For Official Use Only CLR Review Independent Evaluation Group 1. CAS/CPS Data Country: Seychelles CAS/CPS Year: FY12-16 CAS/CPS Period: FY12 – FY16 CLR Period: FY12 – FY16 Date of this review: June 29, 2018 2. Ratings CLR Rating IEG Rating Development Outcome: Satisfactory Satisfactory WBG Performance: Good Good 3. Executive Summary i. The World Bank Group’s (WBG) Country Partnership Strategy (CPS) for Seychelles covers the period, FY12-FY15. The CPS was extended by one year to FY16 at the Country Partnership Strategy Progress Report (CPSPR) in FY15. This Review covers both the CPS and CPSPR period, FY12-16. ii. Seychelles is a high-income country—the only one in Sub-Saharan Africa (SSA)—with a GNI per capita of US$15,410 (2016) in current US dollars, well above the US$1,646 average for SSA. Its average rate of growth of 4.8 percent during the CPS period was well above SSA average. Like other small island countries, its economy is predominantly service-based and largely dependent on the tourism sector and fisheries. Seychelles has eliminated extreme poverty in terms of the international poverty line. Poverty measured by a higher international line is also very low: 2.5 percent at the middle-income line ($3.10 per day, at 2011 PPP). However, inequality is significant (Gini coefficient for income: 46.8) (SCD, 2017). Seychelles is ranked 63rd (of 188 countries), among the top third of countries, in terms of the UN Human Development Index. iii. WBG’s support for Seychelles was in line with the country’s draft Seychelles Medium-Term National Development Strategy 2013–17 (MTNDS), later approved in 2015, which presented the vision and goals for the country. The core aim of the MTNDS was to reduce Seychelles’ vulnerability and to provide the basis for long term sustainable development. Specifically, the objective of the MTNDS was to reduce vulnerability, increase resilience, and provide the basis for a sustainable development. The WBG supported the government in reducing vulnerability and building long-term sustainability with a program centered on two pillars: (i) increasing competitiveness and employment and (ii) reducing vulnerability and enhancing resilience, and one cross-cutting foundation, governance and public-sector capacity. The CPS built on the previous Interim Strategy and aimed to deepen and broaden structural reforms via programmatic support using Development Policy Lending (DPL) operations, complemented with Analytical and Advisory Services (ASA), including technical assistance and reimbursable advisory services (RAS). iv. On balance, the overall program development outcome was Satisfactory. Of the 11 objectives, six were Achieved, two Mostly Achieved, two Partially Achieved, and one was not achieved. Under Focus Area 1, progress was made in improving electricity tariff setting and regulatory framework as well as in the elimination of non-tariff barriers and in facilitating trade, but limited progress was made in reducing time and cost of business registration. Under the Focus CLR Reviewed by: Panel Reviewed by: CLR Review Manager/Coordinator Zeljko Bogetic Juan Jose Fernandez- Pablo Fajnzylber Lead Economist, IEGEC Ansola Manager, IEGEC Consultant, IEGEC Takatoshi Kamezawa, Senior Lourdes Pagaran Evaluation Officer, IEGEC CLRR Coordinator, IEGEC For Official Use Only CLR Review 2 Independent Evaluation Group Area 2, satisfactory results were achieved, including in the adoption of the Disaster Risk Management Act and the associated plan, in advancing the practice of risk management, and in strengthening of the social protection system. Under the cross-cutting foundation area of governance and public-sector capacity, good progress was made with increased transparency and improved regulation of the petroleum sector as well as in strengthening statistical capacity for producing economic and demographic data, and in the adoption of strengthened budget management practices. However, there is no evidence of clear progress on the objective of reducing the share of government health spending in total expenditure. v. Overall, the World Bank Group performance was Good. The Program was aligned with government priorities and relevant for the corporate goals of poverty reduction and shared prosperity. Although the twin goals do not figure explicitly in the CPS objectives, most objectives implicitly relate to the corporate goals. The design of the Program, the choice of instruments and mix of DPL and TA was appropriate. The choice of instruments, especially the DPLs, allowed the WBG to concentrate resources and support the government’s structural reforms for impact, and exploit the synergies between DPLs and technical assistance, in specific areas of policy and institutional reforms and capacity building. Selectivity of the Program was mixed. The program had strategic selectivity with two focus areas and one cross cutting area. However, with 11 objectives, greater selectivity could have been exercised in the objectives of the CPS, and some objectives could have been more carefully selected with more relevant indicators. At the PLR stage, the Bank demonstrated flexibility by extending the CPS period by one year to respond to the emerging priorities of the government and by scaling up its program and focusing it on relevant areas, especially DRM. At the PLR stage, the results framework was also modified, providing a clearer logic of interventions albeit with some remaining shortcomings. The government demonstrated ownership on a broad front of reforms, but with indications of weakening ownership and implementation towards the end of the period. IFC activities were limited to one advisory service (AS) project for Public Private Partnership (PPP) in FY15, which was terminated in FY16. No safeguard or fiduciary issues were reported during the CPS. vi. The IEG concurs with key lessons in the CLR: (i) development policy operations can be mobilized quickly and achieve strong results when complemented by sound analysis and technical assistance but it requires commitment and ownership, (ii) deeper understanding and assessment of political economy would help explain the successes and failures of specific reform efforts and identify factors that might otherwise be missed, and (iii) well-designed and updated results framework prove useful for Bank and Government monitoring of program implementation and results. vii. IEG adds two lessons, as follows: • In a very small island economy, it is important for the World Bank Group to be highly selective in the choice of objectives and to prioritize areas of interventions to enhance development impact. In the case of Seychelles, CPS objectives covered 11 areas. By covering fewer objectives, the CPS could have focused the Bank’s interventions and activities on areas of highest need and potential impact. • The PLR process represents an opportunity to effectively undertake mid-course corrections to respond to changing circumstances and priorities of the government, and the need to improve and retrofit a weak results framework. In the case of Seychelles, the CASPR was effectively utilized to scale up support for the government and strengthen an otherwise weak results framework that helped both government and the World Bank to monitor and report on results at the end of the CPS. 4. Strategic Focus Relevance of the WBG Strategy: 1. Congruence with Country Context and Country Program . Seychelles is a small island economy which has in recent years made a rare transition from an upper middle-income country to a For Official Use Only CLR Review 3 Independent Evaluation Group high-income country after a debt crisis with public debt peaking at 140 percent of GDP in 2008 and a massive decline in per capita income during 2007-10. During the review period, the country’s GNI per capita grew from $12,240 in 2012 to $15,410 in 2016. Following a 4 percent growth in 2012, Seychelles averaged 4.8 percent annual growth in the 2013-2016 period, substantially higher than the averages for the Sub-Saharan Africa region (3.5 percent) and the world (2.5 percent). 2. The WBG’s focus areas and objectives were aligned with the draft Seychelles Medium-Term National Development Strategy 2013–17 (MTNDS), which presented the vision and goals for the country. The core aim of the MTNDS was to reduce Seychelles’ vulnerability and to provide the basis for long-term sustainable development. In addition, Seychelles Sustainable Development Strategy 2012-2020 has broadened the development focus from the previous environmental management towards economic management, human capacity building, and strengthening resilience and protection of the environment. The CPS supported the Government’s national strategy in two key areas: reducing vulnerability and building long-term sustainability with a WBG program centered on two pillars, (i) competitiveness and employment and (ii) vulnerability and resilience; and one cross- cutting foundation, governance and public-sector capacity. Both pillars and the cross-cutting foundation were highly relevant. The CPS built on the previous Interim Strategy and aimed to support structural policy reforms with programmatic support using Development Policy Lending (DPL) operations, extensive TA and some reimbursable advisory services. 