Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2190) ON A GRANT

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank Report No: ICR IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2190) ON A GRANT IN THE AMOUNT OF SDR 21.5 MILLION US$ 31.5 MILLION EQUIVALENT TO THE REPUBLIC OF CAMEROON FOR A DEBT RELIEF GRANT UNDER THE ENHANCED HEAVILY INDEBTED POOR COUNTRIES (HIPC) DEBT INITIATIVE August 13, 2007 Poverty Reduction and Economic Management AFCC1 Africa Region

2 CURRENCY EQUIVALENTS (Exchange Rate Effective 06/01/2007) Currency Unit = CFAF US$ 1.00 = FISCAL YEAR January 1- December 31 ABBREVIATIONS AND ACRONYMS APR DSA JSAN HIPC HIV-AIDS IBRD IDA IMF ISN MDRI NPV PRGF PRSP SAC III Annual Progress Report Debt Sustainability Analysis Joint Staff Advisory Note Highly Indebted Poor Countries Human Immunodeficiency Virus Acquired Immune Deficiency Syndrome International Bank for Reconstruction and Development International Development Association International Monetary Fund Interim Strategy Note Multilateral Debt Relief Initiative Net Present Value Poverty Reduction and Growth Facility Poverty Reduction Strategy Paper Third Structural Adjustment Credit Vice President: Obiageli K. Ezekwesili Country Director: Marie Francoise Marie Nelly Sector Manager: Yvonne Tsikata Task Team Leader: Chukwuma Obidegwu ICR Team Leader: Abdoulaye Seck

3 CAMEROON Debt Relief Grant under the Enhanced HIPC Debt Initiative CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Program Performance in ISRs H. Restructuring 2. Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners... 8 Annex 1 Bank Lending and Implementation Support/Supervision Processes... 9 Annex 2: Status of the Triggers for reaching the floating HIPC completion point Annex 3. List of Supporting Documents MAP 1

4 A. Basic Information Country: Cameroon Program Name: Debt Relief Grant Under the Enhanced HIPC Initiative Program ID: P L/C/TF Number(s): IDA-H2190 ICR Date: 06/27/2007 ICR Type: Core ICR Lending Instrument: DPL Borrower: Original Total Commitment: Implementing Agencies: Comite Technique de Suivi Ministry of Economy and Finance Cofinanciers and Other External Partners: B. Key Dates GOVERNMENT OF CAMEROON XDR 21.5M Disbursed Amount: XDR 19.4M Process Date Process Original Date Revised / Actual Date(s) Concept Review: 03/24/2006 Effectiveness: 12/05/ /05/2006 Appraisal: Restructuring(s): Approval: 04/27/2006 Mid-term Review: Closing: 12/30/ /30/2006 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Satisfactory Low or Negligible Satisfactory Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Not Applicable Quality of Supervision: Satisfactory Implementing Agency/Agencies: Not Applicable Overall Bank Performance: Satisfactory Overall Borrower Performance: Satisfactory i

5 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Performance (if any) Potential Problem Program at any time (Yes/No): Problem Program at any time (Yes/No): DO rating before Closing/Inactive status: No No Satisfactory Quality at Entry (QEA): Quality of Supervision (QSA): None None Rating: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General energy sector General transportation sector Health Law and justice Primary education Theme Code (Primary/Secondary) Corporate governance Primary Primary Debt management and fiscal sustainability Primary Primary Education for all Secondary Secondary HIV/AIDS Secondary Secondary Health system performance Secondary Secondary E. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Gobind T. Nankani Country Director: Marie Francoise Marie-Nelly Ali Mahmoud Khadr Sector Manager: Yvonne M. Tsikata Cadman Atta Mills Program Team Leader: Chukwuma F. Obidegwu Florence M. Charlier ICR Team Leader: ICR Primary Author: Abdoulaye Seck Abdoulaye Seck ii

6 F. Results Framework Analysis Program Development Objectives (from Project Appraisal Document) Provide IDA required assistance under the Enhanced HIPC Debt Relief Initiative, thus contributing to alleviate Cameroon's debt burden and supporting the Government's Implementation of its poverty reduction strategy. Revised Program Development Objectives (if any, as approved by original approving authority) (a) PDO Indicator(s) Indicator Indicator 1 : Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Fund the pre-payment of remaining outstanding IBRD debt owed by Cameroon at the time of HIPC Completion Point. (b) Intermediate Outcome Indicator(s) Indicator Indicator 1 : Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) n/a Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years G. Ratings of Program Performance in ISRs iii

