APEI Regional DPO (RI)

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The regional Development Policy Operation (DPO) programmatic series supports a regional reform program of five countries (Malawi, Mauritius, Mozambique, Seychelles, and Zambia), the Accelerated Program for Economic Integration (APEI). Participation in the two proposed budget support operations for the APEI is linked to readiness criteria (outlined below), which only three countries (Mauritius, Mozambique, and Seychelles) currently meet. The first operation in the proposed programmatic series will therefore be for a proposed credit equivalent to US$10 million for Mozambique, and proposed loans (equivalent to US$14.9 million and US$5 million for Mauritius and Seychelles, respectively). The same readiness criteria will be used for all five countries when preparing the second DPO to assess if they are eligible to participate in the second operation. It is expected that all five countries that are members of APEI will participate at that point. Hence, the programmatic series is aligned with the membership in the APEI, its strategic orientation, and the initiative’s initial time frame, with the second operation planned for Board presentation in FY17. The operation focuses on these pillars because the reforms in these three pillars are more likely to have positive spillovers to neighboring countries. Therefore, coordinated implementation of reforms is expected to increase the overall returns to the reforms that each country undertakes. As a result, these reforms are more likely to be implemented, and will have larger economic impacts, if addressed in parallel, because countries benefit from their own reforms and also from the reforms in neighboring countries. The programmatic approach permits continued support over time to allow sequencing and deepening of complex reforms, and to support all five countries through the second operation if readiness criteria permit. In short, consistency of reforms and credible regional coordination can help change the political economy of domestic debate and also increase pressure for complementary domestic reforms.