Second Public Financial Management Capacity Strengthening Project (P151492)

Transcription

1 AFRICA Somalia Governance Global Practice Recipient Executed Activities Investment Project Financing FY 2016 Seq No: 5 ARCHIVED on 05-Nov-2018 ISR34381 Implementing Agencies: Ministry of Finance, Puntland, Ministry of Finance of Somaliland Hargeisa, Federal Republic of Somalia, Ministry of Finance Federal Government Key Dates Key Project Dates Bank Approval Date: 07-Jul-2015 Planned Mid Term Review Date: 08-May-2017 Original Closing Date: 30-Jun-2018 pdotable Project Development Objectives Effectiveness Date: 09-Sep-2015 Actual Mid-Term Review Date: 08-May-2017 Revised Closing Date: 30-Jun-2020 Project Development Objective (from Project Appraisal Document) The Project Development Objective is to establish and strengthen institutional capacity for the management of public funds incentral Finance Agencies and targeted sectors. Has the Project Development Objective been changed since Board Approval of the Project Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured) To strengthen systems of domestic revenue mobilization, expenditure control and accountability in the Federal Government, Puntland State of Somalia, and Somaliland. Components Table Name Component 4: Public financial management reform oversight, coordination and management:(cost $3.00 M) Component 1: Strengthening Tax Policy and Inland Revenue Administration Systems:(Cost $12.30 M) Component 2: Strengthening Capacity for Public Financial Management Control and Accountability:(Cost $12.70 M) Component 3: Rapid Response Facility:(Cost $2.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating High High Implementation Status and Key Decisions 11/5/2018 Page 1 of 7

2 The original grant became effective on September 9, Following project restructuring and additional financing, the project is expected to close on June 30, The revised development objective of the project is to strengthen systems of domestic revenue mobilization, expenditure control and accountability in the Federal Government, Puntland State of Somalia and Somaliland. After the restructuring the number of Components were reduced from six (6) components to four (4) components: - (i) Component 1: Strengthening Tax Policy and Inland Revenue Administration systems; (ii) Component 2: Strengthening Capacity for the Public Funds Management Transparency and Accountability; (iii) Component 3: Rapid Response Facility; (iv) Component 4 PFM reform Oversight, Coordination and Management; Component 1: Strengthening Tax Policy and Inland Revenue Administration systems The Ministry of Finance (MOF) contracted a technical advisory firm in January 2017 to provide consultancy services for revenue mobilization and tax administration, by developing strategies and providing technical support to Inland Revenue departments in the MOF. The primary focus of the TA is to support improvements in the efficiency and effectiveness of tax administration with the broader expectation of an enhanced domestic revenue collection. Thus far, the following have been developed: (i) a Tax policy gap analysis; (ii) a taxpayer segmentation and required compliance processes; (iii) a TIN register database; (iv) a road map towards implementing an ad valorem customs duty regime. Additional financing will strengthen the tax policy and selected inland revenue systems and capacity. Component 2: Strengthening Capacity for the Public Funds Management Transparency and Accountability This component brings together several PFM related activities including; i) budget planning and execution; ii) support for the SFMIS; iii) professionalization of PFM staff; iv) integrity pillar activities involving the strengthening of the office of the auditor general; All these activities will support the FGS, Puntland and Somaliland to strengthen their PFM systems and assure the effective use of their public resources. Significant progress has been made in several areas, including the deployment of several SFMIS modules, however one key module, the budget module is yet to be used and government is urged to act to use this module to ensure budgets are properly monitored during execution and that only budget appropriated can be expended. There is also a drive to improve the management of cash by limiting cash transfer use by MDAs and that all MDA expenditures are processed through the SFMIS thus limiting the use of cash by the MDAs. Component 3: Rapid Response Facility This component has been introduced to support government access project funds to undertake activities not envisaged at the time of design but identified as critical to supporting the government s PFM reform agenda. In situation of fragility, things change and evolve, hence such resource allows the flexibility under the projects to address any emerging situation. At time of appraisal one such request, to support the government complete the MoF phase 2 building, was made and subsequently agreed to be funded under this component. The completion of the Phase 2 building of the MoF will allow government space to house an enhanced inland revenue offices and systems in its drive to enhance domestic resources. The project will continue to offer substantive support and flexibility to government so long as the requests support the PFM reform agenda and will lead to the attainment of the project development objectives. Component 4: PFM reform Oversight, Coordination and Management The Governance arrangement put in place under the project includes a Reform oversight committee (ROC) chaired by the OPM. There are other technical committees. There is concern that these committees do not meet or only meet infrequently. It is important that the ROC meets quarterly to give it the opportunity for it to help address all emerging issues min relation to the PFM reforms and project challenges. In addition, project management is required to share all relevant project information, reports and data with relevant technical committees and the ROC. As part of the Work planning processes, we will expect the oversight committee meetings to be included and monitored for compliance. The fiduciary reporting requirements under the project have all been met during the life of the project and implementation issues are also addressed as they arise. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial High High Macroeconomic High High High Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Substantial Substantial Substantial Institutional Capacity for Implementation and Sustainability Substantial Substantial Substantial Fiduciary High High High 11/5/2018 Page 2 of 7

