Haiti Technical Assistance Project (Report No. 32147-HT)

Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY Report No: 32147-HT Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT Public Disclosure Authorized IN THE AMOUNT OF SDR 1.4 MILLION (US$2.0 MILLION EQUIVALENT) TO THE REPUBLIC OF H A I T I FOR AN ECONOMIC GOVERNANCE TECHNICAL ASSISTANCE PROJECT May 13,2005 Public Disclosure Authorized Poverty Reduction and Economic Management Sector Management Unit Central America Country Management Unit Latin America and the Caribbean Region r This document has a restricted distribution and may be used b y recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without W o r l d  Republic of Haiti Economic Governance Technical Assistance Project CURRENCY AND EXHANGE RATES US$1 = HG$40 (as of May 10,2005) FISCAL YEAR October 1 - September 30 ABBREVIATIONS AND ACRONYMS AAN AutoritC ABroportuaire Nationale (National Airport Authority) AECI Agencia Espaiiola de Cooperacih Internacional (Spanish Agency for International Cooperation) AGD Administration GenCrale des Douanes (Customs Administration Office) APN AutoritC Portuaire Nationale (National Port Authority) BRH Banque de l a RCpublique d’Haiti (Central Bank o f Haiti) CAE Country Assistance Evaluation CAMEP Centrale Autonome MCtropolitaine d’Eau Potable (Metropolitan Water Authority) CEP Conseil Electoral Provisoire (Provisional Electoral Council) CFAA Country Financial Accountability Assessment CLDA Canadian International Development Agency CMEP Conseil de Modemisation des Entreprises Publiques (Council for the Modernization of Public Enterprises) CNIMP Commission National IntCrimaire des MarchCs Publics (Interim National Commission for Public Procurement) CNMP Commission Nationale des MarchCs Publics (National Commission for Public Procurement) CPAR Country Procurement Assessment Report CPI Transparency International Corruption Perception Index CQS Selection Based on Consultants’ Qualifications CSCCA Cour SupCrieure des Comptes et du Contentieux Administratif (Supreme Audit Institution) cso C i v i l Society Organization DCB Direccion du ContrBle Budgetaire (Directorate of Budgetary Control) DGI Direction GCnCral des ImpBts (General Tax Directorate) EDH Electricit6 d’ Haiti (National Electricity Company) EERC Emergency Economic Recovery Credit EGRO Economic Governance Reform Operation EGTAG Economic Governance Technical Assistance Grant ERC Economic Recovery Credit EU European Union FBS Fixed Budget Selection FER Fonds d’Entretien Routier (Road Maintenance Fund) FMR Financial Management Reports FONHEP Fondation Haitienne de 1’Enseignement PrivC (Haitian Foundation for Private Education) GDP Gross Domestic Product GNI Gross National Income GoH Government o f Haiti  ICB International Competitive Bidding FOR OFFICIAL USE ONLY ICF Interim Cooperation Framework IDA International Development Association IDB Inter-American Development Bank IFMS Integrated Financial Management System IMF International Monetary Fund LCS Least-Cost Selection LICUS Low-Income Countries Under Stress MDG Millennium Development Goals MEF Ministry o f Economy and Finance MENJS Ministkre de I’Education Nationale, de l a Jeunesse et des Sports (Ministry of National Education, Youth and Sports) MINUSTAH UN Mission for the Stabilization of Haiti MPCE Ministkre de l a Planification et de la CoopCration Externe (Ministry o f Planning and External Cooperation) MSPP Ministkre de l a SantC Publique et de la Population (Ministry o f Public Health and Population) NCB National Competitive Bidding NGO Non Governmental Organization OAS Organization o f American States OED Operations Evaluation Department PAD Project Appraisal Document PCN Project Concept Note PCU Project Coordinating Unit PNH Police Nationale d’HaYti (Haitian National Police) PPIAF Public Private Infrastructure Advisory Facility PRSP Poverty Reduction Strategy Paper QAT Quality Assurance Team QBS Quality-Based Selection QCBS Quality- and Cost-Based Selection QER Quality Enhancement Review SA Special Account SBD Standard Bidding Documents SME Small and Medium Enterprises SMP Staff Monitored Program TA Technical Assistance TELECO TClCcommunications d’ Haiti S.A.M. (Telecom Utility) TI Transparency Intemational TOR Terms o f Reference TSS Transitional Support Strategy ULCC Unit6 de Lutte Contre la Corruption (Anti-corruption Unit) UNDP United Nations Development Programme USAID United States Agency for Intemational Development WBI World Bank Institute Vice President: Pamela Cox Country Director: Caroline Anstey Sector Director: Emesto M a y Sector Manager: Ronald E. Myers Sector Leader: Antonella Bassani Task Team Leader: Linn Hammergren This document has a restricted distribution and may be used b y recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed lwithout W o r l d Bank authorization.  HAITI Economic Governance Technical Assistance Project CONTENTS Page A . STRATEGIC CONTEXT AND RATIONALE.................................................................. 1 1. Country and sector issues .................................................................................................... 1 2. Rationale for Bank involvement .......................................................................................... 8 3. Higher level objectives to which the project contributes ................................................... 10 B . PROJECT DESCRIPTION................................................................................................ 10 1. Lending instrument ............................................................................................................ 10 2. Applicable] Program objective and Phases .................................................................. [If 10 3. Project development objective and key indicators ............................................................ 15 4. Project components ............................................................................................................ 16 5. Lessons learned and reflected in the project design .......................................................... 19 6. Alternatives considered and reasons for rejection ............................................................. 19 C . IMPLEMENTATION ......................................................................................................... 20 1. Partnership arrangements (if applicable) ........................................................................... 20 2. Institutional and implementation arrangements ................................................................. 20 3. Monitoring and evaluation of outcomeshesults ................................................................ 21 4. Sustainability ..................................................................................................................... 21 5. Critical risks and possible controversial aspects ............................................................... 22 6. Loadcredit conditions and covenants ............................................................................... 23 D . APPRAISAL SUMMARY .................................................................................................. 23 1. Economic and financial analyses ....................................................................................... 23 2. Technical. ........................................................................................................................... 23 3. Fiduciary ............................................................................................................................ 23 4. Social ................................................................................................................................. 23 5. Environment ...................................................................................................................... 23 6. Safeguard policies .............................................................................................................. 24 7. Policy Exceptions and Readiness ...................................................................................... 24 Annex 1: Country and Program Background ........................................................................... 25 Annex 2: M a j o r Related Projects Financed by the Bank and/or other Agencies ..................35 Annex 3: Results Framework and Monitoring ......................................................................... 37 Annex 4: Detailed Project Description ...................................................................................... 41 Annex 5: Project Costs ................................................................................................................ 47 Annex 6: Implementation Arrangements .................................................................................. 49 Annex 7: Financial Management and Disbursement Arrangements ................... 53 Annex 8: Procurement Arrangements ....................................................................................... 57 Annex 9: Economic and Financial Analysis .............................................................................. 61 Annex 10: Safeguard Policy Issues............................................................................................. 63 Annex 11: Project Preparation and Supervision ...................................................................... 65 Annex 12: Documents in the Project File .................................................................................. 67 Annex 13: Statement of Loans and Credits............................................................................... 69 Annex 14: Country at a Glance .................................................................................................. 71 Annex 15: M a p ............................................................................................................................. 73  HAITI GOVERNANCE TECHNICAL ASSISTANCE GRANT PROJECT APPRAISAL D O C U M E N T LATIN AMERICA AND C A R I B B E A N LCSPS Country Director: Caroline D. Anstey Sectors: Central government administration Sector ManagerDirector: Ronald E. Myers (70%);General public administration sector (30%) Themes: Public expenditure, financial management and procurement (P);Other accountability/anti-corruption (P);Administrative and civil service reform (P) Project ID: PO93936 Environmental screening category: N o t Required Lending Instrument: Technical Assistance Safeguard screening category: C Borrower: Republic o f Haiti Responsible Agency: Ministry o f Economy and Finance (MEF) Expected effectiveness date: June 30,2005 Expected closing date: December 3 1,2007 Does the project depart from the CAS in content or other significant [ ]Yes [XINO respects? Ref. PAD A.3 Does the project require any exceptions from Bank policies? Ref. PAD 0 . 7 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [ IN0 I s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [XIYes [ ] N o Ref. PAD C.5 Does the project meet the Regional criteria for readiness for [XIYes [ ] N o implementation? Ref. PAD D.7 Project development objective Ref. PAD B.2, TechnicalAnnex 3 The objective of the Economic Governance Technical Assistance Grant (EGTAG) i s to assist the GoH in strengthening i t s institutional capacity in the areas of budgetary planning and execution, investment and project planning, internal and external control, procurement, accountability, participatory monitoring, and reform constituency building. Specifically the EGTAG’s development objectives are to: (i) improve the central ministry’s ability to program, execute and track use of public resources and better link them to concrete development goals, ensure an adequate performance of the external, ex-post control function b y the CSCCA, and help the CNMP grow into i t s role as overseer of procurement practices and make open, competitive procurement the rule rather than the exception; (ii) advance the development of a human resource management plan and system, especially as regards ensuring adequate capacity in the financial management system; (iii) advance the development of the U L C C as an effective check on corruption while also encouraging the greater involvement of civil society in i t s own operations and as a monitor of public sector reform; and (iv) ensure as part of the project management process, an adequate system for communicating information on the reform programs and mobilizing public support for their furtherance. Project description [one-sentence summary of each component] Ref. PAD B.3.a, Technical Annex 4 Component 1-Financial Resource Management: This component w i l l aim to develop the Government’s capacity to produce and execute a budget, track i t s implementation, and reduce irregular uses and expenditures. Component 2-Human Resource Development: This component w i l l support the development of a Human Resource Management System and the strengthening of HR capacity under the direction of the HR Unit within the Prime Minister’s Office. Component 3- Anticorruption Unit. This component w i l l strengthen the Ministry of Finance’s Anticorruption Unit and i t s special program for civil society monitoring of economic governance reforms. Component 4-Communication, Coordination and Project Management. This component w i l l strengthen the MEF’s program for communication of economic governance reforms to the public, enhance MEF’s ability to coordinate donor programs in economic governance and otherwise strengthen the Project Coordination Unit (PCU). Which safeguard policies are triggered, if any? Ref. PAD D.6, TechnicalAnnex 10 The project currently triggers none of the Bank's Environmental or Social Safeguard Policies. I f any changes of environmental or social significance should arise during project implementation, Bank policies w i l l apply. Significant, non-standard conditions, if any, for: Ref. PAD C.7 Board presentation: None. Loadcredit effectiveness: The Borrower has prepared a Project Implementation Manual satisfactory to the Association. Covenants applicable to project implementation: None. The proposed project would not require any exceptions from Bank policies and would comply with a l l applicable Bank policies. A. STRATEGIC CONTEXT AND RATIONALE This document describes a proposed US$2 million Economic Governance Technical Assistance Grant (EGTAG) to the Government o f Haiti (GoH) for the purpose o f strengthening i t s economic governance, thereby enhancing i t s ability to attract external funding and use this as well as i t s own resources to advance i t s national development programs efficiently, effectively, and transparently. The operation builds on an exercise conducted b y the Government with the participation of donors to prepare an Interim Cooperation Framework (ICF) to guide their collective activities. The exercise, carried out in April and May o f 2004, included a component on economic governance. As in the other sectors, the needs and recommended actions identified by the ICF may exceed what can be accomplished within the ICF’s two-year time frame, but, as agreed by the participants, i t w i l l serve as a base for planning all international assistance. The I C F has already informed the preparation o f two IDA operations - an Economic Governance Reform Operation (EGRO) in the amount o f US$61 million, approved by the Board in January 2005, and L I C U S Trust Fund grants, approved in November 2004 in the amount of US$6 million, o f which a grant o f US$1.5 million to support economic governance reforms. The Economic Governance Technical Assistance Grant (EGTAG) outlined here i s intended to build on and support IDA’S operations already underway, and to coordinate closely with on- going and planned technical assistance activities o f other donors. If the EGTAG successfully meets i t s objectives, and conditions for economic governance reforms continue to be favorable in Haiti, IDA would consider another technical assistance operation as part of the overall package. Because the needs are so great, the international actors offering assistance so varied, and the Bank’s own assistance package staged in an incremental fashion, this operation takes a somewhat broader look than usual at the situation being addressed. Rather than examining only the conditions relevant to the present operation, i t first addresses the overall challenges as identified through the ICF, then examines initial progress made and estimates likely advances up to the time the proposed operation would become effective, and finally, discusses the EGTAG’s objectives and components as part o f the full spectrum o f planned donor support for the I C F economic governance reforms. 1. Country and sector issues a. General Background: Situated on the western third o f the island o f Hispaniola, Haiti i s the poorest country in the western hemisphere. An estimated 76 percent o f i t s 8.3 million population lives below the poverty line (less than US$2 a day) while approximately 56 percent lives in abject poverty (below US$1 dollar a day). At almost three times the regional average, Haiti’s poverty level can only be compared to that o f Sub-Saharan Africa,’ and income inequality i s amongst the highest in the world2. Haiti ranks 153‘d (out o f 177 countries) in the UN Human Development Index. L i f e expectancy i s a dismal 52 years. Infant and maternal mortality rates remain amongst the highest in the world. Fully half o f the population i s illiterate. Malnutrition affects a third o f a l l children, and ineffective public health and sanitation systems together with widespread poverty provide fertile ground for the rapid spread o f such infectious diseases as Haiti Living Conditions Survey 2003; based on international poverty lines o f US$2 PPP and US1 PPP per capita fer day. As measured by a Gini coefficient o f 0.65. HIV/AIDS3, tuberculosis, polio and human rabies. The widespread lack of solid waste management and access to potable water also contributes to many waterborne illnesses and preventable diseases and childhood deaths. Despite i t s promising beginnings in the 19th century as the first slave colony to gain national independence and second free republic of the Western Hemisphere, Haiti’s subsequent history has been fraught with problems. The 1986 termination of the 30-year dictatorships of Franqois Duvalier and his son, noted for their corruption, police repression, and pillage of the country’s wealth, was followed by a series of short-lived governments also fraught with corruption. The 1990 election o f President Jean Bertrand Aristide was initially hailed as a break with past patterns. The seeming return to civilian rule was interrupted seven months later b y a military coup that prompted an international embargo and the suspension of all but humanitarian aid. These actions further crippled Haiti’s economy and produced a severe decline in the already dire living standards of i t s population. Activity in the textile and export-oriented assembly industries (representing over three quarters of export earnings as well as a considerable share of formal sector employment) virtually came to a halt; tax collection and expenditure control systems collapsed; and maintenance of the country’s economic and social infrastructure was all but abandoned. The return to constitutional rule, introduced via the U.S.-led reinstatement of Aristide’s presidency in 1994, was followed in 1995 b y the election of President RenC PrCval. During the early years of his administration, Prtval’s adoption of an Emergency and Economic Reconstruction Program (EERP) appeared to embark Haiti on a path o f economic recovery. However, by 1997 rampant corruption, internal power struggles, weak institutions and poor governance again took their toll on the economy4. Aristide’s 1997 break from the Organisation Populaire Lavalas (OPL)5 that had backed him since 1990 and establishment b y him of the Lavalas Family (FL) unleashed a severe institutional crisis and a deadlocked parliament - ultimately suspended in 1999. In the absence of a legislative body, no major legislation (including budget laws) could be approved, ongoing reform programs were halted, and ratification of new loans with international creditors was rendered impossible. Aristide’s highly-contested landslide victory in the 2000 elections spurred civil unrest that continued to escalate over the next three years, provoking an armed rebellion that seized the northern half of the country and culminated with Aristide’s resignation on February 29, 2004. H i s departure was followed b y the creation of a Transitional Government6 with a mandate to Haiti also leads the Western Hemisphere in reported cases o f HIV infection rates. The economic crisis was further compounded in September 1998 with the advent o f Hurricane George. Private transfers, largely in the form o f remittances from migrants climbed from 1997 to 2001 to account for fully 18 percent o f GDP. Such transfers were key to offsetting the impact o f economic stagnation that grasped Haiti as a result o f the political crisis and furthermore provided a much needed safety net for the Haitian poor in the absence o f international aid. The OPL was later renamed the Organisation du Peuple en Lutte, soon to become the leading opposition party. The creation o f this Transitional Government, with Supreme Court President Boniface Alexandre as Provisional President in accordance with Haiti’s 1987 Constitution, was endorsed by a UN Security Council Resolution. Thereafter, a Council o f Wise M e n made up o f seven eminent personalities from key sectors o f Haitian society, designated Gerard Latortue as Interim Prime Minister, and on April 4, 2004, the Transitional Government, political parties (with the exception o f the Lavalas) and civil society representatives signed a political pact agreeing on,inter alia, the organization o f elections in late 2005 and the transfer o f power to an elected government in early 2006. 