Documentof The World Bank FOR OFFICIALUSEONLY ReportNo: 37819 PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDCREDIT INTHE AMOUNT OF SDR 1.00MILLION (US$ 1.45 MILLIONEQUIVALENT) TO THE THE COMMONWEALTH OFDOMINICA FORA GROWTH AND SOCIAL PROTECTIONTECHNICAL ASSISTANCE CREDIT October 10,2006 PovertyReductionandEconomicManagementDepartment(LCSPR) CaribbeanCountryManagementUnit (LCC3C) LatinAmerica andCaribbeanRegion(LCR) This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization. CURRENCYEQUIVALENTS (Exchange Rate Effective October, 2006) Currency Unit - EasternCaribbean Dollar US$l - - EC$2.70 US$1 - - SDR 0.68 FISCAL YEAR July 1 - June30 ABBREVIATIONSAND ACRONYMS ASYCUDA Automated Systemfor Customs Documentationand Administration CARTAC Caribbean Regional Technical Assistance Center CDB Caribbean Development Bank CFAA Country Financial Accountability Assessment CPA Country Poverty Assessment CPAR Country ProcurementAssessment Report CG Central Government DEXIA Dominica Export andImport Agency DFID Department for InternationalDevelopment DHTA Dominica Hoteland Tourist Association DSS Dominica Social Security EC EasternCaribbean ECCB EasternCaribbeanCentral Bank ECCU EasternCaribbeanCurrency Union ECSE EasternCaribbean Securities Exchange EU EuropeanUnion FAA Finance (Administration) Act FDI Foreign Direct Investment . GDP Gross domestic product GSPS Growth and Social Protection Strategy ILO InternationalLabor Organization IMF InternationalMonetary Fund IPA Investment Promotion Agency MDGs MillenniumDevelopment Goals MIS Managementinformation system MoF Ministry of Finance NDC NationalDevelopment Corporation NGO Nongovernmental organization OECS Organizationof EasternCaribbean States PAC Public Accounts Committee PRGF Poverty Reduction and Growth Facility PRS Poverty Reduction Strategy PRSP Poverty Reduction Strategy Paper PSIP Public Sector Investment Program USAID United States Agency for InternationalDevelopment Vice President: Pamela Cox Country Managermirector: Caroline D.Anstey Sector Director Ernest0May Sector Manager: Jaime Saavedra LeadEconomist: AntonellaBassani Task Team Leader: ErrolGeorge Graham FOROFFICIAL USE ONLY THE COMMONWEALTH OF DOMINICA Growthand SocialProtectionTechnicalAssistance Project TABLEOF CONTENTS Page A STRATEGIC CONTEXTAND RATIONALE . .................................................................. 1 1. Country and sector issues .................................................................................................... 1 2. Rationale for Bank involvement .......................................................................................... 4 3. Higherlevel objectives to which the project contributes..................................................... 5 B PROJECTDESCRIPTION . .................................................................................................. 6 1. Lendinginstrument.............................................................................................................. 6 2 . Project development objective and key indicators .............................................................. 6 3. Project components.............................................................................................................. 6 4. Lessons learned and reflected inthe project design .......................................................... 11 5 . Alternatives considered and reasons for rejection............................................................. 11 C IMPLEMENTATION . ......................................................................................................... 12 1. Partnership arrangements................................................................................................... 12 2. Institutionaland implementation arrangements................................................................. 12 3. Financial Management Arrangements ............................................................................... 13 4. Monitoring and evaluation of outcomes/results ................................................................ 13 5. Sustainability ..................................................................................................................... 13 6. Critical risks and possible controversial aspects ............................................................... 14 7. Loadcredit conditions and covenants ............................................................................... 16 D APPRAISAL SUMMARY . .................................................................................................. 16 1. Economic andfinancial analyses....................................................................................... 16 2. Technical............................................................................................................................ 16 3. Fiduciary............................................................................................................................ 16 4. Social ................................................................................................................................. 16 5. Environment ...................................................................................................................... 16 6. Safeguardpolicies.............................................................................................................. 17 7. Policy Exceptions and Readiness ...................................................................................... 17 This document has a restricted distribution and may be used by recipients only in the performance of their official duties.Its contents may not be otherwise disclosed without World Bank authorization. Annex 1:Country and ProgramBackground ........................................................................... 19 Annex 2: Major RelatedProjects Financedby the Bank and/or other Agencies ..................24 Annex 3: Results Framework and Monitoring ......................................................................... 27 Annex 4: DetailedProject Description ...................................................................................... 32 Annex 5: Project Costs ................................................................................................................ 39 Annex 6: Implementation Arrangements .................................................................................. 40 Annex 7: Financial Management and DisbursementArrangements ...................................... 42 Annex 8: Procurement Arrangements ....................................................................................... 47 Annex 9: Economic and FinancialAnalysis .............................................................................. 52 Annex 10: SafeguardPolicy Issues ............................................................................................. 54 Annex 11:Project Preparation and Supervision ...................................................................... 55 Annex 12: Documentsinthe Project File .................................................................................. 57 Annex 13: Statement of Loans and Credits ............................................................................... 58 Annex 14: Country at a Glance .................................................................................................. 59 Annex 15: Map ............................................................................................................................. 62 COMMONWEALTHOFDOMINICA GROWTHAND SOCIAL PROTECTION TECHNICAL ASSISTANCE PROJECT PROJECT APPRAISAL DOCUMENT LATINAMERICA AND THE CARIBBEAN LCSPP Date: October, 2006 Team Leader: Errol George Graham Country: Commonwealth of Dominica Sector Director/Manager: Jaime Project Name: Growth and Social Protection Saavedra Technical Assistance Project Country Director: Caroline D.Anstey Project ID: PO94869 - Environmental Category: C - Borrower: Government of the Commonwealth of Dominica Hon. Roosevelt Skeritt, PrimeMinister and Minister of Finance and Planning Ministry of Finance and Planning Roseau, Dominica Responsibleagency: Ministry of Finance and Planning Project Coordinating Unit Roseau -Dominica - - ProjectFinancingData [ ] Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other For Loans/Credits/Grants: Total Bank financing (US$m.): 1.45 Proposedterms: StandardIDA so BORROWERRECIPIENT 0.57 I I0.00 0.57 INTERNATIONALDEVELOPMENT 0.00 1.45 1.45 ASSOCIATION EUROPEANUNION 0.58 0.58 Total - - I 0.00 0.57 I2.03 I2.60 - Revised estimated disbursements(Bank FY/US$m) Current closingdate: June 30,2010 Revisedclosing date [if applicable]: Does the project depart from the CAS incontent or other significant [ ] Yes [XINo resDects Does the project require any exceptions from Bank policies? [ ] Y e s [XINO Have these been approved by Bank management? []Yes [IN0 I s approval for any policy exception sought from the Board? []Yes [XI No Does the project include any critical risks rated "substantial" or "high"? [XI Yes [ ] No Does the project meet the regionalcriteriafor readinessfor [XIYes []No implementation provide targeted social assistanceto reduce poverty. Project description Ref. B.3 The project has five components: (1) Making the public sector more efficient and effective; (2) Improving the investment climate; (3) Reforming the regulatory framework for the energy sector; (4) Improving social protection; and (5) Project management. A description of each of the components follows: Component1:Making thepublic sector more efficient and effective This component will provide technical assistance to the Government to implement its public sector modernization strategy focused on streamlining of the public sector to increasethe efficiency of service delivery whilst lowering costs and strengthening control over public finance and to increase the transparency and efficiency of public procurement. Component2: Improving the investment climate This component would strengthen the institutional and regulatory environment for attracting investment into Dominica. Component3: Reforming the regulatoryframework for the energy sector The objective of this component i s to liberalize and regulate the production and distribution of electricity to improve competitiveness and the support the government in developing a framework for the development of alternative sources of energy. Component4: Improving socialprotection The objective of the Social Protection Component of the Technical AssistanceCredit i s to improve the efficiency and effectiveness of existing social safety net programs, including inter alia the EducationTrust Fundand Public Assistance. Component5: Project Management This component will finance the operation of the small Project Coordinating Unit integratedwithin the Establishment, Personnel and Training Department and employing permanentgovernment staff and where necessarycontract staff. Which safeguardpolicies are triggered, if any? Ref. Annex 10 This Project triggers none of the Bank"s SafeguardPolicies. Significant, Non-standard conditions, if any, for: Boardpresentation: None Covenants applicable to project implementation: Ref. C.7 Conditions of Disbursement Disbursement under sub-component 2.2.2 will be conditioned on the Borrower's establishment of a legal framework for the operation of a stand alone investment promotion agency; Disbursementunder sub-component 3.1 will be conditioned on the passage into law of the new Electricity Act to establish an Independent Regulatory Commission. Covenant related to EUparallelco-financing Itis expected that the EUparallel co-financing for the project will be available by the mid-term review of the project (June 1, 2008). If the EU financing i s not available by this time, the borrower will identify alternative donor financing or restructure the project to reduce the scope to fit within the available financing envelope. COMMONWEALTHOFDOMINICA Growthand Social ProtectionTechnicalAssistanceProject A. STRATEGICCONTEXTAND RATIONALE 1. Countryandsector issues 1. Dominica has been successful in stabilizing its economy from a near crisis in 2001-2002 when output contracted by some 10 percent. The crisis was, in large part, the result of the expansionary fiscal policy pursued by the Government in the late 1990s and early 2000s. A confluence of adverse factors in 2001, including a severe drought, the adverse impact of the September 11, 2001 terrorist attacks, on the tourism industry, the accumulation of arrears, and very limited access to external financing pushed the economy into a deep recession. The overall public sector balance deteriorated from a surplus of 3.3 percent of GDP in 1995/1996 to a deficit of 10.9 percent of GDP by 2000/2001 and the public debt peaked at 130.8 percent of GDP in 2003. The Country Poverty Assessment (CPA) conducted in 2002 found that 39 percent of the populationand 29 percent of the households inDominicawere poor. 2. In mid-2003, the government adopted a focused two-stage adjustment strategy which sought to foster growth and ensure debt sustainability. The first stage focused on achieving macroeconomic stability through a large fiscal adjustment and collaborative debt restructuring. This effort was supported by an IMF Poverty Reduction and Growth Facility (PRGF) and the Bank's Economic Recovery Support Operation (ERSO) in 2004. The economy stabilized in 2004, with GDP growth of 3.6 percent compared with a GDP contraction of 4.7 percent in 2002. Inflation which had risen from 0.4 percent in 2002 to 2.9 percent in 2003 fell to 0.8 percent in 2004. The large increase in imports (driven largely by the tourism sector) in the face of slower growth in exports, led to a worsening of the current account of the balance of payments from a deficit of 13.8 percent of GDP in 2002 to a larger deficit of 17.2 percent of GDP in 2004. The overall central government balance improved from a deficit of 5.4 percent of GDP in 2002 to a much smaller deficit of 0.9 percent of GDP in 2004. Over the same period, the primary balance improved from a deficit of 1.6 percent of GDP to a surplus of 3.6 percent of GDP. The stock of public sector debt also fell from 126.7 percent of GDP in 2002 to 116.1 percent of GDP in 2004. 3. The improvement in Dominica's debt situation has resulted largely from a restructuring of Dominica's official debt under the Paris Club framework. About 72 percent of eligible debt has been restructured. However, closure to the debt restructuring has been hampered by three large nonparticipating creditors. Inthe meantime, new bonds have been issued to all participating creditors and these new bonds are now traded on the Eastern Caribbean Securities Exchange (ECSE).The debt sustainability analysis for Dominica completed in 2005 shows that the 3 percent of GDP central government primary surplus being targeted under the current PRGF would ensure a gradual decline in debt, provided growth remains at current levels' and Dominica Social Security's (DSS) finances are improved. However, the public debt dynamics remain very sensitive to both the assumed primary surplus and the economic growth rate. Abstracting from DSS deficits, if a primary surplus of just 2 percent of GDP were to be targeted, the debt to GDP ratio would remain above 80 percent through 2015. In a similar vein, an average growth performance of 1to 2 percent during the projectionperiod would result in a similar very gradual 1GDPgrowth has averaged about 3 percentinthe last two years. 1 decline in public debt. In both cases, the inclusion of DSS deficits projected under current policies would put the debt back on an unsustainabletrajectory. 4. The second stage of the adjustment strategy, being implemented by the new Government of Prime Minister Roosevelt Skerrit i s aimed at implementingkey structural reforms to establish the basis for private sector-led sustainable growth and poverty reduction. The authorities have repeatedly stressed their desire to see the private sector play a dominant role in the economy. This second stage of the adjustment strategy, based on continuing fiscal restraint and structural reforms, as well as on measures to foster growth and reduce poverty, including maintaining and strengthening the social safety net, constitutes a major pillar of the Government's Medium-term Growth and Social Protection Strategy (GSPS). 5. The GSPS which encapsulates the country's Poverty Reduction Strategy (PRS) provides the framework for Dominica's economic and social policies over the next five years (2005/06 - 2009/10) and sets out: the macroeconomic framework; the growth strategy, including the enabling framework for private enterprise, sectoral strategies and poverty reduction and social protection programs. It also provides for the monitoring and evaluation of progress made in implementing the strategy on an annual basis. In order to build strong public ownership for the strategy, the Government has held wide consultations inthe drafting of the GSPS. 6. The GSPS is the Government's responseto the key challenge of moving the economy to sustained higher growth to reduce unemployment and poverty. The GSPS seeks to foster economic growthby building on four pillars: Fiscal policy and administrative reforms Enhancing the investment climate for private enterprise development Sectoral strategies for growth, and Strategies for poverty reduction and social protection 7. In2002, 29 percent of households inDominica were classified as poor and 11percent as indigent with 39 percent of the population poor and 15 percent indigent. There were approximately 28,000 poor people in Dominica with 7,900 indigent. The incidence of household and population poverty inDominica i s among the highest in the Caribbean, with only St. Vincent and Guyana havingcomparable levels. 8. There i s considerable variation in the incidence of poverty based on geography and age distribution of the population. The incidence of poverty i s lowest in the urban areas of Roseau and Portsmouth and highest in rural and east coast sub-centers of La Plaine, Marigot, Castle Bruce and Grand Bay. The incidence of poverty i s also high among the Carib Indian population of approximately 4,500, 70 percent of whom are poor and almost half are indigent. 9. Poverty disproportionately affects children with approximately 50% of children aged 5- 14 years living inpoor households. Unemployment levels are also highest for school leavers and the younger members of the labor force. The 2001 Census revealed that Dominica's 2 unemployment rate was 11.6%, but the unemployment rate was 40.5% for the 15-19 age group and 20.8% inthe 20-24 age group. 10. The primary cause of current poverty in Dominica was the economic slowdown, which exacerbated high levels of unemployment and reduced incomes for many of those still in employment. Inrural areas, this has been caused by the collapse in banana cultivation, while in urban areas it has been caused by the stagnation in other sectors. Those displaced from banana production have little alternative but to seek low and irregular income in casual labor and small- scale food production, as employment opportunities inrural areas are limited. 11. The GSPS identifies unemployment and underemployment-owning to the slow economic growth since the mid-1990s and the contraction of the economy in subsequentyears- as the primary causes of current poverty. The analysis in the Country Poverty Assessment shows that almost three-quarters of the 15-24 year olds (not studying) from poor households are unemployed. 