Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-92619) ON A FOOD CRISIS RESPONSE DEVELOPMENT POLICY 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 (TF-92619) ON A FOOD CRISIS RESPONSE DEVELOPMENT POLICY GRANT IN THE AMOUNT OF US$3 MILLION TO THE REPUBLIC OF SIERRA LEONE December 17, 2009 Poverty Reduction and Economic Management 4 Country Department West Africa 1 Africa Region

2 CURRENCY EQUIVALENTS (Exchange Rate Effective November 16, 2009) Currency Unit Currency Unit = Leone US$1.00 = Le 3,821 FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS ABU Agricultural Business Units AfDB African Development Bank BSL Bank of Sierra Leone CAS Country Assistance Strategy CPIA Country Performance and Institutional Assessment CWIQ Core Welfare Indicators Questionnaire DACO Development Aid Coordinating Office DfID Department for International Development (United Kingdom) EC European Commission FFS Farmer Field Schools GBAA Government Budgeting and Accountability Act (2005) GDP Gross Domestic Product GFRP Global Food Crisis Program HIPC Heavily Indebted Poor Countries IDA International Development Association IMF International Monetary Fund IRCB Institutional Reform and Capacity Building MDRI Multilateral Debt Relief Initiative MEST Ministry of Education, Science and Technology MOFED Ministry of Finance and Economic Development MOHS Ministry of Health and Sanitation NaCSA National Commission for Social Action NGO Non-Governmental Organization NPV Net Present Value PEFA Public Expenditure and Financial Accountability PETS Public Expenditure Tracking Survey PFM Public Financial Management PRGF Poverty Reduction and Growth Facility PRS Poverty Reduction Strategy PRSP Poverty Reduction Strategy Paper SDR Special Drawing Rights UK United Kingdom UN United Nations UNDP United Nations Development Program UNICEF United Nations Children s Fund WFP World Food Program Vice President: Country Director: Sector Director: Sector Manager: Task Team Leader: Obiageli Katryn Ezekwesili (AFRVP) Ishac Diwan (AFCF2) Sudhir Shetty (AFTPM) Antonella Bassani (AFTP4) Douglas Addison (AFTP4)

3 COUNTRY SIERRA LEONE 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 1. Program Context, Development Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annexes Annex 1 Bank Lending and Implementation Support/Supervision Processes Annex 3. Stakeholder Workshop Report and Results Annex 4. Summary of Borrower s ICR and/or Comments on Draft ICR Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders Annex 6. List of Supporting Documents Country Map IBRD #33478

4 A. Basic Information Country: Sierra Leone Program Name: SL-DPL-FOOD CRISIS RESPONSE Program ID: P L/C/TF Number(s): TF ICR Date: 12/16/2009 ICR Type: Core ICR Lending Instrument: DPL Borrower: Original Total Commitment: Revised Amount: REPUBLIC OF SIERRA LEONE USD 3.0M Disbursed Amount: USD 3.0M Not Applicable Implementing Agencies: Ministry of Finance and Economic Development Cofinanciers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: Expedited Effectiveness: 08/22/ /20/2008 Appraisal: 07/25/2008 Restructuring(s): Not Applicable Not Applicable Approval: 08/06/2008 Mid-term Review: Not applicable Not Applicable Closing: 06/30/ /30/2009 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Satisfactory Moderate Satisfactory Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Quality of Supervision: Satisfactory Implementing Agency/Agencies: 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): Not Applicable Quality of Supervision (QSA): None None Rating: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General education sector Health Theme Code (as % of total Bank financing) Global food crisis response E. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Obiageli Katryn Ezekwesili Country Director: Ishac Diwan Ishac Diwan Sector Manager: Antonella Bassani Antonella Bassani Program Team Leader: Douglas M. Addison Douglas M. Addison ICR Team Leader: ICR Primary Author: Douglas M. Addison J. Matthew Mitchell F. Results Framework Analysis Program Development Objectives (from Project Appraisal Document) The Food Crisis Response Development Policy Grant of US$3 million was to support the Government's poverty reduction strategy by providing the authorities with needed fiscal space to partially compensate for the lost revenues resulting from the reduced tariffs on food and fuel imports. ii

6 Revised Program Development Objectives (if any, as approved by original approving authority) None (a) PDO Indicator(s) Indicator Significant reduction in import tariffs Number of hospital patients in district hospitals and community health centers that receive food Baseline Value As of 12/2007 Rice tariff=15% Flour tariff =20% Wheat tariff =5.0% Sugar tariff =20% Petrol tariff =5% Original Target Values Rice tariff=10% Flour tariff =10% Wheat tariff =2.5% Sugar tariff =10% Petrol tariff =$20/mt Formally Revised Target Values Not Revised 12,800 12,800 Not Revised Actual Value Achieved at Completion Rice tariff=10% Flour tariff =10% Wheat tariff =2.5% Sugar tariff =10% Petrol tariff =$20/mt At least 12,734 hospital patients were fed in district hospitals and local health centers in One hospital did not report. Number of lactating mothers and children under the age of five, in hospitals administered by the Ministry of Health and Sanitation that receive feedings three times a day. Number of pupils in government boarding schools and handicapped children who are fed three times per day. Number of children in remand homes and approved schools who receive food. 5,300 5,300 Not Revised 8,200 3,000 3,000 Not Revised 3, Not Revised 380 children in remand homes and approved schools were fed in The total number dropped because of a reduced number of children in the homes. iii