2 hold democratic elections in end-2005 and hand over power to a new government in early 2006. Faced with the formidable challenge of confronting deep-seated political instability, weak institutions, inefficient use and allocation of resources, and the resulting mistrust of i t s citizenry, in April 2004 the Transitional Government joined forces with the donor community to draft the Interim Cooperation Framework (ICF.) The ICF identifies priority interventions and associated financing needs to support Haiti’s path to economic, social and political recovery throughout the July 2004-September 2006 transition period. I t also constitutes the foundation upon which a future medium-term Poverty Reduction Strategy Paper (PRSP) encompassing the period 2006-2009 w i l l be prepared. The ICF i s based on 4 pillars: (i) Strengthening political governance and promoting national dialogue; (ii)Strengthening economic governance and contributing to institutional development; (iii) Promoting economic recovery; and (iv) Improving access to basic services. The ICF also takes into consideration cross-sectoral issues, notably crisis prevention, human rights, gender, and HIV/AIDS. b. Sector Specific Issues: For a variety of reasons, not the least of which are the weaknesses of i t s institutional base, Haiti’s economic governance deteriorated severely over the past ten years leading up to the departure of the second Aristide government. Donor dissatisfaction with management of the funding they provided was a principal cause of their withdrawal of programs executed by the government at the end of the last decade, after which conditions continued to worsen. That donors remained present as long as they did was partly due to their ability to rely on Haiti’s non-governmental organizations andor to channel funds outside the government’s normal financial management system, but as the GoH has continuously remarked, that strategy did not resolve and arguably may have compounded existing weaknesses. Services can indeed be provided through direct payments to NGOs, but the practice i s neither sustainable nor a substitute for a well-functioning set of public sector institutions. Following the installation of the Transition Government, there have been signs of improvement, as well as a willingness of donors to support i t s policy reform and institutional strengthening efforts. Before turning to these changes, this section reviews the existing situation and trends in the areas of economic governance. Although institutional weaknesses extend to all levels and sectors of government, attention here i s on the functions and organizations most directly related to the programming and use of public resources - financial management in i t s most ample sense. As further developed below, the Bank has identified this area as critical to the success of i t s interventions as well as to Haiti’s sustained recovery and future development. Budgetary Process: Haiti’s Ministry of Economy and Finance (MEF) has the responsibility for overall budget formulation, execution, and control, sharing programming and oversight of public investment with the Ministry o f Planning and External Cooperation (MPEC). However, the 1985 Budgetary Law (replaced in 2004) defining the basic procedures, was never fully implemented, and critical positions and offices were simply not created. Offices that did exist were often understaffed and under-equipped. Parameters for budget analysis and data for budget preparation were weak, and the budget did not reflect all expenditures or revenues. I t s contents were not linked to programs or higher level government goals (e.g. poverty reduction), but rather presented in line item form. The Treasury, which should manage liquidity and program disbursements according to available funds, had become little more than a mechanism for endorsing checks to employees and suppliers and processing accounts on an accrual basis. 3 Typically, deficit control was accomplished by tapping into reserves held by the Central Bank or accumulating internal and external arrears. The overall cash management system was weak and did not allow for proper control and synchronization between disbursements and receipts. From 1997 through 2001, the government operated without an approved budget. The three following budgets were approved late into their fiscal years (which run from October 1 to September 30). The budget for 2004-05 was approved on time but by executive decree owing to the closure o f the Parliament. Since 1997 an increasing share of public resources (reaching 60 percent in 2002-03) was channeled through multiple bank accounts held by individual ministries (called comptes courants) and/or largely assigned to a catch-all category called “autres interventions publiques.” While i t was not expected that funds so assigned be programmed beforehand, the requirement that their uses be subsequently documented and reported was routinely ignored. Public Investment: On the investment side, officially managed b y the Ministry of Planning and External Cooperation (MPCE), expenditures were not identified and planned in a coherent framework. L i k e the operations budget, investment projections were limited to a single-year timeframe. Sectoral ministries’ planning offices (Unite‘s de Programmation) played little part in the process, and in many cases had simply disappeared. B y the mid 1990s, public sector investment had come to be driven b y donor-funded and NGO projects. Donors typically set up special accounts with the Central Bank, but without an automatic transfer of information to the MEF. While the MEF eventually received information on these accounts and disbursements, aid supplied in kind was not registered at all. Although the FY2004-05 public investment budget rose to 6.2 percent of GDP (over the 2002-03 average o f 2.1 percent), limited planning and execution capacity, as well as a lack of sufficient transparency, poses concerns as i t involves vulnerability to misuse. Control: Both internal control and external audit functions were also weak. Internal controls were affected b y the lack of a well-structured accounting system, fragmentation o f the accounting function, and the extensive use of comptes courants. The external audit of the government budget has not been done for several years, as the supreme audit institution, the Cour Supe‘rieure des Comptes et du Contentieux Administratif (CSCCA) had focused nearly exclusively on ex-ante control, duplicating the functions of the Ministry of Economy and Finance’s Directorate of Budgetary Control (DCB). The posts of several of the CSCCA’s ten members had remained vacant for several years. The CSCCA also lacked sufficient staff and equipment as well as funds for training. Under the 1985 budgetary law, the CSCCA’s role in ex- ante and ex-post control, and i t s simultaneous functioning as an administrative court presented potential conflicts of interest. Another usual source of external control, the Parliament, has not been in operation since early 2004, and was also closed during the period from early 1999 to mid 2000. Given the poor quality of information managed and provided by the Executive, and the Parliament’ own institutional weaknesses, effective legislative review of the budget law and i t s execution w i l l be a challenge for that body once i t i s reinstated following elections planned in end 2005. Procurement: Until recently, public procurement operated under a 1989 decree which had never been fully implemented. The law itself had several flaws, including i t s failure to regulate certain 4 types o f public procurement, overregulation of some areas (e.g., by establishing membership o f evaluation committees - jurys de selection, and the thresholds for the use o f different procurement methods), and the provision for the CSCCA's prior approval o f contracts, a clear conflict with i t s other roles. The system was decentralized, but the Commission Nationale des Marche's Publics (CNMP), which was to oversee i t s implementation, had not existed since the early 199Os, and the departmental commission had never been created. The ad hoc arrangements created to fill this institutional void proved to be neither efficient nor transparent and gave rise to accusations o f corruption. Reduced operating budgets and salaries drove qualified procurement specialists to seek employment in the private sector. Sole-source (gre'd-grk) contracts and unadvertised bidding (appels d'ofres restraints) had become the norm, there were no standardized bidding documents or manuals, and information either on proposed or awarded contracts was not publicized or collected in a central data bank. Chronically slow payments to contractors, combined with a lack o f legal recourse, resulted in higher prices, liquidity problems for vendors, and the potential for additional abuses. Revenues: Both taxation and customs are decentralized agencies of the MEF, the Direction Ge'ne'rale des Imp& (DGI) and the Administration Ge'ne'rale des Douanes (AGD), respectively. The repeated political and economic crises have affected the operations o f both. During the February 2004 civil conflict, customs and tax offices were pillaged and already-inadequate equipment destroyed or removed. Despite some improvements begun in the mid 1990s (e.g., the creation of 1'Unite' des Grands Contribuables (Large Taxpayers'Unit), and an office for customer service for the DGI, and well as the modernization o f i t s Pe'tion-Ville office; improvements to Customs' information system), both entities remain inefficient, ineffective, plagued by corruption and fraud, and with an insufficient number o f qualified personnel, who are furthermore inadequately deployed. There are problems with the narrow base and inequity o f the tax system, non-integration o f information systems, a weak organizational structure, poor working environment, and overly centralized decision making combined with inadequate controls and monitoring. There has additionally been a problem o f the retention (and incomplete reporting) o f revenues from fees and other sources b y the agencies receiving them. Public Enterprises and Infrastructure Management: Despite encouragement by the donor community, efforts to privatize Haiti's public enterprises advanced little in the 1990s; only two of the less important holdings were transferred to private hands. I t appears that over the short run the rest will continue to be state controlled. This in itself may be less a problem than the fact that the services delivered have deteriorated significantly over the past ten years, and that the common practice has been either to milk the entities as cash cows or to use them to give employment to political allies and friends. Consequently, they are a drain on the public budget, are often overstaffed with nonessential personnel, and are known for their opaque, irregular, and unprofessional management practices. A World Bank review done in 2003 determined that o f the five major public enterprises, only three were immediately auditable. The two others (Teleco, telecommunications, and EDH, electricity) would first have to clean up and reorder their accounts before an audit would be possible. Additionally, public infrastructure has suffered from a lack o f maintenance over the years. The Ministry o f Public Works, in charge of the road network, has lacked the required financial and human resources to ensure adequate road maintenance. The Ministry also lacks the capacity, or an adequate regulatory framework, to design and oversee policies in the several sectors. 5 Corruption, Vertical Accountability, and Transparency: Since i t s initiation, Transparency International’s Corruption Perception Index (CPI) has placed H a i t i in one o f the three lowest rankings worldwide. While a study b y Transparency International’s Haitian branch indicated that the private sector believed corruption to be the leading constraint on economic growth and investment7, i t also showed corruption to be not only widespread, but also widely tolerated. Government’s o w n limited control o f financial data, and the lack o f any law requiring information to b e made public, meant that citizens had little or no knowledge o f how public resources were being used. Media coverage remains uneven, and c i v i l society groups are few, tend to be concentrated in the capital city, and are relatively unprepared to deal with what information i s available. Within government control mechanisms - the judiciary, public prosecution and police, as well as those already mentioned - remain weak, and are often suspected o f their own internal problems. The offices o f Fiscal and o f Financial Control have yet to be established to provide the required internal checks, respectively, on revenue collection and expenditures. Insufficient human resources: One o f the greatest impediments t o successful financial management in H a i t i i s the quality and quantity o f human resources - the absence o f a sufficient number o f qualified personnel, within the MEF and the sector agencies to make the system work and the lack o f a good incentive system to attract, maintain, and motivate it. The legal framework (a 1982 law and sections o f the Constitution) emphasizes the importance o f building a modern, reliable and competent public service based on equal access to employment and selection o n the basis o f merit. However, the cabinet-level office charged w i t h overseeing the system was never created and the necessary Arr&, a detailed set o f specific regulations to govern the administration o f personnel, has never been drafted. A series o f donor-sponsored studies indicated that a majority o f appointments has been made o n the basis o f political and personal connections. For those that did get a job, b y whatever means, incentives for good performance were scarce. PubIic sector salaries lost fifty percent o f their value between 1995 and 2000, and dropped more rapidly afterwards. There was little funding for training, and l i m i t s o n the possibilities for promotion (for good performance) through a formal career system. Donors, NGOs, and the private sector often attracted the most qualified staff. Human resource inadequacies took many forms. In highly technical offices (the statistical and economic studies offices, procurement personnel in ministerial and independent project units), while there were some qualified professionals, their number was often too small to accomplish their mandate. In a few cases (e.g., commissionaires de douanes’), redundancies (“a useless layer o f extra semi-officials”) were also a problem. The actual quality o f existing staff had never been assessed, but there were clearly many areas where numbers were just too few t o allow adequate implementation (taxation, customs, and local governments are mentioned in particular). Distribution o f staff aggravated the problem, with most located in Port-au-Prince, meaning that programs depending on decentralized execution or enforcement consequently suffered. c. Recent changes: The conditions described above were those confronting Haiti in 2003. Since that time, a series o f steps has been taken t o begin to rectify the situation. M a n y of these have involved the updating o f the legal framework - the passage o f a new Financial Management ’L a Fondation Htritage pour Haiti, L’Etat des Liux de la Corruption en Haiti, 2003. World Bank (1999), RepubIic of Haiti : Country Procurement Assessment Report, Draft, September. p. 21. 6 L a w (enacted in November 2003, and published in August 2004) and a new Procurement Decree (published in February 2005) are among the most important. The former, in addition to establishing the outlines o f a new budgetary process, also mandated the creation o f a new accounting system, distinguishing between authorizers (ordonnateurs) and approvers (comptables) of expenditures, created the position o f contrdleur financier (internal ex-ante control) and a n e w internal auditing office (the Inspection des Finances), and removed the Cour des Comptes’ ex-ante control functions, thus leaving it to focus o n ex-post auditing and so eliminating one potential conflict o f interest. The new Procurement Decree creates a Commission Nationale des Marche‘s Publics (CNMP) with a revised mandate and full-time members selected transparently with input from both the public and private sectors. The new Procurement Decree also formally establishes the requirement o f competitive bidding practices over direct contracting for government procurement and includes new provisions governing the procurement o f intellectual (consulting) services. A new c i v i l service law has been drafted and i s under study. Both the CSCCA and the C N M P are also working on additional laws and regulations t o permit the implementation o f their revised functions. A 2003 law created the Fonds d’Entretien Routier (FER) to finance road maintenance, although i t i s not yet fully operational. Legal and institutional changes, including those effected before the transition, have produced additional progress - the vacant positions in the CSCCA have been filled, the Commission Nationale de Marchks Publics (CNMP) has been created and a director appointed, the FY2004- 05 budget was prepared on the basis of the requirements o f the 2003 Financial Management L a w and presented in draft to the donor community and c i v i l society organizations for consultations, and a Co-ordination Unit in the Prime Minister’s Office has taken o n the human resource functions, as a first step to establishing a new c i v i l service law and agency to oversee i t s implementation. The unit has drawn up an action plan for meeting short and medium term human resource needs. Civil service salaries were increased by 30 percent in 2004, in consultation with the IMF; and an additional 15 percent increase i s under study. The Ministry o f Economy and Finance has also established an Anticorruption Unit (the Unite‘ de Lutte Contre la Corruption, U L C C ) and an office which w i l l promote c i v i l society monitoring o f selected reform programs. The number o f comptes courants has been reduced drastically (one per Ministry being the ultimate goal), and the amounts fed into them dramatically cut to less than 10 percent of cumulative non-salary current public expenditures since the beginning o f FY 2004-2005. H a i t i also has a self-developed automated financial management system, SYSDEP, which has recently been installed in seven ministries. While i t so far only tracks expenditures, and then incompletely, i t s development over the past three years has greatly improved the timely input o f financial information. With donor support, including that o f the W o r l d Bank, this information will be used by the c i v i l society and anticorruption offices, as well as by the Cour des Comptes to facilitate the performance o f their functions. The MEF i s aware o f the limitations o f the present system and has sought donor assistance t o expand i t s coverage and add additional modules to cover budget preparation, investment, contracting/purchasing, accounting (a General Ledger), human resources (especially salary management), and reporting. I t has also been willing to entertain suggestions that SYSDEP be replaced by one o f the several integrated financial management systems developed commercially. 7 While donor support pledged since 2004 has been slow in materializing, several donors now have recently approved projects in the economic governance area. These are discussed in further detail in the next section. Despite doubts about some aspects o f the new Budget L a w (e.g., i t s continuing single-year timeframe and focus on expenditure profiles only, the CSCCA’ s maintenance o f i t s dual role as auditor and administrative court, lack o f emphasis on performance or results), it represents a clear improvement over i t s predecessor. If Haiti can move to i t s full implementation, i t s ability to track, control, and demonstrate the use o f public resources should raise the quality o f public sector expenditures as w e l l as increase both public and donor confidence. This w i l l require considerable efforts to establish offices that s t i l l do not exist, train or hire personnel to fill new positions, work out in detail how new procedures w i l l be carried out, and ensure that the sector ministries and agencies, and not just the office heading each function, are able to carry out their work. Given the apparently bureaucratic nature o f many o f the contemplated changes, it w i l l also be important to explain their content and wider importance to nongovernmental constituencies, and to build support for the program w i t h the broader public. 2. Rationale for Bank involvement Consistency with the Transitional Support Strategy: Under IDA’S Transitional Support Strategy’ discussed by the Board in January 2005, during FY2005-2006 IDA would use a m i x o f lending operations, trust fund grants, and non-lending services t o “support the transition to economic and social recovery, reduce the potential o f a return t o conflict, and lay the groundwork for the Bank’s longer-term objective in Haiti: inclusive growth and poverty reduction through local development, institutional strengthening and support for productive sectors.” T w o areas o f focus are emphasized: delivering hope and quick wins, and restoring credibility in institutions. The current proposal coincides explicitly with this second area, both in i t s emphasis on strengthening economic governance and on promoting inclusion and consensus on development priorities. I t also will be an important input to the quick wins, in ensuring that public investments are made in a productive, transparent fashion. Complementarity with other Bank Activities: As noted, the proposed operation i s part o f a package o f assistance the Bank i s providing to Haiti in the area o f economic governance. The EGRO contains conditionality on economic governance reforms, and the L I C U S Trust Fund i s intended to provide the immediate technical and financial support needed to implement them. However, given their timeframes, both are limited as to the amount o f change they can promote. The EGTAG i s intended to build o n their progress, and move Haiti toward more sustainable patterns o f good economic governance. I t will also be necessary t o ensure the desired returns to other sector work included in the Bank portfolio. Since much of this work will be channeled through government agencies, the latter’s ability to program and execute their funds in an efficient, effective, and transparent manner i s key to their success. For this reason, the EGTAG, while implemented through and with the Ministry o f Economy and Finance, and providing additional direct assistance to other central agencies (the CNMP, the MPCE, the CSSCA), w i l l coordinate w i t h efforts by other donors (principally the IDB) focusing o n building capacity for good financial management within sector ministries. Transitional Support Strategy for the Republic o f Haiti, Report No. 30541, December 10,2004. 