Document of

THE WORLD BANK

Report No. 26269

PROJECT PERFORMANCE ASSESSEMENT REPORT

NIGER

ECONOMIC RECOVERY CREDIT (Credit 2581-NIR)

PUBLIC SECTOR ADJUSTMENT CREDIT

(Credit 2939-NIR)

PUBLIC FINANCE REFORM CREDIT (Credit 3134-NIR)

PUBLIC FINANCE RECOVERY CREDIT

(Credit 3418-NIR)

July 1, 2003 Country Evaluation and Regional Relations Operations Evaluation Department

CURRENCY EQUIVALENTS

Currency Unit = CFA Franc (CFAF) US$ 1.00 = CFAF 710 (2002)

ABBREVIATIONS AND ACRONYMS

CAADIE Centre Autonome d’Amortissement de la Dette Intérieure de l’Etat CAS Country Assistance Strategy CET Common External Tariff CNSS Caisse Nationale de Sécurité Sociale COPRO-NIGER Société Nigérienne de Commercialisation ERC Economic Recovery Credit ESAF Enhanced Structural Adjustment Facility HIPC Highly Indebted Poor Countries HDR Human Development Report ICR Implementation Completion Report I-PRSP Interim Poverty Reduction Strategy Paper NIGELEC Société Nigérienne d’Electricité ONPPC Office National des Produits Pharmaceutiques et Chimiques PAGEF Projet d’Appui à la Gestion Economique et Financière PE Public Enterprise PEAC Public Expenditure Adjustment Credit PEIDP Public Enterprise Institutional Development Project PER Public Expenditure Review PESAP Public Enterprise Sector Adjustment Program PFP Policy Framework Paper PFRC Public Finance Reform Credit PFRecC Public Finance Recovery Credit PIP Public Investment Program PRGF Poverty Reduction and Growth Facility PSAC Public Sector Adjustment Credit PSD Private Sector Development SAL Structural Adjustment Loan SNE Société Nationale des Eaux SONIDEP Société Nigérienne des Produits Pétroliers SONITEL Société Nigérienne des Télécommunications SDR Special Drawing Right UEMOA Union Economique et Monétaire Ouest Africaine UNDP United Nations Development Program VAT Value Added Tax

Director-General, Operations Evaluation : Mr. Gregory K. Ingram Acting Director, Operations Evaluation Department : Mr. Nils Fostvedt Senior Manager, Country Evaluation and Regional Relations : Mr. R. Kyle Peters Task Manager : Ms. Poonam Gupta PPAR prepared by : Mr. Pierre de Raet

OED Mission: Enhancing development effectiveness through excellence and independence in evaluation.

About this Report

The Operations Evaluation Department assesses the programs and activities of the World Bank for two purposes: first, to ensure the integrity of the Bank’s self-evaluation process and to verify that the Bank’s work is producing the expected results, and second, to help develop improved directions, policies, and procedures through the dissemination of lessons drawn from experience. As part of this work, OED annually assesses about 25 percent of the Bank’s lending operations. In selecting operations for assessment, preference is given to those that are innovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which Executive Directors or Bank management have requested assessments; and those that are likely to generate important lessons. The projects, topics, and analytical approaches selected for assessment support larger evaluation studies.

A Project Performance Assessment Report (PPAR) is based on a review of the Implementation Completion Report (a self-evaluation by the responsible Bank department) and fieldwork conducted by OED. To prepare PPARs, OED staff examine project files and other documents, interview operational staff, and in most cases visit the borrowing country for onsite discussions with project staff and beneficiaries. The PPAR thereby seeks to validate and augment the information provided in the ICR, as well as examine issues of special interest to broader OED studies.

Each PPAR is subject to a peer review process and OED management approval. Once cleared internally, the PPAR is reviewed by the responsible Bank department and amended as necessary. The completed PPAR is then sent to the borrower for review; the borrowers' comments are attached to the document that is sent to the Bank's Board of Executive Directors. After an assessment report has been sent to the Board, it is disclosed to the public.

About the OED Rating System

The time-tested evaluation methods used by OED are suited to the broad range of the World Bank’s work. The methods offer both rigor and a necessary level of flexibility to adapt to lending instrument, project design, or sectoral approach. OED evaluators all apply the same basic method to arrive at their project ratings. Following is the definition and rating scale used for each evaluation criterion (more information is available on the OED website: http://worldbank.org/oed/eta-mainpage.html).

Relevance of Objectives: The extent to which the project’s objectives are consistent with the country’s current development priorities and with current Bank country and sectoral assistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, Country Assistance Strategies, Sector Strategy Papers, Operational Policies). Possible ratings: High, Substantial, Modest, Negligible.

Efficacy: The extent to which the project’s objectives were achieved, or expected to be achieved, taking into account their relative importance. Possible ratings: High, Substantial, Modest, Negligible.

Efficiency: The extent to which the project achieved, or is expected to achieve, a return higher than the opportunity cost of capital and benefits at least cost compared to alternatives. Possible ratings: High, Substantial, Modest, Negligible. This rating is not generally applied to adjustment operations.

Sustainability: The resilience to risk of net benefits flows over time. Possible ratings: Highly Likely, Likely, Unlikely, Highly Unlikely, Not Evaluable.

Institutional Development Impact: The extent to which a project improves the ability of a country or region to make more efficient, equitable and sustainable use of its human, financial, and natural resources through: (a) better definition, stability, transparency, enforceability, and predictability of institutional arrangements and/or (b) better alignment of the mission and capacity of an organization with its mandate, which derives from these institutional arrangements. Institutional Development Impact includes both intended and unintended effects of a project. Possible ratings: High, Substantial, Modest, Negligible.

Outcome: The extent to which the project’s major relevant objectives were achieved, or are expected to be achieved, efficiently. Possible ratings: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory.

Bank Performance: The extent to which services provided by the Bank ensured quality at entry and supported implementation through appropriate supervision (including ensuring adequate transition arrangements for regular operation of the project). Possible ratings: Highly Satisfactory, Satisfactory, Unsatisfactory, Highly Unsatisfactory.

Borrower Performance: The extent to which the borrower assumed ownership and responsibility to ensure quality of preparation and implementation, and complied with covenants and agreements, towards the achievement of development objectives and sustainability. Possible ratings: Highly Satisfactory, Satisfactory, Unsatisfactory, Highly Unsatisfactory.

Contents Ratings and Responsibilities ..........................................................................................................i

Preface .......................................................................................................................................... iii

Summary ........................................................................................................................................v

1. Introduction ......................................................................................................................1 2. Background .......................................................................................................................2 Country Strategy..................................................................................................................3 3. Objectives and Design ......................................................................................................6 Relevance of Objectives ....................................................................................................10 4. Implementation................................................................................................................11 5. Outcome and Assessment ...............................................................................................17 Outcome ............................................................................................................................17 Institutional Development Impact .....................................................................................17 Sustainability .....................................................................................................................18 Bank Performance .............................................................................................................19 Borrower Performance ......................................................................................................20 6. Main Findings and Program Impact .............................................................................22 7. Lessons Learned ..............................................................................................................25 Text Tables Table 2.1: Key Economic Indicators, 1990–1993 ...........................................................4 Table 6.1: Key Macro-economic Indicators—Targets vs. Actuals, 1994-2001 ............23 Table 6.2: Civil Service Wage Bill, 1993-2001.............................................................24 Figure Figure 1.1: Four Assessed Projects and Related Credits...................................................1 Figure 4.1: Fiscal Profile (1990 – 2001) .........................................................................11 Annexes Annex A: Key Social Indicators..................................................................................................27 Annex B: Economic Recovery Credit ........................................................................................28 Annex C: Public Sector Adjustment Credit ................................................................................31 Annex D: Public Finance Reform Credit ....................................................................................35 Annex E: Public Finance Recovery Credit .................................................................................44 Annex F: Key Economic Indicators............................................................................................51 Annex G: Basic Data Sheets........................................................................................................52 Annex H: Comments from the Government ...............................................................................60

This report was prepared by Pierre de Raet (Consultant), with Poonam Gupta as Task Manager. Betty Casely-Hayford and Agnes Santos provided administrative support.

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Ratings and Responsibilities

Economic Recovery Credit ES PPAR Outcome Unsatisfactory Unsatisfactory Sustainability Uncertain Highly Unlikely Institutional Development Impact Negligible Negligible Bank Performance Satisfactory Unsatisfactory Borrower Performance n.a. Highly Unsatisfactory

Public Sector Adjustment Credit ES PPAR Outcome Satisfactory Moderately Satisfactory Sustainability Likely Unlikely Institutional Development Impact Modest Modest Bank Performance Satisfactory Satisfactory Borrower Performance Satisfactory Satisfactory

Public Finance Reform Credit ES PPAR Outcome Unsatisfactory Unsatisfactory Sustainability Unlikely Highly Unlikely Institutional Development Impact Modest Modest Bank Performance Satisfactory Satisfactory Borrower Performance Unsatisfactory Unsatisfactory

Public Finance Recovery Credit ES PPAR Outcome Satisfactory Satisfactory Sustainability Likely Likely Institutional Development Impact Modest Substantial Bank Performance Satisfactory Satisfactory Borrower Performance Satisfactory Satisfactory

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Key Project Responsibilities Project Staff Appraisal Completion

ERC Task Manager Amadou Cisse Amadou Cisse Division Chief Jean-Louis Sarbib Charles P. Humphreys Director/Country Director Katherine Marshall Theodore O. Ahlers Public Sector Adj. Credit Task Manager Antonella Bassani Antonella Bassani Division Chief Charles P. Humphreys Charles P. Humphreys Country Director Theodore O. Ahlers Theodore O. Ahlers Public Finance Reform Cr. Task Manager Antonella Bassani Jean-Luc Bernasconi Division Chief Charles P. Humphreys Charles P. Humphreys Country Director Theodore O. Ahlers Antoinette M. Sayeh

Public Finance Recovery Cr. Task Manager Jean-Luc Bernasconi Jean-Luc Bernasconi Division Chief Charles P. Humphreys Cadman Atta Mills Country Director M. Plessis-Fraissard Antoinette M. Sayeh

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Preface

This is the Project Performance Assessment Report (PPAR) on four lending operations to the Republic of Niger in the 1990s, a period marked by considerable political instability, the devaluation of the CFA franc, and attempts by the Government to overcome the critical development and poverty challenges faced by the country.

The Economic Recovery Credit (ERC) (Credit 2581-NIR), in the amount of SDR

18.2 million, was approved on March 17, 1994, became effective on March 25, 1994, and was closed on June 30, 1995, the original closing date. The one-tranche operation was fully disbursed. The Credit was complemented by a Supplemental Credit, in the amount of SDR 6.9 million, to the 1991 Public Works and Employment Credit (Credit 2209-NIR), approved on November 10, 1994.

The Public Sector Adjustment Credit (PSAC) (Credit 2939-NIR), in the amount

of SDR 21.6 million, was approved on March 20, 1997, became effective on March 21, 1997, and was closed on March 31, 1998, the original date. The Credit was a one-tranche operation fully disbursed.

The Public Finance Reform Credit (PFRC) (Credit 3134-NIR), in the amount of

SDR 48.0 million, was approved on October 13, 1998, became effective on October 20, 1998, and was closed on June 30, 2000, the original date. The Credit was a three-tranche operation, the first one of which, for SDR 18.0 million, was fully disbursed upon effectiveness, while the second and third tranches, for SDR 15.0 million each, were cancelled.

The Public Finance Recovery Credit (PFRecC) (Credit 3418-NIR), in the amount

of SDR 26.5 million, was approved on September 14, 2000, and became effective on October 13, 2000. The Credit was of one tranche. A Supplemental Credit, in the amount of SDR 9.4 million, was approved on December 22, 2000. The Credit was closed on June 30, 2001, the original date. Both the original and the supplemental credits were fully disbursed.

This PPAR is based on all relevant Bank and Fund documents. A mission visited

Niger in January 2003 to discuss performance with officials who implemented the projects, representatives of civil society, and members of the Bank resident mission. By letters of June 6, 2003 and June 20, 2003, the Government requested to make some corrections, which were incorporated. These letters, along with an unofficial translation, are in Annex H.

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Summary

1. The four operations must be seen against the background of unsuccessful adjustment during the 1980s and a painful transition to democracy in the early 1990s. Even after achieving a multi-party system in 1993, the ensuing years were marked by political instability, social unrest, rebellions in the northern and eastern parts of the country, and two coups d’Etat, the first one in January 1996 by General Baré, and the second one in April 1999, in which the latter, President since mid-1996, was assassinated.

2. In response to the devaluation of the CFA franc in January 1994 and the sharp fall in oil prices between 1992 and 1994, the March 1994 Economic Recovery Credit (ERC) was a one-tranche operation whose objectives were to support the post-devaluation reform program and help mitigate the adverse social impact of the change in parity in the short-term. After the return of relative stability under a military regime in 1996, the March 1997 Public Sector Adjustment Credit (PSAC) was designed to support the public finance component of the medium-term program agreed with the Fund, with focus on the long-standing and interlinked public finance and public enterprises (PE) problems.

3. Based on progress achieved under the PSAC, the October 1998 Public Finance Reform Credit (PFRC) aimed at restoring the credibility in the Government’s ability to manage public finance in a responsible way by focusing on the reduction of salary arrears to civil servants and other arrears to Government suppliers which had dramatically increased over the preceding two years. After the coup of April 1999, the fiscal situation deteriorated so much that the conditions for release of the second and third tranches could not be met and the latter were cancelled. Only after a return to power of a civilian Government in early 2000, was it possible to prepare a new medium term program under the Poverty Reduction and Growth Facility. The September 2000 Public Finance Recovery Credit (PFRecC) aimed at resuming the agenda left incomplete under the PFRC and at compensating for the fall in revenue following the introduction of the common external tariff of the Union Economique et Monétaire Ouest Africaine (UEMOA) in January 2000. By end 2000, an Interim Poverty Reduction Strategy Paper and the decision point under the Highly Indebted Poor Countries initiative were approved.

4. The implementation of the first three projects was adversely affected by the civil unrest and political instability that prevailed throughout the 1990s, by resistance to reforms, and, to a lesser extent, by droughts. Virtually all measures were taken with delay or not at all. Progress was achieved in tax administration and collection, but efforts at widening the tax base produced meager results. As a result, the revenue to GDP ratio stayed below 10 percent, severely constraining fiscal management. The wage bill was contained, but at the expense of eroding the human resource base of the administration. Budget allocations to the social sectors were raised, but not sufficiently to have a major impact. The settlement of large domestic arrears proved an elusive goal and is still being addressed today. Although a privatization law was enacted, PE reforms met with strong resistance and were very slow. Progress under the fourth operation, the PFRecC, was notably different: the new civilian Government was strongly committed to the program while project design was well tailored to the Government’s priorities and focused on remedying past loopholes. Only under this last project were the foundations laid for a medium-term improvement in public resource management.

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5. ERC: the assessment confirms the ES rating of unsatisfactory for outcome and of negligible for institutional development impact. It downgrades the sustainability rating from uncertain to highly unlikely because of lack of ownership at the political and administrative levels and very weak resilience to exogenous factors. Bank performance is downgraded from satisfactory to unsatisfactory because the Bank misjudged the depth of the political crisis, wrongly interpreted the Government’s declaration for reforms as true commitment, and overlooked the lack of commitment within the administration. The Borrower performance is rated highly unsatisfactory (it was not rated in the ES).

6. PSAC: the outcome is downgraded from satisfactory to moderately satisfactory because the all-important objective of raising revenue was not attained. However, expenditures were contained and the wage bill was on target. The privatization program was only partly implemented due to strong resistance and to legal and administrative obstacles that had been underestimated or neglected by the Bank and the Government at the time of preparation/appraisal. The sustainability is downgraded from likely to unlikely because there was not enough time before the April 1999 coup to fully internalize improvements in a sustainable manner. The other ratings are confirmed: modest institutional development impact, and satisfactory Bank and Borrower performance.

7. PFRC: the ES ratings of unsatisfactory outcome, modest institutional development impact, satisfactory Bank performance, and unsatisfactory Borrower performance are confirmed. Sustainability is downgraded from unlikely to highly unlikely on the basis that of the objectives that were achieved, in the case of the civil service reform, some positive measures taken under the PSAC were reversed.

8. PFRecC: all original ratings of satisfactory outcome, likely sustainability, and satisfactory performance for both the Bank and Borrower are confirmed. The rating for institutional development impact is upgraded from modest to substantial because the revenue agencies were strengthened with better staff and the flow of information improved, budgetary procedures were streamlined and strengthened, legal requirements applicable to fiscal reporting and external auditing were reinstated after a 20-year interruption, and an appropriate framework for the settlement of domestic arrears was established.

9. The main lessons are:

(i) except for the obvious sine qua non condition of political stability, ownership by the Government is not sufficient to ensure success; support within the administration and better communication between the Government and civil society are necessary;

(ii) in countries with a large informal sector and a low tax base, the Bank and the Fund should explore ways to adapt taxation to the particularities of the country, for instance through modest taxation of the agricultural sector (as was the case in Niger prior to the discovery of uranium);

(iii) addressing the problem of very weak institutional capacity cannot be limited to a piecemeal approach via different operations but requires a full-fledged medium-term strategy agreed with the authorities, targeted at least at the

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central ministries and combined with a monitoring and evaluation system in the country;

(iv) in countries endowed with very limited resources, devaluation unaccompanied by longer-term investment and institutional support of the few existing productive sectors is unlikely to generate a lasting supply response, even if the macro policies are sound;

(v) adjustment operations must include a domestic Monitoring and Evaluation mechanism to enable senior officials to assess progress and initiate corrective actions; and

(vi) single tranche operations justified by the contention that future lending will depend on continued performance are not a guarantee of good performance.

Gregory K. Ingram Director-General Operations Evaluation

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1. Introduction

1.1 The four operations selected for assessment provide an opportunity to review Niger’s adjustment efforts in the 1990s and determine whether after the 1994 devaluation of the CFA franc progress was made in launching the basis for sustainable long-term growth and reducing poverty.

1.2 Since the mid-1980s, Niger has struggled to develop policies and mechanisms to: (i) adjust to the difficulties arising from the collapse of the uranium market in the early 1980s and diversify the sources of growth; (ii) improve the management of public resources; (iii) liberalize economic activity and develop the private sector; and (iv) strengthen the basis for long-term growth.

1.3 The Bank has financed 8 operations to help address these issues: four in the 1980s, two adjustment operations, two technical assistance projects,1 and four in the 1990s. The latter are reviewed here: the Economic Recovery Credit (ERC) of 1994, the Public Sector Adjustment Credit (PSAC) of 1997, the Public Finance Reform Credit (PFRC) of 1998, and the Public Finance Recovery Credit (PFRecC) of 2000. The time sequence of these 8 operations is in Figure 1.1.

Figure 1.1: Four Assessed Projects and Related CreditsProjects SDR 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01

PAGEP (TA) 11.0 SAL I* 18.3PESAP** 46.0PEIDP (TA) 4.3ERC*** 18.2PSAC 21.6PFRC 48.0PFRecC**** 26.5In bold: Projects included in this assessment* Accompanied by a SRD 36.0 million Credit under the Special Facility for Africa** Accompanied by a SDR 15.4 million Credit under the Special Facility for Africa*** Complemented by a Supplemental Credit of SDR 6.9 million to the Public Works and Employment Project**** Supplemented by a Credit of SDR 9.4 million

1 The SAL-I - Credit 1660-NIR in 1986, the Public Enterprise Sector Adjustment Program - PESAP - Credit 1833-NIR in 1987, the Projet d'Appui à la Gestion Economique et Financière - PAGEF - Credit 1493-NIR in 1984, and the Public Enterprise Institutional Development Project - PEIDP - Credit 1838NIR in 1987. The PEIDP was closed only in 1995.

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2. Background

2.1 Niger faces formidable obstacles to long-term development. It is landlocked and remote from the sea, and has a meager resource base, recurrent droughts, environmental degradation, heavy dependence on a single export, uranium, and a very weak human resource base. The population, growing at 3.4 percent p.a., is estimated at about 11.5 million, with 79 percent in rural areas and about 85 percent concentrated in a narrow corridor of 100-150 km along the border with Nigeria. The informal sector is very large, at some 70 percent of GDP, and highly integrated with the economy of northern Nigeria. Niger is one of the least advanced countries in terms of poverty and human development: per capita GNP stood at about US$ 180 in 2001 (WB Atlas method), and the country ranked 161 out of 162 listed in the UNDP's 2001 Human Development Index. Based on the most recent data (1992-93), the incidence of poverty is at 63 percent and of extreme poverty at 34 percent.2 Life expectancy is 46 years, adult illiteracy is 84 percent, gross primary school enrollment is 42 percent (33 percent for girls), infant mortality is 11 percent, under-five mortality 25 percent, and child malnutrition 40 percent. HIV/AIDS prevalence is relatively low at 0.8 percent. Niger’s key social indicators are in Annex A. Institutional development impact is very low.

2.2 Since independence in 1960 the country’s political landscape has been marked by two distinct periods: 1974 to 1991, and 1991-onwards. From 1974 to 1991, Niger was dominated by two military regimes. The first, from 1974 to 1987, was under the authoritarian leadership of General Kountche while the second, from 1987 to 1991 was led by General Ali Saibou who established a single-party state. Since 1991, it has known a long period of instability, during which attempts to establish a multi-party democracy have been disrupted by political turmoil, social tensions, and two coups d’Etat. The operations under review fall within this latter period.

2.3 The discovery of uranium in the late 1960s led to a boom over the second half of the 1970s and early 1980s, with two major consequences. First, the boom led to the emergence of a strong and rapidly growing public sector and introduced serious distortions in the structure of the economy. Second, Niger, traditionally vulnerable to erratic rainfall, became also subject to the vagaries of the international uranium market. The plunge of uranium prices in the early 1980s revealed not only the structural weaknesses of the economy but also the boom-induced distortions and the mounting debt obligations.

2.4 In 1983, the Government sought the assistance of the IMF and the Bank to formulate a reform program. The program focused on improving public resource management and launching structural reforms aimed at diversifying the economy. The difficult political and social context and the complexity of the reform program led to disappointing results. The two adjustment operations financed by the Bank were rated unsatisfactory by OED with sustainability highly unlikely.3 After the death of General Kountche in 1987, a weaker military regime was not able to contain the calls for a multi-

2 Based on the household survey of 1992-93. Work on a new household survey began in 2002, drawing on the results of the 2001 population census, but was interrupted as of January 2003 for lack of financing. 3 OED Performance Audit Report No. 12104 of June 29, 1993.

