Audit of the Mali economic policy reform program

Initially, the program authorized two grants - a $16.7 million grant, to be disbursed consequent to Government of Mali (GOM) tax and budgetary reforms (including a Voluntary Early Departure Program to encourage civil servants to enter the private sector); and a $1.3 million grant for TA and equipment. To date, $10.1 million has been released under the first grant and $1.0 million under the second. In addition, the Mission has used $962,000 in Planning, Management, and Research (PMR) funds for additional TA. An 8/87 Mission request for an additional $6 million (to cover the decrease in the exchange rate of the U.S. dollar) and for a program extension to 12/89 is still pending. Except for slowness in encouraging private business to extend loans to former civil servants, the program has made good progress. The GOM has initiated the tax and budgetary reforms required for disbursement of $10.1 million of program funds, and after a some initial delays due to contracting problems, TA and commodities are being provided in a timely fashion. USAID/M has closely monitored the program. The audit identified three concerns, two of which are being adequately handled by USAID/M. Regarding the first, the Mission had not sufficiently defined whether the privatization plan applied to all public enterprises or only a limited number. A decision will be made after GOM-World Bank negotiations on the subject are completed. Audit concern about the Voluntary Early Departure component proved unfounded, since the Mission had established good controls over departee eligibility and severance pay and was adequately monitoring results. Regarding the third concern, however, the audit found that the Mission"s use - with the Africa Bureau"s approval - of PMR funds to provide additional TA violated the Bureau"s guidance, which restricts use of these funds to design new projects. The Bureau has since reaffirmed this guidance. It is recommended that this practice be discontinued.