in Cbte d'lvoire resulted in a shortfall in government revenue amounting to CFAF 14.2 billion during the last quarter of 2002-CFAF 8.6 billion for receipts from customs and 5.6 billion for domestic taxes. Concerning public debt, Mali reached the completion point under the enhanced HlPC Initiative in February 2003, and should benefit from debt relief amounting to US$ 675 million, or CFAF 25 to 30 billiona year. 11.1 Recall of the PRSP main objectives and strategies - The 2002-2006 macroeconomicframework of the PRSP takes into account the evaluation of the policies and strategies already implemented. The policy direction and quantitative objectives are basedon a vision of a sustained and poverty-reducing growth. The policy direction that have been used to develop the PRSP macroeconomic framework were based on the following assumptions: development in the international economic environment projected by the IMF over the period 2002-06 period (particularlywith respectto the prices of gold, cotton and oil) ; projections of production levels based on the preliminary results for 2002, past developmentsand sector policies to be implemented; fiscal projections based on the new measuresthat have been implemented (particularly tax reform, allocation of resources to decentralized communities and social sectors, wage policy, cost of measures included in the PRSP) and on the convergence criteria in the WAEMU. With these assumptions, annual growth was projected to average 6.7% over the period 2002-06, which, through the implementation of PRSP priority actions, should permit a reductionof the incidence of poverty from 63.8% to 47.5% by 2006. This overall medium term objective, however, depends on the achievement of a number of annual macroeconomic and financial objectives (indicators)listed in the table below: 10 - Reportthe first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- Recall of PRSP overall objectives(2002-06)and annual objectives(2002 and 2003): Source:Reportof PRSP Thematic Group rMacroeconomic framing andgrowthx. 11.2 Status of macroeconomicindicatorsin Mali based on "the more comparable - WAEMU" GDP For a better integration policy, the WAEMU has decided that, as of 2003, all member countries prepare economic indicators, notably the GDP, using a common methodology (more comparable GDP) ; this must henceforth constitute the basis for the preparation of regional and internationalindicators. 1. WAEMU quideline relatedto the application of a more comDarable GDP The need to assess convergence have led to implementing measures aimed at preparation of a greater comparability of macroeconomic aggregates developed in different WAEMU member countries. In fact, the national account aggregates of the Union member countries were not all comparablefor the following reasons; --- the varying quality of some basic data; the difference in methodologiesused among countries; and the coverageof the nationalaccounts. The changes in methodology have affected the level of the GDP, and the convergence criteria. In Mali,the revisionswere made in three areas: --- imputed rents; consumptionof fixed capital bythe publicsector, recordingof agricultural crops. Imputed rents concern self-consumption of housing services and relate to the accounting of the rental value of houses occupied by their owners. In Mali's national accounts, only the houses actually rented was accounted for as producing value added. With the new methodology, the production of housing is expanded and it will henceforth include the productionof all inhabitedhouses. With respect to the consumption of fixed capital (CFC), it is comparable to production costs, It can be defined as the loss of the current value of the stock of fixed assets held 11 -Reportthe first year of implementationof Mali's Poverty ReductionStrategy Paper (PRSP- and used by the public sector, a loss due either to physical wear and tear or obsolescenmFC is-calculated from depreciation data. The reconstitution of the series based on the 1998-2003comparable GDP is given in the table below: GDP levels (in billionF CFA)from 1998to 2003 Source: DNSI: Mali's economic accounts. The productionof the agricultural crops (n/n+l) that was formerly recordedto the GDP for the calendar year (n+l) is henceforth recorded to the year (n). With this methodologythe production processis taking place upstream relativeto the consumptionprocess. 2. Mali's economic and financial development in 2003 2.1 Estimateof GDP qrowth in 2003 Mali's economic situation improved significantly in 2003, with a real GDP growth of 6.0%, compared with 4.3% in 2002. The GDP deflator was 2.9%, whereas inflation measured by the consumer price index was -1.3%, mainly reflecting the decline in food pricesfollowing an exceptional cereal production. At the sectoral level, on can makethe following observations: The primary sector grew by about 18.7%, with notably a strong increase of 32% in cereal production and cotton, the latter registering a rise of 38.4% compared with 2002. As for the secondarysector, it recorded a decline of 7.9%, reflecting mainly the drop in gold production of 17.4%, but also falls in the milling of rice (-24.4%) and cotton ginning (-23.0%). The tertiary sector recorded a growth of 3.6%, mainly because of the transportation and telecommunicationsub sector (+I0.2%). 2.2 FiscalDevelopmentsin 2003 a) Revenue Total revenue, excluding grants, amounted to CFAF 421.8 billion in 2003, compared with CFAF 428.1 billion programmed- a shortfall of 1.5%-and CFAF 388.4 billion realized in 2002-an increase of 11.8%. Tax revenue amountedto CFAF 349.2 billion, an increase of CFAF 43 billion compared with 2002. The ratio of tax revenue to GDP was 13.7% in 2003 as against 13.1% in 2002. The is well below the WAEMU objective of 17%. Grants amounted to CFAF 112.3 billion in 2003 reached, comprised of CFAF 60.7 billion in project grants and CFAF 51.5 billionin budgetary assistance. b) Expenditure 12 -Report the first year of implementationof Mali's PovertyReductionStrategyPaper (PRSP - Total expenditure and net lending rose to CFAF 551.4 billion in 2003 from CFAF 540.6 billion in 2002, or an increase of 1.I%. Current expenditure rose to 316.3 billion CFAF in 2003, or by CFAF 7.6 billion relative to the 2002 level. Wages and salaries increased significantly,from CFAF 93.5 billion in 2002 to CFAF 106.2 billion in 2003, mainly because of the adoption of the new civil service salary grid. Capital expenditure declined by CFAF 1.6 billion to CFAF 201.5 billion in 2003, owing to delays in executing some sectoral