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party system. Economic management became weaker and political commitment to reforms diminished, while the CFA franc became increasingly overvalued vis-à-vis the Nigerian currency. By 1991, the IMF-supported program derailed as political instability and social turmoil intensified. A National Conference, held in late 1991, appointed a transitional Government that made vain attempts at stabilization. The Conference led to the adoption of Niger’s first multi-party constitution in December 1992, and by March 1993, a newly elected civilian Government took office, based on a fragile coalition of several parties.

2.5 The results of the first adjustment period (1983-93) were disappointing. Real GDP average was -0.6 percent over the period. The fundamental structural issues remained. A thin revenue base due to a very large informal sector, strong wage bill pressure, and an inefficient public enterprise sector led to persistent budgetary crises. In Niger’s context, raising revenue proved to be a much greater challenge than reducing expenditure. Data for Government revenues, including grants, show that Niger’s revenues are much lower than for Africa as a whole and for selected Francophone countries of the sub-region, standing at 12.8 percent of GDP on average for 1991-93, against 24.7 for Africa, 17.1 for Guinea, 19.2 for Côte d’Ivoire, 19.5 for Senegal, 21.0 for Mali, and 25.0 for Mauritania.

2.6 In August 1993, the authorities attempted to adopt some internal adjustment measures, such as a decrease of 13 percent in public sector wages, and protection measures against fraudulent imports. Despite this, the current fiscal deficit rose from 3.1 percent of GDP in 1991 to 3.9 in 1992 and 5.2 percent in 1993, and the overall fiscal deficit, excluding grants, stood at 9.4 percent of GDP by end 1993. Revenue fell to a level such that 87.6 percent were absorbed by the wage bill, despite the cut in salaries. In addition, the latter went up to four months in arrears in 1993, while further arrears accumulated on account of debts owed by the Government to public utilities. In addition, the overvaluation of the CFA franc made it increasingly difficult for the formal sector, largely dominated by public enterprises, to compete and the agricultural sector to diversify. Table 2.1 presents key economic data for the early 1990s.

Country Strategy

2.7 The 1992 CAS (March 1992) acknowledged that circumstances did not allow for substantial reforms until political stability returned. Although the thrust of the strategy in the 1980s was kept, flexibility became the key operational feature of the Bank’s agenda, which was to respond quickly to the changing political and social situation, while maintaining essential activities and keeping the dialogue open. The CAS proposed a flexible operational program limiting lending for the time to a "core program" of investment operations. Shifting to an "expanded core program" or a "full program" was to be triggered by progress towards a viable macro-economic framework and agreement on a Policy Framework Paper (PFP), respectively. Also, a lower lending profile was to allow for deepening the analytical work, including the preparation of a Poverty Assessment, thus laying the foundations for adjustment lending at a later stage when the situation would allow.

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Table 2.1: Key Economic Indicators, 1990-1993 (in percentage of GDP, unless otherwise indicated) 1990 1991 1992 1993 Real GDP (% increase) -1.3 2.5 -6.5 1.4 CPI – African (% increase) -2.0 -1.9 -2.9 -0.9 Terms of trade (% change) -9.8 -1.8 -8.4 -1.3 Total Revenue 10.3 8.5 8.2 7.3 Total exp. + net lending 22.7 16.9 16.8 16.8 Current exp. 13.3 11.1 12.6 12.8 Primary budget bal. (comit.) -10.1 -6.5 -6.9 -7.7 Current budget bal. (comit) -3.5 -3.1 -3.9 -5.2 Overall bal. Excl. grants -12.4 -8.4 -8.6 -9.4 Wage bill/total revenue 53.0 69.6 76.3 87.6 Exports fob 12.2 12.2 11.3 11.3 Imports cif 21.9 18.3 14.4 14.8 Current act. Def. (excl. off. Transfers) -11.8 -7.4 -6.7 -7.7 Debt outstanding 63.9 64.6 69.6 57.3 Debt service 3.8 3.7 3.9 4.2 Debt service/XGNS 21.3 26.6 27.4 26.8 Source: IMF

2.8 In late 1993, discussions between France and the CFA countries about the devaluation of the CFA franc intensified, as the fixed rate of CFA francs 50 for FF 1.0 was to be changed to CFA francs 100 (presently, the CFA franc is fixed to the Euro). The Government of Niger had some hesitation about the devaluation on economic grounds as Niger did not have important agricultural sub-sectors prone to a strong supply response as some of its neighbors had, e.g., Côte d’Ivoire with cocoa. When the countries of the monetary union decided in favor of a change in parity, the Government prepared a set of reforms that could form the basis of a new PFP, together with a program aimed at protecting vulnerable groups from increased import prices in the months following the change in parity.

2.9 The 1994 CAS argued for adding supporting actions to facilitate a supply response. It proposed to revert to a “full program” of adjustment and investment operations. However, it was recognized that, if the medium-term program, still under preparation at the time, were to go off-track, the Bank would revert to a "core program." Therefore, the implementation of the lending program was to determine the level of IDA commitments, especially in the light of a history of poor portfolio performance.

2.10 This medium-term vision was quickly overshadowed by reality. Without true ownership of the program at the political and administrative levels, and with persistent political and social turmoil, the efforts at stabilization were short-lived, and, by mid-1994 (hardly two months after the CAS discussion), the Stand-By and the Bank program had derailed completely, prompting the Bank to return to a "core program."

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2.11 Continued instability persisted through the end of 1995, and led to a coup by General Baré Mainassara in January 1996. The latter declared his commitment to the reform process and established a strict timetable for a return to democracy by year-end (which indeed took place). The situation stabilized after the coup, and, in June, a new Policy Framework Paper (PFP) was agreed, with a three-year (1996-98) arrangement under the Enhanced Structural Adjustment Facility (ESAF) focusing on regaining control over public finance and addressing impediments to growth and poverty reduction, the two key objectives of all IMF programs since the 1980s.

2.12 The 1997 CAS (October 1997) provided the opportunity to undertake a frank reassessment of Niger's bleak situation.4 It also reflected the findings of the Poverty Assessment Report, which had highlighted the severity of Niger's poverty, including the critical water shortage. Both factors pleaded for redirecting the strategy toward a longer-term focus on poverty. The CAS acknowledged, however, that this challenge could be overcome only in the long run by developing human capital and identifying new sources of growth, notably by economic integration with Nigeria and the UEMOA coastal countries. In support of this new approach, and in the face of persistent fragile public finances, the CAS stressed that public resource management needed continued attention as a pre-requisite to deeper reforms. Another factor conditioned the focus of Bank operations since 1998. By 1997, the problem of domestic and external arrears had become particularly acute as a result of an increasingly tight treasury situation exacerbated by the suspension of a substantial portion of external aid in response to political crises.

2.13 After the April 1999 coup, in which President Baré was assassinated, political and social instability led to a rapid deterioration in the fiscal situation with salaries unpaid and some reform measures reversed by the transitional Government. The dire fiscal situation was exacerbated by two factors: (i) the almost total withdrawal of external assistance (by end 1999, cumulative civil service salary arrears reached 13 months); and (ii) the fall in revenues following the introduction on January 1, 2000 of a common external tariff (CET) by the UEMOA countries, which had penalized Niger more severely than other countries because of its large informal trade with Nigeria.

2.14 It was not until the return of a democratic civilian Government in early 2000, that better political and social cohesion could take hold and measures to redress the situation taken. The Government set four priorities for 2000, all geared to improving the balance between revenue and expenditure: (i) paying civil service salaries on time; (ii) servicing the external debt to prompt a resumption of external assistance; (iii) formulating its Poverty Reduction Strategy Paper (PRSP) to obtain the support of the Fund and the Bank; and (iv) reaching the decision point under the Highly Indebted Poor Countries (HIPC) initiative. An Interim Poverty Reduction Strategy Paper (I-PRSP) was prepared and conditions for achieving the decision point under HIPC were met and approved by the Board in December 2000.

4 Over the 30-year period since independence, real GDP had increased on average by 0.3 percent per year while population had doubled, growing at 3.3 percent p.a. Over that period, GDP had increased only twice for more than two years consecutively.

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3. Objectives and Design

3.1 The Economic Recovery Credit (ERC - March 1994). The overall objective of the ERC was to support the post-devaluation reform program of the Government, and specifically:

• support the measures aiming at minimizing the negative social impact of the devaluation in the short-term;

• provide the necessary financial assistance during the transition period in which follow-up operations were being prepared; and

• support the policy dialogue between the Government and IDA. 3.2 As those approved for all CFA countries at the time, the ERC was meant to be a short-term shot in the arm and not a vehicle to address broader issues. It was prepared quickly and its design was very much influenced by the special circumstances surrounding the devaluation, including the general euphoria of the time. The Credit was subject to approval of a Stand-by (approved on March 4, 1994), that was expected to be replaced by an ESAF as soon as a medium-term program could be agreed. It was a single tranche operation based on actions taken prior to Board presentation and without conditions of effectiveness. The actions taken prior to Board were: (i) realignment of the exchange rate; (ii) tax measures to increase revenue; (iii) freezing of petroleum, water and electricity prices and freeing up of agricultural prices; (iv) customs tariff measures; (v) increase in the Central Bank discount rate from 10.5 to 14.5 percent; and (vi) a supplementary allocation of CFAF 10 billion in the revised 1994 budget for social safety net measures.

3.3 Since there was only one tranche disbursed on effectiveness, there were no further conditions, except the general provision that further lending by the Bank would be based on a judgment made on progress achieved on a wide agenda of measures, all to be taken by end-1994. These covered broadly the following: (i) several revenue mobilization measures focusing on tax simplification and administration and unification of the VAT rate at 17 percent; (ii) control of the wage bill and of scholarships, redirection of expenditure in favor of materials and supplies; (iii) elimination of all external arrears, substantial reduction in internal arrears, and inventory of all domestic arrears and their formal regularization; (iv) formulation of a Public Investment Program (PIP); (v) raising the discount rate from 10.5 percent to 14.5 percent; (vi) introduction of a comprehensive tariff reform, including reduction in some tariffs; (vii) reforms in public enterprises (PE); (viii) adoption of measures to promote Private Sector Development (PSD); and (ix) accompanying social measures to protect the vulnerable groups. In the optimistic mood of the moment, reform measures were added to the program with seemingly little consideration for the Government’s ownership of the program and/or its capacity to carry it out in a timely manner, all the more so since preparation had been minimal. Similarly, in the prevailing context, the risks were considered as moderate. Annex B lists the actions taken prior to Board presentation and the matrix of reform areas that would be monitored by the Bank.

3.4 The Credit was complemented in November 1994 by a Supplemental Credit of SDR 6.9 million to the 1991 Public Works and Employment Credit project on the ground

7

that the devaluation resulted in a substantial short-term increase in urban poverty expected to persist until the supply response to the devaluation materialized.5

3.5 The Public Sector Adjustment Credit (PSAC - March 1997). The Bank focused on the long-standing and interlinked public finance and PE problems. As part of the ESAF program, the Government had decided to renew efforts at restructuring the PE sector and, in November 1996, had created a Privatization Agency.6 Thus, the Bank decided to support an initial phase of PE privatization and restructuring.7 The objective of the Credit was to help sustain the Government’s stabilization and public sector adjustment effort, which aimed at restoring macroeconomic balance and confidence in the economy and at improving the management of public resources. The specific objectives were:

• revenue enhancement through: (i) simplification of the tax system; (ii) strengthening of tax administration; and (iii) widening of the tax base;

• expenditure restructuring by reducing the share of the wage bill, subsidies and transfers in current expenditure in favor of primary education, basic health care and road maintenance;

• reducing arrears; and • implementation of the privatization program.

3.6 Despite a return to relative stability under the Baré Government, the design of the PSAC was very much conditioned by the experience of the past turbulent years. The President’s report acknowledged that a return to a “full program” as advocated by the 1994 CAS was no longer appropriate for three reasons: (i) the uncertainties of the political situation; (ii) Niger’s poor implementation track record; and (iii) the need to re-examine the medium-term priorities in light of a more realistic assessment of Niger’s growth prospects. As a result, instead of a multi-tranche second SAC, as envisaged under the 1994 CAS, a smaller one-tranche operation was proposed for two reasons: (i) to support the authorities’ commitment to the program as demonstrated by the adoption of measures prior to Board presentation; and (ii) to decrease, to the extent possible, the risk of policy reversal. Emphasis was again on actions taken prior to Board presentation and there was no condition of effectiveness.

3.7 Actions taken prior to Board related to: (i) revenue mobilization measures adopted between September 1996 and February 1997; (ii) a 1997 budget law with larger allocations to the social sectors and the maintenance of infrastructure; and (iii) initial 5 The Region submitted a package of five supplemental credits for Sahelian countries as the last in a series of special operations in response to the CFA devaluation. Several EDs expressed strong reservations to these operations on the basis of substance (response time; equality in client orientation; resource mobilization efforts) and procedure (operational guidelines on supplemental credits). In the case of Niger, the criticism was particularly severe because of a lack of medium and longer-term planning capacity, the poor performance in carrying the PFP program, and the absence of a macro-economic framework. 6 The PE reform, initiated with the PESAP in 1987, had largely failed. There had been no substantial improvement in the financial position of PEs and no or little development of the private sector. In fact, reform efforts had been abandoned altogether in the late 1980s and sector performance had further deteriorated in the early 1990s. 7 A second and more in-depth phase of restructuring was to be supported by a PE stand-alone operation (the Privatization and Regulatory Reform Technical Assistance Project of August 1998 - still ongoing).

8

structural reforms of the civil service and the PE sector, including the adoption of a new privatization law and the decision to privatize 12 key PEs. As in the case of the ERC, the conditionality was limited to the provision that further lending by the Bank would be based on a judgment made on progress achieved on a series of measures within specific reform areas to be taken in 1997 and 1998. These covered: (i) revenue enhancement concentrating on simplification of the tax system, tax administration, and widening of the tax base; (ii) expenditure restructuring; and (iii) implementation of the PE privatization program. The detailed actions taken prior to Board presentation and the areas targeted for reform are listed in Annex C.

3.8 The Bank and the Government agreed to set up an Inter-ministerial Committee chaired by the Prime Minister to monitor and evaluate progress under the various components of the program. The committee was to be assisted by three technical groups (public finances; PE privatization and restructuring; civil service reform), that were to be responsible for implementing the program. The operation was considered of high risk in the light of the past troubled years (instability; shortfall in external assistance for 1997-98; and poor implementation capacity).

3.9 The Public Finance Reform Credit (PFRC - October 1998). The objective of the Credit was to help sustain the implementation of the economic reform program in 1998-99. The specific objectives were to:

• restore credibility in the Government’s ability to manage public finance in a responsible way by ensuring budgetary orthodoxy and the orderly clearing of domestic arrears;

• enhance domestic revenue mobilization by supporting measures to consolidate and reinforce the tax reform efforts implemented in 1996-97 (first phase of the program); and

• launch a medium-term effort to improve the efficiency and equity of public spending.

3.10 The design of the PFRC was dictated by internal considerations within the Bank and by the determination of the Baré Government shown in implementing the program. For internal efficiency reasons and to build a longer-term Government’s commitment to reform, the Bank chose to have a single operation with three-tranches for US $64 million. Again, there were no conditions of effectiveness or of release of the first tranche as the Government had implemented a series of measures prior to Board presentation. These related to four areas: (i) budgetary orthodoxy covering budget and payment procedures, audit, and completion of a PER; (ii) creation of an ad hoc Commission for the verification, validation and settlement of domestic arrears; (iii) revenue mobilization covering tax administration, tax exemptions, and strengthening of tax offices; and (iv) civil service reform.

3.11 Independently of the conditions for second and third tranche release (see below), the reform areas for the remaining of 1998 and for 1999 were: (i) improvement in financial and accounting orthodoxy; (ii) settlement of domestic arrears; (iii) strengthening of revenue mobilization with emphasis on widening the tax base; (iv) control and restructuring of expenditure, including control of the wage bill and reallocation of

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resources to the priority sectors; and (v) continued PE reform. Annex D provides a detailed list of the actions taken prior to Board and of the measures to be taken under different reform areas during project execution.

3.12 Release of the second and third tranches was subject to continuing satisfactory performance on the macro-economic front and implementation of the program. In addition, the second tranche of US$ 20.0 million was contingent upon: (i) presentation to Parliament of a draft 1999 budget consistent with the program and reflecting the recommendations and findings of the PER; (ii) settlement of domestic arrears in a net amount of at least US$ 20 million equivalent according to the priorities agreed upon in the settlement plan; and (iii) completion of the verification and validation of all internal arrears not yet verified and validated, and presentation to the Bank of a settlement plan satisfactory to the Bank. The third tranche of US$ 20.0 million was contingent upon: (i) presentation to Parliament of the expenditure audit covering the execution of the budgets for each fiscal year from 1991 through 1997; and (ii) settlement of a second net amount of domestic arrears of at least US$ 20.0 million equivalent according to the priorities agreed upon in the domestic arrears payment plan. In addition, the Bank and the Government agreed on a set of key performance indicators relating to the most important conditions (Annex D). Despite the relative stability under the Baré Government, the operation was also rated as presenting high risks (renewed political and social instability; weak implementation capacity).

3.13 The Public Finance Recovery Credit (PFRecC September 2000). On the basis of the commitment demonstrated by a new civilian Government and the IMF’s PRGF program, the Credit’s main objectives were to help sustain the stabilization and fiscal management component of the program and to compensate for the tariff revenue shortfall caused by the reduction in tariffs in the context of the implementation of the trade liberalization agenda of the UEMOA. Specifically, the objectives were to be achieved by focusing on the following seven policy areas:

• increasing tax revenue; • improving budget preparation and expenditure programming; • improving expenditure management (budget execution); • strengthening fiscal reporting and expenditure evaluation mechanisms; • establishing effective budget audits; • reviving the domestic arrears settlement process; and • accelerating structural reforms with direct fiscal impact, i.e., civil service reform

and privatization.

3.14 Again, the Credit was a single tranche operation without conditions of effectiveness and based on actions taken prior to Board presentation falling under the following broad categories: (i) the resumption of regular and timely payment of civil service salaries to restore credibility and forestall social unrest; (ii) the revision of the 2000 budget law, including expenditure restructuring in favor of the social sectors; (iii) the implementation of the new UEMOA tariff structure (effective on January 1, 2000); (iv) the introduction of a new tax regime, including an increase in the VAT rate from 18 to 19 percent; (v) the improvement in various budgetary procedures and controls;

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and (vi) structural reforms in the civil service and in the PE sector. In addition, given the failure and ineffectiveness of the ad hoc Commission, which had been set up prior to the PFRC to settle the domestic arrears, the Government decided to remove the verification and settlement process of arrears from political interference, and created an autonomous center under the chairmanship of the Director of Cabinet of the President (the Centre Autonome d’Amortissement de la Dette Intérieure de l’Etat – CAADIE), which took over the responsibilities of the defunct ad hoc Commission.

3.15 There was no other conditionality than the provision that further Bank lending would be conditional to a satisfactory judgment on the progress achieved in the seven reform areas mentioned above. Annex E provides a detailed list of the actions taken prior to Board as well as those under the seven reform areas for implementation in 2000-01.

3.16 The PFRecC was, in several respects, the continuation of the PFRC and the two operations must be seen in conjunction. It had ostensibly a limited purpose: an “urgent” recovery in fiscal management aimed at laying the foundation for resuming a wider agenda,8 as well as rebuilding confidence in the donor community, whose resumption of assistance was critical. As in the case of the PSAC and the PFRC, and notwithstanding the commitment of the new civilian Government, the operation was considered of high risk (political and social instability; incapacity to mobilize sufficient external resources to resolve the financial crisis of 2000; the realization of a low-case macro-economic scenario; and weak implementation capacity). The PFRecC openly recognized the necessity to close the 2000 financing gap in view of the hesitancy of donors to resume their assistance. In this line, and with the situation exacerbated by the increase in oil prices in 2000, the Board approved in December of that year, a Supplemental Credit of SDR 9.4 million to compensate Niger for the additional fiscal burden caused by this increase.9 This Credit was also disbursed upon effectiveness without conditions.

Relevance of Objectives 3.17 The objectives of the four operations were at the time and remain highly relevant to the development priorities of Niger and to the Bank’s past and current country assistance strategy. However, none of the four operations directly addressed the need for better and sustained communication on the reform agenda between the Government and other stakeholders, including members of the National assembly, key civil servants, unions, and student organizations.

8 The PFRecC was followed by a Public Expenditure Adjustment Credit (PEAC) in October 2001. 9 The Bank extended a Supplemental Credit to several African countries for that purpose.

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4. Implementation

4.1 The projects focused on macro-economic stabilization and on controlling the persistent budgetary crises. Six major themes were covered: (i) revenue mobilization, (ii) civil service reform and the wage bill, (iii) expenditure restructuring, (iv) budgetary orthodoxy, (v) arrears, and (vi) PE reform and privatization. There was one subsidiary theme: (vii) the mitigation of the negative social impact of the 1994 devaluation on vulnerable groups under the ERC. Annex F presents key economic indicators for the period 1990-2001 and Figure 4.1 illustrates the fiscal profile over the decade.

Figure 4.1: Fiscal Profile (1990-2001)

-15

-10

-5

0

5

10

15

90 91 92 93 94 95 96 97 98 99 00 01

% o

f GD

P

Total revenue Current expenditure Overall bal. Excl. grants (comit.)

-10

-5

0

5

10

15

90 91 92 93 94 95 96 97 98 99 00 01

Rea

l GD

P(%

incr

ease

)

Source: IMF 4.2 The Economic Recovery Credit. Implementation was limited and fragmented. The lack of ownership and the derailment of the program in mid-1994 prevented the adoption of many of the targeted measures or delayed them considerably beyond the end of 1994. The GDP growth target of 3.9 percent for 1994 was slightly exceeded due to a good rainy season, but the 4.2 percent forecast for 1995 and 1996 was not reached. Inflation was contained within the forecast as a result of the prudent policy of the central monetary authority of the UEMOA. The current account target was achieved in 1994 due

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to a good performance of agricultural exports following the change in parity and reduced import of capital goods.

4.3 The overall fiscal deficit worsened, reaching 12.5 percent of GDP against a target of 9 percent for 1994. Most of the revenue mobilization measures were either not taken or delayed beyond the end of 1994. The revenue/GDP ratio fell to 6 percent in 1994, the lowest level ever. Stabilizing the level of the wage bill, a key objective, proved an elusive goal under the prevailing political and social circumstances. The ratio of the wage bill to total revenue reached 90.8 percent in 1994 and fell only to 73.2 percent in 1995.

4.4 Arrears were partially settled. At end 1993,10 the stock of external arrears was estimated at some 133 percent of total revenues (at the new parity) and at some 50 percent for internal arrears. Only 65 percent of external arrears were settled in 1994 against a target of 100 percent, while the bulk of non-wage domestic arrears was left untouched. An inventory was not completed and a formal mechanism for their regularization not set up.

