February 2009 prem 4 Africa Region



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Report No. 44350-CV

Cape Verde

Enhancing Planning and Control to Increase Efficiency of Public Spending

Public Expenditure Review
(In Two Volumes) Volume I: Synthesis
February 2009
PREM 4

Africa Region










Document of the World Bank


Currency Equivalent

Exchange Rate Effective as of February 2009




Currency Unity =

Escudo (CVE)

US$1.00 =

CVE 86.4


Fiscal Year

January 1––December 31



ACRONYMS

ADP

Water Company of Portugal

AGECABO

Agency for Promotion of Employment and Local Development

ANMCV

National Association of Cape Verdean Municipalities

AP

Public Administration

APR

Annual Progress Report

ARE

Economic Regulatory Agency

ARM

Multisectoral Regulatory Agency

ASA

Empresa Nacional de Aeroportos e Segurança Aérea (parastatal that manages airports)

BCA

Atlantic Commercial Bank

BCN

Business Bank of Cape Verde

BCV

Bank of Cape Verde

BIA

Inter-Atlantic Bank

BT

Treasury Bill

CFAA

Country Financial Accountability Assessment

CME

Machinery and Equipment Center

CPAR

Country Procurement Assessment Review

COFOG

Classification of the Functions of Government of the United Nations

CPI

Consumer Price Index

CVE

Cape Verde Escudos

DGCI

General Directorate for Income Tax

DGCP

General Directorate for Public Accounting

DGO

Budget General Directorate

DGP

General Directorate for Planning

DGPE

Directorate General for State Assets

DGPOC

General Directorate for Planning, Budgeting and Management

DGT

Directorate General of the Treasury

DSP

Directorate for Payment Services

EDP

Electricity Company of Portugal

ELECTRA

Electricity and Water Company

EMPROFAC

National Company of Pharmaceutical Products

ENACOL

National Fuel Company of Cape Verde

ENAPOR

National Port Authority

EU

European Union

FAIMO

Labor-Intensive Public Works

FBL

Framework Budget Law

FEF

Financial Equilibrium Fund

fob

Freight on Board

GDP

Gross Domestic Product

GEP

Directorate of Studies and Planning

GoCV

Government of Cape Verde

HC

Hidden cost

ICAO

International Civil Aeronautics Organization

IGF

General Inspectorate for Finances

IMF

International Monetary Fund

INE

National Statistics Institute

INFA

National Institute of Financial Support to Agribusiness

INPS

National Institute for Social Protection

INTERBASE

Company for Sea Products Commercialization

INTOSAI

International Organization of Supreme Audit Institutions

IPSAN

International Public Sector Accounting Norms

IT

Information Technology

MDG

Millennium Development Goal

ME

Ministry of Education

MFA

Ministry of Foreign Affairs

MFAP

Ministry of Finance and Public Administration

MH

Ministry of Health

MIT

Ministry of Infrastructure and Transport

MITM

Infrastructure, Transport and Maritime Affairs

MJIA

Ministry of Justice and Internal Administration

MFF

Municipal Finance Fund

MTEF

Medium-Term Expenditure Framework

NDP

National Development Plan

NIF

Tax Identification Number

NOSI

Operational Nucleus for Information Systems

O&M

Operation and maintenance

OECD

Organisation for Economic Co-operation and Development

PETROGAL

Petroleum Company of Portugal

PIP

Public Investment Program

PIS

Public Investment System

PNCP

Chart of Accounts (Plano Nacional de Contabilidade Pública)

PRGF

Poverty Reduction and Growth Facility

PROMOTORA

Venture Capital Stock Corporation

PRSC

Poverty Reduction Support Credit

PSI

Policy-Support Instrument

QUIBB

Questionário Unificado de Indicadores de Bem-Estar (Unified Survey of Well Being Baseline Indicators)

RMF

Road Maintenance Fund

SDR

Special Drawing Rights

SIGOF

Financial Management Integrated System

SOE

State-owned Enterprise

SONANGOL

National Fuel Society of Angola

STAD

Secretariado Técnico de Apoio ao Desenvolvimento
(Technical Secretariat for Development Support)

STASCO

Shell International Trading and Shipping Company Limited

TACV

Airlines of Cape Verde

TdC

Tribunal de Contas (Court of Accounts)

TRANSCOR

Private Company of Municipal Transportation

US-MCC

US Millennium Challenge Account

VAT

Value-added Tax

WTO

World Trade Organization




Vice President:




Obiageli K. Ezekwesili (AFRVP)

Country Director:




Habib M. Fetini (AFCF1)

Sector Director:




Sudhir Shetty (AFTPM)

Sector Manager:




Antonella Bassani (AFTP4)

Task Team Leader:




Manuela Francisco (AFTP4)



CONTENTS


Tables: i

Annexes: i

ACKNOWLEDGMENTS ii

ENHANCING PLANNING TO INCREASE EFFICIENCY OF PUBLIC SPENDING 1

PUBLIC EXPENDITURE REVIEW 1

Introduction 1

Macroeconomic Background 2

Fiscal Performance 2

Public Finance Management 7

Decentralization 11

Infrastructure 14




  1. Tables:

Table 1: Summary of the Recommended Reform Measures in PER FY06 18

Table 2: Summary of Recommendations PER FY08 19





  1. Annexes:



  1. ACKNOWLEDGMENTS

This PER Update was jointly prepared by the World Bank and the Cape Verdean Government.

The World Bank team consisted of Manuela Francisco (TTL, AFPT4), Hélène Grandvoinnet (AFTPR), Daniel Benitez (FEU), Cecilia Briceno-Garmendia (AFTSN), Mafalda Duarte (EASPR), Hélio Tollini (Consultant, advisor of the Brazilian House of Representatives Budget Office), and Judite Fernandes (AFTP4).

The Working Group within the Cape Verdean Government was under the responsibility of Celina Cruz (Head, Budget Monitoring Unit), Claudino Semedo (Budget Director), and António Pires (Economist, General Director of Planning). The working group included José Roberto (Advisor to the Brazilian Federal Budget Secretary), Paulo Feijó (Consultant, Brazilian Budget Association), and José Macamo Correia (Consultant, UNDP, Mozambique). José Roberto, Paulo Feijó, and José Macamo Correia were financed through the PRSP TF.

The report was prepared under the supervision of Antonella Bassani, Sector Manager (AFTP4), who offered conceptual guidance, provided critical analytical advice, and ensured quality control and management support. From the Country Management Unit, Madani Tall (Country Director), Iradj Alikhani (Country Program Coordinator), and Joelle Dehasse (Senior Operations Officer), supported the overall process and the engagement with the authorities and provided valuable guidance on policy issues.

The report benefited from comments and discussions with sectoral colleagues, particularly Kavita Sethi (AFTTR), Fernando Lecaros (LCSEG), Kai-Alexander Kaiser (PRMPS), Sherri Archondo (AFTFP), and Soukeyna Kane (AFTFM). The report also benefited from discussions with the IMF team: Maitland MacFarlan, Lamin Leigh, Nils Maehle, Eduardo Castro, and Marcio Ronci. Celina Cruz (Head, Budget Monitoring Unit) provided excellent support to the missions. The Report also benefited from comments from participants in the PER Workshop which took place in Praia in August 2008.




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