MENA Transition Fund
Tenth Steering Committee Meeting
May 22-23, 2017 (Rome, Italy)
Meeting Minutes
Key Decisions
1) Cash available on May 22, 2017 was $15.1 million, including funds from Germany ($2.2 million), Italy ($5.4 million), Japan ($4.3 million), UAE ($1 million), and investment income. The following projects were fully approved, to be funded with uncommitted cash, for a total of $2 million:
· Jordan OECD Promoting Open Government: Supporting the coordination and implementation of Open Government Partnership National Action Plan for a total of $1 million; and
· Morocco OECD Supporting Open Government and Anti-Corruption Reforms for $1 million.
2) The following projects were approved for partial funding due to insufficient resources for a total of $13.1 million. If additional funds materialize before the end of calendar year 2017, a call for proposals will be announced during which the unfunded portions of these projects can be resubmitted as additional financing for Steering Committee priority consideration before considering new projects:
· Jordan WB Promoting Financial Inclusion Policies for $1.2 million (in lieu of $1.441 million);
· Jordan WB Public Investment Management and PPP Reform for $0.6 million (in lieu of $1.415 million);
· Morocco IFC/WB Improving Infrastructure Delivery and PPPs for US$1.9 million (in lieu of $3.033 million);
· Libya WB Health Sector Support ASA Program for $2.4 million (in lieu of $3.0836 million);
· Egypt AfDB Strengthening Capacity of the Administrative Control Agency to Combat Corruption for $3.5 million (in lieu of $4.889 million); and
· Tunisia WB Enhance Gas Sector Governance and Competitiveness TA for $3.5 million (in lieu of $5.055 million).
3) The following projects, as presented, were not approved for funding by the SC:
· Jordan WB Al-Mafraq Reconstruction Zone Feasibility and Establishment Planning for $1.4 million;
· Libya OECD Building Public Administration and capacities for post-conflict reconstruction for $1.6 million; and
· Morocco OECD Promoting local job creation and the socio-economic empowerment of women for $1.787 million.
4) The Yemen IsDB Institutional Support for Post-Conflict Reconstruction and Development Project for $4.9 million was also not approved, as presented, for funding by the SC. However, in the case of Yemen, recent cancellation of Transition Fund projects were made totaling $7.84 million (see list below). As with previous cancellations, the funds will remain assigned to Yemen for a period of six months for new project submissions (including revision of the above project) and additional funding to existing projects. If new submissions are not received within 6 months from cancellation (in this case by November 15, 2017), the funds will be returned to the Trustee and can be allocated to projects from other Transition Countries.
· Yemen WB Accountability and Transparency Enhancement Project (full cancellation/closed in December 2016): $5.2 million
· Yemen WB Civil Society and Government Partnership (full cancellation/closed in June 2015): $0.85 million
·Yemen WB Enterprise Revitalization and Employment Pilot Project (partial cancellation of government-executed component/the ISA-executed component is still under implementation): $1.789 million
5) The SC agreed, with the consent of the Trustee and Coordination Unit, to extend the timeframe of the Transition Fund by one year from December 2017 to December 2018. The Operations Manual has therefore been amended accordingly.
6) $0.67 million was approved to cover the Trustee and CU budgets from July 1, 2017 to June 30, 2018.
7) $0.69 million was reserved to cover the Trustee and CU budgets from July 1, 2018 to January 31, 2021.
Summary of Meeting
1) Remarks by Co-Chairs
The tenth meeting of the Transition Fund Steering Committee (SC) took place in Rome, Italy on May 22 and 23, 2017. A list of meeting participants is presented in Annex 1.
The meeting commenced with opening remarks from the Italian co-Chair, Paolo Cuculi, Deputy Director General for Development Cooperation, Ministry of Foreign Affairs and International Cooperation, who noted the importance of stability and development in MENA as key drivers for global peace and prosperity, and committed to reinvigorate the Partnership by strengthening its role as a forum for policy dialogue that gathers G7 partners, Transition Countries (TCs), Implementation Support Agencies (ISAs), and regional stakeholders. H.E. Ms. Hela Cheikhrouhou, Tunisia’s Minister of Energy, Mines and Renewables addressed the importance of maintaining open and democratic dialogue and thanked donors and ISAs for supporting the priorities of TCs and in implementing projects (see Annex 2 for co-Chairs’ remarks).
At the conclusion of these remarks, an introduction of the agenda followed by the Executive Secretary (see Annex 3).
