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AFRICAN DEVELOPMENT BANK GROUP GUINEA-BISSAU ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING SUPPORT PROJECT (PARGEF) OSGE/GECL DEPARTMENTS July 2015 Translated Document Public Disclosure Authorized Public Disclosure Authorized

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Page 1: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

AFRICAN DEVELOPMENT BANK GROUP

GUINEA-BISSAU

ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING

SUPPORT PROJECT

(PARGEF)

OSGE/GECL DEPARTMENTS

July 2015

Translated Document

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Page 2: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

TABLE OF CONTENTS

I STRATEGIC THRUST AND RATIONALE .................................................................... 1

1.1 Project Linkages with Country Strategy and Objectives ............................................ 1

1.2 Rationale for Bank Intervention .................................................................................. 1

1.3 Aid Coordination ......................................................................................................... 3

II PROJECT DESCRIPTION ................................................................................................ 4

2.1 Project Component ...................................................................................................... 4

2.2 Technical Solutions Adopted and Alternatives Explored ........................................... 6

2.3 Project Type ................................................................................................................ 6

2.4 Project Cost and Financing Arrangements ................................................................. 6

2.5 Project Area and Beneficiaries .................................................................................... 8

III PROJECT FEASIBILITY ................................................................................................ 11

3.1 Economic and financial performance ........................................................................ 11

3.2 Environmental and social impact .............................................................................. 11

3.3 Climate change .......................................................................................................... 11

IV IMPLEMENTATION ....................................................................................................... 12

4.1 Implementation Arrangements .................................................................................. 12

4.2 Monitoring ................................................................................................................. 13

4.3 Governance ................................................................................................................ 14

4.4 Sustainability .............................................................................................................. 15

4.5 Risk Management ...................................................................................................... 15

4.6 Knowledge Building .................................................................................................. 15

V LEGAL FRAMEWORK .................................................................................................. 16

5.1 Legal Instrument ....................................................................................................... 16

5.2 Conditions Associated with the Intervention of the Bank and the Fund ................... 16

5.3 Compliance with Bank Policies ................................................................................ 16

VI RECOMMANDATION ................................................................................................... 16

Annex 1: Comparative Socio-Economic Indicators of the Country

Annex 2: Status of AfDB Portfolio

Annex 3: Reasons for Requesting a Waiver Allowing Bank Financing of the Full Project Cost

Annex 4: Map of Project Area

LIST OF TABLES

No. Title Pages

2.1 Project Components 5

2.2 Alternatives Considered and Reasons for Rejection 6

2.3 Estimated Cost by Component 7

2.4 Project Cost by Expenditure Category 8

2.5 Expenditure Schedule by Component 8

2.6 Expenditure Schedule by Expenditure Category 8

2.7 Lessons Learned from Previous Bank Operations in the Country 10

4.1 Monitoring Milestones and Feedback Loop 14

4.2 Risks and Mitigation Measures 15

Page 3: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

i

Currency Equivalents February 2015

UA 1 = CFAF 782.767

UA 1 = EUR 1.19332

UA 1 = USD 1.44881

Fiscal Year 1 January – 31 December

Weights and Measures

1 metric tonne = 2204 pounds

1 kilogramme (kg) = 2.200

1 metre (m) = 3.28 feet

1 millimetre (mm) = 0.03937 inch

1 kilometre (km) = 0.62 mile

1 hectare (ha) = 2.471 acres

Abbreviations and Acronyms

ADF African Development Fund

AfDB African Development Bank

ANP National Popular Assembly

BCEAO Central Bank of West African States

CA Central Procurement Office

CC Court of Auditors

CEDAW Convention on the Elimination of All Forms of Discrimination Against Women

CEM Country Economic Memorandum

CFE

TSA

Centre for the Formalisation of Enterprises - One-Stop Shop

Treasury Single Account

CPIA Country Policy and Institutional Assessment

CSP Country Strategy Paper

CSP Country Strategy Paper

DGB Directorate General of the Budget

DGCF Directorate General of Finance Control

DGCI Directorate General of Contributions and Taxation

DGD Directorate General of Customs

DGED Directorate General of Economy and Development

DGP Directorate General of the Plan

DGT Directorate General of the Treasury

ECF Extended Credit Facility

ECOWAS Economic Community of West African States

ENA National School of Administration

EU European Union

GAP Strategic Framework and Governance Action Plan

GDP Gross Domestic Product

GII Gender Inequality Index,

GPN General Procurement Note

HIPC Heavily Indebted Poor Country

Page 4: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

ii

IGF General Finance Inspectorate

IMF International Monetary Fund

MAE Ministry of Foreign Affairs

MEF Ministry of Economy and Finance

MTEF Medium-Term Expenditure Framework

NPO National Programme Office

NPRSP National Poverty Reduction Strategy Paper

OHADA Organisation for the Harmonisation of Business Law in Africa

PARCA

PCE

Public Administration Capacity Building Support Project

State Accounting Plan

PECA Economic Development and Aid Coordination Support Project

PEFA Public Expenditure and Financial Accountability

PEMFAR Public Expenditure Management and Financial Accountability Review

PFM Public Finance Management

PFS Public Finance Support Project

PIU Project Implementation Unit

PPP Public-Private Partnership

PRCGE Economic Management Capacity Building Project

PUARB

PUAREF

Fiscal Reform Emergency Support Programme

Emergency Support Programme for Economic and Financial Reforms

RAF Administrative and Financial Officer

RCU Reforms Coordination Unit

SBDs Standard Bidding Documents

SIGFIP Integrated Public Finance Management System

SNFO Senegal Field Office

SPN Special Procurement Notice

TFPs Technical and Financial Partners

TSF Transition Support Facility

UA Unit of Account

UAM Millions of Unit of Account

UNDP United Nations Development Programme

WADB West African Development Bank

WAEMU West African Economic and Monetary Union

Page 5: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

iii

PROJECT INFORMATION SHEET

Client Information

BORROWER: Republic of Guinea-Bissau

EXECUTING AGENCY: Ministry of Economy and Finance

Financing Plan

Source Amount

(UA million)

Instrument

TSF

5.00

Grant

TOTAL COST 5.00

Key AfDB Financial Information

Grant Currency

UA

Interest Type* N/A

Interest Rate Margin* N/A

Commitment Fee* N/A

Other Costs* N/A

Maturity N/A

Grace Period N/A

FRR, NPV (baseline scenario) N/A

ERR (baseline scenario) N/A

*if applicable

Timeframe – Key Milestones (expected)

Identification

NA

Preparation December 2014

Concept Note Approval January 2015

Evaluation February 2015

Country Team March 2015

Project Approval April 2015

Effectiveness June 2015

Last Disbursement June 2019

Completion July 2019

Last Repayment N/A

Page 6: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

iv

Project Summary

Overall Project

Overview

Project Name / Number: Economic and Financial Governance Strengthening Support Project (PARGEF)/

SAP Id. P-GW-K00-005.

Geographical Reach: Nationwide

General Schedule: 48 months, from July 2015 to June 2019

Financing: UA 5.00 million (TSF Grant)

Operational Instrument: Institutional Support Project

Needs

Assessment and

Relevance

For more than a decade, Guinea-Bissau was dogged by political instability, a situation which led to a deeply

dysfunctional public administration. Institutional capacity in terms of public finance management was thus

severely weakened and Guinea-Bissau's performance in the area of governance and anti-corruption efforts was

very weak. The latest financial management assessments pointed to the need to embark on major reforms,

particularly in the monitoring of budget execution and modernization of financial services. In this context, the

country’s main challenge is to emerge from fragility and it is, therefore, important to strengthen the rule of law

and State institutions. To that end, improving governance is deemed critical to buoying up private sector

dynamism and potential as well as fostering the participation in reform and public spending control. Increased

involvement of non-State actors offers an opportunity to strengthen resilience. PARGEF is part of a concerted

and urgent effort by the international community to restore the rule of law and promote economic recovery.

Expected

Outcomes

The expected outcomes of this project are (i) reduced impunity through easy access to justice, civil society

organisations (CSOs) trained to better play their role as watchdogs, strengthened and operational Court of

Auditors following the amendment of its Organic Law, the drafting decrees of implementation of this Court

and the training of 34 employees (including 10 women); (ii) a full and correct implementation of WAEMU

directives on the oversight exercised by State authorities, particularly over the DGCF, IGF, DGP and ARMP;

(iii) increased tax revenue that would raise the tax burden from 7.5% in 2013 to 13% in 2018; and (iv)

economic empowerment of women through the formulation and implementation of a female entrepreneurship

development strategy, the establishment of incubators and support tools; and (v) updating of the Code on

Private and State-Owned Land and the training of officers in 2016 on its use.

Target

Beneficiaries

The main beneficiaries of the project are: (ii) the population in at large and more specifically State entities,

given that their institutional capacity will be restored, their structures strengthened and their resources

increased; and (ii) civil society organisations: they will benefit from capacity building in the fight against

corruption and women's associations will be involved in economic activities with the adoption of a women's

entrepreneurship development strategy. Generally, the positive impacts of the fight against corruption and

impunity will benefit the entire population of Guinea-Bissau.

