IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2920 IDA-H9490) ON A GRANT IN THE AMOUNT OF XDR 13.3 MILLION (US$20.2 MILLION EQUIVALENT) TO THE

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1 Public Disclosure Authorized Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT Report No: ICR (IDA-H2920 IDA-H9490) Public Disclosure Authorized ON A GRANT IN THE AMOUNT OF XDR 13.3 MILLION (US$20.2 MILLION EQUIVALENT) TO THE REPUBLIC OF CHAD FOR A PUBLIC FINANCIAL MANAGEMENT CAPACITY BUILDING PROJECT June 30, 2017 Public Disclosure Authorized Public Disclosure Authorized Governance Global Practice Africa Region

2 CURRENCY EQUIVALENTS 1 (Exchange Rate Effective December, ) Currency Unit = Central African CFA Franc (BEAC) XAF US$1.00 = XAF 621 XDR 0.74 = US$1.00 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AAP AF AFS ASDAV CAS CCSRP CEMAC CFAA CID COA DG DGB DHR DO EU FL FM GDP GEEP GOC HR HRM ICR ICT IDP IFMIS IGF IMF Africa Action Plan Additional Financing Annual Financial Statement Application de Suivi des Documents à Viser Country Assistance Strategy College of Control and Supervision of Petroleum Revenue (Collège de Contrôle et de Surveillance des Revenus Pétroliers) Economic Commission for Central African States (Commission Economique des Etats de l Afrique Centrale) Country Financial and Accountability Assessment Integrated Expenditure Circuit (Circuit Intégré de la Dépense) Chamber of Accounts (SAI) General Directorate (Direction Générale) Budget General Directorate (Direction Générale du Budget) Directorate of Human Resources Development Objective European Union Financial Law Financial Management Gross Domestic Product Management of the Petroleum Economy Project (Gestion de l Economie à l Ere Pétrolière) Government of Chad Human Resources Human Resources Management Implementation Completion and Results Report Information and Communication Technology Internally Displaced Person Integrated Financial Management Information System Office of the Inspector General of Finance International Monetary Fund 1 World Bank Group Client Connection Currency Converter

3 IRSC ISR IT KI LOLF MDAs MDG M&E MFB MOF MOU MTBF MTEF MTR ORMP PAD PAMFIP PARCAFIP PDO PEFA PER PFM PIU PND PRGF PRML PRMP PRS PRSP SAI STP PAMFIP SYGADE SYGMA TA TOFE ToR UNHCR UNDP Institutional Reform Support Credit Implementation Status and Results Report Information Technology Key Indicator Organic Finance Law (Loi Organique Relative aux Lois de Finances) Ministries, Departments, and Agencies Millennium Development Goal Monitoring and Evaluation Ministry of Finance and Budget (Ministère des Finances et du Budget) Ministry of Finance Memorandum of Understanding Medium-term Budget Framework Medium-term Expenditure Framework Midterm Review Oil Revenue Management Program Project Appraisal Document Action Plan for the Modernization of Public Finance Management (Plan d Action pour la Modernisation de la Gestion des Finances Publiques) Support Project to Strengthen Public Finance Management Capacities (Projet d Appui au Renforcement des Capacités de Gestion des Finances Publiques) Project Development Objective Public Expenditure and Financial Accountability Public Expenditure Review Public Financial Management Project Implementation Unit National Development Plan (Plan National de Développement) Poverty Reduction and Growth Facility Petroleum Revenue Management Law Petroleum Revenue Management Program Poverty Reduction Strategy Poverty Reduction Strategy Paper Supreme Audit Institution PAMFIP Permanent Technical Secretariat (Secrétariat Technique Permanent du PAMFIP) Debt Management System (Système de Gestion de la Dette) Integrated Procurement Management System (Système de Gestion Intégrée des Marchés Publics) Technical Assistance State Financial Operations Table (Tableau des Opérations Financières de l Etat) Terms of Reference United Nations High Commissioner for Refugees United Nations Development Program

4 Senior Global Practice Director: Deborah Wetzel Practice Manager: Chiara Bronchi Project Team Leader: Jean Charles Amon Kra ICR Team Leader: Fabienne Mroczka

5 REPUBLIC OF CHAD Public Financial Management Capacity Building Project 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 CONTENTS 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 MAP... 52

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7 A. Basic Information Country: Chad Project Name: Public Financial Management Capacity Building Project ID: P L/C/TF Number(s): IDA-H2920, IDA-H9490 ICR Date: 06/30/2017 ICR Type: Core ICR Lending Instrument: TAL Borrower: Government of Chad Original Total Commitment: XDR 6.7 million Disbursed Amount: XDR 8.63 million Revised Amount: Environmental Category: C XDR 9.3 million Implementing Agencies: Technical secretariat to the PAMFIP at Ministry of Finance Co-financiers and Other External Partners:. B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 10/06/2004 Effectiveness: 04/22/ /22/2009 Appraisal: 02/12/2007 Restructuring(s): 04/04/2012 Restructuring(s): 04/05/201312/07/20 12 Restructuring(s): 04/14/2014 Restructuring(s): 12/27/2016 Approval: 05/24/2007 Mid-term Review: 05/01/ /10/2011 Closing: 12/31/ /31/2016 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Moderately Unsatisfactory Low Moderately Unsatisfactory Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Moderately Government: Unsatisfactory Unsatisfactory Quality of Supervision: Moderately Implementing Unsatisfactory Agency/Agencies: Moderately Satisfactory Overall Bank Performance: Moderately Unsatisfactory Overall Borrower Performance: Moderately Unsatisfactory i

8 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Performance any) Potential Problem Project at any time (Yes/No): Problem Project at any time (Yes/No): DO rating before Closing/Inactive status: Yes Yes Moderately Unsatisfactory Quality at Entry (QEA): Quality of Supervision (QSA): None None Rating D. Sector and Theme Codes Original Actual Major Sector/Sector Public Administration Central Government (Central Agencies) Education Workforce Development/Skills 5 5 Major Theme/Theme/Sub Theme Public Sector Management Public Expenditure Management Public Administration Administrative and Civil Service Reform Transparency, Accountability and Good Governance Public Financial Management Public Expenditure Management E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Paul Noumba Um Marie Francoise Marie-Nelly Practice Manager/Manager: Chiara Bronchi Helga W. Muller Project Team Leader: Jean Charles Amon Kra Mamadou L. Deme ICR Team Leader: ICR Primary Author: Fabienne Mroczka Emeline Bredy/Fabienne Mroczka ii

9 F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The overall development objective of the proposed operation is to help the GoC improve the quality of its PFM system to increase the efficient and transparent use of public resources, in particular the expected oil revenue, to attain MDGs. To this end, the proposed IDA project will support the implementation of the Government PAMFIP action plan for modernization of PFM in a concerted manner with other donors. (a) PDO Indicator(s) per PAD The PAD had four (4) project indicators and four (4) intermediate indicators. The April 2013 restructuring and 2014 additional financing agreement included changes in activities, financing reallocation, and extension of closing date to 12/31/2016. Section 1 Project Context, Development Objectives and Design presents the revised indicators. 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 DROPPED: Budget Preparation. Aggregate allocation to priority sectors equal or exceed 70 percent of total expenditure (excluding debt service, but including capital spending and externally financed expenditure) or is aligned with the future PRMP agreement with the donor community. n.a. n.a. n.a. n.a. Date achieved n.a. n.a. n.a. n.a. This indicator was dropped in 2012 (restructuring paper report no ) as it was Comments linked to the discontinued ORMP. DROPPED: Budget execution. Aggregate actual expenditure for priority sectors Indicator 2: compared with original approved budget shall not deviate more than 5 percent from 2011 (for expenditures financed with domestic resources). Value (Quantitative or Qualitative) n.a. n.a. n.a. n.a. Date achieved n.a. n.a. n.a. n.a. Comments This indicator was dropped in 2012 (restructuring paper report no ) as it was (including % linked to the discontinued ORMP. achievement) Indicator 3: Value (Quantitative or Qualitative) Budget reporting. Quarterly budgetary and financial reports, including all items of budget estimates and covering expenditures at both commitment and payment stages, are regularly produced from the CID in a timely manner (issued within four weeks after the end of the period, by the end of 2011). Circuit Intégré des Dépenses (CID) (current IFMIS) is regularly producing a table (tableau des quatre phases), which is inaccurate (data are not consistent with approved 2007: Four phase table is consistent with approved budget, and is issued within eight (8) weeks after period end. In-year budget reporting target: Based on the CID/IFMIS, a four-phase table is issued The expenditure circuit is since September 2014, fully computerized, and is able to instantaneously report the four iii

10 budget), noncomprehensive (does not include salaries and external financing and does not consolidate various budget), and does not cover all payments. It is currently useless for any meaningful follow-up of budget execution. 2008: Four phase table is consistent with approved budget, covers all payments and is issued within seven (7) weeks after period end. 2009: The same as 2008 except that table is issued within six (6) weeks after period end. 2010: The same as 2008 except that table is issued within five (5) weeks after period end. every quarter within 4 weeks after period end automatically including salaries and including all payments. Quarterly budget execution reports are produced in a timely manner (4 weeks following the end of each quarter) phases (for example, commitment, validation, authorization, and payment) of budget execution for all major expenditure categories except for salaries of militaries. The ICR mission was able to obtain the FY16 system generated tableau des quatre phases. Date achieved 12/31/2006 Comments (including % achievement) Indicator 4: Value (Quantitative or Qualitative) 2011: The same as 2008 except that table is issued within four (4) weeks after period end. Partially achieved 12/31/2016 Last revision of this indicator in 2014 Project Paper report no TD. Targets were modified to reflect scaling up of the project at the time of additional financing. Public Financial Accountability. (a) The Treasury s annual financial accounts (Comptes de Gestion du Trésor) are produced and submitted to the Chamber of Accounts in a timely manner (end of May) from May 2010; (b) the annual budget execution law (Loi de Règlement) is submitted to Parliament, in conformity with legal provisions, for 2010 fiscal year (at end September 2011); and (c) the Collège prepares its annual audit on oil revenue, issuing it by the end of July. (a) 2004 Treasury accounts were produced for the COA at the end of September Treasury accounts were (a) 2007: 2006 accounts submitted by the end of September : 2007 accounts submitted by early July documented Treasury Annual Financial Statements have been submitted to 2015 documented Treasury Annual Financial Statements have been submitted to the Court of Accounts by the end of iv

11 (b) produced for the COA at the end of September The 2004 Loi de Règlement (LR) was submitted to Parliament at the end of October The 2005 LR was not yet submitted to Parliament by the end of September 2006; however, the administrative financial statement has been prepared by the MOF and submitted to the COA. (c) The 2005 Collège report was released mid- October : 2008 accounts submitted by the end of June : 2009 accounts submitted by the end of May : 2010 accounts submitted by the end of May 2011 (b) 2007: 2006 draft LR submitted by end of November : 2007 draft LR submitted by early November : 2008 draft LR submitted by end of October : 2009 draft LR submitted by end of September : 2010 draft LR submitted by end of September 2011 (c) 2007: 2006 report released by October : 2007 report released by September 2008 the Chamber of Accounts by end of 2016 v

12 Date achieved 2006 Comments (including % achievement) 2009: 2008 report released by July : 2009 report released by July : 2010 report released by July 2011 Achieved 12/31/2016 This indicator was last revised in 2014 (report no TD) and only part (a) was maintained with an updated target. (b) Intermediate Outcome Indicator(s) for PAD Section 1 Project Context, Development Objectives and Design presents the revised indicators. 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 Extent of multiyear perspective in fiscal planning, expenditure policy and budgeting (PI-12), evidenced by: (a) preparation and annual updating of multiyear fiscal forecasts and functional allocations for and ; and (b) production of priority sector program budget with multiyear costing of recurrent and investment expenditure for the same periods. (a) A macro fiscal forecast for has been prepared and discussed in August 2006, but only year 2007 has actually been elaborated. A longterm forecast will be undertaken on time for next fiscal year. (b) 13 ministries prepared a sector MTEF for by the end of July 2006, but a lot of work remains to be done on costing of investment and recurrent expenditures. (a) 2007: Macro fiscal projections for available at the end of May : Macro fiscal projections for available at the end of May : Macro fiscal projections for available at the end of May 2009 (1) Fiscal and macroeconomic projections for N+3 are prepared during budget preparation (Q1) based on economic/functi onal classification. (2) A global MTEF is prepared and budget ceilings are defined. (3) Statements of sector (1) A macroeconomic framework model has been established which allows since 2012, to prepare each year, a Mid- Term Expenditure Framework (MTEF) covering the next 3 years. (2) A global MTEF is prepared and budget ceilings are defined. vi

