IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-7485) ON A LOAN IN THE AMOUNT OF US$24.8 MILLION TO THE REPUBLIC OF CHILE FOR A

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank Report No: ICR IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-7485) ON A LOAN IN THE AMOUNT OF US$24.8 MILLION TO THE REPUBLIC OF CHILE FOR A SECOND PUBLIC EXPENDITURE MANAGEMENT PROJECT December 12, 2014 Governance Global Practice Bolivia, Chile, Ecuador, Peru and Venezuela Country Management Unit Latin America and the Caribbean Region

2 CURRENCY EQUIVALENTS (Exchange Rate Effective August 27, 2007) Currency Unit = Chilean Peso (Ch$) Ch$1.00 = US$ US$1.00 = Ch$525 (Exchange Rate Effective June 30, 2014) Currency Unit = Chilean Peso (Ch$) Ch$1.00 = US$ US$1.00 = Ch$551 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CGR CPS DIPRES DTI FCM FMIS GDP GOC ICT ICR INP IPS ISL IRS ISR MCS OECD PAD PDO PMO PIU SIAP SIFIM Office of the Comptroller General (Contraloría General de la República) Country Partnership Strategy Budget Directorate in the Ministry of Finance (Dirección de Presupuesto) Information Technologies Division of DIPRES (División de Tecnologías de Información) Common Municipal Fund (Fondo Común Municipal) Financial Management Information System Gross Domestic Product Government of Chile Information and Communication Technology Implementation Completion and Results Report Institute of Social Security Standardization (Instituto de Normalización Previsional) Institute of Social Security (Instituto de Previsión Social) Institute of Employment Security (Instituto de Seguridad Laboral) Internal Revenue Service Implementation Status and Results Report Management Control and Evaluation System Organization for Economic Cooperation and Development Project Appraisal Document Project Development Objective Project Management Office Project Implementation Unit Budget Administration System (Sistema de Administración de Presupuesto) Municipal Financial Management System (Sistema Financiero Municipal)

3 SINIM National System of Municipal Information (Sistema Nacional de Información Municipal) SIGFE Integrated Financial Management System (Sistema de Información para la Gestión Financiera del Estado) SUBDERE Sub-Secretariat for Regional Development and Administration (Sub- Secretaría de Desarrollo Regional y Administración) Vice President: Jorge Familiar Country Director: Alberto Rodriguez Senior Practice Director Mario Marcel Cullell Practice Manager: Arturo Herrera Project Team Leader: Henry Forero ICR Team Leader: Henry Forero ICR Authors: Daniela Felcman and Adrienne Hathaway

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5 CHILE SECOND PUBLIC EXPENDITURE MANAGEMENT PROJECT CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1. Project Costs and Financing Annex 2. Outputs by Component Annex 3. Economic and Financial Analysis Annex 4. Bank Lending and Implementation Support/Supervision Processes Annex 5. Beneficiary Survey Results Annex 6. Stakeholder Workshop Report and Results Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Annex 9. List of Supporting Documents...32 Annex 10. PDO Indicators (Original and Revised)...33 Annex 11: Reallocation of Loan Proceeds (2012 Restructuring)...35 Annex 12. Achievement of PDO Indicators...36 MAP

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7 A. Basic Information Country: Chile Project Name: Second Public Expenditure Management Project ID: P L/C/TF Number(s): IBRD ICR Date: 12/12/2014 ICR Type: Core ICR Lending Instrument: TAL Borrower: GOVERNMENT OF CHILE Original Total Commitment: USD 24.80M Disbursed Amount: USD 24.80M Revised Amount: USD 24.80M Environmental Category: C Implementing Agencies: MINISTRY OF FINANCE Cofinanciers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 01/08/2007 Effectiveness: 02/27/ /27/2008 Appraisal: 07/11/2007 Restructuring(s): 03/05/ /24/2013 Approval: 08/28/2007 Mid-term Review: 04/25/2011 Closing: 06/30/ /30/2014 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Moderately Satisfactory Moderate Moderately Satisfactory Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance:

8 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Performance (if any) Potential Problem Project No at any time (Yes/No): Problem Project at any time (Yes/No): DO rating before Closing/Inactive status: No Moderately Satisfactory Quality at Entry (QEA): Quality of Supervision (QSA): None None Rating D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration Sub-national government administration Theme Code (as % of total Bank financing) Debt management and fiscal sustainability Decentralization Municipal finance Public expenditure, financial management and procurement E. Bank Staff Positions At ICR At Approval Vice President: Jorge Familiar Calderon Pamela Cox Country Director: Alberto Rodriguez Pedro Alba Practice Manager/Manager: Arturo Herrera Gutierrez Nicholas Paul Manning Project Team Leader: Henry Forero Ramirez Roberto O. Panzardi ICR Team Leader: Henry Forero Ramirez ICR Primary Authors: Daniela Veronica Felcman Adrienne Elizabeth Hathaway

9 F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The overall development objective would be to increase the efficiency of operations regarding financial management, budget formulation, and budget execution, and the transparency of public expenditure management at the central and municipal level through the implementation of an updated, functionally enhanced and expanded financial administration system (SIGFE). Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Indicator Indicator 1 : Value quantitative or Qualitative) Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Number of institutions where the time required to aggregate financial data for the central government is reduced from 30 to 8 days. 169 institutions All central 0 (all central government government) Date achieved 03/05/ /30/ /30/2014 Achieved. Original Indicator: Time required to aggregate financial data for the central government reduced from 30 to 8 days. Financial information for the Comments (incl. % achievement) central government institutions in SIGFE and SIGFE II, and the homologated institutions is turned in within the first 15 days of each month. For institutions within the coverage of the central government (except the Public Treasury), the closing period is the 8th working day of each month, and information is aggregated in SIGFE the next working day. Time required to update SIGFE (execution) with the data generated by the SIAP Indicator 2 : system (formulation and administration) is to be reduced from one week to one day. Value quantitative or Qualitative) 1 week 1 day Initial budget law is now automatically loaded in SIGFE from SIAP; modifications are still loaded manually. Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Partially achieved. Not monitored during implementation. achievement) Processing capacity of the SIGFE transaction module is to be increased from Indicator 3 : 95,000 to 200,000 financial transactions per day, with a response time of 8 seconds per transaction measured at the portal. Value 95,000 financial 200,000 financial With the

10 quantitative or Qualitative) transactions per day. transactions per day with a response time of 8 seconds per transaction. institutions currently using the system, only 5% of the CPU is being used. Given results of performance and scalability tests, it can be projected that the system meets the target. Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Achieved. achievement) Time for processing transactions within the Central Government Entities so that Indicator 4 : the information is available in SIGFE is to be reduced from 20 days to less than 3 days. For institutions within the coverage of the central government (except the Public Value quantitative or Qualitative) 20 days Less than 3 days Treasury), the closing period is the 8th working day of each month, and information is aggregated in SIGFE the next working day. Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Partially achieved. Not monitored during implementation. achievement) Increase efficiency of public financial management administration by upgrading Indicator 5 : and expanding the national financial administration system and using common standards at the central level Value quantitative or Qualitative) Aggregated information available only on demand. 100% reconciliation of expenditures and revenues in realtime with SIGFE 100% of SIGFE implemented SIGFE II is 100 percent developed, and implemented in 86 institutions. Date achieved 08/03/ /30/ /30/ /30/2014 Comments Partially achieved. SIGFE II has been implemented in 50% of the targeted 173 (incl. % institutions. achievement) Increase effectiveness of financial management at the local level by Indicator 6 : implementing a system build [sic] on common standards. Value Several incongruent At [sic] financial. 100 municipalities

11 quantitative or Qualitative) Value quantitative or Qualitative) systems used for financial administration at the municipal level. Consolidated financial information at the municipal level [available in 180 days] information of at least 100 municipalities is included in the Municipal Financial Information System. System, capable of aggregating the information of all 345 municipalities is implemented. operating in SIFIM in May Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Achieved. achievement) Indicator 7 : Increase effectiveness and transparency in public expenditure management on the municipal level by developing a Municipal Financial Information System. A Municipal Financial Information System, A Municipal capable of Financial aggregating Information the information of all 345 municipalities is implemented, and information is available in 30 days. SIFIM has been implemented in the 100 targeted municipalities. In regards to the municipal aggregator, the hardware and software licenses, and the municipal aggregator system are installed in the Subsecretariat's office. Date achieved 08/03/ /30/ /30/ /30/2014 Comments Partially achieved. The Municipal Aggregator is expected to enter into operation (incl. % in January [...] in baseline reflected in 2012 restructuring paper. achievement) Increased effectiveness of the operations regarding budget formulation and Indicator 8 : budget execution by developing new methods for resource management by strengthening the Management Control System and integrating it in the budget cycle. Value Isolated information on A revised budget process quantitative or financial and performance incorporating Not applicable Qualitative) related impacts continuous MCS feedback. Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Indicator dropped in March 2012 restructuring. achievement)

