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LESSONS:

Private Sector Development Program

| country: Micronesia, Federated States of

Broad consultation, awareness raising, and development of skills of key state stakeholders during loan preparation would have enhanced program implementation and possibly reduced the delays in achieving loan effectiveness.

Transforming state-owned enterprises and establishing an enabling environment for private sector foreign investment takes considerable time and ongoing support. Individual capacities, particularly in the executive and legislative branches of government, need to be assessed before an accurate judgement can be made of the time needed to prepare for loan effectiveness and then to implement reforms.

Continued formal opportunities for dialogue on private sector development with policy makers and legislators after the second tranche had been released may have helped maintain the impetus for change in the enabling environment for private sector development. Such formal discussions with legislators may have improved their understanding of the constraints facing the sector and thereby facilitated earlier passage of key legislation.

The implementation of civil works was delayed due to the time taken to reach government agreement on design, approval procedures, and project implementation unit (PIU) staffing. Early stakeholder and beneficiary involvement during project preparation is needed to ensure project quality and ownership that can minimize such delays.

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