Second poverty reductionand inclusive growth DPO

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This document presents the second Poverty Reduction and Inclusive Growth Support Operation (PRIGSO) in the amount of US$60 million equivalent to the Government of Mali (GoM), of which 50 percent is IDA Credit (in the amount of Euro 24.9 million) and 50 percent IDA Grant (in the amount of SDR 20.9 million). The operation is designed to support the implementation of the Growth and Poverty Reduction Strategy Paper for the period 2016-2018, known as the ‘Cadre Stratégique pour la Relance Economique et le Développement Durable du Mali’ (Strategic Cadre for Economic Recovery and Durable Development - CREDD). The CREDD, the 2015 Systematic Country Diagnostic (SCD) and the FY16-19 Country Partnership Framework (CPF) for Mali are all closely aligned. The PRIGSO operations support the policies defined in the CREDD by fostering inclusive growth and supporting pro-poor (decentralized) transfers and social protection. This is the second operation of a series comprising two single tranche operations. The first credit (p157900) in the amount of US$50 million was approved in May 2017. Previous development policy operation (DPO) series supported efforts to address the twin challenges of fiscal consolidation while also tackling governance problems by focusing on strengthening Public Financial Management (PFM) and Governance. Reforms supported in the past included efforts to improve budget transparency, strengthen fiduciary and establishment of controls, and improve public investment management, as well as actions to reduce opportunities for corruption, accelerate public procurement and build local government financial management capacity. The present series, by contrast, aims to sustain the foundations for inclusive economic growth, decentralization and protection of the most vulnerable. The dialogue on PFM reforms is mainly driven by the International Monetary Fund (IMF) with the support of other development partners. This second operation maintains the development objectives of the first operation: (i) fostering inclusive growth; and (ii) supporting pro-poor (decentralized) transfers and social protection while deepening the ongoing reforms to achieve the expected results. The operation supports the first objective through a set of mutually reinforcing real-sector reforms that should lead to increased incomes for poor rural households. Point of departure are reforms that enhance the security of tenure. This is accompanied by measures to enhance the functioning of markets (finance, telecom, rural roads, energy) critical to rural growth. The second objective is operationalized by increasing the coverage and reducing the fragmentation of the social protection system, by improving the provision of agricultural subsidies and by supporting accelerated decentralization. This is an important element of the Peace Agreement as reflected by the commitment to almost double the share of spending by non-central entities (collectivités territoriales) from approximately 16 percent of the budget in 2016 to 30 percent in 2018. As governance remains an area of concern, the Authorities have been notified that good governance is an important prerequisite for the PRIGSO series as maintaining macro-economic stability.