13 2010: Macro fiscal projections for available at the end of May : Macro fiscal projections for available at the end of May 2011 (b) 2007: Sector MTEF for available for 13 ministries at the end of July 2007 strategies (at least for key sectors including education, health, rural development, water, and sanitation) exist and are fully costed, broadly consistent with fiscal forecasts, for sectors representing 25 75% of primary expenditure. (3) Not achieved. (4) Partially achieved. 2008: Sector MTEF for available for 13 ministries at the end of July : Sector MTEF for available for 13 ministries at the end of July 2009 (4) An investment management system is operation and investment decisions have links to sector strategies. Date achieved 2006 Comments (including % achievement) Indicator 2: 2010: Sector MTEF for available for 13 ministries at the end of July : Sector MTEF for available for 13 ministries at the end of July 2011 This intermediate indicator was last revised in 2014 (report no TD). Nearly achieved 12/31/2016 DROPPED: Scope, nature, and follow-up of external audit measured by mandatory audits regularly carried out by oversight and audit institutions (the Chamber of Accounts implements the Comptes du Trésor annual audit and IGF performs 80 percent of its annual audit programs by the end of the project). vii

14 Value (Quantitative or n.a. n.a. n.a. n.a. Qualitative) Date achieved n.a. n.a. n.a. n.a. This indicator was dropped. Comments The COA part was dropped in 2013 (restructuring paper report no TD) and the (including % IGF part was dropped in 2014 (report no TD), given the narrower scope of the achievement) project at the time. Frequency of M&E reports evidenced by: (i) M&E system for PAMFIP is set up by Indicator 3: June 2008, and (ii) M&E reports are regularly published (monthly, quarterly and semiannually) including monitoring on key indicators. 2007: M&E system for the project is in place as of December Value (Quantitative or Qualitative) No M&E system for PAMFIP was available as of the end of March : M&E system for PAMFIP is in place at the end of June : M&E reports for PAMFIP are available. 2010: M&E reports for PAMFIP are available. The 2015 M&E report is validated by end-june 2016 and published on the website. As of December 2016, the 2015 RASEP (report of the execution of the National Development Plan) is completed on a technical point of view but is not validated yet by the steering committee of the PAMFIP. 2011: M&E reports for PAMFIP are available. Date achieved 2007 Not achieved Comments (including % This intermediate indicator was last revised in 2014 (report no TD). achievement) Indicator 4: Value (Quantitative or Qualitative) DROPPED: Satisfactory annual financial audit report for the IDA Project measured by issuance of successive annual audit reports with positive opinions (without qualification) from an independent auditor, acceptable to the Bank. n.a. n.a. n.a. n.a. Date achieved n.a. n.a. n.a. n.a. viii

15 Comments (including % achievement) This intermediate indicator was dropped in 2012 (report no ) as this indicator is already monitored through FM supervision. G. Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (XDR, millions) 1 12/27/2007 Moderately Unsatisfactory Moderately Unsatisfactory /23/2008 Unsatisfactory Unsatisfactory /24/2008 Moderately Satisfactory Moderately Satisfactory /29/2009 Moderately Satisfactory Moderately Satisfactory /31/2009 Moderately Unsatisfactory Moderately Satisfactory /20/2010 Moderately Unsatisfactory Moderately Satisfactory /16/2011 Unsatisfactory Moderately Unsatisfactory /11/2011 Moderately Unsatisfactory Moderately Satisfactory /20/2012 Moderately Unsatisfactory Moderately Unsatisfactory /06/2012 Moderately Satisfactory Moderately Satisfactory /02/2013 Moderately Satisfactory Moderately Satisfactory /22/2013 Moderately Satisfactory Satisfactory /21/2014 Moderately Satisfactory Satisfactory /7/2014 Moderately Satisfactory Satisfactory /6/2015 Moderately Satisfactory Moderately Unsatisfactory /28/2015 Moderately Satisfactory Moderately Unsatisfactory /21/2016 Moderately Satisfactory Moderately Satisfactory /1/2016 Moderately Unsatisfactory Moderately Satisfactory H. Restructuring (if any) Restructuring Date(s) Board Approved PDO Change ISR Ratings at Restructuring DO IP Amount Disbursed at Restructuring in XDR, millions 04/04/2012 MU MU /07/2012 PDO changed MS MS /14/2014 No PDO changes MS S 8.55 Reason for Restructuring and Key Changes Made This restructuring aimed at focusing the scope on key PFM challenges (budget preparation and execution and effective computerization of the PFM process) as well as accelerating project execution and extension of the closing date from 12/31/2012 to 06/30/2014. Report no TD Based on the performances achieved during the implementation of the initial ix

16 Restructuring Date(s) 12/27/2016 Board Approved PDO Change No PDO changes ISR Ratings at Restructuring DO IP Amount Disbursed at Restructuring in XDR, millions MU MS Reason for Restructuring and Key Changes Made phase of the project, the World Bank and the Government of Chad agreed to consolidate the PFM reforms. An Additional Financing of the project, amounting to XDR 6.6 million, was prepared and the project closing date was set to December 31, Report TD. As of December 20, 2016, AF disbursement rate was very low and estimated at 28.5% almost two weeks before the project closing date; leaving a total undisbursed amount of XDR 4.7 million. The Government requested the World Bank in November and December 2016 for the cancellation of the project s uncommitted funds, to ensure that IDA funds would remain allocated to Chad and could be reallocated to priority activities of the Ministry of Economic and Development Planning as well as the Ministry of Finance and Budget. Report no. RES I. Disbursement Profile x

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19 Executive Summary The Chad - Public Financial Management Capacity Building Project was approved on May 24, 2007 and effective on April 22, The significant 18-month delay between signature of the agreement and effectiveness of the project was mainly due to (i) difficulties in the Chad and World Bank dialogue over the use of oil revenues leading to the World Bank Representatives Office being shut down for the entire year of 2008 and (ii) the post conflict situation with the normalization of the Chad-Sudan relations in The revised development objective of the project was to help the recipient improve accountability in the use of resources managed through the PFM system. The Project was transformed with four restructurings which included a PDO change, component change, additional financing (AF) and two extensions of the closing date. At closing, the project had three revised components: (a) Public Finance and Financial Accountability; (b) Integrated Financial Management Information System and (c) Coordination, Monitoring and Evaluation of the Action plan for the modernization of PFM (PAMFIP in French). Originally the project had a human resources component which was dropped in The project was financed through a Technical Investment Loan of USD 20.2 million equivalent, fully financed by an IDA grant. The project, originally planned for 5.5 years, was extended twice for a total of 9.5 years. The original closing date of December 2012 was extended a first time to June 2014 and then to December 2016 with the 2014 AF. The USD 10.2 million AF was based on the performance achieved during the implementation of the initial phase of the project. A last restructuring in December 2016, cancelled XDR 4.0 million of the AF s XDR 6.6 million as the AF disbursement rate was estimated at 28.5 percent almost two weeks before the project closing date. Taking into account the cancelation of 61% of the AF, final disbursements were 91.9 percent of the revised project financing. The project was instrumental in laying out the basis for budget preparation and to a lesser extent for improving accountability in public finance and improving the IT environment in a context of limited capacity, institutional complexity and fragility. Key achievements have been the adoption of the Finance Organic Law, the improvement of the budget preparation process through timely issuance of a budget circular, and the availability to the public of partial budgetary information. On the IT front, the strategy had not yet been adopted and the expansion of IFMIS coverage only met 46% of its target. In hindsight, the project design could have been simpler in a Fragile, Conflict and Violence (FCV) affected country. To remain realistic and result oriented in a FCV context (low capacity, frequent staff turnover), the project design could have been simpler and the project length could have been shorter to ensure necessary reform steps are achieved in a phased way. Nonetheless, the project, especially the initial financing, produced some results in budget preparation and increasing budget credibility, as well as improving efficient use of public resources. These results were significant in the country where the political situation is quite fluid--the average tenure for a Prime Minister and Government is less than two years and the turnout of civil servants is quite high. Considering these aspects, the overall project outcome is rated Moderately Unsatisfactory. 1

20 1. Project Context, Development Objectives and Design 1.1 Country Context Country Context 1. At appraisal in 2007, the Republic of Chad, with a population of approximately 13 million, remained one of the poorest countries, struggling to overcome nearly four decades of civil war and continuing regional instabilities. Poverty was widespread, and social indicators were well below the average for Sub-Saharan Africa. It ranked 173 among the 177 countries surveyed in the 2005 United Nations Development Program (UNDP) Human Development Report. The incidence of poverty (defined as the proportion of households with annual spending below what is necessary to meet minimal needs) was estimated at 55 percent according to a 2003 household survey; an estimated four-fifths of the population (about 8.8 million) was living on less than a dollar a day. 2 Of the population older than 15 years, more than 73 percent (and 76 percent of women) were illiterate. Access to potable water had improved but was still limited to one in three people in Less than 2 percent of the population has access to electricity. In this sprawling country that is twice the size of France, a total of only 1,021 km of roads had been paved. 2. In the first few decades following independence from France in 1960, Chad experienced continuous internal and external conflicts. Since 1990, when the regime presently in power overthrew the previous government, improved stability has been achieved. Multiparty elections were held in 1996 and 1997 and again in 2001 and President Deby, who has been in charge since 1991, won the last presidential elections in late August 2016; however, the Government has continued to be challenged by sporadic rebel activities. While the country has shown improved levels of stability since 2010 when peace agreements were negotiated with Sudan, it has a history of unrest. Sources of fragility include influxes of refugees from the conflict in Darfur and more recently, Central African Republic, as well as internal conflict and armed rebel movements. According to the United Nations High Commissioner for Refugees (UNHCR), there were 452,897 refugees residing in Chad as of December 2014 and there are an estimated 68,434 internally displaced persons (IDPs) currently in Chad due to the Boko Haram-related crisis in northern Nigeria. The UNHCR predicts that Chad will host higher levels of refugees and IDPs in Before the advent of the oil era, Chad s economy was primarily agrarian but has since become heavily reliant on oil after joining the list of oil-producing countries in However, despite increased oil revenue, the pipeline has so far not succeeded to steer Chad toward greater stability. About two-thirds of the domestic revenue is generated from the hydrocarbon sector, making Chad s economy highly vulnerable to negative oil price shocks. Driven primarily by a booming hydrocarbon industry, the Chadian economy grew from 3.6 percent in 2013 to 8.5 percent in 2014 in real gross domestic product (GDP) terms. While the increase in revenue over the years from hydrocarbons has translated into increased public spending on social programs to reduce poverty and improve health, progress on this front has been offset by population growth. In addition, weakening fiscal discipline, increased military expenditures, and reduced foreign 2 Line poverty was estimated by the National Statistics Office (Institut National de la Statistique et des Etudes Economiques et Démographiques) and the World Bank methodology. 2

21 budgetary aid meant that oil revenues have been insufficient to spare the Government from recurring financial crises. 4. The Government and its development partners had laid out a number of strategic plans to confront the country s economic problems. One of those plans, the Petroleum Revenue Management Program (PRMP), was intended to help Chad avert the pitfalls that have plagued other resource-dependent countries. However, in December 2005, to address its budget and financial difficulties, the Government decided to amend the Petroleum Revenue Management Law (PRML), despite reservations and alternative recommendations from the World Bank and other development partners. The unilateral change of the PRML led to a dispute that prompted the World Bank to suspend disbursements of all ongoing IDA-supported operations in Chad. The aim was to extract more oil resources to finance the fiscal deficit and unplanned, mainly security-related, expenses. Finally, after extensive discussions during the first six months of 2006, involving all key donors, the Government of Chad (GOC) and the World Bank signed a memorandum of understanding (MOU) in July 2006 pursuant to which the Government agreed to allocate, in 2007, 70 percent of its resources to priority poverty reduction programs and to develop by June 2007 a revised National Poverty Reduction Strategy Paper (PRSP). In the same agreement, the two parties recognized that building a sound and sustainable Public Financial Management (PFM) system was essential to the National PRSP and PRMP goals. Sector Context at Appraisal 5. A consensus existed among donors that Chad s PFM system needed strengthening to ensure more transparent and effective management of the windfall expected from oil revenues in With rising world oil prices, the country was set to receive a sudden and unexpected increase in revenues, further challenging Chad s PFM system. During the discussions to revive the PRMP and the International Monetary Fund (IMF) Poverty Reduction and Growth Facility (PRGF), the authorities concurred with all donors that substantial improvements in PFM would be crucial. To this end, the Chadian authorities and development partners decided that it would be essential to accelerate efforts to implement the Government reform program in this area. 6. Then, in 2005, the GOC prepared and adopted a five-year action plan, Action Plan for the Modernization of Public Finance Management (Plan d Action pour la Modernisation de la Gestion des Finances Publiques, PAMFIP), to modernize PFM covering all budget functions. The action plan is an umbrella Government program intended to consolidate and deepen the ongoing and planned activities, which are intended to improve the quality of PFM and strengthen institutional capacity to make the best possible developmental use of public resources, including oil revenues, to meet the Millennium Development Goals (MDGs). It comprises the following components: (a) budget preparation, (b) budget execution, (c) mobilization, (d) procurement, (e) financial control and audit, (f) restructuring of revenue the Ministry of Finance (MOF) and information and communication technology (ICT), (g) human resource development, and (h) program coordination and steering. 7. PAMFIP was an action plan building on prior joint analytic work. The GOC cared out significant analytical and sector work under the Management of the Petroleum Economy Project (Gestion de l Economie à l Ere Pétrolière, GEEP), including the audit of nine key ministries. The action plan to improve PFM reflects key recommendations from the diagnostic work carried out 3