Bank’s

Comparative

Advantages and

Value Added

The Bank already has a good reputation in Guinea-Bissau and proven experience in the design and

implementation of institutional capacity building projects in emergency contexts and post-conflict situations

(especially in the sub-region: Mali, Guinea and Liberia). This operation will enable the Bank to play a

pioneering role in this country, in the areas covered by the operation (justice, impunity and corruption) and in

coordinating the efforts of Technical and Financial Partners (TFPs). Indeed, many findings and assumptions

have already been made concerning the targeted areas, but very little action has been initiated. In the face of the

often criticized impunity, corruption, drug trafficking, etc., Bank-supported operations will be a step forward,

which should strengthen the perception of the Bank as an institution that is in touch with the realities of the

beneficiaries.

Institutional

Development

The implementation of PARGEF will enable the development of tools and good practices in public finance

management and the fight against impunity and corruption. These tools will be disseminated within the

administration through training and procedure manuals.

Page 7: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

v

INDICATIVE RESULTS-BASED LOGICAL FRAMEWORK Country and Project Name: Guinea-Bissau – Economic and Financial Governance Strengthening Support Project (PARGEF)

Project: Contribute to building capacity for controlling and combating corruption and to the creation of conditions conducive to the rapid economic recovery.

RESULTS

CHAIN

PERFORMANCE INDICATORS MEANS OF VERIFICATION

RISKS/ MITIGATION

MEASURES Indicator (including CSI) Baseline situation Target

IMP

AC

T

Promote strong and inclusive growth by

strengthening budget

discipline, the anti-corruption effort and

ensuring the revival

of economic activity

Annual average GDP growth rate

2.6% in 2014 More than 5% in 2018 MEF (DGP and

DGB) data

Risk 1:

Risk 1: Worsening

political situation and the attendant

institutional

instability.

Mitigation: Strengthening of

the measures being implemented by the

current authorities

to ensure proper control of social

groups in the

country through the on-going social

consultation and

national reconciliation.

International

community efforts for the coordination

and support of

security reforms. Risk 2: Lack of

skilled human

capacity by beneficiary

structures to ensure

the implementation of project activities

Mitigation: Capacity building programmes

provide for

technical assistance

(TA), training and

provisions of

procedures manuals Risk 3: On account

of the fiduciary risk the timely conduct

of audits and

processing by PIUs remains a

challenge.

Mitigation: The CSP provides for

capacity building

through regular training of the staff

of projects and

ministries on the Bank's rules and

procedures. In

addition, given the

fragile state of the

country, close

supervision might be considered, if

need be.

Incidence of poverty 69.3% in 2010 50% in 2018

OU

TC

OM

ES

Outcome I: The

State’s effectiveness

particularly in strengthening the

anti-corruption effort

and the management of the State cash flow

Corruption Perception Index 19 in 2014 30 or more in 2018

Report by

Transparency

International

PI-26: Scope, nature and follow-up of external audit

D in 2013 C in 2018

PEFA PEFA - PI 1 (actual expenditure compared to the

initial budget)

C in 2013 B in 2018

Outcome II: The State mobilises more

domestic revenue

and the tax base is broadened

PI-19. Competition, value

for money and controls in procurement

D+ in 2013 C+ in 2018

Tax revenues relative to

GDP

7.5% of GDP in PIB in

2013 More than 13% in 2018

MEF and IMF data

O

UT

PU

TS

Component I: STRENGTHENING OF CONTROL AND ANTI-CORRUPTION EFFORT

1.1 Strengthening of budget management and internal oversight institutions

1.1.1 The DGCF

procedures manual is revised

1.1.1 Manual updated and decentralized Financial

Control (FC) services in

five key ministries

Finance oversight

procedures manual ill-adapted

Manual ready in 2016, Financial

Control (FC) services in five ministries and 37 controllers

(including 15 women) trained in

2016-18

Data from MEF, DGCF and IGF,

Quarterly project

report

1.1.2 The IGF

procedures manual is harmonised with

WAEMU directives

1.1.2 IGF procedures

manual harmonised and

executives trained

Procedures manual non-

compliant with WAEMU

directives

IGF is equipped, manual made

WAEMU-compliant, 15 inspectors (including 4 women)

trained in 2016-2018

1.1.4 The IGF

procedures manual

is harmonised with WAEMU Directives

1.1.3 Accountants are trained in the functioning of

the WAEMU State

Accounting Plan (SAP) and the Single Treasury Account

(STA) mechanism

WAEMU SAP and STA

non-existent

SAP and STA mechanism in

place. Sixteen (16) accountants

(including five women) trained

1.2 Support the fight against corruption, impunity and strengthening of citizen oversight

1.2.1. The Higher

Anti-Corruption

Inspectorate is operational

1.2.1. The Higher Anti-Corruption Inspectorate is

strengthened

No qualified staff, own

premises and equipment

Training of 10 ISLCC staff members (including three

women) before 2018

UNDP report, Project progress

report

1.2.2 The anti-

corruption tools are

in place

1.2.2 Establishment of the

statutory framework for fighting organised crime,

impunity and corruption

Framework non-existent

Implementation of the anti-

corruption legal framework in

2017

1.2.3 The statutory

asset reporting framework is

established

1.2.3. The statutory asset

reporting framework is

established

Framework non-existent

The legal framework for the

mandatory reporting of assets is prepared and adopted in 2016,

then implemented from 2018

1.2.4. The operation the Court of Auditors

is improved

1.2.4. Strengthening of the status and capacity of the

Court of Auditors

Status non-compliant with

WAEMU directives

The revised Organic Law is enforced in 2016. The Court of

Auditors is strengthened and

operational Court of Auditors

reports

Limited number of staff and

capacity building needs

Recruitment of local consultants, training of 34 staff members

(including 10 women) in 2016-

2018

Page 8: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

vi

Component 2: SUPPORT FOR RESOURCE MOBILISATION AND ECONOMIC RECOVERY

2.1 – Improvement of Public Procurement

KE

Y A

CT

IVIT

IES

2.3.1 Fiscal resource

mobilisation strategy

adopted

1.3.1. DGCI has a multi-

year strategy and a

communication plan

Strategy non-existent

Strategic Plan adopted in 2016 /

the population’s awareness is

raised concerning tax payment

MEF data

2.1 Public

procurement services

are strengthened

2.1 Capacity building for public procurement actors

Low institutional capacity

DGMP is equipped, 147 staff

members (including 22 women) trained, 10 procurement audits

performed by the ARMP in 2018

DGMP progress report

2.2 - Support Domestic Resource Mobilisation

2.1.1. Equipment of DGCI and staff

training

2.1.1. DGI equipped. Number of centres equipped

and staff trained

Centres within the country are not equipped/ low HR

capacities

Bissau and five regions are equipped and 165 staff (30% of

them women) are trained in 2017

DGCI progress

report

2.2.2 Land ownership and

registration law is

updated

2.2.2 Secure access to

registered land is strengthened

Code outdated and ill-

adapted

Code updated and staff trained in

its use in 2016

Land Commission

report

2.3 – Support of Women’s Entrepreneurship

2.2.1 Promoting and

supporting women's

entrepreneurship

2.2.1 Women's

entrepreneurship development strategy is in

place

Women entrepreneurs with

access to integrated services

(training, legal and social protection services)

Non-existent

Non-existent

Strategy prepared in 2016,

incubators and assistance tools in place at the Chamber of

Commerce in 2017

About 3 000 beneficiaries per

year between 2016 and 2019

Data from UN Women

Components RESOURCES

Component: Strengthening budget management and budget discipline: technical assistance, equipment and training: Higher Anti-Corruption Inspectorate, Directorate General of Financial Control, Court of Auditors/

UA 2.37 million

Component II: Capacity building for domestic resource mobilisation Directorate General of Taxation, UN

Women, AMAE, Women’s CSOs, Chamber of Commerce UA 1.86 million

Component III: Reform Coordination and Monitoring Support UA 0.77 million

Total Project Cost UA 5 million

Page 9: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

vii

Project Implementation Schedule

Years

Activities/Month A M J J A S O N D O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Conditions precedent to s tart-up

Board presentation

Grant effectiveness

Insta l lation of PIU s taff

Setting up of the PIU

Preparation of procedures manual

Project launch miss ion

Equipment and suppl ies

Preparation of bidding documents

Launching of invi tations for bids

Award and s igning of contracts

Del ivery of goods and insta l lations

Consultings Services

Preparation of ToR and EOI

Shortl i s ting

Publ ication of requests for proposals (RFP)

Del ivery of consultant services

DGCF+IGF Technica l Ass is tance

Implementation of DGCI Communication Plan

Technica l Ass is tance to Court of Auditors

Tech. Ass is t. ARMP and DGMP

Tech. Ass is t. Reform Coordination Unit (CCR)

National consultants

Tra ining

Local tra ining

Sub-regional tra ining

Study tours

Management

Operating expenses

Mid-term review

Monitoring and evaluation

Reform Coordination Unit (CCR) meeting

Annual accounts audit

Fina l accounts audit

2015 2016 2017 2018 2019

Page 10: ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING … · iv Project Summary Overall Project Overview Project Name / Number: Economic and Financial Governance Strengthening Support Project

1

REPORT AND RECOMMENDATION OF THE MANAGEMENT TO THE BOARDS OF

DIRECTORS ON THE PROPOSED GRANT TO GUINEA-BISSAU FOR THE

ECONOMIC AND FINANCIAL GOVERNANCE STRENGTHENING SUPPORT

PROJECT (PARGEF)

Management submits the following Report and Recommendation on a proposed grant of UA 5

million to the Republic of Guinea-Bissau to finance the Economic and Financial Governance

Strengthening Support Project (PARGEF) in Guinea-Bissau.

