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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT KINGDOM OF MOROCCO Report No. ICR SECOND SERIES OF PUBLIC ADMINISTRATION REFORM DEVELOPMENT POLICY LOANS (PARL III AND IV) Social and Economic Development Group Middle East and North Africa Region IN THE AMOUNT OF MILLION (EQUIVALENT USD 220 MILLION) June 30, 2011

2 KINGDOM OF MOROCCO FISCAL YEAR January 1 December 31 EXCHANGE RATE USD 1 = 8.2 Moroccan dirhams (MAD) (as of February 28, 2010) ABBREVIATIONS AND ACRONYMS AfDB BADR CEM CFAA CGAC CNeGov CPS DRH ENA ERP EU GDP GPEEC HR HRIS ICR IDF IEM IGF IGM ITC African Development Bank Online Customs Network Database Country Economic Memorandum Country Financial Accountability Assessment Country Governance Anti-Corruption National egov Committee (Comité National egov) Country Partnership Strategy Human Resources Directorate (Direction des Ressources Humaines) National Administration Institute (Ecole Nationale d'administration) Early Retirement Program European Union Gross Domestic Product Jobs and Skills Management Planning (Gestion Prévisionnelle des Effectifs des Emplois et des Compétences) Human Resources Human Resources Information System Implementation Completion Report International Development fund Integrated Expenditure Management Inspectorate General of Finance Inspectorate General of Ministries Information and Communication Technology M&E MAD MEF MENA MMSP MTBF MTEF NGO PARL PEFA PER PES PESW PETS PSIA REC ROSC TA TGR TOFT USD Monitoring and Evaluation Moroccan Dirham Ministry of Economy and Finance Middle East and North Africa Ministry of Modernization of the Public Sector (Ministère de la Modernisation des Secteurs Publics) Medium-Term Budget Framework Medium-Term Expenditure Frameworks (Cadre de Dépenses à Moyen Terme) Non-governmental Organization Public Administration Reform Loan Public Expenditure and Financial Accountability Public Expenditure Review Economic and Social Plan (Plan Economique et Social) Programmatic Economic and Sector Work Public Expenditure Tracking Survey Poverty and Social Impact Analysis Staffing and Competencies Registry (Référentiels des Emplois et des Compétences) Report on the Observance of Standards and Codes Technical Assistance General Treasury of the Kingdom (Trésorerie Générale du Royaume) Table of Treasury Financial Operations United States Dollar Vice President: Country Director: Sector Director: Sector Manager: Project Team Leader: ICR Team Leader: Shamshad Akhtar Simon Gray Manuela Ferro Guenter Heidenhof Stefano Paternostro / José López Calix Fabian Seiderer

3 KINGDOM OF MOROCCO THIRD AND FOURTH PUBLIC ADMINISTRATION REFORM DEVELOPMENT POLICY LOAN IMPLEMENTATION COMPLETION AND RESULTS REPORT Table of Contents 1. Program Context, Development Objectives, and Design Context at Appraisal Original Project Development Objectives and Key Result Indicators Revised Project Development Objectives and Result Indicators Public Policy Areas Supported by the Program Revised Public Policy Areas Other Significant Changes Key Factors Affecting Program Implementation and Outcomes Program Performance Key factors affecting implementation Monitoring and Evaluation (M&E) Next Phase and Operation Assessment of outcomes Relevance of objectives, design, and implementation Achievement of Project Development Objectives Justification of overall outcome rating: Overarching Themes, Other Outcomes, and Impacts Summary of findings of beneficiary survey and/or stakeholder workshops Assessment of Risk to Development Outcome Assessment of Bank and the Borrower Performance Bank Performance Borrower Performance Lessons learned and Recommendations Comments on Issues Raised by Borrower, Implementation Agencies, and Partners Annex1. Bank Lending and Implementation Support/Supervision Processes1 Annex 2. Beneficiary Survey Results : NA Annex 3. Stakeholder Workshop Report and Results : NA Annex 4. Summary of Borrower s ICR and/or Comments on Draft ICR Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders: None Annex 6. List of Supporting Documents

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5 A. Basic Information Program 1 Country Morocco Program Name Morocco - Public Adminstration Reform Loan III Program ID P L/C/TF Number(s) IBRD ICR Date 06/30/2011 ICR Type Core ICR Lending Instrument DPL Borrower Original Total Commitment KINGDOM OF MOROCCO USD 100.0M Disbursed Amount USD 96.2M Implementing Agencies Ministry of Economy and Finance Ministry of Public Sector Modernization Cofinanciers and Other External Partners African Development Bank European Commission (EC) Program 2 Country Morocco Program Name Morocco - Public Administration Reform IV Program ID P L/C/TF Number(s) IBRD ICR Date 06/30/2011 ICR Type Core ICR Lending Instrument DPL Borrower Original Total Commitment GOVERNMENT OF MOROCCO USD 100.0M Disbursed Amount USD 95.8M Implementing Agencies Ministry of Public Sector Modernization Ministry of Economy and Finance Cofinanciers and Other External Partners African Development Bank European Commission (EC) i

