Consolidated Annual Report on Activities Implemented under the Joint Programme Local Governance Support (LGSP)

Transcription

1 Consolidated Annual Report on Activities Implemented under the Joint Programme Local Governance Support (LGSP) Report of the Administrative Agent for the LGSP for the period 1 January - 31 December 2011 Multi-Partner Trust Fund Office Bureau of Management United Nations Development Programme 31 May 2012

2 PARTICIPATING UN ORGANIZATIONS United Nations Capital Development Fund (UNCDF) United Nations Development Programme () CONTRIBUTING DONOR Irish Aid Page 2

3 Joint Programme: Local governance Support Programme (LGSP) REPORTING PERIOD: 1 JANUARY 31 DECEMBER 2011 Programme Title & Number Programme Title: Local Governance Support Programme (LGSP) Programme Number -BU: (Award ID), (Project ID), UNCDF-BU (Irish): (Award ID), (Project ID), UNCDF-BU (UNCDF core): (Award ID), (Project ID) MPTF Office Atlas Number: (Award ID) Country, Locality(s), Thematic Area(s) Timor-Leste Local Governance & Decentralization, Poverty Reduction Participating Organization(s) UNCDF and Implementing Partners Ministry of State Administration and Territorial Management (MSATM) Programme/Project Cost (US$) Agency Contribution : US$ 1,060,000 UNCDF:US$ 650,000 Government Contribution US$ 9,768,515 (in-kind contribution: ) Other Contribution (donors) Irish Aid:US$1,968,873(Pass-through funding) Irish Aid: US$ 838,795 (Cost-sharing) Norwegian Government: US$ 119,327 (Cost-sharing) TOTAL: US$ 13,820,510 Programme Duration (months) Overall Duration: 7 years Start Date: 01/2007 End Date or Revised End Date: 12/2013 Operational Closure Date: N/A Expect Financial Closure Date: Project extension agreed by Project Steering Committee Programme Assessments/Mid-Term Evaluation Assessment Completed - if applicable Two consultation missions regarding a two-year project extension ( ) were carried out respectively in May and June Mid-Evaluation Report Y Yes No Date: 05/2010 Submitted By o Name: Alessandro Righetti, Chief Technical Advisor o Participating Organization (Lead): UNCDF o address: alessandro.righetti@uncdf.org Page 3

4 LIST OF ABBREVATIONS AND ACRONYMS AusAid Australian Aid CD Community Development CoM Council of Ministers DA District Assembly DDC District Development Committee DNAF National Directorate for Administration and Finance DNAL National Directorate for Local Administration DNDLOT National Directorate for Local Development and Territorial Management DSF Decentralisation Strategic Framework GoTL Government of Timor-Leste IEC Information for Education and Communication ISD Infrastructure and Service Delivery LA Local Assembly LDF Local Development Fund LDP Local Development Program LG Local Governance LGOS Local Government Options Study LGSP Local Governance Support Program LGWG Local Governance Working Group LoA Letter of Agreement LPP Local Planning Process MC Minimum Condition MoF Ministry of Finance MSA Ministry of State Administration MSATM Ministry of State Administration and Territorial Management MTWGs Ministerial Technical Working Groups NGO Non-Governmental Organization NIM National Implementation Modality NP National Parliament PBGS Performance Base Grant System PDD/DDP Decentralised Development Programme PDID District Integrated Development Planning PEM Public Expenditure Management PFM Public Financial Management PIC Planning and Implementation Committee PSC Program Steering Committee SDA Sub-District Assembly SDDC Sub-District Development Committees SDP Suco Development Plan (also acronym for Strategic Development Plan ) TL Timor-Leste ToT Training of Training TWG Technical Working Group UN United Nations UNCDF United Nations Capital Development Fund UNDAF United Nations Development Assistance Framework United Nations Development Program WG Working Group Page 4

5 TABLE OF CONTENTS Cover Page... 1 Summary of Project Title and Cost... 3 List of Abbreviations & Acronyms... 4 Table of Contents... 5 List of Table... 6 List of Annexes... 6 PART I: NARRATIVE REPORT I. EXECUTIVE SUMMARY... 7 II. PROGRAMME OVERVIEW... 9 III. IMPLEMENTATION AND MONITORING ARRANGEMENTS IV. FINANCIAL AND HUMAN RESOURCES V. RECENT DEVELOPMENTS RELATED TO LOCAL GOVERNANCE IN TIMOR-LESTE VI. ACTIVITIES, ACHIEVEMENTS AND CHALLENGES Output 1: Local Development Programme Support to Activities of Local Assemblies Support to Local Assemblies Minimum Condition Evaluation Allocation of the LDF Budget and Recurrent Costs Meeting of Local Assemblies Finance Transfer of LDF Allocation Recurrent Costs Letter of Agreement (LoA) between MSATM and LGSP Project Implementation Local Procurement Process and Implementation of LDP Projects The Planning Process for FY Project identification and prioritization Gender Support Activities Capacity Building Refresher training on local planning, finance and procurement process AutoCad training for District Technical Staff Study tour on the integrated planning for local governance in Indonesia Output 2: Policy And Legislation Continued Support to Local Government Legislation Support the Drafting process and Approval of the PDID Decree Law Support the Production of Secondary Legislation Ministerial Dispatch on Planning Process Revision of MSATM Guidelines on Community Contracting Policy Development Community Development Local Governance Working Group (LGWG) Technical Working Group (TWG) of Fiscal Decentralization Output 3: Support To Implementation Of Local Government Reforms Page 5