22 with donor support, including the country financial and accountability assessment, public expenditure reviews (PERs), heavily indebted poor countries assessment and action plan, and the European Commission audit of use of its budget support, as well as priorities set out in the IDAfinanced Institutional Reform Support Credit (IRSC). Expected outputs at the end of the five-year PAMFIP covered aspects of PFM and included the following: (a) updated legal framework and streamlined procedures for PFM and financial accountability; (b) established, documented, streamlined, and applied operational guidelines in budget execution, procurement, accounting, and financial controls; (c) trained technical staff working in improved office facilities; and (d) integrated, well-functioning, and more reliable financial management (FM) system in place, with adequate institutional arrangements and more competent ICT staff. 8. At the time of appraisal, the drivers for reform were the strategic plans developed by GoC with donor support (PRSP, PRMP and PAMFIP) in the context of increased oil revenues. The appetite for transparency was indicated by the creation of College of Control and Supervision of Petroleum Revenue (CCSRP) a special oversight institution to ensure transparency in oil revenue management. Rationale for World Bank Involvement at the Time of Approval 9. Although World Bank assistance had helped Chad become an oil-producing country, it was clear that the country had yet to develop the capacity to manage its revenues efficiently and transparently. The July 2006 MOU signed between the World Bank and the Chadian authority called for the World Bank and the IMF to work in partnership with the GOC in preparing a new Poverty Reduction Strategy (PRS) and to support the GOC in developing a framework to guide annual budgetary processes, beginning with the 2007 budget. The MOU encouraged the World Bank to stay engaged and step up its efforts to support PAMFIP implementation. The project was central to the governance dialog in Chad despite the challenging environment. 10. Hence, a strengthened PFM would create a platform for the country to make progress in PRS implementation and other development programs. The goals set for Chad s PRS and sector programs in social sectors as well as infrastructure and capacity building could not be achieved without efficient and transparent PFM. Development programs, including IDA-financed projects, were seriously constrained by the current deficiencies in PFM. 11. In addition, the World Bank s experience showed that strengthening PFM is critical to building institutions that can sustain good governance and positively affect long-term development prospects. Improved PFM would also be key to better governance and achievement of high growth and overall development results in Chad. Because PAMFIP is meant to increase the quality of PFM and promote stronger accountability institutions and fiduciary standards, it is essential to support these efforts. The World Bank can also be instrumental in helping the GOC develop and maintain stronger demand for good governance through interaction with parliamentarians, media representatives, and civil society organizations. 1.2 Original Project Development Objectives (PDO) and Key Indicators 12. The overall development objective of the proposed operation is to help the GoC improve the quality of its PFM system to increase the efficient and transparent use of public 4

23 resources, in particular the expected oil revenue, to attain MDGs. To this end, the proposed IDA project will support the implementation of the Government PAMFIP action plan for modernization of PFM in a concerted manner with other donors. The original PDO s four key indicators (KIs) are the following: With respect to the efficiency of the use of the public resources: o o Original key indicator 1 - Budget preparation. Evidence that aggregate allocation to priority sectors equal or exceed 70 percent of total expenditure (excluding debt service but including capital spending and externally financed expenditure) or is aligned with the future PRMP agreement with the donor community. Original key indicator 2 - Budget execution. Evidence that aggregate actual expenditure for priority sectors compared with original approved budget shall not deviate more than 5 percent from 2011 (for expenditures financed with domestic resources). With respect to the transparent use of public resources: o o Original key indicator 3 - Budget reporting. Evidence that quarterly budgetary and financial reports, including all items of budget estimates and covering expenditures at both commitment and payment stages, are regularly produced from the Integrated Expenditure Circuit (Circuit Intégré de la Dépense, CID) in a timely manner (issued within four weeks after the end of the period, by the end of 2011). Original key indicator 4 - Public Financial Accountability. Evidence that (a) Treasury s annual financial accounts (Comptes de Gestion du Trésor) are produced and submitted to the Chamber of Accounts (COA) in a timely manner (end of May) from May 2010; (b) Annual budget execution law (Loi de Règlement) is submitted to Parliament, in conformity with legal provisions, for 2010 fiscal year (at end September 2011); and (c) The College of Control and Supervision of Petroleum Revenue (Collège de Contrôle et de Surveillance des Revenus Pétroliers, CCSRP) prepares its annual audit on oil revenue, issuing it by the end of July. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 13. Project difficulties were addressed through a series of restructurings in 2012 and The PDO as defined in the Financing Agreement was revised for simplicity and alignment with what the project intended to achieve and to reflect the closure of the Oil Revenue Management Program (ORMP) part of the initial PDO. The new PDO was to help the recipient improve 5

24 accountability in the use of resources managed through the PFM system. The efficient use of public resources part of the initial PDO was linked to ORMP which needed to be dropped given the closure of this program. In the end, the scope was narrowed to PFM and IT and the activities within the narrowed scope were scaled up. However, the remaining scope of the revised PDO was in line with the one of the original PDO, which aimed at improving the quality of the PFM system. 14. The Results Framework was adapted to reflect the revisited PDO and key and intermediate indicators were modified during the restructuring process with revisions to the indicators that took place in 2012, 2013, and The project s Results Framework was updated and consolidated to (a) adjust the project target values considering the new implementation time frame and (b) integrate new indicators to capture the updated scope of project activities. Two new PDO-level results indicators were introduced to monitor progress in public access to budget information and improvement in debt management capacity. One PDO-level results indicator was transferred to the intermediate results level (CID/Integrated Financial Management Information System [IFMIS] coverage of the public administration). One intermediate results indicator was added to reflect the monitoring and evaluation (M&E) of the PFM system (Public Expenditure and Financial Accountability [PEFA] report), and two intermediate results indicators were discontinued to reflect the modified scope of the project. The final revised five key and eight intermediate indicators are described in table 1. Revised Final KI Indicator 1: Comments Indicator 2: Comments Indicator 3: Comments Indicator 4: Comments Indicator 5: Comments Table 1. Final Revised KIs and Intermediate Indicators In-year budget reporting. Quarterly budgetary and financial reports, including all items of budget estimates and covering expenditures at both commitment and payment stages, are regularly produced from the Circuit Intégré des Dépenses (CID) in a timely manner (issued within four weeks following the end of each quarter). Former original KI 3 revised to reflect scaling up of the project. End-year reporting. The Treasury Annual Financial Statements (Comptes de Gestion du Trésor, AFSs) are produced and submitted to the Chamber of Accounts (SAI) Former original KI 4(a) revised to reflect scaling up of the project target: 2015 documented AFS have been submitted to the COA. Aggregate expenditure out-turn compared to original approved budget New KI. This indicator was introduced in 2013 (Report No TD) and the target was revised in target: 2014 inferior to ±5% Budget information is available to the public. New KI target: All enacted Financial Laws (FLs) (since 2012) with annexes, state budget, quarterly budget execution reports, and TOFE, end year budget execution report (2015), citizen budget (2016) annual execution report of the National Development Plan (Plan National de Développement, PND) published. Completeness and timeliness of central government debt records and medium-term debt strategy New KI target: There are complete debt records within a three-month lag for central government domestic, external, and guaranteed debt, as well as all debt-related transactions, including past debt relief and debt restructuring. 6

25 Revised Final Intermediate Result Indicator Component 1: Indicator 1: Comments Indicator 2: Comments Indicator 3: Comments Component 2: Indicator 4: Comments Indicator 5: Comments Component 3: Indicator 6: Comments A medium- term debt strategy, including all typical analysis of medium term debt strategies, covering 90% of existing and expected central government debt and prepared by all concerned entities, have been adopted by the Cabinet and made publicly available. Public Finance and Financial Accountability Multi-year perspective in fiscal planning, expenditure policy and budgeting Former original intermediate indicator 5(a) revised to reflect scaling up of the project target: Fiscal and macroeconomic projections for N+3 are prepared during budget preparation (Q1) based on economic/functional classification. A global Medium-term Expenditure Framework (MTEF) is prepared and budget ceilings are defined. Statements of sector strategies (at least for key sectors including education, health, rural development, water, and sanitation) exist and are fully costed, broadly consistent with fiscal forecasts, for sectors representing 25 75% of primary expenditure. An investment management system is operational and investment decisions have links to sector strategies. Orderliness and participation in the annual budget process New intermediate indicator. This indicator was introduced in 2013 (Report No TD) and the target was revised in 2014 to reflect scaling up of the project target: A clear annual budget calendar exists, but some delays are often experienced in its implementation. The calendar allows ministries, departments, and agencies (MDAs) reasonable time (at least four weeks from receipt of the budget circular). A budget circular is issued to MDAs, including ceilings for individual administrative units or functional areas. Budget ceilings are approved by cabinet before the circular is issued. The Organic Finance Law (LOLF) and associated CEMAC directives on PFM New intermediate indicator. This indicator was introduced in 2013 (Report No TD) and the target was revised in 2014 to reflect scaling up of the project target: Application of the LOLF and Economic Commission for Central African States (Commission Economique des Etats de l Afrique Centrale, CEMAC) directives on PFM have started. The LOLF action plan is implemented as scheduled. Integrated Financial Management Information System (IFMIS) Operational strategy, and a multi-year budget and programming for the modernization of the IT system are available. New intermediate indicator. This indicator was introduced in 2012 (Report No ) and the target was revised in 2014 to update end of project target value target: Implementation of (new) strategy continued in a satisfactory manner. CID/IFMIS coverage of the Public Administration New intermediate indicator. This indicator was introduced as a new PDO-level indicator in 2013 (former 2013 revised KI 4) and moved to intermediate indicator level in 2014 to reflect new project scope target: At least 37 ministries are interconnected. Coordination, Monitoring and Evaluation of PAMFIP An M&E system, incl. institutional arrangements & information system, is adopted and implemented for PAMFIP Former original intermediate indicator 7. End of project target revised to reflect the new project scope target: The 2015 M&E report is validated by end-june 2016 and published on the website. 7

26 Indicator 7: The PAMFIP Annual Work Plan, Budget and Procurement Plan for Year N are available by end of Year N-1 Comments New intermediate indicator introduced in 2012 (Report No ) Indicator 8: PEFA report New intermediate indicator. Comments 2015 target: PEFA report is available and published. 2016: A follow-up (auto-evaluation) PEFA is available and published. 1.4 Main Beneficiaries 15. The primary target beneficiaries groups of the project were technical and management staff in all units involved in the budget cycle, from preparation and execution to financial control and audit, namely the Ministry of Finance and Budget (Ministère des Finances et du Budget, MFB), the Directorate of Budget, the Directorate of Debt, the Treasury, the Supreme Audit Institution (SAI), pilot line ministries involved in budget program implementation, the information technology (IT) department, and the PAMFIP Permanent Technical Secretariat (Secretariat Technique Permanent du PAMFIP, STP PAMFIP) responsible for the implementation of the overall project. Initially, the Project Appraisal Document (PAD) included, as beneficiaries, the CCSRP whose related activities were dropped because the ORMP was discontinued in 2008; the Office of the Inspector General of Finance (IGF) whose activities were dropped in 2014, after implementation of a few activities linked to IGF, as a result of the narrower scope of the project, i.e. focusing only on Public Finance, Financial accountability and IT while HR aspects were dropped, after the restructuring as well as the DHR of the MOF whose activities were dropped in 2012 because, while the authorities insisted to maintain this support, it is deemed too risky because of limited results obtained due to lack of ownership from the Human Resources (HR) Directorate. 1.5 Original Components (as approved) 16. The initial project, as described in the PAD, primarily focused on the budget cycle and on strengthening institutional capacity, accountability, and transparency in PFM. To this end, the project sought to establish or improve systems, procedures, and equipment and strengthen human resources management (HRM) and organizational arrangements at the MOF; its general directorates (directions générales, DGs); and the financial and budgetary functions of ministries in key priority sectors (health, education, infrastructure, agriculture, and rural development). Project components were selected using the following three criteria: (a) activities that consolidate and deepen achievements in public expenditure management and financial accountability accomplished under the GEEP and the IDA-financed structural adjustment support (that is, IRSC), as well as support for the objectives laid out in the PRMP; (b) cross-cutting issues of PAMFIP (ICT, HRM, and leadership training and strengthening of local training institutions); and (c) coordination and M&E of PAMFIP (see annex 1 for details of approved subcomponents and activities). Component 1: Public Finance and Financial Accountability (US$2.33 million) 17. This component included two subcomponents, dealing with budget formulation and execution, and strengthening oversight functions and institutions, respectively. The aim of the component was to create enabling conditions for better fiscal discipline, optimal resource allocation, budget reliability and transparency, and operational efficiency. The budget preparation and execution subcomponent aimed at consolidating the achievements under the GEEP and 8