8 Complementarity with Other Donor Activities: The preparation of this operation has been done in close collaboration with other donor agencies active in the area of economic governance (IDB, USAID, CIDA, AECI, EU, IMF and the French Cooperation Agency). An economic governance group led b y the Government i s now operating in Haiti to help coordinate donor work and to ensure i t meets Haitian priorities. The focus of this collaboration has been to ensure that the direction of donor support i s consistent with ICF priorities and that there are no redundancies. The actors with the broadest focus are the IMF, IDB, USAID, and the World Bank. Canada has begun some activities, focusing largely on the Ministry of Planning and External Cooperation and the sector planning offices, and Spain i s beginning training programs to strengthen administrative and managerial capacity, starting with a course on project design and implementation. France intends to provide a few long-term advisors in the areas of customs, taxation, and budgetary reform. The IMF has undertaken a financial management review, the results of which have been incorporated in the EGTAG design. As regards donors working directly in the area, complementarity i s being pursued b y exchange o f information and some joint planning o f interventions. For example, as USAID had already set up a mission to evaluate SYSDEP and related aspects of tracking of budgetary information, both the IDB and the World Bank agreed to hold o f f action here, and instead use USAID’s assessment as a first cut at identifying needs. As France and the IDB are taking the lead in customs and taxation, the World Bank w i l l not be active there at this time. Likewise, several donors, including the World Bank, are financing the pre-audit and audit activities needed b y the five major public enterprises, meaning that the EGTAG w i l l not work there. Further work with the MEF, CSCCA, CNMP, and MPCE w i l l be jointly programmed with the agencies involved; for example, IDA has shared i t s PCN for the EGTAG and i t s draft P A D with the IDB and USAID, the two agencies which w i l l also support these entities, and Bank staff has been invited to j o i n IDB meetings with their joint Government counterparts. The IDB and the World Bank also held a joint mission to Haiti in mid-April, coinciding with an IMF mission, and aimed at consolidating their joint and individual proposals with the Government. All work on economic governance i s also complementary to the wider range of donor activities (outside economic governance per se) as improved public resource management i s a sine qua non for effective project performance. Lessons from Past Assistance: As the 2002 OED review of Bank assistance to Haiti notes,” a predominant reason for the low success rate o f Bank supported interventions had been assuming the problems were only technical and financial rather than institutional and political. A secondary problem had been the differences in priorities between the government and the Bank (especially as regards privatization and civil service reform). A third was the continuous political turmoil and governance problems in Haiti, and a fourth was the offer, from all donors, of a level o f assistance that overwhelmed the country’s absorptive capacity. Finally, discontinuities in Bank staffing and the poor choice of some local hirings were identified as contributing to a low success rate of Bank supported interventions. Other donors” remarked on similar obstacles to their interventions, highlighting doubts about political commitment to reform, institutional weaknesses, and limited absorptive capacities. Similar lessons emerge from loWorld Bank, Operations Evaluation Department, Haiti Country Assistance Evaluation, Report No. 23637, February 12, 2002. United States Government Accountability Office, GAO (2000), “Foreign Assistance: Any Further Aid to Haitian Justice System Should be Linked to Performance-RelatedConditions.” (GAO-01-24), October 2000. 9 the LICUS Task Force report12 which concluded that development assistance to countries with weak policies, institutions, and governance had been largely ineffective, and recommended that continued engagement focus on a m i x of knowledge and grant financing to support improvements in policies, institutions, governance and basic service provision. The TSS’ emphasis on “restoring credibility in institutions” and strengthening economic governance responds to these lessons, as does the proposed EGTAG. This i s evident first in the EGTAC focus and coverage, but also in the stress on: 0 coordinating donor activities, 0 ensuring government ownership through the use o f the ICF, and 0 pursuing objectives incrementally. 3. Higher level objectives to which the project contributes The higher level objectives to which this project contributes are those highlighted in the TSS - “inclusive growth and poverty reduction though local development, institutional strengthening and support o f productive sectors.” The emphasis in the proposed EGTAG i s on institutional strengthening with an emphasis on economic governance. Without improvement in management of public resources (including those supplied by donors), sector programs focusing on growth, poverty reduction, and emergency relief and recovery w i l l not be effective, and the country may face another withdrawal of external support. The operation also addresses the need for more inclusive policies and programs by incorporating elements o f civil society monitoring, access to information, communication of reform contents and progress, and other mechanisms intended to foment broader participation in and support for governance reforms. B. PROJECT D E S C R I P T I O N 1. Lending instrument The choice of a Technical Assistance Grant follows the LICUS Task Force recommendations (knowledge and grant funding) and i t s emphasis - as well as that of other donor programs -- on technical assistance for institutional strengthening. T o ensure G o H ownership, the EGTAG supports I C F priorities and also includes benchmarks to facilitate monitoring of activities’ implementation and ensure timely execution. Coordination with other donors w i l l perform a s i m i l a r function. 2. Program objective and Phases The operation proposed herein i s part of an assistance package described in the TSS, but also possibly extending beyond the period covered in that d ~ c u m e n t . ’ ~Building on the measures supported under the EGRO and the emergency assistance under the LICUS Trust Fund grant, the US$2 million EGTAG i s intended as the first step in a program o f Bank support to Government efforts to improve economic governance. This program i s based on the contents o f the ICF, additional discussions with the Government, and information provided b y other donors as to their on-going and intended support in the area. As should be clear from the preceding description of ’*World Bank Group Work in Low-Income Countries Under Stress: A Task Force Report, September, 2002. l3 The TSS covers FY 2005 and 2006. I t i s expected that full achievement o f the economic governance objectives w i l l take longer. 10 the situation, quite independently of the amount of resources available, an effective, sustainable change program w i l l require several years of concerted and sustained effort. The objectives outlined in the ICF, while essential, cannot be accomplished quickly; for several of them, experience in other countries suggests that a five-year time frame i s reasonable assuming no setbacks. For this, both sustained government commitment and a substantial injection of donor resources w i l l be needed. The Bank’s medium term assistance program in the area of economic governance would be complementary to those provided by other donors. This somewhat complicates the task of outward planning. While the Government has indicated what i t would like to achieve, the interested donors are also in the process of designing their medium-term support. Hence, the following description of the Bank supported program i s subject to variation, depending on future additional donor commitments. Movement into the next stages of the Bank-supported economic governance program will, of course, be contingent on continuing government commitment to the reforms, the results o f this first stage, and advances made with other donor assistance. In the next section, the content of the EGTAG i s discussed in greater detail. In the present section, the overall goals and envisioned content of the EGTAG and those of a possible second US$2 million TA operation that could be presented to the Board in the later part of FY06 are reviewed. The areas included in the two operations are s i m i l a r except for the possible addition of a public enterprise component in the second. There are differences in emphasis: the EGTAG w i l l include more efforts to lay out frameworks and strategies and to pilot new arrangements; the follow-on TA operation would build on the first, especially as regards implementing these strategic foundations and expanding pilot efforts deemed worth replication. Both are relatively short-term operations, and as noted above and below, a full medium-term assistance program w i l l necessarily extend through five years, and would require additional funding. Financial Management Budgetary Processes - the goal set out under the I C F i s to: modernize the IFMS (SYSDEP); establish an accounting system compatible with international standards; set up a board of public accountants, strengthen budget preparation, strengthen the Ministry of Planning’s ability in investment and project planning; and strengthen the role o f the Treasury in managing all expenditures. These actions are centered in the MEF and in the MPCE, but also include strengthening o f other relevant ministries and agencies across the public sector. The EGTAG w i l l focus on providing support to the MEF and the MPCE in developing their capacities and systems, while support to the sector ministries and on SYSDEP would be covered b y other donors. Under a possible follow-on TA operation, the Bank-supported program would continue support to the MEF and MPCE, but would also include a component on IFMS design, to ensure i t s consistency with the new procedures and organization. Current estimates are that the entire program, with funding from all sources, would cost US$8 million, of which less than half i s currently covered b y existing and planned donor programs. However, funding available within the TSS time frame (FY05-06) appears adequate for what can be achieved during that period, taking into account the government’s absorptive capacities. 0 Control - the ICF goal i s to ensure that the regulatory framework matches the provisions of the new Organic Law on financial administration. Bank support under the LICUS 11  Trust Fund grant, the EGTAG and a possible follow-on TA operation, i s a continuing, iterative process, helping the CSCCA to design i t s new organizational and normative framework and providing assistance (through specialized consultants, training, and equipment) to ensure it can perform i t s role adequately. Under a possible follow-on TA operation, more emphasis would be placed on the training o f the controleurs financiers, responsible for internal control, and on ensuring the coordination o f their work with that of the CSCCA. Estimated costs of activities are US$1 million, of which the Bank would provide the major portion. 0 Procurement - the ICF goal i s to establish a central control mechanism (the CNMP) and ensure i t s ability to carry out i t s work, strengthen sector procurement offices, strengthen private sector capacity to tender bids, and consolidate the judicial and regulatory framework. As with control, Bank support under the LICUS Trust Fund grant, the EGTAG, and a possible follow-on TA operation would be an iterative processing, focusing largely on the CNMP and depending on other donors (largely the IDB) for work on the sector ministries. Estimated costs are US$2.5 million, of which the Bank would provide roughly half. While these activities w i l l take longer than the TSS timeframe, considerable progress should be possible within that period. 0 Revenue management - the ICF includes two objectives: finalizing and implementing the strategic plan to reorganize and modernize the Customs Office, and finalizing and establishing a strategic plan to reorganize and modernize the Directorate General of Taxes. The Bank does not currently contemplate support here, as other donors (IDB, France and IMF) are taking the lead. Should additional assistance be necessary, i t could be provided outside of the TSS timeframe. H u m a n Resources - I C F goals include adoption of a new normative and legal framework for human resource management; short- and medium-term training for staff; and development of mechanisms to improve staff incentives. EGTAG supports the first and second objectives; the possible follow-on T A operation would continue this support, but substantial improvements in the second and third areas w i l l be a longer term process, and in the end require financial investments beyond those immediately available through any identified source. The most likely scenario i s a larger program, with Bank and other support, initiated after the TSS period. Nonetheless, because of the centrality of this theme, and because other donors, while providing training, w i l l not otherwise address it, i t was decided to include a small component to keep i t on the table. Anti-corruption and Civil Society Monitoring - I C F objectives in the anti-corruption area include creation of an anti-corruption unit (accomplished), an anti-corruption survey (underway with Bank support), strengthening of the unit’s capacities in investigation, anti-corruption programming, and public education; and development o f a longer-term anti-corruption strategy. As substantial funding has been made available through the LICUS Trust Fund grant and other donors’ programs, Bank support under both the EGTAG and a possible follow-on TA operation w i l l continue at modest levels, focusing on targeted capacity strengthening assistance. Objectives in regard to civil society monitoring include development o f a mechanism under the MEF to provide financial and technical support to civil society monitors. The Bank i s currently the only donor providing support to civil society monitors. Since overall financing needs for the 12  civil society monitors are estimated at US$1 million, and therefore exceed EGTAG’s budget, additional Bank grant facilities are being sought to finance further activities in this area. Communication and Outreach - ICF objectives include establishing a communications program that explains the vision and goals of the government’s economic governance reform and provides public information on public resources and how they are managed and spent. The Bank i s also supporting additional government and donor efforts around public communications and the ICF through the LICUS Trust Fund grant and plans to continue supporting communications efforts under the proposed EGTAG. Activities to be financed include the publication of reports from civil society monitors and press, television, and radio coverage of the economic governance reforms. Public Enterprises and Infrastructure Management - ICF objectives include the auditing of accounts o f five main public enterprises and actions to improve their management, including but not limited to private sector participation in or assumption of their administration (via management contracts). The LICUS Trust Fund grant provides funding for one audit; other donors (the EU, CIDA, the IDB) and in the case of TELECO, i t s parent the Central Bank, are funding additional audit and (where needed) pre-audit activities. A possible follow-on TA operation may provide some support for the second goal (already being explored through World Bank funded studies) and for the development of a regulatory framework, although the funding and temporal requirements suggest the activity may require i t s own program, with separate funding from the Bank and other donors. The table below summarizes proposed Bank support through EGTAG and a possible follow-on T A operation. As indicated above, it should be stressed that some o f the I C F objectives (especially in the areas o f budget, human resources, private enterprises, and revenue collection) w i l l require a longer time frame than that covered b y the ICF or the TSS. The Bank’s possible medium-term program in fact would extend beyond the TSS and the funding it includes. Table 1: Medium-Term Program to Support Economic Governance Objectives and Funding Possible World Bank Needs Follow-on TA Development of budgetary Support to the LICUS Trust Up to U S $ 1 million for processes system, including MEF and the Fund Grant continuation of EGTAG investment budget and MPCE in $77,000; USAID, assistance and coordination with IFMS developing their US$1.2 million I F M S development capacities and for I F M S Estimated US$8 million systems. evaluation and equipment; IDB US$550,000 US$2.5 million for equipment and support to sector ministries; CIDA and AECI support for project design and management 13 r Table 1: Medium-Term Program to Support Economic Governance Objectives and Funding Possible W o r l d B a n k Needs Follow-on T A 2apabilities. B) Procurement Development of CNMP Support to LICUS Trust Up to US$500,000 to and sector procurement CNMP Fund Grant :ontinue EGTAG assistance system, new processes, strengthening US$231,800 for and training of staff and CNMP; private vendors in new US$500,000 IDB: US$1.34 processes million for support to sector Estimated US$2.5 million ministries C) Control Development of external CSCCA LICUS Trust Continue EGTAG assistance with and internal control strengthening Fund Grant :mphasis on the training of the systems US$270,000; IDB controleurs financiers and on for internal :nsuring the coordination of their Estimated US$1.0 million US$250,000 control, part of work with that of the CSCCA. component A above Uu to US$250.000 Strengthen DGI and Not included IDB U S 2 . 3 Not included Customs capacities, million; France reorganizations, training, and IMF, and equipment provision of consultants Human Resources Create human resource Work on Support for Development of human resource agency and program, normative and training from unit and capacity for strengthen legal legal framework; AECI and as part implementing merit career system framework, provide limited support to of other donor training training institutes programs US$300,000 Estimated US$750,000 Incremental for basic program funding, currently Policy implementation US$250,000 from amount TBD AECI Create and strengthen anti- TA for capacity LICUS Trust Continue EGTAG assistance and Civil Society corruption unit and building in both Fund Grant Monitoring program for civil society areas US$448,000; monitoring o f governance IDB to provide reforms and service financing for delivery ULCC including procurement data Up to US$200,000 for both Estimated US$2 million US$230,000 base subcomponents (US$500,000); USAID financing for equipment and connections to SYSDEP (amount TBD) Audit principal enterprises, Not included LICUS Trust A possible follow-on TA and Infrastructure improve management, and Fund grant to operation could provide support Management build regulatory provide financing for developing model for public framework and institutions for one audit: enterprise management, including 14  Table 1: Medium-Term Program to Support Economic Governance Objectives and Funding EGTAG Possible World Bank Needs Follow-on TA via private sector participation in and the Central or assumption o f their Bank financing administration (via management other audits; contracts). PPIAFs for FER; development and up to us$200,000 study of management contract for EDH Communication Develop program to build Funding to LICUS Trust Depending on results and further and Donor public understanding of, continue Fund Grant for needs may contribute up to coordination and constituency for, communication communication US$SO,OOO for both. economic governance program begun reforms; build capacity under the LICUS within MEF to coordinate Trust Fund Grant donor assistance in and to strengthen economic governance area PCU’s ability to coordinate donor assistance i n economic governance area 3. Project development objective and key indicators a. Project Development Objective: The objective of the Economic Governance Technical Assistance Grant (EGTAG) i s to assist the Government in strengthening i t s institutional capacity in the areas of budgetary planning and execution, investment and project planning, control, procurement, transparency, participatory monitoring, and reform constituency building. I t i s designed to advance changes begun with the EGRO and LICUS Trust Fund grant and to overcome weaknesses undermining Haiti’s planning and implementation of i t s current and investment budget, the efficacy of all donor assistance, and public trust in public sector institutions. Specifically, the EGTAG’ s development objectives are to: (i)improve the government’s ability to program, execute and track use of public resources and better link them to concrete development goals, ensure an adequate performance of the external, ex-post control function b y the CSCCA, and help the CNMP grow into i t s role as overseer o f procurement practices and make open, competitive procurement the rule rather than the exception; (ii) advance the development of a human resource management plan and system, especially as regards ensuring adequate capacity in the financial management system; (iii)advance the development of the Anti-Corruption Unit as an effective check on corruption while also encouraging the greater involvement o f civil society in i t s own operations and as a monitor o f economic governance reforms; and (iv) ensure as part of the project management process, an adequate system for communicating information on the reform programs and mobilizing public support for their furtherance, and coordinating activities financed b y different donors. 15 b. Indicators: Specific results expected by project completion are listed in Annex I II(Results Framework). Altogether, implementation of the EGTAG (in collaboration with activities of other donors) w i l l provide an improved institutional and operational framework for the preparation and execution of the current and investment budget, tracking and control o f expenditures, the implementation o f the new procurement decree, identification, hiring, and training of key staff, and dissemination of information on the reforms and processes to Haitian citizenry. Emphasis w i l l be on bringing existing structures and practices into conformity with the improved legal framework as preparation for subsequent steps leading to further institutional strengthening and public sector modernization. Because of the short life of the project, and the emphasis on institutional change, results indicators w i l l focus on the latter, not on downstream impacts. They w i l l measure the extent of adoption of new practices and structures in the following areas, as a necessary prelude to producing improvements in output: 0 Implementation of key processes, staff, and offices defined b y the new budget law and procurement decree; 0 Advances in the creation of a system to manage human resources, compliance with normative framework, and development of improved regulations; 0 Advances in the development and activities of the anti-corruption office and civil society monitoring program; and 0 Advances in donor coordination, communication and outreach. 4. Project components The project includes four main components: (i) financial resource management; (ii) human resource development; (iii)anti-corruption and civil society engagement; and (iv) communication, coordination, and project management. Below i s a detailed description of each project component. -- Component 1 Financial Resource Management: this i s the largest component, absorbs the majority of the EGTAG’s resources, and i s presented as a single component because the parts are so closely interrelated. As the key area for economic governance, this component aims at the development of a capacity to produce and execute a budget, track i t s implementation, and reduce irregular uses and expenditures. The 2003 Budget Law and the 2004 Procurement Decree represent improvements over their predecessors, but like them could remain largely unimplemented and so have little impact. Aside from further implementing regulations ( A r r M s ) , effective operationalization w i l l require detailed design of new procedures, redistribution and possibly the addition of personnel (both in the MEF and in other agencies, including the MPCE and sector ministries), the creation of new functions and offices, training of personnel in their modified functions and procedures, and some improvements as regards management of information, ICT equipment, and the r o l l out and upgrading o f SYSDEP. As USAID has programmed an evaluation of SYSDEP and has funds for equipment, i t will take the lead there, with additional equipment financed b y the IDB. Similarly, an IDB grant w i l l provide funding for the development of a data base on procurement to be managed b y the CNMP (and shared with the other agencies, including the ULCC). As regards other areas, the IDB and the World Bank have worked on the basis of the MEF’s requests, each focusing i t s assistance as noted below. 