I STRATEGIC THRUST AND RATIONALE

1.1. Project Linkages with Country Strategy and Objectives

1.1.1 In 2011, Guinea-Bissau completed the preparation of its second National Poverty

Reduction Strategy, DENARP II 2011-2015, through an open and inclusive process involving all

development stakeholders. Based on this, Guinea-Bissau recently prepared a strategy document

“vision 2015-2025 Terra Ranka”, presented to the international community on March 25, 2015 at

the donor roundtable for the country. This vision aims for a politically stable Guinea-Bissau

through inclusive development and good governance. It is supported by an operational and strategic

plan in which the promotion of good governance is a central pillar. Guinea-Bissau has also endorsed

the principles of the “New Deal” for fragile States under the G7 + (see Annex VI). PRAGEF is

consistent with the guidelines of the “New Deal”, in particular through the focus areas relating to

the strengthening of justice, the State's capacity to generate and manage revenue and economic

fundamentals. PARGEF is also in line with the policy statement of the newly elected

Government which puts forward an action plan for achieving the results of NPRSP II. This

project is particularly consistent with the second part of this plan, dubbed “Contingency”, which

includes, among others, actions related to the creation of conditions necessary to improve

governance (technical assistance). The third part labelled “Development” is under elaboration

and will be presented at a donor round-table in the course of 2015.

1.1.2 The Bank's Country Strategy Paper (CSP) 2015-2019 is based on the first and third

focus areas of NPRSP II and comprises two pillars (“Strengthen governance and the foundations

of the State” and “Develop infrastructure that promotes inclusive growth”). The project, through

its operations aimed at strengthening institutional capacity and mobilising internal resources of

the State, is consistent with the guidelines of the first pillar of the CSP as well as those of the

Bank’s Strategy for 2013-2022, especially those relating to the strengthening of governance. It is

also in line with the guidelines of the Governance Strategic Framework and Action Plan (GAP

II) 2014-2018 through the first pillar (Public Sector Management and Economic Management)

and the third pillar (Investment and Business Climate). The project, through its “Support for

Women’s Entrepreneurship” component is linked to Pillar 2 on “Women's Economic

Empowerment” of the Bank's Gender Strategy and the Bank's Strategy for Addressing Fragility

and Building Resilience in Africa, and draws on the economic and sector works conducted by

the Bank, including in particular the 2014 Gender Profile.

1.2. Rationale for Bank Intervention

1.2.1. Economic and Social Context: Guinea-Bissau’s economy remains fragile and vulnerable

to external shocks. Indeed, the coup d’état of April 2012 ended nine consecutive years of growth

and the economic disruption that ensued caused GDP growth to drop from 5.3% in 2011 to -

1.5% in 2012. Although slightly positive, the growth rate of 0.9% recorded in 2013 concealed

structural problems and endemic weaknesses related to the institutional capacity of the public

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2

administration that have only worsened since the 2012 coup d’état. In 2013, inflation stood at

0.6%, against the backdrop of sluggish domestic demand. In view of the rebound in demand, this

rate is projected to increase to 2.6% in 2015. Fiscal balance recorded a deficit of 4.7% in 2013.

GDP growth was estimated at 2 6% in 2014 and projected at 3.9% in 2015, based on the

prospects of an upturn in cashew prices and the expected recovery in economic activity

following the return to constitutional order. In the social sphere, there is a significant

deterioration in all indicators. Indeed, the country has stagnated for more than 10 years in the

last decile of the Human Development Index (HDI), with an index of 0.364, and ranked 177th

out of 187 countries in 2014. In 2010, over 70% of the population lived on less than USD 2 a

day, and 30% on less than USD 1. In 2013, these figures were projected to soar, with absolute

poverty affecting over 40% of the population.

12.2. Governance: Guinea-Bissau's performance in terms of governance and fighting

corruption is very poor. According to Transparency International's 2013 Corruption Perceptions

Index, the country is ranked 163rd

out of 177 countries. Impunity, military interference in

politics, weak non-State actors and the absence of a real corruption and financial crime policy

seem to underlie the proliferation of corruption. In addition, Guinea-Bissau's overall score in the

Bank Group's Country Policy and Institutional Assessment (CPIA) for 2014 was 2.7 on 6,

whereas the score on Indicator 12 (Transparency, Accountability and Corruption) was 2.2,

highlighting the major constraints in this area.

1.2.3. It is clear from the above context analysis

that the main challenge facing the country is to

exit from the situation of fragility. Therefore, it is

important to strengthen, among others, the rule of

law and state institutions in order to mitigate

institutional weaknesses. Regarding public

finance management (PFM), the situation

deteriorated drastically with the 2012 crisis. The

2013 PEFA report showed the various

weaknesses of the system, especially in the area

of fiscal credibility and internal and external

oversight. Challenges remain concerning the

transposition into national law of the six

directives of the West African Economic and

Monetary Union (WAEMU) on PFM. In 2010, the Government adopted a new Procurement

Code that ensures greater transparency and efficiency, but the bodies set up to implement it

(Procurement Regulatory Authority, Directorate General of Public Procurement, Central

Procurement Agency) lack the required capacity. In this context, greater involvement of non-

State actors provides an opportunity to build resilience.

1.2.4. Moreover, Guinea-Bissau needs to have the institutional capacity to mobilise more

domestic resources to consolidate and deepen its achievements, guaranteeing economic recovery

and emergence from the state of fragility. However, the tax base remains extremely small and

the tax burden very limited; tax revenue accounted for only 7.5% of GDP in 2013, well below

the WAEMU convergence criterion of 17%. This is largely due to the major challenges faced by

financial services and which adversely affect their performance. As for the Directorate General

of Contributions and Taxes, the main constraints are: (i) inadequate means of actions and misuse

of human resources; (ii) ignorance of tax regulations and tax procedures; (iii) fraud and

corruption; (iv) lack of IT resources and facilities for transport within the country; (v) limited

number of taxpayers; and (vi) the need to revise the General Tax Code in line with the tax

Graph 1: Quality of budgetary & financial

management and economic management

performance

Sources: CPIA 2013 Scores, AfDB

GNB

0

1

2

3

4

5

6

0 2 4 6

Qu

alit

y o

f b

ud

geta

ry

and

fin

anci

al

man

agem

ent

Economic Management

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3

measures issued as part of the annual budget laws. In a context of weak budgetary and financial

management and economic management performance (Graph 1), the limited tax base imposes

significant limitations on the conduct of budgetary policy. This is the context that not only

underpins, but forms the rationale for the Bank's involvement.

1.2.5. Lastly, the project is justified by the need to assist reform programmes through

institutional support aimed at building the capacity of entities responsible for their

implementation. PARGEF, which was appraised concurrently with the Emergency Fiscal

Reform Support Programme (PUAREF), is an initiative intended to implement this

recommendation, notably by supporting the alignment of the PFM legal framework with

WAEMU directives and strengthening the entities responsible for the implementation and

coordination of reform measures.

1.3. Aid Coordination

The aid consultation and harmonisation process was initiated in April 2006 by a joint initiative of

the Delegation of the European Commission and the United Nations Development Programme

(UNDP), both of which established, in line with the “Paris Declaration”, a Guinea-Bissau

Partners' Group open to all bilateral and multilateral donors. However, since the coup d’état of

2012, thematic groups were abandoned pending the resumption of operations by PTFs with the

return to constitutional order. Since then, there has been little progress in the reorganisation of the

consultation process and ad-hoc mechanisms were put in place. Overall, aid coordination and

monitoring mechanisms are still ineffective because of structural weaknesses in public

administration. As part of the Bank's targeted support, the Ministry of the Economy and Finance

(MEF) receives technical assistance in the mobilisation, coordination and monitoring of external

aid, particularly through the establishment of a data base on externally financed projects.

1.3.2 Project activities were designed in coordination with other donors so as to take into

account the various levels of intervention and ensure the effectiveness of development

assistance. Public finance receives many forms of support from technical and financial partners

(TFPs), including the European Union which supports payroll control and the World Bank which

intervenes under the Public Finance Support Project aimed at building the capacity of the

Directorate General of the Budget (DGB) in public resource management. The area of justice

and the fight against impunity is supported by United Nations specialized agencies. TFP

assistance in areas covered by the project is detailed in Technical Annex A3 of this appraisal

report. Table 1.1

Summary table of the intervention of Technical and Financial Partners (TFPs) Name of Operation Area Amount TFP

Targeted Support (PECA 2) NPRSP M &E, MTEF, resource mobilisation

strategy, coordination USD 4.6 million AfDB

Public Administration Reform Support

Project (PARAP)

Public administration reform, payroll

computerization (SIGRAP) EUR 6.5 million EU

Public Administration Capacity

Building Support Project (PARCA)

Public Service (ENA), computerization of the

expenditure chain, financial services UA 6.5 million AfDB

Economic Good Governance Project

Public finance governance (GFP), support to

MEF, communication strategy. Reform

Programmes

USD 1, 625,000 World Bank

Budget Support Programme Budget support EUR 20 million EU

Justice Support Project Access to Justice, Infrastructure, training N/A UNDP

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II PROJECT DESCRIPTION

The overall objective of the project is to help build corruption control and prevention capacity

and create conditions conducive to the rapid recovery of the economy. The specific objectives

are: (i) improving State efficiency, particularly by strengthening the fight against corruption and

fiscal discipline; and (ii) supporting resource mobilisation and activities to support economic

recovery.