6 3.1 Production of Social Communication Materials (SCM) Monthly Radio Programme Monthly Bulletin Civic Education and Local Governance Output 4: Programme Management Recruitment Process Other issues V SUMMARY OF THE MAIN ACHIEVEMENTS AND LESSONS LEARNED IN Achievements Lessons Learned VIII. THE WAY FORWARD: PROJECT EXTENSION & AWP PART II: FINANCIAL ERFORMANCE X. LIST OF ANNEXES LIST OF TABLES Table 1: LDP Minimum Conditions Indicators Table 2: Result of the Minimum Condition Evaluation for Table 3: LDF Capital Fund Allocation and Recurrent Costs for Table 4: Result of the first, second and Extra Ordinary Assemblies Meeting Per District in Table 5: Capital Fund Allocation for Table 6: Allocation and Execution Status of 119,957 USD Table 7: Procurement Phases Table 8: List of District Integrating Meetings Table 9: Number of Projects and Budget Allocation before and after the Budget Review Commission Table 10: List of Produced Radio Program during the Report Period Table 11: List of Monthly Bulletin Topics Table 12: The summary of views from respondents to Communication Check list for LIST OF ANNEXES Annex 1: Summary of the project budget for MSATM for Fiscal Year Annex 2: Brief Summary of the Approved Integrated District Development Planning (PDID) Decree Law Annex 3: Annual Work Plan 2012: Local Governance Support Programme Annex 4: List of LGSP Staff/Posts in Page 6

7 I. Executive Summary The decentralization process in Timor-Leste started with the establishment of an Inter- Ministerial Technical Working Group in 2003, with the objective to study different options for decentralization in Timor-Leste. The working group involved members of all ministries under the leadership of the then Ministry of State Administration (MSA). Decentralization reforms have evolved since, resulting in the approval of a national decentralization policy and decentralization road map and the submission of a set of three local government laws to the National Parliament. Throughout this process, lessons learned from the pilot Local Development Programme have been fed systematically into the policy process and local capacities have been developed. The process has benefited from continuous support provided by the joint UNCDF- Local Governance Support Programme (LGSP) and its predecessor programs, the Local Governance Options Study and the Local Development Program (both supported by UNCDF) both at the policy level and at the local level. The overarching goal of the LGSP is to contribute towards poverty reduction in Timor-Leste. The LGSP has the primary objective of supporting the establishment of a fully-fledged local government system in Timor Leste by (i) providing policy-relevant lessons from pilot activities, (ii) assisting the government in formulating a comprehensive legal and regulatory framework for local government, and (iii) supporting implementation of local government reforms. Through achieving its primary objective, LGSP will thus contribute towards improving local-level infrastructure and service delivery, and reducing poverty. It is funded by the Government of Timor-Leste (GoTL), Irish Aid, the Government of Norway, and UNCDF. The LGSP I was being implemented over a 5-year period ( ). To ensure the achievement of this objective, project activities were implemented under three project outputs: Output 1: Procedures, processes and systems for effective local-level infrastructure and service delivery (ISD) and public expenditure and public financial management (PEM/PFM) are piloted in selected Districts, Sub-Districts and future Municipalities; Output 2: Support is provided to the GoTL for the establishment of an appropriate and comprehensive institutional, legal, and regulatory framework for local government; and Output 3: Support is provided to GoTL for the implementation of local government reforms. The Government of Timor-Leste requested UNCDF and other development partners to continue their support to MSATM and to the overall decentralization and local development agenda in Timor Leste. An LGSP extension project, LGSP II , was approved in December 2011 which reorients the interventions and strategies of the previous LGSP ( LGSP I ) to respond to the new policy environment, the 2012 national elections, and the still largely undefined local government framework and the current UNDAF cycle ( ). Two expected outputs were formulated for extension project are: Output 1: Improved capacity for local service delivery (ISD) by sub national bodies with increased citizen participation; and Output 2: Improved institutional, legal, and regulatory framework established in support of effective local governance. Page 7