7 Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 11/10/2006 Satisfactory Satisfactory 0.00 H. Restructuring (if any) Not Applicable iv

8 1. Program Context, Development Objectives and Design 1.1 Context at Appraisal 1. This grant originated from the Enhanced Heavily Indebted Poor Country (HIPC) Debt Initiative. When Cameroon reached the Decision Point under the enhanced HIPC Debt Initiative in October 2000, the Executive Directors approved the provision of an IDA supplemental credit to prepay outstanding IBRD debt at the Completion Point as part of IDA s contribution to overall HIPC debt relief initiative. As such, this report should be read in conjunction with the HIPC decision and completion point documents. 2. At the decision point, Cameroon was expected to reach completion point in April 2003, upon meeting a set of triggers ranging from satisfactory PRSP implementation to macroeconomic stability and progresses on key governance, structural and social reforms. However, slippages in macroeconomic management and difficulties in the implementation of the poverty reduction strategy delayed the completion point date. In 2005, the macroeconomic framework was strengthened through improved fiscal management, and there was progress in PRSP implementation and the adoption of governance measures. As these progresses were sustained in early 2006, Cameroon reached completion point in April 2006 after fulfilling all agreed conditions. 3. As a result of the attainment of completion point, Executive Directors agreed to provide the financing needed to prepay outstanding IBRD debt, but rather than a supplemental HIPC debt relief credit as agreed at the Decision Point, Executive Directors provided a supplemental HIPC debt relief grant to take into account the adoption of the IDA14 grant allocation framework. Under the new framework, countries are eligible for IDA financing through credits or grants according to their risk of debt distress, and Cameroon was deemed eligible for 100 percent grant financing from IDA in fiscal year The HIPC relief grant provided through the prepayment of IBRD loans outstanding at end-june 1999 amounts to US$20 million in NPV terms, compared to US$75 million assumed if completion point would have been reached in Original Program Development Objectives (PDO) and Key Indicators 4. The objective of this operation was to provide Cameroon the assistance required by IDA under the enhanced HIPC Debt Initiative upon Cameroon reaching the Completion Point, thus contributing to improving Cameroon s overall debt sustainability and supporting the Government s implementation of its poverty reduction strategy through increased spending from the fiscal savings. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification Not applicable. 1.4 Original Policy Areas Supported by the Program 2

9 5. The policy areas supported by the program are those linked to the conditions for reaching the completion point under the enhanced HIPC debt initiative, namely: (i) the preparation of a poverty reduction strategy paper (PRSP), and satisfactory implementation for at least one year; (ii) the maintenance of a stable macroeconomic framework and continued satisfactory performance under the IMF s Poverty Reduction and Growth Facility (PRGF) program; (iii) the satisfactorily use of budgetary savings from the interim debt service relief; (iv) the satisfactorily implementation of the structural reforms supported by the Third Structural Adjustment Credit (SAC III) financed by IDA; (v) the satisfactorily implementation of governance and anti-corruption measures in the areas of judicial reform, budget execution, procurement reform, and the creation of regulatory agencies; and (vi) satisfactorily implementation of key social reforms, including combating malaria and HIV/AIDS 1.5 Revised Policy Areas Not applicable. 1.6 Other significant changes Not applicable. 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance Tranche # Amount Expected Release Actual Release Release Date Date Tranche 1 US$31.5 million September 30, 2006 May 3, 2007 Regular Tranche 1 List conditions from Legal Agreement/ Program Document Reach completion point under the Enhanced HIPC Debt Initiative Met Status 2.2 Major Factors Affecting Implementation: 6. This is a single tranche operation with no substantial implementation issues. The tranche release was conditional to effectiveness which itself was defined by the ratification of the grant agreement and the publication of a legal opinion. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: 7. There is no specific M&E system, implementation and utilization mechanisms for the grant. The use of fiscal savings from debt relief is currently monitored through a tripartite committee including Government, civil society and donors. Bank and IMF 3