4.5 Expenditure restructuring and improvement in budgetary orthodoxy were minimal, as only a three-year rolling PIP was prepared in 1994, but without any accompanying institutional strengthening.

4.6 Reforms in the PE sector and promotion of PSD were minimal. The ERC provided for several actions in the PE sector: (i) an inventory of cross-debts of the sector and the preparation of a timetable to clear them; (ii) independent audits of NIGELEC (electricity), ONPPC (pharmaceuticals), SONIDEP (petroleum), and CNSS (social security); (iii) liquidation of COPRO-NIGER (distribution); and (iv) implementation of the reforms of the uranium sector and of NIGELEC. These were either partially taken or delayed: an inventory of cross-debts was partially done while independent audits were carried out on time for NIGELEC and CNSS, but considerably delayed beyond end 1994 for ONPPC and SONIDEP. The liquidation of COPRO-NIGER was delayed to 1995 and the reforms in the uranium sector and of NIGELEC were still underway in 1996. For PSD, the ERC envisaged the elimination of the Government monopoly over hiring and the revision of the Labor Code. Neither was done.

4.7 Achievements in limiting the negative impact of the devaluation on vulnerable groups were modest as a result of insufficient counterpart funds and administrative delays. The revised 1994 budget had allocated CFAF 10 billion for social safety measures, including: (i) eliminating tariffs on rice and sugar for 3 months; (ii) freezing of the price of kerosene for 3 months and limitation of the increase in the price of gas oil to 30 percent; (iii) ensuring the proper supply of free essential drugs in public health facilities; (iv) supplying the markets with essential foodstuffs (cereals, sugar, cooking oil) at subsidized prices to break speculative commercial practices; and (v) increasing significantly in real terms current expenditure for health and education. Some of those measures were taken, some were partially taken or not at all, as only CFAF 2.6 billion were effectively allocated (see Annex B for details on implementation of measures). 10 It is difficult to obtain a clear picture of the arrears situation at any given time because definitions varied and partial estimates were made at different times. In addition, new arrears accumulated quite regularly throughout the decade.

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4.8 The Public Sector Adjustment Credit. Implementation was partially successful due to the relative stability under the Baré Government. In 1997, macro-economic performance deteriorated owing to a drought, with GDP reaching 2.8 percent against a target of 4.3 percent, but a more responsible fiscal management led to a reduction in the overall deficit to 7.5 percent against a target of 8 percent. Inflation declined fairly rapidly after 1994 to reach an average of 2.4 percent over 1997-2000, well within the range prescribed by the UEMOA. Again, the current account deficit was smaller than projected on account of reduced economic activity, but wider than in 1996 reflecting a decline in agricultural exports due to the drought.

4.9 Most of the revenue mobilization measures relating to simplification of the tax system and tax administration were taken. The improvement in the revenue/GDP ratio achieved in 1995 and 1996 was sustained in 1997, reaching 8.4 percent, but still well below the target of 9.8 percent.

4.10 Expenditure containment and restructuring were also more forcefully addressed. Control over personnel expenditure was strengthened and the wage bill target met, and scholarships reduced. Allocations for education and health were increased, but fell short for the road fund (see Annex C for details). On arrears, settlement was minimal because of the shortfall in external assistance due to continued political uncertainty. In 1997 and 1998, their clearance was through settlement of cross debts, while external assistance was targeted to the extent possible at arrears to suppliers in the health and education sectors. Some measures were also adopted to avoid accumulation of new arrears. Budgetary discipline was strengthened, mostly with respect to budget execution.

4.11 The Government tackled structural reforms that had remained dormant since the 1980s. In 1997, it initiated the rationalization of the civil service and payroll system: the salary scale was revised by eliminating distortions in the remuneration system and by reducing base wages and housing allowances; a civil service census was completed; a redeployment program for the health sector and the tax collection agencies was launched; and the civil service roster and payroll files were harmonized and integrated. Reforms were maintained through 1998 and strengthened in December 1998 with the adoption of a civil service statute introducing mandatory retirement after 30 years of service or 55 years of age, and basing promotion on merit.

4.12 Similarly, since 1996, the Government had been active, with the support of the Bank, in reviving the PE reform. The PSAC had a fairly tall agenda in this area, with all actions to be completed by end 1998. Twelve enterprises, including the three major utilities, the petroleum company, and eight smaller enterprises had been targeted for privatization, three for liquidation, and eight more for restructuring. By early 1997, the privatization strategies for the three utilities and the petroleum company had been adopted. Finally, the program had called for the settlement of all cross-debts.

4.13 In contrast to the good performance at preparation stage, implementation of the PE reform agenda was partial and very slow reflecting strong resistance by the unions, weak technical and administrative capacities, and poor coordination among the different agencies involved (the Implementation Completion Report of the PSAC recognizes that the calendar had been too optimistic). Implementation accelerated somewhat by end

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1997, after the Government and the Bank signed a memorandum of understanding spelling out the modalities of the process, the guidelines to ensure the transparency in the preparation of the transactions, and the measures to strengthen the privatization agency. As of August 1998, only three small companies had been sold and three liquidated, while the restructuring of eight companies was still underway. In August 1998, advisors were recruited to help prepare the bidding documents for the three utilities.

4.14 The Public Finance Reform Credit. Implementation was very much mixed and broke down completely after the April 1999 coup. No specific growth targets were set for 1998 and 1999 in the President’s Report, but growth was projected to average 4.5 percent over 1998-2001. Due to exceptional rainfall in 1998, GDP grew by 10.4 percent, but fell –0.6 percent in 1999. With both current expenditure and revenue targets not achieved, the overall fiscal deficit, excluding grants, widened substantially in 1999, to 9.0 percent of GDP.

4.15 The wage bill could not be contained and domestic arrears could not be settled, leading to the cancellation of the second and third tranches of the Credit. The wage bill target was slightly surpassed in 1998, but was overshot by 13 percent in 1999 following the rapid deterioration in fiscal management after the April coup. With assistance from the Bank during project preparation, an inventory of domestic arrears as of end 1997 had been prepared, as well as a detailed plan for their settlement in 1998-99 (at March 31, 1998, domestic arrears were estimated at 11 percent of GDP). The ad hoc Commission set up to implement the plan, carried out a substantial amount of technical work in verifying the claims but proved ineffective in achieving the settlement objectives, mainly because of persistent infighting among agencies of the ministry of finance. After the coup, the fiscal situation deteriorated so rapidly, due to the laxity in fiscal management under the transitional Government and the immediate suspension of most external assistance, that the conditions for tranche release could no longer be met. The Government undertook an organizational audit of the Treasury, but the first remedial actions, aimed at restoring accounting discipline, were not taken before the end of 2000.

4.16 Revenue mobilization failed to meet the targets and attempts at widening the tax base were disappointing. The revenue/GDP ratio improved in 1998 due to the good GDP performance. However, at 9.1 percent, it did not reach the target of 9.9 percent, nor in 1999, when it fell to 8.8 percent against a target of 10.3 percent. Virtually all measures adopted to strengthen revenue mobilization were implemented with delay or not at all. While the ERC and the PSAC had focused on simplification of the taxation system and on tax administration, the PFRC put greater emphasis on widening the tax base, mainly by reducing the scope and number of exemptions under the Investment Code and the special tax regimes applicable to petroleum and mining. There was also greater emphasis on combating fraud and enforcing sanctions on fraudulent agents, as the number of exonerations had substantially increased in 1997-98. However, little progress was achieved in widening the tax base.

4.17 The Government showed commitment in undertaking the first PERs in health and education, with good results. Some expenditure restructuring was achieved, as the focus on efficiency of public spending shifted to a more comprehensive approach than in the past through PERs and implementation of their recommendations via the budget. PERs

15

for health and education were completed in 1998, as well as audits of the allocation mechanisms for subsidies to major autonomous public agencies (radio, TV, etc.) and for student scholarships. Most of their recommendations were included in the 1999 budget with increased allocations for non-wage spending. The Government demonstrated ownership in these exercises and the PER process was well received at the time by the ministries concerned.

4.18 Progress in reforming the PE sector was limited to the selection of private investors invited to bid for the telecom and water companies, and for two cellular phone licenses.

4.19 The Public Finance Recovery Credit. The transitional Government following the April 1999 coup left an extremely precarious fiscal situation to its successor. Salary arrears accumulated very quickly, up to seven months during 1999, for a cumulative total of 13 months. On the basis of estimates made in March 2000, the stock of domestic arrears stood at CFA 295 billion or 23.7 percent of GDP, at end 1999. Against this background, implementation of the project must be regarded as mostly successful. No specific growth targets were specified for 2000-03 in the President’s Report, but an average GDP growth of 3.9 percent was forecast, supported by a projected increase in the investment ratio. In the event, GDP declined by 1.4 percent in 2000 due to renewed drought, but increased by 7.6 percent in 2001, as a result of good rainfall. With revenue/GDP ratios higher than targeted and expenditure kept under control, the overall fiscal deficit decreased from 9.0 percent in 1999 to 7.6 and 7.4 percent in 2000 and 2001, respectively.

4.20 Revenue mobilization targets were achieved in both 2000 and 2001. Several factors contributed to this result: more realistic targets had been set than in the past; the VAT rate was raised to 19 percent to compensate for the revenue losses incurred with the introduction of the CET; and the exchange of information between revenue agencies on large taxpayers was much improved and facilitated by the effective application of the single taxpayer identification number. However, as in the case of the PFRC, efforts at reducing tax exemptions largely failed.

4.21 Current expenditure was contained. Control of the wage bill remained a challenge and targets for 2000 and 2001 were slightly exceeded. Expenditure restructuring was strengthened with a second round of PERs for education and health and a first PER for the rural sector. These were completed in early 2000, leading to increased allocations for health and education in the revised 2000 budget. A budget-wide PER, capitalizing on the regularization of budgetary accounts for 1997-00 (see below), was delayed, as the Government and the Bank agreed to include not only trends in allocations but also management processes, as well as to associate other donors to the exercise. The full PER was due to start in spring 2003.

4.22 The budgeting cycle was strengthened and a return to budgetary orthodoxy was initiated with good results, with particular attention to the respect of legal requirements and administrative procedures. The budget preparation framework had remained weak for most of the decade. Several programming issues were tackled successfully and progress was achieved in most of them, but problems remained in rationalizing and

16

limiting allocations for scholarships, autonomous entities, and utility consumption. The Government launched corrective measures in budget execution, such as a strict forward-looking cash management system and the prioritization of expenditure, but, here also, progress was limited as some institutional arrangements failed to function properly.

4.23 Fiscal reporting was improved, building on the potential offered by the computerization of budget execution and of payroll/personnel management. But delay was encountered in institutionalizing the reconciliation of data between the different agencies of the Ministry of Finance, especially between budget execution and the Treasury's balance sheet.11 Progress was also achieved in restoring bookkeeping discipline, in reorganizing the Treasury, and in preparing a reconciled balance of entry for the Treasury for 2000.

4.24 External budget oversight and audit were reestablished in accordance with Niger's constitution, a requirement not met since the mid-1980s. In agreement with the Bank and the Fund, the year 1997 was taken as reference year. In December 2002, the Chamber of Accounts sent to the National Assembly for approval the draft budget execution laws for 1997-2000, which were adopted. As of January 2003, the Chamber had completed a detailed audit of the 1997 accounts and had requested clarifications from the Treasury on some issues. Similarly, a draft budget execution law and the closed Treasury accounts for 2001 had been sent to the Cabinet for approval but not yet received by the Chamber. The work of the latter is considerably hampered by a lack of adequate resources.

4.25 An effective settlement plan of domestic arrears was agreed. The Government, in agreement with the Bank, chose to accord absolute priority to the payment of salaries on time (which has been the case since early 2000), leaving salary and other arrears to be liquidated gradually and after a complete reevaluation of the work performed by the ad hoc Commission, including updating the settlement strategy. Under the CAADIE, CFAF 26 billion were settled in 2001-02 out of the total of CFAF 295 billion at end 1999.

4.26 Structural reforms in the civil service and in the PE sector made progress, as the agenda left incomplete under the PFRC was resumed. After the April 1999 coup, some aspects of the civil service reform had been reversed by the transitional Government when the implementation of the retirement provisions had been suspended following the rapid accumulation of salary arrears and related social tensions. In early 2000, the retirement reform was re-enacted with modalities of its implementation agreed with the main trade unions. The PE reform agenda regained some momentum in 2001 with the transactions for SONITEL and SNE completed and the licenses for mobile phone awarded. However, the program encountered not only long delays, but also several important changes, including privatization strategies for some companies, particularly for SONIDEP. As of January 2003, only six companies had been privatized, including the telecom and water companies. NIGELEC was at pre-qualification stage and studies were underway for the opening of capital of SONIDEP; completion of the transactions for the latter two was expected for June 2003.

11 Progress in this area is expected in 2003, as the new UEMOA budget nomenclature and chart of accounts were introduced into the 2003 budget.

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5. Outcome and Assessment

Outcome

5.1 The outcome of the Economic Recovery Credit is rated unsatisfactory, as in the ES, because the fiscal and structural reforms were not implemented. This was the case also for the subsidiary objective of mitigating the negative impact of the devaluation on vulnerable groups.

5.2 The outcome of the Public Sector Adjustment Credit is rated moderately satisfactory, compared to satisfactory in the ES, because it partly achieved the objective of sustaining the stabilization and public sector adjustment efforts. Some specific objectives were achieved such as the reduction and containment of the wage bill and the redirecting of expenditure to the social sectors. However, revenue targets were not achieved while the revival of the structural reforms in the PE sector met with serious obstacles, including strong resistance from the unions, poor commitment within the administration, and long delays in implementation.

5.3 The outcome of the Public Finance Reform Credit is rated unsatisfactory, as in the ES, because the key objectives were not achieved: the overarching objective of restoring credibility in the sound management of public finance through a very substantial reduction in domestic arrears was not attained. In fact, arrears built up. Similarly, the objective of raising revenue was not achieved. The only area of progress was in expenditure restructuring where PERs were undertaken in the education and health sectors. It is difficult to judge whether, in the absence of the April 1999 coup, the limited progress achieved under the PSAC could have been sufficiently sustained and strengthened to enable the Government to meet the second and third tranche conditions.

5.4 The outcome of the Public Finance Recovery Credit is rated satisfactory, as in the ES, because its major objective of sustaining stabilization and fiscal management efforts as well as compensating for the shortfall in revenue caused by the introduction of the CET was met. Also, most of its specific objectives were achieved.

Institutional Development Impact 5.5 The Economic Recovery Credit. The institutional development impact is negligible, as in the ES. The reforms supported by the Credit did not achieve the objective of anchoring the stabilization program and capitalizing on the benefits of the devaluation.

5.6 The Public Sector Adjustment Credit. The project achieved modest institutional development impact, the same rating as in the ES. Some positive changes were made in the institutional environment for managing resources: (i) the revenue agencies were strengthened and their functioning improved; (ii) the civil service and the payroll system were rationalized; (iii) additional allocations to the social sectors were institutionalized; (iv) some budget execution procedures were streamlined; and (v) a legal framework for privatization was adopted, a privatization agency was created, and transactions for some of the major utilities were launched. However, there were significant factors limiting

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progress in institutional strengthening: (i) the Government was distracted by security issues in some parts of the country; and (ii) a lack of cooperation and coordination between various agencies, especially within the ministry of finance.

5.7 The Public Finance Reform Credit. The institutional development impact is rated modest, as in the ES. Improvement was limited to a few areas, such as the setting up of the Large Taxpayer Unit to follow up on the tax obligations of large taxpayers and improve coordination among revenue agencies, and the introduction of the PER process in education and health. But the organizational audit of the Treasury, launched under the project, remained dead letter with the Government failing to follow up on the report recommendations. Similarly, the intensive preparatory work on the settlement plan of domestic arrears did not have any institutional impact, as divisions and frictions between the ad hoc Commission and other agencies, especially the Treasury, led to paralysis.

5.8 The Public Finance Recovery Credit. The institutional development impact is rated substantial, compared to modest in the ES, because progress was made in most areas: the revenue agencies were strengthened and the exchange of information between them improved; the civil service reform was reinstated; the PER process was broadened to involve other donors, although actual work was delayed. But it is especially in the area of budgetary orthodoxy that the greatest impact took place with the strengthening of budget preparation and execution, and renewed fiscal reporting and auditing. Finally, the failure of the PFRC to set up a viable framework for the settlement of arrears was remedied by the abolition of the ad hoc Commission and its replacement by the CAADIE, which has performed effectively since.

Sustainability

5.9 The Economic Recovery Credit. The overall sustainability is rated highly unlikely, compared to uncertain in the ES. Government and stakeholders’ ownership was negligible, while economic resilience and resilience to exogenous influences were very weak. In addition, there was no improvement in institutional capacity, a key requirement for achieving success and mitigating the high risks prevailing in Niger. When the program derailed in mid-1994, donors’ confidence in the program became hesitant and their reduced support accelerated its demise.

5.10 The Public Sector Adjustment Credit. Its overall sustainability is rated unlikely, compared to likely in the ES. Although the risks to civil disturbance had somewhat abated under the military regime at the time, there was not enough time to fully anchor the institutional improvements made in a sustainable manner. Indeed, commitment to the program weakened in the second half of 1997, while continued frictions between the different agencies of the ministry of finance proved to be very damaging for coherent policy-making and implementation.

5.11 The Public Finance Reform Credit. The overall sustainability is rated highly unlikely, compared to unlikely in the ES, on the basis that the objectives were not achieved and that, in some cases like the civil service reform, actions taken under the PSAC were reversed.

19

5.12 The Public Finance Recovery Credit. The overall sustainability is rated likely, as in the ES, on the basis of the commitment shown by the Government during preparation and implementation of the project. Progress is likely to be consolidated and built-upon with renewed political stability.

Bank Performance 5.13 The Economic Recovery Credit. This assessment rates Bank performance as unsatisfactory,12 compared to satisfactory in the ES. Although OED had recently issued its audit of the 1980 adjustment operations (Report No. 12104, 1993), the Bank failed to take past experience into account in conceiving and designing the project. The Bank rightly seized the opportunity of the devaluation, but, in the euphoria of the moment, rushed to throw in a long list of actions, which proved too broad and too demanding for a technically weak Government to absorb in 12 months at a time of high political uncertainty. The Bank misjudged the depth of the political crisis at the time; it wrongly interpreted the Government’s declaration for reforms as long-term commitment and overlooked the lack of commitment among senior and middle-level officials; it neglected to assess the institutional capacity of the administration, especially at a time when many changes in high-level personnel had taken place; and finally, it ignored the increasing informalization of Niger’s economy since the 1980s.

5.14 During implementation, the Bank failed to readjust the dialogue on possibly more focused or realistic measures that the Government could have taken. Instead, the documents show that, while acknowledging the volatility in the political and social situation and continued poor performance, the 1995 supervision missions showed lack of judgment in advocating a deeper and broader cooperation in the form of a SAL II.

5.15 The Public Sector Adjustment Credit. Bank performance is rated satisfactory, as in the ES, both for quality at entry and supervision. The preceding turbulent years and the poor performance under the ERC led the Bank to adopt a much more cautious approach as demonstrated by internal memoranda.13 As a result, preparation was closely coordinated with the Fund on the basis of the 1996 ESAF, and support was better identified and directed to some components of the program. The Bank had a clear vision and understanding of the short-term requirements to redress fiscal management, even though the broader and longer-term lessons of the 1980s were overlooked. The dialogue during preparation over content and design was based on an agenda well known and shared by both parties, although not necessarily by lower level officials. This had not been the case for the ERC. Only the agenda with respect to PE reform was much too ambitious for the time imparted and unrealistic given the social context. There was a

12 It is difficult to assess the quality at entry and the supervision performance of the Bank for the ERC as there are very few documents from that period in Bank files. For instance, until December 1994, there is not a single BTO or Aide-mémoire following supervision missions. The assessment is therefore based on the content of the project as described in the President’s Report, the 1995 supervision missions, the ICR, and discussions with Bank staff and the authorities. 13 The exchange of internal memoranda surrounding the concept paper review, the ROC meeting, and the submission to senior management before Board presentation of the PSAC shows the unusual doubts and caution expressed by many. Clearly, the Bank had become conscious of the risks of pursuing adjustment lending in the circumstances.

20

broad commonality of views, irrespective of the fluid political situation or capacity to deliver. Both parties knew and understood what needed to be done, the consequences, and the risks.

5.16 Bank supervision was close and recognized early on slippages in implementation and reacted accordingly. When weak technical and administrative capacities caused delay in implementing the privatization program, the Bank and the Government signed a memorandum of understanding spelling out modalities and guidelines to ensure transparency in transactions and to strengthen Government capacity. Similarly, the Bank reacted fairly quickly in recommending a series of measures aimed at redressing the situation after it had become clear that lack of coordination between ministries and weakened commitment had caused the program to slip during the second half of 1997.

5.17 The Public Finance Reform Credit. Bank performance is rated satisfactory, as in the ES, for both quality at entry and supervision. As in the case of the PSAC, preparation was well coordinated with the Fund and the authorities, notably for the formulation of the detailed plan for the settlement of domestic arrears. After the program derailed in 1999, the Bank showed initiative and flexibility in proposing to and agreeing with the new civilian Government a set of short-term and well focused measures that could help restore fiscal credibility, transparency and accountability under the next operation, the PFRecC.

5.18 The Public Finance Recovery Credit. Bank performance is rated satisfactory, as in the ES. As soon as the new civilian Government was in place in early 2000, close cooperation with the Fund resumed on the preparation of a PRGF and the I-PRSP. The Bank showed more cognizance of past difficulties and obstacles in designing the project than had been the case in the other operations: objectives and reform areas were more limited and more precise, a necessary requirement for a country with very weak institutional capacity. Moreover, attention very much focused on identifying with the authorities past problems and issues that called for immediate action. At the same time, the Bank and the authorities designed a new institutional framework for the settlement of domestic arrears, a problem that had become acute and politically explosive after the further accumulation of salary arrears in 1999. Supervision was also satisfactory.

Borrower Performance 5.19 The Economic Recovery Credit. This assessment rates the performance as highly unsatisfactory, compared to not available in the ES. In late 1993 and early 1994, the Government had serious reservations on the need to devalue and was ill-prepared for addressing its consequences as well as seizing its opportunities. As a result, with ownership absent, the Government clearly “went along” with an agenda that was not shared and insufficiently assessed in terms of consequences, risks, and requirements for its success. Nor was it ready – and sufficiently supported by external assistance from donors other than the Fund and the Bank – in laying the foundations to capture the potential increase in competitiveness offered by the devaluation or in seizing the opportunity to adopt painful structural reforms, notably in the PE sector. In addition, the period was marked by frequent changes in senior officials, arbitrary political appointments, persistent strikes by the unions, and low morale of civil servants.