2.1 Project Component

2.1.1 The project has three components: (i) strengthening corruption control and

prevention; (ii) supporting resource mobilisation and economic recovery; and (iii)

supporting reform coordination and monitoring. Component 1 includes the following two

sub-components: 1.1 - Strengthening internal oversight and treasury institutions; and 1.2 -

Supporting the fight against corruption, impunity and strengthening citizen control. The sub-

components of the first component are closely related in that increased transparency and

efficiency in public finance management helps channel public spending towards structuring

investments that would create conditions conducive to rapid economic recovery. In addition, the

activities of Component 2 will help promote the revival of economic activity and allow the State

to increase the revenue pool that it could use to address the priority needs of the population. The

following table provides their estimated cost and the list of sub-components:

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Table 2.1: Project Components

# Component

Name

Estimated

Cost Component Description

1

Strengthening

oversight and the

fight against

corruption

UA 2.37

million

1.1 Strengthening Internal Oversight and the Treasury Strengthening of the Directorate General of Financial Control;

technical assistance (TA) for revision of the procedures manual,

decentralization of financial control (FC) services in 5 key ministries,

equipment, training

Strengthening the General Inspectorate of Finance (IGF): TA for the

development of WAEMU-compliant procedures manual, institutional

support

Securing of revenue by taking the necessary steps to facilitate the

Treasury Single Account system and the State's management

accountability: establishment of the State Accounting Plan (PCE),

training of accountants, equipment, study on interconnection with

financial services

1.2 – Support for the fight against corruption and impunity, and

enhancement of citizen oversight

Support for the establishment of a functional mechanism for cooperation

between PNA/ Ethics Commission, the Court of Auditors, the

investigative teams on (economic and blood) crimes and the Higher

Anti-Corruption Inspectorate

Preparation of a study on corruption and helping the country to develop

a country strategy

Development of a legal framework for mandatory asset reporting by

certain state officials and a public anonymous whistleblowing system

Support for the implementation of legislative reform and the

establishment of structures, mechanisms, and international standards in

the fight against organised crime, impunity and corruption

Institutional Support for the Court of Auditors

2

Supporting

Resource

Mobilisation and

Economic

Recovery

UA 1.86

million

2.1 Improvement of public procurement efficiency

DGMP capacity building: TA for the development of procedure

manuals, conduct of study to better redefine the role of actors,

equipment

ARMP capacity building: equipment, training, procurement audits

Training of contracting authorities and non-State actors

2.2 Support for the mobilisation of domestic resources

Support for the development and adoption of a DGCI multi-year

strategic plan

Technical assistance for DGCI institutional building

Building of domestic tax collection capacity in Bissau and the regions

Support for the establishment of a communication plan and development

of taxpayer compliance

Support for the revision of the Land Law to secure access to land and

ensure control of the land registration system

2.3 – Support for Women’s Entrepreneurship

Support for the establishment of a women's entrepreneurship promotion

mechanism

3

Supporting

Reform

Coordination and

Monitoring

UA 0.77

million

Capacity building for the Reform Coordination Unit (RCU)

Project Management Support

Project Audit

2.1.2 Technical Annex B2 of this report provides the detailed cost of component activities and

a comprehensive list of works, goods and services to be procured under the project. In addition,

Technical Annex C4 presents a detailed description of the project components.

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2.2 Technical Solutions Adopted and Alternatives Explored

2.2.1 In preparing the project, we were faced with several options concerning, in particular,

the anchoring of the project, the number of entities to be supported, the scale of the investment to

be made and the management of constraints relating to the entities that would be selected. In

view of these problems, we had to make trade-offs in order to steer the project objectives

towards targets compatible with the available funding and take into account synergies with the

interventions of other TFPs. The effectiveness sought by the multi-sourced support stems from

the unwavering concern to boost state revenue, streamline public spending and promote

transparency. Table 2 below analyses the alternatives considered and the reasons for their

rejection.

Table 2.2

Alternatives Considered and Reasons for Rejection

Alternative

Solution

Brief Description

Reason for Rejection

Decentralization

of SIGFIP

The decentralization of

SIGFIP was to be done

concurrently with the creation

of the post of financial

controller in four priority

ministries

PARCA1 is a Bank-financed project that seeks to support the extension of SIGFIP. The

public finance (PF) support from the World Bank (PFS) also provides for upgrade of

the IT system and training at the Ministry of Finance (MINFI). It is important to ensure

that SIGFIP is properly mastered at central level before considering its decentralization.

The sites of the ministries concerned are far from one another and deployment of

SIGFIP in these ministries has implications in terms of telecommunications systems

that are not yet fully under control (security and cost).

Improvement of

the customs

revenue

collection

framework

Establishment of an interface

between ASYCUDA and

SIGFIP; linking of border

customs clearance centres to

the ASYCUDA++ system;

and preparation of a customs

procedures manual

The customs service has already received multi-sourced support: the Bank and

ECOWAS for the establishment of ASYCUDA++, Portugal for the translation of

WAEMU texts, technical assistance from France, the World Bank and Africa Regional

Technical Assistance Centres (AFRITAC).

These PTF's plan notably to recruit customs procedures experts for the implementation

of the medium-term action plan and the training. To avoid overlap, it is advisable to

wait for the outcomes of this support before considering any Bank intervention.

Project

management

It was envisaged that a Project

Implementation Unit (PIU)

would be established at the

Ministry of Economy and

Finance (MEF), which would

ultimately ensure the

management of all PTF

capacity building projects

This solution was abandoned due to technical and legal difficulties involved in setting

up such a PIU in the context of Guinea-Bissau where aid coordination is still in its

infancy and the labour market lacks qualified executives who could be maintained in a

Unit on a permanent basis. Conversely, with donor support, it is planned to establish a

Project Implementation Unit;

Furthermore, to comply with the Paris Declaration on aid effectiveness, preference was

given to the use of a permanent structure for project management, in coordination with

the World

2.3 Project Type

It is an institutional support project assisted by a grant from the Transition Support

Facility (TSF). This type of operation was chosen because of its relevance to the implementation

of capacity building activities in government agencies with limited experience in project

execution.

2.4 Project Cost and Financing Arrangements

2.4.1 The total project cost, excluding custom duties and taxes, is estimated at UA 5.0 million

(or about CFAF 3.91 billion at the exchange rate of February 2015), of which UA 3.69 million

(73.7%) in foreign exchange and UA 1.31 million (26.3%) in local currency. These costs include

a 2% provision for physical contingencies and 2% per year for price escalation for both foreign

exchange and local currency. The table of detailed costs is provided in Technical Annex B2 to

this report. The following is a summary table of the overall project cost by component:

1 Public Administration Capacity Building Support Project

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Table 2.3

Estimated Cost by Component [in UA million]

Components/Sub-Components Costs in CFAF million Costs in UA million % F.E.

F.E. L.C. Total F.E. L.C. Total

1. Strengthening of oversight and the fight against

corruption 1.36 0.39 1.75 1.74 0.50 2.24 77.6%

1.1 Strengthening of internal oversight and the

treasury 0.56 0.14 0.70 0.72 0.19 0.90 79.3%

1.2 Support for the fight against corruption, impunity and

enhancement of citizen oversight 0.80 0.25 1.05 1.02 0.32 1.34 76.4%

2. Support for resource mobilisation and economic

recovery assistance 1.14 0.25 1.39 1.46 0.32 1.78 82.1%

2.1 Improvement of public procurement efficiency 0.30 0.08 0.38 0.39 0.10 0.49 79.9%

2.2 Support for domestic resource mobilisation 0.57 0.13 0.70 0.73 0.16 0.89 81.9%

2.3 Support for women’s entrepreneurship 0.27 0.04 0.31 0.34 0.06 0.40 85.0%

3. Support for reform coordination and monitoring 0.24 0.34 0.58 0.31 0.43 0.74 42.2%

3.1 – Capacity building for the Reform Coordination Unit 0.11 0.00 0.11 0.14 0.00 0.14 100.0%

3.2 – Support for Project Management 0.13 0.33 0.47 0.17 0.43 0.60 28.8%

TOTAL BASE COST 2.74 0.98 3.72 3.51 1.25 4.76 73.7%

Provision for price escalation (2%) 0.06 0.02 0.08 0.07 0.02 0.09 73.7%

Provision for physical contingencies (3%) 0.08 0.03 0.11 0.11 0.04 0.15 73.7%

TOTAL PROJECT COST 2.88 1.03 3.91 3.69 1.31 5.00 73.7%

Note: The exchange rates used are indicated in the introduction of the report (page (i))

2.4.2 The TSF supports all foreign exchange and local currency costs following the Eligible

Expenditure Policy. Indeed, on the basis of the financial parameter analysis, Guinea-Bissau is

considered eligible in view of the fact that, despite the progress made in the management of

public finances, the country's financial situation is still fragile (cf. Appendix 3).

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Table 2.4

Project Costs by Expenditure Category [in UA million]

EXPENDITURE CATEGORIES F.E. L.C. Total % F.E.