12. The Government's strategy for reducing poverty and improving social protection focuses on invigorating private sector led growth and improving key social services including health and education to build human capital, giving special attention to vulnerable groups. The GSPS proposes to target sustainedeconomic growth of around 3 percent over the mediumterm based on increased activities in all sectors, but more particularly in tourism, agriculture, fisheries and water. It also indicates that improving export performance i s critical for growth and increasing international competitiveness is a major challenge. Increasing the attractiveness of the economy to investors requires reducing firm's cost and improving the reliability of transportation, lowering the cost of energy and increasing the productivity of the labor force. The Bank's analytical work2 and work by other donors have helped to fine tune the Government's role and strategy for improving the enabling environment for private enterprise. Consequently, the GSPS indicates that the main components of the enabling environment are (i)political and macroeconomic stability (ii) sound regulatory framework and efficient supporting institutions; and (iii)an adequatephysical and social infrastructure. 13. The GSPS proposes a number of strategic policy actions to facilitate private sector development and improve the environment for private enterprise including: Intensifying implementation of its comprehensive Public Sector Reform Strategy (PSRS) aimed at improving effectiveness of service delivery, enhancing accountability, and streamlining regulations and procedures that may hinder private sector activities. Improving thejudicial and land administration systems; Implementing recommendations emanating from the comprehensive analysis of Dominica's investment climate by USAID, aimed at improving the climate for starting and conducting business inDominica; "Towards a New Agenda for Growth", April 2005; Dominica: OECS Fiscal Issues "Policies to Achieve Fiscal Sustainability and ImproveEfJiciencyand Equity of Public Expenditures.June 2005. 3 Implementing policy and regulatory measures aimed at lowering costs of transport, electricity, water and telecommunication; Amending labor legislation and regulations to enhanceflexibility inthe labor market. 14. The Prime Minister and Cabinet have acknowledged the need for policy reforms to improve the efficiency of the public sector and facilitate private sector-led growth and are already taking steps in this direction. The GSPS has also become the key focal point for donors' support to Dominica. Although the Government i s committed to the reforms which admittedly have strong support in the analytical work, implementation of these reforms in a timely manner i s a key challenge for the Government given its limited fiscal and technical capacity. 15. Consequently, the proposed Growth and Social Protection Technical Assistance Project would focus on supporting implementation of a focused reform agenda in the following four strategic areas: (i) making the public sector more efficient and effective; (ii) improving the investment climate; (iii)reforming the regulatory framework for the energy sector; and (iv)improving social protection. 2. Rationale for Bank involvement 16. Consistency with the FY06-09 CAS: The proposed operation is fully consistent with the FY06-09 Country Assistance Strategy (CAS) for the OECS sub-region, including Dominica, which was discussed by the Board in September 2005.3 The two pillars of the CAS are (i) stimulating growth and improving competitiveness and (ii) reducing vulnerability by promoting greater social inclusion and strengthening disaster risk management. The CAS presents a new way of doing business to help countries in the sub-region meet the challenges facing them at this critical stage of their development. The guiding principles of the CAS are: (a) supporting regional integration and coordination efforts; (b) partnering and harmonizing inboth lending and analytical work with other development partners; and (c) an active pursuit of simplification and capacity buildinginitiatives tailored to small states. The project's four strategic areas focused on spurringprivate sector led growth and improving social protection are therefore fully consistent with the thrust of the CAS. 17. In recognition of the high debt levels in most of these small states, including Dominica, the Bank's activities under the CAS proposed the use of innovative mechanisms to leverage available donor grant financing. The proposedoperation, in addition to its support for bothpillars of the CAS of improving growth and competitiveness and reducing vulnerability, also emphasizes the CAS guiding principle of using IDA and IBRD resources to leverage grant resources. The EU will provide approximately US$12 million in grants for budgetary support and proposes to align and harmonize its tranche disbursement conditions for this budgetary support with the results framework agreed between the Government and the Bank. The EU will also provide an additional US$0.58 million in grant for parallel co-financing of the technical assistance operation (through a Bank administered trust fund). Country AssistanceStrategy for the Organization of EasternCaribbeanStates for FY06-FY09. ReportNo. 33118- LAC. World Bank. 4 Exploiting the comparative advantage of the Bank 18. Buildingimplementation capacity in Dominica to undertake the necessary policy reform will require a multi-sectoral responseto enhance capacity in key sectors to formulate, implement and monitor the results of policy measures. Compared with the other donors currently active in the sub-region, the Bank has significant comparative advantage in providing such multi-sectoral support as well as taking the lead on harmonizing donor efforts. The formulation of the GSPS offers a unique opportunity to better coordinate the work with all donors to minimize the transaction costs for the Government and to exploit synergies. Complementarity with other donor and multi-lateraldevelopment banks' activities 19. The preparation of this operation has been done in close collaboration with other donors and multi-lateral development banks active in Dominica (EU, IMF, DFID, USAID, CIDA, CDB and UNDP). On the investment climate, USAID is involved in Trade and Competitiveness reform and following the recent completion of an Investor Roadmap, i s focused on supporting the Government in the following areas: (i) governance reforms mainly through legislative reforms aimed at improving the business environment; (ii) improving public/private sector relationship; (iii) expanding the Doing Business indicators (in collaboration with the World Bank); (iv) risk reduction through work on disaster preparedness; and (v) a Public Awareness Campaign. In the energy sector, the OAS i s assisting the Government with its Sustainable Energy Plan, the objectives of which include: (i) ensuring the existence of adequate energy supplies at affordable rates to sustain economic development; (ii) promoting energy efficiency and conservation at all levels of the economy; (iii)promoting the generation of income through energy exports produced from indigenous energy sources including geothermal. On public sector reform, CIDA i s providing support on trade policy; UNDP i s supporting institutional strengthening through information and communication technology improvement and along with DFIDproviding support inpublic sector financial management. The CDB is providingfinancing for legal and judicial development as part of the overall support to the Caribbean Court of Justice. The EU, CIDA and CDB are supporting the social protection efforts through a range of projects. The Caribbean Regional Technical Assistance Centre*(CARTAC) which began in 2001 with support from the Bank, IMF, CIDA, EU, UNDP and DFID is providing technical assistance focused on training in public finance management, tax and customs policy and administration, financial sector regulation and supervision, economic and financial statistics and financial programming. On the social protection side, the EUhas provided support for community-based social protection initiatives. The proposed project supports the implementation of reforms complementary to the activities of other international development partnersinDominica. 3. Higher levelobjectives to which the project contributes 20. The proposed operation is designed to enhance the capacity of the public sector to implement focused reforms geared at improving the public sector delivery of services as well as creating the institutionaland policy framework to facilitate private sector led growth. Inaddition, the operation will strengthen the Government's capacity to plan and administer its social protection programs to ensure that the benefits from growth are equitably distributed for poverty reduction. 5 21. The project will benefit Dominicans through (i) enhanced private sector competitiveness and productivity and improvement in employment prospects resulting from private sector-led growth; (ii) improvement in the quality of public goods and services offered by a more efficient public sector; (iii)more competitive pricing of electricity as a result of a better regulated electricity sector; and (iv) better targeting and efficient delivery of social protection programs. 4. Poverty and social impact 22. The proposed Growth and Social Protection Project i s expected to have a positive impact on poverty reduction as it supports the implementation of the Government's medium-term strategy for growth and poverty reduction as laid out inits Growth and Social Protection Strategy (GSPS) 2005 Report, covering the five-year period from 2005/06 to 2009/10. Inparticular, this operation proposes to enhance the government's capacity to implement a set of policy measures detailed in the GSPS, which are aimed at improving the legal, regulatory and institutional environment to facilitate private sector-led growth and better planning and administration of its social protection programs. 23. The 2002 Country Poverty Assessment for Dominica4indicated that unemployment and underemployment due to slow economic growth i s the primary cause of poverty. Increased private sector led growth is therefore expected to lead to increased employment and consequently a reduction in poverty. In order to strengthen the poverty impact of the increased growth, the operation would help improve the Government's established policies and procedures for implementation of social safety net program, to ensure better targeting of social protection beneficiaries and enhanced capacity to monitor and evaluate the implementation of social protection programs for poverty analysis and targeting. B. PROJECTDESCRIPTION 1. Lendinginstrument 24. Technical Assistance Credit (under IDA) of an equivalent amount of US$1.45 million. The choice of a technical assistance credit responds to the Government's request to enhance its capacity to implement focused reforms elaborated its Growth and Social Protection Strategy. 2. Project developmentobjective and key indicators 25. The GSPTAP's development objective i s to enhance the Government's effectiveness to deliver public goods and services by strengthening the institutional capacity of key agencies to facilitate Dominica's private sector competitiveness and productivity and to provide targeted social assistanceto reduce poverty. 3. Project components 26. The design of the operation reflects Dominica's potential sources of growth and the key constraints to private sector-led growth. The operation i s designed to support the second stage of Dominica's two stage strategy for re-establishing the basis for sustained growth and poverty reduction. The first stage which focused on achieving macroeconomic stability has been largely 4Dominica:Country Poverty Assessment, Governmentof the Commonwealthof DominicdCaribbeanDevelopment Bank,2003. 6 successful. The second stage i s aimed at implementing key structural reforms to establish the basis for sustainedprivate sector-led growth and poverty reduction. 27. The government's structural reformagenda is relativelycomprehensivecoveringjudicial, fiscal, financial sector, labor market, public sector, energy sector regulation, investment climate and social protection reforms. The government i s already well advanced in implementing some of these structural reforms. On Judicial reforms, some attempts have been made to speed up civil processes, particularly through the use of alternative dispute resolution. On fiscal reforms, they have implemented the Valued Added Tax (VAT), thereby providing greater equity in the tax system. In addition, work is ongoing on the amendment to the Finance Administration Act, the improvement of the PSIP and-the institution of rolling three-year expenditure plans in line ministries. On the financial sector reform agenda, the main outstanding agenda item is the establishment of a legislative basis for the Financial Services Unit (FSU) to supervise insurance companies and regulate all non-bank financial institutions. The IMF i s supporting the Government in this area. 28. Following extensive consultations with the government including at the Cabinet level, it was agreed that USAID would support targeted reforms, including in particular labor market reforms, in coordination with the Bank's focus on four areas, namely, public sector reform, energy sector regulatory reforms, investment climate reforms and social protection reforms. Recent analytical work done by the Bank and other donors5highlight that limited public sector capacity, inadequate investment climate and the highcost of electricity are a drag on growth. The 2003 Dominica Social Protection Review highlighted constraints in the delivery of safety net programs. The recent Caribbean wide Social Protection Study also highlighted key issues that needto be addressedinDominica. 29. The 2007 Doing Business report which covered the OECS including Dominica for the first time, also confirmed that the structural reform agenda and particularly the reforms covered under the Bank's and USAID's support were critical to enhancing business activity inDominica. In particular, the Doing Business report noted that in Dominica reforms should focus on; the flexibility of the labor market, the ease and cost of registering property, improving customs-an area where Dominica ranked the lowest in the OECS and judicial reforms to reduce the speed and costs of enforcing contracts. 30. The multi-sector design of the operation reflects a more holistic approach by the Government to ensure the simultaneous targeting of the most binding constraint to growth as well as strengthen the poverty impact of the increased growth through better targeting of social protection programs. 31. The project has five components: (1) Making the public sector more efficient and effective; (2) Improving the investment climate; (3) Reforming the regulatory framework for the energy sector; (4) Improving social protection; and (5) Project management. A description of each of the components follows: Towards a New Agenda for Growth", April 2005; Dominica: OECS Fiscal Issues "Policies to Achieve Fiscal Sustainability and Improve Eflciency and Equity of Public Expenditures. June 2005. 7 Component 1:Making thepublic sector more efficient and effective (US$1,240,000) 32. This component will provide technical assistance to the Government to implement key components of its public sector modernization strategy focused on streamlining the public sector to increase the efficiency of service delivery while lowering costs. It will also assist in strengthening control over public finances and increasing the transparency and efficiency of public procurement. The sub-components include: 1.1Strengthening of theReform Management Unit. 33. This sub-component will support the strengthening of the technical capacity within the Reform Management Unit to plan and implement the public sector reform program. The activities to be financed include manpower needs assessments in targeted ministries and departments and mapping of the change management process to guide the re- organizationhestructuring of these ministries and departments. This sub-component will also support the improvement of the technological capability of the unit. 1.2 Strengthening of Customs. 34. Activities to be supported under this sub-component include: (i) implementation of a the detailed action plan for the Customs Modernization Program including training of Custom's staff; (ii) the implementation of a risk management system for customs inspections; and (iii) the modernization and automation of ports and customs information and payments systems, includingthe upgrade of ASYCUDA-the customs automateddata system. 1.3Modernization of Registry. 35. This sub-component would finance the modernization of the Registry through the full- scale computerization of Companies and Trade Marks section of the Registry to allow for on-line business registrations and searches. The improvement of the computer technology within the land titles section of the Registry i s also expected to reduce the turn-around time for registering properties. I.4Strengtheningof Fiduciary Capacity. 36. This sub-component would support the strengthening of the fiduciary capacity in the public sector through (i)the strengthening of financial management capacity within the Accountant General's and Auditor General's departments; (ii) implementation of a Procurement Action Plan to modernize the public sector procurement system; and (iii) taking measures to integrate, where possible, into the pooled procurement initiative being piloted between Grenada and St. Vincent and the Grenadines under the ongoing Grenada Public Sector Modernization project. Component2: Improving the investment climate (US$252,000) 37. This component would strengthen the institutional and regulatory environment for attracting investment into Dominica. Specifically, the activities under this component will seek to address deficiencies in the current system of investment promotion as carried out by the Dominica National Development Corporation (NDC), and prepare a National Investment Strategy and an Action Plan to buiida well-functioning investment promotion agency (PA). 8 2.1 Development of a National Investment Strategy. 38. This sub-component will support the development of a National Investment Strategy for Dominica to focus the limited public resources in areas which support private sector development and where attracting Foreign Direct investment (FDI) could contribute to the national objective of increasingprivate sector led growth for poverty reduction. 2.2 Development and Implementation of a NationalAction Plan. 39. This sub-component will finance the development of a specific action plan for the investment strategy; and implementation of the action plan, including a restructuring of the NDC charged with the mandateto implement the NationalInvestment Strategy. 2.2.1 Development of a National Action Plan 40. The project will finance the preparation of a detailed action plan which will seek to implement the National Investment Strategy including the restructuring of the NDC to meet the mandate to implement the strategy. The restructuring of the NDC may involve a split into two separate agencies; (i) an investment promotion agency and (ii)Tourism Authority. There may a be need to change the laws that governs the operation of the P A (which seems to be already be underway). 2.2.2 Implementation of National Action Plan 41. The financing of the implementation of the National Action Plan will be conditioned on the establishment of the legal framework for the investment promotion agency (PA). This sub- component will finance training of the P A staff in relevant activities (market intelligence, direct contacts with investors, services to investors, and after-care of investors). The sub-component will, in addition, finance the purchase of office equipment, computers, publication of promotional material, improvement to the website, special software for access to foreign investors' databases as well as subscription to other relevant international business information databases and services. Component3: Reforming the regulatoryframework for the energy sector (US$695,000) 42. The objective of this component is to regulate the energy sector including the production and distribution of electricity to improve competitiveness. The specific sub-componentsare: 3.1 Establishment of National Renulatow Commission. 