21

5.20 The Public Sector Adjustment Credit. Performance is rated satisfactory, as in the ES. The Baré Government took an active part in the preparation of the 1996-98 ESAF and showed determination in implementing the program between mid-1996 and mid-1997 despite strong resistance by the unions to the reduction in wages and the privatization program. However, there were long delays in implementation due to a lack of commitment within the administration and lack of cooperation and coordination between key agencies; implementation slipped considerably during the second half of 1997.

5.21 The Public Finance Reform Credit. Performance is rated unsatisfactory, as in the ES. The Government was fully committed to the program at preparation, with some senior staff actively participating in formulating the content and design of the project. However, implementation suffered from lack of coordination and cooperation among agencies and administrative resistance. This was notably the case in several areas of budgetary orthodoxy, including the lack of effective functioning of the ad hoc Commission and the failings of the expenditure regulation mechanism. In both cases, divisions and frictions between the Treasury and other agencies of the ministry of finance led to paralysis.

5.22 The Public Finance Recovery Credit. The rating is satisfactory, as in the ES. Despite the difficult situation inherited from the transitional administration, the democratically-elected Government of early 2000 was quick to address the most urgent matters, such as paying the salaries on time to inspire renewed confidence in the civil service and the administration. It actively prepared with the Bank a set of short-term measures to redress the most urgent fiscal imbalances and to restore credibility in public finances. This was done with clear-sightedness in defining and selecting the priority actions to be taken under the PFRecC. At the same time, the Government engaged in discussions with the Bank and the Fund on medium-term policies, a dialogue which quickly led to an agreement on a PRGF and an I-PRSP. During implementation, the Government continued to exhibit commitment, even when slippages occurred. However, ownership of the program within the administration was insufficient.

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6. Main Findings and Program Impact

6.1 The implementation of the four projects was adversely affected by continuous political and social instability and the inability of the different Governments to control the persistent budgetary crises, and, to a lesser extent, by exogenous factors such as droughts. These factors thwarted attempts at pursuing the reforms in a consistent and sustained manner. Progress was made only when a stable and relatively strong government, whether military or civilian, was in place, but these periods were short and the gains fragile. In Niger's context, the current Government has been in place for a relatively extended period, since early 2000.

The main findings are: 6.2 Awareness of public finance. Despite all the difficulties encountered, the Bank and Fund operations helped Niger survive the troubled decade of the 1990s and keep a window on the world. They largely contributed to help: (i) address the daunting fiscal management problems faced by the country; and (ii) create an awareness in the public opinion and civil society that public finance matters and requires a sound, responsible, and transparent management. Stakeholders, such as unions and students, who used to staunchly oppose the very notions of liberalization, privatization, fiscal discipline, and the like, have now become open to dialogue in the quest for solutions acceptable to all.

6.3 Ownership. While ownership generally existed at the highest level of the administration, except for the ERC of 1994, there was little or no commitment at lower levels of the administration (even as recently as 2000 for the PPFRecC), or within civil society. There was—and still is—a deficit in participation and communication from the top down and among the different branches of Government. Key senior officials of the three branches of the Government are undoubtedly not sufficiently associated to the preparation and content formulation of economic programs, with the risk of misunderstandings, frustration, and low morale. There is a clear need for the Government and the Bank to actively promote the dissemination of information.

6.4 Realism. When compared to targets, the results achieved over the decade are undoubtedly meager. But were the targets realistic and achievable under the circumstances or was there a lack of judgment in setting them too high, irrespective of the relevance of objectives? There was a wide gap between the reality in the country and the expectations raised—and the messages sent—by the Bank through both the CASs and the first three operations. Indeed, the latter were over-ambitious in their quantitative targets in the light of the 1980 performance, the difficult transition to democracy, and the well-known weak institutional capacity of the country. In this connection, the 1994 devaluation raised unwarranted expectations and blurred the reality of the preceding decade. But, surprisingly, even after the troubled early 1990s, the Bank continued to exhibit unfounded over-optimism. The last operation seems to have recognized this misjudgment by being more realistic and more selective in its focus. This finding is best illustrated by comparing target and actual data for the key benchmarks under each of the four operations (Table 6.1). The same applies to the objectives set for the settlement of arrears and privatization.

23

Table 6.1: Key Macro-economic Indicators – Targets vs. Actuals, 1994-2001 (in percentage of GDP, unless otherwise indicated)

ERC PSAC PFRC PFRecC 1994 1997 1998 1999 2000 2001

Prog. Act. Prog. Act. Prog. Act. Prog. Act. Prog. Act. Prog. Act Real GDP (% increase)

3.9 4.0 4.3 2.8 4.4 10.4 4.5 -0.6 3.5 -1.4 3.7 7.6

CPI- African (% increase)

37.0 35.6 3.0 2.9 3.0 4.5 3.0 -2.3 5.1 2.9 1.2 4.0

Gross dom. inv. 10.4 13.1 10.9 11.1 11.4 11.7 10.2 10.1 10.8 11.0 11.5 Gross dom. savings 2.0 0.0 4.5 3.1 4.5 2.4 4.6 2.6 2.6 3.3 3.4 3.2 Total revenue 9.0 6.0 9.8 8.4 9.9 9.1 10.3 8.8 8.2 8.6 8.9 9.2 Over. fis. bal. (ex. grants/comit.)

-9.0 -12.5 -8.0 -7.5 n.a -8.2 n.a -9.0 -7.9 -7.6 -7.1 -7.4

Cur. act. bal. (ex. off. Trans.)

-16.0 -14.9 -12.1 -8.9 n.a -9.5 n.a -7.8 n.a -7.5 -9.0 -7.5

6.5 Impact on growth and poverty. The impact of the program on growth was small. Over the eight-year period, 1994-2001, GDP growth averaged 3.6 percent, slightly above the rate of increase in population. As a result, poverty was stabilized at best, although there are no data to compare the beginning and the end of the period.

6.6 Devaluation impact. Its impact was short-lived and the opportunity it offered to enhance competitiveness and reverse a rapidly deteriorating situation was largely missed. Three factors appear responsible for this: (i) the paucity of Niger’s resources; (ii) the then Government—weak politically—was not only ill-prepared for it, but was also very skeptical about its economic justification, and, as a result, its attitude was more one of “wait and see” than one of being pro-active in designing supporting and accompanying measures; and (iii) the Bank and the donors were naïve in expecting a lasting response from the agriculture sector beyond a solely “mechanical” and short-term reaction to a change in parity. They failed to provide the necessary support to enable some key agricultural sub-sectors to respond in a more lasting way.

6.7 Revenue mobilization and the informal sector. Together with the settlement of domestic arrears, revenue mobilization was the most challenging objective of the program, but unfortunately remained an elusive goal. Some progress was achieved, thanks to simplification of the taxation system and improvement in tax administration, but was limited because almost all measures were taken partially or implemented with delay. However, little progress was achieved in broadening the tax base, even though the last two operations emphasized the reduction of tax exonerations.

6.8 The record on revenue mobilization calls for the following observations. Despite all the efforts, the revenue/GDP ratio, at 9.2 percent in 2001, not only remained low by any standard, but also did not even revert to its 1990 level. This was due to external shocks, persistent instability and weak administrative capacity, but more importantly to Niger’s large informal sector. The situation in Niger compares as follows to other African countries. For the period 1991-01, Government revenues, including grants, stood at 12.7 percent of GDP on average against 24.2 percent for Africa as a whole, 14.4 for Guinea, 18.8 for Côte d’Ivoire, 19.7 for Senegal, 20.6 for Mali, and 27.0 for Mauritania.

24

6.9 The conclusion on revenue mobilization should not be based on the fact that, for the first three operations, the gap between the targeted and actual revenue to GDP ratio was as much due to overoptimistic—and unrealistic—forecasts as to the factors mentioned above. Rather, the analysis shows that the critical and continued bottleneck to sustainable improvement in fiscal management was and remains Niger’s inability to raise revenue by widening its tax base, a key challenge for a country with 70 percent of its GDP in the informal sector. The contribution of the agricultural sector (including livestock) to GDP is about fifty percent of GDP, that of the rest of the informal sector, mostly trade, is about 20 percent, and that of the formal sector (about the only segment constituting the tax base) is about 30 percent.

6.10 This assessment concludes that the Bank, together with the IMF, focus on three aspects with respect to the tax base and the informal sector. First, examine what and how taxes were levied on agriculture and livestock prior to 1974 (these were taxed until that date). Second, find ways to tax livestock herders and traders, and other traders who trade mostly with Nigeria. These segments are known to be well off enough to be taxed. Third, in addition to discussions with the administration in Niamey, consult with representatives of the targeted segments and with local tax officials in the main livestock regions and in those bordering Nigeria. Unless progress is made in this area, any Government in Niger, for the foreseeable future, will be faced with the necessity of relying on external assistance to provide even the minimal public services expected from the State.

6.11 Wage bill and human capital. Weak performance in revenue mobilization, combined with the relative lack of compressibility in salaries and in personnel, prevented the wage bill/revenue ratio to fall much below a range of 40 to 45 percent depending on the level of revenues collected (Table 6.2). The 2001 performance reflects higher revenues associated with a good GDP performance.

Table 6.2: Civil Service Wage Bill, 1993-2001 (in CFAF billion, unless otherwise indicted) 1993 1994 1995 1996 1997 1998 1999 2000 2001Target - 44.3 - - 44.1 44.0 44.7 51.4 49.6 Actual 40.3 47.4 49.7 33.4 44.2 45.1 50.6 51.8 50.4 Wage bill/total revenue (in %)

87.6 9.8 73.2 42.3 48.7 40.3 46.2 47.0 38.1

6.12 One of the major findings of this assessment is the concern expressed to the OED mission by many Niger's officials and representatives of civil society about the fall of quality in education. There was a perception among them that a reduction in the wage bill and the accompanying compression of the civil service in the 1990s was an important factor explaining the decline in educational quality. This issue was raised often in interviews. Since the OED mission was unable to verify these claims, it would be important for the Region to discuss these concerns with all parties (Government officials, members of Parliament, educators, parents, etc.), disseminate widely the Bank’s own assessment of the factors affecting the quality of education and how this has been reflected in the Bank’s strategy and lending operations. The concern expressed raises

25

the question whether the Bank might have placed undue emphasis on a reduction of the wage bill without a longer-term civil service reform policy.

6.13 Capacity building. In the same vein as the paragraphs above, the Bank is helping to strengthen Niger's capacity in key areas of public sector management through the PEAC, an IDF grant, and the forthcoming PER/CFAA exercise. However, this assessment recommends that the Bank first agree with the authorities on a strategy for capacity building in public sector management in the medium-term, prioritize areas for action, identify activities which other donors will support and direct Bank support to areas unlikely to be supported by donors but which are critical for long-term capacity. In addition, Bank support should have clear monitorable indicators to indicate progress in strengthening the central ministries and other agencies or entities (such as the staff of the Finance Committee of the National Assembly, the Court of Accounts, etc.) responsible for sound public resource management.

7. Lessons Learned

7.1 An assessment of Niger’s adjustment program in the 1990s brings to mind how relevant the lessons from the 1980s are still valid. Very little has changed in Niger and the nature and challenge of the obstacles to sustainable development are basically the same. This is true for fiscal management, as for many other aspects of the economy. This calls for both realistic determination and patience. It seems that the lessons learned from the two adjustment operations of the 1980s (SAL I and PESAP – Report No. 12104, 1993) were hardly absorbed. These lessons were, and still are, very pertinent. Surely, many of the issues raised by the 1993 Audit can be addressed only after fiscal adjustment is sufficiently achieved, as the Bank consistently argued in its CASs. But, at the same time, the record seems to point out that some persistent obstacles to improved fiscal management cannot be removed without tackling some longer-term issues, notably by exploring ways to extend the tax base to the informal sector.

7.2 Ownership. Except for the obvious sine qua non condition of political stability, the case of Niger shows that ownership at the cabinet level is not sufficient to ensure the success of an adjustment program. Much greater attention is needed during preparation to associate and listen to three groups of actors: (i) the senior and middle-level officials responsible for implementing the program; (ii) representatives of the legislative and, if necessary, of the judiciary; and (iii) the other stakeholders in civil society who will be affected by the program, such as labor unions and students organizations, two groups usually vocal on the political scene of low-income countries and vulnerable to any adjustment operation. Niger’s experience demonstrates the need to spend more effort and resources to improve communication, dissemination of information, and coordination not only within the administration itself, but also between the different Government bodies that will be involved in program execution. A participatory approach similar to that currently applied in preparing PRSPs should become normal practice. This requires of course considerable efforts in terms of time and resources from the Bank and donors.

7.3 Informal sector and taxation. In countries with a very large informal sector, greater attention should be directed at identifying, jointly with the IMF, the conditions

26

under which the taxation system can be adapted to the particular characteristics of the economy. In the case of Niger, farmers and livestock growers were taxed until 1974, when it was abolished after the discovery of uranium.

7.4 Capacity building. Addressing the problem of very weak institutional capacity in a piecemeal approach through different lending operations and at different times does not seem to produce the desired results, at least for the proper functioning of the central ministries. The record points to the need for trying another approach, i.e., formulating a full-fledged strategy based on strengthening capacities in key areas of public sector management, tax administration, and other critical government structures. In so doing, all stakeholders should be involved at all stages: conception, design, and execution. Again, this requires considerable time and resources.14

7.5 Devaluation. In countries with very scarce resources, a change in parity alone is unlikely to produce lasting positive effects, unless it is supported by a well prepared program of accompanying measures directed at improving production and marketing and by sound macro-economic policies.

7.6 Monitoring and evaluation. Preparation and appraisal of reform programs should include the establishment of domestic monitoring and evaluation mechanisms to promote sharing of information, transparency, and accountability within the administration. It should be a joint effort by the Bank and the borrower. The information collected on the execution of the programs must be made public.15

7.7 Tranching. Single tranche operations are often accompanied—sometimes justified—by the warning that future adjustment lending will be withheld if, after Board approval, no progress is made in the areas targeted for reform, as measured against monitorable benchmarks. On the basis of the Niger experience in the 1990s, it is not evident that this type of warning is effective or followed by the Bank itself.

14 In commenting on this statement the government indicated that, in recognizing the need to strengthen capacity in the public sector, the Ministry of Economy and Finance set up in 2001 a multidisciplinary structure, called Groupe d’Appui a la Gestion Economique, whose main areas of intervention include the preparation of a financial and economic repot on Niger, statistical and economic analysis based on a macroeconomic model, and technical support to structures in charge of monitoring economic and financial programs. 15 The government’s comment on this point is that information on the execution of programs must be made public provided there are notable improvements in the quality and timeliness of the information.

27 Annex A

Population (million) 11.5Population (annual growth rate) 3.4Poverty (% of population below national poverty line) - 1992-93 * 63Extreme poverty (% of population below national extreme poverty line) - 1992-93 * 34Urban population (% of total population) 21Life expectancy at birth (years) 46Infant mortality (per 1,000 live births) 114Under-five mortality (per 1,000 live births) 250Child malnutrition (% of children under 5) 40Access to an improved water source (% of population) 59Illiteracy (% pf population age 15+) 84Gross primary enrollment (% of school-age population) 42 Male 50 Female 33

Source : Niger- CAS December 16, 2002Note: * : These data are based on the most recent household survey dating back to 1992-93.Work on a new survey began in 2002, based on the results of the 2001 population census.

Niger - Key Social Indicators - 2002, unless otherwise indicated

Annex B 28

Economic Recovery Credit (1994)

Actions taken prior to Board presentation were the following:

a) Realignment of the exchange rate, fixed at 100 CFAF for 1 FF effective January 12, 1994;

b) Adoption of a number of tax measures to increase tax revenue, based on the recommendations of the December 1993 IMF technical mission;

c) Limitation of the civil service wage bill in the revised 1994 Budget to CFAF 44.3 billion (representing an overall nominal increase of 14 percent over 1993);

d) Administered prices (petroleum products, water and electricity) set as specified in the Government's Statement of Economic and Social Policies;

e) Free agricultural producer pricing maintained and restrictions on rice marketing eliminated;

Customs tariff amended as follows:

• doubling of standard values, schedule values, and minimum administrative values (these values were to be eliminated in a subsequent tariff reform);

• 50 percent cut on cumulative taxes and duties on essential and intermediate goods;

• transitional clauses applied exclusively to imports not yet cleared through customs, but already paid at the old exchange rate; and

• ad hoc exemptions eliminated, except those related to projects, diplomatic privileges, and special conventions.

g) Allocation in the revised 1994 Budget of CFAF 10 billion (US$16 million) for social safety net measures, including:

• elimination of tariffs on rice and sugar for three months; • freezing the price of kerosene for three months and limiting the increase in the

price of gas oil to 30 percent; • ensuring proper supply of free essential drugs in public health facilities; • supplying the markets with essential foodstuffs (cereals, sugar, cooking oil) at

subsidized prices to break speculative commercial practices; • increasing significantly in real terms current expenditure for health and education

and ensuring the availability of free essential drugs in public health facilities.

h) Increase in the Central Bank discount rate from 10.0 percent to 14.5 percent.

Annex B (continued) 29

Economic Recovery Credit Action Matrix for 1994 Objectives Measures

Taken Actual at time of ICR

1. Macroeconomic Framework - Realignment of the exchange rate, fixed at 100

CFAF for 1FF

January 12, 1994

Done

2. Public Finance - Adoption of a revised Budget for 1994 in agreement

with the IMF - Adoption of a revised system of public accounts

March 1994 December 1994

Done Done

a. Revenue - Regular payment of mining royalty - Advance payment of BIC and IRVM, and dividends

by Uranium companies - Unification of the VAT at 17 percent - Introduction of the VAT: water, electricity,

transportation - Road toll: Numbered tickets with printed price - Automobile sticker - Administration: Strengthening of tax audits - Administration: Definition of tax collectors and

collection targets - Strengthening of collection of tax arrears - Passing Collections Code in Parliament (New

Budget) - Merging of IGR, ICTS, simplification of rates - BIC exemptions (Investment Code) - Informal sector – stricter application of profit tax - Administration: strengthening of desk audits - Property Tax: levied on all homeowners

Immediate Immediate January 1, 1995 July 1, 1994 Immediate Immediate Immediate Immediate Immediate New 1994 budget January 1, 1995 July 1, 1994 January 1. 1995 Immediate Immediate

Done with much delay Not Done Done Done except for transportation Done in June 1994 Done in January 1995 Done with delay Done Done in September 1994 Done Done for January 1996 Not yet completed Done January 1, 1996 Done with delay Done for 1996 tax law

b. Expenditure - Set wage bill ceiling at CFAF 44.3 billion - Maintain the number of civil servants below 39,080 - Eliminate external payments arrears (CFAF 102

million) - Reduce domestic arrears by at least CFAF 17.5

billion - Make an inventory of all domestic arrears and

regularize them formally - Set a scholarship ceiling at CFAF 4.8 billion and

maintain eligibility criteria - Increase outlays for materials and supplies from

CFAF 16 billion in 1993 to CFAF 28 billion in 1994 - Raise public investment expenditures from CFAF 27

billion in 1993 to 70 billion in 1994

Immediate 1994 1994 1994 March 31, 1994 1994 1994 1994

Actual wage bill of 47.4 bn Number reached 40,761 Only 65 billion eliminated Partially done Inventory not complete CFAF 5.5 billion paid. Eligibility criteria unclear Outlays increased to CFAF 28.1 billion CFAF 109.9 budgeted

3. Public Investment Programming - Prepare a three-year rolling Public Investment

Program for 1994 –96 Strengthen institutional setting for planning, programming and implementation of public investment

April 1994 1994

Done Not done

4. Monetary and Financial Sector Policy - Increase the discount rate of the Central Bank from10.5%

to 14.5% - Closing and liquidation of Caisse Nationale de Credit

Agricole - Completing the restructuring of the Banque Islamique

du Niger (BIN), the Medridien BIAO (MIB), the Banque Commerciale du Niger and the Nigeria

International Bank-Niamey

January 18, 1999 July 1, 1994 1994

Done Done BIAO done in September 1995, others in progress

Annex B (continued) 30

Objectives Measures Taken

Actual at time of ICR

5. Trade Policy - Double standard values, schedule values, and

minimum administrative values - Cut by 50% cumulative taxes and duties on

essential and intermediate goods - Eliminate ad-hoc tariff exception - Introduce transitional clauses for imports paid

before the parity for change - Introduce comprehensive tariff reform

Immediate Immediate Immediate Immediate April 30, 1994

Done Done Not done Done Done in September 1994

6. Price Policy - Set new prices for petroleum products, water and

electricity - Maintain free agricultural producer pricing

Jan – April 1994 1994

Done Done

7. Public Enterprises - Make an inventory of noss-debts of the public sector and

prepare a timetable to clear them - Conduct independent audits for NIGELEC, ONPPC,

SONIDEP, CNSS - Liquidate COPRO-NIGER - Implement reforms of the uranium sector and the

Electricity Company(NIGELEC)

April 1994 1994 1994 1994

Partially done Done on time for NIGELEC and CNSS; delayed for the rest Started in January 1995 Reform underway

8. Promotion of the Private Sector - Eliminate Government monopoly on hiring - Revise Labor Code

1994 1994 - 1995

Not done Not done

9. Accompanying Social Measures - Eliminate tariffs on rice and sugar for three months and

set total taxation at 10% thereafter - Freeze the price of kerosene for three months and increase

the price of gas-oil by less than 30% - Take steps, eventually, to supply the markets with essential

goods (cereals, sugar, cooking oil) at subsidized prices - Increase substantially in real terms appropriations for non -

salary expenditures in education and health in the revised Budget

- Ensure adequate supply of free essential drugs in public health facilities and promote the supply of low-cost generic drugs in private pharmacies

- Provide allocation in the revised 1994 Budget of CFAF 10 billion for the foregoing social measures

Jan – April 1994 January 1994 1994 Immediate 1994 Immediate

Done Not done Partially done No substantial increase Partially done Partially done

Annex C 31

Public Sector Adjustment Credit (1997)

The following actions were taken by the Government between September 1996 and February 1997. Public Finances a) Reduction of the 1996 wage bill to CFAF 42.1 billion (cash basis). b) Increase of budgetary revenue in 1996 to CFAF 79 billion. c) 1996 overall budget deficit (on a commitment basis and excluding grants) limited

to 4.7 percent of GDP. d) Adoption of the 1997 budget law, including:

• limiting the wage bill to CFAF 44.1 billion; • increasing the health sector allocation for non-wage current expenditures from

CFAF 7.2 billion in 1996 to CFAF 8.2 billion in 1997 (representing an increase of 14 percent);

• increasing the education sector allocation for non-wage current expenditures from CFAF 4.6 billion in 1996 to CFAF 5.3 billion in 1997 (representing an increase of 14 percent);

• increasing the allocation for road maintenance from CFAF 2.6 billion to CFAF 3.1 billion;

• increasing material and equipment allocations for tax and customs services from CFAF 459 million in 1996 to CFAF 798 million in 1997;

• introducing a number of tax reform measures including: (i) the streamlining of taxation on petroleum products through a change in the price structure; (ii) the application of a revised grid for the unified income tax on wages and salaries (IUTS); and (iii) a reduction in the maximum length of tax holidays for certain investments from 15 years to 5 years, and a restriction in the number of qualifying investments eligible for such treatment.

e) Completion of inventory of domestic arrears and adoption of plan for their orderly

settlement. f) Initiation of civil service census.

