Technical Assistance Report

Transcription

1 Technical Assistance Report Project Number: September 2007 Islamic Republic of Afghanistan: Technical Assistance for Support for Economic Policy Management (Cofinanced by the Government of Australia and the Government of Denmark) Prepared by [Author(s)] [Firm] [Address] Prepared for [Executing Agency] [Implementing Agency] The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.

2 CURRENCY EQUIVALENTS as of 10 June 2007 Currency Unit afghani/s (AF) AF 1.00 = $0.02 $1.00 = AF50.04 ABBREVIATIONS ADB Asian Development Bank ANDS Afghanistan National Development Strategy FMPAR Fiscal Management and Public Administration Reform IMF International Monetary Fund MOF Ministry of Finance PRGF Poverty Reduction and Growth Facility TA technical assistance TECHNICAL ASSISTANCE CLASSIFICATION Targeting Classification General intervention Sector Law, economic management, and public policy Subsector Economic management Themes Sustainable economic growth, governance, and capacity development Subtheme Institutional development, promoting economic efficiency and enabling markets, economic governance NOTE In this report, "$" refers to US dollars. Vice President L. Jin, Operations Group 1 Director General J. Miranda, Central and West Asia Department (CWRD) Director B. Fawcett, Afghanistan Resident Mission, CWRD Team leader M. Prokop, Country Economist, Afghanistan Resident Mission, CWRD

3 I. INTRODUCTION 1. The Ministry of Finance (MOF) plays the key role in fiscal management, economic development planning, resource mobilization and allocation, and coordination and harmonization of donor assistance in the Islamic Republic of Afghanistan. The Asian Development Bank (ADB) has supported capacity development activities within MOF through cluster technical assistance (TA) 3874 (Capacity Building for Reconstruction and Development), TA 4502 (Capacity Building of the Ministry of Finance), TA 4637 (Capacity Building for Economic Management), and loan 2215 (the Fiscal Management and Public Administration Reform [FMPAR] program). 1 ADB s involvement and investments in advisory and capacity development efforts have yielded valuable lessons and have contributed to a number of significant achievements. 2. The TA was included in ADB s Country Strategy and Program Update pipeline of projects. 2 The TA s scope, implementation arrangements, costs, and terms of reference were identified in consultation with relevant officials and advisors of MOF and the development partners during meetings held from December 2006 to May The TA builds on the achievements made under ADB s assistance to MOF, follows up on the recommendations of the various TA progress reports, and mutually supports other TA and capacity development in MOF. The TA supports MOF s strategic priorities, which emphasize the importance of continued capacity development and a strategic focus on service delivery and achieving results. 3 The TA framework is presented in Appendix 1. 3 II. ISSUES 3. In the past few years, the Government has successfully implemented the Staff Monitored Program led by the International Monetary Fund (IMF) and in 2006 entered into the IMF Poverty Reduction and Growth Facility (PRGF). Budget preparation and execution have improved significantly, particularly with the introduction of a core budget in June 2004 that consolidates the operating budget with the development budget and the commencement of a pilot program and provincial budgeting. Government accounts have been consolidated into a Treasury Single Account along with the presentation of audited core budget financial statements to Parliament. Domestic revenue generation has strengthened significantly, with revenue collection estimated to have reached 7% of GDP in FY 2006 (ending 20 March 2007) or about 6.6% above the annual target set under the PRGF. Operating expenditures in FY2006 reached 10.5% of GDP, reflecting operating budget execution to about 98%. Despite these achievements, formidable reform challenges remain. 4. In light of the severe lack of administrative, technical, and managerial capacity, the reconstruction process in Afghanistan thus far has relied heavily upon donor-funded expatriate technical assistance. 4 TA often had to substitute capacity with only limited local capacity being built. This has also been of necessity and the case for ADB s TA in MOF and in some other 1 TA 3874: ADB Proposed Technical Assistance Cluster to Afghanistan for Capacity Building for Reconstruction and Development. Subcomponent 4b. Manila; TA 4502: ADB Capacity Building of the Ministry of Finance. Manila; TA 4637: ADB Capacity Building for Economic Management. Manila; Loan 2215: ADB Program Cluster of Loans Fiscal Management and Public Administration Reform Program (Afghanistan). Manila. 2 The TA was initially named Capacity Building of the Ministry of Finance. The concept paper was approved by the Director General for the Central and West Asia Department on 7 March The TA first appeared in ADB Business Opportunities on 16 March Review of Technical Assistance and Capacity Building in Afghanistan. Discussion Paper presented at the Afghanistan Development Forum, April 2007.

