document of the world bank · 12/15/2017 · 2015 budget law date achieved 12/31/2013 12/31/2016...

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Document of

The World Bank

Report No: ICR00004366

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IDA-H9370 AND IDA-D0830)

FOR AN

ECONOMIC GOVERNANCE REFORM OPERATION

(US$3.8 MILLION)

AND A

SECOND ECONOMIC GOVERNANCE REFORM OPERATION

(US$3.0 MILLION)

TO THE

UNION OF THE COMOROS

December 15, 2017

Macroeconomics and Fiscal Management Global Practice

Comoros Country Management Unit

Africa Region

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THE UNION OF THE COMOROS

GOVERNMENT FISCAL YEAR

January 1 – December 31

CURRENCY EQUIVALENT

(Exchange Rate as of November 30, 2017 Currency Unit = Comorian Franc (KMF)

US$1 = KMF 418

ABBREVIATIONS AND ACRONYMS

BCC Central Bank of the Comoros

CPS Country Partnership Strategy

CREF Economic and Financial Reforms Unit

DGCPT Direction Générale de la Comptabilité Publique et du Trésor

(Office of Public Accounting and Treasury)

DGRH Direction Générale des Resources Halieutiques

DeMPA Debt Management Performance Assessment

DPO Development Policy Operation

DSA Debt Sustainability Analysis

ECP Economic Citizenship Program

EDA Electricité de Anjouan (Electricity Company of Anjouan)

EGRG Economic Governance Reform Grant

ERDPG Economic Reform Development Policy Grant

ESRP Electricity Sector Recovery Project

GB Gigabyte

GDP Gross Domestic Product

HIPC Heavily Indebted Poor Countries

ICT Information and Communications Technologies

IDA International Development Association

IFC International Finance Corporation

IMF International Monetary Fund

INSEED National Institute of Statistics and Economic Studies and Demographic

MA-MWE Gestion de l’Eau et l’Electricité aux Comores (Water and Power Utility in Comoros)

MOF Ministry of Finance

PDOs Program Development Objectives

PFM Public Financial Management

RCIP-4 Fourth Phase of the Regional Communication Infrastructure Program

SCADD Sustainable Accelerated Growth and Development Strategy

TSA Treasury Single Account

Vice President: Makhtar Diop

Country Director: Resident Representative:

Mark R. Lundell Rasit Pertev

Global Practice Senior Director: Carlos Felipe Jaramillo Practice Manager: Mathew Verghis ICR Team Leader:

ICR Author: Shireen Mahdi Ana Lucia Armijos

iii

UNION OF THE COMOROS

Economic Governance Reform Operation

(P131688)

Second Economic Governance Reform Operation

(P150924)

CONTENTS

Data Sheet

A. Basic Information

B. Key Dates

C. Ratings Summary

D. Sector and Theme Codes

E. Bank Staff

F. Results Framework Analysis

G. Ratings of Program Performance in ISRs

H. Restructuring

1. Program Context, Development Objectives and Design ........................................................ 1

2. Key Factors Affecting Implementation and Outcomes .......................................................... 8

3. Assessment of Outcomes ...................................................................................................... 14 4. Assessment of Risk to Development Outcome ..................................................................... 25 5. Assessment of Bank and Borrower Performance ................................................................. 25

6. Lessons Learned.................................................................................................................... 28 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners....................... 29

Annex 1. Policy and Result Matrix …………………………………………………...………31

Annex 2 Bank Lending and Implementation Support/Supervision Processes.......................... 35 Annex 3. Borrower's Comments ............................................................................................... 37 Annex 4. Comments of Cofinanciers and Other Partners/Stakeholders ................................... 38

Annex 5. List of Supporting Documents .................................................................................. 39

MAP

iv

A. BASIC INFORMATION

Program 1

Country Comoros Program Name:

Comoros Economic

Governance Reform

Grant

Program ID: P131688 L/C/TF Number(s) IDA-H9370

ICR Date: 12/15/2017 ICR Type: 12/15/2017

Financing Instrument: DPL Borrower GOVERNMENT OF

COMOROS

Original Total

Commitment USD 3.80M Disbursed Amount USD 3.85M

Implementing Agencies: Vice-Presidency in charge of Finance of the Union of the Comoros.

Co-financiers and Other External Partners:

Program 2

Country Comoros Program Name: Comoros Second Economic

Governance Reform Grant

Program ID: P150924 L/C/TF Number(s) IDA-D0830

ICR Date: 12/15/2017 ICR Type: 12/15/2017

Financing Instrument: DPL Borrower GOVERNMENT OF

COMOROS

Original Total

Commitment USD 3.00M Disbursed Amount USD 3.09M

Implementing Agencies: Vice-Presidency in charge of Finance of the Union of the Comoros.

Co-financiers and Other External Partners:

B. KEY DATES

Comoros Economic Governance Reform Grant P131688

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 11/06/2013 Effectiveness: 05/16/2014

Appraisal: 02/10/2014 Restructuring(s):

Approval: 04/29/2014 Mid-term Review:

Closing: 12/30/2014 12/30/2014

Comoros Second Economic Governance Reform Grant P150924

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 09/02/2014 Effectiveness: 06/12/2015 06/16/2015

Appraisal: 03/16/2015 Restructuring(s):

Approval: 06/02/2015 Mid-term Review:

Closing: 12/31/2016 12/31/2016

C. RATINGS SUMMARY

C.1 Performance Rating by ICR

Overall Program Rating

Outcomes Moderately Satisfactory

v

Risk to Development Outcome Substantial

Bank Performance Satisfactory

Borrower Performance Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Overall Program Rating

Bank Ratings Borrower Ratings

Quality at Entry Satisfactory Government: Moderately Satisfactory

Quality of Supervision: Satisfactory Implementing

Agency/Agencies:

Overall Bank Performance Satisfactory Overall Borrower

Performance Moderately Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators


Implementation

Performance Indicators QAG Assessments (if any) Rating

Potential Problem Program

at any time (Yes/No): No Quality at Entry (QEA) None

Problem Program at any

time (Yes/No): No

Quality of Supervision

(QSA) None

DO rating before

Closing/Inactive status Moderately Satisfactory


Implementation

Performance Indicators QAG Assessments (if any) Rating

Potential Problem Program

at any time (Yes/No): No Quality at Entry (QEA) None

Problem Program at any

time (Yes/No): No

Quality of Supervision

(QSA) None

DO rating before

Closing/Inactive status

D. SECTOR AND THEME CODES


Original Actual

Major Sector

Agriculture, Fishing and Forestry

Livestock 6 6

Fisheries 6 6

Public Administration

Central Government (Central Agencies) 66 66

Information and Communications Technologies

vi

ICT Infrastructure 11 11

Energy and Extractives

Other Energy and Extractives 11 11

Major Theme/Theme/Sub Theme

Economic Policy 6 6

Fiscal Policy 6 6

Fiscal sustainability 6 6

Private Sector Development 4 4

Jobs 4 4

Job Creation 4 4

Public Sector Management 84 84

Public Administration 50 50

State-owned Enterprise Reform and Privatization 11 11

Transparency, Accountability and Good Governance 39 39

Public Finance Management 34 34

Debt Management 6 6

Public Expenditure Management 28 28

Urban and Rural Development 8 8

Rural Development 4 4

Rural Infrastructure and service delivery 4 4

Urban Development 4 4

Urban Infrastructure and Service Delivery 4 4


Original Actual

Major Sector

Public Administration

Central Government (Central Agencies) 78 78

Information and Communications Technologies

ICT Infrastructure 11 11

Energy and Extractives

Other Energy and Extractives 11 11

Major Theme/Theme/Sub Theme

Economic Policy 6 6

Fiscal Policy 6 6

Fiscal sustainability 6 6

Public Sector Management 84 84

Public Administration 50 50

Administrative and Civil Service Reform 11 11

E-Government, incl. e-services 11 11

Transparency, Accountability and Good Governance 39 39

Public Finance Management 34 34

Debt Management 6 6

Public Expenditure Management 28 28

vii

E. BANK STAFF


Positions At ICR At Approval

Vice President: Makhtar Diop Makhtar Diop

Country Director: Mark R. Lundell Mark R. Lundell

Practice Manager/Manager: Mathew A. Verghis John Panzer

Task Team Leader: Shireen Mahdi Rafael Munoz Moreno

ICR Team Leader: Shireen Mahdi

ICR Primary Author: Ana Lucia Armijos


Positions At ICR At Approval

Vice President: Makhtar Diop Makhtar Diop

Country Director: Mark R. Lundell Mark R. Lundell

Practice Manager/Manager: Mathew A. Verghis Mark Roland Thomas

Task Team Leader: Shireen Mahdi Shireen Mahdi

ICR Team Leader: Shireen Mahdi

ICR Primary Author: Ana Lucia Armijos

F. RESULTS FRAMEWORK ANALYSIS

Program Development Objectives (from Program Document)

The Development Objective of this DPO series is to strengthen economic management, promote transparency, and

enhance performance in the electricity and ICT sectors. The operation is designed around three pillars: (i)

strengthening economic management; (ii) improving transparency in economic management; and (iii) improving

competition and management in key infrastructure sectors.

Indicator(s)

P131688 - Comoros Economic Governance Reform Grant

P150924 Comoros Second Economic Governance Reform Grant

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1: Cash management plans integrating the Union and island treasuries are operational

Value

quantitative or

Qualitative

No integrated plans

Integrated plan

updated

Cash management plans

integrating the Union and

Island Treasuries are

operational and have been

incorporated to the budget

law.

Date achieved 12/31/2013 12/31/2016 12/31/2016

viii

Comments

(incl. %

achievement)

Achieved (100%) Treasury cash management plans are in place. The computerization of

public finances is a recent reality (2017) through the Integrated Financial Management

Information System (IFMIS) rollout with the accounting software SIMBA used since mid-

2016 for implementation by the Union and Island Governments of automate budget

execution, accounting, and reporting.

Indicator 2: Number of non-project central government bank accounts outside of the single account

framework reduced

Value

quantitative or

Qualitative

64 accounts

Less than 10

accounts

Starting in 2016 there are no

central government accounts

outside the Treasury Single

Account (TSA)

Date achieved 12/31/2013 12/31/2016 12/31/2016

Comments

(incl. %

achievement)

Achieved (100%). The Memorandum of Understanding signed between the Ministry of

Finance and the Central Bank in November 2014, prohibited the opening and operating of

new bank accounts unless prior authorization from the vice-president responsible for

finances has been given. The implementation of this agreement played an important role

towards the elimination of accounts

Indicator 3: A computerized wage management system that integrates union and island civil service

operational

Value

quantitative or

Qualitative

Separate systems

operated for the

Union and Islands

An integrated

system that

consolidates

union and islands

civil service

operational

An integrated civil service

wage management system

for the Union and Islands is

operational

Date achieved 12/31/2013 12/31/2016 12/31/2016

Comments

(incl. %

achievement)

Achieved (100%). The integrated personnel and payroll management system for the Union

and Island Governments is functioning since January 2016 through the operationalization

of the Government Human Resource Management Information System (GISE). However,

the gains in efficiency have not been fully obtained yet. As of March 2017, more than 95

percent of civil servants are paid through the automated payroll system.

Indicator 4: Public budget that includes detailed information on investment and recurrent expenditures

adopted

Value

quantitative or

Qualitative

There is no public

budget with

detailed

information on

investment and

recurrent

expenditures

Public budget

with detailed

information on

investment and

recurrent

expenditures

adopted

The Public Investment Plan

(PIP) is included in the

budget law starting with

2015 budget law

Date achieved 12/31/2013 12/31/2016 12/31/2016

Comments

(incl. %

achievement)

Achieved (100%)The Public Investment Plan (PIP) is annexed in the budget law, starting

with the 2015 budget law

Indicator 5: Transparency and accountability of debt management has improved.

ix

Value

quantitative or

Qualitative

No regular debt

reports produced

and debt

management

framework

incomplete

Annual debt

reports produced

& all new loans,

guarantees/loan

renegotiations

conducted in line

with debt

management law

No self-standing debt

reports have been published

but an annual debt report

has been included in the

budget law since 2015.

