Document of The World Bank

Report No: 26246-BU

IMPLEMENTATION COMPLETION REPORT(IDA-33370 PPFI-Q1690)

ON A

CREDIT

IN THE AMOUNT OF US$35.0 MILLION

TO THE

GOVERNMENT OF BURUNDI

FOR EMERGENCY ECONOMIC RECOVERY

APRIL 27, 2004

Africa Country Department 9Poverty Reduction and Economic Management (PREM 3)

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 30 - May 28, 2002)

Currency Unit = Burundi Franc (BuF) SDR 1 = US$ 1.26543 (April 30, 2002)

US$ 1.00 = BuF 853.50 (May 28, 2002)

FISCAL YEARJanuary 1-December 31

ABBREVIATIONS AND ACRONYMS AfDB African Development Bank

AGETIP Agence d’Execution de Travaux d’Interets PublicsAIDS Acquired Immuno-Deficiency SyndromeAPL Adaptable Program LoanBPE Bureau Projet EducationBRB Banque de la Republique du Burundi (Central Bank)BURSAP II Burundi Social Action Project IICAS Country Assistance StrategyCAMEBU Centrale d’Achat des Medicaments du BurundiCOMESA Common Market for Eastern and Southern African States

COPED Conseil Pour L’Education et le Developpement COTEBU Complexe Textile Burundi CTB Cooperation Technique Belge CWIQ Core Welfare Indicators Questionnaire DRC Democratic Republic of Congo EAP Emergency Assistance Project EERC Emergency Economic Recovery Credit ERC Emergency Recovery Credit EU European Union FAO Food and Agricultural Organization GDP Gross Domestic Product GNP Gross National Product GTS Government Transitional Strategy HIV Human Immunodeficiency Virus IDA International Development Association HIPC Highly Indebted Poor Countries IMF International Monetary Fund ISABU Institut des Sciences Agronomiques du Burundi LCA Local Currency Account LIFT Leveraged Insurance for Trade LMTC Lutte Contre les Maladies Transmissibles et Carentielles OAU Organization of African Unity ONAPHA Office National Pharmaceutique PCU Post-Conflict Unit PRDMR Programme de Relance de Developpement du Monde Rural PREBU Programme de Rehabilitation du Burundi PROCOBU Production Commerciale du Burundi PRSP Poverty Reduction Strategy Paper QAC Quality Assurance Control SDR Special Drawing Rights SME Small and Medium-sized Enterprise TSS Transitional Support Strategy

UNHCR United Nations High Commission for Refugees

Vice President: C. MadavoCountry Director E. MbiSector Manager C. Atta Mills

Task Team Leader/Task Manager: H. Fofack, Sr. Economist E. Nelson, Sr. Economist

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 45. Major Factors Affecting Implementation and Outcome 76. Sustainability 87. Bank and Borrower Performance 108. Lessons Learned 129. Partner Comments 1210. Additional Information 14Annex 1. Key Performance Indicators/Log Frame Matrix 18Annex 2. Project Costs and Financing 19Annex 3. Economic Costs and Benefits 20Annex 4. Bank Inputs 21Annex 5. Ratings for Achievement of Objectives/Outputs of Components 22Annex 6. Ratings of Bank and Borrower Performance 23Annex 7. List of Supporting Documents 24Annex 8. Consolidated Summary of Assessment 25Annex 9. Withdrawal/disbursement of Proceeds Following Tranche Releases 26Annex 10. Macroeconomic Indicators 27Annex 11. Additional. Borrower Contribution to ICR -- French Version 28

Project ID: P064556 Project Name: Emergency Economic Recovery CreditTeam Leader: Eric R. Nelson TL Unit: AFTP3ICR Type: Core ICR Report Date: April 27, 2004

1. Project DataName: Emergency Economic Recovery Credit L/C/TF Number: IDA-33370; PPFI-Q1690

Country/Department: BURUNDI Region: Africa Regional Office

Sector/subsector: General agriculture, fishing and forestry sector (20%); Health (20%); General education sector (20%); Housing construction (20%); General water, sanitation and flood protection sector (20%)

Theme: Conflict prevention and post-conflict reconstruction (P); Other social development (P); HIV/AIDS (S); Education for all (S)

KEY DATES Original Revised/ActualPCD: 02/08/1999 Effective: 06/14/2000 06/14/2000

Appraisal: 03/15/1999 MTR: 11/01/2001 03/15/2002Approval: 04/25/2000 Closing: 04/30/2002 10/30/2002

Borrower/Implementing Agency: GOVERNMENT/MINISTRY OF FINANCEOther Partners: None

STAFF Current At AppraisalVice President: Callisto E. Madavo Callisto E. MadavoCountry Director: Emmanuel Mbi Emmanuel MbiSector Manager: Cadman Atta Mills Luca BarboneTeam Leader at ICR: Eric Nelson Eric NelsonICR Primary Author: John W. Otieno

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: M

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:

3.1.1 The development objective of the Emergency Economic Recovery Credit (EERC) was to provide critical balance of payments support in an early post-conflict context, with the goal of providing resources to restore key imports and essential social services in a war-ravaged economy. The need to address the twin problems of acute shortage of foreign reserves and declining standards of living was recognized as an important element in the implementation of EERC in the post conflict period in Burundi. The program was designed to assist in the stabilization of the economy and recovery of the private sector. It also supported government efforts at rehabilitating health, education, agriculture and infrastructure as well as resettlement and reinsertion of refugees and internally displaced persons.

3.1.2 The EERC in the amount of $35 million equivalent was approved by the Executive Directors on May 8, 2000 following extensive borrower participation in its preparation. An initial tranche of about US$15.0 million was disbursed upon fulfillment of the conditions for credit effectiveness, and within less than six months (by mid-June, 2000) about US$ 30.0 million or 87.0 percent of the Credit amount had been disbursed.