27 contribute to achieving the PRMP objectives as well as the IMF s PRGF program. The objectives were to help the GOC (a) align resource allocation with PRS priorities, as defined in the July 2006 MOU on the use of oil revenues, and (b) restore budget credibility by ensuring that the resources are delivered in a predictable manner to line ministries for their approved spending programs, especially in priority sectors. The strengthening oversight functions and institutions subcomponent aimed at consolidating achievements made under the GEEP on capacity building of the IGF, COA, and CCSRP. The aim was to clarify roles and enforcement capacities of audit and oversight institutions (IGF, COA, CCRSP, and Ministry of State Control and Moralization) and develop and implement a capacity-building program for each institution and to strengthen the Finance Commission of Parliament, develop a communication strategy, and train parliamentarians as well as staff in the budget approval and oversight process. Component 2: Human Resources Development (US$2.15 million) 18. This component was intended to introduce and implement human resource reforms at the MOF, including a comprehensive capacity development plan. This component focused on (a) strengthening the DHR of the MOF and human resource focal points at other directorates to define roles and responsibilities in developing and driving the envisaged reforms (in line with Government program priorities); (b) developing job descriptions and profiles and specify job requirements for the main DGs in the MOF according to defined mandates and in line with the new organizational charts; (c) developing and applying management tools and streamlined procedures in HRM based on merit-based recruitment and promotion as well as suitable performance appraisal systems; (d) designing and implementing annual capacity development plans for the MOF based on a comprehensive capacity development needs analysis; (e) strengthening the capacity of local training institutes (in the field of PFM) to equip these to respond better to demands for training; and (f) strengthening the capacity of MOF leaders to develop and drive reforms, including increasing their awareness of their roles and responsibilities in this regard. Component 3: Integrated Financial Management Information System (US$2.44 million) 19. This component intended to support the MOF consolidate improvements in PFM initiated under the GEEP and by other development partners and provide a strategic framework for continued support. The IDA objectives were (a) helping the authorities to define a strategy and implementation plan relevant to PAMFIP s objectives; (b) supporting part of these PAMFIP activities through additional IDA financing; and (c) helping to assure the consistency and availability of necessary funds from donors and government toward implementation of a working, reliable, and sustainable IFMIS. The ICT component will support MOF in developing and implementing the comprehensive ICT strategy drawn around (a) institutional framework, (b) software development, (c) network infrastructure, and (d) ICT human resource development. Component 4: Coordination, Monitoring and Evaluation of the PAMFIP (US$1.29 million) 20. This component aimed at investing up front and during the life of the project in strengthening managerial and leadership capacity of the MOF through the Steering Committee, the Technical Secretariat, and the Administrative and Equipment Directorate (Direction des Affaires Administratives et du Matériel). The component was further intended to 9

28 build consensus among the top leadership of the MOF, the cabinet, and other government structures and institutions, as well as other stakeholders around the PDO. 1.6 Revised Components 21. A restructuring process was completed in 2012 where the Human Resources Development (Component 2) was cancelled because limited results were obtained due to lack of ownership from the HR Directorate and to the fact that at the broader level of civil service management, the authorities had initiated various uncoordinated reforms activities (biometric census of civil servants and import of a Burkinabe HR and Payroll application without proper analysis and preparation work) that obfuscated the project assistance to HRM. 22. The 2013 restructuring aimed at (a) streamlining project scope and reallocating resources among and within the components to ensure funding is adjusted to the needs for activities under implementation (IT equipment and network; payment of IT consultants from IT Center; budget and IT advisors; public investment technical assistance [TA]; and project coordination) and planned activities and (b) modifying result indicators to ensure consistency with project activities. 23. An additional financing (AF) was approved in 2014 to scale up project activities related to the PDO of the original project which were revised following the 2013 restructuring. The revised components are described in the following paragraphs. Revised Component 1 - Public Finance and Financial Accountability: US$4.0 million 24. The AF was intended to scale up existing activities, including TA and training to support implementation of the new organic finance law and CEMAC directives, and dissemination of its requirements and implications, as well as training of line ministries financial directorates, budget departments, public accountants, and financial controllers on the new Organic Finance Law and associated CEMAC directives. In addition, the AF intended to fund new activities in the areas of TA to the design of sector strategies and medium-term budget framework (MTBF) for selected ministries. Debt management capacity would also be strengthened under the component as well as public investment management capacity. Capacity building for the Ministry of Economy, Planning, and International Cooperation in M&E were covered by the AF. The latter consisted of establishing a macro-level M&E system in the Ministry of Economy, Planning, and International Cooperation to further improve capacity to monitor and evaluate implementation of the PND and, later, served as the basis of the M&E system for the budget programs. Revised Component 2: Integrated Financial Management Information System (IFMIS): US$5.4 million 25. The AF would provide additional funding to scale up activities to consolidate and expand the existing CID/IFMIS, including the interconnection of 23 additional ministries and agencies to the CID/IFMIS; upgrade the CID/IFMIS in accordance with the new Organic Finance Law requirements; update the IFMIS blueprint; further enhance the internal and external network for the public expenditure chain; and scale up capacity building of the ICT Unit and in ministries and agencies. 10

29 Revised Component 3: Coordination and Monitoring and Evaluation: US$0.8 million 26. The AF financed scaling up of activities in the area of project coordination and management, M&E, and communication, including support to implement the PFM reform communication action plan. Strengthening M&E capacity for the STP/PAMFIP in charge of both the implementation of the project and the coordination of the implementation of the overall reform program will also be supported. Support comprised funding for a PEFA which included support to strengthen capacity in the MFB to undertake PEFA self-assessments. 1.7 Other Significant Changes 27. In December 2016, a restructuring cancelled XDR 4.0 million of the XDR 6.6 million of the 2014 AF. While 100 percent of the initial Grant (IDAH2920) was disbursed, the disbursement rate of the AF Grant amounts was very low and estimated at 28.5 percent almost two weeks before the project closing date, leaving a total undisbursed amount of XDR 4.7 million as of December 20, The Government sent two letters to the World Bank dated November 25, 2016, and December 12, 2016, requesting the cancellation of the project s uncommitted funds, to ensure that IDA funds would remain allocated to Chad and could be reallocated to priority activities of the Ministry of Economic and Development Planning as well as the MFB. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design, and Quality at Entry 28. The project was initially designed to align with the World Bank s strategy. The project was designed to contribute to the (a) 2003 Regional Integration Assistance Strategy for Central Africa 3 specifically on the strengthening of the institutional capacity in relation to the intraregional linkage of the Cameroon-Chad pipeline; (b) 2003 joint World Bank and IMF Poverty Reduction Strategy Paper 4 which insists on the necessary improved governance and security as prerequisites for effective implementation, especially in light of the rapidly evolving oil sector; and (c) the 2003 Country Assistance Strategy (CAS) 5 whose overarching objective was to help Chad make the best possible developmental use of its new oil revenues (and public resources more broadly) as it strives to attain the MDGs and explicitly includes financing for PFM capacity building. In addition, the PDO was relevant in the context of the second pillar of the Africa Action Plan (AAP) (dated April 6, 2007) Building Capable States, which seeks to improve transparency, accountability, and efficiency in the provision of public services. 29. The project was designed around two principal interventions and was aligned with the GOC s strategy and action plan, PAMFIP, to modernize PFM and consistent with the 2006 MOU between the World Bank and the Chadian authorities. With the adoption of the PAMFIP by the GOC in 2005, which was intended to improve the quality of PFM and strengthen institutional capacity to make more effective use of public resources, it seemed that the GOC was serious about implementing reforms, especially interventions aimed at (a) improving the budget process leading to an allocation of most of public resources to poverty-related needs, which at the 3 Report No Report No CD. 5 Report No CD. 11

30 execution level involved keeping discrepancies between the actual and originally budgeted public expenditures small, and (b) improving monitoring and accountability systems to allow all stakeholders to know how public resources are used. 30. The project implementation arrangements were structured around the GOC PAMFIP which also set the general framework for harmonized donor assistance. The MOF was responsible for coordination of implementation of the IDA project and coordination of PAMFIP implementation was ensured by a Steering Committee chaired by the Secretary General of the MOF and comprising directors of DGs as well as general managers of all beneficiary agencies outside the MOF. Daily management of PAMFIP and project activities was delegated to the STP PAMFIP. The project was an important contribution to the overall governance program of the development partners in Chad, as described in Table 2. In effect, during project implementation, donor coordination remained modest. Table 2. Donor Intervention in Support of PAMFIP (from the PAD) 31. Although the initial project and the corresponding AF identified key risks to achieving PDO, the proposed mitigating measures were difficult to be effectively implemented in reality. Indeed, although the PAD properly identified key risks related to the commitment and leadership at the highest political level due to high turnover of the MOF senior 12

31 staff, the proposed mitigating measures of discussions between the donors and GOC were not adapted. Similarly, the risk related to the difficulty of retaining trained staff was properly identified but the mitigating measure seemed difficult to implement. Indeed, in the nine-year implementation period between 2007 and 2016, Chad had eight different governments and changes of Prime Ministers. 32. In addition, the PAD did not sufficiently consider the capacity risks related to the acquisition and implementation of the integrated information system. Delays experienced in the acquisition and implementation of the integrated information system resulted in this activity not being fully implemented. 2.2 Implementation 33. Overall implementation arrangements were Moderately Satisfactory. Overall, the project s implementation strategy, with the utilization of the STP PAMFIP, remained relevant and responded to the Government s priorities, albeit not fully considering the fragile state context and limited implementation capacity of the Government. The project effectively utilized the PAMFIP as an entry point to governance reform dialog. At the onset of the project, the Project Implementation Unit (PIU) played an effective role in coordinating the assistance provided by the project. However, the preparation of the AF with unrealistically ambitious implementation goals and shortly after the unit undergoing a period of instability (with the investigation of the PIU coordinator for fraudulent activities) became factors in the inability to implement the AF as intended. Working conditions in the PIU presented challenges during the time of the investigation, which lasted for several months, resulting in the entire PIU team nearly stopping implementation and leading to a change in the Project Coordinator. Procurement further impaired the capacity of meeting development objectives (DOs) as the process was very slow with little delegation of power. 34. The project, originally planned for five years, was extended twice for a total of nine years. The project was approved by the Board in May 2007 and it became effective in April 2009 with the original closing date of December 31, The project was extended a first time in 2013 with a revised closing date of June 30, 2014, and a second time with an AF, which was approved by the Board on May 12, 2014, and became effective on September 17, 2014, with an extended closing date of December 31, The disbursement profile is given in figure 1. 13

32 Figure 1. Cumulative Disbursements (XDR) (from World Bank Operations Portal) 35. The significant 18-month delay between the signature of original financial agreement and the effectiveness of the project was due to (a) difficulties in the Chad and World Bank dialogue over the use of oil revenues with the consequence of the World Bank Representatives Office being shut down for the entire year of 2008, (b) lack of political commitment, (c) weak reform management capacities at the Ministry of Finance (MOF), and (d) the post conflict situation with the normalization of the Chad-Sudan relations in Thus, the project experienced significant implementation challenges, as highlighted during the June 2011 midterm review (MTR). The midterm review found that the most of the planned actions were well under implementation and laid the foundations for future restructuring by highlighting critical aspects to consider to remove obstacles to implementation. By the end of May 2012, World Bank supervision mission implementation progress was still low and an emergency action plan was agreed to determine whether to extend the project after December The action plan included (a) increasing the disbursement rate from 27 percent to 50 percent; (b) transmitting the new draft LOLF to Parliament, implementation of mechanism and methodology for macroeconomic projections, and availability of draft strategic documents and manuals related to LOLF implementation; (c) establishing a staffed IT center; and (d) undertaking of procurement to ensure provision of IT equipment and connection to PFM systems to four ministries by the end of December By November 2012, significant progress was made due in part to close support and monitoring by the World Bank. Disbursements increased from 27 percent to 36 percent, the MOF adopted an IT strategy, the IT center was established with recruitment of personnel, the tender process for the IT equipment and network to cover four ministries in terms of PFM was launched albeit not finalized, the draft LOLF was finalized and adopted by the Council of Ministers, and the conference on LOLF implementation was held. Following this progress, the extension of 14

