Rapport sur l'achèvement de la mise en œuvre et les résultats : Renforcement de la gouvernance dans les secteurs de l'éducation, de l'eau et de l'assainissement

Document of The World Bank Report No: ICR00003750 IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-17656) FOR A DEVELOPMENT POLICY GRANT FROM THE HAITI RECONSTRUCTION FUND IN THE AMOUNT OF US$17.33 MILLION TO THE REPUBLIC OF HAITI FOR STRENGTHENING GOVERNANCE IN EDUCATION, WATER AND SANITATION December 15, 2016 Macroeconomics and Fiscal Management Global Practice Haiti Country Management Unit Latin America and Caribbean Region Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized HAITI GOVERNEMNT FISCAL YEAR October 1 – September 30 CURRENCY EQUIVALENTS (Exchange Rate Effective as of November 30, 2016) Currency Unit = Haitian Gourde (HT) US$ 1.00 = HTG 66.76 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS CAEPA Water supply and sanitation committees CNIGS National Geospatial Information Center DDE Departmental Directorate of Education DINEPA National Directorate of Potable Water and Sanitation DPG Development Policy Grant DPO Development Policy Operation EU European Union FDI Foreign Direct Investment GoH Government of Haiti GDP Gross Domestic Product HRF Haiti Reconstruction Fund IADB Inter-American Development Bank IDA International Development Association MEF Ministry of Economy and Finance MENFP NGOs Ministry of Education and Vocational Training Non-Governmental Organizations ONAPE National Education Partnership Office OP Professional Operator OREPA Regional Offices of Water and Sanitation PARDH National Recovery and Development Action Plan for Haiti PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PPE Provisional Teaching Permit PSUGO Universal, Free and Mandatory Schooling Program SIGE Information System for Education Management SISKLOR Water Chlorination and Quality Surveillance System TEPAC Community-Level Water and Sanitation Technician UN United Nations URD Rural Departmental Unit USI Information System Unit US$ United States Dollar Vice President: Jorge Familiar Senior Director Global Practice: Carlos Felipe Jaramillo Special Envoy: Mary Barton-Dock Practice Manager: Miria A. Pigato Program Leader: Raju Singh Task Team Leader: Evans Jadotte ICR Team Leader: Nestor Ntungwanayo HAITI DEVELOPMENT POLICY GRANT FOR STRENGTHENING GOVERNANCE IN EDUCATION, WATER AND SANITATION CONTENTS Data Sheet A. Basic Information ............................................................................................................ i B. Key Dates ........................................................................................................................ i C. Ratings Summary ............................................................................................................ i D. Sector and Theme Codes ................................................................................................ ii E. Bank Staff ....................................................................................................................... ii F. Results Framework Analysis .......................................................................................... ii G. Ratings of Program Performance in ISRs ...................................................................... v H. Restructuring ................................................................................................................. v 1. Project Context, Development Objectives and Design ................................................... 1 2. Key Factors Affecting Implementation and Outcomes................................................... 7 3. Assessment of Outcomes .............................................................................................. 14 4. Assessment of Risk to Development Outcome ............................................................. 19 5. Assessment of Bank and Borrower Performance ......................................................... 20 6. Lessons Learned ............................................................................................................ 24 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ............... 25 Annex 1. Bank Lending and Implementation Support/Supervision Processes ................. 26 Annex 2: Performance on Development Policy Outcomes .............................................. 27 Annex 3: Summary of Borrower's ICR and/or Comments on Draft ICR ......................... 30 Annex 4. Beneficiary Survey in the Ministry of Economy and Finance, in the Ministry of Education and Technical Training, and in the National Directorate of Potable Water and Sanitation .......................................................................................... 42 Annex 5. List of Supporting Documents .......................................................................... 47 i A. Basic Information Country: Haiti Program Name: HRF Grant for Strengthening Governance in the Education and Water and Sanitation Sectors Program ID: P147166 L/C/TF Number(s): TF-17656 ICR Date: 12/05/2016 ICR Type: Core ICR Lending Instrument: DP Grant Borrower: Government of Haiti Original Total Commitment: USD 17.33M Disbursed Amount: US$17.33M Revised Amount: USD 17.33M Implementing Agencies: Ministry of Finance and Economy Cofinanciers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 02/22/2013 Effectiveness: 09/15/2014 09/15/2014 Appraisal: 06/25/2014 Restructuring(s): Approval: 06/30/2014 Mid-term Review: Closing: 12/31/2015 12/31/2015 C. Ratings Summary C.1 Performance Rating by ICR Outcome: Moderately Unsatisfactory Risk to Development Outcome: High Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Unsatisfactory Government: Moderately Unsatisfactory Quality of Supervision: Moderately Unsatisfactory Implementing Agency/Agencies: Moderately Unsatisfactory Overall Bank Performance: Moderately Unsatisfactory Overall Borrower Performance: Moderately Unsatisfactory ii C.3 Quality at Entry and Implementation Performance Indicators