3. Relevance of Design. WBG interventions could reasonably be expected to achieve most of the CPS objectives and contribute in a significant way to the country development goals. Overall, the CPS areas of involvement and objectives aligned well with the country development goals. The use of DPOs to address policy reforms was appropriate, and it complemented the work of development partners (primarily, African Development Bank, UNDP, EU, and IMF). Analytical work focused on sectors in which the Bank was engaging, helped deepen country knowledge, and complemented analysis undertaken by other partners. Supporting TA was complementary in building capacity in areas of policy reform, and RAS interventions focused specifically on public financial management and social protection. Trust fund resources were utilized in some areas such as the extractive industry transparency initiative, statistical capacity building, and disaster preparedness. A key weakness of design was that there were too many objectives (11) in relation to the limited WBG interventions. In addition, there were some objectives that were not well linked to indicators. For example, it is unclear how interventions under objective #3 would contribute to increased competition and the link to the reduced role of the public sector in the housing finance market could have been stronger. The Bank program required substantial government commitment to reform and a significant local capacity to implement policies. While both generally materialized, there was a question of whether the implementation capacity of local institutions was sufficient to ensure progress in all areas of the reforms supported by the six DPLs. Selectivity 4. The program’s selectivity was mixed. It was generally selective with two focus areas and one cross-cutting foundational area, using DPL operations as main instruments of interventions. The choice of instruments was based on the Bank’s comparative advantage and allowed the WBG to concentrate resources and support the government’s structural reforms for impact . However, the program was less selective in terms of the number of objectives (11), especially with respect to the foundational, cross-cutting areas and the number of indicators (21) given the scope of the WBG interventions and limited IBRD financing. Alignment 5. The Program was relevant for the corporate goals of poverty reduction and shared prosperity although the goals did not figure explicitly in the CPS objectives. Increasing competitiveness and employment, reducing vulnerabilities, and increasing resilience were all areas that would contribute to a reduction of poverty. In this vein, the WBG scaled up its program in mid-course in response to client demand, and provided support with DPL-DDO for reducing vulnerability, increasing resilience, and strengthening disaster risk management. AAA on the design of electricity tariffs modeled the For Official Use Only CLR Review 4 Independent Evaluation Group impact of rate increases on the poor and vulnerable, and housing subsidies were designed to benefit low-income households. 5. Development Outcome Overview of Achievement by Objective: Focus Area I: Competitiveness and Employment 6. Objective 1: Revised electricity tariffs and regulatory framework to encourage efficiency, reduce losses, and promote renewable energy 7. This objective, with two indicators, was supported through the Sustainability and Competitiveness Development Policy Lending (DPL) series 1-3 (FY13-FY15), and Improving Electricity Planning Technical Assistance (TA). • Market based utility rates applied by 2014 compared to ad hoc subsidized rates in 2011. The DPL series supported the adoption of market based utility rates. Achieved. • Grid codes and feed-in-tariffs for renewable energy are in place by 2016. Information from different sources indicate that the grid code was developed and in place. Achieved. • The ICR for the DPL series noted that Public Utility Company’s losses decreased from SR123.5 million to SR12.9 million between 2011 and 2015, and eliminated its accumulated losses. • The two indicators were achieved, which contributed to the stated objective of revising tariffs and the regulatory framework to encourage efficiency and promote renewable energy. Additional information indicated that the reduction in PUC’s losses eliminated its accumulated arrears. On balance, this objective was Achieved. 8. Objective 2: Reduced time and cost to start a business This objective, with two indicators, was supported through the Sustainability and Competitiveness DPL series and the Business Regulatory Reform TA (FY13). • Number of days to register business falls from 39 in 2011 to 1 in 2016. The number of days dropped slightly to 32 days (well above the target). Not Achieved. • Online system for registration of companies is set up by 2016. The ICRR for the DPL series reported that the government had established an online system to register companies. Achieved. 9. The first indicator was not achieved while the second indicator contributed to, but did not measure directly the second dimension of the objective (cost to start a business). Additional information indicates that legislative and administrative amendments have been introduced to simplify the process of registering a business, but it remains to be seen how these measures translate into reducing the cost of doing business. The 2017 Doing Business Report showed improvements in the ranking of Seychelles. On balance, this objective was Partially Achieved. 10. Objective3: Increased competition and reduced role of the public sector in the housing market 11. This objective, with two indicators, was supported through the Sustainability and Competitiveness DPL series and the Business Regulatory Reform TA (FY13). The Housing Finance TA (FY15), and the Financial Sector Development Implementation Plan (FSIP)(FY15) supported this objective. • Government has approved housing policy that better targets low-income households in need of assistance. A new subsidy housing policy was approved, which targeted subsidy For Official Use Only CLR Review 5 Independent Evaluation Group payments to low-income households in need of assistance, and 555 new mortgage loans were approved, using the new subsidy policy. Achieved. • Housing Finance Company (HFC) has been reformed to address challenges related to its conflicting mandates. The CLR reported that, to reduce price distortion and increase competition in the housing finance market, the state-owned HFC’s functions were split into two areas: housing finance (HFC) and social (rental) housing (managed by the Property Management Company, PMC). Achieved. 12. Better targeting of housing subsidies could potentially contribute to the reduced role of the public sector. However, there are probably other important intervening factors such as the regulatory barriers to the private sector entry and operation in the housing market relative to the public sector, which are independent from housing subsidies. Addressing the conflicting mandates of the HFC may contribute to increased competition. However, there is no indicator measuring directly the stated objective. On balance, this objective was Partially Achieved. 13. Objective 4: Reduced non-tariff barriers to trade in goods, and improved transparency of trade procedures and processes 14. This objective, with two indicators, was supported through the First Regional Development Policy Operation (DPO) for the Accelerated Program for Economic Integration (FY16) by eliminating permits in line with the country’s commitments with WTO as well as by setting up an online system of applications for import-export permits to improve transparency and accelerate the processing of applications. • Abolition of existing export permit requirements in line with WTO commitments. The existing export permit was abolished as one of the prior actions for the FY16 DPO. Achieved. • Implementation of an online system to apply for import/export permits. An online system for import/export permits was established and functioning. Achieved. • These are relevant output indicators, but there is no evidence of the actual impact of reduced non-tariff barriers and improved transparency. On balance, this Objective was Achieved. 15. Focus Area I was Moderately Satisfactory. Of the four objectives, two were achieved and two were partially achieved. There was good progress in reducing non-tariff barriers and improving transparency of trade and procedures and in revising electricity tariffs and regulatory framework to encourage efficiency, reduce losses, and promote renewable energy. However, there was more limited progress in reducing time and cost to start a business and in increasing competition and reducing the role of the public sector in the housing market. Focus Area II: Vulnerability and Resilience 16. Objective 5: Strengthened institutional/legal framework for disaster risk management 17. This objective with two indicators was supported through the Disaster Risk Management (DRM) DPL with Catastrophe Deferred Drawdown Option (CAT DDO) (FY15). • National DRM Act adopted by the National Assembly and updated Disaster Risk Management (DRM) Policy approved by the Cabinet of Ministers. The new DRC Act was approved by the National Assembly in July 2014 and the updated DRM Policy was approved by the Cabinet in July 2014. The revised DRM Policy detailed responsibilities for risk assessment, risk reduction, adaptation, preparedness and response. Achieved. • A Master Plan for Disaster Risk Management is developed. DRM Act included a National DRM Management Plan and an Integrated Emergency Management System. Building on this, the government has also adopted an early warning system. Also, ISR reports that between 2014 and 2017 district protocols for preparedness and response were piloted in two districts of out five and that education and awareness materials were developed. Achieved. For Official Use Only CLR Review 6 Independent Evaluation Group 18. These are output indicators that would contribute to strengthened institutional/legal framework for DRM. On balance, this objective was Mostly Achieved. 19. Objective 6: Improved targeting, administration and financial sustainability of the social protection system 20. This objective was supported through the Sustaining Reforms for Inclusive Growth DPL series (P153269, FY16) and through several TA, including the FBS - Social Protection (FY13), the Social Protection TA (FY12), and the Safety Net TA (FY13). This objective had three indicators: • Multiple agencies providing welfare assistance merged into a single Agency for Social Protection by 2012. A single Agency for Social Protection (ASP) was established in 2012 under the Agency for Social Protection Act, and mandated it to administer social security benefits and social welfare programs. ASP’s multiple reporting lines were also clarified. Achieved. • A single robust social protection Management Information System (MIS) in place by 2013. The ICR for the FY16 operation reported that a robust and automated MIS to determine eligibility for benefits was implemented. Additional evidence indicated that the share of ineligible beneficiaries of welfare assistance decreased from 33% (2012) to 12.6%, as of December 2015. Achieved. • The pension contribution rate is increased to 5 percent by 2014 from 3 percent in 2011. The ISR for the DPL series reported that the government had increased the pension rate contribution from 3% in 2011 to 4% in 2014. Revenues from the SPF increased from 0.8 percent of GDP 2011 to 1.8 percent of GDP in 2015. 