43. This sub-component will finance the establishment of a commission to provide regulatory oversight for the electricity sector. This support will follow the passage of the Electricity Act which will provide the legal basis for the establishment and sustainability of an independent regulatory commission for the electricity sector in Dominica. This sub-component will provide financing for the operation of the regulatory commission for the first 12 months covering office operational cost, staffing, training and technical assistance. It is envisaged that after the first year, the operations of the regulatory commission will be fully financed from license fees, other fees and levies. It is estimated that under normal operation of the regulatory commission, these fees and levies would represent approximately 1.22 percent of the revenues of the electricity company. 9 44. It is also envisaged that in the medium-to-longer term Dominica will benefit from the regional electricity regulatory initiative, possibly resulting in further reduction of the national cost of regulation. 3.2 Drafting of Alternative Energy Legislation. 45. This sub-component will support the drafting of legislation to provide the legal and regulatory framework for the development of alternative energy technology, including hydropower, wind and geothermal energy. Component4: Improving socialprotection (US$232,000) 46. The objective of this component is to strengthen the Government's capacity to better target, plan and administer social assistanceprograms for poor and vulnerable persons. There are three sub-components as follows: 4.1 Beneficiarv Selection System Modernization. 47. This sub-component will finance activities designed to modernize and streamline systems for beneficiary selection and registration, including: (a) design and implementation of a transparent and objective targetingmechanism for selection of beneficiaries; (b) development of a central beneficiary registry; and (c) application of information from the recently developed poverty maps to better target community based, school-feeding and short-term employment programs. 4.2 Institution Strengthening. 48. This sub-component will support activities to strengthen the administrative capacity to deliver social assistance through: (a) development of program databases to track beneficiaries and expenditures for the Education Trust Fund and the School Feeding Program in the Ministry of Education and further work on database development for the Public Assistance Program in the Ministry of Community Development; and (b) documentation of policies and procedures for the public assistance program and for the Education Trust Fund; (c) establishing linkages and access to the different databasesto assist inpolicy decision makingat the sector level. 4.3 Public Information CamDaign. 49. This sub-component will support the design and implementation of a public information campaign to inform the public about new approaches to the delivery of social safety net programs (including the new approaches to targeting and registration of beneficiaries) and about other social protectionreforms. Component5: Project Management (US$181,000) 50. This component will finance the operation of the small Project Coordinating Unit integrated within the Establishment, Personnel and Training Department and employing permanent government staff and where necessary contract staff. More specifically, this component will finance the project coordinator, the cost of the annual project audits, computers for the PCU as well as the costs of staff assigned to the project. 10 4. Lessons learned and reflected inthe project design 51. The design of the project builds on key lessons learned from previous operations in Dominica and elsewhere in the Caribbean including Jamaica and Grenada. The design of the operation also draws lessons from recent analytical work by the Bank and other donors. 52. The following lessons are incorporated in the project design: (a) The importance of taking an incremental strategic approach focusing on areas that will produce the highest returns for the investment and at the same time address major constraints to private sector development. (b) The need for reform to address areas that will show early visible results to build strong ownership as the reform process moves forward to address more difficult issues. In this regard, the public sector reformcomponent focuses on improving customs and converting the registry into a self-financing semi-autonomous agency, two key areas where there i s a general public consensus that the Government should address. The Caribbean experience on improving customs i s deepening, following recent successful experience in Jamaica which has been based on international best practices. (c) The design of the energy sector regulatory framework also draws on lessons learned from the successful experience o f the development of the regulatory framework for the telecommunications sector within the Caribbean and elsewhere. (d) Small economies with severe capacity constraints in the public sector and subject to periodic natural disasters may require longer adjustment periods and greater flexibility on the part of donors. This is reflected in the design of the project to cover three years which better matches the Government's implementation capacity. In addition, the leveraging o f grant resources from the EU in the form o f budgetary support i s expected to provide greater flexibility for the Government inthe programming of these untied resources. (e) Projects that build institutional capacity and utilize existing government structures for implementation are more likely to succeed and be sustainable than projects that rely on self- standing Project Implementation Units (Plus); but at the same time, require clear delineation o f responsibilities among central ministry staff. The coordination of the TA effort by a central ministry i s essential when a number of beneficiary agencies are involved. The use o f a small unit integrated within the current Government structure with ministries and departments implementing the different components of the project, builds on these lessons. (f) Reforms require a champion who is not only committed to the reform process but has the energy and i s strategically located to drive the reform process. The appointment o f champions to head working groups for each component of the project builds on this lesson. 5. Alternatives considered and reasons for rejection Development Policy Loan (DPL). 53. This option was considered and rejected by the task team because: (i) expressed need the o f the Government i s for capacity building technical assistance to implement reforms to which they are committed; (ii) the EUhas agreed that a TA operation i s a more appropriate mechanism 11 for the strategic partnership with their planned budgetary support operation tied to the achievement of specific results under the government program of reforms whose implementation i s supported by this proposed technical assistance operation. Donor (grant)financedtechnicalassistance 54. Donor (grant) financed technical assistance i s being leveraged by the Bank's operation. The task team has been coordinating with the EU, USAID, CIDA, DFID and other donors. The EU is providing grant financing to support the TA operation. In addition, the EU is providing budgetary support of approximately US$12 million with conditions for disbursement harmonized with the results framework (detailed inAnnex 3) of the technical assistance operation. C. IMPLEMENTATION 1. Partnershiparrangements 55. This project will be financed by IDA credit of US$1.45 million andparallelco-financing grant of US$0.58 million from the European Union. The Government will provide counterpart support of US$0.57 million for the project. The EU i s currently preparing a an EU financing agreement to provide support to the Government of the Commonwealth of Dominica including the parallel co-financing grant for this project to be administered by the World Bank under atrust fund arrangement.The grant is likely to be available by the end of FY2007. USAID is proposing to assist the Government in its private sector development efforts including support to a restructured NDC and support for the modernization of legislation and regulations governing private sector development. Donors will continue to support the public sector reform and social protection efforts of the Government. The implementation of the project will be done in close collaboration with all the donors active inDominica. 2. Institutionalandimplementationarrangements Implementationperiod: December, 2006 to December, 2009 56. The Project will be implemented by a small PCU under the Establishment, Personnel and Training Department. There will be close coordination with the relevant ministries and departments. The PCU will be headed by a full-time CoordinatorProcurement Officer and a small PCU team including a project accountant. 57. The PCU will be responsible for the day-to-day administration of the project including finance, accounting, disbursement and procurement. The PCU will also be responsible for providing timely reports to the government, the Bank and other donors. 58. Given the multi-sectoral nature of the project, the steering committee for this project will be the same committee established for reforms in Dominica. This committee i s headed by the champion for reform, appointed by Cabinet. Currently, this reform committee consists o f the Financial Secretary; all Permanent Secretaries; the Social Development Planner; a representative from the private sector; the Chief Personnel Officer and a representative from the NGO sector. The steering committee will oversee the project implementation process and provide overall policy guidance to the PCU including monitoring and evaluation of implementationprogress and addressingimplementation bottlenecks. 59. To provide fully integrated technical support, there will be four Working Groups (one for each of the first four components of the project) headedby appointed champions. These working 12 groups are already in operation. The Working Group will be responsible for reviewing terms of references, clearing procurement and disbursement request, overseeing selection of consultants and monitoring their work to ensure the transfer of skills and the building of capacities in the relevant ministries and departments.The working groups will report to the steeringcommittee. 3. FinancialManagementand ProcurementArrangements 60. All financial managementand procurement functions of the project will be carried out by the PCU. The PCU will prepare interim un-audited financial reports commonly referred to as Financial Monitoring Reports (FMRs) to be submitted to the World Bank on a quarterly basis. The FMRs would include financial, program progress and procurement information. The financial reports will include a statement of periodic and cumulative cash receipts by sources and expenditures by main expenditure classifications. Programprogressreports will include narrative and outcome indicators, linking financial information with implementation progress. Further details are provided inAnnex 7. 61. The PCU will oversee all procurement, based on the procurement plan. The procurement of goods and related services financed under the credit will be done in accordance with the Bank's latest (May 2004) "Guidelines for procurement under lBRD Loans and IDA Credits." Contracts for consulting services under Bank financing will be procured in accordance with the latest (May 2004) "Guidelines for the Selection and Employment of Consultants by World Bank Borrowers." The Bank's Standard Bidding Documents and Standard Request for proposals will be used. Further details are inAnnex 8. 62. The transactions under the project would be reviewed by the internal auditor (the Borrower's Audit Office) at least once a year. In addition, the accounts of the project would be subject to an external audit by an independent auditor acceptable to the Bank, and the audit report should be sent to the Bank within six months of the end of the fiscal year. More details are includedinAnnex 7. 63. The financial management system will be upgraded to allow the production of timely reports including audit reports. 4. Monitoring and evaluationof outcomes/results 64. The framework for monitoring and evaluation of outcomes and results will be based on the bi-annual and annual reports produced by the PCU as well as close oversight by the Bank. Monitoring and evaluation of the project will be undertaken by the steering committee based on the project objectives and the parameters detailed inthe Results Framework elaboratedin Annex 3. The Bank, in close collaboration and coordination with the EU will participate in monitoring of project implementation through semi-annual supervision missions as well as through regular dialogue with the authorities. 5. Sustainability 65. The sustainability of the project hinges on both technical and political economy factors which may affect each component of the project in a different way. On the technical side, drawing from lessons which suggest that projects that build institutional capacity and utilize existing government structures for implementation are more likely to succeed and be sustainable than projects that rely on self-standing Project Implementation Units (PIUS),this project will be 13 integrated into the current Government structure. In addition, the involvement of the champions from the various ministries and departments will help to ensure continued ownership of the components of the project even after the project i s formally closed. 66. On the political economy side, overall, there is strong political ownership and support among the Government, the private sector, labor unions and Non Governmental Organizations (NGOs) for the package of reforms supported by the project. These sentiments were gauged in a consultation process with key stakeholders. The consultations, which took place in March 2006 ' was a key part of the pre-appraisal of the project. The majority of stakeholders agreed on the need to systematically maintain the consultatiodcommunication process from the beginning and throughout the implementation of the project, in a transparent and open fashion to ensure the public and private endorsement and engagement, as well as the successful adoption of the reforms. 67. The implementation of the project is expected to generate more winners than losers and hence the political incentives for sustainability would be high. The additional recurrent cost implications for the project are expected to be minimal as the project has sought to make use of existing institution and new institutions such as the regulatory commission are expected to be financed from fees and levies after the first year. In fact, fiscal savings may be realized in some areas owing to efficiency gains and rationalization of human resources. 6. Critical risksand possible controversial aspects 68. The project focuses on building, strengthening or changing institutions to improve public sector performance, enhance the investment climate, improve the regulation of the energy sector and better provide social protection services. The related project risks and proposed mitigation measuresare detailed inthe table below: 14 Risk Risk Rating Policy reversal Moderate Loss of political support Low Delay in support from donor partners High Exogenous shocks High reformed Limited implementation capacity within Moderate to High the public sector for project implementationand donor coordination likely to increase the implementation will be addressed by the project. First, the project risk of the project given the gaps in the will finance the purchaseof the self-audit module of public financial management system. Smart Streamsoftware. Second, the project will also finance the training of two staff in the use of the new software. The large number of small value Moderate It was agreedthat the Government's internal auditor ransactions could adversely affect should review the transactions under the project at xoject implementation least once a year. Limited demonstrated experience in Moderate The implementationof the Procurement Action Plan will be-an integral part of the project. This will not only build capacity for this project but will also 3veraU Risk Moderate 15 7. Loadcredit conditionsand covenants 69. Conditions of Disbursement Disbursement under sub-component 2.2.2 will be conditioned on the Borrower's establishment of a legal framework for the operation of a stand alone investment promotion agency; Disbursement under sub-component 3.1 will be conditioned on the passage into law of the new ElectricityAct to establish an Independent Regulatory Commission. 70. Covenant related to EUparallelco-financing I t i s expected that the EU parallel co-financing for the project will be available by the mid-term review of the project (June 1, 2008). If the EUfinancing i s not available by this time, the borrower will identify alternative donor financing or restructure the project to reduce the scope to fit within the available financing envelope. D. APPRAISAL SUMMARY 1. Economicandfinancial analyses 71. The proposed project of US$2.6 million would have minimal direct impact in that it would improve the delivery of services in key areas of the public sector, improve the regulatory framework for energy, improve the investment climate and better target and administer the delivery of social protection. However, the medium and longer term indirect impacts of the project are expected to be considerable, including: improved capacity to plan and implement public sector reform, reduced clearance time at customs, increased investments from improvement in the investment climate, more competitive pricing of electricity and better targeting and administration of social programs. 2. Technical 72. The project poses no technical issues. 3. Fiduciary 73. Fiduciary assessments have been carried out for the Reform Management Unit within which the PCU will be integrated. The assessment found that with specific modification and some strengthening, particularly in procurement, the PCU would be adequately prepared to manage the proposed project's financial reporting and procurement processes. (See Annexes 7 and 8, respectively). 4. Social 74. This Project currently triggers none of the Bank's social safeguardpolicies. 5. Environment 75. This project currently triggers noneof the Bank's environmental policies. 16 6. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP 4.01) [I [XI Natural Habitats (OPBP 4.04) [I [x 1 Pest Management (OP 4.09) [I [ XI Cultural Property (OPN 11.03, beingrevised as OP 4.11) [I Ex 1 Involuntary Resettlement (OPBP 4.12) [I cx 1 Indigenous Peoples (OPBP 4.10) [I [x 1 Forests (OPBP 4.36) [I [x 1 Safety of Dams (OPBP 4.37) [I [x 1 Projects inDisputedAreas (OPBP 7.60)* [I [ XI Projects on International Waterways (OPBP 7.50) [I [ XI 7. Policy Exceptions and Readiness 76. The proposed Project would not require any exception from Bank policy and would comply with all applicable Bank policies. However, the proposed project required an exception to the practice of not presenting IDA operations to the Board when a borrower is in breach of financial covenants on its IBRD loans. Dominica i s in breach of the negative pledge covenant under its existing loans from IBRD. The breach of the clause related to secured bonds of $29 million issued by Dominica in 1999 to a commercial bank based in Trinidad and Tobago. The security of the bonds consisted of a security account funded out of the proceeds of the bonds as well as taxes and dividends payable to Dominica by two local companies, and a pledge over the Government's shares inone of the companies. 77. The Government has since successfully restructured 72 percent of its commercial debt. Unfortunately, the commercial bank with the security claim did not accept the Government's debt restructuring offer. The Government then took exceptional measures to void some of the security arrangements. Specifically, it repealed the existing legislation that provided for the payment of taxes and dividends by the two local companies to the security trustee for the bonds. As a result, no further payments were made to the security trustee. However, the security trustee continued to hold a debt service reserve securing amounts owed to external creditors in continued violation of IBRD's negative pledge clause. The amount in the debt service reserve was approximately US$390,000inJune 2006. 