10 staffs are observers in that committee. The functioning and performance of the committee is explained in more details in Annex Expected Next Phase/Follow-up Operation: Not applicable. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 8. The development objectives remain important. While a Debt Sustainability Analysis (DSA) completed in May 2007 by Bank and Fund staff indicates that Cameroon faces a low risk of debt distress, it also shows that under alternative scenarios and stress tests, there could be a significant deterioration in the public debt outlook. Continuous prudence in financing is therefore still warranted. In addition, poverty headcount remains significant in Cameroon at about 40 percent and widespread in Cameroon and the authorities have launched the revision of their PRSP in order to accelerate growth and reduce poverty. The Bank continues to support these objectives. The Interim Strategy Note (ISN, FY 06-08) presented to the Board in December 2006 includes support to debt sustainability and to the revision of the PRS with a stronger focus on results. In collaboration with IMF staff, the Bank is providing assistance to the authorities in the preparation of a sound debt management strategy. 3.2 Achievement of Program Development Objectives 9. The program development objectives have been fully achieved. IDA assistance under this program has been fully disbursed, allowing Cameroon to repay outstanding IBRD debt. As a result of that assistance and additional debt relief from IDA and other multilateral and bilateral creditors under the HIPC and the Multilateral Debt Relief Initiative, Cameroon s debt burden has significantly improved relative to the situation before completion point. Nominal external debt declined from US$ 6.5 billion in 2005 to US$2.1 billion in 2006, or from 39 to 11 percent of GDP. Cameroon now faces a low risk of debt distress. 10. Furthermore, a satisfactory implementation of the PRSP including increased spending for social and other priority sectors was a condition for HIPC completion point, and this condition was deemed met in the HIPC completion document and in the third PRSP annual progress report discussed by Executive Directors in February A detailed account of achievements is provided in Annex Justification of Overall Outcome Rating Rating: Satisfactory 4

11 11. The program development objectives have been achieved. Cameroon is pursuing the policies needed to maintain debt sustainability and improve PRSP implementation with the support of its development partners, including IDA. Cameroon is implementing a fiscal strategy anchored on preserving debt sustainability. Since 2005, fiscal policy implementation and performance strengthened substantially as evidenced by the completion in June 2007 by the IMF Board of the third review of the PRGF. In addition, Cameroon is preparing a debt management strategy that will guard against the risk of over borrowing. As for PRSP implementation, Cameroon is preparing a revised poverty strategy with a greater focus on results. The completion of the revised strategy is expected in the first half of Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 12. As indicated earlier, a satisfactory implementation of the PRSP was a trigger for completion point and therefore a key element for this grant. The third APR and its accompanying JSAN - submitted to the IMF and IDA Boards in April highlights progress in the preparation of sector strategies in priority sectors and medium-term expenditure frameworks to further enhance the alignment of budget allocations with the PRSP priorities. The government also adopted an updated national program of governance as the framework for improving governance and fighting corruption. It took actions to strengthen economic growth and diversification and further improve social outcomes. In the JSAN of the third APR, the staffs of IDA and the IMF have reviewed progress on each of the PRSP pillars and concluded that PRSP implementation and monitoring have been satisfactory in Policies in specific areas, underlying the implementation of the PRSP and related to the HIPC completion point triggers are reviewed in Section II of the HIPC completion point document. (b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development) Not applicable (c) Other Unintended Outcomes and Impacts (positive or negative, if any) Not applicable 4. Assessment of Risk to Development Outcome Rating: Low 13. A joint Bank-Fund Debt Sustainability Analysis completed in May 2007 shows that after the full delivery of debt relief Cameroon faces a low risk of debt distress. All external debt indicators remain below the relevant country-specific debt burden thresholds. Alternative scenarios and stress tests reveal an upward trend for the debt indicators but do not result in a breach of the thresholds during the projection period of the DSA. The long term fiscal strategy is anchored in preserving overall external debt sustainability. In addition, Cameroon s access to the Multilateral Debt Relief Initiative (MDRI) has further consolidated gains achieved under the HIPC debt initiative. The assumptions of the DSA are described in box 1 below. 5

