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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY PROJECT APPRAISAL DOCUMENT ON A GLOBAL PARTNERSHIP FOR EDUCATION FUND GRANT Human Development Sector Unit East Asia and Pacific Region IN THE AMOUNT OF US$2.8 MILLION TO THE DEMOCRATIC REPUBLIC OF TIMOR-LESTE FOR A MANAGEMENT STRENGTHENING PROJECT June 8, 2012 Report No: TP This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective June 8, 2012) Currency Unit = Timor-Leste US$ US$1 = Timor-Leste US$1 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AAP Annual Action Plan IBRD International Bank for Reconstruction and Development AJR Annual Joint Review IDA International Development Association AusAID Australian Agency for International Development INFORDEPE National Institute for Professional Educators Training CDP Capacity Development Plan LEG Local Education Group CPS Country Partnership Strategy MDG Millennium Development Goals DG-CS Director General for Corporate MoE Ministry of Education Services EGRA Early Grade Reading Assessment MSAF Management Strengthening Action Framework EFA Education For All MSP Management Strengthening Project ESSP Education Sector Support Project NESP National Education Strategic Plan EMIS Education Management Information NSDP National Strategic Development Plan System FTI/GPE Fast Track Initiative PFM Public Financial Management FM Financial Management PIU Project Implementation Unit GAEM Office of Strategic Advice and SOP Standard Operating Procedure Modernization GoTL Government of Timor-Leste TOR Terms of Reference GPE Global Partnership for Education UNICEF United Nations Children s Fund Regional Vice President: Country Director: Sector Director: Sector Manager: Task Team Leader: Pamela Cox Ferid Belhaj Xiaoqing Yu Luis Benveniste Dandan Chen

3 TIMOR-LESTE Management Strengthening Project TABLE OF CONTENTS Page I. STRATEGIC CONTEXT...1 A. Country Context... 1 B. Sectoral and Institutional Context... 1 C. Higher Level Objectives to which the Project Contributes... 3 II. PROJECT DEVELOPMENT OBJECTIVES (PDO)...4 A. PDO... 4 B. Project Beneficiaries... 4 C. PDO Level Results Indicator... 5 III. PROJECT DESCRIPTION...5 A. Project Components... 5 B. Project Financing... 7 Lending Instrument... 7 Project Cost and Financing... 7 IV. IMPLEMENTATION...7 A. Institutional and Implementation Arrangements... 7 B. Results Monitoring and Evaluation... 7 C. Sustainability... 8 V. KEY RISKS AND MITIGATION MEASURES...8 A. Risk Ratings Summary... 8 B. Overall Risk Rating Explanation... 9 VI. APPRAISAL SUMMARY...9 A. Economic and Financial Analyses... 9 B. Technical C. Financial Management (FM) D. Procurement E. Social (including Safeguards)... 12

4 F. Environment Annex 1: Results Framework and Monitoring...14 Annex 2: Detailed Project Description...15 Annex 3: Implementation Arrangements...27 Annex 4: Operational Risk Assessment Framework (ORAF)...40 Annex 5: Summary of Management Strengthening Action Framework (MSAF)...44 Annex 6: Implementation Support Plan...47 Annex 7: National Education Strategic Plan Financing Gap Analysis...50 Annex 8: Gender Analysis...52 Annex 9: Coordination with AusAid Management and Leadership Program...55

5 TIMOR-LESTE MANAGEMENT STRENGTHENING PROJECT PROJECT APPRAISAL DOCUMENT East Asia Pacific Human Development Date: June 8, 2012 Country Director: Ferid Belhaj Sector Manager: Luis Benveniste Sector Director: Xiaoqing Yu Project ID: P Lending Instrument: Specific Investment Grant Team Leader(s): Dandan Chen Sectors: General Education Sector Themes: Education for All (100%) EA Category: C Proposed terms: Project Financing Data: [ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other: Source Total Project Cost: Cofinancing: Recipient: Total GPE Fund: IBRD IDA New Recommitted Total Amount (US$m) Recipient: Democratic Republic of Timor-Leste Responsible Agency: Ministry of Education Contact Person: Sr. Apolinario Magno, Director-General Corporate Services Telephone No.: (670) Fax No.:(670) apolimagno@gmail.com i

6 Estimated Disbursements (Bank FY/US$m) FY Annual Cumulative Project Implementation Period: August 1, 2012 July 31, 2015 Expected effectiveness date: August 1, 2012 Expected closing date: July 31, 2015 Does the project depart from the CAS in content or other significant respects? Yes X No If yes, please explain: Does the project require any exceptions from Bank policies? Have these been approved/endorsed (as appropriate by Bank management? Is approval for any policy exception sought from the Board? Yes X No Yes No X N.A Yes X No If yes, please explain: Does the project meet the Regional criteria for readiness for implementation? X Yes No If no, please explain: Project Development Objective: To support the implementation of the National Education Strategic Plan (NESP) through strengthening the capacity and systems of the Ministry of Education (MoE). ii

7 Project description: Component 1. Strengthening Targeted Management Directorates. A program of prioritized support to the management functions of the MoE will target senior management, management of school-based management reform, and training capacity. Component 2. Strengthening Public Financial Management (PFM) and Evidence-based Planning Capacity, including Management Information Systems (MIS). Technical support will focus on strengthened policy formulation processes and planning systems and capacity; high quality and transparent financial management systems; strengthened procurement and contract management functions; and monitoring and evaluation including the Education Management Information System (EMIS) and related systems. Safeguard policies triggered? Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waters (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) Yes X No Yes X No Yes X No Yes X No Yes X No Yes X No Yes X No Yes X No Yes X No Yes X No Loan Agreement Reference Conditions and Legal Covenants: Description of Condition/Covenant Date Due iii

8 iv

9 I. STRATEGIC CONTEXT A. Country Context 1. Timor-Leste is a country in transition from post-conflict stabilization to development, and from low-income to a medium-income status, graduation supported chiefly by oil and gas revenues. Although there has been significant progress in the creation of the architecture of governance and the associated legal and institutional frameworks, Timor-Leste still exhibits the characteristics of a fragile state. The country has made solid progress in establishing institutions to safeguard public sector accountability, but their effectiveness is constrained by limited capacity and evolving legal mandates. The functioning of both the private and the public sectors has improved markedly during a period of development of government systems, with remaining constraints in staff qualifications and experience. B. Sectoral and Institutional Context 2. Human development outcomes for Timorese in both health and education remain among the weakest in the East Asia Pacific region, and population growth is still high (net total fertility rate of 5.7 in 2009/10). Nevertheless, change and growth in the education sector have been significant since independence in Net enrolment rate in primary education has increased from 68 percent to more than 90 percent from 2004/05 to There were rapid reductions in grade-to-grade dropout from percent in to 3-4 percent in As identified in key sector diagnostics such as the Early Grade Reading Assessment (EGRA) and the National Education Strategic Plan (NESP) itself, the sector continues to face major challenges in the quality of education, and the efficiency of education, including continued high levels of repetition particularly at early grades. 3. After launching the draft NESP in November 2010, Timor-Leste s Ministry of Education (MoE) established in 2011 a new Ministry organizational structure aligned with NESP and recruited a new management team to oversee its implementation. NESP is organized into seven education reform Priority Programs, five management strengthening Priority Programs, and one Priority Program aimed at improving donor coordination. Recognizing key human resource and management challenges in implementing NESP, the Ministry has prioritized: the recruitment of qualified staff; the development of a Management Strengthening Action Framework (MSAF); the development of a Public Financial Management (PFM) Strengthening Plan; the alignment of partner support; and the introduction of a management by results system. 4. At the country level, the National Strategic Development Plan (NSDP) emphasizes an infrastructure-led development strategy, but with an important role for human capital development. A Human Capital Fund has been established to help meet the human capital needs of NSDP achievement. Priorities are set out for the education sector, to which the NESP is fully aligned. The Minister of Finance has indicated that additional domestic resources can be available for the education sector, provided that progress is made on the competent management of government budget for education outcome and improved delivery on key initiatives supported by government, such as the Teacher Career Regime, School Feeding, and 1

10 School Building and Furnishing programs. The MoE has identified the need to strengthen its management to deliver the results of these initiatives within the NESP framework. 5. On the overall public financing of education, education spending has remained constant at 2 percent of Gross Domestic Product (GDP). However, the total amount of education spending is increasing given the fast pace of GDP growth. The growing national resource envelope continues to support the expansion of the education sector in recent years. With the average year-to-year enrollment growth at basic and secondary education is around 9-10 percent per annum during the same period, the increase of public expenditure in education has been at the faster pace than the enrollment expansion. It is estimated per student public spending is about US$120 1 in 2006/07, and rising to around US$190 in Case for FTI/GPE Support 2 6. At the Education Annual Joint Review (AJR) meeting in November 2010, the MoE of Timor-Leste stated its interest in pursuing Fast Track Initiative (FTI) catalytic funding to support NESP implementation. The MoE confirmed his support during the Quarterly Development Partners meeting of May 10, Furthermore, the NESP was appraised in 2011 according to the FTI Appraisal Guidelines. The costing of NESP was subsequently revised. Initiatives to strengthen donor coordination have also taken place including the commitment of the Ministry and partners to the Dili Education Declaration in 2011 and the Ministry s launching of Priority Program of Achieving Donor Coordination (Priority Program 13). The MoE has also played an active role to lead the development partners support to the NESP, through the Local Education Group (LEG) with United Nations Children s Fund (UNICEF) as the coordinating agency. 7. Based on the FTI appraisal results of the NESP, the LEG has endorsed the NESP and identified gaps for external funding support. In light of this appraisal, the development partners confirmed their November 2010 assessment of the Strategic Plan as being a serious, comprehensive, and appropriate framework for the development of the education sector in Timor-Leste. They commended the Government of Timor-Leste (GoTL) and its MoE for their achievements and the strength of their strategic framework, and commit to working as partners within the LEG and the structure of NESP in addressing the challenges identified. The appraisal identified some concerns, especially about management reform and capacity development and NESP costing and financing that call for more attention. With wide financing gaps estimated for NESP execution, especially in 2012 and 2013, the Partners committed to providing continued financial and technical support to the Ministry and to supporting its efforts to gain an increased share of the national budget and to leverage new external support. In this context, they formally recommended the re-endorsement of Timor-Leste and its NESP by the FTI Secretariat, and pledged to support the government in its preparation of a new request for funding from the FTI fund. 1 Including tertiary students. 2 In September 2011, the Education For All Fast Track Initiative (EFA-FTI) was renamed the Global Partnership for Education (GPE). The acronyms FTI and GPE are used in reference to events and support prior to and after this change, respectively. 2

11 8. Timor-Leste has a record of success on results and on-time implementation using FTI funding. The FTI partnership has supported Timor-Leste since The Implementation Completion Report for the 2009 FTI Bridging project found that the project achieved its development objectives of expanding access to education by marginalized groups; and improving the quality of the learning experience and retention rates for the same groups. An EGRA was conducted, and early grade literacy and numeracy training and materials provided. The repeat of EGRA undertaken in 2011 is expected to show a slight improvement in learning outcomes in early grades. The project worked through Ministry systems, collaborated with UNICEF and civil society partners, and developed innovations which were integrated and are now being rolled out within Ministry Priority Programs in NESP (e.g. Escola Básica, Learning Materials). The FTI support was also highly catalytic in nature, as the FTI phase one activities were eventually scaled up with joint International Development Association (IDA)/AusAID funding, and the bridge funding activities extended with Ministry budget and IDA support. Since initial FTI endorsement, Official Development Aid (ODA) to education increased from US$16.6 million in 2006 to US$29.5 million in The MSAF has been developed in early The proposed support from GPE is expected to be catalytic in terms of strengthening the management of all resources for which the MoE is responsible for. It will further leverage increased government and external funding and enable the sector to benefit from the multi-partner nature of GPE support and process. Continued management strengthening of core Ministry systems will enable the Ministry to continue to manage and expand its programs in line with the NESP. The project focus on management strengthening recognizes the ambitious goals of the NESP, and the need for strengthening of targeted directorates and senior management to fulfill their functions in the NESP as a prerequisite for achievement of Education Priority Program goals. It is hoped that with the active engagement of the development partners through newly formed structures such as the LEG, the project will better position the Ministry to manage and coordinate support from external partners. The project implementation will be highly collaborative with other development partners support in related areas, such as the AusAID support to management and leadership training in 2012 (Annex 8 discusses the coordination arrangements for the two approaches agreed by AusAID and the World Bank). 10. GPE funding will be closely coordinated with simultaneous investments in management training financed by the domestic budget of the MoE over the duration of the project. GPE funds will be put to technical assistance and operational costs. Government resources for training costs has also been leveraged by GPE funding particularly to support school-based management and teacher and non-teaching staff training, the Ministry s NESP implementation focus areas for C. Higher Level Objectives to which the Project Contributes 11. The higher level objectives are aligned with the core goals of the NESP and NSDP for education, and the education Millennium Development Goals (MDG s) as follows: 3

