Public Finance Sustainability and Investment DPF II

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This program document proposes the second operation in a development policy operation (DPO) focused on strengthening Madagascar’s fiscal framework and on improving the investment climate. The operation is the second in the Public Finance Sustainability and Investment (PFSI) (DPO2) programmatic series of two International Development Association (IDA) grants and is intended to deepen and consolidate the set of reforms implemented under the first series (DPO1 - P160866) which seeks to: (i) strengthen the fiscal framework by creating fiscal space to support priority expenditures, and (ii) improve the environment for investment. The proposed operation will be in the amount of SDR 31.9 million (US$45.0 million equivalent). This programmatic DPO series complements a Inclusive and Resilient Growth DPO (P162279) which supports structural reforms aiming at building the resilience of the rural poor so that they can benefit from the growth momentum promoted by this operation. This DPO series supports a comprehensive program of reform outlined in the Government’s Economic Development Paper (2017-2019). The reforms under this programmatic operation support the implementation of the economic development paper, which specifies the priorities for stimulating growth and reducing poverty. Key areas of focus include increased revenue and rationalized spending to support public investment, a resilient and inclusive financial system to promote growth, energy development, and a strong business climate to stimulate the private sector. Madagascar’s return to constitutional order in 2014 has seen a much-anticipated pick-up in growth. Nevertheless, as discussed in the World Bank’s CPF 2017-2021, strengthening governance remains key to addressing the country’s deep-rooted fragility, and is therefore central to the reforms being supported in this programmatic DPO series. The reforms supported under this operation complement those under the inclusive and Resilient Growth DPO which seek to promote access of the poorest to the benefits of growth and to promote resilience.

FY17 - Energy and Extractives,FY17 - Financial Sector,FY17 - Public Administration

World Bank Group

Project

Power Generation (CCGT), Forest Products and Packaging, Commercial, Government