Date achieved 12/31/2013 12/31/2016 12/31/2016

Comments

(incl. %

achievement)

Partially achieved . The debt management bill was not adopted by the parliament. Since the

debt management bill was prepared and submitted to the National Assembly on October

13, 2014, an annual debt report has been prepared and included in the annual budget laws

of 2015, 2016 and 2017.

Indicator 6: National Accounts prepared using the 1993 methodology and National Statistics Institute

operational.

Value

quantitative or

Qualitative

Draft national

accounts for year

2007 using the

1993 methodology

prepared

National accounts

for 2013 using

the 1993

methodology

adopted

National Statistics Institute

is operational and has

completed the GDP

database for 2007-2015

using the SNA 93 in 2016

Date achieved 12/31/2013 12/31/2016 12/31/2016

Comments

(incl. %

achievement)

Achieved (100%) The National Accounts until 2015 have been validated and adopted by

the Government in September 2017. INSEED has also delivered the preliminary NA for

2016 with the SNA 93 methodology.

Indicator 7: Number of cases completed by the anti-corruption commission and brought to court.

Value

quantitative or

Qualitative

15 cases

20 cases The anti-corruption

commission was dissolved

in September 2016

Date achieved 12/31/2013 12/31/2016 12/31/2016

Comments

(incl. %

achievement)

Not achieved (0%) The new President that assumed power in May 2016 eliminated the

Anti-Corruption Commission on the grounds of inefficiency. However, the government has

not put in place a credible system for pursuing the fight against corruption nor has taken

specific measures to combat corruption. Indicator 8: Information on access granted for fishing activities systematically disclosed, with revenue

and its use

Value

quantitative or

Qualitative

Information not

systematically

available

Access to

information on

revenue and its

use regularly

documented and

disclosed

Information on fishing

activities is systematically

prepared and disclosed

Date achieved 12/31/2013 12/31/2016 12/31/2016

Comments

(incl. %

achievement)

Achieved (100%) The Direction Generale des Ressources Halieutiques (DGRH)

systematically prepares the fishing activities information that is sent to the Economic and

Financial Refor Unit (CREF) for disclosure. The revenue generated by the fishing activities

is included in the budget law of 2015 and 2016

x

Indicator 9: Increase in the number of Telecom operators with a service license and reduction in the

monthly price per 1 GB of mobile data

Value

quantitative or

Qualitative

1 Telecom operator

and KMF 10,000

price

At least 2

Telecom

operators and

KMF 7,500 price

There are two telecom

operators: Comores

Telecom (national) and

Telma (private).

Telma’s price per 1GB per

month is 5000 KMF while

the Comores Telecom price

is 5250 KMF p/month for

1GB

Date achieved 12/31/2013 12/31/2016 12/31/2016

Comments

(incl. %

achievement)

Achieved (100%) Telma Comores (private company) was awarded a license in December

2015 and began operations in 2016. Telecom was opened to the new operator but the

process was quite complicated and delayed.

Indicator 10: Increase in MA-MWE collection rates

Value

quantitative or

Qualitative

55 percent

65 percent The collection rate reached

79 percent and represents

the total amount collected

for electricity sales billed in

2016

Date achieved 12/31/2013 12/31/2016 12/31/2016

Comments

(incl. %

achievement)

Achieved (100%). The collection rate of the Electricity Company surpassed the expected at

end 2016, despite the low pace of reform. However, to make the gains sustainable, the

government, , is working with the World Bank and African Development Bank on a

longer-term strategy to strengthen the technical, management, and commercial capacity of

the entity.

G. RATINGS OF PROJECT PERFORMANCE IN ISRs


No. Date ISR

Archived DO IP

Actual Disbursements

(USD millions)

1 10/13/2014 Moderately Satisfactory Satisfactory 3.85

H. RESTRUCTURING (IF ANY)

Not Applicable

1

1. Program Context, Development Objectives and Design

1.1 Context at Appraisal

Country context

Comoros had been undergoing a prolonged period of political instability since its independence

from France in 1974, defined by struggles for political power and strained relations between the

national and island governments. Dialogue and constitutional reforms in the 2000s paved the way

for a gradual move to political stability, allowing three democratic transitions of power to occur in

the last decade. The return of political stability had been instrumental for building more stable

institutions and opened a window of opportunity for reform. Thus, since 2009, Comoros has

implemented a series of macro-stabilization and structural reform programs with support from

development partners, securing gains in fiscal consolidation and macroeconomic stability and

making advances in public financial and debt management reforms. These measures enabled the

country to reach the Heavily Indebted Poor Countries Initiative (HIPC) completion point in

December 2012 and allowed it to benefit from debt cancellation.

However, Comoros continued to be a poor and fragile island state with substantial coordination

challenges between the Union government and the three islands’ governments, a delicate political

context and significant political economy constraints. Also, the economy began stabilizing but has

weak growth due to its limited sources of growth, weak fiscal footing: low revenues, high recurrent

costs, a rising public wage bill, fiscal risks from weak public utilities and infrastructure

deficiencies. Poverty was, and still is, widespread and was estimated at 42.3 percent in 2014. The

narrow economic base and the low institutional capacity are major challenges to poverty reduction.

Much of the poverty problem lies in high unemployment, exacerbated by a high prevalence of

informality and low productivity of the economy, centered primarily on the export of a few

agricultural commodities, subject to terms of trade and price shocks associated with global market

fluctuation.

It was against this backdrop that the World Bank’s support to economic governance reforms was

conceived through a programmatic series of two development policy operations (DPO) aimed at

improving economic management and transparency and enhancing performance in key

infrastructure sectors. This was the first programmatic DPO for Comoros and followed a stand-

alone DPO approved in November 2012.

This Implementation Completion and Results Report (ICR) assesses the achievements of the

expected results of the programmatic series of Economic Governance Reform Development Policy

Operations to the Union of the Comoros. The DPO series intended to support the Government of

Comoros to strengthen economic management, improve transparency and improve competition

and management in key infrastructure sectors. The first operation (DPO1) of US$3.8 million was

approved by the World Bank’s Board of Directors on April 29, 2014 and disbursed upon loan

effectiveness on May 16, 2014. The second operation (DPO2) of US$3.0 million was approved on

June 2, 2015 and disbursed upon loan effectiveness on June 12, 2015. The second and last

operation in the series closed on December 31, 2016.

2

Macroeconomic context

At the inception of the DPO series, economic activity in Comoros had improved slowly since

bottoming out in 2009 and real GDP growth reached 3.5 percent in 2013 mainly driven by a good

agricultural harvest and increased investments in infrastructure and construction (Table 1).

However, the fiscal position continued to be fragile with limited room for maneuver, weak public

finance management systems, while transparency and accountability remained key constraints to

the development agenda. Fiscal performance remained too dependent on non-tax revenues and

grants, and the lack of a broader improvement in reducing major public expenses such as the wage

bill and in collecting taxes did not ensure fiscal sustainability in the medium term. Moreover,

growth and job creation continued to be held back by a high cost environment, particularly in

relation to securing reliable access to electricity and connectivity through modern

telecommunication services. Pressures relating to these factors, particularly difficulties in the

electricity sector, reduced the rate of economic growth to 2 percent in 2014.

Growth, deteriorated even further to 1 percent in 2015 due to electricity shortages and cuts to

investment when the non-tax revenues from the Economic Citizenship Program (ECP)1 declined,

placing further pressure on the overall envelope. The weak fiscal management and over reliance

on non-tax revenue from the economic citizenship program, the growing wage bill, added to the

ongoing crisis in the electricity sector and the slower-than expected implementation of the public

investment program, were the main factors behind the growth deceleration in 2015, below the

annual population growth rate of 2.5 percent. The government also started accumulating civil

service salary arrears as the public-sector wage and salary bill continued its upward trend reaching

9.1 percent in 2015. An unforeseen disbursement of a Saudi budget support grant of €40 million

by mid-December 2015, changed the fiscal picture for the year. It enabled the authorities to clear

the wage and salary arrears before the end of the year and record an overall fiscal surplus of 2.9

percent of GDP. This was a one-off disbursement; a fiscal deficit driven by underlying revenue

and expenditure pressures was expected in the subsequent years.

Following presidential elections in April 2016, a new president of the Union of Comoros was

sworn in late May. President Azali had been previously head of state during 1999-2006 and had

repeatedly declared that poor revenue collections, a high public sector wage bill, and corruption

are major challenges for his administration, thus, highlighting some of the challenges that the

economic governance DPO series had been seeking to tackle. He has also declared that he was

aware that persistent electricity shortages were significant obstacles to economic growth and

development in Comoros and that his administration was determined to overcome them as soon as

possible.

1 The Economic Citizenship Program (ECP) allows Comoros to offer citizenship to foreigners who reside

in partner countries. The partner government selects the candidates following a background check

conducted by the partner government. In exchange, Comoros receives a fee for each passport issued. In the

years, before the Economic Governance Reform DPOs were implemented, the revenue from the ECP had

become significant in relation to Comoros’ GDP. In 2012 it reached an impressive 5.6 percent of GDP.

3

Table 1: Comoros Main Economic Indicators and Central Government Operations 2013–2019

Main Economic Indicators (% of GDP)

2013 2014 2015 2016 2017 2018 2019

Actuals Projections

National Income and Prices

Real GDP growth (% change) 3.5 2.0 1.0 2.2 3.3 4.0 4.0

Real GDP per capita (% change) 1.0 -0.3 -1.3 -0.1 1.0 1.7 1.7

Inflation (% change, annual average) 1.6 0.0 2.0 2.0 2.0 2.0 2.0

Public Finance

Domestic Revenue (excl. grants) 15.4 14.5 16.5 14.4 16.0 16.5 17.0

Grants 27.4 9.4 15.1 8.4 8.3 7.8 7.7

Total expenditures (incl. net lending) 26.2 24.4 27.3 29.9 30.8 28.1 28.5

Domestic primary balance -1.5 -2.0 -1.4 -3.5 -2.9 -1.4 -1.3

Overall balance (incl. grants) 15.1 -0.8 2.9 -6.4 -7.3 -3.8 -3.8

External Sector

Current account balance -8.1 -8.6 0.6 -9.3 -10.1 -10.6 -10.8

Exports of goods and services 14.9 16.3 17.1 17.3 17.4 17.4 17.4

Imports of goods and services 57.0 49.7 45.5 47.4 47.8 46.9 46.0

Remittances 25.3 21.6 18.4 18.0 17.6 17.1 16.6

Gross reserves (months of imports) 5.4 6.6 9.1 7.2 6.6 6.3 6.1

External debt

External debt (in percent of GDP) 16.1 20.2 24.2 25.4 27.7 27.3 26.9

External debt service (in % of exports) 2.0 0.5 0.3 1.8 2.0 2.4 2.6

Central Government Operations (% of GDP)

Revenue and grants 42.8 23.9 31.6 22.7 24.3 24.3 24.7

Revenue 15.4 14.5 16.5 14.4 16.0 16.5 17.0

Tax revenue 12.0 11.8 11.1 12.0 12.9 13.4 13.9

Non-tax revenue 3.4 2.7 5.4 2.4 3.1 3.1 3.1

Grants 27.4 9.4 15.1 8.4 8.3 7.8 7.7

Of which: Budget support 1.6 1.5 9.0 0.5 0.5 0.0 0.0

Project grants 7.6 7.8 6.1 7.8 7.8 7.8 7.7

HIPC grants 18.2

Total expenditure 26.2 24.4 27.3 29.9 30.8 28.1 28.5

Current expenditure 14.8 16.4 17.3 17.4 16.1 15.8 15.6

Wages and salaries 7.6 8.5 9.1 9.0 8.4 8.1 7.9

Goods and services 3.7 4.7 4.6 4.4 3.7 3.7 3.7

Transfers and pensions 2.1 2.0 2.6 2.5 2.5 2.5 2.5

Capital expenditure and net lending 11.4 8.0 9.9 12.6 14.8 12.2 13.0

Capital expenditure 10.9 8.0 8.4 10.7 13.0 12.2 13.0

Net lending 0.5 0.0 1.5 1.9 1.8 0.0 0.0

Overall balance w/ grants

(commitment) 16.0 -0.5 4.4 -7.2 -6.5 -3.8 -3.8

Domestic primary balance -1.5 -2.0 -1.4 -3.5 -2.9 -1.4 -1.3

Change in net arrears -0.9 -0.2 -1.6 0.8 -0.7 0.0 0.0

Overall balance w/grants (cash) 15.1 -0.8 2.9 -6.4 -7.3 -3.8 -3.8

Financing -16.9 2.0 -1.4 6.4 3.1 1.3 1.4

Domestic financing (net) 1.6 1.1 -4.7 3.2 0.0 0.0 0.0

Foreign financing (net) -18.5 0.9 3.3 3.2 3.1 1.3 1.4

Drawings 0.0 0.0 3.2 4.0 3.8 2.1 2.2

Amortization -18.5 0.7 -0.1 -0.6 -0.7 -0.8 -0.8

Sources: Government of Comoros; WB and IMF staff estimates.

