PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: 74925 Project Name MA- Support to New Governance Framework (P143979) Region MIDDLE EAST AND NORTH AFRICA Country Morocco Sector(s) General public administration sector (50%), Central government administration (30%), Sub-national government administration (20%) Lending Instrument Specific Investment Loan Project ID P143979 Borrower(s) Ministry of Economy and Finance, Ministry Charged with Relations with Parliament, Ministry of Interior Implementing Agency Ministry of General Affairs and Governance, Environmental Category C-Not Required Date PID Prepared 15-Jan-2013 Estimated Date of Appraisal 25- Jan-2013 Completion Estimated Date of Board 11 February 2013 (Transition Fund Steering Committee) Approval Concept Review Decision 15 January 2013 Other Decision (as needed) I. Introduction and Context Country Context 1. Morocco is a middle-income country with a population of 32 million and a per capita income of US$ 3,100 (2011). Over the past decade, Morocco has made progress towards achieving its millennium development goals (MDG) and has sustained a growth rate of 4.9 percent and a stable macroeconomic framework despite adverse external shocks. Extreme poverty has been reduced but the country still faces important development challenges and thus seeks to enhance the effectiveness of its public policies and investments. 2. Development challenges have fueled demands for reform to strengthen governance, citizen voice and government accountability. Popular demands have been acknowledged in the transition process and have translated into the main components of the new Constitution, in which governance reforms feature prominently. In March 2011, the King announced the launch of a comprehensive process of political, institutional, and social reform that led to the revision of the constitution and to new elections. On July 1, 2011, the new constitution was adopted which introduced reforms improving Morocco’s governance framework through greater checks and balances between the legislative, executive, and judicial branches. More specifically, the Constitution introduced reforms to: (i) strengthen the role of Parliament through greater legislative powers and increased oversight over the government; (ii) elevate the role of the Prime Minister to that of Head of Government, to be nominated by the political party winning a parliamentary election; (iii) enhance the independence of the Judiciary as a power that is autonomous from both the Executive and the Legislative; (iv) strengthen citizen’s rights, including public participation and the right to access public information; (v) strengthen consultative bodies and accountability of institutions, including the National Council for Human Rights, the Ombudsman, and the Anti-corruption Agency, and (vi) establish far-reaching regionalization as a democratic and decentralized system of governance. A section of the constitution (articles 12 to 15) empowering civil society and strengthening its involvement in the management of public affairs is a direct response to recent protests and popular demands for better governance and inclusion. Furthermore, the constitution includes new provisions empowering regions by upgrading them to directly elected local governments (article 135), reinforcing public participation to improve local governance (articles 136 and 139) and strengthening fiscal decentralization (articles 141 and 142). These new provisions further support the new strategy for Advanced Regionalization aiming to improve social and economic development at the local level and reduce geographical and social disparities. 3. These recent constitutional changes represent the road map for Morocco’s transition process and lay out the deep and comprehensive medium-term reforms required to accomplish it. For example, in addition to improving the delivery of public services, these important constitutional changes present an opportunity to directly address the longstanding governance challenges affecting the country’s socioeconomic development policies nationwide and at the local level. The important changes introduced in the mandates and functions of Parliament required the renewal of representatives through early elections, which were held on November 25, 2011, in which the Justice and Development Party (PJD) won 107 out of 395 seats in the nationwide vote. The PJD then formed a coalition government in early January 2012, with its leader becoming the Head of Government, as foreseen by the new constitution. Sectoral and Institutional Context 4. In response to the demands of the Arab Spring, the new government prepared a program that aims to establish a more open and inclusive governance framework to help strengthen the development process and improve the delivery of public services. While many areas under this project are not new, the new government program includes a set of progressive measures which are reinforced by renewed political support and an improved enabling environment. The 2012-2016 government program, which was presented to Parliament on January 26, 2012, is structured around five key pillars, including: (i) deepening national identity and social cohesion; (ii) the rule of law and advancement of regionalization and governance; (iii) job creation and economic development; (iv) national sovereignty and social development; and (v) improving access to social services for all Moroccans. 5. The government program is strongly anchored in the new Constitutional provisions. It introduces transparency, accountability, and participation as three essential facets to effective public sector management. The government program focuses on a number of governance reforms relating to the delivery of public services, access to information and public engagement, reform of the fiscal system, budget reform, decentralization, and a profound emphasis on the justice sector. Improving the transparency of economic and financial governance is given particular mention with the strengthening of the competition counsel and improving governance of state-owned enterprises. 6. The proposed project aims to support the government with the implementation of critical reforms which, together, will help to strengthen the country’s overall governance framework and make tangible the new Constitutional principles derived from popular demands of the Arab Spring. The Bank is supporting this governance reform program through various instruments, most notably in the framework of the Accountability and Transparency Development Policy Loan (DPL) which supports the adoption of new laws and policies, as well as through parallel technical assistance financing the design of these new policies and the implementation of new right to access public sector information. Furthermore, in focusing on reforms that improve the Executive while strengthening Parliamentary oversight, this project complements a parallel World Bank Justice Sector reform project which aims to improve the transparency and performance of the Judiciary. The Bank’s current engagement is thus designed as a holistic approach which helps to strengthen the three pillars of Morocco’s governance framework. This proposed project supports the implementation phase, with the aim of ensuring that the Bank’s engagement in these reforms will yield concrete and ta ngible results. Relationship to CAS 7. The Morocco Country Partnership Strategy (CPS) focuses