12 (b) Intermediate Outcome Indicator(s) Indicator Indicator 1 : Value (quantitative or Qualitative) Baseline Value Original Target Values (from approval documents) Formally Revised Target Values SIGFE's configuration processes have been automated. SIGFE's Manual configuration configuration process processes automated Actual Value Achieved at Completion or Target Years Achieved Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Achieved. achievement) Batch interfaces between SIGFE and ChileCompras, BIP of Indicator 2 : MIDEPLAN and other selected systems have been replaced by full interoperability. Value (quantitative or Qualitative) Batch interfaces Fully automated, real-time data exchange between SIGFE & ChileCompras, MIDEPLAN's BIP and other selected systems Interoperability with SIGFE 2.0 fully developed. However there are delays with putting interoperability with Chilecompras and the Integrated Project Database (Banco Integrado de Proyectos) into operation due to changes in the baseline of the Ministry of Social Development s Public Market applications. Date achieved 08/03/ /30/ /30/2014 Comments (incl. % achievement) Partially achieved. Similarly the business model underlying the BIP and the functionality needs to be revisited, as the Ministry of Social Development is in the process of creating a new version of the BIP application. Upgraded SIGFE used by the 90 percent of the CGE. The remaining 10 percent Indicator 3 : of the CGE that operate their own systems (including National Treasury, Ministry of Public Works, the Legislature and the Judiciary) generate financial information that is consistent with SIGFE financial information requirements. Value (quantitative or Qualitative) Lack of integrated data transfer, off-line system only Fully integrated, online, data transfer of 100% of Central Government's 86 institutions using SIGFE 2.0 (representing 50% of the institutions covered by SIGFE

13 financial I). information Date achieved 08/03/ /30/ /30/2014 Partially achieved. In regards to the institutions operating their own (homologous) systems, the Institute of Labor Security has been operating SIGFE Comments 2.0 since 2011, and positive viability studies have been carried out in the (incl. % Ministry of Public Works and the Social Security Institute. There have also been achievement) advances in the homologation of the accounting conditions in the Public Treasury to SIGFE's rules and requirements. Indicator 4 : Implementation of a new administrative structure and processes to institutionalize SIGFE within DIPRES. Value (quantitative or Qualitative) Management and operational proposal drafted SIGFE fully institutionalized within DIPRES Information Technology Division was created within DIPRES. Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Achieved. achievement) Indicator 5 : New conceptual model developed for integrating MCS information into budget formulation. Model designed Value and implemented (quantitative No model within at least 1 or or Qualitative) more entities Not applicable Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Indicator dropped in March 2012 restructuring. achievement) Indicator 6 : SIAP implemented, including interoperability with SIGFE Value (quantitative or Qualitative) Limited interoperability of SIAP with SIGFE and MCS SIAP in operation producing integrated financial and budget information Following postponement of the project in 2012, authorities decided to reinitiate the project in Date achieved 08/03/ /30/ /30/2014 Comments Not achieved. It is hoped to carry out the bidding process in March 2015, and (incl. % have the contract during achievement) Strengthened of the actual MCS modules and design and implemented new Indicator 7 : systems of MCS, interoperability with SIGFE modules Value (quantitative or Qualitative) MCS implemented Limited integration of the and various MCS information interoperability systems and SIGFE with SIGFE and SIAP Not applicable

14 Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Indicator dropped in March 2012 restructuring. achievement) Indicator 8 : A set of new 'coverage indicators' developed and utilized for monitoring the performance of public sector programs within the overall budget Value (quantitative Limited indicators to monitor public sector 6 indicators developed and Not applicable or Qualitative) programs implemented Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Indicator dropped in March 2012 restructuring. achievement) Indicator 9 : Municipal Information System developed that is capable of aggregating the information of all 345 municipalities. Value (quantitative or Qualitative) Local isolated databases in use 100 percent Municipal SIFIM has been Information implemented in the System, 100 targeted capable of municipalities. aggregating In regards to the the municipal information of aggregator, the all 345 hardware and municipalities software licenses, is and the municipal implemented aggregator system and are installed in the information Subsecretariat's available in 30 office. days Date achieved 08/03/ /30/ /30/ /30/2014 Comments Partially achieved. The Municipal Aggregator is expected to enter into operation (incl. % in January achievement) Indicator 10 : Time lag to produce information on aggregated municipal expenditures has been reduced from 180 to less than 30 days. Value Information can (quantitative or Qualitative) 180 days Less than 30 days 30 days or less now be obtained in 90 days. Date achieved 08/03/ /30/ /30/ /30/2014 Comments (incl. % achievement) Indicator 11 : Partially achieved. With the implementation and entry into operation of the municipal aggregator (expected in 2015), it will be possible to have information in less than 30 days. 100 new municipalities are using a new financial administration sub-systems [sic] Value (quantitative or Qualitative) Date achieved 08/03/ /30/ /30/2014

15 Comments (incl. % achievement) Indicator 12 : Value (quantitative or Qualitative) Achieved. As of May 2014, 100 municipalities are operating SIFIM. Implementation and coordination within and monitoring and evaluation of the process of project implementation 4 information exchange The process of workshops monitoring and amongst entities evaluation of the project which have will take place with a low implemented the level of implementation. new transactional module of SIGFE All workshops were carried out within the SIGFE 2.0 Users' Committee Date achieved 08/03/ /30/ /30/2014 Comments (incl. % Achieved. achievement) G. Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 10/17/2007 Satisfactory Satisfactory /07/2007 Satisfactory Satisfactory /26/2008 Satisfactory Satisfactory /19/2008 Satisfactory Satisfactory /23/2009 Satisfactory Satisfactory /11/2009 Satisfactory Satisfactory /26/2010 Satisfactory Satisfactory /28/2010 Satisfactory Satisfactory /08/2011 Satisfactory Satisfactory /20/2011 Satisfactory Satisfactory /28/2011 Satisfactory Satisfactory /28/2012 Satisfactory Highly Satisfactory /27/2012 Satisfactory Highly Satisfactory /22/2013 Moderately Satisfactory Moderately Satisfactory /21/2013 Moderately Satisfactory Moderately Satisfactory /28/2014 Moderately Satisfactory Moderately Satisfactory 24.74

16 H. Restructuring (if any) Restructuring Date(s) Board Approved PDO Change ISR Ratings at Restructuring DO IP Amount Disbursed at Restructuring in USD millions 03/05/2012 S S /24/2013 MS MS Reason for Restructuring & Key Changes Made The purpose was to (i) focus the Project's activities on the consolidation of the Financial Information System at the Central and Subnational levels; (ii) drop activities related to the strengthening of the Management Control System (subcomponent 2.2); and (iii)) reduce the scope of SIAP 2.0, eliminating the interoperability function. Costs by component and expenditure category were adjusted. Some PDO indicators were revised, and one PDO indicator was dropped. This restructuring extended the Project's closing date from June 30, 2013 to June 30, I. Disbursement Profile

17 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. In 2002, with support from the Public Expenditure Management Project (P for US$23.23 million), the Chilean Government had initiated work on a financial management information system (FMIS) intended to help move Chile from budgeting practices which narrowly focused on controlling expenditures towards a focus on promoting the effective and efficient use of resources. By 2007, this system, called SIGFE (Sistema de Información para la Gestión Financiera del Estado), and administered by the Budget Directorate in the Ministry of Finance (Dirección de Presupuesto DIPRES) and the Office of the Comptroller General (Contraloría General de la República CGR), had become a key feature of budget management in Chile, with coverage equal to roughly 90 percent of the central government and information on budget execution being much more readily available. 2. At the time of design, public sector modernization continued to be a top priority for Chile. 1 The Bachelet administration s Transparency and Probity Agenda aimed to ensure accountability in the appropriate use of public funds and high standards for public services, as well as increasingly decentralized financial management (critical given municipalities key role in service provision) 2. While the implementation of SIGFE represented a significant advance in Chile s financial management system, further efforts including updating the technology, ensuring its scalability, adaptability, and interoperability with other systems, as well as the automation of core modules, linking of the budget administration system (SIAP), and the mainstreaming of the SIGFE team into the Government structure - were still pending. At the national level, further work was also needed to update the Treasury s cash management processes and strengthen their connection to SIGFE, as well as to further the integration of the Management, Control and Evaluation System (MCS) with the budget classification system to enhance the monitoring and evaluation of public expenditure. 3. At the municipal level, given the weak financial administration of many municipalities, their growing responsibilities for service delivery (and hence administration of greater amounts of public resources) and a lack of aggregate municipal financial data, work was needed to strengthening financial administration at the 1 Chile was experiencing an extended period of solid economic growth, having averaged an annual per capita growth rate of 4.1 percent over the fifteen years since This growth had helped Chile to reduce poverty and improve living conditions for the poor, with poverty having been cut from 40 percent in 1990 to 13.6 percent in However, with the need for continuing progress to address poverty and inequality, it faced the challenge of sustaining high levels of growth while ensuring that all segments of the population were able to partake in the benefits of economic prosperity. 2 As a part of this decentralization of financial management, system of incentives and sanctions was planned in order to allow municipalities more autonomy in their financial management. Also planned were steps to improve municipalities timely and accurate reporting of information (PAD page 2). 1