78. The Bank's Management has approved a further exception to Bank practice of not presenting IDA operations to the Board when a borrower i s in breach of financial covenants on its IBRD loans for the following reasons: IDAdoes not have anegative pledge clause, although Bank practice hasbeenfor IDAnot to proceed when IBRDloan covenants have been breached; *By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties` claims on the disputed areas 17 The project i s important in meeting Dominica's immediate financing and development needs and will facilitate an additional US$12 million in EU grant assistance, thereby catalyzing a significant volume of donor resources at a critical period; The Government continues to cooperate with the Bank and has taken extraordinary measuresinan effort to resolve the issue. 18 Annex 1:CountryandProgramBackground DOMINICA: GrowthandSocialProtectionTechnicalAssistanceCredit A. CountryBackground 1. Dominica i s a small Caribbean island state, the most northerly and largest of the Windward Islands with a population of 71,000 and a GNI per capita of US$3,650. The island i s predominately a lush mountainous area with plentiful water resources, excellent for cultivating bananas, which together with other agricultural products are the base of the economy and has been its largest source of employment. The share of output in agriculture has declined steadily over the last ten years, particularly following the reduction in preferential market access to UK and Europe. The island also has a small export-oriented manufacturing sector and offshore and tourism service activities are becoming more important. Mainstream tourism was never developed due to the small number of white-sand beaches, highrainfall and poor air connections; however, given its other natural characteristics, eco-tourism is beingpromoted. 2. The unemployment rate i s estimated to be 15 percent (2004), and the poverty head count index is 39 percent with 15 percent of the population being indigent. However, Dominica does have good social indicators as a result of sustained investment in human development since independence, and these indicators are not significantly different for the poor and non-poor, with the exception of a small group of indigenous Caribs who make up 4 percent of the population but 7 percent of the poor. Also female headed households (making up 34 percent of the population and 39 percent of the poor) are somewhat over-represented among poor households.The incident of poverty and indigence i s much higher in the rural areas (33 percent and 13 percent, respectively) than in the urban areas (19 percent and 6 percent, respectively). The primary cause of poverty in Dominica i s unemployment and underemployment. In this context, reducing poverty will require creating jobs through economic growth and better targeting of the social protection programs. 3. Dominica i s a member of the Organization of Eastern Caribbean States (OECS) and the Eastern Caribbean Currency Union (ECCU) with which it shares a common monetary and exchange rate policy administered by the Eastern Caribbean Central Bank (ECCB). The ECCB manages a quasi-currency board arrangement supporting and exchange rate pegfixed to the U.S. dollar since 1975 at EC$2.67. EconomicContext: 4. Following a contraction of the economy of 10 percent in 2001-02 and a fiscal crisis in 2003, Dominica has made significant progress at macroeconomic adjustment and fiscal consolidation. Despite an earthquake that struck Dominica in late 2004, the real GDP growth rate for 2004 was 3.1 percent, on the back of strong performance by the banana sector, manufacturing and construction, and resumed market confidence. With resolute implementation of the stabilization and structural adjustment program supported by the IMF under a three-year SDR 7,7 million Poverty Reduction and Growth Facility, an IDA adjustment credit (a US$3 million Economic Governance Reform Credit disbursed as a single tranche in February 2004), and other donors' technical and financial support, the fiscal position has strengthened considerably. 19 5. The conduct of fiscal policy has been prudent, with large savings realized above programmed amounts on account of stronger than expected revenues. As a result, the primary balance improved from a deficit of 1.6 percent of GDP in FY2002-03 to a surplus of 5.6 percent in FY2003-04, and the overall fiscal balance improved from a deficit of 5.4 percent of GDP in FY2002-03 to a smaller deficit of 1.3 percent in FY2003-04, largely exceeding its deficit target of 4.2 percent of GDP. 6. In 2004, as part of its macroeconomic program, Dominica launched a comprehensive debt restructuring exercise aimed at reducing its debt to a sustainable level. The debt exchange offer was closed in September 2004. Thus far, agreements (in principle) have been reached to restructure about 70 percent of the eligible debt. For non-participating creditors, interest accrued until June 2004 has been deposited into escrow accounts. The authorities plan to continue making payments for non-participating creditors into such accounts, but under restructured terms. Under the IDA-financed Economic Governance Reform Credit, the Government implemented actions to (i) restore fiscal stability by improving financial and debt management, and (ii)encourage a resumption of growth by strengthening the financial sector and improving the productivity of public investment. 7. Dominica's economic recovery continued into 2005 with real GDP growing at an estimated 3.5 percent as a result of robust growth in most sectors. However, agriculture and tourism remain weak. The performance of the agriculture sector was adversely affected by the performance of the banana sector which contracted by around 7 percent in 2005. The weakness in the tourism sector reflected the fall-out incruise arrivals from the highlevels in 2004. At the same time, inflation remained subdued. Despite increases in energy prices and the pass through to electricity prices, consumer prices rose only by 2.7 percent in 2005. However, the external position weakened as imports led by rising oil prices increased in the face of stagnant exports leading to a deterioration of the current account balance from 17.2 percent of GDP in 2004 to 23.5 percent of GDPin 2005. 8. A strong fiscal performance has been sustained in 200906 reflecting stronger than expected revenue performance and current expenditure being kept below target. Capital expenditures were also lower than expected due to delays in disbursements from donors. The Government was successful in meeting all the performance criteria agreed under the PRGF. However, closure on the debt restructuring i s being delayed by three large nonparticipating creditors. New bonds have been issued to all participating creditors and these bonds are now traded on the Eastern Caribbean Securities Exchange (ECSE). 9. The Government has demonstrated a strong commitment to the structural reform efforts and has inMarch 2006 introduced the Value Added Tax (VAT) to cover goods and services, the latter being previously outside the tax net. The challenges involved in the preparations for the introduction of the VAT including the shortage of legal draftsmen, and delays i s finalizing the computer software underscores some of the main challenges which the Government faces in implementingthe key structural reform measures to which it i s committed. 20 Reforms to improve growth and competitiveness 10. The recent World Bank study on Growth and Competitiveness in the OECS on the basis of comprehensive analysis sets out a proposal for some immediate priorities, which could be addressed over the short term for countries to improve growth and competitiveness. The very intense dialogue with the technocrats and political directorate in Dominica indicate that the following three medium-term priorities are relevant for Dominica: Fiscal and public sector reform Raise the skills base Improve the business environment Fiscal and public sector reform 11. On fiscal and public sector reform, the Government has taken some initial steps. As indicated above, fiscal management has improved under the IMF supported program and the fiscal indicators are heading inthe right direction. InMarch 2006, the Government rolled out the Value Added Tax (VAT). The authorities have also taken initial steps to improve the investment regime by making fiscal incentives more transparent. There i s more to be done on this front however. 12. The Government recognizes that public sector reform is a linchpin for the overall reform program that i s so critical to Dominica's further development and has moved to implement reforms. The Government has established a Reform Management Unit under the offices of the Chief Personnel Officer, to oversee and coordinate the overall public sector reform program. However, in spite of the strong political commitment to reform, progress has been slow, largely due to the limited technical capacity within the reform unit. The Government has made some progress in implementing measures to streamline public sector employment and reduce the wage bill through outsourcing of some services which has resulted innot only areduction of their costs but also an improvement in their quality. The Government also intends to move forward on the merger of the port authorities. 13. The Government has also made progress on the strengthening of public expenditure including the Public Sector Investment Program (PSIP), cash management, and in the preparation of the amendments to the Finance Administration Act and related regulations. Further, the Government i s proposing to implement a medium-term budgeting framework, with technical assistance from CARTAC and the IMF. However, as indicated in the most recent CFAA and CPAR done for Dominica, there is further work needed in the strengthening of the fiduciary capacity in Dominica including improvements in the capacity within the Accountant General's and Auditor Generals departments; implementation of the procurement action plan; and taking measures to integrate where possible into the pooled procurement initiative being piloted between Grenada and St. Vincent and the Grenadines. Raising the skills base 14. Although it i s widely recognized that the lack of skilled workers is a major constraints to growth in Dominica and that it i s necessary to raise the skills base, the pace of education and training reforms has been slow. However, in the 2006/07 budget, the Government announced new measures to address the quality of education including curriculum reform, training of teachers, better regulation of early childhood education and the building of new schools. While 21 the spending on education and secondary education enrollment i s above the average for the OECS sub-region, the poor education outcomes suggest that there could be a significant increase inefficiency inthe secondary education,system. There is currently ongoing dialogue between the Bank and sub-regional Governments regarding a possibly regional initiative focused on skills training. Work has already started on establishing a pilot in St. Lucia and then rolling out to the other countries inthe region. Improvingthe businessenvironment 15. The OECS sub-region, including Dominica has experienced a secular decline in private investment over the 1990s. This issue was analyzed extensively in the recent Bank's Growth and Competitiveness Study for the OECS. As the study pointed out, investment promotion i s weak. In Dominica, the current institutional framework for investment promotion is weak and lacks focus. The Growth and Social Protections Strategy states "The existing foreign investment approval process i s regarded as a deterrent rather than an encouragement to foreign investors. It i s time consuming, due to the number of agencies and government Ministries involved in the approval process, the lack of transparency, and the requirement of Cabinet approval in each case." The GSPS also states that "The GoCD will establish a one-stop-shop in the NDC6 for foreign investment that will reduce and specify the time for approval, improve the transparency by establishing specific criteria to be met, and by vesting final approval to the NDC." 16. The Government of Dominica has made marked progress in improving the business environment. With support from the World Bank, the Governments of the OECS, including Dominica, have taken the major step to address the telecom monopoly in the region. The OECS i s now benefitingfrom the liberalization of the telecommunications market which resulted in the establishment of the Eastern Caribbean Telecommunications Authority (ECTEL) a regional regulatory authority. The increased competition from the Liberalization of the telecommunications sector has resulted in not only lower prices but also increased investment and employment inthe sector. 17. Also, with support from the World Bank under the Economic Recovery Support Operation (ERSO) in2003, the Government introduced a new mechanism for adjusting domestic prices of petroleum products in line with international price movements, including regular price adjustments. Reforms in port operations were also implemented which resulted in reductions of stevedoring and long shoring charges (30%),cost of handing bulk cargo (40%) and a reduction in the costs of container handling. These changes have resulted in a significant reduction in the distortion inthe economy resultingfrom the previous ad hoc pricingmechanism. 18. Two key remainingelements of improving the business environment are: (i) modernizing customs administration; and (ii) improvingthe oversight of electricity utilities to reducecosts. 19. According to the Recent OECS Growth and Competitiveness study, among all government regulations that affect business operations, by far the most serious constraint is custom regulations. Because of the reliance on imports in the production process the time consuming and costly procedures involved in clearing customs i s a significant barrier to 6 The NDC can benefit from the experience of one-stop shops in other OECS countries such as Grenada, St. Vincent and the Grenadines and St. Lucia that have benefited from this approach to facilitating foreign investment by significantly reducing the time taken for approval. 22 improved competitiveness. As Dominica shifts from its heavy reliance on trade taxes, the Customs department should focus more on trade facilitation. Greater reliance should be placed on technology and e-government to improve service and increase transparency. Automated Systems for Customs Data (ASYCUDA) or other systems have the potential to significantly speed up the Customs clearance process. 20. Inthe recent Bank study on Growth and Competitiveness inthe OECS, electricity supply and costs were identified as the number one infrastructure related constraint identifiedby firms. The study showed that Dominica has the highest electricity rate for both residential and commercial users compared with the rest of the OECS sub-region at US$0.2l/kWh and US$0.26/kWh, respectively. The study identified a number of factors which could be contributing to the high cost including, (i) inappropriate generators in terms of size or type of fuel used; and (ii) high operating inefficiency. The report concluded that "In general, weak oversight and regulation of the electricity sector in the OECS has further exacerbated the situation, and not protected consumers-both residential and commercial-from either excessively high costs andlor supply shortage. In Dominica, which has private operators in the electricity sector, the current regulatory framework does not provide the necessary incentives for efficiency. The higher cost in Dominica may also be due to full pass through of the cost of oil and the absenceof subsidy to the sector. 21. However, the Government i s moving to strengthen the regulatory oversight of the operations, investment and pricing of electricity. As a first step, with support under a previous Bank operation (ERSO) and the IMF's PRGF, the Government has drafted a new Electricity Act, which along with the necessary regulation should provide the basis for the establishment of an independent regulatory commission for the electricity sector. ImprovingSocial Protection 22. Dominica has made significant progress towards achieving the Millennium Development Goals (MDGs) and past investments in human and social development have resulted in strong social indicators comparable with countries with much higher incomes. However, many challenges remain. Dominica has most of the building blocks for an effective social protection system. However, these consist of several programs which are uncoordinated and poorly targeted. Weak information and monitoring systems and lack of documented policies and procedures compound these problems. The Social Protection Review for Dominicacompleted in 2003 by the World Bank identified specific areas for improvement including: (i) rationalizing existing programs to eliminate duplication of efforts; (ii) improving targeting of programs, including household and geographic targeting; and (iii)strengthening capacity for implementation, monitoring and evaluation in ministries and agencies. The Government's recently elaborated Growth and Social Protection Strategy details its social protection agenda for the medium term. This agenda reflects the recommendations from the social protection review done by the World Bank. In addition, this will also take into consideration the work done on streamlining services in the social sector. The Government has already given the commitment to undertake the necessaryreforms. 23 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies DOMINICA: Growth and SocialProtectionTechnicalAssistance Credit TITLE ORGANIZATION SECTORS ENDDATE Day/month/year D0.M Stabex 94 and95 EuropeanUnion Agricultural alternative de\elopment :Agricultural kart Date- Agricultural Support and development :Business suppon sen ices and institutions 011011996 Economic Diversification ;Slultisectoraidfor basic socialservices :Social/ Programme welfare services :Economic and de\elopment policyPlanning:Basic healthcare ;EDUCATION DOM STABEX 96/97 EuropeanUnion Tourismpolicy and administrative management : ltart Date- Agricultural Support and Agricultural development ;Business suppon sewices ani 210511999 Economic Di\ersification institutions :Road transport :Social/ welfare senices ; Programme Strengtheningcivil society ;Basic healthcare : EDUCATION Canada CaribbeanGender Canada Cottage industriesand handicraft :Strengtheningcivil 0/3/2005 Equality ProgramI1 (CCGEP) society :Governmentadministration :Public sector financial management ;Personneldevelopment for populationand reproducti\e health :Sledical educationltraining:Vocational training :Basic life skill! for youth and adults Strengtheningthe Capacity of UNDP Environmental education/ training :Environmental 1111112006 Environmental Management of the policy and administrative management OECS Countries Achieving commercialization of EuropeanUnion Rural development :Multisector aid for basic social 1/12/2007 the banana sector and promoting services rural employment and income generation (SFA 2002) Shelter Development Project CDB To establish a framework for developing the shelter ' 1/06/2008 sector on a sustainable basis with particularreferenceto low-incomehouseholds. Student Loan Scheme (Seventh CDB To pro\ide DAIDB with resourcesto continue financing 111212007 Loan) its student loan program. Seventh ConsolidatedLine of CDB To assist DAIDB in continuingto finance its lending 1/12/2006 Credit program in the following areas:Agriculture and IndustrialCredit, Housing and Student Loans. 