12 a. Achieve gender parity in education access and management by 2015; b. Achieve universal basic completion by 2015; and c. Eliminate illiteracy in the age group by The project actively contributes to the achievement of these goals by supporting the implementation of NESP Priority Programs aimed at improving the Ministry s implementation and management capacity. Link to Country Partnership Strategy (CPS) and rationale for Bank involvement 13. The GPE support is consistent with World Bank strategic objectives as included in the Interim Strategy Note , and current draft CPS organized by key themes of Productivity and Jobs. The project s alignment to the strategic objectives include developing the capacity to implement a coherent national development strategy, and strengthening the human development outcomes and service delivery results in Timor-Leste to more widely share the benefits of Timor-Leste s oil and gas wealth. 14. The World Bank was proposed by the MoE and the Local Development Partners Group as the Supervising Entity for GPE Funding support. Bank s experience in preparing and supervising GPE operations and its strong implementation support and oversight capacity were deemed to be of high comparative advantage to carry out the function. II. PROJECT DEVELOPMENT OBJECTIVES (PDO) A. PDO 15. The Development Objective of this project is to support the implementation of the NESP through strengthening the capacity and systems of the MoE. B. Project Beneficiaries 16. The direct project beneficiaries of the project will be the staff of the MoE, through organizational change management processes, systems development, mentoring and training, increased value of their work, and improvement of the work environment. In particular, the following Directorates and Units responsible for management, corporate services and some management of key service delivery priorities for NESP implementation will be targeted (referred to in this document as Targeted Management Directorates): a. Offices of the Minister and the Vice Minister b. Office of Strategic Advice and Modernization (GAEM) c. Office of the Director-General of Corporate Services (DG-CS) d. Office of the Director-General of School Management, Innovation and Curricular Development e. Legal Advisory Office f. National Directorate of Finance and Logistics 4

13 g. National Directorate of Procurement h. National Directorate of Planning, Statistics, and Information Technology i. National Directorate of Human Resources j. National Directorate of Basic Education k. National Institute for Professional Educators Training (INFORDEPE) l. District Directorates (13 Directorates) m. Basic Education Cluster Schools management teams (202 teams) 17. In addition, by allowing the MoE and the school directors to effectively implement the NESP at the national, regional, district, and school level and to leverage additional resources from national and international sources for increased access to and quality of education, this project will reach, as end beneficiaries, all the users of the education system, including more than 300,000 students in Basic Education, as well as approximately 10,000 teachers. C. PDO Level Results Indicator 18. The PDO- level Results Indicator is: Improved rating of sector management capacity assessment. 19. The Intermediate-Level Project Indicators are: a. Improvement in Performance by Targeted Management Directorates and key staff against Annual Action Plans (AAPs) and Budget Plans and relevant NESP Priority Programs ; and b. Strength of PFM systems in the Ministry ; as measured by: (i) Composition of expenditure out-turn compared to original approved budget; (ii) Aggregate revenue out-turn compared to original approved budget; and (iii) Presence of transparency, competition, and complaints mechanisms in procurement. III. PROJECT DESCRIPTION A. Project Components Component 1: Strengthening Targeted Management Directorates (Estimated cost US$1,812,000) 20. Component 1 will first aim at strengthening senior management capacity in terms of sector leadership, coordination, and oversight functions. These functions are aligned with NESP Priority Program for General Management Systems (Priority Program 8). It will provide: (i) Management support in the offices of the Minister, Vice-Minister, and Director-Generals (DGs) to ensure strategic and effective senior management and successful implementation of comprehensive capacity development actions, including partnership with an international 5

14 institution in the areas of education management and organizational development; (ii) Technical support to Ministry coordination and oversight of management strengthening tasks, including advice towards a learning partnership with an international institution; and strengthen national, regional, and district level sector management and coordination; (iii) Support to Ministry in coordination and management of Management Strengthening Project (MSP); and (iv) Technical support to the development and implementation of an adequate legal framework to implement and adapt the NESP. 21. Second, this component will strengthen the policy and planning capacity of Targeted Management Directorates. Aligned with NESP Priority Program for Basic Education (Priority Program 2), this component will also support the Basic Education Directorate in developing: (i) the four School Standards Pillars of Quality School Governance, Positive School Environment, Effective School Management, and Quality Learning Outcomes; (ii) the Escola Básica Implementation Plan, including school management policy and procedures manual; and (iii) the Escola Básica management training modules and materials, including development of systems for management by results. 22. Third, this component will strengthen the development of training capacity of the Ministry, including management training to improve service delivery. Support will be provided to INFORDEPE, the Ministry s training arm, to: (i) undertake a functional analysis and needs assessment reflecting its specific responsibilities to provide training to achieve NESP goals; (ii) produce a Capacity Development Plan (CDP) based on the functional analysis and needs assessment; and (iii) provide technical assistance to support the implementation of the Capacity Development Plan. Component 2: Strengthening Public Financial Management and Evidence-based Planning Capacity, including Management Information Systems (Estimated cost US$988,000) 23. Component 2 will support Priority Program 12, Achieving Planning and Budget Excellence, and 11, Introducing Information Technologies and management information systems. Support will aim to fully achieve NESP Result and partially achieve Result by providing: (i) Technical support to strengthened policy formulation processes and planning systems and capacity; (ii) Technical support to high quality and transparent financial management systems, with support to the implementation of the PFM Reform Matrix, including contribution to the establishment of a pooled fund for joint provision of external support in education through government systems; (iii) Technical support to strengthen procurement and contract management functions in the MoE; and (iv) Technical support to monitoring and evaluation of the NESP, including to further update, maintain and upgrade the Education Management Information System (EMIS) and related systems. 3 R12.3: A quality, transparent Financial Management system is fully achieved by R12.4 The process of Monitoring and Evaluation of the Implementation of the Strategic Plan is fully supported 6

15 B. Project Financing Lending Instrument 24. The Lending Instrument for the MSP will be a Sector Specific Investment Grant. Project Cost and Financing 25. The total project cost is US$2.8 million as shown in the table below. Project Components 1. Strengthening targeted management directorates 2. Strengthening Public Financial Management and Evidence-based Planning Capacity, including Management Information Systems Total Project Costs and financing required Project cost (US$) 1,812, ,000 2,800,000 IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 26. The MoE will provide overall vision of the management strengthening goals and policies that steer the broad direction of the project. The executive management of project activities will be the responsibility of the Director-General for Corporate Services (DG-CS) and overall coordination and management the responsibility of his office. On a day-to-day basis, the management of project activities will rest with the DGs and Directors in whose Directorates MSP activities fall. 27. A Project Implementation Unit (PIU) will be established to perform support functions including: coordination, procurement, disbursement, financial management, monitoring and evaluation, and reporting of project implementation. The PIU will directly report to DG-CS. PIU is responsible for compiling quarterly progress report synthesizing information from relevant Directorates. Consistent with the NESP, the DG-CS should report to the Minister. Further details of reporting arrangements are specified in the Project Operations Manual. B. Results Monitoring and Evaluation 28. The PIU will coordinate with the DG-CS s office and relevant Directorates to monitor the project. The proposed monitoring indicators are provided in Annex 1. The data related to output indicators will be provided by PIU semiannually. Outcome indicators are reported annually. 29. The project monitoring will be an integral part of the overall NESP monitoring and evaluation. Routine monitoring will be carried out by PIU. The GAEM, as part of its strategic 7

16 role, will be responsible for monitoring and reporting on the overall NESP implementation progress. End-of-year AJRs led by the Ministry with participation of development partners will provide feedback for further refinement of the NESP implementation and monitoring arrangement. Developing the NESP monitoring toolkit is also supported by the MSP. C. Sustainability 30. Sustainability of the results of this project lies in its close linkage with the sector s and the country s long-term development plans, NESP and NDSP ( ). The MSP is designed to specifically support the achievement of NESP results and the successful implementation of the activities under NESP. The experience and lessons learned during NESP implementation will help identify future capacity building needs. 31. The MSP aligns with NESP Technical Cooperation Management Protocol and Guidance on Capacity Development in the Ministry, and will work collaboratively with initiatives that promote donor co-ordination. This includes transparent, accountable and participatory technical assistance management systems for capacity development, which are practical and realistic for implementation and monitoring. 32. Managing the capacity strengthening activities under MSP will develop valuable experience in the Ministry for broader management strengthening initiatives and project management. As committed to in the NESP, technical assistance personnel will work and be housed in the Ministry, and will work with stronger terms of reference, clearly defined counterparts and common codes of conduct, principles and regulations, contracts, salary, and leave systems. To ensure value for money is received from technical assistance, the Ministry will maintain and further strengthen harmonized systems for the selection, procurement and general management of all technical assistance. Specific obligations and standard procedures will extend to Ministry Directors receiving international and national consultants. The MSP will align to the NESP Concept of Transition to high-impact capacity support. This includes a focus on organizational objectives rather than inputs, a defined capacity strategy and results framework, mainstreaming of PIU s through a focus on Ministry management, and pooling technical assistance. V. KEY RISKS AND MITIGATION MEASURES A. Risk Ratings Summary Risk Stakeholder Risk Implementation Agency Risk Capacity Governance Project Risk Design Social and environment Rating High High Moderate Moderate Low 8

17 Program and donor Implementation and sustainability Overall Implementation Risk Moderate High Substantial B. Overall Risk Rating Explanation 33. The Ministry has been identified as having low overall capacity with heavy reliance on international advisors. Skills transfer to national staff has been mixed, with the absence of a consultative and comprehensive capacity development approach. However, some key systems capacity has improved recently. The presence of implementation capacity has been reflected in its high disbursements of World Bank/FTI/GPE-funded operations and up to 98 percent execution rate of its own budget. Funding under this project will continue to support efforts to reinforce the Ministry s implementation capacity and to mainstream responsibility for this into the Ministry s directorates. Project funding will continue the effort to transition from international consultant support to use of national consultants. 34. Experience from strengthened Education Sector Support Project (ESSP) management will be applied to the new project delivery approach. To support skills transfer and sustainability, strengthened skills transfer and improved sustainability, the new project will align to the Capacity Development Assistance Framework developed consultatively in the MoE. 35. The project builds on existing structures for project management and implementation in the MoE, which have demonstrated relatively strong capacity to deliver according to agreed implementation plans. Ministry management capacity has been strengthening during During 2010/11, the Ministry has also strengthened results reporting and management of ESSP which provides a strong basis for the achievement of MSP objectives. The EMIS now regularly produces good quality information - it is continually improving and will improve further with project support. To support skills transfer and sustainability, the new project will align to the MSAF developed consultatively in the MoE. 36. The MSP will build on past good practices and project implementation experience, which reduces the risk rating from high, but the imminent change of government and capacity building challenges in the Ministry makes the overall risk rating substantial. VI. APPRAISAL SUMMARY A. Economic and Financial Analyses 37. As a management strengthening/capacity development grant, the economic and financial impacts of the project are difficult to quantify. However, benefits are expected to include: improved planning and budgeting, with closer links between plans and budgets, and with budgets based on better informed costing and AAPs; improved budget execution; more accurate and timely procurement; more effective expenditure and cash planning to reduce the size and incidence of idle cash balances; and more effective management of the GoTL s financial resources. Other benefits include improved governance; more effective leadership and 9