programs,notablyin the area of health. c) Overall fiscal deficit, payment order basis The overall fiscal deficit, on a payment order basis and excluding grants, declined to CFAF 129.6 billion in 2003 from CFAF 169.7 billion in 2002. In relation to GDP, this deficit was 5.1% in 2003 compared with 7.3% in 2002. Including grants and before debt relief, the deficit was CFAF 17.2 billion in 2003, versus CFAF 83.9 billion in 2002 The overall fiscal deficit, on a cash basis and includinggrants, and after debt service, and taking into account the transactions during the complementary period was CFAF 6.5 billion comparedwith CFAF 95.9 billion programmed. d) Financing The overall financing was CFAF 6.5 billion in 2003 to finance the deficit on a cash basis, of which CFAF 90.8 billion in net foreign financing and CFAF -84.4 billion in net domestic financing. Financing from the banking system was CFAF -49.6 billion CFAF in 2003 compared with CFAF -9.9 billion in 2002. Net bank credit to the government was CFAF - 48.6 billion in 2003, compared with CFAF +16.0 billion programmed and CFAF -8.8 billion realized in 2002. 2.3 Balanceof Payments in 2003 Merchandise imports increased slightly from CFAF 492.8 billion in 2002 to CFAF 503.8 billion in 2003, whereas total merchandise exports fell from CFAF 624.6 billion in 2002 to CFAF 561.8 billion in 2003. Receipts from cotton exports fell from CFAF 155.4 billion in 2002 to CFAF 151.3 billion in 2003. Receipts from gold exports, which had reached CFAF 400.0 billion in 2002, also declined to CFAF 319.2 billion in 2003. Thus, the trade balance registered a surplus of CFAF 58.0 billion in 2003 as against a surplus of CFAF 131.8billionin 2002. Overall, the current account deficit, excluding official transfers, which was CFAF 100.0 billion in 2002, reached CFAF 165.9 billion in 2003. This deterioration in the current account balance in 2003 is linked to the decrease in the trade surplus because of the decline in cottonand mining production. 3. Outlookfor developments over the period 2004-2006 The framework presented here is developedfrom historicaltrends. The assumption for average growth over the period is based on estimates for the balance of payments, trends observed in certain sectors based on domestic economic 13 -Report the first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- developments monitored by the Statistical National Office (DNSI) and international economic trends. Thus, during the period economic growth is projected to average 5.9% average, given the expected recovery of industrial production, an increase in household disposable income, and a stabilization of the international economic outlook, with, notably, an end to the lvorien Crisis. The national accounts were projected based on : -the estimates of the sectoral ministriesfor the years 2004 and 2005 ; -- the first (provisional) estimatesof the medium term program budget ; projectionfor agricultural production . As these indicators are based on actual data, ceferis paribus, the resulting projections should be consistent with real historical economic trends, thus permitting one to evaluate the efforts necessary and the actions to be undertaken in order to reach the targets for poverty reduction of the PRSP over the period to 2006. (seeAnnex I.) In conclusion, despite the crisis in C6te d'lvoire, which has greatly affected Mali's external trade since end-2002, the growth rate of the economy attained 4.3 percent in 2003 and is estimated at 6 percent in 2003. These rates are much lower than the objectives set in the PRSP initially (9.3 percent in 2002 and 7.4 percent in 2003). The lower than projected growth shows the importance of the efforts that Mali need to undertake to reach an average annual growth of 6.7 percent over 2002-06, which is required to reduce poverty from 63.8 percent to 47.5 percent in 2006. Furthermore, to continue implementing the action plan for the PRSP and make its indicators comparable to those of the other countries in the WAEMU, it is essential to revise the PRSP an update the data of the macroeconomic framework according to the methodology of the "more comparable'' GDP. 14 - Reportthe first year of implementationof Mali's Poverty ReductionStrategyPaper (PUP- CHAPTER 111: PROGRESS MADE IN THE IMPLEMENTATION OF SECTOR POLICIES, STRATEGIES AND ACTIONS OF REDUCING POVERTY 111.1 First pillar: Institutional Developmentand improvementof - governance and participation This first strategic pillar aims at institutional capacity building to ensure a good management of public affairs, social peace and stability without which no sustainable development action is possible. The Malian authorities have undertaken some major administrative and institutional reforms as part of the implementation of this main strategic pillar of the PRSP. These reforms include: Improvementof the performanceof public administration: In this context the following actions have been carried out: - developing the Institutional Development Program (IDP) and its Action Plan, which, over the medium term, aims to ((make the Malian Administration an effective development and poverty reduction tool)) through the implementation of the five (5) components that are: i. reorganizingthe central State Administration and reinforcing public management, ii. reinforcingdeconcentration, iii. consolidatingdecentralization, iv. valuing and reinforcingthe capacity of human resources, v. communicationand relationshipswith users; - updating the General Status of civil servants with an harmonization of the pay scale of the Civil Service; - undertaking a physical control of the total number of civil servants in order to makethe Civil Service Registryand Payroll files consistent. a Continuationof the decentralization/deconcentrationDrocess: Decentralizationcontinues to be implemented through the following actions: - the adoption of decrees related to the transfer of reponsibilities in the areas of - health, education, and water supply; the strengthening of the capacity of decentralization stakeholders through the establishment of 46 functional Centers of Communal Council (CCC); disbursements (on-going) of CFAF 14.6 billion for projects submitted to the (FICT) Fund of the National Investment Agency of Territorial Communities (ANICT), enabling technical and financial units in charge of assisting local communities to become operational. 