24 TITLE ORGANIZATION SECTORS ENDDATE Daylmonthlyear Poverty ReductionandGrowth IMF A three year PovertyReductionand GrowthFacility 1/01/2007 Facility (PRGF) arrangement was approvedon December 29, 2003. The PRGFfocusedfirst on prospects for an orderl: fiscal adjustment, followed by measuresto reinvigorate growth anda debt strategy to ensure medium-termfiscal sustainability. DOM STABEX 98/99/195 European Union Agricultural landresources ;Agricultural policy and tart Date- Agricultural Support and administrative management 1/01/2006 Economic Diversification progra Dominica Air Access European Union Air transport 1/12/2009 Improvementproject Dominica RoadMaintenance European Union Roadtransport 1112/2008 Project CaribbeanRegional HRD Canada Business support services and institutions 1I1212005 ProgramFor Economic Competitivenessfor OECSC Component CPEClOECS Achieving commercialization of European Union Tourismpolicy and administrative management; 1/12/2011 the banana sector andpromoting Forestryservices ;Basic drinkingwater supply and basic rural employment and income sanitation generation (SFA 2003) Eco-TourismDevelopmentProjectEuropeanUnion Tourismpolicy and administrativemanagement tart Date- 1/08/2003 RoseauRoadReinstatement Kuwait Fundfor Arab To reduce the traffic congestioninthe city of ' Roseau". tart Date- Economic To providecar parkingand pedestrian sidewalks, and !/06/2003 Development increasetraffic safety. Upgradingof EcotourismSites CDB The construction of accessroads andreceptioncentres, 1112/2006 'relatedinfrastructure as well as site trails at five major tourism sites acrossthe island. Trade and Competitiveness USAID USAID is focusedon five areasof reform: 1). 1/09/2007 Reforms Governance reforms mainly through legislativereforms aimedat improving the business environment; 2) Increasingpublic/privatesector working relations through aPartnersWorking Group made up of public andprivatesector representatives;3). ExpandDoing Business Indicatorsby contractingthe World Bankto do the doingbusiness indicators; 4). Risk Reductionthrougl work on disaster preparedness; 5). Public Awareness campaign. 25 l'ITi,E ORGANIZATION SECTORS ENDDATE Day/month/year Zapacity Building Support for the UnitedNations Public sector financial management;Economic and 1511112005 [mplementationof a Structural DevelopmentProgram developmentpolicy/Planning 4djustment Programand Growth 4genda for the Commonwealthof Iominica Zaribbean RegionalHRD Canada Strengtheningcivil society 31112/2005 'rogram for Economic ZompetitivenessRegional Clomponent (CPEC) nstitutionalStrengtheningand United Nations Information andcommunicationtechnology (ICT) ;Air 31/12/2000 'roject Implementation DevelopmentProgram transport ;Public sector financialmanagement EGIONALTRADE POLICY Canada Trade policy andadministrative management;Business 31/12/2005 ESPONSIVE001(CRNM) support services and institutions ;Strengtheningcivil society tegional Trade Policy Responsive Canada Tradepolicy and administrative management;Business 31/12/2005 jund support services and institutions ;Strengtheningcivil society rechnical Assistance-Fiscaland DFID Technical assistance is providedto assist the monitoring 01111/2005 konomic RecoveryProgram andevaluation of the government'scashmanagement system. rechnicalAssistance CARTAC Monitoring andEvaluationtechnical assistanceis Ongoing providedto monitor implementation of the IMF stabilizationprogramand treasury accounting. Energy :ethnicalAssistance )AS Departmentof The SustainableEnergy Plan lays out a strategy to: - 'hase IComplete hstainable l).Ensure the existence of adequateenergy supplies at l1/02/2005 )evelopment andthe affordable rates to sustaineconomicdevelopment, while 'hase I1 hvironment (Phase 11-meetingcurrent and projected power demand; 2). kheduledEnd ?EFProject) Providefor stable, reliable, and affordable electricity late-2014 supplies for all customers; 3). Lower the priceof electricity for consumers;4).Enhance the security of energy supply and usefor all sectors of the economy; 5). Allow reasonable incomes for businessesengaged in the local energy sector, while attracting international investment where appropriate; 6).Promote energy efficiency and conservation at all levels of the economy inorder to achieve optimum economic use of renewable andnon-renewablesources of energy; 7). Protectthe local andglobal environment by maximizingthe use of renewable-energyand energy-efficiency alternatives where viable )ECSICT Development Project Vorld Bank The successfulimplementationof the projectwill 1112/2009 contribute to the high-level development objectives identified in the region as economic diversificationand competitiveness. It will promote universalaccess to ICT services, will provide economic opportunitiesfor the regionby attractingprivate investment andemployment inICT services, and will foster the utilizationof ICT to acheive economic and social development. 26 Annex 3: ResultsFramework and Monitoring DOMINICA: Growth and Social Protection Technical Assistance Credit Results Framework Pr dicators Use Outcome Info To enhancethe Government's Increased capacity of the public To inform decision regarding the effectiveness to deliver public goods sector to implement reforms scope and timing of public reform in and services by strengthening the key areas. institutional capacity of key agencies Better regulatory framework To influence private sector to facilitate Dominica's private governing the electricity sector investment decision. sector competitiveness and productivity and to provide targeted Greater transparency and efficiency To improve efficiency and social assistance to reduce poverty. inpublic procurement transparency of public resource use Reduction in the processing time at Will be usedto track progress customs Better targeting, planning and Will provide an inputinto evidence- administration o f social assistance basedpolicy to improve planning programs and administration of social protection. I Component 1: Making the Public Sector more efficient and effective Outcomes: 1.The capability of the Reform Reform Management Unitplanning, Used to measureincreased Management Unitfor planning, designing and implementing competence of PSRU as well as designing and implementing reforms modernizations plans identify gaps inthe public sector is enhanced 2. The Customs department applies Reduction in the average time for Used to measure progress in the best practice procedures in customs customs clearance resulting in lower modernizationprocess as well as operations and is consequently more transactions cost for businesses input into further diagnostics efficient inthe processing of customs transactions and customs Reduction inthe use of paper based control customs declaration 3. The Registry is autonomous, fully Establishment of self-financing Progress mapping as well as input self financing and has the human semi-autonomous agency for into further diagnostics resource and technological Registry capability to deliver high quality service at the economic cost 4. Fiduciaryprocedures are updated, Modernized procurement regulations Input to improving governance in disseminated and the relevant staffs inthe public sector the public sector have the technical competence and technological support to implement Public contracts above threshold these procedures advertised and awarded through transparent and competitive bids. Improvement inaudit capability through automation of audit function 27 Component 2: Improving the investment climate Outcomes: 1.Government polices and actions National Investment Strategy National Investment Strategy to be to improve the investment climate adopted and being implemented used by policymakers, and firms in are driven by a National Investment planning investment activities Strategy 2. The National Development One-stop-shop for tourism investors NDC and one-stop-shop for tourism Corporation i s restructuredwith a established and operational to be used by new investors specific mandate to implement the Investment Strategy and adequately Number of days to process Surveys of users o f N D C and One- resourced to pursue the mandate investment reduced to 20 days by stop-shop services to provide 2009 feedback for improvement inNDC Component 3: Re irming the regulatory framework for the energy sector Outcome: 1.The energy sector inDominica is alternative energy legislation To provide the framework for new governed by a legal and regulatory available as an inputfor public investment in alternative energy framework which provides greater discussion and debate before incentives for efficiency and which enactment To regulate the operations of the returns those benefits to consumers energy sector Regulatory commission established c nponent4: Improving socialproteci n Outcomes: 1.The Government of Dominica An objective and transparent Selection of beneficiaries for key operates a modern social protection targeting mechanismis implemented social assistanceprograms. system with a streamlined system for targeting beneficiaries and the A central beneficiary registry i s in Systematic and efficient registration administrative capacity to deliver place o f beneficiaries. social assistance efficiently A programdatabase to track Monitoring and evaluation as inputs beneficiaries and expenditures for into management and policy the Education Trust Fundand the decisions School Feeding Program in the Ministry of Education i s in use 2. The general public in Dominica i s Public Informationcampaign is To inform stakeholders and improve Fully informed about the new implemented the transparency o f the use of public ipproaches to the delivery of social resources. jafety net programs 28 Arrangements for results monitoring Institutional issues: 1. The project steering committee will be responsible for the monitoring and evaluation of the project, drawing on the reports provided by the PCU basedon data provided by the technical working groups and the Reform Management Unit. The Project Coordinator will have direct responsibility for coordinating the reports to the steering committee and for organizing the regular monitoring and evaluation meetings throughout the implementation of the project. The baseline and target values for intermediate outcome indicators will help provide a basis for monitoring and evaluating the progress of the project as well as provide the basis for necessary policy actions. Data collection: 2. The Project Coordinating Unit and the technical working groups will draw data from a number of sources based on the indicators that have been established to monitor the implementation progress of the particular sub-component of the project. These performance indicators have been established on the basis of reliable benchmarks. The core statistics required to monitor the performance will be generated within institutions which will be reformed, strengthenedor modernized. The change processes are also focusing on the data and information needed to improve the functioning of these institutions. The data and information for monitoring and evaluation will be normal by-products of the reformprocess. Capacitv: 3. The project i s proposing to strengthen key institutions where it has been recognized that limited capacity could affect the Government's ability to effectively implement, monitor and evaluate the performance of the project and ensure its sustainability. Inthis regards, the Reform Management Unit will be significantly strengthenedin terms of its planning and implementation capacity as well as its capacity to garner and process critical data to judge the progress on public sector reform. The Auditor General and Accountant General offices will also be strengthened. 29 z 3 z 3 I I ze F x a 5 5 I Annex 4: Detailed Project Description DOMINICA: Growth and SocialProtectionTechnicalAssistance Credit Background 1. The design of the operation reflects Dominica's potential sources of growth and the key constraints to private sector-led growth. The operation i s designed to support the second stage of Dominica's two stage strategy for re-establishing the basis for sustained growth and poverty reduction. The first stage which focused on achieving macroeconomic stability has been largely successful. The second stage i s aimed at implementing key structural reforms to establish the basis for sustained private sector-led growth and poverty reduction. 2. The government's structural reform agenda is relatively comprehensive covering reforms inthe following areas: judicial, fiscal, financial sector, labor market, public sector, energy sector regulation, investment climate and social protection reforms. The government i s already well advance in implementing some of these structural reforms. On fiscal reforms, they have implemented the Valued Added Tax (VAT), completed a comprehensive review of statutory exemptions and repealed several concessions and work i s ongoing on the amendment to the Finance Administration Act, the improvement of the PSIP and the institution of rolling three- year expenditure plans in line ministries. On the financial sector reform agenda, the main outstanding agenda item is the establishment of a legislative basis for the Financial Services Unit (FSU) to supervise insurance companies and regulate all non-bank financial institutions. The IMFis supporting the Government inthis area. 3. Following extensive consultations with the government including at the Cabinet level, it was agreed that U SAID would support targeted reforms, including in particular labor market reforms, in coordination with the Bank's focus on four areas, namely, public sector reform, energy sector regulatory reforms, investment climate reforms and social protection reforms. Recent analytical work done by the World Bank and other donors, highlight that limited public sector capacity, poor investment climate and the high cost of electricity are a drag on growth. The 2003 Dominica Social Protection Review highlighted constraints in the delivery of safety net programs. The recent Caribbean wide Social Protection Study also highlightedkey issuesthat needto be addressedin Dominica. 4. The multi-sector design of the operation reflects the Government's more holistic approach to ensure the simultaneous targeting of the most bindingconstraint to growth as well as strengthen the poverty impact of the increased growth through better targeting of social protection programs. The specific components of the project are detailed below: Component 1 US$1,240,000 - Makingthe Public Sector more efficient and effective (48% of total project cost) 5. This component will provide technical assistance to the Government to implement its public sector modernization strategy focused on streamlining of the public sector to increase the efficiency of service delivery whilst loweringcosts and strengthening control over public finance and to increase the transparency and efficiency of public procurement. 32 6. In 2003, the Government launched a public sector reform program including four components: (a) modernizing public administration; (b) strengthening public expenditure management and controls; (c) enhancing growth-supporting public services; and (d) rationalizing the delivery of social services and improving their targeting. The 2005 PER for Dominica pointed out, inter alia that the reform program need to address the issue of the existing fragmentation and duplication of work among ministries, departments and agencies. It further recommended that the reform program should be informed by a human resource management strategy adaptedto the needs and challenges of a small-size administration. 7. Under the first two components, (a) modernizing public administration and (b) strengthening public expenditure management and controls, the authorities (with support from DFID) have already taken action to strengthen policy formulation, reform the budget process including strengthening of the cash management system and improvement of the Public Sector Investment Program (PSIP). However, the pace of reform in modernizing public administration in respect of manpower planning has slowed owing to the limited capacity within the Reform Management Unit. On the third and fourth components; (c) enhancing growth-supporting public services, and (d) rationalizing the delivery of social services and improving their targeting, further work needs to be done. 8. This component of the technical assistance project focuses on strengthening the Reform Management Unit and on enhancing growth-supporting public services, particularly Customs and the Registry, two of the areas that have been consistently identified by the private sector as well as the recent Doing Business Survey (2007) as needing improvement. In addition, this component will address outstanding fiduciary issues necessary to ensure effective project implementation. The specific sub-components include: I.1Strengtheningof theReformManagement Unit 9. This sub-component will support the strengthening of the technical capacity within the Reform Management Unit to plan and implement the public sector reform program. The activities to be financed include manpower needs assessments in targeted ministries and departments and mapping of the change management process to guide the re- organizationhestructuring of these ministries and departments. This sub-component will also support the improvement of the technological capability of the unit. 1.2 Strengthening of Customs 10. This sub-component would provide support aimed at strengthening the Government's capacity to implement institutional reforms to the existing ports management and customs clearance systems. Activities to be supported include: (i)the implementation of a detailed action plan for the Customs modernization programincluding staff training (ii) the implementation of a risk management system for customs inspection; and (iii) modernization and automation of the ports and customs information and payments systems, including the upgrade of ASYCUDA to ASYCUDA World. 1.2.1 Customs modernization plan 11. The implementation of the customs modernization plan based on a comprehensive diagnostics on Customs procedures, staff capabilities and training needs. 33 1.2.2 Strengthening Customs control 12. The current system of inspecting nearly every shipment, lengthen clearance times and increases the chances of damaged goods. To remove the responsibility of customs for inspecting every shipment, inspection should be based on an analysis of the risk involved. The subcomponent includes the implementation of risk management system in ASYCUDA World and training for inspectors in physical inspection oriented to seize banned goods (drugs, weapons, wildlife, etc.) valuation and post clearanceaudit. 1.2.3Information Technology to support Customsmodernization 13. This includes the upgrade of ASYCUDA to the ASYCUDA World version, the building of Customs web site, with information to users and staff. The expected outcome i s a paper-less operation on main procedures, as imports and exports, and an automated database on Dominica international commerce. 1.3 Modernization of Registry 14. The Registry in Dominica i s responsible for a total of 15 different registers including business registration, registration of titles and registration of births and deaths. The Oxford Policy Management study of 2004 proposed (i)a short-term action plan focused on improvement in customer service and some legislative changes and (ii) a longer-term action to address: (i) the full scale computerization of companies' registration; (ii) up a new setting Companies and Intellectual Property Registry and (iii)establishing the Registry as a self- financing agency. Most of the reforms for the improvements in customer services and the legislative reforms were completed in 2004/2005 fiscal year. This sub-component will therefore finance: (i) the modernization of Registry including the full-scale computerization of Companies and Trade Marks section to allow for on-line business registrations and searches and (ii) the improvement of the computer technology within the land titles section of the Registry to reduce the turn-around time for registering properties; (iii) the improvement in the operations of the Registry to allow it to evolve into a self-financing agency through a lowering of its operating cost and an increasing of its fee-based revenues as a result of improved services. 