18 municipal level, and make the mechanisms for collecting such information easier to use, more efficient, and ensure the accuracy of the data. 4. With its experience supporting the Government through the Public Expenditure Management Project as well as at the municipal level through the First and Second Municipal Development Projects (P and P055480), the Bank was well-positioned to support Chile in these areas through the Second Public Expenditure Management Project. Projects objectives were consistent with the Bank s assistance strategy to Chile and directly supported the strategic objective of accelerating sustainable growth by strengthening public sector management (as stated in the 2007 Country Partnership Strategy (Report No CL, discussed by the Board on April 24, 2007)) and the Chilean Government s Transparency and Probity Agenda. Project objectives were also in line with the findings of the 2006 Development Policy Review (Report No CL; June 2006), which concluded that the use of revenues and transfers could be improved by providing greater discretion to municipalities along with enhanced accountability, as well as by strengthening institutional capabilities at the local level to further decentralization. 1.2 Original Project Development Objectives (PDO) and Key Indicators 5. The overall Project Development Objective (PDO) was to increase the efficiency of operations regarding financial management, budget formulation, and budget execution, and the transparency of public expenditure management at the central and municipal level through the implementation of an updated, functionally enhanced and expanded financial administration system. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 6. The PDO remained unchanged throughout Project implementation. Following a Government request, the Project was restructured in March In this restructuring, PDO indicator #8 in the table in Annex 10 (related to the dropped subcomponent on the Management Control System) was eliminated from the Results Framework, the yearly target values for other PDO indicators were revised to better reflect Project progress, and the formulation of PDO#1 adjusted somewhat 3. Changes to the PDO indicators can be seen in Annex 10, and are further described in Section 2.3 (Monitoring and Evaluation). 1.4 Main Beneficiaries 7. The Project s main beneficiaries were to be the Central Government Entities (CGE) in which the system was to be implemented, including the Ministry of Finance and the CGR, and the municipalities using the Municipal Financial Information System (Sistema Financiero Municipal, SIFIM). Moreover, by reducing the lags in the generation 3 Due to differences between the Results Framework as noted in the first part of Annex 3 of the PAD, and the PAD s monitoring matrix, this change was recorded as a change to an intermediate indicator. 2

19 of information, the project was to benefit policy-makers both at the central and subnational level. Overall, the operation would help to strengthen financial management and expenditure effectiveness, rendering benefits for taxpayers and users of public services. 1.5 Original Components 8. Component 1 - Upgrading and Extending the Financial Information System to the Central Government Entities (US$31.1 million of which US$l7.1 million was to be financed by the Bank loan): This component was to support the further development and consolidation of SIGFE to upgrade and expand its functions and implement it in all Central Government Entities by: (i) upgrading and optimizing the ICT and technical design of SIGFE modules; (ii) improving its functionality, interoperability, and reporting; and, (iii) implementing data standards issued by Normative Entities in all entities using homologated systems. 9. Component 2 - Improvement of Budget Procedures and Mechanisms of the Management Control System (US$4.7 million of which US$2.8 million was to be financed by the Bank loan): This component was to focus on enhancing the quality of public expenditures by strengthening the Management Control System (MCS) and integrating them into the Budget Cycle. Specifically, this component was to support the development and implementation: (i) a new conceptual model for the Budget Cycle, linking the budget classification and the MCS; (ii) a MCS information system; and (iii) a new version of the budget formulation system used by DIPRES (SIAP). Innovative methods of budget formulation would be developed for selected policy modules and the capacity of DIPRES to undertake results-based monitoring and evaluation was to be strengthened. 10. Component 3 - Strengthening Financial Administration at the Municipal Level (US$7.5 million of which US$4.5 million was to be financed by the Bank loan): This component was to focus on: (i) improving the availability of information on municipal budgets and on financial transfers; (ii) strengthening financial administration at the municipal level; and (iii) improving the effective use of central government transfers to municipalities, for example within the Municipal Fund (Fondo Común Municipal). The Office of the Comptroller General in partnership with the Sub-secretariat for Regional Development within the Ministry of the Interior (Subsecretaría de Desarrollo Regional y Administración - SUBDERE) was to implement this component. 11. Component 4 - Project Management (US$3.4 million of which US$0.4 million was to be financed by the Bank loan): This component was to cover operating expenses, related to the following activities: (i) Provision of technical assistance to Central Government Entities as part of the implementation of SIFGE or SIGFE-compatible financial administration systems; (ii) Strengthening the Government s capacity to monitor and supervise the overall implementation of the Project. 3

20 1.6 Revised Components 12. The Project was restructured in March 2012 following a Government request to (i) focus on the consolidation of the system at central and subnational levels; (ii) drop activities related to the strengthening of the Management Control System (subcomponent 2.2) given the Government s intention to redefine the instruments for management control and evaluation; and (iii) reduce the scope of SIAP 2.0, eliminating the development of the interoperability function. 1.7 Other significant changes 13. During the March 2012 restructuring, loan proceeds were reallocated between components and expenditure categories as detailed in Annex 11. Subsequently, following an official request from the Government in June 2014, the closing date was extended from June 30, 2013 to June 30, 2014 in order to continue to provide Bank technical support to the completion of implementation. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 14. The ICR finds the quality at entry to be Moderately Satisfactory due to the Project s overall comprehensive design, combined with some complications that later arose during implementation and which could have been better anticipated at design. 15. The Project was intended to build upon past Bank support and the achievements made under the previous Project by continuing to consolidate and expand the SIGFE system. A number of studies 4 confirmed that Chile s recent reforms had left in place a high level of fiscal transparency and a budgeting system that clearly articulated government priorities, with tools that allowed for the evaluation of budget performance. The country had also completed the first stage in the adaptation of its fiscal statistics to the IMF s Government Finance Statistics Manual (GFSM), and introduced a new functional classification of expenditures in line with the GFSM. 16. However, as indicated by international experience, the consolidation and deepening of public sector reforms requires continuous modernization. In the case of Chile, SIGFE was facing technical challenges that needed to be resolved in order to extend coverage to all public entities. The system s technology had to be updated to allow for a faster processing of financial transactions and automation of the core modules. In terms of subnational financial management and transparency, there was space to improve the effective use of public money by increasing the responsibilities of 4 See IMF, Report on Observance of Standards and Codes July IMF Country Report No. 05/262, and World Bank Chile: Study of Evaluation Program, Impact Evaluations and Evaluations of Government Programs. Report No CL, 2006, and Annex 12 of the PAD. 4

21 municipalities to manage resources, along with supporting greater accountability and increased institutional capacities at the local level The Project had strong political support from the highest authorities. It was to be implemented by the same PIU managing SIGFE, established in DIPRES, which had gained considerable experience both in the implementation of a public financial management system and in working with Bank procedures. The PIU reported directly to the Deputy Budget Director, who served as project coordinator and was responsible for implementation. In addition to the overall project implementation, DIPRES was responsible for the execution of Components 1 and 2, while SUBDERE was responsible for Component Lessons from the previous project were considered during preparation. Moreover, project design identified several mitigation measures to tackle risks that might have affected both the overall PDO and component results. To address difficulties in coordination between DIPRES and other branches of government, and reluctance from individual entities to support the system as a potential risk, a users committee that was consulted during the development of the system was created. Other risks, related to the implementation of SIFIM in municipalities with weak technical and institutional capacity and possible municipal resistance to providing timely reports on their financial information to the central government, were proactively managed by SUBDERE. 19. However, the PAD did not identify either the risks of having to regain political support after a change in government administration, or those that using state of the art technology can pose in terms of limited availability of expertise two factors which in practice contributed to delays. Project preparation also did not fully consider the coordination arrangements between DIPRES, SUBDERE and CGR for the design and implementation of the municipal information aggregator, and this shortcoming was felt during the implementation of this activity, as described in Section 2.2. Other issues encountered during implementation and described in greater detail below related to differences of opinion in procurement procedures (See Section 2.2) and monitoring arrangements (See Section 2.3) could have been resolved through a more detailed analysis of the arrangements set forth in the PAD. 2.2 Implementation 20. The Project was signed in November 2007, and became effective on February 27, As mentioned, implementation arrangements were similar to those in the previous project. To promote the further institutionalization of the system, near the end of 2008, the Information Technology Division (División de Tecnologías de Información-DTI) was created within DIPRES, where the PIU was hosted. 5 Development Policy Review (Report No CL; June 2006) 5

22 21. Overall, the project was very ambitious, covering three key areas of work in public financial management, each of which with its own complexities. During implementation, a series of challenges directly related to SIGFE II were encountered. Some of these issues (described in detail below) had implications not only on the pace of implementation of the SIGFE II system, but also upon other areas of Component 1 as well as the other two components, as efforts were concentrated on the successful implementation of SIGFE II. Implementation of Component System design. Some initial system design choices affected the implementation of SIGFE II, adding extra layers of complexity to an already ambitious project. In order to ensure that the system would remain up to date, the Government elected to use a state of the art technology (which by nature can pose a risk due to the lack of experience and knowledge associated with its use, as well as a lack of performance and testing tools), that introduced technical challenges during implementation. Additionally, the conceptual design of the system envisioned an excessive level of flexibility (the system can be adapted to requirements from different institutions and to normative changes, and information can be aggregated and presented in multiple ways), something which contributed to additional challenges during the development of SIGFE II. 23. System development. SIGFE II introduced new functionalities, such as government asset administration and management of international credits, and a module for financial audit, among others. While the main functional model and system architecture were defined in-house by DIPRES, in order to avoid having to hire and manage a large team of highly specialized IT staff, the Government contracted out IT development (programming) of a custom made solution. During the bidding process to hire the software developing company, due to differences with the Bank regarding procurement procedures, the Government opted to finance this activity with its own resources and speed up the process. 24. Once the firm was hired, and the development of the system was initiated, several issues posed challenges to the system s development. First, technical issues which took time to resolve due to limited knowledge about the technology resulted in some delays. Second, the project lacked a robust testing site in which the firm s deliverables could be comprehensively tested before implementation in the institutions, leading to the discovery of some system issues only following the initial roll-out of SIGFE II. Third, the terms of the associated contract left the Government and the company with little flexibility to solve quality and performance issues in an expeditious manner. Finally, with the change in administration in March and a change of the political party for the first time in 20 years implementation suffered a temporary halt (between 3 to 4 months) while the new government became familiar with the Project s objectives and assessed their alignment with its priorities. 25. Roll-out of SIGFE II. System roll-out started in mid The implementation plan envisioned finalizing the year with 85 agencies using SIGFE II exclusively. Some 6