Country Context

3.1.3 The objectives of the EERC for Burundi need to be assessed in the context of political, economic and institutional conditions prevailing in the country before the IDA credit was implemented. A detailed presentation of the political, economic and the institutional context of the EERC is provided in the last section of this document, titled Additional Information “ Country Background” and in EERC Technical Annex-Report No.T 7366 BU (March 23, 2000). Burundi was at an early stage of transition from a serious political crisis, marked by civil war in which thousands of people were killed or fled to neighboring countries. Production entities were also looted and economic and social infrastructure, particularly in health, education and agricultural sectors was badly damaged or destroyed. Ethnic tensions remained acute as the international community coalesced to promote peace and political stability in the war-torn country. These developments, together with the effects of trade sanctions imposed on Burundi from 1996-1999 by regional governments, resulted in the near-collapse of the economy. During the 1993-1999 civil strife the production of coffee, the main export product, collapsed and real GDP declined by 15 percent; industrial output declined by 60 percent in terms of value added; and foreign exchange reserves fell precipitously, from US$ 215.0 million to US$7.0 million (equivalent to 8 days of import cover compared to 8 months in the pre-crisis period). Arrears on debt service on domestic and external debt also increased significantly. Parallel to the decline of the economy, social indicators in Burundi worsened considerably. Governance infrastructure was seriously weakened as the country remained sharply divided along ethnic lines; the need for a political system based on the rule of law, transparency and accountability was greater than ever before, particularly if foreign investment and development assistance was to be encouraged. Thus, the EERC constituted an important instrument for promoting economic recovery, social development and stability. The lifting of the economic sanctions in 1999 opened the door for resumption of donor activities and provided further stimulus for the EERC.

3.1.4 The EERC was part of a multifaceted international effort to stabilize the Burundian economy in the aftermath of political turmoil and economic crisis. It was consistent with the Government’s economic recovery strategy as well as the Bank’s Interim Strategy, which emphasized a three-pronged approach to assist Burundi, comprising support for rehabilitating economic and social infrastructure, promoting employment, and financing essential imports to jump-start the economy and stimulate the private sector. In

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addition to IDA, other multilateral institutions provided balance of payments support during the early post-conflict period in Burundi in parallel with the EERC. These include the European Union (under the Stabex facility and a previously suspended structural adjustment program) and the IMF under its Emergency Post-Conflict Assistance policy. The various aspects of the IDA Credit, its implementation and performance assessment are presented in the remaining sections of this report.

3.2 Revised Objective:Project objectives remained unchanged; project design was not modified during the duration of the credit.

3.3 Original Components:The various components comprised (a) economic stabilization and recovery and (b) rehabilitation of economic and social infrastructure. Counterpart fund resources generated by the Credit were allocated to priority areas including health, education, agriculture, reintegration and resettlement of displaced persons and returning refugees, and settlement of past due government debt to private sector suppliers. Resources were also allocated to the Public Expenditure Review. Audit, project administration and management functions were also supported. The key components of the project were designed with substantial participation of the Borrower.

3.4 Revised Components:Project components were not modified during the implementation phase.

EERC Program Design

3.4.1 In terms of both conception and operational modalities, the EERC was designed as a quick-disbursing balance of payments support credit, intended to stabilize the economy and to provide additional resources for economic recovery. Accordingly, the EERC was designed to implement activities at the macro and sector levels, to achieve economic stabilization and sectoral rehabilitation as well as human resettlement and reintegration. Activities at the macroeconomic level were intended to achieve key objectives, including (a) improving the efficiency and transparency of foreign exchange allocation through the adoption of a market-based foreign exchange allocation system, (b) improving the environment for private sector development by encouraging production, trade and investment through increased availability of foreign exchange resources, and (c) increasing liquidity to further stimulate private sector activity through the settlement of past due obligations by the Government to its suppliers. At the sector level, the sale of foreign exchange to the private sector generated local currency or counterpart funds needed to finance social expenditures with a strong poverty alleviation focus in the priority areas of health, education and resettlement as well as infrastructure rehabilitation, particularly in the agricultural sector.

3.4.2 Appropriate implementation mechanisms were put in place to ensure a timely and smooth execution of the EERC. These included the need to fulfill conditions precedent to Credit effectiveness (as defined in the Development Credit Agreement), namely: (a) the establishment of a Credit Account or a Special Account with the Bank of Burundi, to which Credit proceeds would be disbursed; (b) the establishment of a Local Currency Account, to which counterpart funds resulting from auction sales of foreign currency would be deposited and (c) the formulation of operating or program manuals, comprising a Program Implementation Manual, a Foreign Exchange Auction Market Manual and a Local Currency Account Manual, defining the rules and procedures governing the operations of the various implementation mechanisms.

3.4.3 The implementation of EERC was underpinned by (a) the adoption of appropriate procurement

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procedures governing the purchase of goods and services required for Program implementation and (b) setting up appropriate mechanisms (i.e. Steering and Policy Committee and Technical Implementation Committee at the borrower level) designed to coordinate and implement program implementation with the participation of sector ministries and representatives of the private sector and NGOs.

3.5 Quality at Entry:Quality at entry was rated as satisfactory because of (i) consistency of objectives with the Bank’s Interim Strategy and Government’s priorities for poverty alleviation; (ii) incorporation of experiences and lessons learned under the previous Emergency Reintegration and Recovery Credit; (iii) the incorporation of lessons learned from other countries affected by conflicts such as Rwanda and the Balkans; and (iv) flexibility of Credit design, taking into account institutional constraints and risks and minimizing pressure on scarce borrower implementation capacities. The EERC was one of the three operations forming pillars of the Interim Strategy. It drew upon the Bank’s experience in dealing with conflict and post-conflict situations to curb further deterioration in socio-economic conditions, stabilize the economy and foster durable peace. The design of the EERC also benefited from extensive discussions at various stages both within and outside the Bank. (Refer to section 10 of this report for additional information).

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:The credit was rated as satisfactory in terms of its outcome and achievement of its development objectives. Indicators for assessing EERC performance included the timeliness of making foreign exchange resources available to the private sector operators to procure essential imports; and the generation of counterpart funds to support essential social services, resettlement of refugees and to jump-start the economy. Outside observers and analysts agree that the overall impact of the EERC is doubly positive in that, in its absence, the economy would have collapsed.

4.2 Outputs by components:4.2.1 The EERC objectives set at appraisal were, to a large extent, realized. The outputs and outcomes envisaged under the Program have been realized and are being sustained.

Macroeconomic and Public Finance Framework

4.2.2 Macroeconomic management was generally satisfactory. Economic performance was in line with the Government’s reform program supported under the IMF Post-Conflict Assistance Program. Improvements were visible in a number of key areas. First, real GDP growth rose to 2.1 percent in 2001 and to 4.5 percent in 2002, reversing two years of contraction. Second, the level of foreign exchange reserves rose from one week of import coverage to reach the equivalent of three months of imports in 2000 and maintained and increased this level in the following years. Third, the rate of inflation remained below target, at 3.5 percent per annum in 2002 while the budget deficit was reduced from 7.2 percent of GDP in 2001 to 5.7 percent of GDP in 2002. Fourth, tax and non-tax revenue rose to 20.3 percent of GDP by 2002, about equivalent to the best-run African economies. In particular, customs receipts or trade based revenue were projected to continue to rise following the rebound of the private sector in the aftermath of exchange rate reforms, the subsequent increase in foreign reserves, enhancement of liquidity through settlement of Government payment arrears to private suppliers and revitalization of agricultural production following the rehabilitation of agricultural infrastructure under the Credit.

