Indonesia Government Financial Management and Revenue Administration Project (GFMRAP)

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1 Indonesia Government Financial Management and Revenue Administration Project (GFMRAP) Terms of Reference Assessing Capacity Building Needs for Effective Legislative Oversight of the Budget Process Office of the Secretary General of the DPR and DPR Budget Committee Introduction 1. The Ministry of Finance of Indonesia is implementing a long-term core public sector institutional reform agenda to strengthen governance, accountability and transparency in public financial management (including budget management, treasury modernization, procurement, and financial management), tax administration and customs. The Government is coordinating with various donor partners to finance the implementation of the reform agenda. The World Bank is supporting the program through a proposed GFMRAP, to be implemented in collaboration with the IMF and other donor partners such as AUSAID. 2. World Bank financing for the GFMRAP is intended to be through an adaptable program loan (APL). The APL is expected to provide support in the following areas: A. Public Financial Management (PFM). The objective is to strengthen the effectiveness, transparency and accountability of government spending. The overall program in this area will cover budget formulation and execution systems; modernizing budget classification; adoption of cash planning routines and systems; modernizing the treasury payments system; and strengthening budget reporting and oversight (including by the legislature and civil society). The budget reform component includes expanding the scope of the budget and moving gradually to a system of performance budgeting within an MTEF approach. This will create further challenges for the DPR to provide effective input into budget development and the review of budget execution. These reforms aim to strengthen the legal and institutional framework for budget management, thereby improving the effectiveness of public expenditures and addressing governance risks. The project will finance the costs of MOF reorganization (including human resource aspects), treasury modernization (including the establishment of a Treasury Single Account, the design and implementation of a modern treasury payments system); modernization of fiscal risk management systems; and an electronic procurement system for the central government. B. Tax Administration. The objective is to strengthen the accountability, transparency and integrity of the tax administration. C. Customs Administration. It is envisaged to finance key elements of an overall customs reform strategy. D. Legislative Oversight. In view of the strong budgetary powers of the Parliament it has been decided to add a component to the GFMRAP on strengthening the role of 1

2 Parliament in the budgetary process - both ex ante review of the budget and ex post review. If Parliament does not fully support the overall public financial management reforms, these reforms may fail. It is envisaged that the project will provide technical assistance to the Office of the Secretary General of the Parliament so that the parliamentary staff attached to the Office of the Secretary General (including the staff of the Research and Information Service) can be more effective in helping parliamentary committees (especially the Budget Committee and parliamentary sectoral commissions) perform their ex-ante and ex-post review and oversight functions. Objective and Approach 3. The objective of the assignment is to assist the Office of the Secretary General of the DPR and the Ministry of Finance to carry out a diagnostic review of the capacity building needs of the DPR, including the possibility of training for members of the new Parliament, so that Parliament can play an effective ex ante and ex post budget review function. Specifically, this will involve an assessment of the capacity building needs of (a) the DPR Budget Committee, (b) DPR sectoral commissions, (c) the PPPI (Research and Information Service) attached to the Ofice of the Sec Gen of the DPR and (d) the Office of the Sec Gen DPR. Tasks and Responsibilities 4. Two consultants will jointly undertake this task. They will work together and produce a joint report. One will provide input relating to particular PFM issues as they apply to parliamentary issues. The other will provide input from a knowledge of the operations of the Indonesian parliament and its overall role in improving public sector governance. The tasks will include, but not necessarily be limited to, the following: a) Conduct a Diagnostic Review of the entities mentioned in para 3 above to address the following among other questions: Assessment of the institutional environment including rule systems and incentive structures, and whether champions for institutional strengthening are evident and identifying them if so; Strengths and weaknesses which facilitate or hinder the effective functioning of these entities including data gaps and analytical and statistical capacities; Specific capacity building needs of each of the entities; Inventory of ongoing and planned technical assistance to these entities; Possible grant-financed technical assistance which could be provided under the GFMRAP umbrella; Predictability of budgetary support for TA needs of these entities; Efficacy of technical assistance provided in the past, reasons for their sustainability or lack thereof, and actions to be taken to ensure sustainable outcomes from any technical assistance proposed to be provided. b) Make recommendations specifying (i) the TA needs, phasing and possible costs; (ii) any policy and process reforms necessary to ensure that the TA will lead to a sustainable enhancement of capacity and effectiveness; (iii) intermediate and outcome 2

3 indicators by which the effectiveness of the TA can be assessed; (iv) credible ways in which the results of the assistance provided can be publicly monitored and reported. Deliverables and Timeline 5. The deliverable will comprise a report with specific recommendations. The report should include: Objective of providing TA Summary description of the TA proposed indicating costs: 1 page Detailed description of the component including timeline: 2 pages Performance indicators: 3-4 indicators to assess outcomes Risks and risk mitigation measures Any policy and/or process milestones that need to be completed/implemented between now and end-october 2004 Indication of any major procurement contracts for consultants and/or equipment A separate section on detailed costs: (i) goods/equipment such as hardware, software and implementation services (ii) technical assistance/consulting services (iii) training (the attached cost table may please be filled up). 6. The first draft report is due on April 28, Based on comments and suggestions from the DPR Sec Gen s Office, the MOF, AusAid and the World Bank, a second and final version is due by May 10, Reporting and Liaison 7. The consultants will report to Mr. Amitabha Mukherjee, Task Team Leader GFMRAP and Mr. David Hawes, Team Leader of the TAMF (AusAid) 1, and keeping them as well as Messrs. Joel Hellman and David Shand (World Bank) - apprised of the progress of work and any issues that may arise. While in Jakarta the consultants will work with the Office of the Secretary General of the DPR. The Sec Gen will designate appropriate technical counterparts and her office will coordinate and facilitate any meetings that the consultants needs. The consultants will also liaise with staff of MOF and Bappenas who will be designated by the respective authorities. In addition the consultants will consult with other donor partners including and especially with the ADB, USAID and UNDP so that there is no duplication between donor-financed programs. The consultants will submit soft and hard copies in English of the deliverables to each of the following: (a) the Office of the Sec Gen DPR, (b) Chair and Vice Chair of the MOF Financial Management reform Committee, (c) AusAid, and (d) the World Bank. Duration of Assignment 8. The assignment is based in Indonesia and is expected to last for about two weeks, beginning April 12, Consultants Qualifications and Experience 1 Copies of drafts may please be shared with Messrs. Joel Hellman (Adviser), Mr. David Shand (Financial Management Adviser), and Amitabha Mukherjee (Task Team Leader GFMRAP). 3

4 9. The consultants should possess the following qualifications and experience: Degree in economics/public administration; Experience of the budget process, familiarity with public expenditure management issues and with the role of parliament vis-à-vis the executive on budget oversight; At least 3-5 years hands-on experience of having worked with committee staff of a national or provincial parliament on research/economic review/budget review issues would be an advantage. Other Arrangements 10. The consultants are encouraged to: Identify policy issues and data gaps and make recommendations for coordinated support across donors to build capacity; Promote collaboration among donors in support of the TA needs. 4

5 Amitabha Mukherjee N:\Amit\Indonesia\040406_TOR_DPR Diagnostic_BB.doc April 6, :01 PM 5

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