15 - Reportthe first year of implementationofMali's PovertyReductionStrategyPaper (PRSP- However, some difficulties are being encountered in the implementation of the Decentralization process, notably: - slowness in the transfer of responsibilities and resources from the Central government to the localcommunities; - - lack of coordination between sector program (PRODEC, PRODESS, PNIR) and low mobilization of resources by local communities ; - local communities'programs; Weaknesses and inadequacies in decentralization regulations leading to insufficient coordination in planning and management of regional and local deveIopment. . Improvementof the manaqementof publicexpenditures: In this area, the following actions have been conducted: - Preparation of Medium Term Expenditure Frameworks (MTEF) for the Health -- and Educationsectors; Preparation of a manual of proceduresfor budgetexpenditure; Preparation of a manual of Procedures for Programming, Monitoring and evaluating public investment in Mali; - development and adoption by the Government of a new budget nomenclature for the 2004 budget in order to increase transparency of the Finance Law and harmonize it with the nomenclature adopted by the WAEMU, which will help - multilateralsurveillance; improvement of the preparation of medium term program budgets with a particular emphasis on the definition of poverty reduction expenses and the selection of pertinent monitoring indicators; - interconnection (on-going) of computer networks of the administrative units responsiblefor preparing and implementing the Central Government Budget (at central and regional levels); - strengthening of controls (a priori, ex post) through the revision of the status of the Finance Inspectorate and increased budget allocations for other units in charge of controls. = Rehabilitationof iustice, fiqht aqainst corruptionand financial delinquency: Under the implementationof this component, the authorities,have carried out the following actions and measures: - recruitment and training of judicial staff: 55 auditors, 50 court secretaries, 50 - adoption of the final Plan of the ten-year Judicial Development Program clerks; (PRODEJ), rehabilitationand building of law courts, training of magistrates, and - revisionof statutes for the legal professions; strengthening of the total number of staff and resources of the General Control of Public Services (total staff rising from 27 to 40, increase in office space, increasein allowances and benefits); - strengthening of the Audit Section of the Supreme Court (total staff increased - from 9 to 14 agents, increase in office space); adoption by the Governmentand by the NationalAssembly of a act establishing the Independent General Controller who will be appointed by the President, 16 - Report the first year of implementation of Mali's Poverty Reduction Strategy Paper (PRSP - 111.2 Second main pillar: Sustainable human development and reinforcement of - access to basic social services A - Health and PopulationComponent: In general, attainment of the objectivesfor 2002 has been satisfactory notablywith respect to the extension of health coverage and the organization of the referral system (see coverage and process indicators in the table below). On the other hand, some other health indicators linked, among others, to socio-cultural factors such as weakness in the number and quality of human resources and inadequacy of incentives deserve the development of more adapted strategies. Moreover, it can be noted a quasi stagnation of indicators related to vaccination and assisted child births, significant discrepancies between regions with respect to prenatal visits and assisted child births. It can also be noted a large difference between the extension of health coverageand the use of services. Despite the efforts made in the allocation of HlPC resources, the share of health in the current expenditure of the Central Government Budget is increasing slowly (10.5% achieved in 2002 as against 10.7% projected). This is due, among other things, to the low absorption capacity of the sector as evidenced by the disbursementrates of the financing under PRODESS (about 27% for IDA financing as of November 15, 2002), for which the first phase 1998-2002hasjust been completed. Regarding the population component, the Government adopted in April 2003 the updated National Population Policy (NPP) the overall objective of which is to {(contribute to the improvement of the standard and quality of people's lives)). The implementation of the updated NPP will be carried out through the Population Investment Priority Program (PIPP) being developed. Lookingforward, the 2003-2007 MediumTerm Expenditure Framework (MTEF) for the health sector, which has already been prepared, will permit the allocation and absorption of the additional financial resources that are necessary for the implementation of actions and measures to correct the noted weaknesses, the attainment of PRSP objectives, and the MDGs. In fact, the MTEF approach aims to address the main bottlenecks encountered and weaknesses noticed in the health sector: low access to health structures and care, lack of and low motivation of the health staff, low participationof populations in the management of health services. Development of the monitoringevaluation indicators of the "Health and Population" component of PRSP: N' Indicators Reference basis Target Achieved Targets Year I Level II 2002 II 2002 II 2003 I 2004 I 2005I 2006 1 . Healthbudaetsharehecurrentcosts of the State Budaet Allocations I 2001 I 10.0% I 10.7% I 10.5% I 10.8% 1 11.1% I I 12.0% Result indicators 7 ,Rate of attendanceof curative healthcare 2001 17.0% 20.0% 20.0% 20.0% 8 . Rate of prenatalvisits 2001 52.0% 55.0% 54.0% 57.0% 60.0% 9 . Rate of assisteddeliveries 2001 41.0% 45.0% 40.0% 47.0% 50.0% 10 . Rate of DTCP3 vaccinationCoverage among 1 childrenunder 1 year old I 2001 I 71.0% I 80.0% I 74.0% I 75.0% I I I 75.0% 17 -Report the first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP - 1 11 I Rateof contraceptiveprevalence(all methods , I 2001 I 8.2% I 15.0% I 3.0%I 3.0%1 I B - Educationand Literacv Component: The eradication of poverty by education necessarily is predicated on the achievement of a number of objectives such as: equal opportunities of access to education, literacy of non- schooled populations, and redistribution among the different socio-professional categories in the country. The preparation and implementation of the ten-year Education Development Program (PRODEC) is consistent with this strategy thanks to the implementation of its four components that are: ---- Access component; Quality component; "Decentralized Management of the System" component; and Cross-cuttingthematic issues. The