16 0 Subcomponent 1.1 -Budgeting: The IDB and USAID w i l l finance most equipment needs and the latter will, in coordination with the IDB and World Bank, provide financial and technical assistance to evaluate SYSDEP and plan i t s expansion or replacement. The E G T A G w i l l instead focus on design and implementation of basic budgetary procedures and functions as established in the new Organic Law. This w i l l include supporting the MEF and MPCE to help staff implement procedures and instructions focusing on: developing a structure for budget elaboration, with increasing elements of a program- activity format; developing the accountability process s t i l l absent from the Financial Management Law; developing and implementing a sound cash-management system; implementing the internal ex ante control process (support for ex-post internal control w i l l be provided by the IDB); and integrating at the central (MEF and MPCE) and in the sector ministries, the investment and current cost budgets and programming process. The IDB and C I D A w i l l focus on supporting key sector ministries in implementing programming procedures developed in the MEF and MPCE with World Bank assistance. The LICUS Trust Fund grant finances two related activities: a study tour to review other integrated financial managements systems (which w i l l be coordinated with U SAID’S initial findings) and a consultant to help the MEF develop a plan for implementing the new law, and possibly moving beyond i t toward a more programmatic budget format (with some connection to a results framework, poverty reduction indicators, and a multi- year focus). This consultancy w i l l provide the more specific design and action program for the activities listed above. 0 Subcomponent 1.2 - External Control: The LICUS Trust Fund grant funding for the Cour Supe‘rieure des Comptes et du Contentieux Administratif (CSCCA) w i l l support class-room and on-the-job training of auditors in their new ex-post control function and the drafting of an updated Organic Law. Under the EGTAG, the CSCCA’s initial experience with ex-post auditing w i l l be evaluated, and further personnel, equipment, budgetary, and training needs identified, resulting in a plan for upgrading the agency’s performance over the following two to three years. The EGTAG w i l l support implementation of and further adjustments to this plan. Work w i l l be coordinated with assistance provided b y the IDB in the area of ex-post internal control, the only other donor agency to contemplate assistance in this area. 0 - Subcomponent 1.3 Procurement: The EGTAG builds on assistance provided under the LICUS Trust Fund grant to support the newly created Commission Nationale des Marche‘s Publics (CNMP). I t w i l l support the CNMP’s transformation into the permanent body mandated b y law, the creation of a public-sector wide corps of procurement officials, and the development o f and training in standardized procurement procedures. I t w i l l also continue work initiated under the LICUS Trust Fund grant in the development o f standardized bidding documents, publication of information on bids and contracts, and the education o f potential bidders and the general public on the procurement process. At the same time, IDB technical assistance w i l l support strengthening of procurement departments within key sector ministries (Health, Education, Agriculture, Public Works, and Justice) and the CNMP’s creation of a centralized database on suppliers and consultants available for government contracts, 17  with input from and for use by all contracting entities. The IDB may also support work to prepare a new procurement law to present to Haiti’s new legislature in 2006, building on the improvements introduced by the decree of February 2005. As with all elements under this component, this i s an incremental process in which new procedures w i l l be tested and modified according to preliminary results. I t i s contemplated that a consulting firm w i l l be hired to support the Government in these activities, and that segments of i t s contract will be paid through the LICUS Trust Fund grant, the EGTAG, and the IDB programs. Component 2 -- H u m a n Resource Development: during the identification missions and as part of the ICF, a Bank consultant worked with 22 government agencies to develop an initial plan for meeting the public administration’s most critical human resource needs. This plan w i l l be the basis for further development of this area, but given the plan’s estimated costs (in excess of US$lOO million), the EGTAG w i l l support the Human Resource Unit in the Prime Minister’s Office to focus selectively on three areas to lay the foundations for subsequent work: 4 Subcomponent 2.1.- Strengthening of H u m a n Resource Program: this w i l l provide support to the Prime Minister’s Office (pending creation of a Ministry for the Public Function) to develop i t s capacity for monitoring human resources needs, policy, and programs and i t s ability to help other executive agencies develop plans for meeting their personnel needs over the next five years. 0 Subcomponent 2.2 Civil Service Reform: Working with the Human Resource Unit and other agencies to design a longer-term civil service reform, including the necessary legal foundation. Under a possible follow-on technical assistance operation, steps would be taken to initiate implementation, probably on an agency-by-agency, or function-by- function basis. 0 Subcomponent 2.3 - Further development of training capacity: Enhancing the Human Resource Unit’s ability to plan training and the capacity o f public sector training institutions to deliver the training needed for the first three areas. While course design w i l l be financed under the other components o f this operation or b y other donors (e.g., AECI, USAID, IDB), the emphasis in this sub-component i s on upgrading the overall planning capabilities and physical facilities o f public sector’s training institutions (the latter with the goal of eliminating the need to rent hotel conference rooms). - Component 3 Anti-corruption and Civil Society Engagement: the LICUS Trust Fund grant i s supporting establishment of the Unite‘ de Lutte cuntre la Corruption (ULCC) and a program of civil society monitoring of economic governance reforms. The U SAID and IDB “anticorruption” projects w i l l fund some ULCC activities directly. The EGTAG w i l l help develop the ULCC’s capacity for anti-corruption programming, including s k i l l s and techniques needed for diagnosing institutional vulnerabilities (corruption maps) and the design o f remedies, provide assistance in drafting improved laws (notably, a freedom of information law) and fund an evaluation of the early performance of the mechanisms for monitoring o f economic governance reforms b y civil society organizations. Component 4 -Communication, Donor Coordination, and Project Management: the program supported by the EGTAG w i l l be implemented under the project management 18 mechanism developed for the LICUS Trust Fund grant, and w i l l have an overall coordinator as well as an individual responsible for the area of budget reform (the MEF’s own activity). The overall coordinator w i l l have oversight of the World Bank, IDB and USAID activities in the areas covered b y EGTAG; the budget reform coordinator w i l l have oversight of IDB, USAID, World Bank, and other donor assistance in this specific complex reform area. One or more liaison officers w i l l be responsible for tracking progress in the other components and entities, identifying difficulties in implementation of their programs, and helping address them. The PCU w i l l also coordinate all donor assistance to economic governance, including holding periodic meetings (through the Table Sectorielle and related mechanisms) and the creation of a data base to track activities. In addition, through the EGTAG the Bank w i l l continue to provide support for communications activities around the EGRO that have been launched by the MEF with the LICUS Trust Fund grant support. This includes implementing a communications strategy and promoting two-way communications between the government and stakeholders to build consensus on reforms, increase understanding of economic reforms and their objectives, and promote input from stakeholders. I t w i l l be critical to ensure public understanding and support for reforms to ensure their sustainability. 5. Lessons learned and reflected in the project design: Aside from the general lessons applicable to all LICUS countries, experience in Haiti over the last year indicates three important lessons: (i) the need to work incrementally; (ii) the importance of constant communication and coordination among and within governmental agencies and among donors; and (iii) the key role played b y the counterpart agency and i t s PCU in effecting this coordinating function. Also, while the government has shown a capacity to draft and pass new laws, their implementation has lagged. Before supporting the adoption of new legislation or systems, i t therefore appears important to assist the authorities in implementing existing legislation. The new budget law and procurement decree include many worthwhile innovations, and i t w i l l be important to ensure they are implemented in full. As a result, the EGTAG focuses on assisting the Government in putting into effect the innovations i t has recently introduced b y law. I t has also been apparent that despite the recent greater emphasis on donor coordination, more attention i s needed to enhance this further and this has been a main focus in the preparation o f the EGTAG and the definition of i t s project management arrangements. 6. Alternatives considered and reasons for rejection: A larger technical assistance operation was considered and rejected for the following reasons: (i) a new Government w i l l enter in office in early 2006, at which time the World Bank, in coordination with other donors, w i l l discuss with i t the next phase of technical assistance needs in the economic governance area that could be supported b y a possible follow-on TA operation, thereby ensuring full government ownership; and (ii) the need to link additional assistance to performance in implementation of the program and achievement of results on the ground. I t was thus decided to provide assistance to Haiti on economic governance reforms in a two-phase approach as described in Section 2. 19 C. IMPLEMENTATION 1. Partnership arrangements. Not applicable 2. Institutional and implementation arrangements: A project coordination unit (PCU) already exists in the MEF to oversee the LICUS Trust Fund grant execution. Since the EGTAG w i l l work with the same group of entities, in addition to the MEF, the same unit w i l l be used, and w i l l also oversee the IDB projects. As day-to-day activities for each component or subcomponent, in the EGTAG and other operations, would be handled by different government agencies, the major responsibilities of the PCU are to: (i) ensure that the implementation of the various components i s on track; (ii) provide an overall vision and keep implementation in line with it; (iii); ensure compliance with GoH and other donor procurement and financial management regulations; and (iv) design and implement the MEF-specific component (the budgetary process). I t i s the last item in particular that requires strengthening as during project preparation i t has become clear that if there i s a single MEF vision on directions and priorities (the plan for implementing the new budget law), this needs to be better communicated to all the relevant parties in the public administration. The PCU w i l l also need to add either a full- or part- time employee to oversee financial management as well as another to complete the processing of procurement actions. The EGTAG w i l l benefit from agency experience under the LICUS Trust Fund grant and the EGRO, in that b y the time it comes into operation, all of the agencies w i l l have a basic understanding of the project cycle and Bank procedures, know how to do a work plan, how to access funds, and how to apply procurement procedures and identify and hire consultants. Rather than ask the PCU to take over this job for the EGTAG, a development which would require a substantial expansion, the EGTAG w i l l continue the current practice of using a local consultant to work directly with the various agencies. A coordinating body including representatives of the entities beyond the MEF, the overall coordinator, and PCU liaison officials w i l l hold regular meetings to ensure overall inter-agency communication and coordination. Either in conjunction with this group, or separately, the PCU w i l l hold periodic meetings with the donors financing these activities to ensure adequate coordination o f their assistance. As needed, the EGTAG may also finance T A for the PCU, to deal with issues crossing agency borders. 3. FinancialManagement arrangements Accounting. The MEF w i l l have overall financial management responsibility for the project, following to a large extent the mechanisms put in place under the LICUS Trust Fund grant. Accounting of the LICUS grant operations i s handled b y the Accounting Unit o f the MEF. One accountant was given specific tasks to keep a separate set o f book o f accounts for the grant while the usual approval and control mechanisms of the MEF were followed. Financial operations o f the LICUS grant are therefore recorded and reported separately. Similar arrangements w i l l be used for the EGTAG. The same PCU w i l l be used for both the EGTAG and the IDB financed technical assistance project. The current manual accounting system may thus require upgrading to cope with larger financing and facilitate reporting. 20 Disbursement. A project special account (SA) denominated in U S Dollars w i l l be opened at the Central Bank o f Haiti or in a commercial bank on terms and conditions acceptable to IDA, and be managed by the MEF. Funds deposited in the SA w i l l be used to finance the activities implemented directly by the respective entities. The MEF w i l l disburse the funds directly to suppliers of goods and services upon request from the implementing entities and after control of all relevant supporting documentation. The authorized allocation to the SA w i l l be limited to US$300,000 (representing approximately four months of expenditures.) Disbursements w i l l be made on the basis of Statements o f Expenditures. Reporting. Financial Monitoring Reports (FMRs) w i l l be prepared reflecting all components o f the project and submitted to IDA. The FMRs w i l l be an integral part of the activity report, and accordingly w i l l follow the same periodicity. Given the nature of the activities to be financed (essentially consultant services and training), the FMRs w i l l focus mainly on the financial situation of the project, while information on the physical progress and procurement activities w i l l be provided in the activity report. Auditing. Annual financial statements w i l l be prepared b y the PCU, and audited annually by independent auditors, in accordance with International Standards on Auditing and terms o f reference acceptable to IDA. The auditors w i l l be recruited no later than six months after grant effectiveness. 4. Monitoring and evaluation of outcomeshesults: Monitoring and supervision o f project implementation would focus on the achievement o f expected results. The overall project monitoring and results framework i s presented in Annex 3 and includes component- and subcomponent-specific indicators as well as aggregate monitoring indicators agreed upon with the government for supervision purposes. Each componenthubcomponent implementing agency would evaluate i t s progress vis-&vis expected results and would inform the project PCU of the same in order to have aggregate progress reports prepared twice annually. The Bank would conduct, at a minimum, quarterly supervision missions to evaluate achievement of intermediate results and to agree with the participating agencies on adjustments when necessary. Since i t i s intended that the project be implemented within a 12-18 month timeframe, no mid-term review w i l l be undertaken. 5. Sustainability: Government commitment to and ownership of the project i s strong as indicated b y i t s sponsorship of the ICF process which provides the basis for the activities included. The I C F was also instrumental in unifying donor views on the objectives and activities requiring support, and in encouraging an unusually high level of donor coordination in the preparation of their individual operations. The GoH' s insistence on creating mechanisms to broaden citizen understanding of the reform process and to involve civil society in the monitoring of advances w i l l also be critical in establishing and maintaining an external reform constituency and so helping the program sustain i t s impetus after the change of administrations. As these three factors - government commitment, consistency across donor programs, and citizen demand - are among the most important determinants of sustainability, the operation enjoys decided advantages there. 21  I t i s also important to note that the operation i s not an isolated intervention, but rather i s part of a longer-term IDA package and of a coordinated set of activities financed by other donors. I t builds on activities already under way and, if successful, w i l l be followed b y additional technical assistance. Hence i t s sustainability must be measured within this context. This i s an incremental process in which the EGTAG and the larger program aim to support the G o H in the attainment o f the goals i t has set out, and to accompanying i t as i t further develops i t s own vision. 6. Critical risks and possible controversial aspects Risk Mitigation Measures To Project Development Objectives Proximity o f next elections and The project has been designed to support the first phase o f implementation o f S the chance that the new economic governance reforms over a short time frame (12-18 months). When the government w i l l not support the new Government comes in office, IDA staff w i l l discuss a possible follow-on TA project, or that because o f the operation to support the next phase o f reforms. This incremental approach w i l l elections (or their failure to be encourage Government ownership in the medium-term and w i l l also provide a held) civil violence w i l l escalate means o f determining whether i t i s appropriate to continue Bank assistance on economic governance areas. In addition, various project components (e.g. the communications strategy, the anti-corruption and civil society activities) are intended to build broader support for i t s goals and so decrease the chances o f government’s shifting direction. If the security situation were to deteriorate to the point o f preventing the execution o f the EGTAG, the Bank would remained engaged in the economic governance area through policy dialogue, analytical work and donor coordination. Insufficient donor coordination Government-donors coordinating meetings in Haiti and in Washington w i l l be held M impedes advances in key areas regularly, and project planning i s being done in a coordinated fashion To Component Results MEF’s failure to establish a clear Proposed joint donor project implementation arrangements for the activities M direction for implementation of supported by the EGTAG w i l l contribute to improved coordination for the the budget law makes i t difficult implementation o f the budget law. The Minister o f Economy and Finance has said to program activities, in this and he w i l l follow IMF recommendations and that these w i l l provide the direction for in the other areas support provided b y other donors Weak institutional capacity in any As with the LICUS Trust fund grant, the EGTAG w i l l use a local consultant to M or all components and failure to work with the agencies in putting together their work plans and making enact enabling legislation prevents procurements. While waiting for a new Parliament to be seated for the approval o f forward movement in one or more complex legislation, the current Government has been passing decrees to ensure o f them enactment o f critical legislation. G o H i s unable to provide the staff Training w i l l be used to bring staff already in place closer to the required M needed for one or more o f the capabilities, but for the MEF, CNMP, CSCCA Government’s commitment to fill agencies required posts w i l l be critical. Staff from the diaspora financed by donors i s also being hired. 22 7. Grant conditions and covenants The preparation of a project implementation manual acceptable to the Bank w i l l constitute the sole condition for effectiveness. The inclusion o f this condition w i l l ensure that the work i s kept on track and w i l l guarantee that the project i s implemented per the original agreements and understandings with the GOH. D. APPRAISAL SUMMARY 1. Economic and financial analyses Although the proposed US$2.0 million project would have a minimal direct economic and financial impact, in as much as the project aims at improving the use o f public sector resources, reducing corruption and waste, and increasing public (and donor and investor) confidence, its indirect impacts are expected to be considerable. Moreover, if the EGTAG successfully meets i t s objectives, i t should at the very least encourage the donor community to increase their programs in H a i t i and with the Haitian government in particular. I t should also ensure that public funds are invested in a manner that would increase public benefits and substantially reduce leakage towards nonproductive uses. 2. Technical The project poses no technical issues. 3. Fiduciary Fiduciary and capacity assessments o f the MEF and other participating entities have been undertaken. B o t h assessments have concluded that all units would be adequately prepared to manage the proposed project’s procurement processes and finances upon completion o f certain recommendations set forth in Annexes 7 and 8. 4. Social This project currently triggers none o f the Bank’s social safeguard policies. 5. Environment This project currently triggers none of the Bank’s environmental policies. 23 6. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.01) [I [x 1 Natural Habitats (OP/BP 4.04) [I [x 1 Pest Management (OP 4.09) [I [x 1 Cultural Property (OPN 11.03, being revised as OP 4.1 1) [I [x 1 Involuntary Resettlement (OP/BP 4.12) [I [x 1 Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I [x 1 Forests (OP/BP 4.36) [I [x 1 Safety o f Dams (OP/BP 4.37) [I [x 1 Projects in Disputed Areas (OP/BP/GP 7.60)' [I [x 1 Projects on International Waterways (OP/BP/GP 7.50) [I [x 1 7. Policy Exceptions and Readiness The proposed project would not require any exceptions from Bank policies and would comply with a l l applicable Bank policies. * By supporting theproposedproject, the Bank does not intend to prejudice thefinal determination of the parties' claims on the disputed areas 24  Annex 1: Country and Program Background HAITI: Economic Governance Technical Assistance Grant A. Country Overview Situated on the western third o f the island o f Hispaniola, Haiti i s the poorest country o f the Western Hemisphere. With a population o f approximately 8.3 million, an estimated 76 percent lives below the poverty line (less than US$2 a day) while approximately 56 percent live in abject poverty (below US$1 dollar a day). At almost three times the regional average, Haiti’s poverty level can only b e compared to that o f Sub-Saharan Africa,14 and income inequality i s amongst the highest in the world15. Haiti ranks 153rd (out o f 177 countries) in the UN Human Development Index. L i f e expectancy i s a dismal 52 years. Infant and maternal mortality rates remain amongst the highest in the world. Fully half of the population i s illiterate. Malnutrition affects a third o f all children, and ineffective public health and sanitation systems together with widespread overty provide fertile ground for the rapid spread o f such infectious diseases as HIV/AIDS’f tuberculosis, polio and human rabies. The widespread lack o f solid waste management and access to potable water also contribute to many water borne illnesses and preventable diseases and childhood deaths. B. Political Context Despite i t s promising beginnings in the 19th Century as the first and only slave colony to gain national independence and second free republic o f the Western Hemisphere, Haiti’s subsequent history has been fraught with political and economic instability. During the mid 20th Century Haiti endured a 30 year dictatorship characterized b y corruption, repression, and the pillage o f i t s wealth. I t s termination in 1986 was followed by a series of short lived governments also wrought with corruption, which led to the 1990 election o f now exiled President Jean Bertrand Aristide. Initially hailed by a hopeful populace as the “first leader o f the people” since Haiti’s hard-fought independence, Aristide had little time to effect his promises to end political instability, conflict, and corruption. Seven months into his administration, the military overthrew him, prompting an international embargo and the suspension o f all but humanitarian aid. These actions further crippled Haiti’s economy and prompted a severe decline in already dire living standards. Activity in the textile and export-oriented assembly industries (representing over three quarters o f export earnings as well as a considerable share o f employment) virtually came to halt; tax collection and expenditure control systems collapsed; and maintenance o f the country’s economic and social infrastructure was all but abandoned. The return to constitutional rule introduced via the U.S.-led reinstatement of Aristide’s presidency in 1994, was followed a year thereafter by the election and presidential term o f l4Haiti Living Conditions Survey 2003; based on international poverty lines of US$2 PPP and U S 1 PPP per capita rfr day. As measured b y a Gini coefficient of 0.65. l6Haiti also leads the Western Hemisphere in reported cases o f HIV infection rates. 25 President RenC PrCval. Over the next two years, PrCval's Emergency and Economic Reconstruction Program (EERP) showed promise towards embarking Haiti on a path o f economic recovery. Indeed, economic indicators for the period 1995-1998 reveal that measures adopted b y the Government to improve economic management had a favorable impact. Unfortunately, by 1997 corruption, internal ower struggles, weak institutions and poor governance had begun to reverse this progress." Aristide's 1997 break from the Organisation Populaire Lavalas (OPL)'*that had supported him since 1990 and establishment b y him o f the Lavalas Family (FL) unleashed a severe institutional crisis and a deadlocked parliament - ultimately suspended in 1999. Absent a legislative body, no major legislation (including budget laws) could be approved, ongoing reform programs were halted, and ratification o f new loans with international creditors was rendered impossible. Aristide's highly contested landslide victory in the 2000 elections spurred civil unrest that continued to escalate throughout the next four years. This unrest ultimately gave rise to an armed rebellion that seized the northern half of the country and culminated with Aristide's resignation on February 29, 2004 and the establishment of a Transition G ~ v e r n m e n t ' ~ with a mandate to create the conditions necessary to hold democratic elections in end-2005 and hand over power to a new government in early 2006. C. The Transition Government - Paving the Road for Democratic Reform The 20th century legacy o f predatory presidencies, founded on, preserved and safeguarded through corruption, pervasive rent seeking, and brutal human right violations, devastated Haiti's economy, political institutions and infrastructure, not to mention the plight of the population at large. Faced with the formidable challenge of confronting deep-seated political instability, weak institutions, inefficient use and allocation of resources, and the resulting mistrust of i t s citizenry, in April 2004 the Transition Government joined forces with the donor community to prepare the Interim CooperationFramework (ICF.) l7The economic crisis was further compounded in September 1998 with the advent o f Hurricane George. Private transfers, largely in the form o f remittances from migrants climbed from 1997 to 2001 to account for fully 18 percent o f GDP. Such transfers were key to offsetting the impact o f economic stagnation that grasped Haiti as a result o f the political crisis and furthermore provided a much needed safety net for the Haitian poor. l8 The OPL was later renamed the Organization du Peuple en Lutte, soon to become the leading opposition party. l9 The creation o f this Transitional Government, with Supreme Court President Boniface Alexandre as Provisional President in accordance with Haiti's 1987 Constitution, was endorsed b y a UN Security Council Resolution. Thereafter, a Council of Wise M e n made up o f seven eminent personalities from key sectors o f Haitian society, designated Gerard Latortue as Interim Prime Minister, and on April 4, 2004, the Transitional Government, political parties (with the exception o f the Lavalas) and civil society representatives signed a political pact agreeing on,inter alia, the organization o f elections in late 2005 and the transfer o f power to an elected government in early 2006.  The ICF identifies priority Box 1: Summary of the ICF interventions and associated Pillar 1. Improving political governance and promoting national dialogue: This pillar covers security, police, and demobilization, financing needs to support Haiti’s disarmament and reintegration, justice, prisons and human rights; and path to economic, social and the electoral process. political recovery throughout the Pillar 2. Strengthening economic governance and promoting July 2004-September 2006 period. institutional development: This pillar focuses on economic I t also constitutes the foundation governance, strengthening institutional capacity, and regional, urban and local development and decentralization. upon which a future medium-term Pillar 3. Promoting economic recovery. This pillar seeks to support Poverty Reduction Strategy Paper macroeconomic stability, electricity, private sector, notably SMEs, (PRSP) encompassing the period development, rapid j o b creation and microfinance, agriculture, roads 2006-2009 will be prepared. The and transport, and environmental protection and rehabilitation. ICF i s founded on 4 pillars: (i) Pillar 4. Improving access to basic service. This pillar focuses on urgent humanitarian aid and post-disaster reconstruction; water and Strengthening political governance sanitation; health and nutrition; education, youth and sports; culture, and promoting national dialogue; the media and communication; food security; slum upgrading; solid (ii) Strengthening economic waste; and safety nets and social protection. governance and contributing to Source: Haiti Country Overview institutional development; (iii) Promoting economic recovery; and (iv) Improving access to basics services. The ICF also takes into consideration the cross-sectoral issues of crisis prevention, human rights, gender, and HIV/AIDS (refer to Box 1 above.) D. Jumpstarting Growth and Poverty Reduction through Improved Governance As indicated in the ICF, i t i s now widely agreed that poor economic governance and weak institutional capacity have constituted the key impediments to economic growth and poverty reduction in Haiti and that in the absence of fundamental economic governance reforms, no other reforms can be achieved much less sustained. Hence, the strengthening of Haiti’s economic governance structure i s considered a sine qua non to the success of the I C F and ultimately Haiti’s future. In response to the Government’s program, on January 6, 2005 the Bank’s Board approved a Transitional Support Strategy (TSS) which provides assistance to Haiti for the implementation o f the ICF. The TSS provides a two-year strategy for Bank support comprised o f a m i x o f credits, grants and non-lending services totaling up to US$l50 million. Beyond supporting efforts to meet basic and urgent needs and promoting income generating opportunities, the launch of reforms that promote longer-term economic governance and institutional development i s central to the Bank’s support of the Transition Government’s ICF. The ICF identified 5 critical areas in need of reform if long-term economic governance and institutional development are to take root and thrive, namely: (i) public procurement; (ii) budget process; (iii) ex-ante and ex-post financial control (including b y the Superior Court o f Accounts and Administrative Litigation and the fight against corruption); (iv) public enterprise management; and (v) strengthening of human resources for policy formulation and program implementation. 27  - E. Economic Governance Overview of Prevailing Challenges and Planned Reforms and Activities During preparation o f the ICF, the Government and the donor community identified the structural obstacles prevailing in each o f the 5 areas targeted for reform under Pillar I1 o f i t s reform agenda (i.e, Strengthening economic governance and contributing to institutional development) together w i t h measures aimed at rectifying existing deficiencies. What follows i s a summary o f said findings and proposals.20 Challenge 1: Public Procurement. The legislative framework prevailing in ‘2003 was founded on the Public Procurement Decree o f 1989 which called for a decentralized national procurement system whereby sector ministries, administrative units and public enterprises were entrusted responsibility over public procurement management under the supervision o f a national public procurement commission (Commission Nationale des March& Publiques - CNMP) with auditing responsibilities bestowed on an independent agency. However, a regulatory framework necessary to implement the Public Procurement legislation had not been enacted. Furthermore, the C N M P had not functioned since the early ‘90s. This was due to an institutional void caused by the absence o f a Ministry o f Civil Service, which according to the procurement decree, was mandated t o coordinate the CNMP’ s functions. In the absence o f the necessary regulatory legislation and oversight, ministries and agencies found themselves hard-pressed to adopt altemative methods t o procure goods and services - rendering them open to opportunities for and allegations spanning f r o m inefficient procurement practices at best and to large-scale corruption at worst. The situation further deteriorated as ever-decreasing levels o f public expenditures coupled with increasing non- compliance with procurement procedures prompted qualified procurement staff t o abandon the ranks o f the c i v i l service. In order to rectify these deficiencies the ICF proposed that the following measures be adopted. 9 Establishment of an interim public procurement commission under the authority of the Prime Minister to f i l l the current void in the supervision of the public procurement function. This interim body21 comprised o f five two-year full-time staff, recruited through a competitive selection process, would exert control and oversight functions over the system o f public procurement and contracts. All meetings would be opened to observers, NGO’ s and independent project entities. The interim commission would be allocated sufficient operational budget to allow i t to recruit external expertise as necessary. 9 Recruitment of public procurement specialists. Fixed-term public procurement specialists (agents) would be recruited by the interim commission to supervise procurement above a threshold, yet to be determined. These specialists/agents would train relevant interim commission staff in all facets associated with the management and oversight o f public procurement including the training o f public and private sector enterprise staff so that oversight responsibilities could be taken over b y the interim commission staff within a one-year period. 2o This section draws heavily from the Economic Governance Strategic Group’s Sectoral Report: Haiti’s Interim Cooperation Framework, M a y 26, 2004 *’The interim commission could be formalized via passage o f public procurement legislation. 28 > Reinforcing transparency. The creation o f an Anti-corruption Unit together with the passage o f a professional code o f ethics and dissemination o f informatioddata o n procurement processes through both a website and daily journals would go a long way to reduce both the opportunities for and perception o f corruption on the part o f c i v i l servants involved in procurement functions. > Strengthening of private sector capacity to tender bids for Government contracts and procurement. To this end, the interim national commission would: (i) hold discussions with the Central Bank, commercial banks and insurance companies to identify measures t o facilitate private sector participation in public bidding; (ii) impart training to the private sector o n procurement regulations; (iii) facilitate the open tendering o f bids; and (iv) ensure prompt response to inquiries, claims or grievances on behalf o f bidders. > Consolidation of Judicial and Regulatory Procurement Framework. The Government would retain a legal consultant to assist in the preparation and implementation of new public procurement and contract legislation and would furthermore formalize the status o f the interim commission. Challenge 2: Budget process. Between 1997 and 2002, Haiti had operated without a budget and in 2002/03, approximately 60 percent o f government expenditures were spent through the respective Ministries’ o w n accounts (comptes courants)--so-called discretionary accounts which effectively evaded tracking mechanisms thereby considerably reducing the transparency and control of public expenditures. The I C F noted that the overall efficiency o f the budget process i s undermined b y a combination of weak capacity o f the planning, monitoring and assessment structures throughout the Ministries of Finance, Planning and all other sector ministries and agencies; delays in budget ratification, deficiencies in both the parameters for budget analysis and data underpinning budget proposals, and the pervasive use o f comptes courants b y the ministries to circumvent a lengthy and cumbersome expenditure execution process. The latter were found to be particularly conducive to mismanagement and corruption given their considerably discretionary nature and the fact that use o f such accounts i s neither subject to ex ante nor ex-post budgetary scrutiny. The ICF proposed that the following measures be adopted to correct the above cited structural inefficiencies : > Modernization of the State’s automated financial management system. Successful implementation o f this action would require that: (i) the SYSDEP management team receive assistance in drafting a development plan while actions would be taken in parallel t o (ii) operationalize the DAC System; (iii) improve the existing SYSDEP module; and (iv) integrate the State budget module into the D A C so as to facilitate real-time processing o f State financial transactions. > Establishment of a State accounting system. A unit would be established within the Treasury Department to implement a module based o n a standardized accounting code and format that would facilitate the recording o f nearly all State financial operations in a double entry fund accounting system thereby enhancing transparency. 29 9 Establishment of a Board of Public Accountants. To this end, qualified public accountants would be recruited and trained and statutory orders and regulations would be drawn up to clearly differentiate the functions of authorizer from those of accountants. k Strengthening of Budget preparation. This would entail inter alia strengthening the analytical capacity of the MEF in budget planning and preparation and imparting training programs on budget processing to key officials responsible for the budget function; ensuring that budget information i s linked to the Government’s expenditure and poverty reduction goals; and drafting o f a public investment budget consistent with the ICF and a national strategy for poverty reduction (PRSP). 9 Reinforcing the capacity of the Ministry of Planning in its role as coordinating public investment for development activities. To ensure effective program and project monitoring, the Evaluation and Control Directorate (Direction d ’Evaluation et de Controle, DEC) as well as departmental offices would be reopened and provided the support necessary to carry out their respective oversight roles. 9 Strengthening the role of the Treasury and eliminating parallel institutional accounts. A single Treasury Account (CUT) under the auspices of the Treasurer-General would be established b y transferring all state revenues (including comptes courunts) into a single Treasury account. This would increase the Budget Office’s capacity to assess the State’s financial standing prior to authorizing expenditures. k Completion and implementation of the strategic plan to reorganize and modernize Customs Offices. The plan calls for inter alia (i) decentralizing the monitoring system; (ii) creating an ex-ante control unit to expedite document verification (iii)establishing an information and documentation unit to track fraudulent activities and determine selection criteria; (iv) creating an arbitration unit; (v) setting up a declarations assessment and assistance unit in Port-au- Prince; and (vi) strengthening the quality of service o f staff in the provincial offices through training of same and refurbishing o f offices. 9 Completion and implementation of a strategic plan to reorganize and modernize the Directorate General of Taxes. This would entail: (i) mobilizing resources; (ii)expanding and strengthening the revenue envelope and modernizing the revenue collection roles; (iii) recovering overdue and outstanding taxes; (iv) improving the quality of assistance to tax payers; and (v) collecting other State receivables and claims. Challenge 3: Financial Control December 2003 saw the passage of the Organic Law on the Preparation and Execution o f Laws on Finance. This law modernizes and clearly delineates the roles o f the Supreme Court of Accounts and Administrative Litigation (CSSA) as well as other public finance institutions and furthermore establishes a regulatory framework conducive to the efficient control o f public finances. Upon drafting of the ICF, overall control over public finances as called for in the 2003 Organic Law, was seriously undermined b y a series o f factors: 30  CSSA. Although responsible for exercising exclusive oversight of the public finance audit functions, the CSCCA’s energies and resources had hereto been limited to i t s ex-ante control functions due to such factors as lack of qualified personnel, training and competitive salary structures; outdated equipment and data systems; improper and/or lack of preparation of final accounts by the Accountants General; lack o f cooperation among state institutions; and the wide scale use of comptes courants. Direction du Controle Budge‘taire (DCB). This agency (located within the MEF) i s charged with the responsibility of enforcing compliance with investment and operational functions. To this end, the DCB tracks the execution of budget expenditures and generates periodic reports that identify gaps between expenditures programmed and executed and formulates strategy for corrective actions. As in the case o f the CSCCA, the overall efficiency of the DCB’s operations i s seriously hampered b y inadequate structure, personnel, and office infrastructure. Directorate of Fiscal Inspection. This agency exerts permanent control over all agencies responsible for the collection and recovery of duties, taxes, fees and other charges and revenues on behalf of the State. A key impediment to i t s efficient functioning stems from i t s inability to inspect comptes courants which in turn undermines the Government’s capacity to evaluate the economic, financial and/or social impact o f such expenditures. The following measures were proposed b y the ICF to correct the above inefficiencies: P Establishment of the Regulatory Framework for the new Organic Budget Law. This action would entail (i) the publication and dissemination of the new organic law, regulatory provisions on the responsibilities of ordonnateurs and enabling legislation for the creation o f a board of public accountants; and (ii) drafting the regulatory provisions on the status of the financial comptrollers. P Provision of support to public finance control structures. Support would be provided to the National Treasury, CSSA, DCB and DEC to bolster their ability to efficiently carry out their functions in accordance with the Organic Law on the Preparation and Execution of Laws on Finance. Actions would include but are not limited to: (i) reorganizing the CSSA, training i t s staff and providing logistical support as necessary; (ii)setting up a board of financial comptrollers at the DCB and providing this office with the technical assistance and logistical support necessary to reinforce its organization and control methodologies; (iii)rationalizing the management of comptes courants and eventually eliminating them; (iv) strengthening the Directorate of Evaluation and Control (MPECE). P Strengthening the Directorate of Fiscal Inspection through such actions as: equipping i t with procedures manuals, and adequate informations systems; the hiring and training of staff in the areas of accounting, auditing and information technologies; and the provision of necessary logistical infrastructure. P Other. Finally, the feasibility o f eventually creating an Inspectorate General of Finance would be analyzed. 