1.4Strengthening of Fiduciary Capacitv 15. This sub-component would support the strengthening of the fiduciary capacity within the public sector in Dominica including (i) strengthening of financial management capacity within the Accountant General's and Auditor Generals departments; (ii) implementation of procurement action plan; and (iii) taking measures to integrate where possible into the pooled procurement initiative beingpiloted between Grenada and St. Vincent and the Grenadines inthe context of the ongoing public sector modernization project inGrenada. Component2 US$252,000 - Improvingthe InvestmentClimate (10% of totalprojectcost) 16. The primary objective of this component i s to strengthen the policy, strategic and institutional environment for attracting investment into Dominica. Specifically, the activities under this component will seek first to develop a National Investment Strategy and Action Plan which embodies the long-termsector policy and strategic focus of the agenda agreed between the Government and the private sector. Second, on the basis of the strategy and action plan, there will be activities to restructure the Dominica National Development Corporation (NDC) into an 34 effective institution with a specific mandate to implement the strategy. This component will be complementary to work to be undertaken by USAID to address deficiencies in the regulatory framework for investment. 2.1 Development of a National Investment Stratem 17. This sub-component will provide support for activities to develop a National Investment Strategy based on extensive consultations with key stakeholders and drawing on international best practice. This investment strategy will help to focus the limited public resources in areas in which Dominica could develop competitive advantage and where attracting Foreign Direct investment (FDI) could contribute to the national objective of increasing private sector led growth. 2.2 Development and Implementation of National Action Plan 18. This sub-component will support the development of a specific action plan for the investment strategy as well as the implementation of the action plan including a restructuring the currently unwieldy NDC (with both industrial and tourism departments), to function as a full investment promotion agency (PA) charged with the mandate to implement the investment promotion strategy. 19. The main bottlenecks which investors face in setting up a business in Dominica are presented in detail in the Dominica Investor Roadmap7 (USAID, 2004). These include, among others, strengthening the resources and capacity of the NDC so that it i s capable of performing its investment support role, making investment incentives automatic and subject to approval by the NDC for most cases, removing discretion in the granting of investment incentives, providing adequate information and publishing guides on how the investment regime works (both on paper and online). An overarching concern i s also the lack of a consistent long-term investment strategy, which outlines the sectors and types of firms which Dominica would work to attract, and the regions of the country which would be actively promoted abroad. 20. In line with the above, the proposed component will finance the development of a National Investment Strategy for Dominica covering 2006 to 2020. The Strategy will be elaborated in consultation with all stakeholders including the Diaspora. It should clearly outline the main sectors where investments are sought, their potential in Dominica, and the incentives to be providedto investors inthese sectors. 2.2.1 Development of a National Action Plan 21. The project will finance the preparation of a detailed action plan which will seek to implement the National Investment Strategy including the restructuring of the NDC to meet the mandate to implement the strategy. The restructuring of the NDC may involve a split into two separate agencies; (i) an investment promotion agency and (ii)Tourism Authority. a 2.2.2 Implementation of National Action Plan 22. The financing of the implementation of the National Action Plan will be conditioned on the establishment of the legal framework for the investment promotion agency (PA). This sub- component will finance training of the IPA staff in relevant activities (market intelligence, direct IThe Investor Roadmap outlines detailed recommendations with respect to employing, reporting, locating and operating a company in Dominica. 35 contacts with investors, services to investors, and after-care of investors). The sub-component will, in addition, finance the purchase of office equipment, computers, publication of promotional material, a new website, special software for access to foreign investors' databases as well as subscription to other relevant international business information databases and services. Component 3 US$695,000 - Reforming the regulatory framework for the energy sector (27% of total project cost) 23. The objective of this component is to liberalize and regulate the production and distribution of electricity to improve competitiveness and to support the government in developing a framework for the development of alternative sources of energy. According to the recent OECS Growth and Competitiveness Study', electricity supply and costs was the number one infrastructure related constraint cited by firms. Although 45 percent of the electricity produced in Dominica i s from hydro-power, the country has the highest cost of electricity in the OECS. The report also pointed out that the operating inefficiency was high in Dominica with transmission and distribution losses at 19 percent of total generation. Further, the report argued that weak oversight and regulation of the electricity sector has exacerbated the situation and not protectedresidential and commercial consumersfrom either excessively highcosts and/or supply shortages. 24. The OECS Growth and Competitiveness study suggests that increasedregulatory scrutiny of capacity plans of both private and public utilities will be essential to reduce overall costs and prices. In addition, the report suggests that the introduction of alternative energy sources such as wind, geothermal and natural gas could provide some savings. Indeed, in the case of Dominica, preliminary feasibility studies suggest that geothermal energy could provide the basis for Dominica's export of electricity to neighboring French islands of Martinique and Guadeloupe. 25. The Government of Dominica has recently moved to enact a new Electricity Act which will provide the basis for the strengthening of the regulatory oversight of the operations, investments and pricing of electricity utilities. This component of the technical assistance operation will provide support to the Government for the establishment of a modern, effective regulatory framework for the energy sector. The specific sub-components include: (i) establishment of a regulatory commission to provide regulatory oversight for the electricity sector; and (ii) enactment of alternative energy legislation to provide the legal and regulatory framework for the development of alternative energy technologies, including hydropower, wind and geothermal energy. 3.1 Establishment of National Regulatory Commission 26. This sub-component will finance the establishment of aregulatory commission to provide regulatory oversight for the electricity sector including for the first 12 months; office, staffing, training and economic and legal technical assistance to help establish an explicit road map for both economic and quality of service regulation. The financing of activities under this sub- component will be conditioned on the passage of the passage of the Electricity Act which will provide the legal basis for the establishment and sustainability of an independent regulatory 8Towards a New Agenda for Growth: Organization of Eastern Caribbean States, World Bank, April, 2005. 36 commission for the electricity sector in Dominica. The draft Electricity Act also makes provision for the commission to operate as part of a multi-jurisdictional regulatory body serving Dominica and one or more other jurisdictions in the region. This makes it possible for Dominica to benefit from the regional regulatory framework that is currently under consideration. 3.2 Drafting of Alternative Energy Legislation 27. This sub-component will support the drafting of alternative energy legislation to provide the legal and regulatory framework for the development of alternative energy technologies, including hydropower, wind and geothermal energy. The potential for hydropower has been demonstrated-approximately 40 percent of the electricity i s now produced from hydro. Recent' feasibility studies have established the potential for geothermal to satisfy the demand in Dominica and provide for exports to the neighboring islands of Martinique and Guadeloupe. Component 4 US$232,000 - Improvingsocial protection (9% of total project cost) 28. The objective of the Social Protection Component of the Technical Assistance Project i s to improve the efficiency and effectiveness of existing social safety net programs, including inter alia the Education Trust Fund and Public Assistance. The project will support activities to develop beneficiary databases for program monito,ring; develop a central registry of beneficiaries; design and implementan efficient and transparent targeting mechanism that would be used for a number of safety net programs; establish and document all operating procedures for Public Assistance and the Education Trust Fund; and implement a public information campaign to inform the public about new approaches to the delivery of social safety net programs. 29. These activities are intended to address constraints in the delivery of safety net programs as identified in the 2003 Dominica Social Protection Review and the Government's Growth and Social Protection Strategy (GSPS) which highlighted problems with respect to non-transparent targeting of beneficiaries, weak capacity to monitor and evaluate programs and overlap lack of established policies and procedures for implementation of social safety net programs, and duplication of skills training and community based programs. The GSPS has been the impetus for a number of activities intended to strengthen the system. A preliminary database of beneficiaries for Public Assistance has been established and i s being used by the Ministry of Community Development. A poverty map has been created and preliminary work on application of the poverty map for specific programs has begun. Proposals for rationalization of skills training and community basedare under review. There are three sub-componentsas follows: 4.I Beneficiary Selection System Modernization 30. This sub-component will finance activities designed to modernize and streamline systems for beneficiary selection and registration, including: (a) design and implementation of a transparent and objective targeting mechanism for selection of beneficiaries for the Public Assistance Program, the Education Trust Fund and other social assistance programs; (b) development of a central beneficiary registry; and (c) application of the recently developed poverty maps (which provide information on the spatial distribution of poverty) to community based, school feeding and short-term employment programs. 37 4.2 Institution Strengthening 3 1. This sub-component will support activities to strengthen the administrative capacity to deliver social assistance through: (a) development of program databases to track beneficiaries and expenditures for the Education Trust Fund and the School Feeding Program in the Ministry of Education and further work on database development for the Public Assistance Program in the ministry of community development; and (b) documentation of policies and procedures for the public assistance program and for the Education Trust Fund; (c) establishing linkages and access to the different databases to assist indecision makingat the sector level. 4.3 Public Information Campaign 32. This sub-component will support the design and implementation of a public information campaign to inform the public about new approaches to the delivery of social safety net programs, including the new approaches to targeting and registration of beneficiaries and about other social protection reforms. Component 5 US$181,000 - Project Management (7% of total project cost) 33. This component will finance the operation of the small Project Coordinating Unit integrated within the Establishment, Personnel and Training Department and employing permanent government staff and where necessary contract staff. More specifically, this component will finance: (a) the project coordinator, (b) the cost of the annual project audits, computers for the PCU as well as the costs of staff assigned to the project and (c) the preparation and implementation of a communication strategy to raise support for the proposed reforms as well as address any resistance to the reforms. This communication strategy will build on the institutional framework and experience which the Government has established from recent consultations for the GSPS and implementation of the Value Added Tax (VAT). In addition, the project will benefit from Grenada's successful experience in conducting public information campaigns. 38 Annex 5: Project Costs DOMINICA: Growth andSocialProtection Technical Assistance Credit Project Cost B y Component and/or Activity Local Foreign Total U S $million U S $million U S $million 1. Making the Public Sector more efficient and 0.42 0.82 1.24 effective 2. Improvingthe Investment Climate 0.00 0.25 0.25 2.1 Development of Investment Strategy 0.04 0.04 2.2.1 Development of Action Plan 0.04 0.04 2.2.2 Implementation of Action Plan 0.17 0.17 3. Reforming the regulatory framework for the 0.12 0.58 0.70 energy sector 3.1 Establishment of National Regulatory 0.02 0.58 0.60 Commission 3.2 Drafting of Alternative Energy Legislation 0.10 0.00 0.10 4. Improving social protection 0.00 0.23 0.23 5. Project Management 0.03 0.15 0.18 Total Baseline Cost 0.57 2.03 2.60 Physical Contingencies 0.00 0.00 0.00 Price Contingencies 0.00 0.00 0.00 Total Project Costs' 0.57 2.03 2.60 Front-end Fee Total Financing Required 0.57 2.03 2.60 Note: Costing include technical assistancegrant of US$580,000 from the EU 39 Annex 6: Implementation Arrangements DOMINICA: Growth and Social Protection TechnicalAssistance Credit Fully Integrated PCU 1. The Project will be implementedby the Government over three years. There will be close coordination with the relevant ministries and departments. A small Project Coordinating Unit (PCU), fully integrated within the public sector in the Establishment, Personnel and Training Department will be responsible for the management of the project. The unit will be headedby a full-timeCoordinatorProcurement Officer and aproject accountant. 2. The Project Coordinator could be seconded or transferred from a current position within the public service or be selected on a competitive basis in accordance with Bank procedures if selected from outside of the current Government structure. The Project Coordinator will report to the Financial Secretary in the Ministry of Finance and Planning. The PCU under the leadership of the Project Coordinator will be responsible for the day-to-day administration of the project includingfinance, accounting, disbursement and procurement as well as the preparation of Terms of Reference. The PCU will also be responsible for providing timely reports to the government and to donors. 3. To provide fully integrated technical support, there will be four Working Groups (one each for the first four components of the project) headed by technical champions or by the relevant Permanent Secretaries. All four of the working groups have already been established. The Working Groups will be responsible for providing technical inputinto or reviewing terms of references, clearing procurement and disbursement request, overseeing selection of consultants and monitoring their work to ensure the transfer of skill and the building of capacities in the relevant ministries and departments. The working groups will meet "on demand" to respond to the needs of the PCUfor technical support. Project Steering Committee 4. Given the multi-sectoral nature of the project, there i s need for a steering committee which i s representative of the different sectors involved. The Government has already established a steering committee for reforms headed by a champion appointed by the Cabinet. Currently, this reform committee consists of the Financial Secretary, all Permanent Secretaries, the Social Development Planner, a representative from the private sector, the Chief Personnel Officer and a representative from the NGO sector. In order not to create a new institutional structure but build on an existing one, it is proposed that this same steering committee have oversight over the project based on the following terms of reference: The Terms of Reference of the steering committee will be to: (i) provide overall policy guidance to the PCU through the Ministry of Finance and Planning; (ii) oversee the project implementation process; (iii) address implementation bottlenecks; and (iv) monitor and evaluate implementation progress. 40 Ministryof Finance and Planning 41 Annex 7: FinancialManagementand DisbursementArrangements DOMINICA: Growth and SocialProtectionTechnicalAssistance Credit 1. A mission visited Dominica between March 6-9, 2006 to assess the Financial Management arrangements for the Growth and Social Protection Technical Assistance Project (GSPTAP). The complete Financial Management Assessment Report is available in the Project Files. 2. The main findings of the missions were: (a) The overall strategy for establishing the financial management systems for the GSPTAP would be to utilize, to the maximum extent possible, the existing country systems for financial accounting, documentation, and reporting aspects of the project, consistent with the Bank's fiduciary requirements. Given the findings of the Country Financial Accountability Assessment (CFAA) undertaken in 2004, reliance on country systems i s likely to increase slightly the implementation risk of the project. However, sufficient countervailing measures have been includedinthe project, to substantially mitigate the implementation risks. (b) The Chart-of-Accounts of the Reform Management Unit (RMU) of the Establishment, Training and Personnel Department (ETPD) would be changed to accommodate the GSPTAP. This would enable the project to be integrated into the Governmental budgetary structure. Off- the-shelf accounting software would be initially needed to record and report on project transactions until the Smart stream accounting software i s reprogrammed to accommodate accounts neededto prepareWorld Bank reports. (c) The Project Coordinating Unit within the Reform Management Unit, which will be responsible for coordinating the project's activities, has agreed to hire a Project Accountant with qualifications and experience satisfactory to the World Bank. (d) The project would have severalimplementing entities as well as a relatively large number of small value transactions. Furthermore, the fiduciary arrangements under the project would rely on existing country systems. In order to enhance accountability under the project it has been agreed that an internal audit would be undertaken by the Audit Office annually. The Government's internal auditor would consult with the Bank by May 31 each year on the aspects of the Project to be includedinthe internal auditor's work programfor the following year. (e) Given the planned reliance on country systems, it i s important that gaps in the public financial management system be addressed under the project. The Smart stream Software i s presently lacking a self-audit module and staff are not able generate a full range of reports, partly due to limited skills of the staff utilizing the system. It i s unable to generate a report with individual un-clearedbalances, which necessitates the Department of Audit to audit these classes of transactions. It has been agreed that the self-audit module of Smart stream Software would be bought and two staff would be sent for further Smart stream training, lasting about 3 months each inBarbados, under the Project. 