WASHINGTON, May 20, 2010 – The World Bank’s Board today approved a Third Economic Recovery and Governance Grant (ERGG-3) for the Republic of Togo. With a commitment of US$16.3 million (almost FCFA8.2 billion), ERGG-3 is part of the operations contained in the Interim Strategy Note developed by the Bank to support Togo over the period 2008-2010. The reform policies supported by ERGG-3 are also aligned with Togo’s Poverty Reduction Strategy Paper (PRSP) covering the period 2009 to 2011. The amount granted for ERGG-3 includes a Crisis Window’s Response funding of US$4.3 million added to help the country mitigate the impact of the global financial crisis.
As in the case of the earlier grants ERGG-1 and ERGG-2 (approved respectively in May 2008, and April 2009), ERGG-3 provides budget support to Government, and will be released in a single tranche. Its main objective is to support government-owned economic reforms to improve governance, transparency and efficiency in public financial management, as well as advance structural reforms aimed at strengthening governance and transparency in key sectors of the economy, such as phosphates, cotton and energy.
The reforms supported by the operation are critical to the Government’s ability to use public resources efficiently and effectively to support the country’s economic and social recovery. The approval of ERGG-3 is based on a set of prior actions undertaken by the government in the following areas:
- budget formulation and monitoring: quarterly publication of the 2009 budget execution reports; and submission of the draft 2010 budget to Parliament before the end of 2009, with a medium term expenditure framework for two priority ministries (education and health);
- budget execution: (i) availability of at least 80 percent of the allocations for poverty reduction activities upon authorization of expenditures for the priority ministries by end of February 2010, and of the final 20 percent by end October 2010; and (ii) installation and operationalization of the SIGFIP information system in the Treasury department;
- budget controls: preparation and implementation of a procedures manual for the General Finance Inspectorate; and establishment and operationalization of the Court of Accounts;
- public procurement: establishment and operationalization of the General Procurement Department, and creation of commissions to conduct ex-ante procurement controls in at least five priority ministries and the Lomé municipal office;
- cotton sector: preparation of an assessment of the cotton company’s (NSCT[1]) management information and cost accounting system; and adoption of the sector’s regulatory framework, specifying the roles, responsibilities and obligations and the mechanisms to make effective the representation of the producers at the Board of the NSCT.
- phosphate sector: adoption of the legal and institutional framework with the objective of becoming an EITI[2] candidate; and publication of the reconciliation results of the 2008 revenues generated from phosphate sales, with revenues received by the public Treasury that year; and
- energy sector: preparation of a time-bound plan for the clearance of the public and para-public arrears to the national electricity company (CEET[3]) and identification of measures to prevent accumulation of arrears in the future; and (ii) clearance of State arrears and obligations to CEET.
Upon approval of ERGG-3, Madani M. Tall, Country Director for Togo, commended the Togolese government for all the efforts made to implement the prior actions for the new budget support operation. “We congratulate the Togolese authorities for the considerable efforts made to reform key areas of the economy and for the progress achieved so far. We strongly believe that the new program will help continue the implementation of the country’s reform agenda to support the economic and social recovery, and help address some of the remaining institutional and economic challenges”. Tall also encouraged government to continue and intensify the reforms already started, in order to reach in the near future the completion point of the HIPC Initiative and benefit from the cancellation of its multilateral debt: “The country will then be able to mobilize the resources necessary to achieve growth and reduce poverty”, he ended.
ERGG-3 is closely coordinated with assistance provided to the Government’s economic reform program through the LICUS[4] Trust Fund grant for economic recovery and international re-engagement, the Enhanced HIPC[5] initiative, the African Development Bank’s budget support, and the International Monetary Fund’s ECF[6] program (formerly known as Poverty Reduction and Growth Facility). The Togolese Ministry of Economy and Finance is responsible for implementing the grant.
[1] Nouvelle Société de Coton du Togo
[2] Extractive Industry Transparency Initiative
[3] Compagnie Energie Electrique du Togo
[4] Low Income Countries Under Stress
[5] Highly Indebted Poor Countries
[6] Extended Credit Facility