8 The programme is implemented as an integrated part of the activities of the Ministry of State Administration and Territorial Management (MSATM). It follows /UNCDF procedures and manages all procurement processes through the Country office or the UNCDF Regional Centre. The Joint Programme is linked to the UN Development Assistance Framework (UNDAF): Outcome 1.1: State organs and institutions are more efficient, transparent, accountable, equitable, and gender responsive in planning and delivery of services; Output 1.1.3: The Government has a clear legal framework for decentralisation; and Output 1.1.4: The established local government institutions have the core capacities to fulfil their mandates. The project aims at supporting the National Priorities of Timor-Leste, with particular focus on promoting decentralization and local government reforms processes. During 2011 several key results were achieved. In particular, the project provided key support to the drafting of a decree-law on Integrated District Development Planning (known by its Tetum acronym PDID), which has been approved in January 2012 while this report is being drafted. The PDID decree law allows for the harmonization and synchronization of the different programmes implemented by the MSATM under a single framework, that incorporates many of the processes and procedures that the LGSP piloted through the LDP. The project also supported a six-fold expansion of bottom-up planning procedures, which mark a significant step in the expansion of LDP processes and procedures to the whole range of infrastructure and service delivery projects implemented by the MSATM. Although exceptional circumstances (particularly the legislative vacuum created by the delayed approval of the PDID) caused that planning procedures were rather flexibly adhered to, this was a significant step forward. Furthermore, a Letter of Agreement (LoA) signed between and MSATM marks a significant step towards aligning with national systems, as it will permit to test the capacity of the MSATM to carry out activities in accordance with procedures that are previously agreed with the LGSP: this can be seen as the start of the transition from Direct Implementation (DIM) to National Implementation modalities (NIMs). Local government reforms did not take place during the original life span of LGSP and are not likely to take place during the period of its two-year extension. A new government should be formed around August 2012, and it is only likely to take its first important decisions during Page 8

9 PART I: NARRATIV EREPORT II. PROGRAMME OVERVIEW The Local Governance Support Programme (LGSP) is a joint programme funded by the Government of Timor-Leste (GoTL), Irish Aid, the Government of Norway, and UNCDF; it is being implemented over a 5-year period ( ). The overarching goal of the LGSP is to contribute towards poverty reduction in Timor-Leste. The Programme s objective is to support the establishment of accountable and effective local government and decentralisation, by endowing accountable local government bodies with greater responsibilities for planning, budgeting, and implementation of infrastructure and service delivery. To achieve its purpose, LGSP will deliver three key outputs: Output 1: Procedures, processes and systems for effective local-level infrastructure and service delivery (ISD) and public expenditure and public financial management (PEM/PFM) are piloted in selected Districts, Sub-Districts and future Municipalities. This output builds on the former Local Development Programme (LDP), which started as a national pilot programme in 2004 with the objective of testing different models for decentralization and local governance. The LDP supports capacity development at the local level through the provision of block grants to local assemblies, which are responsible for allocating and managing a small capital budget for local infrastructure programs, called the Local Development Fund (LDF). The first pilots started in 2005; in 2010 the LDP was upscaled to all 13 districts, making it a nation-wide local development program. Once municipalities will be created in the context of decentralization, LGSP plans to support the establishment of local government systems and procedures in the new municipalities, and the continued strengthening of local capacities for public service provision. Output 2: Support is provided to the GoTL for the establishment of an appropriate and comprehensive institutional, legal, and regulatory framework for local government Through this output, which continues the work started by the Local Governance Options Study (LGOS) in 2003, the programme supports the development of a policy framework for the establishment of a fully-fledged local government system in Timor-Leste. This output includes the provision of technical support to the drafting, internal discussion and eventually external consultation of policy and legal instruments that are necessary to establish an effective and accountable local government in Timor-Leste. Page 9

10 Output 3: Support is provided to GoTL for the implementation of local government reforms This output refers to the actual set up of municipalities. The LGSP s support to the implementation of local government reforms will depend largely on final decisions about the phasing of this process. Following the postponement of municipal elections LGSP has focused on communication and civic educations activities for local governance and decentralization. The programme is implemented as an integrated part of the activities of the Ministry of State Administration and Territorial Management (MSATM). It follows /UNCDF procedures and manages all procurement processes through the Country office or the UNCDF Regional Centre. The Joint Programme is linked to the UN Development Assistance Framework (UNDAF) as below: Outcome 1.1: State organs and institutions are more efficient, transparent, accountable, equitable, and gender responsive in planning and delivery of services. Output 1.1.3: The Government has a clear legal framework for decentralisation Output 1.1.4: The established local government institutions have the core capacities to fulfil their mandates. The project aims at supporting the National Priorities of Timor-Leste, with particular focus on promoting decentralization and local government reforms processes. III. IMPLEMENTATION AND MONITORING ARRANGMENETS The programme is developed and implemented as an integrated part of the Ministry of State Administration and Territorial Management (MSATM). Until mid 2010, LGSP worked directly with and was embedded in the National Directorate for Local Development and Territorial Management (DNDLOT), which was created in 2008 to oversee the LDP pilot and the decentralization reform process. Following a request by the Minister in mid-2010, LGSP adjusted its structure to work with a broader counterpart structure, including the Director General and five key directorates within MSATM, depending on the subject concerned. The five directorates are: Directorate for Local Development (regarding the LDP), Directorate for Local Administration (regarding decentralization policy issues) Directorate of Finance, Directorate of Sucos, and Institute for Public Administration Reform (INAP) for capacity development issues. In addition, policy issues will be closely coordinated with the Minister of State Administration. As part of the Joint Programme of cooperation with the Government of Timor-Leste as fully Page 10

