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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 47712-PY INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROGRAM DOCUMENT FOR A PROPOSED Public Disclosure Authorized FIRST PUBLIC SECTOR PROGRAMMATIC DEVELOPMENT POLICY LOAN IN THE AMOUNT OF US$lOO MILLION TO THE REPUBLIC OF PARAGUAY Public Disclosure Authorized March 31,2009 Poverty Reduction and Economic Management Argentina, Chile, Paraguay and Uruguay Country Management Unit Latin America and the Caribbean Region Public Disclosure Authorized 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. REPUBLIC OF PARAGUAY FIRST PUBLIC SECTOR PROGRAMMATIC DEVELOPMENTPOLICY LOAN Paraguay - Government Fiscal Year January 1 - December 3 1 Currency Equivalents Weights and Measures Metric System ABBREVIATION AND ACRONYMS AAA Analytical and Advisory Activities AGPE Auditoria General del Poder Ejecutivo (Internal Audit Ofice of the Executive Power) AI1 Auditoria Institucional Interna (Institutional Interal Audit) ANDE Administracidn Nacional de Electricidad (National Power Authority) ANN7 Administracidn Nacional de Administracidn y Puertos (National Port Authority) ANTELCO Adminstracidn Nacional de Telecomunicaciones (National Telecom Administration) APC Alianza Patridtica para el Cambio (Patriotic Alliance for Change) BCP Banco Central de Paraguay (Paraguay’s Central Bank) CAPASA Caiias Paraguayas Sociedad Anonima CAS Country Assistance Strategy CEDLAS Centro de Estudios Distributivos, Laborales y Sociales (Center for Distributive, Labor and Social Studies) CEP Consejo de Empresas Publicas (Council for State-Owned Enterprises) CGR Contraloria General de la Republica (National Comptroller General) CLYFSA Compaiiia de Luz y Fuerza Sociedad Andnima (Electricity Company) CONATEL Comision Nacional de Telecomunicaciones (National Telecommunication Commission) COPACO Compafiia Paraguaya de Comunicaciones Sociedad Anhima (Paraguay Communications Company) CORPOSANA State water company cos0 Committee ofSponsoring Organizations oftheTreadway Commission CPI Consumer Price Index CPS Country Partnership Strategy DDO Deferred Drawdown Option DGEEC Direccidn General de Estadisticas, Encuestas y Censos (General Directorate for Statistics, Surveys and Census) DGT Direccih General del Tesoro (General Treasury Directorate) DINAC Direccion Nacional de Aeroniutica Civil (National Aerospace Authority) DNA Direccidn Nacional de Aduanas (National Customs Office) DPL Development Policy Loan EC European Commission ERSSAN Ente Regulador de Servicios Sanitarios (Sanitation Regulator) ESSAP Ente Regulador de Servicios Sanitarios (Water Supply and Sewarage Authority) FOR OFFICIAL USE ONLY FCCAL State national railway FEPASA Ferrocarriles del Paraguay Sociedad Anonima (Paraguay Railways) FLOMERPASA Flota Mercante Paraguaya Sociedad Anonima FOCEM Fondo para la Convergencia Estructural del MERCOSUR (MERCOSUR Structural Convergence Fund) FY Fiscal Year GDP Gross Domestic Product GDPP General Directorate for Public Procurement GNI Gross National Income Gs. Guaranies (Paraguay local currency) GTZ German Organization for Technical Cooperation HHRR Human Resources HRM Human Resources Management IDB Inter-American Development Bank IFA Integrated Fiduciary Assessment IF1 International Financial Institution IGR Institutional and Governance Review IMAGRO Impuesto a la Renta de Actividades Agropecuarias (Agricultural Income Tax) IMF International Monetary Fund INC Industria Nacional del Cement0 (National Cement Industry) INTOSAI International Organization of Supreme Audit Institutions IRACIS Impuesto a la Renta Comercial y de Sewicios (Corporate Income Tax) IRP Impuesto a la Renta Personal (Personal Income Tax) JICA Japan International Cooperation Agency LAFE Ley de Administracidn Financiera (Financial Administration Law) LAPSA Lineas Adreas Paraguayas Sociedad Andnima (Paraguay Airlines) LTU Large Tax Payer Unit M&E Monitoring and Evaluation MDA Ministries, Departments and Agencies MDG Millenium Development Goals MECIP Modelo Estandar de Control Interno del Paraguay (Paraguay Standard Model of Internal Control) MERCOSUR Mercado Comun del Sur (Southern Common Market) MIDEPLAN Ministerio de PlanQ3cacidn de Chile (Minister of Planning of Chile) MOF Ministry of Finance NDP National Development Program OECD Organization for Economic Co-operation and Development OPBP Operation Policy/Bank Procedure PA1 Plan Anual de Inversidn (Annual Investment Plan) PC Partido Colorado (Colorado Political Party) PDPL Programmatic Development Policy Loan PEFA Public Expenditure and Financial Accountability PETROPAR Petrdleos Paraguayos (Paraguayan Oils) PFM Public Financial