33 the closing date to June 30, 2014, was granted. Eighty-six percent of the initial financing was disbursed as of June 30, The aforementioned progress led to an overly ambitious restructuring in April 2014 in terms of scope of activities and implementation timing worsened by the absence of a country-based Task Team Leader. It took more than five years, between effectiveness and June 2014, to disburse 86 percent of the original financing of XDR 6.7 million and the AF, of the XDR 6.6 million was to be disbursed in 2.5 years, with a revised closing date of December 31, 2016, with a scale-up of activities. 39. This led to very low disbursement level of 28 percent two weeks before the project closing date and to a final restructuring on December 27, 2016, cancelling 61 percent, XDR 4 million, of the AF. Ultimately, only 31 percent of the original AF amount was disbursed. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 40. The original PAD M&E system was substantially well-designed to incorporate indicators supporting monitoring of progress toward PDO and is rated Substantial. Indeed, with respect to the objective of increasing the efficiency in use of public resources, the two KIs on budget preparation and budget execution were relevant as the first one measured the efficient allocation of budget to priority sectors and the second measured predictability of the budget. Those were relevant tools for assessing whether the budget was implemented within an effective system ensuring that resources are obtained and used as intended. As far as the objective of having a more transparent use of public resources was concerned, the initial two KIs on budget reporting and public financial accountability were not completely adapted to measure progresses toward PDO. While the budget reporting indicator measuring the extent to which accurate a reliable record allowed to produce information that is disseminated on time for decision-making purposes, was well-adapted, the indicator on public financial accountability was only a partial proxy for measuring the transparency of public finances as it was more concerned with accountability to Parliament and the SAI than to the public and civil society. The PDO revision did not adversely affect M&E arrangements as the scope of the revised PDO was in line with the one of the original PDO. Indicators for the IT component were added after the 2011 MTR. Two IT component specific intermediate indicators were introduced in 2012 for the strategy and 2013 for the coverage, hence there was a misalignment at the beginning of the project between original project components and indicators. 41. Given the weak capacity context, the PIU implemented an effective system for M&E of project s activities and results. The PIU had a satisfactory M&E team in place and data could be collected during MTRs and supervision missions. The nature of data to be collected to evaluate the key and intermediate indicators mainly took the form of reports and legislations and was easily accessible. Finally, M&E arrangements will not be sustainable after project as the PIU, PAMFIP was closed. 42. In the last Implementation Status and Results Report (ISR) (December 2016), the achievement toward the PDO was rated Moderately Unsatisfactory because of the delays observed at the phase of approval and signing of contracts by the authorized persons in the Government; most of the activities planned to be implemented in 2016 were cancelled and some key activities 15

34 for which the procurement process was very advanced (for example, negotiations phase) were stopped to avoid ineligible expenditure at closing date. 2.4 Safeguard and Fiduciary Compliance 43. The project did not trigger safeguard policies and there were no exceptions to World Bank policies. It was categorized as C for both. 44. The FM and procurement activities were conducted in line with the provisions in the Legal Agreement and were considered satisfactory. The project was adequately financially managed with no overdue audit report, and financial information and reports of acceptable quality were produced with no significant delays. 2.5 Post-completion Operation/Next Phase 45. Fiduciary management transition arrangements were taken. The final audit report will be delivered no later than six months after the end of the fiscal year, as indicated in the Legal Agreement. The World Bank will also continue to disburse/approve the use of grant proceeds for withdrawal applications received within a specified period of up to four months after the closing date for payments made or payments due for eligible expenditures incurred before the closing date. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design, and Implementation Relevance of Objectives Rating: High 46. At the time of the Implementation Completion and Results Report (ICR), the DOs remain strongly relevant in the context of the oil crisis and in line with the World Bank s Country Partnership Framework. Going forward, the relevance of project objectives is likely to remain high as the Government is addressing the fiscal crisis. The Government has adopted cash-based budgeting to control budget execution and maintain fiscal discipline. Total spending has been drastically reduced from 29.4 percent of GDP in 2014 to 16.6 percent in Expenditures have been reduced even further than the drop in revenues by postponing all domestically financed public investments to 2017 while adopting an emergency stabilization program to curtail recurrent expenditures including transfers and subsidies, civil servant allowances, and goods and services. The Government has also rationalized medium term FM by strengthening procurement process. Relevance of Design Rating: Modest 47. The project s design relevance is rated Modest as, in spite of financing key priorities and providing assistance in much needed areas, the project design failed to properly consider the fragile state context, especially when designing an overly ambitious AF, given the project s past performance time frame. Even though the country situation of Chad was difficult during project implementation, difficulties identified were addressed through a series of restructurings, including a refocusing of activities, cancelation of funding at the end of the project, and a total length of the project exceeding eight years, indicating inherent design flaws, in addition to low capacity, weak Government commitment, and other implementation issues. 16

35 48. In addition, the revised PDO was vaguer than the original one and the related indicators were not as clearly linked to the achievement of the objectives as they were in the original PAD. Indeed, the original PDO had two clear objectives which were to improve (i) efficient and (ii) transparent use of public resources though enhanced PFM system. Each of these objectives had clearly linked to key indicators as described explicitly in the PAD. The AF, however, focused more on the continuation or amendment to components than on delineation to objectives. 3.2 Achievement of Project Development Objectives 49. The revised PDO is to help the recipient to improve accountability in the use of resources managed through the PFM system. Since this objective formulation is very broad, the best understanding of what the project intended to accomplish can be derived from the PAD and AF paper and activities under each component and subcomponent. Hence, the PDO can be broken down into three identifiable objectives: (a) To improve budget preparation and credibility (activities and results related to Component 1) (b) To improve accountability in public finance, including budget execution and control (activities and results related to Component 1) (c) To improve the IT environment and coverage of the PFM system (activities and results related to Component 2) 50. Annex 2 on the assessment of achievements by objectives captures the revised Results Framework as in the project documents, while showing achieved outputs by components. The sources of information include information collected directly from the STP PAMFIP unit and units directly responsible for the execution and beneficiaries of the project during an ICR mission performed in Chad in December 2016, as well as the borrower completion report, and interviews with different project stakeholders from the World Bank. 51. Objective 1 was to improve budget preparation and credibility and the expected outputs were (a) availability of comprehensive budget information to the public, (b) preparation of multiyear fiscal forecasts and functional allocation, and (c) orderliness and participation in the annual budget process. In aggregate, this objective was nearly achieved and is rated Substantial as the macroeconomic framework, MTEF, and sector strategies for five ministries exist. Indeed, since the 2014 LOFL, the MTEF has to be prepared. In 2016, the Budget General Directorate (Direction Générale du Budget, DGB) benefited from a TA to prepare 2017 budget circular. Thus, the budget preparation process was improved with the issuance of a budget circular 6 although the calendar was not fully respected. Regarding information dissemination, only part of the budget information has been made available to the public by the end of the project in All enacted FLs with annexes and state budgets since 2012 were published on the PAMFIP website. However, serious gaps remained as the quarterly budget execution report was neither finalized nor available for Q and the full year of 2015 was not prepared, The 2016 citizen budget was prepared and translated in the two official languages (French and Arabic) and disseminated with the support of 23 civil society associations in September 2016 which was a little late in the year and the Arête 10/PR/PM/SG/

36 annual execution report for the PND was not approved yet and hence not available. These elements although not made available to the public, were prepared either pending finalization or approval. Only the TOFE, for any year, was not prepared. 52. Objective 2, to improve accountability in public finance including budget execution and control, is rated Modest, as outcome indicators were partially achieved. On the one hand, efficiency of use of public resources has seen some improvements since 2007 with the computerization of the expenditure circuit, the reduction in steps in the circuit, and the implementation of the Application de Suivi des Documents à Viser (ASDAV). All these have enabled a more agile execution of expenditures (reducing steps from 12 to 6 and thus reducing delays in budget execution) and better management of resources. Additionally, since 2011, quarterly budget execution reports are produced periodically (albeit with some delays still), as well as the fourphase table (commitment, validation, authorization, and payment) with budget execution information for all major expenditure categories, except military salaries and payment information. This has, without a doubt, contributed to the enhancement of accountability in public finance. Furthermore, still on the IT side, not on the HR development side which was supporting capacity building under the dropped component 2, the acquisition and installation of the Salary Management System (Système de Gestion Solde) (Integrated Human Resource and Payroll Management System), which is now fully interconnected with CID, allows for better management of civil servant expenditures. Finally, the strengthening of oversight institutions such as the IGF and COA has further contributed to increasing the efficient use of public resources by ensuring that more effective control exists. Increasing the capacity of such institutions has enabled the IGF to better implement its annual audit plan and has enhanced the ability of the COA to conduct more audits. This includes progress to catch up with the preparation and submission of all overdue budget settlement laws up to The 2014 Treasury AFS was submitted to the COA in August 2016 (with an 18-month delay) and the 2015 Budget Settlement Law was still being finalized in December However, expenditure credibility has not improved as shown by the poor performance of the aggregate expenditure out-turn compared to the original approved budget (it was ±15 percent at the end of 2014 and is estimated to be at ±16 percent for 2015), although in the last few years some of the deviation could be attributed to the pressures of declining oil revenues. However, several key activities planned under the AF, such as the operationalization of the CEMAC directives, upgrading of the IFMIS, improvements to debt management, and improvements to the public investment management system, which would have further contributed to a more substantial improvement in budget execution and accountability, were not completed. Thus, more efforts are still needed in this area. 53. Objective 3 was to improve the IT environment and coverage of the PFM system and the expected outputs were to expand the existing IFMIS and interconnections and implement an IT strategy. This objective was only partly achieved and is rated Modest. The IT strategy is not yet adopted and implemented. Nevertheless, the project contributed to developing a new draft strategy for development and modernization of PFM adopted in August 2016 and a detailed action plan was being developed. As of the evaluation date, the Government had to arbitrate between three scenarios to have an IT system that can be adapted to the six CEMAC directives. The scenario analysis has been transmitted to the MOF and the IT action plan is being revised. Regarding the expansion of the IFMIS coverage, only 46 percent of the target was met. The target of 37 ministries connected has not been reached and only 17 institutions have been connected to the MOF. 18

37 3.3 Efficiency Rating: Negligible (minimal achievement) 54. The return on investments under the project is Negligible (minimal achievement). The economic rate of return has not been estimated in the PAD of the project and this makes difficult the assessment of the efficiency at completion stage. While rates of return are difficult to determine for this type of TA project, project efficiency can be considered as low given the results achieved. Given the progress made toward the achievement of the PDOs and the result indicators during implementation, the overall efficiency of the project can be considered as very low. For instance, the current situation of oil price collapse led to the unprecedented accumulation of arrears (8.7 percent of GDP), demonstrating the weaknesses of the PFM system regarding the predictability as well as the management and control of public resources. 3.4 Justification of Overall Outcome Rating Rating: Moderately Unsatisfactory 55. The overall outcome rating of Moderately Unsatisfactory is based on the individual ratings for relevance, efficacy, and efficiency, as shown in table 3. Table 3. Calculation of the Overall Project Outcome Rating Relevance of: Efficacy: Objective Overall Efficiency Objectives Design Outcome High Modest S M M Negligible MU 56. The project, especially the initial financing, produced some results in budget preparation and increasing budget credibility, as well as improving efficient use of public resources. However, since most of the activities under the AF were not completed, more efforts are still needed to further improve governance in Chad and attain the results intended. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 57. The strategic importance of improved governance in providing reliable data to inform policies aimed at poverty reduction and social inclusion is well-recognized. The project contributed to some improvements in the efficiency of use of public resources, as well as reporting and transparency of public resources with the publication of some information which allows citizens to access information about public finances and hold the Government accountable for the management of public resources. However, additional work is still need in that area to make the information more readily available. Despite difficulties, the project remains relevant to the country, especially when the GOC is facing significant fiscal constraints due the decrease in oil prices and the increase in citizen s demand for good governance. In addition, the project contributed to the development of the citizen s budget which would allow citizen access to more information. The format and content was adopted in July 2015 but still remains to be published. (b) Institutional Change/Strengthening 58. The governance project is essentially an institutional strengthening project. Today, Chad benefits from better-trained and highly capable staff, especially at the MOF and the Ministry of 19

38 Planning, owing to the intervention of the governance project. The governance project was instrumental in operationalizing the reform process in Chad. (c) Other Unintended Outcomes and Impacts (positive or negative) 59. With the training and TA provided by the project, many units in the GOC, particularly in the MOF, the Ministry of Planning, and the COA are staffed with highly trained and skilled individuals. The project therefore contributed to creating a more robust civil service but also led to higher staff turnover. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable. 4. Assessment of Risk to Development Outcome Rating: Low 60. Given the overall outcome MU rating, even though the project achieved a number of results and was a positive contributor to increased governance in Chad, the overall risk to development outcome can only be considered Low. The project was a key contributor to the establishment and implementation of the Government s PFM modernization policy by supporting the development of the national action plan for PFM modernization (PAMFIP) and providing the administration the necessary tools and training to implement the plan. During the period, concrete results were achieved, in particular the enacting of the Organic Finance Law (LOLF) by the President, the creation of an IT unit within the MFB, the computerization of the public expenditure chain, the establishment and overall compliance of a budget preparation calendar, the establishment of a macroeconomic framework model, the strengthening of financial reporting, and the updating of the debt information. These advances are likely to remain. However, one significant risk to the achieved development outcome and the sustainability of the achievements is the constant turnover in the MOF. The risk is that the capacity gains over the life of the project will be greatly diminished or lost because of the high turnover. This risk, however, is mitigated by the continued involvement of other donors in the sector and the fact that procedures implemented and supported under the project have now been operational for a few years and are fully embedded in government procedures. 61. The achievements attained in reporting and rationalization of the expenditure chain (increased efficiency in the expenditure chain and budget credibility) could be hampered by the continued use of emergency spending procedures and reliability of accounting information (spending before approval dépenses before ordonnancement are still not systematically regularized). 62. Finally, the project assisted the Government in making progress with the transcription of the six CEMAC directives (at the end of the project in December 2016, the six directives were transposed into law) which represents an important step for Chad to align the budget management system on international standards. While these advances are likely to remain, the timeline for their gradual implementation (such as, for example, the introduction of performance-based budgeting) may experience delays, as is common in other countries 20