4.2.3 Another achievement in the macroeconomic front was the improvement in the exchange rate regime. In July 2000, the Central Bank established a foreign exchange auction market, unifying the two previous exchange windows. The new procedure of weekly auctions of foreign exchange established a

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single official rate for all transactions. All foreign exchange sales of the Central Bank are now by transparent competitive auction. The convergence between official and parallel exchanges increased donor confidence and encouraged a significant increase in external assistance. This important development prevented the recurrence of balance of payments crises that characterized the period of the conflict and immediately therafter prior to the implementation of the EERC.

4.2.4 The near-collapse of the Burundian economy had been fuelled by deficit financing and the accumulation of a large amount of arrears by the Government to domestic suppliers. The Governments settlement of substantial arrears to suppliers using counterpart funds from the Credit generated liquidity and contributed to revitalize private sector activity. Total resources allocated to financing payment arrears to suppliers amounted to about US$7.3 million.

4.2.5 With regard to public expenditure management, audit and administration, EERC proceeds supported the Government’s efforts to improve public expenditure management, aimed to promote transparency and accountability in public sector financial management. The conduct of a Public Expenditure Review was applauded by donors, including the European Union, Belgium and France, who also championed an increased level of assistance to Burundi. Activities supported under this rubric included support to the Project Coordination Unit (PCU, including assistance for technical and financial management, procurement, monitoring and evaluation, general operational expenditures and project administration.

Social Indicators

4.2.6 Considering the degree of economic, political and social instability during the period of projectimplementation and the challenges associated with enlisting local participation in various activities, the achievements of the project are considered remarkable. Output targets for the health, education and agriculture sectors were substantially met over a shorter time frame than envisaged at appraisal. Overall, the outcome of the project can be rated as “Satisfactory”. Indications of economic and social conditions in Burundi are presented by the Burundian authorities in Annex 11.

4.2.7 The health component was rated satisfactory. Seven activities were included under this component, which were actively implemented by NGOs, the Ministry of Health, CAMEBU, PROCOBU, COPED, and other agencies in the face of extremely challenging political and security conditions. The project has made an important contribution in extending primary health care to the majority of the population in the affected areas by rehabilitating, building, or equipping health care facilities. Capacity improvements in local primary health care facilities also reduced the need for hospitalization. A recent economic evaluation of the project found that reduced morbidity led to lower demand for hospitalization. Infant mortality was reduced from 129 to 125 per 1,000 live deaths during the life of the project; hospital infections also declined significantly.

4.2.8 The implementation of the project resulted in the following outputs: (a) rehabilitation and re-equipment of 24 health centers, enabling the Government to re-establish health infrastructure and enhance accessibility to health services to pre-crisis levels; (b) replenishment of the stock of pharmaceutical products, enabling the Government to address the problem of acute scarcity of essential pharmaceutical products and insufficiency of health care that characterized the crisis era and promoting a decline in reported cases of infectious diseases such as diarrhea, cholera, bacterial dysentery, and epidemic malaria as well as cases of “exanthematic “ typhoid; (c) provision of essential small medical equipment and laboratory and test products to 40 health centers and the Blood Bank; and (d) support to HIV/AIDS and STD programs (while it is estimated that the HIV/AIDS infection rate dropped from 20 percent to 18 percent, it

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is unlikely that this decline was solely attributable to EERC related financing.). In this area, the Credit supported the establishment of a national machinery for the coordination of the campaign against HIV/AIDS and STDs. The Credit also financed: (i) the purchase and distribution of condoms; (ii) the installation of epidemiological surveillance through the provision of screening facilities at monitoring sites; (iii) the provision of facilities and services (food, medicines and education) to vulnerable groups, including orphans and sick people. (iv) assistance to populations afflicted by epidemics, such as malaria, by providing 240,000 locally fabricated mosquito nets; (v) provision of cleaning facilities in affected areas through the services of organizations such as COTEBU and LMTC; (vi) rehabilitation of water supply systems in health centers to prevent the widespread incidence of endemic diseases: and (vii) rehabilitation of housing facilities at health centers in order to improve working conditions for health workers.

4.2.9 The implementation of the education component was rated satisfactory. The objectives of this component were: (a) re-establishing and improving the rate of school enrollment; (b) restoring and improving the quality of instruction, and (c) enhancing good governance and equitable access to quality education. BPE, the Ministry of Education, NGOs and consultants implemented various activities under this component. BPE carried out activities under challenging political conditions and insecurity in the country. The six main outputs comprised: (1) 117 primary schools (compared to the target of 100) rehabilitated and equipped, and 360 classrooms reconstructed and re-equipped to provide capacity to accommodate 29,050 students; (2) textbooks provided to primary schools at a total cost of BuF 270 million; (3) 3,000 primary school teachers trained (compared to the target of 2,100); (4) On-the-job training to all directors and inspectors of primary schools (exceeding the target of 80 percent trained); (5) logistic materials and equipment (1 vehicle and 4 computers) provided to the Educational Planning Bureau; and (6) textbooks and laboratory equipment supplied to country high schools serving the groups most disadvantaged at a total cost of BuF 1,000 million and BuF 238 million, respectively.

4.2.10 The implementation of the agricultural component was rated satisfactory: Activities under this component comprised the following: (i) resettlement of displaced persons and returning refugees; (ii) rehabilitation of eight seed testing and multiplication centers operated by ISABU; and (3) environmental rehabilitation. Agricultural tools and seeds were provided to 10,000 displaced and repatriated households to facilitate their re-integration. Also, hundreds of hectares of forest shrubs and fruit trees were integrated into agricultural farming in the provinces of Karuzi, Kirundo, Cankuzo, Bubanza and Cibitoke.

4.2.11 The implementation of the re-settlement and re-integration component was rated moderately satisfactory. Activities under this component comprised the following: (i) support to the reconstruction of housing destroyed by conflict; and (ii) clean up of sites occupied by the affected populations. The lack of organization and procedures at both the grassroots and ministerial levels adversely affected the satisfactory delivery of materials to beneficiaries, thus compromising the full attainment of the objectives envisaged under this component. Consequently, only 10,000 houses were rebuilt (of the target of 30,000), while 16.55 km of drinking water supply pipes were reconstructed or rehabilitated and 2.98 Km of new pipes were installed.