18 management; improved integrity and transparency of the PFM system; improved skills base (language, accounting/bookkeeping, IT); and improved service delivery. Economic and financial sustainability is built into the design of the program, as described in Annex 6. The project will build institutional and human resource capacity and systems and processes that are meant to serve the government over the long-term, with a broad view to improve economic, financial, and implementation management of the sector. Previous experience in transitioning towards more national technical assistance has proven successful in ensuring longer term transfer of skills and greater sustainability. B. Technical 38. Project preparation has drawn on relevant analytic work up to 2011 including Education Efficiency Analysis and the multi-partner analysis of the FTI process including FTI appraisal of the NESP and External Quality Review according to FTI process. Considering the PDO of the MSP, the question of how best to sustainably strengthen the capacity and systems of the MoE has been the subject of considerable analytic work during supervision of the previous ESSP and during preparation of the MSP. The multi-donor mid-term review of the ESSP and New Zealand Ministry of Education Capacity Building Project in 2010 focused on review of capacity building and of financial management systems. Considerable lessons learnt on effective capacity building were included in the technical approach to MSP. Further relevant analytic work also integrated into project design included Bank-contracted advice to the finalization of the NESP and a Technical Cooperation Management protocol for the Ministry. 39. Project preparation included support to the development of a consultative MSAF based on a capacity assessment of the Ministry, identification of a priority Management Strengthening Agenda, and provision of Policy Notes on key management strengthening approaches. The key features of the agenda include (i) Results-based management; (ii) Leadership; (iii) Change management; (iv) Process management (v) Competence management; and (vi) Monitoring results and processes. The emerging priority actions in the MSAF proposed to the Ministry included: a. Management and Leadership Course coordination; b. A Communication Strategy to ensure management buy-in on management reform; c. Functional Analysis as the starting point to clarify functions, tasks and required competencies of Ministry units as a basis for development; d. Participatory definition of organizational processes and procedures and key management processes; and Ministry implementation of these based on agreed standard operating procedures (SOPs); e. Recruitment or reappointment of key staff; f. Undertaking targeted capacity strengthening based on steps above; g. Setting up Performance Assessment, Accountability Processes and Incentives; and h. Ministry implementation of identified and new processes based on agreed SOPs. 10

19 40. A list of six-month priorities for management strengthening from project effectiveness in June 2012 has been agreed with the MoE. These priorities are supported in the activities described in the Project Description detailed in Annex 2. Further details on the MSAF and approach are included in the Project Operations Manual. Measurement of achievement of the project development will be achieved through the PDO-level indicator of a capacity assessment of the Ministry, and intermediate outcome indicator achievement of improved performance by Targeted Management Directorates and key staff against AAPs and Budget Plans and relevant NESP Priority Programs. C. Financial Management (FM) 41. The FM approach is detailed in Annex 3, Implementation Arrangements. 42. Project funding will be managed by the Directorate of Finance, Administration and Logistics. FM specialist support will be funded under the project. Experience under the ongoing ESSP and the series of operations funded over previous years by the FTI Catalytic fund has demonstrated that the MoE in Timor-Leste has a satisfactory capacity for FM, however, this has occurred through relative isolation of the projects from the Ministry, with reliance on a project accountant employed on a contractual basis and use of project spreadsheets separated from the Ministry. It is envisaged that funds will be integrated onto Freebalance (the GoTL Accounting Software) when this is rolled out to the MoE. A greater degree of integration, as proposed by this project, while desirable does entail some fiduciary risk as FM capacity within the Ministry is quite low, and is the subject of project support. 43. Engagement of development partners with the Government in the formulation and execution of annual budgets and annual actions plans is important. 44. This project is designed to finance and disburse 100 percent of all eligible project expenditures as identified in the project documents and Trust Fund Grant Agreement. Ministry unaudited interim financial reporting requirements and disbursement arrangements through the Designated Account (DA), are detailed in Annex 3. The project will have one expenditure category of Consultants and Operational Costs. 45. The GoTL has well documented processes and procedures with adequate segregation of duties and these are generally followed in World Bank projects. While internal audit within Timor-Leste is very weak, FM supervisions of World Bank Education Projects have not revealed any material internal control issues. D. Procurement 46. Procurement of consultant services will be carried out in accordance with IDA s Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers dated January 2011, and the provisions stipulated in the legal agreements. The procurement plan would be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. Consultant Services is the main category for project support. Details of methods and thresholds are 11

20 provided at Annex 3. In addition, GPE financing will support incremental operating costs. Overall responsibility for project implementation rests with the Directorate of Procurement. Procurement activities will be carried out by the Department of Procurement of the Directorate of Procurement, supported on an intermittent basis by an international procurement advisor contracted under the project. This position has been previously supporting capacity development of the procurement responsibilities of the on-going education projects in the portfolio. The Department is also supported by two national procurement officers. 47. An update of the assessment of the capacity of the MoE to implement procurement actions for Bank-supported projects was carried out in May 2010, and a Situational Analysis was undertaken in July 2011 by the international procurement advisor supported under ESSP. The overall project risk for procurement is high, consistent with the previous Country Procurement Assessment Report. Issues and risks concern identified include the implementing agencies lack of available procurement expertise and the overall administration for the numerous consultants contracts, and grants as well as planning and programming of the various training initiatives. The project will itself support a number of activities with the objective of carrying out the priority procurement strengthening agenda of the Ministry. E. Social (including Safeguards) 48. The population of Timor-Leste is considered indigenous, and significantly poor and rural. The poverty rate in 2007 was 49 percent. Human Development outcomes are weak but improving. There are 32 language groups in Timor-Leste, indicating a significant diversity of social groupings. Divisions along ethno-political lines marked unrest in 2006 which affected service delivery. Service delivery concerns raised with government, civil society and donor partners commonly include teacher absenteeism, school feeding programs, and access to tertiary scholarships, with a perception of systemic bias to Dili-based elites regarding the awarding of tertiary scholarships. Due to low levels of Portuguese fluency which vary across the country, language of instruction is a source of frustration, with teachers poorly trained in the skills needed to teach languages including the most common language of Tetum. 49. Social and safeguards policies are not triggered as the project is focused on management strengthening at the central Ministry level. 50. Gender parity in access and management by 2015 is one of the three core goals of the NESP. The gender balance is quite even for primary education, but becomes progressively less so at higher levels of education and in the professional world, with only 38 percent of the students at the National University being female. In the education workforce, women are increasingly outnumbered as the levels increases, and are underrepresented in management positions. The low number of women in senior management means that women s voices are not always represented in policies and decision making. Terms and conditions are not favorable to female employment. Analysis of gender issues, and recommended approaches and policy and procedure changes for the project to support, are included in the Gender Analysis at Annex 8. Annex 8 also identifies priorities for data collection related to EMIS strengthening and for particular activity priorities emerging for the project to support are further listed. 12

21 F. Environment 51. Environment safeguards are not triggered as the project is focused on management strengthening at the central Ministry level. The focus on management strengthening includes inputs of technical assistance and training. No safeguards are expected to be triggered and no physical investments are planned in the proposed project. 13

22 Annex 1: Results Framework and Monitoring TIMOR-LESTE: Management Strengthening Project Indicator Baseline Target Values (Proposed changes in bold) YR1 YR2 YR3 (2013) (2014) (2015) PDO level result indicators: Improved rating of sector management capacity assessment Intermediate result indicators: 1. Performance by Targeted Management Directorates and key staff against AAPs and Budget Plans and relevant NESP Priority Programs, including: 1) Priority Program 2: Basic Education Reform 2) Priority Program 7: Improving Teacher Quality 3) Priority Program 8: General Management Reform 4) Priority Program 10: De-concentration and Organizational Improvement 5) Priority Program 11: Introducing Information and Communication Technology and Management Information Systems 2 Strength of PFM systems in the Ministry; as measured by: a) The average deviation (in percentage) of budget execution from original budget across all National Directorates; b) Budget Execution measured in cash basis; and c) Presence of transparency, competition and complaints mechanisms in procurement. 5/13 (AJR 2013) a)budget Variation : 6% b) Budget 94% To be carried out 50% Satisfactory Improved assessment result 80% satisfactory Improved assessment result 100% satisfactory a) 5% a) 4% a) 3% b) 97% b) 97% b) 97% Frequency and Reports Annual Annual Data Collection and Reporting Data Collection Instruments Independent assessment of Ministry management capacity NESP Performance Assessment Framework (PAF); AJR reporting; Annual project progress report Responsibility for Data Collection DG- CS/GAEM GAEM/ DG- CS a) and b) Dir. of Finance and Logistics c) DG-CS, Dir. of Procurement 14

23 Annex 2: Detailed Project Description TIMOR-LESTE: GPE Management Strengthening Project 1. The MSP will support the MoE to achieve the NESP by strengthening the capacity and systems of identified Ministry Directorates and Senior Executive Officers responsible for NESP Management Reform Priority Programs. By so doing, it will provide vital support to these directorates in their management oversight and corporate services support to the Ministry s implementation of the Education Reform Priority Programs of the NESP. By supporting the Ministry to implement key reform agendas, project support will contribute both to: (i) developing long term capacity to manage the education sector; and (ii) providing the MoE with supplementary short term implementation and technical advisory capacity to manage its ongoing programs funded by GoTL and its donor partners. The support will aim to increase quality of budget expenditure and plan implementation, as well as leverage more GoTL and donor funding to support the service delivery goals of NESP. 2. The project will build on achievements and lessons learnt from previous activities in the area of management support. The project s approach will strengthen the Ministry s management, planning and monitoring of external support based on evidence, with a clearer focus of supported activities prioritized through sector discussion, and planned and monitored through a participatory governance framework including medium-term and evidence-based planning. A PFM Reform Matrix and a MSAF, consultatively developed and prioritized by the Ministry, will be key tools for focusing external support to NESP implementation. Two major NESP Management Reform Priority Programs will be targeted by this project Priority Program 8: General Management Systems, and Priority Program 12: Planning and Budgeting Excellence. PROJECT DESCRIPTION Project Components Component 1: Strengthening Targeted Management Directorates (Estimated cost US$1,812,000) 3. Component 1 will strengthen senior and general management systems in Targeted Management Directorates to ensure the implementation of the NESP. The component supports NESP Priority Program 8, General Management Systems ensuring the implementation of the Strategic Plan. 4. The intermediate outcome indicator of Component 1 will be Improved performance by Targeted Management Directorates and key staff against AAPs and Budget Plans and relevant NESP Priority Programs, including: a. Priority Program 2: Basic Education Reform; b. Priority Program 7: Improving Teacher Quality; c. Priority Program 8: General Management Reform; d. Priority Program 10: De-concentration and Organizational Improvement; and 15

24 e. Priority Program 11: Introducing Information and Communication Technology and Management Information Systems. 5. This component includes a program of prioritized support to the management functions of the MoE, essential to manage NESP implementation. The component includes the Ministry s management and coordination of overall capacity development based on an overarching Ministry CDP, strengthened senior management of strategic and administrative processes, and continued support to the legal framework to implement and adapt the NESP in coordination with stakeholders. 6. The program of management support includes technical assistance coordinated with Government-funded training costs. Management support will include on-the-job training and applied skills enhancement activities, technical assistance, and mentoring activities and an institutional twinning and advice to develop a Government-funded international training partnership. Partner support will be coordinated through a Management Strengthening Reference Group to be led by the Ministry. 7. First, this component will aim at strengthening senior management capacity in terms of sector leadership, coordination, and oversight functions. These functions are aligned with NESP Priority Program for General Management Systems (Priority Program 8). It will include the following activities: a. Providing management support in the offices of the Minister, Vice-Minister, and Director-Generals. This support will ensure strategic and effective senior management and successful implementation of comprehensive capacity development actions. The project proposes support from an international institution in the areas of education management and organizational development as proposed below. This will support NESP activity and NESP activity Design and implement a CDP for the Office of the Minister and Vice Minister. NESP activity Design and implement a CDP for the Offices of the Director-Generals and Inspector- Generals of Education, and for the INFORDEPE President. Activities include technical support to the refinement and implementation of comprehensive management support and capacity development actions in the offices of the Minister, Vice-Minister, and Director-Generals, Inspector Generals, and INFORDEPE leadership to ensure effective senior management of strategic and administrative processes based on SOPs, management protocols, and functional analysis. This includes the establishment and implementation of effective administrative procedures and regulations. Priority examples of these include anti-corruption governance mechanisms and procedures to make the MoE a women-friendly work place. b. Providing technical support to Ministry coordination and oversight of management strengthening tasks, including advice towards a learning partnership with an international institution, and strengthening national, regional, and district level sector management and coordination. This includes support to NESP activities and to develop management by results tools, and 8.4 aimed to design and implement a program of management support based on a capacity building plan for 16

