Senegal - Third Multi-Sectoral Structural Reforms Development Policy Financing (P170366)
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The World Bank Senegal - Third Multi-Sectoral Structural Reforms Development Policy Financing (P170366) Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: PGD111 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT DOCUMENT FOR A PROPOSED DEVELOPMENT POLICY CREDIT IN THE AMOUNT OF EURO 161.4 MILLION (US$180.0 MILLION EQUIVALENT) Public Disclosure Authorized TO THE REPUBLIC OF SENEGAL FOR THE THIRD MULTI-SECTORAL STRUCTURAL REFORMS DEVELOPMENT POLICY FINANCING November 21, 2019 Public Disclosure Authorized Energy and Extractives Global Practice Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official Public Disclosure Authorized duties. Its contents may not otherwise be disclosed without World Bank authorization. The World Bank Senegal - Third Multi-Sectoral Structural Reforms Development Policy Financing (P170366) Republic of Senegal GOVERNMENT FISCAL YEAR January 1 – December 31 CURRENCY EQUIVALENTS (Exchange Rate Effective as of October 31, 2019) Currency Unit = CFAF US$1.00 = 588.03812839 CFAF US$1.00 = 0.89645899 EURO US$1.00 = 0.72495813 SDR ABBREVIATIONS AND ACRONYMS The World Bank Senegal - Third Multi-Sectoral Structural Reforms Development Policy Financing (P170366) ADIE State Informatics Agency (Agence de l’Informatique de l’État) AfDB African Development Bank ANSD National Statistics and Demographics Agency (Agence Nationale de la Statistique et de la Démographie) ARTP Telecommunications and Postal Services Regulator (Autorité de Régulation des Télécommunications et des Postes) ASA Advisory Services and Analytics BCEAO Central Bank of Western African States (Banque Centrale des Etats de l’Afrique de l’Ouest) CFAF Financial Community of Africa (Communauté financière d'Afrique) Franc CGU Single Global Contribution (Contribution Globale Unique) CNN National Consultative Council (Conseil National du Numérique) COP Conference of the Parties CPF Country Partnership Framework CRSE Regulatory Commission for the Electricity Sector (Commission de Regulation du Secteur de l’Eléctricité) DE4A Digital Economy for Africa DGID Tax Administration (Direction Générale des Impôts et Domaines) DPF Development Policy Financing DSA Debt Service Assessment DSF Debt Sustainability Framework EBITDA Earnings before Interest, Taxes, Depreciation and Amortization ECOWAS Economic Community of West African States EPAF Public Autonomous Entity (Etablissement Publique à Autonomie Financière) ESPS Senegal Poverty Monitoring Survey (Enquête de suivi de la pauvreté au Sénégal) EU European Union FDI Foreign Direct Investment FSE Energy Sector Support Fund (Fonds Spécial De Soutien au Secteur de L'Énergie) FSRU Floating Storage and Regasification Unit GDP Gross Domestic Product GEP Global Economic Prospects GHG Greenhouse Gas DPO Development Policy Operation HCI Human Capital Index HFO Heavy Fuel Oil IBRD International Bank for Reconstruction and Development ICT Information and Communications Technology IDA International Development Association IFC International Finance Corporation IFRS International Financial Reporting Standards IMF International Monetary Fund IPP Independent Power Producer ISP Internet Service Provider KfW German Development Bank (Kreditanstalt für Wiederaufbau) LDP Letter of Development Policy LESDP Letter of Energy Sector Development Policy LFI Initial Budget Act (Loi de Finances Initiale) LFR Budget Amendement Act (Loi de Finances Rectificative) LMIC Lower Middle-income Country LNG Liquified Natural Gas M&E Monitoring and Evaluation MCC Millennium Challenge Corporation MCTPEN Ministry of Communication, Telecommunications, Posts and Digital Economy (Ministère de la Communication, des Télécommunications, des Postes et de l'Economie Numérique) MFB Ministry of Finance and Budget (used interchangeably with Ministry of Finance and Budget or MOF) MFD Maximizing Finance for Development MIGA Multilateral Investment Guarantee Agency MOF Ministry of Finance (used interchangeably with Ministry of Finance and Budget or MFB) MPE Ministry of Energy (Ministère du Pétrole et des Energies) MSME Micro, Small and Medium-sized Enterprises MTEF Medium-Term Expenditure Framework NPL Non-performing loan OMVG Gambia River Basin Development Organisation (L'Organisation pour la Mise en Valeur du fleuve Gambie) OMVS Senegal River Basin Development Organisation (L'Organisation pour la Mise en Valeur du Fleuve Sénégal) PAP Priority Action Plan (Plan d’Actions Prioritaires) PCI Policy Coordination Instrument PDO Program Development Objective PER Public Expenditure Review PSE Emerging Senegal Plan (Plan Senegal Emergent) PV Photovoltaic RE Renewable Energy RMA Maximum Allowed Revenue (Le Revenu Maximum Autorisé) SCD Systematic