21. The three indicators covered the three dimensions of the stated objective of administration, targeting and financial sustainability. The objective was Achieved. 22. The IEG rates the outcome of Focus Area II as Satisfactory. The two objectives were achieved or mostly achieved. The objective of improving the administration, targeting and financial sustainability was achieved. The output indicators for strengthening institutional/legal framework were also achieved, which were key building blocks for achieving the stated objective. Cross-Cutting Foundation: Focus Area III: Governance and public-sector capacity 23. Objective 7: Adoption of strengthened budget management practices 24. This objective was supported through the Sustainability and Competitiveness DPL series and the Sustaining Reforms for Inclusive Growth DPL (FY16) as well as the Public Financial Management TA (FY15) and, a RAS TA (FY17). • Full inclusion of recurrent costs of capital projects into the recurrent budget by 2015 compared to no linkages in 2011 The CLR reported that the Public Sector Investment Plan (PSIP) did not include the full recurrent costs of capital project. Not Achieved. • Reduction in the difference between budgeted and executed budget from 4.2% in December 2011 to 2.5% by December 2015. The second indicator was overachieved after the PFM Act with a reduction in the differences between voted and executed budget, from 4.2% (December 2011) to 0.5% (December 2015). Achieved. • Full adoption of Program and Performance-based Budgeting (PPBB) by 2017. The new Public Financial Management Act introduced a Program Performance Based Budgeting (PPBB), which was piloted in two Ministries for the 2015 and 2016 budgets, and rolled out in three ministries in 2016. The ICR also reported that the PPBB was to be rolled out in all ministries between 2017 and 2019. Mostly Achieved. • With one indicator not achieved and two achieved or mostly achieved; this objective was Mostly Achieved. For Official Use Only CLR Review 7 Independent Evaluation Group 25. Objective 8: Government expenditure on health as a share of total health expenditure falls from 87 percent (2009 baseline) to 80 percent by 2016 • This objective, with one indicator, was supported through the Sustaining Reforms for Inclusive Growth DPL (P153269, FY16) and the Social Sectors and State-Owned Enterprises RAS 6 (P157794, FY16) • Development of sustainable health financing strategy (baseline none). A health financing strategy policy was adopted, representing a shift towards prevention and wellness promotion services, and that served to reallocate resources towards health and prevention and promotion services. Achieved. 26. There is a mismatch between the objective and the indicator. There is also an issue with the formulation of the objective as it is more of an indicator than an objective. It is also unclear why it would be desirable to reduce the share of government expenditure in total health expenditure. The ICR reported that the health objective was related to improving efficiency in the health system and towards health prevention and promotion services which increased from 6% of the total health budget (2014) to 12.5% as of December 2016. However, while indicative of potential improvement in sustainability because curative services are typically cost drivers in the health system as compared with preventive services, evidence presented is not convincing that sustainable health strategy has been put in place. On balance, this Objective was Not achieved. 27. Objective 9: Increased transparency and strengthened regulation in the petroleum sector. The objective was supported through the Sustainability and Competitiveness DPL series and a small grant from the Extractive Industries Technical Advisory Facility for the Implementation of the Extractive Industries Transparency Initiative (EITI) project (P150595, FY15) and the Seychelles Petroleum Sector TA (P132697, FY16) supported this Objective. • Petroleum Regulatory Authority is established and petroleum legislation revised by 2014 (baseline no Petroleum Authority. Petro-Seychelles was created in March 2012 to supervise, monitor and promote upstream activities and oversee exploration activities. The Petroleum Mining Act and the Petroleum Tax Act were revised in 2013 to improve the legal and fiscal framework for awarding and administering Petroleum Agreements. Achieved. • EITI report submitted to EITI Secretariat for evaluation by end 2015 (baseline no report submitted). Seychelles was admitted as a candidate to IETI in August 2014. In July 2016 Seychelles submitted its 2015 Annual progress Report. In July 2017 the country also presented its 2016 Annual progress Report. EITI webpage presents the published reports for Seychelles. Mostly Achieved. 28. The two indicators are important institutional reforms and actions that lay the foundation for greater transparency and better regulation of the petroleum sector. However, they do not measure increased transparency and improved regulation. On balance this objective, was Mostly Achieved. 29. Objective 10: Strengthened Capacity of the National Bureau of Statistics to Provide Economic and Demographic Data. 30. This objective supported through the Sustainability and Competitiveness DPL series; the Poverty Statistics and Inequality TA (P156329, FY15, see final Report) and the Building Statistical Capacity for Evidence-Based Policies (BSCEP) TA (P116997, FY13) contributed to this Objective. • Quarterly National Accounts report is released to the public by 2014. The CLR reported that the Quarterly National Accounts were published on the external website of the National Bureau of Statistics (NBS). Achieved. • Additional information suggested mixed results: the 2017 SCD reported that while NBS lagged international standards, its dissemination capacity scored high. On balance, this objective was Achieved. For Official Use Only CLR Review 8 Independent Evaluation Group 31. Objective 11: Adoption of a modern legislative framework for insolvency and alternative dispute resolution. 32. This objective was supported through the Sustainability and Competitiveness DPL series and the Business Regulatory Reform TA (P123351, FY13) supported this Objective. • Commercial Division at the Supreme court established and operational by 2013 (baseline no commercial division). A specialized commercial division, within the Supreme Court, was established and the set-up of a new mediation framework and new commercial list rules laid out (April 2012) to speed hearing processes. Achieved. • The backlog of commercial cases registered by December 2011 is processed by December 2016 (baseline no backlog registered). The ICRR for the DPL series reported that the share of commercial cases resolved at the commercial court within 12 months as a share of cases lodged increased from no cases resolved in 2011 to 52% as of December 2015. It also reported that as of December 2015, 97 cases were completed, while 91 cases were pending (or 65%). Partially Achieved. 33. With one indicator achieved, and one partially achieved, this objective was Mostly achieved. IEG rates the outcome of WBG support under the Cross-Cutting Foundation Governance and Public- Sector Capacity as moderately satisfactory. Out of five objectives, one was achieved, three mostly achieved, and one not achieved. The main achievements were with reforms that strengthened the national statistical capacity, with moderate achievements in insolvency and resolution frameworks, budget management, and transparency and regulation in the petroleum sector. No achievement was recorded in the area of public expenditures. Overall Assessment and Rating 34. On balance, IEG rates development outcome as Satisfactory. The Program achieved moderately satisfactory results in the first focus area of supporting competitiveness and employment, especially in improving electricity tariff setting and regulatory framework as well as in the elimination of non-tariff barriers and in facilitating trade but less progress was achieved in reducing time and cost of business registration. In the second focus area of reducing vulnerability and increasing resilience, the Program achieved satisfactory results, which were especially relevant given the vulnerability of the small island economy to environmental and social risks. These results included the adoption of the Disaster Risk Management Act and Master plan and advancing the practice of risk management, as well as strengthening administration, targeting and sustainability of the social protection system. In the cross-cutting foundation area, the outcome was moderately satisfactory with the most important achievements being in the areas of increased transparency and improved regulation of the petroleum sector as well as in strengthening of the statistical capacity for producing economic and demographic data. Good progress was also achieved in the areas of adoption of strengthened budget management practices, especially with the introduction of performance based budgeting, as well as in the adoption of a modern insolvency framework and mechanisms for commercial disputes. There was no evidence of clear progress on the objective of reducing the share of government health spending in total spending and this objective scored poorly on relevance and quality of formulation and links to its indicator. Objectives CLR Rating IEG Rating Moderately Focus Area I: Competitiveness and Employment Moderately Satisfactory Satisfactory Objective 1: Revised electricity tariffs and regulatory framework to encourage efficiency, reduce losses, and promote renewable Achieved Achieved economy Objective 2: Reduced time and cost to start a business Partially achieved Partially achieved Objective 3: Increased competition and a reduced role for the Partially Achieved Partially achieved public sector in the housing finance market For Official Use Only CLR Review 9 Independent Evaluation Group Objective 4: Reduced non-tariff barriers to trade in goods, and Achieved Achieved improved transparency of trade procedures and processes Focus Area II: Vulnerability and resilience Satisfactory Satisfactory Objective 5: Strengthened institutional/legal framework for Achieved Achieved disaster risk management Objective 6: Improved targeting, administration and financial Achieved Achieved sustainability of the social protection system Cross-Cutting Foundation: Focus Area III—Governance Satisfactory Moderately satisfactory and public-sector capacity Objective 7: Adoption of strengthened budget management Achieved Mostly achieved practices Objective 8: A Government expenditure on health as a share of total health expenditure falls from 87 percent (baseline) to 80 Not achieved Not achieved percent by 2016 Objective 9: Increased transparency and strengthened Achieved Achieved regulation in the petroleum sector Objective 10: Strengthened capacity of National Bureau Achieved Achieved Statistics to provide economic and demographic data Objective 11: Adoption of modern legislative framework for Achieved Mostly achieved insolvency and alternative dispute resolution 6. WBG Performance Lending and Investments 35. During the CPS period, IBRD approved a total of $38 million in new lending commitments, in line with the planned program lending. Initially, new lending approved during the CPS period consisted of the three DPL series on Competitiveness and Sustainability, each for $7 million, totaling $21 million. Following the CPSPR, the program was significantly expanded with three additional operations in response to client demand, featuring $7 DRM DPL-DDO, $5 million Regional Integration, and $5 million Second DPL series. IBRD lending was complemented by trust funded activities in the amount of $2.2 million in the area of extractive industry transparency, statistical capacity, and disaster preparedness. 