4.3 Net Present Value/Economic rate of return:Not applicable

4.4 Financial rate of return:Not applicable

4.5 Institutional development impact:Besides laying the foundations for public administration reforms, the EERC supported reforms in the

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budgeting and resource allocation processes: (i) improvement of the budget process through functional and economic classification of expenditures, to strengthen the nexus between inputs and outputs; (ii) introduction of a double-entry accounting system, to facilitate budget analysis; (iii) an audit of Treasury operations and (iv) targeted interventions to increase the provision of essential social services to the poor.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:5.1.1 The achievement of EERC objectives were facilitated by two main factors. First, the

EERC benefited from a generally favorable international environment, characterized by renewed interest and support of a number of donors, particularly Belgium, France and the European Union. The Interim Strategy and EERC succeeded in creating a framework for greater donor assistance to the weak economy of Burundi. Second, the quick disbursement of significant balance of payments support to an economy barely emerging from conflict helped create a beneficial image of the country’s economic management abroad and of catalyzing other sources of development assistance. It is important to note that one of the reasons for program success was the positive lessons learned from similar operations in other countries, which provided a better insight for implementing a post-conflict economic recovery program for Burundi.

5.1.2 Three negative factors also affected program implementation. First, sporadic violence and political uncertainty continued throughout 2002. However, in 2003, Burundi moved closer towards political reconciliation and sustainable peace. Following an understanding reached in November 2003, the main rebel group that had refused to participate in the Arusha Peace Negotiations, the Forces for the Defense of Democracy (CNDD-FDD) joined the transition government. Under the comprehensive power-sharing plan, the various segments of society are represented in a balanced manner in both the executive and legislative branches of government. Second, poor export performance and adverse terms of trade shocks (partly due to falling international coffee prices) continued to dampen economic growth. Coffee, historically the main cash crop of Burundi, has provided 85 percent of export receipts, about 45 percent of GDP and 30 percent of government revenues over the last decade. The entrance of low-cost producers like Vietnam and the demise of the ICA has had the effect of depressing the international price of coffee and hence reducing the Burundi government’s fiscal base. After strong performance in 2002, economic growth has been projected at –1.0 percent in 2003 due to the effects of adverse weather on crop production. However, economic growth should improve in 2004 with the strengthening of the process of national reconciliation, improved security, and the reconstruction of physical and social capital damaged during the conflict. Third, growth and the success of the Government’s economic program was hampered by inadequate levels of balance of payments support by other donors and the absence of an IMF-supported program during the early phase of project implementation.

5.2 Factors generally subject to government control:An atmosphere of mutual trust between the Bank and the Borrower facilitated dialogue between

both parties at all stages of the project cycle. The Borrower showed a strong commitment to support the priority sectors of education, health, agriculture, and the reintegration and resettlement of refugees and displaced persons. The Government took swift action in appointing project staff; however, it was slow in replacing ineffective staff. The single most significant constraint to effective project implementation was the pervasive insecurity in some regions which frustrated prospects for increasing the geographic scope and coverage of the project.

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5.3 Factors generally subject to implementing agency control:The maintenance of a strong partnership with NGOs proved effective in implementing the project in insecure areas.

5.4 Costs and financing:The final total cost of the EERC was US$ 34.8 million, leaving US$ 200,000 undisbursed from the US$ 35.0 million Credit.

6. Sustainability

6.1 Rationale for sustainability rating:6.1.1 A program or project’s sustainability is its probable ability to maintain the achievements generally expected or envisaged to be generated over its economic life. The sustainability of the program supported by EERC is rated as likely. This and other ratings of the EERC are presented in Annex 5. In the Burundian context, the sustainability of achievements under the credit depends on a number of factors, such as (a) the ability of the Transition Government to build its institutional capacity and reinforce its efforts in national reconciliation and peace; (b) its ability to stay on track on the implementation of its reform program; and (c) the continued and increased flow of donor assistance. Burundi is heavily dependent on development assistance, which declined abruptly and greatly during the crisis period from over US$ 300 million in 1993 to US$ 48 million in 1999. Considerable progress has been made in achieving national reconciliation and re-integration in Burundi.

6.1.2 The establishment of an all-inclusive Government marked the most remarkable achievement on the political front. More recently, a peaceful transfer of power that witnessed the investiture of Domitien Ndayizeye as President under a Transitional Government took place. The first phase of the Transitional Government, under President Pierre Buyoya, provided the platform for dialogue with political factions that did not subscribe to the Peace Accord; the CNDD-FDD has since joined the Government. An African Peacekeeping Force, comprising South Africa, Ethiopia and Mozambique is now stationed in Burundi. Nonetheless, political developments and the security situation within the Great Lakes sub-region, particularly in the Democratic Republic of Congo, will continue to have spillover effects on Burundi.

6.1.3 Economic reforms initiated under the impetus of EERC, particularly those relating to exchange rate and public expenditure management, encouraged the adoption of other wide ranging reform measures with the support of the IMF and other donors. The second generation of reforms is intended to consolidate the gains associated with the implementation of EERC in four priority areas: governance, public expenditure management, private sector development, agriculture and rural development. Reforms being advanced by the Transitional Government include (i) the implementation of measures intended to strengthen the administration of public procurement; (ii) the creation of the Cour des Comptes, an Independent Audit Office vested with the power to combat fraud and corruption; (iii) the implementation of a tracking system to monitor the flow of public spending to specific facilities, projects or activities; (iv) the revision of commercial legislation, including labor and bankruptcy statutes and strengthening of commercial and arbitration mechanisms; and ( v) the pursuit of public enterprise privatization measures. These reforms were developed under the Interim PRSP and enjoy the support of the Bank, the International Monetary Fund and other donors. The political and economic situation in Burundi remains fragile and fluid and calls for continued support of the international donor community.

6.2 Transition arrangement to regular operations:6.2.1 The Bank’s assistance to Burundi during the post-conflict phase reflected two major challenges: the need for macro-economic stability, and the imperatives of emergency reconstruction and rehabilitation. The Bank’s Interim Strategy for Burundi included a number of complementary operations: (i) the Social Action

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Project (BURSAP II), supporting a participatory approach to the rehabilitation and provision of social and economic infrastructure (co-financed by a number of donors and involving NGOs); (ii) a Post-Conflict Grant fund supporting the re-settlement of displaced persons in partnership with the UNHCR through the financing of a community re-integration project; (iii) a labor-intensive public works program (ABURTIP); (iv) an Infrastructure (Roads) Rehabilitation Program; and (v) a Leveraged Insurance Facility for Trade (LIFT) to promote trade and investment. In parallel with progress being made in the achievement of peace and reconciliation, the Government of Burundi has placed increased emphasis on development priorities, particularly those relating to the pursuit of macroeconomic stabilization and economic recovery. The emphasis on the process of transition from conflict to peace, reconciliation, economic recovery and development is reflected in the Government’s Interim PRSP. These priorities are consistent with the vision of the Transitional Government and reflect the outcome of participatory consultations and dialogue. The defined priorities include: (i) re-establishing and reinforcing the quality of essential services in both health and education sectors; (ii) stabilizing the macro-economic framework and promoting faster and sustainable growth to accelerate poverty reduction; (iii) re-integrating the victims of conflict and other disadvantaged groups into the economy; (iv) stepping-up the anti-HIV/AIDS/STD crusade; (v) advancing the role of women in the development process; and (vi) promoting peace, security and good governance.