25 management directorates. This component will provide technical support to Ministry coordination and oversight of management strengthening tasks including the implementation and monitoring of the MSAF and associated tools such as Training Needs Analysis and staff performance review. Advice will be provided on management of training and support for staff to address identified gaps in achieving AAPs of Directorates. Key features of the management strengthening approach of the project include results- based management, change management, leadership, SOPs and process identification, participatory development and management, management of required competences, and monitoring of results and processes. Key management strengthening actions include communication strategy functional analysis, identification of competencies in both organizational and management processes, and development of SOPs, and participatory process design. Advisory support will target the Director-General of Corporate Services, the Director-General of School Management, Innovation and Curricular Development and also the Directorate of Human Resources to lead development of the strengthening of directorate capacity. This activity will include coordination of essential technical support to strengthening of national, regional, and district Directorates, as per NESP 8.4. The detailed management technical approach contained in the Project Operations Manual provides further discussion of management strengthening approaches to be considered. c. Provision of support to the Ministry in coordination and management of MSP. This includes management of the MSP and of additional external support to management strengthening in coordination with development partners and stakeholders. Management arrangements are detailed in Annex 3. Inputs include national consultant expertise as well as contributions by international technical assistance funded under other project activities. d. Provision of technical support to the development and implementation of an adequate legal framework to implement and adapt the NESP. Technical support to complete already identified legislation and other legal instruments required under the legal framework and support implementation that ensure there is compliance with the law of Timor-Leste. Additionally, support in development of legal instruments that are identified as necessary during the planning processes of NESP. Support to legal strengthening will help ensure the adequate coordination of the Ministry s legal, budget and policy frameworks. A training and support program will be provided for development of new legislation and to raise awareness of Ministry staff of existing legislation and competencies relevant to their functions. Support to the establishment and adequate staffing of an entirely Timorese-staffed Legal and Cooperation Office will prepare national staff to undertake three key areas of activity: i. Deliver legal advice in sectoral areas of the Education System; ii. Help finalize legislation for the legal framework; and iii. Contribute to effective training and support programs. 8. Second, this component will strengthen the policy and planning capacity of Targeted Management Directorates for improved service delivery. Aligned with NESP Priority Program for Basic Education (Priority Program 2), the project will support the capacity of the 17

26 Directorate of Basic Education to support the 202 Basic Education Cluster Schools (Escolas Básicas) management teams to develop, from the school level, the four School Standards Pillars: Quality School Governance, Positive School Environment, Effective School Management and Quality Learning Outcomes that are articulated in the draft Schools National Quality Standards Framework. 9. This area of activities will be implemented under the leadership of the National Directorate of Basic Education and INFORDEPE through technical assistance, and training and support activities. Additional partner support will be coordinated through the Basic Education Implementation Team as required under the NESP led by the Ministry. Activities will include: a. Technical support for NESP Priority Program 2 for the Directorate of Ensino Basico, and other directorates and Ministry bodies, to effectively coordinate the development of planning, implementation, monitoring and evaluation of activities that promote effective school based management. Support will be given to developing the Escola Básica Implementation Plan, including school management policy and procedures manual. Priority is to be given to strengthening systems, targets, deadlines, and accountability mechanisms. This includes ensuring that representatives from Ministry district structures and Escola Básica are able to participate effectively in these processes. This area of support recognizes that effective Escola Básica implementation is a Ministry priority and will be integrated into MSP and NESP implementation processes so that the capacity of multiple directorates is improved to meet their NESP responsibilities. Areas of activity are outlined in sub-program 2.3 of the NESP, specifically: i. Result Area Plan for the new cluster-based management system designed and implemented ; ii. Result Area School management policy and procedures manual developed and implemented. b. Technical support will be provided to the development of the Escola Básica management training modules and materials, including development of systems for management by results, and provision of training and support to Escola Básica leaders and Ministry staff who work with Escola Básica. Modules of training will include the four Escola Básica pillars of: Quality School Governance, Educational Leadership, Positive School Environment, Physical Resource Management, Human Resource Management, Financial Management, Information Management, and Quality Learning Outcomes. Methods of training and support required to improve Escola Básica management will be identified and appropriate delivery mechanisms developed and implemented. Systems will be developed and implemented to monitor and evaluate the impact of training and support on results at the school level. Areas of activity are outlined in sub-program 2.3 of the NESP, specifically: i. Result A capacity development program for school managers and technical staff based on a management-by-results approach is developed and implemented. ii. Result Systems are developed and implemented for school managers and others to promote management by results. 18

27 10. Third, this component will strengthen the training capacity of the Ministry, including for management training for improved service delivery. The project will support the management strengthening of the Instituto Nacional de Formação de Docentes e Profissionais da Educação INFORDEPE to support the achievement of NESP Priority Program 7: Improving Teaching Quality, specifically Results 7.2 and 7.3, and other training required for non-teaching staff that are identified in the NESP and during NESP implementation. This component recognises that additional support is required due to the vital role INFORDEPE has in improving the overall performance of the Ministry and schools and the urgency of INFORDEPE providing the services that are required of it under its Decree Law, including its management training responsibilities. It is recognised that the MSP does not have the resources to fully support strengthening the management and service delivery of INFORDEPE. Therefore, this activity can be seen as a platform upon which more effective support from the Ministry and donors can be targeted in the future. Current coordination with significant support from other parties to INFORDEPE management and teacher database development (including the Universities of Minho and Aveiro in Portugal) is also essential. 11. The project aims to provide support that ensures INFORDEPE is informed of the extent of resources, facilities, equipment, and capacity available and required to fulfil its training mandate. The final output will cost CDP as is required under NESP and A key approach is the use of technical support to enhance INFORDEPE s own capacity to identify its needs reflecting its training mandate, plan how to address those needs and to develop the advocacy skills so that it can clearly articulate to the Ministry and donors the support that it requires and how this support should be delivered. The Research Unit of INFORDEPE will be the counterpart of technical support provided by the MSP in the production of the INFORDEPE CDP. In parallel, support will be provided to the President and Vice Presidents of INFORDEPE so they are able to strengthen their ability to participate in project activities. 13. Partnerships in this sub-sector will be important. The project proposal recognizes the significant ongoing work of key partners supporting INFORDEPE, including Portugal, Brazil, and UNICEF, and the likelihood of significant new donor support. Alignment of donor support to the NESP and planning generated as a result of NESP activities. The fragmented support for INFORDEPE to date will transition to better coordination by partners as a key feature of future support. This is based on recognition that INFORDEPE and the Ministry manages and leads the new agenda for strengthening of INFORDEPE. 19

28 14. Specific activities within the this area of the component include: a. A Functional Analysis and Needs Assessment of INFORDEPE, with a lead role of the INFORDEPE Research Unit in the process, and which uses the INFORDEPE, Decree Law, the NESP and NESP planning documents to determine the full extent of INFORDEPE functions. Of particular importance is to distinguish what constitutes training, which is the responsibility of INFORDEPE and other forms of teacher, school manager, and non-teacher support such as mentoring and on-the-job assistance, which are the responsibilities of Ministry directorates. The needs assessment of INFORDEPE would link the functional analysis to the existing institutional arrangements, management and administration systems, staff capabilities and resources currently available to INFORDEPE. b. Production of a CDP based on the functional analysis and needs assessment of capacity development requirements, timeframes for achievement, sources of support and likely costs. This plan should involve participation and input from INFORDEPE and have evidence that inputs from Ministry directorates, school managers, and teachers has been given proper consideration in the planning process. c. Technical Support to Implementation of the CDP so that INFORDEPE is able to clearly articulate what future support it requires from the Ministry and donors, plays a leadership role in design of that support and ensures that support is consistent with the CDP. The project will assist INFORDEPE managers to ensure that their Officers have the ability to manage this process and plan implementation. 15. Implementation of the overall component will recognize and provide support to some key priorities for management strengthening: a. A Communication Strategy on Management Support is an urgent priority, to: i. Achieve Buy-in on management reform; ii. Explain the focus of the MSAF and specifically the MSP and its link to the NESP; iii. Gain input from key Ministry staff at the design stage and requires workshops once the operation manual is developed; iv. Develop baselines (especially regarding attitudes and organizational culture) and reaffirm these through the life of the project; v. Inform all teams about NESP, annual plans accountability system and starting of process definition workshops; and vi. Meet other communication priorities as identified / emerging during implementation. b. Physical environment is a key constraint to effective management. This has been identified through consultation with Ministry staff. A suggested approach is a committee based in the National Directorate for Finance and Logistics to consider proposals from Directorates for physical environment funding priorities, for support from identified Ministry budget. 20

29 c. Although the Ministry has experience and capacity in selecting and managing technical advisors, this requires improvement, further standardization, formalization, and empowerment of lower level managers. The Ministry s ESSP technical advice selection processes have been Ministry-managed. The Ministry is willing to improve its capacity to recruit and manage its technical advisors transparently, to hold them accountable, and these processes can be further strengthened including for transparency and accountability. d. The project will provide advice to develop a learning partnership with an international institution. The learning partnership is proposed with a Lusophone institution with a range of successful experience and training offerings in the education, public administrative reform, and organizational development spheres in a context similar to that of Timor-Leste. The objectives of the partnership will include: strengthening the institutional systems and capacity of the Ministry through access to multiple areas of expertise and modular programs, beyond the traditional approach of individual technical specialists; sine qua non criteria selection of a partners with Portuguese-speaking capacity and experience working with education management and administration, and similar governance and capacity contexts (potentially a South-South collaboration). Component 2: Strengthening Public Financial Management and Evidence-based Planning Capacity, including Management Information System (Estimated cost US$988,000) 16. Component 2 will support NESP Priority Program 12, Achieving planning and budget excellence. Support will aim to fully achieve Result and partially achieve Result This component will also support NESP activities and to design and implement management by results tools and coordinate and monitor the performance of the NESP. 17. The intermediate outcome indicator of Component 2 will be the Strength of PFM systems in the Ministry, as measured by: a. The average deviation (in percentage) of budget execution from original budget across all National Directorates; b. Budget Execution measured in cash basis; and c. Presence of transparency, competition, and complaints mechanisms in procurement. 18. The component will be implemented through technical assistance, and training and support activities. Partner support will be coordinated through a Management Strengthening Reference Group to be led by the Ministry, as well as through a PFM working group. Component 2 will include the following activities: a. Technical support to strengthened policy and planning systems and capacity in the GAEM and the Directorate of Planning, Statistics, and Information Technology 5 R12.3: A quality, transparent financial management system is fully achieved. 6 R12.4: The process of Monitoring and Evaluation of the Implementation of the NESP is fully supported 21

30 including the continued development and use of NESP implementation tools, AAPs, and School Development Plans, as per NESP Priority Program 12. b. Technical support to quality, transparent FM systems, with support to and implementation of the PFM Reform Matrix with active Ministry of Finance and partner participation. This includes priority areas such as financial management capacity at all levels, strengthened budget development process, more accurate financial management reporting and information flows, strengthened financial systems and strengthened ability to cost programs and operate and update cost and expenditure forecasting and modeling tools (See PFM Reform Matrix, Figure 3). This activity will be of critical importance in supporting the Ministry s efforts to improve the efficiency of expenditure of Education finance from both government and development partner sources. Significant analysis is available to support these efforts, including the refined costing of the NESP in 2011, and sector expenditure and efficiency analysis undertaken in It is also expected that this component will contribute to the establishment of a pooled fund for joint provision of external support in education through government systems. This area of support reflects NESP Priority Program Result 12.3, Creating a quality, transparent financial management system. c. Technical support and support to training to strengthen Procurement and Contract Management functions in the MoE. This includes refinement, implementation, and monitoring of a Procurement and Contract Management Training Plan and Manual, and legal support to the Directorate of Procurement. The Ministry will support strengthened Procurement and Contract Management through adequate and sustained staffing and resourcing of the Directorate of Procurement, and commitment of responsible staff for training in procurement and contract management responsibilities within Directorate AAPs and Training Plans. Strengthening of this function will be closely linked to the support to Priority Program 12, Creating a quality, transparent financial management system. Technical support will also contribute to Priority Program 13, Ministry Management of Technical Assistance, particularly in the Ministry performance monitoring and evaluation of consultants, suppliers and contractors performance, including those provided through external support. d. Technical support to Monitoring and Evaluation of the NESP and MIS including regular participatory monitoring of NESP achievement and development of monitoring, analytic and evaluative capacity in the MoE; and updating, maintenance, and upgrading of the EMIS and related systems. Initial monitoring tools and performance evaluation frameworks have been developed by previous support under the ESSP and Just In Time Policy Notes Trust Fund in Continued support will include intermittent specialist visits to support the GAEM, Ministry Senior Management and the Department of Planning, Statistics, and Information Technology to maintain, analyze, and review Strategic Plan performance. This support will align to Priority Program 12 to monitor the implementation of the NESP. 22

31 The activities will be implemented through technical assistance and training activities, under the leadership of the National Directorate of Planning, Statistics, and Information Technology. Partner support will be coordinated through the existing EMIS Working Group, led by the Ministry. 23