12 Box 1: Macroeconomic Assumptions and Borrowing Assumptions of the DSA Macroeconomic assumptions Real GDP growth is expected to accelerate to 6 percent in 2011 reflecting economic stimulus from increased capital spending, the implementation of structural reforms under the PRGF-supported program, and investment in infrastructure and energy with support of the World Bank. Over the long-term, growth in the non-oil economy is expected to stabilize at about 5.5 percent, while oil GDP will gradually decline. On average, the projected growth rate is about 1 percentage point higher than the historical average on the account of higher investment financed by debt relief. Oil production is assumed to increase slightly in 2007, and then decline by 5 percent in 2008, 2-3 percent thereafter. Inflation is assumed to hold steady at 2 percent over the long-term, in line with recent historical experience. Fiscal policy would be supportive of economic growth and poverty reduction. Nonoil revenues are expected to rise from 12 percent of GDP in 2006 to 15 percent at the end of the projection period, reflecting tax and customs administration measures. Government expenditure is expected to rise steadily before declining to the more sustainable level of 17 percent of GDP in the outer years. Exports of goods and services are projected to gradually decline over time reflecting the decline in petroleum exports. As a result, the current account deficit, including grants, is expected to increase to about 7 percent of GDP over the medium-term, and gradually improve thereafter. The deterioration in the current account is larger than was earlier envisaged reflecting lower oil prices. The deficit is expected to be financed through foreign direct investment, private capital flows, and loans, a mixture of which will be from IDA and the rest from other creditors on less concessional terms. Assumptions related to new borrowing and debt relief have been updated. New public borrowing is assumed to increase gradually over the medium term to help finance new investment. External borrowing is expected to rise gradually to 1.8 percent of GDP in 2015 and then to gradually decline to about 1 percent by IDA borrowing is assumed to constitute 47 percent of new borrowing, with the remainder loans originating from other multilateral and bilateral creditors on less concessional terms. Cameroon is projected to graduate from IDA in Starting from that year, new lending on concessional IDA terms will be gradually phased out. Other providers of concessional assistance are assumed to take similar action. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 6

13 14. The assessment of Bank performance through the lending phase cannot be separated from the assessment of performance under the HIPC completion point and the third Structural Adjustment Credit (SAC III). Bank s performance under SAC III was rated satisfactory in the Implementation Completion Report (ICR) for that operation. The Bank was also able to mobilize a strong team from several departments and work closely with IMF staff to assist Cameroon in reaching completion point. In addition, Cameroon was one of three HIPC countries where IDA had planned to deliver HIPC debt relief on IBRD debt outstanding, and the team was only second to the Honduras team in successfully preparing this first of its kind operation in the Bank. (b) Quality of Supervision Rating: Satisfactory 15. This is a single tranche operation with a closing date originally planned five months after approval. The main supervision task was to assist the authorities in bringing the grant to effectiveness, and ensure the reimbursement of all payments made by Cameroon between completion point and grant effectiveness. The Bank team worked actively with the authorities toward effectiveness, but the latter was delayed because of legal issues with the evidence provided by Cameroon. The Bank team extended twice the closing date to resolve these legal issues and allow effectiveness to take place. The reimbursement by the Bank to Cameroon for all payments made by the latter between completion point and effectiveness was not completed until 4 months after effectiveness, in part because of incomplete information provided by the authorities. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 5.2 Borrower Performance (a) Government Performance Rating: Not applicable (b) Implementing Agency or Agencies Performance Rating: Not applicable (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 16. Cameroon met the conditions for reaching HIPC completion point by garnering the necessary support for implementing difficult reforms and fiscal restraints (see Annex 2). As a result, it has received significant debt relief that has brought its debt burden well under the sustainability threshold. Cameroon now faces a low risk of debt distress. 6. Lessons Learned 17. The substantive policy measures supported by this operation were those of the SAC III and the HIPC completion point preparation. Lessons from this operation prepared and approved in a 3-month span period cannot be drawn independently of SAC III and the HIPC process. For the latter, a close coordination with the IMF team was 7

14 critical to the successful dialogue with the authorities along the path to completion point, thus allowing the approval of this operation. Other lessons could be drawn from the ICR of SAC III and include: formulating a realistic timeframe for the government to meet the triggers of the completion point and ensuring that the government puts in place a strong focal point/unit to coordinate and monitor the implementation of the completion point triggers and facilitate related post completion point actions. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies (b) Cofinanciers (c) Other partners and stakeholders 8

