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Guinea-Bissau AFRICAN DEVELOPMENT BANK GROUP Authorized Disclosure GUINEA-BISSAU Public ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING SUPPORT PROJECT (PARGEF) OSGE/GECL DEPARTMENTS Public DisclosurePublic Authorized July 2015 Translated Document TABLE OF CONTENTS I STRATEGIC THRUST AND RATIONALE .................................................................... 1 1.1 Project Linkages with Country Strategy and Objectives ............................................ 1 1.2 Rationale for Bank Intervention .................................................................................. 1 1.3 Aid Coordination ......................................................................................................... 3 II PROJECT DESCRIPTION ................................................................................................ 4 2.1 Project Component ...................................................................................................... 4 2.2 Technical Solutions Adopted and Alternatives Explored ........................................... 6 2.3 Project Type ................................................................................................................ 6 2.4 Project Cost and Financing Arrangements ................................................................. 6 2.5 Project Area and Beneficiaries .................................................................................... 8 III PROJECT FEASIBILITY ................................................................................................ 11 3.1 Economic and financial performance ........................................................................ 11 3.2 Environmental and social impact .............................................................................. 11 3.3 Climate change .......................................................................................................... 11 IV IMPLEMENTATION ....................................................................................................... 12 4.1 Implementation Arrangements .................................................................................. 12 4.2 Monitoring ................................................................................................................. 13 4.3 Governance ................................................................................................................ 14 4.4 Sustainability .............................................................................................................. 15 4.5 Risk Management ...................................................................................................... 15 4.6 Knowledge Building .................................................................................................. 15 V LEGAL FRAMEWORK .................................................................................................. 16 5.1 Legal Instrument ....................................................................................................... 16 5.2 Conditions Associated with the Intervention of the Bank and the Fund ................... 16 5.3 Compliance with Bank Policies ................................................................................ 16 VI RECOMMANDATION ................................................................................................... 16 Annex 1: Comparative Socio-Economic Indicators of the Country Annex 2: Status of AfDB Portfolio Annex 3: Reasons for Requesting a Waiver Allowing Bank Financing of the Full Project Cost Annex 4: Map of Project Area LIST OF TABLES No. Title Pages 2.1 Project Components 5 2.2 Alternatives Considered and Reasons for Rejection 6 2.3 Estimated Cost by Component 7 2.4 Project Cost by Expenditure Category 8 2.5 Expenditure Schedule by Component 8 2.6 Expenditure Schedule by Expenditure Category 8 2.7 Lessons Learned from Previous Bank Operations in the Country 10 4.1 Monitoring Milestones and Feedback Loop 14 4.2 Risks and Mitigation Measures 15 Currency Equivalents February 2015 UA 1 = CFAF 782.767 UA 1 = EUR 1.19332 UA 1 = USD 1.44881 Fiscal Year 1 January – 31 December Weights and Measures 1 metric tonne = 2204 pounds 1 kilogramme (kg) = 2.200 1 metre (m) = 3.28 feet 1 millimetre (mm) = 0.03937 inch 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres Abbreviations and Acronyms ADF African Development Fund AfDB African Development Bank ANP National Popular Assembly BCEAO Central Bank of West African States CA Central Procurement Office CC Court of Auditors CEDAW Convention on the Elimination of All Forms of Discrimination Against Women CEM Country Economic Memorandum CFE Centre for the Formalisation of Enterprises - One-Stop Shop TSA Treasury Single Account CPIA Country Policy