31 Challenge 4: Public Enterprise Management. Historically treated as sources o f funding or employment providers, Haiti’s public enterprises have fallen prey to a legacy o f mismanagement that ultimately undermined their overall efficiency and profitability. Within the context o f the ICF, five state-owned enterprises (SOEs) were chosen to spearhead a strategy geared to improve the management o f public enterprises as a further venue to bolster national economic recovery and growth, i.e., the national electricity (EDH); telephone (TELECO); airport authority (AAN); ports (APN); and potable water supply (CAMEP) companies. In general, the I C F calls for a package o f interventions in auditing and management consultation in each o f the five SOEs aimed at (i)increasing the overall transparency o f public enterprise management and (ii) preparing them for increased private sector participation in their management structures and recapitalization to ensure their technical and financial viability. Specifically, the following actions would be undertaken within the context o f the ICF: National Airport Authority (Autorite‘Ae‘roportuaireNationale, AAN). > External audit. An audit o f AAN’s FY2003 accounts, financial statements and financial position would be undertaken. > Management Review/Assessment of Master Plan. AAN’s capacity to meet the civil aviation and security service needs o f the Haitian airports would be evaluated, and options and a schedule proposed for private sector participation in the management and/or recapitalization o f same. National Port Authority (Autorite‘Portuaire Nationale, APN). > Secure international certification for the Port au Prince Port so that international maritime companies can continue to operate in Haiti. k External audit. An audit o f APN’s FY2003 accounts, financial statements and financial position would be undertaken. > Strategic Review. APN’s strategy would be assessed and options and a schedule proposed for private sector participation in the management and/or recapitalization o f the ports. Furthermore, the institutional, financial, technical and operational viability o f the Jacmel Port would be undertaken on a pilot basis. Metropolitan Potable Water Supply Agency (Centrale Autonome Me‘tropolitaine d’Eau -- Potable CAMEP). > External audit. An audit o f CAMEP’s 2002/04 accounts, financial statements and financial position would be undertaken. > Management Review of CAMEP. The overall viability o f the strategies to improve CAMEP’s potable water and sanitation services in the Port-au-Prince metropolitan area would be assessed and options and a schedule to promote private sector participation in the management and/or capitalization o f CAMEP would be provided. 32 Haiti Telecom (TELECO). > External audit. A review o f the accounting records, automation o f the data management process and auditing o f financial statements for FY 2003/04 would be undertaken. > Provision of advice on steps for securing private management of TELECO over a fixed period. This would entail among other things the definition o f (i) services to be included within the management contract; (ii) the strategy and process for establishing prerequisites and honoring State commitments; (iii) management contract cost estimations; (iv) criteria for selection; and (v) the selection and negotiation o f the associated management contract. - Haiti Electricity (Ebctricite‘d’Haiti EDH). P External audit. A review o f the accounting records, automation o f the data management process and auditing o f financial statements would be undertaken. > Provision of advice on steps for securing private management of EDH over a fixed period. This would entail among other things the definition o f (i) services to be included within the management contract; (ii) the strategy and process for establishing prerequisites and honoring State commitments; (iii) management contract cost estimations; (iv) criteria for selection; and (v) the selection and negotiation o f the associated management contract. Challenge 5: Strengthening Human Resources. Although the 1987 Constitution and prevailing legal framework underscore the importance o f building a modern, reliable and competent public sector firmly grounded on equal employment opportunities and merit-based recruitment and promotion practices, the Government’s overall efficiencies i s seriously undermined by a generalized insufficiency in the number o f qualified c i v i l servants and the lack o f an incentive structure capable o f attracting, maintaining and motivating it. Moreover, Haiti’s public agencies are particularly vulnerable to high turnover associated with political fallout which in turn undermines efforts to professionalize career c i v i l servants. The level o f technical expertise throughout all ranks o f the public sector i s limited as evidenced in the fact that: (i) senior officials comprise 5.6 percent o f public service employees; (ii) technical personnel make up between 35 and 40 percent; while (iii) fully 65 percent o f the public sector i s comprised o f support staff. T o a large extent, the precarious state o f the public sector reflects in part the failure o f Haiti’s institutions o f higher education and life-long learning to develop policy management training programs that can meet the human resource needs of the public service.22 22 Economic Governance Strategic Group Sectoral Report: Haiti’s Interim Cooperation Framework, May 26, 2004. 33 The ICF identified the following measures to address the above inefficiencies:: > Hiring of critical staff at the decision-making, conceptual and execution levels for ICF implementation. Over the short term, this could be achieved through: (i) competitive recruitment of qualified young professionals (Le., public service officials, staff or consultants); (ii) participation o f qualified executive o f the Haitian Diaspora for 1 to 2 years; (iii) hiring o f consultants b y lenders for 4 to 6 months. > Training of existing staff over short and medium term: Needs based training anchored in the program offerings o f existing training institutions could be imparted. With the collaboration of foreign training institutions, the latter could be developed into individualized programs. Adoption of an incentives-based system to retain qualified civil servants. A system of incentives, including salary increases, would be developed to attract and retain competent staff. 34  Annex 2: Major Related Projects Financed by the Bank and/or other Agencies H A I T I : Economic Governance Technical Assistance Grant budget processes and financial control; public sector procurement; HR Operation (EGRO) (IDA US$61.OM) management, public enterprise management, private sector participation in health and education; civil society monitoring o f economic governance reforms, the development o f an anti-corruption strategy. - - building for governance reform in three areas o f public Capacity I LICUS Trust Fund Support for S (sector offices) 0082, US$5.0 million loan) Implement legal framework for more efficient management o f public IDB - Public Finance Reform (U$25.0 million Policy finances. Based Loan) Technical assistance in tax administration, Institute o f Statistics, and French Cooperation Agency - amounts and timeframe Customs; undefined number o f long and short term consultants undefined 35 36  Annex 3: Results Framework and Monitoring HAITI: Economic Governance Technical Assistance Grant Results Framework Strengthen GoH institutional capacity in Percentage of non-salary current public Determine extent to which new budget budgetary planning and execution, expenditures going through comptes wles are taking hold; identify possible investment and project planning, control, courants 2ack sliding procurement, transparency, participatory monitoring, and reform constituency Percentage of un-programmed budget building resources (in autres interventions publiques) Inclusion of external financing (disbursements and expenditures) in public Intermediate Results by Component e Results Indicators b Component One: Practices mandated by Budget law and Number of comptables designated and Check level of compliance with new Procurement decree enter into effect trained in their functions Budget Law Number of auditors hired, trained and Track CSCCA’s progress in reorganizing carrying out audits i t s e l f to perform new functions. Percentage o f direct (Le. noncompetitive) Determine whether CNMP i s assuming i t s procurements out of total new functions Component Two: Better enforcement o f existing human Number of public employees listed in Determine extent o f compliance with resource regulations and development of human resource unit’s registry regulations on human resources plan for improved system Development and approval of a plan to Measure extent o f progress in create a permanent human resource agency systematizing human resource management Component Three: Development of anti-corruption and citizen Corruption cases identified by ULCC Assess ULCC efficacy monitoring programs referred to judicial authorities for prosecution and follow-up Assess efficacy o f civil society Number of reports produced by CSO monitoring program, identify any needed monitors and actions taken in response by readjustments agencies monitored Component Four: Greater coordination among elements of Coverage o f donor economic governance To determine whether PCU i s performing financial management reform program activities in PCU data base coordination function Greater public understanding of, and CSO members’ ability to identify elements Identify any needed changes in content support for, reform program content o f MEF’s reform programs 23 and format o f MEF’s communication program 23 While ideally this should be public and not CSO response, as the MEF w i l l work directly with CSO groups, i t w i l l be easier (and not require additional funding) to obtain this informationless formally from members of the groups involved. 37 Arrangements for results monitoring Institutional issues: As this i s a project with multiple secondary counterparts (aside from the prime counterpart, the Ministry of Economy and Finance), most monitoring will be carried out by the agency directly responsible for a specific set o f results. Thus the CSCCA will keep i t s own records o n hirings, number of audits carried out, and so on; while the ULCC w i l l likewise keep records o f i t s own investigations, complaints registered by individuals and the like. The only exceptions to this general rule w i l l be the few qualitative evaluations (for example o f the links between the budget formulation and development objectives, the actions o f the comptables or the content o f the instructions for preparing the budgets). This part w i l l be done through the project’s supervision budget, either by Bank staff or consultants. Information on public reactions w i l l either come from separate surveys or from more informal consultations. The PCU’s role will be in consolidating the information from the various agencies. Although the long term impacts o f the endeavor are aimed at the Haitian public as beneficiary, the short timeframe for the project w i l l mean that within-institution changes are the most that can be measured realistically. The working hypothesis i s that if these within-institutional changes can be effected, the improved use of public resources will bring more benefits for all Haitians. However, within the life-of-project, i t would be very difficult to measure that effect. Datu collection: Data w i l l be both qualitative and quantitative. M o s t w i l l be derived directly f r o m the office outputs (budgets, number o f audits, trainees, investigations, rules and document designed) with some additional external evaluation o f quality. While there i s always room for manipulating results, this type o f primary data (with the exception o f the qualitative assessments) i s less susceptible to this effect. Capacity: As all these offices tend to be short-staffed, collecting the data may be a challenge but the approach proposed i s rather basic. Efforts put into collecting and presenting data normally kept b y the entities w i l l be counted as counterpart in kind. 38 zA 2 2 2 2 A 0 0 B .-e 3 3 Y 0 C 0 yz U * 3 * f 3 0 5  Annex 4: Detailed Project Description HAITI: Economic Governance Technical Assistance Grant The proposed EGTAG (Economic Governance Technical Assistance Grant) i s a US$2 m i l l i o n grant intended to assist the Government o f Haiti in strengthening i t s institutional capacity in the areas o f budgetary preparation and execution, investment and project planning, internal and external control, procurement, accountability, participatory monitoring and reform constituency building. I t builds on needs and recommendations identified by the Interim Cooperation Framework (ICF) in April and M a y o f 2004. I t i s envisioned as a medium-term undertaking, building o n progress already made under two existing Bank operations (the Economic Governance Reform Operation, EGRO, and the L I C U S Trust Fund grant) and preparing the way for further assistance assuming progress under i t and commitment to continued economic governance reforms by the next Government. Since Haiti i s scheduled to hold elections in late 2005, and install a new government in early 2006, much depends o n the latter’s willingness to continue in this line, as well, o f course, as on the progress made by the present Transition Government. Thus the time frame for the EGTAG i s intentionally short and the objectives more narrowly defined than the existing situation might seem to dictate. For example, no activities are planned for public enterprises under this operation. In selecting the areas to be supported under the EGTAG, the project team has considered progress likely to be made over 2005 b y the EGRO and the L I C U S Trust Fund grant; programs underway or proposed b y other donors; the areas considered most critical to immediate improvements in economic governance (thereby narrowing the ICF list); and the relatively short timeframe and existing resources for the proposed operation. The overall emphasis and logic behind the selection o f activities to be covered b y the EGTAG i s the desirability o f Haiti’s moving into full compliance with i t s current, vastly improved legal framework, as opposed to the potential for introducing s t i l l further legal modifications, which over the longer run may be desirable. Priority areas not covered under current W o r l d Bank and other donor programs may be included in a possible follow-on TA operation assuming successful completion o f the EGTAG. -- Component 1 Financial Resource Management: this i s the largest component, absorbs the majority o f the EGTAG’s resources, and i s presented as a single component because the parts are so closely interrelated. As the key area for economic governance, this component aims at the development o f a capacity to produce and execute a budget, track i t s implementation, and reduce irregular uses and expenditures. The 2003 Budget L a w and the 2004 Procurement Decree represent improvements over their predecessors, but like them could remain largely unimplemented and so have little impact. Aside f r o m further implementing regulations ( A r r M s ) , their effective operationalization will require detailed design o f new procedures, redistribution and possibly the addition o f personnel (both in the MEF and in other agencies, including sectoral ministries), the creation o f new functions and offices, training o f personnel in their modified roles and procedures, and some improvements as regards management o f information, ICT equipment, and the r o l l out and upgrading o f SYSDEP. Consultations with other donors indicate that immediate needs in some o f these areas w i l l be covered b y their programs. For example, as U S A I D has programmed an evaluation o f SYSDEP 41 and has funds for equipment, they w i l l take the lead there, with additional equipment purchases financed by the IDB. Similarly, an IDB grant w i l l provide funding for the development of a data base on procurement to be managed by the CNMP (and shared with the other agencies, including the ULCC). Revenue management (taxes and customs) w i l l be supported b y the IDB and France, with U SAID providing some support to improving information systems. As regards other areas, the IDB and the World Bank have worked on the basis o f the MEF’s own suggestions, each focusing i t s assistance as noted below. Subcomponent 1.1 -Budgeting: The IDB and USAID would finance most equipment needs and the latter will, in coordination with the IDB and the World Bank, provide financial and technical assistance to evaluate SYSDEP and plan i t s expansion or replacement. The EGTAG w i l l instead focus on design and implementation of basic budgetary procedures and functions as established in the new Organic Law. This w i l l include supportiig the MEF and MCPE to help staff implement procedures and instructions focusing on: developing a structure for budget elaboration, with increasing elements o f a program-activity format; developing the accountability process s t i l l absent from the Financial Management Law; developing and implementing a sound cash- management system; implementing the ex-ante internal control process (support for the ex-post internal control and the creation of the Inspection des Finance w i l l be provided b y the IDB); and integrating at the central ministries (MEF and MPCE) the investment and current cost budgets and programming process. The IDB and C I D A w i l l focus on supporting key sector ministries in implementing procedures for programming and executing recurrent and investment budgets developed in the MEF and MPCE with WB assistance. The MEF’s own evolving budgetary model i s being further developed on the basis o f IMF recommendations. The LICUS Trust Fund grant w i l l finance two related activities: a study tour to review other integrated financial managements systems (which w i l l be coordinated with USAID’s initial findings) and a consultant to help the MEF develop a plan for implementing the new law, and possibly moving beyond i t toward a more programmatic budget format (with some connection to a results framework, poverty reduction indicators, and a multi-year focus). This consultancy w i l l provide the more specific design and action program for the activities listed below. Activities under the EGTAG include the provision of consultants to help Budget and Treasury develop a diagnosis of current staffing patterns and needs, including those related to new functions within the Ministry (e.g expanded role for the Treasury and for the DCB) and throughout the public sector (e.g., the differentiation o f the ordonnateur and comptable roles; addition of controleurs financiers) and offices (e.g. that for accounting in the Treasury); development and implementation of plans to fill staffing gaps; preparation and delivery of training programs within the MEF (to be coordinated with those financed by the IDB in the sector ministries), provision o f short term consultants to assist agencies in applying and refining new procedures, and training in the use and analysis of SYSDEP. As the Ministry of Planning manages the investment budget, the same objectives w i l l be addressed there, with Canada taking the lead in the development o f sector ministries’ programming units (Unite‘s de Programmation). The 42  EGTAG w i l l focus on coordination of the investment and operational budgets and the improved overall planning of both. Depending on progress made, and further developments in the MEF’s own plans, the EGTAG may also provide consultancies to advance the progress toward a program budget, but this would be only after the initial objectives are achieved and most likely w i l l be left for a possible follow-on T A operation. I t i s envisaged that the technical assistance w i l l be done provided a single TA contract with an institute or firm able to provide support in all the areas noted. The US$550,000 earmarked for this purposed should include the provision o f one long-term consultant to oversee and coordinate the process, short-term consultants in more specific areas, and training costs for MEF and MPCE staff. 0 - Subcomponent 1.2 External Control: The LICUS Trust Fund grant funding for the Cour Supe‘rieure des Comptes et du Contentieux Administratif (CSCCA) w i l l support class-room and on-the-job training of auditors in their new ex-post control function and the drafting of an updated Organic Law. The EGTAG w i l l support: the CSCCA’s: (i) evaluation of i t s initial experience with ex-post auditing; (ii)identification of further personnel, equipment, budgetary, and training needs; and (iii) development of a plan to upgrade i t s performance over the following two to three years. The EGTAG will also support the implementation of and further adjustments to this plan. Work w i l l be coordinated with assistance provided b y the IDB in the area o f ex-post internal control (the creation of the Inspection des Finances), the only other donor agency to contemplate assistance in this area. Specific activities supported by the EGTAG w i l l include: Restructuring of CSCCA and further development of i t s own auditing policy and standards aligned with internationally accepted policies and standards, and business process re-engineering (with a greater focus on modern information technology, cross cutting functions, and improved oversight of internal CSCCA operations); 0 Defining staffing policies and human resource management plan emphasizing training to ensure that the full range o f skills, experience and expertise i s available and relevant to the audit tasks required for effectively fulfilling the CSCCA’s mandate; 0 Establishing measures to ensure quality control and quality assurance laid down in regulations, rules and procedures; 0 Promoting effective communication within CSCCA and with key stakeholders externally, particularly Parliament (when i t i s reinstated), the media and civil society; 0 Coordination with work related to accounting processes and internal control (formation of the controleursfinanciers) developed under subcomponent 1.1 and with the IDB funded activities related to internal control (development o f the Inspection des Finances.). Inputs w i l l be a combination of long and short term technical assistance in the areas identified as needing readjustments (US$150,000), development and execution of further training programs for the CSCCA professional and administrative staff (US$50,000), and development and production of manuals (US$50,000). 43  0 - Subcomponent 1.3 Procurement: The EGTAG builds on assistance provided under the LICUS Trust Fund grant to support the newly created Commission Nutionale des Mui-chks Publics (CNMP). It w i l l support the CNMP’s transformation into the permanent body mandated by law, the creation of a public-sector wide corps of procurement officials (in coordination with IDB assistance), and the development of and training in standardized procurement procedures. It w i l l also continue work initiated under the LICUS Trust Fund grant in the development of standardized bidding documents, publication of information on bids and contracts (coordinated with the data based developed with IDB support), and the education of potential bidders and the general public on the procurement process. At the same time, IDB technical assistance w i l l support strengthening of procurement departments within key sector ministries (Health, Education, Agriculture, Public Works, and Justice) and the CNMP’s creation o f a centralized database on suppliers and consultants available for government contracts, with input from and for use by all contracting entities. The IDB may also support work to prepare a new procurement law to present to Haiti’s new legislature in 2006, building on the improvements introduced by the decree of February, 2005. As with all elements under this component, this i s an incremental process in which new procedures w i l l be tested and modified according to preliminary results. I t i s envisaged that a consulting firm w i l l be hired to support the Government in these activities and that segments of i t s contract w i l l be financed through the LICUS Trust fund grant, the EGTAG, and the IDB programs. Table A: Component 1, Cost Table Subcomponents 1.1 Strengthening the Budgetary Process (including investment US$ 550,000 budget, MPCE) 1.2 Control US$ 250,000 1.3 Procurement US$ 500,000 Total Comnonent Cost US$1.300.000 Component 2 -- H u m a n Resource Development: during the identification missions and as part of the ICF, a Bank consultant worked with 22 government agencies to develop an initial plan for meeting the public administration’s most critical human resource needs. This plan w i l l be the basis for further development of this area, but given the plan’s estimated costs (in excess of US$lOO million), the EGTAG w i l l support the Human Resource Unit in the Prime Minister’s Office to focus selectively on three areas: 0 Subcomponent 2.1.