7 G. Ratings of Program Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 03/24/2009 Moderately Satisfactory Moderately Satisfactory /19/2009 Satisfactory Satisfactory 3.00 H. Restructuring (if any) Not Applicable iv

8 1. Program Context, Development Objectives and Design (This section is descriptive, taken from other documents, e.g., Program Document/ISR, not evaluative): 1.1 Context at Appraisal (Brief summary of country macroeconomic and structural/sector background, rationale for Bank assistance) Background. In 2008, the massive spike in global food and fuel prices threatened to exacerbate the high rate of poverty in Sierra Leone, a country of 5.6 million people. About 57 percent of the population was already below the poverty line in Furthermore, 21 percent faced extreme poverty, unable to meet more than half of their daily calorie requirements. The international price of rice more than doubled in the first half of 2008, from US$375/ metric ton (mt) in January to US$775/mt in June. Global prices of other major food staples, such as wheat and sugar, also rose. Rice is a major food staple in Sierra Leone. Because of limited agricultural production, the country imports nearly a third of its rice consumption. Approximately one million people live in the capital city of Freetown, far from food-producing areas and dependent on imported food staples. According to Government estimates, the increase in the price of rice alone threatened to push 100,000 to 150,000 more people below the poverty line. Sierra Leone s indicators of human development, among the lowest in the world, attest to the country s pervasive poverty. Per capita Gross National Income (GNI) of US$ 300 per day in 2008, is roughly half the average for low-income countries. The rate of infant mortality, estimated at 158 per 1,000 live births in 2005, is more than double the average for the world s low-income countries. An estimated 27 percent of children less than five years of age suffer from malnutrition with mortality in this age group reportedly at 267 per 1,000 in Thus, the availability of affordable food is a major concern of the Government. The program of policy actions linked to the Food Crisis Response Development Policy Grant (FCR grant) reflected the priorities of the Government s first Poverty Reduction Strategy (PRS), which covered the period of 2005 to This PRS had a target annual economic growth rate of 8-9 percent, focused on three pillars: (i) good governance, security, and peace building; (ii) sustainable economic growth focused on food security and job creation; and (iii) human development. In addition to the poverty-related concerns, the PRS emphasized continued peace and security. A second PRS was adopted by the authorities in mid A civil conflict for the seven years prior to 2001 had devastated the country s infrastructure and displaced about a third of the population. The Government considered poverty reduction a key factor in preventing a rise in social and political tensions. The quality of governance was also a major issue because Sierra Leone s low ranking in this area had constrained external assistance to the country. 1

9 Sierra Leone had made significant progress in economic growth before the food crisis of From the end of civil conflict in 2001, through 2007, the country s economy showed a strong recovery. In 2007, the economy grew at 6.8 percent despite high oil prices. Much of this growth came from the informal agricultural, fishing, mining and service sectors. Exacerbating the adverse impact of more expensive food imports was sluggish growth in exports. Diamonds have been Sierra Leone s major source of export earnings. However, in recent years the country has broadened the export base to include other minerals and cash crops. Export growth, though positive, slowed relative to GDP growth in 2007, with imports declining as a result of falling export earnings and rising oil prices. Macroeconomic projections during the appraisal of the program that the FCR grant supported (FCR program) indicated slower growth of 6 percent for compared to 7 percent between 2005 and Inflation was a major concern in Increases in international food and fuel prices were accelerating inflation, which jumped to about 16.8 percent in June of 2008, more than double the level at the end of 2006 (8.3 percent). The international consumer price of rice was 139 percent higher in June 2008 than in June The international price of petroleum increased by 92 over the same period. The rising pace of inflation, made more painful by the sharp increases in food and fuel prices, caused concern within the Government about the impact on poverty and social stability. Rationale for Assistance. In July 2008, the Government prepared a detailed letter of development policy to address the crisis of high food prices. It requested a US$3 million grant from the World Bank under the Global Food Crisis Program (GFCP) with financing from the Food Price Crisis Response Trust Fund to partially compensate for foregone revenues resulting from a policy to reduce tariffs on key food and fuel imports. The Government stated that the assistance would help to protect the provision of basic food services to groups of people most vulnerable to price increases in A rapid response was necessary because the Government was concerned about the availability of affordable food and its ability to provide adequate levels of assistance to groups most vulnerable to higher food prices during the hungry season, from June to December 2008, a period of frequent scarcity in the domestic food supply. Meeting basic needs also was crucial to maintaining peace and security in Sierra Leone s post-conflict economy. In order to expedite GFCP operations, the World Bank s management approved the use of procedures that reduced the number of internal reviews and clearances. The program of policy measures for which the Government requested assistance met the eligibility criteria for funding under GFCP, which assisted operations designed to: (i) reduce the negative impact of high and volatile food prices on the lives of the poor, in a timely way; (ii) support governments in the design of sustainable policies that mitigate the adverse impact of high and volatile food prices on poverty while minimizing the 2