4 2 agencies. However, there have been some notable, initial successes. The FY 2006 budget has largely been prepared by an Afghan team with limited international technical assistance. TA 4637 (see footnote 1) provided support for the establishment and capacity building of the fiscal policy unit. After intensive capacity building support, the domestic staff of the unit is now able to conduct analyses of fiscal trends, as well as of fiscal sustainability of government policies and reforms. They also can review and monitor policy actions associated with benchmarks under various program lending modalities. The TA s success in building capacity is largely due to the international advisor s continued on-the-job training of MOF staff that is complemented by shortterm in-country and international training opportunities. The proposed TA will use a similar approach. 5. The high-level work of the Office of the Minister of Finance and the Deputy Ministers has required international expertise in the past. This assistance will remain crucial to sustaining the reform momentum and ensuring the efficient delivery of basic services over the medium term. Building on lessons learnt from TA 4637 and other success stories, however, the TA will put an increased focus on capacity development to consolidate the achievements in a number of areas within MOF. This will include moving from initial technical support by international advisors to the progressive Afghanization, with national advisors performing key functions supported by international counterparts. Due to the nature of the work and the limited availability of skilled local staff, these advisors are primarily Afghans having had education or experience abroad. 6. The Office of the Minister, headed by a chief of staff and consisting of international and national advisors and support staff, supports the Minister and Ministry across all its functions. The office complements the operational activities of the Ministry s departments and staff by advising on strategic communications, economic and legislative reform, development coordination, and the operational aspects of developing a functioning ministerial secretariat. The Minister s advisory team is supposed to consist of four national directors covering economic policy, communications, legal affairs, and regional cooperation. For the medium term (2 years), the economic policy, communications, and legal directors will need to be assisted by international advisors until their capacities will be strengthened and they can assume full advisory functions. It is suggested that the TA will also provide funding to engage a national economic policy advisor and a national legal advisor. 5 It is envisaged that after completing their assignments the consultants will be able to assume the positions of national director of economic policy and legal adviser. It is expected that at that point another funding mechanism would take effect, its most likely being the Management Capacity Program under the Afghanistan Reconstruction Trust Fund. 7. Targeted support will also be provided under the TA to the deputy ministers of Finance and of Administration to facilitate critical reforms in budget and fiscal management, as well as to improve administration within MOF covering broad responsibilities that include internal audit, human resources management, and internal budget formulation and execution. The core administrative functions presently receive little support. That is in fact true of most of the Afghan Government s line ministries, where development partners focus more on program delivery than on ensuring that core administrative functions within the ministries are capable of supporting effective program delivery. These advisors will closely liaise with advisors in the Minister s office to coordinate the reform agenda and assist in coordinating donor-financed programs. 5 ADB is already funding a regional cooperation advisor to the Minister through its Central Asia Regional Economic Cooperation program.