32 Ministry of Education Public Financial Management Reform Matrix (September 2011) Category Activities Responsibility Primary Performance Indicator 1. Revise the structure of the budget and ledger system as a minimum to three broad cycles of school education DG-CS Classification of the budget Extent of unreported 2. Define the combined sources AAP for the MoE all DGs government operations Comprehensiveness and Transparency Policy-based Budgeting Predictability and Control in Budget Execution Predictability and Control in Budget Execution 3. Multi-donor fund for Management programs of the strategic plan DG-CS Classification of the budget 4. Integrate the donor-funded projects in the Freebalance DG-CS Classification of the budget 5. Donors aligning their support to national strategic objectives and increasingly use of the Government s systems DG-CS Classification of the budget 6. Cost of the Strategic plan and prioritization all DGs Multi-year perspective in fiscal planning, expenditure policy and budgeting 7. Continue to improve the budget system process, policy-based, transparent, and participatory, and start to introduce performance management measures DG-CS Classification of the budget 8. Prepare the details of the annual procurement plan in the Competition, value for money beginning of the year all DGs and controls in procurement 9. Complete the school census, update EMIS, and reconcile with Effectiveness of payroll payroll all DGs controls 10. Detail staffing profile based on the new Escola Básica and new Effectiveness of payroll organic law (teachers separate from administrative functions ) all DGs controls 11. Procurement reform that includes new recruitment of staff and simplification of procedures and documentation in more languages 12. Implement in the Ministry the decentralization functions from Ministry of Finance 13. Produce operational manuals and detail business process in the 4 languages for the Priority Programs (school feeding, distribution of materials, etc.) 14. Implement new financial procedures for the Escola Básica clusters 24 DG-CS DG-CS all DGs DG-CS Competition, value for money and controls in procurement Effectiveness of internal controls for non-salary expenditure Effectiveness of internal controls for non-salary expenditure Effectiveness of internal controls for non-salary expenditure

33 Accounting, Recording, and Reporting Cross-cutting 15. Implement new financial procedures for the Districts operations DG-CS 16. Imprest tranches transferred directly to the new official bank accounts in each Escola Básica (reduce fiduciary risks) to avoid delay payments DG-CS Effectiveness of internal controls for non-salary expenditure Effectiveness of internal controls for non-salary expenditure Effectiveness of internal 17. Create a small unit of quality assurance for commitments, contracts and payment requests all DGs controls for non-salary expenditure 18. Submit at the beginning of the year the annual audit plan based on the risk assessment by the Inspector-General all DGs Effectiveness of internal audit 19. Coordinate unit report on quarterly basis on the consolidated Quality and timeliness of inyear annual actions plans (government and donors) DG-CS budget reports 20. Study on how the EMIS can be the main instrument to serve the Ministry managers (budget/planning/policy /monitoring/reporting) and be the evidence of service delivery 21. Implement new financial procedures for the Imprest system in the Regions and reflect the financial operations in the Freebalance DG-CS DG-CS Quality and timeliness of inyear budget reports Timeliness and regularity of accounts reconciliation Timeliness and regularity of accounts reconciliation 22. Reconcile and consolidate all the information related with the cash balance available in all official bank accounts of the MoE DG-CS 23. Give training to the managers on management procedures, communication, and administrative procedures DG-CS Cross-cutting 24. Provide adequate recruitment of staff in the key areas like finance, procurement and human resources all DGs Cross-cutting 25. Complete the recruitment of the staff to the MoE - Escola Básica all DGs Cross-cutting 25

34 Figure 1: Ministry of Education Organizational Chart Gabinete de Protocolo e Assessoria de Imprensa Ministro de Educação Chefe de Gabinete Gabinete Jurídico e de Cooperação Gabinete de Análise Estratégica e Modernização Vice Ministro Secretário de Estado da Cultura Inspector Geral de Educação (IG) Director Geral Serviços Corporativos (DGSC) Director Geral Administração Escolar, Inovação e Desenvolvimento Curricular (DGAEIDC) Director Geral Cultura (DGC) Director Geral Ensino Superior (DGES) Universidade Nacional Timor Lorosa e (UNTL) Instituto Nacional de Formação de Docentes e Profissionais da Educação (INFORDEPE) Agência Nacional para a Avaliação e Acreditação Académica (ANAAA) Sub-Inspector Geral para Administração e Finanças DN Plano, Estatística e Tecnologias de Informação DN Currículo e Avaliação Escolar DN Património Cultural Biblioteca Nacional DN Ensino Superior Universitário Sub-Inspector Geral para Administração Escolar DN Finanças e Logística DN Aprovisionamento DN Educação Pre- Escolar DN Ensino Básico DN Museus e Bibliotecas DN Artes, Cultura e Indústrias Criativas Culturais Museu Nacional DN Ensino Superior Técnico DN Desenvolvimento das Ciências e Tecnologias DN Recursos Humanos DN Ensino Secundário Geral DN Acção Social Escolar DN Ensino Secundário Técnico-Vocacional Unidade de Infra- Estruturas e Manutenção dos Equipamentos da Educação DN Ensino Recorrente Unidade de Media Educativa Direcções Regionais Directores Regionais: a) Direcção Regional de Educação I (Distritos de Baucau, Viqueque, Lautém e Manatuto); Dept Serviços Corporativos Dept. Recursos Humanos Dept Ensino Secundário Geral e Secundário Técnico- Vocacional b) Direcção Regional de Educação II (Distritos de Díli, Liquiçá e Aileu); c) Direcção Regional de Educação III (Distritos de Ainaro e Manufahi e Covalima); d) Direcção Regional de Educação IV (Distritos de Ermera e Bobonaro); e) Região Especial: Direcção Regional de Educação de Oe-Cusse. Superintendentes Distritais Direcções Distritais Inspectores Escolares Secção Serviços Corporativos Secção Educação Pré-Escolar e Ensino Básico* *Os Distritos de Dili, Liquiçá, Covalima e Bobonaro terão uma Secção de Educação Pré-Escolar separada. Secção Acção Social Escolar Secção Cultura Ensino Recorrente Ensino Secundário Geral e Secundário Técnico-Vocacional Educação Pré-Escolar e Ensino Básico 26

35 Annex 3: Implementation Arrangements TIMOR-LESTE: Management Strengthening Project Project Institutional and Implementation Arrangements 1. The Ministry will have overall responsibility for coordination and implementation of the MSP including procurement, disbursement, and financial management. 2. Key tools for strengthening the Ministry s management of the project include: a. the existence of a national project coordinator and national finance and procurement consultant staff responsible for supporting Ministry management of previous Bank-supervised projects in the Ministry; b. the development of a Project Management Structure including roles, reporting arrangements, and ways of working among partners for previous Bank-supervised projects in the Ministry; c. the dedicated focus on Ministry project management within Component 1; and d. the use and strengthening of existing Ministry experience and capacity in selecting and managing technical advisors, which requires further standardization, formalization, and lower level management empowerment. As further discussed in the Management Strengthening approach detailed in the Project Operations Manual, the Ministry is demonstrating its capacity to recruit and manage its technical advisors transparently. The NESP identifies the priority for developing technical assistance management protocols, standards and processes. National and Education sector-based policies on technical assistance management provide opportunities for further strengthening. 3. The MoE will provide overall vision of the management strengthening goals and policies that steer the broad direction of the project. The executive management of project activities will be the responsibility of the DG-CS and overall coordination and management the responsibility of his office. Management of the MSP will be executed with Component 1 activities to support supplementary capacity for management of additional external support to the Ministry. On a day-to-day basis, the management of project activities will rest with the Director-Generals and Directors in whose Directorates MSP activities fall. Project coordination, reporting, and monitoring will be the responsibility of a national consultant project coordinator who would report to the office of the Director-General. A monthly financial and technical report to the Minister and Vice Ministers by the Director-Generals and Directors will be introduced as a standard procedure and is detailed in the Project Operations Manual. 4. A PIU will be established to perform support functions including procurement, disbursement, financial management, and monitoring and evaluation of project implementation. The PIU will directly report to DG-CS. PIU is responsible for compiling quarterly progress report synthesizing information from relevant Directorates. Consistent with the NESP, the DG- CS should report to the Minister. Further details of reporting arrangements are specified in the Project Operations Manual. 27

36 5. This process will be supported and informed by the NESP PAF and MSAF. 6. Each Directorate s AAPs and other tools for NESP implementation, and the AJR and quarterly sector development partner meetings, will link the project s activities to the implementation of the NESP and to a strengthened donor coordination structure. 7. The MSP will be managed and integrated in the Ministry s NESP implementation and coordination frameworks. Project management of MSP will apply principles of Ministry leadership, active management level engagement, and development partner participation. These structures include: a. Directorates implementing AAPs for Priority Program Implementation; b. NESP implementation coordination working groups; c. A Capacity Development reference group to form as part of the Ministry s development of its MSAF; and d. Regular Quinzenal Ministry meetings Considering the need for coordination of management strengthening, the Ministry will develop a Ministry-led calendar of training within the MSAF for the NESP. A Management Strengthening Reference group, as a specific group for Ministry managers to discuss the human resource constraints to achieving the NESP, will be supported by the project as a priority. The need to integrate within existing Ministry structures, and to avoid added burden of additional projects structures, is a reasonable concern. However, such a group is required for the Ministry to prioritize and lead its management strengthening agenda, including reducing the burden of the current fragmented approaches to management strengthening in the Ministry. Project Administration Mechanisms 8. As part of support provided under Component 1, the national consultant project coordinator responsible for project coordination, reporting, and monitoring will ensure regular project reporting to the Ministry executive and to the broader LEG including the World Bank as supervising entity. A Ministry-led Management Strengthening Reference group will act as project coordination committee for MSP and for other external support to management strengthening. Financial Management, Disbursements, and Procurement Financial Management and Disbursements 9. Under the Bank s OP/BP with respect to projects financed by the Bank, the borrower and the project implementing agencies are required to maintain financial management systems including accounting, financial reporting, and auditing systems adequate to ensure accurate and timely information regarding project resources and expenditures. These arrangements are deemed acceptable if they are capable of correctly and completely recording all transactions and balances relating to the project. In addition, such arrangements are acceptable if 28

37 they can facilitate the preparation of regular, timely and reliable financial statements and safeguard the projects assets; and are subject to auditing arrangements acceptable to the World Bank. 10. Overall, the financial management system will meet the financial management requirement as stipulated in OP/BP subject to implementation of the agreed actions and mitigating measures. The project risk was rated as substantial due to the high country risk, low capacity of the MoE over reliance on one current staff member. However, this can be reduced to Moderate with the mitigating measures proposed in this annex. Risk Analysis 11. Timor-Leste continues to be a post-conflict country subject to political instability and macroeconomic fragility. Petroleum savings provide a strong buffer against near term shocks, but the rapid increase in government spending can pose problems for fiscal and external sustainability given large non-oil deficits. Timor-Leste has established many of the formal institutions of governance; however in practice the institutions are fragile. The separation of powers has been challenged; the judiciary is fragile; findings of the oversight institutions are ignored by the Executive; Parliament often struggles to perform an effective accountability role. Timor-Leste s position on the Transparency International s perceptions index ranking is 146 out of 180 for 2009, which is consistent with the 145 for Experience has revealed some concerns about the Country Public Financial Management System, however there is also evidence that the situation is improving with the increased revenues and accountability demand brought on by donors and the incoming oil revenues. While capacity remains low and there is potential for instability within the country the country environment risk remains high. The table below summarizes the risk analysis. With the appropriate risk mitigation measures as outlined the overall risk assessment is moderate. Type of Risk Risks Rating Summary Comments and Risk Mitigation Residual Risk Rating A. INHERENT RISKS (risk that arises from environment in which Project is situated) Country Level High High Condition of Negotiations/ of Effectiveness Timor-Leste continues to be a post-conflict country subject to political instability and macroeconomic fragility. Petroleum savings provide a strong buffer against near term shocks, but the rapid increase in government spending can pose problems for fiscal and external sustainability given large non-oil deficits. Timor- Leste has established many of the formal institutions of governance; however in 29