10 creation of long-term market distortions; and (iii) support broad-based growth in productivity and market participation in agriculture and sustainable food supply response. The FCR program supported the PRS pillar for sustainable growth, food security and job creation, which also was a pillar in the Bank s Country Assistance Strategy (CAS). By helping to contain the adverse impact of the food crisis, the grant complemented mediumterm operations in the CAS to reduce poverty and expand domestic food production--the latter to be achieved through a combination of agricultural investment projects in agricultural development, road network expansion, and increased extension services. By supporting feeding programs for vulnerable groups in Government hospitals and schools, the grant also complemented operations under the Human Development pillar of the CAS. (For a detailed description of the relationship of this operation to other World Bank activities, please see paragraph 4.2 in the Program Document.) The International Development Association (IDA) has coordinated its operations closely with those of the IMF and other development partners that are providing budget support or financing for investment operations. 1 The design of the program supported by the FCR grant incorporated a key lesson learned from cross-country experience that governments facing temporary price shocks should seek to maintain their expenditure plans, to the extent that they have access to noninflationary and concessional financing, in order to minimize program disruptions and hold down costs. In the case of permanent shocks, an adjustment in taxation and spending will be necessary. In the former case, budget support can help ease the process of transition, especially since other operations were supporting efforts to expand domestic food production. Such programs are particularly important in countries with fragile economic and political situations, such as Sierra Leone. The performance of past development policy grants for Sierra Leone had been satisfactory. The key factors resulting in satisfactory performance were continuous improvements in fiduciary arrangements, adaptation to local implementation capacity, frequent consultation with authorities, intensive coordination with other budget support donors, and intensive supervision in collaboration with staff of the Ministry of Foreign Affairs and Economic Development (MOFED). 1.2 Original Program Development Objectives (PDO) and Key Indicators (As approved) The program objective was to support the Government's PRS by providing the authorities with needed fiscal space by partially compensating for lost revenues resulting from the reduced tariffs on food and fuel imports. This support would help mitigate the impact of such price increases and contribute to continued basic service delivery for vulnerable 1 Development partners involved in budget support include the British Department for International Development (DfID), the European Community (EC), and the African Development Bank (AfDB). Organizations helping Sierra Leone increase food production or supporting feeding programs include the Food and Agriculture Organization (FAO), the World Food Program (WFP), the World Health Organization (WHO) and the United Nations Children s Fund (UNICEF). A national coalition of nongovernmental organizations (NGOs) are supporting the development of national field schools to improve farmer productivity and marketing. 3

11 groups. In particular, the size of the grant was matched against the estimated incremental cost (US$3 million) of maintaining government funded feeding programs across all ministries and agencies. The program matrix consisted of two sets of performance indicators: (i) policy actions designed to enhance food security, which the Government took prior to the release of grant funds; and (ii) support for human development through the provision of food assistance in 2008 to at least the same number of people in designated priority groups as in The key indicators in support of food security were reductions in tariffs on major imported foodstuffs rice, flour, wheat and sugar as well as petroleum (See Section 3.2, Table 2.3). In support of human development, the key indicators were the provision of food assistance to at least the same number of people in 2008 as in 2007, designated by the Government as priorities for food assistance. The FCR program monitored assistance to the following key groups considered most vulnerable patients in district hospitals and community health centers, lactating mothers and children under five years of age in hospitals administered by the Ministry of Health and Sanitation, and selected groups of school children (See Section 2.1, Table 2.3). 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification There was no change in the PDO during the program s implementation period. 1.4 Original Policy Areas Supported by the Program (as approved) Within the framework of the Government s PRS, the FCR program supported the policy of lessening the adverse impact of high food and fuel prices on consumer welfare through reducing duties on food and fuel imports; (b) using lower world reference prices to value rice, the country s core food commodity; (c) reducing the excise tax on petroleum products; (d) accessing funds from the strategic petroleum reserve to temporarily subsidize petroleum prices; and (e) providing seed rice to farmers. The Government also prepared an action plan to use additional resources from donors, including from this operation, to protect the provision of selected basic services to vulnerable groups despite higher prices and lower tariff revenues. 1.5 Revised Policy Areas (if applicable) There was no revision to the policy areas. 1.6 Other Significant Changes (In design, scope and scale, implementation arrangements and schedule, and funding allocations) There were no significant changes to the project s design, scope, scale, implementation framework, or funding allocation. 4

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13 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance (Supported by a table derived from a policy matrix) Policy Actions and Release of Grant Funds. The program that the FCR grant supported required a set of policy actions summarized in Table 2.1(a) and detailed in Section 3.2. The Bank released US$3 million in grant funds (August 27, 2008) to Sierra Leone for budget support as noted in Table 2.1(b) after all actions were completed and the grant had been made effective following Board approval on August 4, Table 2.1 (a) Summary Conditions for Single Tranche Release List conditions from Legal Agreement/ Program Document Reduction of tariffs in 2008 to mitigate the impact of rapidly rising international prices of food and fuel and the preparation of an action plan, acceptable to the World Bank, to protect the provision of basic services to vulnerable groups. Status Achieved. Table 2.1 (b) Amount and Date of Tranche Release Amount Expected Release Actual Release Date Release (USD million) Date 3.0 (Single tranche) August 23, 2008 August 27, 2008 Regular Policy Actions. The government took the following actions to mitigate the impact of the food and fuel price increases: a. reduced tariff and excise rates in March 2008: the import duty on petroleum was reduced from 5 percent of CIF ad valorem to US$20 per metric ton; the import duty on rice was reduced from 15 to 10 percent; the fixed reference price used to value rice was set at US$375 per metric ton, well below world prices but higher than the 2007 reference price of US$260 per metric ton; the import duty on flour was reduced from 20 to 10 percent; the import duty on wheat was reduced from 5 to 2.5 percent; the import duty on sugar was reduced from 20 to 10 percent. b. reduced the excise tax on petroleum products by Le 610 per imperial gallon in November 2007 and partially restored the excise tax by Le 300 per imperial gallon in March 2008; c. used funds from a strategic petroleum reserve to subsidize petroleum product prices for five weeks in June and July of 2008; and d. provided 71,000 bushels of seed rice to farmers. 2 2 The previous government had discontinued the distribution of seedlings due to wasteful delays beyond planting times and an inability to account for all the seedlings distributed. 6