WORKS 0.24 0.16 0.40 60.6%

GOODS 1.13 0.11 1.24 91.1%

SERVICES 1.56 0.40 1.96 79.6%

TRAINING 0.40 0.27 0.67 59.5%

OPERATION 0.18 0.31 0.49 36.9%

TOTAL BASE COST 3.51 1.25 4.76 73.8%

Physical contingencies 0.07 0.03 0.10 70.0%

Price escalation 0.11 0.04 0.15 73.7%

TOTAL COST OF COMPONENT A 3.69 1.31 5.00 73.7%

Table 2

Expenditure Schedule by Component [amounts in UA million]

COMPONENTS 2015-16 2016-17 2017-18 2018-19 Total

1. Strengthening of oversight and the fight against

corruption 0.67 1.19 0.40 0.11 2.37

2. Support for resource mobilisation and economic recovery assistance

0.63 0.90 0.28 0.04 1.86

3. Support for reform coordination and monitoring 0.31 0.19 0.14 0.12 0.77

TOTAL COST 1.62 2.29 0.82 0.28 5.00

Table 2.6

Schedule of Expenditure by Category [amounts in UA million]

EXPENDITURE CATEGORIES 2015-16 2016-17 2017-18 2018-19 Total

WORKS 0.11 0.21 0.11 0.00 0.42

GOODS 0.74 0.34 0.10 0.09 1.26

SERVICES 0.41 1.22 0.36 0.08 2.06

TRAINING 0.20 0.28 0.18 0.05 0.71

OPERATION 0.18 0.22 0.08 0.05 0.53

TOTAL 1.63 2.27 0.82 0.27 5.00

2.5 Project Area and Beneficiaries

The project area is the Republic of Guinea-Bissau as a whole. Indeed, PARGEF

activities will concern public administration services in Bissau, as well as DGCI regional offices

in Bafata, Gabu, Cacheu, Oio and Buba, which are responsible for tax revenue collection within

the country. The main project beneficiaries are: (i) the State of Guinea-Bissau through

institutional capacity building for the entities responsible for economic and financial

management and increased public resources; (ii) enterprises, particularly SMEs and women's

microenterprises, which will operate in a more conducive institutional environment.

Improvement in the quality of services consequent on the project will benefit, in general, the

people of Guinea-Bissau as a whole in that they will be the primary beneficiaries of the jobs

created, notably through improved public sector efficiency and secure access to land resources.

2.6 Participatory Approach for Project Identification, Design and Implementation

2.6.1 The project preparation was characterized by broad consultation of stakeholders of the

public sector (economic and financial services), private sector, Guinea-Bissau's civil society and

technical and financial partners. These consultations continued during the appraisal mission. The

approach as well as the use of the diagnostic studies on public finances management (PEFA and

CEM2), the Bank's economic and sector works and the development of domestic public

2 Country Economic Memorandum, prepared by the World Bank in 2014

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resources, including the study on the evaluation of the tax system’s organisation, conducted in

2014 with the support of UNDP, enabled the appraisal team to have a better grasp of the

constraints and challenges faced by the project’s beneficiary entities and to better address their

capacity building needs in the design and formulation of project components. In addition, a joint

consultation framework will be set up for budget support (PUAREF) and this project. This will

include civil society representatives.

2.7 Consideration of the Bank Group's Experience and Lessons Learned from the

Project Design

2.7.1 The Bank’s active portfolio on March 15th

2015 comprises five (5) projects under

execution for a total approved amount of UA 16.32 million. The overall rating under the latest

review undertaking in 2014 was 1.8 (on a 0 to 3 scale), that is an overall performance not

deemed very satisfactory. Details on the portfolio are presented in Annex 2. To date, the Bank

has approved two institutional support projects that have been completed3. The Project

Completion Report (PCR) on the Economic Management Capacity Building Project (PRCGE),

which ended in December 2010 with an overall score of 2 out of 4, provides a number of lessons

to be learned from the implementation of this project, including: (i) the need to promote better

complementarity of the projects being implemented by various PTFs at the time of project design

and to ensure coordinated project implementation; (ii) ensure the establishment of a suitable

project monitoring and evaluation mechanism; (iii) ensure greater ownership of project results,

particularly by assuming the recurrent costs; and (iv) ensure the availability of skills and

capacities at national level.

2.7.2 In addition to the projects already completed, the Bank has financed two other on-going

capacity building projects: (i) the Economic Development and Aid Coordination Support Project

(PECA II), which is a support operation targeting Pillar III of the TSF, co-financed by UNDP

and was to be completed by end-2015; and (ii) the Public Administration Capacity Building

Support Project (PARCA). PECA II supports the monitoring and evaluation of NPRSP,

preparation of the overall MTEF and two sector-based MTEFs, as well as preparation of the

Resource Mobilisation and Aid Coordination Strategy. PARCA aims to raise the level of

administrative managers, to support the computerization of budget preparation and execution as

well as provide technical assistance to financial authorities. The PARGEF appraisal team not

only took into account the lessons learned from completed projects, but also held discussions

with the implementation units of PARCA and PECA in order to include in this project’s design

the experience gained from implementation of the two operations.

2.7.3 Based on the lessons learned from previous operations, the new institutional mechanism

provided for enough innovation to improve the effectiveness of project implementation,

especially with the empowerment of a permanent structure (the Reform Coordination Unit) for

project management, while ensuring the implementation of technical assistance to support the

implementation of project components.

3 Institutional Support Project at the Ministry of Planning approved in August 1989 (ADF loan of UA1.97 million and ADF grant of UA 3.8

million) and the Economic Management Capacity Building Project (PRCGE) approved in 2005 (ADF grant 1.35 million).

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Table 2.7

Lessons learned from previous Bank operations in the country

Key Lessons Taken into Account in PARGEF

The need to be realistic in the choice of type and number

of activities (selectivity depending on the objectives,

limited number of frameworks, feasibility of the proposed

support, etc.) to avoid overburdening the institutions,

already constrained by their very limited project

implementation capabilities.

The Government and the Bank reached a consensus on the need to

be realistic in the choice of components and conditions, particularly

the formulation of conditions precedent to first disbursement.

The need to strengthen coordination between PTFs and

the Government to support and ensure synergy between

their respective operations in a fragile context.

TFPs in Guinea-Bissau worked in close collaboration in

formulating the project and also included capacity building for the

internal system for the coordination and monitoring-evaluation of

projects and programmes.

The need to closely link capacity building operations to

the Bank’s Budget Support Programme to ensure synergy

between these two types of operation and

complementarity with the Bank's institutional support in

Guinea-Bissau.

The planned capacity building operation (PARGEF), intended as a

response to the weak capacity, is a catalyst for reform

implementation. Also worth noting is the existence of other

institutional support projects, including the Bank-financed targeted

support and PARCA programmes and the planned support from

other PTFs.

2.8 Key Performance Indicators

2.8.1 Progress towards achieving the project’s key results for the beneficiaries will be

measured using the logical framework based on indicative results. The executing agency will be

responsible for collecting and analysing data to produce indicators for measuring the said results.

Performance indicators (progress being achieved from 2015 to 2019) are summarized in the

following table:

Box 1

Key Performance Indicators

Output Indicators

The DGCF procedures manual is updated in 2016 and executives are trained in 2016-2017

Financial Control (FC) is decentralized in 5 ministries and 37 controllers (including 15 women) trained in 2016-18

The IGF is equipped, has a WAEMU compliant manual, 15 inspectors (including 4 women) trained in 2016-2018

The DGMP and ARMP are equipped, 147 staff members (including 22 women) trained, 10 contract audit performed

by the ARMP in 2018

Organic Law of the Court of Auditors revised in 2016 and implemented. The Court of Auditors is strengthened and

operational

Regional tax collection centres are strengthened and equipped in 2016, 165 DGCI staff members (30% of them

women) are trained in 2016-2018

Entrepreneurship development strategy formulated in 2016, incubators and support tools in place at the Chamber of

Commerce in 2017

Number of microenterprises owned by women entrepreneurs in rural areas and the informal sector, high-quality

integrated services (training, legal and social protection services)

The land law is updated in 2016 and 30 staff members (including 8 women) are trained in 2016 for its use

Outcome Indicators

Guinea-Bissau moves from the 163rd

to the 150th

position out of 177 countries in 2018 in the ranking of the Corruption

Perceptions Index

Guinea-Bissau's score on PEFA PI-1 relating to aggregate expenditure out-turn compared to original approved budget

moves from C in 2013 to B in 2018

The tax burden should go from 7.5% in 2013 to 13% in 2018

The score on PEFA PI-26 relating to the scope, nature and follow-up of external audit should rise from C in 2013 to B

2018

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III PROJECT FEASIBILITY

3.1 Economic and Financial Performance

Given that this is an institutional support project, analysis in terms of rate of return does

not apply. However, it should be noted that by strengthening the country's domestic resource

mobilisation capacity, intensifying the fight against corruption and economic crimes, the project

will help increase the State's tax revenue, allowing Guinea-Bissau to sustainably enhance

economic and financial performance of the State and public procurement beneficiaries.

3.2. Environmental and Social Impact

The works to be performed under the project are light development and finishing works on

existing buildings. Therefore, the project will have no adverse environmental impacts. No

safeguard measure is therefore required for this project which is classified as Category 3.