15 Annex 1 Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Lending and Supervision Florence M. Charlier Senior Economist AFTP3 Abdoulaye Seck Senior Economist AFTP3 David Tchuinou Senior Economist AFTP3 Chukwuma Obidegwu Lead Economist AFTP3 Faustin Koyasse Senior Operation Officer AFTP3 Gilles Veuillot Senior Counsel LEGAF Wolfgang Chadab Finance Officer LOAG2 Simon Ochieng Lang o Finance Analyst LOAG2 Anjana Singh Finance Assistant LOAG2 Ursula M. L. Wiehl Finance Assistant LOAG2 Antonio S. Davila-Bonnazi Portfolio Officer ACTCF Hassine Hedda Finance Analyst LOAG2 Paula Joachim White Language Program Assistant AFTP3 Bernadette Djapa Program Assistant AFMCM Luca Bandiera Consultant EDS21 Boris Gamarra Economist PRMED Carolin Geginat Economist FPDMA Laurence Hougue Bouguen Team Assistant AFMCM Josiane Luchmun Program Assistant AFTP3 Jean Marie Fouda Abega Driver AFMCM Ousmanou Ngougueu Driver AFMCM Responsibility/ Specialty (b) Staff Time and Cost Stage Lending Supervision/ICR Staff Time and Cost (Bank Budget Only) USD Thousands (including No. of staff weeks travel and consultant costs) Total: ,557 Total: 5 20,000 9

16 Annex 2: Status of the Triggers for reaching the floating HIPC completion point Trigger Poverty Reduction Strategy Paper The full PRSP has been prepared and satisfactorily implemented for at least one year. Status Implemented. The PRSP was prepared by the government through an extensive and comprehensive consultation process, adopted by the government in April 2003 and discussed by IDA and Fund Boards in July The first PRSP Annual Progress Report (APR) was completed in April 2004 and the JSA submitted to the two Boards in May The second Annual Progress Report (APR) was completed in September 2005 and the JSAN of the second APR, covering the period January 2004-March 2005 was issued in February The third APR, covering 2005 was completed in February 2006, and the associated JSAN is being issued together with this completion point document. The staffs consider that the implementation of the PRSP was satisfactory in Macroeconomic and Structural Reforms There is continued maintenance of a stable macroeconomic environment and satisfactory implementation of a new three-year PRGF program. Implemented. Cameroon has broadly maintained macroeconomic stability since reaching decision point, although policy implementation has at times been uneven. A new three-year PRGF arrangement was put in place in October 2005, following satisfactory policy implementation under an IMF staff-monitored program during the first half of Performance during the first six months under the PRGF-supported program has been good, and the first review is to be discussed by the IMF Board concurrently with consideration of the HIPC completion point. The budgetary savings from the debt relief have been used in accordance with the criteria set forth at the decision point (control and monitoring mechanisms). Implemented. Interim debt relief assistance has been used in accordance with the criteria set forth at the decision point. The funds were deposited in a special account at the BEAC, a HIPC monitoring committee was established and annual audits of the operations conducted. There were initial delays in using the debt resources to fund projects due to delays in putting in place the HIPC Consultative Committee and elaborating disbursement procedures. Once the framework was in place, HIPC debt relief was used to improve public services in education, health, social development, urban sanitation and rural development. SAC III has been concluded and reforms have been implemented in a satisfactory manner. Governance and anti-corruption The priority strategy and action plan for improving governance and combating corruption attached to the I-PRSP have been satisfactorily implemented, in particular: Implemented. SAC III was broad-ranging adjustment operation (six tranches) covering privatization of utilities as well as key reform in the forestry, transport and financial sectors. The credit was concluded in March 2004 after full disbursement of all tranches. Although implementation of the privatization component was mixed, overall implementation and credit outcomes were, on balance, rated as satisfactory by Bank staff and the Operation Independent Evaluation Group 10