23 institutions were first time users of SIGFE. However, in many agencies which were already users of SIGFE, the new system was tested while SIGFE continued to be used, implying that SIGFE and SIGFE II were operating in parallel. While international experts who accompanied supervision missions favored a big bang approach to implementation - that is, implementing the system at the beginning of the fiscal year in all agencies at the same time (which would not have required the maintenance costs or duplication of financial management transactions associated with operating the two systems at the same time, and which would have expedited the change process), DIPRES maintained a more gradual approach, similar to the one previously used in the successful implementation of SIGFE I During implementation, performance issues not identified in integrated testing processes 7 began to arise with the system in November This forced DIPRES to come up with a contingency plan that included hiring additional staff to strengthen the software architecture, and hiring a specialized firm to perform enhanced software quality control. In January 2013 implementation was paused until system errors could be reduced considerably. At that point, the system had been implemented in 55 agencies. System implementation restarted in January As part of SIGFE II s gradual implementation, the integration of several key entities, including the Ministry of Public Works and the pension administration, was planned. While progress was made with these entities, it was more limited than had been expected. In the case of the Ministry of Public Works, feasibility studies were carried out, but did not proceed to implementation of SIGFE. Within the pension administration, in 2008, as a result of Law , the Institute of Social Security Standardization s (Instituto de Normalización Previsional, INP) (now called the Institute of Employment Security (Instituto de Seguridad Laboral, ISL)) functions and responsibilities were, with the exception of those ascribed to the INP in Law , transferred to the Institute of Social Security (Instituto de Previsión Social, IPS). As the ISL was a new institution, SIGFE II was implemented there in While the necessary preparatory work was carried out in the IPS, organizational changes in 2012/2013 impacted the implementation plans and its integration with SIGFE is still pending. Implementation of Component Implementation of this component was impacted by both pressure to finalize and implement SIGFE II successfully as well as a change in Government priorities. The issues faced during the implementation of SIGFE II mentioned above put considerable strain on the technical staff at the DTI, slowing the progress in the development of SIAP 2.0. During , necessary preparatory work for development of the updated 6 See the ICR on the First Public Expenditure Management Project (Report No. ICR ) for an evaluation of the achievements under this project. 7 Aide Memoire, Second Public Expenditure Management Project, Supervision Mission, February 28- March 2,

24 system (including collection of information on budgetary processes; an analysis of alternative technologies; and requests for information on available tools) were carried out. A bidding process for its implementation was carried out in 2012, but as a result of budget reassignments and the desire to prioritize development of SIGFE II, the contract was not awarded. 29. Following the change of administration in 2010, the decision was made to redefine the instruments for management control and evaluation before they would be integrated into the budget cycle. As a result, Subcomponent 2.2 was dropped from the operation. Implementation of Component As in Component 1, the development of the municipal financial system was contracted out to a firm. The implementation of the system faced several challenges, some of which are usually encountered in most subnational projects: resistance from some local authorities, in particular those in the political opposition; lack of technical capacity and high rotation of local public staff; and problems in the coordination with other agencies. Most of these issues were successfully overcome and the implementation of the system was accomplished successfully, resulting in significant progress in terms of management of municipal finances, and transparency and timeliness of municipal information. 31. The original scope of this component was expanded once project implementation started (from 100 municipalities to 122 municipalities and 10 municipal corporations, including health and education sectors). Technical support to the municipalities were SIFIM was implemented (subcomponent 3.2) was financed with funds from the loan, which also included the municipal financial management system and IT equipment. The network connection, data center and the system to aggregate the information from all municipalities (subcomponent 3.1) was financed with local funds. Because of the larger scope and other costs not anticipated at design (such as IT support, management and control systems, IT storage, and back-ups) this component was underfunded, causing delays in the implementation of the municipal system aggregator (which has been developed, is expected to be rolled out in 2015) until funding became available. 32. Coordination between SUBDERE, DIPRES and CGR also posed a challenge to the design and implementation of the municipal information aggregator. During the Project, the Bank played a key role in bringing the three institutions together in technical meetings, promoting and coordinating a memorandum of understanding to determine i) the role of each institution within the system; and ii) the type of information that would be requested from municipalities and shared by the three institutions. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 33. The Project s M&E framework is considered to be moderately unsatisfactory. A set of indicators covering all Project components was prepared at design. Annex 3 of the PAD specified seven Project Outcome Indicators in its presentation of the Results 8

25 Framework (pages 39-40). Three of these indicators were presented as PDOs in the matrix detailing the Arrangements for Results Monitoring (pages 45-46), two appeared in the section presenting results indicators by Component, two were not included in the matrix (which subsequently resulted in their not being specifically monitored during implementation), and one additional indicator was included in the matrix (See Annex 10 for an overview). In 2012, the restructuring used the Results Monitoring matrix from the PAD as the basis for adjustments made at that time. For purposes of evaluating Project Results, Section 3 of this ICR will use the seven indicators from pages of the PAD as well as the additional PDO indicator appearing in the PAD s results monitoring matrix, any adjustments made to these indicators in the March 2012 restructuring, and additional supporting information. While perhaps weighted more towards the objective of improving the efficiency of financial management operations and with some indicators corresponding to multiple aspects of the PDO, overall, the original PDO indicators measured each of the four objectives. 34. The PIU established a Project Management Office (PMO) within the DTI to monitor progress on Project activities. The PMO met bi-weekly with the coordinator of each activity to track progress and prepared a dashboard with project indicators, risk, and mitigation measures for the management. Regular supervision missions, including the Bank supervision team and technical experts were carried out, and at least two Implementation Status and Results Reports (ISRs) were filed each calendar year. However, given that many results indicators did not record any progress in ISRs filed during the first years of implementation, it seems that M&E design was not well-suited for tracking progress during the initial stages of the project. 2.4 Safeguard and Fiduciary Compliance 35. During implementation some procurement challenges were encountered. As mentioned in Section 2.2, due to differences between the Bank and the Government regarding procurement procedures, the Government decided to finance SIGFE II s software development with its own resources. Procurement ratings were Satisfactory in ISRs through ISR#6 in September In January 2010, the rating was downgraded to Moderately Satisfactory 9 and it remained there throughout the rest of implementation. 36. Financial management performance is considered to have been Satisfactory. The Second Public Expenditure Management Project has been characterized by the use of country systems and pre-financing of eligible expenditures by the government and reimbursements from the Bank. Overall, the project maintained adequate financial management arrangements during project implementation. Project budgeting, accounting, treasury, and auditing arrangements were fully integrated into country systems and the project fully complied with Bank requirements related to financial reporting and auditing. 8 ISR#6, 9/11/ ISR#7, January 26,

26 Besides the use of country systems, the project has also benefited from maintaining qualified and experienced staff, which contributed to a successful implementation. 2.5 Post-completion Operation/Next Phase 37. As of Project closure, advances related to SIGFE II and SIFIM have been wellinstitutionalized. The creation of the DTI within DIPRES in 2008 marked an important step in the institutionalization of SIGFE within the Government. Given the nature of such FMIS projects - which makes it nearly impossible to revert to the old system once a new one has been rolled out - as well at the incorporation of half of the central government entities within SIGFE II, continuing advances are expected in the future, and the incorporation of 31 additional institutions is already planned for Similarly, SIFIM has been successfully implemented in the targeted 100 municipalities, helping to improve their financial management processes, and SUBDERE is committed to continuing to support the system. While as discussed further in Section 3, the completion of some of the activities planned under the Project is still pending, achievements to date provide a strong foundation for future work, and the Government has already defined short-term timelines for continuing work to finish the SIAP and municipal aggregator. 38. While the Bank does not currently have immediate plans for a follow-up project, the topics addressed under the Project remain of high relevance and are expected to continue to remain such in the future. From a financial perspective, having disbursed more than 99 percent of Project funds by December 2011 and continued activities to advance on Project objectives financed through local funds since that time, the Government has demonstrated a clear commitment to these objectives well-beyond the scope of the loan which is fully expected to be maintained. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 39. Overall project relevance is considered to be substantial. The Project s objectives are fully consistent with the Country Partnership Strategy (CPS) (Report Nº CL, discussed by the Board on February 15, 2011), with public sector modernization identified as a key results area, and improving performance and public financial management being noted as one of the five subareas of focus (and the Project being identified as one of the Bank s instruments in this area). The Project was also well aligned with President Bachelet s Government Program for , in which continuing work to further improve medium term budget planning is noted as a component of efforts to ensure fiscal responsibility. 10 Programa de Gobierno Michelle Bachelet , October 2013, < > 10