3.3. Climate Change

Project activities aimed at strengthening human and institutional capabilities have no

adverse impacts on the environment, nor on the climate change process.

3.4. Gender

In government services, women account for 25% of the staff, but hold less than 2% of

decision-making positions. It is planned that TSF resources will be used to acquire the services of

an international consultant in social development who will be tasked with preparing the project’s

training programme. In designing this programme, special attention will be given to the

mainstreaming of gender into the proposed activities. Therefore, PARGEF will ensure that in the

planned training, women are given a more substantial role and that the executing agency gives

equally skilled female candidates preference in the selection of experts for the project team.

Moreover, the support that will be provided to women’s entrepreneurship under PARGEF will

enable women to take advantage of the conditions conducive to the creation of new job

opportunities, and that will positively impact their lives. Thus, between 2016 and 2019, about 3

000 to 5 000 women entrepreneurs will benefit annually from high-quality integrated services

(training, legal and social protection) and appropriate supervision.

3.5. Social

3.5.1. PARGEF will have a positive impact on social indicators and poverty. First of all, in the

face of a difficult socio-economic context (the crises of 2008, 2009 and 2011, political instability,

scarcity of budget support inflows, etc.), the implementation of project activities should help

increase the delivery of essential public services, ease their accessibility and improve their

quality, by enhancing the mobilisation of public resources and ensuring their efficient use. These

changes would lead to greater use of own resources for public investment financing. Also, the

revival of growth and job creation will have a positive impact on social indicators. Indeed, in the

social sphere, given that the share of social spending in the budget increased from 17.1% of GDP

in 2010 to 22% in 2014, the decentralization of internal oversight and the increased tax revenue

to be brought about by PARGEF will improve budget implementation and enable the allocation

of more substantial resources to priority sectors such as health and education, as well as facilitate

access to social services. In addition, support for SMEs and training in the field of women's

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entrepreneurship will enable women to enjoy conducive conditions for the creation of new job

opportunities which will positively influence their lives.

3.5.2. Generally, reduced corruption in the country should, in the long run, have a positive

impact on political stability, insofar as political and institutional disturbances are highly

correlated with the corruption levels (Graph 1). Also, PARGEF should have an impact on

financial services. Indeed, the establishment of an administrative or budgetary process without

provision for oversight and penalties cannot have the desired effect. In this regard, PARGEF

links the work performed regarding economic management to efficiency, given that it will

strengthen the justice-related institutions required for the proper functioning of public and

private economic institutions. Socially, PARGEF will help fight against a scourge that has been

identified as a stumbling block to development, especially among women as highlighted in

Guinea-Bissau’s Country Gender Profile for 2014.

3.6. Forced Resettlement

The project will entail no population displacement.

IV IMPLEMENTATION

4.1. Implementation Arrangements

4.1.1. Institutional Arrangements: The project’s institutional anchor is the Ministry of the

Economy and Finance (MEF). The Reform Coordination Unit (RCU), attached to the Office of

the Minister of the Economy and Finance will be responsible for the coordination of PARGEF.

The Project Implementation Unit (PIU), established under the supervisory authority of the RCU,

will be responsible for implementing the planned activities of governance and institutional

capacity building support projects, including PARGEF, and the World Bank-funded institutional

support project. The Unit comprises a project manager, a procurement officer, a training expert

and a monitoring and evaluation specialist, an administrative and financial officer (AFO), a driver

and a messenger. It will have the necessary material resources and will be strengthened according

to the projects under its responsibility. The PIU will, among other project management tasks, be

responsible for the administrative, accounting and financial management of projects and will

produce summary annual financial statements and organise audits. A project Technical

Coordination Committee (TCC) will be set-up, presided by the project coordinator and

comprising the project team as well as the focal points of the beneficiary structures. It will meet

at least once every two months to take stock of activities execution and coordinate actions within

beneficiary structures. A detailed description of execution modalities are presented in the

technical annexe B.3.

4.1.2. Procurement: The procurement of goods, works and services financed by the Bank will

be done in accordance with the Bank rules of procedure for the procurement of goods and works,

edited in 2008 and revised in July 2012, or the Bank’s rules and procedures for the use of

consultants, edited in 2008 and revised in July 2012 as the case may be, using appropriate Bank

bidding documents. The procedure for procurement of works, goods and services financed by the

Bank, the PIU resources and capacities and the procurement plan are presented in Annex B5. The

Bank will cooperate with UNDP to support justice and the anti-corruption effort, and with UN

Women to support the establishment of a women's entrepreneurship promotion mechanism. This

cooperation will be based on delegated project management agreements.

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Disbursement: Disbursements are subject to Bank disbursement procedures. The following

methods will be used: (i) the special account method for the disbursement of operating costs,

field missions and training activities; (ii) direct payment method for the disbursement of contracts

for the procurement of goods or services and works; (iii) the reimbursement method will be used

for eligible expenditure pre-financed with prior Bank agreement.

4.1.3 For the special account method, a special account will be opened with a local

commercial bank acceptable to the Bank to receive the grant resources. The account's

transactions will jointly signed by the PIU Coordinator and the Project Accountant (bearing in

mind that each project funded by a partner will hire an accountant exclusively for itself). The

administrative and financial officer (RAF) will keep the cheque books and will endorse the stump

of each cheque issued. The opening of the special account to receive the Grant resources will be a

condition precedent to first disbursement.

4.1.4 Financial Management: The financial management system of the executing agency of

the above-mentioned operation was reviewed, leading to the conclusion that the system does not

provide any guarantee that funds provided by the Bank will be used properly, nor that reporting

and accountability will be satisfactory. Indeed, the project executing agency has not yet been set

up and the structures of the line Ministry designated for its anchoring are still being put in place.

It is a new Ministry established by the new Government that emerged from the elections held in

April and May 2014. The Ministry is still being organised and the documents and tools relating to

its functioning (organisation chart, powers and responsibilities of the various technical

directorates, etc.) are still awaited. Also, PEFA 2013 notes significant weaknesses in Guinea-

Bissau's public finance management system which provides no mechanism for the management

and monitoring of donor-financed projects and programmes. A parallel financial management

system in line with international standards and Bank reporting and accountability requirements is

essential for implementing this project. An autonomous accounting system will be set up, centred

on (i) an integrated management software configured according to private-type commitment

accounting rules and according to the standards of the West African Accounting System

(SYSCOA), tailored to project management; and (ii) an administrative, accounting and financial

procedures manual with a clear separation of tasks.

4.1.5 Audit: The accounts will be audited by an independent private external audit firm. This

firm will be recruited on the basis of terms of reference previously agreed upon with the Bank

and according to Bank rules and procedures, no later than six (06) months following the entry

into force of the financing agreement. His/her contract will be for a one-year period, renewable

on the basis of the performance quality and for a period not exceeding three years. These reports,

prepared according to the International Standards on Auditing (ISA), will be forwarded to the

Bank for approval no later than six months after the audited period.

4.2 Monitoring

4.2.1 The physical implementation of the project spans a 48-month period, from July 2015 to

June 2019. This schedule is deemed reasonable and takes into account the assistance from the

UNDP Office in Bissau designed to accelerate the implementation of the “Anti-Corruption and

Impunity Support” component, as well as the support from UN Women for implementation of

the project component that aims to provide “Support for the establishment of a women's

entrepreneurship promotion mechanism”. In addition, the use of project funds for the recruitment

of a procurement expert and a monitoring and evaluation specialist to support the executing

agency is expected to reduce procurement time and ensure proper monitoring of the

implementation of project components. The procurement of a monitoring and evaluation

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14

software and the training of the Reform Coordination Unit (RCU) staff are also planned. The

PIU will ensure the establishment and management of the project monitoring and evaluation

system, including the selection of relevant and easily quantifiable performance indicators, the

collection of baseline data as well as the measurement of the project’s progress towards

achieving the impacts and interim targets.

4.2.2 The project team will be responsible for monitoring the implementation of the project on

the basis of the logical framework indicators. Once the Grant Protocol Agreement becomes

effective, a launch mission will be organised to train the project implementation staff in the use

of Bank procedures. Supervision missions will be organised at least twice a year. A mid-term

project review mission is also planned, to be scheduled before the end of the second year of

implementation. In addition, quarterly and annual progress reports will be prepared and

forwarded to the Bank. The AfDB Senegal Regional Office (SNFO) will play an important

leadership role in supporting the executing agency, in supervision missions and in monitoring the

implementation of relevant recommendations.

4.2.3 The major indicative stages are presented in the table below:

Table 4.1

Monitoring milestones and feedback loop Schedule Milestones Monitoring Activities / Feedback Loop

June -15 Board approval of the grant, Notification to the Government

July-15

Grant effectiveness Signing of the grant agreement and fulfilment of conditions

precedent to first disbursement

July -15 Grant effectiveness and project launch Training of project officers

July-15

General Procurement Note (GPN) and Special

Procurement Note (SPN) UNDB; national and regional newspapers

Sept.-15

Fulfilment of conditions precedent to the first

disbursement

Opening of the special account, establishment and training

of the members of the Project Team

July-15 Launch of the first activities Preparation of the work and training programmes

Sept-15 Preparation and launch of bid invitations Preparation by beneficiary structures and DGED

Dec.-15 Bid assessment and contract awards Evaluation by DGED and approval by the authorities

May-16

Implementation of development works

By the contractors, verified by the project team and the

focal points

2015-2019 Implementation of other project activities Quarterly and annual progress reports

2015-2019

Supervision missions and mid-term review

mission (June 2017) Mission reports

2015-2019 Annual project audits Project completion

July-19 Project completion Project completion

4.3. Governance

Project implementation may encounter governance problems (fraud, corruption, misuse

of funds, ineligible expenditure, etc.), mainly in procurement and financial management process.