17 Trigger o In the area of judicial reform, (i) the Chambre des Comptes (audit office) and (ii) the Conseil Constitutionnel have been created. Status (i) Implemented. The law specifying the responsibilities, organization, and functioning of the external control audit body for state finances (Chambre des Comptes) of Cameroon's Supreme Court was adopted by the National Assembly in March 2003 and promulgated by the Head of State on April The audit chamber became operational in January (ii) Implemented. The law specifying the responsibilities, organization and functioning of the Constitutional Council was adopted in March 2004 and promulgated in April In June 2005, the President signed the decree 2005/250 on the organization of the Secretariat of the Constitutional Council; the secretariat is expected to be in place by August 2006, paving the way for making the Council fully operational by o The public procurement system has been reformed and, in particular, audits for the preceding fiscal year have been completed and appropriate follow-up actions implemented, in accordance with the law. o In the area of budgetary execution and service delivery, the results of the budget tracking exercises and beneficiary assessments for education and health have been published and the relevant recommendations have been implemented. Regulatory agencies. Regulatory agencies for key sectors (including water, electricity, and telecommunications) are autonomous and are operating in an efficient and professional manner. Social sectors Education sector. The sector strategy has been satisfactorily implemented in a timely manner, and in particular: (i) 2,500 new classrooms have been built; and (ii) teacher management has been effectively decentralized and new teacher statutes have been adopted and implemented. Implemented. The public procurement system has been satisfactorily reformed. A regulatory agency has been created and procurement operations are monitored through ex-ante (independent observers) and ex-post controls (independent audit). Audits for fiscal years 2000/01, 2001/02, 2003 and 2004 have been prepared and the main recommendations of these audits have been implemented. Implemented. Over the period , the government carried out a budget tracking and beneficiary assessment in the health and education sectors in order to evaluate the quality of public expenditure and identify bottlenecks. The results have been published on the website of the Prime Minister's Office. Action plans to address identified bottlenecks have been implemented in order to strengthen policy effectiveness in the social sectors. Substantially Implemented. Regulatory agencies for electricity and telecommunications have been set-up and made operational. In the water sector, the regulatory framework is in place. Following the advice of World Bank staff, the authorities decided that the water sector should be regulated through the provisions of a lease contract between the government and the lessee company rather than through the creation of a water regulatory agency. The regulatory framework is ready to be operational once the operator is selected and the lease signed. Indeed, the financial model to be used to regulate the sector through the determination of tariffs and investments has been prepared and presented at a private sector investor conference in February Implemented. The sector strategy has been satisfactorily implemented. As a result, there has been significant progress in increasing access and reducing gender and regional disparities in enrollment: (i) the Minister of Basic Education (MINEDUB) completed the construction of 3,768 new classrooms in November 2005 and (ii) teacher management has been decentralized and new teacher statutes have been adopted and implemented. 11

18 Trigger Health sector. The sector strategy has been satisfactorily implemented in a timely manner, and in particular (i) child immunization rates for DPT have been increased to 70 percent; and(ii) knowledge about protection and prevention measures against malaria will have substantially increased, i.e., 50 percent of pregnant women are using impregnated bed-nets HIV/AIDS. Concrete progress has been made to prioritize the fight against HIV/AIDS in the government's overall development agenda and to curb infection rates among the population, with particular emphasis on education to promote the use of condoms by truck drivers, port workers, and soldiers to 50 percent, and by commercial sex workers to 70 percent. Status Implemented. The government has satisfactorily implemented the health sector strategy. (i) Progress on immunization coverage has been substantial with differentials between the poor and non-poor narrowing and immunization coverage for DPT3 reaching more that 76 percent ; and (ii) The government has prepared and implemented a national Malaria Strategic Plan, in line with the Roll Back Malaria (RBM) initiative. World Bank staff estimates that roughly 70 percent of pregnant women receive impregnated bed-nets. The government is also distributing impregnated bed-nets to children under five with resources from the Global Fund. Implemented. The fight against HIV/AIDS has been prioritized in the overall development agenda. Concrete progress has been made through the implementation of the HIV/AIDS strategic plan which provided a sound framework for the multi-sectoral and decentralized approach to combating the HIV/AIDS epidemic. The strategy emphasizes educating the population at high risk including truck drivers, port workers, soldiers and sex commercial workers, through specific communication campaigns and the distribution of condoms. This education campaign has produced very good results. The 2004 DHS survey indicates that (i) 68.7 percent of women and 82 percent of men are aware that using condoms or limiting sexual relations with one partner help reduce contamination risk, (ii) 54.7 percent of men and 40.5 percent of women who had high risk sexual relations used condoms. A 2004 study indicates that 78 percent of commercial sex workers use condoms. In addition to the education campaign and condom distribution, the government implemented a broad package of curative and preventive measures. These measures were implemented beyond set targets discussed with the World Bank. Notable progress has also been made in expanding access to voluntary counseling and testing, providing care to those living with HIV/AIDS, and expanding access to treatment. 12

19 Annex 3. List of Supporting Documents Cameroon: Decision Point Document for the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative, IDA/R (09/18/2000) and EBS/00/194; 9/19/2000. Cameroon: Completion Point Document for the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative, Report CM Heavily Indebted Poor Countries (HIPC) Initiative: Note on Modalities for Implementing HIPC Debt Relief Under the Enhanced Framework, IDA/R2000-4, January 10, Additions to IDA resources: Fourteenth Replenishment (IDA14)--Working Together to achieve the Millennium Development Goals March 10, Debt Sustainability and Financing Terms in IDA14: Further Considerations on Issues and Options, November ICR of SAC III PRSP Third Annual Progress Report 13