implementation of PRODEC has been speeded up with the effective start-up of the Investment Program of the Education Sector (IPES) jointly financed by the Central Governmentand donors. Moreover,the developmentof the MTEFfor the Educationsector (on going) will permit to increase the capacity of PRODEC to meet the PRSP and MDGs targets. This framework shall contribute, in principle, to a better coordination of donors as well as poolingof resources in order to improvethe absorptioncapacity of the sector. Development of the monitoring-evaluationindicators of the Educationand Literacy))componentof the PRSP: (( 1No 1 Indicators [ Reference basis I Target I1Achiev Targets 1 ed II Year I Level I 2002 I 2002 I 2003 I 2004 I 2005 I 2006 I w e t allocations 1 I .Share educationbudaeffrecurrentcost I 2001 I 27.0% I 29.9% I 30.5% I 30.3% I 31.5% I I 32.7% State Budget 2 . Share educationbudgeffstate Budget 2001 11.5% 12.7% 13.9% 14.0 15.1 18.5% 3 ,Share basic educationbudgefftotal 2001 60.4% 63.6% 65.9% 67.2% 69.00 60.8% Sources: CPSIEducation: PRODECand Budget-programs indicators. 18 -Report the first year of implementationof Mali's PovertyReductionStrategy Paper (PRSP- Ultimafelymmesemeasures aim at improving the indicators of the M a l i a n x b d bnal system, the level of which remains relatively satisfactoryas indicated in the table above. The analysis of this data leadsto the following findings: - Regarding progressachieved,the objectiveof 64.0%of gross schooling rate (GSR)in the first cycle in 2002 has been achieved even slightly exceeded (64.3%). It is likewise for the GSR of girls: 53.7% achieved as against 52.0% targeted. In addition, significant efforts have been made in budget allocations to the education sector, which permitted the accelerated implementation of PRODEC through the building of classrooms and recruitment of contractualteachers, notably with resources from the enhanced HlPC Initiative. (2,467 additional classrooms built in 2001/2002; 1,854 contractual teachers were recruited and trained in 2002; 2,450 pupils- teachers were recruitedfor the 2002/2003 academic year). - Regarding remaining weakness, there is the persistence of the low quality of the Malian educational system despite the improvement of the pupils-teachers ratio, and inadequate numbers of classrooms and teachers in the Teacher Training Institutes (IFM). Because of this, it was not possible to reach the objective of 2,500 teachers recruited and trained per year. Regarding access level, except the regions of Kayes, Koulikoro, and the District of Bamako, the GSR in other regions is lowerthan the national level. C - Drinkinawater and Sanitation component: Some important institutional reforms and actions were conductedin this sector in 2002 and 2003. They include among others: - creation of regional and sub-regional Water and Energy offices as part of - Devolution(Decree n"369 of July 19, 2002) ; adoption of Decree no 02-315 of June 4, 2002 stating the details of responsibilities transferred from the Central Government to local communities - regardingrural and urban water supply; inventory of 24,562 modern water fountains in 20,512 areas, which permitted to estimate the percentage of villages benefiting from at least one modern water pointto 84.0% and that of populations havingdrinking water to 61.6 % ; - - update of the list of villages having no modernwater fountain; modernization of the SIGMA database and developmentof a water map. This exercise permitted to better identify the difficulties inherent to this sector including, among others, delay in the transfer of responsibilities skills, and the number of entities intervening in the sector with different strategies. This makes coordination difficult in this area. 111.3- Third main pillar: Development of basic infrastructures and support to productive sectors The development of infrastructuresand the support to productive sertors have for objective to improvethe economic environmentand profitabilityof factors of production with the view of attracting investments, creating jobs, increasing revenues, accumulating wealth, and reducing poverty. 19 -Report the first year of implementationof Mali's Poverty Reduction StrategyPaper (PRSP- L Some important institutional reforms have been undertaken by the authorities in order to improve connections within the country and with the outside world and facilitate the movement of people and goods.They include : - creation of the National Office of Roads (DNR) and of the Office of Road Data - W R ) ; - implementationof a study on the classificationof the country's road network; establishment of a Road Authority, and privatization of road maintenance with . work undertaken by state agencies being now assigned to private enterprises. Reqardinqairport infrastructures: The Government has decided to put in concession the management of the Airports of Mali (ADM). The bidding process has started and the project for the rehabilitation of domestic airports is being completed. In addition, the Government submitted a request for financing to the Arab Bank for Economic Development in Africa (ABEDA) for the extension of the airstrips of the airports in Kayes and Sikasso, which were builtfor the 2002 African Soccer CUP Reqardinqrailway infrastructures: Senegal and Mali successfully leased the Dakar-Niger Railway. A social plan has been adopted financed though the Central Government Budget and the World Bank. The private Franco-Canadian consortium - CANAWGETMA, has obtained a 25-year lease and has already taken over the exploitation of the railway. It is committed to increase transportation capacity (currently300,000 tondyear) and to improve significantlythe quality and safety of the service provided to clients. The development of indicators related to transportation infrastructure is relatedas follows: Status of indicators related to road and railway transportation in 2002 and 2003 (mid-term): -the Sources: CPSIMET: Report of PRSP Thematic Group: a Internal and external opening up n. Note: main constraint in this sector is the inadequacy of budget credits for the maintenance of infrastructures. Hence the need for installing new financing mechanisms through the institutionof toll and other similar fees. Reaardinatelecommunication infrastructures: 20 -Report the first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- -Overail Mz8 has one line for 168 persons. This rat10IS particularty low compared to otner . . - countries in the region. In addition, the country is unequally covered and basic communicationtariffs are high. To