36. The Program was implemented mainly using the DPL as a budget support instrument, which was suited for support to a broad front of policy reforms, combining policy dialogue, assistance in the design of reforms, and financing for the budget. The DPLs were also accompanied by complementary capacity building using technical assistance. Seychelles performance at exit was better than its SSA and Bank-wide averages. 37. IEG project validations rate the three DPLs (2013, 2014, and 2015) as moderately satisfactory. However, the most recent DPL Sustaining Reforms for Inclusive Growth was rated moderately unsatisfactory, reflecting weakening of ownership and implementation. Analytic and Advisory Activities and Services 38. During the CPS period, a total of 21 ASA products were delivered: three ESW and 18 TAs, including four RAS. One ESW was on poverty and inequality analysis, broadly in line with the plan in the strategy. In support of the reforms to improve electricity tariff, reduce losses, and strengthen regulatory framework for renewable energy, three AAA were prepared: Preparation of Grid Code and Feed in Tariffs for Renewable Energy (SIDS-DOCK grant), Seychelles Electricity, Water & Sewage Tariff Study, Seychelles Energy Efficiency and Renewable Energy Project (IFC). Building on the past policy dialogue under the earlier PER and DPLs, a programmatic public expenditure review (2013- 14) has informed policy reform on public investment management, social protection and health and For Official Use Only CLR Review 10 Independent Evaluation Group education as well as the subsequent DPLs. AAA has generally been strategically selected and often embedded in the broader package supporting the DPL operations. 39. IFC activities were limited to one AS project approved in FY15 for PPP advisory, which was terminated in the following year FY16. Since there was no AS exit, IEG did not validate any Project Completion Report (PCR) of the IFC AS Project. Results Framework 40. The original results framework was weak with unclear objective statements and with the link between outcomes and WBG interventions not clearly established. At the PLR stage, the results framework was modified, providing a clearer logic linking country development goals, CPS objectives, indicators and WBG interventions. For the most part, the revised results framework had clear and quantitative targets or binary, qualitative baseline and targets. Notwithstanding the positive changes at the PLR stage, there were some shortcomings: (i) there could have been fewer than 11 objectives, which could have been more consolidated, given the scope of WBG interventions; (ii)There were also some issues with the objective formulation: Objective 8 was more of an indicator than an objective while some objectives were pitched at the process level (objectives 7 and 11); and (iii) there was also an issue of weak links between objectives and indicators. For instance, Objective 3 does not link to an indicator measuring increased competition. Reduction of subsidies and their better targeting to low-income households is, on its face value, a reform that has the potential to have a positive impact on the budget and equity, but it is unclear how it is related to competition. The other indicator could be better formulated to be more directly linked to the part of the objective measuring reduced role of the state. Finally, some indicators are output indicators that do not sufficiently measure the stated objectives. It is understood that many upstream institutional reforms necessitate upstream output indicators for monitoring progress and in this case, the objective could have also been adjusted to better link with the indicators. There was limited discussion of scale up of objectives and achievement to country level outcomes and twin goals. Partnerships and Development Partner Coordination 41. The other development partners were IMF, EU, AfDB and the UNDP. Collaboration with the IMF was good, guided by the Joint Management Framework and team collaboration including during Bank missions. The country was on an IMF program during the period of evaluation. Except for a temporary slippage in 2016, the program has remained on track (IMF Article IV Consultation 2017). While there has been some overlap with the other partners’ activities, the Ministry of Finance has exercised coordination and this arrangement appears to have fostered coordination and ownership. Safeguards and Fiduciary Issues 42. During the CPS period, there were no safeguards and fiduciary issues and no complaints were brought to Inspection Panel and INT. Ownership and Flexibility 43. The government was committed to a broad front of structural reforms, which were mostly implemented. The ownership of reforms was mirrored in the WBG selection of the DPL instrument in support of the government’s reform program. Many of these reforms were substantial, including, for example, passing new legislations (e.g., DRM, PFM Act), creating new institutions (Petroleum Authority), and putting in place new budgetary practices such as performance based budgeting. This and the apparent sustainability of reforms reported demonstrated strong ownership. The IMF reports also show the medium-term program on track with strong progress the government has made on long-term fiscal consolidation and reduction of the public debt-to-GDP ratio. The WBG demonstrated flexibility by extending the CPS period to align it with the election cycle and to respond to the emerging priorities of the new government. In response to the government’s request, the WBG provided additional DPL support, including in the critical area of disaster risk management using DPL-DDO as well as a regional integration operation. At the PLR stage, the results framework was retrofitted by defining the CPS objectives and indicators and their linkages to the WBG interventions. For Official Use Only CLR Review 11 Independent Evaluation Group WBG Internal Cooperation 44. The IFC activities were limited to one AS project in FY15, which was terminated in FY16. As a result, internal cooperation between IBRD and IFC was limited. Results frameworks did not appear to reflect the contribution of the IFC. Risk Identification and Mitigation 45. The WBG strategy discussed and assessed key risks, especially macroeconomic and fiscal risks. The Program in its choice of instruments using DPLs and in its collaboration with the IMF embedded strong mitigation mechanisms of those risks. Disaster risks to the Bank program were directly addressed in the DRM DPL-DDO in FY2015 as well as in the related TA. The CPS covered a period of political stability and related risks did not materialize. Overall Assessment and Rating 46. World Bank Group performance was, overall, rated as Good. The design of the Program, the choice of instruments and mix of DPL and TA was appropriate, including the WBG flexibility and readiness to scale up its program and focus it on relevant areas in FY15, especially DRM. However, selectivity could have been stronger, including with fewer number of objectives, better choice of objectives and more outcome oriented indicators. Combining DPL with appropriate TA was also a strong feature of the Program. Focus Areas were relevant and well-chosen but the number of objectives (11) could have been fewer, including fewer cross-cutting areas, and some objectives had indicators that could have been more outcome oriented. The Bank collaborated well with the IMF and other partners. The CPF integrated lessons from the previous strategy, including continued, strong client focus and the need for flexibility. Implementation 47. Program implementation was solid with preparation and delivery of the DPLs on schedule. This included flexible scaling up of Bank Program and scaled up delivery on a tight timeline in the FY15-16 period. However, as noted in the case study on Seychelles in the IEG evaluation on small states and in the most recent validation of the DPL (2017), ownership and implementation has been weakening towards the end of the review period. Given limited engagement of the IFC, internal synergies were weak. The AAA part of the program was extensive and relevant, mostly in the TA form, supporting the DPL lending program. The Bank was responsive to the change in client demand and the need to provide support for disaster risk management. The Bank’s response was timely, flexible, and substantial. The WB Program relied on country systems in its DPLs, in concert with the IMF. No safeguard or fiduciary issues were reported during the CPS. 7. Assessment of CLR Completion Report 48. The CLR is candid, clear and concise. The DO assessment is consistent with the updated CPSPR objectives and results framework. It provides adequate evidence and analysis of the WBG’s contributions to the country outcomes. It also provides adequate evidence and analysis of the design and implementation of the Program and its context. It could have provided more evidence from other sources to supplement the assessment of the achievement given the weaknesses in some of the results indicators. 