Statement by the World Bank

Republic of Congo

Donor Meeting, Paris, September 14,2004

Mister Chairman,
Your Excellencies, Ministers of the Republic of Congo,

Your Excellencies, Ambassadors,
Ladies and Gentlemen,

On behalf of the World Bank, 1 would like to make a few remarks to take stock of the developments over the last year and share with YOD some of the lessons we have leamed over that period.

Let me start, however, by joining my voice to earlier speakers, to say how much we have been encouraged by the developments of the last year.

First, the continued consolidation of the political and security situation. This area falls clearly outside our mandate - but as a resident in Brazzaville let me just say that 1 have observed the active involvement of political opposition in national and local
assemblies, the efforts made by the Govemment to start to reach out to civil society on some critical issues and the graduaI restoration of security throughout the country (even if the situation remains difficult in a few districts in the Pool region). Sncb progress bas created hopes that the "conflict trap", to which the Chair was referring earlier, caTI be broken. But clearly, the persistent presence of groups ofunpaid ex-combatants places a threat on these achievements. We, together with other clODOTS, stand ready to build on the past efforts and play our part to help the Govemment en sure the effective demobilization and reintegration of former combatants who have been disarmed.

Second, the improvement of economic governance. My IMF colleague bas already described the achievements of the last period - implementation of the last January-June 2004 IMF-Bank Staff Monitoring Program is satisfactory, and negotiations for an early access to the IMF Poverty Reduction and Growth Facility have started. So let me just add that we at the Bank are very satisfied too with recent progress. We have been particularly involved in the oil sector, and we are pleased to observe that Congo Tanks today among the top performers in the developing world against each of the five key benchmarks of the Extracting Industries Transparency Initiative (BITI). Clearly, much remains to be clone, but we are confident that significant progress will be made in the period ahead.

ln this context, let me briefly describe some of the key activities undertaken by the World Bank since we last met in July last year.

Our first area offoeus has been to work closely with the Government to ensure rapid and effective implementation of the projeets we are fin an cing.

Last year, we mentioned five Bank operations - and I am pleased to report that we have made major progress. The Post-Conflict Economic Recovery Credit of about $38 million was fully disbursed. Implementation of the ongoing portfolio of five projects amounting to about $112 million is satisfactory, with almost 40% of the commitments already disbursed, which is ahead of the initial schedule.

But this is Bot ORly about commitments and disbursements - it is about results. The activities financed under our projects are starting to produce visible results - from the policy level to very concrete actions - from the capital to remote rural areas. Let me cite just a few of those. The first ever audit of SNPC - and the action plan for refonn that followed. The rebuilding of urban infrastructure in Brazzaville. The provision of equipment for the railways between the capitals and the main harbor. The purchase of benches for the schools throughout the department of Bouenza, in the South of the country. The acquisition of a 25-ton boat by a community of fishennen who used to navigate in fragile pirogues. The rehabilitation of schools and health centers in rural areas.

The message I would therefore like to convey here is that implementation is possible. The implementation mechanisms in place are efficient, work weIl, and can be used by aIl douars. There is also extensive experience over the past yeaTs which provides lessons on what works weIl. The Government's request for external financial support bas been accompanied by substantial efforts to demonstrate that donor assistance can be put to good use - and 1 would like to say here that we, at the Bank, are convinced by this demonstration.

Our second area offoeus has been to help the Government pursue the implementation ofits program of eeonomie reforms.

Over the last year, we have worked closely with the Government and ail relevant Congolese stakeholders to support the continued efforts towards economic reforms - through regular briefings of the highest authorities in the country, dialogue with sectoral institutions and specialists, as weIl as regular consultations with private sector and civil society. This bas helped disseminate critical infonnation on the economic program and consolidate the constituency for refonns.

ln close coordination with the IMF, the Bank provided substantial policy advice to the authorities. Advice focused on: (i) public expenditure management, (ii) transparency, in particular in the oïl sector, (iii) forestry management - on bath environmental and fiscal matters, in particular to increase revenues, and (iv) financial sector refonn, in particular for the restructuring and privatization of Government-owned commercial

baTIks, which is DOW completed. This dialogue bas been particularly successful as key measures have been taken by the Govemment in each area of focus.

The message I would like to couver here is for the Congolese delegation, to encourage them to continue their efforts towards improving govemance, the business environment, and social services delivery - and to restate the World Bank's commitment to continue to assist in ibis endeavor.

Our third area offocus has been on providing additionaljinancial support, to help the Government in ils recovery efforts.

Since we met last year, the World Bank bas launched one additional project - a grant in the amount of $19 million for the HIV/AIDS and Health Project, which bas been approved in May 2004, and aims to assist the Govemment in its efforts to slow down the spread of HIV / AIDS, and to strengthen support and cafe for people infected or affected by HIV / AIDS.

ln addition, there are two new operations for which preparation was completed:

A new grant of $20 million for a Support to Basic Education Project, which will be presented to our Board ibis month, and which aims to help improve efficiency and quality of education services, and to reduce inequality in the provision of these services; and

A new $30 million Economic Recovery Credit, which would be presented to our Board in line with the firming up of plans for a PRGF, and aims to help enhance transparency in the oïl sector, rationalize public investment, and reduce domestic arrears in an orderly
and transparent manDer.

The message I would like to couver here is thaï for a country of ibis size, ibis represents an exceptionallevel of support froID the World Bank. Our research and our experience in post-conflict countries indicate thaï such a high level of financial assistance is needed in the aftermath of a conflict to mitigate the risks of relapse in chaos and help lay the foundations for development and poverty reduction. We would like to encourage aIl donors to take a similarly pro-active and ambitious approach to facing Congo's challenges of getting out of the conflict trap.

Looking ahead, the Bank looks forward to continued cooperation with the Government:

Our CUITent Transitional Support Strategy proposes an assistance program for the two coming yeaTs, to help Congo get out ofthe 'conflict trap' - by working together with the Govemment and other key stakeholders to address the four key challenges:

* First, support the growth and diversification agenda - with a focus on macro¬economic stability, infrastructure, education, and rural development.

* Second, help to enhance and reposition the public sector - through both advisory services and adjustment operations, with a focus on transparency in the oil sector, public resources management, and capacity strengthening.

* Third, help mitigate short- and medium-term risks for the social environment - and in particular DDR and HN/AIDS.

* And last, assist in increasing resources for peace and development - in particular by helping Congo to access HIPC as soon as its performance allows.

We hope to work closely with aIl don ors in ibis process, to maximize synergies. ln particular, we are 100 king forward to a close cooperation in the preparation of a sound and realistic I-PRSP and later full PRSP - and in their Implementation.

Mister Chairman,
Your Excellencies, Ministers of the Republic of Congo,

Your Excellencies, Ambassadors,
Ladies and Gentlemen,

Let me close here by reiterating three of the key lessons we have learned over the last period:

* Constraints to Implementation can be overcome and projects can be effectively and transparently executed, to translate into actual results on the ground;

* Continued reform is critical for the success of the overall endeavor, including in the oil sector; and
An exceptionallevel of external financial assistance is needed in a fragile post¬conflict context to consolidate the achievements of the past period.

Thank you.