5 3 8. MOF receives a range of development partner support: The World Bank s Public Administration Capacity Project focuses on improving procurement, internal audit, and financial management. The World Bank is also financing the Emergency Customs Modernization Project. United States Agency for International Development is financing an economic governance and state-owned enterprises reform project, as well as the communications, economic, and legal advisors in the Minister s office. 6 Department for International Development is supporting the tax administration. ADB s FMPAR grant component (see footnote 1) provides TA for the mustoufiat (provincial arms of MOF) reform and to the budget department. The United States Treasury provides support to the debt management unit. 9. Through TA 3874, TA 4502, and FMPAR, ADB provided funding for advisors to the Deputy Minister of Finance for Administration and the Deputy Minister of Finance as well as for a legal and economic advisor to the Minister. There is an urgent need to continue this type of assistance to allow for continuity, build on the achievements thus far, and continue building the capacity of Ministry staff. While during TA 3874 and TA 4502 no national advisors served as counterparts to the international advisors, this TA will ensure that each international advisor has a national advisor as a direct counterpart and who will assume the main advisory functions upon the TA s completion. It is expected that broader strategic coordination of reforms and TA will be managed by a reform management unit to be funded and established under the next phase of the World Bank s Public Administration Capacity Project. That unit will coordinate reforms in line with MOF's strategic plan, including effective use of TA. III. THE TECHNICAL ASSISTANCE A. Impact and Outcome 10. The TA will strengthen the Government s capacity in economic and fiscal policy management. The main objectives of the TA are to provide advisory services to the Minister of Finance and deputy ministers on key economic and fiscal policy issues as well as to support capacity building for national counterparts (advisors) to facilitate their taking over the advisory roles upon completion of the TA. B. Methodology and Key Activities 11. One of the key lessons learnt from TA 3874, TA 4502, and TA 4637 (see footnote 1) is the importance of taking a flexible approach to TA that provides for capacity development, given political and economic circumstances, the evolving institutional structures, and government capacity. The TA s scope and terms of reference, therefore, outline broad areas of activities. All activities will be closely coordinated with ongoing ADB-supported TA in MOF and assistance provided by other development partners. The support detailed immediately below is envisaged under the TA. Detailed terms of reference can be found in Appendix Support to the Office of the Minister of Finance 12. The senior strategic policy advisor to the Minister of Finance will strengthen and develop the capacity of the Office of the Minister and MOF in the following key areas: (i) economic and fiscal policy, (ii) strategic planning and program prioritization, and (iii) development planning and 6 The legal advisor is funded for 12 months and continuity will be provided from this TA.

6 4 aid coordination processes. The legal advisor will provide strategic advice to strengthen the Ministry s capacity in the legal, regulatory, and enforcement areas, including contract dispute resolution and development partnership agreements and contracts. The advisor will also assist MOF in facilitating the revision and passage of key economic management legislation. 2. Support to the Office of the Deputy Minister (Finance) and the Deputy Minister (Administration) 13. The Deputy Minister for Finance is responsible for fiscal, budget, treasury, and debt management issues. The Deputy Minister serves as day-to-day interlocutor for the international financial institutions and oversees issues related to the PRGF Program, the Heavily Indebted Poor Countries initiative, FMPAR, and other benchmarks. To support these activities, the advisor to the Deputy Minister for Finance will strengthen the capacity of staff in (i) macro-fiscal skills, (ii) preparing medium-term budget forecasts, (iii) including risks and uncertainties as well as costs of the proposed pay and grading exercise as part of the public administration reform program, (iv) analysis related to public finance management, and (v) following the linkages of the FMPAR with other reform programs of the World Bank and IMF. 14. The advisor to the Deputy Minister of Administration will provide critical support covering the range of responsibilities falling under the Deputy Minister of Administration, including internal audit, human resources management, state-owned enterprises, state-owned banks, and internal budget formulation and execution. The advisor will be supported on a short-term basis by a financial management expert who will assist the Deputy Minister and the Director General of Administration to improve coordination and preparation of the MOF budget, expenditure management, and public sector operational effectiveness. As new budget instructions are issued from the Ministry of Finance, the financial advisers will be required to ensure that the Director General Administration and the administration team understand these concepts and information disseminated through instructions. The Director General Administration will coordinate across the MOF and review preparation of the MOF budget for approval by the Minister. This is a key process and is paramount to delivering the objectives of the Ministry as set out in its strategic plan. The financial management expert will be expected to develop and support problem-solving within MOF in order to identify and remove blockages to operating budget and development expenditures. The expert will further focus on developing and implementing systems and processes. Once in place, the longer-term support will be provided by the administration advisor. 3. Capacity Development 15. The core element of capacity development will be on-the-job training of national advisors and staff to enable the phaseout of international advisors. The international consultants will also hold small workshops, seminars, and training courses as outlined in the capacity building road maps (see below). The national economic policy and legal advisors will provide direct support to the Minister on appropriate national and international representation visits. TA funds will be made available for short-term training for staff. Where possible, the training will use local facilitators. TA funds will also support international consultants as facilitators. 16. Each international advisor will prepare a capacity building road map for his or her respective area of responsibility, outlining capacity gaps and proposed training activities. These capacity road maps will include concrete indicators of progress towards transfer of skills, knowledge, and other relevant capacity dimensions.

