World Bank Document
Total Page:16
File Type:pdf, Size:1020Kb
Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: P7589-MOR INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROGRAM DOCUMENT FOR A Public Disclosure Authorized PROPOSED ADJUSTMENT LOAN Ir THE AMOUNT OF m.5 MILLION (us$ioo MILLION EQUIVALENT) TO THE KINGDOM OF MOROCCO FOR A PUBLIC ADMINISTRATION REFORM ADJUSTMENT LOAN Public Disclosure Authorized June 4,2004 Social and Economic Development Group Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group Public Disclosure Authorized authorization. CURRENCY EQUIVALENTS (As ofMay 2004) Currency Unit = MAD MAD 1 = US$O.lO US$l.OO =MAD 9.172 FISCAL YEAR January 1-December 3 1 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CED Expenditure Commitment Control (Contr6le des Engagements de Dkpenses) ESW Economic Sector Work EU European Union FDI Foreign Direct Investment GDP Gross Domestic Product IBRD International Bank for Reconstruction and Development IGF General Inspector ofFinance (inspection gknkrale des$nances) IGM Ministries’ General Inspectorates (inspection gkndrale des ministgres) IMF International Monetary Fund IT Information technologies MoF Ministry ofFinance MTEF Medium-Term Expenditure Framework OED Operations Evaluation Department PARL Public Administration Reform Adjustment Loan PER Public Expenditure Review PJD Parti de la Justice et du Dkveloppement PM Prime Minister SAL Structural Adjustment Loan TGR Kingdom’s General Treasurer (Trdsorerie G&nkraledu Royaume) USA United States ofAmerica VAT Value Added Tax Vice-president: Christiaan Poortman Sector Director: Mustapha K. Nabli Country Director: Theodore Ahlers Task Team Leader: Pierre Demangel FOR OFFICIAL USE ONLY INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROGRAM DOCUMENT FOR A PROPOSED PUBLIC ADMINISTRATION REFORM ADJUSTMENT LOAN TO THE KINGDOM OF MOROCCO TABLEOF CONTENTS LOANAND PROGRAM SUMMARY ................................................................................................... i I. COUNTRYAND ECONOMICCONTEXT ..................................................................................... 1 A . Country Context .................................................................................................................. 1 B. Political and Economic Developments ............................................................................... 2 C. Public Sector and Governance Issues ................................................................................ 4 D. Medium-Term Macroeconomic Prospects and Fiscal Sustainability ............................. 5 11 . THE GOVERNMENT’SREFORM PROGRAM............................................................................. 9 A . Objectives ofthe Program.................................................................................................. 9 B. Government’s Past Reform Activities .............................................................................. 10 C. The Government’s Present Reform Program................................................................. 11 1. Improving the Eflciency ofBudget Management ......................................................... 11 2 . Improving the Administration’s EfJiciency in Human Resource Management .............12 3 . Keeping the Wage Bill under Control ........................................................................... 14 111. THE PROPOSED PUBLIC ADMINISTRATION REFORM ADJUSTMENTLOAN (PU) ........ 14 A . Loan Objectives and Description..................................................................................... 14 B. Loan Rationale ................................................................................................................... 14 C . Earlier Bank Assistance and Lessons Learned............................................................... 15 D. Institutional Arrangements with Government ............................................................... 16 E. Coordination with other Donors ...................................................................................... 16 F. Benefits and Risks.............................................................................................................. 17 ANNEXES Annex I: Letter of Development Policy Annex 11: Policy Matrix Annex 111: List ofMeasures Taken by the Borrower under the First Phase of the Program Annex IV: IMF Morocco-2004 Article IV Consultation .Summing Up Annex V: Morocco At A Glance Annex VI: Operations Portfolio Annex VII: Morocco PARL Task Team This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. KINGDOM OF MOROCCO PUBLIC ADMINISTRATION REFORM ADJUSTMENT LOAN (PAW Loan and Program Summary Borrower: Kingdom ofMorocco Amount: €82.5 million (USSlOO million equivalent) Terms: Libor-based Fixed Spread Loan, commitment linked, annuity maturity type, repayable in 20 years, including five years ofgrace period. Description: The objectives of the proposed program are to support the Government’s efforts to improve the effectiveness of public resource management, a key step for accelerated growth and poverty reduction. It includes: (i)improving the efficiency of budget expenditure by de-concentrating expenditures and accountability to enable greater flexibility to regional administrations, and by introducing performance budgeting and auditing; (ii)implementing a reform of the civil service based on enhancing efficiency and service quality; and (iii)ensuring a sustainable macro framework, by controlling inter alia the magnitude ofthe civil service payroll. Based on an agreed set of public administration reforms, the Bank will provide resources to the Government. The proposed loan would be the first in a series of annual programmatic loans supporting the implementation of the reform program. The proposed loan would complement and strengthen the ongoing multi-year Economic and Sector Work (ESW) activity through which the Bank is providing the Government with advice, training and technical assistance as required in the areas of budgetary management and civil service. It is closely coordinated with the European Union: program content, conditions and trigger points are common to the two institutions. Benefits: By addressing the key constraints affecting the effectiveness of public service delivery, the proposed operation would contribute to the key goals of private sector development and poverty reduction. By helping keep the wage bill under control, it will help ensure macroeconomic stability. It would help provide the practical budgetary framework necessary to implement the Government’s administrative decentralization orientation. From the Bank’s point of view, this operation would provide an example across the region ofhow to address these important issues. i Risks: One important risk is that the Government would not be able to resist pressures to increase salaries for various categories of civil servants, and significantly undermine the improvement in the fiscal balance that allowed us to move to the base case CAS scenario. This risk is being mitigated by the reform program itself, combined with the reformist stamp of the Government. Another risk is that the implementation of the reforms would be stalled, as was the case in the past, because of the silo mentality in Government and opposition from interest groups. The risk is mitigated by the political coordination put in place by the new Cabinet to implement reforms, and also by the strategic policy dialogue pursued between Moroccan authorities and the Bank. Also, we are planning, along with key partners, extensive supervision of the implementation of the reforms, together with the knowledge sharing and technical assistance entailed by a continuation ofthe programmatic ESW operation. Disbursements: The proposed Loan would be disbursed in one installment upon Loan effectiveness. Project ID No: PO78565 Map: IBRD 3 1437 11 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROGRAM DOCUMENT FOR A PUBLIC ADMINISTRATION REFORM ADJUSTMENT LOAN TO THE KINGDOM OF MOROCCO 1. The proposed adjustment loan to the Kingdom of Morocco for €82.5 million (US$lOO million equivalent) will contribute to financing the Public Administration Reform Program. The objectives of the proposed loan are to support the Government’s efforts to improve the effectiveness of public resource management, a key step for accelerated growth and poverty reduction. They include: (i)improving the efficiency ofbudget expenditure by de-concentrating expenditures and accountability to enable greater flexibility to regional administrations, and by introducing performance budgeting and auditing; (ii)implementing a reform of the civil service based on enhancing efficiency and service quality; and (iii)ensuring a sustainable macro framework by controlling inter alia the magnitude of the civil service payroll. It is closely coordinated with the European Union (EU): program content, conditions and trigger points are common to the two institutions. The European Commission considers a support in the form of a Structural Adjustment Grant, with yearly tranches. The borrower has requested that the Loan be Libor-based Fixed Spread Loan, commitment linked, annuity maturity type, repayable in 20 years, including five