Public Enterprises

g) Adoption of revised PE privatization law. h) Adoption of decree to privatize 12 key public enterprises. i) Adoption of privatization strategies agreed with IDA for the public utilities (SNE,

NIGELEC and SONITEL) and the petroleum company (SONIDEP). j) Initiation of hiring process for financial advisors to complete privatization

transactions for the 12 targeted companies.

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ogra

m m

easu

res

Res

pons

ible

aut

hori

tyan

d tim

etab

le

A

ctua

l at t

ime

of IC

R

1. P

ublic

fina

nce

1.1

Rev

enue

- S

impl

ify th

e ta

x sy

stem

an

d br

oade

n th

e ta

x ba

se

- Stre

ngth

en th

e ta

x an

d cu

stom

s dep

artm

ents

- I

mpr

ove

colle

ctio

n pr

oced

ures

and

pro

vide

the

colle

ctio

n se

rvic

es w

ith

mea

ns o

f brin

ging

co

erci

ve a

ctio

n ag

ains

t ta

x de

faul

ters

- I

ncre

ase

budg

etar

y re

venu

e fr

om 7

.3%

of

GD

P in

199

6 to

9.8

% in

19

97.

- Uni

ficat

ion

of th

e th

ree

VA

T ra

tes a

t 17%

- M

ergi

ng o

f the

gen

eral

inco

me

tax

(IG

R) a

nd th

e sc

hedu

lar t

ax o

n w

ages

and

inco

me

(IC

TS) i

nto

a si

ngle

tax

on w

ages

and

sala

ries (

IUTS

) - C

onso

lidat

ion

of a

ll im

port

levi

es in

to tw

o ta

xes

(cus

tom

s dut

y an

d st

atis

tical

tax)

, and

a re

duct

ion

in th

e nu

mbe

r of r

ates

to th

ree

(10,

15

and

35%

) - E

limin

atio

n of

dut

ies o

n no

n-ur

aniu

m e

xpor

ts an

d un

ifica

tion

of re

-exp

ort d

uty

rate

s at 1

0%

- Ref

orm

of i

nfor

mal

sect

or ta

xatio

n th

roug

h in

trodu

ctio

n of

a si

ngle

pro

fess

iona

l tax

(pat

ente

sy

nthe

tique

) enc

ompa

ssin

g al

l for

mer

taxe

s - E

stab

lishm

ent o

f a p

re-s

hipm

ent i

mpo

rt in

spec

tion

syst

em (O

ctob

er 1

996)

- 7

4% in

crea

se in

bud

geta

ry a

lloca

tions

for t

ax a

nd

cust

oms d

epar

tmen

t ope

ratio

ns in

199

7 - R

edep

loym

ent o

f tax

and

cus

tom

s dep

artm

ent s

taff

- Stre

amlin

ing

of ta

xatio

n on

pet

role

um p

rodu

cts

thro

ugh

a ch

ange

in th

e pr

ice

stru

ctur

e - A

pplic

atio

n of

revi

sed

grid

for t

he u

nifie

d in

com

e ta

x on

wag

es a

nd s

alar

ies

- Red

uce

the

max

imum

leng

th o

f tax

hol

iday

s for

ne

w in

vestm

ents

from

15

to 5

yea

rs a

nd re

stric

t the

nu

mbe

r of q

ualif

ying

inve

stmen

ts el

igib

le fo

r suc

h tre

atm

ent

- Enf

orce

the

prop

erty

tax

and

the

tax

on re

ntal

inco

me

- Har

mon

ize

the

real

est

ate

law

s - S

treng

then

the

cada

stra

l se

rvic

es

- Red

uce

the

volu

me

of

exem

ptio

ns

- Stre

ngth

en su

perv

ision

ove

r the

sy

stem

of e

xem

ptio

ns a

nd sp

ecia

l co

nven

tions

Min

istry

of F

inan

ce 1

997

Min

istry

of T

rade

, 199

7

8.4%

1.2

Expe

nditu

re

- Red

uce

the

shar

e of

the

wag

e bi

ll an

d sc

hola

rshi

ps in

to

tal e

xpen

ditu

re

- I

ncre

ase

the

shar

e of

non

- w

age

curre

nt e

xpen

ditu

res

for t

he b

asic

soci

al se

rvic

es

(edu

catio

n an

d he

alth

) and

- Red

uctio

n of

the

wag

e bi

ll fro

m C

FAF

49.7

bill

ion

in 1

995

to C

FAF

44.1

bill

ion

in 1

997

thro

ugh

a re

duct

ion

in b

ase

sala

ries a

nd b

enef

its

- Ado

ptio

n of

a n

ew sa

lary

scal

e - C

uts i

n sc

hola

rshi

ps (f

rom

4.2

bill

ion

to 3

.5 b

illio

n in

199

7) a

nd in

tran

sfer

s and

subs

idie

s - 1

4% in

crea

se in

allo

catio

ns fo

r non

-wag

e cu

rrent

- Kee

p th

e w

age

bill

with

in

limits

com

patib

le w

ith re

venu

e gr

owth

, ass

igni

ng p

riorit

y to

the

soci

al se

ctor

s - C

ontin

ue to

impl

emen

t cut

s in

scho

lars

hips

and

subs

idie

s - E

xerc

ise

stric

t con

trol o

ver a

ll pu

blic

exp

endi

ture

- Min

istry

of F

inan

ce

- Min

istry

of C

ivil

Serv

ice

- Min

istry

of E

quip

men

t, 19

97

CFA

F 44

.2 b

illio

n C

FAF

3.2

billi

on

Obj

ectiv

e M

easu

res t

aken

Pr

ogra

m m

easu

res

Res

pons

ible

aut

hori

ty

and

timet

able

A

ctua

l at t

ime

of IC

R

for t

he ta

x ad

min

istra

tion

agen

cies

- R

atio

naliz

e th

e ci

vil

serv

ice

and

payr

oll s

yste

m

expe

nditu

re in

the

educ

atio

n an

d he

alth

sect

ors i

n 19

97

- Inc

reas

e in

allo

catio

ns to

the

Roa

d Fu

nd fr

om 2

.6

billi

on in

199

6 to

3.1

bill

ion

in 1

997

- Rev

ise

the

civi

l ser

vice

re

gula

tions

- C

arry

out

a c

ivil

serv

ice

cens

us

- App

ly a

rest

rictiv

e hi

ring

polic

y - I

ntro

duct

ion

of a

cen

tral

com

pute

rized

civ

il se

rvic

e (p

erso

nnel

and

pay

roll)

dat

abas

e - I

ncre

ase

non-

wag

e ex

pend

iture

in

the

heal

th a

nd e

duca

tion

sect

ors

in li

ne w

ith th

e re

com

men

datio

ns o

f the

Pub

lic

Expe

nditu

re R

evie

w

12%

incr

ease

on

aver

age

Obj

ectiv

e m

et

CFA

F 1.

1 bi

llion

1.3

Paym

ent a

rrea

rs

- Res

tore

the

Gov

ernm

ent’s

cr

edib

ility

and

solv

ency

- Ado

ptio

n of

a p

lan

to re

duce

the

dom

estic

arr

ears

on

the

Trea

sury

’s b

ooks

at D

ecem

ber 3

1, 1

996

by

19.2

bill

ion

- Inv

ento

ry o

f oth

er a

ccou

nts p

ayab

le

- Im

plem

ente

d a

settl

emen

t pla

n fo

r 19.

2 bi

llion

in 1

997,

and

co

ntin

ue th

is o

pera

tion

in 1

998.

- Min

istry

of F

inan

ce

CFA

F 13

.8 b

illio

n cl

eare

d in

199

7 an

d C

FAF

11.8

bi

llion

in fi

rst h

alf o

f 19

98; m

easu

res a

dopt

ed to

av

oid

accu

mul

atio

n of

new

ar

rear

s 2.

Pub

lic E

nter

pris

es

- Gov

ernm

ent d

ives

titur

e to

le

ssen

the b

urde

n of

non

- vi

able

pub

lic e

nter

pris

es o

n pu

blic

fina

nces

- R

educ

e fa

ctor

cos

ts a

nd

incr

ease

ent

erpr

ise

com

petit

iven

ess

- Inc

reas

e pr

ivat

e se

ctor

ac

tiviti

es

- Res

truct

ure

ente

rpris

es

rem

aini

ng w

ithin

the

gove

rnm

ent p

ortfo

lio

- Liq

uida

te n

onvi

able

en

terp

rises

- Ado

ptio

n of

the

ordi

nanc

e es

tabl

ishi

ng c

ondi

tions

fo

r priv

atiz

atio

n an

d its

impl

emen

ting

decr

ee

- Cre

atio

n of

a p

rivat

izat

ion

agen

cy to

impl

emen

t th

e pr

ivat

izat

ion

prog

ram

- A

dopt

ion

of a

div

estit

ure

stra

tegy

and

tim

etab

le

for S

NE,

NIG

ELEC

, SO

NID

EP, a

nd S

ON

ITEL

- A

bolit

ion

of m

onop

olie

s on

impo

rts o

f pet

role

um

prod

ucts

and

drug

s - L

iqui

datio

n of

FIP

MEN

(Sm

all a

nd M

ediu

m-S

ize

Ente

rpris

e Pr

omot

ion

Fund

)

- Brin

g to

the

poin

t of s

ale

OLA

NI,

SNC

, and

AB

ATT

OIR

- R

eque

st bi

ds fo

r con

cess

ion

cont

ract

for N

IGEL

EC

- Req

uest

bids

for l

ease

con

tract

fo

r SN

E - -

Brin

g to

the

poin

t of

sale

maj

ority

of s

hare

s of

SON

ITEL

- F

or S

ON

IDEP

, cre

atio

n of

a

priv

ate

com

pany

to

man

age

stora

ge fa

cilit

ies a

nd a

dopt

ion

of

- Min

istry

of E

cono

mic

- R

efor

ms &

Priv

atiz

atio

n - J

une,

Sep

tem

ber &

O

ctob

er 1

997,

re

spec

tivel

y - J

anua

ry 1

998

- Jan

uary

199

8 - J

uly

1997

OLA

NI &

SN

C:

com

plet

ed. B

ids w

ere

issu

ed fo

r man

agem

ent o

f A

batto

ir, b

ut n

o in

vest

or

cam

e fo

rwar

d; b

ids w

ill b

e re

-issu

ed in

199

8. SO

NIT

EXTI

L: C

ompl

eted

SN

E: U

nder

pre

para

tion

(fin

anci

al a

dvis

ors f

or

prep

arat

ion

of b

ids

docu

men

ts h

ave

been

re

crui

ted

inA

ugus

t199

8)

Obj

ectiv

e M

easu

res t

aken

Pr

ogra

m m

easu

res

Res

pons

ible

aut

hori

ty

and

timet

able

A

ctua

l at t

ime

of IC

R

regu

lato

ry fr

amew

ork

for p

rivat

e im

ports

of p

etro

leum

pro

duct

s - B

ring

to th

e po

int o

f sal

e SP

EHG

, SO

NIT

EXTI

L, R

INI,

ON

AH

A, a

nd O

FED

ES

- R

estru

ctur

ing

of 8

ent

erpr

ises

rem

aini

ng in

the- go

vern

men

t po

rtfol

io: O

RTN

(Rad

io

andT

elev

isio

n O

ffic

e), C

PCT

(Cre

dit A

genc

y), C

redi

t du

Nig

er, S

ON

ICH

AR

, SO

NU

CI

(Urb

an P

lann

ing

and

Rea

l E

stat

e B

uild

ing

Com

pany

), O

NPP

C, S

NTN

(Nat

iona

l Tr

ansp

orta

tion

Com

pany

), C

NU

T (C

ounc

il of

Publ

ic

Tran

spor

tatio

n U

sers

)

- Liq

uida

tion

of 3

ent

erpr

ises

: O

NT

(Nat

iona

l Tou

rism

Off

ice)

, SO

NH

OTE

L (H

otel

M

anag

emen

t Com

pany

), an

d LA

BO

CEL

(Cen

tral L

ives

tock

La

bora

tory

)

- Oct

ober

199

7 19

97

1997

recr

uite

d in

Aug

ust 1

998)

SO

NIT

EL: U

nder

pr

epar

atio

n (f

inan

cial

and

re

gula

tory

adv

isor

s for

pr

epar

atio

n of

bid

s do

cum

ents

hav

e be

en

recr

uite

d in

Aug

ust 1

998)

SO

NID

EP: R

egul

ator

y fr

amew

ork

form

ulat

ed;

prot

ocol

for t

he c

reat

ion

of

priv

ate

com

pany

; com

pany

to

be

crea

ted

in F

ebru

ary

1999

N

IGEL

EC: U

nder

pr

epar

atio

n (f

inan

cial

and

re

gula

tory

adv

isor

s for

pr

epar

atio

n of

bid

s do

cum

ents

hav

e be

en

recr

uite

d in

Aug

ust 1

998)

SP

EHG

, RIN

I, O

NA

HA

an

d O

FED

ES: O

ngoi

ng

3. L

egis

lativ

e an

d re

gula

tory

fram

ewor

k - C

reat

e an

env

ironm

ent

cond

uciv

e to

priv

ate

sect

or

deve

lopm

ent

- Sim

plify

the

regu

lato

ry

and

legi

slat

ive

fram

ewor

k

- Rev

ision

of t

he L

abor

Cod

e an

d its

impl

emen

tatio

n de

cree

s - A

bolit

ion

of th

e m

onop

oly

on m

inin

g fre

ight

- A

dopt

ion

of B

ook

3 of

the

Com

mer

cial

Cod

e (C

ontra

cts a

nd b

ankr

uptc

y la

ws)

- A

dopt

ion

of p

harm

aceu

tical

legi

slat

ion

and

abol

ition

of t

he m

onop

oly

on d

rugs

impo

rt - L

egis

latio

n su

pple

men

ting

the

Rur

al C

ode

(dec

ree

regu

latin

g th

e de

velo

pmen

t of r

ural

nat

ural

re

sour

ces,

decr

ee g

over

ning

her

ders

' acc

ess t

o gr

azin

g la

nds,

decr

ee g

over

ning

org

aniz

atio

n,

func

tions

, and

ope

ratio

ns o

f ins

titut

ions

enf

orci

ng

the

guid

ing

prin

cipl

es o

f the

Rur

al C

ode)

N.A

.

Annex D 35

Public Finance Reform Credit (1998)

Actions taken prior to Board presentation were the following:

Budgetary Orthodoxy

a) Completion of a comprehensive inventory of domestic arrears and adoption of a plan for their orderly settlement and of measures to avoid their future recurrence;

b) Launching of a comprehensive audit of the Treasury, including of its accounts to ensure reconciliation between actual expenditures and budgeted amounts for the 1982-97 period;

c) Elimination of all expenditure payments outside normal budgetary procedures (PPAs);

d) Adoption of implementation decree keeping expenditures strictly in line with resources mobilized;

e) Following the completion of the civil service census in September 1997, removal from the payroll and civil service roaster of 319 employees whose status had been found to be irregular;

f) Integration of the civil service database and payroll files to ensure full control of the government wage bill; and

g) Completion of a Public Expenditure Review with detailed recommendations and an action plan for their implementation, including through the 1999 Budget Law.

Revenue Mobilization

h) Making fully operational the large taxpayer unit in the tax administration office and providing it with adequate personnel and material to enhance its effectiveness;

i) Introduction of the single taxpayer identification number system for all revenue agencies and introduction of computerized value records;

j) Completion of a review of procedures for tax exonerations granted under the petroleum and mining code and under the tax regime for the uranium sector and implementation of their recommendations;

k) Elimination of all ad hoc exemptions and no granting of new exonerations under the investment code to enterprises to be privatized starting from September 1, 1998;

l) Provision to the General Tax Directorate of an additional 75 permanent staff and 30 fixed-term employees to accelerate revenue collection, and provision to tax agencies of CFAF 1 billion for equipment and supplies to strengthen their effectiveness;

m) Effective implementation of the system of Treasury checks for the payment of import duties under externally-financed government procurement contracts; and

n) Extension to NGOs of the system of Treasury checks to pay import duties and other applicable indirect taxes.

Publ

ic F

inan

ce R

efor

m C

redi

t Pol

icy

Mat

rix

Obj

ectiv

e M

easu

res

Stat

us o

f Exe

cutio

n

Pe

rfor

man

ce In

dica

tors

Res

pons

ible

Aut

hori

ty

Act

ual a

t tim

e of

IC

R

Res

tore

C

redi

bilit

y of

Fi

nanc

es

1. C

ontro

l the

w

age

bill

and

the

civi

l ser

vice

size

2.

Re-

esta

blis

h fin

anci

al a

nd

acco

untin

g or

thod

oxy

and

budg

etar

y di

scip

line

3. A

void

a n

ew

build

-up

of

dom

estic

arr

ears

du

ring

1998

and

- Har

mon

izat

ion

of th

e re

sults

of t

he

civi

l ser

vice

cen

sus,

the

payr

oll a

nd

the

civi

l ser

vice

dat

abas

e - S

et u

p a

mec

hani

sm fo

r kee

ping

ex

pend

iture

stric

tly in

line

with

re

sour

ces m

obili

zed

1) a

dopt

impl

emen

tatio

n de

cree

for

the

setti

ng o

f thi

s mec

hani

sm

2) st

reng

then

the

role

of t

he

Trea

sury

Com

mitt

ee

- Aud

it of

the

Trea

sury

- P

repa

re T

reas

ury

acco

unts

(TA

) fo

r 198

8 to

199

6 an

d ye

ar-e

nd

expe

nditu

re a

udits

(loi

s de

regl

emen

t) (E

A) f

or 1

982

to 1

997

Don

e: a

n in

tegr

ated

civ

il se

rvic

e da

taba

se w

ill b

e co

mpl

eted

by

Dec

embe

r 19

98

Don

e; q

uarte

rly re

ports

of

expe

nditu

re c

omm

itmen

ts

Perm

anen

t mea

sure

Th

e au

dit w

as la

unch

ed in

A

ugus

t 199

8; th

e au

dit w

ill

be c

ompl

eted

by

Janu

ary

31, 1

999

Pres

enta

tion

of th

e ye

ar-

end

expe

nditu

re a

nd a

udits

co

verin

g th

e ex

ecut

ion

of

the

budg

et fo

r eac

h fis

cal

year

from

199

1 to

199

7 to

th

e Pa

rliam

ent d

urin

g th

e fir

st h

alf o

f 199

9

Con

tain

the

wag

e bi

ll at

CFA

F 44

.0 b

illio

n in

199

8 an

d C

FAF

44.7

bill

ion

in 1

999;

exi

sten

ce in

19

99 o

f an

inte

grat

ed d

atab

ase

linki

ng th

e pa

yrol

l, th

e ci

vil

serv

ice

data

base

and

oth

er

min

istri

es.

Gap

bet

wee

n ex

pend

iture

co

mm

itmen

ts a

nd in

tern

al

reso

urce

s mob

ilize

d+ e

xter

nal

reso

urce

s. Pe

rman

ent a

pplic

atio

n of

the

mec

hani

sm.

Impl

emen

tatio

n of

the

reco

mm

enda

tion

of th

e Tr

easu

ry

audi

t dur

ing

the

perio

d 19

98-9

9.

Ava

ilabi

lity

of th

e TA

and

dra

ft EA

up

to th

e ye

ar 1

997

on th

e ba

sis o

f the

resu

lts o

f the

Tre

asur

y au

dit ;

exp

erie

nce

of a

co

mpu

teriz

ed p

rogr

am to

pre

pare

th

e TA

and

EA

, inc

ludi

ng th

e pr

oced

ure

man

ual

No

new

acc

umul

atio

n of

dom

estic

ar

rear

s sta

rting

from

July

1, 1

998

- Min

istry

of F

inan

ce,

Econ

omic

Ref

orm

s and

Pr

ivat

izat

ion

(MF)

M

F w

ith e

xter

nal

supp

ort

Gen

eral

Bud

get

Dire

ctor

ate(

GB

D)

Trea

sury

(T)

MF

1998

wag

e bi

ll: C

FAF

48.6

bn.

; 199

9 w

age

bill:

CFA

F 50

.8 b

n.

Inte

grat

ed d

atab

ase

fully

inst

alle

d an

d op

erat

iona

l in

2000

but

ad

just

men

ts st

ill

nece

ssar

y to

cle

an

data

base

; Ex

pend

iture

regu

latio

n m

echa

nism

inst

alle

d in

19

99 b

ut u

nsuc

cess

ful;

Tr

easu

ry a

udit

com

plet

ed in

199

9;

Act

ion

plan

ado

pted

in

Sept

embe

r 200

0 an

d fir

st re

com

men

datio

ns

impl

emen

ted

in la

te

2000

; B

udge

t rev

iew

law

for

FY 1

997

and

FY 1

998

sent

to P

arlia

men

t in

2000

and

200

1 re

spec

tivel

y; (d

) Tr

easu

ry a

ccou

nts f

or

FY 1

997

trans

ferr

ed to

C

ham

ber o

f Acc

ount

s in

200

0.