The procurement-related risk will be mitigated by: the Bank's oversight over the procurement

process exercised through the issue of no-objection notification in respect of bid invitation

documents and bid proposals, as well as through the supervision and audit of project

procurement. Regarding the financial governance of the project, the executing agency will

maintain separate accounts for the project, which will enable identification of expenditure by

component, category and source of funding. Project accounts will be audited annually by a firm

hired for this purpose. Financial reports and audit reports will be submitted to the TSF within six

months of the end of the accounting period.

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15

4.4. Sustainability

The sustainability of the project impacts will be ensured firstly by the commitment and

political will of the authorities by assuming ownership of the project objectives. Indeed, the

project funding was requested by the Government. The beneficiary entities were actively

involved in the project preparation and appraisal. Project activities are aligned with on-going

economic and financial reforms and are supported, among others, by the International Monetary

Fund (IMF), the World Bank and the EU. In addition, the establishment and implementation of

training and development programmes for the benefit of these entities as well as the transfer of

specialized knowledge through the training provided by high-level experts, constitute a

guarantee of sustainability of the expected impacts of institutional capacity building in the

country. Lastly, thanks to the greater mobilisation of tax revenue and the increased stringency in

the management of public expenditure, the Government will gradually meet with recurrent

expenses by allocating the necessary resources in the budget.

4.5. Risk Management

The project will be implemented in a fragile State. The overall risk (implementation, outcomes,

and impacts) is high. The table below gives an idea of the residual risks (exclusive of risks related

to governance and sustainability) and mitigation. These risks should be weighed against the risk

of not providing assistance to the country in this difficult situation.

Table 4.2

Risks and mitigation measures

Risks Mitigation measures Level 1. The deteriorating political situation

and its attendant institutional instability Strengthening of the measures being implemented by the current authorities

(extension of banking services, gradual integration of soldiers in payroll, setting up of a social fund, etc.) for the proper control of social groups in the country through

the on-going social dialogue and national reconciliation. Coordination support by

the international community in respect of security reforms.

Moderate

2. The lack of skilled human capacity by

beneficiary entities for ensuring the

implementation of the project activities Capacity building programmes provide for technical assistance, training and

provision of procedure manuals.

Average

3. Fiduciary risk: The weakness of

internal oversight resources and procurement and PFM capacities increases fiduciary risks, as well as

the risks related to conflict of interest and

corruption

The measures for mitigating these risks are described in Section 4.1 and in the

technical annexes. Thus, the project funds will be managed in a transparent manner by implementing the Bank's rules and procedures on financial management and

procurement. The risk will also be mitigated through Bank monitoring and

supervision in close collaboration with the other PTFs.

Average

4.6. Knowledge Building

The types of knowledge that should emerge from the project implementation include: (i) best

practices on internal budget oversight; (ii) the harmonisation of national legislation with

WAEMU directives on external oversight, with as upshot jurisdictional control and effective

reporting of actual account by the Court of Auditors; (iii) the modernisation of the tax system, the

legal framework for business and investment promotion in fragile states. The practices will be

disseminated within the administration by circulating the documents produced and procedure

manuals, as well as through the training sessions that will be organised as part of the project.

Knowledge will be acquired through processes involving the production of the following reports:

technical assistants’ reports, activity reports prepared by the executing agency, supervision

reports, project completion report and the “discussions and working papers” of the Department.

The knowledge acquired and lessons learned will be disseminated in the Department, the Bank

and in the host country by the Bank, through seminars and OPEV reports.

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16

V LEGAL FRAMEWORK

5.1. Legal Instrument

The proposed financial instrument is a protocol agreement for a grant of UA 5.0 million from the

Transition Support Facility (TSF) to the Republic of Guinea-Bissau.

5.2. Conditions Associated with the Intervention of the Bank and the Fund

5.2.1. Implementation conditions: Effectiveness of the Grant Protocol Agreement is

conditional on the signing of the protocol agreement between the TSF and the Republic of

Guinea-Bissau.

5.2.2. Conditions precedent to the first disbursement: In addition to effectiveness of the Grant

Agreement, the Bank and the Fund will subject the first disbursement of the grant to the

fulfilment by the Donee, to the satisfaction of the Bank and the Fund, of the following conditions:

Provide evidence of opening of a special bank account in a commercial bank

acceptable to the Fund, to receive payments from the Transition Support Facility

(TSF);

Provide evidence of the recruitment of the Coordinator and the Administrative and

Finance Officer; and

Provide evidence of assignment of functional premises to the Project

Implementation Unit (PIU).

5.2.3. Other conditions: In addition the conditions for effectiveness and the conditions

precedent to first disbursement, the following conditions must be met within six (6) months of the

first disbursement:

Establishment of a computerized management system (accounting and financial

management software) and training of staff in its use; and

Preparation of an administrative, accounting and financial procedures manual and

training of project staff in its use.

5.3 Compliance with Bank Policies

This project complies with all applicable Bank policies.

VI RECOMMANDATION

Management recommends that the Boards of Directors approve the proposed grant of UA 5.0

million to the Republic of Guinea-Bissau for the purpose and under the conditions set out in this

report.

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I

Annex 1

Comparative Socio-Economic Indicators of the Country

YearGuinea-

BissauAfrica

Develo-

ping

Countries

Develo-

ped

Countries

Basic Indicators

Area ( '000 Km²) 2014 36 30 067 80 386 53 939Total Population (millions) 2014 1,7 1 136,9 6,0 1,3Urban Population (% of Total) 2014 46,0 39,9 47,6 78,7Population Density (per Km²) 2014 48,3 37,8 73,3 24,3GNI per Capita (US $) 2013 590 2 310 4 168 39 812Labor Force Participation - Total (% ) 2014 73,4 66,1 67,7 72,3Labor Force Participation - Female (% ) 2014 47,0 42,8 52,9 65,1Gender -Related Development Index Value 2007-2013 0,381 0,801 0,506 0,792Human Develop. Index (Rank among 187 countries) 2013 177 ... ... ...Popul. Living Below $ 1.25 a Day (% of Population) 2008-2013 48,9 39,6 17,0 ...

Demographic Indicators

Population Growth Rate - Total (% ) 2014 2,4 2,5 1,3 0,4Population Growth Rate - Urban (% ) 2014 3,9 3,4 2,5 0,7Population < 15 years (% ) 2014 41,3 40,8 28,2 17,0Population >= 65 years (% ) 2014 2,9 3,5 6,3 16,3Dependency Ratio (% ) 2014 78,3 62,4 54,3 50,4Sex Ratio (per 100 female) 2014 98,9 100,4 107,7 105,4Female Population 15-49 years (% of total population) 2014 24,0 24,0 26,0 23,0Life Expectancy at Birth - Total (years) 2014 54,5 59,6 69,2 79,3Life Expectancy at Birth - Female (years) 2014 56,1 60,7 71,2 82,3Crude Birth Rate (per 1,000) 2014 37,1 34,4 20,9 11,4Crude Death Rate (per 1,000) 2014 12,4 10,2 7,7 9,2Infant Mortality Rate (per 1,000) 2013 77,9 56,7 36,8 5,1Child Mortality Rate (per 1,000) 2013 123,9 84,0 50,2 6,1Total Fertility Rate (per woman) 2014 4,9 4,6 2,6 1,7Maternal Mortality Rate (per 100,000) 2013 560,0 411,5 230,0 17,0Women Using Contraception (% ) 2014 16,3 34,9 62,0 ...

Health & Nutrition Indicators

Physicians (per 100,000 people) 2004-2012 7,0 46,9 118,1 308,0Nurses (per 100,000 people)* 2004-2012 58,5 133,4 202,9 857,4Births attended by Trained Health Personnel (% ) 2009-2012 43,0 50,6 67,7 ...Access to Safe Water (% of Population) 2012 73,6 67,2 87,2 99,2Healthy life expectancy at birth (years) 2012 47,0 51,3 57 69Access to Sanitation (% of Population) 2012 19,7 38,8 56,9 96,2Percent. of Adults (aged 15-49) Living with HIV/AIDS 2013 3,7 3,7 1,2 ...Incidence of Tuberculosis (per 100,000) 2013 387,0 246,0 149,0 22,0Child Immunization Against Tuberculosis (% ) 2013 94,0 84,3 90,0 ...Child Immunization Against Measles (% ) 2013 69,0 76,0 82,7 93,9Underweight Children (% of children under 5 years) 2005-2013 18,1 20,9 17,0 0,9Daily Calorie Supply per Capita 2011 2 304 2 618 2 335 3 503Public Expenditure on Health (as % of GDP) 2013 1,1 2,7 3,1 7,3

Education Indicators

Gross Enrolment Ratio (% )

Primary School - Total 2011-2014 116,2 106,3 109,4 101,3 Primary School - Female 2011-2014 112,3 102,6 107,6 101,1 Secondary School - Total 2011-2014 34,5 54,3 69,0 100,2 Secondary School - Female 2011-2014 12,6 51,4 67,7 99,9Primary School Female Teaching Staff (% of Total) 2012-2014 21,8 45,1 58,1 81,6Adult literacy Rate - Total (% ) 2006-2012 56,7 61,9 80,4 99,2Adult literacy Rate - Male (% ) 2006-2012 69,8 70,2 85,9 99,3Adult literacy Rate - Female (% ) 2006-2012 43,9 53,5 75,2 99,0Percentage of GDP Spent on Education 2009-2012 ... 5,3 4,3 5,5

Environmental Indicators

Land Use (Arable Land as % of Total Land Area) 2012 10,7 8,8 11,8 9,2Agricultural Land (as % of land area) 2012 0,6 43,4 43,4 28,9Forest (As % of Land Area) 2012 71,2 22,1 28,3 34,9Per Capita CO2 Emissions (metric tons) 2012 0,3 1,1 3,0 11,6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :

UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports.