4

1.2 Original Program Development Objectives (PDO) and Key Indicators

The original program development objective specified in DPO1 was: to (i) improve economic

management and transparency, and (ii) enhance competition and improve development

performance in key infrastructure sectors (ICT and electricity). The operation was designed around

three pillars: (I) Strengthening economic governance; (II) improving transparency in economic

management; and (III) improving competition and management in key infrastructure sectors.

(Table 2)

1.3 Revised PDO and Key Indicators, and Reasons/Justification

There were no revisions to the PDOs. But in the second operation (DPO2), the wording of the

PDO was more specific and better aligned with the three pillars of the operation. Moreover, the

reform focus was broadened to include two new indictors aimed at better coordinating the treasury

and cash management and strengthening the wage bill management. The second operation kept

the three pillars: (I) strengthening economic management; (II) improving transparency in

economic management; and (III) improving competition and management in key infrastructure

sectors. The outcome indicators expected to be achieved by the end of DPO1 and DPO2 series

follows:

Table 2: DPO Key Outcome Indicators – Original (DPO1) and Revised (DPO2)

DPO1 Indicators DPO2 Indicators

Pillar A: Strengthening economic management

Coordinating treasury and cash management

1. Cash management plans integrating the Union and

island treasuries are operational. (Baseline: No

integrated plans (2013); Target: Integrated plan

updated monthly (2015)

1.Cash management plans integrating the Union and island

treasuries are operational. (Baseline: No integrated plans

(2013); Target: Integrated plan updated monthly (2016).

2. Number of non-project central government bank accounts

outside of the single account framework reduced. (Baseline:

64 (2013; Target: Less than 10 (2016)

Strengthening the wage bill management

3.A computerized wage management system that integrates

union and island civil service operational. (Baseline:

Separate systems operated for the Union and Islands (203);

Target: An integrated system that consolidates union and

islands civil service operational (2016)

Improving budget comprehensiveness

2.Public budget that includes detailed information on

investment and recurrent expenditures adopted.

(Baseline: No public budget with detailed

information on investment and recurrent

expenditures (2013); Target: Public budget with

detailed information on investment and recurrent

expenditures (2015)

4.Public budget that includes detailed information on

investment and recurrent expenditures adopted. (Baseline:

No public budget with detailed information on investment

and recurrent expenditures (2013); Target: Public budget

with detailed information on investment & recurrent

expenditures (2016)

5

Improving debt management

3.Transparency and accountability of debt

management has improved. (Baseline: No regular

debt reports produced and debt management

framework incomplete (2013); Target: Annual debt

reports produced & all new loans, guarantees and

loan renegotiations conducted in line with debt

management law (2015)

5.Transparency and accountability of debt management has

improved. (Baseline: No regular debt reports produced and

debt management framework incomplete (2013); Target:

Annual debt reports produced and all new loans, guarantees

and loan renegotiations conducted in line with debt

management law (2016)

Strengthening statistical system

4.National Accounts prepared using the 1993

methodology and National Statistics Institute

operational.

(Baseline: Draft NA for year 2007 using the 1993

methodology prepared (2013) and no autonomous

National Statistics Institute 0perational. Target: NA

for year 2012 using the 1993 methodology adopted

(2015) and autonomous National Statistics Institute

is operational

6.National Accounts prepared using the 1993 methodology

and National Statistics Institute operational. (Baseline: Draft

national accounts for year 2007 using the 1993 methodology

prepared (2013); Target: National accounts for year 2013

using the 1993 methodology adopted (2016)

Pillar B--- Improving transparency in economic management

Supporting the fight against corruption

5.Percentage of senior officials who filed their Asset

Declaration Form, publicly available on the CNLPC

website and/or in a national newspaper. (Baseline:

30% (2013); Target: 80 % (2015)

7.Number of cases completed by the anti-corruption

commission and brought to court. (Baseline:15 (2013);

Target: 20 (2016)

Enhancing transparency in the management of fisheries resources

6.Information on access granted for fishing activities

systematically disclosed, with revenue and its use

documented in the budget law. (Baseline:

Information not systematically available and

included in the budget law (2013); Target: Access to

information on revenue and its use regularly

documented and disclosed (2015)

8.Information on access granted for fishing activities

systematically disclosed, with revenue and its use

documented. (Baseline: Information not systematically

available (2013); Target: Access to information on revenue

and its use regularly documented and disclosed (2016)

Pillar C--- Improving competition and management in key infrastructure sectors

Enhancing competition in the ICT sector

7. Increase in the number of Telecom operators with

a service license and reduction in the monthly price

per 1 GB of mobile data (3G). Baseline: 1 Telecom

operator and US$20.81 price (2013); Target: 2

Telecom operators and US$15 price (2015)

9.Increase in the number of Telecom operators with a service

license and reduction in the monthly price per 1 GB of

mobile data (3G). Baseline: 1 Telecom operator and KMF

10,000 price (2013); Target: At least 2 Telecom operators

and KMF 7,500 price (2016)

Improving performance in the electricity sector

8.Reduction in total losses in the electricity sector.

(Baseline: 45% (2013). Target: 40% (2015)

10. Increase in MA-MWE collection rates. (Baseline: 55

percent (2013); Target: 65 percent (2016)

6

The reasons for the adjustments made to the outcome indicators under DPO2 are below:

Table 3: DPO1 and DPO2 Outcome Indicators - Reasons for the Adjustments2

2 The remaining four indicators (indicators #1, #4, #5, #6, #8 and #9 in DPO2) did not change. The language

of these indicators was amended to make them more specific or reflect the availability of the new

information on the baseline and target values (e.g., indicator #1, #6 and #8 in DPO2).

DPO1 Results Indicators DPO2 Results Indicators Notes


Consolidating treasury and cash management

Number of non-project central

government bank accounts outside of the

single account framework reduced.

(Baseline: 64 (2013; Target: Less than

10 (2016)

This indicator was introduced to

measure the results of the functioning

& administration of a Treasury Single

Account (TSA) created following the

signing of a MOU between MOF and

CB in Nov 2014. This indictor

reflects a stronger policy measure for

deepening treasury coordination,

namely the TSA framework that

prohibits the opening & operating of

new bank accounts

Strengthening the wage bill management

A computerized wage management

system that integrates union and island

civil service operational. (Baseline:

Separate systems operated for the Union

and Islands (203); Target: An integrated

system that consolidates union and

islands civil service operational (2016)

The wage bill indicator was

introduced because wage bill

management was added as an area of

reform in DPO2, in response to

increased wage bill pressures

affecting the fiscal position.


Supporting the fight against corruption

Percentage of senior officials

who filed their Asset

Declaration Form, publicly

available on the CNLPC

website and/or in a national

newspaper. (Baseline: 30%

(2013); Target: 80 % (2015)

Number of cases completed by the anti-

corruption commission and brought to

court. (Baseline:15 (2013); Target: 20

(2016).

The corruption indicator was changed

because the original one was too

close to the actual prior action. The

revised indicator is more closely

aligned to the objective of the pillar.


Improving performance in the electricity sector

Reduction in total losses in the

electricity sector.

(Baseline: 45% (2013).

Target: 40% (2015)

Increase in MA-MWE collection rates.

(Baseline: 55 percent (2013); Target: 65

percent (2016)

The electricity indicator was changed

to be more aligned with the expected

outcome of the reforms under the

electricity sector recovery plan, which

had a strong focus on improving

commercial management. So, the new

indicator aimed at increasing the

collection rates, linked to improved

commercial management.

7

1.4 Original Policy Areas Supported by the Program:

1. Strengthening economic management

In support of strengthening economic management under the first pillar, the DPO series sought to

support the implementation of the government’s reform program, aligned with the strategic

direction on the SCADD and other key strategies underpinning the government’s reform program

through:

Improving treasury coordination between the Union and Island governments through a

coordinating directorate for public accounts and treasury

Enabling better cash management by introducing a Treasury Single Account (TSA).

Strengthening the wage bill management by adopting harmonized computerized wage

management system for the civil services of the Union and Island governments

Improving budget comprehensiveness by integrating more information on revenues,

recurrent spending, budget execution and the public investment program in the budget

law;

Strengthening debt management through a debt management law; and

Strengthening statistical institutions and upgrading national accounts system to SNA 93.

2. Improving transparency in economic management

Under the second pillar, the DPO series sought to advance the transparency and anti-corruption

agenda by:

Publishing the list of public officials who have filed an asset declaration;

Giving more legal power to the anti-corruption commission to fight corruption by

strengthening the anti-corruption law; and

Systematizing the disclosure of fishing activities: licenses, access rights to national

waters, as well as related revenues and its allocation.

3. Improving competition and management in key infrastructure sectors

Under the third pillar, the DPO series sought to improve competition in the telecom sector and

strengthen management in the electricity sector by:

Enhancing competition in the telecommunication sector by launching a bidding process

for a second full-service license; and

Improving the performance of the electricity sectors by adopting a recovery and

development plan for the national electricity company MAMWE, that includes

commercial recovery and performance framework.

1.5 Revised Policy Areas

Policy areas were not revised

8

1.6 Other significant changes

The changes occurred are mentioned in section 1.3 under “reasons for adjustments”

2. Key Factors Affecting Implementation and Outcomes

2.1 Program Performance

The programmatic series consisted of two single-tranche Development Policy Operations

disbursed upon effectiveness, in the total amount of US$6.8. Table 4 provides key dates for the

DPO series.

Table 4. Key Dates of the DPOs

Operation Disbursed

Amount

Expected Release

Date

Actual Release

Date Release

DPO1 (P1316888) XDR 2.5 M 05/16/2014 05/16/2014 Regular

DPO2

(P150924) XDR 2.2 M 06/16/2015 06/22/2015 Regular

All the prior actions for both DPO1 and DPO2 were satisfactorily met before Board approval on

April 29, 2014 and June 2, 2015 respectively (see Table 5). The last operation of the series closed

on December 31, 2016.

As the series evolved, the changes made to the policy matrix in DPO2 were limited to two

adjustments. Out of the nine indicative triggers identified under DPO1, eight were converted into

prior actions for DPO2, one trigger was dropped and a new prior action was added. The new prior

action supported the strengthening of the wage bill management3 in response to mounting wage

bill pressures and accumulating salary arrears in 2015.

The trigger that was dropped was related to the reforms for enhancing transparency in the

management of fisheries resources. The authorities had made considerable progress towards

improved transparency of fisheries revenue based on the prior action under DPO1; further reforms

were not identified as a priority.

3 The prior actions sought to strengthen wage bill management through: (i) the integration of civil service

wages in the computerized wage management system; and (ii) the integration of biometric national ID

numbers in the computerized wage management system.

9

Table 5: DPO1 and DPO2 - Prior Actions and Implementation Status

DPO1 - Prior Actions Status


Consolidating treasury and cash management:

A dedicated budget line for the Directorate of Public Accounts and Treasury is clearly identified in the

2014 Budget Law and the following key staff is appointed in accordance with the Recipient’s decree

no. 12-047/PR 29 February 2012 relating to DGCPT, including its General Manager (Directeur

Général), Coordinator (Coordonnateur), Managers of the three support services (Chefs des 3 Services

d’Appui), Treasurer of the Union (Trésorier Payeur Général) and Treasurer of each of the three

Autonomous Islands (Trésoriers Payeurs de chacune des trois Îles Autonomes).

The Recipient has included in its 2014 Budget Law four (4) previously off-budget accounts (comptes

de régies) recorded in the accounts of the Treasury, and has issued a decision (arrêté) containing a

complete list of accounts of the administrative entities of the Recipient (at the union and the

Autonomous Islands’ levels) in the Recipient’s central bank.

