Document of The World Bank FOR OFFICIAL USE ONLY REPORT No. 24310-BUR INTERNATIONAL DEVELOPMENT ASSOCIATION PROGRAM DOCUMENT FORA PROPOSED POVERTY REDUCTION SUPPORT CREDIT II IN THE AMOUNT SDR 28.1 MILLION (EQUIVALENT TO US$ 35 MILLION) TO BURKINA FASO June 20, 2002 AFTP4 Africa Region Thi:; document has a restricted distribution and may be used by recipients only in the perlormance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (as of June 2002) Currency Unit = CFA franc (CFAF) US$1 = CFAF 691.35 FISCAL YEAR January 1 - December 31 ACRONYMS AND ABBREVIATIONS AAA Analytical and Advisory Activities AfDB African Development Bank ARTEL Telecommunications Sector Regulatory Authority CAMEG National Drug Procurement and Distribution Company CAS Country Assistance Strategy CET Common External Tariff CFAA Country Financial Accountability Assessment CFAF CFA franc CID Computerized Expenditure Circuit CISMA International Conference on Aids in Africa CHN National Medical Centers CMA Advanced Medical Centers CNCC National Commission on Competition and Consumption COGES Local Management Committees CONAGESE National Council for Environmental Management CPAF Literacy and Training Centers CPAR Country Procurement Assessment Report CSPS Community Health Centers DAAF Directorate of Administrative and Financial Affairs DCMP Central Directorate for Public Procurement DEP Directorate for Planning and Studies DGB Budget Directorate General DGPE Directorate General for the Preservation of the Environment DGCOOP Directorate General for International Cooperation DHS Demographic of Health Survey DSA Debt Sustainability Analysis EU European Union ENEP Teachers Training Colleges GDP Gross Domestic Product GNP Gross National Product HIPC Heavily Indebted Poor Countries HIPC-ETS HIPC Expenditure Tracking Study IDA International Development Association IFC International Finance Corporation IGE State General Inspection IGF State Financial Inspection IMF International Monetary Fund INDS National Institute of Statistics and Demography JSA Joint Staff Assessment LDP Letter of Development Policy LPDRD Decentralized Rural Development Strategy MDGs Millennium Development Goals MEBA Ministry of Basic Education MEF Ministry of Economy and Finance FOR OFFICIAL USE ONLY MOH Ministry of Health MTEF Medium-Term Expenditure Framework NGO Non Governmental Organization NHS National Household Survey OECD Organization for Economic Cooperation and Development OHADA Organization for the Harmonization of Business Law in Africa PB Program Budget ONATEL National Telecommunication Company PER Public Expenditure Review PDDEB Ten-year Basic Education Plan PNDS National Health Care Development Plan PNDSA National Program for the Development of Agricultural Services PRGB Budget Management Reform Plan PRGF Poverty Reduction and Growth Facility PRSC Poverty Reduction Support Credit PRSP Poverty Reduction Strategy Paper PRSP-PR Progress Report on the Implementation of the PRSP RESINA Interconnected Administrative Computer System ROSC Report on the Observance of Standards and Codes SAC Structural Adjustment Credit SECAC Sectoral Adjustment Credit SECAL Sectoral Adjustment Loan SDR Special Drawing Rights SIGASPE Budget Payroll Management System SYGADE Debt Analysis and Management System SONABEL National Electric Power Company SONABHY National Petroleum Company SOPROFA Public-Private Society for the Promotion of Agricultural Networks SPA Strategic Partnership for Africa STC-PDES Technical Secretariat for the Coordination of Social and Economic Development Programs SYGADE Debt Management System TOD Decentalization Law TOFE Government Financial Operation Table UNDP United Nations Development Program WAEMU West African Economic and Monetary Union WHO World Health Organization ZBB Zero Base Budgeting Vice President: Callisto Madavo Country Director: David Craig Sector Manager Emmanuel Akpa Task Team Leader: Nicola Pontara 3 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. BURKINA FASO POVERTY REDUCTION SUPPORT CREDIT II TABLE OF CONTENTS I. INTRODUCTION ..........................................8 H. ECONOMIC POLICIES AND PERFORMANCE .9 A. COUNTRY CONTEXT .9 B. REFORMS AND RESULTS .10 C. MEDIUM-TERM PROSPECTS AND FINANCING REQuIREMENTs ......................................... 12 m. POVERTY REDUCTION IN BURKNA FASO .......... 14 A. POVERTY DYNAMICS ........... 14 B. MILLENNIUM DEVELOPMENT GOALS ........... 16 C. THE PRSP PROCESS ........... 17 D. SUPPORTING THE IMPLEMENTATION OF THE PRSP: THE PRSC PROGRAM . .................... 19 IV. THE PROPOSED CREDIT (PRSC 1) .................... ..................................... 25 A. OBJECTIVES OF THE PRSC PROGRAM ....................................... ........................... 25 B. OVERALL EVALUATION OF THE PROGRAM SINCE PRSC I: TRIGGERS AND BENCHMARKS FOR MOVING TO PRSC II ............................................................... 25 Component 1: Public Sector Reform and Governance ....................................................... 26 Component 2: Pro-poor Sectoral Policies ................... .................................... 35 C. CREDIT ADmisTRATION. .45 D. PRIOR ACTIONS FOR PRSC II AND TRIGGERS FOR PRSC III . .......................................... 46 E. BENEFITS AND RISKS .49 ANNEXES Annex 1. Letter of Development Policy ..........................................................5.....................,.... 50 Annex 2. Public Expenditure Reviews, Program Budgets and Medium-Term Expenditure Framework in Burkina Faso: Progress Achieved and Future Challenges ...................................... 74 Annex 3. Bank Group Operations and Collaboration with Other Donors .................. ................... 86 Annex 4. Social Expenditure 1996-2002 .........................................8.....8............ ... 88 Annex 5. The Participatory Process in Revising the PRSP .............................. ................. 91 Annex 6. Main Issues and Medium Term Government Prograrn in Education, Health and Rural Development ............................................... 94 Annex 7. Capacity Building for Environmental Assessment ............................................... 99 Annex 8. PRSC II - Matrix of Policy Actions ................................... 104 Annex 9. Fund Relations Note ........................................... 112 Annex 10. Burkina Faso at a Glance ......................................... 117 Annex 11. Recent Analytical Work on Burkina Faso ............ ............................. 119 4 Boxes Box 1. Infant Mortality in Burkina Faso: Is the MDG Feasible? ....................................... 17 Box 2. Economic Modeling in Burkina Faso .............................................................. 20 Box 3. The 2002 Country Financial Accountability Assessment (CFAA) ............................ 28 Tables Table 1. Burkina Faso: Selected Economic Indicators (1999-2004) ................................... 10 Table 2. Burkina Faso: Fiscal Financing Requirements 2001-2003 .................................... 13 Table 3. Distribution of Welfare and Inequality Across Economic Regions (1994-1998) .......... 15 Table 4. Burkina Faso: Poverty Indicators by Socioeconomic Groups (1994 and 1998) ............ 15 Table 5. Perfonnance under Selected PRSP Indicators (2000-2001) .................................. 18 Table 6. Burkina Faso: Criteria on Tracking Poverty-related Spending ............................... 30 Table 7. Progress Since PRSC I. Component 1: Public Sector Reform and Governance ........... 32 Table 8. Progress Since PRSC I. Component 2: Pro-Poor Sectoral Policies .......................... 41 Figures Figure 1. The PRSC Program and AAA Underpinnings ................................................ 24 The World Bank team for this operation was led by Nicola Pontara and included: Boubker Abisourour, Bepio C. Bado, Siaka Bakayoko, Elisabeth Bambara, Marta Berhane, Siaka Coulibaly, Renee Desclaux, Francois Diop, Pascale Dubois, Jane Hopkins, Remi Kini, Catherine Laurent, Luc Lapointe, Josiane Luchmun, Ibrahim Magazi, Francois Nankobogo, Makha Ndao, Ibrahim Nebid, Emmanuel Nikiema, Eavan O'Halloran, Lucie Poirier, Miriam Schneidman, Agn6s Soucat, Amadou Tidiane Toure, Eustache Ouayoro, Jan Walliser and Steve Wan Yan Lun. Advisors include Emmanuel Akpa, David Craig, Jean Mazurelle, Celestin Monga, Daniel Morrow, and Miquel Saponara. 5 POVERTY REDUCTION SUPPORT CREDIT II CREDIT AND PROGRAM SUMMARY Borrower: Burkina Faso. Amount: SDR 28.1 million (about US$35.0 million equivalent). Terms: IDA terms with a forty-year maturity, including a grace period of ten years. Objectives: The Poverty Reduction Support Credit II (PRSC II) is an integral part of the Bank's Country Assistance Strategy (CAS) to support the imnplementation of the Poverty Reduction Strategy Paper (PRSP). It is the second in a series of three PRSCs planned for FY02-03, which was designed to help the Government achieve better outcomes in the management of public resources by: (i) strengthening program budgets, linking allocations to specific sector objectives, strategies, and action plans; (ii) improving service delivery in education, health and rural development; and (iii) strengthening the fiduciary framework to promote accountability and transparency in the use of public funds, including external assistance. Benefits: This operation, by focusing on public sector reform and governance and pro-poor sectoral policies, is expected to help move the poverty reduction program forward in two ways. First the credit will help poverty reduction by improving public expenditure management and ensuring that public funds are actually channeled to the frontline of service delivery. Secondly, PRSC H supports the implementation of important measures in priority sectors, health, education and rural development, whose combined effect is expected to benefit the poor by improving their access to basic social services and increase their incomes by expanding income generating activities, notably in rural areas. Risks: The main risks to this credit and its reform program come from three sources: political instability, vested interests, and fiduciary and institutional issues. The reforms are being implemented in a sensitive and evolving country context, related to progressive developments of democratic institutions and participation of opposition parties in the political dialogue. Vested interests of individual constituencies and regions may seek to exert influence on the composition and execution of the budget, which may divert resources away from the poverty reduction activities. Moreover, notwithstanding the Government's strong continued efforts to strengthen financial management and procurement systems, some fiduciary risks with regard to the use of public funds remain. These risks are mitigated to a substantial extent by the design and content of the credit since the main reform measures supported by this credit 6 will have been taken as prior actions before Board presentation and by the fact that there will be sustained technical support from the Bank and other donors. Schedule of Disbursement: To be released in a single tranche adjustment opemtion of SDR 28.1 million following effectiveness scheduled for July 2002. Implementing Agencies: The Ministry of Economics and Finance (MEF) has overall coordination. Poverty: This is a poverty-focused operation. Project ID Number: P075378 7 INTERNATIONAL DEVELOPMENT ASSOCIATION PROGRAM DOCUMENT FOR A PROPOSED POVERTY REDUCTION SUPPORT CREDIT II TO BURKINA FASO I. INTRODUCTION 1. The proposed Poverty Reduction Support Credit n (PRSC II) to Burkina Faso for SDR 28.1 million (US $35 million equivalent) on standard International Development Association (IDA) terms, is an integral part of the Bank's Country Assistance Strategy (CAS)' to support the implementation of the Government's poverty reduction strategy, as laid out in the Poverty Reduction Strategy Paper (PRSP).2 PRSC II is the second in a series of three PRSCs planned for FY02-03. The Bank's Board approved the first single-tranche PRSC (PRSC I) for Burkina Faso on August 23, 2001.3 PRSC I established a rolling medium-term policy framework setting out a three-year reform program aimed at supporting the implementation of the PRSP, with specific progress benchmarks and outcome indicators defined and agreed with the Government and all donors. 2. The implementation of the program supported by PRSC I has been satisfactory. Nearly all triggers for PRSC II have been satisfied. In instances where the triggers were partially met, the medium-term program has been modified, in full agreement with the Bank and other donors, to reflect a reevaluation of capacity constraints and clarifications of existing policies in certain areas, Overall, the satisfactory progress made since the approval of PRSC I fully warrants a move to PRSC II. Subject to satisfactory progress on the program outlined in the proposed credit, it is envisaged that in 2003 there will be an additional single- tranche PRSC, PRSC III. 3. The proposed PRSC II supports reforms aimed at sustained poverty reduction, including greater efficiency in the use of public funds, greater transparency and accountability in public sector management, and more effective public service delivery, particularly to the poor. It draws on the first Annual Progress Report on the implementation of the PRSP (PRSP-PR) and related Joint Staff Assessment (JSA)4, discussed by the Boards of the World Bank and IMF on November 30 and December 6, 2001 respectively, as well as on analytical work finalized in the last year, including the Country Financial Accountability Assessment (CFAA). 4. PRSC II provides financial assistance to help Burkina Faso meet the financing requirements of its 2002 fiscal program. Burkina Faso is an economy that aspires to reduce poverty on the basis of sustained income growth and human development. This would require 'See Burkina Faso: Country Assistance Strategy - IDA/R2000-195 (November 30, 2000). 2 See Burkina Faso: Poverty Reduction Strategy Paper and Joint World Bank-IMF Staff Assessment of the PRSP (June 30, 2000) - IDA/SecM2000-313. 3 See Burkina Faso: Poverty Reduction Support Credit - Report No. P7477-BUR (July 2001). 4 See Burkina Faso: Poverty Reduction Strategy paper Annual Progress Report and Joint IDA-IMF Staff Assessment of the PRSP Annual Progress Report - IDA/SecM2001-0670 (December 6, 2001). 8 improved growth performance driven by structural change and accompanied by improvements in the external position. The current large external financing needs would then diminish over time. The hopes of the Burkinabe, which are shared by the development partners, is that with adequate assistance from the donor community and strong program implementation the challenges of achieving strong broad-based growth, reducing poverty and progressively narrowing the financing gaps can be met. H. ECONOMIC POLICIES AND PERFORMANCE A. Country Context 5. Burkina Faso is a poor landlocked country with a limited resource base, high vulnerability to external shocks and very low human development. During the 1980s, the State became the dominant actor in the BurkinabW economy. It was heavily involved in the productive sectors and generalized price and trade regulations. In 1991, the country embarked upon a comprehensive reform program and has since made significant headway in its transition towards a market-oriented economy with a more selective role of the State. Despite the good progress achieved in many dimensions, the country remains one of the poorest in the world. In 2001, real GNP per capita was estimated at US$230 and, on the basis of its human development index, Burkina Faso was ranked 159th out of 162 countries. According to the most recent National Household Survey (NHS), carried out in 1998, 45.3 percent of the population live below the poverty line. 6. As a result of the narrow resource base that is reflected in a large primary sector (36.5 percent of GDP in 2001), a small formal economy, and external vulnerabilities, Burkina Faso will remain dependent on external assistance to implement its poverty reduction strategy for the foreseeable future. Tax revenue remained limited to 12.5 percent of GDP in 2001 and this ratio is expected to rise only slowly over time with improvements in tax administration and expansion of the formal sector. The pervasive developmental needs of the Burkinabe economy therefore result in large fiscal deficits (excluding grants) on the order of 1-2-13 percent of GDP that would decline only over the medium term. After accounting for project financing, the projected deficits would result in financing gaps of 5-6 percent of GDP, which would need to be filled by program grants and loans as well as debt relief under the HIPC Initiative. 7. The political history of Burkina Faso has been characterized since independence by a series of military regimes, transitional governments and a socialist revolution. Since 1987, under the leadership of President Blaise Compaore, Burkina Faso has enjoyed political stability and moved steadily towards political pluralism. Multi-party elections took place in 1991 and 1998 (presidential), 1992, 1997 and 2002 (parliamentary), and 1995 and 2000 (municipal). The May 2002 parliamentary elections resulted in a sharp decline of the majority of the presidential party (from 104 out of 111 seats to 57 seats), reflecting an increasing participation of opposition parties in the political life of the country. A new government was formed in June 2002. 9 B. Reforms and Results 8. Growth and Other Outcomes. Over the past decade, Burkina Faso has established a relatively strong track record on macroeconomic performance. Since 1991 the country has implemented a wide range of economic reforms under a series of stabilization and structural adjustment programs supported by the Bank, the IMF and other donors. As a result, after declining during the first half of the 1990s, real GDP growth picked up in 1994 and averaged 5.1 percent per year between 1997 and 2001. The relatively strong growth performance is attributable to the competitiveness gains following the 1994 CFA franc (CFAF) devaluation, the large public investment program, and financial and structural policies aimed at consolidating the market orientation of the economy and maintaining macroeconomic stability. 9. Real GDP growth decelerated to 2.2 percent in 2000 (Table 1) because of adverse weather conditions, which resulted in a drop in cotton and cereal production.5 Economic activity was subdued for most of 2001, but picked up in the fourth quarter as a result of the good harvests of cereal and cotton crops, resulting in an annual 2001 real GDP growth rate of 5.7 percent. Cotton production reached record levels in the 2001-02 campaign, increasing by 45 percent to 400,000 tons, mainly due to higher farm-gate prices and good rainfalls.6 Growth was driven by the primary sector (12.7 percent), with the secondary and tertiary sectors exhibiting much lower growth rates (0.1 percent and 0.3 percent, respectively), due to depressed demand in the first three quarters of 2001. Average consumer price inflation, accelerated from -0.2 percent in 2000 to 4.9 percent in 2001, driven by price pressures resulting from the poor cereals crop of the 2000-01 campaign. 10. Higher inflation and the slight decline of the U.S. dollar against the euro resulted in an appreciation of the real exchange rate, although the gains in competitiveness achieved through the 1994 devaluation were largely preserved. The external current account deficit (excluding current official transfers) declined from 17.6 percent of GDP in 2000 to 15.9 percent of GDP in 2001, largely owing to the decline in petroleum product prices in the second half of the year and higher than expected cotton exports. Table 1. Burkina Faso: Selected Economic Indicators (1999-2004) Actual Estimate Projection 1999 2000 2001 2002 2003 2004 Real GDP growth (%) 6.3 2.2 5.7 5.7 5.4 5.4 GDP growth per capita (%) 3.4 -0.6 2.9 2.9 2.6 2.6 nflation (CPI, %) -1.1 -0.3 4.9 2.0 2.0 2.0 Tax revenue/GDP 11.9 12.2 12.8 13.8 14.1 14.7 Overall fiscal balance/GDP, incl. grants -4.0 -4.2 -4.8 -5.9 -4.4 -2.7 /excl. grants -13.3 -12.7 -13.0 -13.5 -11.6 - 9.5 Current account balance/GDP, incl. transfers -12.8 -14.6 -12.4 -10.3 -9.0 -7.9 /excl. transfers -16.0 -17.6 -15.9 -14.1 -13.0 -12.1 5 Shocks included the increase in oil prices and the deterioration of the political situation in CMte d'Ivoire, where 3 million Burkinabe reside, a factor that significantly reduced workers' remittances. 6 Producer prices were raised in 2001 by 10 percent (from CFAF 159/kg to CFAF 175/kg of seed cotton). In addition, a bonus of CFA 25/kg was paid, representing the distribution of half of SOFITEX pretax profits in the previous campaign. 10 11. Regional Integration. Burkina Faso remains one of the most compliant members regarding the regional norms of the West African Economic and Monetary Union (WAEMU). It is the only WAEMU member that has fully implemented all the regulations pertaining to the Common External Tariff (CET). As of January 1, 2002, the Declining Protection Rate (TDP) stands at 5 percent, down from 10 percent in 2001. The authorities have also worked towards meeting the WAEMU convergence criteria (including tax/GDP and current account - excluding grants -/GDP ratios) and complying with WAEMU's five directives harmonizing the legal, accounting, and government finance statistics frameworks. 12. Structural Reforms. The authorities persevered in the implementation of their structural reform program, focusing on improving the management of public finances, privatizing public enterprises, and improving governance. The monopoly of SOFITEX on the collection and marketing of seed cotton was abolished. Two additional cotton zones, where private operators are free to invest, were opened in the eastern and central parts of the country. These zones will undergo a competitive bidding process by mid-2003. In the area of public finances, the authorities have been working on an action plan harmonizing the recommendations of the Budget Management Reform Plan (PRGB), approved by the Council of Ministers in September 2001, of the Report on Observance of Standards and Codes (ROSC)7, and the recently finalized CFAA (see Box 3). On privatization, the government has sold its residual shares in a petroleum distributor, liquidated or sold three additional state enterprises an'd launched Phase III of the privatization program, which envisages the privatization of major public utilities (SONABEL, ONATEL and SONABHY).8 On governance, in March 2002, new public procurement regulations were approved. Moreover, the budget execution reports for FY 1999 and 2000 were adopted by the Council of Ministers and forwarded to the Audit Office (Chambre des Comptes) in April 2002. 13. Fiscal Position. In 2001, the overall budget deficit (on a commitment basis, including grants) reached 4.8 percent of GDP (0.3 percent lower than programmed). The mobilization of fiscal revenue was low at 12.5 percent of GDP, as compared to a target of 14 percent of GDP. This result was mainly attributable to a slower than expected pick up in growth, some delays in the implementation of the petroleum price mechanism and generalized weaknesses in revenue collection. The shortfall in revenue was more than offset by cuts in current and capital expenditure'and a slow start in the spending of HIPC Initiative resources. The latter phenomenon was primarily due to: (i) late delivery of certain creditors' contributions under the enhanced HIPC Initiative, (ii) late approval by the National Assembly of the allocation of resources and (iii) the need to set up proper spending procedures at the decentralized level in order to be able to account for HIPC expenditures. Despite these results, budget allocations to social sectors continued to increase (see Annex 4). 14. The IMF PRGF Program. The current PRGF arrangement (2000-2002) amounts to the equivalent of SDR39.1 million (US$49.4 million). In April 2002, the IMF Board approved the 5th review under the program. The commitment period of the program, originally expiring in September 2002, has been extended until December 2002. The program is on track and all structural performance criteria and benchmarks (with the partial exception 7 Part of the ROSC was a Joint Bank-IMF Study on Tracking of Poverty Reducing Public Expenditure (HIPC-ETS). s Under Phase I and II of the privatization program, some 41 companies have been either sold or liquidated. of the fiscal revenue target) are routinely met. The IMF Relations Note is presented in Annex 9. C. Medium-Term Prospects and Financing Reqluirements 15. Growth Strategy and Poverty Reduction. Burkina's production and trade base is narrow. Its single most important product, cotton, accounts for nearly 60 percent of total exports. As stated in the PRSP and the Competitiveness and Growth Study9, long-run competitiveness in Burkina would require: (i) raising productivity of labor and capital; (ii) reducing the costs of inputs such as transportation, communication, water and energy; and (iii) supporting the productive sectors, notably agriculture. Accordingly, the overall program of the government is to boost competitiveness by (i) investing in human capital by expanding access to health and education and bringing down their cost; (ii) reducing factor costs by pursuing a policy of privatization and liberalization, and reducing transaction costs by improving the business environment and governance; and (iii) liberalizing the cotton sector and supporting agricultural diversification. PRSC II selectively supports measures that aim at reaching these goals. 16. Real GDP growth is expected to reach 5.7 percent in 2002 and average 5.5 percent for the medium term. According to data from two National Household Surveys (NHSs), between 1994 and 1998 the incidence of poverty did not decline in Burkina Faso, despite relatively high growth rates averaging about 5 percent per year (see Section III below). Preliminary analysis of the dynamics of poverty in Burkina suggests that high levels of initial inequality, as well as rising inequality (especially in urban areas) over the period, prevented the poor from sharing the benefits of economic growth. This knowledge warrants further investigation of the relationship between growth, poverty reduction and inequality in Burkina to align future PRSPs (and PRSCs) in such a way that economic growth is accompanied by a declining incidence of poverty (see Box 2). 17. Sustainability of Internal and External Sectors. Fiscal Stance. In the medium tern, the Government's primary objectives in this area are to strengthen resource mobilization in order to preserve sound public finances while allocating more resources to poverty reduction. In 2002, the tax revenues are projected at 14 percent of GDP. This target is supported by the introduction of new measures, including: (i) increased excise taxes on petroleum products, (ii) a new taxation of the informal sector, (iii) improvements in real estate taxation, (iv) better control of tax exemptions and (v) a reform package to enhance performance of the tax administration.10 Current expenditures (excluding the utilization of HIPC resources) are targeted at 12.3 percent of GDP. Social expenditures are projected to increase. In addition, to make up for the delays in the utilization of HIPC funds, the authorities committed the totality of residual HIPC Initiative resources of 2000 and 2001 by end-April 2002. Likewise, the totality of the HIPC funds expected for 2002 will be committed by end-2002. In terms of emphasis, education and health continue to be priority sectors, expected to absorb 67 percent of these resources (See Annex 4). 9 Competitiveness and Economic Growth: Policies, Strategies, Action, (See Annex 11). '1 The direct impact on the poor of these measures is expected to be small. For instance, the increase in the excise duties on petroleum products concems products mainly used by more affluent households. The prices of cooking fuels and butane gas, utilized by the poor, remain subsidized. 12 18. Financing Gap. The financing requirements of the 2002 budget (including grants) amount to CFAF 117.1 billion. Of this, external sources are expected to contribute some CFAF 108.7 billion. This amount includes program aid of CFAF 47.3 billion, with IDA accounting for CFAF 25.6 billion and African Development Bank (AfOB) accounting for the remaining 21.7 billion, which amounts to 27.6 percent and 23.4 percent respectively of external sources. Domestic resources are expected to provide the remainder of CFAF 8.4 billion, including the drawing on unspent HIPC resources. In 2003, the overall deficit on a cash basis (including grants) is projected to amount to CFAF 86.3 billion. External sources are expected to contribute CFAF 116.1 billion, of which program aid will amount to CFAF 50.9 billion. Table 2. Burkina Faso: Fiscal Financing Requirements 2001-2003 (In billions of CFA francs) 2001 2002 2003 Overall Deficit (cash basis) 42.3 -117.1 -86.3 Excluding grants -182.0 -256.2 -228.9 Financing 42.3 117.1 86.3 Foreign 85.4 108.7 116.1 Drawings 89.1 110.5 115.9 Project loans 56.0 63.2 65.0 Adjustment aid (1) 33.1 47.3 50.9 IM (2) 0.0 0.0 0.0 World Bank (3) 33.1 25.6 ... AfBD 0.0 21.7 ... EU (4) 0.0 0.0 0.0 Amortization due -27.1 -27.0 -28.4 HIPC Initiative relief 23.4 25.2 28.6 Domestic Financing -37.4 8.4 -29.8 Bank financing -12.3 -6.0 -18.2 Nonbank fmancing -25.1 14.4 -11.6 Of which: HIPC account -18.7 22.5 0.0 Errors and omissions -5.7 0.0 0.0 Financing gap 0.0 0.0 0.0 (1) Adjustment aid in 2003 would need to be financed by the World Bank and other multilateral and bilateral parties. PRSC III could fill about CFAF 28 billion of these financing requirements. (2) IMF included in domestic financing. (3) Including the Belgian co-financing of PRSC. (4) EU provides budget support in the form of grants (not shown). (5) The amount for 2002 refers to unspent HIPC resources received in 2000 and 2001, which were accumulated in an account in 2000 and 2001 and will be spent in 2002. 13 19. Debt Sustainabilitv. Burkina Faso achieved the completion point under the enhanced HIPC Initiative in early April 2002." Although Burkina Faso met the all the conditions for the floating completion point as of September 2001, the completion point was deferred to April 2002 in order to take into account exogenous shocks that adversely affected the Burkinabe economy in 2000 and to update the Debt Sustainability Analysis (DSA). The new DSA, based on end-2001 (and revised end-1999) data shows that proposed assistance under the Initiative would have left the country with a hump of the NPV of debt-to-export ratio significantly above the threshold of 150 percent for a prolonged period. For this reason, IMF and IDA Executive Boards agreed to grant US$129 million of "topping up" in NPV terms to Burkina Faso, in order to reduce the NPV of debt-to-export ratio to 150 percent at the completion point. 