address these weaknesses, the authorities have decided to reform institutions in the sector and open telecommunicationto competition. Measurestaken include: - the establishment of a regulatory framework with the creation of a Telecommunication Regulating Committee (TRC) that ensures that there is a - sound competition among actors in the sector; the granting of a license to a second telecommunication company called - IKATEL,which already operates along the traditional operator, SOTELMA; the establishment of a Privatization Support Department (CAP) to manage the - opening the capital of SOTELMA to the private sector; the reduction in tariffs for fixed and mobiletelephone lines The developments in the main sector indicators are shown in the table below: The Telecommunicationsector Main Indicators: It can be noted that telecommunication networks and services in Mali are characterized by: -- a low telephone density (much below internationalstandards); - a low penetration rate in rural areas; an unequal coverage of telecommunicationservices between urban areas (98%) and rural areas (2%). - a low Internet connectionlevel in the country. a Reaardinathe enerav sector: Progressmade in the sector involves: - the improvementof the national rate of access to electricity from 9.3% in 2001 to - 12.0% in 2002, with objectivesof 13.0% in 2004 and 14.0% in 2005; the increase in the density of the electricity network of the company, Energie du Mali (EDM) SA (increase in the number of subscribers to low voltage between 21 - Reportthe first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- 2001 et 2002: 29,591 and an increase in the number of new clients using the electricity networK: ZI ,360);- . ~~ - the creation of the Malian Agency for the Development of Rural Electrification - and Domestic Energy (AMDER); the adoption of a base of reference for domestic energy and rural electrification by the Governmentand then by the NationalAssembly; - . the on-going creation of the Fund for Rural Electrification(F.E.R.). Reqardinqsupport to productivesectors: The authorities have emphasizedthe development of the rural sector with the adoption of the Government Program for the Development of 50,000 irrigated hectares between 2003 and 2007. They have also focused on the development of the Support Program to Agricultural Offices and Farmer Organizations (PASAOP), the effective implementationof the National Program of Rural Infrastructures(PNIR), and the creation and establishment of the Infrastructureand Rural Equipment ImplementingAgency (AGETIER). At the same time, some important reforms are being implemented as part of the restructuring of the cotton sector. These reforms will lead over the medium term to the rehabilitation and recovery of the Malian Textile Development Company (CMDT), the refocusing of its activities, the opening of its capital to national and foreign private investors, and the effective application of the mechanism for determining the producer pricefor seed cotton. Some important efforts are also being made in the fields of equipment and credit to producers,the development of other agricultural products, the promotion and extension of the results of agricultural research in order to achieve quickly food security and self- sufficiency. 1 The restructuring of the cotton sector includes the following reforms and measures: 1) effective application of the mechanism for determining the producer price of seed cotton for the 2002/2003 2)campaign;by the Government of a plan for the gradual withdrawal of the CMDT from public service delivery; adoption 3) adoption and implementation of an emergency plan and a financial recovery plan of the company; 4) downsizing of CMDT staff with a social plan partly supported by the State; 5) sale of Mali's cottonseed oil producing company (HUICOMA) by end of September 2003; 6) Government's option on the splitting of the CMDT, in line with the conclusions of the study on the 7)liberalizationthe Government of an overall action plan in the context of the pursuit of the cotton sector reform. of the cotton sector; adoption by Indicatorsof rural sector developmentsare shown below: Rural Sector Developments: 200112002 to 2003/2004 campaigns Items I 200112002 I 2002/2003 I 2003/2004 Sources: CPS/MET/DNSllBCEAOlOffice du Niger 22 -Report the first year of implementationof Mali's Poverty Reduction Strategy Paper (PRSP - (3) 1 Overall, importantmeasures and reforms have* been or are being carried out under the three . . . made in the Central Government Budget to improve expenditure ratios for priority sectors such as Education, Health, Rural Development, Equipment -Transportation-City planning, as indicatedby the following table: Ratios of budget allocations to priority sectors and total budgetary expenditure (in percent) Descriptions \ Years 12001*12002*1 2003 I2004 I Comments It is hopedthat these effortswill translate into a net improvement in access to these sectors in the near term and therefore in a reductionin poverty in all its forms. 111.4 - Mali's progress toward the attainment of the Millennium Development Goals Currently, Mali has not yet completedthe first report on the Millennium Development Goals (MDGs)that should provide comprehensive informationof the levels of monitoring indicators.However,a preliminaryevaluationprovidesthe following indications: - Inview of the great potentials(particularlyin agriculture) of the country as well as the sustained level of economic growth recorded and projected, the country has real assets to achieve the overall objective of bringing down poverty and - hunger providedthat growth is more redistributivethan previously; The current trends of social indicators are mixed. Progress in some education sectors (primary schooling...) contrast with setbacks in others. It is likewise in -- health.This makes unlikelythe attainment of the overall objectives; About HIVIAIDS, it is very likelythat Mali achieves the objective retained; As to sex equality, based on the current trends it can be said that it is more likely that Mali achieves the overall objectives by 2015, notablywith respectto health and education. For more details see Annex 9. 