Obj

ectiv

e M

easu

res

Stat

us o

f Exe

cutio

n Pe

rfor

man

ce In

dica

tors

R

espo

nsib

le

Aut

hori

ty

Act

ual a

t tim

e of

IC

R

1999

- TO

TAL

ELIM

INA

TIO

N o

f PPA

s. Th

is e

limin

atio

n w

as a

ccom

pani

ed

by a

retu

rn to

and

stric

t res

pect

of,

expe

nditu

re p

roce

dure

s - M

easu

res t

aken

for u

rgen

t ex

pend

iture

s tha

t are

a so

urce

of

PPA

s a)

med

ical

eva

cuat

ion

and

offic

ial

trave

ls; c

reat

ion

of “

regi

es

d’av

ance

s”, s

tudy

of m

edic

al

evac

uatio

ns to

iden

tify

mea

sure

s to

bette

r con

trol t

hem

b)

cre

atio

n of

“de

posi

t acc

ount

s” fo

r ot

her p

oten

tial s

ourc

es o

f PP

As

(Sec

urity

fund

, Par

liam

ent,

expe

nditu

res f

or th

e pe

ace

proc

ess,

etc)

M

easu

res t

o av

oid

the

accu

mul

atio

n of

new

dom

estic

arr

ears

(a

) exp

endi

ture

s for

wat

er,

elec

trici

ty a

nd te

leph

one

- stre

ngth

en m

anag

emen

t of w

ater

, el

ectri

city

and

tele

phon

e bi

lling

(in

clud

ing

thro

ugh

the

unit

crea

ted

for t

his p

urpo

se )

- pro

vide

ade

quat

e bu

dget

ary

allo

catio

ns in

the

revi

sed

1998

B

udge

t Law

and

the

1999

Bud

get

Law

to c

over

act

ual c

onsu

mpt

ion

- ide

ntifi

catio

n an

d im

plem

enta

tion

of m

easu

res t

o re

duce

Gov

ernm

ent

cons

umpt

ion

of th

ese

serv

ices

(b

) exp

endi

ture

for e

mba

ssie

s - s

treng

then

mon

itorin

g of

em

bass

y ac

coun

ting

- con

duct

an

insp

ectio

n of

the

occa

sion

of e

very

cha

nge

of o

ffic

ial

in c

harg

e of

mak

ing

paym

ent a

nd

acco

untin

g pr

oced

ures

The

elim

inat

ion

was

ef

fect

ive

on A

pril

1, 1

998

Don

e D

one

Rev

ised

199

8 B

udge

t Law

an

d 19

99 B

udge

t Law

Se

e de

taile

d m

easu

re in

the

Foot

note

2 o

f the

Let

ter o

f D

evel

opm

ent

Perm

anen

t mea

sure

Pe

rman

ent m

easu

re

Poss

ibili

ty o

f rev

iew

ing

at a

ny

mom

ent t

he li

st o

f ope

ratio

ns

reco

rded

in th

e Tr

easu

ry a

ccou

nt

112-

61-1

0 to

ver

ify th

e la

ck o

f PP

As

Impl

emen

t pla

n to

redu

ce th

e co

st

of m

edic

al e

vacu

atio

ns b

y D

ecem

ber 1

998

No

new

acc

umul

atio

n of

arr

ears

fo

r wat

er, e

lect

ricity

and

te

leph

one

Gov

ernm

ent

cons

umpt

ion

star

ting

July

1, 1

998

(on

the

basi

s of S

NE/

NIG

ELEC

/S

ON

ITEL

bill

ing

and

“bas

e po

int

age”

stes

/ D

CF

of M

F)

Red

uctio

n of

20%

of G

over

nmen

t co

nsum

ptio

n of

wat

er, e

lect

ricity

an

d te

leph

one

(on

the

basi

s of

1997

con

sum

ptio

n le

vels

) by

Dec

embe

r 31,

199

9

MF

New

arr

ears

est

imat

ed

by a

utho

ritie

s to

have

ris

en b

y C

FAF

8.5

bn

in 1

998

and

by 3

6.9

in

1999

, inc

ludi

ng o

n ut

ility

exp

endi

ture

U

tility

exp

endi

ture

ro

se in

199

8 be

fore

co

min

g do

wn

to 1

997-

leve

ls in

199

9.

Con

sum

ptio

n es

timat

ed to

hav

e de

clin

ed b

y ab

out 1

0%

year

-on-

year

in 2

000.

Obj

ectiv

e M

easu

res

Stat

us o

f Exe

cutio

n Pe

rfor

man

ce In

dica

tors

R

espo

nsib

le

Aut

hori

ty

Act

ual a

t tim

e of

IC

R

4. P

repa

ratio

n an

d im

plem

enta

tion

of

a do

mes

tic a

rrea

rs

settl

emen

t pla

n

(c) i

nves

tmen

t exp

endi

ture

-in

clud

e th

e co

unte

rpar

t fun

ds fo

r in

vest

men

t pro

ject

s am

ong

oblig

ator

y ex

pend

iture

(d

) Sub

sidi

es a

nd sc

hola

rshi

ps

- aud

it of

the

Uni

vers

ity, t

he O

RTN

, th

e EN

A a

nd th

e IN

RA

N

- aud

it of

the

man

agem

ent o

f un

iver

sity

scho

lars

hips

and

fin

aliz

atio

n of

the

cen

sus o

f un

iver

sity

stud

ents

(e

) Oth

er e

xpen

ditu

res

- stri

ct a

pplic

atio

n of

the

syst

em o

f ex

pend

iture

con

trol a

nd re

gula

tions

- s

ubje

ct d

eleg

ated

exp

endi

ture

s to

the

expe

nditu

re c

ontro

l and

re

gula

tion

syst

em

- con

duct

an

insp

ectio

n on

the

occa

sion

of e

very

cha

nge

of o

ffic

ial

in c

harg

e of

mak

ing

paym

ents

and

ac

coun

ting

proc

edur

es

- Inv

ento

ry o

f dom

estic

arr

ears

1)

The

inve

ntor

y of

dom

estic

ar

rear

s has

bee

n co

mpl

eted

on

the

basi

s of i

nfor

mat

ion

prov

ided

by

rele

vant

uni

ts (T

-GD

ER-P

ED-

GB

D-D

PD) w

ith a

ssis

tanc

e of

co

nsul

tant

s Th

e st

ock

of a

rrea

rs a

mou

nts t

o C

FAF

118

billi

on a

s of M

arch

31,

19

98

Perm

anen

t mea

sure

A

udit

is o

ngoi

ng

Aud

it is

ong

oing

Pe

rman

ent m

easu

re

Perm

anen

t mea

sure

Pe

rman

ent m

easu

re

Don

e

Impl

emen

tatio

n of

the

audi

t’s

reco

mm

enda

tion

in 1

998

App

licat

ion

of th

e au

dit’s

re

com

men

datio

ns in

199

8

Ad

hoc

Com

mis

sion

+ T

+ G

en.

Dir.

Of E

con.

Ref

orm

s (G

DER

) + P

ublic

En

terp

rise

Dir.

(PED

) +

GB

D+D

ir. P

ublic

Deb

t (D

PD)

Ad

hoc

Com

mis

sion

+

T+ G

DER

+ P

ED +

G

BD

+D

PD

Stud

ies c

ompl

eted

in

1999

. Im

plem

enta

tion

of so

me

reco

mm

enda

-tio

ns in

itiat

ed in

200

1 (c

ensu

s of s

chol

arsh

ip

reci

pien

ts).

Obj

ectiv

e M

easu

res

Stat

us o

f Exe

cutio

n Pe

rfor

man

ce In

dica

tors

R

espo

nsib

le

Aut

hori

ty

Act

ual a

t tim

e of

IC

R

- Im

plem

enta

tion

of th

e se

ttlem

ent

plan

1)

The

mod

aliti

es a

nd p

riorit

ies f

or

the

settl

emen

t of t

hese

arr

ears

are

de

taile

d in

the

Lette

r of

Dev

elop

men

t Pol

icy

2) T

hese

arr

ears

will

be

valid

ated

by

an

ad h

oc c

omm

issi

on w

hose

at

tribu

tions

are

det

aile

d in

the

Lette

r

Impl

emen

tatio

n of

the

settl

emen

t pla

n in

199

8 –

99

Impl

emen

tatio

n of

the

settl

emen

t pla

n in

199

8 –

99

Cas

h se

ttlem

ent o

f dom

estic

ar

rear

s in

a ne

t am

ount

of U

S$20

m

illio

n in

199

8 ac

cord

ing

to th

e m

odal

ities

and

prio

ritie

s of t

he

settl

emen

t pla

n de

taile

d in

the

Lette

r. C

ash

settl

emen

t of d

omes

tic

arre

ars i

n a

net a

mou

nt o

f U

S$20

mill

ion

in th

e fir

st q

uarte

r of

199

8 ac

cord

ing

to th

e m

odal

ities

and

prio

ritie

s of t

he

settl

emen

t pla

n de

taile

d in

the

Lette

r.

Prel

imin

ary

estim

ates

sh

ow th

at th

e eq

uiva

lent

of a

bout

U

SD 1

9 m

illio

n of

the

pre-

1998

stoc

k w

ere

settl

ed b

etw

een

1998

an

d 20

00.

Impr

ove

the

effic

ienc

y of

pu

blic

spen

ding

- Fin

aliz

e th

e dr

aft P

ublic

Ex

pend

iture

Rep

ort(P

DR

) - D

raft

1999

Bud

get L

aw

satis

fact

ory

to ID

A a

nd re

flect

ing

the

PER

reco

mm

enda

tions

Aug

ust 1

998

Oct

ober

31,

199

8

Exec

utio

n of

the

1999

bud

get

whi

ch in

tegr

ates

the

reco

mm

enda

tions

of t

he P

ER

PER

Com

mitt

ee

Gen

eral

Bud

get

Dire

ctor

ate

The

1999

bud

get l

aw

incl

uded

reco

mm

en-

datio

ns fr

om th

e PE

R

in te

rms o

f inc

reas

ed

allo

catio

ns fo

r non

-w

age

curr

ent

expe

nditu

res i

n he

alth

an

d ed

ucat

ion.

Sha

re in

al

loca

tion

of th

ese

expe

nditu

res i

ncre

ased

fu

rther

in F

Y 2

000.

R

even

ue

Mob

iliza

tion

and

redu

ctio

n of

tax

exon

erat

ions

1.

Stre

ngth

en

cont

rol o

f ex

oner

atio

ns a

nd

redu

ce th

eir

num

ber a

nd

scop

e.

- stri

ctly

lim

it ex

oner

atio

ns to

goo

ds

and

serv

ices

list

ed in

con

vent

ions

an

nexe

s

Mea

sure

s stri

ctly

app

lied

by D

CR

ES;

com

mun

icat

ion

sent

to

conc

erne

d en

terp

rises

to

ensu

re th

e st

rict r

espe

ct o

f th

e co

nven

tions

Inex

iste

nce

of e

xone

ratio

ns B

asic

do

cum

ents

for m

onito

ring

ALL

ex

oner

atio

ns: r

epor

ts o

f ex

oner

atio

ns g

rant

ed a

re p

repa

red

perio

dica

lly a

nd w

ill b

e us

ed fo

r th

e m

onito

ring

of e

xone

ratio

ns

(all

code

s)

gran

ted

outs

ide

of th

e sc

ope

of th

e

Min

. of C

omm

erce

+ G

ener

al C

usto

ms

Dire

ctor

ate

(GC

D)+

Gen

eral

Tax

D

irect

orat

e

Tota

l exe

mpt

ions

re

porte

d by

cus

tom

s de

crea

sed

from

38.

1%

of ta

xabl

e va

lue

in

1997

to 3

6.8%

in 1

998

and

34.2

% in

199

9.

Obj

ectiv

e M

easu

res

Stat

us o

f Exe

cutio

n Pe

rfor

man

ce In

dica

tors

R

espo

nsib

le

Aut

hori

ty

Act

ual a

t tim

e of

IC

R

- ens

ure

bette

r con

trol o

f the

fina

l de

stin

atio

n of

exe

mpt

ed g

oods

- S

trict

ly a

pply

the

Inve

stm

ent C

ode

(IC

): 1)

with

draw

exo

nera

tions

whe

n a

com

pany

doe

s not

com

plet

e th

e in

vest

men

t pro

gram

with

in 1

2 m

onth

per

iod

2) n

on-r

enew

al e

xpiri

ng e

xem

ptio

ns

gran

ted

unde

r the

Inve

stm

ent c

ode

3) d

ecis

ion

to e

xclu

de a

ll en

terp

rises

that

will

be

priv

atiz

ed

star

ting

from

Sep

t1, 1

998

from

ex

empt

ions

und

er th

e pr

ovis

ion

of

Inve

stm

ent C

ode

- con

duct

a re

view

of e

xist

ing

proc

edur

es fo

r exo

nera

tions

gra

nted

un

der

the

petro

leum

and

min

ing

code

and

und

er t

he ta

x re

gim

e fo

r th

e ur

aniu

m se

ctor

and

who

se

reco

mm

enda

tions

will

be

impl

emen

ted

durin

g 19

98

- int

rodu

ce a

syst

em o

f Tre

asur

y ch

ecks

as a

mea

ns to

mon

itor

exem

ptio

ns re

late

d to

impo

rts u

nder

fo

reig

n-fin

ance

d go

vern

men

t pr

ocur

emen

t con

tract

s - e

xten

d to

NG

Os t

he sy

stem

of

Trea

sury

che

cks t

o pa

y im

port

dutie

s and

oth

er a

pplic

able

indi

rect

ta

xes

- elim

inat

e al

l ad

hoc

exem

ptio

ns

Perm

anen

t mea

sure

: co

ntro

l act

iviti

es, m

obile

un

its a

nd D

ECD

/ST

Com

mun

icat

ion

sent

to

conc

erne

d en

terp

rises

; the

m

easu

re is

bei

ng a

pplie

d C

omm

unic

atio

n se

nt to

co

ncer

ned

ente

rpris

es; t

he

mea

sure

is b

eing

app

lied

Com

plet

ed

Com

plet

ed

Com

plet

ed

Com

plet

ed

No

ad h

oc e

xem

ptio

ns h

as

been

gra

nted

sinc

e Ja

nuar

y

conv

entio

ns a

nnex

es

Num

ber o

f sur

veill

ance

mis

sion

s an

d co

ntes

ted

case

s In

exis

tenc

e of

exo

nera

tions

on

equi

pmen

t goo

ds fo

r ent

erpr

ises

w

hich

hav

e no

t exe

cute

d th

eir

inve

stm

ent p

rogr

am w

ithin

a 1

2 m

onth

per

iod

Inex

iste

nce

of e

xone

ratio

ns fo

r en

terp

rises

who

se a

gree

men

t va

lidity

for t

he e

xplo

itatio

n ph

ase

has e

xpire

d N

o ne

w e

xone

ratio

n gr

ante

d un

der t

he p

rovi

sion

of t

he

Inve

stm

ent C

ode

to th

e en

terp

rises

that

will

be

priv

atiz

ed

from

Sep

t. 1,

199

8 A

pplic

atio

n in

199

8 of

the

reco

mm

enda

tions

of t

he re

view

Pr

ogre

ssiv

e di

sapp

eara

nce

of

exon

erat

ions

und

er C

odes

8 &

9

No

exon

erat

ion

gran

ted

for N

GO

-fin

ance

d pu

blic

pro

cure

men

t co

ntra

ct

No

new

ad

hoc

exem

ptio

n gr

ante

d (c

ode

12)

Obj

ectiv

e M

easu

res

Stat

us o

f Exe

cutio

n Pe

rfor

man

ce In

dica

tors

R

espo

nsib

le

Aut

hori

ty

Act

ual a

t tim

e of

IC

R

2. S

impl

ify th

e ta

xatio

n sy

stem

, br

oade

n th

e ta

x ba

se a

nd

stre

ngth

en th

e ta

x ad

min

istra

tion

- elim

inat

e ex

empt

ions

from

dut

ies

and

taxe

s on

all i

mpo

rts o

f lu

bric

ants

and

spar

e pa

rts w

ith a

un

it va

lue

unde

r CFA

F 10

0,00

0 -in

trodu

ce a

syste

m o

f exe

mpt

ions

ap

plic

able

to p

etro

leum

pro

duct

s ba

sed

on th

e ad

vanc

e pa

ymen

t of

cust

oms d

utie

s and

taxe

s and

thei

r re

imbu

rsem

ent o

n th

e ba

sis o

f de

liver

y re

ceip

ts

- int

rodu

ce th

e si

ngle

taxp

ayer

id

entif

icat

ion

num

ber s

yste

m to

all

reve

nue

agen

cies

- s

impl

ify th

e pr

oper

ty ta

x an

d tra

nsfe

r res

pons

ibili

ty fo

r its

co

llect

ion

from

the

Trea

sury

to th

e G

ener

al T

ax D

irect

orat

e (G

TC)

- set

up

the

Larg

e Ta

xpay

er U

nit

- lau

nch

the

activ

ities

of t

he V

AT

mon

itorin

g un

it

1998

C

ompl

eted

U

nder

pre

para

tions

C

ompl

eted

C

ompl

eted

Th

e un

it st

arte

d au

dit

activ

ities

in F

eb. 1

998;

as

of A

pril

30, 1

998,

53

verif

icat

ions

wer

e la

unch

ed, 3

6 w

ere

com

plet

ed. V

AT

asse

ssed

: C

FAF

132,

580,

894;

IUTS

: C

FAF6

,609

,316

; pen

altie

s fo

r VA

T:

CFA

F79,

650,

567;

IUTS

: C

FAF

8,23

2,94

8

No

exon

erat

ion

gran

ted

from

du

ties a

nd ta

xes o

n im

ports

of

lubr

ican

ts a

nd sp

are

parts

with

a

unit

valu

e un

der C

FAF

100,

000

App

licat

ion

of th

e m

easu

re b

y M

arch

31,

199

9 In

crea

se b

udge

tary

reve

nues

from

8.

4% o

f GD

P in

199

7 to

9.9

% in

19

98 a

nd 1

0.3%

in 1

999

Perf

orm

ance

indi

cato

rs: f

rom

July

to

Dec

embe

r 199

8: C

FAF

200,

000,

000;

Janu

ary

to

Dec

embe

r 199

9: C

FAF

700,

000,

000

GTC

+ G

DC

+ Tr

easu

ry

Bud

geta

ry re

venu

es to

G

DP:

19

98: 9

.1%

19

99: 8

.8%

C

olle

ctio

ns fr

om

verif

icat

ion:

H

2/ 1

998

: CFA

F 20

3 m

illio

n 19

99: C

FAF

1,31

2 m

illio

n

Obj

ectiv

e M

easu

res

Stat

us o

f Exe

cutio

n Pe

rfor

man

ce In

dica

tors

R

espo

nsib

le

Aut

hori

ty

Act

ual a

t tim

e of

IC

R

- pre

pare

com

pute

rized

val

ue

reco

rds f

or u

se b

y th

e G

ener

al

Cus

tom

s Dire

ctor

ate

(GD

C)

- Ope

n N

iam

ey /r

oad

and

Nia

mey

/righ

t pilo

t rev

enue

off

ices

- u

se st

atem

ents

of r

econ

cilia

tion

betw

een

the

AD

Vs o

f CO

TEC

NA

an

d th

e cu

stom

s dec

lara

tions

- P

rovi

de in

199

8 th

e ta

x ag

enci

es

with

a b

udge

tary

allo

catio

n of

C

FAF

1 bi

llion

for l

ogis

tical

eq

uipm

ent

- Rec

ruit

at th

e G

ener

al T

ax D

irect

-or

ate

an a

dditi

onal

75

perm

anen

t st

aff a

nd 3

0 fix

ed-te

rm e

mpl

oyee

s

Com

plet

ed

Nia

mey

/road

and

N

iam

ey/ri

ght b

ank

pilo

t re

venu

e of

fices

es

tabl

ishe

d; e

xten

sion

to

othe

r off

ices

in 1

998-

99

use

of th

e fir

st

reco

ncili

atio

n st

atem

ent i

s on

goin

g; p

erm

anen

t m

easu

re

Exec

utio

n of

the

1998

bu

dget

19

98

Use

of a

com

para

tive

valu

e re

cord

s sys

tem

by

the

GC

D

Red

uctio

n of

the

diff

eren

ces

betw

een

the

GC

D a

nd th

e Tr

easu

ry d

ata

on in

tern

atio

nal

trade

taxe

s col

lect

ed to

impr

ove

reve

nue

mob

iliza

tion

Qua

rterly

repo

rts o

n th

e us

e of

st

atem

ent o

f rec

onci

liatio

n Ex

ecut

ion

of th

e 19

98 b

udge

t

GTD

G

TD

GC

D

GC

D

Annex D (continued) 43

Public Finance Reform Credit Key Performance Indicators

The following key performance indicators were agreed between IDA and the Government to evaluate implementation progress and outcomes of the program supported by the PFRC:

• Increase in budgetary revenues from 8.4 percent of GDP in 1997 to 9.9 percent in 1998 and 10.3 percent in 1999;

• Contain the wage bill at CFA 44.0 billion I 1998 and 44.7 billion in 1999, and

establish by start of 1999 an integrated database for the civil service, the payroll, and the other ministries;

• Implement the recommendations of the audit of the Treasury during 1998-99;

• No accumulation of new internal arrears starting from July 1, 1998;

• Elimination of the use of advance expenditure payments procedures (PPA);

• Execution of the 1999 budget reflecting the PER recommendations, and

• No granting of new exonerations under the provisions of the Investment Code to

enterprises to be privatized starting from September 1, 1998. Detailed performance indicators were defined in the policy matrix of the Letter of Development Policy.

Annex E 44

Public Finance Recovery Credit (2000)

Actions taken between December 1999 and Board presentation in September 2000 were the following: a) Revision and implementation of a new tariff structure, in accordance with the

requirements of the WAEMU treaty, with the effect of reducing the maximum tariff rate from 25 to 20 percent, the (non-weighted) average tariff form 22.3 to 12.3 percent, and the statistical tax on imports from 5 to 1 percent1;

b) Enactment of new legislation setting forth a new tax regime and increasing the

value added tax rate from 18 to 19 percent2; c) Enactment of a revised budget law for FY 2000 based on revenue projections

consistent with tax collection capacity and increase, under the said budget law, of the budgetary allocations for the health and education sectors3;

d) Adoption of adequate steps to reduce the government's utility and

telecommunications bill, including through the enforcement of regulation discontinuing government subsidies of private utility consumption of public officials4;

e) Re-enactment of the legislation governing the civil service retirement and pension

regime5 and agreement with the main federations of trade unions (Union des Syndicats de Travailleurs du Niger and Confédération Nationale des Travailleurs) on the implementation of the reform;

f) Enactment of legislation establishing a Road Maintenance Fund, and transferring

road maintenance operation to private sector operators6; g) Launching the privatization process with respect to SONITEL and SNE by

selecting, through a transparent pre-qualification process, potential private sector investors, and formally inviting such investors to submit bids;

1 Ordinance No. 99/65 of December 20, 1999. 2 Law No. 2000-003 of May 2, 2000. 3 In particular, the 2000 Budget Law included all-time highs in terms of (i) the share of health allocations in total current spending (8.2 percent) and of non-wage and non-subsidy health expenditure in total current spending (3.8 percent); (ii) the share of basic education allocations (primary, secondary, literacy) in total current spending (14.1 percent), and the share of non-wage expenditure for primary education in total spending for basic education (13.1 percent). The revised Budget Law also eliminated any allocation to the budget line debited in the past years for the discretionary settlement of domestic arrears. 4 Decree No 99-363 of August 31, 1999. 5 Ordinance No. 98-380 of December 24, 1998. 6 Respectively Ordinance No. 99-55 of November 22, 1999, and Decree No. 2000-101 of April 7, 2000.

