RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF GOVERNMENT S CENTRAL PUBLIC ADMINISTRATION REFORM (CPAR) PROJECT
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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank RESTRUCTURING PAPER ON A Project No: PROPOSED PROJECT RESTRUCTURING OF GOVERNMENT S CENTRAL PUBLIC ADMINISTRATION REFORM (CPAR) PROJECT TF effective since July 11, 2006 TO THE REPUBLIC OF MOLDOVA DECEMBER, 2010
2 ABBREVIATIONS AND ACRONYMS CPAR MDTF PDO IP ICB DFID SIDA Central Public Administration Reform Multi-donor trust fund Project development objective Implementation performance International competitive bidding UK Department for International Development Swedish International Development Cooperation Agency Regional Vice President: Country Director: Sector Manager: Task Team Leader: Philippe H. Le Houerou Martin Raiser William Leslie Dorotinsky Elena Nikulina 2
3 MOLDOVA GOVERNMENT S CENTRAL PUBLIC ADMINISTRATION REFORM (CPAR) P CONTENTS Page A. SUMMARY... 4 B. PROJECT STATUS... 4 C. PROPOSED CHANGES... 4 D. RISKS.8 3
4 MOLDOVA GOVERNMENT S CENTRAL PUBLIC ADMINISTRATION REFORM (CPAR) RESTRUCTURING PAPER SUMMARY The Moldova Central Public Administration Reform (CPAR) project has made good progress in achieving its development objective (PDO). Most of activities included in the project implementation plan that served the basis for the first project extension in 2008 were successfully completed. Major investment in the establishment of the civil service registry was delayed because of the technical difficulties with developing the tender documentation. However, the problems were successfully resolved and the tender was announced in July The proposed restructuring includes extension of the grant closing date for an additional 24 months to allow for use of the remaining funds for implementation of the civil service registry and a few other activities which are key for successful achievement of the PDO. The restructuring also includes a change in the composition of the sources of financing because of withdrawal of one of the donors. The project is highly valued by the Government and contributing donors, and discussions are under way about a possible expansion in the scope of project activities and additional financing from one of the existing donors in To reflect the improved project performance, the PDO and implementation performance (IP) ratings were upgraded in the last ISR archived in June 2010 from moderately unsatisfactory to moderately satisfactory. PROJECT STATUS The project has made good progress in achieving the PDO of strengthening institutional capacity of the Moldovan public administration for better policymaking, policy implementation and efficient use of public resources. As documented during the recent project progress review (completed on June 25th), the project has achieved many of the intended results, despite the slow progress over the first years of implementation. The Government is also strongly committed to achieving the remaining results for which activities have been initiated. Among the key results achieved to date is development and implementation of the legal framework reform to support merit based civil service, effective since January The project also supported development and introduction of an effective strategic planning and policy coordination system by building the capacity of a dedicated policy coordination unit in the State Chancellery and developing strategic planning methodologies to be used across the line ministries. In addition, the project contributed to 4
5 streamlining the institutional structure of the Government and achieving better separation of policy development from implementation functions. Central public administration reform remains among the top priorities of the Moldovan Government. The new Government (established in September 2009) has reconfirmed its commitment to public administration reform, as reflected in the Government s Action Plan and the Stabilization and Economic Recovery Plan. This provided continuity of political commitment and created favourable conditions for the attainment of the objectives of the CPAR MDTF. The pace of project implementation has increased considerably over the last 12 months. Despite acceleration of project implementation during 2010, the time remaining was too short to fully implement all the activities by the present Closing Date of December 31, An extension of the closing date therefore became a necessity. PROPOSED CHANGES Financing The project is 100% financed by a multi-donor trust fund (MDTF), to which three donors have originally agreed to contribute (DFID, the Dutch Government and SIDA). Because of the closure of their program in Moldova, DFID is unable to remain a contributor to the CPAR MDTF after December 31, DFID is also unable to provide the remaining undisbursed installment to the MDTF in the amount of GBP 528,565. This amount will therefore not be disbursed and is to be cancelled. The notification letter informing the Bank of DFID s withdrawal from the CPAR MDTF was received in July 2010 (attached). This withdrawal, however, does not require an adjustment of the grant amount. As a consequence of exchange rate fluctuations for the currencies in which donor contributions to the trust fund are denominated, the amounts of contributions already transferred by the donors to the grant account are sufficient to fully finance the original grant amount 1. The changes in donor contributions are presented in Table 1. 1 This was confirmed by TACT together with clearance of the amendments to the legal agreements for this MDTF through a message received on November 29 th. 5
6 Table 1. MD CPAR MDTF Financing Donor contributions Current Proposed DFID (GBP) 1,390, ,732 2 Government of the Netherlands (EURO) 1,797,488 1,797,488 SIDA (SEK) 22,002,680 22,002,680 Total Grant Amount, as reflected in the Grant Agreement, USD 6,150, ,150,000 Closing date The closing date is proposed to be extended for 24 months (till December 31, 2012). This will be the second extension of the grant closing date. The first extension for 24 months was approved in December The total cumulative length of extension is 48 months (4 years). As indicated in the letter-request from the Prime Minister of Moldova (attached), an extension is needed to finalize and implement the contract for implementation of the civil service registry and several other activities already initiated under CPAR MDTF. Most of the remaining balance of MDTF funds was reserved for the civil registry implementation. The Government has prepared and agreed with the Bank team on the implementation plan for the extension period (attached). The Government has expressed an interest to expand the scope of project activities and has requested additional financing for the project. There is a good prospect for receiving such additional financing from SIDA in The discussions on the scope of activities to be supported through additional financing are expected to be finalized in January There are no financial management issues associated with the project and project audits are up to date. Implementation schedule The agreed implementation schedule for all the activities envisaged to take place during the extension period is available in the attached Government implementation plan. 2 This amount represents the funds already transferred to the MDTF by DFID. 3 Based on the policy for MDTFs, the grant amount included in the Grant Agreement with the beneficiary represented USD equivalent of 85% of the donor contributions estimated on the basis of the exchange rates valid on the date of signing. 6
7 The most important new activity to be launched during this period is implementation of the civil service registry, which is expected to start in April A two-stage ICB tender for the procurement of the registry IT system was launched in July The first stage of the tender is to be completed shortly, and the contract signed in March The estimated implementation period for the contract activities is 18 months. D. RISKS The risks identified during the preparation of the Trust Fund brief in 2006 remain broadly valid. The team also considered it important to assess the relevance of the political risk, taking into account the uncertainties related to Parliamentary elections. The elections that took place on November 28,, 2010 did not result in a major change of the balance of political forces. While the changes of key decision makers at the implementing agency for CPAR MDTF (State Chancellery) cannot be excluded, the related risk for the prospects of implementation of the project activities is assessed as moderate. The decision makers are expected to be confirmed before the time when the key new MDTF activities planned for 2011 are expected to start (March 2011). Based on the experience of interaction with the Government that took office in the fall of 2009, CPAR activities are expected to be of high value for the new Government and the chances for further continuity of MDTF implementation appear to be good. The proposed length of the extension period takes this risk factor into account by allowing a few additional months for any potential delays related to the need to bring the new decision makers up to speed. 7
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