39 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 63. The project was grounded in the World Bank AAP and fell into a priority area of both the plan (building capable states) and the Government and its rationale and design was strongly underpinned by ownership and political willingness at the time of preparation. Firstly, the project, through its capacity development activities and partnership with other donors, was designed to be a critical element to help Chad achieve better development results. It was designed to help the country, under its newly oil-producing status, develop the capacity to better manage its revenues efficiently and transparently. Secondly, the Chad country team recognized the importance of strong political commitment and thus supported the preparation of the PAMFIP by working closely with technical staff and line managers of PFM-related institutions. The commitment and leadership at the highest political level, however, remained a weak link in the process of designing and launching the PAMFIP, aggravated by the high turnover of staff and line managers. 64. In addition, the project design drew on several lessons and good practices in similar projects in the Chad and World Bank-wide projects, even if this did not translate to implementation. This was the fourth IDA-financed project for capacity building in economic management. Since the early 1990s, three IDA credits were extended to Chad to help implement economic reforms and build related institutional capacity. Performance of the first two projects was overall satisfactory, while the third one fell short. The GEEP fell short in meeting its objectives mainly for four reasons: (a) there was no explicit link between the GEEP and PRMP, (b) the project s institutional and implementation arrangements were not properly designed, (c) the strategy for institutional capacity building was incomplete, and (d) the strategy for introducing modern ICT was not properly developed. These lessons and recommendations of the 2004 IDA portfolio review, as well as those of the Country Financial and Accountability Assessment (CFAA) report and PER , were incorporated into the project design. 65. Nevertheless, the project had major shortcomings due to the overambitious design, with a too comprehensive scope and broad PDO, given the country FCV context. A restructuring in 2012 was necessary to cancel project activities aimed at strengthening the MOF s Human Resource Management Directorate and drop Component 2 on HR development, as well as eliminate support for the preparation of budget programs and MTEF, given the need to primarily focus on strengthening the existing annual budget preparation and calendar, thereby focusing on the more basic elements to improve the quality of the PFM system. In addition, the cancelation of part of the financing for the AF right before the end of the project also indicates the unrealistic ambition of the AF. 66. Furthermore, the project failed to recognize the need for a new project instead of an AF. Indeed, as at the time of the AF the project was already 7 years old, including 2 years of extension, with a 75% disbursement rate. In a hindsight, it would have been more effective to close the old project and start a new project, in particular to foster a new momentum. 21

40 (b) Quality of Supervision Rating: Moderately Unsatisfactory 67. Project difficulties were addressed through a series of restructurings, including a change in the PDO, a refocusing of activities, and an extension of the closing date. The project started with an 18-month delay in implementation due to difficulties in the dialogue with the World Bank over the use of oil revenues (the World Bank Representatives Office was shut for the entire of 2008), a lack of political commitment, and weak reform management capacities at the MOF. Chadian authorities adopted a roadmap in December 2010 to address the lack of results in PFM reform activities and delays in project execution. Implementation of the roadmap was positively assessed during the MTR which took place in This led to a series of restructurings in 2012 and The PDO, as defined in the Financing Agreement, was simplified and better aligned to project objectives. The Results Framework was also revised to reflect the changes made to the PDO. The restructuring also involved a revision of the components, activities, and implementation arrangements, as well as reallocation of proceeds. 68. Following the restructurings, project performance improved and significant progress was achieved within a short period. Progress toward achievement of the PDO improved from Moderately Unsatisfactory between 2011 and June 2012 to Moderately Satisfactory from December 2012 until November Project management significantly improved, resulting in disbursement levels improving from 30 percent in June 2012 to 80 percent in January Thus, during the course of the project, there is evidence that the World Bank team provided regular technical supervision and hands-on assistance focused on proactively identifying and resolving threats to the achievement of the PDO. Between 2007 and 2016, the World Bank conducted 18 formal supervisory missions, documented in ISRs with formal supervision missions and corresponding Aide Memoires. These missions covered approximately six-month periods and included reviews of the technical aspects of the project, as well as the aspects relevant to procurement, FM, and social and environmental safeguards, when applicable. These supervision missions were conducted with the support of various specialized technical experts and jointly with the Government. This created a dynamic environment for the project, promoting the sharing and implementation of good practices and initiatives. These supervision missions often led to agreed-upon action plans, which were closely monitored during subsequent missions. It is important to note that the implementation situation deteriorated after the signature of the AF in part due to uncertainties within the Central Implementation Unit created by the investigation of the coordinator and changes in procurement processes which contributed to lengthy delays and some procurement processes, already at an advanced stage, had to be stopped to avoid ineligible expenditures at closing date. Although the World Bank team continued to provide quality implementation support and troubleshoot potential issues, the situation could not be resolved by the World Bank team alone. 70. In spite of the restructuring and assistance provided by the supervision team, the number of TTLs and the absence of Chad based TTL hindered project implementation because of the fragility, complexity and low capacity of the country. Indeed, throughout implementation, the project had 5 TTLs and 2 of them (in 2012 and 2015) for short periods of time of 1 year or less. Moreover, between effectiveness in April 2009 and closing in December 2016, the project had a TTL based in the country for only about 17% of the time during the 2012 and 22

41 2013 right before the AF. The team recognized this importance as the period when the TTL was country based was when the emergency action plan to redress the project and decide on the AF needed to produce results. In a context where frequent interactions and close assistance is required, this setting have been detrimental in speeding bottlenecks resolutions and easing communication. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 71. The overall World Bank performance is rated Moderately Unsatisfactory based on the ratings for quality at entry and quality of supervision. The ICR author questioned whether the impact would have been greater had the project focused only on a few reforms and implemented a more hands-on approach, particularly if the AF could have contributed to reinforcing the partnership between Chad and the World Bank in the implementation of PFM reforms. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory 72. Even though the World Bank team tried to ensure Government ownership and commitment to reforms at project design, commitment and leadership to undertake PFM reforms at the highest political level remains a weak link. Frequent changes of MOF senior staff make strong leadership of the PAMFIP difficult to achieve. This is particularly true under the AF and can be measured by the lack of progress made in the implementation of activities under the project, as well as for the PAMFIP in general and a lack of commitment from the Government s side. This lack of commitment stemmed from a political issue (certain reforms are not understood the same way by institutional players who are supposed to facilitate their preparation and implementation), which resulted in substantial delays. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 73. The performance of the coordinating unit for the original financing was a positive element during the original financing, as demonstrated by progress made between 2011 and However, once the AF became effective, due to the uncertain situation in the coordinating unit (prosecution of the coordinator for fraudulent activities who was acquitted) and the changes in the coordinating unit, the dynamic changed, impeding the effectiveness of its performance. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory 74. Overall, the coordinating unit and the beneficiary agencies could have performed better in this challenging environment that was marked by high staff turnover. But overall lack of ownership and commitment to reforms resulted in a Moderately Unsatisfactory borrower performance 6. Lessons Learned 75. In a context of ever-changing Government officials and priorities, a project needs to remain flexible and adaptable to remain relevant, include a communication strategy, and 23

42 establish measures to ensure capacity-building elements of the project can remain sustainable. It was not always the case for this project. It is important for the task team to be present in the field or for the project design to include embedded advisors to provide advice on reforms and activities. For example, the original financing included an adviser, who, Government counterparts disclosed, provided invaluable support in defining activities and ensuring coherence among the various activities implemented under the project, particularly helping in providing a continuation in an ever-changing environment. In addition, it is important to periodically perform in-depth reviews, such as MTRs, as well as more regular supervision to make appropriate adjustments to project activities, and use appropriate avenues such as restructuring (the project was restructured once to allow for additional activities to be included in the project). Given the high turnover of Government officials, it is important to include in the project design a communication strategy to ensure Government officials are sensitized to the objectives of the reform program and the project. In addition, it is imperative to ensure that the strategy for capacity building through training includes an element of sustainability by inversing the trend of providing training for a few outside the country to training for a larger number of staff inside the country. Finally, to mobilize the client and create a productive dynamic to reach results, the Rapid Result Initiatives, which is multi-stakeholder leadership approaches to strengthen client capacity to address complex development challenges under World Bank Group operations / activities, could be used In a FCV, fragile state context, with limited capacity and a strong vulnerability and sensitivity to shocks and externalities, it is of the highest importance that the World Bank remains realistic and result-oriented in its project design. The design focus needs to be a basic at first approach. The DOs have to focus on improving the basic elements of the PFM system, remain simple, feasible, and be part of an incremental approach where it would not be expected of one project to achieve overly ambitious objectives which was the case here with too ambitious objectives. In addition, it is crucial to design adapted mitigating measures to risks identified at PAD stage as stressed in paragraphs 31 and 32. The World Bank needs to focus on implementing the basis and laying out the first building blocks to prepare a strong foundation for further improvements and consider the capacity related risks in IFMIS projects. In this respect, for PFM in FCVs were the needs (for e.g. meeting payroll) and the country resources are very basics the Bank could design a basic project package that could be tailored to the specific needs and circumstances of the client while really adding value. Similarly, the related indicators have to integrate the fact that access to information and data is often challenging in a fragile state context and that one size does not fit all when it comes to using international framework indicators (for example, PEFA or Tax Administration Diagnostic Assessment Tool indicators). Failure to effectively tailor objectives and indicators to the country context would lead to further waste of resources, client demobilization, and steady deterioration of policy dialog. 77. Given the difficulties and delays encountered with procurement processes, especially since 2016 with the lowering of thresholds for approval, utilization of alternative 7 This modality was successfully used in a PFM project, Economic Governance Technical Assistance, in the Union of Comoros 24

43 procurement arrangements could facilitate implementation. Due to delays observed at the phase of approval and signing of contracts by the authorized persons in Government, most of the activities planned to be implemented in 2016 were cancelled and some key activities for which the procurement processes were advanced were stopped, given the expected closing date of the project. Therefore, the project suffered from the constraints of procurement rules and requirements in place for donor-financed projects in Chad. Thus, it is important to explore alternative procurement arrangements, such as the use of procurement agents, exemptions for donor-financed projects (which apparently exist in Chad for projects financed by the European Union [EU]), or contracting with institutions involved in PFM reforms for a wide range of services at the beginning of the project (such as Expertise France), to ensure a smoother implementation. 78. Utilizing the right mean of financing is key to success and small manageable projects in a fragile environment as part as a longer term program could help achieve results. When the AF was approved in 2014, the original project, which was approved in 2007 for the same amount, already had been under implementation for seven years, leaving virtually no chance of extension. Even with the implementation rate at the time of signing of the AF, the World Bank should have considered the possibility to design a new operation, expanding the progress made by the original operation. This may have allowed more time for implementation and better achievement of objectives. Moreover, to remain realistic and result oriented in a FCV context (low capacity, frequent staff turnover) an interesting approach could be to design a medium to long term PFM program (for example 8 years which is aligned with the average implementation time for an IFMIS project 8 ) implemented through several consecutive small projects (for example 12 to 18 months projects could be suited for Chad where the average tenure for a Prime Minister and Government is less than 2 years). To stress result orientation P4Rs could be used. After closing of each short term projects, the evaluation would inform a feedback loop that would help reassess the relevance and adjust the overall longer term program. 79. Given a country with a low level of ownership of PFM and governance reforms at the highest political level, a more integrative approach can be beneficial. One option to mitigate decreasing ownership in PFM and governance reforms, whether due to high turnover of key staff or political priority shifts, could be to ensure that the project involves a broader stake of stakeholders through citizen budgets and information dissemination at an early stage to create demand for better governance. Another option would be to ensure an integrated approach with a PFM TA project tied to a DPO with PFM triggers to support governance reforms at the political level. 80. Considering the behavioral element of reforms and implementing a national communication campaign to build awareness when new or transformational strategies are implemented is crucial to facilitate implementation and build better ownership. To ensure that new procedures, systems, or institutions are utilized, there is a need to ensure that the project considers the behavioral aspect of change, as well as build awareness of the new or transformational elements of the reform. An example could be to offer economic incentives for the 8 Hashim (2014) A Handbook on Financial Management Information Systems for Government, A Practitioners Guide for Setting Reform Priorities, Systems Design and Implementation, World Bank. 25