14 In addition, on July 25, 2008, the Government provided the Bank with an action plan to protect the provision of basic services to vulnerable groups. Under the plan, the Government used additional resources from donors (including from this operation) to fund the provision of basic services to vulnerable groups. The beneficiaries included school children and patients in district hospitals and community health centers that receive government provided meals. The latter include lactating mothers and children under the age of five. Tariff and tax policy. The tariff and tax reductions were conceived of as temporary measures, to be reversed when international prices had returned to pre-crisis levels. The average petroleum price in 2007 was US$71 per barrel. It reached a peak of US$133/bbl by July 2008 and had fallen to US$73/bbl by October The import tariff and excise tax on petroleum and petroleum products were therefore restored to their pre-crisis rates in October The average international price of rice was US$326 per metric ton in It reached a peak of US$907/mt in April 2008 and then began falling--but not enough to bring prices close to pre-crisis levels. The price was US$532/mt in December 2008 and it grew to US$572/mt by June Somewhat similar patterns are displayed by wheat, flour, and sugar 3 prices. The Government has therefore chosen to maintain the reductions in the import tariffs for these commodities. Macroeconomic Performance. The Government maintained good macroeconomic performance throughout 2008 and 2009, despite the adverse exogenous shocks generated by the food and food crisis and the global recession that followed immediately thereafter. Consumer price inflation has remained moderate. The policy measures described above reduced the magnitude of the shock felt by consumers and government providers of basic services. For example, the international price for rice rose by 139 percent between June 2007 and June 2008 while the domestic price rose by only 49 percent over the same period. The international price of petroleum rose by 92 percent in the same period while the domestic price rose by only 27 percent. The international prices for food and fuel began to fall in the second half of the year, although most prices remained well above 2007 levels. This allowed a moderation in domestic price inflation rate so that the endof-period inflation rate in 2008 for the consumer price index was only 12.2 percent against an IMF program forecast of 15.7 percent (see Table 2.2). The end-of-period inflation rate for 2009 is forecast to be 9.5 percent as a consequence of prudent monetary policy and despite exchange rate depreciation of almost 30 percent (end-of-period) induced by slower export demand and reduced inflows from remittances. Fiscal policy has promoted price stability and public service provision. By temporarily reducing tariffs, the Government lessened the burden of high food prices on the consumer. However, this policy action also lowered the revenue that Government could have collected had tariffs remained at the 2007 levels. MOFED estimated this loss, for 2008, at about Le 20.7 billion (or US$7 million), valued at actual prices during the first half of the year. At the same time, MOFED estimated an increase of Le 13.6 billion in the cost of delivering basic food services across all ministries and agencies, of which 3 From EU sources. 7

15 around Le 8.9 billion (US$3 million) resulted from the higher cost of food. The FCR grant partially compensated for the foregone revenues and increased costs. 4 Total domestic revenues collected by the Government in 2008 were 11.4 percent of GDP against a budget target of 11.9 percent of GDP. Some of this loss could be attributable to the policy actions described above but additional shortfalls occurred in other categories of import duties, excise taxes, mining taxes, and non-tax revenues. Net external financing was well below the budget target, requiring a compression in spending to 20.7 percent of GDP from the approved budget of 21.3 percent of GDP. The overall deficit therefore increased to 4.8 percent of GDP against the expected deficit of 3.2 percent of GDP. Table 2.2: Selected Economic Indicators, Program Estimate Budget Projection Real GDP Growth a/ Aggregate Per-capita GDP Shares Exports Goods & Non-factor Services b/ Imports Goods & Non-factor Services Current Account Balance c/ Revenue and Grants Revenues Grants d/ Expenditures Recurrent Development Fiscal Balance Fiscal Balance, excluding grants d/ Domestic Primary Fiscal Balance Other Broad money (%, e.o.p.) Reserve money (%, e.o.p.) Consumer Price Inflation (%, e.o.p.) e/ Exchange Rate (Le/US$, e.o.p.).. 3, ,910 a. The GDP estimates are provisional and remain subject to review. b. Includes estimates of unrecorded diamond exports. c. Including current official grants. Excludes capital official grants. d. The domestic primary fiscal balance is defined as domestic revenues minus total expenditures and net lending, excluding interest payments and externally financed capital expenditures. e. Western Area only. Sources: International Monetary Fund and World Bank staff estimates and projections. Sierra Leone s economic conditions and prospects have been being seriously affected by the global economic downturn. The mining sector is particularly hard hit, but other sectors are also affected, including services and tourism. Sluggish global demand for exports combined with a reduction in remittances from abroad has contributed to a slowing in economic activity with forecast real GDP growth in 2009 reduced to 4 percent compared to an earlier forecast of 5.5 percent made in the fourth quarter of In parallel, the GFRP provided US$ 4 million for a Cash-for-Work program, implemented by the National Commission for Social Action. 8