Implementation Performance Indicators QAG Assessments 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 Sector Code (as % of total World Bank financing) General education sector 50 50 General public administration sector 17 17 Sector Code (as % of total World Bank financing) Sanitation 16 16 Water supply 17 17 E. Bank Staff Positions At ICR At Approval Vice President: Jorge Familiar Calderon Jorge Familiar Calderon Global Practice Senior Director : Carlos Felipe Jaramillo Sector Director : Paloma Anos-Casero J. Humberto Lopez Special Envoy: Mary Barton-Dock Mary Barton-Dock Practice Manager/Manager: Miria A. Pigato Auguste T. Kouame Program Team Leader: Raju Singh Raju Singh Task Team Leader: Evans Jadotte Elizabeth Ruppert Bulmer/ Evans Jadotte ICR Team Leader: Nestor Ntungwanayo F. Results Framework Analysis Program Development Objectives The Grant’s Program Development Objective (PDO) is “to strengthen transparency and institutions for budget management in education, water and sanitation”. In particular, the reform program supported by the operation aimed to achieve the following specific objectives: (i) improve cash management by the treasury, enabling a better execution of iii sectoral budgets, (ii) improve the Ministry of Education and Vocational Training (MENFP) regulation of non-public education services, (iii) increase transparency through timely and more widely accessible information on education service delivery, (iv) improve the education budget alignment with sector priorities, (v) improve oversight of the water and sanitation sector, and (vi) increase monitoring and transparency of water service availability and quality at the community level. Revised Program Development Objectives : Not applicable (a) PDO Indicator(s) Table 1: Achievement of PDO Indicators Indicator Baseline Value Original Target Values (from approval documents) Actual Value Achieved at Completion Year (December 2015) Policy Objective 1: Improve cash management by the Treasury Department, enabling better execution of sectoral budgets. Indicator 1: The Treasury Department at the Ministry of Economy and Finance has little knowledge of how line ministries’ expenditure requests will be spread throughout the budget year. Line ministries measure payment arrears on a monthly basis. Line ministries did not measure and send payment arrears on a monthly basis to the Treasury Department on time. Monthly budget-execution reports sent to the Treasury Department, however, showed lower amounts than the effective budget commitments made by line ministries. Partially achieved Policy Objective 2: Improve MENFP’s regulation of non-public education services. Indicator 2: 10,000 non-public schools remain unrecognized and non- accredited, and the MENFP and Departmental Directorates of Education (DDEs) have a backlog of 4,000 accreditation requests and lack the staffing to carry out accreditations; the Accreditation Commission does not exist. The current backlog of school accreditation requests is eliminated; accreditations are carried out at the regional DDE level; MENFP consults the public-private accreditation group. While the targets were missed, due to a significant change in Government policy on accreditation process, the following achievements were made: (i) the public-private accreditation group (ONAPE) was revived in order to accelerate the accreditation process, (ii) the identification of 17,191 schools to which a School Identity Card will be delivered once a set of agreed-upon criteria have been fulfilled, and (iii) the delivery of a portion of the School Identity Cards at end-2015. Partially achieved iv Policy Objective 3: Increase transparency by providing timely and widely accessible information on education service delivery. Indicator 3: The school census is published irregularly and with delays of up to 8 years; the most recent census was published after a 2- year delay. Annual information on education services, including regional and gender- disaggregated data, is made available online and in flyers at regional DDE offices within 45 days of the end of the school year. While the program targets were missed, important achievements were made toward meeting the target, including: (i) the creation of a database that can generate annual reports on the education sector, (ii) the digital mapping of 78.5% of all schools, (iii) the completion of computerized data treatment and Statistical Yearbook tables for 2012, and, (iv) the publication of annual reports on developments in the education sector, including recent data, on the Ministry of Education’s website. Partially achieved Policy Objective 4: Improve the education budget’s alignment with sector priorities . Indicator 4: 46% of MENFP’s FY14 operating budget is allocated to primary education cycles 1 and 2, and non-salary expenditures account for 30.6%. 52% of the FY15 MENFP operating budget and 55% of the FY16 MENFP operating budget are allocated to primary education cycles 1 and 2; non-salary budget allocations in FY15 and FY16 represent at least 32% and 35%, respectively, of MENFP’s operating budget. At the end of the second quarter of FY15, budget allocations to the first two primary education cycles reached 50% and 52 % of the Ministry of Education’s operating budget for FY15 and FY16, respectively; non-salary budget allocations reached 22% and 26% of the Ministry’s operating budget for FY15 and FY16, respectively. Updated data on the above allocations were unavailable. Budget prioritization and comprehensiveness could not be achieved in FY15 and FY16 because the Ministry was under reorganization, including the directorate overseeing primary education. Moreover, new outlays contributed to further increases in personnel expenditures at the expense of the non-salary budget. Not achieved v Policy Objective 5: Improve oversight of the water and sanitation sector. Indicator 5: The National Directorate of Potable Water and Sanitation (DINEPA) lacks a functioning oversight body. The DINEPA Executive Board approves DINEPA’s planned