Note : n.a. : Not Applicable ; … : Data Not Available.

juin 2015

0

20

40

60

80

100

120

200

0

200

5

200

8

200

9

201

0

201

1

201

2

201

3

Infant Mortality Rate( Per 1000 )

Guinea-Bissau Africa

0

500

1000

1500

2000

2500

200

0

200

5

200

7

200

8

200

9

201

0

201

1

201

2

201

3

GNI Per Capita US $

Guinea-Bissau Africa

0,0

0,5

1,0

1,5

2,0

2,5

3,0

20

00

20

05

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Population Growth Rate (%)

Guinea-Bissau Africa

01020304050607080

200

0

200

5

200

8

200

9

201

0

201

1

201

2

201

3

201

4

Life Expectancy at Birth (years)

Guinea-Bissau

Africa

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Annex 2

Status of AfDB Portfolio

In 2014, the overall score of the portfolio assessment was 1.8 (on a scale of 0 to 3), that is, a

performance deemed unsatisfactory and lower than the score awarded at the end of the last portfolio

review in 2010 (2.15). The political crisis that led to the suspension of disbursements adversely impacted

the portfolio performance in Guinea-Bissau. Due to the suspension, on-going projects could not be

supervised regularly and activities were put on hold. The average age of operations increased from 3.4

years in 2012 to 5 years in March 2015. The Bank’s active portfolio in Guinea-Bissau comprises an

operation ranked in the aged projects category, namely the Education Project III. This project is also

considered potentially problematic (PP).

Table of AfDB Portfolio in the Country as at 15 March 2015

Sector / Operation Source Approval

date

Approved

amount

(UA m)

Disb.

amount

(UA m)

Disb.

rate (%)

Closing

date

1

Administrative Capacity Building Project

(PARCA) ADF 15-Jul.-09 7.80 0.47 6.0

31-Dec.-16

2 Education III Project ADF 2- Jul.-03 3.65 1.62 44.4 31-Dec.-15

NTF 2-Jul.-03 3.51 0.24 6.9 31-Dec.-15

3 Institutional Capacity Building Programme

(PECA II) FSS 9-Dec.-11 0.66 0.66 100

30-Jun.-15

4

PRESAR Results Capitalization,

Optimization and Dissemination Support

Project (USD 180 000)

FFCSS 21-Dec.-12 0.13 0 0

31-Dec.-15

5

Technical support for PRESAR in the area

of climate change and development of

renewable energy (USD 806 576 USD)

FFCSS 21-Dec.-12 0.57 0 0

31-Dec.-15

TOTAL 16.32 2.99 18.3

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III

Annex 3

Reasons for Requesting a Waiver Allowing Bank Financing of the Full Project Cost

A. Introduction

1. A. Introduction 1. The main objective of the project is to strengthen institutional

resilience by improving budget discipline, combating financial crimes, mobilising domestic

resources and supporting the revival of economic activity. This objective is in line with the

Second National Poverty Reduction Strategy Paper (NPRSP II) and particularly its strategic focus

areas relating to (i) strengthening of the rule of law and state institutions; (ii) establishment of a

stable and stimulating macroeconomic environment.

2. However, given the state of fragility that has prevailed in the country since

independence, the programme is also in line with the principles of the New Deal for fragile states

as set forth in the G7 +. Led by 19 States that are said to be fragile and/or in conflict, the New

Deal establishes the main objectives of consolidating peace and strengthening the State as

proposed by the countries themselves. It focuses on new ways of getting committed and

identifies commitments for strengthening mutual trust. In this context, the Member States take

ownership of the actions by committing themselves to undertaking reforms to consolidate peace

and strengthen the State, including through: (i) strengthening the security of people; (ii)

establishing inclusive political agreements; (iii) strengthening justice, (iv) improving the State's

capacity to generate and manage revenue; and (v) strengthening economic fundamentals.

3. Indeed, the Bank's analyses highlight the fact that Guinea-Bissau is plagued by many

vectors of fragility, giving it the characteristics of a post-conflict country, hence: the need to

reconstruct the State, provide basic infrastructure, reform the army and the justice system and lay

the foundations for inclusive and sustainable growth. As a result of these vectors, the country

recently drifted into a difficult socio-economic and political situation in the wake of the coup

d’état of April 2012, followed by a transition period that lasted until mid-2014. In view of the

end of the transition period and the return to constitutional rule, the main challenge for the

country is to strengthen institutional resilience in order to mitigate the risk brought about by the

vectors of fragility. In the short term, the country's decline towards greater fragility will need to

be prevented. In the medium term, it will be necessary to lay the groundwork for greater

resilience of the State as advocated by the New Deal, which highlights peace building and state

building as prerequisites for any sustainable development in the country.

B. Recent Trends in the Economic and Financial Situation

4. The return to constitutional order after a transition period paved the way for the return to

growth. In 2012, the year of the coup d’état, GDP declined by around 1.5%, and was followed by

a weak performance, with a growth rate of 0.9% in 2013. In 2014, the economic growth rate was

estimated at 2.6%. However, this return to growth remains fragile given the structural problems,

the low level of infrastructure and human capital, and the fragility of economic governance. For

2015, the rate of economic growth could reach 3.9%, but will depend on the socio-political

climate, the performance of the crop season (food and cashew nuts), as well as the progress

achieved in terms of improving economic and fiscal governance. Regarding inflation, it will be

on the uptrend against a backdrop of increasing demand, to stabilize at 2.6% in 2015.

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IV

5. In terms of the budget, the normalization of constitutional order allowed some

improvement. Indeed, the effective return of donors who had withdrawn from the country since

the coup d'état reactivated trade agreements such as fishing agreements with the European Union

(EU), and led to the grant of general budget support in 2014 by the EU and East Timor, as well

as specific support from the World Bank for the payment of wages. This added to a certain

improvement in revenue from 6.5% of GDP in 2013 to 7.1% in 2014. On this basis, and with the

issuance of State bonds in July 2014, the Government managed to balance the annual budget and

pay arrears owed to civil servants.

6. Despite these commendable advances, the foundations of a structural imbalance are still

in place. The budget deficit worsened to 2.7% of GDP in 2012 and 4.7% of GDP in 2013.

Moreover, the country is heavily dependent on foreign aid as well as its limited sources of

revenue. Indeed, the tax base remains very narrow with a very low number of taxpayers and tax

base mainly concentrated on a limited number of revenue sources as customs duties on imports,

cashew exports and fishing agreements. The tax burden remains very low at 7.1%, below the

WAEMU convergence criterion of 17%. In a context where the quality of budget and financial

management and economic management performance are weak, the narrow tax base imposes

significant limitations on the conduct of fiscal policy. In addition, the budget structure remains

inflexible, particularly with a high proportion of salary-related expenditures (75.2% of fiscal

revenue at end-2014, compared with a WAEMU maximum target of 35%). In 2014, the primary

balance is expected to stand at -2.0% of GDP.

7. Guinea-Bissau’s debt became unbearable since the attainment of the completion point of

the Highly Indebted Poor Countries (HIPC) Initiative in 2010. It remains nevertheless relatively

high, although it has been brought down to a level below the WAEMU convergence criterion.

The public debt stock rose to 59.7% of GDP in 2014 after reaching 164% in 2009 (BCEAO).

According to the IMF debt sustainability assessment of 2014, the public debt burden is deemed

“moderate”. Various IMF scenarios report a “debt/exports” shortfall in the event of an external

shock due to a very limited export base since it consists mainly in cashew trade.

C. Conclusion and Recommendation

8. In order to enhance the progress recorded in the area of growth and public finance

management, Guinea-Bissau is committed to implementing structural reforms. The country

began by negotiating the basis for a programme with the IMF for the disbursement of a Rapid

Credit Facility before end-2014. In this context, progress was noted, such as the establishment of

a Cash Flow Committee, the end of a number of exemptions on diesel, or efforts in the customs

sector. In 2015, the Government wants to continue down this path by negotiating new measures

for promoting governance, and its efforts in this regard will be bolstered by the budget support

from the Bank well as the activities of this project. Given the situation of public finances, the

fragile context and the importance of the post-transition period and the selective approach

advocated by the New Deal, as well as the new Bank strategy on fragility and the strengthening

of resilience in Africa, it is recommended that the Bank should waive the rule on counterpart

funding and finance the full project cost.

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V

Annex 4

Map of Project Area