PROGRAM INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No.: AB6649
(The report # is automatically generated by IDU and should not be changed)
Operation Name
Region
Country
Sector
Operation ID
Lending Instrument
Borrower(s)
Implementing Agency
Date PID Prepared
Estimated Date of Appraisal
Estimated Date of Board
Approval
Corporate Review Decision
I.
Côte d’Ivoire: Fourth Economic Governance and Recovery
Grant
AFRICA
Cote d'Ivoire
Central government administration (50%); Crops (25%);
Mining and other extractive (10%); General finance sector
(15%)
P122800
Development Policy Lending
GOVERNMENT OF COTE D'IVOIRE
MINISTRY OF ECONOMY AND FINANCE
June 9, 2011
July 15, 2011
September 15, 2011
Following the corporate review, the decision was taken to
proceed with the preparation of the operation.
Key development issues and rationale for Bank involvement
Côte d’Ivoire’s political situation suffered a sharp reversal after the long-awaited
Presidential elections of November 2010. Elections were held peacefully and in a manner
generally considered to be free and fair. However, when outgoing President Laurent Gbagbo
refused to accept his defeat, a political stalemate resulted and eventually led to a short-lived civil
war. Five months, many lives and much economic wealth were lost. The new government faces
a daunting task of promoting reconciliation while providing justice and rebuilding the economy.
The economy has been severely hit by trade sanctions, the closure of the banking system
and extensive looting. There has been a sharp fall in revenues from import duties, cocoa export
taxes and petroleum sales while those revenues which were collected in the first three months of
2011 are not available to the new government. At the same time, the authorities face continued
salary and debt service obligations, coupled with extra spending requirements as a result of the
crisis. Thus, the Government is in urgent need of external funding to avoid arrears to employees
and suppliers which would have a devastating effect on economic recovery and job creation. At
the same time, it needs to reassure the population of its commitment to good governance through
pursuit of public financial management reforms, and to create the foundations for long-term
development and poverty reduction through promotion of the private sector.
II.
Proposed Objective(s)
The key objective of the proposed EGRG IV is to provide a rapid response to a new
government in dire financial straits while supporting essential reforms to improve
governance, transparency and efficiency in public expenditure management and in the key
sectors of cocoa, energy and finance.
This one-tranche development policy operation is a key component of the World Bank strategy
to assist the new government in addressing the immediate challenges of reconciling and
rebuilding the country. It supports essential governance and economic reforms initiated under the
three previous Economic Governance and Recovery Grants, detailed in the Poverty Reduction
Strategy Paper (PRSP) adopted in February 2009, and consistent with the new Government’s
emerging agenda. Specifically, this grant will deepen policy reforms in public financial
management (PFM) and the key cocoa, finance and energy sectors, and promote recovery in the
wake of the debilitating political crisis of early 2011.
III.
Preliminary Description
Under the first three EGRGs, substantial improvements have been achieved by the
Government in each of the four policy areas (PFM, energy, cocoa and financial sectors)
covered by this operation. Even so, there are still challenges that need to be addressed in these
sectors. Thus, this operation continues to support the government’s effort to promote efficiency,
transparency and accountability in the use of public resources through enhanced public financial
management and governance in the energy, cocoa and financial sectors. Specifically, in the
context of the implementation of the PRS and to be in line with the PFM action plan, it focuses
on the government’s efforts to restore credibility, comprehensiveness, and transparency of the
budget. In addition, it contributes to enhancing private sector confidence, investment and growth
recovery through improved governance and transparency in the energy, cocoa, and financial
sectors. It also paves the way for anticipated debt relief under the HIPC Initiative and MDRI.
IV.
Poverty and Social Impacts and Environment Aspects
Poverty and Social Impacts
The proposed EGRG IV is expected to have a significant positive direct impact on poverty
reduction. It builds on the findings of the June 2006 World Bank report “Côte d’Ivoire –
Contributions to the analysis of poverty”, the analysis of the 2008 household budget survey in
the PRSP, and the recently completed poverty and social assessments. These found poverty
increasing against the backdrop of a continued decline in per capita incomes. The emphasis on
cocoa reforms is particularly important given the large number of poor rural households
producing cocoa, which are estimated to account for 28 percent of the poor in Côte d’Ivoire.
Both partial and general equilibrium analysis confirms that reduced cocoa taxation will improve
the incomes of cocoa producers. By one estimate, a 10 percent reduction in cocoa taxes would
increase the value of cocoa output by 16 percent. Furthermore, improvements in the cocoa
sector will raise the rural wage, thereby benefiting rural laborers who are generally among the
poorest and most difficult to assist. A new study has been conducted by the authorities with
support from IDA which confirms that tax and price changes are generally transmitted to the
producer, while recommending ways to further improve the transmission mechanism.
Environment Aspects
The specific reforms supported by the proposed development policy grant are not likely to
have significant negative effects on the country’s environment, forests and other natural
resources. Any likely adverse effects are expected to be minor and manageable through the
existing Bank framework. The reforms supported aim primarily to strengthen economic
governance at the national government level. The measures to improve management of public
finances and the cocoa sector are not considered to carry environmental implications. It is not
expected that the export tax reductions included in the current operation will have any significant
impact on the environment. If there is an effect on production, it will likely be to slow down the
exodus of farmers from the sector, which is already happening, rather than to promote any
expansion in the area under cultivation.
The Bank has recently completed a post-conflict Country Environmental Analysis looking
at the forestry, mining, urban, and environmental governance sectors. The study reveals the
following challenges: (i) weak or almost non-existent mechanisms for the collection, analysis
and dissemination of environmental information; (ii) weak intersectoral collaboration of the
Environment Ministry with ministries responsible for water resources, transport, fishing,
agriculture, and energy; and (iii) low funding available to the sector both from Government, the
private sector and development partners. Far reaching recommendations were proposed
including assisting the Government to develop an action plan for the forestry sector for the
period 2008-15 and establishing a national environmental information system.
V.
Tentative financing
Source:
BORROWER/RECIPIENT
International Development Association (IDA)
Borrower/Recipient
IBRD
Others (specify)
($m.)
0
100
Total
VI.
Contact point
World Bank
Contact:
Title:
Tel:
Fax:
Email:
VII.
Philip English
Lead Economist, AFTP4
(202) 473-6483
(202) 473-8368
penglish@worldbank.org
For more information contact:
100
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