27 40. The relevance of project design and implementation is considered to be substantial. Design focused on key areas of financial management processes requiring modernization at both the central and municipal levels and was well-suited to support the Project s stated objectives. While an adjustment in priorities resulted in some changes to the original design (e.g. dropping of Subcomponent 2.2 related to the MCS and prioritization of attention to SIGFE II) and the performance issues encountered with SIGFE II resulted in a slower than expected roll-out of the system, implementation arrangements were highly responsive to the circumstances encountered and supported the necessary adjustments through the project restructuring, the extension of the closing date, and other forms of proactive implementation support. 3.2 Achievement of Project Development Objectives 41. Overall, the Project is viewed to have demonstrated substantial efficacy in achieving its development objective of increasing the efficiency of operations regarding financial management, budget formulation, and budget execution, and the transparency of public expenditure management at the central and municipal level through the implementation of an updated, functionally enhanced and expanded financial administration system. 42. The objective related to the efficiency of financial management operations has been substantially achieved. SIGFE II improved the efficiency of financial management operations mainly through changing the management model as well as the operation of the system from a model based on accounting transactions to one based on administrative/financial transactions. Those changes contributed to simplifying processes, reducing the requirement of high accounting skills to operate the system, and providing better performance management information for decision making. 43. Operationalizing this reform, the SIGFE II system has been developed and implemented in 86 institutions (50 percent of the target), and this number is expected to continue to rise in the future as following the resolution of past performance issues, it will now be possible to devote resources to the development of the capabilities necessary to encourage the accession of other entities 11. Activities undertaken with other key entities have also laid the groundwork for increased integration in the near future. As mentioned above, progress towards implementation of SIGFE II has progressed more slowly than expected in the IPS following organizational changes in 2012/2013, but advances to date include the analysis of existing processes and gaps, definition of the operational model, and the initiation of work on an accounting converter. Similarly, while the Ministry of Public Works has not implemented SIGFE II, critical preparatory work for the agency s future use of SIGFE II or design of a homologation strategy including analyses of existing processes, the potential value-added to be provided to the Ministry through use of the system, and gaps needing to be addressed by the Ministry before using SIGFE II was executed under the course of the Project. The eventual future incorporation of these 11 As mentioned above, the incorporation of 31 new institutions is planned for

28 entities which account for a significant fraction of transactions within Chile will represent an important step in increasing SIGFE II s coverage, with important positive implications for the efficiency of financial management operations in Chile. 44. As a result of these advances, information is now available more quickly, facilitating more efficient financial management. For institutions within the coverage of the central government (except the Public Treasury), following the monthly closing period on the 8th of each month, information is aggregated in SIGFE the next working day (achievement of PDO#1 and partial achievement of PDO#4). The Public Treasury s interconnection and reporting systems have also been improved. They are now sending weekly and monthly information to SIGFE, and potential strategies for making the system compatible with SIGFE II (homologation) were carried out, paving the way for future work At the municipal level, the successful development and rollout of the municipal financial administration system (SIFIM) which covers budgeting, accounting, recovery orders, treasury, procurement, personnel and remuneration in 100 municipalities (achievement of PDO#6) represents a significant advancement in Chile, ensuring the compatibility of information provided to different central government agencies and timely access to information. 13 Municipalities using the system now do not have to enter information in multiple systems. The system facilitates communication with other information systems, generates automatic reports, and facilitates medium term financial planning. 46. The two objectives related to the efficiency of budget formulation and execution have also been substantially achieved. SIGFE is now automatically updated with information from SIAP on the initial budget law each year (although manual updates of budget modifications made during the year continue) and information entered into the payments module of SIGFE is now automatically reflected in budget execution (partial achievement of PDO#2). Based on information from performance and scalability tests, it is projected that the system has the processing capacity to manage the targeted 200,000 financial transactions per day with a response time of 8 seconds (achievement of PDO#3), allowing for up to date information for decision making. While SIAP 2.0 has not been developed, as mentioned above, new bidding documents are under preparation, and the process is expected to be carried out in Once implemented, SIAP 2.0 will contribute to more efficient budget formulation. At the municipal level, the implementation of the SIFIM system in 100 municipalities (described above, PDO#6) has contributed to greater efficiency in budget formulation and execution through the inclusion of a budget module. 12 It is important to clarify that in Chile, the Treasury is responsible for revenue collection but not for payments; responsibility for payments is decentralized and lies within each entity. 13 Previously, information was heterogeneous and difficult to combine. 12

29 47. Finally, the objective related to transparency was substantially achieved. As mentioned above, the timely access to information captured through achievement of PDO#1 points to improved mechanisms to support oversight and transparency. Entities now have real time, online access to their information, and oversight entities have access to information the next day after the end of the period, facilitating accountability. At the municipal level, the upcoming launch of the municipal information aggregator (expected in 2015, partial achievement of PDO#7), for which the software and hardware have been purchased and the system installed, will ensure that DIPRES, SUBDERE and CGR are all working with a single source of information. 48. See Annex 11 for presentation of the PDO indicators and their achievement. 3.3 Efficiency 49. Overall project efficiency is considered to have been modest. Neither the net present value nor the economic rate of return were calculated in the PAD. A list of Project benefits noted to testify to its economic and financial soundness and which emphasized the processing efficiencies to be delivered by the new system as well as its potential to reduce costs was presented in the Economic and Financial Analysis. Total registered project costs (including local support) for the Project which was implemented over the course of six and a half years are U.S $81.56 million (approximately U.S. $34.9 million more than expected at design, with the difference coming from the allocation of additional local funds). The higher than expected costs are due to a variety of factors, including the additional costs implied by using a gradual implementation strategy requiring the parallel operation of SIGFE I for longer than anticipated and the need to hire support to address the performance challenges encountered during implementation. Additionally, hardware and software were purchased for all institutions at once, even though a gradual implementation strategy was to be followed. 50. When costs ascribed to local support but not directly imputable to the Project are excluded 14, total Project costs decrease to U.S. $70.04 million (compared to anticipated costs of U.S. $46.62 million); a figure that while larger than expected, is less than the PAD estimates of the cost of comparable systems 15. Additionally, it is important to note that the time taken to implement SIGFE II is below the average found in World Bank research for completed FMIS projects (7.9 years), and together the cumulative time for SIGFE I and II (approximately 11 years) is also less than the time required for back-toback FMIS projects in other countries in the region These include three amortization repayments of the loan and the corresponding interest (U.S. $8.016 million) and operational costs for SIGFE I in the first half of 2008 (U.S. $3.51 million). 15 According to Annex 9 of the PAD, [c]omparable projects in other countries are costing an estimated one hundred percent more than SIGFE. 16 Cem Dener, Joanna Alexandra Watkins and William Leslie Dorotinksy, Financial Management Information Systems: 25 Years of World Bank Experience on What Works and What Doesn t, The World Bank, Washington, D.C.,

30 3.4 Justification of Overall Outcome Rating 51. Rating: Moderately Satisfactory. The Project s overall outcome rating is considered to be Moderately Satisfactory (See Table 1). Over the course of implementation, the Project made substantial progress towards its development objective of increasing the efficiency of operations regarding financial management, budget formulation, and budget execution and the transparency of public expenditure management at the central and municipal levels. The operation s objectives remain highly relevant for both the Government and the Bank, and given the substantial relevance of design and implementation, overall relevance is considered substantial. While higher than anticipated, Project costs were in line with comparable projects, leading to an overall assessment of modest Project efficiency. Table 1. Overall Outcome Rating Item Rating - Relevance Substantial Relevance of Objective High Relevance of Design/Implementation Substantial - Efficacy Substantial - Efficiency Modest Overall Moderately Satisfactory 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 52. This Project has supported Chile s more efficient and effective management of its resources through its focus on financial management, budget formulation and budget execution. While the Project was not designed to have a direct impact on poverty, gender or social development, these improvements - and the more effective use of resources they imply could help to support the Government s achievement of key public policy priorities - including policies or programs focused on such areas. (b) Institutional Change/Strengthening 53. This project has had a significant impact on institutional change and strengthening. Through the work undertaken on the SIGFE II system as well as advances related to the Public Treasury, the Ministry of Finance has strengthened its ability to oversee Chile s budget execution. Importantly, by developing SIGFE II with its greater focus on facilitating usability and management (instead of a pure accounting focus) the Ministry of Finance has strengthened the Government s ability to more effectively and efficiently manage financial resources through improved information management and sharing (see Section 3.2 for a detailed account of improvements) advances important for continuing improvements in terms of transparency, accountability and efficiency. As a natural part of accompanying the development of SIGFE II, implementation has also strengthened the Ministry s capacity to manage the various aspects of work related to the development and operation of its financial management system including the incorporation of additional, pending functionalities and the ability to respond to technical 14

31 issues as they arise during implementation making it well-equipped to continue to support the system in the future. 54. The Project s work at the municipal level has also had several important impacts in the area of institutional strengthening. Importantly, implementation of the municipal financial administration system SIFIM in the targeted 100 municipalities has both improved the central government s ability to monitor municipal finances and also provided the opportunity to provide municipalities with the tools (equipment, training, systems, etc.) necessary to enhance municipal public management. The project has also supported the strengthening of institutional connections between entities, with collaboration agreements between DIPRES and the Treasury, as well as DIPRES, SUBDERE and CGR forming the foundation for various aspects of work carried out under the Project. (c) Other Unintended Outcomes and Impacts 55. No unintended outcomes or impacts have been identified. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 56. Not applicable. 4. Assessment of Risk to Development Outcome 57. Rating: Moderate. The design, development and rollout of the SIGFE II system represent a significant advance in Chile s financial management. With the past performance issues now resolved and approximately half of the central government entities using the system (and additional entities expected to join in the near future), SIGFE II is well on its way to achieving the critical mass necessary to become the Government s dominant financial management system. Through the implementation process, the Government has gained substantial experience in operating the system and trouble-shooting the various problems that have arisen, and is well-equipped to continue to do so following project completion. While it was not possible to completely implement all of the anticipated activities (e.g. development of SIAP 2.0, etc.), the work undertaken under this Project serves as a solid foundation for future advances which are anticipated in the short to medium-term. 58. At the municipal level, the implementation of the SIFIM has provided participating municipalities not only with needed equipment and systems to better manage their financial information, but also with training targeted toward enhancing local staff s capacity. There is demand for the incorporation of additional municipalities, with the Government regularly receiving requests for addition to the system. There are plans for municipalities using the system to provide training to their peer municipalities in its use, important for both strengthening municipal capacity as well as shifting responsibility for the system to the municipal level. 59. However, some challenges remain. In spite of SIGFE II s greater focus on usability, the incorporation of the remaining large central government entities is still 15