6 B. Key Dates Morocco - Public Adminstration Reform Loan III - P Process Date Process Original Date Revised / Actual Date(s) Concept Review: 05/24/2007 Effectiveness: 08/20/ /20/2008 Appraisal: 02/04/2008 Restructuring(s): Approval: 05/15/2008 Mid-term Review: Morocco - Public Administration Reform IV - P Closing: 12/31/ /31/2008 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 10/23/2009 Effectiveness: 07/21/2010 Appraisal: 02/01/2010 Restructuring(s): Approval: 04/29/2010 Mid-term Review: Closing: 12/31/ /31/2010 C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating Outcomes Risk to Development Outcome Bank Performance Borrower Performance Moderately Satisfactory Moderate Satisfactory Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory Overall Bank Performance Satisfactory Overall Borrower Performance Satisfactory ii

7 C.3 Quality at Entry and Implementation Performance Indicators Morocco - Public Adminstration Reform Loan III - P Implementation QAG Assessments Indicators Performance (if any) Potential Problem Quality at Entry Program at any time No (QEA) (Yes/No): Problem Program at any Quality of No time (Yes/No): Supervision (QSA) DO rating before Closing/Inactive status None None Rating: Morocco - Public Administration Reform IV - P Implementation QAG Assessments Indicators Performance (if any) Potential Problem Quality at Entry Program at any time No (QEA) (Yes/No): Problem Program at any Quality of No time (Yes/No): Supervision (QSA) DO rating before Satisfactory Closing/Inactive status None None Rating: D. Sector and Theme Codes Morocco - Public Adminstration Reform Loan III - P Original Sector Code (as % of total Bank financing) Actual Central government administration Theme Code (as % of total Bank financing) Administrative and civil service reform Decentralization Public expenditure, financial management and procurement Morocco - Public Administration Reform IV - P Sector Code (as % of total Bank financing) Original Actual Central government administration iii

8 Theme Code (as % of total Bank financing) Administrative and civil service reform Decentralization 8 8 Other public sector governance Public expenditure, financial management and procurement E. Bank Staff Morocco - Public Adminstration Reform Loan III - P Positions At ICR At Approval Vice President: Shamshad Akhtar Daniela Gressani Country Director: Neil Simon M. Gray Mats Karlsson Sector Manager: Guenter Heidenhof Miria A. Pigato Task Team Leader: Fabian Seiderer Jose R. Lopez Calix ICR Team Leader: Fabian Seiderer ICR Primary Author: Fabian Seiderer Morocco - Public Adminstration Reform Loan III - P Positions At ICR At Approval Vice President: Shamshad Akhtar Shamshad Akhtar Country Director: Neil Simon M. Gray Mats Karlsson Sector Manager: Guenter Heidenhof Farrukh Iqbal Task Team Leader: Fabian Seiderer Stefano Paternostro ICR Team Leader: Fabian Seiderer ICR Primary Author: Fabian Seiderer F. Results Framework Analysis Program Development Objectives (from Program Document) The proposed loan is the second of the second series of programmatic loans designed to support the implementation of the Government's public administration reform support program (PARAP) whose objectives are fully shared. The objectives of the series aim at : (a) improving Government efficiency in the management of budget resources through greater transparency and accountability, and by introducing performance measurement; (b) improving government efficiency in the management of human resources through the preparation of a new management system for staffing and remuneration with performance measurement, while streamlining current human resources management; (c) iv

9 consolidating and controlling public payroll; and (d) improving public services and simplifying procedures through e-government. The proposed loan is complemented and strengthened by an ongoing multiyear Programmatic Economic Sector Work activity through which the Bank is providing the Government with advice, training, and technical assistance as required in the areas of public finance management, civil service reform, and wage bill containment. A new technical assistance activity has just been approved for the e-government component. Other donors supporting this program provide complementary technical assistance. Support to the public administration reform program is a key component of the new Country Partnership Strategy (CPS) (FY10-FY13). PARL IV contributes to the achievement of the first and second CPS pillars: (i) promoting macro-economic stability and private sector development as an engine of growth and (ii) support to the improvement in access to, and quality of services. In addition the operation is fully aligned with the CPS cross cutting theme of enhancing governance. Revised Program Development Objectives (as approved by original approving authority) NA (a) PDO Indicator(s) Morocco - Public Adminstration Reform Loan III - P Original Target Baseline Values (from Indicator Value approval documents) Indicator 1 : Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) Indicator 2 : Value (quantitative or Qualitative) Date achieved Comments (incl. % Formally Revised Target Values Actual Value Achieved at Completion or Target Years Efficient budget management by (i) integrating multi-annual budget planning into budget preparation; (ii) increasing public i nvestment execution rates; (iii) building performance audit capacity; and (iv) making accounting inf. reliable and transparent Objectives and indicators are at series level, not for each individual loan. Component A is rated Moderately satisfactory as 3 out of the 4 indicators were met. The MTEFs have not yet been integrated into the budget preparation process. Efficient human resources management by (i) harmonizing civil service laws, which cover 90% of civil servants, and (ii) imple menting reforms to develop a more equitable and transparent compensation system. Component B is rated moderately satisfactory as te civil service statutes harmonization covers more than 90% of civil servan ts and the compensation v