42 Flow of Funds 3. The IDA Grant would be channeled to the project through a Designated Account denominated in U S Dollars to be established by the Ministry of Finance and Planning at a bank satisfactory to the World Bank ( possibly the National Bank of Dominica). If the Government has an agreement for overdraft facility with the Bank, then the provision of a comfort letter by the Bank holding the Designated Account would be required before the deposit of the initial deposit in the Designated Account. A local currency account would also be opened to cover local currency expenditures falling due. These expenditures would be financed via withdrawals from the Designated Account. An initial deposit out of the IDA Credit will be made to the Designated Account equivalent to US$145,000 until the World Bank determines, based on the amounts and frequency of withdrawal applications, that a higher balance i s necessary. Transfers from the Designated Account to the Local Currency Account would be based on projected expenditures for a period lasting no more than 30 days. Payments made from the Designated Account and related Local Currency Account would require two signatures, one by the Financial Secretary and the other by the Project Coordinator. The Designated Account and the Local Currency Account are expectedto be openedby the end of November, 2006. Accounting System 4. The Chart-of-Accounts of the Establishment, Training and PersonnelDepartment (ETPD) has been modified to accommodate the GSPTAP. This would enable the project to be integrated into the Governmental budget structure, The accounting and recording of expenditures would be based on the Government's SIGFIS and Smart stream Accounting Software. All project expenditures would be processedby the Office of the Chief Personnel Officer of the ETPD using the Governments Smart Stream Accounting System, thereby integrating the project expenditures directly into the Government's budgeting system. This payment procedure would enhance both internal control and the reliance on country systems. If necessaryan additional Accounting Clerk would be hired to handle the increased transactions volume necessitated by the Project. Expenditures would be recorded at RMU to meet reporting requirements of the EU and the World Bank. The PCU would utilize a cash basis of accounting for recording and reporting on the transactions of the project and would utilize the QuickBooks to maintain the records of transactions under the project. The line ministries would also utilize a cash basis of accounting, but would have the option to use either Smart stream, a spread sheet such as Microsoft Excel or QuickBooks to maintain their records. Administrative procedureswould be put inplace to ensure that policies and procedures are complied with and that financial transactions would be made with the consideration to safeguarding assets and ensuring proper entry in the accounting/monitoring system. FinancialReporting 5. In addition to the internal reports that the PCU would prepare, it has agreed to prepare FinancialMonitoring Reports (FMRs) that would be submitted to the World Bank on a quarterly basis. The basic format of the FMRs was confirmed during negotiations. The FMRs have been designed to be as simple as possible. The FMRs would include financial, program progress and procurement information. The financial monitoring reports would include a statement showing for the period and cumulatively cash receipts by sources and expenditures by main expenditure classifications. Program progress reports would include narrative information and output indicators, if any, linking financial information with progress in implementing the Technical Assistance Program. As part of the FMRs the PCU would prepare 6-month cash forecast 43 statements, which would indicate the projected level of disbursements during the next 2 quarters following the quarter covered inthe FMRs. The cash forecast would point in advance to potential areas where procurement action could be expedited as well as indicate the major project implementation activities falling due. The participating line Ministries would be provided with a template for generating the project FMRs relating to their respective components. The format for the FMRs and the reporting template for the line ministries were confirmed during negotiations. The Project Coordinator would decide whether a separate software package (QuickBooks or M S Excel) would be needed to prepare the FMRs. The PCU would also produce financial disbursement reports for the EU and the World Bank, such as Statements of Expenditures (SOEs). While, the basic reports would be produced directly from the system, donor reports would be generally produced utilizing M S Excel (from the data obtained from the PCU and Smart Stream). InternalAudit 6. The PCU would not have an internal auditor. However, because of the large number of small value transactions that would be financed under the project and the decentralized approach to project implementation, it has been agreed that the Government's internal auditor should review the transactions under the project at least once a year. It was agreed that the Government's internal auditor would consult with the Bank by May 31 each year on the aspects of the Project to be included in the internal auditor's work program for the following year. The internal audit is to be undertaken by December 31, of each year of project implementation and submitted to the Bank no later than January 31of the following year. ExternalAudit 7. Under the technical assistance project, the PCU's financial statements would be audited annually by an independent auditor satisfactory to the World Bank. The audit reports would be prepared in accordance with International Standards on Auditing following Terms of Reference (TORS) satisfactory to the World Bank. The audits would be prepared by private auditors under the auspices of the Audit Office. The audit reports would include supporting schedules providing sufficient information on the Sources and Uses of Funds, Statement of Expenditures (SOE) and the Designated Account and related Local Currency Account pertaining to the IDA Credit. The amounts in these financial statements would be required to be reconciled with the amounts in the World Bank's disbursement records as contained in Client Connection. The annual audit reports would be submittedto the World Bank no later than 4 months following the end of the fiscal year (July 1-June 30). DisbursementArrangements 8. The disbursements under the project would be transactions based. Disbursements will be made on the basis of full documentation, provided in advance, for all expenditures above the prior review threshold. For all other eligible expenditures, goods costing less than US$50,000 contracts for consulting firms costing less than US$50,000 and for contracts for individual consultants costing less than US$25,000 disbursement would be on the basis of SOEs. For expenditures made on the basis of SOEs, the PCU would maintainthe supporting documentation for the expenditures for review by visiting Bank supervision missions and by the independent auditors. All direct contracting for goods and single source selection for consultants would be subject to prior review regardless of amount. The authorized allocation would be deposited into 44 the Designated Account; the authorized allocation shall be limited to an amount equivalent to US$145,000 until the World Bank determines based on the amounts and frequencies of withdrawal applications that a higher balance i s necessary. Category Amount of the Credit Percentageof Expenditureto be Allocated USD(SDR) Financed (1) Goods for Project with 285,000 69% the exception of sub- (197,000) components 2.2.2, 3.1 and 5 (c') (2) Consultant services for 333,000 40% Project with the exception (230,000) of components 5 (a) and sub-components 2.2.2 and 3.1 (3) Training for Project with 150,000 59% the exception of (103,000) components 5 and sub- components 2.2.2 and 3.1 (4) Goods, consultant 175,100 100% services and training for (120,000) component 2.2.2 the project (5) Goods, consultant 507,000 100% services and training for (350,000) component 3.lof the project TotalAmount 1,450,000 (1,000,000) 45 IFinancialManapementAction Plan Area / Action IExpected/Completed date 1. MinistryofFinanceandPlanning 1.1 Include the main GSPTAP project components into the Chart-of- By November 30, Accounts of the Establishment, Training and Personnel Department 2006 1.2 Integration of the GSPTAP into Smart Stream software to enable By November 30, processing into the Governmental Budgetary Process 2006 1.3 Update Smart Stream by installing the self-audit module and upgrade the By June 30, 2007 ReportingSoftware 1.4 Upgrade the skill of staff inthe use of Smart Stream _- IBy June 30,2007 2. ProjectCoordination Unit 2.1 Fully staff the PCU with Coordinator, Project Accountant and By November 30, Procurement Specialist 2006 3. Flow of funds 3.1 Agree on the terms relating to the interest rate and issuanceof the October 11, 2006 monthly bank statementsfor opening the Designated andLocal Currency Accounts 3.2 Openthe Designated Account in US Dollars inthe bank selected, and the By November 30, Local currency Account for local and recurrent expenditures. 2006 4. OperationalManual 4.1 Prepare Operational Manual and submit for review by the World Bank October 11, 2006 5. FinancialReporting 5.1 Submit Format for FMR for the PCU and the template for the Line October 11,2006 Ministries. 6. Safeguard of Assets 6.1 Submit Asset Register for review October 11,2006 7. InternalAudit 7.1 Prepare and submit first year internal audit program for review by the By May 31,2007 World Bank 8. Externalaudit 8.1 Prepare the audit TORSand short list of firms and submit to the IDA for By November 30, review and clearance. 2006 8.2 Once the IDA clears the TOR and short list of auditor firms, proceed By March 31,2007 with biddingprocess and the appointment of the auditors. Follow-up & Supervision Plan 9. A financial managementsupervision mission should visit Dominicaprior to effectiveness in order to ensure that the financial management system of the project is in place. After effectiveness, a FM Specialist would need to review the quarterly FMRs, including the cash forecast, the annual internal and external audit reports and should perform one supervision mission per year. 46 Annex 8: Procurement Arrangements DOMINICA: Growth and Social ProtectionTechnical Assistance Credit A. General 1. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreedbetween the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements ininstitutionalcapacity. 2. Procurement of Goods: Goods procured under this project will include: office equipment and furniture, computer equipment and software. For proprietary software, procurement through direct contracting i s envisioned. The procurement will be carried out using the Bank's standard bidding documents (SBD) for all ICB and National SBD agreed with the Bank for national competitive bidding (NCB) and shopping procedures. 3. Procurement of non-consulting services: will consist of printing services, communication and internet services for the regulatory commission. Printing services will be procured using shopping procedures and internet services will be procured through direct contracting with the sole provider of internet services inDominica. 4. Selection of Consultants: Consultant services will be required, inter alia, for change management, manpower management, preparation of strategic documents, preparation of action plans, specialized trainers, IT systems, legal drafting and legal opinion, economic analysis and advice, strategic reviews and technical assistance for Customs and for the PSRU. Where teams of consultants are not required, individual consultants will be hired to provide specialized advisory seryices and services to support project implementation and monitoring. 5. Training: The project will finance all costs associated with training, study tours and workshops required for the implementation of the project. 6. Recurrent Costs: Recurrent operating costs related to the first year of operation of the regulatory commission, including the salaries for support staff will be covered by the project and will be procuredusingprinciples and procedures that are acceptableto IDA. B. Assessment of the agency's capacity to implement procurement 7. Institutional Arrangements: The Government has chosen to locate the implementation unit for the Growth and Social Protection Technical Assistance Project (GSPTAP) in the Ministry of Finance and Planning in order to tap into their installed capacity. A procurement specialist in the PCU will oversee all procurement, based on the procurement plan. However, as currently organized, the Ministry of Finance and Planning i s severely understaffed, which may 47 constrain its ability to perform these functions. The core staff of the Ministry consists of 15 positions, 2 of which are vacant, with one person on extended study leave. 8. InDominica only limited procurement activities are carried out by the public sector and the majority i s executed by the donors' representatives following donor requirements. The Administrator's office is charged in general with procurement for MoFP, while procurement of computers and related equipment is carried out by the Computer center within the Ministry. Stationary and other like items are procured by the clerk at the Prime Minister's office. However, he only does this for the other public sector agencies upon request, and no attempt i s made to consolidate like items. It i s also important to note that the Prime Minister's office/Ministry of Finance acts as the Central Tenders Board for Dominica, as this regulatory agency was never established. All these extra duties concentrated in MoFP limit the time they can devote to their core mandate as policy makers. 9. The GSPTAP presents an opportunity to createhtrengthen capacity in the GoCD, rather than relying on PIUs/donor implementingunits staffed by consultants, which ensure only limited transfer of knowledge to the institutions. However, for this to be accomplished it i s necessary to identify the existing staff with potential to take on project managementresponsibilities, including procurement and financial managementpersonnel. A procurement advisor financed by EUfunds will be hired for the first 6 months of the GSPTAP to work step by step with the procurement staff. Procurement Environment 10. The Commonwealth of Dominica Country Procurement Assessment Report (CPAR), dated June 2003, prepared by the World Bank, provides a detailed Action Plan to bring public procurement in line with international standards. The reason given by the government for not following up on the recommendations of the CPAR i s that, in 2004 and 2005, their limited staff resources were concentrated on the debt reduction strategy as a priority. A CPAR funded by the IDB and implementedthrough CARICOM was also prepared in 2004. In addition, CIDA is supporting the preparation of a draft Procurement Act in several of the OECS countries. 11. The current procurement regulatory framework for Dominica i s contained in the Financial and Stores Regulation Act of 1980. The Act i s outdated and establishes low thresholds for contract review and approval that were appropriate to the size of Dominica's economy 25 years ago. The Central Tenders Board required by the Stores Regulation was never established. The Prime Minister/Minister of Finance acts as the regulatory authority for public procurement and in this capacity reviews the majority of contracts. Donor financed contracts and even "change orders" must have MoFP approval although signature i s delegated to two budget officers at MoFP. Intheir capacity as budget officers these Ministry staff cannot contribute in a substantive way to any technical review, as their responsibility i s limited to confirming budget allocations. 12. Interms of code of ethics and anti-corruption legislation, Dominica issued the Integrity Act in 2003. The Act is fairly comprehensive, but has not been fully disseminated, according to reports prepared by consultants for the (CIDA-funded) Eastern Caribbean Economic Management Project (ECEMP). 48 13. A major issue identified is the overall lack of procurement planning. Even the strongest ministries-such as the Ministry of Public Works and Public Utilities-need further strengthening in forecasting and preparation of realistic schedules. The position of Chief Development Planner for the Planning and Public Investment Unit in MoFP has been vacant for some time and the staff charged with this responsibility lack not only the experience but the time required to coordinate with all the line Ministries. 14. It is worth noting that some government agencies are very efficient at procurement, for example the Central Medical Stores located in the Princess Margaret Hospital, which could be replicated in other ministries and government agencies. The Central Medical Stores, with a limited staff of nine, manages to identify and set deadlines for requests for drugs and minor medical equipment from all health facilities in the country; and to prepare purchase orders and submit them to the OECS Pharmaceutical Procurement Services (PPS) in order to receive the goods in a timely manner. They also carry out procurement outside of PPS for medical equipment for the main hospitals and all clinics. OECS PPS considers the Central Medical Stores of Dominica as one o f the most organized inthe OECS. 15. In order to address the institutional and staff capacity constraints to procurement, the authorities have worked closely with Bank staff to prepare a Procurement Action Plan (which i s also a condition for budgetary support from the EU). The implementation of the Procurement Action Plan will also be a key element of the public sector reform supported by the GSPTAP. 16. The overall project risk for procurement i s moderate given the limited demonstrated experience in procurement. However, the implementation of the Procurement Action Plan as an integral part o f the project i s not only a strong mitigation measure but also will ensure that future projects will not be subject to this lack of capacity. C. Procurement Plan 17. The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on October 10, 2006 and i s available at the PCU. It will also be available in the project database and in the Bank's external website. The Procurement Plan will be updated inagreement with the Project team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. D. Frequency ofProcurement Supervision 18. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended bi-annual supervision missions to visit the field to carry out post review of procurement actions. 49 E. Detailsofthe ProcurementArrangements involvinginternationalcompetition. 1.1 zl 1Goods and non consulting services. 1 1 (a) List of contract Packageswhich will be procuredfollowing ICB and direct contracting: Fyc 1 3 1 4 5 6 17 18 :;tract Estimated Procurement Prequali Expected 119Comments Description cost Method fication Preference by Bank Bid-Opening (yedno) ::::Post) Date ~ Procurement 171,000 ICB No Prior June 1,2007 I* Com uters 275,000 DC No hardware and signature proprietary I+ software for I Customs (b) ICB Contracts estimated to cost above US$150,000 per contract and all direct contracting will be subject to prior review by the Bank. 2. Consulting Services. (a) List of Consulting Assignments with short-list of international firms. 