32 pending and the parallel operation of the SIGFE I and II systems could make the transition period between the two systems longer than expected. At the municipal level, SIFIM continues to be financed by the central government, leading to some questions about its long term sustainability. Additionally, the high rotation of municipal staff with political cycles may require regular efforts to maintain effective municipal use of the system. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry 60. Rating: Moderately Satisfactory. During project preparation, the Bank team drew upon its significant experience in Chile in general, as well as its specific experience working with the SIGFE I system, allowing for the incorporation of important lessons learned into project design. 61. However, given the challenges encountered during implementation, which resulted in the prioritization of activities related to SIGFE II (and the putting on hold of other areas of work), it seems that implementation risks and their effects on the Project were not fully anticipated at the design stage. Moreover, the issues encountered during implementation related to the procurement method to be used to develop SIGFE II suggests that procurement arrangements could have benefited from a more thorough examination at the time of design, as could have the Results Framework and its monitoring matrix so as to ensure better alignment between the two. (b) Quality of Supervision 62. Rating: Satisfactory. The Bank team provided continual and strong technical and implementation support during Project execution. Its ability to convene the international expertise critical to the development of SIGFE II, as well as its support in addressing the performance issues encountered following rollout, were highly valued by the counterpart, helping to promote technical dialogue and ensure the continuing advancement towards project objectives 17. While the 2012 restructuring represents a strong effort to adjust to the evolving implementation context and its impact on Government priorities, a more detailed review of Annex 3 of the PAD at that time could have helped to adjust for the differences between its Results Framework and its matrix for results monitoring. (c) Justification of Rating for Overall Bank Performance 17 Implementation support missions included a mix of international experts (from OEDC and other LAC countries) and IT experts to support the government in solving functional and IT issues that appeared during implementation (see implementation support aide memoires). 16

33 63. Rating: Moderately Satisfactory. Overall Bank performance is considered to have been moderately satisfactory. While at design it did not completely anticipate some of the challenges that would arise, its proactive and tailored support during implementation was critical to ensuring continued progress towards project objectives and solidifying Chile s capacity to continue such efforts in the future outside of the scope of the Project. 5.2 Borrower Performance (a) Government Performance 64. Rating: Moderately Satisfactory. The Government played a crucial role during the implementation of the project. It demonstrated a strong commitment to Project objectives, with the deployment of SIGFE II continuing to advance in spite of mid- Project changes in government administrations. Nevertheless, these changes in administration did contribute to some delays as work to date was analyzed and priorities re-examined. When combined with the technical performance issues encountered during SIGFE II s rollout, this impacted the pace with which work on the SIGFE II system was able to advance as well the progress achievable under the other areas of the project. (b) Implementing Agency or Agencies Performance 65. Rating: Satisfactory. The institutional arrangements for the implementation of the project were devised to ensure continuity with the previous operation, and in practice, provided a strong foundation for work under this Project. The PIU established within DIPRES was successfully assimilated into the Government s structure during Project implementation, and comprised a very solid project management and technical team. During implementation, it did a good job of adjusting to the range of challenges encountered (including both the technical issues associated with the SIGFE system as well as shifting Government priorities), proactively adjusting to the circumstances and seeking solutions where possible. (c) Justification of Rating for Overall Borrower Performance 66. Rating: Moderately Satisfactory. Overall Borrower performance is considered to be moderately satisfactory. While the Project s broad scope, technical issues and changes in administration did pose some challenges to implementation, projects of this nature are always complex, and both the Government as a whole as well as the implementing agency did a very good job of adjusting to the realities encountered and supporting the continuing progress towards the development objective via the rollout of SIGFE II and SIFIM, while also continuing progress towards other Project goals. 6. Lessons Learned 67. Planning for the implementation of FMIS should be sure to allocate adequate time for development, testing, incorporation of user feedback, and implementation, and take the abundant international experience available into account. The time envisioned for redesigning SIGFE II s functionalities, updating, 17

34 developing and rolling out the system to all entities proved to be too short, and an extension of the closing date was ultimately requested in order to complete the implementation of the system, following a temporary suspension of its roll-out due to software performance issues. While not available at the time of design, future projects should reflect upon existing wide-scale studies of similar projects While the use of the most state-of-the-art and newest technology available can provide benefits, it may also imply additional risks for implementation and it is important to balance these risks against the benefits. Using such technology can confer important benefits, including increased usability, while perhaps lessening the need to engage in as many updates in the future. However, potential risks include more expensive and lengthier implementation periods. In the case of SIGFE II, these risks associated with the use of such technology materialized. 69. Both big-bang and gradual implementation processes for FMIS systems present challenges, and there does not seem to be an easy answer as to which is the better approach. In the case of Chile, the decision to proceed gradually allowed it to initiate implementation (and deal with the issues that arose) without risking impacting the entirety of the government, and shift towards a more aggressive strategy only when such problems had been addressed. Nevertheless, this strategy has its costs requiring that resources continue to be allocated to both the old system and the new one and may diminish individual institution s incentives to transition to the new system. 70. While bundling central government FMIS projects with other reforms may make sense from technical perspective, the value-added of doing such may be limited by implementation constraints. The broad scope of this Project, covering both the central and municipal levels, created a supportive environment for important advances in Chile s financial management which have already started to have positive impacts in the timeliness of available information. Nevertheless, given the challenges often associated with FMIS projects, it is important to consider and plan for the trade-offs that may be necessary and their impact on full achievement of the development objective. 71. As FMIS are designed to extend beyond one political administration, such political transitions should be managed and accounted for in project design and supervision. In the case of this Project, while political changes resulted in some slowing of implementation and the re-prioritization of non-central activities, roll-out of the SIGFE II was able to successfully continue given the strong technical orientation of the work and an institutionalized foundation which transcended government administrations. 18 E.g. Cem Dener, Joanna Alexandra Watkins and William Leslie Dorotinksy, Financial Management Information Systems: 25 Years of World Bank Experience on What Works and What Doesn t, The World Bank, Washington, D.C.,

35 72. When transitioning from one operational platform to a new one, assigning separate human and technological resources is critical. Given that some staff were shared between SIGFE I and II, when issues arose with SIGFE I, in order to ensure the continued operation of the existing system, attention to SIGFE I had to be prioritized over SIGFE II. 73. In projects of this magnitude, it is important that the directorate leading it have all of the necessary competencies related to technology, finances, budgeting, and management capacity. When all of these are not present, it can cause challenges that impact quality, time and/or costs. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 74. The draft ICR was shared with the Counterpart and their comments have been incorporated. In regards to the lessons learned, they noted that they did not agree that the sharing of some staff impacted the implementation of SIGFE II, given the stability of SIGFE I. (b) Cofinanciers N.A (c) Other partners and stakeholders N.A 19

36 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Components Appraisal Estimate (USD millions) Actual/Latest Estimate (USD millions) Percentage of Appraisal Component Component Component Component Total Baseline Cost Physical Contingencies Price Contingencies Total Project Costs Front-end fee PPF Front-end fee IBRD Total Financing Required (b) Financing Source of Funds Type of Cofinancing Appraisal Estimate (USD millions) Actual/Latest Estimate Percentage of (USD Appraisal millions) Borrower International Bank for Reconstruction and Development

37 Annex 2. Outputs by Component Component 1: Upgrading and Extending the Financial Information System to the Central Government Entities Hardware: Infrastructure for Development, testing, and training o 3 Chasis o 16 Blade servers o 2 Balancers o 2 Storage o Communication and security equipment (Firewall, switch, balancers, router) o Other small equipment Production Infrastructure o 3 Chasis o 16 Blade servers o 1 Storage o 4 Balancers o Communication and security equipment (Firewall, switch, balancers, router) o Other small equipment Basic Software: Platforms Database management products Quality assurance products Management products Architecture/development products Products for Incident Management Information Systems: Transactional SIGFE II (Web application for the State s financial management) Reporting SIGFE II (Web application for reports on the State s financial management) Management and Aggregation (Web application for business intelligence on the State s financial management) Configuration (DRM tool with the data and/or parameters of the institutions that use SIGFE II) Financial auditing module (Web application for auditing of the State s financial management) Public Portal (Web application with self-administrable content for information for public institutions) Private Portal (Web application with self-administrable content for information from SIFGE II and public institutions own information) 21