38 Type of Risk practice the institutions are fragile. The separation of powers has been challenged; the judiciary is fragile; findings of the oversight institutions are ignored by the Executive; Parliament often struggles to perform an effective accountability role. Timor- Leste s position on the Transparency International s perceptions index ranking is 146 out of 180 for 2009, which is consistent with 145 of Experience has revealed some concerns about the Country Public Financial Management System, however there is also evidence that the situation is improving with the increased revenues and accountability demand brought on by donors and the incoming oil revenues. While capacity remains low and there is potential for instability within the country the Country Environment Risk remains High Risks Rating Summary Comments and Risk Mitigation Residual Risk Rating Entity Level High High Condition of Negotiations/ of Effectiveness The MoE has been identified as having low overall capacity and is sometimes vulnerable to political forces on policy formulation, occasional restructuring, FM staff retention problems and consultant turnover. The higher risk rating reflects the lack of FM capacity within the MoE and the reliance advisers and consultants. (1) Sufficient resources have been assigned to ensure adequate FM coverage within other MoE projects and there have been minimal FM issues in these projects. (2) Additional Staff within the project unit are being trained to reduce the reliance on the current FM advisor. (3) Repeated reassurances of the priority of the initiative from the highest level of the MoE during preparation. Project Level Moderate Moderate Project Size: US$2.8 million of GPE funding. Project Duration: 3 years. Project Complexity: The project has one implementing agency, one disbursement categories including only consulting services and operating costs 30

39 Type of Risk and 2 components. Risks Rating Summary Comments and Risk Mitigation Residual Risk Rating Condition of Negotiations/ of Effectiveness OVERALL INHERENT RISK Substantial Substantial B CONTROL RISKS (risk that the Project s financial management system is inadequate to ensure funds used economically and efficiently for intended purpose) 1. Budgeting There are no activities intended to be funded by government so no government budgeting issues for funding of the project. However, the project will need a budget and monitor actual against, even more important for report based disbursements. Substantial The MoE have adequately budgeted for the existing World Bank projects. Also as this project is management strengthening through capacity building, including PFM then this aspect of the project would also assist develop and improve project budgeting processes. Moderate 2. Funds Flow Fund flows under existing World Bank projects have been well established and there have been no issues previously. Low Low 3. Accounting (1) Currently project accounts are maintained on spreadsheets and these generally do not provide the same level of robustness as an accounting software package. (2) The planned roll out of Freebalance, the government accounting system from the start of the project will require user training. (3) There is limited experience and capacity of staff both within MoE and in the current MoE Bank projects and an over reliance on the project accountant. Substantial (1) Training will be provided to staff before Freebalance is implemented. (2) Until the project accountant is confident the Freebalance is meeting the project s accounting needs, transactions will be maintained concurrently on spreadsheets in the same format as other MoE bank projects. (3) Additional training (this has already started) is provided to other staff working on the project accounts to reduce the over reliance on the current project accountant. Moderate. 31

40 Type of Risk Risks Rating Summary Comments and Risk Mitigation Residual Risk Rating Condition of Negotiations/ of Effectiveness 4. Internal Controls While the current Bank projects have maintained adequate internal controls and generally followed country internal control procedures there is still a strong perception of a lack of transparency and hence there risk that controls will not always be complied with. Moderate The MoE has a functioning internal control system that will be used to support this project. These controls have been reviewed in previous projects and have been found to be in full compliance with Bank guidelines. FM supervision missions will review both the controls systems and compliance to the systems. Moderate 5. Financial Reporting The project team have had previous experience with World Bank reporting and reporting has been timely and generally of a high standard. However, given the low capacity within the country and the reliance on the project accountant there is some risk if this person leaves. Moderate (1) Quarterly IFRs will be required. (2) Ongoing FM capacity building within the Ministry and project staff through Financial Advisors employed within the MoE. Moderate 6. External Audit Audits may not be completed by due date. In recent years Timor-Leste projects have a poor record in issuing audits to the Bank within the agreed time frame. This is not only a potential breach of the Grant Agreement but also delays the opportunity of the project to obtain independent verification of the accounts and to address any issues identified. Moderate MoE to ensure that accounts are ready when the auditor arrives and to liaise with government over the timing of the completion of timely audits. Moderate CONTROL RISK Moderate Moderate OVERALL FM PROJECT RISK Implementing Agency Substantial Substantial 12. Project funding will be managed by the Directorate of Finance, Administration and Logistics. The Bank and the MoE recognize that the Directorate of Finance, Administration and Logistics will require support from external finance management consultant or Technical Assistance (TA) during the project s implementation period. The MoE will provide for this technical support in its annual financial plans and budget, and funded under this project. 13. Experience gained from the ongoing ESSP and the Second Chance Education Project, and a series of operations funded over the past three years by the FTI Catalytic fund has demonstrated that the MoE in Timor-Leste has a satisfactory capacity for financial management. However, this has occurred through relative isolation (ring fencing) of the projects from the 32

41 Ministry. A project accountant is employed on a contractual basis and hence is not an employee of the MoE. The FM success of the recently completed and on-going Bank projects has depended largely on the expertise of this accountant. The accounts for the project are maintained on spreadsheet and there is no integration of the FM requirements, such as either by reporting or staffing, other than through authorizations of purchases orders and cheque signatories. A greater degree of integration, as proposed by this project, while desirable, does entail some fiduciary risk as FM capacity within the MoE is quite low. Funding Sources 14. The MSP will be funded from a GPE grant of US$2.8 million with a project implementation period of 3 years. Budget 15. A total budget for the project will need to be prepared by the MoE and broken down into annual budgets. Procurement plans will be prepared to support the budget. Detailed budgets for operating costs will need to be prepared annually for approval by the Bank. Funds Flow and Disbursement Arrangements 16. This project is designed to finance and disburse 100 pecent of all eligible project expenditures as identified in the project documents and GPE Grant Agreement. 17. Disbursements methods of Advance, Replenishment and Direct Payments will be used. There is no goods procurement under the project, therefore there is no need for Special commitments. 18. Project funding will be deposited into a DA through the Ministry of Finance in a commercial bank held by the GoTL on behalf of the project. The account will be in US Dollars. Withdrawal Applications to replenish the DA will be report-based disbursements on a quarterly basis, ensuring sufficient funds to cover 6 months expenditure requirements. 19. The project will have one expenditure category as listed below: Category Description GPE Grant US$ Percentage of expenditures to be financed (inclusive of taxes) Consultants services, Operating Costs for the 2,800, Project Total 2,800,000 Accounting Systems 20. The project will initially continue to use spreadsheets to record its accounting transactions until such time as the Ministry of Finance approves the roll out of the Government of Timor-Leste s Accounting Software (Freebalance) to World Bank funded projects (now approved in principle and scheduled for 2012). While the accounting transactions for other 33

42 World Bank funded projects at the MoE have been well maintained on Spreadsheets there are some risks over the corruption of files, failure to maintain adequate back up files and lack of capacity within spreadsheets to operate as an effective accounting recording system. 21. While Freebalance will enable great reporting options - a more robust system and the integration into the MoE consolidated reports - and address systems security issues, there is some initial risk as the current project staff and MoE finance staff has limited skills in Freebalance. Therefore it is crucial that adequate training is provided. 22. In May 2012, Ministry of Finance has indicated that it has approved and planning for the rollout of Freebalance to the World Bank funded projects, with priority for new projects. Freebalance system can be implemented as early as September 2012 if not earlier. Internal Controls 23. The GoTL has well documented processes and procedures with adequate segregation of duties and these are generally followed in World Bank projects. However, internal audit within Timor-Leste is very weak and therefore little reporting on the effectiveness of internal controls apart from annual external audits. There is no framework within Timor-Leste for internal audit and two ministries are partly covering this. Reviews of the framework for internal audit are currently underway through other donor initiatives. Reporting Systems 24. IFRs will be prepared quarterly by the project staff within the MoE. The financial reports will include an analysis of budgeted versus actual expenditure for the current period, year to date and for the cumulative to date by each component and sub-component and will also identify the project commitments. While only one Disbursement Category is proposed, it is recommended that the reports should still include a breakdown of consultants services and operating costs. As report-based disbursements are proposed for the project and the reporting formats have been agreed to for disbursement purposed and included in the disbursement letter. The IFRs will be forwarded to the Bank within 45 days of the end of each calendar quarter 25. As mentioned in the Funds Flow Section the IFRs will also contain a column for the projected project expenditure and cash forecast for the next 6 months to enable funds to be drawn down. 26. The move of the accounting system from Spreadsheet to Freebalance may see changes to the formats of the reports depending on system capabilities, but any changes will be agreed upon by both parties in order to comply with the requirements of reports in form and substance acceptable to the World Bank. External Audit 27. The constitution of Timor-Leste allots the function of external audit to the High Administrative, Tax and Audit Court. As this institution remains to be created, the function of external audit is assigned to the MoF which discharges its responsibilities through the 34

43 contracting of external audit services. The Government will fund the costs of the audit through their existing contractual arrangements. 28. The Recipient will be required to submit annual audited project financial statements for each fiscal year within 6 months of the end of the each fiscal year. Financial Management Action Plan 29. A summary of the FM Action Plan is shown below. No. Action Date by which action required 1 Approval of the draft formats of unaudited IFRs that will Completed be used for the Project financial reporting and disbursements. This will be fundamentally the same as those provided for ongoing projects, but ensuring they meet all requirements. Responsible MoE & World Bank FM Specialist Supervision Plan 30. The overall FM risk assessment for this project is substantial before mitigating measures. Therefore 2 on-site implementation support visits a year is recommended initially. The intensity could be varied subsequently depending on the risk rating. 31. Below is the implementation support plan proposed, based on the outcome of the financial management risk assessment. Desk reviews IFRs FM activity Project audit audited financial statements report On site visits Review of overall operation of the project FM arrangements Monitoring of actions taken on issues highlighted in review of the IFRs and audit reports, auditors management letters, systems audit report, and other reviews Transaction reviews as part of semiannual implementation support site visits Quarterly Annually Frequency Semiannually, based on the substantial risk rating As needed Semiannually, based on the substantial risk rating 35

44 Procurement 32. Procurement of consultant services will be carried out in accordance with IDA s Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers dated January 2011, and the provisions stipulated in the Legal Agreements. 33. The general description of items under the expenditure category is presented below. For each contract to be financed by the Grant, different procurement methods or consultant selection methods, need for prequalification, estimated costs, prior review requirements, and time frame would be agreed between the Borrower and IDA project team in the procurement plan. The procurement plan would be updated at least annually or as required to reflect the actual project implementation needs and improvements in an institutional capacity. 34. Selection of Consultants (US$2,700,000): Consulting services will involve mainly assignments for individual consultants. Expertise required will consist of: (i) strategic plan implementation and monitoring advice; (ii) management capacity building coordination; (iii) budget and finance advice; (iv) legal advice; (v) procurement advice; (vi) process design expertise; (vii) FM support; and (viii) MIS database as well as a series of studies (baseline, tracer of leavers). a. Quality- and Cost-Based Selection (QCBS): With regard to the assignments where the scope of work of the assignment can be precisely defined and the Terms of Reference (TOR) are clear and well specified; b. Selection Based on Consultants Qualifications (CQS): Regarding small assignments (below US$200,000) of a routine nature, such as training and/or facilitation, a qualified consultant firm may be selected through CQS method; c. Individual Consultants: International consultants, as well as local ones, may be appointed/hired by the Directorate to assist in project implementation and to provide technical assistance. They should be selected competitively based on experience and qualifications of at least three qualified consultants among those who have expressed interest in the assignment. In addition, with appropriate justifications and after concurrence by IDA, individual consultants may be selected on a sole-source basis in exceptional cases, such as: tasks that are continuation of previous work that the consultants have carried out and for which the consultants were selected competitively; assignments lasting less than 6 months; and when the individual consultant is the only consultant qualified for the assignment. 35. The ceiling for short-lists of consultants composed entirely of national consultants would be US$200,000. In the event that sufficient numbers of qualified national firms are not available for effective competition, then the short-list would consist of both national and international consultants. 36. The prior review threshold is shown in the following table. 36