44 utilization of new procedures, systems, or institutions created by new reforms or tie activities of the project to prior actions, or output of budget support, or an agreed-upon economic framework. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies Not applicable (b) Cofinanciers Not applicable (c) Other partners and stakeholders Not applicable 26

45 Total Annex 1. Project Costs and Financing (a) Project Cost by Component (in US$, millions equivalent) Components Appraisal Estimate Reallocation AF Total Actual/Latest Estimate Percentage of Appraisal and AF Component 1: Public Finance and Financial Accountability Original Component 2: HR Management Revised Component 2: Integrated Financial Management Information System (IFMIS) Original Component 3: IFMIS 2.44 Revised Component 3: Coordination and Monitoring and Evaluation Component 4: Coordination, Monitoring and Evaluation of 1.29 the PAMFIP Actual/Latest Estimate (US$, millions) Contingencies 0.84 Project Preparation Facility Total Financing Required (b) Financing Source of Funds Appraisal Estimate Actual/Latest Estimate (US$, millions) (US$, millions) Percentage of Appraisal Borrower IDA Grant (c) Approved Project Components, Subcomponents and Activities Component 1: Public Finance and Financial Accountability: US$7.9 million 1.1 Improve budget preparation by providing support for Elaboration of the macrofiscal projections and the preparation of budgets up to 2017; and Establishment of a system to manage public investment projects. 1.2 Improve budget execution by Streamlining and simplifying expenditures processes at the level of all entities involved; 27

46 Reorganizing and strengthening several departments at the MOF; and Strengthening the M&E capacity at the macro-level of the recipient s ministry in charge of economy, planning, and international cooperation. 1.3 Enhance institutional reforms and restructuring for improved accountability by Updating and harmonizing the financial legal and regulatory framework to reflect the new CEMAC directives; Upgrading the accounting system at the Treasury; Providing TA to support the preparation of the Treasury AFSs; and Conducting an assessment of the IT system compliance with the requirements of the organic budget law. 1.4 Enhance control over the use of public resources by Clarifying the roles and responsibilities of the audit and oversight institutions; and Developing and implementing a capacity-building program for each of these institutions. 1.5 Provide TA to Support the design of sector strategies and MTBF for selected ministries; and Strengthen debt management capacity and public investment management capacity. Component 2: Integrated Financial Management Information System (IFMIS): US$9.3 million 2.1 Improve effectiveness and efficiency of the recipient's budget management by Establishing ICT advisory and strategic expertise; Assessing the existing ICT environment; Developing a comprehensive ICT multiyear strategy and implementation plan; Supporting such ICT multiyear strategy s implementation and extension to selected additional institutions; Enhancing the capacity of the ICT unit; 28

47 Upgrading the IFMIS in accordance with the CEMAC directives; and Enhancing the internal and external network of the public expenditure management system, all through the provision of TA, equipment, and training. Component 3: Coordination and Monitoring and Evaluation: US$1.7 million 3.1 Provide support to the MOF's managerial and leadership capacity to implement PAMFIP by Strengthening the PAMFIP Steering Committee and Technical Secretariat; Preparing a public expenditure and financial assessment; Developing an operational M&E system for PFM; and Developing and implementing (a) a communication plan and (b) a training program. 29

48 Annex 2. Outputs by Objective and Component Objective 1: To improve budget preparation and credibility PDO Outcome Indicator Budget information is available to the public Table 2.1. Achievement by Objective Rating: Substantial Baseline (Other Baseline (AF) Target Actual (2016) Status Financing) 1. All enacted FLs of 2012, Partially 2013, 2014, and 2015 with achieved annexes and state budget have been published on the website of the PAMFIP: n.a. The enacted FL ( ) is published on a website. Neither the annexes nor the budget, except the 2012 budget, nor budget execution reports are published. All enacted FLs (since 2012) with annexes, state budget, quarterly budget execution reports and TOFE, end of year budget execution report (2015), citizens budget (2016) annual execution report of the PND is published. 2. Quarterly budget execution reports for 2014 were published on the PAMFIP and MOF website: 3. Budget execution reports for Q1, Q2, and Q3 of 2015 were published on the PAMFIP and MOF website: 4. State Financial Operations Table (TOFE) are not published on the MFB website. 5. Q4 of 2015 budget execution as well as 2015 yearend budget execution not finalized yet. 6. The format and content of the citizens budget was adopted in July 2015; however, the 2016 budget prepared based Data Source Comments Major progress was made regarding the publication of budgetary information. However, publications are still not completely up to date. Although the citizen budget was not published on time, a major achievement is the dissemination to the public with the support of 23 civil society associations. Major progress in budget preparation process with the budget circular. However, implementation is still lagging and the results are not fully satisfactory. Progress regarding the macroeconomic framing for budget 30

49 on citizens budget format is not published yet on the website of the MFB citizen budget was prepared and translated in the two official languages (French and Arabic) and disseminated with the support of 23 civil society associations in September 2016 which was a little late in the year. preparation was set on a good path. Multi-year perspective in fiscal planning, expenditure policy and budgeting 2007: Macro fiscal projections for available at the end of May : Macro fiscal projections for available at the end of May : Macro fiscal projections Since 2010, fiscal and macroeconomic projects for N+3 are prepared during budget preparation (Q1) based on economic classification. A global MTEF is prepared and budget ceilings are defined. Costed sector strategies for education, health, rural development, water, and sanitation exist but are (1) Fiscal and macroeconomic projections for N+3 are prepared during budget preparation (Q1) based on economic/functional classification. (2) A global MTEF is prepared and budget ceilings are defined. (3) Statements of sector strategies (at least for key sectors including education, health, rural development, water, and sanitation) exist and are fully costed, broadly consistent with fiscal forecasts, for sectors represent annual execution report of the PND is finalized but not adopted by the Steering Committee of the PAMFIP nor the council of ministers. (1) (a) A macroeconomic framework model has been established which allows since 2012, to prepare each year, an MTEF covering the next 3 years. (b) The operationalization of the CEMAC directives related to the State Budgeting Classification an annual budget reporting based on administrative, economic, and functional classification using Government Financial Statistics standards will be prepared starting (2) Global MTEF and ceilings: (a) A global MTEF is prepared and budget ceilings are defined based on the Government objective of poverty reduction. (b) The budget preparation and discussions focus on the fiscal Nearly achieved 31

50 for available at the end of May : Macro fiscal projections for available at the end of May : Macro fiscal projections for available at the end of May 2011 inconsistent with fiscal aggregates. Linkages between investment budgets and forward expenditure estimates are weak. ng 25 75% of primary expenditure. (4) An investment management system is operation and investment decisions have links to sector strategies. and macroeconomic for next year. Budget ceilings for N+2 and N+3 are provided for information only and are not discussed. (3) Statements of sector strategies (Projet Annuel de Performance 2017) were prepared for the Ministries of Agriculture, Education, Infrastructures, Health. and Finance (4) (a) The Platform pour la Gestion de l Aide is being used at the Ministry of Planning to manage donor-financed investment. 32

51 Orderliness and participatio n in the annual budget process n.a. A budget calendar exists and has been adhered to since 2010, though with some delays. A budget circular has been prepared every year since Budget has been approved by Parliament before the start of each fiscal year since (1) A clear annual budget calendar exists. (2) The calendar allows MDAs reasonable time (at least four weeks from receipt of the budget circular). (3) A budget circular is issued to MDAs, including ceilings for individual administrative units or functional areas. (4) Budget ceilings are approved by cabinet before the circular is issued. (1) A new arête No.10/PR/PM/SG/2016 dated October 4, 2016, was issued by the Prime Minister for the preparation of 2017 budget. (2) Year 2017 budget preparation and discussions face significant delays according to the prescribed time frame. (3) Arête No.10/PR/PM/SG/2016 provides details on the process and timing of the preparation of budget. (4) This circular also provides ceilings for individual administrative units or functional areas. Nearly achieved 33

52 Objective 2: To improve accountability in public finance including budget execution and control PDO Outcome Indicator In-year budget reporting Baseline (Other Financing) CID (current IFMIS) is regularly producing a four-phase table, which is inaccurate (data are not consistent with approved budget), not comprehen sive (does not include salaries and external financing and does not consolidate various budgets), and does not cover all payments. It is currently useless for Rating: Modest (partially achieved) Baseline (AF) Target Actual (2016) Status Based on the CID/IFMIS, a four-phase table is issued within four weeks after period end but does not automatically include salaries and external financing and does not cover all payments. Budget execution reports are not produced on a regular and timely basis. Based on the CID/IFMIS, a fourphase table is issued every quarter within four weeks after period end, automatically including salaries and all payments. Quarterly budget reports are produced in a timely manner (four weeks following the end of each quarter). The four-phase table is being prepared but still does not include all salaries or payments (salaries of the military are not included). It is, however, a more useful tool for budget execution. Quarterly budget reports are also prepared but with some delays (fourth quarter of 2015 and first and second quarters of 2016 were not finalized by end of October 2016). Partially Achieved Data Source Additional Comments Major innovation: In 2009: a document (Arreté) from MOF decreases steps in the execution of expenditures from 12 to 6 and eliminates the Directorate for Commitments (reduction in the execution of expenditures). Major innovation: In 2012: Implementation of ASDAV and reorganization of Finance Comptroller Unit to further the execution of expenditures and enable tracking of files (reduction in the execution of expenditures). Major innovation: In 2011: the PFM system (CID) started to produce the four-phase table 34

53 The Treasury AFSs (Comptes de Gestion du Tresor) Aggregate expenditure out-turn compared to original approved budget any meaningful follow-up of budget execution Treasury accounts were produced for COA at the end of September Treasury accounts were not produced for COA at the end of September n.a and 2011 documented AFSs were submitted to COA, respectively, in 2011 and and 2013 AFSs are being prepared. 2010: +12% 2011: +12% 2012: 6% 2015 documented AFSs have been submitted to COA. 2014: inferior to ±5% AFSs are produced and submitted to COA (2014 was submitted and 2015 was submitted by December 2016). 2013: 7% 2014: 12% Achieved Not Achieved which enabled a better monitoring of budget execution (even if it does not include all information) In 2013, the implementation of automated payment systems (Integrated Procurement Management System [Système de Gestion Intégrée des Marchés Publics, SYGMA] and SYSTAC) in according to the CEMAC directive. Pending: Automation of accounting system which did not materialize. Needs to improve public investment management were identified and actions have started to be implemented at the end of the project. Strengthening of oversight institutions such as IGF and COA. IGF has been able to increase the implementation rate of its annual audit 35

54 Completene ss and timeliness of central government debt records and medium n.a. Debt records are incomplete and not updated on a regular basis. There are complete debt records within a three-month lag for central government, domestic, external, and guaranteed debt, as well as all debtrelated transaction, Validation of the database and integration in Debt Management System (Système de Gestion de la Dette, SYGADE) 5.3 which provides a complete record of debts for the central government. The medium-term strategy was prepared and adopted by a Nearly Achieved plan (in 2013, IGF conducted 11 missions from 15 planned). In 2012, COA was able to conduct 5 audits (Ministry of Health, MOF, General Hospital - HGRI, environmental audit of Chad Lake and audit of activities related to December 1, 2012, festivities) A calendar was adopted fixing the submission date of the Loi de Reglement to COA on August 12 of each year for the year N-1. There are, however, delays in the submission of Loi de Reglement (2014 was submitted to COA in November 2016, 2015 was not finalized as of end of October 2016). The implementation of and data migration to SYGADE 6 was not finalized at the end of the project (the Government is 36

55 term debt strategy including past debt relief and debt restructuring. A medium-term debt strategy including all typical analysis of medium-term debt strategies covering 90% of existing and expected central government debt and prepared by all concerned entities has been adopted by the Cabinet and made publicly available. committee (ETAVID). The current debt strategy has not been adopted by the Cabinet nor made publicly available. exploring other financing sources). The Organic Finance Law (LOLF) and associated CEMAC directive on PFM n.a. The LOLF was adopted by Parliament in January 2014 and enacted in February A draft action plan for the implementation of the LOLF has been prepared. Application of the LOLF and implementation of CEMAC directives on PFM has started. The LOLF action plan is implemented as scheduled. Implementation of the LOLF was initiated with TA to DGB. The action is being implemented (albeit with some delays). The 6 CEMAC directives were transposed into law. Achieved DGB is getting ready to establish the beginning framework to allow for program budgeting. 37