20. Despite the topping up of assistance at the completion point, Burkina Faso's external position remains vulnerable. The county is characterized by volatility of export performance and is exposed to changes in international commodity prices, in particular the export price of cotton and import price of petroleum. Even small adverse price shock can undermine the sustainability of the external position. Absent further increases in grant financing the Government will continue to depend on concessional lending from multilateral and other official sources to implement its poverty reduction strategy.12 At the same time, it is crucial that future external assistance be allocated in ways that will generate the expected returns by strengthening the growth performance, reducing poverty and boosting the long-term competitiveness of the Burkinabe economy. HI. POVERTY REDUCTION IN BURKINA FASO A. Poverty Dynamics 21. In 1996 and 2000, the Government issued poverty profiles based on the results of NHSs conducted in 1994 and 1998. These profiles showed that poverty incidence rose modestly from 44.5 percent in 1994 to 45.3 percent in 1998.13 Poverty also remained predominantly rural, although as a share of total, rural poverty declined from 96.2 percent in 1994 to 94.5 percent in 1998. The share of urban poverty, on the contrary, increased by nearly 6 percentage points, reflecting a deterioration of welfare across all urban regions. As regards the regional distribution of poverty, the center-north and center-south parts of the country remained the poorest regions. However, the incidence of poverty declined substantially both in the southern and northern regions. 22. Inequality declined modestly at the aggregate level, driven by a small decline in rural areas, which outweighed the sharp increase in urban areas. Persisting income inequality is " The Completion Point Document was discussed by the Boards of the IMF and Bank on April 9 and April 11 respectively (See IDA/R2002-004 1). 12 Sustained assistance to implement the medium-term program articulated through the PRSC series reduces the risks of spending fluctuations, especially in social sectors, which can jeopardize or even reverse the good progress made to date by the Burkinabb authorities. 3 In absolute terms, the variation represents an increase in the total number of poor by nearly 400,000. 14 possibly the main factor preventing aggregate poverty incidence from declining between 1994 and 1998. Especially in urban areas, rising income inequality negatively affected household welfare through the reduction of poverty-growth elasticity. The poverty-growth elasticity declined substantially in absolute terms, from -3.2 to -1.9 in all urban areas and from -6.06 percent to -0.89 percent in smaller urban centers.14 Table 3. Distribution of Welfare and Inequality Across Economic Regions (1994- 1998) Poverty Growth Headcount ndex Gini Coefficient Elasticity 1994 1998 1994 1998 1994 1998 West 40.1 40.8 47.2 44.4 -1.3 -1.16 South 45.1 37.3 47.16 40.89 -1.01 -1.2 Center South 51.4 55.5 39.1 45.5 - 1.18 -1.01 Center North 61.2 61.2 46.2 37.1 -1.3 - 1.16 North 50.1 42.3 45.1 46.6 -1.3 -1.32 South-east 54.4 47.8 47.2 44.15 -1.18 -1.13 Ouaga-Bobo 7.8 11.2 52.98 56.75 -1.95 - 1.81 Other towns 18.1 24.7 49.33 51.32 -6.06 -0.89 All urban 10.4 15.9 50.59 54.67 - 3.21 - 1.92 All rural 51.1 50.7 55.09 54.75 - 1.21 - 1.07 National 44.5 45.3 55.09 54.75 -1.13 -1.01 23. In terms of the dynamics across socio-economic groups, between 1994 and 1998, poverty incidence increased among food farmers and declined substantially among export farmers. These two socio-economic groups account for over 90 percent of the poor. Despite falling poverty incidence within export farmers, the group's relative contribution to national poverty increased over the period (from 11.8 percent in 1994 to 15.7 in 1998), reflecting the increased number of export farmers following the post-devaluation boom in cotton planting. The incidence of poverty increased across all other socio-economic groups. Table 4. Burkina Faso: Poverty Indicators by Socioeconomic Groups (1994 and 1998) Headcount Index (%) Poverty Gap Index (%) Relative Contribution (%) 1994 1998 1994 1998 1994 1998 Wage public 2.2 5.9 A40 1.6 .20 .50 Wage private 6.7 11.1 2.2 2.5 .40 .70 Artisans/Commerce 9.8 12.7 2.8 2.7 1.4 1.6 Other activities 19.5 29.3 6.4 7.0 .30 .40 Export farmers 50.1 42.4 13.8 12.5 11.8 15.7 Subsistence Farmers 51.5 53.4 16.3 16.5 78.9 77.1 Inactive* 41.5 38.7 14.5 12.1 7.1 4.0 National 44.5 45.3 13.9 13.9 100.0 100.0 *Category including all observations that did not fit the remaining socio-economic groups. 14 Given the significant variations in urban poverty-growth elasticity between 1994 and 1998, these data should be interpreted with caution. The next NHS, scheduled for 2003, and further analytical work planned for 2002-03 (see Box 2) will allow to shed additional light on the complex relationships between growth, inequality and poverty in Burkina Faso 15 B. Millennium Development Goals 24. Burkina Faso is amongst the countries that are currently expected to face a major challenge in achieving the Millennium Development Goals (MDGs) absent a drastic change in past trends (see Box 1). Constraints include the low level of per capita income, low levels of human development, weak capacity and ineffective public service delivery service. In line with the PRSP, the proposed and future PRSCs will continue to support Government's objectives to: (i) improve the efficiency and equity in public spending on health and education, with a view to expanding their access and lowering their cost (ii) expand community financing schemes; (iii) address human resources issues; and (iv) strengthen capacities, working in collaboration with other development partners. 25. Achieving the MDGs in Burkina Faso poses considerable challenges. According to most recent estimates, some 61.2 percent of the population lives belbw the $1 a day poverty line. Net primary enrolment rate is around 34 percent, and the ratio of girls to boys in primary and secondary education stands at 66.5 percent. Under-5 and infant mortality rates are at 205 and 105 per 1.000 live births respectively. The prevalence of HIV is around 5.8 percent amongst adult females. 26. To reduce the proportion of the population who lives below the $1 a day poverty line, the PRSC aims at reducing bottlenecks for growth by: (i) improving the government's efficiency; (ii) raising productivity in rural areas, where 90 percent of the Burkinabe live, notably by increasing competition in the cotton sector; (iii) reducing illiteracy and (iv) reducing the prevalence and impact of diseases. The PRSC is part of the overall World Bank's assistance to Burkina Faso, which includes several investment projects (Agricultural Services, Irrigation, and Community-Based Rural Development) that directly assist in capacity building and improving productivity in agriculture. Other donors support Burkina in the rural sector through investment projects in rural infrastructure. 27. In education, during the past two years the authorities have considerably increased allocations to basic education, including the resources freed up under the HIPC Initiative, in order to achieve rapid progress in improving literacy. The PRSC program supports these efforts through improvements in budgetary allocations to schools, permitting free access to schooling material for poor families and improved school equipment. The PRSC program includes several measures aiming in particular at improving girls' schooling rates. The Bank's support to education is supplemented by a Basic Education Investment Project.15 28. In the area of health, measures undertaken under the PRSC program targets reductions in the cost of health services and drugs, as well as improvements in vaccination rates. The PRSC program will seek further improvements in maternal health care (including protection against malaria), greater transparency of the costs of health services, and more -effective decentralization of health administration. The Bank is further assisting the 15 The elaboration of a PRSP, and a long-term education sector strategy combined with a strong track record, contributed to Burkina Faso being selected as one of the 18 countries that will be considered for additional education sector grant financing under the "Education For All" Initiative of the G8 (see World Bank press release on June 12, 2002). 16 authorities through an HIV/AIDS Disaster Response Project aiming at reducing the spread and the impact of HIV/AIDS. 29. Increased efforts are also needed at the national level to make sure that the MDGs become progressively the focus of a concerted movement comprising not only the Government and the donor community but also Non-Governmental Organizations (NGOs), trade unions and other civil society movements. Box 1. Infant Mortality in Burkina Faso: Is the MDG Feasible? Infant mortality is currently 105 deaths per 1000 births. It declined substantially during 1975-1989, rose during the first half of the 1990s and declined modestly during the second half. If trends since the mid 1990s persist, the infant mortality goal of 37 per 1000 live birth will not be attained. Burkina will only be able to attain a more modest decline in the infant mortality rate by 2015, as projected by the diamond line in the figure. While the country is unlikely to reach the MDG target, important inroads can be made by raising and sustaining immunization coverage rates, improving nutritional status of vulnerable groups through better infant feeding practices and micronutrient interventions, and promoting child spacing. By simply regaining the rate of decline attained during 1975-89, for instance, infant mortality can decline to 85 per 1000 live births by 2015, which could be a more realistic goal for Burkina, consistent with the country conditions. In this respect, the Burkinabe have rightly focused on extending systematically vaccination coverage. In this area, encouraging progress has been achieved and PRSP targets for both 2000 and 2001 were met or surpassed (see Table 5). This implementation record demonstrates that if there is the will and capacity, solid progress can be attained in critical areas that affect directly progress towards getting closer to the mortality millennium goal. Burkina Faso: Trends in infant mortality, 1975-1999, with projections to 2015 160 140 t 120 - If recent trends 00 8- _continue CD _ ___ To achieve MDG o 60 - 0 40 ' 20v Estimate at five-year Interval C. The PRSP Process 30. PRSP Main Objectives. The overarching objective of the PRSP is to promote broad- based growth by ensuring that the poor have access to basic social services, expanding 17 opportunities for employment and income-generating activities for the poor, and promoting good governance. The PRSP gives priority to three sectors - education, health and rural development, and embraces the reform of public administration, including strengthening the management of public finance. 31. PRSP First Annual Progress Report. In September 2001, the Government presented its first PRSP-PR, prepared with extensive consultation with civil society and the donor community. The report notes that Burkina Faso had unforeseen constraints in executing its priority poverty reduction program, chiefly exogenous shocks and lower than expected receipt of funds under the enhanced HIPC Initiative because of delays in finalizing agreements and non-participation by certain creditors in 2000 and 2001. Despite these constraints, the Government has continued to promote an enabling environment to foster growth and carry out its poverty reduction program, ensuring the effective implementation of priority actions, as listed in the PRSP. 32. According to the PRSP-PR, the implementation of the PRSP was, on balance, satisfactory. Expenditures on social sectors (including the utilization of HIPC resources) were maintained at adequate levels, increasing from 5.4 of GDP in 2000 to 6.2 of GDP in 2001.16 Expenditure on health increased from 2.1 to 2.6 percent of GDP between 2000 and 2001, while expenditure on education increased from 2.8 to 3.0 percent over the same period. This reflects the commitment of the authorities to execute the poverty reduction program defined in the PRSP (see Annex 4). The Government also accelerated the introduction of delegated appropriations for the decentralized infrastructure of the Ministry of Health (MOH - Health Districts) and the Ministry of Basic Education and Literacy (MEBA - Regional Departments) and took steps to ensure a satisfactory budget implementation rate in these departments. Notable progress was also achieved in meeting or exceeding most PRSP indicators in health and education (see Table 5 below). Table 5. Performance under Selected PRSP Indicators (2000-2001) 2000 2001 Sector. Measure Target Actual Target Actual Health Strengthen child - Share of infants (0-1I months) vaccination programs vaccinated (%) - BCG (Tuberculosis) 70 80 80 84 - DCT/Polio (Diphtheria, cholera and 50 57 60 64 tetanus) - Measles 55 59 60 65 - Yellow fever 55 56 60 65 Education Promote girls' education - Girls' primary school gross 34 36.2 37.2 N/a enrolment ratio (%) - First enrolment ratio (CPI) - Girls 32.0 32.9 34 N/a 33. Additional progress was achieved in fostering participatory development, which is a tradition in Burkina Faso. The process of the review of the implementation of the PRSP, culminating in the release of the first PRSP-PR in September 2001, has been conducted in a 16 Expenditure refers to the sum of current and capital expenditure. Social sectors include health, education, women's welfare and other social expenditure and rural roads. 18 participatory manner. As stated in the JSA of the PRSP-PR: "The government should be commended for its considerable PRSP outreach program. It has made great efforts to disseminate the PRSP, publicize its main actions, and intensify the debate on poverty reduction. The participatory process associated with the implementation of the PRSP, designed to obtain feedback for revising the strategy and fostering ownership, has thus been greatly strengthened. The PRSP-PR report is candid about the concerns raised by domestic stakeholders and proposes to incorporate many of these concerns in their plans for updating the PRSP. Also, the PRSP-PR was disseminated by the authorities in Ouagadougou in September 2001 and discussed by a large audience, including government officials, civil society, and development partners, all of whom openly expressed their views on the strengths and weaknesses of the first year of the PRSP implementation." 34. The framework for the review of the PRSP included four regional workshops held in Tenkodogo, Ouahigouya, Bobo-Dioulasso, and Ouagadougou, with a total of over 450 participants. These represented important occasions to discuss the role of the central Government, local governments, development partners, the private sector, and civil society in the implementation of the PRSP. The main results of these workshops are summarized in Annex 5. 35. Areas for further improvement were also identified, including: (i) updating of the medium-term macroeconomic framework and its links to poverty reduction, in light of lower than expected domestic growth for 2000 and beyond, and the global economic slowdown; (ii) taking concrete action with a view to setting up a monitoring and evaluation system for the PRSP and strengthening the quality of social statistics; and (iii) developing a global vision on rural development, by relying on the program outlined in the PRSP. Moreover, the proposed PRSC II incorporates concrete measures to address some of the recommendations that emerged from the PRSP-PR exercise, as reflected in the matrix of policy actions, presented in detail in Annex 8, and discussed in Section IV below. D. Supporting the Implementation of the PRSP: The PRSC Program. 36. Rationale. The PRSC series of credits supports the implementation of Burkina Faso's PRSP with highly concessional financing. These credits do not provide support to all the policy measures in the PRSP but selectively focus on key policy and institutional reforms in priority areas. Given the emphasis in the Burkina Faso PRSP on public expenditures as a key tool for poverty reduction, the focus of the PRSCs is predominantly on the reform program to improve the effectiveness of public spending, as well as the transparency and accountability of public resource management. The PRSCs also support key sectoral reforms in education, health and rural development, which are the sectors highlighted in the PRSP as priorities for poverty reduction. 37. Design and Sequencing. The time horizon of the PRSC series corresponds to the PRSP and CAS periods, i.e. 2001-2003. The CAS, finalized in November 2000, supports the Government's efforts to achieve sustained growth rates, reduce the incidence of poverty and improve the health and education of the rural population, as described in the PRSP (see Annex 3). Bank lending to Burkina Faso will increasingly take the form of results-driven programmatic credits (PRSCs) and self-standing projects for capacity building, support for Community Driven Development (CDD) activities (concentrating on rural, social or 19 HIV/AIDS interventions) and infrastructure investments, directly targeted to poverty alleviation, and private sector development. There will be a continuation of Analytical and Advisory Activities (AAA) as knowledge is the critical input for progress in the substantive areas presented in the PRSP. In the high case scenario, the CAS envisioned a series of PRSCs totaling around US$120 million. 38. The first annual single-tranche PRSC for Burkina Faso (PRSC 1) established a rolling medium-term policy framework setting out a three-year reform program aimed at implementing the PRSP, with specific progress benchmarks and outcome indicators defined and agreed with the Government and all donors. The rolling nature of the policy framework should enhance predictability of funding for the Government and allow the Bank to better monitor progress towards the PRSP targets. It is expected that the future PRSC series will be progressively aligned with the country's budget cycle (i.e. January-December), to make sure that the credits can be taken into account in budget formulation and become available early in the budget year. 39. Analytical Underpinnings. In preparing the PRSC program, IDA has been able to draw upon an increasing body of analytical work prepared over the past three years, of which the great bulk has been prepared collaboratively between IDA and the government (see Annex 11). Six PER studies were completed since 1999 (see Annex 2). In 2000 a Country Procurement Assessment Report (CPAR) was finalized. The PRGB, ROSC, CFAA (see Box 3), PRSP-PR, and HIPC Expenditure Tracking Study (IIIPC-ETS) were all finalized in 2001. In November 2001, the Study on Competitiveness and Growth was discussed in Ouagadougou with civil society and the donor community. The authorities plan to carry out a Participatory Poverty Assessment (PPA) and launch the third NHS in 2002-2003. A technical assistance program in the area of macroeconomic modeling has been developed in collaboration with the World Bank (see Box 2). Box 2. Economic Modeling in Burkina Faso Currently, the existing macroeconomic models used by the authorities are not equipped to establish the link between the growth (macro) and poverty (micro) frameworks. As a result, the impact on poverty and inequality of currently forecasted growth rates and selected policy packages cannot be analyzed within a consistent framework. A medium-term technical assistance program to strengthen the local capacity to analyze the impact of alternative policy packages (and shocks of various kinds) on poverty and inequality in Burkina Faso has been elaborated in collaboration with the Bank. The program involves the extension and adaptation of existing macro models to shed light on the manner in which- micro and macro factors interact. This will allow policy makers to: (i) analyze the dynamics that affect the transmission channels of adjustment policies to the micro level'7; and (ii) simulate the impact of alternative policy packages on growth, poverty and distribution across selected socio-economic groups. 40. These AAA have provided a good understanding of Burkina Faso's development problems, the analytical framework for designing and evaluating macroeconomic and " How do changes in macroeconomic environment induced by government policy actions (e.g. changes in public spending, taxation, fiscal, inflation and exchange rate targets) and exogenous shocks (e.g. trade shocks, capital flows volatility, changes in foreign aid etc.) affect the incentives and constraints facing agents at the micro level? 20 sectoral strategies, the need for and availability of external financing, and the strengths and weaknesses of its fiduciary systems. They help harmonize IDA, IMF, Government and donors' perspectives, and generate public discussion of Burkina Faso's development options, with the aim of creating public support for the ambitious reform agenda ahead (see Figure 1). 41. Poverty and Social Impact Analysis. If implemented in full, all policies on public sector reform, governance, and health and education sectors, envisaged under the current PRSC series, are unambiguously pro-poor. Policies aiming at improving the efficiency and transparency of the budget process seek to strengthen the capacity of the authorities and donors alike to track public expenditure and make sure that public and external funds are increasingly allocated according to the priorities highlighted in the PRSP. Moreover, the measures supported by the PRSC series in health and education are geared at expanding the access to, and lowering the cost of, basic services for the most disadvantaged segments of the Burkinabe population. 42. In the cotton sector, the authorities have pursued a successful policy of gradual liberalization (see Annex 6). Further liberalization and growth in the sector and its ability to have a widespread impact on poverty reduction - directly through increased cotton incomes and indirectly through consumption and production linkages with other sectors -, will depend on successful implementation of the liberalization process. The authorities have planned a series of measures to be implemented over the next 18 months to ensure a smooth transition to a more open and competitive cotton sector. Actions planned range from agricultural research activity and input provision, to the creation of an Inter-professional Group (comprising producers, ginners, bankers, input suppliers and transporters), which will be responsible for establishing cotton producer prices in the future. 43. The overarching aim of the liberalization' effort is to keep the cost of cotton transformation and marketing at a minimum to ensure the highest possible pass-through to cotton farmers. The Government, in collaboration with the World Bank, will monitor closely the poverty impact of these measures over the period of their implementation. 44. Bank Activities in Burkina Faso. IDA's cumulative commitments to Burkina Faso as of April 2002 amount to some US$1,218 million for 57 credits (48 closed and 9 open). There have also been three International Financial Corporation (IFC) investments, amounting to US$2.7 million, which have all closed. IDA's operations in Burkina complement the PRSC program in the areas of education, health and rural development with a view to stimulating economic growth, reducing poverty and getting closer to the ambitious MDGs (see also paragraphs 26-28). IDA's active portfolio in Burkina Faso is as follows: Three operations support IDA's strategy in the agriculture sector. A second Agricultural Services project (US$41.3 million, FY98) aims at increasing agricultural productivity and farmers' incomes, improving natural resource management and promoting institutional development. The closing date of this project was extended by eighteen months to June 30, 2003. A Private Irrigation project (US$5.2 million, FY99) supports provision of the demand-driven services necessary for the development of an efficient, sustainable small irrigation subsector in Burkina Faso. A Community-Based Rural Development Program (US$66.7 million, FY01) aims at reducing poverty and promoting sustainable development in rural areas. Its first phase provides for building local capacity to plan and implement rural development, accelerating the pace of public transfers for decentralized 21 rural development, and supporting implementation of the country's decentralization framework. * To support human resource development. three operations are being implemented. In education the IDA Board of Directors approved a Basic Education operation in January 2002. The project will provide support for the Government's Basic Education Ten-Year Program, which will be implemented in three phases the first of which covers the period 2001-2005. The main development objective of Phase I of the Ten Year Program is to lay the foundation for accelerating the development of basic education, while ensuring adequate quality and financial sustainability. A Post-Primary Education project (US$26 million, FY97) supports implementation of the Government's post-primary education strategy: this project was extended for 12 months to June 30, 2003. In health, a HIV/AIDS Disaster Response project (US$22 million, FY2002) supports the implementation of the Government's 2001-04 medium-term HIV/AIDS/STIs strategic plan, which has been endorsed by the country's technical and financial partners. This project became effective on March 4, 2002. * In the urban sector, an Urban Environment project (US$37 million, FY95) aims at improving living conditions through priority urban works and urban services benefiting low-income groups. Under this project, a supplemental credit of US$22 million to the Government's decentralization process was approved by the Board on 28 March 2002. * A water supplv project (US$70 million, FY01) aims at increasing access to adequate and reliable potable water in Ouagadougou through expanded distribution and tertiary water networks and improved urban water subsector management. * In the mining sector, a Mining Sector Capacity Building and Environmental Management project (US$21.4 million, FY97) supports regulatory reform and training, institutional strengthening and resource management, environmental management and small-scale artisanal mining. This project's closing date is being extended by one year to 31 December 2003. 45. Collaboration with Other Donors. The Bank has been working closely with the donor community to assist the Government in achieving the objectives outlined in the PRSP. The Bank has continued to work closely with the IMF to support the Government's efforts to strengthen public finance management. The priorities for the Bank's assistance program vis- a-vis those of other donors have been determined through an intensive country dialogue with the Government, and consultations with all development partners during preparation of the PRSP and the CAS. On the basis of the "conditionality test" exercise, led by the European Union (EU) and adopted by most of the donors based in Burkina Faso, the Government recently proposed a new set of indicators, which should facilitate the monitoring and evaluation of the PRSP by the Government and donors alike.18 46. A number of donors have manifested their intention to co-finance future Bank credits, reflecting the willingness of the donor community to switch progressively from project lending to budget support. The proposed PRSC II will be co-financed by the Belgium co- operation, for an amount corresponding to approximately US$4.3 million. The Belgian 18 The Conditionality Reform Test Exercise in Burkina Faso for all donors and lenders aimed at reaching consensus on a series of performance indicators for key sectors of government activities. Those indicators would then be used as the basis for decisions regarding disbursement of financial assistance, preferably in the form of budget support. The experiment led to inclusion in the June 2000 PRSP of a number of indicators for use in monitoring strategies in three areas: basic education, health, and budget management. 22 financing, which will be disbursed at the same time as PRSC II, will provide financial support specifically to the implementation of the Health Development Plan within the overall framework of the proposed Bank support to the implementation of the PRSP. The European Union and other donors such as Switzerland and. Norway have agreed to provide more of their assistance in the form of budget support, delivered in a phased manner according to progress made in implementing the PRSP. 47. Monitoring and Evaluation. Working closely with the Govermment and other donors, the Bank's support focuses on directly monitorable results. Policy reforms, which are critical for the PRSC program to achieve its macroeconomic and poverty reduction objectives, have been discussed with the authorities and are included in the Letter of Development Policy (LDP) to ensure national ownership (see Annex 1). Progress under the proposed and future PRSCs is reviewed on the basis of implementation of triggers and benchmarks, as presented in the matrix of policy measures in Annex 8. Progress also depends on maintaining a sound macroeconomic framework, as evidenced by continued IMF support under the PRGF. The main monitoring instruments for PRSCs are the annual PRSP progress reports, reviews of the structural reform program carried out every six months by the Bank team in coordination with the IMF, PERs, selected economic and sector work, and household surveys. The next PRSP progress report is expected to be presented to the IMF and Bank Boards in late 2002 and will propose a further broadening of monitoring indicators to follow more closely progress in reducing poverty. 