8. Findings and Lessons 49. The IEG concurs with the lessons in the CLR summarized below: (i) development policy operations can be mobilized quickly and achieve strong results when complemented by sound analysis and technical assistance but it requires commitment and ownership, (ii) deeper understanding and assessment of political economy would help explain the successes and failures of specific reform efforts and identify factors that might otherwise be missed, and (iii) well-designed and For Official Use Only CLR Review 12 Independent Evaluation Group updated results framework prove useful for the Bank and Government monitoring of program implementation and results. 50. To these lessons, IEG adds two more. • In a very small island economy, it is important for the World Bank Group to be highly selective in the choice of objectives and to prioritize areas of interventions to enhance development impact. In the case of Seychelles, CPS objectives covered 11 areas. By covering fewer objectives, the CPS could have focused the Bank’s interventions and activities on areas of highest need and potential impact. • The PLR process represents an opportunity to effectively undertake mid-course correction to respond to changing circumstances and priorities of the government, and the need to improve and retrofit a weak results framework. In the case of Seychelles, the CASPR was effectively utilized to scale up support for the government and strengthen an otherwise weak results framework that helped both government and the World Bank to monitor and report on results at the end of the CPS. Annexes CLR Review 13 Independent Evaluation Group Annex Table 1: Summary Achievements of CPS Objectives - Seychelles Annex Table 2: Planned and Actual Lending for Seychelles, FY12-FY16 Annex Table 3: Analytical and Advisory Work for Seychelles, FY12-FY16 Annex Table 4: Grants and Trust Funds Active for Seychelles in FY12-16 Annex Table 5: IEG Project Ratings for Seychelles, FY12-16 Annex Table 6: IEG Project Ratings for Seychelles and Comparators, FY12-16 Annex Table 7: Portfolio Status for Seychelles and Comparators, FY12-16 Annex Table 8: Disbursement Ratio for Seychelles, FY12-16 Annex Table 9: Net Disbursement and Charges for Seychelles, FY12-16 Annex Table 10: Total Net Disbursements of Official Development Assistance and Official Aid for Seychelles Annex Table 11: Economic and Social Indicators for Seychelles, 2012-2016 Annex Table 12: List of IFC Advisory Services in Seychelles Annexes CLR Review 15 Independent Evaluation Group Annex Table 1: Summary Achievements of CPS Objectives - Seychelles CPS FY2-FY16: Focus Area I: Competitiveness and Actual Results IEG Comments Employment 1. CPS Objective: Revised electricity tariffs and regulatory framework to encourage efficiency, reduce losses, and promote renewable energy Indicator 1: Market based utility The Sustainability and Competitiveness rates applied by 2014 compared Development Policy Lending (DPL) Series to ad hoc subsidized rates in 1 (P125202, FY13), 2 (P132425, FY14) 2011 and 3 (P146567, FY15) supported this Objective as well as the Improving Baseline: Ad hoc subsidized Electricity Planning Technical Assistance rates (2011) (TA) (P154048, FY15, see final report). Target: Market based utility The DPL series provided support to the rates applied (2014) Public Utility Company (PUC) to eliminate ad hoc tariff and introduce market-bases tariffs. Quarterly automatic tariff adjustments to reflect changes in exchange rate and fuel prices were adopted by the Government and utility tariffs were rebalanced in November 2013. Management: MS for the IEG ICRR: MS for the DPL series reports DPL series reports that that the operating losses of PUC were PUC’s losses decreased eliminated and that PUC has been from SR 123.5 million to profitable since 2012 and had erased all SR 12.9 million between its past accumulated losses. 2011 and 2015. Achieved. Major Outcome Indicator 2: Grid codes and The Determination of the Grid Absorption Measures feed-in-tariffs for renewable Capacity of the PUC Grid Code and Feed energy are in place by 2016 in Tariff for Renewable Energy TA (P143254, FY13) supported the Baseline: no grid codes and strengthening of the regulatory framework feed-in tariffs (2011) for the promotion of centralized generation Target: Grid codes and feed-in- with renewable energy systems. –the tariffs for renewable energy in activities contributed to the main outcomes place (2016) sought by the Small Island Developing State DOCK Support Program (SIDS- DOCK). Through this TA, grid codes and feed-in tariffs for renewable energy were developed. IEG Seychelles Country Case Study, part of IEG Cluster Country Program Evaluation on Small States (FY07-15) reports on the preparation of the grid code and feed-in tariffs in place through the SIDS-DOCK. Achieved. 2. CPS Objective: Reduced time and cost to start a business Indicator 1: Number of days to The Sustainability and Competitiveness Data from the 2017 register business falls from 39 in DPL series and the Business Regulatory Doing Business Report 2011 to 1 in 2016 Reform TA (P123351, FY13, final output) indicates that the number supported this Objective. of days required to Annexes CLR Review 16 Independent Evaluation Group CPS FY2-FY16: Focus Area I: Competitiveness and Actual Results IEG Comments Employment Baseline: 39 days (2011) IEG ICRR: MS for the DPL series reports register a business Target: 1 day (2016) that the government introduced several decreased from 39 days legislative and administrative amendments to 32 days, between to simplify the process of registering a 2011 and 2016. business but that only a marginal improvement was realized as the number of days required to register a business decreased from 39 days to 32 days, between 2011 and December 2015. Partially Achieved. Indicator 2: An online system for Management ICR: MS for the DPL series The CLR reports that the registration of companies is set reports that the government established introduction of the one- up by 2016 an operation online system to register stop shop and of a flat fee companies; a virtual one-stop shop for structure permitted to Baseline: no system (2011) starting a business, permitting the decrease the costs Target: online system for involved in registering a automatization of business processed and; registration of companies set up business. the introduction of a flat fee structure for (2016) services associated with company Data from Doing registration. The revisions to the 1972 Business confirm that the Companies Act enabled the government to cost to start a business use the virtual one-stop shop. decreased in Seychelles, Achieved. from 16% to 13.4% (income per capita), that starting a business takes 9 procedures (in 2017) compared to 10 in 2012and that Seychelles’ overall ranking in Doing Business increased from 103/182 and 93/190 between 2011 (see 2012 report) and 2016 (see 2017 report). The 2017 Doing Business Seychelles Report indicates that Seychelles ranked above the regional average (Sub- Saharan Africa, SSA) for the ease of doing business (it scored 61.21 compared to 49.51 for SSA). 3. CPS Objective: Increased competition and a reduced role for the public sector in the housing finance market Indicator 1: Government has The Sustainability and Competitiveness The TA P130867 was a approved a housing subsidy DPL series and the Housing Finance TA direct follow-up of the policy that better targets low- (P130867, FY15), which is part of the Review of Publicly income households in need of multi-donor FIRST Initiative that includes Owned Financial assistance the WBG supported this Indicator. Institutions TA which Annexes CLR Review 17 Independent Evaluation Group CPS FY2-FY16: Focus Area I: Competitiveness and Actual Results IEG Comments Employment The TA supported the government in a supported the Baseline: no housing subsidy reform effort in the housing finance market development of a policy (2011) through, among others, the design of diagnostic. Target: housing subsidy policy smart subsidies to increase private sector approved by the government mortgage financing. The CLR reports that (2016) private sector As reported in IEG ICRR: MS for the DPL participation in the series, a new subsidy housing policy was housing market was not approved, which targets subsidy payments directly affected by WBG to low-income households in need of supported reforms since assistance, and 555 new mortgage loans it is not clear that these were approved, using the new subsidy reforms were sufficient to policy as of December 2016. attract private Achieved. commercial banks to mortgage finance. Indicator 2: Housing Finance The Financial Sector Development IEG Seychelles Country Company (HFC) has been Implementation Plan – part of the FIRST Case Study, part of IEG reformed to address challenges initiative - (P147161, FY15) supported this Cluster Country Program related to its conflicting Indicator. Evaluation on Small mandates. The CLR reports that, to reduce price States (FY07-15) reports distortion and increase competition in the that the reforms were Baseline: no reform (2011) housing finance market, the state-owned important for their fiscal Target: HFC has been reformed HFC’s functions were split into two areas: impact and that they (2016) housing finance (HFC) and social (rental) supported reforms to housing (managed by the Property increase the role of Management Company, PMC). private banks in housing The TA output Financial Sector finance. Development Implementation Plan for Seychelles of the FSDIP reports that the Information from the First separation of HFC’s financial mandate Initiative indicates that from the real estate and social renting the smart subsidy housing has been fully implemented with scheme developed for the deconsolidation of HFC into HFC and housing finance (rolled PMC as of September 2013. out in January 2014) Achieved. supported a reduction of the public sector in housing finance. Between January and October 2014, the share of subsidies approved by HFC decreased from 95% to 42% of total mortgage financing (by value) while the commercial banks contributed to 58%. 