Completed

Completed

Improving budget comprehensiveness:

The Recipient has included in its 2014 Budget Law: (i) overall envelopes per ministry; (ii) the state of

execution of the 2013 budget until June 30, 2013 presented in the same format as the draft budget; and

(iii) data on government revenues (own resources and external resources) in the main headings of the

budget nomenclature, including data for Fiscal Year 2013

Completed

Improving debt management:

The Recipient has included in its 2014 Budget Law a detailed debt report analyzing the debt stock as

of October 31, 2013

Completed

Pillar B: Improving transparency in economic management

Enhancing transparency and efficiency on the fight against corruption:

The Anti-Corruption Commission (Commission nationale de prévention et de lutte contre la

corruption) has published, on its website and/or in a national newspaper, a list of public officials who

have filed their asset declaration, in accordance with the Recipient’s Decree no. 12-183/PR dated

September 15, 2012.

Completed

Enhancing transparency in the management of fisheries resources

The Recipient has signed and published a presidential decree to systematize disclosure of fishing

access rights to national waters attributed and related revenues as well as their allocation.

Completed

Strengthening statistical systems:

The Recipient has signed (after Cabinet review) and published a presidential decree for the

establishment of the National Council of Statistics.

Completed

Pillar C: Improving competition and management in key infrastructure sectors

Enhancing competition in the ICT sector:

The Recipient’s government has prepared and submitted to the National Assembly a draft information

and communication technology sector law that sets out a framework for market liberalization.

Completed

Improving performance in the electricity sector:

To reduce total losses in the electricity sector, the Recipient’s government has approved the terms of

reference for a recovery and development plan establishing clear objectives for results to be attained by

MA-MWE management and has initiated the procurement of the independent expert to prepare such

plan by the publication of a call for expressions of interest

Completed

10

DPO2 - Prior Actions Status


Coordinating treasury and cash management:

The Recipient’s Directorate of Public Accounts and Treasury within its Ministry of Finance has become

operational through: (i) the identification of a dedicated budget line in the Recipient’s 2015 Budget

Law; and (ii) the appointment of the remaining core staff as required by the Recipient’s Decree no. No.

12-047/PR dated February 29, 2012, through the Recipient’s Arrete No.15-008/VP-MFEBICEP/CAB

dated March 28, 2015.

The Recipient’s Ministry of Finance and Central Bank have signed a memorandum of understanding

governing the functioning and administration of a Treasury Single Account at the Recipient’s Central

Bank, which memorandum of understanding, among other things, prohibits the opening and operating

of new bank accounts unless prior authorization from the Recipient’s vice-president responsible for

finance has first been obtained.

Completed

Completed

Strengthening wage bill management: The Recipient has strengthened wage bill management through: (i) the integration of civil service wages

in the computerized wage management system; and (ii) the integration of biometric national ID numbers

in the computerized wage management system.

Completed

Improving budget comprehensiveness:

The recipient has incorporated the public investment program in its 2015 budget law.

Completed

Improving debt management:

The Recipient has prepared and submitted to its National Assembly a debt management bill to

strengthen the Recipient’s debt management framework.

Completed

Strengthening statistical systems:

The Recipient, through its National Statistics Institute (L’Institut National de la Statistique et des

Etudes Economiques et Demographiques), has: (i) prepared a budgeted five year action plan that uses

the SNA 1993 methodology for the production of national accounts; and (ii) has completed data

collection for updating the Recipient’s 2011-2013 accounts.

Completed

Pillar B: Improving transparency in economic management

Supporting the fight against corruption:

The Recipient has enacted Law No.13-015/AU amending the Anti-Corruption Law, dated December

26, 2013, in order to, inter alia, strengthen the judicial powers of the Anti-Corruption Commission

(Commission nationale de prévention et de lutte contre la corruption).

Completed

Pillar C: Improving competition and management in key infrastructure sectors

Enhancing competition in the ICT sector:

The Recipient has launched a competitive bidding process to award a second full-service license in the

telecommunications sector.

Completed

Improving performance in the electricity sector:

The Recipient, through its Ministry in charge of Production, Environment, Energy, Industry and Craft,

has adopted a recovery and development plan of the MA-MWE Company that includes a commercial

recovery and performance framework.

Completed

2.2 Major Factors Affecting Implementation:

Adequacy of government’s commitment

The overall implementation of the DPO series was adequate with the Government committed to

the reform program, though there were factors that negatively affected program implementation.

11

These negative factors were: (i) the impact of the elections on the fiscal position: an increase in

spending occurred during this period; (ii) the new government changed policy focus to an

expansionary fiscal policy instead of a focus on more efficacy in spending; (iii) the new

government made extensive changes in management and technical personnel in the union and

island governments including the closure of the anti-corruption commission, which is affecting

capacity and continuity in the reform momentum; (iv) Comoros continue to present a very low

capacity for implementation: (v) Comoros has a staff-monitored program (SMP) with the IMF but

a disbursing program has not been possible partly because of the challenges listed above.

Notwithstanding the mentioned negative factors, the contribution of the DPO series to the

strengthening of economic management, improvement in transparency and improvement in

competition and management in key infrastructure sectors was positive and satisfactory, except

for two specific areas (debt management and the fight against corruption) where the intended

outcome was partially achieved or not achieved. Specifically, in debt management, the debt

management bill proposed to the National Assembly in October 2014 had not yet been adopted as

of November 2017. However, annual debt reports on central government debt management have

been regularly produced and annexed to the annual budget laws. On the fight against corruption,

the number of cases investigated and completed by the anti-corruption commission and sent to the

judiciary has not been achieved even though Comoros enacted in 2013 the Law No.13-015/AU

amending the Anti-Corruption Law, to inter alia, strengthen the judicial powers of the Anti-

Corruption Commission, enhance its independence and reinforce its authority. In September 2016,

the new President decided to dissolve the Anti-Corruption Commission on grounds of lack of

efficiency of the commission.

Soundness of background analysis

The DPO series was part of the Bank’s strategic engagement with the Government’s Program for

2012-2014 which was based on the Poverty Reduction and Growth Strategy Paper (PRGSP),

aimed at stabilizing the economy, promoting private sector growth and improving the delivery of

social services. The government strategy under the PRSP was followed by the Sustainable

Accelerated Growth and Development Strategy for 2015-19 (SCADD) that continued to support

the same themes, focusing on the productive sectors of agriculture, fisheries, trade and

infrastructure.

The DPO series also: (i) supported the Government’s Public Financial Management (PFM)

Reform Strategy for the period 2010-19 which was organized around modernizing the regulatory

framework; strengthening institutional capacity; rationalizing budget preparation; strengthening

budget execution; and increasing transparency through improved internal and external controls;

(ii) were aligned with the Government’s policy for the energy sector that lays out plans for sector

reform and recovery; (iii) supported the roadmap for the telecommunications sector reforms,

including the adoption of market-based mechanisms and good governance; and (iv) are aligned

with both strategic pillars of the Country Partnership Strategy for Comoros FY14-FY17, that is

increasing public sector capacity, growth and employment. Added to the support given by the DPO

to the country’s program, a positive factor affecting implementation was the coordination with

other WB technical assistance and investment projects, post HIPC reform momentum.

12

Relevance of the risks identified at appraisal

The factors that negatively affected program implementation are linked to the overall risks

identified under the DPO series, which although mitigated, affected the implementation of the

reforms in some form or another.

Political Risk

The electoral cycle posed significant political risks to the DPO series and the implementation of

Comoros’ broader reform program. The new administration that assumed office in May 2016,

recognized that faster reforms and urgent action on the budget were needed and adopted a set of

measures to improve revenue mobilization and reduce expenditures for the remainder of 2016.

Measures included cancellation of contracts of recently hired government employees, but as

mentioned earlier, the Government made extensive changes in management and technical

personnel in the union and island governments, affecting the capacity and continuity in the reform.

Opposition to reform risk

Some of the reforms supported by the operations stimulated stakeholder opposition in the design

and implementation stages. For instance, reform plans for the recovery of the electricity sector

required stricter enforcement of payment of bills that resulted unpopular as they were not

accompanied by an improvement in service provision.

Macroeconomic risk

Comoros’ macroeconomic and fiscal framework continues to be vulnerable to shocks that are

characteristic of small island economies. Commodity price shocks could be readily translated into

higher domestic prices given the extent to which consumption relies on imported goods,

particularly food and fuel. Global or regional economic downturns could yield a shock to

remittance flows and diminish employment opportunities abroad.

Institutional capacity risk

Weak institutional capacity affected the pace of implementation of some of the sector reforms

supported by the DPO series. Capacity constraints are typical in the case of small, fragile states

including the capacity to execute the budget. Institutions at the island level have particularly high

capacity constraints. These factors affected some of the actions supported by the programmatic

operations not allowing to be implemented as successfully as expected or in the agreed timeframe.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:

Design

The DPO series policy matrix presented the pillars, sub-components and results indicators clearly

and these were well aligned with the PDO. Some indicators were revised during the preparation of

the second operation, as described in Section 1.3, and the adjustments enhanced the M&E

13

framework of the series. The design of the indicators to monitor DPO progress was adequate.

Overall, the indicators were well-selected, measurable, and clearly linked to the prior actions. The

result indicators identified baseline and targets in line with the expected program outcomes. They

were largely based on publicly-available data, however as the statistics system of the country is

weak. Both the policy matrix and the corresponding results indicators were prepared jointly with

the government counterparts, supporting the process of institutionalizing the monitoring and

evaluation (M&E) arrangements in the public sector.

Implementation

The Bank conducted regular supervision in collaboration with the government to ensure continued

implementation of the operations. The Bank’s supervision had great impact in the implementation

of DPO1 and DPO2 as the supervision was accompanied by technical assistance given to the

Economic and Financial Reforms Unit (CREF), responsible for monitoring reforms, reporting

progress and coordinating actions with all ministries and entities, including at the island level. The

technical assistance was intended to strengthen the monitoring and evaluation capacity of the

CREF who was expected to provide updates on progress of indicators, however this materialized

only for a few indicators and not with the expected frequency given constraints in the coordination

with the ministries and most of all with the Island entities.

Utilization

The DPO series promoted the use of the M&E arrangements. Regular monitoring and data

collection undertaken as part of the DPO series facilitated discussions with the Government on the

implementation of reforms and progress on the indicators. In particular, given that the statistics

system of the country was weak, the DPO selected readily available indicators that the government

already produced to facilitate monitoring and government decision making, Por instance, the

systematic preparation and disclosure of information of fishing activities (agreements, licenses,

revenues and its allocation) has contributed to improve the management of the fisheries resources

and accountability.

2.4 Expected Next Phase/Follow-up Operation:

Having set a foundation for economic governance reforms and a multi-sectoral approach to

development policy reforms, the economic governance reform series was followed by a stand-

alone DPO that seeks to further deepen the results. The follow-up DPO was designed as a

standalone in response to a government request to maintain the momentum for reform between the

end of the economic governance reform DPO series in mid-2015 and the expected inauguration of

a new government by mid-2016. Although the follow-on DPO underwent a concept note review

and has largely accomplished the implementation of its policy matrix, further progress has been

delayed by the weakening of the macroeconomic framework after the 2016 elections. Dialogue is

ongoing on the reforms areas supported by the economic governance DPO series through the

follow-on DPO series, technical assistance and World Bank investment projects. The country

strategy also provides for development operations to resume under a programmatic framework

from 2018 onwards.

14

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

Relevance of Objectives

Rating: Substantial

The program’s development objectives to assist the Government of Comoros to strengthen

economic management and improve its transparency; and improve competition and management

in key infrastructure sectors, continue to be as relevant today as they were when the DPO series

were designed. The key components of the DPO program were fully consistent with the

Government’s agenda and poverty reduction strategy (Accelerated Growth and Sustainable

Development Strategy 2015–2019); and with the pillars of the Country Partnership Strategy

(2014–2017). The relevance of the objectives is further highlighted by the fact that challenges in

economic management remain, especially in fiscal policy and public finance management. There

is need to further strengthen wage bill management, improve revenue collection, and improve

transparency. In addition, Comoros continues to have difficulties in increasing access to electricity,

and in advancing the development of its telecom sector – a driver of dynamism in many developing

countries. The 2016 IMF article IV report for Comoros, which includes a staff monitored program,

has been supporting the government efforts to address many of the challenges that the economic

governance DPO series was seeking to tackle. In effect, the new administration that took office in

mid-year 2016, recognizing that accelerated reforms and urgent action on the budget were needed.

adopted a set of measures to improve revenue mobilization and reduce expenditures for the

remainder of 2016, including cancellation of contract of recently hired government employees, as

well as measures to improve the supply of electricity.