16 Domestic revenue in 2009 is projected to decline by 0.2 percentage points of GDP to 11.2 percent of GDP (0.9 percent of GDP less than the budget target) due to lower imports, a decline in mining activity, weaker corporate income, and revenue policy slippages. The expected revenue shortfall will be accommodated by identified additional external budget support, a reduction in recurrent spending (mainly through a decline in domestic interest obligations), and additional financing. As a result, the overall fiscal balance is projected to worsen to -4.4 percent of GDP against the budget target of -3.5 percent of GDP, while the domestic primary fiscal balance would worsen to -3.8 percent of GDP compared to the budget target of -1.4 percent of GDP. Despite this, overall monetary growth is forecast to remain moderate and supportive of price stability, growing by 12.9 percent (for a more detailed description of macroeconomic developments in 2008 and 2009, see the Program Document for the Governance Reform and Growth Credit III, Report N SL). Implementation of Action Plan. In spite of the fiscal difficulties outlined above, the Government implemented the action plan that it had committed to. In essence, the Government intended to meet its targets for numbers of vulnerable people fed despite rising food prices. Table 2.3 summarizes the implementation of the program. Two targets were exceeded one target did not benefit from full reporting, and one target (for remand homes) may have been set too high in light of reduced demand for remand home services. Impact of the Program. Annex 2 of MOFED s implementation report on the FCR program indicates that at least 24,784 people received food assistance in sectors specified in the Program Matrix. 5 The aggregate number of people receiving assistance was at least 15 percent higher than in The overall impact was likely much higher because the FCR program also provided food assistance to security services, for which the Program Matrix had no monitoring indicators. The beneficiaries cited are only those who received food assistance from government-funded social service programs, with budget support from external sources, including the FCR grant. 6 In addition, the population at large would have benefited from the reduction in the food and fuel import tariffs, the reduced fuel excise tax, and the fuel subsidy. Section 3.2 discusses the results in more detail. 5 It is possible that more people may have benefited from feeding programs: one district hospital did not report their performance for Table The indicators do not include people who received food assistance from programs that official donors and non-governmental agencies (NGOs) financed and operated on their own. 9

17 Table 2.3: Program Performance PRSP and CAS Results to Which the Policy Actions Contribute Indicator Baseline Value As of 12/2007 Food Security Significant reduction in import tariffs Rice tariff=15% Flour tariff =20% Wheat tariff =5.0% Sugar tariff =20% Petrol tariff =5% Original Target Values Rice tariff=10% Flour tariff =10% Wheat tariff =2.5% Sugar tariff =10% Petrol tariff =$20/mt Actual Value Achieved Rice tariff=10% Flour tariff =10% Wheat tariff =2.5% Sugar tariff =10% Petrol tariff =$20/mt Human Development 1. Number of hospital patients in district hospitals and community health centers that receive food 12,800 12,800 At least 12,734 hospital patients were fed in district hospitals and local health centers in One hospital did not report. 2. Number of lactating mothers and children under the age of five, in hospitals administered by the Ministry of Health and Sanitation that receive feedings three times a day. 5,300 5,300 8, Number of pupils in government boarding schools and handicapped children who are fed three times per day. 3,000 3,000 3, Number of children in remand homes and approved schools who receive food children in remand homes and approved schools were fed in The total number dropped because of a reduced number of children in the homes. 2.2 Major Factors Affecting Implementation The major factors affecting implementation were exogenous shocks and the degree of Government commitment. Three exogenous shocks were felt during the period of program implementation. The first was a rapid escalation in the international prices of imported fuel and food during the first half of 2008 which motivated a rapid response on the part of the Government to reduce import duties, excise taxes, and implement a temporary subsidy for petroleum products. As noted in the section above, the international prices for food and fuel abated somewhat in the second half of the year. In the case of fuel prices, the reduction was enough to justify an end to the temporary tariff and excise tax reductions. The second exogenous shock came from lower than programmed net external aid flows. As noted in section 2.1 above, the Government 10

18 compensated by compressing expenditures. Fortunately, Government commitment to its Action Plan was sufficient to ensure good progress in meeting (and in two cases, exceeding) feeding program targets. The third exogenous shock was the impact of the global economic crisis that dampened the country s growth prospects in 2009 and affected fiscal performance. Despite this shock, the Government was able to maintain acceptable macroeconomic performance. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization In April 2008, MOFED prepared a draft implementation report, followed by a second report in June 2009 and a final report in December Until the final report, data on one outcome indicator (district hospitals) was largely incomplete while data on another outcome indicator (for remand homes) was unavailable. The reporting problems were largely attributable, in the view of the authorities, to slow reporting from beneficiary government facilities, notably the district hospitals and remand homes. In order to track the implementation of the plan, the Budget Bureau of MOFED and the Accountant General s Department established a uniform code for program expenditures within the PRS monitoring framework of Sierra Leone s Integrated Financial Management Information System (IFMIS). The Government used this code to track expenditures for the food assistance programs of beneficiary government agencies funded thanks to the fiscal space created by this operation. However, despite well identified budgetary allocations for each component of the food assistance programs, there was no reporting on overall public expenditures on these programs. On the physical side of the food distribution program, MOFED relied on the various ministries benefiting from the grant to provide a report on the number of people receiving food assistance. This led to some important reporting lags, notably for the number of beneficiaries in district hospitals and remand homes. According to the Program Document, a technical committee, consisting of representatives from the various line ministries to receive grant funds, was to produce monthly reports on program progress. The M&E framework was simple--reporting on the number of persons, in each beneficiary category who received food assistance through government programs for food assistance, to which the grant contributed. However, the Bank did not receive regular, periodic progress reports and MOFED s implementation report does not indicate the creation of the planned technical committee. 2.4 Expected Next Phase/Follow-up Operation: The grant was an emergency response to high food prices in 2008 and the Government s request for assistance. Food prices have declined somewhat in 2009, although they are still well above pre-crisis levels. At the same time, the global economic crisis further reduced Government revenues available for social programs resulting in the need for continued budget support from development partners, including from the IDA-financed 11