45 Selection Method Consultants-Individual Competitive Selection (IC - CS) Sole-Source Basis (IC-SS) Consultancy - Firm Quality and Cost- Based Selection (QCBS) Quality-Based Selection (QBS) Least Cost Selection (LCS) Consultant's Qualification Selection (CQS) Fixed Budget Selection (FBS) Single-Source Selection (SSS) Prior Review (No Objection Letter Required) Yes/No Only TORs on Selective basis All Threshold Remarks TORs All Only used in exceptional circumstances with proper justifications. Yes Yes Yes Yes Yes Above US$100,000 up to no limit Above US$100,000 up to no limit Above US$100,000 up to no limit Above US$100,000 up to no limit TOR, Fixed Budget Ceiling as specified in the Request For Proposal subject to bank's Prior Approval Only for routine assignments Fixed Budget Ceiling will be indicated in Request for Proposal Document Yes All In exceptional cases only with proper justification. 37. Incremental Operating Costs (US$100,000): From GPE financing, the project will finance costs associated with field visits, transport, per diem, as well as maintenance of vehicles and equipment used by the project. While the operating cost can cover office supplies and consumables, it will not finance procurement of goods, such as computers. 38. Assessment of the agency s capacity to implement procurement: Overall responsibility for project implementation rests with the Directorate of Procurement. 39. Procurement activities will be carried out by the Department of Procurement of the Directorate of Procurement, staffed on an intermittent basis with an International Procurement Advisor contracted under the project. This position has been supporting capacity development of the procurement responsibilities of the on-going education projects in the portfolio. The Department is also supported by two national procurement consultants. 40. A Situational Analysis was undertaken in July 2011 by the International Procurement Advisor supported under ESSP. The situational analysis provides a comprehensive assessment of procurement capacities, issues, and strengthening priorities including training, and a procurement strengthening agenda for the Ministry. The assessment reviewed the organizational 37

46 structure for implementing projects and the interaction between the staff responsible for procurement and other national agencies. 41. An updated Procurement Risk Assessment has been completed during appraisal, and filed on project file. While the country s public procurement system is still weak in terms of internal manuals, clarity of procurement process, and documentation, the designated procurement staff for projects has generally good knowledge and skills in managing procurement activities following Bank guidelines, and thus overall procurement risk is rated Moderate. 42. In the meantime, the project itself will support a number of activities with the objective of carrying out the priority procurement strengthening agenda of the Ministry, with focus on developing clear guidelines and procedures for record-keeping, procurement planning, bid evaluation and contract awarding, contract management and administration, strengthening procurement oversight through regular internal, and external audits. The priorities include: a. Technical assistance in developing a training program in procurement for both Procurement staff and Line Directorate staff with procurement responsibilities; b. Technical assistance in developing a project procurement and contract management manual; c. Technical assistance in developing manuals for increased transparency and internal control following the Integrity and Transparency agenda; d. Develop guidelines and training programs for contractor performance evaluation; and e. Legal support aiming at institutionalizing procurement procedures. Environmental and Social (including safeguards) 43. Social, Environment, and Other Safeguards are not triggered as the project is focused on management strengthening at the central Ministry level. The focus on management strengthening includes inputs of technical assistance and training. No safeguards are expected to be triggered and no physical investments are planned in the proposed project. Monitoring & Evaluation 44. Data for the project s outcome and results indicators will be drawn from the information sources for the Ministry s PAF. Given the limited, complex, and challenging nature of the monitoring and evaluation tasks envisioned for this MSP and the Ministry s limited experience with and capacity for such tasks, the project will support capacity for project monitoring through Components 1.3 (management strengthening project management) and 2.4 (technical support to monitoring and evaluation of the NESP). The credibility of the Ministry s budget planning and expenditure, and strength and transparency of key PFM systems, will be measured and collected through NESP monitoring and through regular budget reports. 38

47 Role of Partners (if applicable) 45. The MoE is chair and UNICEF is Coordinating Agency of the LEG. A consultative process involving the development partners has been adopted as part of project preparation and is proposed for project implementation and monitoring. This is particularly relevant given the catalytic nature of the funding support, and the expectation of relevance to external support including management strengthening and NESP education reform Priority Program activities. 39

48 Annex 4: Operational Risk Assessment Framework (ORAF) TIMOR-LESTE: Management Strengthening Project Project Stakeholder Risks Rating High Description: Elections in mid-2012 may result in a change of government and change of priorities. However, project activities that are part of the NESP, are integrated in the NSDP and directly aligned to the MDG s, and are both essential and not controversial. Implementing Agency Risks (including fiduciary) Capacity Description: The MoE has been identified as having low overall capacity, and is sometimes vulnerable to political forces on policy formulation, occasional restructuring, staff retention problems, and consultant turnover. The high risk rating reflects these issues and the heavy reliance on international advisors. Skills transfer to national staff has been mixed, with the absence of a consultative and comprehensive capacity development approach. However, some key systems capacity has improved recently. The presence of implementation capacity has been reflected in its high disbursements of World Bank/FTI/GPE-funded operations and up to 98 percent execution rate of its own development budget. Risk Management : Project design is flexible to allow for small changes in activities within initial project objectives. Resp: Client, Bank Stage: Preparation Due Date : completed Status: completed Task team will work with LEG and potential new government to ensure understanding of project activities and adequate handling of change requests. Resp: Client, Bank Stage: Preparation, implementation Due Date : underway, ongoing Status: underway, ongoing Rating: High Risk Management : Funding under this project will continue to support efforts to reinforce the Ministry s implementation capacity and to mainstream implementation responsibility into the Ministry s departments. Project funding will continue the effort to transition from international consultant support to use of national consultants. Experience from strengthened ESSP management will be applied to the new project delivery approach. To support skills transfer and sustainability, strengthened skills transfer and improved sustainability, the new project will align to the Capacity Development Assistance Framework developed consultatively in the MoE. Resp: Client, Bank Stage: Preparation, implementation Due Date : underway, ongoing Status: underway, ongoing 40

49 Governance Rating Moderate Description: The project will be coordinated under PIU, working collaboratively with relevant Directorates. The PIU has been working well in past projects. While implementation capacity remains a challenge for MoE, the FM supervision ratings for past and on-going projects have been satisfactory. The quality of the accounting information and documentation represents a high standard. Bank reconciliations are routinely completed correctly, petty cash records are accurate and a cash account reconciles the cash to the petty cash book balance. Transactions have adequate documentation information that can be quickly and easily accessed and spreadsheets are comprehensive in their information but relatively simple in their design. All contracts for consultants are found to be well monitored and internal controls are robust. There are limited specific FM issues for the MSP given the focus on technical assistance. One central concern is sustainable FM capacity. FM capacity in the Ministry is concentrated in two key people, on which effective FM management heavily relies. As part of Component 2 activities, focus will be given to appropriate capacity building and transfer of competencies in FM. The Ministry is committed to maintaining qualified national consultants for FM during the remaining project period. Consultants in the Ministry with FM responsibilities have agreed to take on the extra work associated with the activities included in Additional Financing. A focus on preparation for project implementation readiness during appraisal stage has included the intention to minimize risks, delays and additional work during the implementation phase. Project Risks Risk management: Transparency and accountability will be improved through wellestablished procedures that are included in the project operations manual. Resp: Client, Bank Design Rating Moderate Description: The MSP will build on the positive results and midterm-review-guided implementation lessons learnt from ESSP, which are incorporated in design. Design will be kept straightforward and closely aligned to the NESP Management Reform Priority Programs and the overall MSP supported by multiple donors. Stage: Preparation, implementation Due Date : underway, ongoing Status: underway, ongoing The MSP will be regularly monitored from World Bank Dili and Jakarta Country Offices, formally supervised semi-annually. Annual audited financial reports are subject to reviews from the Bank s FM team. Risk Management: Design to be kept straightforward and in line with MoE s own plan; transition will continue to reliance on national contractors for highly technical roles, including education expertise, and implementation support. Resp: Client, Bank Stage: Preparation Due Date : completed Status: completed 41

50 Social & Environmental Rating Low Description: Risk Management : No identified social safeguards or environmental safeguards risks due to project focus on management strengthening. Program & Donor Description: MSP will build on the successful implementation of the ESSP and FTI/GPE, through which donor coordination has improved in the Education sector. Rating: Moderate Risk Management: The AJR of donors on NESP progress will provide a continuous platform for donor coordination. A weakness of donor support to capacity development in the MoE has been that support has been fragmented and has been provided on an inputs-basis, with little joint planning by partners with the Ministry for the timing of training and study visits for a small and busy number of Ministry staff. Major Ministry policy, program development, and training events have been undermined when partners have funded competing opportunities overseas at the cost of Ministry program commitments at home. Considering the need for coordination of management strengthening, the Ministry will develop a Ministry-led calendar of training within the MSAF for the NESP. A Management Strengthening Reference group, as a specific group for Ministry managers to discuss the human resource constraints to achieving the NESP, will be supported by the project as a priority Resp: Client, Bank Implementation and Sustainability Rating High Description: The project builds on existing structures for project management and implementation in the MoE, which have demonstrated relatively strong capacity to deliver according to agreed implementation plans. Ministry management capacity has been strengthening during During 2010/11, the Ministry has also strengthened results reporting and management of ESSP which provides a stronger basis for the MSP. The EMIS system is in place regularly producing good quality information - it is continually improving and will improve further with project support. Resp: Client, Bank Stage: implementation Due Date : underway, ongoing - annual Status: underway, ongoing Risk Management: Experience from strengthened ESSP management will be applied to the new project delivery approach. To support skills transfer and sustainability, the new project will align to the MSAF developed consultatively in the MoE. Stage: Preparation, Implementation Due Date : underway, ongoing Status: underway, ongoing 42

51 Project Team Proposed Rating Implementation Risk Preparation Risk Rating: Moderate Rating: Substantial Comments: While demonstrated project implementation performance at MoE suggests that risk is reduced, overall implementation risk is rated at Substantial given the continued challenges of low implementation capacity. 43

52 Annex 5: Summary of Management Strengthening Action Framework (MSAF) TIMOR-LESTE: Management Strengthening Project Action Item General Management Strengthening Management for Sub-sector Results 1. Management and Leadership Course coordination (Change Management) Generic management skills 2. Set a Communication strategy Commence Communication Strategy for buy-in on management reform. Explanation of the focus of the MSP and its link to the NESP. Seeks input from key Ministry staff at the design stage and requires workshops once the operation manual is developed. Establishes some baselines (especially regarding attitudes and organizational culture) and continues through the life of the project. Inform all teams about NESP, annual plans accountability system and starting of process definition workshops. Other components as identified in the communications strategy over time. 3. Functional Analysis This is the starting point as part to clarify Ministry functions and tasks. This requires analysis of the Organic Law, NESP, other laws and review of existing practice. This should focus on identification of the services required by schools and the links from national to district to school levels to meet NESP education access and quality objectives. An example for a useful functional analysis would be identifying the range of tasks necessary for Cycle One students completing at the right age. This requires coordination of management activities by District Directorates, National Directorate of Ensino Basico, National Directorate of Curriculum, INFORDEPE (lead units) and also National Directorate for Planning, Statistics and Information Technology, National Directorate for Human Resources, National Directorate for Procurement, National Directorate for Finance and Logistics, Unit for Infrastructure and Education, and the General Education Inspectorate. Inform all existing priority program teams about NESP, annual plans accountability system and starting of process definition workshops Which units of the Ministry do what tasks? This clarifies some gaps, overlaps and uncertainties that currently exist. For example, INFORDEPE provides training and the District Directorates and Directorate of Ensino Basico also provide support for schools. What does this distinction mean in practice? What are the priorities for the areas of internal Ministry operation need that should be addressed. e.g. decision making, internal communication. Which are the target areas where the focus is on improving education outcomes? This requires identifying some key NESP education goals where the various units of the Ministry can work together so that improved management can produce improvement in schools. 44