23 -Report the first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- CHAPTER I V DIFFICULTIES ENCOUNTERED,WEAKNESSESOBSERVED AND RECOMMENDATIONS The Malian Government, it should be recalled, adopted the final PRSP document on May 29, 2002. It constitutes the bringingtogether of sector policies and strategies which, for the majority, were being implemented at that date. It is therefore obvious that it will take some time for all actions being implemented to be gradually refocused toward the overall objectiveof an acceleratedand redistributivegrowth, which will reduce poverty in Mali. It is thus difficult to make an objective assessment on a process that has just started. At most, one can mention the difficulties that were encountered, outline the weaknesses that were noted, and make a few recommendationsfor the improvement of the implementation of PRSP in the future. IV.l Difficulties encountered, weaknesses noted A - Institutionalarranaement for monitorina and evaluatina the PRSP: At the end of the first year of its implementation, the different entities in charge of monitoring and evaluating the PRSPwere late in reallyand correctlyembracingthe rolethat has been assignedto them. So, it has been noted that: The coordination unit has tendency to take on the responsibilities of the Technical Secretariat and Thematic Groups, perhaps because of their lack of dynamism; The Technical Secretariat does not always initiate the preparation and organization of meetings, seminars/workshops,and other technical meetings on the PRSP, even though they are under its responsibilities; Thematic Groups are not working as desired due, among other things, to problems related to their organization (composition), leadership (their chairman and the Technical Secretariat), and the motivation of members; The Observatory of Sustainable Human Development and Poverty Reduction in Mali (OSHD/PRM) is late in becoming operational and hence in conducting further analyses of the results of the Malian Survey of Poverty Evaluation (MSPE), available since September 2003. B - Methods,tools, instruments,and indicators used: Difficulties encountered and weaknesses that were noticedcan be summarized as follows: n The lack of a referenceor a starting situation and well defined targets at the level of the components of the PRSP makes it difficult to have a balanced approach and a detailed analysis of all main strategic pillars based on the objectives and priority actions retained and implemented; n The national information system remains yet inadequate to be able to measure preciselyoutcome indicatorsor performances(process indicators) given the lack, in most of the public administration, of a culture of result-based management, as 24 -Report the first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- evidenced by the "too administrative" nature of the reports from the thematic group that are The approach consisting of monitoring the PRSP implementation through program budget, which was used by most thematic groups, does not seem sufficient to assess intermediate results (process indicators), and hence could not replace the routine activities stated in most of the thematic reports. In addition, it was noted limited coherence between the program budgets of ministries and the strategies and objectives of the PRSP; The methodology to prepare the reports of the thematic group deserves to be reviewed in the light of the requirements and needs tied to the dual function attached to the PRSP monitoring-evaluation process Le.: on the one hand, provide over the short term the result indicators obtained by implementing the PRSP in the priority areas that have an influence on poverty and growth in the medium run, on the other hand provide over the long term elements permitting to assess the efficiency and effectiveness of sector policies and strategies implemented toward reducing poverty in Mali; The reliability and coherence of information and statistics obtained from various sources remainsan acute problems; In addition, it may be too ambitious to try to encompass in a synthetic and analytical report on the monitoring and evaluation of the PRSP implementation all aspects contained in that document. C -The mobilizationof financinq for the PRSP: A comparative analysis of development expenditures planned in the PRSP with those in the table of the Central Government Financial Operations (TOFE) over the 2002-2004 period shows an accumulated gap of non-mobilized resources of approximately CFAF 121.4 billion (or about 14%of planned expenditure). This amount reflects domestic resources (CFAF 36.1 billion, or about 30%) and external resources (CFAF 85.3 billion, or 70%). The size of this gap raises the problematic of mobilizing financing, particularly external, toward achieving the objectives of the PRSP, even though there was some improvement, over time, in the mobilizationrate of expected financing. Comparisonof developmentexpenditure planned in PRSP and achieved in the TOFE over the 2002-2004 period (in billion F CFA) Sources: PRSP and update TOFE. 2004*: projections. However,with respect to the expenditure financed on HlPC resources, it can be noted that actual spending is likely to be CFAF 7.2 billion higher that the amount projected in the PRSP for 2002-04. 25 -Report the first year of implementationofMali's Poverty Reduction Strategy Paper (PRSP- Items\Years 2002 2003 2004* 2002-2004 PPTE PRSP projections 31.8 23.0 24.3 79.1 Achievements PPTE updated 27.5 29.2 29.6 86.3 TOFE Differences (TOFE-PRSP) -4.3 +6.2 +5.3 +7.2 Achievementrate (in YO) 86% 127% 122% 109% IV.2 Recommendationsand Outlook - A -At the level of the implementationof sector policies and strateaies: To ensure a better implementation of the PRSP and achieving development and poverty reduction objectives, it is advisable to make the following corrections and adjustments: 9 Focus all sector policies and strategies being implemented (or envisaged) around the strategic pillars defined in the PRSP in order to better target measures toward assisting poor populations and vulnerable groups; 9 Accelerate the transfer of responsibilities and resources from the Central Government to local authorities and harmonize sector policies with the devolution process; 9 Improvethe legaland institutionalframework for devolution by revisingthe Code of Local Communities with the view of ensuring, among other things, a better coordination in the planning and the management of develQpmentat the regional and local levels; 9 Complete all important reforms in a timely manner (cotton sector, transportation, telecommunications, public finances, administration) in order to create the institutional and legal framework favorable to the development of the private sector and thereby attract foreign direct investments (FDI) B -At the level of the institutionalarranqement for monitorinqand evaluatinqthe PRSP For the monitoringand evaluating arrangement to operate correctly