program of activities and annual budget. The names of DINEPA’s Executive Board members were sent to the Senate, but there was no Senate quorum to approve them. However, DINEPA’s operational budgets for FY15 and FY16 were approved. Partially achieved Policy Objective 6: Improve monitoring and transparency of water-service availability and quality at the community level . Indicator 6: DINEPA, through the Rural Departmental Units (URDs) and Community-Level Water and Sanitation Technicians (TEPACs), does not collect performance information from its delegated operators, the water supply and sanitation committees (CAEPAs) and water system professional operator (OPs). DINEPA, through the URDs and TEPACs, has collected and published on a monthly basis, beginning in January 2015, performance information on its delegated operators, including at least 230 CAEPAs and OPs by December 2015. Out of 500 CAEPAS and OPs targeted in the program, only 163 have been reporting performance information to DINEPA. Further progress on this objective was hampered by the lack of funding for water-treatment chemicals which interrupted the activities being measured and the costs of communicating data from CAEPAs to DINEPA’s central database, which is managed by the “ Observatoire .” As a result, this publication series was interrupted. Not achieved G. Ratings of Program Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 05/06/2015 Moderately Unsatisfactory Moderately Unsatisfactory 17.33 2 01/26/2016 Unsatisfactory Unsatisfactory 17.33 H. Restructuring Not Applicable 1 This Implementation Completion and Results Report (ICRR) assesses the achievements of the expected results of the Strengthening Governance in Education, Water and Sanitation Development Policy Grant (DPG). The DPG intended to support the Government of Haiti to strengthen transparency and build institutional capacity for budget management in the education and water and sanitation sectors. The standalone DPG of US$17.33 million was approved by the World Bank’s Board of Directors on June 30, 2014, and closed on December 31, 2015. 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. Reconstruction after the 2010 earthquake was progressing well and had achieved tangible results. A massive earthquake in January 2010 had killed over 230,000, displaced over a million Haitians, devastated critical infrastructure and destroyed significant institutional capacity in the Government. At the time of the appraisal: (i) most earthquake affected areas had been cleared of rubble, (ii) the majority of internally displaced people had been relocated, (iii) many schools had been reconstructed and opened to children who benefited from government’s support, and (iv) cholera incidence had significantly subsided. However, much still remained to be done to achieve sustained growth rates, improve social conditions and reduce poverty levels, and strengthen institutions in order to curb poor governance and corruption. 2. Per capita GDP growth picked up, but reducing poverty required higher growth rates. Growth had been steady at about 4 percent between FY2011 and FY2014, driven by output from construction, commerce and industry. While per capita income growth increased, poverty levels remained high, due to structural shortcomings, including weak governance, and vulnerability to natural disasters. The central government deficit increased to about 6.3 percent of GDP during FY13-14, leading to an upswing in the current account deficit, which was financed by foreign direct investment (FDI) inflows, concessional Petrocaribe debt and depletion of international reserves. External public debt, which had fallen to 9 percent of GDP in FY11 rebounded to 21 percent of GDP in FY2014, almost exclusively due to Venezuela-related Petrocaribe concessional financing. 3. Macroeconomic stability was largely preserved over FY11 through FY14, thanks to the policies pursued by the Government and Central Bank (see Table 2). Inflation had accelerated to 7.4 percent at end-FY11 mainly because of the surge in international food and commodity prices and weak local agricultural production, but moderated over the period 2012-2014 thanks to a larger supply of local agricultural goods. An increase in reserve requirements in 2013 and 2014 had also contributed to the deceleration of credit growth, helping to control inflation. The exchange rate regime, a managed float, was effectively implemented by the Central Bank, which has allowed some depreciation to contain inflationary pressures. The currency has nevertheless remained relatively stable over the period. External imbalances widened from -4.4 percent in FY11 to -8.9 percent of GDP in FY14, but international reserves were maintained at a healthy level above 5 months of import. The fiscal deficit also widened from -3.8 percent to -6.4 2 percent of GDP over the period FY11-FY14, undermined by stagnant revenues and continued drop in grants. Table 2: Macroeconomic Indicators FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Act. Act. Act. Act. Act. Est. Est. Est. Output and Prices Real GDP growth (%) 2.9 -5.4 5.6 2.8 4.3 2.7 1.2 1.5 Consumer price inflation (e.o.p., % change) 3.4 4.1 7.4 6.5 6.8 3.9 7.5 13.4 Government finances (% of GDP) Total revenue and grants 17.8 23.9 21.9 23.4 20.8 18.9 19.3 17.0 Domestic revenue 9.5 10.2 11 11.2 10.4 10.1 11.5 14.3 Grants 8.3 13.7 10.9 12.2 10.4 8.8 7.7 3.1 Total expenditure 22.4 21.7 25.5 28.2 28.0 25.2 21.7 18.4 Current Expenditures 11.7 11.3 11.8 11.9 11.8 12.5 12.6 12.6 Capital expenditure 10.7 10.4 13.7 16.3 16.2 12.7 9.1 5.8 Primary balance -3.8 2.8 -3.2 -4.4 -6.6 -6.2 -2.2 -1.2 Overall balance -4.6 2.2 -3.6 -4.8 -7.1 -6.3 -2.4 -1.6 Excluding grants -12.9 -11.5 -14.5 -17.0 -17.5 -15.1 -10.1 -4.7 Financing -4.6 2.2 -3.6 -4.8 -7.1 -6.3 -2.4 -1.6 External net financing 3.1 3.4 4.6 4.7 4.6 3.8 1.6 0.5 o/w PetroCaribe 2.2 3.5 4.4 4.6 4.7 4.2 1.8 0.2 Arrears (net) 0 0 0 0 0 0 0 0 Internal net financing 1.5 -5.6 -1.0 0.1 2.1 2.6 0.8 1.1 HIPC interim relief 0.5 0 0 0 0 0 0 0 External sector Current account balance (% of GDP) -1.9 -1.6 -4.4 -5.4 -6.8 -8.9 -2.3 0.4 Exports of g. (% change) 12.4 2.2 36.3 0.8 18.1 5.0 7.0 -2.5 Imports of g. (% change) -3.6 48.1 10.1 -7.1 8.1 10.1 -6.6 -3.0 Current Transfers (net, US$ m) 1,635 3,147 2,997 2,600 2,531 2,540 2,685 2,619 o/w private 1,241 1,307 1,551 1,612 1,781 1,977 2,196 2,349 Foreign direct investment inflows (US$ m) 55 178 119 156 162 99 106 108 Gross official reserves (months of imports) 2.8 5.0 5.8 6.4 6.6 5.5 4.8 5.0 Memorandum items Nominal GDP (billions of gourdes) 268.0 267.0 302.8 328.1 364.5 392.3 425.7 476.0 Nominal GDP (US$ m) 6,585 6,623 7,518 7,890 8,451 8,792 8,766 7,972 Total public debt (% of GDP) 23.1 16.5 11.1 15.6 19.4 22.5 27.2 27.7 Remittances (% of GDP) 21.0 22.5 21.0 20.4 21.1 21.0 22.0 25.0 Source: World Bank staff estimates. 