PROGRAMME SUMMARY
Programme Overview
Programme Name: Economic Governance Reform Support Programme, Phase I (PARGE-I)
General Schedule: 2015 – 2016.
Financing: UA 15 million Operational Instrument: General Budget Support
Sector: Economic Governance
Programme Outcomes
PARGE-I, the first phase of two programme-based budget support operations aims to consolidate the achievements of previous budget support operations and contribute to sustained economic growth by enhancing the efficiency of public expenditure and promoting private sector development. The first component, which focuses on the efficiency of public expenditure, will, through major structural reforms: (i) improve fiscal decentralization; (ii) enhance public procurement management; and (iii) strengthen the role and efficiency of internal control. The main objective of the second component is to support private sector development through: (i) support for the promotion of investments and development of private enterprises; and (ii) improvement of the business environment. Achievement of these operational objectives will: (i) improve the PEFA PI 23 indicator “Competition, Value for Money, and Controls in Procurement” from a C score in 2010 to B in 2016; (ii) raise the fiscal deconcentration rate in favour of the local authorities (% of expenditure) from 10.3% in 2014 to 14% in 2016, and increase the level of credit to the private sector from 24.4% of GDP in 2014 to 26% and 27% of GDP in 2015 and 2016 respectively.
Alignment with Bank's Priorities
PARGE-I is consistent with two (strengthening of governance and private sector development) of the five main operational priorities of the Bank's 2013-2022 Ten-Year Long-Term Strategy (LTS). It is fully aligned on Pillar 1, “Enhancement of Governance for Inclusive Growth” of the 2015-2019 Country Strategy Paper (CSP), as well as the Bank's 2013-2017 Private Sector Development Policy, in particular the first long-term objective relating to the improvement of the investment and business climate. The reforms supported by PARGE-I are in line with Pillars 1 “Public Sector Management and Economic Management” and 3 “Investment and Business Climate” of the 2014-2018 Governance Action Plan (GAP.II). PARGE-I is consistent with the Bank's Strategy for Addressing Fragility and Building Resilience in Africa, particularly with its first area of focus, “Strengthening of State capacity and support for efficient institutions”, aimed at supporting countries in public finance management and private sector development support to facilitate job creation.
Needs Assessment and Rationale
In 2014, economic activity was boosted by the return to normal of cereal production and robust manufacturing sector growth. However, the Malian Authorities must address the following three challenges to maintain this momentum: (i) sustainable improvement of the security situation, a key factor for development; (ii) continuing enhancement of good governance in public management by improving public expenditure quality, and (iii) achievement of strong, private sector-driven, economic growth in spite of constraints of the economy's structural fragility, its largely informal nature and low level of public investment. iv
Harmonization
The design of PARGE-I drew enormously on close coordination with development partners in Mali to improve the harmonization of their interventions. The PARGE reforms are therefore mainly in synergy with those supported by the respective programmes of the World Bank (WB), and European Union (EU). Furthermore, because of the presence of a Mali Country Office (MLFO), the Bank has an entry point which enables it to considerably strengthen its role in dialogue with the Government and the other TFPs. There are ongoing discussions among the TFPs regarding the preparation of a common matrix of reforms.
Bank's Added Value
The Bank's added value lies in its experience in providing budget support to countries in transition, which allows it to promote dialogue on major structural reforms, particularly public finance management and creation of conditions that will foster the emergence of a buoyant private sector that can sustainably support economic growth. The experience is enhanced by that gained from the implementation of institutional support projects that back budget support operations and complement support provided by other TFPs.
Contribution to Gender Equality and Women's Empowerment
The strengthening of internal control for greater public expenditure effectiveness and efficiency could help to improve government action in favour of social inclusion and equity. This should primarily benefit women and children who are the vulnerable segments of the population. Private sector development support through investment promotion will facilitate women's access to financing in order to develop activities that will enhance their empowerment and reduce gender inequalities.
Policy Dialogue and Related Technical Assistance
During PARGE I and II implementation, dialogue with the Government will focus on the following areas: (i) improvement of fiscal decentralization; (ii) strengthening of public procurement management; and (iii) enhancement of the role and effectiveness of internal control. With regard to the second component, private sector development support will chiefly target: (i) support for investment promotion and development of private enterprises; and (ii) improvement of the business climate. Dialogue will be sustained by analytical work carried out under PAGE, the Bank's ongoing institutional support project.