2) Trustee Presentation
The Trustee presented the Transition Fund’s current funding status and outlook. The presentation is provided in Annex 4.
· Total pledges received at the time of the SC meeting amounted to $252.3 million.
· Total cash contributions received to date amount to $240.4 million, includingrecent contributions received from Germany ($2.2 million); Japan ($4.3 million); Italy ($5.4 million); and the UAE ($1 million) since December 2016. Thirteen countries have contributed the full amount of their pledges: Canada, Denmark, Germany, Italy, Japan, Kuwait, Netherlands, Qatar, Russia, Saudi Arabia, UAE, Turkey and the UK. Investment income earned to date amounts to $2.5 million, bringing the total funding to US$242.9 million. This meeting marks the first time investment income is allocated to projects.
· Funding decisions totaling $218.6 million were made before the SC meeting for projects and administrative budgets.
· Current cash available, net of reserved funds, is $15.1 million. Reserved funds include $7.8 million in project cancellations reserved for Yemen until November 16, 2017, and $1.4 million reserved for the Trustee and Coordination Unit (CU) budgets from July 1, 2017 to January 31, 2021 (see additional breakdown of budget below).
· The next cash payments of $10 million and Euro 1.8 million are expected from the United States and France, respectively, according to original pledges. The Trustee indicated hope that these payments will come through in the next half of 2017. The US noted that the state department has not yet identified a source for its final contribution, but continues to look, while France remarked that its additional contribution was conditional upon the Transition Fund reaching full capitalization, i.e. $250 million and will be awaiting guidance on when that is achieved.
· Estimated administrative costs for the Trustee and CU in FY17 (July 1, 2016-June 30, 2017) are projected at $437,000, which is $26,000 above the approved budget. The proposed FY18 budget for the Trustee and CU is $670,000. The SC approved a transfer of the full FY18 budget of $670,000 (see table below), and reserved $690,000 for the administrative budgets through FY21.
Total Budget Approved FY17 / Total Estimated Expenditures* FY17 / Total Proposed FY18 Budget / Total Reserved FY19-21Trustee / 258,000 / 252,000 / 250,000 / 450,000
Coordination Unit / 153,000 / 185,000 / 420,000** / 240,000
Total Budget / 411,000 / 437,000 / 670,000 / 690,000
*Actual expenditures through April 2017 and estimated expenditures for May and June 2017
** Of which US$300,000 to be allocated to Independent Assessment
3) CU Presentation
The Executive Secretary gave a brief presentation providing a financial and portfolio updated and outlining the 12 projects that were submitted totaling $30.6 million (see presentation in Annex 5). The presentation outlined key highlights on the status of the Fund and portfolio-related progress issues mainly:
· Overall disbursement as of December 2016 increased to 29% from 18% in December 2015 (approx. $64 million disbursed);
· Additional funds leveraged to co-finance Transition Fund projects amounted to about $20 million;
· On average, as of December 2016, about 87 percent of the portfolio was rated in the satisfactory range; 12 percent in the unsatisfactory range; and one project is not yet effective – projects are moving faster from the time of SC approval to project effectiveness.
The Executive Secretary also indicated that the performance of the portfolio of the Transition Fund will be re-assessed during the next progress update due in late July/early August 2017.
Disbursements: Donors noted the need to keep an eye on disbursements as well as problem projects, although some remarked that disbursements are not always the best barometer of progress, but also noting that Fund-level disbursements reflect average disbursements for all projects, irrespective of when they were approved. Hence, new project approvals tend to drag down the average disbursement rate, and a more accurate assessment of disbursement levels can be viewed on the basis of the length of time projects have been in implementation (reference bubble chart in the CU’s presentation).
Results: Donors indicated the need to focus more on project outcomes rather than outputs, including reporting comprehensively at the project-level of all indicators. The CU remarked that the current Fund-level results framework comprises both outcome and output indicators due to the diverse scope of the Fund, but noted that the final independent assessment will include an in-depth review of results/impact on the ground from Transition Fund projects.
