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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 74161-TG INTERNATIONAL DEVELOPMENT ASSOCIATION PROGRAM DOCUMENT FOR A PROPOSED CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 9.2 MILLION (US$14 MILLION EQUIVALENT) TO THE REPUBLIC OF TOGO FOR THE SIXTH ECONOMIC GROWTH AND GOVERNANCE CREDIT (EGGC-6) Public Disclosure Authorized November 6, 2013 Poverty Reduction and Economic Management 4 Public Disclosure Authorized Country Department AFCF2 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 authorization. CURRENCY EQUIVALENTS As of November 1, 2013 Currency Unit = CFA Franc (CFAF) US$1 = 485 C.F.A. FISCAL YEAR January 1 – December 31 ABBREVIATION AND ACRONYMS AfDB African Development Bank AFRITAC East Africa Regional Technical Assistance Center API/ZF Agence de Promotion des Investissements / Zone Franche (Investment Promotion Agency / Free Zone) BCEAO Banque Centrale des États de l’Afrique de l’Ouest (Central Bank of West African States) BIA-T Banque Internationale pour l'Afrique au Togo (International Bank for Africa) BNPP Bank-Netherlands Partnership Program BTCI Banque Togolaise pour le Commerce et l’Industrie (Togolese Commerce and Industry Bank) BTD Banque Togolaise de Développement (Togolese Development Bank) CAGIA Centrale d’Achat et de Gestion des Intrants Agricoles (Centre for the Purchase and Management of Agricultural Inputs) CEB Communauté Electrique du Benin (Electric Company of Benin) CEET Compagnie d’Energie Electrique du Togo (Togo Electric Energy Company) CEM Country Economic Memorandum CFAF Franc of the African Financial Community CPA Comprehensive Political Agreement CPAR Country Procurement Assessment Report CPS Country Partnership Strategy DGE Direction Générale de l’Economie (General Directorate of Economy) CPDS Cadre Permanent pour le Dialogue et la Concertation (Permanent Framework for Dialogue and Reconciliation) DGSCN Directorate Générale de la Statistique et de la Comptabilité Nationale (General Directorate of Statistics) DNCMP Direction Nationale de Contrôle des Marchés Publics (National Department for the Oversight of Public Procurement) DPO Development Policy Operation DSA Debt Sustainability Analysis EC European Commission ECF Extended Credit Facility ECOWAS Economic Community of West African States EI Extractives Industry EITI Extractive Industry Transparency Initiative EGGC Economic Growth and Governance Credit ERGC Economic Recovery and Governance Credit ERGG Economic Recovery and Governance Grant ESDP Energy Services Delivery Project ESW Economic and Sector Work i EU European Union FAD Fiscal Affairs Department FDI Foreign Direct Investment FZ Free Zone GDP Gross Domestic Product FNGPC Fédération Nationale des Groupements de Producteurs de Coton (National Federation of Cotton Producer Groups) GEF Global Environment Facility HIPC Heavily Indebted Poor Countries HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficient Syndrome IBRD International Bank for Reconstruction and Development IDA International Development Association ICR Implementation Completion Report IGE Inspection Générale de L’Etat (State Finance Inspectorate) IGF Inspection Générale des Finances (General Finance Inspectorate) IMF International Monetary Fund IPP Independent Power Producers ISN Interim Strategy Note ISP Internet Service Provider MDG Millennium Development Goal MDRI Multilateral Debt Relief Initiative MEF Ministry of Economy and Finance MTEF Medium-term Expenditure Framework MVNO Mobile Virtual Network Operator NSCT Nouvelle Société Cotonnière du Togo (New Togo Cotton Company) OECD/DAC Organization for Economic Cooperation and Development/Development Assistance Committee OHADA Organization for the Harmonization of Business Law OTR Office Togolais de Recettes (Togo Revenue Authority) PAL Port Autonome de Lomé (Lomé Autonomous Port Company) PAP Plan of Priority Actions PASA Agriculture Sector Support Project PEFA Public Expenditure and Financial Accountability PEMFAR Public Expenditure Management and Financial Accountability Review PER Public Expenditure Review PFM Public Financial Management PPA Program Preparation Advance PRSP Poverty Reduction Strategy Paper QUIBB Questionnaire Des indicateurs Base Du Bien-Etre RPT Rassemblement du peuple togolais (Togolese People’s Rally) SDR Special Drawing Rights SIGFIP Système Intégré de Gestion des Finances Publiques (Integrated Public Financial Management System) SIGMAP Information Management System for Public Procurement SNPT Société Nouvelle des Phosphates de Togo (New Phosphate Company of Togo) SYGADE Système de Gestion et d'Analyse de la DEtte (Debt Analysis and Management System) SOTOCO Société Togolaise de Coton (Togo Cotton Company) TA