3 4. Security was uncertain, reflecting a contentious political climate. Despite the relatively peaceful election of President Michel Martelly in May 2011, his term has been marked by strong tensions between the Executive and Parliament. The rising cost of living (inflation averaging 5.1 during 2011-15), the slow pace of reconstruction, and allegations of corruption were fueling discontent and sporadic demonstrations that had at times become violent. Although political dialogue had led to an agreement to hold presidential elections in October 2014, the necessary legal and administrative steps to do so were lagging, leading to uncertainty about meeting the set deadlines. Further disruptions to social stability were expected. 5. As Haiti’s focus shifted from post-disaster emergency actions to implementing a longer term development program, the Grant tried to address structural bottlenecks in order to strengthen Haiti’s governance systems and increase transparency. The significant post-earthquake inflow of reconstruction funds not only created pressure on the existing capacity to manage and execute funds, but also increased demand for better economic governance. In this context, the Grant aimed at enhancing public resource use through improved expenditure planning, better oversight of education and water and sanitation service delivery, and increased transparency around the availability and quality of these services. 6. The HRF Development Policy Grant aimed at supporting the Government’s governance reforms program . In particular, the operation supported three areas of the Government’s strategy for reconstruction and development (PARDH), namely (a) territorial rebuilding with a focus on infrastructure, in particular the water and sanitation sector; (b) social rebuilding to create networks of modern education centers; and (c) institutional rebuilding with a focus on government’s essential functions related to public financial management and oversight. The DPG comprised measures intended to increase public spending efficiency and maximize the impact of the high level of donor financing in the transition period. The grant’s focus was geared toward improved governance by ensuring the efficient use and enhanced oversight, transparency and accountability of public funds, particularly in the sectors of education, water and sanitation. It was deemed necessary to focus on the latter sector as well, i.e. water and sanitation, in order to contain or reverse water-borne diseases. 4 7. The operation provided highly needed resources to the GOH. During the period preceding the DPO approval, domestic revenue had increased modestly (12.6 percent of GDP on average during 2012-2014 against 11.2 percent in 2008), remaining insufficient to meet the Government’s financing requirements for reconstruction and growth. The country continued to depend heavily on donor aid. Aid flows were, however, declining substantially from their exceptionally high levels following the earthquake. The Bank provided exceptional support to Haiti with substantial financing from the IDA 16 Crisis Response Window after the 2010 earthquake. Together with the Government of Haiti and its partners, the Bank set up the Haiti Reconstruction Trust Fund (HRF) and became its Trustee. It coordinated internal and external stakeholders in support of a long term reform program, consistent with the Bank’s 2013-14 ISN and Government priorities. 8. Previous budget support operations and reforms to strengthen public resource management had produced only modest results . Back-to-back hurricanes and the 2010 earthquake negatively affected the performance of a programmatic series of DPOs (see Table 2 below. A subsequent single-tranche DPO did not perform better, hampered by Haiti’s weak administrative and implementation capacity. The operation aimed to support the country’s program in the areas of institution building and strengthening economic governance in sectors critical to reconstruction and growth. Key achievements under this operation included, nevertheless, the clearance of Government’s arrears toward the electricity company, and some progress towards the use of a Single Treasury Account. 9. However, continued donor support to the government’s reform and institutional-building efforts was crucial. Despite the modest results from previous DPOs, it was crucial for international partners to continue to support the Government’s reform and institution-building efforts, including through technical assistance, analysis and policy advice. As this DPO aimed at addressing institutional and transparency issues in education and water and sanitation, it complemented and supported investment lending by many donors in areas that were critical for development impact and in particular human development, through for example better schooling outcomes and reducing cholera risk through improved water quality. Table 3: Haiti: Performance of recent Development Policy Operations Title of the operation Period Nature of the operation Disbursed Amount ($million) IEG Outcome Rating Haiti Second Economic. Governance Reform FY09/10 Programmatic 24.1 Moderately Unsatisfactory Haiti Third Economic. Governance Reform