23 Fieure 1: The PRSC Program and AAA Underpinnings /G rowth and M MTEF for 2002-04 Competitiveness Ten -Year Health Plan MTEF 2003-2005 study (April 2000) National HIV/AIDS and Sexually * PPA * Priority survey no. 2 Transmitted Infections Strategic Plan * HIPC - ETS (Final) Ten-Year Education Plan * 2000 Poverty Profile * PER (two studies) Analytical Demographic and Health Survey PER (four studies) Priority Survey no. 3 Andesnalvttcal * Document d'Orientation Straldgique (DOS) CPAR * Macroeconomic Modeling TA Undervinni"S!s and Plan StratUgique Opdrationnel (PSO) PRGB CFAA for Rural Development HIPC -ETS (Desk assessment) CPPR * Energy Sector Note Improving Service Delivery study Transport Sector Strategy Note Jc 2000 Budget . 2001 Budget 2002Budget _ 2003 Budget Burkina Faso's - - -*… - - - - - -- -- ------ - - - - - - - Budret Cycle June 2000 Nov. 2000 Aug. 2001 Nov. 2001 April 2002 June 2002 Nov. 2002 March 2003 CA S and~ ~ ~ ~ PRSP HIPC CAg PRSP CAS and PRSP PRSP CAS | Progress Compl. Progress Progress Timetable e ort Report Report Proposed IDA PRSC Support Key Policy and 1. Pablic Sector Reform 1. Pablic Sector Reform 1. Public Sector Reform Institutlonal Reforms Strengthening program budgets and Strengthening program budgets and Strengthening program budgets and the MTEF; improving service delivery; the MTEF; improving service delivery; the MTEF; improving service delivery; promoting the national Good improving budget execution snd procurement promoting participation; strengthening Govermance Plan; strengthening strengthening audit functions . the judicial and procurement systems. budget management capacity Decentralization, budget de-concentration 2. Pro-poor sectoral policies 2. Pro-poor sectoral policies Education supporting the implementation 2. Pro-poor sectoral policies Education increasing access of the first phase of the Ten-Year Plan; Education. continued support of the in rural areas; decentralizing the hiring lowering the cost of education to the poor implementation of the first phase of the of teachers; introducing innovative Halth, supporting the implementation of Ten-Year Plas; increasing enrolment teaching schemes the first phase of the Ten-Year Plan; lowering and literacy rates * Health i defining sectoral strategy and the cost of health care to the poor * Health continued support of the action plans; providing adequate * Rural Development supporting implementation of the first phase of funding institutional reforms; Opening up the cotton the Ten-Year Plan supporting institutional reforms Sector * Rural Development Further -Rural Development strengthening * Environment: Improving capacity in the area liberalization of the cotton sector; capacity; assessing the efficiency of of environmental assessment. * Environment: Improving capacity in tho public expenditures area of environmental assessment. 24 IV. THE PROPOSED CREDIT (PRSC II) A. Objectives of the PRSC Program 48. PRSC I was designed to help the Government achieve better outcomes in the management of public resources by: (i) strengthening the link between budget allocations and sector objectives, strategies, and action plans; (ii) improving service delivery by ministries of education, health and rural development; (iii) strengthening the fiduciary framework to promote accountability and transparency in the use of public funds, including external assistance; and (iv) strengthening the Government's capacity to track and manage public expenditure efficiently. 49. The proposed PRSC II supports these same objectives in the medium-term program, but updates the details of the program based on experience over the past year. It supports the implementation of the PRSP in two broad areas: * Public Sector Reform and Governance. Public sector reform and governance is considered in the PRSP to be the pre-requisite for effective implementation of the poverty reduction strategy. Recognizing that progress in creating an efficient, accountable, and transparent public sector and governance structure is necessary for effective implementation of the PRSP action plans, the authorities have recently given additional emphasis to improving the efficiency in the use of public resources, including donor funding for projects and for budget support. The overarching objectives of PRSC II in these respects are to: (a) improve the quality of the budget process in all its stages (formulation, execution, reporting), (b) promote greater stakeholder participation and (c) improve the quality of PRSP monitoring and evaluation. * Pro-poor Sectoral Policies. In the PRSP, health, education, and rural development were identified as priority sectors. PRSC II supports some of the key reforms in the implementation of the first phase of the development plans in health and education. It also supports liberalization of the cotton sector and agricultural diversification, as part of the rural development strategy. B. Overall Evaluation of the Program since PRSC I: Triggers and Benchmarks for Moving to PRSC II 50. This section reviews in detail progress made in meeting PRSC II triggers (i.e. those policy conditions that have to be satisfied before a PRSC credit can be approved and disbursed) and benchmarks. It also compares the set of triggers and benchmarks (as specified in the PRSC I document) to the final prior actions that that have been agreed with the 25 Government in order to progress to PRSC II (see Annex 8).19 Overall, implementation of the reform program since PRSC I is satisfactory and progress fully justifies moving to PRSC II in the amount originally envisaged. Where differences exist between the set of triggers and benchmarks and prior actions, they are attributable to the Government's willingness to: (i) modify the medium-term program to reflect strengths and weaknesses in policy implementation since PRSC I, (ii) incorporate, to the extent possible, the findings of the PRSP-PR and recently completed CFAA, (iii) adapt policy formulations to evolving knowledge of existing conditions and capacity constraints. The following discussion is summarized schematically in Tables 7 (Component 1) and 8 (Component 2). 1. Component 1: Public Sector Reform and Governance (a) Budget Management Rules and Government Restraint 51. Progress on Budget Formulation. The government has broadly satisfied all triggers and benchmarks related to budget formulation, with the partial exception of the PER program. On December 20, 2001, the Parliament approved the budget bill for 2002 (Loi de Finance), based on ceilings set by the Medium-Term Expenditure Framework (MTEF) 2002- 2004 and PRSP priorities. National budget expenditure allocations to social sectors have been raised with respect to the previous year's budget. All ministries, as compared to only six originally envisaged, have presented Program Budgets (PBs). The PER program saw the completion of two additional studies, on Transport Infrastructure and Rural Development. 52. Delays and Government's Response. The authorities have completed two of the four expected PERs, namely on Rural Development and Transport Infrastructure sectors. Delays have been experienced in the finalization of the studies planned for the ministries of Justice and Secondary and Tertiary Education, essentially due to slow disbursement of funds by identified donors. The authorities have decided that, starting with the next budget exercise (2003), resources will be routinely allocated to the elaboration of PERs to avoid similar problems in the future. Following the recommendation of the PRGB, on March 5 and 6, 2002, the Govemment held a workshop in Kaya to take stock on the last three years of experience on PER, MTEF and PBs and define an agenda for action. Annex 2 presents in detail the actions to be carried out by the authorities in this sector over the medium-tern. 53. Progress on Budget Execution. All the triggers and benchmarks pertaining to this area have been broadly achieved, although the program originally envisaged to strengthen the procurement system has been partially reformulated to reflect existing legal conditions and capacity constraints. The authorities have focused in particular on two areas: (i) deepening budget de-concentration, and (ii) formulating a realistic medium-term plan to create an efficient and transparent public procurement system and begin its implementation. 54. (i) Budget De-concentration. The Govemment is committed to move steadily towards budget de-concentration to improve the availability of necessary resources at the service delivery front-line. The devolution of the entire budget management at the local level has '9 Hereafter, "triggers and benchmarks" refer to those policy measures originally specified for PRSC 11 in the PRSC I document. "Prior actions" refer to all the measures whose satisfaction is considered necessary for proceeding with PRSC II approval, and are based on triggers and benchmarks. 26 made good progress. With the new decree, approved in July 2001, creating the regions as administrative entities, the Governors of the region are now authorised to order payments for government budget at the regional level (i.e. Governors are now "ordonnateur secondaire").20 While the measure has been legally adopted, thus fulfilling the PRSC II trigger, it now has to be put into practice. A pilot experiment, involving the creation of budget administration at the regional level, has been elaborated and will soon be implemented in Bobo-Dioulasso. The authorities plan to carry out and evaluate the pilot project by end-2003. 55. In order to strengthen effective budget management at the regional level, by ensuring that funds are available when needed, the Government intends to pass on direct management of budget appropriations at the lowest level of regional administration (districts), through the creation of cash advance funding (regies d'avance). The experiment is being conducted in the health sector. The Treasury has already compiled a list of districts and health personnel that will participate in this exercise, who will be trained as "regisseurs" in Ouagadougou. If the experiment will prove successful, it will be extended to the other social sectors. 56. (ii) Procurement. All prior actions for PRSC II have been satisfied, although the current program is somewhat less ambitious than that originally envisaged. The CPAR, finalized in 1999, conducted an evaluation of the country's legal and institutional framework for public procurement. The report concluded that'the current procurement system in Burkina Faso was on the whole soundly configured, although there remained a number of shortcomings deriving chiefly from: (i) weaknesses and gaps in the legal and institutional system; and (ii) weak enforcement of procedures, and failure to make the best use of existing mechanisms. 57. In December 2001, the authorities reviewed, in collaboration with the Bank's procurement experts, the medium-term action plan to implement in full all the recommendations highlighted in the CPAR. The' reviewed program reflects a more realistic assessment of in-country capacity in this area and pace for reform. A notable step taken by the authorities in March 2002 has been to approve a Decree that modifies the existing Procurement Code, thereby addressing important weaknesses of the current procurement system. 58. Delays and Governnent's Response. Delays concern in particular the elaboration of the new Procurement Procedures Manual, following the Government's request for technical assistance, and the study to verify that 50 percent of public procurement contracts are subject to competitive procurement procedures. The authorities have already submitted: (i) the TOR and the expression of interest for the selection of a consultant to elaborate the new Procurement Procedures Manual, and: (ii) the TOR and expression of interest for the selection of a consultantlindependent auditor for the audit that aims at verifying that at least 50 percent of procurement is subject to competitiye practices; and (iii) the capacity building plan to strengthen the capacity of the Central Directorate for Public Procurement (DCMP). 20 While the intention of the legislation was indeed to make the Governor "ordonnateur secondaire", it figures, in the current text, as "ordonnateur d§Iegue', with no real powers or direct responsibility over expenditure. The Government noted that this was a mistake in formulating the law, to be corrected in due course. 27 The resulting products i.e. the Procurement Procedure Manual, the Audit report, as well as the implementation of the Capacity Building Program, will be delivered before PRSC III approval. 59. In addition, notwithstanding the recent revision of the old Procurement Code, its provisions and application will be subject to further discussions between the Bank and the Government in order to ensure a full alignment of procurement procedures with best international practices. In particular, the Government will ensure an appropriate role of the DCMP and the commission allocating contracts for public works. The authorities will also seek ways to reinforce external audit mechanisms and further clarify sanctions for violations. 60. Progress on Budget Reporting. Budget reporting is arguably the weakest phase in the budget process in Burkina Faso although in recent months the authorities have made significant progress and all prior actions for PRSC II have been satisfied. The current audit institution, the Chambre des Comptes, has audited the 1993 and 1994 budget executions reports and is auditing those concerning the period 1995-98. Moreover, the Chambre has received in April 2002 the budget execution reports for FYI999 and 2000. The CFAA was finalized in December 2001. The main results and recommendations of this study (see Box 3) were discussed and presented at a workshop specifically designed for this purpose, which was held in Ouagadougou on March 25, 2002. A short termn-action plan, harmonizing the recommendations of the CFAA with those of the PRGB and ROSC was elaborated in May 2002 and a medium-term plan was adopted in June 2002. 61. In addition to the CFAA, the authorities have also benefited from the completion of other important studies. In September 2001, in the framework of its own regular assessment of the budget system, the Government finalized the PRGB, which was immediately approved by the Council of Ministers and adopted as the guiding document for the strengthening of the budget process in Burkina Faso. The PRGB provides a sound and comprehensive coverage of the institutional framework for budget management; the budget law; budget execution; and budget control. It describes the existing financial management architecture, identifies the main strengths and weaknesses of the current budget system and highlight priorities for action. Box 3. The 2002 Country Financial Accountabiiity Assessment (CFAA) The Government, World Bank and eight other bilateral and multilateral donors (the African Development Bank, the European Union, UNDP, the Embassy of Denmark, the Embassy of the Netherlands, the Canadian Development Cooperation, the French Development Cooperation and the Swiss Development Cooperation) participated in the elaboration of the CFAA, which was finalized in December 2001. The overarching objective of the study was to assess the quality of the mechanisms that ensure the transparency of financial management in Burkina Faso. The CFAA focused mainly on the public sector, the parastatals and the private accounting profession. It identified the strengths and weaknesses, as well as the risks, of the financial accountability framework, and proposed recommendations to improve the existing system. The study built on the government's own internal review of public financial management, the PRGB, ensuring that the areas not fully covered under the PRGB were adequately addressed in the CFAA. In this respect, the CFAA covered also the revenue side, analyzed issues related to human resources and institutional organization, approached in a more global fashion the issue of budget transparency, carried out a comprehensive fiduciary risk analysis (considering strategic options for Bank country support) and reviewed the adequacy of the existing expenditure computerized system. 28 The CFAA recognized the progress achieved by the Burkinabe authorities in recent years in the sphere of public expenditure and fiduciary risk management. Although not yet fully operational, .a Supreme Audit Institution (Cour des Comptes) was set up in 2000. The Budget Execution Reports for 1993 and 1994 were approved by Parliament, and those referring to 1995-1998 were transmitted to the current audit institution, the Chambre des Comptes. In the last three years, the Government introduced the MTEF exercise and Program budgets in key ministries. A Government Financial Operation Table (TOFE) has been used routinely to monitor public finance and project budget expenditure in line with government priorities. Moreover, good progress was achieved in the computerization of public finance management, notably on the expenditure side, by the adoption of different systems such as the Computerized Expenditure Circuit (CID), Budget Payroll Management System (SIGASPE), Public Debt Management System (SYGADE) and the Interconnected Administrative Computer System (RESINA). Improvements have also been noted in the budget controls carried out a priori. Despite these advances, urgent progress is called for in a number of areas. Ex-post controls, to ensure that services have been actually rendered to beneficiaries, remain weak. The mandate of General State Inspection Office (IGE) and General State Financial Office (IGF) needs to be strengthened accordingly. Emphasis should be put on designing mechanisms for the substantive audit of public finances and efficient debt management. Although parliamentary controls through the Finance Commission are progressively becoming reality, their scope is rather limited and the Budget Execution Reports are issued with substantial delays, after the fiscal year has long been closed. Although the computerized expenditure circuit is up and running, it needs to be upgraded to obtain better results and prevent major breakdowns that affect the production of reliable data and information. More importantly, the computerized system needs to be extended to cover the revenue side in order to improve the processing, monitoring and controls over revenue collection and allocation. A key CFAA recommendation - submission of the budget execution reports for 1999 and 2000 to the Chambre des Comptes - has been implemented. Other recommendations include: (i) Reinforcement of ex-post controls by IGE and IGF; (ii) Establishrnent of an integrated revenue collected system along the model of the budgetary expenditure; and (iii) Establishment of an efficient fixed assets, goods and services monitoring and management system. 62. As part of the ROSC exercise IMF and World Bank conducted a joint HIPC-ETS, which aimed at identifying weaknesses in public expenditure management systems that could hinder the tracking of poverty-reducing public spending in 25 HIPC countries. To assess relative needs, a classification was adopted on the basic requirements for a budget system to track poverty reducing spending. Burkina Faso was ranked in the top country group, meeting the required classification in 8 out of 15 criteria (see Table 6). The study suggested a number of short and medium-term corrective measures, particularly to improve budget reporting and auditing (e.g. operationalization of the Cour des Comptes, implementation of the legislation to comply with the five WAEMU directives on fiscal policy), which are fully consistent with the Government program in this area. 29 Table 6. Burkina Faso: Criteria on Tracking Poverty-related Spending EU=1VVA4W AwmAmn *2. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1. a40 dofieamIai*&nM 1frad9x A s 2 (mm arilisgnr fiixld&mec&xiymm toaggihGnd iA;- A R3. BHdotzdatanedgfeim* lfloib)aeqxWdzEctdwdx:adaigahIb .0- 4 fl, :- ....... ,V -1 .;..-,- ~ 34 lWt iqiti aplatdmQmt cqafimbydmom A C CLAUrcAIc. ' 5 B*td WfieI ala nmfixteax tia s b; 7. MA odr b* A . , a & Snflbkofqiseanaie-infxwasowr. A B '. 9. ha is c A B 10. Iialdzsanw sm unmli :,r oB'Trd A-: -- 11. FiaxlbrrunA __ .;_ .__A.-_ 12 hmdhutbfi nlimlbrn zyididnhmfiraffrtdeafttdf i f B*'§T pi iA . - .E 13 1 diiisi dmdc:mbxi1s A C v. F1NALAUNIEDALDUI.U 1; 14. C A B _15. Audt1W t1toduuayji1in 12 ulI2 f Iadtferfls,f f w. B C A: Fully Satisfactory; B: Satisfactory; C: Not satisfactory. Highlighted benchmarks are met. 63. Delays and Government's Response. Delays concern notably the operationalization of the Supreme Audit Institution, the Cour des Comptes, which was created in 2000 but has yet to become operational. This situation is attributable to the need to identify its physical location and prolonged negotiations on the required funding for its headquarters and staffing. A trigger for PRSC II, the operationalization of the Cour des Comptes is now retained as a trigger for PRSC III. In order to satisfy the prior action for PRSC II, the government has presented an action plan for the operationalization of the Cour des Comptes by end- December 2002 and appointed in June 2002 three magistrates, including its President. The role of the Cour des Comptes will be to audit the annual accounts on state budget implementation, as well as monitor and analyze all public sector performance in the area of financial management and governance. (b) Stakeholder Participation 64. The trigger for PRSC II in this area has been satisfied. The Government has taken important steps to post district budgets in public places. The experiment was spearheaded by the health sector. On January 21, 2002, the Secretary General of Health disseminated a Circular requesting health authorities at the regional and district levels to post information in public places on a regular basis, so that all stakeholders are kept well informed of budgetary allocations. (c) PRSP Monitoring and Evaluation 65. The PRSC II matrix of policy actions (see Annex 8) introduces a new section on PRSP Monitoring and Evaluation to further strengthen the program originally envisaged in PRSC I. The JSA of the PRSP-PR noted that increased efforts were required in the areas of 30 poverty monitoring and evaluation.21 The authorities have decided to place more emphasis on this important issue. A four-day national workshop was held in Bobo-Dioulasso on December 19-22, focusing on Statistical Capacity Building and Poverty Reduction. The overarching aims of the forum were to assess the ability of monitoring poverty outcomes under the current statistical system in Burkina and propose an agenda for the setting up of a poverty monitoring system. Key recommendations of the workshop included: (i) the establishment of a set of simple and easily collectable poverty indicators, (ii) the review of the national statistical program by the National Council for Statistical Coordination, in the light of the new needs, (iii) the production of an action plan by the National Demography and Statistics Institute (INSD) and the Technical Secretariat for the Coordination of Social and Economic Development Programs (STC-PDES). The Government has already started to work on refining the list of poverty indicators for the monitoring and evaluation of the PRSP and has submitted the new list to the Bank. The new set of indicators will be presented in the next PRSP-PR, to be presented to the Board in late 2002. 21 According to the JSA of the PRSP-PR: "The PRSP-PR does not discuss progress in improving the adequacy of data collection and analysis, which are inherent parts of a sound monitoring and evaluation system. Social statistics are still incomplete, scattered among various ministries, and untimely. There is an urgent need to activate the centralized unit to monitor social spending and outcomes, to update and implement the statistical master plan, prepared with the assistance of the World Bank and AFRISTAT, and to prepare the third national household survey. The authorities propose to elaborate a set of indicators for monitoring and evaluation of the PRSP within the "reformulated conditionality test initiative", although the timing and use of the results from this initiative is not specified in the PRSP-PR." 31 Table 7. Pro gress Since PRSC I. Component 1: Public Sector Reform and Governance* Triggers and Benchmarks' Status after Negotiations [ Prior Actions (PRSC U) Comments (i) Budget Formulation Adoption of a budget bill for 2002 based on Trigaer fulfilled. The budget bill was Sarne formulation. A Workshop was held in Kaya in March 2002, to ceilings set with reference to the 2002-04 adopted in February 2002 and it was based (i) take stock of progress achieved and difficulties MTEF and PRSP priorities. on the MTEF 2002-2004, reflecting PRSP encountered in the MTEF, PER and PB exercises priorities. and (ii) define an agenda for future action. The Workshop also discussed the recommendations Completion of Program budgets consistent Trigger fulfilled. As discussed above, all Sarne formulation. contained in the PRGB conceming these with PRSP objectives in key ministries ministries participated in this exercise, not instruments. It saw the participation of the (including Economy and Finance, only the 6 originally envisaged. Govemment, World Bank and all other major Infrastructure, Secondary and Tertiary multilateral and bilateral donors. The Committees Education), performance indicators charged with the PER, MTF and PB processes included. presented the strengths and weaknesses of each instrument and proposed a set of Completion of PER studies (including Trigger partially fulfilled. The PER process Completion of PER studies in the recommendations to improve them (see Annex 2). Economic Infrastructures, Justice, Ministry has experienced some delays, notably areas of Economic Infrastructure and The key conclusions and recommendations have of Secondary and Tertiary Education). because of lack of funding and delays in Rural Development been already presented to the Bank and will be fund commitment by donors. The program consolidated into an Action Plan harmonizing the discussed with the authorities for PRSC II Held workshop to analyze the strengths recommendations of the CFAA, PRGB and included the completion of PERs on and weaknesses of the PER, MTEF and ROSC. Key outcome-oriented policy actions will Economic Infrastructure and Rural PB exercises and defined agenda for be selected for PRSC III on the basis of the plan. Development, by March 2002. It also future action in these three domains. included the realization of a workshop to take stock of strengths and weaknesses of PER, MTEF and PB processes and define the agenda for the future actions to imp rove these instruments. (ii) Budget Execution, monitoring and de-concentration Regionalization of payment order-issuance Trigger fulfilled. The article 4 Ibis of the Organization of regionalization of De-concentration implies a revision of the role of through appointment of > law no.013-2001, approved in July 2001 payment order issuance through the central government and its central and within ministries modifies the Decentralization Law and creation of a legal framework for the administration, moving from direct to empower regional Government entities. creates the region as an administrative appointment of delegated payers> implementation to planning, monitoring and entity. Within this new organization, the and Refine the PRSP list of poverty indicators This section has been added to PRSC It. It to be used as benchmarks for the reflects the willingness of the authorities to . monitoring and evaluation of the PRSP. improve the quality of the monitoring and Not in the original matrix. Measure added w Establish a medium-term program to evaluation of the PRSP and to improve strengthen the analytical capacity to analyze capacity in the analysis of alternative policy the impact on poverty of different policy packages (and shocks of various kinds) on reforms and shocks of various kinds. poverty and inequality in Burkina Faso. Not in the original matrix. Measure added => Elaborate set of preliminary estimates, List of indicators and logistical arrangements linking the growth and poverty frameworks. on collection, elaboration and dissemination presented at appraisal. Medium-term program on macroeconomic modeling agreed with the Bank. Completion of the study of opening up Triacer fulfilled. Moved to Component 2, (see Table 8, Section C). Originally under Section C Competition in cotton sector to several operators Section C. Rural Development. Service Delivery (PRSC 1), substituted by Section C above, Civil Service Reform and Decentralization) Completion of the participatory poverty Measure not fulfilled. Moved to Component Same formulation. Delays have been experienced in identifyting assessment 2, Section C. Rural Development and to donors to finance this study. Financing has prior actions for PRSC 111. now been secured (UNDP and National Budget). 34 66. PRSC III: Component 1, Public Sector Reform and Governance. PRSC III will focus its support on measures geared at improving budget formulation, execution and reporting, civil service reform and decentralization, stakeholder participation and PRSP monitoring and evaluation. Specific triggers and benchmarks will aim at strengthening the instruments necessary for the formulation of a sound budget, including the MTEF and PBs. Efforts will continue before PRSC III to put into practice the measures on budget de- concentration after the change in the legal framework taken before PRSC II. For instance, the program before PRSC III envisages the operationalization of the "regionalization of payment order issuance" through: (i) the revision of budget regulation to reflect changes in the order of payment authority and (ii) the creation of a budget administration at the regional level in Bobo-Dioulasso, as a pilot experiment. 67. The program before PRSC III will also support the implementation of the key recommendations of the CPAR study. On budget reporting, it is expected that the Cour des Comptes will be made fully functional and that key recommendations of the CFAA, notably concerning the strengthening of controls a posteriori, will be implemented in full. Regarding civil service reform and decentralization, additional efforts will be geared at de-concentrating personnel management under the principle of making civil servants available to the regions according to their needs. Progress is also expected in refining the understanding of poverty, with the completion of the PPA. A third NHS will be launched in mid-2002. 