Relevance of Design

Rating: High

The design was appropriate and relevant. It supported the implementation of core reforms in

Comoros’ CPS covering the period 2014-17 and in the Accelerated Growth and Sustainable

Development Strategy 2015–2019 (SCADD). The two main pillars of focus in the CPS, namely,

increasing public sector capacity to deliver results by building the capacity to mobilize and

effectively use public resources and strengthening the foundation for sustainable growth by

investing resources to address constraints to growth and job creation, particularly energy and

telecoms, are still at the center of the areas addressed by the DPO series. Similarly, the reforms

supported by the Accelerated Growth and Sustainable Development Strategy (SCADD) aimed at

addressing the productive sectors with a focus on agriculture, fisheries, trade and tourism, and

searching to enable environment through improved infrastructure are also part of the reforms

addressed in the DPO series.

In retrospect, the design could have benefited from a more active inclusion of Island government

authorities to promote faster implementation of reforms; and it would have also been good to

address revenue management in the DPO. At the initial stage when DPO1 was being designed,

Comoros still enjoyed revenue from the economic citizenship program. When this was suspended,

the weakness of the revenue base became even more clear. The Bank started doing analytical work

15

in this area to build a base of knowledge for future DPOs. Therefore, the follow-on stand-alone

DPO has a pillar on revenue.

Relevance of Implementation

Rating: High

Implementation arrangements were and continue to be relevant. As indicated earlier, the Economic

and Financial Reform Unit (CREF) was responsible for monitoring the reforms, reporting progress

and coordinating actions with all ministries and entities, including at the Island level. Although the

CREF has been instrumental in providing information, improvements could have been made to

maintain the flow of information throughout the implementation period as reporting was sporadic

and not always complete.

3.2 Achievement of Program Development Objectives

Overall Rating: Moderately Satisfactory

The overall Program Development Objective of strengthening economic management, improving

transparency in economic management and improving competition and management in key

infrastructure sectors, was overall achieved as evidenced by key results indicators. Although

economic management in Comoros continued to be weak, substantial progress has been achieved

in coordinating treasury and cash management; strengthening wage bill management; improving

budget comprehensiveness; strengthening statistical system; enhancing transparency in the

management of fisheries resources; enhancing competition in the ICT sector; and, improving

performance in the electricity sector. Meanwhile, less satisfactory progress has been achieved in

improving debt management and no progress was made in supporting the fight against corruption.

The sustainability of these achievements is supported by operational plans, such as for the treasury

and cash management; integrated management system, i.e., civil service wage management

system; the actual adoption of new methodology for the national accounts; the development plan

put in place for improving the performance of the electricity sector.

The PDO of the DPO series was evaluated using ten results indicators. Out of ten indicators, eight

were achieved (Indicators #1, #2, #3, #4, #6, #8, #9 and #10), while one indicator (#5) was partially

achieved and one indicator (#7) was not met. The results indicators and their status are discussed

in detail below.

Objective 1: Strengthening economic management

Rating: Moderately Satisfactory

16

Outcome Indicator 1: Cash management plans integrating the union and island treasuries are

operational from a baseline where no integrated plans existed (2013) to a target where

integrated plans have been developed and adopted within the budget laws (2016). Achieved

At the time when the DPO series were designed Comoros had taken important legal and

institutional steps towards improving public financial management. However, weak treasury

management continued to be a persistent challenge for the effective management of public

resources. The National Assembly had adopted the Public Financial Management Law in 2012

providing more clarity on the roles and responsibilities of the federal government and autonomous

islands for the management of public finances. The authorities had also adopted a PFM reform

plan towards strengthening the budget preparation process and improvements in revenue

administration. However, significant challenges remained pertaining to all aspects of the PFM

cycle. Key amongst these were Comoros’ fragmented four existing treasuries4 operations that

caused difficulties for the government to have a clear view of its cash position and to allocate

scarce resources strategically as it executed the budget.

Against the backdrop of not having cash management plans that integrated the Union and Island

treasuries, the DPO series supported efforts to improve treasury management by effectively

making operational the Directorate of Public Accounts and Treasury (DGCPT) that plays a key

coordinating role in consolidating (union and island) cash plans and financial statements. To that

end, a high priority was given to the preparation of a timely and accurate table of consolidated

government financial operations (TOFE), as this table is crucial for budget preparation, execution,

and monitoring, as well as for ensuring transparency in fiscal operations. Thus, the cash

management plans are there, but only since 2017. In fact, the computerization of public finances

is a recent reality through the Integrated Financial Management Information System (IFMIS)

rollout with the accounting and budget software SIMBA5 used since mid-2016 for implementation

by the Union and Island Governments of automate budget execution, accounting, and reporting.

Despite this progress, the full utilization of SIMBA is still hampered by the lack of a legal basis to

enforce the use of the system for capturing all critical budget transactions. Furthermore, a fire that

took place on March 4, 2017, in the Treasury building in Moroni interrupted the Union’s access to

the server for a few weeks, creating delays in the budget management and reporting.

Notwithstanding these constraints, the Treasury has prepared (even manually) integrated cash

balance statements that have been incorporated in the budget laws, contributing towards achieving

the PDO of a stronger economic management.

Outcome Indicator 2: The number of non-project central government bank accounts outside of

the treasury single account framework reduced from a baseline of 64 accounts (2013) to a target

of less than 10 accounts (2016). Achieved

The DPO series supported the adoption of a memorandum of understanding between the Ministry

of Finance and the Central Bank of Comoros governing the functioning and administration of a

4 The union treasury, and one for each of the three islands.

5 Installation and operationalization of the IFMIS IT solution (SIMBA) was completed in June 2016.

17

Treasury Single Account at the Central Bank in response to the tight cash position of government

throughout the fiscal year, to the growing number of bank accounts operated by government

spending agencies, and the delays in the depositing of funds collected by revenue agencies. The

implementation of the TSA framework would also result in a consolidation of the government’s

banking operations and the rationalization of the number of bank accounts. Prior to the

implementation of the TSA there were 64 government bank accounts6. This number was expected

to be reduced to less than 10 as of December, 2016. However, the number of central government

bank accounts outside of the TSA framework has been reduced to zero accounts from the baseline

value of 64 in 2013. The fact that the MOU signed between the Ministry of Finance and the Central

Bank, among other things, prohibited the opening and operating of new bank accounts unless prior

authorization from the vice-president responsible for finance had been obtained, played an

important role towards the rationalization of accounts.

Outcome Indicator 3. A computerized wage management system that integrates union and

island civil service must be operational. Baseline: Separate systems operated for the union and

islands (2013. Target: An integrated system that consolidates union and island civil service

operational (2016). Achieved

When the second operation of the DPO was designed Comoros’ civil service management

modalities were fragmented, leading to a lack of coordination and weak control in the wage bill

management. The union and islands operated separate civil service and wage management systems

and they had autonomy over recruitment rights. These arrangements had resulted in fragmented

management of the wage bill and provided incentives for hiring at the local level irrespective of

the aggregate cost of salaries to the budget. That is why the operation supported the strengthening

of wage bill management through the adoption of an integrated wage management system. With

support from the operation the Government migrated from the fragmented to a centralized wage

management system and a new computerized system allowed the integration of the union and the

island civil services databases.

The integrated personnel and payroll management system for the Union and Island Governments

has been operational since January 2016 through the operationalization of the Government Human

Resource Management Information System (GISE)7. However, the gains in efficiency have not

been fully obtained, yet. The deployment of the SIMBA/GISE interface has not been completely

materialized and therefore deployment of GISE has not yet translated in total human resources

data consolidation. As of March 2017, more than 95 percent of civil servants are paid through the

automated payroll system.

Outcome Indicator 4. Public budget that includes detailed information on investment and

recurrent expenditures adopted. Baseline: No public budget with detailed information on both

investment and recurrent expenditures (2013. Target: Public budget with detailed information

on investment and recurrent expenditures (2016) Achieved

6 Arrêté #14-029/VP-MFEBICEI/CAB dated 11 March 2014. 7 Government Human Resource Management Information System (Gestion Informatisée des Structures

des Effectifs, GISE).

18

At the time when the DPO series was designed, Comoros had made progress in widening the scope

of its budget documents. Previously, a key constraint to budget comprehensiveness and

transparency had been the narrow classification framework. A new classification established in

2013 was implemented in 2015. The DPO sought to deepen budget transparency by expanding the

coverage of the budget to include the Public Investment Program (PIP), which had been prepared

by the National Commission for Planning, under an entirely parallel process to the budget cycle

and hence had not been included in the budget law. The DPO supported the Planning Commission

and the Budget Directorate to prepare the PIP together with the budget preparation calendar, and

to present this information in the budget law. Thus, since 2015 the PIP has been appropriated by

parliament and the budget, using the institutional classification framework presents a complete

picture of domestically and externally funded investment program.

The inclusion of the public investment plan has contributed to widening the scope of the budget.

However, the low and decreasing execution ratio of the PIP is a major concern. The execution ratio

of the PIP has been on a declining trajectory in recent years, decreasing from 47 percent in 2012

to around 40 percent in 2016. The low execution ratio not only signals weaknesses in budget

credibility, but also causes the delay and even failure of ongoing projects. To increase the

execution ratio, the authorities should aim to improve infrastructure, enhancing project

management, and strengthening the communications with the donor countries.

Outcome Indicator 5. Transparency and accountability of debt management has improved.

Baseline: No regular debt reports produced and debt management framework incomplete (2013)

Target: Annual debt reports produced and all new loans, guarantees and loan renegotiations

conducted in line with debt management law (2016). Partially achieved

The debt management reforms supported by this DPO series were expected to strengthen economic

management through more transparent and strategic control of borrowing. Scrutiny of the debt

position through regular reporting and an effective legal framework were considered critical for

maintaining control of the country’s liabilities. The reforms supported by this operation had started

to yield results in this direction as access to regular debt information has been institutionalized in

the budget. However, despite improvements in debt management reporting, the target remains

short of full achievement. In fact, the annual reports on central government debt management are

currently not produced by the Debt Directorate (DD). However, as indicated in the latest Debt

Management Assessment8, the Debt Directorate (DD) prepares each year a Debt Management

Strategy (DMS) attached to the annual Budget law, which is published every year. The annual law

also contains information on statistics of external debt service expenditures, expected new external

debt disbursements, and monitoring of debt service payments arrears.

8 World Bank Debt Management Performance Assessment (DeMPA), August 2016.

The DeMPA is a methodology for assessing public debt management performance through a

comprehensive set of indicators spanning the full range of government debt management functions.

19

Furthermore, by law9 the DD is responsible for producing the debt statistical bulletin. De facto,

the latest annual debt statistical bulletin that DD produced was for fiscal year 2014. The bulletin

was published in print and distributed to relevant officials, including Minister of Finance and Vice-

president for finance and economy. It included information on: evolution of debt stock by external

creditors, types of creditors, currency composition, interest rate, annual debt service forecast and

actual payments, as well as forecast of debt service for the upcoming three years’ period.

Unfortunately, the bulletin is not available at the MOF website. In addition, DD produces quarterly

information briefs, which include data on outstanding debt stock, debt service and accumulated

external debt arrears, and are presented to management of the MOF and the BCC.

Per the 2016 IMF Art IV the government has neither contracted nor guaranteed any other external

loans apart from two concessional loans from the Export-Import Bank of India (US$33 million)

for the construction of a heavy fuel oil electricity generation plan, and from China (US$32 million)

to strengthen the telecommunications infrastructure. At the end of June 2016, total debt arrears

were estimated at USD 4.5 million, so the IMF indicated the authorities that the incurrence of

arrears on external debt service, even in small amounts, by a country, such as Comoros, that had

recently received comprehensive debt relief would send a very bad signal to the international

community. Hence, IMF explored with them possible steps to strengthen external debt

management to avoid further arrears, including the establishment of a mechanism that would

provide authority to the BCC to debit the government’s account to facilitate debt service payments.