Operation FY09/10 Programmatic 12.5 Moderately Unsatisfactory Economic Reconstruction and Growth Development Policy Grant FY13/14 Single-tranche 20.0 Moderately Unsatisfactory Source : World Bank Data. 5 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) 10. The operation’s overarching development objective was to strengthen transparency and build institutional capacity for budget management in the education and water and sanitation sectors . The operation was structured around six specific objectives (see Table 1 above) under three key policy pillars: • Pillar I: Enhancing public financial management. The specific objective under this pillar was to improve cash management by the treasury department, enabling better execution of sectoral budgets. • Pillar II: Enhancing governance and service delivery in the education sector. The three objectives under this pillar were to: (i) improve the capacity of the Ministry of Education and Vocational Training ( Ministère de l’Education Nationale et de la Formation Professionnelle , MENFP) to regulate non-public education services, (ii) increase transparency through more timely and widely accessible information on education service delivery, and (iii) improve the alignment of the education budget with sectoral priorities. • Pillar III: Enhancing governance and service delivery in the water and sanitation sector. The two objectives under this pillar were to: (i) improve oversight of the water and sanitation sector, and (ii) increase monitoring and transparency of water service availability and quality at the community level. 1.3 Revised PDO and Key Indicators, and reasons/justification 11. The Development Objectives were not revised during implementation. 1.4 Original policy areas supported by the operation Policy area I: Enhancing Public Financial Management 12. The sole policy objective pursued under this pillar was to improve cash management by the treasury department to enhance the execution of sectoral budgets. The prior action that set the stage for this reform was the publication by the Ministry of Economy and Finance ( Ministère de l’Économie et des Finances , MEF) of regulations requiring line ministries to submit annual forecasts of their respective monthly expenditures. Actions under this policy area were intended to enable the Treasury Department to better manage disbursement requests throughout the budget year, and to better align requests with available revenues. 6 Policy Area II: Enhancing Governance and Service Delivery in the Education Sector 13. The first policy objective under this pillar aimed to improve the capacity of the MENFP to regulate non-public education services. As prior actions, the government (i) established a new regulatory framework for decentralized non-public school accreditation and (ii) adopted a regulation to create a public-private advisory committee tasked with establishing accreditation criteria. The expected outcome was a more effective accreditation system marked by increased school coverage, more decentralized processes and greater stakeholder oversight. 14. The second policy objective was designed to increase transparency by providing timely and widely accessible information on education service delivery. Prior actions included (i) the decentralization of the annual collection and compilation of school census data by DDEs , and (ii) the publication of census results in the Statistical Yearbook and in department-level flyers within 45 days of the close of the school year. The expected result was the timely availability of richer data on education services across Haiti, disaggregated by department and gender, and increased consumer access to information on the supply of education services, including class size by education level and department. 15. The third policy objective was to improve the education budget’s alignment with sectoral priorities . While the government has demonstrated a strong commitment to education reform, education financing represents a significant challenge. Financing needs are substantial, and the existence of multiple sources of funding for a plethora of school initiatives complicates the task of implementing a comprehensive development plan. As a prior action, the MENFP developed and adopted an integrated Annual Operational Plan in the context of the MENFP’s medium-term expenditure framework. The expected outcome was a more comprehensive and prioritized budgeting process that better integrates domestic and external resources to advance sector priorities. Policy Area III: Enhancing Governance and Service Delivery in the Water and Sanitation Sector 16. The first objective under this pillar was to improve oversight of the water and sanitation sector . As a prior action, the authorities submitted DINEPA’s proposed Executive Board members for approval by the Senate. The expected outcome was an improvement in DINEPA’s functionality through the establishment of an appropriate institutional and oversight framework. The performance indicator was the Executive Board’s approval of DINEPA’s planned program of activities and annual budget. 17. The second objective was to strengthen monitoring and improve the transparency of water-service availability and quality at the community level. As a prior action, DINEPA expanded its water sector oversight structure beyond water quality to include service quality and coverage, asset monitoring and revenue tracking within the CAEPA monitoring framework. The expected outcome was a more transparent monitoring system that generates performance information on service delivery, which can be used by 7 service providers, consumers and other stakeholders to improve water-service access and quality in rural communities. 1.5 Revised Policy Areas 18. The policy areas were not revised. 