10 achievement) Indicator 3 : Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) Indicator 4 : Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) reform is in its final study phase. Public wage bill consolidation and control by reducing the wage bill from 11.8% of GDP in 2005 to 10.4 % in Component C is rated satisfactory as the wage bill has been reduced to 10.4% GDP in E-Government and Simplification of Procedures: (i) higher productivity resulting from e-government measured by the increased number of public services on line and (ii) greater transparency in public bidding processes. Component D is rated satisfactory as the reform institutional governance has been strengthened and online applications devel opped (incl in public procurement) Morocco - Public Administration Reform IV - P Original Target Baseline Values (from Indicator Value approval documents) Indicator 1 : Value (quantitative or Qualitative) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Efficient budget management by (i) integrating multi-annual budget planning into budget preparation; (ii) increasing public i nvestment execution rates; (iii) building performance audit capacity; and (iv) making accounting inf. reliable and transparent Number of ministries that have adopted flexible budgeting: All ministries Achieved, all ministries have adopted flexible budgeting at paragraph level. Date achieved 01/06/ /31/ /31/2010 Comments (incl. % achievement) Component A is rated Moderately satisfactory as 3 out of 4 objectives were met. The MTEFs have not yet been integrated into the budget preparation process. vi

11 Indicator 2 : Value (quantitative or Qualitative) Efficient human resources management by (i) harmonizing civil service laws, which cover 90% of civil servants, and (ii) imple menting reforms to develop a more equitable and transparent compensation system. Number of ministries that have finished RECs: 6 in 2007 all already achieved All ministries have completed their REC end of 2010 Achieved, all ministries have completed their REC. Date achieved 01/01/ /31/ /31/2010 Comments (incl. % achievement) Component B is rated moderately satisfactory as te civil service statutes harmonization covers more than 90% of civil servan ts and the compensation reform is in its final study phase. Indicator 3 : Public wage bill consolidation and control by reducing the wage bill from 11.8% of GDP in 2005 to 10.4 % in Value (quantitative or Qualitative) Wage bill: 11.8% of GDP in 2005 reduce the wage bill to 10.4% GDP in 2009 Wage bill represented 10.2% GDP in 2010 Date achieved 01/01/ /31/ /31/2010 Comments (incl. % achievement) Component C is rated satisfactory as the wage bill has been reduced to 10.2% GDP in 2010 and appropriate monitoring and cont rol mechanism have been adopted. E-government and procedure simplification by (i) improving e-government Indicator 4 : productivity, which is measured based on the number o f public online banking transactions; and (ii) making public procurement procedures more transparent. Value (quantitative or Qualitative) At least 80% of the public administration's offers, termes of reference and results of public bids are available to the public online 80% of public administrations Achieved, practically 100% of central and local administration offers, terms of reference and results of the public bids are available online. Date achieved 01/01/ /31/ /31/2010 Comments (incl. % achievement) Component D is rated satisfactory as the reform institutional governance has been strengthened and online applications devel opped (incl in public procurement) (b) Intermediate Outcome Indicator(s) vii

12 Morocco - Public Adminstration Reform Loan III - P Original Target Formally Values (from Indicator Baseline Value Revised approval Target Values documents) Indicator 1 : Number of sector MTEFs developped Value (quantitative or Qualitative) 12 ministries prepared MTEFS for TOFT and 14 sector MTEFs established for Actual Value Achieved at Completion or Target Years 16 ministries had prepared an MTEF at the end of Date achieved 01/01/ /31/ /31/2010 Comments (incl. % achievement) Morocco - Public Administration Reform IV - P Original Target Formally Values (from Indicator Baseline Value Revised approval Target Values documents) Indicator 1 : Number of performance audit carried out Value 13 for FY (quantitative or 2006 Qualitative) Actual Value Achieved at Completion or Target Years 20 for FY for FY 2007 Date achieved 01/01/ /31/ /31/2010 Comments (incl. % achievement) G. Ratings of Program Performance in ISRs Morocco - Public Administration Reform IV - P Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/04/2010 Satisfactory Satisfactory 0.00 H. Restructuring (if any) viii