4. CPS Objective: Reduced non-tariff barriers to trade in goods, and improved transparency of trade procedures and processes Indicator 1: Abolition of existing The First Regional Development Policy Another measure export permit requirements in Operation (DPO) for the Accelerated supporting trade line with WTO commitments facilitation was the Annexes CLR Review 18 Independent Evaluation Group CPS FY2-FY16: Focus Area I: Competitiveness and Actual Results IEG Comments Employment Program for Economic Integration migration to the software Baseline: presence of export (P146512, FY16) supported this Objective. ASYCUDA (Automated permit requirements (2011) One of the prior actions for the DPO was System for Customs Target: export permit the removal, by the Ministry of Finance Data) World in June requirements abolished (2016) and Trade, in line with the World Trade 2013, to improve Organization (WTO) commitments, of the customs processes and existing requirements that all products shorten clearance time. destined for export be accompanied by an Important reform. export permit. As per the Program Current national Document of the DPO this prior action was information from the completed by the Government in 2014 Seychelles Revenue through the promulgation of Customs Commission confirms Management Regulations. that the country still uses Achieved. ASYCUDA World. Indicator 2: Implementation of One of the prior actions of the DPO was an online system to apply for the setting of an online system to apply for import/export permits import-export permits to improve transparency and accelerate the Baseline: no online system processing of applications. As per the (2011) Program Document of the DPO, this prior Target: online system in place action was completed and the online to apply for import/export system was available to businesses in permits (2016) September 2012. Achieved. CPS FY2-FY16: Focus Area II: Actual Results IEG Comments Vulnerability and Resilience 5. CPS Objective: Strengthened institutional/legal framework for disaster risk management Indicator 1: National DRM Act The Disaster Risk Management (DRM) The latest ISR: S of adopted by the National DPL with Catastrophe Deferred Drawdown project P148861 Assembly and updated DRM Option (CAT DDO) (P148861, FY15) (December 2017) Policy approved by the Cabinet supported this Indicator. The Program reported that the 2014 of Ministers. Document of the DPL indicates that, as a DRM Act was under prior action, a new DRM Act was approved review and was expected Baseline: no DRM Act (2011) by the National Assembly in July 2014 to reflect a new Target: National DRM Act (see Act) and that the 2011 DRM Policy institutional construct in Major adopted and updated DRM was revised in 2014 to detail which DRM will be Outcome policy approved (2016) responsibilities for risk assessment, risk upgraded. Measures reduction, adaptation, preparedness and response. The DRM Policy was approved by the Cabinet in July 2014. Achieved. Indicator 2: A Master Plan for The Program Document of the DRM DPL The latest ISR: S of Disaster Risk Management is indicates that the new DRM Act approved project P148861 reported developed in July 2014 included a National DRM that between 2014 and Management Plan and Strategy (see the 2017 district protocols for Baseline: no Master Plan (2011) Seychelles Department of Risk and preparedness and Disaster Management’s page) an response were piloted in Annexes CLR Review 19 Independent Evaluation Group CPS FY2-FY16: Focus Area II: Actual Results IEG Comments Vulnerability and Resilience Target: Master Plan for DRM is Integrated Emergency Management two districts (out of a developed (2016) System. . project’s target of five Achieved. district protocols) and that education and awareness materials were developed. 6. CPS Objective: Improved targeting, administration and financial sustainability of the social protection system Indicator 1: Multiple agencies The Sustainability and Competitiveness Management: MS for the providing welfare assistance DPL series and the Sustaining Reforms for Sustainability and merged into a single Agency for Inclusive Growth DPL (P153269, FY16) Competitiveness DPL Social Protection by 2012 supported this Objective. Management series reports that the ICR: MU reports that the Agency for Social WBG program has helped Baseline: Multiple agencies Protection Act established, in 2012, a to develop the ASP and (2011) single Agency for Social Protection (ASP) the revision of the Target: Single Agency for and mandated it to administer social methodology for Social Protection (2012) security benefits and social welfare assessing applicant’s programs. IEG ICRR: MU reports that the income to determine Cabinet approved a strategy and action eligibility for benefits. plan for the ASP. Achieved. Other TA that contributed to Objective 6 were: Indicator 2: A single robust Management ICR: MS for the - The FBS - Social social protection Management Sustainability and Competitiveness DPL Protection (P125775, Information System (MIS) in series reports that the operations FY13, see Activity place by 2013 supported the implementation of a robust Completion Summary) and automated MIS to determine eligibility - The Social Protection Baseline: No system (2011) for benefits. TA (P127102, FY12, Target: MIS in place (2016) Management ICR: MU for project P153269 see the Pension Issues reports that the Government expanded the Assessment) and coverage of the ASP’ MIS to include - The Safety Net TA sickness benefit and that as a result the (P112525, FY13, see directions for central social assistance Activity Completion interventions were to be more clearly Summary) defined. The DPO also supported measures to enhance ASP’s monitoring Regarding targeting, as and evaluation capacity, which improved reported in IEG ICRR: MS control of social assistance and to for the DPL, the share of automate ASP databases for application ineligible beneficiaries of procedures and payment systems. welfare assistance Achieved. decreased from 33% (2012) to 12.6%, as of Indicator 3: The pension IEG ICRR: MS for the Sustainability and December 2015 and, as contribution rate is increased to Competitiveness DPL series reports that, reported in Management 5 percent by 2014 from 3 as of 2014, the government had increased ICR: MS, total spending percent in 2011 the pension rate contribution from 3% to on reformed social 4%. assistance programs Baseline: 3% (2011) The DPL also supported the establishment stabilized at, respectively, Target: 5% (2014) of a benefit formula to improve the equity 1.1% and 1.2% of the of the Seychelles Pension Funds (SPF) GDP between 2011 and and revenues from the SPF increased 2015. Annexes CLR Review 20 Independent Evaluation Group CPS FY2-FY16: Focus Area II: Actual Results IEG Comments Vulnerability and Resilience from 0.8% of the GDP to 1.8% of the GDP, between 2011 and 2015. Partially Achieved. CPS FY2-FY16: Cross-cutting area: Focus Area III- Actual Results IEG Comments Governance and Public-Sector Capacity 7. CPS Objective: Adoption of strengthened budget management practices Indicator 1: Full inclusion of The Sustainability and Competitiveness The PPBB Reimbursable recurrent costs of capital DPL series and the Sustaining Reforms for Advisory Service projects into the recurrent Inclusive Growth DPL (P153269, FY16) (P152258, FY17) also budget by 2015 compared to supported this Objective as well as the contributed to this no linkages in 2011 Public Financial Management TA Objective and the 2015 (P132465, FY15, see final report). WBG commissioned Baseline: No linkages (2011) report “Strengthening Target: Full inclusion (2016) The Program Document of project Public Investment P153269 reports that, in 2012, the Management: government adopted a Public Financial Strengthening the Roles Management (PFM) Act and related of the Public-Sector regulations in 2014 that introduced, among Investment Program, others, the Public Sector Investment Plan Development Committee (PSIP). It also reports that, as a prior and Project action, the government made operational Implementation” provided a Development Committee (created in guidance about the October 2014) to appraise large projects. mandate of the IEG ICRR: MU reports that the program Development Committee Major supported actions to strengthen Public and the guidelines to Outcome Investment Management (PIM) to ensure adopt. Measures adequate assessment of all investment projects from the PSIP. The CLR reports that However the PSIP does not include the full 2016 PEFA ratings attest recurrent costs of capital projects – in this to the substantial respect, the Program Document reports a improvement in public lack of connection between project finances (measures that financing and recurrent expenditures and enhance fiscal disciplines the Public Expenditure Review (PER) and strengthen budget prepared under TA P132465 reports that execution) although these “estimated project costs typically reflect ratings were not publicly only the initial capital investment, not the available at the time of recurrent cost of operations and CLRR preparation (see maintenance”. PEFA page for Not Achieved. Seychelles). Indicator 2: Reduction in the IEG ICRR: MS for the Sustainability and difference between budgeted Competitiveness DPL series reports and executed budget from improvement in expenditure efficiency; 4.2% in December 2011 to after adoption of a new Public Financial 2.5% by December 2015 Management Act the reduction in the differences between voted and executed Annexes CLR Review 21 Independent Evaluation Group CPS FY2-FY16: Cross-cutting area: Focus Area III- Actual Results IEG Comments Governance and Public-Sector Capacity Baseline: 4.2% (December budget decreased from 4.2% (December 2011) 2011) to 0.5% (December 2015). Target: 2.5% (December 2015) Achieved. Indicator 3: Full adoption of IEG ICRR: MS for the Sustainability and Program and Performance- Competitiveness DPL series indicates that based Budgeting (PPBB) by the Government adopted a new Public 2017 Financial Management Act. Management ICR: MS reports that the Act introduced a Baseline: No PPBB (2011) Program Performance Based Budgeting Target: Full adoption of PPBB (PPBB) which was piloted in two Ministries (2017) for the 2015 and 2016 budgets and rolled out in three ministries in 2016. The 2017 Programme Performance Based Budget Statements from the Ministry of Finance indicates that PPBB was piloted in five portfolios in the 2016 budget and that the PPBB was to be rolled out at all ministries between 2017 and 2019. Mostly Achieved. 