38 Vertical interoperability (Set of web services that allows for integration with institutions own management systems and SIGFE II) Interoperability with SIAP (Set of web services that allows for integration with external systems for loading of the law and other things in SIGFE II) BIP interoperability (Set of web services that allows for integration with MIDEPLAN systems for loading of decrees, investment initiatives and other things in SIGFE II) Interoperability with homologous entities (Set of web services that allows for the integration of institutions own management systems with SIGFE II and Management and Aggregation) Interoperability with Chilecompra (Set of web services that allows for the integration of the Chilecompra and SIGFE II systems) SII Interoperability (Set of web services that allows for the integration of the SII and SIGFE II systems) Migration system (System for migrating data from SIGFE I to SIGFE II) Technical console (Back office web application of SIGFE II for correcting information) Configuration console (Web application for management of SIGFE II configuration) Training: User manuals for SIGFE II Presentations of the technical concepts for each of the modules Prototypes of each of the functionalities Self-contained courses for the core modules of the system Component 2: - Improvement of Budget Procedures and Mechanisms of the Management Control System Basic software: Integrated planning products Component 3: Strengthening Financial Administration at the Municipal Level Hardware: Municipal Financial Information System (SIFIM): Contracting of the services, hardware and software necessary for the development, implementation and maintenance of the SIFIM in an environment with high availability, physical and logical backup of information, facilitating access and minimizing the loss of services as a result of events that could cause damage, and ensuring the delivery of the levels of service required for the municipalities and SUBDERE. o 2 Data storage disks o 6 Switches o 1 Firewall for the production site o 7 Servers 22

39 Computational Equipment: Permits the introduction of a financial management system in municipalities lacking such, including loading of data, testing, data migration and implementation of updating plans. o Central Level 4 Application servers 2 Storage 1 Communications Equipment 1 Central administration console o Local level 1,464 Desktop PCs (12 for each municipality and/or municipal corporation 122 Notebook computers (1 for each municipality and/or municipal corporation) 122 Application servers (1 for each municipality and/or municipal corporation) 122 Server racks (1 for each municipality and/or municipal corporation) 122 Backup power sources for municipal application servers (1 per municipality and/or municipal corporation) 122 Firewalls for municipal application servers 122 Communications equipment Normalization of electrical and data networks o Data network, which includes the implementation of a laying signal for the local area network service, which contemplated an open, multi-user architecture based on a distributed plan for the administration of logical resources and software o Electrical network for the computational network of the financial accounting network. Components included: special electrical panel for computation, power supply, grounding grid, computational circuits. SIFIM technological platform o Upgrade of RAM in 4 servers o Firewall o Tool for centralized security management o Data center switch Software: Municipal Financial Information System (SIFIM): o Software licenses for business intelligence platform o Software licenses for data extraction, transformation and loading platform o Software licenses for the portal platform o Software licenses for the application server platform o Software licenses for information access platform o Software licenses or database platform o Software licenses for business rules platform o Software licenses for monitoring platform o Other basic software 23

40 Information Systems: Financial accounting systems for 112 municipalities and 10 municipal corporations which includes computational applications such as: o Municipal government accounting (including health and education) o Municipal budget (including health and education) o Municipal treasury and recovery orders o Bank reconciliation o Municipal procurement and its integration with the public purchases portal (including health and education) o Municipal recovery orders o Municipal personnel and remuneration (including health and education) Training: Municipal Financial Information System (SIFIM) o Training in hardware and software infrastructure as well as the applications added by the Project Municipal technological diagnostic: Consultancy to elaborate a municipal technological diagnostic for the implementation of computational networks and systems (Source: DIPRES, Informe de Cierre Banco Mundial, Ministry of Finance, July 2014, Santiago de Chile, Annex 1: Inventory of Products Generated by the Project) 24

41 Annex 3. Economic and Financial Analysis As noted in the main text, neither the net present value nor the economic rate of return were calculated in the PAD. A list of Project benefits noted to testify to its economic and financial soundness and which emphasized the processing efficiencies to be delivered by the new system as well as its potential to reduce costs was presented in the Economic and Financial Analysis. Total registered project costs (including local support) for the Project which was implemented over the course of six and a half years are U.S $81.56 million (approximately U.S. $34.9 million more than expected at design, with the difference coming from the allocation of additional local funds). The higher than expected costs are due to a variety of factors, including not having fully captured the costs of implementing SIGFE II in institutions (including the additional costs implied by using a gradual implementation strategy requiring the parallel operation of SIGFE I), the high cost of hardware and software, and the need to hire support to address the performance challenges encountered during implementation. When costs ascribed to local support but not directly imputable to the Project are excluded, total Project costs decrease to U.S. $70.04 million (compared to anticipated costs of U.S. $46.62 million); a figure that while larger than expected, is less than the PAD estimates of the cost of comparable systems. Moreover, the time taken to implement SIGFE II is below the average for completed FMIS projects (7.9 years), and together the cumulative time for SIGFE I and II (approximately 11 years) is also less than the time required for back-to-back FMIS projects in other countries in the region. 25

42 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibili ty/ Specialty Sandra X. Alborta Program Assistant GEDDR Francis J. Earwaker Andres Mac Gaul Sr. Procurement Specialist GGODR Ana Maria Grofsmacht Procurement Specialist GGODR Enrique Fanta Ivanovic Senior Public Sector Specialist GGODR Efraim Jimenez Consultant GGODR Wolfgang K. C. Koehling Senior Operations Officer INTSC Marcos Pedro Makon Marta Elena Molares-Halberg Xiomara A. Morel Sr Financial Management Specialist GGODR Juan Navas-Sabater Program Leader ECCU1 Nina-Christina Ohman Roberto O. Panzardi Sr Public Sector Mgmt. Spec. GGODR TTL Alejandro Roger Solanot Sr Financial Management Specialist GGODR Silvio V. Solarte Leiton Gerardo Martin Una Maria Cecilia Zanetta Consultant IEGPS Supervision/ICR Tatiana Cristina O. de Abreu Souza Finance Analyst CTRLN Pablo Andres Guzman Abastoflor Junior Professional Associate GGODR Daniel Jorge Arguindegui Procurement Specialist GGODR Marcelo Daniel Barg Walther Homero Contreras Rosmary Marcela Cornejo Valdivia Patricia Draper de Freitas Daniela Veronica Felcman Public Sector Specialist GGODR Ana Maria Grofsmacht Procurement Specialist GGODR Andres Mac Gaul Sr. Procurement Specialist GGODR Ricardo A. Gutierrez Patricio Gutierrez Gonzalez Adrienne Elizabeth Hathaway Research Analyst GGODR Ian Halvdan Ross Hawkeswort Keisgner De Jesus Alfaro Ana Lucia Jimenez Nieto Financial Management Specialist GGODR Wolfgang K. C. Koehling Senior Operations Officer INTSC Mariano Lafuente Lourdes Consuelo Linares Loza Sr Financial Management Specialist GGODR Marcos Pedro Makon 26

43 Luz Maria Meyer Financial Management Analyst GGODR Juan Navas-Sabater Program Leader ECCU1 Jenni Amanda Pajunen Roberto O. Panzardi Sr Public Sector Mgmt. Spec. GGODR Svetlana I. Proskurovska Senior Public Sector Specialist GGODR Henry Forero Ramirez Senior Public Sector Specialist GGODR TTL Francisco Rodriguez Procurement Specialist GGODR Fernando Rojas Consultant GGODR Benjamin David Roseth David Santos Ruano E T Consultant GGODR Alejandro Guerrero Ruiz Mercy Mataro Sabai Sr Financial Management Specialist GGODR Carlos Silva-Jauregui Lead Economist GPVDR Alejandro Roger Solanot Sr Financial Management Specialist GGODR Silvio V. Solarte Leiton Shrimant Tripathy Lead Information Security Officer ITSRC Marta Susana Vazquez Ana Bellver Vazquez-Dodero Sr Public Sector Spec. GGODR TTL Jean-Jacques Verdeaux Senior Procurement Specialist GGODR Fanny Weiner Public Sector Mgmt. Spec. GGODR Maria Cecilia Zanetta Consultant IEGPS (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY FY Total: Supervision/ICR FY FY FY FY FY FY FY FY Total:

44 Annex 5. Beneficiary Survey Results N.A 28

45 Annex 6. Stakeholder Workshop Report and Results N.A 29

46 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR The counterpart provided a detailed report of the design and implementation of the Project that was very useful for the team in preparing the ICR, serving as a key input to its preparation. The draft ICR was shared with the Counterpart and their comments have been incorporated. In regards to the lessons learned, they noted that they did not agree that the sharing of some staff impacted the implementation of SIGFE II, given the stability of SIGFE I. 30