3 IN IN IN Environment and Social Low Moderate Moderate Stakeholders Substantial Substantial Substantial Other High High High Overall High High High Results PDO Indicators by Objectives / Outcomes Increase in Domestic Revenue Mobilization Revenue instruments (both tax and non-tax) with basic processes automated at the FGS. (Number, Custom) The following apply for the purposes of this revenue mobilization indicator: (i) instruments include corporate income tax; personal income tax; excise tax; simple broad-based consumption tax; simple GST or VAT based consumption tax; registration tax; property tax; stamp duty; tax on remittances; telecommunications taxes; road tax (including vehicle licenses and drivers permits); business licenses; telecom licenses; and off-shore fishing licenses. (ii) the processes to be included in computing the indicator include (a) registration, (b) declaration/filing and assessment, (c) taxpayer payment and accounting, and (d) debt collection. Strengthen Systems of Accountability MDA audits (incl. pro-poor sectors) completed and published. (Percentage, Custom) Transparency in the use of public funds and strategic allocation and use of funds in pro-poor sectors Strengthen Systems of Expenditure Controls Appropriated expenditures processed through the system. (Percentage, Custom) Aggregate Fiscal Discipline 11/5/2018 Page 3 of 7

4 IN IN IN IN Overall Comments PDO The results for the indicators are identical from previous one as it still early stage after the Board approval of AF (September 25, 2018). Intermediate Results Indicators by Components Strengthening Tax Policy and Inland Revenue Administration Systems FGS revenue administration capacity for tax administration (Number, Custom) Revenue mobilization Revenue mobilization strategy implemented (Text, Custom) Allocation of TINs Allocation of TINs Procedures manual for Ad hoc approach to commenced and commenced and tax administration revenue mobilization expected to be expected to be disseminated and operational in 2018 operational in 2018 training conducted Date 31-Dec Dec Oct Jun-2022 Revenue mobilization FGS improved tax policy capacity (Number, Custom) Revenue mobilization Strengthening Capacity for Public Financial Management Control and Accountability CIPFA Diploma Certified students gender disaggregated ( PL, SL) (Number, Custom) /5/2018 Page 4 of 7

5 IN IN IN IN IN PFM Knowledge, Skills and Competencies Strengthened audit methods implemented (Text, Custom) Audit procedures & methodology not aligned with INTOSAI Standards (FGS, PL,SL) -- Audit procedures & methodology not aligned with INTOSAI Standards (FGS, PL, SL) (I) Improved regularity audit methods applied for Government Financial Statement Audits (FGS and SL) (II) Percentage of MDAs with audited financial statements using Audit Management Software & adopting improved methodology (Puntland) Independent oversight and accountability for use of public funds Citizen engagement measured by the number of tax payers consulted / educated (gender disaggregated) (Number, Custom) , Payments made directly to vendors (Percentage, Custom) Budget and Fiscal Discipline Improved coverage and classification of data in in-year budget reports (Text, Custom) Only approved budget and actuals disclosed -- Only approved budget and actuals disclosed Timely In year budget reports include expenditure both at commitment and at payment stage Date 11-Jul Mar Oct Jun-2022 Improved reporting for management decision-making and transparency Open Budget Initiative (OBI) principles 11/5/2018 Page 5 of 7

6 Improved information contained in annual financial reports (Text, Custom) Annual Financial Statements submitted in a timely manner with coverage including Donor funds under the Revenue and Revenue and revenue, expenditures, control of government Expenditure reports by Expenditure reports by financial assets, and Register for organizational and organizational and domestic arrears and moveable fixed assets economic classification economic classification cash flow statement; as included well as donor funds under the control of the government Date 31-Dec Jul Oct Jun-2022 Transparency and accountability Overall Comments IR The results for the indicators are identical from previous one as it still early stage after the Board approval of AF (September 25, 2018). Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P IDA-D3700 Not Effective USD %% P TF-A0388 Effective USD % P TF-A0389 Effective USD % Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P IDA-D3700 Not Effective 25-Sep Jun Jun-2022 P TF-A0388 Effective 06-Jul Jul Sep Jun Jun-2020 P TF-A0389 Effective 10-Nov Nov Dec Jun Jun-2020 Cumulative Disbursements 11/5/2018 Page 6 of 7

7 Restructuring History Level 2 Approved on 25-Aug-2016,Level 2 Approved on 07-Dec-2017 Related Project(s) P Domestic Revenue Mobilization and Public Financial Management Capacity Strengthening Project 11/5/2018 Page 7 of 7