2. Component 2: Pro-poor Sectoral Policies (a) Education 68. Progress since PRSC L All triggers and benchmarks in the area of education have been broadly satisfied. The PRSC program supports the Government's education strategy by focusing on the implementation of the Ten-year Education Plan (2001-2010), the reference document in the sector, whose implementation started in the academic year 2000-2001. PRSC II supports policies aimed at subsidizing school supplies and expanding access to, and lowering the cost of, primary education, focusing in particular on the poorest areas and most disadvantaged groups. The delays experienced in the utilization of 2001 HIPC resources have slowed progress with respect to construction of schools and literacy centers (on the progress made by the Government in speeding up the commitment of HIPC resources, see paragraph 17). 69. Since July 2001, the authorities have continued to work towards: (a) facilitating the implementation of the Educational Policy Statement and the Governmental Action Plan in the area of Basic Education; (b) subsidizing school supplies in the 20 provinces characterized by lowest coverage; (c) expanding the access to education focusing on the poorest provinces; and (d) decreasing the cost of primary education, by continuing to distribute books free of charge and subsidize school canteens in the poorest provinces. 70. (a) Implementation of the Educational Policy Statement and of Governmental Action Plan in the area of Basic Education. A number of Presidential Decrees were adopted between April and October 2001 and the authorities have been working on creating the conditions for their effective implementation. 35 * Presidential Decree No 2001-143/PRES/PM/MEBA, dated April 19, 2001, abolished the automatic link between admissions to teacher training colleges and civil service employment, as of September 2001. The decree reduced the length of training to one year and specified that newly trained teachers would be hired at decentralized levels by community schools or private schools. All new primary school teachers would be also paid about 50 percent of the current civil servant teacher salary, thereby improving financial sustainability under current and projected fiscal constraints. Implementation Status: A first draft of the revised curriculum reducing the pre-service training to one year has been produced by MEBA on February 2002. A workshop was held in June 2002 with the Teachers Training Colleges (ENEP) and school inspectors, to amend and validate the curriculum, which will be applied during the school year 2002-2003 (starting on September 2002). The first cohort under this new arrangements will complete its training by July 2003 and will be in the job market from September 2003. This will coincide with official implementation of the Government decentralization policy allowing the implementation of the measure related to the reduction of teachers salary to all new teachers and their recruitment at decentralized levels. * Presidential Decree No 2001-179/PRES/PM/MEBA, dated May 2, 2001, adopted the Education Policy Letter which introduced automatic promotion between grades I and 2, 3 and 4, and 5 and 6; limited repetition to 10 percent for grades 2, 4, and 6; increased learning hours from about 660 hours to 800 hours p.a. It also introduced literacy programs delivered by non-governmental and private providers. Implementation Status: Actions have been take to ensure that the full implementation of this measure will take effect as of academic year 2002-2003 (September 2002), which are deemed crucial to attain the goal of reducing overall repetition rates in primary education to 17 percent by 2004, a key outcome in the area of education. * Presidential Decree No. 2001-528/PRES/PM/MEBA, dated October 4, 2001, specified: (i) the scope of decentralization, and the roles and responsibilities at each level of the system, (ii) the institutional changes needed in the context of the decentralization and the volume of activities to be carried out within the 10 year program; (iii) how the units and services of the MEBA are to be reorganized; and (iv) the capacity gaps and corrective measures. Implementation Status: MEBA units are in the process of being reorganized according to the measures contained in the decree. Training seminars for MEBA's personnel (Central and Regional Directors, Technical Advisers, Project Supervisors) have been held in January 2002 in Kaya and Tenkodogo, on the institutional changes that will affect the Ministry until end-2003. 71. (b) Subsidize school supplies in the 20 provinces characterized by lowest coverage. The Government has committed some 450 million CFAF for the purchase of school supplies in the 20 provinces characterized by lowest education coverage. The objective is to equip 229,664 pupils with basic material, including a pen, eraser, compass and ruler. The contracts with the providers were signed in April 2002. The authorities are currently studying the best way to transfer this material from MEBA directorates at the provincial level to the schools, which have been already identified. 72. (c) Expand the access to education focusing on the poorest provinces. The government has committed nearly 8 billion CFAF of 2001 HIPC funds to the construction of 36 140 schools (with furnished classrooms, didactic material, and latrines), 420 housing units and 100 literacy centers in the 20 provinces characterized by lowest enrollment rates. 73. (d) Decrease the cost of primary education to students. The authorities have continued to lower the cost of education by continuing to provide books free of charge and subsidize school supplies. Some 400 million CFAF have been allocated to school canteens for the purchase of food items, in the 20 provinces characterized by lowest enrollment rates. The number of pupils who benefited from distribution of free textbook and subsidized school meals in 2000-2001 is estimated at 283,992, of which 112,220 are girls. A study on the cost of financing basic education in Burkina Faso is also in the pipeline. (b) Health 74. Progress Since PRSC L Since August 2001, the government has achieved notable progress in the health sector, achieving all triggers and policy benchmarks. Efforts have been concentrated on: (a) reducing the financial burden of basic health care and essential drugs on the poor; (b) maintaining appropriate financing for basic health services targeted to the poor; (c) strengthening the management of cost recovery proceeds; (d) boosting immunization coverage; (e) ascertaining the views of beneficiaries with regards to user charges; (f) maintaining adequate levels of health facility staffing; (g) exploring options for developing incentives to maintain personnel in underserved rural areas; and (h) maintaining adequate levels of drug availability. 75. (a) Reduce the financial burden of basic health care and essential drugs on the poor. The government has taken important steps to reduce the cost of essential drugs to beneficiaries. As a first step in this direction, two ministerial decrees issued jointly by MOH and the Ministry of Commerce, Promotion of Enterprises and Crafts fixed at 25 percent the maximum profit margin on over 200 Essential Generic Drugs (MEG) sold by wholesalers as from February 2002. All district authorities, health facility personnel, and Local Management Committees (COGES) representatives are required to pass on these cost savings to the population by adjusting their own profit margins, so that the out of pocket costs for the population are reduced. 76. The INSD has conducted on behalf of the Ministry of Economy and Finance (MEF) a light survey on the price of 45 MEG (most used products). The survey concludes that, as of April 2002, the average price of most used basic medicines has declined by 6 percent with respect to 2001. Further declines are expected before end-2002, as more Community Health Centers (CSPS) and Advanced Medical Centers (CMA) will receive the relevant information contained in the ministerial decrees. With a view to strengthening its control functions to enforce the application of this measure, the MOH plans to establish a group of controllers at the district level. 77. Recognizing that fees pose a major financial barrier to improving coverage of cost effective preventive services, in February 2002 the MOH has disseminated a Circular to all principal health actors, removing charges on some preventive care services, including syringes for vaccination, iron, cloroquine and the health booklet (carnet de sante). The MOH 37 has also prepared in March 2002 a ministerial decree for all health regions, districts and health facilities to ensure application of this new guideline.22 78. (b) Maintain appropriate financingfor basic health services targeted to the poor. The government is fully committed to replacing the funds provided under the now closed IDA- funded Health and Nutrition Project with public funds and to ensuring that donors continue supporting the decentralization process in the health sector. The MOH has made an effort to ensure both adequate funding and improved management of these resources. In order to address concerns over liquidity, the MEF and the MOH are collaborating for the setting up of regies d'avance at the district level (see also paragraphs 53-54). 79. (c) Strengthen the management of cost recovery proceeds. To assess the effectiveness of COGES, the MOH has recently carried out an initial evaluation of the functioning of these health committees that have been given a substantial amount of autonomy and responsibility in recent years. A draft report was finalized in March 2002. The main focus of this evaluation has been on COGES financial management, including the transparency and efficiency of administering the proceeds from the cost recovery program. 80. (d) Boost immunization coverage. The government has made very good progress attaining and surpassing all the PRSC II targets on vaccination. Immunization coverage rates, which had plummeted from 1995 to 1998, have gradually increased and surpassed levels of the mid 1990s, as well as the target set in the PRSP (see Table 5). 81. (e) Ascertain the views of beneficiaries with regard to user charges. The MOH carried out a beneficiary assessment within the context of the recently completed IDA-funded Health and Nutrition Project. A workshop was organized in September 2001 to discuss the main messages of the report and get feedback from participants. The beneficiary assessment provides valuable information on people's views and perceptions with regard to the quality and cost of health services. The majority of those interviewed felt that financial barriers posed a major obstacle to accessing the health care system. 82. 69 Maintain adequate levels of health facility personnel. Recognizing the need to better staff health facilities in remote areas the MOH has been gradually improving the staffing levels. The proportion of CSPS that have been staffed according to ministry norms has increased from 65 percent in 1999 to 75 percent in 2001. The targets set in the PRSP have been surpassed (see Table 5). 83. (g) Exploring options for developing incentives to maintain personnel in underserved rural areas. The MOH has made a concerted effort to reallocate personnel to underserved areas that are perceived to be undesirable. In 2001 the government has recruited some 780 contractual staff using HIPC resources, of which roughly 500 are targeted to work in rural areas to improve staffing of these facilities. This effort has contributed to improved staffing of facilities that serve primarily the poor. While working towards the broader goal of decentralizing health positions to regional/district authorities, the Ministry has also been 22 The original triggers in PRSC I referred to rendering all preventative measures at the primary health care level free of charge. The MOH reconsidered this measure and aligned it with the philosophy of the Bamako Initiative on cost recovery in health (see Table 8). 38 exploring possibilities for developing incentives to assign and to retain staff in underserved areas. To this end, the Ministry has recently completed a pilot in Nouna to determine what types of incentives might work. The plan is to scale up this pilot with the assistance of the World Health Organization (WHO). 84. (hi) Maintain adequate levels of essential drugs. Efforts have continued to maintain a good supply of essential drugs, which is critical to quality care. The CAMEG drug stock out rate has been maintained below 2 percent against a target of 8 percent. (c) Rural Development 85. Progress Since PRSC I. Performance on rural development triggers has been mixed, although the liberalization of the cotton sector has gained momentum in 2001-02. During the last year the authorities have taken significant steps to liberalize the cotton sector. The SOFITEX monopoly on cotton marketing legally ended on December 27, 2001 with the approval by the Council of Ministers of two decrees opening two additional cotton producing zones to new private sector investment in ginning. A calendar of actions needed over the next 18 months was elaborated in March 2002, detailing all the necessary steps required to prepare the sector for new investors. SOFITEX has issued a call for bid proposals to assess the value of their physical assets in the two zones being opened. A number of cost-cutting measures in transport, ginning and input supply (treated seeds) have been put in place to improve the competitiveness of the cotton sector. 86. Within the realm of agricultural diversification, all IDA rural development operations under implementation have been restructured by end-2001, in order to harmonize their objectives, implementation strategies, content, management procedures and monitoring and evaluation with the priorities highlighted in the Decentralized Rural Development Strategy (LPDRD) and PRSP. Programs to develop private/public partnerships have been initiated to encourage agricultural diversification by improving market access for a variety of commodities (e.g. cereals, fruits and vegetables, sesame). Concerning institutional reforms, donors have agreed with the Government on an approach to review field level agricultural services. This would result in an institutional analysis (roles, responsibilities, structure and staffing) of the ministries of Agriculture and Animal Resources. A new approach involving demand-driven service delivery was introduced and will be tested through a pilot experiment to be carried out under the IDA financed Agricultural Services project. 87. Delays and Government's Response. Delays have been experienced in the elaboration of action plans in the following sectors: fruits and vegetables, livestock and meat, cowpea and oilseeds. The finalization of these action plans is now a prior action for PRSC III approval. To date, the diagnostic study of the cowpea sector has been finalized. The authorities have also finalized the TOR for the fruit and vegetable and livestock and meat sectors, while the TOR for the oilseed sector are underway. The study on the liberalization of the cotton sector was not completed, in that the authorities have decided to take concrete measures to open up the sector. The Government, in collaboration with the Bank, will closely monitor the poverty impact of cotton liberalization in the medium-term, and take corrective measures if necessary. Concerning the liberalization of cotton seed (i.e. seeds left over after ginning), the trigger has been fulfilled in that SOFITEX sell the seed at a price approaching world market price and there is no export ban, but the Government is currently considering 39 whether it is also necessary to introduce auction sales for the product. The finalization of institutional audits of ministries active in the rural sector, a trigger for PRSC II, is now a prior action to be satisfied before PRSC III approval. The TOR for the institutional reform of the ministries of Agriculture and Livestock have been already finalized. (d! Environment 88. While environmental measures in the PRSC I matrix of policy actions were listed under the Rural Development section, PRSC II and III include prior actions (benchmarks) under the heading "Environment" (see Annex 7 for a detailed discussion on capacity building for environmental assessment in Burkina Faso). All prior actions for PRSC II have been satisfied. The authorities have defined the respective responsibilities of the National Council for Environmental Management (CONAGESE) and Directorate General for the Preservation of the Environment (DGPE) in the area of environmental impact research. They have also presented a 3-year plan for the building of capacity in the area of environmental assessment and are in the process of creating environmental focal points in key ministries involved in carrying out measures supported by the PRSC II and PRSC III programs. 40 Table 8. Progress Since PRSC I. Com onent 2: Pro-Poor Sectoral Policies* Triggers and Benchmarks ' Status after Negotiations Prior Actions RSC Comments Implementation of the Educational Policy Trigger fulfilled. Same formulation. The implementation of the 4 decrees that have Statement and of Governmental Action been approved between April and October 2001 Plan in the area of basic education proceed as planned. Implementation of a mechanism for Trigeer fulfilled. Same formulation. The Government has signed the contract for the subsidizing school supplies in the 20 purchase of school supplies (CFAF 450 million of poorest provinces HIPC resources for the year 2001). It is currently devising a mechanism to transfer the purchased material from the provincial directorates to the rural schools identified as recipients. Increasing access to education in rural areas Measure fulfilled. Same formulation. Some CFAF 7 billion of HIPC resources for the by expanding the number of schools- Progress has been slower than originally year 2001 have been committed by end-March equipped with running water and separate programmed because of delays in mobilizing and will be spent by end-June. sanitary facilities for girls-in the 20 rural HIPC resources for 2001. Government has provinces with the lowest coverage, by made up ground in recent months. ensuring that schools utilize multigrade teaching where population density is too low to provide for six separate grades, and by expanding double-shift teaching in urban areas where there is excess demand Lowering the cost of education to poor Measure Fulfilled. Prior action for PRSC II Lowering the cost of education to poor All HIPC resources (CFAF 400 million of HIPC families by continuing to provide books free reformulated. Delays have been experienced families by continuing to provide books resources for the year 2001) have been committed of charge, ensuring sufficient allocations to in the mobilization of HIPC resources for free of charge, ensuring sufficient by end-March and will be spent by end-June. rural schools to cover basic materials and 2001. Govermment has made up ground in resources to rural schools to cover basic Canteens have been subsidized. operating costs, and making the payment of recent months. The part of the measure materials and operating costs. parent-teacher association (PTA) fees referring to the PTA has been dropped, at the voluntary in the 20 provinces with request of the authorities. it is considered enrollment rates below the national average, that at the provincial level, the poorest while increasing government allocations to parents are already exempt from paying those schools to compensate for the loss of school fees. school income *Triggers in bold as specified in PRSC I 41 Triggers and Benchmarks T Status after Negotiations I Prior Actions (PRSC |I) Comments Introduction of policy and institutional Trigger fulfilled. Prior action for PRSC Introduce policy and institutional A number of items (i.e. syringes for vaccination, measures, rendering all preventive services II refonnulated to reflect clarification measures, extending the number of iron, cloroquine, and the carnet de sante) are now at the primary health care level free of of the Government's policy in this preventive services at the primary provided free of charge. The MOH has been charge area. health care level free of charge. determined in its rejection of the trigger as originally formulated in PRSC I, on the grounds that its philosophy goes against the Bamako Initiative (cost recovery in health), of which the Bank is an active supporter. Introduced appropriate measures to Trigger fulfilled. Same formulation. Two ministerial decrees issued jointly by the essential drugs sold by CAMEG with a view Ministiy of Health and the Ministry of to reducing the cost of drugs to users Commerce, Promotion of Enterprises and Crafts fixed at 25 percent the maximum profit margin on over 200 essential generic drugs (MEG) sold by wholesalers as from February 2002. The Govemment will have provided financial Measure fulfilled. Provide financial resources in the 2002 resources in the 2002 budget to replace IDA budget to replace IDA funds which were funds under the recently-closed Health and financing health districts and regional Nutrition Project (expected to close on health directorates under the recently- September 30, 2001); this will ensure closed Health and Nutrition Project, with a continuity of quarterly disbursement to health view to ensuring continuity in quarterly districts and regional health directorates to disbursements that will "top off" financing "top off" financing from other sources to carry from other sources. out their plans, maintain quarterly financial management and performance reports, and carry out random financial audits. Review (evaluation) of the COGES, including Measure fulfilled. Review issues related to the COGES Review finalized. such issues as adequacy of financial including quality of relations with management arrangements, quality of relations communities and health sector actors and with communities and health agents to the adequacy of financial management arrangements. Continued vaccination program in order to Measure fulfilled. Continue efforts to boost immunization boost vaccination rates in accordance with coverage rates with a particular focus on PRSP objectives for 2000- with particular targeting rural areas in accordance with efforts targeting rural areas PRSP targets. 42 Triggers and Benchmarks | Status after Neotiations Prior Actions (PRSC ) Comments Completion of a beneficiary assessment to Measure fulfilled. Complete beneficiary assessment to ascertain Beneficiary assessment completed and ascertain perceptions and views of the views and perceptions with regard to quality analyzed in a September 2001 workshop. population with regard to the efficiency and and access of health care services, including accessibility of health services, including financial, socio-cultural and geographic financial, socio-cultural and geographic barriers. barriers to care Implementation of the plan to staff CSPSs Measure fulfilled. Implement plan to staff CSPS with minimum PRSP Target has been exceeded. with minimum personnel in accordance with personnel in accordance with norms norms established by the MOH and reiterated established by the MOH and reiterated in the in the PRSP (the proportion of CSPSs PRSP. adhering to these norms should be at least 65% by the end of 2001); Maintained incidence of CAMEG's inventory Measure fulfilled. Same formulation. The CAMEG drug stock out rate has been shortfalls for the 45 generic drugs at a level maintained below 2 percent. below 8% Completion of the study of opening up Trigger fulfilled. Prior action Open up the cotton sector to several The SOFITEX monopoly ended on cotton sector to several operators reformulated. operators December 27, 2001, with the approval by the Council of Ministries of two decrees - Decree ended SOFITEX legal monopoly in opening two of the three cotton producing cotton marketing zones to new private sector investment in - Opened up two new cotton producing zones ginning activities. to new private investment in ginning - Established calendar of actions needed over the next 18 months to prepare the sector for new investors in new zones Liberalized cotton seed marketing (auction Trigger (partiallv) fulfilled. SOFITEX is Liberalized cotton seed marketing Measure referring to auction sale will be re- sales and lifting of export ban) selling the seed (including on the export discussed with the authorities, to see how it market) at a price that approaches world fits into the liberalization strategy. market. There is no export ban.. The usefulness of auction sales is under discussion. Restructuring, by end-2001, of rural Trigger fulfilled. Prior action Restructuring, by end-2001, of IDA funded Following the June 2001 mid-term review, development operations under reformulated to reflect its reference to rural development operations under the extension service component of the implementation, in order to harmonize IDA-funded agricultural operation. implementation, in order to harmonize their National Agricultural Services Program their objectives, implementation strategies, objectives, implementation strategies, was restructured. A new demand-drive content, implementation and management content, management procedures and approach to agricultural service delivery procedures and monitoring-evaluation with monitoring and evaluation with those was introduced, and a procedure manual those defined in the LPDRD and PRSP defined in the LPDRD and PRSP drafted. 43 Triggers and Benchmarks Status after N otiations Prior Actions (PRSC | Comments Development of action plans in other Trigger partially fulfilled. Diagnostic Same formulation. A program to develop private/public production streams and priority programs study on cowpea ready. TOR for fruits partnerships to boost agricultural in agriculture and livestock (cotton, fruits and vegetables and livestock and meat diversification by improving market access and vegetables, livestock/meat, cowpea, ready. TOR for oilseed underway. for a variety of commodities (SOPROFA) oilseeds) was launched in December 2001. Enforcement of health guidelines for livestock Measure fuilfilled. Same formulation Completed institutional audits of ministries Measure not fulfilled. Prior action for Finalize TOR for institutional audits of Nevertheless, there has been progress in this active in the rural sector (Agriculture, PRSC II reformulated while original Ministries of Agriculture and Livestock area. Donors agreed with goveurnent on an Livestock, and Water and Environment) action moved to PRSC IH (see Annex 8). approach to review field level agricultural Terms of Reference (TOR) for the audit services. This would result in an of the Ministries of Agriculture and institutional analysis (roles, responsibilities, Livestock finalized. structure and staffing) of the Ministries of Agriculture and Animal Resources. Update of the institutional responsibilities and Measure fulfilled Clarify the mandates and responsibilities of the administrative procedures of the CONAGESE and DGPE in those areas directorate and the agency responsible for pertaining to EA compliance and enforcement enforcing environmental assessment requirements Update of the National Action Plan for the Measure Dropped Measure considered not useful by both the Environment Government and ASPEN Not in the original matrix. Measure added => Preparing a three-year capacity building plan The justification for these measures is for EA discussed in detail in Annex 7. Not in the original matrix. Measure added > Establish small EA focal points in the key ministries involved in policy reforms listed as prior actions for PRSC 11 44 89. PRSC 1m.: Component 2, Pro-poor Sectoral Policies. PRSC HI will continue to support the implementation of the ten-year plans in education and health, and the liberalization of the cotton sector, agricultural diversification and institutional reform in rural development. The program supported by PRSC III in the education sector will continue its focus on: (i) implementing the Government action plan in the area of basic education, (ii) expanding access to education in the provinces with lowest enrollment rates and (iii) decreasing the cost of education to poor families. 90. The PRSC III program in the health sector will support a new set of reforrn measures aimed at improving the equity and efficiency of public spending including: (i) the expansion of community-financing schemes as a means to improve equity in access to health and nutrition services for low-income groups and to provide incentives to deliver quality care; (ii) the rationalization, standardizing and/or removal of user charges to limit the impact of health care payments on the income of needy households; and (iii) the fine-tuning of performance based, contractual approach for funding health districts to ensure the delivery of priority services that are the major causes of mortality and morbidity among Burkina's poor. 91. In rural development, the PRSC III program will accompany the reform process in the cotton sector by supporting participatory mechanisms for developing the rules and conditions governing the opening of two cotton zones to private investors, awarding the contracts, and addressing issues related to input financing. In addition, PRSC III will support measures geared at implementing institutional reforms to strengthen the regulatory, analytical and public service delivery roles of rural development ministries, and at boosting agricultural diversification. C. Credit Administration 92. Credit amount and financing. The Borrower will be the Government of Burkina Faso. The proposed amount of IDA financing is US$35 million equivalent. 93. Tranching. The credit will be disbursed in one tranche of SDR 28.1 million (US$35 million), to be released at credit effectiveness, anticipated to be in August 2002. The credit closing date would be June 30, 2003. The current PRSP cycle will likely involve another single-tranche PRSC (PRSC III - about US$40 million), to support implementation of the PRSP of Burkina Faso. 94. Disbursement. The credit will follow IDA's simplified disbursement procedures for adjustment operations.23 Credit proceeds will be made available for disbursement upon effectiveness. The Government will open an account with the Central Bank. Upon notification of release of the tranche, IDA will deposit the proceeds in this account when requested to do so by the Government. If, once deposited with the Central Bank, withdrawals are used for ineligible purposes (i.e., to finance goods or services on the standard negative list), IDA will require the Government to refund the amount to the credit account. 23 Operational Memorandum: Simplifying Disbursements under Structural and Sectoral Adjustment Loans, February 8, 1996. 45 95. Auditing. IDA reserves the right to seek an audit of the deposit account. 