47 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders N.A 31

48 Annex 9. List of Supporting Documents BERNER, H. Sistema de Control de Gestión y Presupuesto por Resultados: La Experiencia Chilena, DIPRES, División de Control de Gestión, Ministry of Finance, PowerPoint Presentation, Nov. 2008, Santiago de Chile. DIPRES, Informe de Cierre Banco Mundial, Ministry of Finance, July 2014, Santiago de Chile. DIPRES, Informe de Finanzas Públicas Proyecto de Ley de Presupuestos del Sector Público para el año 2014, Ministry of Finance, Oct 2013, Santiago de Chile. DIPRES, Presentations prepared for May 2014 Supervision Mission. UÑA, G. (2013), SIGFE 2.0 Principales Aspectos Funcionales, Unidad Ejecutora del Proyecto, Budget Directorate, Power Point Presentation, Feb 2013, Santiago de Chile. WORLD BANK, Aide Memoirs, Back-to-Office Reports, Project Implementation Status and Results (ISR) and Project Assessments, Washington, D.C. WORLD BANK, Republic of Chile Country Financial Accountability Assessment, Report No CL, Jun. 2005, Washington, D.C WORLD BANK, Chile: Study of Evaluation Program, Impact Evaluations and Evaluations of Government Programs; Report No CL, Dec. 2005, Washington, D.C WORLD BANK, Chile Development Policy Review, Report No CL, Jun, 2006, Washington, D.C. WORLD BANK, Country Partnership Strategy for the Republic of Chile for the period , Report No CL, Apr, 2007, Washington, D.C. WORLD BANK, Country Partnership Strategy for the Republic of Chile for the period FY11- FY16, Report No CL, Jan, 2011, Washington, D.C. WORLD BANK, Implementation Completion and Results Report (IBRD-46500; IBRD-71410) on a loan to the Republic of Chile for the First Public Expenditure Management Project, Report No. ICR Dec, 2007, Washington, D.C. WORLD BANK, Project Appraisal Document on a proposed Loan to the Republic of Chile for the Second Public Expenditure Management Project, Report No CL, Aug, 2007, Washington, D.C. WORLD BANK, Restructuring Paper on a Proposed Restructuring of Second Public Expenditure Management Project, Loan 7485-CH, August 28, 2007 to the Republic of Chile, Report No CL, March 5, 2012, Washington D.C. WORLD BANK, Restructuring Paper on a Proposed Restructuring of Second Public Expenditure Management Project, Loan 7485-CH, August 28, 2007 to the Republic of Chile, Report No. RES10930, June 24, 2013, Washington D.C. 32

49 Annex 10. PDO Indicators (Original and Revised) Results Framework (PAD) Monitoring Matrix (PAD) 2012 Restructuring (i) Improve Efficiency of the (i) Time required to (i) Number of institutions where Public Financial Management aggregate financial data for the the time required to aggregate financial Administration: Time required for central government reduced data for the central government is aggregating the financial data of the central government is to be reduced from 30 to 8 days. from 30 to 8 days.* reduced from 30 to 8 days.** (ii) Increase Efficiency of (ii) Not in monitoring (ii) Not in monitoring matrix Operations regarding Budget matrix Formulation and Execution: Time required to update SIGFE (execution) with the data generated by the SIAP system (formulation and administration) is to be reduced from one week to one day. (iii) Improve Efficiency of Budget Execution: Processing capacity of the SIGFE transaction module is to be increased from 95,000 to 200,000 financial transactions per day, with a response time of 8 seconds per transaction measured at the portal. (iv) Improve Efficiency of Financial Management Operations and Improve Effectiveness of Fiscal Control: Time for processing transactions within the Central Government Entities so that the information is available in SIGFE is to be reduced from 20 days to less than 3 days. (v) Not in first part of PAD Results Framework; only in Monitoring Matrix (vi) Increase Transparency of Municipal Financial Information: Financial information and expenditures on at least 100 municipalities is to be made available in the Municipal Financial Information System, which can aggregate the financial information of all (presently 345) municipalities. (vii) Increase Efficiency of Fiscal Monitoring of Municipal Finances: Information on aggregate municipal finances is to be made available at the central level within 30 days instead of presently up to 180 days. (iii) Increased processing capacity of transaction module from 95,000 to 200,000 financial transactions per day with a response time within 8 seconds at port.* (iv) matrix Not in monitoring (v) Increase efficiency of public financial management Administration by upgrading and expanding the national financial administration system and using common standards at the central level (Final target 100% reconciliation of expenditures and revenues in real-time with SIGFE) (vi) Increase effectiveness of financial management at the local level by implementing a system build [sic] on common standards. (Final target: At [sic] financial information of at least 100 municipalities is included in the Municipal Financial Information System) (vii) Increase effectiveness and transparency in public expenditure management on the municipal level by developing a Municipal Financial Information System (Target: A Municipal Financial Information System, capable of (iii) Continued ** (iv) Not in monitoring matrix (v) Increase efficiency of public financial management Administration by upgrading and expanding the national financial administration system and using common standards at the central level (Final target: 100% of SIGFE II implemented) (vi) Increase effectiveness of financial management at the local level by implementing a system build [sic] on common standards. (Final target: At [sic] financial information of at least 100 municipalities is included in the Municipal Financial Information System) (vii) Increase effectiveness and transparency in public expenditure management on the municipal level by developing a Municipal Financial Information System (Final Target: A Municipal Financial Information System, capable of aggregating the information of all 345 Municipalities is 33

50 (viii) Increase Effectiveness of Budget Cycle Indicators: All monitoring indicators will be aligned with the financial indicators and integrated in the budget formulation and execution. The new methodology will be adopted by all Ministries covered by the MCS and will be integrated in the budget by aggregating the information of all 345 Municipalities is implemented.) (viii) Increase effectiveness of operations regarding budget formulation and budget execution by developing new methods for resource management and strengthening the Management Control System and integrating it in the budget cycle. implemented, and information is available in 30 days.) (viii) Dropped *As specified in matrix of Arrangements for Results Monitoring (PAD) under Results Indicators for each Component **Indicator monitored under Intermediate Indicators in Annex 1: Results Framework and Monitoring of the March 2012 Restructuring Paper. 34

51 Annex 11: Reallocation of Loan Proceeds (2012 Restructuring) Project costs by component (US$ million) Revised Original (as per PAD) (Table 1, March 2012 Restructuring Paper) Local Bank Total Local Bank Total Component Component Component Component Total Category of Expenditure (1) Goods, non-consultant services, works, consultant services, operating costs and training for parts A, B and D of the Project (2) Goods, non-consultant services, works, consultant services, operating costs and training for part C of the Project Category of expenditure (US$ million) Original (as per PAD) Allocation Revised (Table 2, March 2012 Restructuring Paper) (3) Front-end Fee Total Amount

52 Annex 12. Achievement of PDO Indicators PDO Level Results Indicators (Objective to which they correspond) PDO#1. Time required for aggregating the financial data of the central government is to be reduced from 30 to 8 days. Revised: Number of institutions where the time required for aggregating the financial data of the central government is to be reduced from 30 to 8 days. (Contributes to efficiency of financial management operations and transparency) PDO#2. Time required to update SIGFE (execution) with the data generated by the SIAP system (formulation and administration) is to be reduced from one week to one day. (Contributes to efficiency of budget formulation and execution) PDO#3. Processing capacity of the SIGFE transaction module is to be increased from 95,000 to 200,000 financial transactions per day, with a response time of 8 seconds per transaction measured at the portal. (Contributes PAD Baseline Original Target Revised Target Final Value All institutions. Financial information for the central government institutions in SIGFE and SIGFE II, and the homologated institutions is turned in within the first 15 days of each month. For institutions within the coverage of the central government (except the Public Treasury), the closing period is the 8th working day of each month, and information is aggregated in SIGFE the next working day. 1 week 1 day N/A Initial budget law is now automatically loaded in SIGFE from SIAP; modifications are still loaded manually. Information in the payments module is automatically reflected in information on budget execution. 95, ,000 N/A With the institutions currently using the system, only 5% of the CPU is being used. Given results of performance and scalability tests, it Level of Achievement Achieved. High. Partially achieved. Substantial. Achieved.High 36

53 to efficiency of budget execution) can be projected that the system meets the target. PDO#4. Time for processing transactions within the Central Government Entities so that the information is available in SIGFE is to be reduced from 20 days to less than 3 days. (Contributes to efficiency of financial management operations.) 20 days Less than 3 days N/A; not monitored during implementati on For institutions within the coverage of the central government (except the Public Treasury), the closing period is the 8th working day of each month, and information is aggregated in SIGFE the next working day. Partially achieved. Substantial. PDO 5. Increase efficiency of public financial management administration by upgrading and expanding the national financial administration system and using common standards at the central level (Contributes to efficiency of financial management operations) Aggregated information available only on demand 100% reconciliation of expenditures and revenues in real time with SIGFE 100% of SIGFE II implemented SIGFE II is 100 percent developed, and implemented in 86 institutions 50% of the targeted 173 institutions. In 2015, the incorporation of 31 additional institutions is expected. Partially Achieved. Substantial. PDO 6. Increase effectiveness of financial management at the local level by implementing a system build on common standards (Contributes to efficiency of financial management operations, budget formulation and execution) Several incongruent systems used for financial administratio n at municipal level. At financial information of at least 100 municipalities is included in the Municipal Financial Information System No change in final target 100 municipalities operating in SIFIM in May Achieved. High PDO 7. Increase effectiveness and transparency in public expenditure management on the municipal level by developing a Municipal Financial Information system (Contributes to transparency) Consolidated financial information at the municipal level available in 180 days. A Municipal Financial Information System, capable of aggreatating the information of all 345 Municipalitie s is implemented. A Municipal Financial Information System, capable of aggregating the information of all 345 Municipalitie s is implemented, and information is available in 30 days SIFIM has been implemented in the 100 targeted municipalities. In regards to the municipal aggregator, the hardware and software licenses, and the municipal aggregator system are installed in the Subsecretariat's office. The Municipal Aggregator is developed and expected to enter into operation in Partially achieved. Substantial. 37

54 January PDO 8. Increase effectiveness of operations regarding budget formulation and budget execution by developing new methods for resource management by strengthening the Management Control System and integrating it in the budget cycle (Contributes to efficiency of budget formulation and execution, and transparency) Isolated information on financial performance and related impacts A revised budget process incorporating continuous MCS feedback Dropped N/A N/A 38

55 39