7 5 C. Cost and Financing 17. The total cost of the TA is estimated at $2,780,000, of which ADB will provide on a grant basis an amount not exceeding $800,000 to be financed under the ADB s TA funding program. The TA will be cofinanced on a grant basis by the Government of Australia in an amount equivalent to $800,000 and the Government of Denmark in an amount equivalent to $900,000, which will be administered by ADB. The Government will finance the balance of the costs, equivalent to $280,000, through providing office accommodation, transport, and remuneration of counterpart staff (see Appendix 2 for detailed cost estimates and the financing plan). D. Implementation Arrangements 18. MOF will be the executing agency for the TA. MOF will assign counterpart staff to work with the consultants and provide suitable office space, utilities, and logistical and administrative support to the consultants. Executed over 36 months, the TA is expected to start in August 2007 and be completed by July The TA requires a total of 83 person-months of international consultancy (a strategic policy advisor [20 person-months], a legal advisor [15 person-months], a fiscal advisor [20 person-months], an advisor to the Deputy Minister of Administration [20 person-months], and a financial management expert [8 person-months]). All international consultants will be engaged on an intermittent basis. The TA will also provide for a total of 60 person-months of domestic consultancy (an economic advisor [15 person-months], a legal advisor [15 person-months], and 30 person-months of unallocated domestic consultancy). The international consultants will identify gaps and develop terms of reference for the unallocated domestic consultancy inputs over the course of implementation. Efforts will be made to ensure that the salaries of the national consultants will be in a similar range to those provided by the Government (Management Capacity Project salary level). All consultants will be engaged by ADB in accordance with ADB s Guidelines on the Use of Consultants (2007, as amended from time to time). Consultants will be engaged individually to allow for more flexibility and to be able to address urgent gaps. Equipment will be financed by ADB in accordance with ADB s Procurement Guidelines (2007, as amended from time to time). The strategic policy advisor (international) to the Minister of Finance will be responsible for procuring equipment, which will be turned over to the Government upon completion of the TA. 20. The outcomes of the TA will be shared with government officials, ADB staff, and other agencies through regular MOF meetings and through discussions at appropriate forums. The TA will also provide funding for translating key documents and training materials into Dari and Pashto. IV. THE PRESIDENT'S DECISION 21. The President, acting under the authority delegated by the Board, has approved (i) ADB administering a portion of technical assistance not exceeding the equivalent of $900,000 to be financed on a grant basis by the Government of Denmark, and (ii) ADB administering a portion of technical assistance not exceeding the equivalent of $800,000 to be financed on a grant basis by the Government of Australia; and (iii) ADB providing the balance not exceeding the equivalent of $800,000 on a grant basis, to the Government of the Islamic Republic of Afghanistan for Support for Economic Policy Management, and hereby reports this action to the Board.