19 Third Governance Reform and Growth Credit (GRGC-3) that was approved by the Bank s Board of Executive Directors on November 24, Parallel to the FCR grant for food assistance programs, the Food Price Crisis Response Trust Fund operation, in August 2008, approved a grant of US$4 million to support a cash-for-work program, which was part of the IDA-funded National Social Action Project (NaSAP). This project, supported by an IDA Credit of US$41.9 million (Credit 3748-SL), uses a community-driven development (CDD) approach to design and manage projects focused on rebuilding the lives of Sierra Leoneans in the aftermath of the devastation of facilities and displacement of people during the country s seven-year civil war. A second GFRP trust fund grant of US$4 million grant was approved in early November 2009 to continue and scale up the cash-for-work program. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation (To current country and global priorities, and Bank assistance strategy) The FCR grant objectives, design, and implementation were fully consistent with the country s priorities in the context of the food and fuel crisis, as specified in the Letter of Development Policy that accompanied this operation. The program s design was appropriate to country circumstances. The design was keep simple by focusing on one set of policy actions that were considered critical to address the impact of the crisis on the most vulnerable segment of society, especially given the country s dependence on food imports. Although not explicitly included in the CAS, the operation was fully consistent with the CAS pillar in support of sustainable growth, food security and job creation. By helping to contain the adverse impact of the food crisis, the grant complemented mediumterm operations in the CAS to reduce poverty and expand domestic food production. By supporting feeding programs in Government hospitals and schools, the grant also complemented operations under the Human Development pillar of the CAS. Finally, the operation was prepared and processed in a very short time period (12 weeks). This allowed the Bank to provide timely counter-cyclical support to the Government during the crisis. 3.2 Achievement of Program Development Objectives (Including brief discussion of causal linkages between policy actions supported by operations and outcomes) The Government addressed the crisis in a timely and appropriate manner in early 2008 by reducing tariffs and excise taxes to lessen the burden of high world food prices on the consumers (see Table 2.2). After petroleum prices fell substantially in 2008, the tariff and excise tax reductions for petroleum and petroleum products were discontinued. By contrast, the tariff reductions for rice, wheat, and flour have been maintained in the face of continued high international prices. 12

20 The Government backed these policies with an appropriate action plan meant to safeguard feeding targets for vulnerable groups in government hospital and school programs. Acceptable progress towards these targets was achieved (and surpassed for two targets) despite shortfalls in budgeted revenues and net external financing. Table 2.2 shows the baseline, target and actual numbers of people receiving food assistance according to the Program Matrix. Based on reported results for all beneficiary groups combined, the grant supported a program of food assistance to at least 24,784 people in educational and health institutions, which was well above the baseline for 2007 (21,600). The program provided meals for 8,200 lactating mothers and children under age five, exceeding the target by 55 percent. In contrast, food assistance to 12,734, patients in district hospitals and health centers, was about 20 percent below the target. However, according to MOFED, this total does not include all people who actually received assistance. In its final implementation report, MOFED indicated that one district hospital that received food assistance had not yet reported on the number of people assisted. Even so, it would appear that progress was substantial: 99.5 percent of the target was met by the reporting district hospitals. The program provided meals for 3,470 handicapped children and pupils in Government boarding schools, exceeding the target by 16 percent. The program provided meals for 380 children in remand homes. The number dropped below the 2007 baseline of 500 due to an improved security situation. In addition, the Government ensured that this operation was backed by complementary projects aimed at increased food production and the provision of a social safety net program. 3.4 Justification of Overall Outcome Rating (Combining relevance, achievement of PDOs) Rating: Satisfactory The operation is rated satisfactory. The operation s development objectives were achieved and the anticipated results substantially materialized. Objectives, design, implementation, and outcomes were highly relevant to country circumstances and development priorities as well as to the Bank s strategy. Satisfactory performance was achieved with regard to monitoring and evaluation although there was some room for improvement. In particular, there was no confirmation that the technical monitoring committee was created. Also, there were no periodic progress reports although the proposed monthly frequency was too ambitious. Finally, there was incomplete reporting on actual expenditures on feeding program components, and substantial lags in reporting on the number of beneficiaries in district hospitals and remand homes. 13

21 3.5 Overarching Themes, Other Outcomes and Impacts (If any, where not previously covered or to amplify discussion about) (a) Poverty Impacts, Gender Aspects, and Social Development The measurable impact of the program was the number of vulnerable people in specified categories of the original Program Matrix who received some form of food assistance (meals or bulk food supplies), which amounted to 24,784. In addition, as indicated earlier, the program also provided food assistance to security services not included in the Policy Matrix. However, including the broader impact of the FCR program s policy measures, it is likely that the poverty reduction impact was higher than the number of people receiving food assistance. A poverty analysis in the Program Document indicated that without measures to contain the increase in the price of key food staples, the poverty headcount of rice consumers alone could rise by at least 150,000, increasing the share of people below the poverty line by an estimated three to four percentage points, in a matter of months. 7 Because the tariff reduction policy cushioned the impact of high global food prices on the ability of rice consumers to meet their food needs, the FCR program had a broader human development impact than the measured impact on the number of people receiving food assistance. The lower price of rice relative to what consumers would have had to pay without the tariff reductions enhanced the ability of consumers to meet their food needs. And quite possibly it prevented a portion of the 150,000 people vulnerable to higher prices from falling below the poverty line, although the precise number would be difficult to determine. Lactating mothers were among the key beneficiaries of the food assistance programs. (b) Institutional Change/Strengthening (Particularly with reference to impacts on longer-term capacity and institutional development) The FCR development policy operation did not include measures aimed at institutional change or strengthening, given its crisis response nature. It is noted, however, that the Government did make use of its new Integrated Financial Management Information System to track expenditures for the food assistance programs of beneficiary government agencies funded thanks to the fiscal space created by this operation a positive development in the Government s efforts to strengthen its crisis management capacity. However, despite well identified budgetary allocations for each component of the food assistance programs, there was no reporting on overall public expenditures on these programs. It should also be noted that the grant complemented other operations in the CAS to reduce poverty and expand domestic food production--the latter to be achieved through a combination of agricultural investment projects in agricultural development, road network expansion, and increased extension services projects which are providing support for institutional strengthening in these respective sectors. (c) Other Unintended Outcomes and Impacts (positive or negative, if any) 7 Based on 2003/04 household survey data. The analysis excluded the impact of real growth between 2003 and See World Bank Report No SL, Sierra Leone: Poverty Diagnostic. 14