6.2.2 The Bank’s priorities in the post-conflict phase are reflected in the Transitional Support Strategy (TSS), discussed by the Board in March 2002. The TSS provided an exceptional IDA allocation to Burundi for the period 2003-2004. The TSS envisaged support in a number of operations, including an Economic Rehabilitation Credit (ERC). The TSS also emphasizes support for (i) demobilization and re-integration of ex-combatants, (ii) prevention of the spread of HIV/AIDS and supporting the provision of health services, (iii) pursuit of economic policy and institutional reforms to revitalize the economy and improve governance, and (iv) reinforcement of donor coordination and resource mobilization.

6.2.3 On August 29, 2002, the Board approved the ERC (Cr.24611-BU) to Burundi in the amount of SDR 40.8 million (US$ 54 million equivalent). The ERC will advance the TSS goal of consolidating the gains made under the Interim Strategy. The TSS envisages project assistance including (i) demobilization and reinsertion, (ii) a multi-sector capacity building project (economic management support), (iii) emergency road rehabilitation, (iv) HIV/AIDS/orphans and health & population project and (v) a social action project (BURSAP III). The last two projects were approved by the Board in FY02 and FY03; the three others were approved in FY04.

7. Bank and Borrower Performance

Bank7.1 Lending:7.1.1 Project preparation and appraisal benefited from the Bank’s experience in post-conflict reconstruction in other countries, intensive consultations with Government authorities, participation in the Arusha Peace negotiations and collaboration with the IMF and other development partners, including various UN relief agencies and NGOs. The first tranche of the Credit, approximately US$15 million, was concentrated on activities aimed at (a) alleviating the acute shortage of foreign reserves, (b) financing urgent import needs of the private sector, (c) financing urgent rehabilitation programs in health, education and agriculture and (d) supporting resettlement and re-integration of internally displaced persons and refugees.

7.1.2 The Bank devoted human and financial resources to each of the stages of the project cycle. These inputs are described in Annex 4. Performance as reflected in the rapid, timely and full availability of the counterpart resources produced by tranche releases is shown in Table 1 below.

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Table 1: Credit/Counterpart Fund Performance Component Planned

Disbursement (US$ million)

Actual Disbursement (US$ million)

Achievement Rate

(percent) Health 8.2 8.2 100.0 Education & Governance 7.5 7.5 100.0 Agriculture 4.5 4.5 100.0 Resettlement of refugees and IDPs 6.7 6.6 98.5 Settlement of arrears to suppliers 7.3 7.3 100.0 Audit & administration 0.8 0.7 87.5 All categories 35.0 34.8 99.4

7.2 Supervision:Supervision of the project was effectively carried out during the implementation phase, with close

collaboration of the Country Office. The Country Director’s Office provided substantial support, advice and guidance. The annual CPPR Review process led by the Country Director also helped the supervision. Bank staff reasonably assessed the risks associated with the implementation of the Program, particularly with regard to the introduction of new institutional and procedural processes. Potential factors likely to impede the smooth execution of the project (Section 5 above) were also anticipated by Bank staff, who, drawing upon lessons learned from similar operations and with close collaboration with the borrower, introduced appropriate remedial measures.

7.3 Overall Bank performance:Based on the foregoing assessment, the overall performance of the Bank is rated satisfactory.

Borrower7.4 Preparation:Government performance in the preparation of the program supported by the Credit was satisfactory. Between 1997 and 2000, the Government of Burundi made considerable progress on the political front by forging national reconciliation and promoting peace and security. A Transition Government established under the Arusha Peace Accord acceded to power in late 2001.

7.5 Government implementation performance:The Government demonstrated a strong commitment to the reform program envisaged in the EERC; this commitment was an essential ingredient for the successful implementation of the reform program. Interministerial coordination during project design and implementation was satisfactory, and contributed significantly to the progress achieved by the PCU in managing the Program, conducting timely financial audits and undertaking various administrative, financial and accounting functions associated with the Program.

7.6 Implementing Agency:During the early period, the PCU’s performance in financial management was slower than

expected. The lack of clarity in the definition of the functional responsibilities of the PCU at the very beginning of the Program was another reason for the identified weaknesses in the performance of its early role. However, once the staff acquired full familiarity with Bank procedures, its performance improved markedly for the remainder of the project’s life cycle. The PCU played a leading role in the preparation and subsequent adoption of internal action plans that underpinned project execution and implementation. The

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PCU generally performed well and is better equipped to manage the implementation of similar projects in the future.

7.7 Overall Borrower performance:In view of the progress and achievements made in project implementation within a relatively short

period of time against the background of a relatively difficult and fragile security situation in Burundi, the Government’s performance in the preparation and implementation of the Credit was rated satisfactory.

8. Lessons Learned

8.1.1 The Credit served as an effective instrument during the emergency and early post-conflict phases in Burundi. It assisted in jump-starting a failing economy, stimulated the private sector and helped the government provide essential social services (especially in education, health and agriculture) and to cope with the resettlement of displaced persons and returning refugees. It likely helped demonstrate to a wider public that the peaceful settlement of conflict was not leading instead to greater misery among the non-participants. The economic, political and social returns accruing from investment in such activities in a post-conflict country is considerable, especially in Burundi, where the total collapse of the economy seemed imminent, due to risks associated with an extremely fragile and volatile political environment. However, in order to be effective, project design and implementation needed to be sensitive to the prevailing circumstances.

8.1.2 The most important lesson emerging from the project is that in a crisis situation where the atmosphere of insecurity was pervasive, the degree of flexibility and devolution of responsibilities adopted at design stage of the project cycle greatly facilitated project implementation. The need to pay particular attention to “poverty alleviation” components of post-conflict programs cannot be overemphasized. The Bank’s requirement to include these as an integral part of any program proved beneficial in the case of Burundi.