Outcome Indicator 6: National Accounts prepared using the 1993 methodology and National

Statistics Institute operational. Baseline: Draft national accounts for year 2007 using the 1993

methodology prepared (2013) Target: National accounts for year 2013 using the 1993

methodology adopted (2016). Achieved

Comoros adopted a law to strengthen its institutional framework for statistics management in 2011.

The law established the National Council of Statistics, changed the status of the National

Directorate for Statistics from a directorate under the Planning Commission to an autonomous

agency, the National Institute of Statistics and Economic Studies and Demographic (INSEED).

Yet, despite these reforms and capacity building, outdated basic statistics and methodologies

continued to hamper policy decision. This DPO supported the modernization of Comoros’ national

accounts methodology as a key step towards improving basic statistics. In fact, until 2014 INSEED

had been preparing national account statistics using the SNA 1968 methodology. The DPO

operation supported INSEED in preparing updated national accounts based on SNA 1993, for the

period 2007-2016, aiming to reinforce economic management by providing more accurate

information for policy making.

At end 2016, INSEED has completed the cleaning up of a GDP database for the 2007-2015 using

the SNA 1993. The National Accounts until 2015 have been validated and adopted by the

Government only last September 2017. INSEED has also delivered the preliminary national

accounts for 2016 and although the updated series based on the SNA 93 methodology have not yet

been published, awaiting the green light from the Government, the full dataset was provided to the

World Bank.

9 Decree No. 12-047 / PR of 29 February 2012, Art. 20

20

Objective 2. Improving transparency in economic management

Rating: Moderately Unsatisfactory

Outcome Indicator 7. Number of cases completed by the anti-corruption commission and

brought to court should increase from a baseline: 15 (2013) to a Target: 20 (2016). Not achieved

Corruption is recognized as one of the main governance challenges facing Comoros. In 2014,

Comoros ranked 142 out of 175 countries in the Transparency International corruption perceptions

index, indicating the depth of the accountability and transparency deficit. In recognition of the

need to tackle this situation, the government adopted in 2012 an anti-corruption strategy that

included the issue of a decree that required asset and income declarations by high ranked public

officials to increase transparency and avoid conflict of interests. The first DPO supported this effort

by requiring the Anti-Corruption Commission to begin publishing a list of compliant and non-

compliant public officials who have filed their asset declaration. But major challenges remained,

particularly in terms of the limited capacity of the anti-corruption commission. Hence, the second

DPO sought to enhance the country’s capacity to combat corruption by supporting the

strengthening of the legal and institutional framework. The government adopted a set of

amendments to the anti-corruption legislation, empowering the Commission by giving its officers

the legal powers to investigate perceived corruption cases, and to prepare and submit those cases

to the judiciary, thus enhancing the independence of the Anti-Corruption Commission and

reinforcing its authority. It was expected that these reforms would foster an environment of

increased accountability.

As of 2013 the anti-corruption commission had submitted 15 cases to the judiciary, and under the

operation it was expected to increase the number of completed cases to 20 by 2016. However,

three months after the new President took office (mid-year 2016) the Anti-Corruption Commission

was dissolved in the grounds of lack of efficiency and efficacy. The government has not put in

place an alternative credible system for pursuing the fight against corruption nor has it taken

specific measures to combat corruption.

Outcome Indicator 8. Information on access granted for fishing activities systematically

disclosed, with revenue and its use documented. Baseline: Information not systematically

available (2013). Target: Access to information on revenue and its use regularly documented

and disclosed (2016) Achieved

The first DPO supported transparency efforts in the fisheries sector, namely, the disclosure of

information related to fishing agreements. In March 2014, the government signed and published a

presidential decree 10 that mandated full systematic disclosure of fishing agreements, license

information and budget revenues from this source. The disclosure of this information through

government sites and local newspapers had contributed to improved transparency and

accountability for the sector. Hence, the second DPO continued to support the systematic

10 Decree No. 14-034 of March 2014

21

disclosure of information of fishing activities including revenue and its allocation as it would also

contribute to improve the management of the fisheries resources where all sectors involved

(stakeholders, fishing agreement signatories and neighboring coastal countries) would get the same

information. The DGRH 11support efforts to enhance transparency in the management of the

fisheries resources through the systematic preparation of the information that is sent to the CREF12

twice a year for its publication13.This met the target of having the information available to the

public through the CREF website and is updated at least once a year. Furthermore, the amount of

revenues generated by access granted to fishing activities have been included in the budget law of

2015 and 2016. However, as of December 2016, and until October 2017, the information has not

been published in newspapers due to the lack of financial resources.

Objective 3. Improving competition and management in key infrastructure sectors

Rating: Satisfactory

Outcome Indicator 9. Increase in the number of Telecom operators with a service license and

reduction in the monthly price per 1 GB of mobile data (3G) Baseline: 1 Telecom operator and

KMF 10,000 price (2013. Target: At least 2 Telecom operators and KMF 7,500 price (2016)

Achieved

Since 2013, the Government of Comoros had been committed to the liberalization of the telecoms

sector. To that end the Communications Law was approved by Parliament in March 2014 and was

signed by the President on 25 December 2014. This law, among other issues removed Comores

Telecom’s exclusive privileges, effectively providing a level playing field for new competitive

market entry.

The reforms of the telecom sector have been supported by the Bank under the fourth phase of the

Regional Communications Infrastructure Program (RCIP-4). The program aided with

strengthening the legal framework for liberalization and with technical assistance to the process of

licensing and selecting new service providers. The DPO series supported the effective opening of

the telecoms sector through the granting of a full-service license to a new operator. Specifically,

the expected result indicator was achieved as the competitive bidding process was launched in

2015 and Telma Comores (private company) was awarded a license in December 2015 and began

operations in 2016. Although telecom was opened to the new operator the process was very

complicated and prolonged. The price paid for the license was around US$16m and there were at

least three other bidders. As expected Telma’s price per 1GB per month is 5,000 KMF14 while the

Comores Telecom (national company) has a price of 5,250 KMF per month for 1GB. Telma’s unit

price is even lower if the purchase is higher (as low as 1,000 KMF per 1GB).

11 The Direction General de Resources Halieutiques (DGRH) 12 Information on fishing agreements updated until 2016 is available on the CREF website

http://www.cref.gouv.km. 13 Licenses information can be found in site: http://www.cref- comores.org/pubs/Protocoles/

14 see http://www.telma.km/offres/4?#Telma_Net

22

The introduction of competition to Comoros’ telecoms sector is expected to result in better

connectivity for Comorian businesses and households as well as allow the access to more modern

and affordable telephone and internet services, thus contributing towards achieving the PDO of an

improving competition and management in a key infrastructure sector.

Outcome Indicator 10. Increase in MA-MWE collection rates from a baseline of 55 percent

(2013) to a target of 65 percent (2016) Achieved

At the onset of the DPO series it was clear that inadequate commercial management, investment

and maintenance were major drivers of poor electricity supply in Comoros, hence the electricity

reforms under the DPO series complemented the Bank’s Electricity Sector Recovery Project

(ESRP) aimed at improving the commercial management and governance of the sector. Based on

experience with such operations, it was fundamental to develop a performance and regulatory

framework between the Government of Comoros and MA-MWE. Hence, the DPO series

supported the preparation of a recovery and development plan for the MA-MWE in the first place

and then the adoption of the plan by the Government of Comoros and MA-MWE. The framework

would hold MA-MWE management and the senior managers accountable by setting reasonable

and achievable targets for improving performance.

The recovery process supported by this DPO series was expected to place the electricity sector on

a path to improved performance that included an expected increase of the collection rates from a

baseline of 55 percent in 2013 to 65 percent in 2016, a target that was fully achieved. In fact, the

collection rate (as of end 2016) reached 79 percent and represents the total amount collected for

electricity sales billed in 2016 (KMF) as a percentage of the total amount of electricity sales billed

in 2016 (KMF). This rate concerns electricity sold to customers from both the low and medium

voltage groups using traditional meters, which require a meter reader to manually record the

information displayed on the meter and transmit it to the sales department for registration in the

commercial management information system.15 Parallel efforts are being made to improve the

utility’s recovery commercial performance through the deployment of a state-of-the-art

management information system, prepaid meters as well as targeted communication campaigns

and stakeholder engagement against electricity theft and meter fraud. MAMWE is improving

slowly but, as mentioned earlier in this report, the new government is aware that unreliable and

15 The data used to estimate the collection rate have been extracted from the recuperations database of the

sales department of the Water and Power Utility (MA-MWE. This database has been developed under the

leadership of international senior managers hired as part of the ESRP project during the second half of 2015.

The database is regularly up-dated and records the following information (from January 1, 2015 to October

2017): (i) monthly sales in kWh (based on billing date); (ii) monthly sales in KMF (based on billing date);

(iii) receipts in KMF (knowing that each receipt is now associated with an invoice); and (iv) pre-paid meters

sales/receipts (pre-paid meters is excluded from the indicator). The collection results are always reported

to the billing period: Examples: 1) If a July 2015 bill is canceled in January 2017, the July 2015 billing rate

is impacted (downward); 2) If a January 2017 bill is paid in August 2017, it is the January 2017 collection

rate that is impacted (upward)

23

low quality supply of electricity represents a significant obstacle to economic growth, while the

high cost of diesel-based generation puts a considerable strain on public finances by making the

sector dependent on continuous provision of fuel subsidies. The government is therefore working

with the World Bank and African Development Bank on a longer-term strategy to strengthen the

technical, management, and commercial capacity of the entity in compliance with the PDO of

improving management in this key infrastructure sector.

3.3 Justification of Overall Outcome Rating

Rating: Moderately Satisfactory

The rating of the achievement of development outcomes of DPO series is moderately satisfactory.

The overall rating of moderately satisfactory reflects, conservatively, the moderately satisfactory

rating of pillar 1, the moderately unsatisfactory rating of pillar 2 and the satisfactory rating of pillar

3. The overall assessment is on balance positive, both because the reform program was significant

and relevant, eight of ten indicators were achieved while one was partially achieved. However,

one of the supported measures has been reversed (the fight against corruption). The main reason

why it is rated moderately satisfactory is because the elimination, in September 2016, of the Anti-

Corruption Commission represents a risk to the sustainability of the program development

objective “promoting transparency” given that, the fight against corruption and transparency, is a

cornerstone of the DPO series.

3.4 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

The three pillars of the DPO series are expected to have a positive impact on poverty reduction

and social development in the medium and long term. In effect, improving public financial

management and transparency indirectly contributes to improved poverty and social outcomes as

(i) an effectively executed budget allows the allocation of resources to development priorities; (ii)

effective treasury and wage bill management support the system’s ability to maximize the use of

scarce resources; (iii) an improved governance framework, driven by transparency measures,

supports openness and helps limit the leakage of funds.

The third pillar of the DPO directed to improving competition and management of the ICT and

electricity sectors is also expected to have a positive social impact by increasing the reliability of

access to electricity services available in Comoros. This will particularly be the case for households,

businesses, health facilities and schools in rural areas that still have low levels of supply and cannot

afford to run individual generators. Finally, the reforms in the telecoms sector has already

improved access to ICT services and to lower communication costs which are of social benefit in

the Comoros context given the important role that connections with family members and

remittances from abroad play in the economic welfare of households.

Notwithstanding progress made under the DPO series regarding integration between the Union

government and the islands, coordination remains to be improved. Meanwhile, problems with

revenue collection and service delivery persist resulting in limited improvements in living

24

standards and poverty rates. Per the latest Poverty Assessment prepared by the World Bank16

using the new household survey data from 2014, around four out of ten Comorians live below the

national poverty line and nearly one fourth of the population is in a state of extreme poverty. In

2014, 42.4 percent of the population lived below the basic needs poverty line of KMF 25,341 per

capita per month and about 23.5 percent of the population is in extreme poverty. However, using

the international poverty line of US$1.9 per capita per day only two out of ten Comorians would

be classified as poor, a rate that puts Comoros ahead of other Low Income (LIC) and Sub-Saharan

African (SSA) countries by up to 30 percentage points. ES.3). However, compared to some of the

richer Island Nations in the region, such as Mauritius or Seychelles, Comoros’ poverty rate is

significantly higher.