13 1. Program Context, Development Objectives, and Design 1.1 Context at Appraisal At appraisal economic conditions were favorable, with sustained growth rates and a balanced macroeconomic policy. The Government was pursuing a structural reform program that aimed at increasingly diversifying and integrating the Moroccan economy into the global and Euro-Mediterranean economies, among other things. Over the previous decade, real GDP rose at the rate of 5.1% on average. Per capita income practically doubled and reached USD 2,800 in Moreover, the government continued a proactive trade liberalization and integration policy following the signing of a free trade agreement with the Unites States (US), the implementation of the Association Agreement with the European Union (EU), and the signing of a regional free trade agreement (the Agadir Agreement) with Tunisia, Egypt, and Jordan. This context made it all the more crucial to transform the administration into an effective and efficient institution, with the capacity to drive private sector development and provide citizens with better services. As regards public finance, the government focused on consolidating its budget and adopted a cautious debt strategy, which reduced the central government s debt from 62 to 47.2% of GDP in 2005 and 2008, respectively. Although prudent budget management resulted in a surplus in 2007 and 2008, the global financial crisis and the spike in international prices of heavily subsidized oil and food, gave rise to increased pressure on public finances. Consequently, greater priority was given to improving public expenditure efficiency as a way of addressing the dilemma of increased demand for public services and growing budget constraints, and avoiding the adverse effects of increased budget regulation in On the political front, the reform program was strengthened by the new government, which took office after the elections held in October To fulfill the electorate's expectations and meet the needs of an increasingly open economy, the government submitted its Economic and Social Plan (Plan Economique et Social PES) 2 to Parliament. This plan aimed at consolidating public finances and the macroeconomic framework. It further aimed at accelerating and deepening reforms undertaken to improve Morocco s economic competitiveness, human capital, social indicators, and governance. Special attention was thus given to administration and public management reform and modernization, launched in 2002 and supported by the World Bank, the EU and the African Development Bank (AfDB), including a first series of programmatic loans. The reform was extended to fiscal reform, public expenditure, wage bill rationalization and deconcentration in order to achieve a more sustainable macroeconomic framework by improving public expenditure efficiency and ensuring optimal budget resource allocations. To achieve the plan s objectives, the government s reform strategy focused on: (i) modernizing the administration and the civil service; (ii) developing a new results-oriented budget mechanism, which includes public policy evaluation mechanisms; (iii) enhancing public sector governance and transparency; (iv) improving human resource management; (v) improving the quality of public services by introducing community-based management and implementing the deconcentration process; and (vi) simplifying administrative procedures by introducing e-government. The second series of programmatic loans for the Public Administration Reform Loans (PARL III and IV) and the World Bank s Country Partnership Strategy (CPS), adopted in 2005, are fully aligned with the 2 For a full and detailed description of the current government s comprehensive reform program, see CPS , (Report No MA). 1

14 new government s reform strategy and support the six previously mentioned priority reforms. As a key component of the new CPS, PARL IV contributes to two major strategic pillars: driving growth and competitiveness, and improving public service quality and accessibility. Moreover, the program contributes to the strategy s cross-cutting governance enhancement theme. 1.2 Original Project Development Objectives and Key Result Indicators (approved) Supported by the PARL series, the objective of the public administration reform program was to improve the public administration s efficiency, transparency, and accountability. To this end, PARL III and IV retained the overall objectives of the series: a. Improving government efficiency in budget management; b. Improving government efficiency in human resources management; c. Further consolidating management and control of the payroll; and d. Improving public services and simplifying procedures through e-government. The key result indicators related to the second series of PARL include: Efficient budget management by (i) integrating multi-annual budget planning into the budget bill preparation process; (ii) increasing public investment execution rates; (iii) building performance audit capacity; and (iv) making accounting information reliable and more transparent. Efficient human resources management by (i) harmonizing civil service laws, which cover 90% of civil servants, and (ii) implementing reforms to develop a more equitable and transparent compensation system. Public wage bill consolidation and control by reducing the wage bill from 11.8% of GDP in 2005 to 10.4 % in E-Government and Simplification of Procedures: (i) higher productivity resulting from e-government measured by the increased number of public services on line and (ii) greater transparency in public bidding processes. 1.3 Revised Project Development Objectives and Result Indicators (as approved), and Reasons and Justifications Not applicable 1.4 Public Policies Supported by the Program (approved) The main policies supported by PARL III and IV programs include: Improving government efficiency in budget management; Improving government efficiency in human resources management; Consolidating and controlling the public wage bill; and E-government and procedure simplification. 1.5 Revised Public Policies Not applicable 1.6 Other Significant Changes No significant changes were made to the objectives, scope, procedures, or financing related to this series. 2