8 6 Appendix 1 1DESIGN AND MONITORING FRAMEWORK Design Summary Impact Improved macroeconomic management performance. Outcome Ministry of Finance (MOF) has the capacity to effectively manage and provide advice on economic and fiscal policy issues. Performance Targets/Indicators Poverty Reduction and Growth Facility (PRGF) targets continue to be met. For these targets include: a floor on fiscal revenue of the central government a ceiling on currency in circulation a ceiling on the net central bank financing (NCBF) of the central government a floor on net international reserves (NIR) a zero ceiling on contracting and/or guaranteeing new medium- and long-term nonconcessional external debt by the government and the Central Bank a zero ceiling on short-term external debt owed or guaranteed by the government or the Central Bank a zero ceiling on the accumulation of external payment arrears, excluding interest on preexisting arrears an indicative target (ceiling) for the operating budget deficit of the central government, excluding grants. Effective delivery of a fiscally sustainable budget to achieve national priorities and reform objectives as outlined in MOF s strategic plan National advisors can effectively provide advisory services to Minister s and deputy ministers offices. Data Sources/ Reporting Mechanisms PRGF reviews PRGF reviews Reviews of Afghanistan National Development Strategy (ANDS) and budget documents Consultations with MOF staff and development partners Assumptions and Risks Risks Deteriorating security conditions negatively affect the achievement of the Government s overall macroeconomic goals Assumptions The Government remains committed to economic management reforms. Risks MOF fails to attract and retain skilled resources.

9 Appendix 1 7 Outputs Assumptions 1. Provision of advisory services and strengthened national capacity for fiscal and economic policy management 2. Strengthened planning and program prioritization, development planning, and aid coordination capacity 3. Provision of advisory services and strengthened capacity in legal, regulatory, and enforcement areas MOF effectively manages various reform programs (PRGF, ADB s Fiscal Management and Public Administration Reform [FMPAR] program, World Bank s Programmatic Support of Institution Building). Achievement of benchmarks of capacity building road maps (prepared by each international consultant) Fiscal implications of government policies and priorities of ANDS are considered. Improved human resource management and MOF budget preparation PRGF and FMPAR reviews Consultations with development partners MOF aid effectiveness working group regular reports Budget documents and midyear budget reviews Consultant s reports on progress towards capacity building road map Availability of highly qualified consultants Commitment of Government to provide counterpart staff and resources 4. Strengthened capacity in macro-fiscal skills and preparation of medium-term forecasting 5. Provision of technical advisory support and strengthened capacity in human resource management and MOF budget planning

10 8 Appendix 1 Activities with Milestones Throughout the duration of the technical assistance, advisory services and capacity development support of national advisors and counterpart staff will be carried out covering the areas stated below. Capacity development support will include on-the-job training, mentoring, as well as short training courses and seminars. Within 1 month of commencing their assignments, all international consultants will prepare capacity building road maps for their respective areas of responsibility that outline capacity gaps and proposed training activities. These capacity road maps will include concrete indicators of progress towards transfer of skills, knowledge, and other relevant capacity dimensions. Key areas of advisory and capacity development support include: Minister s Office (senior strategic policy advisor and legal advisor) 1.1 economic and fiscal policy (improving the budget as a policy instrument, strengthening the medium-term framework); 2.1 strategic planning and programming and development planning process (linkage of budget and ANDS, improving aid management and aid coordination); 3.1 drafting of new rulings, regulations, and procedures in areas related to economic management; 3.2 resolution of contract disputes and negotiations involving MOF; and 3.3 review and analysis of documents and agreements with international financial institutions and donors. Inputs ADB contribution $800,000 Government contribution (inkind) $280,000 Cofinancing (Government of Denmark) contribution $900,000 Cofinancing (Government of Australia) contribution $800,000 Deputy Minister for Finance Office 4.1 macro-fiscal skills and analysis related to public finance management; 4.2 linkages between reform program loans of ADB, World Bank, and PRGF; and 4.3 development of medium-term fiscal and budget framework. Deputy Minister of Administration Office 5.1 financial management (internal audit and accounting), 5.2 improvements in MOF budget preparation and execution, and 5.3 MOF human resource management. ADB = Asian Development Bank, ANDS = Afghanistan National Development Strategy, FMPAR = Fiscal Management and Public Administration Reform, MOF = Ministry of Finance, PRGF = Poverty Reduction and Growth Facility.