11 described in the Joint Programme Document dated 30 January 2012, it was agreed to establish a coordination mechanism which is called Steering Committee chaired by the Minister of State Administration and Territorial Management RDTL to facilitate the effective and efficient collaboration between the Participating UN Organizations and the host Government for the implementation of the Joint Programme. A Project Board (PB) was established to provide programme oversight and guidance. The PB meets twice a year to discuss LGSP progress and endorse programme orientation. It is responsible for endorsing the annual work plan, the annual progress reports, and provide guidance on project implementation, and adjustment required. The PB consists of: Minister of MSATM (Chair), a senior MSATM officials directly involved in the programme; a UNCDF representative; a representative; and one representative from each participating development partner organization. The programme follows /UNCDF procedures and manages all procurement processes through the Country Office in TL or UNCDF Regional Center. LGSP operates a Monitoring Information System to manage data on project progress in a systematic manner. LGSP team meetings are being held on a regular basis and there are daily management meetings to discuss the progress, planned activities and any challenges as well as follow-up actions to address any area lagging behind. These meetings have proved to be essential for establishing a regular channel for communication and coordination within the LGSP team The Programme reports on a quarterly basis on the progress against assigned outputs and activities, challenges and issues in the consolidated report. Annual reports are prepared and shared with the Ministry of State Administration and Territorial Management (MSATM) as well as donors, reporting on the achievements made and challenges encountered during the year. An internal programme review was conducted in August 2008, which had the main objective to evaluate LGSP design and progress. An external mid-term evaluation was conducted in March 2010, as part of the UNCDF Special Project Implementation Review Exercise (SP) The Administrative Agent Participating Organizations have appointed the MPTF Office to serve as their Administrative Agent (AA) for this Joint Programme. The AA is responsible for a range of fund management services, including: (a) receipt, administration and management of donor contributions; (b) transfer of funds approved by this Joint Programme to Participating Organisations; (c) Consolidate statements and reports, based on submissions provided to the AA by each Participating UN Organisation; (d) synthesis and consolidation of the individual annual narrative and financial progress reports submitted by each Participating Organization for submission to donors through the Steering Committee. Transparency and accountability of this Joint Programme operation is made available through Joint Programme web site of the MPTF Office GATEWAY at Page 11

12 IV. FINANCIAL AND HUMAN RESOURCES The Programme is funded by Irish Aid, the Government of Norway, and UNCDF. The Government of Timor-Leste also provides funds to the Local Development Programme (LDP), one of the LGSP components. In terms of Human Resources, the program had 20 posts with a total number of 21 staff throughout the year, which includes 4 international staff, and 17 national staff (see annex 4). V. RECENT DEVELOPMENTS RELATED TO LOCAL GOVERNANCE IN TIMOR- LESTE The Constitution of Timor-Leste contains an explicit commitment towards decentralization and local governance. Such commitment has, so far, been reflected in previous and current governments policies and decisions. While the State remains centralized, the GoTL under the leadership of MSATM has proceeded with the development of a policy framework for decentralization since This process reached a peak in 2009, when a set of three Local Government bills was submitted to the National Parliament: the Law on Administrative and Territorial Division, the Local Government Law and the Municipal Election Law. A year later (April 2010) the GoTL decided to slow the pace of reform and postponed municipal elections until after the 2012 national elections. Only the first of the three mentioned bills has been approved, while the other two are unlikely to be discussed by the present legislature. Starting in 2010, there has been a marked shift in focus related to decentralization and local governance issues. In particular, the government conceived a new programme, called Decentralized Development Programme (known by its Portuguese acronym PDD), which was introduced through the 2010 mid-year rectified budget. The PDD allocated a budget of around 31 million USD to be implemented directly by District Administrations for infrastructure projects up to a cost of 250,000 USD each. In 2011, the PDD was replaced by two separate Decentralized Development Programmes (PDD I and PDD II), the first of which included projects smaller than 150,000 USD (for a total of 15,520,000 USD), channelled via MSATM, while the second included projects which cost ranged from 150,000 USD to 500,000 USD (for a total of 28,811,000 USD), channelled via the Agency for National Development (Prime Minister s office). Additionally, other major spending programmes were initiated during this period, of which the biggest is the programme known as MDG-Suco that was channelled via the Agency for National Development. Through these programmes, a much bigger number of small and medium sized infrastructure Page 12

13 projects were delivered in rural areas. District Administration staff were empowered and trained to manage such projects; there were increased opportunities for employment of local workers; there were also increased opportunities for local contractors. However, while some PDD processes and procedures (especially for financial management) were adopted from the LDP, others (especially for planning and procurement) differed greatly, creating some confusion and difficulties both at the central and local levels. Towards the end of 2010, the MSATM tried to overcome these difficulties through the development of an integrated approach that should effectively link LDP and PDD. Under this approach, an Integrated District Development Plan (known by its Tetum acronym PDID) would harmonize all processes and procedures for district-level implementation. Unfortunately, the conceptualization and the drafting of the PDID have taken longer than was initially envisaged, and only in September 2011 was the draft decree law presented to the CoM. Although the final discussion and approval could not take place within 2011, at the time of drafting this report the PDID had finally been approved by the CoM (11 January 2012) and still only waiting for promulgation by the President of the Republic and subsequent publication in the official gazette (see section on PDID & Annex 2). Given the likelihood that future budgets continue to allocate increased spending at the local level, the attention is presently focused on strengthening the capacity of local structures to plan and manage infrastructure and service delivery projects. At the same time, discussions have recently started within the government (particularly MSATM and MoF) regarding the possibility to initiate a national mechanism to accelerate community development that would be planned and implemented at the suco level. Initial steps included an AusAid-financed study tour to Indonesia, as well as the creation, in October, of a technical WG through which the two ministries should continue to discuss the elaboration of a comprehensive approach towards local development. In the meantime, AusAid is supporting the establishment of a programme to which it would possibly contribute with 2 million USD in 2012 and 35 million USD during the following four years. UNCDF, and the WB are also participating in the debate. At this early stage it is still unclear in which way this new programme will fit into the processes to be established by the PDID, which represents the present government policy. At the time of writing, the CoM has just approved (18 January 2012) a resolution to establish a national mechanism to accelerate community development, thus giving the go ahead to the proposed programme. In 2010 the government also started working on its Strategic Development Plan (SDP), which is a more visionary exercise through which it aims to transition Timor-Leste from a low income to upper middle income country, with a healthy, well-educated and safe population by In July 2011 the parliament officially endorsed the SDP. Regarding decentralization, the SDP envisages that by 2015 a pilot program will be established in between three to five municipal chambers to work towards the gradual decentralisation of the exercise of government. This indicates that although decentralization is still a commitment, Page 13