1.6 Other significant changes 19. Not applicable 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance 20. The DPG was a single-tranche grant of US$ 17.33 million, which supported actions (see Table 3) that complemented previous reforms and that constituted a coherent reform program. At appraisal, several key factors supported a standalone approach. It was hoped that a standalone operation would allow for greater flexibility to capitalize on reform opportunities as they arose, and that its relative simplicity would accommodate the government’s weak implementation capacity. A Joint Budget Support Group, including the World Bank, the Inter-American Development Bank (IADB), the EU, the Spanish Agency for International Development Cooperation and the French Development Agency, convened regularly to define a reform program with the government, the result of which was an annual joint policy matrix. This operation was also the result of understandings among representatives of the HRF trustees involved in sectors supported by the operation. 8 Table 4: Policy Matrix (Prior actions) The Grant’s Program Development Objective (PDO) is to strengthen transparency and institutions for budget management in education and water and sanitation Pillar 1: Enhancing Public Financial Management Policy Objective 1 - Improve cash management by the Treasury, enabling a better execution of sectoral budgets. Prior action #1: The Government of Haiti, through its Ministry of Economy and Finance, has issued and published on June 16, 2014, the regulations requiring line ministries to submit thereto annual forecasts of their respective monthly expenditures. Completed Pillar 2: Enhancing governance and service delivery in the Education Sector Policy Objective 2.1 - Improve MENFP regulation of non-public education services Prior action #2: The Government of Haiti (i) established a new regulatory framework for decentralized non-public school accreditation]; and (ii) adopted a regulation for creating a public-private advisory committee tasked with establishing accreditation criteria. Completed Policy Objective 2.2 - Increase transparency through timely and more widely accessible information on education service delivery. Prior action #3: The Government of Haiti, through the MENFP, adopted regulations for the (i) decentralization of the annual collection and compilation of school census data to Department-level Directorates, and (ii) publication of census results in the Statistical Yearbook and in Department-level flyers within 45 days of the close of the school year. Completed Policy Objective 2.3 - Improve the Education budget alignment with sector priorities. Prior action #4: The Government of Haiti, through the MENFP, has institutionalized the preparation and adoption of an integrated Annual Operational Plan in the context of MENFP’s medium-term expenditure framework. Completed Pillar 3: Enhancing governance and service delivery in the Water and Sanitation Sector Policy Objective 3.1 - Improve oversight of the water and sanitation sector. Prior action #5: The Government of Haiti, through the Prime-Minister’s Office, has submitted to the Senate for approval thereby the nomination of DINEPA’s Executive Board members so as to establish the management structure of DINEPA. Completed Policy Objective 3.2 - Increase monitoring and transparency of water service availability and quality at the community level. Prior action #6: The Government of Haiti, through DINEPA, has expanded its water sector oversight structure beyond water quality to include service quality and coverage, asset monitoring and revenue tracking in the CAEPA/OP monitoring framework. Completed Source : World Bank Official documents. 9 21. Despite the swift completion of all prior actions, progress on the DPG- supported reform program was limited, and half of the result indicators were missed, while the other half was partially achieved. The expected outcomes were not realized, and all target indicators were either missed or partially achieved. The factors behind the DPG’s unsatisfactory outcomes will be analyzed in the chapters of the implementation completion report (ICR) that cover program design and implementation, as well as the performance of both the World Bank and the Borrower. The status of the DPG’s outcome indicators is summarized below and detailed under Section 3.2 and in Annex 2. • While the prior action on PFM was completed, and other positive measures were approved as planned, the execution of sectoral budgets did not significantly improve due to weaknesses in budgetary management and controls, combined with insufficient revenue outturns. • Progress on improving governance and service delivery in the education sector was mixed, as outcome indicators for specific objectives were either missed or partially achieved. School accreditation did not progress as planned in part due to a change in Government’s approach to accreditation, and timely and widely accessible information on education service delivery was not made available, despite positive initial actions. The ongoing institutional restructuring at the MENFP prevented the alignment of the budget with sectoral priorities and triggered unplanned expenses. • Efforts were made to improve DINEPA’s oversight capacity, but the Senate failed to approve DINEPA’s Executive Board, a key driver of progress in this area. Improvements in the transparency of water-service availability and quality indicators at the community level were impeded by unreliable funding to undertake the activities to be measured (supply of water-treatment chemicals) and the costs of data communication. 22. All prior actions were completed before the DPG’s approval and were intended to lay the groundwork for the reform agenda supported by the operation. The achievements of the prior actions is summarized in Table 3 above. 2.2 Major Factors Affecting Implementation (i) A difficult political environment and weak technical capacity limited commitment to the reform agenda. 