11 Appendix 2 9 COSTS ESTIMATES AND FINANCING PLAN ($'000) Total Item Cost A. Asian Development Bank, a Government of Denmark Financing, b and Government of Australia Financing c 1. Consultants a. Remuneration and Per Diem i. International Consultants 1,680 ii. National Consultants d 200 b. International and Local Travel 160 c. Reports and Communications Equipment e Training, Seminars, and Conferences Miscellaneous Administration and Support Costs (including Translation) Contingencies 200 Subtotal (A) 2,500 B. Government Financing 1. Office Accommodation and Transport Remuneration and Per Diem of Counterpart Staff Others 30 Subtotal (B) 280 Total 2,780 a $800,000 to be financed by the Asian Development Bank s (ADB) technical assistance funding program. b $900,000 to be financed by the Government of Denmark, administered by ADB. c $800,000 to be financed by the Government of Australia, administered by ADB. d $100,000 out of the proposed $200,000 for domestic consultants will be reserved for 30 person-months of national consulting services to be determined during implementation. e Equipment includes computer, printers, photocopiers, and printers. Source: ADB estimates.

12 10 Appendix 3 OUTLINE TERMS OF REFERENCE FOR THE CONSULTANTS I. INTERNATIONAL CONSULTANTS A. Senior Strategic Policy Advisor to the Minister of Finance (international, 20 personmonths, intermittent) 1. The Senior Strategic Policy Advisor will, in close coordination with the Economic Advisor to the Minister, provide strategic inputs to strengthen and develop capacity of staff within the Office of the Minister and Ministry of Finance (MOF) in the following key areas: (i) economic and fiscal policy advice assist in strengthening systems for the provision of economic and fiscal policy advice to the Minister; (ii) strategic planning and programming support the development of MOF strategic planning and program prioritization capacity; and (iii) development of planning processes assist in strengthening development planning and aid coordination processes. 2. In close consultation and liaison with the Director General Budget, Director General Treasury, Director General Revenue, Director General Customs, and other advisors, provide technical and management advice to: (i) improve the role of the budget as a policy instrument, thereby strengthening policy, planning (national development strategy), and program linkages; (ii) strengthen and develop mechanisms for improved aid management and coordination, trust fund support, and direct program and/or budget support; and (iii) facilitate and support preparation of related policy reports and MOF statements and strategy papers. 3. Prepare a capacity building road map outlining capacity gaps and proposed training activities. The road map will include concrete indicators of progress towards transfer of skills, knowledge, and other relevant capacity dimensions. 4. Assist in identifying domestic consultancy gaps and develop terms of reference for unallocated domestic consultancy inputs. 5. Advise and develop capacity of MOF staff representing the Ministry on key working groups in the aforementioned areas to facilitate required outcomes. 6. Provide support and advice to MOF staff on institutional reorganization and business process reengineering. 7. In relevant areas, support systems for transfer of knowledge and skills to key MOF counterparts. B. Legal Advisor (international, 15 person-months) 1. The Legal Advisor will provide strategic inputs to strengthen the Ministry s capacity in the legal, regulatory, and enforcement areas. Key functions will include to (i) assist in the drafting of new rulings, regulations, and procedures in the areas of tax, customs, budget, and procurement law; (ii) assist in negotiations and in the resolution of contract disputes involving the MOF;