4) Comments from the IFI Coordination Platform Secretariat
The IFI Coordination Platform noted that there is strong consensus amongst IFI CP members that the Transition Fund fills critical gaps in particular given the limited grant resources or concessional financing for ACTs. Indeed, these projects play a catalytic role and address an important niche in the area of capacity building and policy advice for reform implementation, which is complementary to other larger projects in infrastructure, social sectors, etc. At the same time, the Transition Fund provides donors, transition countries and ISAs with a forum to carry out policy dialogue. The significant project pipeline for this round (over USD 30 million) provides a strong evidence of the commitment of Platform members (ISAs) to the Fund. The Secretariat encouraged donors to keep and step up their support for the Fund, including by making effective the pledges already made. The Secretariat also expressed the commitment of ISAs to effective project implementation, as shown by the recent improvement in portfolio quality. Finally, the Secretariat informed SC members about the ongoing stocktaking exercise concerning the activities of the IFI coordination platform, which is being undertaken at the request of the Italian Presidency.
SC members encouraged donor partners to consider the future of the Deauville Partnership and asked ISAs to come up with a proposal for the way forward. The importance of taking structured decisions on whether projects are restructured or cancelled early on was also highlighted.
5) Ninth Call Project Approvals
Twelve projects totaling $30.6 million were submitted for SC consideration. A total of eight projects were approved, including six projects which are partially funded at this time. The list of projects submitted with a breakdown of funds requested and allocated is provided in Annex 6. Below is a list of the projects fully approved, partially approved, and not approved as presented:
· The following projects were fully approved:
o Jordan OECD Promoting Open Government: Supporting the coordination and implementation of Open Government Partnership National Action Plan for a total of $1 million; and
o Morocco OECD Supporting Open Government and Anti-Corruption Reforms for $1 million.
· The following projects were approved for partial funding due to insufficient resources. If additional funds materialize before the end of calendar year 2017, a call for proposals will be announced during which the unfunded portions of these projects can be resubmitted as additional financing for SC priority consideration before considering new projects:
o Jordan WB Promoting Financial Inclusion Policies for $1.2 million (in lieu of $1.441 million);
o Jordan WB Public Investment Management and PPP Reform for $0.6 million (in lieu of $1.415 million);
o Morocco IFC/WB Improving Infrastructure Delivery and PPPs for US$1.9 million (in lieu of $3.033 million);
o Libya WB Health Sector Support ASA Program for $2.4 million (in lieu of $3.0836 million);
o Egypt AfDB Strengthening Capacity of the Administrative Control Agency to Combat Corruption for $3.5 million (in lieu of $4.889 million); and
o Tunisia WB Enhance Gas Sector Governance and Competitiveness TA for $3.5 million (in lieu of $5.055 million).
· The following projects, as presented, were not approved for funding by the SC:
o Jordan WB Al-Mafraq Reconstruction Zone Feasibility and Establishment Planning for $1.4 million;
o Libya OECD Building Public Administration and capacities for post-conflict reconstruction for $1.6 million;
o Morocco OECD Promoting local job creation and the socio-economic empowerment of women for $1.787 million; and
o Yemen IsDB Institutional Support for Post-Conflict Reconstruction and Development Project for $4.9 million. However, in the case of Yemen, recent cancellation of Transition Fund projects were made totaling $7.84 million (see list below). As with previous cancellations, the funds will remain assigned to Yemen for a period of six months for new project submissions (including revision of the above project) and additional funding to existing projects. If new submissions are not received within 6 months from cancellation (in this case by November 15, 2017), the funds will be returned to the Trustee and can be allocated to projects from other Transition Countries.
§ Yemen WB Accountability and Transparency Enhancement Project (full cancellation/closed in December 2016): $5.2 million;
§ Yemen WB Civil Society and Government Partnership (full cancellation/closed in June 2015): $0.85 million; and
§ Yemen WB Enterprise Revitalization and Employment Pilot Project (partial cancellation of government-executed component/the ISA-executed component is still under implementation): $1.789 million
6) Project Implementation Progress
The CU gave a brief presentation on red-flagged projects that were slow performing in the December 2016 progress update (see Annex 7). TCs and ISAs presented an update on these projects as of May 2017 to help better assess implementation bottlenecks. Currently, only 12 percent of the portfolio is rated Moderately Unsatisfactory or Unsatisfactory. Below is a brief re-cap of actions to be taken by TCs/ISAs to advance projects on the red-flag list (watch-listed projects were not discussed due to time constraints):
· Regional EIB Logismed: Morocco[1] is working on advancing project implementation, Egypt is going to finalize EU funds and ensure project is fully disbursed by 2020, and Tunisia noted delays relate to the signature requirements of other countries, but has a new schedule for revised disbursements. The EIB, which was expected to present the progress of this regional project, was not represented at this meeting.