- Strengthening of H u m a n Resource Program. This w i l l provide support to the Prime Minister’s office (pending creation o f a Ministry for the Public Function) to develop i t s capacity for monitoring human resources needs, policy (including enforcement o f merit appointments), and programs, and i t s ability to help other executive agencies develop plans for meeting their personnel needs over the next five years, While donor-financed consultants may temporarily perform some core functions, 44  the longer term need i s to ensure Haiti can recruit, maintain, and compensate a permanent core staff. Inputs here w i l l largely be technical assistance, aimed both at helping the present staff carry out their functions and developing a plan for building a more permanent unit with expanded functions (e.g. with a capacity for doing personnel inventories and job classifications). Some equipment may be provided for ordinary office work and to expand the existing registry of government employees. - Subcomponent 2.2 Civil Service Reform: Working with the above agencies to design a longer-term civil service reform, including the necessary legal foundation. Under a possible follow-on T A operation, steps can be taken to initiate implementation, probably on an agency-by-agency, or function-by-function basis. Technical assistance w i l l be provided to work on the draft civil service law and to do non-legal analysis (economic studies) o f i t s implications once entering into effect. Subcomponent 2.3 - Further development of training capacity: Enhancing the capacity o f public sector training institutions to deliver the training needed for the first three areas. As specific courses w i l l be developed within each of the other components, this subcomponent w i l l provide funding for rehabilitating and equipping existing training institutes (e.g. CEFOPAFOP) which w i l l be used as sites for training financed under the E G T A G or b y other donors. In any possible follow-on TA operation, support may be added to help CEFOPAFOP and others develop programs prioritized b y the Human Resource Unit or b y specific ministries. Table B: Component 2, Costs Subcomponent cost 2.1 Strengthening of Human Resource Program us$loo,ooo 2.2 C i v i l Service Reform U S $ 50.000 2.3 Further Development of Training Capacity US$150,000 Subtotal US$300,000 - Component 3 Anti-corruption and Civil Society Engagement: the LICUS Trust Fund grant supports establishment of the Unite‘ de Lutte contre la Corruption (ULCC) and a program o f civil society monitoring of economic governance reforms. The U SAID and IDB “anticorruption” projects w i l l fund some ULCC activities directly. The EGTAG w i l l do further fine-tuning in both offices’ programs, but owing to limited resources w i l l reserve further support for a proposed second phase. In the case of the ULCC, i t w i l l help develop the unit’s capacity for anti- corruption programming, including additional training in s k i l l s and techniques needed for diagnosing institutional vulnerabilities (corruption maps) and the design of remedies, provide assistance in drafting improved laws (notably, a freedom of information law, FOIA) and promoting national dialogues to build support for their passage, and continue the public communication campaign. The EGTAG w i l l also fund an evaluation o f the early performance of the mechanisms for monitoring of economic governance reforms and performance by civil society organizations. I t also seeks to contribute by helping to improve the undertaking’s design, providing some further training to CSO monitors and to these and other groups in interpreting budgetary information, and ensuring the adequate dissemination of information on the results of the exercise. 45  Table C: Component 3, Costs Subcomponent cost 3.1 L L C C (includes FOIA) US$150,000 3.2 C i v i l Society Monitoring US$ 80,000 Subtotal US$230,000 Component 4 - Communication, Donor Coordination and Project Management: the program supported b y the EGTAG w i l l be implemented under the project management mechanism developed for the LICUS Trust Fund grant and w i l l have an overall coordinator as well as an individual responsible for the area of budget reform (the MEF’s own activity). The overall coordinator w i l l have oversight of the World Bank, IDB and U S A I D activities in the areas covered by the EGTAG; the budget reform coordinator w i l l have oversight of IDB, USAID and World Bank assistance in this specific complex reform area. One or more liaison officers w i l l be responsible for tracking progress in the other components and entities, identifying difficulties in implementation of their programs, and helping resolve them. The PCU w i l l also be responsible for coordinating donor activities in the economic governance area, and to this end w i l l ensure a continuation of the working table or s i m i l a r mechanism for periodic meetings, as well as develop a system to register and track relevant externally funded activities. The EGTAG may support, as needed, specialized technical assistance not available through the other components. In addition, through the EGTAG the Bank w i l l continue to provide support for communications activities around the EGRO that have been launched b y the MEF with LICUS support. This includes implementing a communications strategy and promoting two-way communications between the government and stakeholders to build consensus on reforms, increase understanding of economic reforms and their objectives, and promote input from stakeholders. I t w i l l be critical to ensure public understanding and support for reforms to ensure their sustainability. Table D: Component 4, Costs Subcomponent - costs 4.1 PCU (including donor coordination) US$ 50,000 4.2 Communication Program US$ 70,000 Subtotal us$120,000 An amount of US$50,000 has been left for future programming. 46  Annex 5: Project Costs HAITI: Economic Governance Technical Assistance Grant Local Foreign Total Project Cost By Component andor Activity U S $million U S $million U S $million Financial Management a) Budget $200,000 $350,000 $550,000 b) External Control $127,000 $123,000 $250,000 c) Procurement $75,000 $425,000 $500,000 Human Resources a) Strengthening of program $25,000 $75,000 $ 100,000 b)Civil Service Reform $20,000 $30,000 $ 50,000 c)Training capacity $150,000 $ 150,000 Anti-corruption, civil society $80,000 $150,000 $ 230,000 Project management and coordination, $120,000 $ 120,000 communication To be programmed $ 25,000 $ 25,000 $ 50,000 Total Baseline Cost $822,000 $1,178,000 $2,000,000 Total Project Costs 822,000 1,178,000 $2,000,000 47 48  Annex 6: Implementation Arrangements HAITI: Economic Governance Technical Assistance Grant The project would be implemented over a period o f 12 to 18 months, f r o m July 2005 to July or December 2006. Various government agencies would take part in implementing project components. They are the Ministry o f Economy and Finance (MEF), the MPCE, the CSCCA, the CNMP, the U L C C (located within the MEF but operating with relative autonomy), the Human Resources Unit within the Prime Minister’s Office, and the MEF’s Executive Secretary and Oversight Committee for the c i v i l society monitoring program. This Annex describes the implementation arrangements related to (i) project administration; (ii) implementation structure and coordination of participating agencies and (iii) monitoring and evaluation arrangements. Project Administration: The Project Coordination Unit (PCU) w i l l be established within the MEF, the principal counterpart for the project. In effect, i t w i l l be an extension o f the PCU already established for the EGRO, the L I C U S Trust fund grant, and for the IDB activities, and w i l l probably continue to coordinate and oversee all economic governance activities undertaken by the t w o institutions. The W o r l d Bank and IDB are in agreement on this arrangement, and believe i t will both reduce costs for the MEF and increase the efficiency and augment the coordination o f i t s work. The establishment o f a satisfactory PCU i s a condition for effectiveness o f the IDB’s Sector Facility Project for economic governance and will also be a condition for the EGTAG’s effectiveness. While the existing P C U w i l l have to expand to take on these new activities, i t should not be an extremely large unit. This i s because the agencies responsible for each component will continue to do the more detailed work o f elaborating annual plans, drafting terms o f reference for procurement, and overseeing contractors’ performance. The PCU’s role w i l l thus be: 0 Financial management (requests o f disbursements, tracking and reporting o f expenditures, payment o f contractors and consultants). 0 Oversight o f procurement and contractual representative for the grant. The P C U w i l l review all procurement documents, will participate directly in contracting procedures over a predetermined threshold and all procurements o f equipment, and will be the government signatory to all contracts. 0 Reviewing and channelling other documentation required by the Bank. 0 Ensuring compliance w i t h Bank and G o H regulations. 0 Ensuring inter-agency communication and coordination, and monitoring physical advances in each area (to ensure an adequate pace o f work). Each participating agency (including the MEF for i t s components) will designate a person responsible for overseeing i t s o w n activities under the EGTAG and will assign, as needed, members o f i t s own staff to handle related administrative work. Supervised by the agency designee, this staff w i l l prepare annual work plans, terms o f reference, and handle selection of consultants for amounts under the threshold l i s t above. 49 The IDB has agreed to pay for any additional staff needed b y the PCU or top off salaries for ministry employees seconded to the unit. The EGTAG w i l l provide funding for any technical assistance needed to improve internal organization. Implementation Structure and Inter-Agency Coordination: The direct responsibility for project implementation rests on six main execution entities, including those located within the MEF. For the budgetary subcomponent (l.l), the MEF w i l l designate an individual to coordinate the actions of the various internal offices involved (notably the Directorate General of Budget (DGB), Directorate General o f Treasury (DGT), and Directorate General of the Ministry (DGM)). The five other entities (ULCC, Oversight Committee and Executive Secretary for civil society programs, CSCCA, CNMP, and Human Resource Unit of the Prime Minister’s Office) w i l l do the same, by designating the agency head or hisher representative. Agencies with programs with other donors (e.g., with the IDB or USAID) w i l l be encouraged to name the same individual to oversee them as well. I Component I Institution I Executing Agency 1. Financial Management a) Budget MEF (MPCE) DGB, Treasury, DCB, (MPCE) b) Control CSCCA CSCCA c) Procurement CNMP CNMP 2. Human Resources Prime Minister’s Office Human Resource Unit 3. Anti-corruption, Transparency a) Anti-corruption MEF ULCC b) Monitoring MEF Oversight Committee 4. Management, MEF PCU communication, coordination Project and annual work plans and procurement plans w i l l be elaborated b y each agency for i t s respective component. Agencies w i l l also be responsible for drafting TORS for procurement actions, referring them to the PCU for their clearance and that of the Bank, and for selecting consultants for amounts below the threshold stated above or participating in a selection committee with members of the PCU. Agencies w i l l supervise performance b y their own consultants and contractors (including those for goods and equipment), and w i l l request that payments be made b y the PCU upon satisfactory completion of work. To enhance coordination of the inevitably interrelated activities and to ensure satisfactory advances in each component, the PCU w i l l also hold periodic meetings with a committee composed of each component head, or their designated representatives. As necessary, representatives of donor agencies and/or principal long term consultants may also be invited to attend. For more targeted coordination issues (e.g. harmonization o f internal and external control mechanisms; dissemination of budget or contracting information to the U L C C or civil society monitors) the PCU may suggest the formation of smaller working groups. 50 Accounting, Reporting, and Auditing The PCU will be responsible for all project finances, for compiling and submitting reports to the Bank, and for arranging for required audits. Every implementation agency or unit will keep records o f their o w n physical operations and will provide the PCU, for transmittal to the Bank, with annual and quarterly reports on progress. The project accounts maintained by the PCU and progress records kept b y the executing agencies will be audited periodically by independent and qualified auditors acceptable to IDA, and in accordance with International Standards on Auditing and the guidance provided in the “Guidelines: Annual Financial Reporting and Auditing for World Bank-Financed Activities” (the Guidelines) and other guidance. In order to comply fully with the revised Bank requirements per OP/BP 10.02, the P C U and the executing agencies w i l l implement planning, budgeting, accounting and reporting systems that substantially satisfy the needs of the project. Monitoring and Evaluation: The P C U w i l l monitor project execution through a set o f key performance indicators, supported by supervision missions. In coordination with the executing agencies, the PCU w i l l provide a consolidated first year work plan within two months o f entrance into effectiveness and annual work program for the subsequent year(s). Given the project’s anticipated short time frame, there w i l l be a full final evaluation and an abbreviated mid-term evaluation, 12 months after the project enters effectiveness. Semi-annual progress reports will be presented to the Bank no latter than 30 days after the conclusion o f each calendar semester, starting 6 months after the project enters effectiveness. 51 52  Annex 7: Financial Management and Disbursement Arrangements HAITI: Economic Governance Technical Assistance Grant Introduction This report summarizes the findings o f the financial management capacity assessment conducted b y the Bank task team during the preparation phase o f the project. The objective o f the assessment i s to determine whether the entities that w i l l be involved in implementing the EGTAG have acceptable financial management arrangements, including system o f accounting, reporting, auditing, and internal controls. An entity’s arrangements are acceptable if they are considered capable of recording correctly all transactions and balances, supporting the preparation o f regular and reliable financial statements, safeguarding the entity’s assets, and are subject to auditing arrangements acceptable to the Bank. Bank policy requires that acceptable accounting and internal control systems are in place when project implementation begins. Overall conclusion of the financial management assessment The proposed financial arrangements are adequate given the size o f the project, the nature o f i t s activities and the volume o f i t s transactions. The PCU located in the MEF, which will have overall financial management responsibility o f the project, has already acquired some knowledge o f the Bank’s financial management requirements and procedures through the implementation of the Economic Governance Grant financed b y the L I C U S Trust Fund. A manual accounting system was put in place for the LICUS grant, which also relied o n the ministry’s internal disbursement approval and signatory mechanisms. An accountant o f the Ministry’s accounting unit i s specifically dedicated to the LICUS grant operations. Since the EGTAG will use the same financial management arrangements, the financial management capacity i s considered satisfactory to a large extent. However, the EGTAG will use different disbursement mechanisms (Le. disbursement based o n statements o f expenditures as opposed to tranches). Also, the financial management procedures under the L I C U S grant have not been formalized yet, which affected implementation as there was not common understanding among the various implementing entities o f the procedures to follow. For the purpose o f the EGTAG, these two weaknesses w i l l be addressed through training o f the accountant and development o f an operations manual, respectively. Project background A detailed project description i s available in the main text and annex 4 o f the PAD. A brief summary i s presented below to highlight the main features affecting financial management arrangements. The EGTAG seeks to: (i) improve the government’s ability to program, execute and track use o f public resources and better link them to concrete development goals, ensure an adequate performance o f the external, ex-post control function by the CSCCA, and hilp the C N M P grow into i t s role as overseer o f procurement practices and make open, competitive procurement the rule rather than the exception; (ii) advance the development o f a human resource management plan and system; (iii) advance the development o f the Anti-Corruption Unit (ULCC) as an effective check on corruption while also encouraging the greater involvement o f c i v i l society in i t s own operations and as a monitor o f economic governance reforms; and (iv) ensure as part of 53 the project management process, an adequate system for communicating information on the reform programs and mobilizing public support for their furtherance. The EGTAG i s designed to advance changes begun with the EGRO and L I C U S grant. I t w i l l provide support more or less to the same entities supported by these two operations (MEF, CSCCA, CNMP, Prime Minister Office, and ULCC) b y financing mainly consultant services, training and operating costs. The institutional arrangements w i l l follow largely the structure used under the L I C U S with a P C U in the MEF to oversee the execution and each o f the entities involved directly responsible for the implementation o f their activities. Procurement and financial management activities w i l l be the responsibility o f the PCU. Financial Management responsibilities and arrangements Accounting. The MEF w i l l have overall financial management responsibility for the project, following to a large extent the mechanisms put in place under the L I C U S grant. Accounting o f the L I C U S grant operations i s handled b y the Accounting Unit o f the MEF. One accountant was given specific tasks to keep a separate set o f book o f accounts for the grant while the usual approval and control mechanisms o f the MEF were followed. Financial operations o f the LICUS grant are therefore recorded and reported separately. Similar arrangements will be used for the EGTAG. The Government will use the same P C U for both the EGTAG and the IADB financed technical assistance project. Thus, the current manual accounting system may eventually require upgrading to cope with larger financing and facilitate reporting. Disbursement. A project special account (SA) denominated in U S Dollars will be opened at the central bank on terms and conditions acceptable to IDA, and be managed by the MEF. Funds deposited in the S A w i l l be used to finance the activities implemented directly by the respective entities. The MEF w i l l disburse the funds directly to suppliers of goods and services upon request from the implementing entities and after control o f all relevant supporting documentation. The authorized allocation to the S A w i l l be limited to US$300,000 (representing approximately four months o f expenditures.) Disbursements w i l l be made o n the basis o f Statements o f Expenditures. Reporting. Financial Monitoring Reports (FMRs) w i l l be prepared reflecting all components o f the project and submitted to IDA. The FMRs will be an integral part o f the activity report, and accordingly w i l l follow the same periodicity. Given the nature o f the activities to be financed (essentially consultant services and training), the FMRs will focus mainly o n the financial situation o f the project, while information on the physical progress and procurement activities w i l l be provided in the activity report. Auditing. Annual financial statements w i l l be prepared by the PCU, and audited annually by independent auditors, in accordance with International Standards o n Auditing and terms o f reference acceptable to IDA. The auditors will be recruited no later than six months after grant effectiveness. 54 Risks Country fiduciary risks. Haiti’s public financial management systems have experienced weak performances over the last years. The Bank has not carried out a Country Financial Accountability Assessment (CFAA), but a number o f studies have highlighted major weaknessesz6 in the overall accountability framework, as described below. In the interim, the government has been engaged in a number o f reforms to improve public financial management. Also, the risks are unlikely to affect the project as appropriate internal control mechanisms will be built into the procedures that w i l l be used specifically for the project. Although the country fiduciary risk i s high, i t s impact on the project i s medium. Project risks. Given the nature o f the project activities and institutional set up, n o major inherent fiduciary risk i s identified. The risk level i s rated low. Relevant issues to be included in the legal documents The legal documents should include the standard financial management provisions: 0 Requirement for the MEF through i t s P C U to maintain an adequate financial management system, produce quarterly interim financial statements and submit annual audited financial statements. 0 One special account denominated in U S dollar will be opened at the Central Bank (Banque de la Rbpublique d’Hai’ti or BRH), and w i l l be replenished using statement o f expenditure method. 0 The sole condition o f effectiveness i s the existence o f a project implementation manual for the project, in f o r m and substance satisfactory to the W o r l d Bank and including a section on financial management.27 Action plan AredAction Responsibility/To be completed b y 1. Flow of Funds 1.1. PCU to open the project bank M E F P C U , project effectiveness accounts: the Special Account in U S dollars in the bank selected, and the Project account in local currency in the bank selected. 