on three pillars; (i) growth, competitiveness, and employment; (ii) service delivery to citizens; and (iii) sustainable development in a changing climate. It also emphasizes two cross-cutting beams: governance, and territoriality. These development objectives have been confirmed and even strengthened in the new constitution and government program. The CPS progress report, discussed by the Board in June 2012, confirms the relevance of these objectives while recognizing the need to adapt the strategy to the new socio-political priorities by strengthening governance and accountability, ensuring greater social and economic inclusion, and increasing the scope for voice and public engagement. The proposed project is designed to support the achievement of the two cross-cutting objectives of the CPS by supporting the implementation of horizontal reforms including: (i) public consultation; (ii) performance based budgeting and fiscal transparency; and (ii) decentralization. II. Proposed Development Objective(s) Proposed Development Objective(s) The Project Development Objective is to strengthen mechanisms for transparency, accountability and participation on the central and local government level in Morocco. The project will achieve the PDO by (i) supporting processes to develop public engagement laws and policies; (ii) improving access to fiscal information and enhancing performance orientation in budget management; and, (iii) strengthening the role and functions of local governments, particularly through fiscal decentralization. Key Results 1. At the level of the project development objective: o Citizen's new constitutional rights for greater participation in public affairs have been consecrated through dedicated policies and practices. o The Government's accountability towards parliament and tax payers over the use of public resources has been strengthened. o The transparency of intergovernmental fiscal relations and local finances has increased. III. Preliminary Description Concept Description 8. The project supports the implementation of the governance framework foreseen in Morocco’s new Constitution through technical assistance and capacity building for three strategic intertwined governance reforms aiming to increase civic engagement in government affairs, enhance the government’s accountability towards parliament and tax payers, as well as to strengthen fiscal decentralization and local governance. The project follows an integrated and holistic approach by supporting three horizontal and mutually reinforcing governance reforms in order to improve the inclusiveness and effectiveness of Morocco’s public policies across the whole of government. 9. The project’s first component supports the development and implementation of government wide policies for public consultation and petitions. These policies will be developed in a participatory manner through a national dialogue to be headed by an independent personality. 10. The second project component supports the implementation of performance budgeting, another key horizontal governance reform that will enhance Government transparency and accountability. This reform represents a strategic lever to strengthen the government’s internal and external accountability in the implementation of public policies and the use of corresponding resources. The new organic budget law will require the Government and its different ministries to commit to performance objectives along with the budget proposal. Likewise, this new budget management approach will also increase accountability and managerial flexibility within the public administration. Finally, the new programmatic budget presentation will increase fiscal transparency and the link between policy priorities and budget allocations. 11. The third project component will support the holistic implementation of these new governance principles across the public sector by strengthening fiscal decentralization, local governance and intergovernmental fiscal relations. The empowerment of directly elected local governments and strengthening transparency and public engagement in the management of local affairs, represent a key pillar of the Country’s new governance framework and Constitution. Reforms supported under the two first project components represent an opportunity to bring about more inclusive local governance and strengthen their financial management. Furthermore, the advanced regionalization strategy and the planned empowerment of regions will necessitate in the transfer of new competences and financial resources. This will in turn require the revision of the current system of fiscal transfers and equalization, taking into account the new distribution of competences in a constrained fiscal environment. 12. The duration of this project is envisaged for a period of 4 years, in line with the time frame of the government’s development program (2012-2016) as well as with the transition period foreseen for the full implementation of the new constitution. This project will also support an information and communication strategy that will help provide the necessary visibility to improve awareness within the administration and the public on the benefits of the government’s reform strategy and ongoing initiatives. This strategy will be particularly important for cross-cutting reforms such as public consultations, performance budgeting and fiscal decentralization. The strategy should also contribute to building momentum for their effective and successful implementation. 13. The project is recipient executed and will be managed by the Ministry of General Affairs and Governance (MAGG), which will act as an implementing agency. A project management unit (PMU) will be established and supervised by MAGG, which will be responsible for the implementation of project activities, procurement of services and financial management. The Unit will also be tasked with monitoring the activities and coordination between the different actors associated in the respective reforms covered under this project. The PMU will be overseen by a Steering Committee which consists of representatives of the central departments and decentralized units involved in these reforms. Budget The grant amount is estimated at USD 4 million over a four (4) year duration. The indicative allocations by components and sub-components are specified below in table 1 IV. Safeguard Policies that Might Apply Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X V. Tentative financing Financing Source Amount Borrower 0.00 MNA Transition Fund USD 4 million Total USD 4 million VI. Contact point World Bank Contact: Fabian Seiderer Title: Sr Public Sector Mgmt. Spec. Tel: 473-8049 Email: fseiderer@worldbank.org Borrower/Client/Recipient Name: Ministry of Economy and Finance Contact: Mr. Fouzi Lekjaa Title: Director of Budget Tel: 212537677267 Email: lekjaa@db.finances.gov.ma Name: Ministry Charged with Relations with Parliament Contact: Mr. Mohammad Doukali Title: Adviser to the Minister Tel: 212610845306 Email: doukalimo@hotmail.com Name: Ministry of Interior Contact: Mr. Abdelrhani Guezzar Title: Director of Local Finance Tel: 212537215865 Email: aguezzar@interior.gov.ma Implementing Agencies Ministry of General Affairs and Governance Contact: Mrs Sabah Bencheqroun Title: Adviser to the Head of Government Tel: 212537687316 Email: benchekroun@affaires-generales.gov.ma VII. 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