Technical Assistance TFP Total Factor Productivity ii TFSCB Trust Fund for Statistical Capacity Building TOFE Tableaux des Opérations Financières de l’Etat (State Finance Operations Tables) UN United Nations UNDP United Nations Development Program UNFPA United Nations Population Fund UTB Union Togolaise de Banque (Togolese Bank’s Union) VAT Value-Added Tax WACS West Africa Cable System WAEMU West African Economic and Monetary Union WAPP West African Power Pool WARCIP West Africa Regional Communication Infrastructure Program WEO World Economic Outlook Vice President: Maktar Diop Country Director: Madani M. Tall Sector Director: Marcelo Giugale Sector Manager: Miria Pigato Task Team Leader: Johannes Hoogeveen iii REPUBLIC OF TOGO SIXTH ECONOMIC GROWTH AND GOVERNANCE CREDIT TABLE OF CONTENTS CREDIT AND PROGRAM SUMMARY ............................................................................................... VI 1. INTRODUCTION ................................................................................................................................ 1 2. TOGO’S DEVELOPMENT CHALLENGES AND PROSPECTS ................................................. 3 A. Background .................................................................................................................................... 3 B. Recent Economic Developments ................................................................................................... 8 C. Macroeconomic Outlook and Debt Sustainability ....................................................................... 12 3. THE GOVERNMENT’S REFORM PROGRAM ........................................................................... 15 4. BANK GROUP’S SUPPORT TO THE GOVERNMENT'S PROGRAM .................................... 16 A. Link to the Interim Strategy Note and the Africa Strategy .......................................................... 16 B. Complementarity with Other Bank Group Activities ................................................................... 17 C. Complementarity with Other Development Partner Programs .................................................... 18 D. Analytical Underpinnings ............................................................................................................ 19 E. Lessons Learned ........................................................................................................................... 21 5. THE PROPOSED SIXTH ECONOMIC GROWTH AND GOVERNANCE CREDIT .............. 22 A. Description of the Operation ........................................................................................................ 22 B. Prior Actions for EGGC-6 ............................................................................................................ 40 C. Anticipated Results of the Program ............................................................................................. 41 6. OPERATION IMPLEMENTATION ............................................................................................... 42 A. Country Ownership ...................................................................................................................... 42 B. Fiduciary Aspects ......................................................................................................................... 42 C. Credit Administration, Disbursement and Auditing ..................................................................... 43 D. Environmental Aspects ................................................................................................................ 43 E. Poverty and Social Impact ............................................................................................................ 44 F. Monitoring and Evaluation ........................................................................................................... 46 G. Risks and Risk Mitigation ............................................................................................................ 46 List of Annexes: Annex 1: Letter of Development Policy .................................................................................................... 49 Annex 2: Government Policy Matrix ......................................................................................................... 75 Annex 3: IMF Relations Note .................................................................................................................... 78 Annex 4: Status of Anticipated Results of the fifth ERGC ........................................................................ 80 Annex 5: Debt Sustainability Analysis (2011)..........................................................................................