14 the full establishment of municipalities throughout the country may require several more years, making it very important to have a clear interim approach to development and governance issues. Among other recent developments, in August 2011 the MoF presented to the CoM a draft decree law on procurement issues ( Omnibus Law ). While the overall aim of the new law is to harmonize procurement procedures that are presently regulated by a vast set of at times incoherent pieces of legislation, there is fear that the new law might allow for an excessive simplification of procurement procedures. In particular, the present draft establishes that simplified procedures (meaning direct sourcing procurement, rather than tendering) would apply to all projects smaller than 100,000 USD, which would be a major step backward for the LGSP efforts to develop local capacities for project implementation. MSATM, with the support from LGSP, has prepared written comments to the present draft, arguing that in the case of projects smaller than 100,000 USD District Administrators should be empowered to choose among a range of different procurement procedures, including competitive tendering. It is unclear if and when the bill will be discussed again by the CoM. VI. ACTIVITIES, ACHIEVEMENTS AND CHALLENGES DURING THE REPORTING PERIOD Output 1: Local Development Programme Establish procedures, processes and systems for effective local-level infrastructure and service delivery (ISD) and public expenditure and public financial management (PEM/PFM) are piloted in selected Districts, Sub-Districts and Municipalities Support to Activities of Local Assemblies Support to Local Assemblies LGSP continued to provide technical support to Local Assemblies in 13 Districts for the planning and implementation of projects financed through the Local Development Program (LDP). LGSP also assisted and observed Local Assembly (LA) Planning and Implementation Committees (PIC) in the planning process for During the reporting period all the 13 Districts finalized their annual investment plans for the next project cycle Minimum Condition Evaluation The Minimum Conditions (MC) Evaluation has been conducted on a yearly basis since fiscal year 2005/2006. Its main objective is to provide recommendations to the MSATM with regard to the allocation of LDP funds for the following fiscal year: in particular, a positive assessment is a pre-condition for Districts to receive a new allocation the following year. In addition, the MC evaluation provides recommendations to the MSATM, Local Assembly (LA), Planning and Implementation Committee (PIC), Finance teams and LGSP on how to Page 14

15 improve their performance in the future. The MC evaluation scheme assesses Local Assemblies performance with regard to 11 basic governance indicators (see Table 2). This year, in consideration of the length of time in which they have been implementing LDP projects, eight Districts were fully evaluated, while three Districts (Ermera, Oe-cusse and Viqueque) were partially evaluated based on seven indicators and the two remaining Districts (Dili and Liquiça) were evaluated based only on four indicators. The evaluation was carried out by DNDLOT as regulated by Ministerial Decree No. 1/2010 DNDLOT/MSATM. Table 1: LDP Minimum Conditions Indicators Accountability: 1. The Assembly was established according to MSATM regulations 2. The Assembly conducted four meetings during the last year. 3. The Assembly approved the current Investment Plan and Annual Budget. 4. Implementation follows the Financial Regulations of Local Development Fund (LDF). 5. The budget expenditure report of the last year was submitted to the Assembly. 6. Last year s audit report (where available) was submitted to the Assembly Transparency: 7. Investment Plans and Annual Budgets are published on the public information boards. 8. The minutes of the Assembly meetings are published on the public information boards. 9. Documents related to the bidding process are published according to the Financial Regulation. Local Contribution: 10. A local contribution to projects financed by LDF was made. 11. Operation & Maintenance followed LDF Financial regulations The MC evaluation was conducted between 7 and 16 February 2011 in each District and two Districts (Aileu and Lautem) did not fully comply with the set requirements and were consequently ranked only as sufficient with score inferior to 60 (see Table 2). The assessment also highlighted some more general weaknesses, particularly with regard to the transparency and local contribution indicators. More specifically, the assessment found that Local Assemblies will need to improve their performance with regard to ensuring that key information, e.g. information on Investment Plans and Annual Budgets and minutes of Local Assembly meetings, is published on public notice boards and is available to the public. The evaluation also found that communities did not always contribute to LDP projects, despite of the fact that LDP regulations require community involvement as a precondition to receive funding. Page 15