8. CPS Objective: A Government expenditure on health as a share of total health expenditure falls from 87 percent (2009 baseline) to 80 percent by 2016 Indicator 1: Development of The Sustaining Reforms for Inclusive The CLR reports that sustainable health financing Growth DPL (P153269, FY16) and the Government expenditure strategy Social Sectors and State-Owned on health, as a share of Enterprises RAS. (P157794, FY16) health expenditure Baseline: No strategy (2011) supported this Objective. increased to 97% as of Target: Strategy developed As reported in IEG ICRR: MU of project 2015. (2016) P153269, the government has adopted and Data from the World implemented a National Health Policy that Development Indicators increased focus on preventive services. reported 92.2% of The ICRR also reports that national health government expenditure budget allocated to prevention and on health, as a share of promotion services increased from 6% of total health expenditure, the total health budget (2014) to 12.5% as as of 2014 but no more of December 2016. recent data was available. Achieved. 9. CPS Objective: Increased transparency and strengthened regulation in the petroleum sector Indicator 1: Petroleum The Sustainability and Competitiveness With assistance from the Regulatory Authority is DPL series and a small grant from the WBG, the Government established and petroleum Extractive Industries Technical Advisory issued the Model legislation revised by 2014 Facility for the Implementation of the Petroleum Agreement in Extractive Industries Transparency June 2013 (see Project Baseline: No authority (2011) Initiative (EITI) project (P150595, FY15) Paper of project P15059). Target: Authority established and the Seychelles Petroleum Sector TA and legislation revised (2014) (P132697, FY16) supported this Objective. The Program Document for the Third Series of the DPL indicates that, with Annexes CLR Review 22 Independent Evaluation Group CPS FY2-FY16: Cross-cutting area: Focus Area III- Actual Results IEG Comments Governance and Public-Sector Capacity support from the First and Second Series, Petro-Seychelles was created in March 2012 to supervise, monitor and promote upstream activities and overseeing exploration activities. It also reports that the Petroleum Mining Act and the Petroleum Tax Act were revised in 2013 to improve the legal and fiscal framework for awarding and administering Petroleum Agreements. Achieved. Indicator 2: EITI report As reported in the June 2015 ISR: MS of EITI webpage presents submitted to EITI Secretariat the EITI Implementation Project (P150595, the published reports for for evaluation by end 2015 FY15), Seychelles applied for EITI Seychelles. It also reports candidacy on June 2014 and was admitted that Seychelles had Baseline: No EITI report as a candidate in August 2014. requested reporting submitted for evaluation (2011) IEG ICRR: MS for the DPL series reports companies to disclose Target: EITI reports submitted that Seychelles submitted its 2015 Annual beneficial ownership for evaluation (2015) progress Report. In July 2017 the country although there are no also presented its 2016 Annual progress obligations or restrictions Report. on the disclosure of Achieved. beneficial ownership information by the Government, state-owned enterprises and private companies under the current Legislation. 10. CPS Objective: Strengthened capacity of National Bureau of Statistics to provide economic and demographic data Indicator 1: Quarterly National The Sustainability and Competitiveness Management ICR: MS for Accounts report is released to DPL series; the Poverty Statistics and the DPL series reports the public by 2014 Inequality TA (P156329, FY15, see final that the WBG program Report) and the Building Statistical supported the government Baseline: No report released Capacity for Evidence-Based Policies introducing a new Chart of (2011) (BSCEP) TA (P116997, FY13) contributed Accounts in compliance Target: Report released (2014) to this Objective. with the 2001 Government The IEG Seychelles Country Case Study, Finance Statistics. part of IEG Cluster Country Program The 2008 SNA replaced Evaluation on Small States reports that the 1993 SNA (see some important capacity building initiatives OECD Statistics Brief). supported by the WBG included the strengthening of the National Bureau of WB data on countries’ Statistics (NBS) and improvement to its statistical capacity reports organizational structure to develop and that Seychelles had a produce new economic data series as part Statistical Capacity of the National Strategy for the Indicator (SCI) of 78.89 in Development of Statistics. 2017 compared to 60.52 for the Sub-Saharan The NBS releases estimates of poverty African (SSA) region and inequality using the 2013 Household (excluding high income Annexes CLR Review 23 Independent Evaluation Group CPS FY2-FY16: Cross-cutting area: Focus Area III- Actual Results IEG Comments Governance and Public-Sector Capacity (see NBS webpage related to the poverty countries) and to 74.9 for profile of the country) although WBG IBRD countries. attribution of this results cannot be verified Seychelles’ score was based on the reviewed WBG documents. above SSA and IBRD The 2017 Seychelles Systematic Country scores for the Diagnostic (SCD) reports that the NBS Methodology category (90 was still using the 1993 System of compared to 44 and 68.9) National Accounts (SNA), lagging behind but was below IBRD international standards. However, the SCD countries’ scores and notes that, in terms of dissemination above SSA for the Source capacity of national statistical systems Data category (70 Seychelles scored high and that the NBS compared to 71.9 and performed well in providing an advance 55.8). Seychelles was release calendar, a listing of surveys and below both IBRD and well-developed data portal. Finally, NBS SSA for the Periodicity external information confirms that category (76.7 compared Quarterly National Accounts are published to 83.9 and to 81.8). on their external website. Achieved. 11. CPS Objective: Adoption of a modern legislative framework for insolvency and alternative dispute resolution Indicator 1: Commercial The Sustainability and Competitiveness Division at the Supreme court DPL series and the Business Regulatory established and operational by Reform TA (P123351, FY13, final output) 2013 supported this Objective. IEG ICRR: MS for the DPL series and the Baseline: No commercial IEG Seychelles Country Case Study, part division 2011) of IEG Cluster Country Program Evaluation Target: Commercial Division on Small States (FY07-15), report that the established (2013) WBG supported reforms to accelerate the process of settling commercial disputes, through the establishment of a specialized commercial division, within the Supreme Court, and the set-up of a new mediation framework and new commercial list rules laid out (April 2012) to speed hearing processes. Achieved. Indicator 2: The backlog of IEG ICRR: MS reports that the share of commercial cases registered by commercial cases resolved at the December 2011 is processed commercial court within 12 months as a by December 2016 share of cases lodged increased from no cases resolved in 2011 to 52% as of Baseline: No backlog December 2015. It also reports that as of processed (2011) December 2015, 97 cases were Target: Backlog processed completed, while 91 cases were pending (December 2016) and concludes that it did not reach target of 85% (achieved results are 65%). Partially Achieved. Annexes CLR Review 24 Independent Evaluation Group Annex Table 2: Planned and Actual Lending for Seychelles, FY12-FY16 Approved Instrument Proposed Approval Closing Proposed Proposed Project ID Project name IBRD Type FY FY FY Amount Amount Amount Project Planned Under CPS/PLR 2012-2016 CPS CPSPR SC- Dev Pol P125202 Sustainability&Competit FY13 2013 2013 7.0 7.0 Lend ivenes (FY13) Sustainability and Dev Pol P132425 FY14 2014 2014 7.0 7.0 Competitiveness DPL 2 Lend Sustainability and Dev Pol P146567 FY15 2015 2016 7.0 7.0 Competitiveness DPL 3 Lend Disaster Risk Dev Pol P148861 Management DPL FY15 2015 2021 7.0 7.0 Lend (DDO) Accelerated Program **P146512 for Economic FY15-16 10.0 5.0 Integration Sustainability and Dev Pol P153269 Competitiveness DPL FY16 2016 2017 4.0 5.0 Lend Series Total Planned 21.0 21.0 38.0 Unplanned Projects during the CPS and PLR Period Total Unplanned 0.0 Approval Closing Approved On-going Projects during the CPS and PLR Period FY FY Amount Total On-going 0.0 Source: Seychelles CPS and PR, WB Business Intelligence Table 2b.1, 2a.4 and 2a.7 as of 3/1/18 *LIR: Latest internal rating. MU: Moderately Unsatisfactory. MS: Moderately Satisfactory. S: Satisfactory. HS: Highly Satisfactory. ** Regional Project Annexes CLR Review 25 Independent Evaluation Group Annex Table 3: Analytical and Advisory Work for Seychelles, FY12-FY16 Proj ID Economic and Sector Work Fiscal year RAS Output Type P156329 SC - Poverty, Inequality FY16 No Other Poverty Study P132465 SC-Programmatic Public Expenditure Rev FY15 No Public Expenditure Review (PER) PSD, Privatization and Industrial P151778 SC-PPP Outsourcing and PSD dialogue FY15 No Policy Proj ID Technical Assistance Fiscal year Output Type P132697 Seychelles Petroleum Sector TA1 FY16 No Technical Assistance P147088 Reimbursable Services Agreement PFM & SP FY16 Yes Technical Assistance P147160 Seychelles #A026 Secured Lendng & Collat FY16 No Technical Assistance P147161 Seychelles #A027 FSD Implementation Plan FY16 No Technical Assistance P148383 Seychelles MTDS FY16 No Technical Assistance P150829 PPP Outsourcing Diagnostic and Recom. FY16 No Technical Assistance P154048 Improving Electricity Planning Info. FY16 No Technical Assistance P123351 SC-PSD Reforms FY15 No Technical Assistance P130867 Seychelles #10254 Housing Finance FY15 No Technical Assistance P130899 Sustainability and competitiveness TA FY15 Yes Technical Assistance P149436 StAR - Study of the Seychelles OFC FY15 No Technical Assistance P152372 SC - Poverty Stats & Inequality Analysis FY15 No Other Poverty Study P153239 JIT support for ECD FY15 No Technical Assistance P125204 Seychelles #10040 Stren. Insurance Reg FY14 No Technical