10 23. The Government’s attention was diverted by the overwhelming pressure of implementing reconstruction activities funded by non-conditional resources. When the operation was being designed and implemented, the Government was deeply involved in post-earthquake reconstruction activities, and significant pledged external resources were being disbursed. The government found it difficult to devote its limited administrative resources to the implementation of the reform program, once the one-off disbursement had been made. The DPG was part of the 18 percent of the HRF resources that were used to provide budget support, while the remainder of the resources were allocated to investment, humanitarian and reconstruction activities. Institutional weakness and fragmentation of Government action, often financed by external resources, led the MEF and the line ministries to prioritize the implementation of reconstruction projects supported by investment funding untied to policy reform. 24. Political instability weakened the oversight of the reform agenda. A fragile political and security environment undermined the implementation of the DPG-supported policy measures. The Martelly administration was characterized by frequent changes in government and delays in the electoral calendar. Tensions between the executive and legislative branches complicated the approval of legislation needed to improve economic performance and the business climate in general, and to advance the DPG-supported reforms in particular. The weakness of political institutions hampered Government’s ability to conclude on pending issues and execute its policy undertakings under the operation. For instance, the Senate’s failure to nominate the members of DINEPA’s Executive Board limited independent oversight of the action plan and budget for the water and sanitation sector, which was a key DPG-supported objective. 25. Weak public institutional and technical capacity also hindered progress on the reforms supported by the DPG . A 2015 Systematic Country Diagnostic noted that low public administrative capacity, as well as a heavy dependence on donor financing and external technical assistance (TA), tend to undermine the government’s ability to use public resources efficiently. Capacity constraints are particularly acute among the institutions devoted to producing key data. The demands of overseeing the management of the disaster- reconstruction agenda overwhelmed the government’s weak technical capacity, preventing the completion of several DPG-supported reforms. For instance, in the second half of 2014 a new DINEPA General Director was nominated, and staff members crucial to the DPG- supported reforms either left the agency or were reassigned to other tasks. The reorganization of human resources and limited domestic funding undermined local ownership of the reform agenda and diminished its institutional momentum. (ii) Lack of analysis of political economy constraints to inform the operational design. 11 26. While the Bank’s team succeeded to convene all stakeholders around a coordinated agenda of reforms, the operation’s design did not rely on an analysis of political economy constraints or on lessons learned from the previous Haiti DPO . In a context of state fragility and ongoing reconstruction efforts, the Bank’s team successfully brought together donors, the Government and interested departments of the Bank around a set of policy reforms that were supported by all. However, the operation’s design was not informed by a political economy analysis of sector reforms and once the budget support operation was disbursed, very few resources and technical assistance were made available to help the implementation of reforms. In such a situation, the incentives for line ministries to implement the measures needed to reach the program’s targets were very weak. Moreover, the lessons drawn later from the most recent IDA DPO, which underlined the risk of stand-alone DPGs were not yet available when this operation was designed. The ICR suggested that a programmatic approach would have been more appropriate, as it would have created much stronger incentives for policymakers to follow through with program objectives. 1 However, in acting as a Partner Entity for the HRF, the World Bank and its project team faced strong limitations. The funding made available by donors to the HRF for this operation needed to be committed within the Haitian fiscal year (as required by donors’ respective authorizing environments). And, the limited scope of this funding could not have accommodated a programmatic approach. 27. Nevertheless, designing the DPG as a stand-alone operation was risky, given the Haitian government’s overextended institutional resources and the short period of reform implementation. While the number of outcome indicators was limited, implementing policy reforms in multiple sectors in a fragile context requires robust coordination capacity and strong incentives to maintain reform momentum. A beneficiary survey revealed that a large majority of the senior government staff involved in implementing the reform program was not satisfied by the level of coordination at the government level (see Annex 4, Table A4.1). 2 (iii) Donor incentives. 28. HRF funding for budget support in Haitian FY2014 was critical to balancing the government budget for that year. Prior actions were swiftly undertaken and the preparation timeline was compressed. HRF donors contributing resources for the operation helped formulating the policy measures and implementation targets. They were eager to ensure that these serve to improve the environment in which their own projects in PFM, education, and water and sanitation were being implemented. As a result, a combination of measures and results were included from diverse policy areas of PFM (World Bank), education (World Bank, France, Canada) and water and sanitation (World Bank, Spain and IADB). The multiplicity and diversity of these measures and the expectations and participation of multiple contributors presented an added challenge for the Government 1 ICR for the Haiti Economic Reconstruction and Growth Development Policy Grant, p.22, June 2015. 