16 Table 2: Results of the Minimum Condition Evaluation for 2010 District Evaluation Result Category Aileu Sufficient Ainaro Satisfactory Baucau Good Bobonaro Good Covalima Satisfactory Dili Satisfactory Ermera Good Lautem Sufficient Liquiça Satisfactory Manatuto Good Manufahi Very Satisfactory Oe-Cusse Good Viqueque Good Allocation of the LDF Budget and Recurrent Costs Based on the results of the MC evaluation for 2010, in February 2011 the MSATM on behalf of GoTL announced the Local Development Fund (LDF) allocation for The total amount is 3.5 million USD, which is allocated among the different districts based on their respective populations (see Table 3). Eleven districts received an allocation of $3.62 per capita, while the two districts (Dili and Liquiça) which started implementing LDP projects only in 2010 received an allocation of $2.40 per capita. Following the announcement of the allocation, Local Assemblies confirmed that a total of 144 projects could be implemented as per approved by National Parliament in State budget for Table 3: LDF Capital Fund Allocation and Recurrent Costs for 2011 District # of Projects Capital Fund (USD) Recurrent Cost (USD) Aileu ,000 8,119 Ainaro 9 216,000 7,596 Baucau ,000 11,792 Bobonaro 8 324,000 12,446 Covalima ,000 9,923 Dili 7 565,000 8,078 Ermera 7 414,000 10,276 Lautem 9 225,000 9,506 Liquiça 8 152,000 6,434 Manatuto ,000 8,674 Manufahi ,000 9,654 Oe-cusse 9 236,000 7,473 Viqueque ,000 9,986 Total , Meetings of Local Assemblies First and second Local Assemblies meetings were held in all 13 districts. The purpose of the first Local Assembly (LA) meeting is to announce the results of the MC evaluation and to Page 16

17 inform assemblies about their final budget allocation, so that they can revise District Investment Plans and schedule the LA activities for the year. This year some of the LA members were disappointed with central-level decisions, as only 144 projects that were approved by the National Parliament coincided with the project proposals that had been earlier submitted by District Assemblies. Between the first and the second LA meetings, the Planning and Implementation Committees (PICs) proposed to cancel some of the approved projects as they had become unfeasible to be implemented due to natural disasters, some projects were implemented by NGOs and some projects were implemented in This proposal was subsequently approved during the second LA meeting, thereby reducing the total number of projects from 144 to 133. The second LA meeting, which was held between the months of July and September, discussed how to allocate the savings that originate following the bidding process, whenever contracts are issued for amounts that are lower than those indicated in the original budgets. In these cases, the savings that were made in each district can be reallocated by the LA to increase the budget of some of the existing projects, or sometimes to finance entirely new projects that had been earlier prioritised but not been financed. As a result of this discussion (see Table 4), eight new projects could be financed while 30 of the existing projects received some additional funding. In November, as there were still some small savings that originated from the bidding of the additional projects, some of the LAs held an extraordinary meeting in order to allocate such savings. In this way, 11 small projects were approved (mainly involving the rehabilitation of projects implemented during previous years). Given the small amounts involved, tendering processes and implementation could be successfully carried out before the end of the year. As Ministry Dispatch No. 10/2011 (please see points and 2.2) only regulated the planning process up to the submission of proposals by the Sub-District level to the District level, there was a partial legislative vacuum that hampered the organization of the third and fourth LA meetings, which normally are organized to present and approve investment plans. In particular, the third LA meeting should have been conducted after the PIC prioritises all proposals, which did not happen until December. The prioritized proposals should then have been approved at the fourth LA meeting, while project proposals had in fact to be approved by September in order to fit into the regular budget process (please see section of planning 1.3). Page 17

18 Table 4: Result of the First, Second and Extra Ordinary Assemblies Meeting per District in 2011 District Date of I LA Meeting Approved projects (as per budget law) Projects remaining after cancellations proposed by PIC [1] Decisions taken by II LA Meeting (July-Sept) Reallocated to existing projects [2] New projects # New Projects Decided by Extraordinary Assembly Aileu 1-Mar 8 8 (3) Ainaro 16-Mar 9 8 (1) Baucau 23-Mar (0) Bobonaro 7-Mar (1) Covalima 1-Mar 9 9 (4) Dili 28-Feb (1) Ermera 21-Mar (2) Lautem 21-Mar (3) Liquiça 7-Mar 7 7 (1) Manatuto 5-Mar (7) Manufahi 23-Mar 9 7 (7) Oe-cusse 21-Mar 7 7 (0) Viqueque 18-Mar 8 6 (0) Total Projects TOTAL (30) [1] Some projects were cancelled due to natural disaster risks, project is implemented by other actors (e.g. NGOs) or some projects were implemented in previous year. [2] Some of the funds were reallocated to increase the budget of other projects, therefore, these are not calculated as a new project. 1.2 Finance Transfer of LDF Allocation On 30 September 2011, the MSATM transferred the capital fund of 3.5 million USD to district bank accounts. By the end of the year, final commitments and obligations were 3,437,197 USD. The balance of 62,803 USD will be returned to the Banking and Payments Authority (see Table 5). Table 5: Capital Fund Allocation for 2011 District Allocation (USD) No of Projects Commitment and Obligation (USD) Balance from Obligation Aileu 165, ,122 11,878 Ainaro 216, ,000 0 Baucau 405, ,319 1,681 Bobonaro 324, , Covalima 218, , Page 18