15 2. Key Factors Affecting Program Implementation and Outcomes 2.1 Program Performance (based on a table from the policy matrix) The second series of PARL is a continuation of the first. It retains the same components and reforms and aims at consolidating intermediate results. The sole difference lies in the new e-government component introduced in Given that most triggers relating to the two operations were achieved within the prescribed deadline, second series performance can be rated as satisfactory. Of a total of 10 triggers identified for PARL IV, only two had to be revised. The first one is a PARL IV s trigger envisaging expanding Medium-Term Expenditure Frameworks (MTEF) to five new ministries, covering the period 2009 to 2011 and based on a revised approach that draws lessons from the first phase. Implementation of the trigger benefited from technical assistance financed by a World Bank grant. Due to delays in mobilizing the expertise needed to revise the methodology, the final prior action foresaw 5 new MTEFs for the period This prior action was met and by the end of 2010, five ministries (Agriculture, Justice, Youth and Sports, Modernization of the Public Sector (MMSP), and New Technologies) had developed their MTEFs based on a more strategic approach that is better suited to the new budget approach. These MTEFs are now awaiting formal approval. The second revised trigger involves online procurement planned in PARL IV. In addition to being too ambitious, the measure providing for the introduction of online tenders met with technical and legal difficulties related to securely providing corporate signatures online when submitting such tenders. Although online tendering was excluded, the revision provided an opportunity to better define and strengthen the trigger, and extend its scope to include 80% and 25% of local governments and public institutions, respectively. Table 1 outlines the detailed outcomes achieved by PARL III and IV. (Revised triggers and detailed revisions are shown in italics) Table 1: Program outcomes and triggers (PARL III and IV) PARL III PARL III prior actions PARL IV triggers Outcome Subprogram A: Improving government efficiency in budget resource management Preparing sector-based MTEFs for nine ministries. Expansion of sector-based MTEFs to include five new ministries, with assistance from an ad hoc group. Met. Nine ministries had prepared their MTEFs by the end of A February 8, 2007 circular from the Prime Minister launched the process in Although the measure was formally achieved, without a multi-annual budget perspective, these MTEFs remained budget guidelines, not budget allocation and management instruments. Moreover, the ministries neither updated nor integrated these into the budget preparation process. The globalization of appropriations was implemented in at least 30 ministries. Met. 32 ministries adopted the globalization of appropriations at paragraph level. 3

16 PARL III Adopting a circular by the MEF that simplifies the budget appropriation deconcentration process. Finalizing the study of public expenditure control. Preparation of 2007 performance audit reports by IGF and IGM in at least 20 ministries and publication of a consolidated performance audit report based on the 2007 budget. Subprogram B: Improving government efficiency in human resource management RECs were completed by at Completion of standard job classification. least 6 ministries in 2007, and the job classification system was launched. Initiation of a study to implement a new remuneration system based on a new job classification. Signature of the service contract launching the study. Completion of the diagnostic, review of current documents and technical adjustments, and launching of scenario designs for a new remuneration system based on the new job classification. Subprogram C: Public payroll consolidation and control Adoption of a circular setting up a commission to monitor wage bill trends quarterly Adoption of a MEF Circular to set up a working group for the development of good practices for wage bill forecasting and monitoring and pilot testing in MEF, Education, Health, Housing. Extension of best practices in monitoring, forecasting, and payroll credit management to other ministries. Subprogram D: Improving public services and simplifying procedures through e-government Signing by the Prime Minister of a circular creating a high-level body with sufficient authority, credibility, and visibility to enable it to manage the administration s e- government activities. Extension of current online procurement tools (tender documents, terms of reference, and outcome downloads) to all central administration levels. Signing of at least one partnership agreement between the public and the private sector to improve public service quality. Met : the circular has been adopted and speed up the devolution of appropriations identified as such in the budget law. The development of an integrated budget management information system (GID) automated such devolution from 01/1/2010. Met. The study of public expenditure control was completed by the Ministry of Economy and Finance. As of end 2010, the prior controls have been consolidated, the assessment of authorizing officers management capacity is well advanced and selectivity is to be introduced end of Met. RECs were developed in six major ministries and launched in four others, thus covering 80% of the civil service. Met. The study of the new remuneration system was initiated. Although cumbersome administrative procedures delayed its implementation, results pertaining to the first two phases have been validated and the third and final phases are expected to be validated in the second half of Met. A MEF circular set up a commission to monitor wage bill trends quarterly. Wage bill of each department is monitored monthly and shared with each Ministry s general secretary. Met. An MEF circular created a group responsible for preparing and implementing measures that would improve wage bill monitoring and predictability; it is also responsible for phasing in best salary appropriation management practices in four ministries (MEF, Education, Health, and Housing). 4