53 Action Item General Management Strengthening Management for Sub-sector Results 4. Define Organisational Processes and Procedures What processes (operational policies and procedures) are necessary for the Ministry to operate effectively? This links to the Ministry-wide priority areas and the education outcomes focus. From a bottom-up approach the educational outcome focus would assist defining the Ministry-wide processes and processes specific to directorates. Start the process of developing a Manual of SOPs based on an agreed format and commencing with priority areas. E,g. document management, decision making processes/accountabilities and teacher attendance. The SOPs must be clear about what procedures must be followed, who is accountable, consistent across the Ministry and explain how monitoring and reporting occurs. 5. Define Management Processes Implement process definition for general MoE management functions through facilitated participatory workshops. 6. Identify Needed Competences Based on process definition, identify the competences that are required for effective general management (use 10-point Competence Matrix as a starting point). Codify need competences in (a) procedures manual(s). Identification of potential ongoing support (change management processes, training, mentoring) for managers such as the Institutional twinning arrangement and specific Technical Advisor support. 7. Recruit or Reappoint Staff Use the adapted Competence Matrix as the basis for recruiting new staff where units are not staffed to cover the processes/competences needed. 8. Undertake targeted Capacity Strengthening 9. Set up Performance Assessment, Accountability Processes, and Incentives Training Needs Analysis, Training Plans, Training programs targeted at technical and administrative staff at all levels Use procedures manual(s) covering the 10 functional areas as the basis for management training design. Deliver the courses through INFORDEPE (initially using local and/or expat trainers from other agencies). Assess competence (performance) Regularly monitor staff performance through Civil Service systems and in relation to staff TOR and annual plans (annual review). Units and their leaders to give face to face accountability reports (covering desired outcomes) including reasons for shortfalls, and any new capacity development needs. Rewards are to be given to units/individuals reaching or Implement process definition of the activities required for producing desired sub-sector results, using facilitated participatory workshops approach. Identify what staff are required to implement the procedures both in terms of competences and numbers of staff, and the resources necessary to do their job effectively. Based on process definition, identify -- for each Priority Program -- the competences needed for implementing the processes required for NESP goal attainment. Write staff terms of reference (TOR) to reflect the jobs to be performed and competences (qualifications) needed. TOR, recruitment, training and support of staff to do their jobs and evaluation of individual, group and Ministry performance. Once TOR have been written (or rewritten) reorient staff members to their tasks or, ask position holders to reapply for their positions. Recruit externally for position that cannot be filled by existing staff members. Based on an assessment of staff qualifications and experience in relation to TOR requirements create individual capacity development programs to be provided through training courses or other means (mentoring, on-thejob training, etc.), developed with the help of a capacity strengthening advisor. Regularly monitor staff performance through Civil Service systems and in relation to staff TOR and annual plan (annual review). Units and their leaders to give face to face accountability reports (covering desired outcomes) including reasons for shortfalls, and any new capacity development needs. Rewards are to be given to units/individuals reaching or exceeding goals. Specific indicators and methods relevant to individual directorates and 45

54 Action Item General Management Strengthening Management for Sub-sector Results 10. Implement new processes based on SOPs. exceeding goals. Develop an ongoing Monitoring and Evaluation system that allows the Ministry to know that procedures are being followed. Implementation of procedures with priority focus on improving educational outcomes. Institutionalize management training at INFORDEPE Implement the monitoring and evaluation system so that the Ministry knows that procedures are being followed and as a consequence results are being achieved that improve educational outcomes. other Ministry bodies are developed as a part of the Ministry wide Monitoring and Evaluation system. This allows directorates to know that there is a change of practice and behavior. Institutionalize process Human Resources functions at the Directorate of Human Resources (process definition, mapping staffing needs, creating or advising on creation of TORs, determining staff training needs, organizing or advising on staff training programs, and undertaking staff performance assessment). Accountability reporting could be routinized under the leadership of the Planning Directorate, and setting standards for and coordinating technical assistance by the Sector Coordination Advisor in the Strategic Analysis and Modernization Cabinet of the MoE. Implement the monitoring and evaluation system so that directorates know that procedures are being followed and as a consequence there is a change of practice and behavior. 46

55 Annex 6: Implementation Support Plan TIMOR-LESTE: Management Strengthening Project Strategy and Approach for Implementation Support 1. Implementation support provided by the World Bank will build on experience built up from previous and ongoing operations, chiefly the ESSP ( ). Implementation support is provided in a proactive supervision mode, reflecting the capacity challenges faced by the GoTL in meeting pressing and ambitious human development goals. Trust Funding from AusAID, complementing the co-funding of the ESSP, has been important in strengthening the supervision approach. 2. The Ministry has overall responsibility for coordination and implementation of the MSP including procurement, disbursement, and financial management. Key themes of project implementation support by the World Bank to sector engagements including ESSP since the mid-term review of ESSP in late 2010 include: a. Ministry management. Supporting strengthened Ministry management including understanding of management responsibilities using key tools such as a Project Management Structure document and practices (Project Coordination Committee, regular reporting, and Project Executive structure for project-related decision-making). b. Technical advice. Expanding the scope and increasing the level of experience applied to analytic work provided to inform development and achievement of strategic goals of the sector, in a responsive and Just in Time mode; and c. Decentralized supervision. Task Team Leadership based in the region, and the expansion of World Bank technical and operations staff in the Dili office supporting sector interventions. 3. During project preparation and initial implementation in January 2013, MSP project implementation will benefit from particular relevant technical advice: a. MSAF development between September 2011 and February 2012, funded by FTI/GPE project supervision trust funding; b. Strategic plan implementation & monitoring advice as part of the ESSP project, which will provide senior advice to NESP implementation and coordination from September 2011, developing a framework for monitoring including strengthening key data sources; c. NESP PAF policy advice supported by the AusAID-supported Just In Time Policy Trust Fund during late 2011, to develop an outcomes monitoring framework and evaluation capacity, and intermittent further review to January 2013; and d. Economic sector update and efficiency analysis and NESP costing advice and dissemination supported by the Just In Time Policy Trust Fund, which will develop multi-year budgeting frameworks and transfer skills in use of key costing and efficiency tools to support implementation of Component Joint sector engagement and review of NESP implementation and monitoring will contribute through fora including LEG meetings and AJR. Ministry-led agendas including 47

56 the MSAF and PFM reform agenda will be reviewed, updated, and informed through these mechanisms. 5. In addition to the use of existing and demonstrated project management structures, particular aspects of project design intended to support implementation include: a. Flexibility in design to respond to implementation priorities of the NESP. Priorities and inputs for the implementation of the NESP will further evolve. Changes and adjustments can take place under the direction of the MoE and in discussion with sector stakeholders. b. Component alignment to responsibility of Ministry Directorates as defined in NESP Annual Action Planning process, linked with budget. By increasingly engaging through appropriate NESP coordination mechanisms, with middlemanagement representations of the MoE, project supervision will continue to support the Ministry s increased delegation of responsibilities to its middlemanagement. This will help strengthen the NESP management for results approach and NESP implementation results through the pre- and post-election period in c. Procurement and financial management support contracted as part of Component 2, supplementing Ministry capacity to implement and update the Ministry s Procurement and Contract Management plan. 6. FM and Procurement Management technical specialist support will continue to be provided to the MSP by Dili- and regionally-based World Bank specialist staff, as discussed in Annex 3: Implementation Arrangements. Implementation Support Plan Time Focus Skills Needed Resource Estimate Partner Role First 12 months Project effectiveness and mobilization priorities and new Minister inception engagement MSAF, PAF, PFM specialist expertise US$100,000 FTI/GPE Supervision budget (total including Task Team preparation) AusAID Trust Fund Supervision budget; includes engagement and discussion months Routine project supervision support including project progress and policy engagement, financial, disbursement, and procurement specialist support. Management Strengthening technical, PFM and PAF monitoring and update advice World Bank education sector operations experience and fiduciary specialist expertise for Supervision Task Team Leadership and Dilibased Education Operations Officer. Support from US$100,000 per annum GPE project supervision budget and US$70,000 per annum Timor-Leste Second Chance Education project budget GPE Secretariat engagement related to project supervision support; regular discussion with LEG 48

57 Skills Mix Required during Implementation Skills Needed Number of Staff Weeks Number of Trips Comments Proactive supervision strategy Proactive supervision strategy in Timor-Leste context. Regionallybased Task Team Leader (TTL) Economic analysis and 4 4 PFM advice Institutional 6 6 development PAF advice 3 3 Annually as part of AJR preparation Partners Name Institution/Country Role UNICEF Ms. Norkham Souphanouvong, Education Specialist Coordinating Agency for FTI/GPE 49

58 Annex 7: National Education Strategic Plan Financing Gap Analysis TIMOR-LESTE: Management Strengthening Project 1. The NESP presents an ambitious financing agenda. An updated plan costing effort based on 2010 census data, and updated data on key subsectors including a teacher survey, has produced more realistic figures, with 2011 implementation requiring about US$111.8 million, followed by a steep escalation in 2012 and model increases after that. This remains above what the government has allocated for 2011 (US$95 million) plus Development Partners (DP) financial contributions (around US$11.4 million). Some of this shortfall (about US$5 million) could be covered by DP pledges that so far have not been counted as direct contributions to NESP. However, the sharp costing increases in 2013 and beyond put the needed funding far beyond the expected revenue stream (both government funds and DP contributions). To examine these issues the FTI/GPE appraisal of the NESP conducted a gap analysis. The very nature of the Timorese budget, directly depend on the size of the funds drawn from contained oil revenues, which is decided upon each year by the government,, makes such projections more difficult than in other countries (where budgets are more directly linked to the economic growth). To estimate government contributions, the appraisal used two scenarios, as shown in the Table below. The first one is based on a steady increase of the education budget by 10 percent per year. The second scenario assumes a similar steady increase, but by 13 percent per year. Table 5 summarizes the projections for 2011 to 2015 using these hypotheses. The US$5 million gap mentioned above can be seen for With such increases in education s share of the budget in 2012, the gap (even after adding DP contributions) rises to around US$45 million in Depending on the actual increase of the government budget for education, this gap might either remain in the vicinity of US$45 million per year, or slowly decrease to about US$5 million 2015 (although this figure doesn t account for much external support, most of it being still undetermined for that year). Projected Total Education Budget (NESP, March 2012) Educational Programmes 01 Pre school Education $1,740,486 $2,249,006 $11,391,646 $12,570,042 $13,836, Basic Education $52,431,948 $64,649,208 $78,989,568 $80,072,540 $79,547,200 03a Secondary Education - General $3,771,533 $7,906,194 $9,018,637 $9,850,767 $11,431,956 03b Secondary Education - Technical $2,255,788 $7,506,243 $10,072,670 $10,658,156 $11,683, Higher Education incl. Polytechnics $13,246,317 $29,449,000 $35,804,327 $39,636,775 $39,471, Recurrent Education $1,500,000 $2,939,000 $4,067,200 $3,803,400 $3,739, Social Inclusion $0 $0 $617,312 $620,649 $621, Teaching Quality $4,852,000 $4,808,000 $7,623,868 $7,821,875 $8,433,502 Sub-Total Educational Programmes $79,798,071 $119,506,651 $157,585,229 $165,034,205 $168,765,467 Management Programmes 08 General Management $0 $0 $2,500,000 $2,700,000 $3,000, HR Management $264,000 $284,000 $312,000 $297,000 $292, De-concentration $2,384,000 $3,568,000 $3,568,000 $2,722,000 $2,722, IT and MIS $465,000 $501,000 $285,000 $315,000 $345, Planning and Budgeting $241,000 $279,000 $132,000 $122,000 $132, Donor Coordination $0 $154,000 $122,000 $122,000 $5,632,000 Sub-Total Management Programmes $3,354,000 $4,786,000 $6,919,000 $6,278,000 $12,123,000 MoE non teacher salaries $7,600,000 $8,278,076 $8,534,480 $8,961,204 $9,409,264 Total Estimated Budget $90,752,071 $132,570,727 $173,038,708 $180,273,408 $190,297,731 50

59 Projected NESP Costs and Funding Sources (NESP, March 2012) a External funding for 2015 mostly not yet determined b Does not include international cooperation funding (ODA and non-oda, estimated at above US$12 million per year) that do not come in support of explicit NESP targets. c Does not include new support sought from FTI/GPE in support of NESP. 2. In a case similar to the second scenario, a modest increase in external funding (complementing the assumed increase in government funding levels) would succeed in closing the expected financing gap. These levels of government support will probably remain below the FTI/GPE benchmark level of 20 percent of the national budget allocated to education, but may be as much as the government can manage in the short-term, given that: a) overall government revenues are expected to increase sharply, and b) capacity for effective management and implementation of the NESP will still be being built over the period. Also, an important caveat is needed. This gap analysis only covers the next five years. The longterm sector plan so far presents costing (still being revised) that will increase rapidly to a level in 2030 that would require a 20 percent share of the government budget for education plus continued DP support. 3. If the government is not in a position to increase the proportion of its spending going to education to these extents, the other alternative would be for the Ministry to scale back or re-phase education development plans, especially in the middle years (2012 and 2013), when a large increase in spending is required by the NESP. Such scaling back is, in fact, an option already provided by the NESP itself, in case funding or capacity are found to be insufficient. The AAPs constitute the key tools for the re-adjustments of implementations programs, as the different directorates adjust their annual goals and budgets to the resources available that year (both human and financial). 4. The Ministry has requested that development partners prioritize support for the NESP capacity building agenda, whatever the financing gaps might be. This seems reasonable since successful implementation of the Plan depends in early strengthening of management expertise, an agenda which is estimated to require about 7-12 percent of the NESP overall budget. Given that much of this funding would be for technical assistance (difficult to finance with domestic funds), it is particularly appropriate that this be supported by external agencies. 51