22 There are no major impacts that the ICR has not covered elsewhere. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (Optional for Core ICR, required for ILI, details in annexes) N.A. 4. Assessment of Risk to Development Outcome Rating: Moderate The risk to development outcomes is moderate. Sierra Leone is an open economy that is emerging from conflict. As such it is exposed to extraordinary endogenous and exogenous risk factors that could further increase food prices and endanger the sustainable provision of basic public services to vulnerable groups. A further rise in food and petroleum prices during the last quarter of 2008, considered a risk during the FCR program s appraisal, did not materialize. In fact, global food prices have declined since 2008 but are still relatively high compared to pre-crisis levels. The operation considered the possibility, which was realized (see section 2.1 above), that the goal of redirecting resources to offset rising food prices would be made more difficult in the event that revenues or grants fall significantly short of targets. This risk was mitigated by the Government s manifested commitment to adhere to the already established principle of protecting priority expenditures through reductions in less essential spending and the fiscal space provided by the operation. The operation also observed a risk that implementation capacity in the central ministries and local councils may not be sufficient to ensure that targeted beneficiaries are served in 2008 at least as well as they had been in 2007, because of the natural replacement of various key officials a result of the political transition in late 2007 and early This risk was evident in the first quarter of As indicated above, however, the overall implementation of the program was adequate with good progress towards program targets, two of which were surpassed. Finally, the design of the operation did not anticipate the impact of the global recession that began to affect the country in late 2008 and throughout The country has, however, remained fairly resilient with moderate growth, adequate macroeconomic policies, and support from the international donor community including from the Bank s development policy credit, GRGC-3. 15

23 5. Assessment of Bank and Borrower Performance (Relating to design, implementation and outcome issues) 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase) Rating: Satisfactory Bank performance was satisfactory during grant preparation and appraisal. The preparation of the grant was based on relevant analytical work and drew upon lessons from previous development policy operations. The operation fit into an overall program of short-term and long-term interventions to avoid food shortages and reduce poverty in Sierra Leone. During preparation, the Bank maintained a close relationship with the IMF and budget support donors. Also, and as indicated above, the Bank responded rapidly (12 weeks) to the Government s request for assistance. (b) Quality of Supervision (including M&E arrangements) Rating: Satisfactory The Bank supervised the FCR program as part of its broader program of policy dialogue and budget support. This was a reasonable approach given the relatively small size of the grant. The Bank prepared two ISRs on the FCR program in March and June of The ISR in March of 2009 rated the project s M&E unsatisfactory because, at that time, the Government had not yet provided reports on progress in meeting development indicators. As a result, the Bank rated the program s overall performance as moderately satisfactory. Following the receipt of MOFED s report, the Bank upgraded the overall performance rating to satisfactory based on: (i) MOFED s detailed tracking of grant expenditures, (ii) its reporting on most of the key performance indicators, and (iii) the expectation that MOFED would provide the missing information on the indicators and respond to the Bank s other queries on the program s results during the preparation of the ICR. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory A mixed rating of satisfactory for quality and entry and quality at supervision results in an overall rating of satisfactory. 16

24 5.2 Borrower Performance Note: According to the ICR Guidelines, if the Government and the implementing agency are indistinguishable, as is the case for Development Policy Lending operations, then a rating and justification is provided only for the overall Borrower. Rating: Satisfactory The Government showed a strong commitment to the FCR program, contributing to the analytical work that underscored the need for policy actions. The analytical work included the completion of a Poverty Diagnostic in June 2008 and a Core Welfare Indicators Questionnaire, which addressed poverty and public service delivery issues in key sectors that the FCR grant supported education and health. The Government produced three good, detailed implementation reports describing the budget allocation among beneficiary agencies; grant expenditures by beneficiary sectors through June 2009; and actual performance indicators in the Program Matrix, compared to targets. There were, however, two shortcomings in the Government s performance. First, it did not produce regular reports monitoring the program s actual progress compared to planned indicators, as stipulated in the Program Document although the proposed monthly frequency was in retrospect too ambitious. Second, MOFED did not respond to the ICR team s requests for important information necessary for the evaluation of the FCR program, particularly the outcome indicators for the number of beneficiaries in hospitals and remand homes, until the issuance of the final December 2009 progress report. In addition, it would have been useful to report on the total expenditures on the programs to which the FCR grant contributed. 6. Lessons Learned There are a number of lessons to be learned from this operation that may be applicable to other crisis response operations: It can be challenging to ensure the establishment of an effective monitoring and evaluation system (M&E) in the context of a crisis response operation. In the context of Sierra Leone, the Government and donors have a well established M&E framework to assess the impact of policy reforms supported by budget support provided by several donors. This framework operates around pre-established timetables and outcome indicators and it currently does not have the flexibility to respond to the need for a rapid crisis response. However, inclusion of the outcome indicators related to this operation in the broader multi-donor budget support M&E framework, could have facilitated more regular and complete reporting of results. This points to the need to introduce greater flexibility in the multi-donor budget 17