17 PARL IV Indicative triggers at beginning of series Prior actions Revision of trigger and outcome Subprogram A: Improving government efficiency in budget resource management Expansion of sector-based MTEFs to include five new ministries, with assistance from an ad hoc group. Preparations related to medium-term expenditure frameworks (MTEFs) for five additional ministries began with assistance from an ad-hoc working group. Trigger revised and prior action met. Five ministries (Agriculture, Justice, Youth and Sports, MMSP, and New Technologies) developed an MTEF for the period, with the assistance of an international consultancy company. The prior action was revised accordingly. Without a multi-annual budget perspective, these MTEFs remained sector guidelines that were neither validated by MEF nor integrated into Signing of a minimum of 3 pilot performance contracts between the ministries of Education and Health and their de-concentrated offices. Establishment through a Prime Minister's decree of a new system for the control of public expenditure. Development of 2007 performance audit reports by IGF/ IGM in at least 20 ministries and publication of a consolidated report based on the 2007 budget. The Ministry of National Education, Higher Education, Public Officials Training and Scientific Research and the Ministry of Health have each signed at least three (3) pilot performance contracts with their respective deconcentrated offices. The Prime Minister has issued Decree No dated November 20, 2008, providing for the establishment of a new system for the control of public expenditure. Prepared by IGF and IGM in at least 20 ministries, 2007 performance audit reports were drafted and a consolidated 2007 budget performance audit report was published. Subprogram B: Improving government efficiency in human resources management Completion of standard job classification. The standard job classification study has been validated by the Steering Committee chaired by the Ministry delegated to the Prime Minister, in charge of Public Sector Modernization the budget preparation process. Met. The Ministry of Health already signed performance contracts with 6 pilot regional health agencies. The Ministry of Education has signed performance contract with 15 universities and 2 establishments under public oversight. Moreover the ministry of Education is expected to sign shortly the performance contracts with its de-concentrated entities (AREFs) in the context of its Plan d Urgence in the coming weeks. Met. A new system of modulated expenditure control was implemented through the adoption of a related Decree (N ) on 20 November The objective is to introduce more fluidity and flexibility of expenditure control, and orient the control towards performance evaluation. Met and 2008 performance audit reports were completed for 22 ministries. The consolidated performance audit report can now be accessed by the general public via the MEF website. Met. A new job classification has been validated by the HR network steering committee chaired by the MMSP. Ministries having GPEEC are currently filling in their own classification, with specific training provided to do so. Completion of the diagnostic, review of current documents and technical adjustments, and launching of scenario designs for a new remuneration system based on the new job classification. The firm responsible for the study on developing a new remuneration system based on the new job classification has completed the first two phases and the results have been validated by the MMSP-chaired Steering Committee. Subsequent to this validation, the firm began designing scenarios for a new remuneration system based on the new job classification, which is the study s third and final phase. Met. The results pertaining to the first phase of the study have been achieved and validated by the MMSPand MEF-chaired Steering Committee. Results pertaining to the second phase were validated in early March 2010, and the third and final phase has begun. 5

18 PARL IV Indicative triggers at Prior actions beginning of series Subprogram C: Public wage bill consolidation and control Dissemination by MEF of a The Ministry of Economy and Finance quarterly report on the has launched the dissemination of evolution of the wage bill monthly reports on the evolution of the and its main determinants in wage bill and its main determinants in each ministry. each ministerial department. Extension of best practices in monitoring, forecasting and payroll credits management to other ministries. The group comprising representatives of the Ministries of Finance, National Education, Higher Education, Public Officials Training and Scientific Research, Health, Housing, urbanization and Spatial Development, Fisheries, in charge of the preparation and implementation of measures leading to an improved monitoring, forecasting and payroll management and including, in particular, tools for improved forecasting of personnel credits and best practices for job posts management, has identified and introduced said measures in said ministries, and Circular No. 189/MOM /2009 date November 30, 2009, of the MEF has been issued to extend key measures for improved civil service management to all of the Borrower s ministries Revision of trigger and outcome Subprogram D: Improving public services and simplifying procedures through e-government Creation of a credible and comprehensive governance framework for developing an information society and e-government. Extension to some public entities as well as some local administration of the existing tools as regard public bids online (download offers, terms of reference, results, and the submission of offers online). The Prime Minister issued a decree establishing an institutional and governance framework for developing an information society and e-government. Existing tools for public bids on-line (down load offers, terms of reference and results) have been extended to at least twenty five percent (25%) of state controlled public entities and eighty percent (80%) of local administration, and the action plan for the submission of offers on-line to be operational by December 31, 2010 has been completed. Met. MEF has set up a working group (MEF, Education, Health, and Housing) to prepare and implement best practices designed to improve wage bill monitoring and forecasting. The Ministry of Fisheries has been added to the group. This group met several times when wage bill forecasting tools and salary appropriation management measures were transferred to group members and training sessions related to these themes were organized. In this regard, MEF published a circular based on which key measures for improving staff budgetary activity management were implemented in all ministries. Met. The MEF set up a working group (MEF, Education, Health, and Housing) for the preparation and implementation of best measures to improve monitoring and forecasting of the wage bill. The ministry of Fishing has been added to the group. The working group met several times where forecasting tool for the wage bill and payroll credit management measures have been transferred to the group members and a related training was organized. In this context the MEF has issued a circular where key measures to improve the management of personnel budgetary posts have been extended to all Borrower s ministries. Met. While the Prime Minister heads the institutional framework implemented and approved by a May 2009 decree, the Ministry of Industry, Trade, and New Technologies oversees two bodies in the new interministerial structure: the steering committee and the secretariat. The steering committee and the secretariat are both operational. Trigger revised and prior action met. Over a third (36%) of government-controlled public institutions and all (100%) local governments can access tender documents, terms of reference, and outcomes online. While the online bidding procedure is not yet operational due to administrative and technical constraints related to electronic signatures, an action plan has been developed to implement this activity by the end of The prior action has been revised accordingly. 6