13 Appendix 3 11 (iii) (iv) undertake reviews and prepare comments and modifications, where required, on contracts between the development community and the Islamic Republic of Afghanistan; and support systems to build capacity and train Afghan legal staff with respect to contract drafting, negotiation, and dispute resolution (in particular, arbitration pursuant to the United Nations Commission on International Trade Law and other international obligations). 2. Prepare a capacity building road map outlining capacity gaps and proposed training activities. The road map will include concrete indicators of progress towards transfer of skills, knowledge, and other relevant capacity dimensions. 3. Assist in identifying domestic consultancy gaps and develop terms of reference for unallocated domestic consultancy inputs. C. Advisor to the Deputy Minister for Finance (international, 20 person-months) 1. The consultant will act as advisor to the Deputy Minister for Finance. The responsibilities of the consultant will include providing strategic advice and conducting capacity development in the following areas: (i) overall strengthening of macro-fiscal skills; (ii) preparing medium-term budget forecasts; (iii) including risks and uncertainties as well as costs of the proposed pay and grading exercise as part of the public administration reform program; (iv) (v) analysis related to public finance management; and following the linkages of the Fiscal Management and Public Administration Reform (FMPAR) with other reform programs of the World Bank (Program Support for Institutional Building) and the International Monetary Fund (Poverty Reduction and Growth Facility [PRGF]). 2. The consultant will work closely with the Budget Department, Revenue Department, and the fiscal policy unit for designing a public finance management strategy and will liaise effectively on key issues with the advisors to the Minister; as well as to (i) advise MOF on fiscal issues relating to the public administration reform; (ii) liaise and coordinate reform issues with donors, including international financial institutions and in particular with ADB s FMPAR; (iii) assist in strengthening the capacity of MOF staff relating to the reforms under FMPAR (including to participate actively and liaise with the Independent Administrative Reform and Civil Service Commission); and (iv) assist in developing a medium-term fiscal and budget framework. 3. Prepare a capacity building road map outlining capacity gaps and proposed training activities. The road map will include concrete indicators of progress towards transfer of skills, knowledge, and other relevant capacity dimensions. 4. Assist in identifying domestic consultancy gaps and develop terms of reference for unallocated domestic consultancy inputs.

14 12 Appendix 3 5. The consultant will facilitate communication between MOF and ADB s headquarters, missions from Manila, and Afghanistan Resident Mission to improve the planning and implementation of ADB assistance to Afghanistan. D. Advisor to the Deputy Minister of Finance (Administration) (international, 20 personmonths) 1. The consultant will act as advisor to the Deputy Minister of Finance (Administration). The tasks of the consultant include providing strategic advice and capacity development in the following areas: (i) economic and financial management, including mapping of current development partner interventions against strategy, in particular to: a. identify and resolve gaps, overlaps, and potential conflicts; b. define and agree with development partners on outcomes and other performance measures; c. monitor development partners performance against agreed performance measures; d. create and maintain records of all consultants working in MOF financed by development partners; e. review development partners reports and provide advice to the management team on appropriate actions; and f. communicate and coordinate on an ongoing basis with development partners and consultants financed by development partners. (ii) review of organizational structures and business process reengineering in MOF, including change management; (iii) (iv) issues relating to financial management (internal audit, accounting); and review of privatization strategies and divestiture plans for state-owned enterprises and restructuring plans for the state-owned banks. 2. Prepare a capacity building road map outlining capacity gaps and proposed training activities. The road map will include concrete indicators of progress towards transfer of skills, knowledge, and other relevant capacity dimensions. 3. Assist in identifying domestic consultancy gaps and develop terms of reference for unallocated domestic consultancy inputs. 4. The consultant will also work closely with the financial management expert (see below) and assume some of his or her responsibilities once that expert s short-term input is completed and programs and systems have been set up. E. Financial Management Specialist (international, 8 person-months) 1. The consultant will work closely with the Director General in Administration (equivalent of the Chief Financial Officer), reporting to the Deputy Minister Administration. 2. The consultant s tasks will include, but not be limited to, capacity building and support to the following: (i) MOF s budget preparation and execution and expenditure management & financial systems integration, including to