1 2 3 4 5 6 17 Ref. No. Description of Estimated Selection Review Expected Comments Assignment Method by Bank Proposals cost (Prior / Submission Post) Date CF1.1 Consultant 1 - to 80,000 COS Post July 2008 Owing to the implement NDC 1 complexity of Action Plan the assignment CF1.2 Drafting of 105,000 QCBS Prior June 2009 Alternative Energy Legislation CF1.3 Custom 235,000 QCBS - Prior modernization Sept2007 I CF 1.4 IIModernization of 45,000 1 I QCQS - . I Prior August Registry CF1.5 Audit Report 21,000 LCS Post August Total Firms 486.000 (b) Consultancy services estimated to cost above US$ 100,000 per contract and all Single Source selection of consultants (firms)will be subject to prior review by the Bank. 50 (c) Short lists composedentirely of national consultants: Short lists of consultants for services estimated to cost less than US$ 100,000equivalent, per contract, may be composed entirely of national consultants inaccordancewith the provisions of paragraph 2.7 of the Consultant Guidelines. F. Thresholds for procurement methods and prior review 19. Recommended thresholds for the use of the procurement methods specified in the legal agreement are identified inthe table below. These thresholds are common to all World Bank projects inOECS member states. The agreedprocurement plan will determinewhich contracts will be subject to Bank prior review. Note: ICB = InternationalCompetitiveBidding NCB = National Competitive Bidding QCBS = Quality- and Cost-BasedSelection QBS = Quality-Based Selection FBS=FixedBudget Selection LCS =Least-Cost Selection CQS = Selection Basedon Consultants' Qualifications 51 Annex 9: Economic and Financial Analysis DOMINICA: Growth and Social Protection Technical Assistance Credit 1. The proposed project will provide technical assistance to support the implementation of key policy reforms to facilitate private sector ledgrowth for increasedemployment and reduction of poverty. Inthe process, the project will also improve the overall efficiency and effectiveness of the public sector inkey areas including procurement, investment promotion, trade facilitation, registration of businesses, regulation of utilities and social protection. 2. Although difficult to quantify, the fiscal, economic and social impacts from the project are expected to be significant. These are summarized inthe table below: 1.Makingthe Public Sector More Efficient andEffective 1A. ReformManagement Unit Better control and A higher quality of Improved service delivery strengthened deployment o f human services delivered by from the public service resources within the the public service. public sector. Increased savings from the rationalization of public sector institutions 1B.Strengthening of Customs More efficient and timely Lower trade Reduced cost to Services flow of information for transaction cost for consumers. evidence based policy private sector positively affecting profitability. 1C. Modernization of Registry Lower fiscal cost of Improved efficiency Improvedquality o f operating the Registry and hence lower services for the general and possible positive transactions costs for public. contribution to the business registration Consolidated Fund and operation 1D.Strengthening of Fiduciary Improvement in quality Increased Improved governance Capacity and timingo f financial transparency inthe audits as well as more operation of transparent and efficient Government public procurement resulting in better value for money 52 2. Improving the Investment Climate 2A. Development o f a National Better defined and more Better defined Increased social capital Investment Strategy transparent incentive investment framework resulting from the framework for investors to facilitate private increased consultations reducing the transactions sector planning with civil society in the costs of ad hoc fiscal development o f the policy National Investment Strategy 2B. Development and Higher level of Implementation o f a National employment and lower Action Plan including agency with a lower investment to spur poverty resulting from restructuring of NDC overall fiscal burden increased investment 3. Reforming the Regulatory Framework for the Energy Sector 3A. National Regulatory Lower energy cost for the Lower energy cost or Lower cost of electricity Commission established public sector. slower rate of and Lower electricity cost increasing resulting in pass-through on domestic improved cost goods and services structure of production resulting in improvement and therefore inconsumer welfare improved competitiveness 3B. Alternative Energy Over the long-term Framework for more Increased employment Legislation drafted increased fiscal revenues competitive generated from increased from the exploitation of exploitation of economic activities alternative forms o f alternative energy resulting from the lower energy including geo- sources leading to cost of energy thermal energy lower energy cost 4. Improving Social Protection~ ~~ 4A. Modernize and streamline Better targeting of Limitedeconomic Better targeting of system for beneficiary selection beneficiary is expected to impact beneficiaries resulting in result in the more improved benefits for the efficient allocation of deserving and reduction fiscal resources inextreme poverty 4B. Strengthen the administrative Improvedcoordination o f Limited economic Lower transactions cost :apacity to deliver social the delivery of social impact for beneficiaries receiving xssistance assistanceresulting in social assistance savings in administrative costs l.C. Design and implement a Limited fiscal impact Limited economic More and better quality mblic information campaign impact informationto the public regarding social assistance 53 Annex 10: Safeguard Policy Issues DOMINICA: Growth and Social Protection Technical Assistance Credit 1. The project currently triggers none of the Bank's Environmental and Social Safeguard Policies. If any changes of environmental or social significance should arise during project implementation, Bank policies will apply. Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP 4.01) [I [ XI Natural Habitats (OP/BP 4.04) [I [x 1 Pest Management (OP 4.09) [I [ XI CulturalProperty (OPN 11.03, being revised as OP 4.1 1) [I [x 1 Involuntary Resettlement (OPBP 4.12) [I [x 1 Indigenous Peoples (OPBP 4.10) [I [x 1 Forests (OPBP 4.36) [I Ex 1 Safety of Dams (OPBP 4.37) [I [x 1 Projects in DisputedAreas (OPBP 7.60)* [I [XI Projects on International Waterways (OPBP 7.50) 11 [ XI * By supporting theproposed project, the Bank does not intend toprejudice thefinal determination of theparties' claims on the disputed areas 54 Annex 11:Project Preparation and Supervision DOMINICA: Growth and SocialProtectionTechnical Assistance Credit Planned Actual PCNreview 12/08/05 02113/06 Initial PID to PIC 04114/06 05111/06 InitialISDS to PIC Appraisal 05/27/06 I O / 10106 Negotiations 06/05/06 10111/06 Board/RVP approval 07118/06 Planneddate of effectiveness 07/30/06 Planneddate of mid-termreview 0611108 Planned closing date 12131/09 Key institutions responsible for preparation of the project: Ministry of Finance and Planning ReformManagement Unit 2. Bank staff and consultants who worked on the project included: Name Title Unit Errol Graham Sr. Economist LCSPE Antonella Bassani LeadEconomist LCSPE Rachel Mccolgan Country Officer LCC3C Lisa Lui Sr. Counsel LEGOP Emmanuel Njomo Sr. Financial Management Specialist LCOAA EvelynVillatoro Sr. ProcurementSpecialist LCOAA Yoa Wotter ProcurementSpecialist LCSPT Stefka Slavova Economist LCSFR Lorraine Blank Consultant Social Protection LCSHS Gillette Hall Social Protection Specialist LCSHS Cornelia Tesliuc Social Protection Specialist LCSHS Donald Hertzmark Consultant Energy Regulation LCSFP Jordan Schwartz Senior Infrastructure Specialist LCSFT Theresa Beltramo Junior Professional Associate LCC3C Alejandro Cedeno Communications Officer LCC3C EnriqueFanta Consultant Public Sector LCSPS Michael Corlett ResearchAnalyst LCC3C Anna Musakova Team Assistant LCC3C Martha Kaunapawa Voice Secondee LCSPE 55 3. Bank funds expendedto date on project preparation: 1. Bankresources: US$209,283 2. Trust funds: 3. Total: US$209,283 4. EstimatedApproval and Supervision costs: US$105,000 1. Remaining costs to approval: U S $ 20,000 2. Estimatedannual supervision cost: US$ 85,000 56 Annex 12: Documents in the Project File DOMINICA: Growth and SocialProtection Technical Assistance Credit Aide Memoire: Pre-Appraisal Mission, Dominica Growth and Social Protection Technical Assistance Credit. Country Assistance Strategy of the Organization of Eastern Caribbean States for FY06 - FY09. Report No. 33118-LAC, World Bank. Commonwealth of Dominica: Country Financial Accountability Assessment July 12, 2004. World Bank. Financial Management Assessment Report, 2006. Commonwealth of Dominica: Country Procurement Assessment Report, June 2003. World Bank. Dominica OECS Fiscal Issues: "Policies to Achieve Fiscal Sustainability and Improve Efficiency andEquity of Public Expenditure". June 25,2005. World Bank. Independent OECS Countries: Improvingthe Investment Climate through the Implementation of Legal, Regulatory and InstitutionalReforms. Draft Report on The Commonwealth of Dominica, IFC, September 30,2002. Organization of Eastern Caribbean States: Towards a New Agenda for Growth, February 7, 2005. Report No. 31863-LAC. World Bank. Proposal for the Rationalization of Social Services and Restructuring of the Ministry of Community Development, Gender Affairs and Information of the Government of the Commonwealth of Dominica. CARICAD. March 2006. SEED- Strengthening the Enabling Environment in Dominica: Action Plan to Strengthen Registration Services for the Private Sector. Oxford Policy Management, March 2004. The Investor Roadmap and Sectoral Analysis of Dominica CaribbeanTrade andCompetitiveness Development Program (C-TRADECOM) U.S. Agency for International Development (USAID) October 15,2004. Scoping Study for Strengthening the Enabling Environment in Dominica. Oxford Policy Management, December 2001. 57 Annex 13: Statementof Loansand Credits DOMINICA: GrowthandSocialProtectionTechnicalAssistance Credit Differencebetween expectedandactual Original Amount inUS$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd 05 Telecommunications & ICT Development 0.00 0.54 0.00 0.00 0.00 0.58 0.00 Project 04 Dominica Economic Recovery Support 0.00 3.00 0.00 0.00 0.00 0.00 0.00 Operation 02 DominicaEmergencyRecoveryProject 0.96 2.24 0.00 0.00 0.00 0.00 0.00 Total: 0.96 5.78 0.00 0.00 0.00 0.58 0.00 0.00 DOMINICA STATEMENT OF IFC's HeldandDisbursed Portfolio InMillions of US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ApprovalsPendingCommitment FY Approval Company Loan Equity Quasi Partic. Total pendingcommitment: 0.00 0.00 0.00 0.00 58 Annex 14: Country at a Glance DOMINICA: Growth andSocial Protection Technical Assistance Credit Dominica at a glance 8/12/06 I Latin Upper Key Development Indicators America middle Dominica &Carib. income Age distribution, 2005 (2005) Male Female Population,mid-year (millions) 0.07 551 599 Surfacearea (thousandsq. km) 0.8 20,418 30,135 Population growth ("A) 0.8 1.3 0.4 1 Urban population(%of total population) 73 78 72 GNI (Atlas method, US$ billions) 0.3 2,210 3,368 3c-* GNI per capita (Atlas method, US$) 3,790 4,008 5,625 D24 GNI per capita (PPP, international$) 5,560 8,111 10,924 1014 GDP growth (%) 3.6 4.4 5.5 GDP per capita growth(%) 2.8 3.1 5.0 I percent (most recent estimate, 2000-2005) Ibo Poverty headcount ratioat $1 a day (PPP,%) 9 Poverty headcount ratioat $2 a day (PPP, %) 23 Under-5 mortality rate (per 1,000) Lifeexpectancy at birth (years) 72 69 Infant mortality (per 1,000live births) 13 27 23 Child malnutrition(%of children under 5) 7 7 Adult literacy, male (%of ages 15 and older) 91 95 Adult literacy,female (%of ages 15and older) 90 92 Gross primary enrollment,male ("hof age group) 96 121 108 Gross primary enrollment,female (% of age group) 95 117 106 Access to an improvedwater source (%of population) 97 91 94 Access to improvedsanitationfacilities (% of population) 84 77 84 1990 1985 2oW 2004 Dominica LatinAmerica&theCanbbean N e t Aid Flows 1980 1990 2000 2005 Lo (US$ millions) Net ODA and official aid 18 20 15 29 Growth of GDP and GDP per capita (%) Top3 donors (in2004): Japan 0 2 4 14 .. Canada 1 3 0 0 Germany 0 0 0 0 Aid (% of GNI) 29.8 12.2 6.4 11.5 Aid per capita (US$) 241 273 214 409 Long-Term Economic Trends Consumer prices (annual % change) 13.3 3.2 0.9 2.7 GDP implicit deflator (annual %change) 16.8 3.0 0.5 -0.1 Exchange rate (annual average, local per US$) 2.7 2.7 2.7 2.7 Terms of trade index (2000 = 100) 133 100 1980-90 1990-2000 2000-05 (average annualgrowth %) Population, mid-year (millions) 0.1 0.1 0.1 0.1 -0.1 -0.1 0.2 GDP (US$ millions) 59 166 271 279 5.1 2.0 -0.8 ("A of GDP) Agriculture 30.7 25.0 18.1 18.7 3.4 -1.4 -3.4 Industry 20.9 18.6 23.4 23.0 5.2 3.0 -5.3 Manufacturing 4.8 7.1 8.8 8.1 6.1 1.6 -5.I Selvices 48.4 56.4 58.4 58.3 4.6 3.2 7.7 Household final consumptionexpenditure 92.4 64.7 68.7 82.4 2.1 1.5 0.1 General gov'tfinal consumptionexpenditure 27.3 20.5 21.2 20.4 1.8 2.7 -3.8 Gross capital formation 50.9 40.8 24.8 17.7 3.9 -1.1 -23.2 Exports of goods and services 22.0 54.5 52.9 47.5 12.5 3.0 -3.8 Imports of goods and services 92.6 80.5 67.5 60.7 4.3 1.2 -6.4 Gross savings 22.1 15.4 5.0 4.2 4.6 -2.7 -43.5 Note: Figures in italics are for years other than those specified. 2005 data are preliminary estimates. .. indicatesdata are not available. a. Aid data are for 2004. Development Economics, DevelopmentData Group (DECDG). 59 Dorninica ~ ____ Balance of Payments and Trade 2000 2005 (US$ rniilions) ]Governanceindicators,2000 and 2004 Total merchandise exports (fob) 58 44 Total merchandise imports (cif) 148 126 Net trade in goods and services -35 -32 Workers' remittances and compensation 01 employees (receipts) 3 4 Current account balance -49 -67 as a % of GDP -18.2 -23.5 Reserves, including gold 30 38 Central Government Finance pk of GDP) Revenue 34.5 38.1 Tax revenue 23.5 27.9 Expense 30.4 30.4 Technology and Infrastructure 2000 2004 Cash surplus/deficit .I1.o -2.3 Paved roads (% of total) 50.4 Highest marginal tax rate (%) Fixed line and mobile phone Individual subscribers (per 1,000 people) 335 879 Corporate High technology exports (% of manufactured exports) 6.7 7.8 External Debt and Resource Flows Environment (US$ millions) Total debt outstanding and disbursed 167 209 Agricultural land (% of land area) 28 31 Total debt service 11 19 Forest area (% of land area, 2000 and 2005) 62.7 61.3 HlPC and MDRl debt relief (expected; flow) - Nationally protected areas (% of land area) Total debt (% of GDP) 61.5 74.9 Freshwater resources per capita (cu. meters) Total debt service ("A of exports) 6.7 10.4 Freshwater withdrawal (% of internal resources) Foreign direct investment (net inflows) 11 19 C 0 2 emissions per capita (rnt) 1.4 1.7 Portfolio equity (net inflows) 0 0 GDP per unit of energy use :omposition of total external debt, 2004 (2000 PPP $per kg 01 oil equivalent) Energy use per capita (kg of oil equivalent) IBRD 4 Short-term, 3- Private. 4 9 J IMF 9 (US$ rniiiions) IBRD Total debt outstanding and disbursed 2 4 Disbursements 1 0 Principal repayments 0 0 Other multi. Interest payments 0 0 lateral, 97 JS$ millions IDA Total debt outstanding and disbursed 14 22 Disbursements 0 0 ' Private Sector Development 2000 2005 Total debt service 0 0 Time required to Start a business (days) IFC (fiscal year) Cost to start a business (% of GNI per capita) Total disbursed and Outstanding portfolio 0 0 Time required lo register property (days) - of which IFC own account 0 0 Disbursements tor IFC own account 0 0 Ranked as a major constraint to business Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 0 0 n.8. n.a. MlGA Gross exoosure Stock market capitalization (% of GDP) New guarantees -- -- Bank branches (per 100,000 people) Note: Figures in italics are for years other than those specified. 2005 data are preliminary estimates. ..indicates data are 8/12/06 not available. -indicates observation is not applicable. Development Economics. Development Data Group (DECDG). 60 Millennium DeveloDment Goals Dominica With selected targets to achieve between 1990and 2015 (estimate closest to dateshown, +/- 2years) Goal 1:halvethe rates for $1a day poverty and malnutrition 1990 1995 2000 2004 Poverlyheadcount ratioat $1 a day (PPP, Yoof population) Poverty headcount ratioat nationalpoverty line (% of population) 33.0 Share of incomeor consumption to the poorest qunitile (%) Prevalence of malnutrition(% of children under5) Goal 2: ensure that children are able to complete primaryschooling Primaryschool enrollment (net, %) 95 88 Primarycompletion rate ("A of relevant age group) 94 107 Secondary school enrollment (gross, X) 95 107 Youth literacyrate (% of people ages 15-24) Goal 3: eliminate gender disparity ineducation and empower women Ratioof girls to boys in primaryand secondaryeducation("A) 103 99 Womenemployed in the nonagnculturalsector ("A of nonagricultural employment) 47 Proportionof seats heldby women in national parliament(X) 10 9 9 13 Goal 4: reduce under-5 mortality bytwo-thirds Under-5mortalityrate (per 1,000) 17 15 14 14 Infantmortalityrate (per 1,000live births) 15 14 13 13 Measles immunization(proporlionof one-year olds immunized,%) 66 99 99 99 Goal 5: reduce maternal mortality bythree-fourths Maternalmortalitvratio (modeledestimate. Der 100.000 live barths) Birthsattended cy skilled healthstaff (% of iotal) 100 100 Goal 6: halt and begin to reversethe spread of HlVlAlDS and other malor diseases Prevalenceof HIV ("A of population ages 15-49) Contraceptiveprevalence (X of women ages 15-49) 50 Incidenceof tuberculosis(per 100,000people) 19 15 Tuberculosiscases detectedunder DOTS (Yo) 84 51 36 Goal 7: halve the proportion of people without sustainable access to basic needs Accass to an improvedwater source (% of population) 97 Access to improvedsanitationfacilities (% of population) 84 Forest area (% of total land area) 66.7 62 7 613 Nationallyprotectedareas (% of total landarea) C02 emissions(metrictons per capita) 0.8 1 1 1 4 1 7 GDP per unit of energy use (constant 2000 PPP $ per kg of oil equivalent) Goal 8: develop a global partnership for development Fixedline and mobileohone subscribers (Der 1.000 oeoole) 161 244 335 879 Internet users (per I,000 people) , . I 0 5 64 259 Personal computers (per 1,000people) 77 126 Youth unemployment(Yoof total labor force ages 15-24) 20.0 40.6 Education indicators(X) Weasles immunization (46 of I-year olds) CT indicators (per 1,000 people) 1251 1W 1.m 75 750 50 5W 25 250 lssa moo 2W2 2 w 4 0 0 ---O-Primarynet enrollmentratio 1890 1995 2 w O ZO2d -Ratio of girls to boys in pnmary & 0Fixed mobilesubscribers + secondaryeducation 0Dominica0LatinAmerica & the Caribbean 0Internetusers Note: Figures in italicsare for years other than those specified...indicatesdataare not available. 8112/06 DevelopmentEconomics Development Data Group (DECDG). 61 IBRD 33397 61°30' 61°45' D o m i n i c a P a s s a g e Cape Capucin Carib Point DOMINICA Vieille Case Douglas Bay Prince Rupert Calibishie Bluff Point Crompton Point Portsmouth Glánvillia S A I N T Wesley Prince ad Rupert Bay Pica J O H N ste rd pmaH Marigot Bay Point Ronde Tweed Me lville Hall Marigot Pagua Bay S A I N T Pagua Point S A I N T A N D R E W Morne ne 15°30' P E T E R Diablotins 15°30' (1421 m) Salibia Colihaut Pagua S A I N T Morne Raquette J O S E P H Salisbury M acoucheri Castle Bruce Layou S A I N T D AV I D Saint Joseph BelleFille Grand Marigot Bay Pointe à Peine Petite Soufrière Bay Belfa st S A I N T Rosalie Point Rosalie Morne Rosalie Mahaut PA U L Trois Pitons Rosalie (1402 m) Caribbean Massacre Bay Morne ne Sea Massacre Macaque (1221 m) Point Giraud La Plaine Roseau Watt Mountain ROSEAU S A I N T (1224 m) G E O R G E pmseT Perd u S A I N T PAT R I C K 61°30' Pointe Michel SAINT 15°15' LUKE Point Saint Jean 15°15' DOMINICA Berekua Grand Carib Soufrière Bay Point Soufière Bay SAINT SELECTED CITIES AND TOWNS Scotts Head MARK 0 1 2 3 4 5 Kilometers Scotts Head Pointe des Fous NATIONAL CAPITAL RIVERS 0 1 2 3 4 5 Miles MAIN ROADS M a r t i n i q u e P a s s a g e This map was produced by the Map Design Unit of The World Bank. PARISH BOUNDARIES The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. DECEMBER 2004