9. Partner Comments

(a) Borrower/implementing agency:Government authorities expressed their satisfaction for the successful execution and completion of the project. (The Government’s contribution to the ICR (in French) is Annex 11). They also commended the role played by the implementation agencies and the PCU, all of which operated under extremely difficult conditions. Beneficiaries in the project areas expressed satisfaction for the project and recognized the positive impact on their living conditions brought about by the various completed projects in education, health, water supply, agricultural rehabilitation and resettlement of displaced persons and returning refugees. Prior to the closing of the project, the Burundian Government solicited additional assistance in the form of balance of payments support and were confident that lessons derived from the EERC would be useful in launching similar programs in the country in the future. The executing agencies also expressed their satisfaction with the role played by the Government in encouraging the provision of basic social infrastructure and expanding accessibility to these facilities by the population. Finally, the agencies also expressed satisfaction at the constructive and facilitative role assumed by the Bank in both the design and implementation stages of the project.

(b) Cofinanciers:There was no cofinancing of EERC components. However, the objectives of the project benefited from a number of simultaneous and complementary activities financed in parallel by the European Union, Belgium and France. During interview discussions with donor representatives, the consensus was that the collaboration with the Bank was generally satisfactory and was greatly facilitated by regular consultations initiated by the Team Leaders.

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(c) Other partners (NGOs/private sector):A number of NGOs were willing to operate in a highly fragile and insecure environment during the implementation of the Program. These organizations made a positive assessment of the Bank’s role, particularly in helping the government to finance activities benefiting the rural population throughout the country. They commended the participatory approach adopted for the implementation of the components of the Program, in which beneficiaries made contributions in kind, such as materials and labor. However, a shortcoming of this approach was the delay in project implementation arising from the difficulty of participating beneficiaries in making timely contributions. Early administrative problems such as unfamiliarity with the Bank’s procedures resulted in some disbursement delays on contracts with the PCU. The NGOs expressed the opinion that while routine maintenance of project-financed investments should be the responsibility of beneficiaries, there was an urgent need to include financing for periodic maintenance in the investment budget of activities financed by counterpart funds.

(d) Overall Assessment of Project OutcomeThe outcome of the EERC was, to a large extent, satisfactory. The Credit supported macroeconomic, sector, social and institutional policy reforms and contributed to specific programs having a poverty alleviation focus. Economic recovery was assisted by the provision of quick disbursing foreign exchange resources needed for urgent financing of private sector imports and settlement of Government arrears to private sector suppliers. The establishment of a foreign exchange auction system and the subsequent generation of local currency or counterpart funds were intended to support the Government’s social sector rehabilitation and resettlement of displaced persons and returning refugees. The EERC supported the economic growth process by financing the stabilization program through the provision of foreign exchange resources, the rationalization of the foreign exchange regime, the provision of liquidity to the private sector, the rehabilitation of priority health, education and agricultural sectors and resettlement of human capital. Improvements in the macro economic policy front made possible by the Credit stimulated new or additional assistance and disbursement from other donors, particularly the European Union, Belgium and France. The upturn in Burundi’s economic performance has led in turn to a “virtuous circle” of rising government revenues, decreasing fiscal and external deficits and resumption of development assistance.

10. Additional Information

10.1 Burundi is a small landlocked country. With a population of just over 7 million (growing at 2.9 percent), its population density of 215 persons per square kilometer is the second highest in Africa. Since independence in 1962, Burundi, has experienced a volatile political situation, fuelled by ethnic tensions between two major ethnic groups: the Hutus, representing over four fifth of the population and the Tutsis, representing the minority group. The most serious civil strife erupted in 1993, when the assassination of the democratically elected President Ndandaye and the Speaker of the National Assembly triggered massive violence resulting in the murder of over 250,000 people and the displacement of thousands of people during the eight-year long civil war. The number of internally displaced persons and refugees is estimated at about 1.2 million, most of whom fled to Tanzania. The economic decline accompanying the civil war saw GDP per capital falling from $ 180 in 1993 to $ 110 in 1999, significantly below the $490 average for Sub-Saharan Africa.

10.2 The social costs of the protracted conflict were also significant. Poverty, already a widespread phenomenon in Burundi, increased sharply between 1993 and 1999; the headcount index reached 68.7 percent from 40 percent in the pre-conflict period. The deterioration in the standard of living was countrywide in scope but was much more pronounced in the urban areas. Social indicators and outcomes reflected the deterioration in social welfare. HIV/AIDS has become one of the major causes of mortality in the adult population during the post-conflict period and a major factor in the rise in mortality rates from

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110 per 1000 live births to 116 in 2000. This indicator is significantly above the average for Sub-Saharan Africa, which stands at 92. The epidemic is affecting people in their most productive years; the proportion of adults dying before age 40 increased significantly in the 1990s. In rural areas the HIV prevalence rate increased from less than 1 percent to 6 percent between 1989 and 1998, while in urban areas, it increased from 11 percent to 20 percent during the same period. The number of people living with HIV/AIDS was about 360,000 in the 15-49-age group and 19,000 for those under 15 in 1999. There are 558,000 orphans in Burundi, about 195,000 of whom are believed to have been orphaned by HIV/AIDS.

10.3 The conflict also had a negative impact on other dimensions of well-being. The number of victims of malaria, the leading cause of death, has increased. Both malaria and HIV/AIDS pandemic are largely responsible for the decline in life expectancy, which fell from an already low level of 51 years in 1993 to less than 42 in 2000. Access to safe water and health services remained extremely low, at less than 48 percent and 20 percent, respectively. In the education sector, gross primary enrollment fell to 51 percent from 68 percent in 1992 while the repetition rate increased from 13 percent to 17 percent.

10.4 The high social and economic costs of the conflict prompted the international community to assist Burundi in the search for peace by establishing a framework for national reconciliation and durable peace. These efforts culminated in the conclusion of the Arusha Peace Accord, signed in Arusha, Tanzania, in August 2000. A power sharing Government was inaugurated on November 1, 2001 in accordance with terms of this Accord. The Transitional Government was vested with the responsibility to administer the country during a 36-month transition period, at the end of which democratic elections would be conducted. The transitional period had two phases in power sharing arrangements. Pierre Buyoya, a Tutsi, led the transitional government for a period of 18 months, from November 1, 2001 to April 30, 2003. On this date, Domitien Ndayizeye, the Hutu Vice-President in the first Transitional Government, succeeded President Buyoya. This second phase of the transitional period is scheduled to end through general elections in November 2004.