19 Dili 565, ,000 0 Ermera 414, ,808 19,192 Lautem 225, ,000 0 Lequiça 152, ,000 0 Manatuto 157, ,000 0 Manufahi 185, , Oe-cusse 236, ,852 6,148 Viqueque 240, ,493 23,507 TOTAL 3,500, ,437,197 62, Recurrent Costs At the end of March 2011, MSATM transferred regular budget of US$119,957 to District bank accounts in order to finance LDP operational activities (see Table 6). Table 6: Allocation and Execution Status of 119,957 USD District Allocation Expenditure Balance Aileu 8,119 8,119 0 Ainaro 7,596 7,596 0 Baucau 11,792 11,792 0 Bobonaro 12,446 12,446 0 Covalima 9,923 9,923 0 Dili 8,078 8,078 0 Ermera 10,276 10,276 0 Lautem 9,506 9,506 0 Lequiça 6,434 6,434 0 Manatuto 8,674 8,674 0 Manufahi 9,654 9,654 0 Oe-cusse 7,473 7,473 0 Viqueque 9,986 9,986 0 Total 119, , Letter of Agreement (LoA) between MSATM and LGSP At the meeting of the Project Steering Committee (PSC) that was held on 25 February 2011, parties agreed that will: (a) support the recruitment of thirteen district-based planning officers and two national engineers, to be paid according to the salary grades and benefits of the Government of Timor-Leste; and (b) fund part of the operational costs associated with the LDP. Toward this end, hired a consultant to conduct a capacity assessment of the MSATM in May Based on the consultant s recommendations, a Letter of Agreement (LoA) between MSATM and was signed on 12 August. The signature of the LoA allowed LGSP to partially finance the salaries of 42 technical staff in the districts who had been recruited by Local Assemblies in the past years and for whose salaries there were no sufficient funds in the State budget. LGSP s contribution has allowed for the retention of these critical staff, while at the same time the MSATM has undertaken Page 19

20 actions to ensure that all of them will be again entirely financed through the State budget starting in January The signature of the LoA is also permitting the recruitment of 13 additional staff at the district level and two at the national level, which contribution will be critical given that in 2012 the range of coverage of LGSP will be extended to a much greater number of projects. The signature of this LoA is also a valuable opportunity to test the capacities of the MSATM, in view of the planned shift of s assistance from Direct Implementation Modality (DIM) to National Implementation Modality (NIM) during the coming years. The MoF has already created a specific bank account into which funds can be transferred in conformity with the LoA. As modalities for such bank transfers and for financial reporting through Free Balance are still being worked out, it is likely that the first transfer will be done in early However, direct payments to 42 technical staff were made to retroactively cover for their salaries for much of year Project Implementation Local Procurement Processes and Implementation of LDP Projects During the reporting period, LAs carried out procurement processes according to the current LDP procedures (see Table 7). It should be noted that projects costing less than 15,000 USD do not require central approval by the MSATM; therefore, their implementation could generally start in June. Projects costing more than 15,000 USD were only granted central approval in July, so that their implementation could only start in August. All projects could be completely implemented by 31 December. Table 7: Procurement Phases Procurement Phase Date (month) Bid preparation March Bid Announcement March April Pre bid Meeting 3 th week of March Site visit 4 th week of April 1 st May Bid Opening 3 th week of May Bid doc Evaluation 4 th week of May 4 th June Sign letter of acceptance 3 rd week of May last week of July Local awarding and contracting 1 st week of June 1 st week of August 1.4 The planning process for FY Project identification and prioritization In view of the anticipated approval of the PDID decree law (please see Output II), in February 2011 the MSATM issued Ministerial Dispatch 10/2011, regulating the planning phases for the 2012 project cycle. The Dispatch only regulated the initial phases of the planning process, up to the submission of proposals from the Sub-District Development Committee (SDDC) to the District Development Committee (DDC); it further assumed that the PDID decree law would establish two different budgets (mainly depending on the size of Page 20