96. Implementation. The reform program funded by this credit will be implemented by the Ministry of Economy and Finance. Because this is a one-tranche operation, overall program implementation and macroeconomic performance will be reviewed in the context of preparation for the following credit, as well as through bi-annual reviews of this credit, and jointly with the IMF through the assessment of the implementation of the PRSP. D. Prior Actions for PRSC II and Triggers for PRSC III 97. PRSC H: Prior Actions. As part of the reform program supported by the proposed PRSC II, the Government has carried out the following prior actions: * Adoption of a budget bill for 2002 based on ceilings set with reference to the 2002-04 MTEF and PRSP priorities; * Completion of program budgets consistent with PRSP objectives in key ministries (including Economy and Finance, Infrastructure, Secondary and Tertiary Education), performance indicators included; * Completion of PER studies (Economic Infrastructures and Rural Development); * Organization of regionalization of payment order issuance through creation of a legal framework for the appointment of "delegated payers" and "secondary payers" within ministries to empower regional Government entities; * Approve the new Regulatory Decree for public procurement; * Redefine the role of the two major departments DGCOOP and DCMP, limiting DGCOOP's role to lending and disbursement procedures; * Present terms of reference and launch the expression of interest for the selection of a consultant for the elaboration of a new Procurement Procedure Manual; * Present a Capacity Building Plan (objectives, activities, calendar, budget) for strengthening the DCMP and DGCOOP, in the light of their new roles; * Elaborate terms of reference and launch the expression of interest for the selection of a consultant/independent auditor to verify that at least 50 percent of public procurement for FY01 is subject to competitive procedures; * Submission of Budget Execution Reports for FY99 and FY00 and their remittal to the Audit Office (Chambre de Comptes); * Presentation of an Action Plan for operationalizing the Supreme Audit Institutions (Cour de Comptes); 46 * Appointment of 3 magistrates of the Cour de Comptes, including its President; * Finalization of the CFAA study and presentation of Action Plan harmonizing the recommendations of CFAA, PRGB and ROSC; * Adoption of transparent mechanisms for allocating resources managed at the district level (e.g., posting budgets allotted to each health facility in public places in the districts); * Refine the PRSP list of poverty indicators to be used as benchmarks for the monitoring and evaluation of the PRSP; * Implementation of the Educational Policy Statement and of Governmental Action Plan in the area of basic education; * Implementation of a mechanism for subsidizing school supplies in the 20 provinces with lowest schooling levels; * Introduce policy and institutional measures, extending the number of preventive services at the primary health care level free of charge; * Introduce appropriate measures to reduce the profit margin on essential drugs sold by CAMEG, with a view to reducing the cost of drugs to users; * Open up the cotton sector to several operators; * Liberalize cotton seed marketing; * Restructuring, by end-2001, of rural development operations under implementation, in order to harmonize their objectives, implementation strategies, content, and management procedures and monitoring and evaluation with those defined in the LPDRD and PRSP; * Development of action plans in other production streams and priority programs in agriculture and livestock (cotton, fruits and vegetables, livestock/meat, cowpea, oilseeds). 98. PRSC III: Triggers. Whether IDA will proceed with the PRSC III will be triggered by the completion of the following: * Adoption, by May 1, 2002, of the MTEF for the 2003-2005 period that is keeping with priorities under the revised and updated PRSP, and adoption in 2002 of 2003-05 program budgets consistent with the MTEF and PRSP; * Operationalize regionalization of payment order by June 2003 through: (a) Revision of budget regulations to reflect changes in the order of payment authority, and (b) Creation of budget administration at the regional level linked to the IFMS, as a pilot in Bobo- Dioulasso for FY 2003; * Revise the procurement code to fully align it with best international practice (details to be specified); 47 * Create a high-level working group to define and oversee execution of procurement reforms; * Adopt a Procurement Procedures manual (PPM); * Implement an adequate institutional capacity building plan; * Verify that 50 percent of public procurement will have been subject to competitive procurement practices as required by law and that the largest contracts will be subject to public audit; * Institutionalize Procurement Plans through official instructions issued by the Ministry of Finance to ensure proper coordination between procurement and the projected budget execution schedule; * Completion of budget report for the 2001 fiscal year and its transmission to the Supreme Audit Court by December 2002; * Satisfactory implementation of key recommendations of CFAA Report (details to be specified); * Reinforcement of ex-post controls by IGE and Inspection General de Finance IGF; * Satisfactory implementation of Educational Policy Statement and of Governmental Action Plan in the area of basic education; * Continued implementation of a mechanism for subsidizing school supplies in the 20 provinces with lowest schooling levels; * Put in place incentives to entice health personnel, in particular surgical staff, nurses and midwifes to: - work in rural areas, in particular poor and inaccessible areas; - ensure a high level of coverage for key services for women and children on the basis of the experience in Nouna and other experiences and studies; * Develop, adopt and publish in the press and in health institutions a nationally standardized list of fees for services provided by health centers and district hospitals, drugs, and other consultative services, including: - Subsidized fees for 3-5 essential pediatric drugs; - Reduction as far as possible the cost of consultations for children under 5 years of age; - Reduction as far as possible the cost of birth; - Free prenatal care; - Free preventive services for children; * Continue implementation of 18-month program to prepare the cotton sector for the new investors: 48 - Creation of standing committee and working groups to advise and monitor the implementation of the decrees opening two new cotton zones to private investors; - Recruitment of firm to draft the bidding document; - Prepare the bidding document outlining the rules and conditions for awarding contracts; - Start the bidding process for the two zones and bring to point of sale; - Adoption of credit and risk guarantee mechanisms; - Creation of inter-professional association involving all actors in the sector; - Put in place an objective mechanism, agreed to by the inter-professional association, for setting the price of seed cotton; E. Benefits and Risks 99. By focusing on public sector reform and governance and pro-poor sectoral policies, the proposed PRSC is expected to help move the poverty reduction program forward in two ways. First the credit will help poverty reduction by improving public expenditure management and ensuring that public funds are actually channeled to the frontline of service delivery. Line ministries and local-level spending agencies are expected to become more efficient in budget formulation and execution, which will progressively create the network, mechanisms and skills for more effective budget management across the country. By improving the availability and efficient use of public resources for basic public services, and by stressing delegation, accountability and transparency in budget management, the reform program associated with this credit should improve both the quality of these services and access to them. Secondly, PRSC II supports the implementation of important measures in priority sectors, health, education and rural development, whose combined effect is expected to benefit the poor by improving their access to basic social services and increase their incomes by expanding income generating activities, notably in rural areas. 100. The main risks to this credit and the reform program that it supports come from three sources: political stability, vested interests, fiduciary and institutional issues. First, the reforms are being implemented in a sensitive and evolving country context, related to progressive developments of democratic institutions and participation of opposition parties in the political dialogue. Secondly, vested interests ofindividual constituencies and regions may seek to exert influence on the composition and execution of the budget, which may divert resource allocation away from the poverty reduction activities. Thirdly, as spelled out in the CPAR, PRGB and CFAA, despite the Government's strong continued efforts to strengthen financial management and procurement systems, some fiduciary risks with regard to the use of public funds remain. This risk is mitigated somewhat by the proposed use of societal pressure via greater transparency (wide dissemination of the key elements of the budget). Finally, continued weaknesses in implementation capacity, particularly in line ministries may hamper improvements in service delivery that are intended under the credit. These risks are mitigated to a substantial extent by the design and content of the credit since the main reform measures supported by this credit will have been taken as prior actions before Board presentation and by the fact that there will be sustained technical support from the Bank and other donors. 49 Unofficial Translation Annex 1. Letter of Development Policy BURKINA FASO MINISTRY OF ECONOMY AND FINANCE No.#-775/MEF/STC-PDES Mr. James WOLFENSOHN President - World Bank WASHINGTON DC, 20433 (USA) LETTER OF DEVELOPMENT POLICY Dear Mr. Wolfensohn, 1. The objective of this LDP is to present the progress made on the reform program under the second PRSC, which aims at supporting the implementation of the PRSP, and to discuss the prospects for the period 2002-2004. The Letter reviews the progress made and difficulties encountered during the first year of the implementation of the PRSP. It outlines the programs that are likely to put Burkina Faso's economy on a higher growth path, contributing to poverty alleviation. The letter also proposes major reforms to improve (i) budget management procedures; (ii) economic competitiveness; (iii) support directed to the productive sectors; and (iv) human resource development. The program laid out in this regard is consistent with the sector-based strategies that have already been formulated and approved, and aims at strengthening the impact of pubic policies on poverty reduction. The ultimate aim is to raise the purchasing power of the most underprivileged sections of the population and provide them better opportunities for social development. 2. The elaboration of this strategy aims at encouraging all technical and financial partners to support the Government's priorities and strategic choices, with a preference for using budgetary instruments, whose perforrnance and transparency the Government is committed to improve further. In view of the remarkable progress made during the last few years in the improvement of budget management, a growing number of development partners have decided to progressively switch from project assistance to budget support in order to achieve a better co-ordination of assistance. This development indicates that, on the whole, there is greater confidence in the Government's capacity of managing the budget and public finances, but also increased Government responsibility to give account of the use of resources. 3. This letter consists of three parts. The first part examines recent developments in the economic and social spheres. The second part reviews the progress made in the implementation of the PRSP and the reform program supported by PRSC II. The third part presents the prospects for the next three years. 50 1. RECENT DEVELOPMENT IN THE ECONOMIC AND SOCIAL AREAS 1.1 Macroeconomic Development 4. Despite a difficult economic recovery after the slowdown in growth experienced in the year 2000, in 2001 Burkina Faso has implemented the program supported by the IMF's PRGF in a determined fashion. All criteria relating to the HIPC completion point have been satisfied as of March 2001. The preparatory work undertaken at end-March 2002 to examine the HIPC completion point demonstrated the need for additional debt relief, in the light of the deterioration of Burkina Faso's external position as compared to the assumptions made at decision point. The Bretton Woods institutions approved the HIPC completion point on April 9 and 11, 2002, respectively, and decided to grant Burkina Faso additional relief amounting to US$129 million, thus bringing to some US$550 million the total amount of the reduction of the country's external debt in net present value terms. 5. According to the latest available estimates, real GDP growth reached 5.7 percent in 2001. Owing to adequate rainfall and in spite of unfavorable trends of international market prices, the production of seed cotton increased by 45 percent to reach 400,000 tons. The good cotton crop contributed to increase the income of growers (representing about 20 percent of the population) by some 70 percent, leading to a considerable fall in the level of poverty in cotton-growing areas. 6. As a result mainly of the rise in the export of cotton and a fall in the import of capital goods, the external current account deficit (excluding grants) declined to 15.9 percent of GDP in 2001, as compared to 17.6 percent in 2000. Including grants, the current account deficit was in the order of 12.4 percent of GDP, representing a decline of more than two percentage points of GDP compared with the year 2000. A marked improvement in the overall balance was also registered, leading to an accumulation of net foreign assets of CFAF 27 billion. 7. In 2001, budget execution faced some difficulties, mainly due to a fall in tax revenue, affecting all revenue categories and in particular Direct Corporate Taxes (BIC). This fall in tax revenue was offset by cuts in current and investment expenditure. As a result, the overall deficit (on a commitment basis, including grants), reached 4.8 percent of GDP, 0.3 percent smaller than the target of the PRGF program. 8. In spite of severe cash-flow problems, the government safeguarded planned budgetary allocations to poverty alleviation programs, which continued to increase in 2001. The actual utilization of HIPC funds for the years 2000 and 2001 was relatively slow due to the late receipt of funds from certain creditors, as well as the need to establish appropriate expenditure procedures. Nevertheless, more than 80' percent of HIPC funds 2000 and 2001 have been committed by March 15, 2002 and the delay in committing HIPC funds will be made up for by the end of 2002. 9. The average annual inflation rate reached 4.9 percent in 2001, mainly on account of the severe pressure on the prices of food-grains due to the poor harvest in 2000. However, as a result of the fall in prices towards the end of the year, the 12-month inflation rate declined 51 to about 1 percent in December 2001. The increase in the GDP deflator is estimated to be 3.5 percent. 10. Money supply and credit to the economy rose respectively by 4.9 percent and 13.9 percent as compared to the end of 2000, while crop credits were reimbursed without difficulty. Local banks adhered to the principal prudential ratios stipulated by WAEMU. Non-performing loans remained stable at 2.5 percent of total amount of credit to the economy. Encouraged and trained by the State, micro-finance institutions (networks of cooperative banks and other local networks) continued to develop and played an increasingly important role in the financing of inputs in cotton-growing areas. 1.2 Social Development 1.2.1 Poverty Profile 11. According to the 1998 NHS, 45.4 percent of the population lives below the poverty line, fixed at CFAF 72,690. In 1994, the incidence of poverty was estimated at 44.5 percent. Poverty is more predominant in rural areas where the majority of people live. Almost 80 percent of the population live in rural areas and are employed in the agricultural and related sectors. Overall and sustained reduction of poverty depends therefore on a significant transformation of the rural sector, led by marked improvements in productivity levels. At the same time, the fight against poverty should not ignore urban areas where, despite relatively low incidence, poverty is spreading faster than in rural areas. 1.2.2. Health 12. Even though health care conditions have improved during the last few years, sustained efforts are still needed to improve health indicators. The rate of infant mortality continues to be high (105.3 per 1,000 live births in 1998) and infectious and parasitic diseases are rampant. Malaria is one on the main causes of morbidity with an average of 600,000 cases per year. The government has continued to improve access to primary health care, and undertook widespread vaccination campaigns and campaigns against endemic diseases by developing the necessary infrastructures, taking preventive measures and creating awareness. 13. HIV has spread rapidly and is present in all social classes. In 2001, the overall rate of HIV prevalence was 9.8 percent. The government and all its partners are well aware of the size of the problem in this sector. Due to its multidimensional effects, this phenomenon has become a major developmental problem, which must be tackled in an engaged, responsible and coherent manner, by intensifying preventive measures and taking care of infected persons. Burkina Faso has to this end prepared a multisectoral program, in the amount of US$66m, to be financed by its partners. It has also contributed to the international anti-AIDS program by hosting the 2nd International Conference on AIDS in Africa (CISMA) in December 2001. 14. There has been considerable improvement in accessibility of households to safe drinking water. In 2001, almost 90 percent of the population could obtain water either from wells, bore-wells or taps. Nevertheless, disparities between various regions persist and the 52 problem of sewage disposal will continue to be a major cause for concern, considering that some 70 percent of households still do not have access to latrines. An extensive program of collective sewage disposal covering the cities of Ouagadougou and Bobo-Dioulasso has been launched to improve living conditions. Education is an important factor for speeding up progress in the fields of health and sanitation. 1.2.3 Education 15. The education sector is still characterized by low levels of literacy and low school enrolment rates. In 1999-2000, the following enrolment rates were recorded: pre-school level: 1.44 percent; primary level: 41.3 percent; secondary level: 11.9 percent; university level: 1 percent. Overall, literacy level was in the order of 28 percent. 16. During the past decade, Burkina Faso has pursued the policy of increasing budgetary allocation to the education sector, particularly on primary education. This policy has led to a significant improvement in education indicators, even though it is still far from the objective of "education for all." In the last decade, the number of children enrolled in primary schools rose from 30 percent to 41 percent (35 percent in the case of girls) and the number of new entrants doubled. The main problems identified in this sector are: (i) insufficient access due to inadequate infrastructure and its unequal distribution; (ii) high cost of education; (iii) improper utilization of resources and poor quality of education; (iv) insufficient funds for education; (v) low management and supervision capacities. 2. IMPLEMENTATION OF POVERTY ALLEVIATION PROGRAM 17. The government of Burkina Faso has taken upon itself to mobilize all the means at its disposal to implement the PRSP that was approved in 2000, while at the same time consolidating its achievements and deepening the reforms undertaken under its different programs. The implementation of the PRSP is supported by the World Bank through PRSCs, the first of which was disbursed in October 2001. After some initial problems associated with the implementation of the PRSP due to the delay in receiving debt relief under the HIPC Initiative and the time needed to set up coordination and monitoring mechanisms, 2001 can be considered a turning point in realizing priority action programs. Almost all the scheduled activities have either been, or are being, carried out. As regards the four strategic pillars of the PRSP, this evaluation will be fleshed out in the following paragraphs. 2.1 Pillar 1: Accelerating Broad-Based Growth 18. Agriculture remains the principal source of growth. The development of other sectors crucially depends on a concerted effort to support production in agriculture, improve productivity and strengthen producer organizations. 2.1.1 Rural Development 19. The structural weakness of agricultural productivity and incomes impede significant improvements in the living conditions of the rural population. Several studies have confirmed the potential of agriculture despite the existence of constraints. Only one-third of the nine 53 million hectares of agricultural land is cultivated. Moreover, it is estimated that only 12 percent of the 165,000 hectares of land suited for irrigation is utilized. The potential reserves of surface and underground water are estimated to be 10 billion and 113 billion cubic meters, respectively. 20. The final version of the LPDRD lays out the sector's policies and strategies that have been adopted, including: (i) the Strategic Plan for Scientific Research; (ii) the Orientation Note on Livestock Action Plans; (iii) the Strategic Report on the Prospects of Agriculture and Livestock (until 2010); (iv) the National Action Plan for the Prevention of Desertification; (v) the Strategic Plan for Sustainable Agricultural Sector Growth; and (vi) the different approaches developed for the Management of Agricultural Land and Local Development. 21. The new rural development policy aims at increasing agricultural production by 5 to 10 percent per year, contributing to a growth of per capita income of farmers and cattle- breeders of at least 3 percent per year, and creating suitable conditions so that sufficient nourishment is available and accessible to the entire population. 22. To achieve the goals listed above, priority activities are based on the following strategic poles: (i) development of market economy in rural areas; (ii) promotion of sustainable management of natural resources; (iii) achievement of food and nutritional security; (iv) improvement of women's economic position in rural areas; (v) rationalization of the role of the state and promotion of private initiative; (vi) co-financing of programs by public authorities and local communities; (vii) administrative decentralization; and (viii) assignment of responsibilities to local bodies, creating the necessary infrastructures and broad-based participation of local people in their management. 23. The reorientation of the activities of National Program for the Development of Agricultural Services (PNDSA II) at the occasion of the mid-term review of the project in June 2001 led to a restructuring of rural development operations. There has been a significant increase in the cultivation of food crops after the mixed public-private Society for the Promotion of Agricultural Networks (SOPROFA) was set up to train growers of food-crops, and help them to market their produce. 2.1.2 Liberalization of the Economy. Improvement of Competitiveness and Development of the Private Sector 24. The adoption of Law no. 033-2001/AN on December 4, 2001, modifying the Law no. 1 5/94/ADP dated 5 May 1994, concerning the organization of competition and consumption in Burkina Faso, underscores the government's commitment to reforms aimed at liberalizing the economy. The amended law gives powers to the National Commission on Competition and Consumption (CNCC) to bring violations of laws relating to competition, fraud and corruption to the attention of the judiciary. Box 1. The New Privatization Program The state will Withdraw further, from commercial activities after adopting a new law on July 4, 2001, authorizing the privatization of 20 companies, six of which were already partially privatized (Law no. 015/AN, dated July 4, 2001 on the authorization for the privatization of public sector companies). Accordingly, the Privatization Commission has prepared a timetable for the privatization program. The 54 privatization law comes in the wake of a study of the remaining portfolio of state enterprising consisting of fifty companies in which the govermnent is still present, no matter what the government's stockholding position. These include notably some companies of strategic importance, such as monopolies on public utilities (water and electricity) and petroleum products. - Amongst the companies from which the state or its agencies will seek partial withdrawal are ONEA, SONABEL, SONABHY, CBMP, BUMIGEB, CENATRIN, H8tel Independance, Hotel Silmande and CCVA; - Companies from which the state or its agencies are going to withdraw completely include ONBAH, ONPF, MDIFA, SBF, Burkina & Shell, SIFA, FASOPLAST, ZAMA PUBLICITE, SOSUCO, and CGP. 25. In the same vein, the liberalization process has been strengthened by the increasing openness of the country to the outside world and improvements in the judicial and institutional environment for businesses. In the context of adapting national laws to the provisions of the Organization for the Harmonization of Business Law in Africa (OHADA) treaty, the judicial system has benefited from the establishment of a business registry, a credit mobilier, and from training ofjudiciary personnel. 26. The first phase of the privatization program, covering forty-four (44) enterprises has been executed to more than 90 percent. Under the program, which included privatization through sale of stocks or granting of concessions to the private sector, twenty-six (26) companies have been privatized, twelve (12) liquidated and two (2) have been turned over to research activities. The program resulted in the elimination of monopolies in several sectors, notably in the transport and telecommunication sectors. In the latter sector the reforms are bearing fruit, as the year 2001 saw two successive reductions in telecommunication prices. During the coming years, the privatization of the operating company ONATEL and the strengthening of the Telecommunications Sector Regulatory Authority's (ARTEL) capacity, are expected to have further positive effects on the price of international telecommunications and on that of the price of connecting between the networks run by different companies. 27. With the further opening of markets at the regional (WAEMU) and international level, the economy of Burkina Faso can become more competitive only by lowering the cost of the factors of production, e.g. electricity, telephone, water and transport. The government has therefore also begun to strengthen regulatory bodies in the sectors of telecommunication, energy and water together with the liberalization of public utility services. 28. In the energy sector, the Letter of Development Policy adopted in December 2000 envisages the setting up of a regulatory agency. To facilitate the implementation of this measure, the government has begun to liberalize the sector by approving two laws: the first one (Law no. 60/98/AN of December 17, 1998) defines the general rules and regulations of electricity provision in Burkina Faso; the second law (Law no. 015/AN of July 4, 2001) allows the Government to privatize companies with public participation. The approval of these laws has paved the way for private-sector entry in the production and distribution of energy over the medium-term. Moreover, the option of connecting the national electricity grid with that of neighboring country saw a first realization with the finalization of the interconnection of the line between Ivory Coast and Bobo-Dioulasso. 55 29. With a view to reducing the burden of tax and customs duties on the formal sector, especially local industries, the government has finalized a study on the Macroeconomic Impact of Corporate Taxation on Overall Supply (TEMI). The conclusions of this study were discussed in a specially designed workshop, held in Ouagadougou in early 2002, with the participation of the private sector. In this context, it became apparent that it is necessary to deepen the studies to define more clearly the strategies conceming the widening of the tax base, simplification of tax laws, and identification of the sectors escaping taxation. 2.1.3 Budget Reforms 30. Burkina Faso has implemented a series of reforms resulting in healthy public finances, modemization of its tax system and development of sound instruments of budget management, which markedly improved the control and transparency of state expenditure. The Government has also implemented the measures developed for the regional integration in the WAEMU in line with the agreed regional timetable. Some of these measures had a negative impact on public finances, especially on budgetary revenue. This outcome has prompted the Govemment to conduct more detailed studies and to take steps to widen the tax base, protect budgetary revenue and improve the efficiency of expenditure. 31. One important measure in this context is the preparation of a comprehensive plan, under the overall guidance of the MEF, aiming at strengthening capacity in the areas of macroeconomic and budgetary management. Preparation began in 2001 with a series of studies, namely the ROSC, PRGB, and CFAA. 32. Modernization of the means available to the economic and financial administration services was undertaken in 2001, particularly through capacity building in the revenue- collecting departments, continuing efforts to extend the coverage of the CID and the implementation of new accounting system of Public Entities of Administrative Nature (EPA). 