and Institutional Assessment CSP Country Strategy Paper CSP Country Strategy Paper DGB Directorate General of the Budget DGCF Directorate General of Finance Control DGCI Directorate General of Contributions and Taxation DGD Directorate General of Customs DGED Directorate General of Economy and Development DGP Directorate General of the Plan DGT Directorate General of the Treasury ECF Extended Credit Facility ECOWAS Economic Community of West African States ENA National School of Administration EU European Union GAP Strategic Framework and Governance Action Plan GDP Gross Domestic Product GII Gender Inequality Index, GPN General Procurement Note HIPC Heavily Indebted Poor Country i IGF General Finance Inspectorate IMF International Monetary Fund MAE Ministry of Foreign Affairs MEF Ministry of Economy and Finance MTEF Medium-Term Expenditure Framework NPO National Programme Office NPRSP National Poverty Reduction Strategy Paper OHADA Organisation for the Harmonisation of Business Law in Africa PARCA Public Administration Capacity Building Support Project PCE State Accounting Plan PECA Economic Development and Aid Coordination Support Project PEFA Public Expenditure and Financial Accountability PEMFAR Public Expenditure Management and Financial Accountability Review PFM Public Finance Management PFS Public Finance Support Project PIU Project Implementation Unit PPP Public-Private Partnership PRCGE Economic Management Capacity Building Project PUARB Fiscal Reform Emergency Support Programme PUAREF Emergency Support Programme for Economic and Financial Reforms RAF Administrative and Financial Officer RCU Reforms Coordination Unit SBDs Standard Bidding Documents SIGFIP Integrated Public Finance Management System SNFO Senegal Field Office SPN Special Procurement Notice TFPs Technical and Financial Partners TSF Transition Support Facility UA Unit of Account UAM Millions of Unit of Account UNDP United Nations Development Programme WADB West African Development Bank WAEMU West African Economic and Monetary Union ii PROJECT INFORMATION SHEET Client Information BORROWER: Republic of Guinea-Bissau EXECUTING AGENCY: Ministry of Economy and Finance Financing Plan Source Amount Instrument (UA million) TSF 5.00 Grant TOTAL COST 5.00 Key AfDB Financial Information Grant Currency UA Interest Type* N/A Interest Rate Margin* N/A Commitment Fee* N/A Other Costs* N/A Maturity N/A Grace Period N/A FRR, NPV (baseline scenario) N/A ERR (baseline scenario) N/A *if applicable Timeframe – Key Milestones (expected) Identification NA Preparation December 2014 Concept Note Approval January 2015 Evaluation February 2015 Country Team March 2015 Project Approval April 2015 Effectiveness June 2015 Last Disbursement June 2019 Completion July 2019 Last Repayment N/A iii Project Summary Overall Project Project Name / Number: Economic and Financial Governance Strengthening Support Project (PARGEF)/ Overview SAP Id. P-GW-K00-005. Geographical Reach: Nationwide General Schedule: 48 months, from July 2015 to June 2019 Financing: UA 5.00 million (TSF Grant) Operational Instrument: Institutional Support Project Needs For more than a decade, Guinea-Bissau was dogged by political instability, a situation which led to a deeply Assessment and dysfunctional public administration. Institutional capacity in terms of public finance management was thus Relevance severely weakened and Guinea-Bissau's performance in the area of governance and anti-corruption efforts was very weak. The latest financial management assessments pointed to the need to embark on major reforms, particularly in the monitoring of budget execution and modernization of financial services. In this context, the country’s main challenge is to emerge from fragility and it is, therefore, important to strengthen the rule of law and State institutions. To that end, improving governance is deemed critical to buoying up private sector dynamism and potential as well as fostering the participation in reform and public spending control. Increased involvement of non-State actors offers an opportunity to strengthen resilience. PARGEF is part of a concerted and urgent effort by the international community to restore the rule of law and promote economic recovery. Expected The expected outcomes of this project are (i) reduced impunity through easy access to justice, civil society Outcomes organisations (CSOs) trained to better play their role as watchdogs, strengthened and operational Court of Auditors following the amendment of its Organic Law, the drafting decrees of implementation of this Court and the training of 34 employees (including 10 women); (ii) a full and correct implementation of WAEMU directives on the oversight exercised by State authorities, particularly over the DGCF, IGF, DGP and ARMP; (iii) increased
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