Assistance P145337 Seychelles Disaster Risk Management FY14 No Technical Assistance P125775 SC-FBS Social Protection FY13 Yes Technical Assistance P127102 SC-Social Protection FY13 No Technical Assistance P112525 SC-FBS TAP FY12 Yes Technical Assistance Source: WB Business Intelligence 6/15/18 * RAS - Reimbursable Advisory Services Annex Table 4: Grants and Trust Funds Active for Seychelles in FY12-16 Project Approval Closing Approved Project name TF ID ID FY FY Amount Seychelles: Extractive Industries Transparency Initiative P150595 TF 18936 2015 2016 290,000 Implementation Determination of the Grid Absorption Capacity of the P143254 Public Utilities Corporation (PUC) Grid Code, Feed-in- TF 14187 2013 2015 250,000 Tariff for RE P112358 SYC PAR IDF TF 97289 2011 2014 425,800 Seychelles: Building Statistical Capacity for Evidence- P116997 TF 94640 2010 2013 376,200 Based Policies s(BSCEP) Seychelles National Disaster Preparedness and P111474 TF 91927 2009 2013 900,000 Response Project Total 2,242,000 Source: Client Connection as of 3/1/18. ** IEG Validates RETF that are 5M and above. NR: No rating available Annexes CLR Review 26 Independent Evaluation Group Annex Table 5: IEG Project Ratings for Seychelles, FY12-16 Total Exit IEG Risk to Proj ID Project name Evaluated IEG Outcome FY DO ($M) MODERATELY 2013 P125202 SC-Sustainability & Competitiveness (FY13) 7.0 MODERATE SATISFACTORY MODERATELY 2014 P132425 Sustainability and Competitiveness DPL 2 7.0 MODERATE SATISFACTORY MODERATELY 2015 P146567 Sustainability and Competitiveness DPL 3 7.0 MODERATE SATISFACTORY Total 21.0 Source: AO Key IEG Ratings as of 6/14/18 and IEGNet. Annex Table 6: IEG Project Ratings for Seychelles and Comparators, FY12-16 Total Total RDO % RDO % Outcome Outcome Region Evaluated Evaluated Moderate or Lower Moderate or Lower % Sat ($) % Sat (No) ($M) (No) Sat ($) Sat (No) Seychelles* 21.0 3 100.0 100.0 100.0 100.0 AFR 21,081.3 412 69.5 64.3 38.4 32.1 World 119,626.2 1,378 82.5 70.7 54.5 43.8 Source: WB AO as of 6/14/18 and IEGNet. *Refer to Annex Table 5 for IEG Project Ratings. Annex Table 7: Portfolio Status for Seychelles and Comparators, FY12-16 Fiscal year 2012 2013 2014 2015 2016 Ave FY12-16 Seychelles # Proj - 2 2 1 Net Comm Amt 14.0 12.0 13 AFR # Proj 418 403 438 458 474 438 # Proj At Risk 102 106 115 111 124 112 % Proj At Risk 24.4 26.3 26.3 24.2 26.2 25.5 Net Comm Amt 38,492.7 40,799.0 46,621.7 51,993.5 56,089.8 46,799 Comm At Risk 6,223.2 13,938.0 16,171.5 15,372.2 18,235.0 13,988 % Commit at Risk 16.2 34.2 34.7 29.6 32.5 29.9 World # Proj 1,371 1,337 1,386 1,402 1,398 1,379 # Proj At Risk 304 339 329 339 336 329 % Proj At Risk 22.2 25.4 23.7 24.2 24.0 23.9 Net Comm Amt 166,208.1 169,430.6 183,153.9 191,907.8 207,350.0 183,610 Comm At Risk 23,324.5 39,638.0 39,748.6 44,430.7 42,715.1 37,971 % Commit at Risk 14.0 23.4 21.7 23.2 20.6 20.7 Source: WB BI as of 6/15/18. *Only IBRD/IDA. Annexes CLR Review 27 Independent Evaluation Group Annex Table 8: Disbursement Ratio for Seychelles, FY12-16 Overall Fiscal Year 2012 2013 2014 2015 2016 Result Seychelles Disbursement Ratio No data for Inv Disb in FY Seychelles Inv Tot Undisb Begin FY AFR Disbursement 21.40 22.50 23.1 24.5 19.6 22.2 Ratio Inv Disb in FY 5,260.30 5,652.10 6,143.9 6,473.2 5,572.5 29,102.1 Inv Tot Undisb 24,595.00 25,175.90 26,540.4 26,463.6 28,377.1 131,152.0 Begin FY World Disbursement 20.80 20.60 20.8 21.8 19.5 20.7 Ratio Inv Disb in FY 21,048.20 20,510.70 20,757.7 21,853.7 21,152.9 105,323.2 Inv Tot Undisb 101,234.30 99,588.30 99,854.3 100,344.9 108,600.3 509,622.0 Begin FY Source: AO as of 6/14/18 Annex Table 9: Net Disbursement and Charges for Seychelles, FY12-16 Period Disb. Amt. Repay Amt. Net Amt. Charges Fees Net Transfer FY12 - - - 503,384.8 - (503,384.8) FY13 7,000,000.0 - 7,000,000.0 344,594.9 17,500.0 6,637,905.1 FY14 7,363,855.8 - 7,363,855.8 368,127.3 18,555.1 6,977,173.5 FY15 7,035,000.0 - 7,035,000.0 462,893.0 52,500.0 6,519,607.0 FY16 5,012,500.0 - 5,012,500.0 549,256.2 25,000.0 4,438,243.8 Report Total 26,411,355.8 - 26,411,355.8 2,228,256.2 113,555.1 24,069,544.5 World Bank Client Connection 3/1/18 Annex Table 10: Total Net Disbursements of Official Development Assistance and Official Aid for Seychelles Development Partners 2012 2013 2014 2015 2016 All Donors, Total 34.75 27.42 12 6.78 5.71 DAC Countries, Total 6.03 7.26 3.36 3.55 -9.02 Australia 0.51 1.82 0.74 0.74 0.27 Belgium 0.01 .. -0.23 -0.07 -1.31 France 1.56 4.13 1.35 1.43 -9.2 Germany 0.02 0.03 0 0.02 0.01 Greece 0.02 .. .. .. .. Hungary .. .. .. 0 0 Annexes CLR Review 28 Independent Evaluation Group Development Partners 2012 2013 2014 2015 2016 Italy .. .. 0.09 .. .. Japan 1.75 0.55 0.66 0.84 0.98 Korea 0.1 .. .. .. 0.01 New Zealand 0.04 0.02 0.05 0.06 0.06 Slovenia 0.01 .. .. .. .. Sweden 0.17 .. .. .. .. United Kingdom 1.81 0.48 0.63 0.49 0.17 United States 0.03 0.23 0.07 0.03 .. Multilaterals, Total 17.05 13.46 6.78 2.28 10.71 EU Institutions 14.23 10.32 1.36 0.06 6.53 Regional Development Banks, Total -0.32 -0.34 -0.24 0.21 0.96 African Development Bank, Total -0.32 -0.34 -0.24 0.21 0.96 African Development Bank [AfDB] 0.42 0.4 0.48 0.71 1.56 African Development Fund [AfDF] -0.74 -0.74 -0.72 -0.51 -0.6 United Nations, Total 0.8 1.02 0.86 1.05 1.07 Food and Agriculture Organisation [FAO] .. 0.05 .. .. .. International Atomic Energy Agency [IAEA] 0.16 0.17 0.25 0.26 0.19 International Labour Organisation [ILO] 0.1 0.12 0.12 0.12 0.12 UNDP 0.02 0.04 .. 0.01 0.09 UNFPA 0.05 0.06 .. .. .. World Health Organisation [WHO] 0.47 0.58 0.5 0.65 0.67 Other Multilateral, Total 2.35 2.46 4.8 0.97 2.14 Adaptation Fund .. .. 1.27 .. 1.14 Arab Bank for Economic Development in Africa [BADEA] 1.54 0.92 1.45 -1.17 .. Global Environment Facility [GEF] 1.12 1.85 2.31 2.31 1.17 OPEC Fund for International Development [OFID] -0.31 -0.31 -0.24 -0.17 -0.17 Other Multilateral, Total 2.35 2.46 4.8 0.97 2.14 Adaptation Fund .. .. 1.27 .. 1.14 Arab Bank for Economic Development in Africa [BADEA] 1.54 0.92 1.45 -1.17 .. Global Environment Facility [GEF] 1.12 1.85 2.31 2.31 1.17 OPEC Fund for International Development [OFID] -0.31 -0.31 -0.24 -0.17 -0.17 Non-DAC Countries, Total Israel 0.02 0.03 0.01 0 .. Kuwait -0.6 -0.64 -0.52 -0.65 -0.61 Romania 0.01 .. .. 0 .. Russia 0.01 .. .. .. .. Thailand 0.01 0.02 0.03 0 0.05 Turkey 0.01 0.06 0.04 0.21 0.1 United Arab Emirates 12.21 7.22 2.31 1.39 4.49 Source: OECD Stat, [DAC2a] as of 3/1/18 Data available only up to FY16 Annexes CLR Review 29 Independent Evaluation Group Annex Table 11: Economic and Social Indicators for Seychelles, 2012-2016 Seychelles SSA World Series Name 2012 2013 2014 2015 2016 Average 2012-2016 Growth and Inflation GDP growth (annual %) 6.6 6.0 3.3 3.5 4.5 4.8 3.5 2.6 GDP per capita growth 5.6 4.1 1.7 1.2 3.1 3.1 0.7 1.4 (annual %) GNI per capita, PPP 22,930.0 24,350.0 24,900.0 25,670.0 28,380.0 25,246.0 3,453.5 15,152.0 (current international $) GNI per capita, Atlas method (current US$) 12,240.0 13,500.0 14,100.0 14,680.0 15,410.0 13,986.0 1,645.7 10,616.5 (Millions) Inflation, consumer 7.1 4.3 1.4 4.0 (1.0) 3.2 5.0 2.4 prices (annual %) Composition of GDP (%) Agriculture, value 2.4 2.9 2.6 .. .. 2.6 17.6 3.9 added (% of GDP) Industry, value added 16.0 15.1 14.3 .. .. 15.1 25.6 28.1 (% of GDP) Services, etc., value 81.7 82.0 83.0 .. .. 82.2 56.8 68.0 added (% of GDP) Gross fixed capital 37.4 37.9 37.3 33.7 .. 36.6 20.7 23.4 formation (% of GDP) Gross domestic savings 20.7 30.5 22.2 .. .. 24.5 18.3 24.8 (% of GDP) External Accounts Exports of goods and 92.8 85.5 83.1 .. .. 87.1 28.5 29.8 services (% of GDP) Imports of goods and 109.4 92.8 98.2 .. .. 100.2 31.4 29.2 services (% of GDP) Current account -14.2 -11.2 -21.8 -17.8 -20.1 -17.0 balance (% of GDP) External debt stocks (% .. .. .. .. .. of GNI) Total debt service (% of .. .. .. .. .. 2.0 GNI) Total reserves in 2.4 3.1 3.3 4.2 3.8 3.3 5.2 13.3 months of imports Fiscal Accounts /** General government 41.5 38.2 37.5 34.2 37.9 37.8 19.6 revenue (% of GDP) General government total expenditure (% of 38.6 37.8 33.8 32.4 37.7 36.0 23.2 GDP) General government net lending/borrowing 2.9 0.4 3.7 1.9 0.2 1.8 -3.6 (% of GDP) General government 80.1 68.2 72.7 67.7 69.0 71.5 34.4 gross debt (% of GDP) Health Life expectancy at birth, 74.2 73.1 73.2 73.2 .. 73.5 59.1 71.6 total (years) Immunization, DPT (% of children ages 12-23 98.0 98.0 99.0 97.0 96.0 97.6 73.0 85.3 months) Annexes CLR Review 30 Independent Evaluation Group Seychelles SSA World Series Name 2012 2013 2014 2015 2016 Average 2012-2016 Improved sanitation facilities (% of 98.4 98.4 98.4 98.4 .. 98.4 29.2 66.7 population with access) Improved water source (% of population with 95.7 95.7 95.7 95.7 .. 95.7 54.5 83.4 access) Mortality rate, infant 12.5 12.6 12.6 12.5 12.3 12.5 56.8 32.5 (per 1,000 live births) Education School enrollment, 99.2 93.2 93.0 90.5 .. 94.0 20.6 46.5 preprimary (% gross) School enrollment, 108.8 106.0 104.1 102.3 .. 105.3 98.0 105.1 primary (% gross) School enrollment, 80.9 78.4 79.1 81.6 .. 80.0 42.2 75.5 secondary (% gross) Population Population, total 88,303 89,949 91,359 93,419 94,677 91,541 979,225,765 7,269,320,589 (Millions) Population growth 1.0 1.8 1.6 2.2 1.3 1.6 2.8 1.2 (annual %) Urban population (% of 52.9 53.2 53.6 53.9 54.2 53.6 37.2 53.4 total) Poverty Poverty headcount ratio at $1.90 a day (2011 .. 1.1 .. .. .. 41.8 11.6 PPP) (% of pop) Poverty headcount ratio at national poverty lines .. 39.3 .. .. .. 39.3 (% of pop) Rural poverty headcount ratio at .. .. .. .. .. national poverty lines (% of rural pop) Urban poverty headcount ratio at .. .. .. .. .. national poverty lines (% of urban pop) GINI index (World Bank .. 46.8 .. .. .. 46.8 estimate) Source: WB Development Data Platform (DDP) as of 3/1/18 DDP Data available only up to FY16 *International Monetary Fund, World Economic Outlook Database, October 2017 Annexes CLR Review 31 Independent Evaluation Group Annex Table 12: List of IFC Advisory Services in Seychelles Advisory Services Approved in FY12-16 Impl Impl Primary Project Total Funds, Project Name Start End Project Status Business ID US$ FY FY Line 600704 Seychelles Port 2015 2016 TERMINATED CAS 67,618 Sub-Total 67,618 Advisory Services Approved pre-FY12 but active during FY12-16 Impl Impl Primary Project Project Total Funds, Project Name Start End Business ID Status US$ FY FY Line Sub-Total - TOTAL 67,618 Source: IFC AS Data as of 4/15/18