33. Concerning the budget, efforts were made to improve the quality of the MTEF by taking into account the priorities of the PRSP for the period 2002-2004, which are reflected in the allocations to social sectors in the 2002 budget. Moreover, efforts were undertaken to ensure a timely execution of the budget and shorter delays in the preparation of the budget execution law. An effort was also made to deepen budget de-concentration and utilize delegated credits in social sector ministries and public procurement. 2.2 Pillar 2: Ensuring that the Poor Have Access to Basic Social Services 34. The budget of the state increasingly funds the major part of the expenditure on education and health and additional resources will continue to be mobilized from partners with a view to expanding education opportunities and providing greater access to health care and medication. The resources allocated to these sectors have increased on average by 10.7 percent per year between 1998 and 2001. The share of these expenditures as a proportion of the budget of the state (excluding grants and HIPC resources) has increased from 21.7 percent to 24.7 percent over the same period. This commitment reflects the government's desire to provide more services for education and health care, particularly to the most underprivileged sections of the population, and intensify the fight against AIDS. These 56 efforts have led to an expansion of social and medical infrastructure, improvement in equipment, and recruitment of new staff. 2.2.1 Access to Basic Education Services 35. In May 2001, the government approved the Letter of Education Policy. This document takes into account the conclusions and recommendations of the meeting of the general assembly on education held in September 1994, as well as the provisions of the Orientation Law on Education of May 6, 1996. The Letter reconfirms education as a national priority and plans the intensification of efforts to increase school enrolments with a view to reaching the rate of 70 percent by the year 2011. Other key objectives include achieving an adult literacy rate of 40 percent and improving the cost-efficiency of the country's education system. 36. The implementation of the program for the expansion of basic education involved the construction of new schools. Efforts were concentrated in the 20 provinces characterized by lowest enrolment rates with the implementation of the priority program of the PRSP, financed with HIPC resources. Under the program, 622 additional classrooms were built and equipped during the period 2000-2001. Some 60 more classes were built with the assistance of the Swiss cooperation. In addition, 100 additional Literacy and Training Centers (CPAF) will be created, funded by HIPC funds for the year 2001. Concerning recruitment, HIPC funds have allowed the additional staffing for the academic year 2000-2001, with the contribution of about a thousand staff members of the National Development Service (SND). 37. Efforts to reduce disparities in school enrolment rates have continued. School enrolment rates in the 20 least literate provinces rose by 13 percent between 1999-2000 and 2000-2001, against a national average increase of 5.8 percent over the same period. The number of children enrolled rose from 852,160 to 901,291. Pupils have benefited from greater availability of free textbooks, school equipment and food for canteens. Overall, all 226,000 children, 38 percent of whom are girls, have been affected by these improvements in the 2000-2001 academic year. 38. To improve the quality and efficiency of both formal and informal primary education, the government has adopted regulatory texts to reorganize basic education in sub-cycles and define the rules for class advancements and repetitions. Learning time in the class has been increased from 600 to 800 hours per year and the curricula have been revised. Teaching and learning conditions have been improved by expanding the number of school canteens, strengthening school health care, providing a minimum package of inputs and promoting the reading habit. 39. The change of the status of graduates of the National Teachers' School (ENEP) and the reduction in teachers' training period from two (2) years to one (1) year was aimed at reducing the unit cost and improve the control of recurrent expenditure. The revision of the rules governing class advancement and repetition also aims at lowering costs, which benefits pupils' parents in addition to the benefits related to the distribution of free textbooks and provision of meals in school. The contribution of HIPC resources for 2000 and 2001 to reach this objective, has been in the order of CFAF 1.2 billion, consisting of didactic material 57 (CFAF 344 million), subsidies for providing learning tools to children from underprivileged areas (CFAF 450 million) and subsidies to school canteens (CFAF 400 million). 40. In order to improve its ability in the elaboration and implementation of literacy campaigns, the government (under the 10-year Basic Education Program - PDDEB) has decided to entrust informal education to voluntary organizations and NGOs active in this field in rural areas, by adopting a new "get it done" strategy to be supported by a literacy development fund, which was launched in March 2002. 41. While placing priority on the development of basic education, both in terms of quality and quantity, the government will also pay attention to the development of education at the post-primary levels, to ensure a proper balance within the system. This strategy aims at satisfying the aspirations of a part of the population in this area, the development needs of the modern sectors and the need for an evolution of the infornal sector in both urban and rural areas. 2.2.2 Access to Health Care Services 42. In the area of health, the Government has launched a 3-year plan, derived from the 10-year PNDS. This plan include policies aiming at lowering morbidity and mortality rates by focusing on eight (8) intermediate goals: 1/ increasing national health coverage; 2/ improving the quality, and increasing the utilization, of health services; 3/ intensifying the fight against communicable and non-communicable diseases; 4/ reducing the transmission of HIV; 5/ developing human resources; 6/ making health care services affordable to the population; 7/ increasing funds destined to the health sector; 8/ strengthening the institutional capacity of the Ministry of Health. 43. The efforts to rebuild and standardize health care infrastructures have continued in 2000 with the construction of 23 dispensaries, 18 maternity centers, 104 housing units and 16 stores for MEG. In addition, 56 CSPS were set up to reduce the distance to health care facilities and 15 CMA were built to relieve pressure on National Hospital Centers (CHN). In 2001, the functioning of health care facilities continued to improve owing to an increase of health allocations in the national budget (14.1 percent in 2001 against 12.4 percent in 2000), the recruitment of additional staff to increase the number of fully staffed and operational CSPS (more that 70 percent of the total in 2001) and an improvement in the availability of essential generic drugs. Vaccination coverage rose from 80 percent to 84 percent in the case of Tuberculosis, from 57 percent to 64 percent for DCT/Polio (Diphtheria, cholera and tetanus), and from 55 percent to 65 percent for measles. 44. Access to essential drugs will further improve due to the recent reduction in the profit margin of the CAMEG by 32 percent. Steps are also being taken to ensure that the decline in the margin is reflected in the prices of basic medicines charged outside major urban centers. A survey has already been conducted to verify the enforcement of earlier price reductions for basic medicines. Preliminary findings reveal a declining gap between the price fixed by law and those actually charged in rural and remote areas of the country, although in some cases the delays between legal action and actual price decline are substantial, due to the slow spread of information. 58 2.3 Pillar 3: Increasing Employment Opportunities and Income-Generating Activities for the Poor 2.3.1 Reducing the Vulnerability of Agricultural Activities 45. Significant progress has been achieved during the last twelve months in the area of water and soil conservation, with the creation of some 23,378 anti-erosive sitesl8,826 hectares of "zai" lands, 7,124 hectares of mulch and 1,638 hectares of gentle slopes. In addition, in an effort to improve the management of natural resources, Village Committees for Land Management (CVGT) are being appointed to take care of soil conservation. 46. Concerning rural hydraulics and the supply of drinking water, the government plans to strengthen institutions of the sector to guarantee the efficient management of this precious resource. For this purpose, a law on water management was approved in February 2001. 47. In terms of concrete achievements, 1,034 new water supply systems have been set up (against a target of 600), 774 bore-wells were have been opened (against an estimated target of 500) and 35 large diameter wells have been restored for use. The number of large wells will be further increased in the future through the utilization of HIPC resources. Concerning agricultural water management, some 1,331 hectares of lowlands, 181 hectares devoted to small irrigation and 60 hectares destined for training have been opened. Concerning grassland water management, one dam has been built, 22 bore-wells (15 of which in the context of a plan to save livestock) and 23 wells opened, and 5 sites carrying small volumes of water detected. Under the sector-wide programn for supporting the development of livestock, 32 enclosures have been built. Finally, at the institutional level, the framework paper for the reform of the management of AEP hydraulic infrastructure was approved by the Council of Ministers on 18 October 2000. 48. Concerning grassland development and land protection, the authorities have elaborated regulations on seasonal migration, grazing, settlement of conflicts between agriculturists or animal farmers and the creation of 12 pastoral zones. More than 1,000 International Migration Certificates (CIT) and 2,300 National Migration Certificates (CNT) were issued to animal farmers. A series of consultations were held in 2001, including regional workshops, as a basis for the elaboration of a grassland code. A national workshop on this topic will be held before end-2002. 2.3.2 Intensification and Modernization of Agriculture 49. In 2000, about 551,000 farmers benefited from support and advice to improved their production practices. Divulgation of technical advice reached 12,785 working groups. The average rate of adoption of disseminated technical advice reached 89 percent. Farmers showed a keen interest in the development of anti-erosive sites, the practice of animal-drawn cultivation, the utilization of organic manure and mineral fertilizers. 50. The measures undertaken to reorganize the cotton sector have started showing positive results. Producers, organized in a well-structured federation, actively participate in the management of the sector. They hold 30 percent of SOFITEX's capital assets, and are involved in the elaboration and implementation of its strategies. This arrangement, the only 59 one of this kind in the sub-region, has brought about a considerable improvement in the relations between the various players involved and fostered professionalism in the sector. SOFITEX intends to pull out gradually from financing inputs and allow the National Agricultural Credit Bank (CNCA) and the decentralized financial system to take over this task, believing that these actors are in a better position to take up risk. 2.3.3 Growth and Diversification of Rural Income 51. To boost the growth and diversification of rural income, the Support Program for Community Initiatives and Poverty Alleviation (PAICB/LCP) has funded more than 100 employment projects in the five regions in which it is active. Similar initiatives, such as poultry farming, pig rearing and dairy farming projects, have also benefited from the assistance of various programs, including the Women Food Security Program and other programs sponsored by NGOs. Rural development sectors have benefited from the allocation of CFAF 3.1 billion of HIPC funds for the year 2001, aimed at funding income-generating activities among the rural population. In addition, a small irrigation project based on a low- cost system for promoting out-of-season crops was launched in 2001, with a view to exploiting agricultural potential and boosting employment and income generation in rural areas. 2.3.4 Improving Access 52. Burkina Faso has supported agricultural activities through a comprehensive program, which envisages the construction of 6,000 kilometers of rural roads by the year 2004. A new program, partially financed by HIPC resources for the year 2000, has been launched and plans are to build 266 kilometers of rural road in four (4) provinces, for a total cost of CFAF 1.8 billion. Thanks to a further allocation of CFAF 2 billion of HIPC resources for the year 2001, this program has been extended to nine (9) provinces for an additional 387 kilometers of rural roads. At the institutional level, a General Directorate for Rural Roads has been set up under the control of the ministry in charge of infrastructure, to reflect the government's commitment in this area. The preparatory consideration for the elaboration of a strategy for the development of rural roads in the most economically backward regions is under way. The strategy's aim would be to encourage the emergence of dynamic markets and therefore the creation of development poles that will bring about greater diversification of employment opportunities by stimulating links between farmers and traders, farmers and craftsmen, boosting transport and the creation of small-scale processing of agricultural products. Road links with neighboring countries are also being improved. Sections of the network that are being resurfaced include the following: Ouagadougou-Dano-border with COte d'Ivoire; Ouagadougou-P6-border with Ghana; and Ouagadougou-Leo-border with Ghana. 53. Under the national electrification plan, which is under revision, 9 centers of secondary importance were electrified in 2000 and a pre-electrification program for rural areas based on photovoltaic solar panels was completed in the administrative centers of 125 departments. This program has greatly contributed to the reduction of poverty in rural areas by introducing street-lighting and providing electricity to health-care centers, which are now able to preserve medicines. Activities in recreation centers have also been revitalized through the provision of audio-visual equipment. Rural electrification will be developed further during the next few years, following the establishment of a rural electrification agency and 60 rural electrification fund, in accordance with the policies laid out in the letter of the development policy for the energy sector. 54. Concerning telecommunications, a program has been launched to expand access to the world telecommunication network. The program aims at providing at least one public telephone to every village and rural community, permitting service access to town halls and health-care centers and assuring free calls to the nearest emergency public services. This program, which will be implemented between 2001 and 2004, is expected to cost US$89.6 million (equivalent to CFAF 63 billion), and will be financed by the Universal Network Access Fund, financed by telecommunication providers. Some 200 communities have already been covered by this program, which has made available 22,400 telephone lines in rural areas. 2.3.5 Supporting Producers' Organizations and Common Infrastructure 55. Producer organizations have been set up to promote closer consultations between producers and all the partners. Currently, there are about 24,460 farmer organizations (21,600 village groups, 3,500 cotton producer groups andi 360 young farmer groups), 230 producer unions and 730 young people active in their respective regions. Concerning livestock, an organization of dairy-farmers has been set up under the name of Burkina Faso Breeders Federation. The National Farmers' Day is held every year and is characterized by the meeting of the rural population with the Head of State. Under the animal health and cattle farming part of the PNDSA, a Support Unit for Migrating Cattle Breeders (UAFET) has been created to provide information to migrating cattle farmers, facilitate monitoring of herd movements and maintain close cooperation with border countries. 56. Measures have been taken to support farmers and their organizations during the 2000- 2001 campaign to achieve the goals envisaged under the strategic operational plan to assist the development of this sector. At the micro-finance level, the Action Plan for Financing Rural Areas (PA/FMR) has supported the upgrading of professional skills in this sector by co-financing training programs. The Action Plan for the Rice Sector (PA/FR) has supported the setting up of an Inter-professional Rice Committee (CIR), consisting of producers, input providers, traders, processors and transporters. The program for opening up rural zones to outside influences through the construction of rural roads has enabled producers to join the market economy and increase their monetary earnings. 2.4 Pillar 4: Promoting Good Governance 57. The Government continues to promote and regulate economic and social development. Accordingly, it defines the general directions to be followed by the development strategy. It also decides the rules of the game for economic policy and makes sure they are observed. Since democracy was established in 1991, the government of Burkina Faso has made constant efforts to strengthen the state's foundations. 58. The implementation of civil service reform made considerable progress in 1999 following the introduction of new pay scales and was further strengthene4, since 2001 with the introduction of new ratings for staff for merit-based promotions. Programming tools for the activities of administrative units have been introduced, for instance: job descriptions, 61 contracts linked to objectives, activity programs, personnel charts, activity reports and so on. Forward-looking personnel management methods will be further improved, including the process of defining civil service employment, the setting up human resource directorates and the de-concentration of the management of personal files through the Integrated System for the SIGASPE and RESINA. 2.4.1 Democratic Governance 59. The establishment of the State Secretariat for the Promotion of Human Rights (SEPDH) and the National Human Rights Commission (CNDH) will make it possible to strengthen human rights protection both within the existing judiciary system and in the context of the elaboration of new legislation. Box 2: Reforming the Judiciary in Burkina Faso The Government of Burkina Faso has stated its political will to introduce legal and judicial reforms to improve the organization and functioning of the justice system. To this end, it commissioned in 1995 an audit of the justice system, which highlighted flaws in the sector's institutions. A national forum on justice was held in October 1998, giving an opportunity to all actors involved (justice personnel, economic actors, civil society) to point out the flaws in the justice system and suggest possible solutions. This forum produced a clear picture of the disastrous conditions that characterize the justice system in Burkina Faso, in terms of its organization, functioning, financial needs and ethics. In order to implement the forum's recommendations a National Action Plan to Reform the Judicial System (PARNJ) was formulated. The Plan was adopted by the government on April 12, 2000, and approved by all partners involved in its implementation, including the World Bank, during a round table meeting held on June 19, 2001. The PANRJ seeks to improve the justice system by strengthening the position and the role of justice within the democratic institutions and promoting knowledge and education about human rights. The willingness to render justice accessible, credible and efficient has been reaffirned in the National Plan for Good Governance (PNBG), where justice is identified as an important element of good democratic and economic governance, the PRSP and the Action Plan of the Secretariat for the Promotion of Human Rights. Various development partners have expressed their intention to support the efforts of the goverrunent of Burkina Faso to implement the action plan for judicial reform, whose cost is estimated at CFAF 21 billion. The state has committed itself to special financial efforts during the period 2002-2006 providing 34.8 percent of the total costs of the action plan. It has also promised to gradually increase the budget allocation for the justice sector, increasing it to at least I percent of the national budget. 60. More than one hundred magistrates have been appointed since 1993, in addition to 14 court registrars, 5 senior registrars and 13 court secretaries. The goal is to reach a ratio of one magistrate for 35,000 inhabitants against the present ratio of 1 for 75,000 (as compared to I for 10,000 in industrialized countries). 61. The fight against poverty can bear fruit only in an environment of peace and security. Following an upward trend in crime that undermines peace, impedes economic activity and hampers access to basic social services, the government adopted in October 2001 a four-year plan to combat insecurity under which the State Security Police Service (CRS) will be strengthened and deployed in different parts of the country. 62 2.4.2 Economic Governance 62. In the area of economic governance, the government has strengthened the institutional framework to combat frauds, elaborated and transmitted the 1999 and 2000 budget execution reports (after those relative to the 1995-1998 period) to the Audit Office (Chambre des Comptes). It has also devised strategies for improving budget management procedures and mechanisms of transparency and introduced the principle of accountability in budget management. The capacity of controlling bodies like the IGE and IGF will also be strengthened. 63. The anti-corruption unit has been set up, as described in the PRSP. In December 2001 a High Authority for Coordinating the Fight Against Corruption was set up to take up anonymous or explicit denunciations, conduct enquiries at its own initiative and refer cases to the competent judicial authority. Steps are being taken to make the unit operational in due course. 2.4.3 Local Governance 64. A policy of administrative and territorial decentralization is essential to foster participation and ensure the equitable distribution of the benefits of development. The decentralization process, started in 1998 with the adoption of the decentralization laws, will enter its operational phase from 2003 onward. On the administrative reform front, considerable progress has been made and 13 regions have been created. The decentralization process will allow the implementation of measures geared at de-concentrating government services, according to geographical areas and socio-economic characteristics. Box 3: The Decentralization Process in Burkina Faso The ongoing decentralization process in Burkina Faso is characterized by a real political commitment, which found its expression in the adoption of a progressive and pragmatic implementation approach with the creation of the National Decentralization Commission (CND) in 1993, a small government structure charged with conceiving, previewing and guiding government decentralization activities. The implementation of this process is ongoing and irreversible, although characterized by rather slow transfer of the required skills and financial means to local administrations - and the slow adoption of texts governing the functioning of local communities. A crucial stage of this process took place in 1998 with the adoption of the Decentralization Orientation Law (TOD). In urban areas, progress has been good, and in the past five years 33 urban communities have been managed locally (the number increased to 49 after the second municipal elections in 2000). In rural areas, by contrast, decentralization has not taken off as yet, and local election will take place in 2003. Overall, progress was made in the decentralization process and further advances will be experienced through: 1/ setting up of institutional, technical and financial mechanisms to support local administrations (fund to set up local communities or SAGEDECOM, a CND/GTZ training project); 2/ the improvement of managerial and operational capacity of locally elected leaders and local administration officials; 3/ the provision of equipment and strengthening of infrastructure of local administrations, 4/ the consolidation and increased volume of financial and fiscal resources in the majority of local administrations; 5/ the preparation of monographs and local administration development plans; 6/ the planning of measures for implementing the Decentralization Law; 7/ the continuous supply of information to the various players involved in decentralization to foster ownership of the reform process; 8/ the creation of more than 700 permanent jobs and 9/ the setting up of a ministry for territorial administration and decentralization (MATD) for the ultimate implementation of the 63 process at the grassroots level. Bearing in mind the planning law and ongoing socio-economic and political reforms, important action needs to be taken to ensure that the Decentralization Law is implemented efficiently. In particular, it is necessary to estimate the amount of resources needed to build capacity in local administrations, the setting up of ad hoc committees to arbitrate the effective transfer of responsibility at the local level by 2003 and the transfer of personnel to local bodies in charge of recruitment and management. The government is filly aware of the pressing need to complete the process by 2003 and has directed its attention to improving the transparency of the transfer of responsibility. 2.4.4 Monitoring of the PRSP 65. The PRSP constitutes the reference framework for all actions and interventions, of government and donors alike, aimed at reducing poverty in Burkina Faso. The implementation of the PRSP experienced some delays due to the necessity of setting up a monitoring mechanism, which was finally put in place in March 2001, some 8 months after the approval of the document. 66. The monitoring system consists of three main elements: the Ministerial Committee for the Supervision of the PRSP (CMS/CSLP), a decision-making body under the direct responsibility of the Prime Minister, the Inter-ministerial Technical Committee for the Monitoring of the PRSP (CTS/CSLP), a technical body chaired by the Secretary-General of the Ministry of Economy and Finance, and the Sectoral Working Groups of the PRSP (GST/CSLP), organized within single ministries or into interdisciplinary teams, which represent operational structures headed by general secretaries. 67. To improve the availability of infornation, the observatory for poverty and sustainable human development, and the observatory for employment have been created. 3. PRSC AND PRSP PERSPECTIVE FOR 2002-2004 3.1 Implementation of Measures Under the PRSC lII Program 68. Almost all the measures supported by PRSC II have been successfully implemented. Regarding the budget, the government has approved: 1/ the Finance Law of 2002, based on ceilings set with reference to the 2002-2004 MTEF and in accordance with the priorities of the PRSP; 2/ Program Budgets, consistent with PRSP objectives, in six (6) ministries, including the Ministry of Economy and Finance, Ministry for Basic Education, Ministry for Secondary and Higher Education and Scientific Research, Ministry of Health, Ministry of Agriculture and Ministry for Territorial Administration and Decentralization. 69. Regarding public procurement, the government has adopted a new regulation for public procurement by Decree no. 2002-11 0/PRES/PM/MEF dated March 20, 2002, which aims at fostering greater transparency of public procurement procedures and clarifying the role of different players in this area. 64 70. The CFAA was completed and the final report was discussed in a workshop held on March 25, 2002 in Ouagadougou. A short-term action plan harmonizing the recommendations of the PRGB, ROSC and CFAA has been prepared and its implementation has been underway since January 2002. 71. The budget execution reports for the financial years 1999 and 2000 have been approved by the Council of Ministers on February 13, 2002, and submitted to the Chambre des Comptes on March 27, 2002. 72. Concerning poverty monitoring, the list of monitoring indicators of the PRSP is available. Given the importance of this task, the Govemment has set up a network of reporting officers from different departments with a view to strengthening the monitoring system. By making the monitoring of indicators a permanent feature, the govermment has transferred more responsibility to the various sectional groups involved in this exercise. The creation of this network aims at overcoming some of the weaknesses that characterized the monitoring system, such as the absence of indicators in some key sectors like rural development. Until the assessment of progress under the PRSP in July 2002, monitoring of indicators in sectors other than education, health and potable water will be of a temporary and experimental nature. 73. To make the administration more effective in the field of education, a new organizational chart of the MEBA was approved by Decree No. 2001-528/PRES/PM/MEBA dated October 4, 2001. This decree specifies: the scope of decentralization in the education sector, and the roles and responsibilities at every level of the system; the institutional changes in the education sector needed in the context of decentralization; the volume of activities to be carried out under the PDDEB and the reorganization of structures of the MEBA. 74. To provide the population with better access to health care, the MOH has issued a circular pointing out those preventive measures at the primary health care level that are free of charge. Following the same philosophy, a ministerial decision issued jointly by the MOH and the Ministry of Commerce, Promotion of Enterprises and Crafts (Order no. 2010/MCPEA/MS dated 8 February 2002) fixes at 25 percent the maximum profit margin on MEGs sold by wholesalers. 