10.5 The configuration of the Transitional Government, which was highly inclusive, is also reflected in the structure of the leadership governing the second phase of the Transition. This leadership has been making remarkable progress, particularly in addressing the various development challenges and consolidating the gains since the signing of the Arusha Peace Accord and the implementation of transitional arrangements. In particular, some of the challenges include: fostering inclusiveness, peace and security, promoting national reconciliation and good governance, resettling and reintegrating displaced persons and other victims of conflict, rehabilitating destroyed economic and social infrastructure, revitalizing the economy and strengthening human resource capacities. In addition to recent progress on the political front, and despite the sporadic violence, the progress made and the consolidation of gains have been significant in the areas of rehabilitation of economic and social infrastructure, reintegration and resettlement of victims of conflict and displaced persons, reengagement with development partners. In particular, with the support of the international community, Burundian authorities rehabilitated a schools and educational facilities to provide essential social services to the poor and vulnerable groups and to redress historic ethnic imbalances in access to services. They also supported the rehabilitation of community housing to facilitate the reinsertion and reintegration of victims of conflicts and returning refugees. By end of December 2002, over 10,000 houses had been either rehabilitated or reconstructed, and over 100 destroyed primary schools had been rehabilitated and become operational. The Transitional Leadership has also been implementing a number of reforms, notably in the areas of governance, exchange rate and public expenditure management.

10.6 Burundi has always been highly dependent on external assistance, and became even more so during the crisis period. Despite the resumption of international assistance, and increased donor commitment after

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the signing of the Arusha Peace Accord, the economic recovery process remains vulnerable as the political situation continues to be fragile and the level of development assistance remains significantly below pre-crisis levels. The country’s high and unsustainable external debt burden, reflected in the accumulation of arrears on both private and public debt have resulted in a significant reduction in external resource flows into Burundi.

10.7 In the face of declining external capital flows and the emerging development challenges, Burundian authorities prepared a post-conflict development strategy, emphasizing short-term humanitarian relief and emergency assistance with multi-medium-term reconstruction and longer-term reconciliation and sustainable development. The strategy underpinned a number of economic reforms, in governance, public expenditure management, liberalization, economic growth, clearance of domestic arrears to private suppliers and provision of foreign exchange for financing key imports essential for growth, monetary and exchange rate management, particularly the unification of exchange rate regimes. The Bank’s Interim Strategy to assist Burundi during the period 1999-2001 was discussed by the Board of Directors in October 1999. That strategy was designed to support the Government reform program. The Interim Strategy rested upon three pillars: (i) the promotion of governance and ownership through participation in rehabilitation and reconciliation, (ii) the creation of productive employment in support of restoring purchasing power, and (iii) restoring key imports to support private sector activities and restoring minimum levels of essential social services. The Interim Strategy and specifically, the third pillar provided the basis for the EERC.

10.8 Burundian authorities presented the Government Transitional Strategy (GTS) for the period 2001-2003 to the international community at an international donor conference in December 2000. The GTS stressed continued implementation of economic reforms, the need for social inclusion and a participatory approach to development, a policy at variance with the actions carried out in the pre-crisis period, when most benefits of growth accrued to a small and privileged segment of the population, largely living in the urban areas. In particular, the strategy placed emphasis on an increased role for the private sector and consolidation of gains in reforms undertaken so far. The Strategy included the following key components: (i) support for agriculture and rural development; (ii) private sector development; (iii) good governance and improved public expenditure management; and (iv) human resource development.

10.9 The reforms initiated by the Burundian authorities and supported by the Bank, together with the EERC facility were instrumental in reviving donor interest in the country. An IMF-backed Staff Monitored Program (SMP) was put in place during the second half of 2001. This led to financing under the IMF’s Post-Conflict Assistance policy. The level of pledges made by donors at the Paris conference was substantially increased at the Geneva Round Table Meeting in December 2001, bringing the total amount of pledges to US$830 million. The Bank’s Board endorsed a Transitional Support Strategy (TSS) in March 2002 to lend further support to the Government’s reform program. The TSS was underpinned by a number of operations, including the US$54 million ERC approved by the Board in August 2002. A Multilateral Donor Trust Fund was established to mobilize resources to help service Burundi’s external debt to multilateral institutions (IDA, AfDB and IFAD). This marked another important step in revitalizing the role of external donors and stimulating the flow of international assistance to the country. With the completion of preparation of the Interim Poverty Reduction Strategy Paper (PRSP) during 2003 fiscal year, the Government has laid the foundation for eventual assistance under the Highly Indebted Poor Countries (HIPC) Initiative.

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Annex 1. Key Performance Indicators/Log Frame Matrix

Indicator /Matrix Projected at Appraisal Actual Outcome Qualitative Macro Indicators: (i)Macro stabilization

(ii)Foreign exchange allocation (iii)Private sector development

(i) Promote economic stabilization. (ii)Improve efficiency in the allocative process. (iii)Lay the foundation for private sector development.

(i) Achieved by Board approval of EERC to provide quick disbursing assistance needed to “jump-start” the economy. (ii)Achieved by establishing a market base allocative system through a local foreign exchange auction market. (iii)Achieved by settling Government past due debts to the private sector through payments to private sector suppliers-thereby injecting liquidity and stimulating private sector growth.

Qualitative Sectoral Indicators: (i) Health sector development (ii) Educational development (iii) Agricultural development (iv) Human Settlement (v) Institutional Development

(i) Rehabilitate the health sector (ii) Rehabilitate the education sector. (iii) Rehabilitating the agricultural sector. (iv) Resettling internally displaced persons and returning or repatriated refugees. (v) Improving public expenditure management.

(i) Achieved by (a) reconstructing health care facilities, including health centers and water supply systems (b) financing the procurement of urgent pharmaceutical products and health equipment. (ii) Achieved by (a) reconstructing primary and secondary school classrooms (b) financing the procurement of school textbooks and other materials;(c) supporting teacher training program and (d) providing institutional support such as training supervisory and inspectorate staff and strengthening educational planning bureau. (iii) Accomplished by (a) resettling people in farming areas; (b) providing agricultural equipment and farming materials; (c) restocking the livestock population and (d) rehabilitating seedling centers reconstructing rural access roads. (iv) Accomplished by constructing 30,000 houses to resettle affected persons and providing basic facilities for productive self-employment. (v) Accomplished by financing a Public Expenditure Review exercise intended to improve budgeting and public resource allocation processes.

Note: Due to its nature and conception, the project was not a standard project and did not have precise quantitative benchmarks.