and carry out the dual functionto be assigned to it, the following measure are requiredt: 9 Clarification and simplificationof the PRSP institutional monitoring and evaluating arrangement,and respect of roles of the different entities; 9 Improved leadership of thematic groups (at the national and regional levels) by the Technical Secretariat and the PRSP coordinating unit; 26 -Report the first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- 9 Operationalization of the OSHD and implementation of thematic analyses on povertytrom [ne Tinai resUItS OT (mt); - \ 9 Adequate financial support for the operation of the monitoring and evaluating entities to enable them to plan better their activitieswith a certain visibility and avoid shortsighted decision based on the availability of financing. Therefore, a realistic planning of essential activities to be conducted (statutory meetings, seminarslworkshops, periodical reports, surveys, specific studies/consultancies, study travels, etc) must be established by all the stakeholders over the 2002-2004 period. C -At the level of methods,tools, instruments,and indicatorsused: At this level, we can propose, among others, : 9 Refine and updatethe PRSP Action Plan (prioritizationof actions/projects/programs retained by component, grouping components by strategic pillar, indication of the sources of financing available or to be sought), integrate and harmonize with the three-year Program and the Special Investment Budget (PTVBSI) and budget- programs; 9 Revise the number and the nature of indicators retained by componenthhematic area, with a view to reduce their number and makethem more relevant, 9 Develop a situation of reference (startingyear) for all the indicators retained in the PRSP monitoring-evaluationmechanism and plan studies or surveys for those of them that could not be producedfrom current statistics; 9 Facilitatethe circulationof informationgeneratedthroughthe implementation of the PRSP, thanks to compatible computer applications and networking of the main entities involved in the monitoring-evaluationmechanism. D -At the level of the mobilizationof financina for the PRSP: 9 Continueto informand negotiatewith donors in orderto bring them to adhere more to the priorities and strategic pillars defined in the PRSP: the holding of the Donors' Round Table in Mali around the implementation of the PRSP reflects this point of view; 9 Integrateinfiscal policy,the Strategyfor a sustainable reduction of Mali's debt level, prepared in August 2003 and based principally on increasedfinancing in the form of budgetarygrants; 9 Implementthe conclusionsof the Reform ofthe InternationalAid Mechanism in Mali, so that Official Development Assistance can be an efficient tool in the reduction of povertyand promotion of economic growth. 27 -Report the first year of implementationof Mali's Poverty ReductionStrategy Paper (PRSP- CONCLUSION By adopting a Poverty Reduction Strategy Paper (PRSP), on May 29, 2002, Mali has confirmed, once more, its willingness to make the reduction of poverty the priority of all its development priorities. Reflecting all sector policies and programs focused on poverty reduction, the implementation of the PRSP has effectively started with the development and implementationof the 2003 Central Government budget. Therefore, the point is not, here, to "take stock, but to "make an assessment" of the major actions already undertaken or envisaged under the PRSP's main strategic pillars At the end of this exercise, we can say that Mali's macroeconomic framework has been strengthened, despite a less enabling environment in 2002/2003. We can also say that the main indicators point, overall, in the right direction, and that some important reforms are being initiated. However, to attain the objectives it has set for itself at the end of PRSP in 2006 and achieve the Millennium Development Goals (MDGs), Mali must find appropriate solutions to recurrent problems and take up a number of challenges it faces in the future. These include notably? 9 The progressive improvement of the poverty reduction strategy defined under the PRSP, the deepening of the analysis of poverty reduction policies, the focusing of sector policies and strategies around the priority pillars of the PRSP as well as the taking into consideration of the devolution process; 9 The acceleration of growth in order to reduce poverty, while preserving macroeconomic stability and making the national economy less vulnerable to external shocks through the processing of commodities and diversification of exportable goods, the continuation of regional integration within WAEMU and ECOWAS; 9 The continuation of the stabilization of public finances and of debt sustainability, through notably the increase in tax revenue, and the improvement of the managementof public expenditure; > The acceleration of the process of transferring responsibilities and resources from the central government to local authorities as well as the strengthening of local government budget management; 9 The continuation and deepening of structural reforms seeking to ensure macroeconomicstability, improve competitiveness and make the national economy less vulnerable to external and internal shocks, and make the private sector the driving force of economic development; 9 The reinforcement of the mechanisms for monitoring and evaluating the implementationof the PRSP; 9 The improvement of coordination in the areas of development planning and management, in general, and external assistance, in particular. `See aides - memoiresof IMF missionsfrom August to September2003 (ref. Annex 10: Sources and bibliographic references). 28 -Report the first year of implementationof Mali's Poverty ReductionStrategyPaper (PRSP- ~ _ _ ____ ANNEXES 29 - 1* Main Economicand Flnancial Indicators ................................................................................................................................................................................................................................................... GROWTH i 20011 2002; 2003; 20041 2005!.......................................................... 2006/2002/2006 ....................................... Rea!,,,GDP.......................................................................................................... j/. ............................................................................................................................................................................. ............................................... : .................................................. ..................................................... 