(b) Institutional Change/Strengthening

The Bank’s assistance to Comoros under the DPO series supported several reforms aimed at

institutional strengthening across the pillars of the operation. In effect, the DPO reforms in debt

management were also linked to the institutional strengthening of the debt management office that

the Bank supported through targeted capacity building, including a program of technical trainings

of a Comorian debt manager. The capacity of the Public Debt Directorate has been strengthened,

including their role in managing regular debt reporting and supporting timely debt service

payments. The 2016 Debt Management Performance Assessment (DeMPA)17 noted that the Debt

Directorate has made remarkable improvements since the last evaluation conducted in 2011.

Furthermore, through the telecom and energy investment lending – the DPO could help accelerate

the reform agenda and institutional strengthening of the Electricity and the telecom institutions.

Complementary advisory activities under the umbrella of DPO series have had a direct impact on

institutional change. Most probably, one of the most significant underpinnings included the

statistical strengthening reforms that are expected to reinforce economic management by providing

more accurate information for policy making. Improved national accounts will provide critical

information on the actual size and structure of the economy, and guide policy makers in designing

economic reforms. The institutional strengthening of INSEED allowed the institution to regularly

produce national accounts data based on an updated methodology (SNA 93) from 2015 onwards.

Furthermore, the DPO supported institutional reform mainly through public financial management,

making operational the Directorate of Public Accounts and Treasury (DGCPT) that plays a key

coordinating role in consolidating (union and island) cash plans and strengthening the functioning

of the Single Treasury Account. Finally, but not less important is the support given to wage bill

management through the operationalization of an integrated system that consolidated union and

island civil service.

(c) Other Unintended Outcomes and Impacts

No unintended negative effects have been identified by the team or the Government.

16 World Bank Comoros Poverty Assessment -- P156542 April 2017 17 World Bank, “Union of the Comoros: Debt Management Performance Assessment,” August 2016

25

3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

There were no beneficiary survey and/or stakeholder workshop.

4. Assessment of Risk to Development Outcome

Overall Rating: Substantial

The risk of either policy reversals or not maintaining the outcomes in the areas supported by the

DPO series was substantial. It is mostly associated with the country’s potential political difficulties

to implement reforms, the vulnerability to external shocks, high risk of debt distress and weak

institutional capacity that could affect the pace of implementation of some of the sector reforms

supported by the operation.

In particular, the risks identified in the DPO relating to electoral cycle were well identified and

have had an important effect on the results of the program in the areas of debt management

(adoption of the debt management bill) and the anti-corruption reforms (disbanding of the anti-

corruption commission). These risks, which were well acknowledged, have also affected the PDO

to the extent that the changes brought about by the new government in economic management,

including looser fiscal policy, have weakened economic management after the DPO series

concluded.

Historically, difficult inter-islands relations over the use of public resources, within the context of

weak governance, structural weaknesses in public financial management and high politicization,

have been at the root of the country's fragility. This has been reflected in the impact of some of the

reforms and the pace at which others were implemented. Currently, although the DPO series

addressed reforms that were endorsed by the Union and Island governments, providing technical

assistance to facilitate the consensus, it has not completely created sufficient trust among the

parties despite improving transparency in the use of public resources. This is reflected in the fact

that the TSA does not include the island own revenues, which fortunately do not amount to more

than 5 or 6 percent of total revenues, due to lack of confidence that the Union government would

not revert to the islands their own revenues.

Furthermore, the country is highly vulnerable to external shocks (natural disasters, increases in

international fuel and food prices, and slowdown in remittances), that could affect continuing

implementing the reforms. As mentioned earlier in this ICR, Comoros’ macroeconomic and fiscal

framework continues to be vulnerable to shocks that are characteristic of small island economies.

Commodity price shocks could be translated into higher domestic prices given the extent to which

consumption relies on imported goods, particularly food and fuel, and global or regional economic

downturns could yield a shock to remittance flows and diminish employment opportunities abroad.

Hence, government finances remain fragile, limiting the capacity of the authorities to respond to

external shocks and maintain the country on a steady macroeconomic path.

5. Assessment of Bank and Borrower Performance

26

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry

Ratings: Satisfactory

Bank performance during the preparation of the operation was satisfactory. The design of the

operation was appropriate, timely and responded to the country’s priorities. It built on lessons

learned from previous DPOs in Comoros and the Bank’s experience with DPOs in low income

countries. The operations’ identification and appraisal drew from existing analytical work in areas

such as treasury and cash management, budget comprehensiveness, or debt management. In the

cash management area, the DPO benefited from the PEFA18 report that highlighted the key

weaknesses relating to treasury operations, including the fragmentation in treasury and cash

management. In budget comprehensiveness, the PEFA report as well as the analysis of the

Comoros public investment program19 made by the WB identified several gaps relating to budget

comprehensiveness and supported the recommendation to integrate all investment projects in the

budget. With regards to improving debt management the DPO benefited from the DeMPA20 that

highlighted the need to strengthen the legal and strategic framework underpinning debt

management, and this recommendation was taken-up in the operation’s plan.

Furthermore, the DPO series was underpinned by technical assistance and a frank policy dialogue.

The work was well-coordinated within the Bank’s multi-sectoral team. The results framework

established a clear mapping from PDO to prior actions to results indicators. During the preparation

of DPO2, the prior actions supported a broader reform scope relative to the triggers originally

envisioned in DPO1. Moreover, in preparing for the DPO series, the Bank consulted and

coordinated with major development partners and the sector reforms supported by the operation

were discussed with stakeholders as part of the preparation of sector operations (i.e. ICT and

electricity).

The DPO was designed to leverage the TA and investment projects in the portfolio. This helped

ensure (i) there was sufficient dialogue and consultations at the sectoral level, (ii) that there was

analytical work done, and (iii) that there was support on the ground for monitoring and

implementation. In areas, such as PFM, the World Bank Economic Governance Technical

Assistance Grant supported the implementation of PFM reforms, with a focus on budget execution

and wage bill management. The policy reforms on anti-corruption build on a dialogue stemming

from a Governance and Anti-Corruption Technical Assistance, which supported the government

in redefining the governance and anti-corruption action plan. However, the change of government,

which involved a change in political party, widespread institutional and personnel changes, were

key factors behind the closing of the anti-corruption commission. With regards to key

infrastructure sectors, the reforms towards the liberalization of the telecoms sector were supported

by the World Bank under the fourth phase of the Regional Communications Infrastructure Program

(RCIP-4), that provided technical assistance to the process of licensing and selecting new service

18 Comoros Public Expenditure and Financial Accountability (PEFA) Report (2013) 19 Policy Note on the Comoros Public Investment Program (2013) 20 Debt Management Performance Assessment (DeMPA) (2011)

27

providers. Finally, the electricity component reflects the ongoing reform supported by the

Electricity Sector Recovery Project Grant which helped the authorities in improving the

commercial performance of MA-MWE.

(b) Quality of Supervision


Bank performance in the supervision of the operation was satisfactory. The Bank conducted three

supervision missions of the DPOs (May-June 2014; October-November 2014; and March 2015),

The second supervision mission was combined with the identification mission of the second

programmatic DPO. This helped assess the status of the outcome indicators and triggered the

design of the new operation. The tentative timeline for the second economic reform DPO was like

the first operation, about a year, with negotiations and board approval envisaged in March-April

and disbursement in May 2015. Follow-up and implementation support for the program started in

May 2014, one month after the approval of the first operation and continued to be on-going

throughout the period of the operation. Additional guidance was provided by the World Bank team

in key areas, for example closer Bank supervision in debt management including a DeMPA

assessment for Comoros in 2016. In addition to this, numerous supervision missions and additional

support was provided through the World Bank Governance, Telecoms and Electricity projects that

supported areas linked to the reform program.

(c) Justification of Rating for Overall Bank Performance


Given that the Bank performance for quality at entry and the quality of supervision is rated

satisfactory, the overall Bank Performance is rated satisfactory. The unstable nature of Comoros’s

political situation and the fact that a new Government would come into power by mid-2016, six

months before the closing of the second DPO posed challenges to get political support for the

reform agenda. However, the fact that the series was anchored to Government’s strategic reforms

helped to ensure the positive results of the series. The Bank maintained high quality standards in

the design and implementation of both DPOs, providing support through its analytical work and

technical assistance

5.2 Borrower Performance

(a) Government Performance

Ratings: Moderately Satisfactory

For this ICR, Government performance and implementing agency performance are considered

the same. Therefore, the above rating should be viewed as an overall rating for the Borrower.

The Government overall performance for this operation is rated moderately satisfactory. The

Government showed commitment to reform and took full ownership of the program. The CREF

played a consistent and effective role in coordinating dialogue and implementation, but when it

came to monitoring and sustaining results its role was less effective as it monitored only

28

sporadically. In its role of harmonization, CREF coordinated with other Government ministries

and agencies involved in the implementation of the DPO series, including BCC, SG-Finances,

DGCPT, INSEED, DGRH, and MA-MWE. Together with CREF, these institutions collected the

necessary data to assess implementation progress and reported to the Bank. During the collection

of data, the documentation received for preparation of this ICR was mostly timely.

The government made progress in complying with the integration of the cash management

accounts, the reduction of central government bank accounts, strengthening the management of

the wage bill and the statistical system and improving competition and management of the key

sectors of telecommunications and electricity. Section 3.2 above explains in detail the actual

achievements of the expected outcomes. It is important to note that despite the shortcomings in

institutional capacity, the Government still managed to fully or partially achieve all indicators but

one. The government was not successful in supporting the fight against corruption through the

strengthening of the judicial powers of the Anti-Corruption Commission as established in indicator

No.7. On the contrary, the government eliminated the commission and has not put in place a

credible system for pursuing the fight against corruption. As indicated below, one of the lessons

learned is that this indicator might have been too ambitious and the fact that it was revised in DPO2

could well indicate a shortcoming on the side of the Bank

(b) Implementing Agency or Agencies Performance

Not Applicable

(c) Justification of Rating for Overall Borrower Performance

Given that the Government performance is rated moderately satisfactory, and as the Government

and Implementing Agency are indistinguishable, the overall Borrower Performance is rated

moderately satisfactory

6. Lessons Learned

Experience with the Economic Governance Reform DPOs validates lessons from previous

operations but also generated new ones.

1. A key lesson learnt is that DPOs can help secure key reforms and complement

traditional investment lending even in a fragile setting. Comoros remains a difficult

implementation environment for reforms due to the limited institutional capacity, requiring

simple project design focused on policy reforms in few relevant areas that are broadly

supported by donors and with adequate technical assistance to support implementation.

The narrow focus of the DPO was a positive design feature. By joining forces with other

development partners in a systematic manner, particularly on PFM, wage management,

statistics, energy and telecom sectors, the Government ensured adequate program

implementation. In Comoros, small steady steps, and regular consultation, proved to be

more feasible than the big bang approach.

29

2. Leveraging the existing Bank project and technical assistance activities is key to

achieving results in low capacity fragile states. The implementation of the reforms was

facilitated by targeted technical assistance provided by the Bank, i.e., through the

Electricity Sector Recovery Project (ESRP) aimed at improving the commercial

management and governance of the sector, in coordination with other donors (The AfDB

provided support through a capacity building and technical assistance project and direct

budget support); or the IMF ongoing program of technical assistance designed to improve

the reliability of the national accounts and price statistics.

3. In settings, such as in Comoros, where power is shared amongst four governments, it

is critical to seek consensus as much as possible prior to the implementation of

reforms. This is even more crucial when it touches upon political economy issues such as

the power sharing between the Island governments and the Union, or coordination between

the Union and Island entities. Better understanding can also foster trust among the parties

and help move the agenda forward in a more efficient manner. Ensuring that the Islands

participate in relevant consultations so that the reforms that the government of the Union

want to pursue are understood among all stakeholders is key.

4. Given the complicated, fragile and low capacity setting, a closer Bank supervision is

needed to follow up with the Government regarding the steps towards achieving the

PDO. For example, under this DPO, the government had information for the preparation

and publishing of debt reports, but apparently, it was not totally clear to them that these

meant self-standing comprehensive reports and not only including the information in the

budget laws.