19 2.2 Key factors influencing implementation Program implementation has not been affected by any key factors, given that: (i) the operation is significantly in alignment with the administrative reform strategy and program; and (ii) the government implemented a cautious macroeconomic management strategy that enabled the country to mitigate the impacts of major external shocks such as the food crisis, oil price hikes, and the global economic and financial crisis of These crises only gave added relevance to the reform program s objectives and underlined the need to modernize public finance and human resources management, and control the wage bill. Although its impact on Morocco was limited due to the low international integration level of its banking sector, the impact of the crisis in Europe, Morocco s major export market, emphasized the need for governments to be proactive and investment-oriented. Factors that positively contributed to implementing the second series of PARL include: Alignment: The program s alignment with administrative reform priorities constituted an advantage. Administrative reform is a significant pillar of the economic and social reform program adopted by the new government in October Both MEF and MMSP were fully committed to implementing budget and civil service reforms. These ministries worked together with sector ministries to efficiently undertake reforms aimed at improving payroll management and control. The National e-government Committee (CNeGov) managed reforms under the e-government and simplification of procedures component. Appropriation was less with respect to MTEFs. Coordination: At the government s request, the program was jointly prepared and monitored by Morocco s three major development partners (The EU, the AfDB and the WB). Identification and appraisal were conducted jointly, resulting in a single activity matrix, strong dialogue, and joint supervision missions and reports. The World Bank is endeavoring to maintain this approach, which is especially suitable for such complex and extensive administrative reforms. In compliance with the Paris Declaration on Aid Effectiveness, this joint effort has strengthened the reform program s credibility and reduced the country s transaction costs. Analytical work: Preparation related to the second series of PARL drew from lessons learned during the first phase, which focused on developing concepts of reform components and instruments, and from experience by a significant number of ministries (9 for MTEFs, 10 for deconcentration and 32 for globalization of appropriations). This series further benefited from substantial analytical work (see Table 2) and from a good coordination of donors technical assistance, including World Bank support to the MTEF approach and EU support to the preparation of the new organic law. The Bank s Programmatic Economic and Sector Work (P-ESW) was crucial in supporting and informing this especially complex and extensive reform process. Table 2: Key World Bank analytical underpinnings ( ) Area Instrument Dates General areas Poverty assessment (PEEs) AAA Country Economic Memorandum (CEM) AAA 2006 Morocco: Sector policy notes AAA 2007 Country Governance Anti-Corruption (CGAC ) analysis AAA 2009 Efficient public sector management PESW on budget reforms and HR AAA Since 2002 Legal framework reform and procurement modernization IDF grant 2000 &

20 Public Expenditure Review (PER) AAA 2002 Accounting, auditing, and monitoring of ROSCs (2008) AAA 2002 & 2008 Public finance management system (CFAA) AAA 2003 & 2007 Public Expenditure and Financial Accountability (PEFA) assessment AAA 2008 UCS Procurement Pilot Program AAA 2009 Decentralization Decentralization and municipal management technical assistance (TA) TA 2006 Study on international experience in health service decentralization AAA 2009 Consultation : the reform design and implementation could have benefitted from a greater stakeholder and civil society consultation. This is particularly the case for the budget reform and the pilot testing of the performance management approach. The regional administrations were insufficiently associated to the establishment of the Ministries performance indicators and targets, which in turn were only partially taken into account in the performance contracts with the center. Likewise, performance objectives and indicators could have been more focused on taxpayers and users expectations. Such consultation could have increased the internal and external visibility of the reform and enhanced appropriation at the operational level. 2.3 Monitoring and Evaluation (M&E) design, implementation, and utilization Reforms were continuously monitored through regular policy dialogue with the authorities in compliance with development policy support program procedures. This dialogue and monitoring were facilitated by stationing most program team members in the Bank s country office. The series result and impact indicators were aligned with administrative reform program objectives, although some were too ambitious considering the conceptual and pilot testing phase of the reform. This is notably the case for performance indicators pertaining to the budget and the human resources reforms. While the program was focused on the development and pilot testing of medium term expenditure frameworks, the indicator was measuring the integration of multi-annual budget planning into the budget bill preparation process, which would have required the adoption of a multi annual budget perspective and a global MTEF. Likewise, one key performance indicator of the human resource component measured the implementation of reforms to develop a more equitable and transparent compensation system, while the program focused the preliminary study. Both these ambitious indicators thus weight negatively on the rating of these two components. From an institutional perspective, there was no formal central steering and monitoring system. Reform specific steering committees were set up to monitor progress. Their effectiveness was uneven. For instance the inter-ministerial high committee set up at the beginning of the program for the budget reform, barely convened and thus did not play its steering role. The e-government reforms benefited from the strengthening of its institutional governance under the program. The set up in May 2009 of the National Council for ITC and of the e-government inter-ministerial committee came close to a monitoring and evaluation system. The reforms supported by the series contributed to strengthening the government s monitoring and evaluation system. The development of an integrated expenditure management (GID) system improved real-time budget execution monitoring. The development of wage bill monitoring and control tools and the greater involvement of line ministries further strengthened public finance management and monitoring. Finally, the program helped build performance audit capacity through the development of a methodological guide and the emphasis on performance audits, which were carried out in 20 ministries. 8