Management PIP Programa de Inversidn Publica (Public Investment Program) PR Procurement ROSC Report on the Observance of Standards and Codes SBA Stand-By Arrangements SENASA Sewicio Nacional de Saneamiento Ambiental SET Subsecretaria de Estado de Tributacidn (Undersecretariat of Taxes) SFP Secretaria de la Funcion Publica (Public Administration Secretariat) SIABYS Sistema Integrado de Administracidn de Bienes y Sewicios (Integrated Goods and Sewices Management System) 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. SIAF Sistema Integrado de Administracibn Financiera (Integrated Financial Magement Information System) SIARE Sistema Integrado de Administracibn de Recursos del Estado (Integrated System of State Resources) SICCA Sistema Integrado de Control de Cumplimiento de la Carrera Administrativa (Integrated Compliance Control of Administrative Carrer) SIC0 Sistema Integrado de Contabilidad (Integrated Accounting System) SICP Sistema Integrado de las Contrataciones Publicas (Integrated Public Procurement System) SIGADE Debt Management System SINARH Sistema Integrado Nacional de Recursos Humanos (National Integrated Human Resources System) SIPP Sistema Integrado de Programacion Presupuestaria (Integrated System of Budget Programming) SISPLAN Sistema de Planijkacibn (Planning System) SITE Accounting System SNIP Sistema Nacional de Inversion Publica (National Public Investment System) SOEs State-Owned Entrerprises STP Secretaria Tdcnica de Planeamiento (Technical Secretariat of Planning) TI Transparency International TSA Treasuvy Single Account UAF Unidad de Administracibn Fianciera (Financial Management Unit) UNACE Partido Unibn Nacional de Ciudadanos Eticos (National Union of Ethical Citizens Party) uoc Unidad Operativa de Contrataciones (Operational Procurement Units) USAID United States Agency for International Development VAT Value-Added Tax WE3 World Bank WI World Bank Institute WHO World Health Organization Vice President: Pamela Cox Country Director: Pedro Alba Sector Director Marcel0 Giugale Sector Manager: Nick Manning Task Team Leader: Alexandre Arrobbio Co-Task Team Leader: Jasmin Chakeri ACKNOWLEDGEMENTS The First Public Sector Programmatic Development Policy Loan (PDLPI) was prepared by a World Bank team led by Alexandre Arrobbio (Task Team Leader), Jasmin Chakeri (Co-Task Team Leader), and including Henri Fortin, Jeffrey Rime, Enrique Fanta, Mariano Lafuente, Maria del Carmen Mifioso, Mariangeles Sabella, Fernando Lorenzo, Federico Guala, Marcelo Barg, AngClica Vanoli, Patricia Holt, and Mariela Alvarez. The team gratefully acknowledges the support and guidance of Pedro Alba, Nick Manning, Marcelo Giugale, Todd Crawford, Rodrigo Chaves, Lily Chu, David Yuravlivker, Felipe Saez, Rossana Polastri, Alejandro Santos (IMF), Patricia Alonso-Gam0 (IMF), Montford Mlachila (IMF), Andrea Lemgruber (IMF), Ricardo Varsano (IMF), Luis de la Plaza, Patricia Mackenzie, Ed Mountfield, Barbara Mierau-Klein, Genevieve Boyreau, Robert Ragland Davis, Reynaldo Pastor, Ariel Fiszbein, Rafael Rofman, Juan Martin Moreno, AndrCs Pizarro, Verhica Raffo, Maria Angelica Sotomayor, Marco Arena, Peter Hansen, Graciela Sanchez Martinez, Maria Masutti, Pedro Luis Rodriguez, Gloria Dure, Karem Edwards and the reviewers of the Regional Operations Committee who provided valuable comments. The peer reviewers were Jim Parks, Tony Verheijen, Robert Beschel and Rajeev Swami. The team acknowledges and is grateful for the collaboration of the Paraguayan authorities. REPUBLIC OF PARAGUAY PROGRAMMATICDEVELOPMENT POLICY LOAN TABLE OF CONTENTS I. INTRODUCTION............................................................................................................................. 1 I1. COUNTRY CONTEXT .................................................................................................................. 1 Political Context ............................................................................................................................. 1 Structural Constraints ..................................................................................................................... 2 Recent Economic Developments ..................................................................................................... 3 I11. THE GOVERNMENT’S PROGRAM ....................................................................................... 11 IV. BANK SUPPORT TO THE GOVERNMENT’S PROGRAM ................................................ 12 Link to CPS ..................................................................................................................................
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