75. Notable progress was made with respect to the cotton sector reform program, following the approval in December 2001 of two decrees authorizing the entry of private operators in the central and eastern zones (Decree No. 2001-764/PRES/PM/MCPE/AGRI) and ending SOFITEX's monopoly (Decree No. 763/PRES/PM/MCPEA/MEF/AGRI). The managing committee of this sector decided in March 2002 to extend the inter-professional agreement for one year, maintain the price paid to producers at its present level (CFAF 175 per kilogram for top quality cotton) and eliminate the profit distribution (ristourne), in the light of the downward trend of cotton prices on international markets. The committee also approved the division of responsibilities between SOFITEX and the National Union of Cotton Producers of Burkina (UNPCB) concerning the purchasing, marketing and financing of inputs. 65 3.2 Prospects During The Period 2003-2005 3.2.1 Macroeconomic Prospects 76. Following the implementation of structural reforms Burkina Faso's economy has made remarkable progress at the macroeconomic level. However, the situation is fragile due to several random factors (e.g. vulnerability to external factors and climatic conditions), which contributed significantly to the slow-down in economic growth in the year 2000. Despite economic recovery in 2001, real GDP growth remained below the target of 7-8 percent considered necessary for a sensible improvement in the income of the most disadvantaged sections of the population. Growth in the medium-term is expected to average 5.7 percent in 2002, 5.6 percent in 2003, 5.6 percent in 2004 and 5.5 percent in 2005, with stable prices (average rate of inflation below 3 percent). 3.2.2 Budgetary Policy 77. The government is aware that the success of its objective to reduce poverty crucially depends on its ability to formnulate a sound short and medium-term fiscal policy which is capable of raising the level of fiscal revenue to: 1/ limit the overall fiscal deficit, on a commitment basis, including grants but excluding HIPC resources, to 11.6 percent of GDP in 2003, 9.4 percent of GDP in 2004 and 8.8 percent of GDP in 2005, 2/ Limit public debt and 3/ Ensure an adequate level of expenditure in those sectors which are likely to be most important in the fight against poverty. 78. Concerning revenue levels, 2002 will see renewed efforts to create an integrated revenue circuit, widen the tax base and strengthen the efficacy of tax and customs departments. Moreover, laws and regulations relating to the single Taxpayer Identification Number (IFU) will be reexamined and its potential will exploited more effectively, within the framework of the fight against fraud. The monitoring mechanisms for tax exemptions will be strengthened. 79. The MTEF will be used to channel substantial resources towards sectors identified as priority in the PRSP, which will be updated. MTEF ceilings for the period 2003-2005 will be used as reference to prepare PBs for 2003. The quality of these instruments will be strengthened further by taking into account the recommendations of PERs, conducted in 2002 in the rural development and transport infrastructure sectors, and those that emerged in the workshop held in March 2002, with the objective of assessing the MTEF, PER and PB exercises. 80. Greater emphasis will be laid on a better inter- and intra-sectoral division of labor to implement more effectively the poverty reduction strategy. The Government also plans to implement the integrated action plan resulting from the recommendations of the PRGB, ROSC and CFAA, during 2002 and over the medium-term, to increase the efficiency of public expenditure. Measures relate to budget formulation and execution, public procurement, budget reporting, the PER process, the utilization of HIPC resources and the monitoring of poverty. 66 81. Budget Preparation. Using the budget as the main tool for the implementation of the PRSP, the government realized that better results could be attained with more reliable macroeconomic projections with the improvement and further development of the models used for this purpose, i.e. the RAMA BKF and the Automated Projection Instrument (IA4P). Increased cooperation with development partners, including the World Bank, will be necessary to reinforce the modeling capacity. 82. As regards the PBs, the weaknesses observed in the course of their elaboration are expected to be rectified gradually, notably through the formulation of comprehensive strategic and operational plans covering all aspect of this important instrument (preparation, execution, monitoring), training of principal actors involved (DEP/DAF), the integration into the curriculum at professional schools and the formulation by all line ministries of 3-year action plans. 83. Budget execution. The CID will be extended and strengthened. The module for management of external funding will be linked to the system. Moreover, the authorities plan to study ways to create an interface with the SYGADE. The de-concentration of budget execution will experience significant advances with the implementation of the plan for the decentralization of payment order issuance. A study on the implication of budget de- concentration on data analysis will be carried out with a view to extend the integrated expenditure circuit to the regional level. 84. Procurement. The government will implement all the recommendations of the CPAR study. In particular, the aim is to strengthen the capacity of the DCMP and DGCOOP to ensure that competitive procedures of high standard are used (such as those envisaged by the revised procurement code), elaborate a new manual of procurement procedures, and elaborate instructions for public procurement. 85. Budget Reporting. The Supreme Audit Institution (Cour des Comptes) will become fully operational by end-2002. Steps will be taken to appoint the members of the tribunal and provide it with adequate material means and human resources. Emphasis will be laid on the development of a mechanism to provide information on the results of audits and inspections in order to stimulate public debate and foster accountability. 86. Review of Public Expenditure. About ten PERs have already been conducted in Burkina Faso. The most recent studies focused on the rural development and transport infrastructure sectors. Significant recommendations emerged from the Kaya workshop regarding the future use of this instrument to assess the effectiveness of public expenditure. Plans include: 1/ the evaluation on the ability of implementing the recommendations of existing PERs as a prerequisite before launching the next series of PERs, 2/ the need to make the government and the institutions involved more aware of the objectives of this exercise to facilitate its elaboration, and the 3/ strengthening of training programs with a view to setting up a panel of national experts capable of conducting PERs. These actions will constitute the basis for launching the new PER program for 2002-2004, which includes the realization of studies on the justice system and secondary and tertiary education sector. 87. Utilization of HIPC resources. With a view to improving the execution of programs funded by HIPC resources, the government has opened an account at the BCEAO. This action will also facilitate the receipt and tracking of HIPC resources, beginning in 2002. 67 Moreover, an effort will be made to include HIPC resources in a supplementary budget law. The MTEF will incorporate HIPC funds starting from the 2003-2005 exercise, permitting their inclusion in budget laws. 3.2.3 Economic Liberalization. Increased Competitiveness and Private Sector Development 88. To promote further private sector activities, the government will prepare in collaboration with its technical and financial partners a new program (Project to Support Competitiveness and Private Enterprise Development), which will essentially cover privatization, public service reform and the development of private enterprise. 89. To implement these plans successfully, two fundamental actions have been taken, that is the development of a Private Sector Development Policy and the establishment of a Competitiveness Committee. Other actions include the creation of the House of Entrepreneurs of Burkina Faso (MEBF) the Support Fund for Shared Costs (FSCP). The MEBF, which will become operational towards the end of 2002, will provide a local advisory service. The aim is to reduce the number of formalities required for setting up a company from 8 to 4 by 2003. 90. The authorities will continue their efforts to create and strengthen regulatory mechanisms in recently liberalized sectors. Thus, just like ARTEL in the telecommunications sector, the Energy Development Policy, approved in December 2000, envisages the creation of a regulatory body in the energy sector. The set up of a common electricity grid with neighboring countries (i.e. Ivory Coast and Ghana) is likely to bring about a substantial reductions in the price of electricity per kilowatt hour, especially for industrial units. 91. Regarding the financial domain, the government will enhance the supervision of the financial sector in cooperation with monetary officials and formulate a comprehensive strategy for a more efficient organization of micro-finance. Further, it will re-examine the taxation of savings to bring practices in line with the sub-region and promote the mobilization of funds for the financing of Small and Medium Enterprises (SMEs). 92. The reorganization of the transport sector will mainly affect air transport following the privatization of the airports of Bobo-Dioulasso and Ouagadougou as well as stopover assistance. 3.2.4 Human Resource Development 93. The progress achieved and difficulties encountered in the first year of the implementation of the PRSP, together with the concerns expressed in the course of regional consultations apd by the technical and financial partners, indicate clearly the path that needs to be followed in the future. 3.2.4.1 Basic Education 94. The 10-Tear Basic Education Program, for which a credit agreement has recently been signed with the World Bank, is the main tool the Government intends to use to reduce 68 the country's gap in basic education. In its initial three-year phase, it spells out the government's commitment to accelerating the development of basic education while guaranteeing its quality and financial viability. In this respect, efforts of the Government joint with those of donors aim at achieving an enrolment rate of 53 percent in 2003, against 43 percent in 2001. The non-formal education program will reach 200,000 students, which is expected to raise the literacy rate to 32 percent against the current level of 22 percent. 95. The program of expansion of basic education envisages the construction of 2,013 new classrooms, 4,000 CPAF and 3,000 out-of-school children centers (CEBNF) per year. It also involved the recruitment and training of 2,067 schoolteachers, 410 community workers and 300 CEBNF facilitators, on a yearly basis. A policy of distribution of free school textbooks in the 20 poorest provinces will be adopted with the 'objective of reducing the schooling gap in relation to the national average. Pedagogical innovations will also be introduced to increase access to education. 96. With regards to the measure concerning authorization for the devolution of basic education buildings to local communities, this measure is linked to the implementation of the decentralization process,'currently in progress (see Box 3 on decentralization). 97. In order to develop a dynamic vision of the educational sector, it is necessary to take into account the systemic ties between the various levels of education. To this end, the Government.organized a series of provincial workshops on education during April 2002, in order to develop a common approach and improve synergies between the different components of the education system (basic, secondary and higher education). 3.2.4.2 Health 98. In order to render health care financially more accessible to the population, efforts will be made to improve the efficiency of health services and to promote risk-sharing mechanisms in the area of health. To improve the financial situation of the sector, the Government also plans to mobilize additional financial resources and identify ways and means to improve cost recovery. At the same time, efforts to strengthen the institutional capacity of the MOH will continue in a number of areas (organizational and legal framework, administration, management and technical support, coordination of interventions, etc.). 99. Several challenges at the district-level remain within the context of health system decentralization, including the strengthening of operational planning and health information system, the integration of vertical programs, the development of management capacities, the reinforcement of health infrastructures, the appropriate development of health coverage in urban districts, the inclusion of local communities, quality control and so on. 100. In order to provide primary health centers with the necessary resources for proper functioning and making communities increasingly responsible for their management, efforts will aim at strengthening budget de-concentration through delegated credits. Programs currently underway, in particular the Health Service Supply Program (including the Expanded Immunization Program (PEV), the fight against diseases such as dracontiasis, leprosy and tuberculosis) and the fight against malaria, will be pursued to improve the access of the poorest to health care. 69 101. Vigorous actions are planned to put in place the free provision of certain preventive health care services, notably prenatal consultations and routine vaccinations (immunization booklet). The government will make sure that the decision to decrease the costs of MiEGs taken by the CAMEG will have positive repercussions on drug prices on all levels (in decentralized and remote areas and for the entire population). Furthermore, the Bamako Initiative will be evaluated to permit the reinforcement of measures reducing user fees. 3.2.5 Rural Development 102. An institutional audit will be carried out with a view to finding solutions to the current dysfunctions that hinders the activities of rural development services provided by the public sector. In order to link the rural economy to the market and enable it to play its role as a catalyst for other development sectors, the highest authorities have decided to establish agricultural chambers in the country's thirteen regions. As of 2002, this institutional reform will be accompanied by special funding for rural areas through the setting up of decentralized local development banks. The adoption and effective application of the LPDRD and the implementation of the various action plans that have been finalized or whose preparation is underway will boost agricultural sector activities for a truly sustainable rural development. 3.2.5.1 Agriculture 103. The govemment is currently putting in place the prior conditions for the implementation of the decision to open up the cotton sector. Essentially, this involves the definition of conditions for the establishment of private operators in the new cotton zones, the creation of an environment for competition between private operators and SOFITEX, and the development of a medium-term plan to face the challenges that will arise. 104. The program for the elaboration of sectoral action plans is considerably advanced: the cowpea action plan, which is already underway, will be available by June 2002. The fruits and vegetables plan is at the tender stage. The terms of reference for the plans concerning tubers (yams, potatoes) and oilseeds (peanuts, sesame seeds) are being finalized and will be available by June 2002. 105. The modernization of agriculture will be achieved through four action plans: I / action plan for mechanization and agricultural equipment, already finalized and awaiting funding; 2/ action plan for rural sector financing, being implemented since June 2000; 3/ action plan on the for development of the seed sector, to be finalized by end 2002; 4/ action plan for land rights, whose terms of reference will be drafted in the course of 2002 on the basis of the assessment of the results and analysis of the Ganzourgou rural land plan. 3.2.5.2 Environment and Natural Resources 106. The current reexamination of the National Environment Action Plan (PANE) seeks to guide the preparation of National Plan for Sustainable Environmental Development (PEDD), which will take into account all environmental sectors, including water, nature, human activities in both rural and urban areas, as well as all those activities that affect the environment. The monitoring of future measures in these areas will be conducted by environmental cells that are being set up within ministries. The first session of the conference 70 on the role of CONAGESE, held in March 2002, has proposed that this structure -should evolve into a National Council for Sustainable Environmental Development (CONEDD) and the attachment of its Permanent Secretariat to the Cabinet of the Prime Minister with and expansion of its mandate to include the monitoring of actions taken by the environmental cells. 107. Concerning forestry and fish resource management, the government intends to increase the contribution of the forestry, fishing and hunting sub-sectors to 2 percent of GDP. Measures that are being implemented aim at increasing national fish production by 3,000 tons, liberalizing the wood, fish and fauna sectors with the creation of about 5,000 jobs, and inventing and promoting the use of forest products in food and pharmaceutics. 3.2.6 The Promotion of Good Governance 3.2.6.1 Democratic Governance 108. The implementation of legal system reforms will result, between now and 2006, in the strengthening of institutions that contribute to the functioning of the justice system, expansion of the access to justice and the improvement in the efficiency of the justice system. 109. The territorial coverage of the justice system will be expanded by the construction of six new major courts in Banfora, Bogande, Diapaga, Tougan, Manga and Kongoussi. These courts will be supported by the creation of administrative tribunals, linked in turn to the four superior courts (Superior Court, Supreme Audit Institution, State Council and Constitutional Court). 110. In order to provide procedural rules that are clear and strengthen the rule of law, the modernization and updating of Burkina Faso's laws is indispensable. To this end, the new text concerning civil law procedures, already available, is an example that needs to be followed. 111. The 5-year recruitment plan in the justice sector envisages the recruitment of 30 magistrates, 12 registrars, 5 senior registrars and 8 court secretaries. These actions will contribute to achieve the objective of a ratio of one magistrate for every 35,000 inhabitants, expand the reach of the justice system and favor the specialization of different courts. 112. The review of texts on the organization and functioning of auxiliary legal professions (bailiffs, lawyers and notaries), during the year 2002, will make it possible to better define their respective roles and responsibilities in order to avoid any overlap, which would hamper the good operation of the legal system. 113. These measures, combined with the reinforcement of facilities and intellectual tools should lead to a shortening of the time taken to process court material, a rise in the number of cases handled and an improvement in the quality of decisions taken. 3.2.6.2 Economic Governance 114. Monitoring bodies such as the IGE and IGF, both under the supervision of the Ministry of Finance, will be reinforced. The Supreme Audit Institution (Cour des Comptes) 71 will be granted appropriate premises and fully staffed to allow it to examines public accounts with greater efficiency, constancy and regularity. The draft budget execution report for the year 2001 will be transmitted to the Court by 30 June 2002. Moreover, the High Authority for the Coordination of the Fight Against Corruption, set up in December 2001, will be made fully operational by end-2002. Some administrative structures particularly exposed to the phenomenon of corruption have decided to develop and adopt an ethics code. 3.2.6.3 Local Governance 115. Following several studies and preparatory consultations, the year 2003 will witness the effective application of the process of transfer of expertise and resources from the central government to local communities, as well as the effective establishment of regions. This program requires the mobilization of administrative and financial resources in all sectors to ensure a smooth transition. 3.2.7 Improvement of the Monitoring of the PRSP 116. On the basis of the experience gained during the first year of the implementation of the PRSP, it is apparent that the monitoring mechanism deserves to be modified at both the analytical/technical and operational levels. The roles of the Interministerial Technical Committee and Sectoral Working Groups need to be reexamined. Moreover, the monitoring mechanism also needs to be expanded to include those poverty reduction programs that are carried out at the local level. 117. As regards the Interministerial Technical Committee its role to coordinate and harmonize actions undertaken at the sectoral level will be reaffirmed. Sectoral Working Groups will be reviewed to make them more operational. Guidelines are being developed to formalize these committees and specify their role, composition, responsibilities and mode of operation. These committees will be responsible for the monitoring and evaluation of the implementation of sectoral reform policies (results and outlook). 118. To reflect the concerns about the consistency of policies, Sectoral Working Groups will be reorganized in order to cover all relevant areas. The number of committees, originally set at 6, could be reviewed if necessary. The monitoring of poverty will be ensured through better coordination of the process of preparation, funding, and monitoring of all the major socio-economic studies, in particular NHSs, and of their results. 119. The entire poverty reduction strategy is based on the participation of the population as well as its internalization of the process. As a result, besides the programs envisaged to expand the composition of Sectoral Working Groups to incorporate members of civil society and other development partners, additional efforts will be taken to integrate the monitoring of poverty reduction programs carried out at the community level. 120. The Government is aware of the strategic importance of adequate statistical information in the adapting its poverty reduction policy, and is planning to organize a National Household Survey in 2003, to produce a new poverty profile and compare it with those of the two previous surveys of this kind. A PPA will be undertaken in 2002 and its terms of reference are already available. 72 121. The authorities of Burkina Faso remain convinced that the programs and measures described above will contribute to create the necessary conditions for sustained economic growth, whose nature and quality will be able to free the majority of the population of extreme poverty. The Government intends to use the budget as the primary instrument in the fight against poverty in all its manifestations, and is adamant that all technical and financial partners embrace rapidly the logic of budget support. The considerable progress made with respect to information systems and transparency will make it possible to account regularly for the use of resources. Sincerely yours, Jean - Baptiste M. P. Compaore Minister Delegated to the Prime Minister, In Charge of Finance and the Budget Officer of the National Order 73 MINISTERE DE L'ECONOMIE I BURKINA FASO ET DES FINANCES Unhh - Progrbs - JusMe Ouagadougou9 Is cIz P'z# Af.i,~ chiq NO IMEF/STC-PDES de £9M ae e 4 4 Monslour Jamnes WOLFENSON Prfudent de Ia lanque Mondialq WASIIINC1C?N DC. 20431 (uSA) QkI: Lettre de PoUtique de D6veloppement Monsieur le Pr6stdent, 1. La presente lettre de politique de developpement a pour objet ce presenter l16tat d'ovancement du programme de r6formes defini dans le CASRP 2 qui vise 6 soutenir la mise en oeuvre du CSLP et les perspectives pour la p4t¶ode 2002-2004, Ole se fonde essentiellement sur le bilan de lo premlire ann6e de mise en cuvre au CSLP. A ce Hitre, elle precise les programmes susceptibles de hisser 1'6conomie budfinabb sur wn sentler de crolssance plus forte, favorable b la reductlon de Iq pauvret6, 6nonce les principales r6formes en vue d'une amelioration de la gestion budg6taire, de la comp6ftMt6 de l'6coinomie, de l'appui aux secteurs productifs et des ressources humaTnes. Les Ugnes d'actlons definles dans ce cadre sont en cohbrence qvec les strat6ges sectorielles qul ont 6te bl3bor6es et a1.prouv6es. lle permettra de t6d6rer les efforts de r6duction de lo pouvret6 pour obtenir un meilleur impact des politiques publiques. L'objectif ultime 6tont d'accrottre le pouvolr dlachat des ,opulctlons las plus d6favoris&es et de leur offrir un meilleur cadre d'ipanoulssement social. 2. L'6laboration de ces strat6gies Incitera davantage 'ensemble des partenaires techniques et financiers b qppuyer les programmes awritis en r6f6rence aux p6"lti63 et aux and vsecondary payers^) within order Of payment authority, and (b) Creation ministries to empower regional Government of budget administration at the regional level entities linked to the IFMS, as a pilot in Bobo- Dioulasso for FY 2003 Preparation, by August 15, of a status report on Greater transparency and budget implementation as of end June 2001, accountability Objective: Accelerate equity- followed by corrective measures if necessary based growth * Procurement - Approve the new Regulatory Decree for -Revise the procurement code to fully align it Transparency in public resource public procurement: with best international pracdce (details to be management increased Objective: Promote good - Redefine the role of the two major specified) governance (local govenance - departments DGCOOP and DCMP, limidng - Create a high-level working group to define Effective, simplified combat corniption) DGCOOP's role to lending and disbursement and oversee execution of procurement reforms procurement system in place procedures - Adopt a Procurement Procedures manual - Present terms of reference and launch the (PPM) expression of interest for the selection of a - Implement an adequate institutional capacity consultant for the elaboration of a new building plan Procurement Procedure Manual - Verify that 50 percent of public procurement - Present a Capacity Building Plan (objectives, will have been subject to competitive activities, calendar, budget) for strengthening procurement practices as required by law and the DCMP and DGCOOP, in the light of their that the largest contracts wil be subject to new roles public audit - Elaborate terms of reference and launch the - Institutionalize Procurement Plans through expression of interest for the selecton of a official instructions issued by the Ministry of consultant/independent auditor to verify that Finance to ensure proper coordination at least 50 percent of public procurement for between procurement and the projected FY01 is subject to compedtive procedures budget execution schedule (iii) Budget Reporting - Submission of Budget Execution Reports for - Completon of budget report for the 2001 Budget reporting procedures FY99 and FY00 and their remittal to the Audit fiscal year and its transmission to the Supreme improved Objective: Promote good * Financial Office (Chambre de Comptes) Audit Court by December 2002 governance (local govemance - - Presentation of an Acton Plan for - Satisfactory implementation of key Cour de Comptes created combat corruption) management operationalizing the Supreme Audit recommendatons of CFAA Report (to be Insttutons (Cour de Comptes) specified) Ex-post control strengthened - Appointment of 3 magistrates of the Cour, - Reinforcement of ex-post controls by including the President Inspection General de L Etat (IGE) and - Finalization of the CFAA study and Inspection General de Finance (IGF) presentation of Action Plan harmonizing the I recommendatons of CFAA, PRGB and ROSC I 105 B. Civil Service Adoption of the Government plan for de- Civil Service Reform Program Reform and concentrating personnel management under the implemented Decentralization principle of making civil servants available to regions and provinces according to.their needs. Stronger public institutions focused more narrowly on Effective implementation of the Civil Service analytical, regulatory and Reform Program in accordance with the Law on monitoring mandates and Government Reform of May 1998 leading to more rational and effective public sector Implementation of the region as administrative expenditures entity and progressive representation of different ministerial departments; continuation of studies as regards that modalities for the harmonization and coordination of technical and territorial subdivisions C. Stakeholders' Adoption of transparent mechanisms for Continued use of transparent mechanisms for Increased transparency in public Objective: Promote good Participation allocating resources managed at the district allocating resources managed at the district level resource management govemance (local govemance - level (e.g., posting budgets allotted to each (e.g., posting budgets allotted to each health combat corruption) health facility in public places in the districts) facility in public places in the districts) (New Improved access to agricultural measure to be elaborated) services and improved quality of service delivery (ultimately leading to increased productivity and incomes) D. PRSP Monitoring Refine the PRSP list of poverty indicators to be Complete Participatory Poverty Assessment Improved knowledge of Objective: Accelerate equity- and Evaluation used as benchmarks for the monitoring and dynamics of poverty in Burkina based growth evaluation of the PRSP (i) Poverty Monitoring Launch 3rd National Household Survey Improved analytical capacity to and Evaluation evaluate impact of altemative policies on poverty (ii) Macroeconomic Establish a medium-tenr program to strengthen Improve the analytical tools and macroeconomic modeling: micro- the analytical capacity to analyze the impact on models to improve the analysis of links between Operationalized macroeconomic macro linkages poverty of different policy reforms. economic policies and poverty reduction. model (LAP) and linked to Elaborate set of preliminary estimates, linking the (more measures can be selected, drawing on the growth and poverty