1,5%1 9,3%,........................................... 7,4% 5,9%!........................................ 5,6%j 5,3%1...................................... 6,7% !!!?..ok.i......!!,6%] 7.!?/0.......... / !. j ................................................................................................................................... I............................................................... Primary sector ./ :. ......... 39,0%/ 38,8% 39,8?40 ~ ................................................................................................................................................................. In percent of GDP ,,: / ............................................................................................................. -1314%! 1915%i .......?.!?O/j !.?!ah.. 37,9%! 41,5%! 40,0%/ 39,5%!".................................................................................................. ... Contribution to growth......................................................... i -6,0%! _ ........."............................................... 1 7,4%! 1,5%1+ 1,8%!+ 1,8%!. ............. ........................ 1,8%!.............................................. 2,8% ~ " "i Seondary.8!%k .............................................................................................I 31,0%! -2,6%/ 17,9%; ................................................................................................. In percent of GDP .................... .................................................. ! &....................................* ................ 23,1%I' 22,9% 22,7% ......................................................................................................................................................... Contribution to growth '!..I ............................ .... 6,3%/ 4,8%:.................................. ..................,................ 4,4%1~................................ 6,2% ... ...( 237%I 21?1%:: 232%; 23,3%!.................................... 5,796 -0,6%i 3,8%j 1,5%! .. ................................. 6?!?04.i.............................................5?8o/q:............51.!9%........ , 1,1%!................................................................................. 1,0961 1,4% ....................... ~ .................................. ........................................................................................................................................... Primary sector ..... .......... 6?.70k.i ......... ... .............................................. Contribution to.growth ...................................................... 0,4%! In.eercel?t.!?fGDP,............................................................................................................................................................................................ 3o,o%j 30,2%1............................................................ 30,5%! 30,7%i, 30,404 ,.., .,. co?tribuion....Of ind.irect .o,o/,i..: 8 I.!? ....................................................................... ................................................................... .........i........ %' ! 0,7%\ 0,7%1 0,7%!............................................ 0,7% ~ ../.. ..................................................................................................................................... Check .taxes................................................................ i..........O,O% ...o6.5.1 0,7%1 1,9%; 1,4%! 2,0%! 2,0%; ......................................................... 1,8%; 1,8% ~ .:......................... ; 0 ................,.................................................. O,O%i O,O%! 0,0%1>.. O,O%i ............................ 0?0% ................... .......................................................................................................................................................................................... ...................................................................... ...........................Deflator GDP ................................... !.................................................. I !!-!crease....i,n,lhe,!o!ume Of.ex.Ports........................................................... ncrease..i.n..the,vo!.u.m.e..of..!.m.p.prts~s j 08%;' 06%:.: 0,,8,04 ............ ~ 78%!; 32%!;..................................... 2 ! ................. -2,7%1..................2 4 2!.......04.;................ ! ............ ...............?..... ....................................................... 13,3%1 11,4%i............................. ....................... ..oi...............2...............i.................................. 9,1%! 7,30/' 69%: 6,6%!................................... 8,3% ~ .: ............................................. j : : 19,1%1' 9,4%1 16,4%/' 6,1%/ 3,6%!+. 2,7%!.+ / 7,7% ............................................................... Total investment/GDP................................................................................. I............I ............... 20,7%/ 23,1%i 22,7% ., Public investmentlGDP I. :; i .................................:................................... 21,1%1..........76%; 23,4%! 23,0%I., 23,3%I.................. ." , ."....................................................... ,............................... .............+............ .... ........... ........... 82% Domestic....savi?.%Ete .................................................................................... : 83%': 81%;................... ................................................. 82%1L ? ................. 88%i .................................... 1 .......................... ~ ! ! ................. ! ! * ! a " ................................ 16,6%1" 16,2%1 19,0%1 18,4%1 17,6%/ 15,8%' 17,4% REAL SECTOR DATA !. I Y ,------. I I I I I' I t I I I I I II I Annex 5: Mali's main macroeconomicindicators, ~ ~~ Sources: DNPlDNSllCNPE 2003* = estimations. Mali-1st PRSP ProgressReport improved englishfinal.doc mai 24,2004 (4:49 ) Annex 6: < o\ m mi a m i m Q 9 2 m E P I 0 m Y %m L i 12 n u ? u 3 n 12 3 (b i 3 u 3 u 4 9 3 u n + 12 -4 n u . ? 2n u 3 3 d 2n (s u x) n vi m . '? . m 10 n : m . d n m 2m . \ n 0 o\ 2 6 I : I P P ? 3 .2, \ P 0 n 0 u i "i ? "i x 3 d E t; . 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Um C 0 0 .-S e 8 0 .-* e hl E E 0 m3 8 E &a, *a, v) 3 C -E -0 28 r e! a -.. m .. W ca, B fa, ? m hl 0 n 0 a, tn 0 z z E 0 E z a 3 a a h h a 0 n n m 2 z 2