21 the projects). The fact that the decree law could not be approved within year 2011 caused that the following phases of the planning process were carried out in a sort of legislative vacuum, departing significantly from past LDP regulations. A first consequence of the application of the new Dispatch was that there were no community consultations at the Suco level, as Suco Councils selected their proposals among those identified through Suco Development Plans (SDP) that had been drafted in 2010 following a process of consultation with the relevant communities. Therefore, the new Dispatch provided that new consultations are only required when communities or suco councils would like to proposed projects that are not included in the SDPs. All projects proposed by the Sucos, as well as others proposed by line sectors at the Sub- District level, were submitted to the SDDC. By 6 May 2011, all the proposals that were prioritized by the SDDCs were sent to the LAs for discussion and screening. LAs and relevant line sectors were then able to finalise draft District Investment Plans for At the end of May, LAs organized District Integrated Meetings, in which relevant stakeholders were invited to discuss the proposed investment plans in order to avoid project duplications and to increase their technical capacity and skills. Participants included both state and non-state institutions. As a result of the meetings, the LAs recommended 714 project proposals with a total proposed allocation of 85,211,907 USD (see Table 8). Table 8: List of District Integrated Meetings District Meeting Date #Project Proposals Total amount (USD) Aileu 25/05/ ,090,000 Ainaro 26/05/ ,032,000 Baucau 30/05/ ,244,000 Bobonaro 27/05/ ,241,500 Covalima 27/05/ ,122,900 Dili 25/05/ ,319,000 Ermera 25/05/ ,293,828 Lautem 27/05/ ,816,700 Liquiça 26/05/ ,232,000 Manatuto 25/05/ ,483,000 Manufahi 27/05/ ,941,600 Oe-cusse 31/05/ ,848,700 Viqueque 31/05/ ,546,679 TOTAL ,211,907 All proposals were then presented and discussed at a national level meeting, the District Budget Consultation Workshop, which was held in Dili on 13 and 14 June. During this twoday workshop, District Administrators presented the proposed projects for their Districts. Relevant ministries were present to provide their appreciations. The main objective of the meeting was to synchronize the district investment plans with national level initiatives. As a follow up action to the meeting, technical staff from DNDLOT and LGSP met with District Administrators to rank and prioritise the proposed projects. As a result, a total of 281 proposals were recommended for data verification prior to their submission to the Budget Page 21

22 Revision committee. On 15 August, without conducting data verification, DNDLOT sent to the Budget Revision Committee of the MoF a list of 216 proposed projects under the LDP (including 150 LDP projects and 66 Community Centres), plus a second list of 205 proposed projects for the PDD I (see Table 9). Following the review by the Budget Revision Committee, 199 of the 216 LDP projects were included in the draft 2012 State Budget, with a total budget allocation of 6,292,910 USD and 115 projects with a total budget of 7,415,000 for PDD I projects (see Summary of the project budget of MSATM in Annex 1). Table 9: Number of Projects and Budget Allocation before and after the Budget Review Commission PDL Projects (including Community Centre) PDD Projects District Proposed by DNDLOT Included in State Proposed by DNDLOT Included in State budget Budget Projects Budget Projects Budget #Project Budget #Projects Budget Aileu , , , ,000 Ainaro , , , ,000 Baucau , , , ,000 Bobonaro , , ,145, ,000 Covalima , , ,211, ,000 Dili , , ,432, ,000 Ermera , , ,372, ,000 Lautem , , , ,000 Liquiça , , ,020, ,000 Manatuto , , , ,000 Manufahi , , , ,000 Oe-cusse , , ,143, ,000 Viqueque , , , ,000 TOTAL 216 7,359, ,296, ,892, ,415,000 In late October 2011, the data verification process started for both LDP and DDP projects. While most proposed projects were sound, the verification teams found some cases in which budget allocations were not realistic, or the conditions at the project site were not fit for adequate project implementation. 1.5 Gender Support Activities In January, LGSP produced a Gender training manual in Indonesian language. On 19 and 20 January, LGSP also organized a two-day Training of Trainers (ToT) session for 10 LGSP and MSATM staff. LGSP has finalised the recruitment process to hire an international Gender Specialist, who should arrive in February Many of the gender-related activities included in the 2011 AWP are therefore being re-scheduled for the next year. Page 22

23 1.6 Capacity Building Refresher training on local planning, finance and procurement process To develop capacities at both national and district levels, LGSP organized and carried out refresher training on local planning, finance and procurement processes. The session targeted 24 participants from both districts and the central levels. The training was conducted from 30 April to 1 May in Dili. As a continuation of this training, DNDLOT and LGSP staff is presently providing training to district administration treasury and finance teams. This activity is planned in five districts, three of which were already completed (Liquiça, Ermera and Oe-cusse) AutoCAD training for District technical staff A total of 41 technical staff was trained on basic project design. A national short-term consultant was recruited to help LDP and DNDLOT teams to train the participants. Two training sessions were held in Dili, respectively from 10 to 14 and from 17 to 21 October. The objective of the training was to develop participants graphic design and their calculation specification skills Study tour on the integrated Planning for Local Governance in Indonesia A team consisting of 10 MSATM and LGSP staff went to Indonesia for one week (15-22 December 2011) to receive training on Integrated Planning for Local Governance. The training was carried out at the Satunama Training Centre in Yogyakarta with the objective of helping participants in understanding the concepts, principles and alternative models of integrated development planning and to have an overview of legislative and conceptual frameworks for project design, implementation and monitoring. Output 2: Policy & Legislation Support is provided to GoTL for the establishment of an appropriate and comprehensive institutional, legal, and regulatory framework for local government 2.1. Continued support to Local Government Legislation The finalization of some pieces of the policy and legislative frameworks for decentralization and local government was put on hold by the Government following the postponement of the municipal elections in April LGSP has therefore concentrated its efforts on supporting the drafting of other pieces of legislations that related to the improvement of the current PFM framework rather than with the establishment of future municipalities. Pending the recruitment of a legal adviser, a consultant has been hired during critical periods of the year in order to support the drafting of the PDID (please see 2.2). A legal advisor was also recruited and is expected to start her duties on 3 January Following the approval of the PDID, the legal adviser will support the legal drafting of the required subsidiary Page 23