Annex E (continued) 45

h) Launching the process of awarding two cellular phone licenses to private operators by formally inviting private companies, through advertisement in the international press, to submit bids to that effect;

i) Adoption of instructions requiring all government agencies to execute their

expenditures in accordance with the relevant payments procedures in effect in Niger, and confirming the ban on exceptional payment procedures;7

j) Regularization of all advance payments of public expenditure made during FY

2000, in accordance with relevant budgetary and Government accounting rules and standards;

k) Implementation of the regulation establishing the Treasury Committee (Comité

National de Suivi de la Trésorerie de 1 'Etat)8, by making the Committee fully operational, and ensuring adequate financial reporting (budget execution reports, monthly financial plans) to guide expenditure and cash management;

l) Establishment of adequate financial control mechanisms to monitor the

expenditures of all autonomous public sector agencies or enterprises that benefit from government subsidies (Correspondants du Trésor);

m) Submission to the National Assembly of a draft Loi de Règlement for FY 1997; n) Adoption of an action plan, for the reorganization of the Treasury Department

(Trésorerie Générale), based on the recommendations of the functional audit performed in 2000; and

o) Completion of an evaluation report on the work of the former Arrears Settlement

Commission (Commission ad hoc de Gestion des Arriérés Intérieurs de 1' Etat).

7 Prime ministerial instruction No. 536, dated May 29, 2000. 8 Ministerial instruction No. 491/MF/RE, dated November 29, 1999.

Publ

ic F

inan

ce R

ecov

ery

Cre

dit -

Fis

cal M

anag

emen

t Ref

orm

pro

gram

: Pol

icy

Mat

rix

Obj

ectiv

esPr

ior

actio

nsFu

ture

mea

sure

s and

tim

etab

le

Perf

orm

ance

ben

ch

mar

ks

Res

pons

ible

au

thor

ity

Act

ual a

t tim

e of

ICR

1. In

crea

se

Eff

icie

ncy

of

Rev

enue

M

obili

zatio

n

- The

Com

mon

Ext

erna

l Tar

iff

of th

e WA

EMU

is

impl

emen

ted,

redu

cing

the

max

imum

tarif

f fro

m 2

5 to

20

%

- Dom

estic

tax

syste

m w

as

revi

sed

to re

duce

corp

orate

in

com

e tax

(for

m 4

5 to

42.

5 %

),and

raise

VA

T (fr

om 1

7 to

19

%)

(a) C

ontin

ued

redu

ctio

n in

tax

exem

ptio

ns

- Im

prov

e mon

itorin

g of

tax

exem

ptio

ns an

d ta

ke

addi

tiona

l mea

sure

s to

strea

mlin

e gra

ntin

g of

ex

empt

ions

(200

1 Bu

dget

Law

) - I

mpr

ove s

yste

m o

f exe

mpt

ion

cont

rol o

n ex

tern

ally

fin

ance

d pr

ocur

emen

t (Q

4/20

00)

(b) I

mpr

ove t

axpa

yer m

onito

ring

syste

ms

- Effe

ctiv

e use

of T

IN d

atab

ase

- For

mal

ize e

xcha

nge o

f dat

a bet

wee

n PS

I age

nt G

CD

on tr

ade v

alue

s; str

ict e

nfor

cem

ent o

f con

trols

whe

n da

ta d

iver

ges.

(Q4/

2000

)

(c) I

mpr

ove r

even

ue co

llect

ion

outsi

de th

e cap

ital

- Red

eplo

ymen

t and

trai

ning

of t

ax co

llect

ion

agen

ts;

- Stri

cter

mon

itorin

g of

tax

perfo

rman

ce in

majo

r ur

ban

cent

ers

(d) I

mpr

ove e

ffici

ency

of p

etro

leum

pro

duct

s tax

atio

n (Q

2/20

01)

Rea

ch fi

scal

rev

enue

to

GD

P ta

rget

s:

FY 2

000:

8.2

%FY

200

1: 8

.9 %

Incr

ease

d do

mes

tic ta

x re

venu

e per

form

ance

: FY

200

0: C

FAF

47.6

bill

ion

FY 2

001:

CFA

F 51

.2

billi

on

Impr

oved

custo

ms t

ax

perfo

rman

ce:

FY 2

000:

55.

7 bi

llion

FY

200

1: 5

9.7

billi

on

MO

C, G

CD

, G

TD

TR, G

CD

, G

TD, G

BD

G

CD

FY 2

000:

8.6

%

FY 2

001:

9.2

%

FY 2

000:

CFA

F 44

.3

billi

on

FY 2

001:

CFA

F 60

.3

billi

on

FY 2

000:

CFA

F 58

.5

billi

on

FY 2

001:

CFA

F 64

.8

billi

on

2. Im

prov

e B

udge

t Pr

epar

atio

n an

d E

xpen

ditu

re

Prog

ram

min

g

- A re

vise

d B

udge

t law

was

ad

opte

d, b

ased

, on

reve

nue

proj

ectio

ns c

onsi

sten

t with

cu

rren

t tax

col

lect

ion

capa

city

.

(a) R

atio

naliz

e bu

dget

allo

catio

ns fo

r non

-wag

e sp

endi

ng it

ems:

- Util

ities

: Det

erm

ine c

onsu

mpt

ion

stand

ards

for

wat

er, e

lect

ricity

and

tele

phon

e (Q

2/20

01)

- Sub

sidie

s: bu

dget

allo

catio

ns o

n re

cipi

ent a

genc

y's

subm

issio

n of

pre

viou

s yea

r acc

ount

s, cu

rrent

yea

r es

timat

es, a

nd a

budg

et p

ropo

sal f

or th

e fu

ture

fisc

al

year

(Q4/

2000

) - E

stabl

ish fi

nanc

ial m

anag

emen

t and

acco

untin

g sy

stem

s for

auto

nom

ous a

genc

ies (

EPA,

EPI

C;

Q3/

2001

) - S

chol

arsh

ips:

Upd

ate s

tude

nt d

atab

ase t

o co

ntro

l el

igib

ility

; rev

iew

allo

catio

n cr

iteria

(Q4/

2000

)

Avo

id n

ew d

omes

tic

arre

ars o

n ut

ilitie

s co

nsum

ptio

n,

auto

nom

ous a

genc

ies

spen

ding

, or

scho

lars

hips

GD

B, U

tility

co

mpa

nies

G

DB

, TR

, M

HE,

oth

er

line

min

istri

es

In F

Y 2

000,

util

ity

cons

umpt

ion

rem

ains

a

prob

lem

in so

me

min

istri

es, b

ut st

ringe

nt

mea

sure

s hav

e be

en

take

n (e

.g. c

ut-o

ff in

se

rvic

es) a

nd b

ills a

re

paid

on

time;

Li

mite

d im

plem

enta

tion

of th

e ra

tiona

lizat

ion

in

the

dete

rmin

atio

n of

su

bsid

ies i

n FY

200

1;

Lim

ited

chan

ge in

sc

hola

rshi

p al

loca

tions

m

echa

nism

s for

FY

200

1

Obj

ectiv

es

Prio

r ac

tions

Fu

ture

mea

sure

s and

tim

etab

le

Perf

orm

ance

ben

ch

mar

ks

Res

pons

ible

au

thor

ity

Act

ual a

t tim

e of

ICR

- Effe

ctiv

e use

of t

he in

tegr

ated

ci

vil s

ervi

ce d

atab

ase f

or

payr

oll m

anag

emen

t

(b) R

atio

naliz

e bud

get a

lloca

tion

for p

erso

nnel

sp

endi

ng:

- Det

erm

ine t

he v

olum

e of d

epar

ture

s and

new

re

crui

tmen

t, an

d ev

alua

te fi

scal

impa

ct (w

ages

and

pens

ions

) by

usin

g th

e int

egra

ted

payr

oll/p

erso

nnel

da

taba

se (o

ngoi

ng)

- c) I

ntro

duce

med

ium

term

bud

get p

rogr

amm

ing

proc

edur

es

- Pre

pare

sec

tor b

udge

t env

elop

es in

tegr

atin

g in

vest

men

t and

recu

rren

t bud

gets

(Q4/

2000

) - I

ntro

duce

con

cept

s of

Med

ium

-Ter

m

Expe

nditu

re F

ram

ewor

ks (M

TEFs

), in

tegr

atin

g ag

greg

ate

fisca

l dis

cipl

ine

and

pove

rty re

duct

ion

obje

ctiv

es (Q

3/20

01)

(d) R

efor

m B

udge

t nom

encl

atur

e in

line

with

R

egio

nal g

uide

lines

(Q2/

2001

)

- Sec

tor-

wid

e bu

dget

sh

eets

- D

eter

min

atio

n of

m

ediu

m-te

rm a

ggre

gate

fis

cal t

arge

ts

- Eva

luat

ion

of se

ctor

ex

pend

iture

targ

ets

linke

d to

sec

tor d

evel

opm

ent

stra

tegy

GB

D, p

ilot

MTE

F m

inis

try

(MPH

)

New

bud

get n

omen

-cl

atur

e fin

aliz

ed; t

o be

im

plem

ente

d fo

r the

ex

ecut

ion

of th

e 20

03

budg

et.

3. Im

prov

e E

xpen

ditu

re

Man

agem

ent

- Adv

ance

pay

men

t pr

oced

ures

form

ally

ban

ned

and

regu

lariz

ed [B

oard

co

nditi

on]

- Est

ablis

hmen

t of a

Tr

easu

ry C

omm

ittee

- Est

ablis

hmen

t of f

inan

cial

co

ntro

l on

expe

nditu

res

of

stat

e au

tono

mou

s ag

enci

es•

- Int

erru

ptio

n of

util

ity

deliv

ery

in c

ase

of n

on-

paym

ent

(a) E

nfor

ce b

udge

tary

dis

cipl

ine

with

resp

ect t

o ur

gent

exp

endi

ture

requ

ests

(mis

sion

s, m

edic

al

emer

genc

ies,.

.) - S

trict

ly a

nd p

arsi

mon

ious

ly a

pply

exi

stin

g ru

les

for u

rgen

t exp

endi

ture

man

agem

ent (

régi

es

d'av

ance

) (on

goin

g)

(b) R

atio

naliz

e ex

pend

iture

regu

latio

n an

d ca

sh

man

agem

ent

- Wee

kly

oper

atio

nal c

ash

man

agem

ent p

lans

va

lidat

ed b

y Tr

easu

ry C

omm

ittee

(Q3/

2000

) - E

valu

atio

n of

the

exis

ting

budg

et re

gula

tion

mec

hani

sms,

and

ado

ptio

n of

cor

rect

ive

mea

sure

s fo

r the

200

1 bu

dget

exe

cutio

n (Q

4/20

00)

(c) S

treng

then

of c

ontro

l ove

r non

-wag

e cu

rrent

ex

pend

iture

- F

urth

er re

info

rce

over

sigh

t ove

r EPA

/EPI

C ex

pend

iture

(ong

oing

) - C

ompl

ete

rem

aini

ng te

chni

cal m

easu

res

need

ed

to p

reve

nt a

busi

ve c

onsu

mpt

ion

of u

tility

co

nsum

ptio

n (Q

2/20

01)

- Vol

ume

of re

gies

d'

avan

ces;

30

days

. - N

on-a

ccum

ulat

ion

of

new

dom

estic

arr

ears

fr

om 2

000

onw

ard

- Red

uce

utili

ty

cons

umpt

ion

in r

eal

term

s ove

r 20

00-2

001

GB

D, T

R,

GFI

G

BD

, TR

, G

CD

, GTD

G

BD

, TR

Out

stan

ding

arr

ears

for

FY 2

000:

CFA

F 0.

2 bi

llion

;

Obj

ectiv

es

Prio

r ac

tions

Fu

ture

mea

sure

s and

tim

etab

le

Perf

orm

ance

ben

ch

mar

ks

Res

pons

ible

au

thor

ity

Act

ual a

t tim

e of

ICR

- Ful

ly in

tegr

atio

n of

pe

rson

nel a

nd p

ayro

ll fil

es;

editi

on o

f sal

arie

s f

rom

the

new

inte

grat

ed d

atab

ase

- Pre

para

tion

of a

n ac

tion

plan

in fo

llow

-up

to T

R

audi

t and

IMFI

FAD

m

issi

on re

ports

(com

plet

ed)

- Re-

esta

blis

hmen

t of s

ame-

day

acco

untin

g pr

actic

es

(d) S

tren

gthe

n w

age

bill

cont

rol

- Und

erta

ke c

lean

-up

of in

dem

nity

allo

catio

n by

el

imin

atin

g al

l leg

ally

unj

ustif

ied

allo

wan

ces

(Q1/

2001

) - D

esig

n st

rate

gy fo

r the

stre

amlin

ing

and

redu

ctio

n of

inde

mni

ties (

Q4/

2000

)

(e) R

efor

m p

ublic

exp

endi

ture

pro

cess

- R

evis

e co

mm

itmen

t and

acc

ount

ing

proc

edur

es

of d

econ

cent

rate

d ex

pend

iture

s (d

eleg

atio

ns d

e cr

edit)

(Q2/

2001

) - S

horte

n pr

oces

sing

tim

e be

twee

n in

itial

co

mm

itmen

t pro

posa

l and

eff

ectiv

e in

itiat

ion

of th

e ex

pend

iture

(Q2/

2001

) - P

repa

re a

ctio

n pl

an fo

r the

refo

rm o

f the

ex

pend

iture

pro

cess

follo

win

g re

com

men

datio

ns

of a

n "o

rgan

ic"

PER

(Q3/

2001

) f)

Reo

rgan

izat

ion

of th

e Tr

easu

ry a

nd

mod

erni

zatio

n of

acc

ount

ing

proc

edur

es

- Stre

amlin

e an

d cl

arify

acc

ount

ing

nom

encl

atur

e, h

arm

oniz

ed w

ith b

udge

t no

men

clat

ure

refo

rm (Q

4/20

00)

- Red

uctio

n in

use

of s

uspe

nse

acco

unts

(o

ngoi

ng)

- Gen

eral

ize

doub

le-p

art a

ccou

ntin

g fo

r tax

co

llect

ing

agen

cies

, in-

coun

try T

R n

etw

ork

(Q2/

2001

)

- Res

pect

wag

e bi

ll ta

rget

s:

2000

: CFA

F 51

.4

billi

on

2001

: CFA

F 49

.6

billi

on

- Act

ion

plan

for

expe

nditu

re p

roce

ss

form

fina

lized

- V

olum

es o

f sus

pens

e ac

coun

ts

- Rev

ised

acc

ount

ing

nom

encl

atur

e

GB

D, M

LMA

G

BD

, TR

TR

FY 2

000:

CFA

F 51

.8

billi

on

FY 2

001:

CFA

F 50

.4

billi

on

4. S

tren

gthe

n Fi

scal

R

epor

ting

and

Exp

endi

ture

E

valu

atio

n Sy

stem

s

- Int

rodu

ctio

n of

a n

ew

com

pute

rized

bud

get

info

rmat

ion

syst

em

a) Im

prov

e tim

elin

ess a

nd q

ualit

y of

fisc

al

repo

rting

- I

nstit

utio

naliz

e an

d fo

rmal

ize

regu

lar d

ata

reco

ncili

atio

n m

eetin

gs b

etw

een

conc

erne

d ag

enci

es

(ong

oing

) - A

dopt

pro

visi

onal

bal

ance

of e

ntry

for 2

000

Trea

sury

bal

ance

she

et (Q

4/20

00)

(b) E

xpan

d ut

iliza

tion

of th

e bu

dget

info

rmat

ion

syst

em:

- Exp

ansio

n to

spen

ding

uni

ts an

d th

e Tr

easu

ry D

ept.

(Q3/

2001

) - I

ntro

duct

ion

of a

utom

ated

con

trol p

roce

dure

s (Q

1/20

01)

- Reg

ular

reco

ncili

atio

n be

twee

n G

DB

bud

get

info

rmat

ion

and

TR

bala

nce

of a

ccou

nts

with

ex

plan

atio

n of

di

verg

ence

s - 2

000

Bal

ance

of e

ntry

- Reg

ular

fisc

al r

epor

ts

- Int

egra

ted

budg

et

man

agem

ent i

nfor

mat

ion

syst

em in

pla

ce

GB

D, T

R,

GC

D, G

TD

GB

D, C

IS,

TR, S

pend

ing

Age

ncie

s

Fully

inte

grat

ed d

ata

avai

labl

e B

alan

ce o

f ent

ry h

as n

ot

been

fully

reco

ncile

d w

ith o

uttu

rn o

f pre

viou

s ye

ar in

200

0;

Inte

grat

ed F

MIS

es

tabl

ishe

d in

ear

ly 2

002;

Obj

ectiv

es

Prio

r ac

tions

Fu

ture

mea

sure

s and

tim

etab

le

Perf

orm

ance

ben

ch

mar

ks

Res

pons

ible

au

thor

ity

Act

ual a

t tim

e of

ICR

- Com

plet

ed se

ctor

al P

ublic

Ex

pend

iture

Rev

iew

s (H

ealth

, Edu

catio

n, R

ural

se

ctor

).

- Reg

ular

pro

duct

ion

of b

udge

t exe

cutio

n ta

bles

(Q

3/20

00)

- Int

egra

tion

of re

venu

e an

d pa

yrol

l dat

a in

to th

e bu

dget

info

rmat

ion

syst

em (Q

2/20

01)

(c) S

treng

then

exp

endi

ture

eva

luat

ion

mec

hani

sms

- Int

egra

te re

com

men

datio

ns o

f com

plet

ed se

ctor

PE

Rs in

Bud

get p

repa

ratio

n pr

oces

s (Q

4/20

00)

- Und

erta

ke a

nd c

ompl

ete

budg

et-w

ide

PER

for

1997

-99

focu

sing

on:

(i) i

nter

-sec

tora

l exp

endi

ture

tre

nds;

(ii)

revi

ew o

f bud

geta

ry p

roce

dure

s

- 200

1-02

bud

get

allo

catio

ns fo

r hea

lth,

educ

atio

n, ru

ral

deve

lopm

ent,

HIV

/AID

S re

flect

ing

PER

re

com

men

datio

ns

- Com

plet

ed b

udge

t-w

ide

PER

Star

t on

PER

del

ayed

(e

xpec

ted

com

plet

ion:

m

id-2

003)

5. R

esto

re E

x Po

st E

xter

nal

Aud

it of

the

Bud

get

Bud

get e

xecu

tion

law

s fo

r 19

97 is

subm

itted

to th

e N

atio

nal A

ssem

bly

- The

199

7 ac

coun

ts a

re

trans

ferr

ed to

the

Stat

e C

ourt

's C

ham

ber

of

Acc

ount

s

(a) R

e-es

tabl

ish

the

regu

lar p

rodu

ctio

n an

d su

bmis

sion

of b

udge

t rev

iew

law

s (lo

is d

e re

glem

ents

) - S

ubm

it 19

98 B

udge

t rev

iew

law

for 1

998

to th

e N

atio

nal A

ssem

bly

(4/2

000)

- A

ll 19

99 e

xpen

ditu

res a

re re

gula

rized

and

bud

get

revi

ew la

w fo

r 199

9 su

bmitt

ed to

the

Nat

iona

l A

ssem

bly

(Q2/

2001

) - W

ork

plan

is p

repa

red

and

adop

ted

to e

nsur

e re

gula

r pro

duct

ion

of b

udge

t exe

cutio

n la

ws

by

the

Bud

get D

irect

orat

e (Q

1/20

01)

(b) R

esto

re S

tate

Cou

rt co

ntro

l ove

r Tre

asur

y cl

osin

g ba

lanc

es(c

ompt

es d

e ge

stio

n)

- The

199

8 ac

coun

ts a

re c

lose

d an

d tra

nsfe

rred

to

the

Cha

mbe

r of A

ccou

nts

(Q1/

2001

) - T

he a

nd 1

999

acco

unts

are

clo

sed

and

trans

ferr

ed to

the

Cha

mbe

r of A

ccou

nts

(Q4/

2001

) - W

ork

plan

is p

repa

red

and

adop

ted

to e

nsur

e re

gula

r clo

sing

of a

ccou

nts

by th

e Tr

easu

ry

(Q1/

2001

) - C

ham

ber o

f Acc

ount

s rep

ort o

n 19

97 a

ccou

nts i

s su

bmitt

ed to

Nat

iona

l Ass

embl

y (Q

3/20

01)

- Pub

lishe

d bu

dget

revi

ew

law

s for

199

8, 1

999

- Com

plet

ed C

ham

ber o

f A

ccou

nts R

epor

t for

199

7 B

udge

t

GB

D, N

A

TR. C

HA

C

Bud

get r

evie

w la

ws/

Tr

easu

ry a

ccou

nts f

or

1998

-99

subm

itted

. B

udge

t rev

iew

law

for

2000

sent

to P

arlia

men

t 20

00 a

ccou

nts c

lose

d in

la

te 2

001.

Firs

t aud

it re

port

expe

cted

by

mid

-20

02; B

udge

t Rev

iew

La

w fo

r 200

0 co

mpl

eted

in

Mar

ch 2

000.