5. Strong analytical underpinnings and technical assistance can ensure an adequate

program implementation. The DPO series was grounded in strong analytical groundwork,

which, in turn, provided the rationale for the selection of policy reform areas. However, in

formulating the results framework, a more satisfactory result could have perhaps been

achieved by focusing on the objective of what needed to be achieved (fight against

corruption) rather than a specific action for achieving it (e.g., an increase in the number of

cases completed by the anti-corruption commission and transfer to the judiciary versus a

requirement to strengthen the judiciary. This could have given the incoming administration

some flexibility.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/Implementing agencies

Not yet available

(b) Co-financiers

Not Applicable

(c) Other partners and stakeholders

30

Not Applicable

31

Annex 1: Economic Governance Reform Operations- Policy and Results Matrix

Prior Actions supported by DPO 1

Prior Actions supported by DPO2

Expected Results Indicators DPO2 (end 2016)

Actual Outcome (as of end 2016)

Pillar A: Strengthening economic management 1.1 Coordinating treasury and cash management

A dedicated budget line for the Directorate of Public Accounts and Treasury is clearly identified in the 2014 Budget and the following key staff is appointed in accordance with the Recipient’s decree no. 12-047/PR 29 February 2012 relating to DGCPT, including its General Manager), Coordinator, Managers of the three support services), Treasurer of the Union and Treasurer of each of the three Autonomous Islands

The Recipient’s Directorate of Public Accounts and Treasury within its Ministry of Finance has become operational through: (i) the identification of a dedicated budget line in the Recipient’s 2015 Budget Law; and (ii) the appointment of the remaining core staff as required by the Recipient’s Decree No. 12-047/PR dated February 29, 2012, through the Recipient’s Arrêté No.15-008/VP-MFEBICEP/CAB dated March 28, 2015.

1.Cash management plans integrating the union and island treasuries are operational. Baseline: No integrated plans (2013) Target: Integrated plans developed and adopted with the budget laws (2016)

Achieved Cash management plans integrating the Union and Island Treasuries are operational and have been incorporated to the budget law starting in 2015.

The Recipient has included in its 2014 Budget Law four (4) previously off-budget accounts (comptes de régies) recorded in the accounts of the Treasury, and has issued a decision (arrêté) containing a complete list of accounts of the administrative entities of the Recipient (at the union and the Autonomous Islands’ levels) in the Recipient’s central bank.

The Recipient’s Ministry of Finance and the Central Bank have signed a memorandum of understanding governing the functioning and administration of a Treasury Single Account at the Recipient’s Central Bank, which memorandum of understanding, among other things, prohibits the opening and operating of new bank accounts unless prior authorization from the Recipient’s vice-president responsible for finance has first been obtained.

2.Number of non-project central government bank accounts outside of the single account framework reduced Baseline:64 (2013) Target: Less than 10 (2016)

Achieved The number of central government bank accounts outside of the TSA framework has been reduced to zero accounts

1.2 Strengthening wage bill management

The Recipient has strengthened wage bill management through: (i) the integration of civil service wages in the computerized wage management system; and (ii) the integration of biometric national ID numbers in the computerized wage management system.

3.A computerized wage management system that integrates union and island civil service operational. Baseline: Separate systems operated for the union and islands (2013) Target: An integrated system that consolidates union and island civil service operational (2016)

Achieved The integrated civil service wage management system for the Union and Island Governments is in place since January 2016 through the operationalization of the Government Human Resource Management Information System (GISE). More than 95 percent of civil servants are paid through the system.

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1.3 Improving budget comprehensiveness

The Recipient has included in its 2014 Budget Law: (i) overall envelopes per ministry; (ii) the state of execution of the 2013 budget until June 30, 2013 presented in the same format as the draft budget; and (iii) data on government revenues (own resources and external resources) in the main headings of the budget nomenclature, including data for Fiscal Year 2013.

The recipient has integrated the public investment program in its 2015 budget law.

4.Public budget that includes detailed information on investment and recurrent expenditures adopted.

Baseline: No public budget with detailed information on both investment and recurrent expenditures (2013) Target: Public budget with detailed information on investment and recurrent expenditures (2016)

Achieved The Public Investment Plan (PIP) is included in the budget law, starting with the 2015 budget law.

1.4 Improving debt management

The Recipient has included in its 2014 Budget Law a detailed debt report analyzing the debt stock as of October 31, 2013,

The Recipient has prepared and submitted to its National Assembly a debt management bill to strengthen the Recipient’s debt management framework.

5.Transparency and accountability of debt management has improved. Baseline: No regular debt reports produced and debt management framework incomplete (2013) Target: Annual debt reports produced and all new loans, guarantees and loan renegotiations conducted in line with debt management law (2016)

Partially achieved Since the debt management bill was prepared and submitted to the National Assembly in 2014, no self-standing debt reports have been published but debt information is produced each year and included in the budget law.

1.5 Strengthening statistical system

The Recipient has signed (after Cabinet review) and published a presidential decree for the establishment of the National Council of Statistics.

The Recipient, through its National Statistics Institute (L’Institut National de la Statistique et des Etudes Economiques et Demographiques), has: (i) prepared a budgeted five-year action plan that uses the SNA 1993 methodology for the production of national accounts; and (ii) has completed data collection for updating 2011-2013 accounts.

6.National Accounts prepared using the 1993 methodology and National Statistics Institute operational.

Baseline: Draft national accounts for year 2007 using the 1993 methodology prepared (2013) Target: National accounts for year 2013 using the 1993 methodology adopted (2016)

Achieved The National Statistics Institute (INSEED) is operational and has completed the GDP database for 2007-2015 using the SNA 1993.

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2.1 Supporting the fight against corruption

The Anti-Corruption Commission (Commission nationale de prévention et de lutte contre la corruption) has published, on its website and/or in a national newspaper, a list of public officials who have filed their asset declaration, in accordance with the Recipient’s Decree no. 12-183/PR dated September 15, 2012.

The Recipient has enacted Law No.13-015/AU amending the Anti-Corruption Law, dated December 26, 2013 in order to inter alia, strengthen the judicial powers of the Anti-Corruption Commission (Commission nationale de prévention et de lutte contre la corruption).

7.Number of cases completed by the anti-corruption commission and brought to court. Baseline:15 (2013) Target: 20 (2016)

Not Achieved The anti-corruption commission has been dissolved by the President in of the Union of Comoros in September 2016

2.2 Enhancing transparency in the management of fisheries resources

The Recipient has signed and published a presidential decree to systematize disclosure of fishing access rights to national waters attributed and related revenues as well as their allocation.

8.Information on access granted for fishing activities systematically disclosed, with revenue and its use documented. Baseline: Information not systematically available (2013) Target: Access to information on revenue and its use regularly documented and disclosed (2016)

Achieved Information on fishing activities is systematically prepared and disclosed through the Economic and Financial Reform Unit (CREF) Furthermore, the amount of revenues generated by access granted to fishing activities have been included in the budget law of 2015 and 2016


3.1 Enhancing competition in the ICT sector

The Recipient’s government has prepared and submitted to the National Assembly a draft information and communication technology sector law that sets out a framework for market liberalization.

The Recipient has launched a competitive bidding process for a second full-service license in the telecommunications sector.

9.Increase in the number of Telecom operators with a service license and reduction in the monthly price per 1 GB of mobile data (3G) Baseline: 1 Telecom operator and KMF 10,000 price (2013) Target: At least 2 Telecom operators and KMF 7,500 price (2016)

Achieved

There are two telecom operators: Comores Telecom (national) and Telma (private).Telma’s price per 1GB per month is 5000 KMF while the Comores Telecom price is 5250 KMF per month for 1GB

34





3.2 Improving performance in the electricity sector

To reduce total losses in the electricity sector, the Recipient’s government has approved the terms of reference for a recovery and development plan establishing clear objectives for results to be attained by MA-MWE management and has initiated the procurement of the independent expert to prepare such plan by the publication of a call for expressions of interest.

The Recipient, through its Ministry in charge of Production, Environment, Energy, Industry and Craft, has adopted a recovery and development plan of the MA-MWE Company that includes a commercial recovery and performance framework.

10.Increase in MA-MWE collection rates Baseline: 55 percent (2013) Target: 65 percent (2016)

Achieved The collection rate (as of end 2016) reached 79 percent and represents the total amount collected for electricity sales billed in 2016

35

Annex 2 Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

P131688 - KM First Economic Governance Reform Operation

Names Title Unit Responsibility/

Speciality

Rafael Muños Moreno Program Leader LCC Task Team Leader

Noro Aina Andriamihaja Senior Financial Sector Specialist GFM01

Anne-Lucie Lefebvre Senior Public Sector Specialist GG017

Hajarivony Andriamarofara Consultant GGO13

Xavier Vincent Lead Fisheries Specialist GENDR

Dirk Bronselaer Senior Procurement Specialist AFTPE

Tim Kelly Lead ICT Policy Specialist GTI11

Mustafa Zakir Hussain Operations Adviser OPSIL

Helene Bertaud Lead Counsel LEGES

Faniry Razafimanantsoa Economist GMF13

Hugues Agossou Senior Financial Management Specialist GGO31

Joseph Byamugisha Financial Management Specialista AFTFM

Ralph Van Doorn Senior Counrty Economist GMF06

Stephan Eggli Operations Officer OPSOR

Shahrzad Mobasher Fard Consultant GMF05

Said Ali Antoissi Operations Officer AFMKM

Jean Gaspard Ayi Ntoutomane Consultant AFTP1

P150924 - KM Second Economic Governance Reform Operation

Names Title Unit Responsibility/ Specialty

Shireen Mahdi Senior Economist GMF13 Task Team Leader

Wael Mansour Senior Economist GMF08

Said Ali Antoissi Operations Officer AFMKM

Anne-Lucie Lefebvre Senior Public Sector Specialist GG017

Hajarivony Andriamarofara Consultant GGO13

Xavier Vincent Lead Fisheries Specialist GENDR

Tim Kelly Lead ICT Policy Specialist GTI11

Mustafa Zakir Hussain Operations Adviser OPSIL

Ewa Katarzyna Klimowicz Consultant GEE07

Siobhan McInerney-Lankford Senior Counsel LEGAM

Ruxandra Costache Senior Counsel LEGLE

Aissatou Diallo Senior Finance Officer WFALN

John Y.Ngwafon Senior Economist/ Statistician DECDG

Hugues Agossou Senior Financial Management Specialist GGO31

Jean Gaspard Ayi Ntoutomane Consultant AFTP1

Madeleine Chung-Kong Senior Program Assistant GMFDR

Rondro Malanto Rajaobelison Program Assistant AFMMG

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(b) Staff Time and Cost

P131688 - KM First Economic Governance Reform Operation

Stage

Staff Time and Cost (Bank Budget Only)

No. of staff weeks

USD Thousands (including

travel

and consultant costs)

Lending 40.8 185,783.62

Supervision 0 1,104.19

P150924 - KM Second Economic Governance Reform Operation

Stage

Staff Time and Cost (Bank Budget Only)

No. of staff weeks

USD Thousands (including

travel

and consultant costs)

Lending 27.3 137,365.38

Supervision 0 0

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Annex 3. Borrower's Comments

38

Annex 4. Comments of Cofinanciers and Other Partners/Stakeholders

N/A

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Annex 5. List of Supporting Documents

World Bank, Program Document for Economic Governance Reform Operation, Report No.

81671-KM of March 27, 2014

World Bank, Program Document for the Second Economic Governance Reform Grant, Report

No. 95824 -KM of May 5, 2015

World Bank Policy Note on the Comoros Public Investment Program (2013)

World Bank Electricity Sector Recovery Project, Report RES25200 of September 2013

World Bank Comoros Public Expenditure and Financial Accountability (PEFA) Report (2013)

World Bank, Comoros Policy Notes Accelerating Economic Development in the Union of

Comoros, Report No: 84095-KM of February 2014.

World Bank Country Partnership Strategy for Comoros Fy2014-17, Report No. 82054-KM of

April 16, 2014

World Bank Debt Management Performance Assessment (DeMPA), August 2016.

World Bank Comoros Public Expenditure and Financial Accountability (PEFA) Report (2016)

World Bank ICR Economic Governance Technical Assistance Project, Report No. ICR00004178

of June 20, 2017

World Bank Comoros Poverty Assessment of April 2017

International Monetary Fund, 2016 Art IV Consultation, IMF Country Report No. 16/393,

December 2016

World Bank Aide-Memoirs and Back-to-Office Reports from June 2014 to March 2015

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MAP