25 support M&E framework to allow for the inclusion of policy actions and outcome indicators addressing unforeseen shocks to preserve growth and poverty reduction s longer term objectives. It would be preferable to use an already standing monitoring committee capable of delivering periodic progress reports rather than envisaging the creation of a new technical committee. Also, quarterly reports rather than monthly reports would have provided sufficient information without unduly stretching the government administration. There were advantages gained from keeping the design of the operation simple and well focused on the Government priorities, e.g. tariff reductions and a narrowly defined action plan with well identified outcome indicators. This helped ensure adequate Government s response to the crisis given its limited capacities. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies Implementation report was delayed because of the slow reporting from the beneficiary Ministries, Departments, and Agencies. All of the additional data requested have now been provided in the final report. Bilateral meetings were arranged with Ministry of Social Welfare, Defence, Police, Local Government Finance Department and the Accountant General's Department to update the information gaps. (b) Cofinanciers (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) 18

26 Annex 1 Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility/ Specialty Lending Douglas Addison Senior Economist AFTP4 Team Leader Kathryn Suzanne Bach Junior Professional Associate AFTH2 Social Dev. Yusuf Bob Foday Economist AFTP4 Economics Anna Victoria Gyllerup Operations Officer AFTRL M&E Mirey Ovadiya Senior Operations Officer AFTH2 Social dev. Manush Hristov Senior Council LEGAF Legal John Nyaga Sr Financial Management Specialist AFTFM Fiduciary Trichur Balakrishnan Lead Financial Management Specialist AFTFM Fiduciary F. Tsri Apronti Procurement Specialist AFTPC Procurement Tidiane Toure Lead Procurement Specialist AFTPC Procurement Rajiv Sondhi Senior Finance Officer CTRFC Loan Accounting Suzanne Morris Senior Finance Officer CTRFC Loan Accounting Supervision Douglas Addison Senior Economist AFTP4 Team Leader Yusuf Bob Foday Economist AFTP4 Economics Kathryn Suzanne Bach Junior Professional Associate AFTH2 Social Development Mirey Ovadiya Senior Operations Officer AFTH2 Social Development (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY Total: Supervision/ICR Total: Through December 1, Some consultancy claims outstanding. 19

27 Annex 2. Beneficiary Survey Results (if any) 20

28 Annex 3. Stakeholder Workshop Report and Results (if any) 21

29 Annex 4. Summary of Borrower s ICR and/or Comments on Draft ICR Implementation report was delayed because of the slow reporting from the beneficiary MDAs. All of the additional data requested have now been provided in the final report. Bilateral meetings were arranged with Ministry of Social Welfare, Defence, Police, Local Government Finance Department and the Accountant General s Department to update the information gaps. 22

30 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders 23

31 Annex 6. List of Supporting Documents Program Preparation and Appraisal World Bank, Poverty Reduction and Economic Management, Country Department, West Africa, Africa Region, World Bank, Food Crisis Response Trust Fund, Program Document for a Proposed Grant in the Amount of US$ 3 Million, to the Government of Sierra Leone for a Food Crisis Response Development Policy Grant, July 12, World Bank, Food Crisis Trust Fund Grant Agreement (Food Crisis Development Policy Grant) between Sierra Leone and the International Development Association (acting as trustee for the Food Crisis Response Trust Fund), August 18, Informal exchange among Bank staff concerning the design of the program and processing steps (various dates, May July 2008). Program Implementation Ministry of Finance and Economic Development, Sierra Leone, Food Crisis Trust Fund (Grant), Implementation Report, April Ministry of Finance and Economic Development, Sierra Leone, Food Crisis Trust Fund (Grant), Implementation Report, June World Bank, Implementation Status Report for Development Policy Operation, Sierra Leone, SL-DPL-Food Crisis Response (Program ID: P Trust Fund No. TF92619), March 24, World Bank, Implementation Status Report for Development Policy Operation, Sierra Leone, SL-DPL-Food Crisis Response (Program ID: P Trust Fund No. TF92619), June 12, Other Documentation on Development Strategy, Policy, and Public Sector Management and Related Investment Projects World Bank, Implementation Completion Report on a Credit in the Amount of US$ 3.5 Million to the Republic of Sierra Leone for a Second Public Management Support Project, November 18, World Bank, Country Department 10, Africa Region, Country Assistance Strategy for the Republic of Sierra Leone for the Period , May 5, World Bank, Sustainable Development Department, West Africa 1, Project Appraisal Document for the Rural and Private Sector Development Project, April 19,

32 World Bank, Human Development Sector 2, Country Department 2, West Africa Region, Food Crisis Response Trust Fund, Project Paper for a Proposed Grant in the Amount of US$ 4 million to the Republic of Sierra Leone, July 29, World Bank, Doing Business 2009: Sierra Leone Makes Key Improvements in Business Reform, September 10, World Bank, Sierra Leone Country Brief (updated as of March 2009). World Bank, Sierra Leone Client Survey Shows Governance and Government Effectiveness as Key Priorities, May 11,

33 Country Map 26