Clo

sed

acco

unts

for 2

000

sent

o

the

Cha

mbe

r of A

ccou

nts

6. R

eviv

e D

omes

tic

Arr

ears

Se

ttle

men

t Pr

oces

s

- Eva

luat

ion

repo

rt on

the

past

set

tlem

ent i

nitia

tives

is

prep

ared

, and

ach

ieve

men

ts

of p

revi

ous

wor

k (p

hysi

cal

and

elec

troni

c ar

chiv

es,

- Rev

ise

inst

itutio

nal f

ram

ewor

k fo

r arr

ears

se

ttlem

ent,

incl

udin

g cl

arifi

catio

n of

the

decr

ee

crea

ting

the

"aut

onom

ous

cent

er fo

r the

am

ortiz

atio

n of

the

Stat

e's in

tern

al d

ebt"

(C

AAD

IE, Q

4/20

00)

- Up-

date

d ar

rear

s-st

atist

ical

tabl

e an

d up

-dat

ed se

ttlem

ent

stra

tegy

CA

AD

IE,

DG

B, T

R St

rate

gy fi

naliz

ed in

Se

ptem

ber 2

001;

C

FAF

37.8

bill

ion

clea

red

in F

Y 2

001

(incl

udin

g su

pple

men

tary

Obj

ectiv

es

Prio

r ac

tions

Fu

ture

mea

sure

s and

tim

etab

le

Perf

orm

ance

ben

ch

mar

ks

Res

pons

ible

au

thor

ity

Act

ual a

t tim

e of

ICR

clai

ms v

erifi

catio

n w

ork)

are

pr

eser

ved

- Tak

e st

ock

of a

ll in

tern

al a

rrea

rs b

y ye

ar-e

nd

1999

, und

erta

ke p

rope

r sta

tistic

al a

nd a

ccou

ntin

g cl

assi

ficat

ion

(Q4/

2000

) - U

pdat

e se

ttlem

ent p

lan

to in

clud

e al

l arr

ears

, id

entif

y tra

nspa

rent

set

tlem

ent m

odal

ities

ac

cord

ing

to th

e na

ture

of t

he a

rrea

rs a

nd

finan

cing

stra

tegy

(Q4/

2000

)

settl

emen

t per

iod)

7. A

ccel

erat

e St

ruct

ural

R

efor

ms w

ith

Fisc

al Im

pact

- Civ

il Se

rvic

e re

tirem

ent

refo

rm w

as re

-ena

cted

- P

re-q

ualif

ied

inve

stor

s fo

r SO

NIT

EL, S

NE

wer

e se

lect

ed a

nd in

vite

d to

su

bmit

finan

cial

bid

s. - I

nvita

tions

to s

ubm

it fin

anci

al o

ffer

s for

two

cellu

lar p

hone

lice

nses

la

unch

ed

(a) C

ivil

serv

ice

refo

rm

- Rev

ise- no

men

clat

ure

of b

udge

tary

pos

ts

atta

ched

to a

civ

il se

rvic

e po

sitio

n an

d up

date

da

taba

se w

ith re

vise

d bu

dget

ary

post

s (Q

2/20

01)

- Ini

tiate

pro

cess

of d

ecen

traliz

atio

n of

bud

geta

ry

posi

tions

(Q3/

2001

) - P

repa

re h

uman

reso

urce

man

agem

ent p

lans

for

key

min

istri

es fo

cusi

ng o

n re

depl

oym

ent a

nd

alte

rnat

ive

recr

uitm

ent s

trate

gies

(Q1/

2001

) (b

) Priv

atiz

atio

n an

d re

gula

tory

refo

rm p

rogr

am

- Sta

ffin

g an

d op

erat

iona

l est

ablis

hmen

t of t

he

Mul

ti-se

ctor

Reg

ulat

ory

Age

ncy

(Q1/

2001

) - D

esig

natio

n of

the

inve

stor

to ta

ke o

ver t

he

SON

ITEL

stra

tegi

c ca

pita

l sha

re, a

nd a

ttrib

utio

n fo

r tw

o ce

llula

r pho

ne li

cens

es to

the

priv

ate

sect

or (Q

4/20

00)

- Des

igna

tion

of th

e in

vest

or to

take

ove

r the

m

anag

emen

t con

tract

of t

he w

ater

dis

tribu

tion

com

pany

SN

E (Q

1/20

01)

- Des

igna

tion

of th

e in

vest

or to

be

gran

ted

the

conc

essi

on fo

r the

pow

er d

istri

butio

n co

mpa

ny

NIG

ELEC

(Q3/

2001

) - D

esig

natio

n of

the

shar

ehol

ders

for t

o ta

ke o

ver

the

petro

leum

impo

rt co

mpa

ny (Q

2/20

02)

- Ref

orm

the

petro

leum

pric

ing

syst

em (Q

1/20

01)

- New

bud

geta

ry p

ositi

ons

nom

encl

atur

e - S

ecto

ral h

uman

reso

urce

m

anag

emen

t pla

ns

(hea

lth, e

duca

tion)

- C

ompl

eted

tele

-co

mm

unic

atio

ns s

ecto

r lib

eral

izat

ion

(att

ribu

tion

of c

ellu

lar

phon

e lic

ense

s, SO

NIT

EL

pri

vatiz

atio

n)

- Com

plet

ed S

NE,

N

IGEL

EC tr

ansa

ctio

ns

MF,

MLM

A,

MPH

, MN

E M

P/R

SE,

MC

, MF

Mar

ch 2

001:

two

mob

ile

phon

e lic

ense

s sol

d to

pr

ivat

e se

ctor

ope

rato

rs;

tele

phon

e co

mpa

ny

priv

atiz

ed o

n D

ecem

ber

2001

. W

ater

dis

tribu

tion

com

pany

priv

atiz

ed.

Sele

ctio

n of

the

pre-

qual

ified

inve

stor

s for

the

pow

er c

ompa

ny e

nd Ju

ne

2001

and

pro

cess

to b

e fin

aliz

ed b

y en

d D

ecem

ber.

Lim

ited

prog

ress

N

ew p

etro

leum

pric

ing

syst

em e

stab

lishe

d (A

ugus

t 200

1).

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Est

.R

eal G

DP

(% in

crea

se)

-1.3

2.5

-6.5

1.4

4.0

2.6

3.4

2.8

10.4

-0.6

-1.4

7.6

GD

P pe

r cap

ita (U

S$)

225.

021

0.0

197.

016

9.0

180.

0C

PI -

Afr

ican

(% in

crea

se)

-2.0

-1.9

-2.9

-0.9

35.6

10.9

5.3

2.9

4.5

-2.3

2.9

4.0

Term

s of t

rade

(% c

hang

e)-9

.8-1

.8-8

.4-1

.3-1

3.7

4.9

-8.7

-7.6

5.8

Term

s of t

rade

199

5=10

0 (%

cha

nge)

-16.

7-1

.19.

89.

3-1

2.8

3.8

Nat

iona

l Acc

ount

s19

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

01C

onsu

mpt

ion

96.0

92.5

95.6

96.7

100.

010

0.2

97.6

96.9

97.6

97.4

96.7

96.8

Gro

ss in

v.11

.47.

85.

45.

710

.47.

39.

710

.911

.410

.210

.811

.5Pu

blic

inv.

4.2

6.6

5.2

4.6

5.8

6.5

6.4

5.9

6.5

Priv

ate

inv.

1.9

2.3

1.8

4.7

4.8

4.6

3.6

4.6

4.8

Gro

ss d

om. s

avin

gs4.

07.

54.

43.

30.

0-0

.22.

43.

12.

42.

63.

33.

2Pu

blic

savi

ngs

-1.0

1.0

0.2

1.2

-0.6

0.9

2.0

Priv

ate

savi

ngs

0.8

1.4

2.9

1.2

3.2

2.3

1.3

Res

ourc

e ga

p-4

.1-1

.7-1

.1-2

.4-1

0.3

-7.5

-7.3

-7.7

-9.0

-7.6

-7.5

-8.2

Publ

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Annex G 52

Basic Data Sheet

ECONOMIC RECOVERY CREDIT (CREDIT 2581-NIR)

Key Project Data (amounts in US$ million) Appraisal

estimate Actual or

current estimate Actual as % of

appraisal estimate Total project costs 25.0 25.0 100 Loan amount 25.0 25.0 100 Cofinancing Cancellation

Cumulative Estimated and Actual Disbursements FY94 Appraisal estimate (US$M) 25 Actual (US$M) 25.8 Actual as % of estimate 103.2 Date of final disbursement April 28, 1995

Project Dates Planned Actual Initial Discussions with IDA January 10-14, 1994 January 10-14, 1994 Appraisal January 17-25, 1994 January 1994 Negotiations February 28, 1994 February 28, 1994 Board Presentation March 17, 1994 March 17, 1994 Effectiveness March 31, 1994 March 25, 1994 Closing date June 30, 1995 June 30, 1995

Staff Inputs (staff weeks) Planned Revised Actual Weeks US$ Weeks US$ Weeks US$ Preappraisal - Appraisal 0 0 0 0 2.7 9,300 Appraisal - Board 0 0 0 0 0 0 Board – Effectiveness 0 0 0 0 0 0 Supervision 0 0 0 0 9 16,200 Completion 8 7,600 13 19,000 8.1 31,800 Total 8 7,600 13 19,000 19.8 57,300 Mission Data

Date (month/year)

No. of persons

Staff days

in field

Specializations represented

PerformanceRating

Types of problems

Implementation Status

Development Objectives

Preparation & Appraisal

January 1994 3 8 2 Economists 1 Country Officer

Appraisal Supervision I Nov. 10-22,

1994 1 12 Economist

Supervision II May 3-13, 1995 1 10 Economist Unsatisfactory Unsatisfactory Project Management. Performance

Supervision III Sept. 17-25, 1995

1 8 Economist

Completion April 1-12, 1996 2 11 Consultant Economist

Annex G (continued) 53

Other Project Data Borrower/Executing Agency: Ministry of Finance FOLLOW-ON OPERATIONS Operation Purpose.

Year of Approval Status

Public Sector Adjustment Credit To improve fiscal management

FY97 Closed

Annex G (continued) 54

Basic Data Sheet

PUBLIC SECTOR ADJUSTMENT CREDIT (CREDIT 2939-NIR)

Key Project Data (amounts in US$ million) Appraisal

estimate Actual or

current estimate Actual as % of

appraisal estimate Total project costs 30.0 30.0 100 Loan amount 30.0 30.0 100 Cofinancing Cancellation

Cumulative Estimated and Actual Disbursements FY97 Appraisal estimate (US$M) 30,000 Actual (US$M) 29,725 Actual as % of appraisal 99 Date of final disbursement: March 21, 1997

Project Dates Original Actual Identification October 1-5, 1996 October 1-5, 1996 Preparation October 31-November 13, 1996 October 31-November13, 1996 Appraisal February 6-12, 1997 February 6-12, 1997 Negotiations February 12-13, 1997 February 12-13, 1997 Letter of Development Policy February 14, 1997 February 14, 1997 Board Presentation March 20, 1997 March 20, 1997 Signing March 21, 1997 March 21, 1997 Effectiveness March 21, 1997 March 21, 1997 Single Tranche Release March 21, 1997 March 21, 1997 Closing date March 31, 1998 March 31, 1998

Staff Inputs (staff weeks) Planned Revised Actual Weeks US$ Weeks US$ Weeks US$ Preparation - Appraisall 56.0 157.8 56.0 157.8 62.9 160.0 Appraisal 11.6 25.3 11.6 25.3 7.7 21.7 Negotiations – Board 7.1 17.7 7.1 17.7 8.0 18.7 Supervision 34.5 97.7 34.5 97.7 20.6 57.1 Completion 3.0 4.1 3.0 4.1 4.6 7.4 Total 112.2 302.6 112.2 302.6 103.8 264.9 Mission Data

Date (month/year)

No. of Persons*

Staff days in field

Specializations represented

PerformanceRating

Types of problems

Imp. Status Deve. Obj. Identification/ Appraisal

11/96 6 12 Macroeconomists,Privatization spec.

S S none

Appraisal- Board

02/97 8 10 Macroeconomists,Privatization spec.

S S none

Supervision 05/97 8 8 Macroeconomists, privatization spec.

S S none

10/97 6 2 Macroeconomists, privatization spec

S S

02/98 5 6 Macroeconomists, privatization spec

S S

Completion * Excluding consultants

Annex G (continued) 55

Other Project Data Borrower/Executing Agency: Ministry of Finance FOLLOW-ON OPERATIONS Operation Purpose. Year of Approval Status Public Finance Reform Project To improve

fiscal management

FY99 Closed

Annex G (continued) 56

Basic Data Sheet

PUBLIC FINANCE REFORM (CREDIT 3134-NIR)

Key Project Data (amounts in US$ million)

Appraisal estimate

Actual or current estimate

Actual as % of appraisal estimate

Total project costs 64.0 25.0 Credit amount 64.0 25.0 37.3 Cofinancing Cancellation

Cumulative Estimated and Actual Disbursements FY99 Appraisal estimate (US$M) 64.0 Actual (US$M) 23.0 Actual as % of appraisal 38.8 Date of final disbursement: January 26, 2000

Project Dates Original Actual Preappraisal 03/05/98 Appraisal 05/04/98 Approval 10/13/98 Effectiveness 10/20/98 10/20/98 Closing date 06/30/2000 06/30/2000

Staff Inputs (staff weeks) Stage of Project Cycle No. Staff Weeks US$ (‘000) Identification/Preparation 27.2 57.6 Appraisal/Negotiation 18.1 44.6 Supervision 34.2 64.2 ICR 3.1 6.0 Total 79.5 172.4 Mission Data

Date (month/year)

No. of persons

Specializations represented Performance Rating

Implementation Status

DevelopmentObjective

Identification/ Preparation

March-April 1998

2 Economists

2 Public Sector Specialists 2 Sector Specialists (health,

education)

2 Consultants (public finance specialists)

Appraisal/Negotiations May-Sept. 1998

2 Economists

Supervision October 1998- March 2000

2 Economists

2 Consultants (public finance specialists

Completion 2 Economists

Annex G (continued) 57

Other Project Data Borrower/Executing Agency: Ministry of Finance FOLLOW-ON OPERATIONS Operation Purpose Year of Approval Status Public Finance Recovery Credit To improve

fiscal management

FY01 Closed

Annex G (continued) 58

Basic Data Sheet

PUBLIC FINANCE RECOVERY CREDIT (CREDIT 3418-NIR)

Key Project Data (amounts in US$ million) Appraisal

estimate Actual or

current estimate Actual as % of

appraisal estimate Total project costs 47.00 47.00 100 Original Credit amount 35.00 35.00 100 Supplemental Credit 12.00 12.00 100 Cofinancing Cancellation

Cumulative Estimated and Actual Disbursements FY01 Appraisal estimate (US$M) 47.0 Actual (US$M) 47.0 Actual as % of appraisal 100 Date of final disbursement: October 18, 2000

Project Dates Original Actual Identification – Preappraisal 07/18/2000 Appraisal 08/01/2000 Approval 09/14/2000 Effectiveness 10/13/2000 10/13/2000 Closing date 06/30/2001 06/30/2001

Staff Inputs (staff weeks) Actual/Latest Estimates No. Staff weeksx US$ (‘000) Identification/Preparation l 4.9 9.8 Appraisal/Negotiation 8.9 28.8 Supervision 13.8 44.8 ICR 1.9 6.5 Total 29.5 89.9 Mission Data Date

(month/year) No. of

persons Specializations

represented Performance Rating

Implementation Progress

Development Objective

Identification/ Preparation

July 2000 2 Economists

Appraisal/Negotiations August 2000 2 Economists Supervision February 2001 2 Economists S S May-June 2001 2 Economists S S 2 Public Finance Specialists Completion Feb.-June 2002 2 Economists S S

Annex G (continued) 59

Other Project Data Borrower/Executing Agency: Ministry of Finance FOLLOW-ON OPERATIONS Operation Purpose. Year of Approval Status Public Expenditure Adjustment Credit

Support fiscal management FY02 Fully disbursed

. Annex H 60

Government's Comments dated June 6, 2003 on the Draft Niger PPAR

REPUBLIQUE DU NIGER

Niamey, le

L6 JUIN c~ :~

MINISTERE DE LA PRIVATISATION ET DELA RESTRUCTURATION DES ENTREPRISESCELLULE DE cOORDIyATION DU PROGRAMMEDE PRIVATISATI t~4{O

LA MINISTRE

l-)N°MP/RE/CCPP~

Obiet : Evaluation retrospective des operations de la 'Banque Mondiale au Niger

Reference : Votre projet de rapport du 23 mat 03

Apres examen de votre projet de rapport, j'ai I'honneur de porter a votreconnaissance les observations suivantes

A la oage 15,- point 4.12 : lire % au debut de 1997, les strategies de privatisation des

trois sodetes de services publics et de la societe petroliere avalent eteadoptees . au lieu de : au debut de 1977 . . .point 4.13 : supprlmer les deux derrieres phrases sulvantesToujours en 1998, le monopole d'importat1on des prodults petroliers a

ete aboli et un cadre reglementaire a ete adopte pour les Importateursdu secteur prive . Enfln, un protocole a ete signe avec une societeprivee en vue de gerer les installations de stockage de la SONIDEP z .Ces propositions etaient contenues dans le schema initial et n'ontjamals ete miles en oeuvre .

A la me 36 Annexe C- g) Au lieu de 4c Adoption d'une lol revisee concernant la privatisation

des entreprises prNees. " lire « Adoption d'une ordonnancemodiflant I'ordonnance 96 - 75 du 11 d6cembre 1996 portantconditions generales de privatisation * .

A la Dage 39- derniere colonne du tableau : SONIDEP : Cadre de reglementatlon

elabore au lieu de adopte et protocole pour la creation dune socleteprivee etabli au lieu de condu avec un groupe prive.

Monsieur R. Kyle PetersChef de Division - Departementde ('Evaluation Retrospective desOperations

Ix : 202 522 3124Washington DC

61

A la Dam SZg) supprimer le terme d'achat car dans le cas de la SNE, it s'agitd'un affermage. Idem a la page 58 au 26"` tiret du point 7 .

Veulllez agreer, Monsieur, ('expression de mes sinceres salutations .

,.

'r\

Cl .Rfv

r4.

r

Annex H (continued)

Annex H (continued)

62

Subject : PPAR of World Bank Operations in Niger

Reference : Your draft report of May 23, 2003

After reviewing your draft report, I have the honor to inform you of the following :

At page 15 :para. 4.12: read "at the beginning of 1997, the privatization strategies ofthe three utilities and of the petroleum company had been adopted,"instead of: at the beginning of 1977para.4.13 : delete the last two sentences : "Also in 1998, the importmonopoly for petroleum products was cancelled and a regulatoryframework governing private sector importers adopted . Finally, a protocolwas signed with a private company to manage the storage facilities ofSONIDEP ." These proposals were part of the initial plan, but were neverimplemented.

At page 36 Annex C- g) instead of "Adoption of revised privatization law" read : "Adoption of

an ordinance modifying the ordinance 96-75 of December 11, 1996 on thegeneral conditions of privatization ."

At page 39last column of table : SONIDEP: Regulatory framework formulatedinstead of adopted and protocol for the creation of a private companyinstead of concluded with a private group .

Government's Comments dated June 6, 2003 on the Draft Niger PPAR(Unofficial Translation of French Letter)

Republic of Niger

Niamey, June 6, 2003Ministry of Privatization and

Enterprise RestructuringPrivatization Program Coordination Unit

The Minister

No . 00199 MP/RE/CCPP

To

Mr. R. Kyle PetersSenior ManagerOperations Evaluation DepartmentWashington, D .C .

At page 52

Sincerely,

g) delete the word purchase, because in the case of SNE, it is aconcession. Idem at page 58 at item 2 of paragraph 7 .

Signed : Mrs. TRAPSIDA, Fatima.

6 3

Annex H (continued)

Ob'et : Observations sur le Rapport d'Evaluation Retrospective

Monsieur le Chef de Division,

J'ai 1'honneur de vous faire parver#ir les observations au sujet du documentetabli par le Departement de 1'evaluation gretrospective des operations .

Page 2/point2 .2

Formuler la deuxieme phrase ainsi qu'il slit : " De 1974 a 1991, it a ete doming pardeux regimes militaires . Le premier, de 074 a 1987, etait place sous la directionautoritaire du General Kountche tandis qUe le second, de 1987 a 1991 fut dirige parle General Ali SAIBOU qui instaura alor Ie parti unique ."Le reste sans changement .

1141

Page 23/point 5.20 : Lire "Credit d'ajud'ajustement du secteur prive" .

ment du secteur public" et non " Credit

TII

Annex H (continued)

64

Government's Comments dated June 20, 2003 on the Draft Niger PPAR

REPUBLIQUE DU NIGER Niamey, le2, 0 JUIN 2003MINISTERE DES FINANCES ET DE L'ECONOMIE

DIRECTION GENERALE DES PROGRAMMESDIRECTION DES ETUDES FINANCIERES SETDES REFORMES

1 11

N.. .O . .. 6 .9 . . /MF/E/ I ,•" t_ DEF/R,,, Le Ministre,

A

Monsieur R . Kyle PetersChef de DivisionDepartement de ('EvaluationRetrospective des OperationsFax no 202-522-3124

65

Annex H (continued)

Page29/point 7.4: ajouter a la fin du paragraphe

Cependant, le Ministere des Finances 't de l'Economie, conscient de cettenecessite, a mis en place en aout 2001 iihe structure multidisciplinaire appeleeGroupe d'Appui a la Gestion Economique dont les principaux domainesd'mtervention sont entre autres la reahsah n d'un rapport economique et financiersur le Niger, 1'analyse statistique et conometrique a partir d'un modelemacroeconomique, 1'appui technique structures chargees du suivi desprogrammes economiques et financiers .

Page 30/point 7.6: Reformuler la derniere phrase ainsi qu'il suit

Les informations recueillies sur 1'execution des programmes doivent etre renduespubliques dans la mesure ou l'on cons une certaine amelioration dans leurfiabilite et leur regularite .

~1Page 51(suite de 1'Annexe E) L'intitule du credit est "Credit a l'ajustement desfinances publiques ( 2000) .

Page 68(Fiche de donnees de base)semblent incorrects. Ii s'agit en fait duPubliques ( Credit 3428-NIR) >> .

Je vous prie d'agreer, MonsieurI0

haute consideration .

'intitule ainsi que le numero du creditCredit a 1'ajustement des Finances

Chef de Division, 1'expression de maLit

Annex H (continued)

66

Government's Comments dated June 20, 2003 on the Draft Niger PPAR(Unofficial Translation of French Letter)

Republic of Niger

Niamey, June 20`h , 2003Ministry of FinanceGeneral Directorate for ProgramsDirectorate for Financial Studies and Reforms

No. 02069/MF/E/DGP/DEF/R

The Minister

To

Subject : Remarks concerning the Country Assistance Evaluation .

To the OEDCR Senior Manager,

I have the honor to send you some remarks concerning the document that the OperationsEvaluation Department elaborated .

Page 2/paragraph 2.2 :

Formulate the second sentence the following way : `From 1974 to 1991, it was dominatedby two military regimes . The first one, from 1974 to 1987, was an authoritarian regimeled by General Kountche while the second one, from 1987 to 1991 was under the controlof General Ali SAIBOU who then instituted the single party .'The rest does not change .

Page 23/paragraph 5.20 : Read `public sector adjustment credit' and not `private sectoradjustment credit' .

Page 29/paragraph 7.4 : Add at the end of the paragraph :

Nevertheless, the Ministry of Finance and the Economy, which is conscious of thisnecessity, has set up in August of 2001 a multidisciplinary structure named EconomicManagement Support Group, whose principal fields of intervention are the elaboration ofan economic and financial report on Niger, the statistical and econometric analysis

Mr. R. Kyle PetersSenior ManagerOperations Evaluation DepartmentFax No . 202-522-3124

67

Annex H (continued)

starting from a macroeconomic model, and the technical support provided to thestructures in charge of the economic and financial programs follow-up .

Page 30/paragraph 7 .6 : Rewrite the last sentenced as indicated below :

The collected information concerning the implementation of programs must be madepublic when a subsequent improvement of their liability and regularity is observed .

Page 51/(continuation of Annex E) : The name of the credit is `Public FinanceAdjustment Credit (2000)' .

Page 68 (Basic data annex) : The name and the credit number appear to be incorrect . Itis in fact the `Public Finance Adjustment Credit (Credit 3428-NIR)' .

Sincerely yours .

HABOU HAMIDINE