fraimeworks workshop held in Bobo-Diouiasso) 106 Sl::CONI) C(.)i\lV'(.)Nl[NT: I'V()-I'()(OR Sl.Cl'(RAL. P'(O)LIClI S A. Basic Education Implementation of the Educational Policy Satisfactory implementation of Educational Improved public service Objective: Accelerate equity-based Statement and of Governmental Action Plan Policy Statement and of Governmental Action delivery, especially in rural growth (i) Ten-year cducation in the area of basic education Plan in the area of basic education areas Objective: Guarantee that the poor plan Maintaining primary education's share of total Increased enrolment rates in have access to basic social services education expenditure at 60 percent in the rural areas medium term, while increasing education's share Objecfive: Accelerate equity-based of total govemment expenditure from Higher literacy rates among the growth 21.6 percent to 23 percent in 2003 poot Selected Targets for 2003: (ii) Focus on poorest Implementation of a mechanism for Continued implementaton of a mechanism * Total enrolhment at first areas and groups subsidizing school supplies in the 20 for subsidizing school supplies in the 20 grade increases by about provinces with lowest schooling levels32 provinces with lowest schooling levels 20,00 students (of which 60% from rral areas) a year which would increase (iii) Access to Increasing access to education in the 20 Continued increase in access to education in the the admission rate to 45%; education provinces by expanding the number of 20 provinces with least lowest schooling levels * Share of girls in total schools-equipped with nmning water and by expanding the number of schools and enrollment reaches 42%; separate sanitary facilities for girls-in the ensuring that schools utilize multigrade teaching * Repetition rate reduced to 20 nrul provinces with the lowest coverage, by where population density is too low to provide 17%. ensuring that schools utilize multigrade teaching for six separate grades, and by expanding where population density is too low to provide double-shift teaching in urban areas where there for six separate grades, and by expanding is excess demand double-shift teaching in urban areas where there is excess demand (iv) Cost of education Lowering the cost of education to poor families Satisfactory consolidated Medium term Budget by continuing to provide books free of charge, and expenditure program including extenal ensuring sufficient resources to mrl schools to funds, highlighting categories and which is cover basic materials and operating costs. consistent with the Ten year Program 32 Komondjari, Yagha, Gnagna, Seno, Tapoa, Noumbiel, Soum, Koulpelogo, Namentenga, Ouladan, Ziro, Ganzourgou, Sanmatenga, Banwa, Gourma, Kompienga, Kossi, Poni, Leraba and Tuy. 107 (i) Improve health at the primary health care level free of and midwifes to: personnel normsl servies: aailablity, charge. - work in rural areas, in particular poor and accessibility, and - ensure a high level of coverage for key * Vaccination rates: quality of health care services for women and children on the basis - DPT3: 75% of the experience in Nouna and other - Measles: 75% experiences and studies * Assisted birth: 400/e Implement plan to staff CSPS with minimum Take measures to manage the health personnel * Children receiving Vitamin personnel in accordance with norms established in the context of decentralization including the A supplementation: 75% by the MOH and reiterated in the PRSP. decentralization of budgetary posts * Pregnant women using impregnated bed nets: 40% Development of a training and recruitment plan * Use of condoms among for assisting health staff on the local level men: 60% including midwifes for the obstetrical consultations Continue efforts to boost immunization Increase efforts to improve the vaccination coverage rates with a particular focus on coverage rate with special emphasis on rural targeting rural areas in accordance with PRSP areas (outside Ouagadougou and Bobo- targets. Dioulasso) increasing the DTC3 rates to at least 70 percent in those zones (ii) Increase health Introduce appropriate measures to reduce Develop, adopt and publish in the press and Increase of resources to sustain Objective: Guarantee that the poor financing the profit margin on essential drugs sold by in health institutions a nationally the services on district level have access to basic social services CAMEG, with a view to redudng the cost of standardized list of fees for services provided drugs to users by health centers and district hospitals, Reduction of health care costs drugs, and other consultative services, Maintain incidence of CAMEG's inventory Including: Increase access of poor to basic shortfalls for the 45 generic drugs at a level social services below 8% - Subsidized fees for 3-5 essenffal pediatric drugs - Reduction as far as possible the cost of consultations for children under 5 years of age - Reduction as far as possible the cost of birth - Free prenatal care - Free preventive services for children 108 (ii) Increase health Provide financial resources in the 2002 budget Ensur the effective implementation of regies Increas of resources to sustain Objective: Guarantee that the poor financing to replace IDA fiinds which were financing d'avance in all heath districts of Burkina Faso the services on district level have access to basic social services health districts and regional health diredorates and sufficient financing at die same or higher under the Health and Nutrition Prcjecl, with a levcl compared to 2000 of health districts and Reduction of health care costs view to ensuring continuity in quarterly regional directorates for health disbursements that will 'top off' financing from Take administrative and regulatory measures to Increase access of poor to basic other sources. ensure that the mechanism of r6gies d'avances social services is effectively used to consolidate the approach of regional financing and management on the basis of health district performance Complete beneficiary-assessment to ascertain Implement a pilot third party payment views and perceptions with regard to quality and experience at the local level to finance the access of health care services, including essential health services of indigents (child financial, socio-cultural and geographic barriers. health care, maternal emergencies) under central government financing (iii) Participation in Review issues related to the COGES including Establish an administrative framework for Improvement of the coordination Objective: Accelerate equity-based local co-management quality of relations with communities and health collaboration between the health districts and of interventions of actors in the growth and activities. sector actors and to the adequacy of financial the local and regional authorities defining the health sector on the local level management arrangements. respective roles and responsibilities (especially as regards the issuance of payment orders and Incrcase accountability of local the expenditure execution) of all actors (central stakeholders administration, local authorities, health staff, management health committees, civil society, communities, users, etc) for the budgeting, planning, and implementation and monitoring of health activities in the framework of decentralization Define the legal framework for the management health committees of the health centers, broadening the participation (to women's groups, youth associations, people living with HIV) and specifying their functioning mode including the separation of decision making and execution/management Elaborate the planning, budgeting and monitoring tools for health activities at the health center level and train local stakeholders to use them Implement community-based strategies in priority areas including malaria, nutrition, and _ reproductive health. 109 Development oper^ators program to prepzare the cotton sectr for the syseaticsu wagy on equity new investors: (i) Libralizaion of Ended SOFITEXC monopoly on cotton marketing (i) Creation of standing committee and Objective: Expand opportunibs working groups to advise and monitor the Opened up the cotton sector in a for employment and income- cotton sector Opened up two new cotton producing zones to Implementaton of the decrees opening two systematic way generating activities for the poor new private investment in ginning new conton zones to private investors (ii) Recruitment of firm to draft the bidding Established calendar of actions needed over the document next iS months to prepare the sector for new (iii) Prepare the bidding document outlining investors in new zones the rules and condidons for awarding contracts (Qv) Start the bidding process for the two zones and bring to point of sale Liberalize cotton seed marketng (v) Adoption of credit and risk guarantee mechanisms (vi) Creation of inter-professional associaton involving afl actors in the sector (vii) Put in place an objective mechanism, agreed to by the inter-professional associaton, for setting the price of seed cotton (ii) Agricultural Restructuring, by end-2001, of rural Preliminary review of progress in implementing Promoted agricultural. diversification development operations under the pilot for demand-driven agricultural service diversification implementation, in order to harmonize their delivery objectives, implementation strategies, content, and management procedures and monitoring and evaluation with those defined In the LPDRD and PRSP Development of action plans in other Finalize actions plans producdon streams and priority programs in agriculture and livestock (conton, fruits and Improve market access for a variety of vegetables, livestock/meat, cowpea, oilseeds) commodities (e.g. cereals, fruits and vegetables, I I . I sesame) - (Specific measures to be developed) (iii) Institutional Finalize TOR for institutional audits of Completion of institutional reform analyses of Carried out institutional reform reform ministries of Agriculture and Livestock key mral development Ministries (Agriculture, Animal.Resources and Water & Envirnoment) and implementation of first set of recommendations . 110 EA conen of nationl EAc prouedures and world environmrental assessment i nionnal on .i Eniomna Bank environmental and social safeguards to (l) Envuonmental Establish small EA focal points in the key facilitate ministries' complianoe capacity ministries involved in policy reforms listed as prior actions for PRSC n Prepare technical guidelines for sector- or activity-specific EAs. Clarify the mandates and responsibilities of CONAGESE and DGPE in those areas pertaining to EA compliance and enforcement f Annex 9. Fund Relations Note Public Information Notice (PIN) No. 01/74 May 1, 2002 International Monetary Fund 700 19*' Street, NW Washington, DC 20431 Burkina Faso: Public Information Notice On April 9, 2002, the International Monetary Fund (IMF) Executive Board concluded the 2002 Article IV consultation with Burkina Faso.33 Background Since 1991, Burkina Faso has been implementing reforms supported by the Fund through successive Enhanced Structural Adjustnent Facility and Poverty Reduction Growth Facility (PRGF) arrangements.34 The current PRGF arrangement was approved in September 1999 in support of a program covering the period 1999-2002. In July 2000, the IMF and World Bank Boards agreed that Burkina Faso had fulfilled the conditions for reaching the completion point under the original Heavily Indebted Poor Countries Initiative (HIPC) and the decision point under the enhanced HIPC Initiative. In November 2001, the Executive Boards considered the first annual progress report of the poverty reduction strategy paper and agreed that the country's effort to implement the strategy provided sufficient evidence of its continuing commitment to poverty reduction. 33 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. This PIN summarizes the views of the Executive Board as expressed during the April 9, 2002 Executive Board discussion based on the staff report. 34 On November 22, 1999, the IMF's concessional facility for low-income countries, the Enhanced Structural Adjustment Facility, was renamed the Poverty Reduction and Growth Facility, and its purposes were redefined. It is intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a poverty reduction strategy paper. This is intended to ensure that each PRGF- supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an interest rate of 0.5 percent a year, and are repayable over 10 years with a 5VM2-year grace period on principal payments. 112 After a lower growth in 2000 due to exogenous shocks, real GDP growth is estimnated to have rebounded to 5.7 percent in 2001 essentially because of good cotton production, which reached a record level of 400,000 tons. Average consumer price inflation accelerated to 4.9 percent driven by price pressures resulting from the poor cereal crops of the previous campaign. The real effective exchange rate appreciated somewhat as a result of higher inflation and the slight decline of the U.S. dollar against the euro, to which the CFA franc is pegged. In 2001, fiscal revenue reached only 12.5 percent of GDP compared to a target of 14 percent, mainly because of the slower than expected pick up in growth, but also of poor performance of the fiscal administration. Wage outlays remained on target and the Burkinabe authorities took specific measures to tighten both current and capital expenditures. At end- December 2001, the overall fiscal deficit (on a commitmnent basis and including grants) reached 4.8 percent of GDP compared to a program target of 5.1 percent. Monetary policy, conducted at the regional level by the Central Bank for West African States, remained prudent. Credit to the economy rose in 2001 by 14 percent while broad money grew by about 5 percent. The extemal current account deficit (excluding grants) declined from 17.6 percent of GDP in 2000 to 15.9 percent in 2001. The terms of a trade improved by about 4 percent on account of the decline in petroleum prices and a higher volume of cotton and live animal exports. Executive Board Assessment Executive Directors commended the authorities for their continued sound economic policies, and noted, in particular, the prudent management of the cotton sector in the face of low international prices, with the bumper cotton crop contributing to poverty reduction and a rebound in the rate of economic growth. Directors stressed that further efforts to liberalize the cotton sector, lower the cost of energy, promote good governance and judiciary reform, and develop human capital will be essential to maintain steady and rapid growth, strengthen the external position, and achieve durable poverty reduction. It will be important that these efforts are supported by good coordination of donor assistance. Directors commended the tightening of nonpriority outlays in response to the lower level of fiscal revenue, and the containment of wage outlays within program indicators, while increasing social expenditure. They stressed, however, that a sustained increase in tax revenue will be essential to free resources for investment and the social sectors. Directors strongly encouraged the authorities to persevere in their efforts to broaden the tax base and to strengthen tax and customs administration and public finance management. The authorities' commitment to catch up on the spending on priority social programs of resources freed up by the HIPC Initiative is welcome, and will need to be supported by continued efforts to further improve public expenditure management. Directors noted that the regional monetary policy of the BCEAO continues to serve Burkina Faso well, but needs to be buttressed by firm adherence to the fiscal targets. They welcomed the actions by the regional banking commission to improve the health of the banking sector, as well as the authorities' efforts to promote the micro finance sector. In this regard, Directors underscored the need for further progress in strengthening financial supervision and regulatory enforcement. They commended the authorities for being among the first countries 113 to have replied to the anti-money laundering/combat of terrorism questionnaire and for spearheading efforts in this regard. Directors welcomed the authorities' continued commitment to structural reform, including further efforts to realize efficiency gains in the cotton sector, improved public financial management, greater regional integration, improved governance, advances in the privatization program, and the deregulation of public utilities. They encouraged the authorities to proceed forcefully in continuing to implement their structural reforn agenda, which will be key to achieve sustained economic development and diversification. Directors encouraged the authorities to continue improving the quality, timeliness, and frequency of reporting of key data, notably on national accounts and the balance of payments, while noting the need for appropriate technical assistance in this regard. They welcomed the fact that Burkina Faso has begun publishing its General Data Dissemination System metadata on the Fund's website. For questions please contact Mr. Pierre van den Boogaerde, Mission Chief, African Department, IMF, ext. 623-8427. 114 Burkina Faso: Selected Economic and Financial Indicators 1998 1999 2000 2001 2002 Est. Proj. (Annual percentage change) Real GDP 6.2 6.2 2.2 5.7 5.7 GDP deflator 3.2 -2.4 1.2 1.7 1.7 Consumer prices (annual average) 5.0 -1.1 -0.3 2.9 2.0 Real effective exchange rate 1/ 4.4 -2.0 -5.1 ... (In percent of GDP) Gross domestic investment 29.6 27.2 26.9 26.7 28.1 Gross domestic savings 12.7 9.4 7.7 10.2 13.4 Gross national savings 19.6 14.3 12.6 14.2 17.8 (In millions of US$) Exports (f.o.b.) 323.0 254.0 205.9 235.1 250.5 Imports (f.o.b.) 639.0 581.2 590.6 605.1 520.8 Current account balance, excluding official -373.4 -396.0 -476.5 -479.2 353.7 Transfers Gross official reserves 356.2 312.5 241.3 263.2 319.4 (In percent of GDP) Current account balance, excluding official -14.5 -16.0 -17.6 -15.9 -14.1 Transfers Current account balance, including official -10.0 -12.8 -14.6 -12.4 -10.3 Transfers External public debt 54.7 59.9 62.1 59.7 58.7 (In percent of GDP) Financial variables Tax revenue 13.1 14.4 12.8 12.5 13.8 Domestic current expenditures 12.6 11.9 12.2 12.8 13.4 Basic fiscal balance (deficit -) 0.5 -0.7 -1.6 -3.2 4.3 Overall fiscal balance, excluding grants -9.8 -13.3 -12.7 -13.0 -13.5 Overall fiscal balance, including grants -2.9 -4.0 4.28 -4.8 -5.9 Change in broad money (in percent) 1.7 3.1 5.7 4.9 10.6 Interest rate 2/ 6.2 5.8 6.3 ... Sources: Burkinab6 authorities; and IMF staff estimates and projections. 1/ (+)=appreciation. 2/ Central Bank rediscount, end of period. 115 z z 0 to to ti a 8 0 4 ;o i .3 > 7 CD -;5 a G .744 -4. 7&4 5=D i iD 4 fg P P --- . ....... .. . . . . .. .. ..... .. Annex 10. Burkina Faso at a Glance Sub- POVERTrY and SOCIAL Surklna Saharan Low- Faso Affica Income Dvel"opmnt diamond' 2000 Poputon, mid-year mlWIons) 11.9 659 2,459 Llleexpdancy GNI per capka (Aitas rnofho4 USS) 220 480 420 GNI (Alias mnelho4d, USSliOns) 2.6 313 1,030 Average annual growth, 199400 Popultn 6) 2.8 2.6 1.9 GNI Labor e fl4 2.1 2.6 2.4 GNI Gmss per primary Most recent estimate (atst year available, 1994-00) capOa e rimsey Povty (X ofpopureffon belOw atonal poverty le) 45 Urban population (16 oftolajpopouatron) 17 34 32 Lfe expectancy at birth Gaws) 54 47 59 Infant mortality (per 1,000 gIm births) 105 92 77 Child malnutrition (16 of cdren under 5) 33 ,. ,. Acess to Impwoed water soumrce Access to an improved water sourme (1 ofpopulation) 78 55 76 IllIenracy (% of popLdafon es 16+) 81 38 38 Gmss primary enrolment (%of schoo-age populadon) 41 78 96 BSudnaeFaso Male 47 85 102 - Low-ncome grup Female 35 71 86 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1980 1990 199 200D Economki rat of GDP (US$ billions) 1.7 2.8 2.7 2.4 Gross domestic InvestmentUGDP .. 20.8 27.1 27.6 ExportsofgoodsandserviOesOGDP 10.1 12.7 11.6 10.7 Trade Gross domestic sIngs/GDP 4.8 7.7 9.2 8.7 Grss national savings/GDP .. 16.9 22.0 21.0 Curwt account balanceaGOP .. 4.7 -4.7 -.9 Domesfc n Interest payments/GDP 0.4 0.4 0.2 0.2 svInvestent TOtla debtGDP 19.3 30.2 53.8 63.5 Total debt servtce/exports 5.9 6.7 23.0 24.2 Present value of debtWGDP .. Present value of debt/exports .. indebtedness 1986"90 19900 1999 2000 2000.4 (avesage annual gowth) GDP .. 5.1 6.3 2.2 5.8 BurIna Faso GDP per capita .. 2.2 3.4 -0.6 2.9 Low4bncone gmup Exports of goods and services -0.4 -0.1 -11.7 -10.5 10.4 STRUCTURE af the ECONOMY 1980 890 1999 2000 wtoftnvesment and GDP I%) (1 of GDP) 69 Agricuture 33.2 32.3 36.0 34.5 . Industry 22.0 22.3 18.1 17,2 Manufacturing ..I. . ,. 2 ServIos 44.8 4U.3 48.8 48.3 lepea9b Private consumptIon 95.4 77.4 76.6 76.2 F4 General govemment consurnptlon 10.4 14.9 14.2 15.1 --O- GDP Imports of goods and services 33.0 25.6 29.6 29.6 1980-90 1990-00 199 2000 Growt of export anid Import I(6 (ave e annual growth) Agrculture 3.1 4.2 3.7 -3.8 0 Industry 3.8 5.9 10.3 4.2 4D0 Manufacuring 2.2 .. .. .. Services 4.6 5.0 6.9 7.0 c Private consumpton 2.6 4.7 1.9 -3.7 .2D General governent consumptin 6.2 40.7 3.2 2.5 40 Gross domestic Investment .. 0.9 12.8 10.3 Exprt - r*-Ipor Imports of goods and services 2.6 1.6 -8.5 -13.7 Nore 2000 data are prelmnhary estmates. T'ne diamonds show four key Indkators In Ihe country (In bold) compared with income-group average. If data are missIng, fe diamond will be incomplete. 117 PRICES and GOVERNMENT FINANCE 1980 1990 1999 2000 Inflation (%) Domes£7c ptlcea (f6 change) 30 Consumerprices .. -0.8 2.3 1.5 20 ImplIcit GDP deflator .. .. -2.8 0.6 I0 Government flnance 0 ;_ (W otGDP, Inchldes current grants) 5 11 15 W0 n o Current revenue 12.5 17.1 15.5 -1S Curentbudgetbalance .. -1.6 5.2 3.0 -GDPdetator C PI Overail surplus/deficit . -7.1 -11.8 -12.5 P TRADE (t980 1990 1999 2000 Export and Import levels IUSS mill.) (US$ nililons) Total exports (fbb) .. 283 254 208 no Cotton .. 97 136 102 Omt Meat .. 38 48 45 SW Manufactures .. .. .. .. c* Total Imports (ci) .. 542 581 519 300 Food .. 97 75 62 2C Fuel and energy .. 83 81 94 100 Capital goods .. 129 203 173 a Exportpvlceindex(1995-100) .. 91 97 rr s go rr w n oo Import price Index (1995=100) 58 108 126 *E,ports *MIpons Terms of trade (1995 100) .. 91 68 78 BALANCE of PAYMENTS (US$ nVIfiIns) s199 1990 1999 2000 Currant account balance to GOP (%) Exports of goods and servces 210 352 287 238 0 Imports of goods and services 577 708 730 651 2 K Resource balance -387 -357 -442 -415 Net income .. -7 -18 -20 Net current transfers 112 263 335 291 -I Current account balance .. -101 -126 -143 * Finandng Items (net) .. 103 100 81 -10 Changes In net reserves .. -2 26 63 -12 Memo: Reserves Induding gold (USS nstilons) .. 301 407 426 Conversion rte (DEC. locaJUS$) 211.3 272.3 583.0 646.9 EXTERNAL DEBT and RESOURCE FLOWS 1980 1990 1999 2000 (USS nilSons) Conipoalson of 1999 debt (US$ mnill.) Total debt outstanding and disbursed 330 834 1.452 1.533 IORD 0 0 IDA 77 282 753 795 Total debt service 22 34 .. 74 IBRD 0 0 IDA 1 3 11 .. 0:8es Composition of net resource flows B: 753 Oliclal grants 88 158 13 158 Oflicial creditors 51 61 Private creditors 4 0 Foreign direct Investment .. .. .. 0 Portolio equity 0 0 .. 0 World Bank program Commitments 21 0 30 23 A- IBRD E- 8ilatwr DIsbursementb 12 15 63 60 8-IDA D- Otr multllteral F- PrIvate Principal repayments 0 1 6 6 C - IMF G - Sholtrterm Netflows 12 14 57 54 Interest payments 1 2 5 5 Net transfers 1 1 12 52 49 Development Economics 1/7102 118 Annex 11. Recent Analytical Work on Burkina Faso ABSP et Universite de Montreal. (CANADA), Evaluation des liens entre les programmes d'ajustement macro-economique, la reforme du secteur de la sante et l'accessibilite l'utilisation et la qualite des services de sante au Burkina Faso. [2001] Alain Mingat et al., Cozuts, financement etfonctionnement du systame educatifdu Burkina Faso, contraintes et espaces pour la politique educative. Draft. [2000] Banque mondiale, Analyse de la faisabilite financiere technique, institutionnelle et economique duplan National de developpement sanitaire, Agnes Soucat. [2001] Banque Mondiale, Burkina Faso, Rapport sur le Renforcement des Capacites nationales. [1997]. Bigman, D., Dercon, S. Guillaume, D. and Lambotte, M., Community Targeting for Poverty Reduction in Burkina Faso, Center for Economic Studies Discussion Paper Series DPS 99. 10. Burkina Faso, Ministere de I'Agriculture et des Ressources Animales. Document d'Orientation Strategique. [1997] Burkina Faso, Ministere de lafonction publique et du developpement institutionneL Plan national de bonne gouvernance. Programme d 'investissement 1999-2003. [1999] Burkina Faso, Ministere de la sante. Enquete sur l'utilisation des services de sante au Burkina Faso, Rapport final. [1999] Burkina Faso, Ministere de l'economie et des finances. Revue des depenses publiques. Les procedures d'elaboration et d'exdcution du budget national par les services d&concentres de l 'Etat. [2000] Burkina Faso, Minist6re de l'economie et des finances. Revue des depenses publiques. Secteur de la sante, 1996-1999. [2000] Burkina Faso, Ministere de l'economie et des finances. Revue des depenses publiques. Secteur de 1 'enseignement de base et de l 'alphabetisation. [2000] Burkina Faso, Ministere de l'economie et des finances. Document de strategie sur la reduction de lapauvrete. [2000] Burkina Faso, Ministere de la sante. Rapport de I evaluation interne par les pairs du systeme de gestion d¢ralisee des DRS et DS appuye par le Projet de developpement sante et nutrition. [2000] 119 Burkina Faso, Minist6re de la sante. Evaluation externe de la performance des services de sante appuye par le projet de developpement sante et nutrition. [2000] Burkina Faso, Ministere de l'education de base et de l'alphabetisation. Mesures d'accompagnement des mutations institutionnelles'et humaines du MEBA. [2001] Burkina Faso, Ministere de l'education de base et de l'alphabetisation, Core Advice. Mutations institutionnelles et humaines pour le programme decennal de leducation de base. (The Netherlands and the World Bank). [2001] Burkina Faso, Ministere de l'education de base et de l'alphabetisation, World Bank, Norvegian Trust fund. Coults, Financement et Fonctionnement du systeme educatif du Burkina Faso; contraintes et espaces pour la politique educative. Sous la direction de Makha Ndao, with Alain Mingat, Ramahatra Rakatomola, Aboubacar Sow, and Paul Coustere. [2000] Burkina Faso, Ministry of Economics and Finance - The World Bank: Competitiveness and Economic Growth: Policies, Strategies, Actions. [2001] Centre d'Etude et de Formations aux Technologies Economiques CEFTE. Programme d'appui regional a l'integration des pays de l'UEMOA. Burkina Faso. [1997] Collier, P, Romer M, Sachs, J et al. Politiques a adopter pour la croissance economique et la reduction de la pauvrete au Burkina Faso, Harvard Institute for International Development. [1997] Danish Development International Agency, Logistics Consulting Group. Facilitation du Commerce des Produits Agricoles du Burkina Faso. [1999] EDF, Etude sur le Renforcement de la Capacite de la Production d'Electricite au Centre Regional de Consommation de Ouagadougou. [2001] European Commission, Rapport sur la strategie d'une reforme du systeme judiciaire au Burkina Faso. [1999] European Commission /Fondation Entreprendre, Rapport sur l'opinion des operateurs economiques et fournisseurs de l'Etat sur les reformes et la passation des marches. [1999] FAO/World Bank, Burkina Faso, Strategie de Croissance Durable de l 'Agriculture et de l'Elevage. [1998] Fofack, H., Monga, C. and Hasan Tuluy, Household Welfare and Poverty Dynamics in Burkina Faso: Empirical Evidence from Household Surveys, The World Bank - Policy Research Working Paper 2590. [2001] 120 Fofack, H., The Nature and Dynamics of Poverty in Burkina Faso in the 1990s, The World Bank - Policy Research Working Paper 2847. [2002] Pierre Holveck, Energy Sector in Burkina Faso: Ten year-Least-Cost Investment Program. [1998] Inventaire des Projets de Production et de Transport d'Electricite au Burkina Faso. [1998] IMF, Draft Report on Observance of Standards and Codes: Fiscal Transparency module. [2001] INSD, Profil de lapauvrete au Burkina Faso. [2000] Miistere de l'Economie et des Finances, RecentEconomic Developments. [2001] Ministere de l'Economie et des Finances, Burkina Faso: Competitivite et Croissance Economique - Orientations, Strategies et Action. [2000] Ministere de l'Economie et des Finances Plan de renforcement de la gestion budgetaire. [2001] Pays Bas-BASP 96, Etude sur la decentralisation du systeme de sante au Burkina Faso. [2000] Pays Bas - MDF/Crystal, Etude sur le renforcement des capacites institutionnelles du Ministere de la Sante. [2000] SOGREAH, Etude de Faisabilite de la Ligne de Transport d'Electricite Bobo-Dioulasso - - Ouagadougou; et de Bolgatanga (Ghana) -- Ouagadougou (Burkina Faso). [2001] UNICEF/World Bank, Etude sur la consolidation des &oles satellites pour l'amelioration de l'enseignement de base au Burkina Faso. [1998] University of Ouagadougou, World Bank, Cooperation francaise, La Refondation de l'Universite de Ouagadougou, sous la direction du Alfred Traore. [2000] World Bank, Note Technique sur le systeme budgetaire du Burkina Faso. [1999] World Bank, Local Level Institutions and Poverty Eradication: The Case of Rural Decentralization in Burkina Faso, Report No. 21997. [1999] World Bank, Country ProcurementAssessment Report (CPAR) for Burkina Faso. [1999] World Bank, Energy Sector Note on Burkina Faso, Michel del Buono. [1999] 121 World Bank, Country Procurement Assessment Review. [2000] World Bank, Implementation Completion Report for Structural Adjustment Credit III, Report No. 21555. [2000] World Bank, Etude sur la competitivite des filieres de l'agriculture et de l'elevage au Burkina Faso (Nicolas Gergely). [2000] World Bank, Implementation Completion Report for Public Institutional Development Project. [2001] World Bank, Country Financial Accountability Assessment: Initiating Memorandum. [2001] World Bank, Improving Service Delivery: The Challenges for Public Management Reform. [2001] World Bank, Household Welfare and Poverty Dynamics in Burkina Faso: Empirical Evidence from Household Surveys (Hippolyte Fofack, Celestin Monga, and Hasan Tuluy). [2001] World Bank, Implementation Completion Report - Public Institutional Development Project, Report No. 21853. [2001] World Bank, The Local Level Institutions Study: Local Institutions and Service Delivery in Burkina Faso, Swamy, A.V., Grootaert, C. and Oh, G.-T. [1999] 122 IMAGING Report No.: 24310 BUR Type: PAD