2 A total of 68 percent of surveyed senior staff in the three branches of the public service that implemented the reform agenda rated their satisfaction regarding the level of coordination of the reform program as 2 on a scale of 1 to 5, with 5 being the highest score. 12 and the team in developing and implementing a coherent program of reform in the given time frame. (iv) Weaknesses in the mitigation of identified risks. 29. During the DPG’s design phase a number of risks were correctly identified, but mitigating actions were difficult to undertake during implementation. The identified political, governance and institutional risks not only materialized, but significantly weakened the Government’s ability to advance the reform agenda. However, there were few actionable avenues to mitigate these risks. For instance, political gridlock between the President and the legislature became an obstacle to the effectiveness of DINEPA’s leadership structure, and there was no way to overcome this obstacle and complete the reform. In addition, better harnessing of resources available elsewhere in the Bank’s work program (an education operation under implementation and a water and sanitation operation under preparation), to achieve reform objectives would have been beneficial. This would have required stronger collaboration between the Task Team and the Education and Health teams as well as greater creativity in using all instruments to achieve objectives. However, although such collaboration may have generated marginally better results, weak incentives for Government action under the stand alone design would have remained a critical obstacle. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 30. M&E Design. Overall, M&E capacity was in place for the operation. The MEF was responsible for coordinating and implementing the activities and reforms under the DPG. The MEF was also tasked to monitor and evaluate the program’s implementation in close coordination with the MENFP and DINEPA. The results chain appeared sound, as outcome indicators for each specific objective had realistic initial and final benchmarks. A supervision committee headed by the MEF was to be created to facilitate coordination, and the MEF was in charge of reporting progress on the outcome indicators listed in the results framework of the policy matrix. In parallel, collaborative monitoring was to take place among donors with the government’s support. Originally, implementation was to be monitored as part of the joint donor matrix agreed upon by the government and the Budget Support Group, but the Government abandoned the joint donor matrix in November 2014 in favor of a single matrix that focused exclusively on the PFM agenda. 31. M&E Implementation. Although there was a continuous dialogue between the Task Team Leader in the field and the authorities on the implementation of the reform agenda, M&E occurred primarily during supervision missions. Two supervision missions were completed, for which aide-memoires were produced, in March and June 2015— a full 9 and 12 months after the operation’s approval. The mission teams were comprised of World Bank staff and specialists who, in coordination with a large government team, reviewed progress in the implementation of the supported reform program. Each supervision mission determined that the reform program had been delayed and agreed upon a set of remedial measures with their government counterparts. Two additional implementation support missions took place in September and December 2015, and found once again that the reform program was falling short of its targets. While no formal aide 13 memoires were prepared, the Bank team continued to discuss with the authorities the shortcomings of the implementation process as well as corrective measures, which were not followed through. Finally, the supervision committee was never established. Some line ministries complained that the MEF did not effectively coordinate the reform program and suggested that a more participatory approach to M&E would have led to better results. 32. M&E Utilization. While the aide-memoires included detailed assessments of the progress achieved and the obstacles encountered, the implementing agencies did not have a strong incentive to execute the agreed-upon remedial actions. Overall, M&E utilization was not effective because the government’s capacity to guide reforms in DPG’s three sectors was insufficient. M&E is rated Unsatisfactory to reflect the fair quality of M&E design, and weak M&E implementation and utilization. 2.4 Expected Next Phase and Follow-Up Operation 33. In the context of the new Country Partnership Framework for FY16-19, the World Bank Group plans to provide (i) a programmatic budget support operation, (ii) a new statistical and PFM capacity-building project, (iii) TA programs, and (iv) timely policy advice. Donor coordination will continue to be led by the Budget Support Group, which includes all partners providing policy-based support to Haiti. Going forward, a programmatic multiyear approach to policy-based lending, with clear triggers for successive implementation phases, is likely to be more effective than single-tranche DPOs. To maximize predictability and support the programmatic approach, IDA financing rather than Trust Fund resources is being envisaged. In addition, resource to support TA for the implementation of the reform program will be made available. The satisfactory completion of the delayed presidential elections, as well as improved coordination and dialogue between the government and its development partners, will be critical to the success of future operations. 34. The World Bank Group intends to develop Haiti’s data infrastructure, analytical tools, financial policies and general institutional capacity based on effective models of service delivery. In this context, the World Bank Group will support analytical work aimed at improving the financial and technical sustainability of basic services in several key sectors, including water and sanitation, social protection, education and energy. 14 3. Assessment of Outcomes 3.1 Relevance of