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Annex 2. Project Costs and Financing

Allocation of Counterpart Resources by Activity (Government activities funded by auction of Foreign Exchange under Project)

Estimated Cost at Appraisal

% of Total Cost

Actual Cost % of total % Variance on Appraisal Estimates

Health 6,130 13.76Education and Good Governance 5,620 12.62Agriculture 3,345 7.51Resettlement 5,000 11.22Settlement of Arrears to private sector suppliers 5,509 12.37Audit & Administration 646 1.45Sub-Total 26,250.00 58.93Sectoral Components

Health Sector 6,130.00 13.76Rehabilitation/Re-equipment of Health Centers 1,100 2.47Replenishment of the current stock of pharmaceutical products

900 2.02

Provision of Small medical equipment, laboratory supplies and blood testing paper for the Blood Bank

165 0.37

Support Against Aids 505 1.13Support against Endemic/epidemic diseases 2,800 6.29Water Supply Rehabilitation for Hospitals and Health Centers

550 1.23

Incentives for Workers in Rural Areas 110 0.25Education Sector 7,350.00 16.50Rehabilitation and Equipment of Primary Schools 2,500 5.61Supply of Textbooks for Primary Schools 700 1.57Training for Primary School Directors and Inspectors 120 0.27Support for the Education Planning Bureau 30 0.07Equity and Good Governance 2000 4.49Acquisition of Textbooks for High Schools 1,500 3.37Acquisition of Laboratory Materials for Village/County High Schools

500 1.12

Agricultural Sector 3,345.00 7.51Support for Resettlement of Displaced Persons and returning Refugees

1,815 4.07

Rehabilitation of ISABU Seedling Centers 110 0.25Rehabilitation of Rural Trails and Feeder Roads 1,200 2.69Environment Rehabilitation 220 0.49Resettlement and Re-integration 1,470.00 3.30Purchase of Materials 3,530 7.92Number of Houses 0.00Site-clean up 1,470 3.30Sub-Total

TOTAL PROGRAM COST 44,545.00 100.00Note: Exchange Rate: 1IS$=BuF 600 (March 1999)

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Annex 3. Economic Costs and Benefits

Not applicable

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation3/15/99-6/25/99

2111111111

EconomistsHealth sector specialistProcurement specialistEducation specialistCounselFinancial mgmt expertEducation specialistCounselYoung professional Program assistant

S S

Appraisal/Negotiation2/05/00-2/23/00 2

11

EconomistsCounselDisbursement specialist

S S

Supervision6/15/02 2

111

EconomistsProcurement specialistCountry ManagerFinancial mgmt specialist

S S

CPPR 5/02 Country Team incl. CD S S

ICR12/15/03 1 Economist S S

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 48 125.6Appraisal/Negotiation 36 84.2Supervision 20 220.0ICR 8 60.0Total 112 489.8

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

Not applicable

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Additional Annex 8. Consolidated Summary of Assessment

A; Achievement of Objectives

High Substantial

Modest

Negligible

Not Applicable

Macro Policies v Sector Policies Financial Objectives v Institutional Development v Physical Objectives v Poverty Reduction v Gender Issues v Other Social Objectives v Environmental Objectives v Public Sector Management

v

Private Sector Development

v

B.Project Sustainability Likely Unlikely Uncertain v C.Bank Performance Highly

Satisfactory Satisfactory Deficient

Lending v Supervision v Overall v D. Borrower Performance Preparation v Implementation v Implementation Agencies v Overall v E. Assessment of Outcome

Overall v

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Additional Annex 9. EERC Withdrawal/Disbursement of Proceeds

Disbursement Date Amount (US$million)

Cumulative Disbursement (US $millions)

Cumulative Disbursement (%)

June 00 14.9 14.9 43.52Sept 00 7.89 22.79 66.57Nov 00 6.95 29.74 86.85May 01 2.51 32.25 94.19March 02 1.18 33.43 97.63May 02 0.46 33.88 98.97Oct 02 0.24 34.12 99.65Nov 02 0.02 34.14 99.71

Cumulative Disbursement Pattern 2000-2002

14.9

22.79

29.7432.25 33.43 33.88 34.12 34.14

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

June 00 Sept 00 Nov 00 May 01 March 02 May 02 Oct 02 Nov 02

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Additional Annex 10. MACROECONOMIC INDICATORS- BURUNDI

TABLE: BURUNDI KEY ECONOMIC INDICATORS 1998-20051997 1998 1999 2000 2001 2002 2003 2004 2005

Macroeconomy Nominal GDP (bill. Burundi francs) 342.8 400.2 455.4 511 550 584.6 640.7 716.5 793.1Real GDP growth (%) 0.4 4.8 -1 -0 .9 2.1 4.5 - 1 5.1 5.3Inflation (end of period) (%) 26.6 -1 20.7 14.1 3.9 3.5 9 5.5 4.8Gross investment/GDP (%) 6.8 5.6 9 6 7.5 9 10.3 11 11.4Gross national savings/GDP (%) 4 -1.9 2.9 -4 0.7 2.5 4.9 0.4 1.2

Public FinanceRevenue (excluding grants)/GDP (%) 13.6 17.1 16.3 19.2 20 20.3 20.2 19.9 20Total expenditure and net lending/GDP (%) 21.8 23.7 25.3 24.2 27.2 25.9 29.4 29 27.5Primary budget balance/GDP (%) -0.5 0.7 -0 .8 2.2 -0.8 2.2 -0.3 0 0.8Overall balance (excluding grants)/GDP (%) -8.3 -6.6 -9 .1 -4 .9 -7.2 -5 .7 -9.2 -9.2 -7.5Overall balance (including grants)/GDP (%) -5.3 -5.7 -6 .6 -1 .8 -5.2 -1 .4 - 4 -7 -5

Trade Exports, f.o.b. (in U.S. dollars) 115.4 -26.9 -14 -10.7 -20.2 -20.3 49.8 -30.6 36.5Imports, f.o.b. (in U.S. dollars) -3.8 28.5 -21.3 10.8 0.5 -4 .2 22.7 8.8 5Terms of trade (%) -8.7 19.5 0.3 -22.2 -21 0.1 -2.8 4.4 2.9Current account balance /GDP (%) -2.8 -7.5 -6 .1 -10 -6.8 -6 .5 -5.3 -10.6 -10.2Official reserves (in months of imports, c.i.f.) 12.3 5.9 5.8 4.1 2.3 5.9 5.9 6.5 6.3

Debt Stock of debt ($ million) 1077.5 1127.3 1099.3 1077.7 1057.7 1119.3 1215 1194.1 1209.6 Debt-service ratio (% of exports) 59.2 76.2 76.2 84.1 105.3 157.2 86.6 123.7 85 Exchange rate (Burundi francs per U.S. dolla r) 408.4 505.2 628.6 778.2 864.2 1,071 1,073 ... ...Sources: Government of Burundi, IMF, and Bank staff estimates

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