15 Appendix 3 13 (ii) (iii) (iv) (v) a. ensure that the Director General in Administration, Deputy Minister of Administration, and other senior ministry officials are aware of their responsibilities; b. assist with MOF s overall budget preparation process in a manner consistent with MOF s strategic plan (consolidating and reviewing from departments across ministries and mustufiats), including programming activities and preparing budget estimates of the wage, non-wage, and development expenditures, as well as the development of required budget documentation; c. compile an internal MOF budget management manual highlighting processes and procedures for budget preparation and monitoring, as well as implement the proposed procedures; and d. compile an internal MOF financial management manual highlighting key aspects of accounting, internal controls, recordkeeping, financial reporting, and monitoring, then implement the proposed procedures (this may be based on the accounting manual developed by Treasury); review and interpret payroll instructions to identify ways for improving the timely and accurate submission of payroll data to MOF; lead problem-solving teams in the Ministry to identify and remove obstacles to executing the MOF operating and development budgets; collaborate with the relevant advisers to the MOF (e.g., Treasury, accounting and audit) on financial systems integration; and support procurement processes conducted by the MOF, working in consultation with the MOF Procurement Policy Unit. 3. Because a significant portion of this work will be cross-cutting and have benefits across other ministries, the consultant is expected, where applicable, to collaborate very closely in establishing standard practices that will be effective in the Afghan context and drawn from other ministries (e.g., Ministry of Education) that have already drafted and follow such processes, as well as to tailor solutions to individual ministries where needed. To a large extent, the consultant can then assist in developing standard training programs and a few focused special courses. 4. Working closely as the allocated counterpart to the appointed Director General in Administration, the consultant will also (i) review the capacity of key staff and departments while preparing a clear development and capacity building program to assist the Ministry in managing its mandate from a finance and accounting perspective; (ii) provide on-the-job training in the Ministry in Kabul and, where required, assist in mustufiat reform in transformation of public sector management; (iii) organize and execute a rolling program of capacity building seminars and workshops in Kabul and in selected provincial centers within Afghanistan to engage key staff, develop their confidence and experience, and address key needs identified above; (iv) provide advice to the Director General in Administration, Deputy Minister Administration, and, as required, the Minister; (v) identify a small cadre of staff within the Ministry (and if necessary by selective recruitment in accordance with the Government s procedures) capable of implementing modern financial management systems, subject to sufficient training;

16 14 Appendix 3 (vi) (vii) execute a program of capacity building seminars and workshops in Kabul and in selected provincial centers for key Ministry staff; and provide on-the-job training to selected staff. 5. Prepare a capacity building road map outlining capacity gaps and proposed training activities. The road map will include concrete indicators of progress towards transfer of skills, knowledge, and other relevant capacity dimensions. II. NATIONAL CONSULTANTS A. Legal Advisor (domestic, 15 person-months) 1. The consultant will provide advice and support to the Minister on all relevant legal issues. 2. The responsibilities of the consultant include to (i) review and evaluate all pertinent laws submitted to, or generated by, MOF and compare the laws against best international practice; (ii) review various contracts entered into between the MOF and third parties; (iii) render opinions on the enforceability of contractual clauses that are relevant to the MOF; and (iv) assist with the drafting and review of laws promoted by the MOF. B. Economic Policy Advisor (domestic, 15 person-months) 1. The consultant will provide advice and support to the Minister on all relevant economic development fiscal and policy issues. 2. The responsibilities of the consultant include to: (i) advise and prepare briefing notes and issues papers for the Minister on key economic, development, fiscal, and policy reform issues; (ii) participate in key government, ministry, and development partner forums and working groups on relevant economic, development, and policy issues; (iii) establish working relationships with the key government ministries and development partners along with an understanding of development partner programs and modes of operation; (iv) engage in major national policy debates and advise the Minister accordingly (This may take in the National Development Strategy and related economic policy and fiscal key benchmarks, as well as Afghanistan s progress against the Millennium Development Goals); (v) in coordination with relevant Ministry departments, review all major contracts, grants, and agreements on development programming and assess their strategic policy implications (This is to include, but not be limited to, agreements with major multilateral institutions [International Monetary Fund, Asian Development Bank, World Bank] and key bilateral donors); and (vi) ensure the Minister s office is fully engaged in implementing the strategic plan for the Ministry and in particular with regard to the issues of policy reforms.