Country Diagnostic SDR Special Drawing Rights SENELEC Electricity Utility of Senegal SME Small to medium sized enterprise SSA Sub-Saharan Africa SSN Senegal Digital Strategy (Stratégie Sénégal Numérique) SOE State owned enterprise SPV Special Purpose Vehicle TCO Municipal Tax for Energy (Taxe Communale sur les Consommations d'Energie) TER Regional Express Train (Train Express Regional) ToT Terms of trade UNFCCC United Nations Framework Convention on Climate Change USF Universal Service Fund VAT Value-added Tax WAEMU West African Economic and Monetary Union WAPP West African Power Pool WB World Bank WBG World Bank Group . Regional Vice President: Hafez M. H. Ghanem Country Director: Nathan M. Belete Global and Regional Director: Riccardo Puliti Practice Manager: Charles Joseph Cormier Mustafa Zakir Hussain, Arthur Denis Pascal Foch, Markus Task Team Leaders: Kitzmuller, Laurent Olivier Corthay The World Bank Senegal - Third Multi-Sectoral Structural Reforms Development Policy Financing (P170366) REPUBLIC OF SENEGAL SENEGAL - THIRD MULTI-SECTORAL STRUCTURAL REFORMS DEVELOPMENT POLICY FINANCING TABLE OF CONTENTS SUMMARY OF PROPOSED FINANCING AND PROGRAM .......................................................................3 1. INTRODUCTION AND COUNTRY CONTEXT ...................................................................................5 2. MACROECONOMIC POLICY FRAMEWORK ....................................................................................7 2.1. RECENT ECONOMIC DEVELOPMENTS ........................................................................................... 7 2.2. MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY ...................................................... 14 2.3. IMF RELATIONS ........................................................................................................................... 19 3. GOVERNMENT PROGRAM ........................................................................................................ 19 4. PROPOSED OPERATION ............................................................................................................ 21 4.1. LINK TO GOVERNMENT PROGRAM AND OPERATION DESCRIPTION .......................................... 21 4.2. PRIOR ACTIONS, RESULTS AND ANALYTICAL UNDERPINNINGS .................................................. 22 4.3. LINK TO CPF, OTHER BANK OPERATIONS AND THE WBG STRATEGY .......................................... 48 4.4. CONSULTATIONS AND COLLABORATION WITH DEVELOPMENT PARTNERS ............................... 51 5. OTHER DESIGN AND APPRAISAL ISSUES .................................................................................... 52 5.1. POVERTY AND SOCIAL IMPACT .................................................................................................... 52 5.2. ENVIRONMENTAL ASPECTS ......................................................................................................... 55 5.3. PFM, DISBURSEMENT AND AUDITING ASPECTS .......................................................................... 55 5.4. MONITORING, EVALUATION AND ACCOUNTABILITY .................................................................. 57 6. SUMMARY OF RISKS AND MITIGATION ..................................................................................... 58 ANNEX 1: POLICY AND RESULTS MATRIX .......................................................................................... 61 ANNEX 2: LETTER OF DEVELOPMENT POLICY ..................................................................................... 70 ANNEX 3: ENVIRONMENT AND POVERTY/SOCIAL ANALYSIS ............................................................ 99 ANNEX 4: CLIMATE CHANGE ADAPTATION CO-BENEFITS ................................................................ 103 ANNEX 5: WORLD BANK STRATEGY IN THE ENERGY SECTOR IN SENEGAL ........................................ 106 ANNEX 6: CONTEXT ON ICT SECTOR ............................................................................................... 119 ANNEX 7: CONTEXT ON DIGITAL ECONOMY IN SENEGAL ................................................................. 123 Page 1 The Third Multi-Sectoral Structural Reforms Development Policy Financing (DPF) for the Republic of Senegal was prepared by an International Development Association (IDA) team led by Mustafa Zakir Hussain (Task Team Leader (TTL) and Lead Energy Specialist, IAFE2) and including Arthur Foch (co-TTL and Senior Digital Development Specialist, IDD02), Markus Kitzmuller (co-TTL and Senior Economist, EA2M1), Laurent Olivier Corthay (co-TTL and Senior Private Sector Specialist, EA2F1), Manuel Luengo (Senior Energy Specialist, IAFE2), Ewa Klimowicz (Consultant, IAFE2), Johan Mistiaen (EA2DR), Alioune Fall (Consultant, IAFE2), Nicholas Elms (Consultant, IAFE2), Petra