21 2.4 Next Phase and Operation Following a government request, provision was made for a new programmatic series that supports implementation of new budget and administrative management approaches. Recent events in the region and the country confirm that population is eager to see good governance, transparency and efficiency with respect to public finances and services, all key objectives of the budget and administrative reform. To meet the citizens expectations in a tangible and visible way, the new series would focus on institutionalizing and scaling up these reforms, and on implementing the new regionalization strategy. Government authorities and development partners are currently discussing the following strategic pillars: (i) improving transparency and accountability in public finance management by adopting and implementing performance-based budget management; and (ii) improving public service management and efficiency. Discussions related to tax reform consolidation are currently underway to identify available tax revenue that may be allocated to (re)deploying development priorities. Finally, regionalization, as a cross-cutting priority, will strengthen the two strategic pillars mentioned above by bringing decision making closer to service delivery. 3. Assessment of outcomes 3.1 Relevance of objectives, design, and implementation Objectives, Design, and Implementation of the Second Series of PARL are considered relevant. The four objectives of the program were well aligned with the government s reform strategy for the implementation of its economic and social program. The objectives of improving effectiveness of budget and human resources management, of consolidating and controlling the public wage bill, of developing e-government, and of simplifying procedures closely matche the government s reform priorities. These priorities are to: (i) modernize public administration and the civil service; (ii) develop a new system of results-based budgeting, including mechanisms for assessing public policy; (iii) strengthen governance and transparency in the public sector through reform of public financial controls; (iv) improve human resources management; (v) enhance the quality of public services through the introduction of proximity management; (vi) pursue the deconcentration process; and (vii) simplify administrative procedures by developing e-government. These objectives take into account the sequencing of these reforms and aim at deepening reforms supported by the first series of PARL, including (i) multi-year budget planning, (ii) developing program budgets with performance indicators, (iii) modernizing internal controls, (iv) reducing the wage bill through the voluntary retirement program, and (v) modernizing human resources management through the introduction of the Staffing and Competencies Registry (REC). The design of the series took into consideration trends in policy priorities and was adapted to the gradual implementation of these structural reforms. The first PARL series initially foresaw three loans. A decision was taken to suspend this series after the second loan and to begin a new series of two loans (PARL III & IV). This helped take into account the priorities of the reforms initiated by the government, which took over after the October 2007 election. E-administration and the simplification of procedures were added as a fourth component. The second series was approved on May 15, The choice of a new programmatic series responded to the need for flexibility in an reform approach based on experimentation in pilot ministries. Programmatic lending allows for lessons to be learned from experience. For example, the initial methodology for preparing MTEF based on programs corresponding to budget items proved inadequate for an effective performance approach. The latter 9

22 requires major programs and more strategic indicators. PARL IV s corresponding trigger was revised to reflect the new MTEF methodology. Similarly, the public procurement transparency trigger was strengthened, taking into account progress made in this area. The Development Policy Loan instrument proved to be an appropriate instrument to support the reform process by enhancing attention to key reform benchmarks and triggers and by formalizing the reform phasing, in the absence of a reform blueprint. The implementation of the series relied on solid ownership of reforms by the government and on the steering structures it had put in place. An inter-ministerial steering committee for administrative reform headed by a Permanent Coordinator was established through a decision of the Prime Minister aiming to ensure the coordination and monitoring of the program. However, steering these complex reforms would have been facilitated by more frequent meetings and the adoption of a master plan, especially for budget reform, as was the case for the e-government component. As indicated in Sub-section 2.2 above, the implementation of the series benefited from good coordination and harmonization between the major partners supporting these reforms (WB, EU and AfDB). This coordination resulted in increased leverage and credibility of complex and sensitive reforms, which significantly modified the mode of operation of the administration and of civil servants. This approach helped to reduce the risks associated with both institutional and individual resistance to reforms. However, it is appropriate to reinforce the visibility of these reforms and of their short term results in order to enhance ownership at scaling-up stage. Particular attention should be paid to change management as well as to internal and external communication. 3.2 Achievement of Project Development Objectives The definition of results and impact indicators is difficult for any public sector reform. This is particularly true in the case of complex and long term reforms such as those supported by the PARL programs. While the second programmatic series (PARL III and IV) helped raise budget and human resources reforms to a higher level, they remained at a preparation and experimentation phase. In the absence of a generalization of reforms as well as of institutional and legal backing for the new modes of management, results in terms of effective public management (financial, human resources, budget balances, and e-administration) will remain limited. Results achieved by the second programmatic series, as specified below, must therefore be analyzed primarily within the context of overall objectives and then in relation to the specific objectives of each component. The overall objective of PARL to improve effectiveness, transparency, and accountability in public administration has been partially achieved and can be considered moderately satisfactory. 1. Effectiveness of the administration The development of new instruments for planning and budget projections, such as MTEFs in the 16 ministries, helped in some cases to improve efficiency in their actions by reinforcing the link between their strategy, their programs, and their budget. The adoption of a new methodology for preparing MTEFs from 2009 helped assess the allocation of financial and human resources on the basis of strategic areas and programs. Once institutionalized, these instruments will contribute to improving intra-ministerial allocations, identifying asymmetries and waste, and reinforcing budget dialogue with MEF. In some cases, information contained in the MTEFs was used in budget negotiations. However, the impact would have been more significant if (i) sector MTEFs were part of a general MTEF and were well integrated into the budget preparation and negotiation process, and (ii) a program budget nomenclature had been 10