2. Staffing Project Accountant PCU, project launch Complete training on W o r l d Bank financial management and disbursement procedures, with specific emphasis on statement o f expenditures and financial reporting 3. Accounting and Internal Control 26 See Economic Governance Reform Operation Program Document 27 The inclusion of this condition w i l l ensure that the work i s kept on track and w i l l guarantee that the project i s implemented per the original agreements and understandings with the GOH. 55  3.1. Open separate book o f accounts for PCU, project effectiveness the project with a chart o f accounts to reflect the disbursement categories for the project and project activities. 3.2. Prepare the project Operations PCU, project effectiveness Manual, with a section on Financial Management, including FM organization, flow o f funds. FMRs formats. etc. 4. External Audit 4.1. Submit final Audit TORSto the Bank PCU, no later than six months after for review and clearance. project effectiveness 4.2. Once the Bank clears the TOR, PCU, no later than six months after proceed with the appointment o f the project effectiveness auditors. Expenditure Category Amount o f the Grant Financing Allocated (US$) Percentage Consultants services $1,650,000 100 Works, Goods $ 250,000 100 Operating Costs $ 50,000 100 Unallocated $ 50,000 100 Total $2,000,000 100 1,200,000 800,000 ~ Annual Cumulative 1,200,000 2,000,000 56  Annex 8: Procurement Arrangements HAITI: Economic Governance Technical Assistance Grant A. General Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated M a y 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated M a y 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed b y the Grant, the different procurement methods or consultant selection methods, the need for pre- qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan w i l l be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. Procurement of Works: The only works that would be procured under the project would b y minor renovations required to upgrade training institute facilities. This procurement would be done using Standard Bidding Documents (SBDs) agreed with the Bank. Procurement of Goods: Goods procured under this project would include computers, equipment and furnishings for the training institute and for other agencies involved in project implementation. The procurement w i l l be done using SBDs agreed with the Bank. Procurement of non-consulting services: Procurement of printing services for publication of manuals and training materials w i l l also be done using SBDs agreed with the Bank. Selection of Consultants: The bulk o f the technical assistance to be financed b y the grant w i l l be composed of discrete technical and advisory assignments with the various implementing agencies, which can be performed most effectively b y individual consultants. For assignments where teams of consultants are required to ensure coordination and/or centralization o f responsibility, consulting f i r m s w i l l be hired. Short l i s t s of consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. For some contracts the services of civil society organizations (CSOs), NGOs, universities, government research institutions, public training institutions, and other specialized organizations may also be required. Operating Costs: Operating costs (e.g.: office utilities, travel costs, operation and maintenance of office equipment financed with the proceeds o f the Grant, and non-durable goods) and logistical costs of training activities (e.g.: travel costs and per diem of facilitators, rental of training facilities and equipment, and training material) would also be financed b y the project and procured using the Ministry of Finance's administrative procedures, which were reviewed and found acceptable to the Bank. 57 The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, will be presented in the project Operations Manual. Thresholds recommended for the use o f each method discussed above are identified in the table below, which also establishes the notional thresholds for prior review. The agreed procurement plan w i l l determine which contracts w i l l be subject to Bank prior review. Thresholds for Ppocurement Methods and Prior Review Expenditure Contract Value Procurement Contracts Subject to Category (Threshold) Method Prior Review US $ thousands 1. Works >1,000 ICB All 100-1,000 NCB All <loo Shopping All 2. Goods >loo ICB All I I 25-100 I NCB I All I <25 Shopping All 3. Consulting Services -3.A Firms Regardless o f value QCBS,QBS ,FBS ,LCS All <loo cos All I I Regardless of value I Single Source I All I -3.B Individuals Regardless o f value Comparison o f 3 CVs i n All accordance with Chapter V o f the Guidelines B. Assessment of the agency’s capacity to implement procurement Most o f the technical input for procurement activities will be provided by the six agencies receiving the goods and/or consulting services (Le. : MEF, ULCC, Oversight Committee, CSCCA, C N M P and PMO/HR unit). These agencies have varying levels o f procurement s k i l l s and experience, so all contracts will be signed by the expanded PCU in the Ministry o f Finance, which w i l l also be responsible for coordination and oversight o f all procurement financed by the grant. As described in Section C-2 o f the PAD on implementation arrangements, the existing PCU w i l l be expanded to include an employee with specific responsibility for reviewing all procurement documents and ensuring that they are submitted as needed for Bank prior review. The Bank’s assessment o f the capacity o f the P C U to implement procurement actions for the project has been based on performance to date in implementing the L I C U S grant, which has been satisfactory. However, this assessment w i l l need to be updated after the additional P C U staff has 58 been recruited f o r the EGTAG and the project implementation manual has been prepared and circulated to all the participating agencies. The key issues and risks concerning procurement implementation for the project arise f r o m the many weaknesses in the Haitian procurement system, as identified in the body of this PAD. While the Government’s commitment to reform procurement institutions and practices i s clear f r o m the actions already taken under the EGRO, real change w i l l take time. In addition t o the technical assistance to be provided to the newly created CNMP by the EGTAG, corrective measures such as the development o f operating manuals for Bank-financed projects and the broad dissemination o f information on new procurement procedures to all purchasing agencies are expected to mitigate some risks. However, the overall project risk for procurement remains HIGH. C. Procurement Plan The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on M a y 9, 2005 and will be available in the project’s database and in the Bank’s external website. The Procurement Plan w i l l be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. D. Frequency of Procurement Supervision Supervision will be carried out primarily through the prior review by the Bank of all procurement actions. This exceptional level o f Bank oversight will be made possible by the engagement by the Bank o f a local consultant to work with the PCU and the various participating agencies. In addition, day-to-day procurement supervision w i l l be supplemented b y supervision missions every quarter. E. Details of the Procurement Arrangements 1. Goods, Works, and N o n Consulting Services N o contract packages are expected to be procured following I C B or direct contracting. 59  r 2. Consulting Services (a) L i s t of consulting assignments with short-list of international firms. L A 5 6 Ref. No. Description of Estimated Selection Review Expected Assignment cost Method by Bank Proposals (Prior I Submission Post) Date 1.A.4 T A to define $150,000 FBS Prior July 2005 roles and processes for ordonnateurs , comptables, and contrdleurs financiers 1.c.1 T A to $425,000 QCBS or Prior July 2005 support FBS Commission Nationale des Marchks Publics (CNMP) (b) All selection processes for consultancy services w i l l be subject to prior review b y the Bank. (c) Short l i s t s composed entirely of national consultants: Short lists of consultants for services estimated to cost less than $100,000 equivalent per contract, may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 60  Annex 9: Economic and Financial Analysis HAITI: Economic Governance Technical Assistance Grant The proposed operation w i l l focus on capacity building activities, and i t i s therefore difficult to quantify outputs and benefits, and to precisely calculate rates o f return. Nevertheless, since positive fiscal impacts are expected, project implementation i s projected to generate economic gains. The most noteworthy economic and fiscal savings are expected to result from: (i) the implementation of a budgetary process in accord with the new Organic Law and i t s incorporation in an expanded automated expenditure tracking system (SYSDEP), the latter supported largely by assistance provided by and coordinated with the IDB and USAID: (ii) the implementation and further strengthening of the commission (CNMP) charged with overseeing procurement and ensuring greater transparency and competitiveness in the process; (iii) developing the ex-post audit function of the Cour Supe‘rieure des Comptes et du Contentieux Administratif (CSCCA) and coordinating this with a strengthened internal audit and control capacity; (iv) enhancing the capabilities of the human resource unit to oversee new appointments, ensuring they follow legal procedures and incorporate an emphasis on merit, and ensuring a facility for the delivery o f training programs for this and other public sector operations; (v) strengthening the capacity of the new anti-corruption office (ULCC) and publicizing i t s presence and activities; (vi) further developing the system of civil society monitors and the MEF’s communication program to inform all citizens of the content and progress of the package of economic governance reforms; and (vii) further developing mechanisms to ensure greater coordination o f all donor activities in economic governance operations. All of these measures aim at improving the government’s ability to program and track the use of public resources, including external assistance and human resources, strengthening the internal and external controls used to promote transparency, fight corruption, and reduce waste, and increasing all citizens’ understanding of and support for the changes sought. Better management of the government’s resources should lead to improved performance and increased efficiency b y strengthening the linkages between inputs and outputs and ensuring that funds are no longer assigned to un-programmed catch-all categories (autres interventions publiques). The fiscal impact of improved resource allocation, better planning and execution may be significant, as efficiency gains translate into reduced investment and recurrent costs for a given level of output. These in turn w i l l contribute to a better investment climate, which in Haiti i s essential for long- term economic growth, the reduction of unemployment and the improvement of critical social conditions. The cost effectiveness of the components i s discussed in the following table: 61  Cost Effectiveness of EGTAG Interventions Components and Possible fiscal impact Expected economic gains Expected social gains Subcomponents 1.1New budget Fiscal savings through Increased impact o f [mproved allocation o f funds in practices put into effect improved capacity for programs through better social programs aimed at allocation o f public budget allocation poverty reduction. resources in priority areas; decisions and better reduce risks for duplicate expenditure tracking. andlor ineffective activities 1.2 Development of Lower prices paid for same More competitive and More o f money going into CNMP’s capacity to levellquality o f goods and open procurement process, social programs actually wersee procurement services purchased b y State. encouraging participation reaches and benefits the poor. yystem o f more efficient local and international vendors More effective monitoring Improved and more transparent and control o f financial allocation o f public funds for control systems and accounting mechanisms ,flows and reduced public social programs aimed at poverty reduction . Improved programs with Human Resource because o f better fit, and 1 o f human resources and greater benefits for the poor Management System availability o f government improved capacity o f facilities. those holding positions 3.1 Strengthening Less financial leakage due Greater protections for More funds for social services Capacity of Anti- to diversion o f resources investors willing to start get to poor. Corruption Unit up economic activities in Haiti. 3.2 Strengthen civil Fiscal savings through Reduced corruption and Give civil society organizations society monitors increased incentives for waste means greater a place at the table in the program public employees to use returns on public and evaluation and design of all resources efficiently. private investments. government programs. 4. I Strengthen To support impact o f other To support impact o f other Citizens more involved in communications areas areas policy process, and better able program to understand and make suggestions on resource use 4.2 Strengthen Donor Funds available buy more Greater impact o f funds More donor funds available for Coordination inputs invested; more donor social programs and greater funds attracted returns o n investments 62  Annex 10: Safeguard Policy Issues HAITI: Economic Governance Technical Assistance Grant The project currently triggers none of the Bank’s Environmental or Social Safeguard Policies. I f any changes o f environmental or social significance should arise during project implementation, Bank policies will apply. 63 64  Annex 11: Project Preparation and Supervision HAITI: Economic Governance Technical Assistance Grant Planned Actual PCN review 0 111912005 02/03/2005 Initial PID to PIC 0 1/26/2005 02/10/2005 Initial ISDS to PIC 0 1/26/2005 02/08/2005 Appraisal 04/04/2005 05/05/2005 Negotiations 04/06/2005 0511012005 BoardIRVP approval 06/07/2005 Planned date o f effectiveness 06/30/2005 Planned date o f mid-term review 0611512006 Planned closing date 1213112007 Key institutions responsible for preparation of the project: Ministry of Economy and Finance Supreme Audit Institution Office of the Prime Minister (National Commission for Public Procurement and the Human Resources Unit) Anti-Corruption Unit Bank staff and consultants who worked on the project included: Name Title Unit Linn Hammergren Sr. Public Sector Mgmt. Specialist LCSPS Auguste Tan0 Kouame Sr. Country Economist LCSPE Patricia McGowan Sr. Procurement Specialist LCOPR Ahmadou Moustapha Ndiaye Sr. Financial Management Specialist LCOAA Mark Nelson Sr. Operations Officer WBIEE Solange Alliali Sr. Counsel LEGLA Hilarion Bruneau Sr. Finance Officer LOAGl Luc Ladouceur Budget Specialist (Consultant) Benjamin Santa Maria Human Resources Specialist (Consultant) Franca Braun Civil Society Specialist (Consultant) Maria del Carmen Miiioso Operations Officer LCSPS Jes6s Martinez Operations Officer (ET Consultant) LCSPS Peer Reviewers Tony Verheijen Sr. Public Sector Specialist ECSPE Chris Parel Sr. Operations Officer LCSPS 65 Bank funds expended to date on project preparation: 1. Bank resources: $116,623.31 2. Trust funds: $0.00 3. Total: $116,623.3 1 Estimated Approval and Supervision costs: 1. Remaining costs to approval: $10,376.69 2. Estimated annual supervision cost: $116,490.00 66  Annex 12: Documents in the Project File HAITI: Economic Governance Technical Assistance Grant A. Project ImplementationPlan Draft Procurement Plan Project Implementation Manual (condition for effectiveness) B. Bank Staff Assessments Financial Management Assessment Procurement Capacity Assessment QAT Environmental and Social Comments on the PCN, PAD and associated Integrated Safeguards Data Sheet (ISDS) Country Procurement Assessment Report, September 30, 1999 L a Fonction Publique: L e Renforcement des Capacith - Analyses et Propositions d’Actions, D e Weerd, June 1999 Haiti Country Brief, December 16,2002 Haiti Country Assistance Evaluation, Operations and Evaluation Department, February 12, 2002 An End to the Beginning: Resolving the “Interminable” Crisis and Neeting the Challenge of Governance in Post-Duvalierist Haiti, Ira Lowenthal, June 2, 2002 Economic Governance - Findings and Analysis, Ladouceur, November 2003 Decentralisation: Cour Supe‘rieure des Comptes et du Contentieux Administratif; Mission de la Banque Mondiale sur la Gouvernance Economique, Laurence MCzin, October 13-18,2003 H a i t i Interim Cooperation Framework - Economic Governance Strategic Group Sectoral Report, M a y 26,2004 C. Other Project Concept Note Project Appraisal Document Review Meeting Minutes: PCN, QER, Decision and Negotiations Peer reviewer and other reviewer comments on project cycle documents Public Information Document Component reports prepared by World Bank staff and consultants Aide Memoires 67 68  Annex 13: Statement of Loans and Credits HAITI: Economic Governance Technical Assistance Grant Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Ong. Frm. Rev’d PO89873 2005 HT Economic Governance Adjustment Op 0.00 61.00 0.00 0.00 0.00 15.26 0.00 0.00 PO90159 2005 H T Emergency Recov.& Disaster 0.00 12.21 0.00 0.00 0.00 12.21 0.00 0.00 Management Total: 0.00 73.21 0.00 0.00 0.00 27.47 - 46.85 0.00 HAITI STATEMENT OF IFC’s Held and DisbursedPortfolio In Millions of U S Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1998 Microcredit 0.00 0.40 0.00 0.00 0.00 0.40 0.00 0.00 Total oortfolio: 0.00 0.40 0.00 0.00 0.00 0.40 0.00 0.00 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. Total oending commitment: 0.00 0.00 0.00 0.00 69 70  Annex 14: Country at a Glance HAITI: Economic Governance Technical Assistance Grant Latin Low POVERTY and SOCIAL Haiti America Income Development diamond' 2003 Population, mid-year (millions) 8.2 534 2,310 GNI per capita (Atlas method, US$) 390 3,260 450 Life expectancy GNI (Atlas method, US$ billions) 3.3 1,741 1,038 Average annual growth, 1997-03 Population (%) Labor force (%) 1.9 1.9 1.9 2.1 2.1 2.3 T Gross Most recent estimate (latest year available, 1997-03) primary Poverty (% of population below national poverty line) 65 capita enrollment Urban population (% of total population) 37 77 30 Life expectancy at birth (years) 49 71 59 1 Infant mortality (per 1,000 live births) 79 28 82 Child malnutrition (% of children under5) 23 42 Access to improved water source Access to an improved water source (% of population) 46 86 76 illiteracy (% of population a.9e 15t) 48 11 36 Net primary enrollment (% of school-age population) 56 129 92 Low-income group Male 56 131 99 Female 56 126 85 ' KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios' GDP (US$ billions) 1.6 1.7 3.5 2.9 Gross domestic InvestmenffGDP 16.3 6.9 25.0 31.1 Trade Exports of goods and SeniceslGDP Gross domestic savings1GDP 17.5 5.9 9.0 -6.9 12.2 1.6 16.4 0.2 I 1 Gross national savings/GDP -3.5 22.0 28.8 Current account baianceiGDP Domestic -9.7 -4.9 -4.8 yi investment interest payments/GDP 0.4 0.0 0.2 0.3 savings Total debffGDP 37.5 46.9 36.1 45.0 Total debt servicelexports 4.3 1.8 3.1 1 Present value of debffGDP Present value of debffexports Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annual growth) GDP -0.7 0.7 -0.5 0.4 1.7 1 ^___^ Haiti -Low-income group GDP per capita -2.6 -1.4 -2.4 -1.8 -0.4 Exports of goods and services 0.8 4.7 -2.2 35.6 4.3 ~ STRUCTURE of the ECONOMY (% of GDP) Agriculture 1983 1993 2002 28.0 2003 27.9 Growth of investment and GDP ( O h ) M I Industry 16.9 17.0 10 Manufacturing 8.4 8.4 Services 55.2 55.1 0 Private consumption 83.4 100.1 89.2 91.3 io General government consumption 10.7 6.8 9.3 8.4 I --GDI '30'GDP I Imports of goods and services 27.9 22.8 35.6 47.2 (average annual growth) 1983-93 1993-03 2002 2003 (Growth of exports and imports (%) 30 I Agriculture 1.7 -1.2 -3.7 0.3 20 Industry -5.2 -3.6 1.3 1.o Manufacturing -1.5 -7.0 1.6 0.5 io Services 1.6 3.0 -0.5 0.4 0 -io Private consumption 2.2 General government consumption -6.8 Gross domestic investment -6.1 10.1 -3.9 24.9 Imports of goods and services 3.9 6.3 -2.1 33.4 Note: 2003 data are preliminaryestimates. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 71 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Domestic prices (% chan.qe) Consumer prices 20.2 8.7 32.5 Implicit GDP deflator 8.9 32.5 10.0 25.4 Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall surplusldeficit 7.4 -1.5 -2.4 8.3 -1.1 -3.1 9.1 -0.3 -3.7 I "a- GDP deflator 69 O1 +CPI O2 TRADE I 1983 1993 2002 2003 (US$ millions) :xport and import levels (US$ mill.) Total exports (fob) 166 131 304 361 Coffee 9 ow Sisal and sisal strings 2 8W Manufactures 108 273 330 6W Total imports (cia 346 983 1,116 Food 144 400 Fuel and energy 71 2w I Capital goods 22 0 97 98 69 w 01 02 Export price index (1995=100) Import price index (1995=100) Exports Imports O3 Terms of trade (1995=100) BALANCE Of PAYMENTS 1983 1993 2002 2003 urrent account balance to GDP ph) (US$ millions) Exports of goods and services 180 437 461 Imports of goods and Services 409 1,239 1,400 Resource balance -229 -802 -939 Net income -11 -15 -12 Net current transfers 70 649 811 Current account balance -169 -168 -140 Financing items (net) 200 127 130 Changes in net reserves -31 41 10 Memo: Reserves including gold (US$ millions) 20 36 228 207 Conversion rate (DEC, iocal/US$) 5.0 12.2 27.1 40.5 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 IUS5 millions) Composition of 2002 debt (US$ mill.) Total debt ouistanding and disbursed 610 817 1,251 1,313 IBRD 0 0 0 0 245 351 IDA 122 337 496 491 Total debt service 25 8 19 39 IBRD 0 0 0 0 IDA 1 0 0 0 1899 Composition of net resource flows Official grants 49 72 135 96 Official creditors 38 -3 -3 -2 Private creditors -6 0 41 30 Foreign direct investment 8 -3 5 8 Portfolio equity 0 0 0 0 1608 World Bank program Commitments 49 0 0 0 A. iBRD E. Bilateral Disbursements 26 0 0 0 B - IDA D .Other multilateral F .Private Principal repayments 0 0 0 0 C-IMF G .Short-term Net flows 26 0 0 0 Interest payments 1 0 0 0 Net transfen 26 0 0 0 Development Economics 12/7/04 72  Annex 15: Map HAITI: Economic Governance Technical Assistance Grant 73 MAP SECTION  73°W 72°W H AI T I ATLANTIC OCEAN This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank SELECTED CITIES AND TOWNS Île de la Tortue Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Palmiste DEPARTMENT CAPITALS 20°N 20°N e Port-de-Paix NATIONAL CAPITAL ag ss RIVERS Pa i d Tro To MAIN ROADS ar Môle St.-Nicolas NORD - OUEST Les Monte dw s Christi Cap-Haitien RAILROADS in W Limbé DEPARTMENT BOUNDARIES Gros-Morne Fort-Liberte To Baie de NORD Santiago INTERNATIONAL BOUNDARIES Trou- Ferrier Henne Grande Rivière du-Nord du Nord 74°W Ennery Saint- NORD - EST Gonaives Raphaël C Saint Michel e de l'Attalaye n Gu Golfe de tr a l a ya Pl mp la Gonâve at uo ARTIBONITE ea Maïssade HAITI u Hinche Verrettes Ar ti b D OM I N IC AN onite CENTRE 19°N Lac de Péligre R E PU BL I C La Cayenne Île de la Gonâve Anse-à-Galets Mirebalais To San Juan Pointe-à-Raquette Grande Jeremie Cayemite Roseaux Croix des PORT-AU-PRINCE Bouquets Anse d'Hainault Léogâne Étang Lago To f de la Ho tte GRANDE- OUEST Saumâtre Enriquillo Barahona Massi ANSE Miragoâne Petit- Goâve Chaine de la Selle (2680 m ) Les Anglais Camp-Perrin SUD Vieux Bourg SUD - EST Belle- d'Aquin Jacmel Anse Thiotte Côtes-de-fer Marigot Les Cayes Port-Salut Île à Vache 18°N 18°N SEPTEMBER 2004 0 10 20 30 40 Kilometers IBRD 33417 To Caribbean Sea Oviedo 0 10 20 30 Miles 74°W 73°W 72°W