56 Objective 3: To improve the IT environment and coverage of the PFM system PDO Outcome Indicator Rating: Modest Baseline (Other Baseline (AF) Target Actual (2016) Status Financing) 1. The previous strategy ended in December 2015 and a report on the implementation drafted. Data Source Additional Comments Operational strategy, and a multiyear budget and programmi ng for the modernizati on of the IT system CID/IFMIS coverage of the Public Administra tion A strategy has been adopted and implemented. MOF + 7 ministries (Presidency, Infrastructure, Health, Ministry of Public Administration, Petroleum, Mines, and Urban and Rural Planning [Aménagement du Territoire]) are interconnected. Implementation of strategy continued in a satisfactory manner. At least 37 ministries are interconnected 2. A new Strategy for Development and Modernization of PFM (Strategie pour le Developpement et la Modernisation de la Gestion des Finances Publiques) was drafted and was pre-validated during a workshop on August 19, Detailed Action Plan was developed by thematic groups but the final version was not yet adopted by the Steering Committee of the PAMFIP by end of December A total of 17 institutions have been interconnected with the datacenter of the MFB, including the specialized department of the MFB (Treasury and Public Accounting General Directorate [Direction Générale du Trésor et de la Comptabilité Publique], IGF, Tax General Directorate [Direction Générale des Impôts], and Debt Directorate); HR/Payroll; Ministry of Public Health, Petroleum, Infrastructures; MFPTE; Ministry of NTIC; State House, Prime Minister s office. The EU project Partially Achieved Partly Achieved Major delays in strategy adoption. Only 46% of IFMIS coverage target achieved. IT department issues, mostly related to staffing, are jeopardizing the sustainability of the result achieved and the continuing activities. 38

57 (PAG) has financed the acquisition of IT equipment to interconnect 11 fiscal institutions (regies financières) located in some regional offices of the MOF (delegation regionals des finances) with the Database of the IT Center (Centre Informatique). These equipment were received in August

58 Table 2.2. Output by Component Project Components/Activities Output at Completion Achieved/Not Achieved Explanation if not Achieved PDO Component 1: Public Finance and Financial Accountability 1. Elaboration of the macrofiscal projections and the preparation of budgets up to Establishment of a system to manage public investment projects 3. Streamlining and simplifying expenditures procedures at the level of all entities involved 4. Reorganizing and strengthening several departments at the MOF 5. Updating and harmonizing the financial legal and regulatory framework to reflect the new CEMAC directives Organization of macroeconomic strategy committee (Arrete 168) Preparation of central MTEF and Guides prepared for budget elaboration Conference on the implementation of new law on public finance in 2012 TA for the preparation of TOFE, MTEF, and REF Program nomenclature for 5 ministries Training for DBG staff TA on new budget calendar Citizen budget Consultant terms of reference (ToR) prepared and 1 study completed Simplification of the expenditure circuit 9 from 12 to 6 steps via an Arrete) Implementation of ASDAV in 2012 (administrative system to track the treatment of files) Development and implementation of the manual for expenditure circuit Reorganization of Financial Controller Office in 2012 Training provided to several departments of MFB LOLF and associated CEMAC directives on PFM was adopted by Parliament in January Publication of the compendium of texts on the harmonized PFM framework (Recueil de textes sur le cadre harmonise de gestion des Partially achieved Not achieved Partially achieved Partially achieved Many of the activities contemplated under the AF for the establishment of a system to better manage public investments were not implemented. Reorganization of MFB not completed 1 1 and and 2 Achieved 1 and 2 40

59 Project Components/Activities 6. Upgrading the accounting system at the Treasury 7. Providing TA to support the preparation of the Treasury AFSs 8. Conducting an assessment of the IT system compliance with the requirements of the organic budget law 9. Clarifying the roles and responsibilities of the audit and oversight institutions 10. Developing and implementing a capacity-building program for each of these institutions 11. Support the design of sector strategies and MTBF for selected ministries 12. Strengthen debt management capacity and public investment management capacity Output at Completion finances publiques), first edition of A study tour was undertaken and exchanges happened. TA provided for the preparation of Treasury AFSs 2014 and 2015AFS were prepared. As of the evaluation date, the Government had to arbitrate between 3 scenarios to have an IT system that can be adapted to 6 CEMAC directives. In the interests of harmonization and the establishment of public financial control instruments at the level of the CEMAC zone, a COA was created by Organic Law No. 017/PR/2014, on the organization, attributions, functioning, and rules of procedure of the Cour des Comptes in the Republic of Chad. Trainings were conducted for IGF staff. Statements of sector strategies were prepared for agriculture, education, infrastructure, health, and finance. TA to update debt records Validation of the database and integration in SYGADE Achieved/Not Achieved Not achieved Explanation if not Achieved Accounting system at the treasury was not implemented PDO Achieved 2 Partially achieved Partially achieved Partially achieved Partially achieved Partially achieved Strategy not finalized Clarification of the role of IGF, although recommended by a 2012 diagnostic No comprehensive plan was made available during evaluation other than a list of ad hoc training activities. Medium-budget framework for selected ministries was not prepared. Implementation and data migration to SYGADE 6 was not completed. 5.3 Component 2 (original financing): Human resource and Capacity Development (dropped) Component 2 (additional financing): Integrated Financial Management Information System (IFMIS) 13. Establishing ICT advisory and strategic expertise 14. Assessing the existing ICT environment 15. Developing a comprehensive ICT multiyear strategy and implementation plan Experts hired Creation of ICT Center Second strategy for development and modernization of PFM was drafted and validated in August Second strategy for development and modernization of PFM was drafted and validated in August Achieved 3 Achieved 3 Achieved

60 Project Components/Activities 16. Supporting such ICT multiyear strategy s implementation and extension to selected additional institutions 17. Enhancing the capacity of the ICT unit 18. Upgrading the IFMIS in accordance with the CEMAC directives 19. Enhancing the internal and external network of the public expenditure management system; all through the provision of TA, equipment, and training Output at Completion First strategy was implemented with modernization of CID system, implementation of payment systems (SYGMA and SYSTAC). Experts hired Enhancements made to CID Preparation of 4-phase table Equipment and TA provided Extension of network to ministry s structures Achieved/Not Achieved Partially achieved Partially achieved Not achieved Partially achieved Explanation if not Achieved Final second strategy not adopted by the Steering Committee of the PAMFIP by the end of December 2016 Local staff of ICT unit not properly informed or trained on the use of new IT systems IFMIS not implemented Training for local ICT staff not completed Accounting system not implemented IFMIS not implemented PDO

61 Annex 3. Economic and Financial Analysis 1. As a PFM capacity-building project, quantitative computations of rates of return are difficult to quantify, and no formal economic and financial analysis was performed at the time. Economic and fiscal savings could have occurred through the introduction of a more efficient FM system, and program budgeting and HRM could have ultimately contributed to efficiency. It was expected that streamlined budget preparation and execution procedures, establishing an IFMIS, enhanced internal audit capacity, and trained civil servants would improve management and control of public resources. However, despite the original project being entirely disbursed and the implementation of a few intended activities of the AF, the overall efficiency of the project can be considered as very low. 2. It definitely seems very difficult to identify clearly the savings and efficiency gains of this project, given the current situation summarized in the following paragraphs. 3. The models and methods of projections of the macroeconomic aggregates and especially the public revenues suffer from major shortcomings. There appears to be a mismatch between the forecasts in the macrobudgetary framework and the real economic situation, leading to the need to revise the budget at least two times during the recent years. 4. Domestically funded investments are not subject to feasibility studies before their inclusion in the budget. There are institutional frameworks to review and validate the studies. The lack of a feasibility study of projects largely explains the high number of extensions granted to the ongoing contracts causing delays in the execution of the projects as well as the subsequent budget overruns, leading to the creation of arrears. 5. The chain of expenditure is slow and clogged by redundant steps, leading certain expenses to use the emergency procedure frequently. Furthermore, extra budgetary expenditures increased during the recent fiscal years from XAF 255 billion in 2013 to XAF billion in Owing to the project, a notable effort has been made in the area of the IFMIS implementation. However, the current functionalities of this IFMIS do not allow the production of a real dashboard on the budget execution. The IFMIS does not cover all steps of the budget execution and only traces budget expenditure operations from the administrative phase to the payment. In addition, it does not allow to ensure the public accounting and revenue is not processed in this application. 43

62 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team Members Names Title Unit Responsibility/Specialty Lending Beatrice Dominique Alperte Senior Public Sector Spec AFTPR- HIS Jerome F. Chevallier Consultant GTI08 Ningayo Charles Donang Senior Procurement Specialist GGOGI Emile Louis Rene Finateu Lead Financial Management Spec AFTME- HIS Pierre Morin Consultant GFMDR Mark Nelson Lead Specialist LLIOP- HIS Gradimir Radisic Consultant GGOFR Brahim Badaoui Tidjani E T Temporary AFMTD Sibaye Joel Tokindang Senior Economist AFTP3- HIS Supervision/ICR Yang-Hah Chung-Kong Senior Program Assistant GMF13 Horbira Nambatinguie Djimte E T Temporary AFMTD Ningayo Charles Donang Senior Procurement Specialist GGOGI Lancine Dosso Financial Management Specialist AFTME- HIS Emile Louis Rene Finateu Lead Financial Management Spec AFTME- HIS Sekou Keita E T Consultant AFTME- HIS Samia Melhem Lead ICT Policy Specialist GTI09 Pierre Morin Consultant GFMDR Etienne NKoa Sr. Financial Management Specialist AFTME- HIS Mark Nelson Lead Specialist LLIOP- HIS Emmanuel Ngollo HQ Consultant ST GENDR Karen Cecilie Sjetnan Senior Country Officer EACVQ Sibaye Joel Tokindang Senior Economist AFTP3- HIS Paulette C.E. Aida Thioum Zoua Program Assistant AFMTD (b) Staff Time and Cost Staff Time and Cost (World Bank Budget Only) Stage of Project Cycle US$, thousands (including travel No. of Staff Weeks and consultant costs) Lending FY FY FY FY Total: 1, Supervision/ICR 44

63 FY FY FY FY Total:

64 Annex 5. Beneficiary Survey Results Not applicable 46

65 Annex 6. Stakeholder Workshop Report and Results Not applicable 47

66 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 1. The evaluation of the Republic of Chad - Support Project to Strengthen Public Finance Management Capacities (Projet d Appui au Renforcement des Capacités de Gestion des Finances Publiques, PARCAFIP) was carried out from November 3 to 30, 2016 in N Djamena and finalized in December 2016 by two independent evaluators. The evaluation was carried out according to the criteria defined in the ToRs (relevance, effectiveness, efficiency, impact/effects, viability). This annex summarizes the main findings and recommendations of the mission. 2. The PARCAFIP was financed with two Financing Agreements signed between the the GOC (the beneficiary) and World Bank (the lessor). The first, amounting to SDR 6.7 million, or US$10 million, with an initial term of 5 years from 2007 to 2012, was signed on the basis of initial funding on behalf of PARCAFIP 1 on December 22, 2007 (the 5-year period was subsequently extended to 18 months at the end of 2012). The second, amounting to SDR 6.6 million, or US$10.2 million, was signed on June 20, 2014, for additional 20-month funding on behalf of PARCAFIP 2 (AF). Both funds were approved by the Board of Directors of the World Bank on May 24, 2007, and May12, 2014, respectively. 3. The formalization of the PARCAFIP, in its initial phase in four components, all targeted toward PFM improvement, informed the choice of the institutional anchor at the MOF. The coherence of the institutional arrangements was ensured by the very close links between each of the components, namely Public Finance and Financial Accountability (Component 1), Human Resources Development (Component 2), Integrated Financial Management System (Component 3), and Coordination, Monitoring and Evaluation of PAMFIP (Component 4). All components contributed to improving efficiency and transparency in the use of public resources through the strengthening of the PFM system. There is coherence between the PARCAFIP and successive World Bank strategies in Chad (SAP 2003, PAA, CAS , and New Country-Partnership Framework) as well as between the PARCAFIP and the national strategies of Chad (SNBG, National Poverty Reduction Strategy [Stratégie Nationale de Réduction de la Pauvreté], PND). Furthermore, it should be emphasized that there are complementarities between the PARCAFIP and interventions in the public finance sector of other Chad technical and financial partners (EU, African Development Bank, UNDP, French Cooperation). 4. On institutional arrangements. The selection of a project management unit with a national organizational structure and the alignment of the implementation of the PARCAFIP with national procedures were relevant, even if the latter was somewhat altered by the absence of an operational monitoring committee, in other words, a monitoring structure that could have played a role in the M&E of the project implementation process, the role of intermediation between the beneficiaries and the steering bodies of the project (Steering Committee and STP PAMFIP) to which the donor (World Bank) must be associated. 5. On efficiency. This criterion has only been partially fulfilled because of all the dysfunctions which have led to such a result have not been entirely corrected at the human, institutional, and operational level. With respect to HR, owing to the PARCAFIP, the initial STP PAMFIP scheme has been strengthened by recruiting a project FM Specialist and a Procurement Specialist. In addition, project deadlines were not met for PARCAFIP 1 (with the extension of its initial duration for 18 months), unlike PARCAFIP 2, where the terms of its duration remained the 48

67 same, although PARCAFIP 1 and 2 have been characterized by the same operational failures, leading to delays and/or blockages in the carrying out certain activities. 6. On the effectiveness. This criterion has only been partially fulfilled. (a) With respect to the annual budgets level of execution. Although the annual budgets implementation rates of the last two years of PARCAFIP 1 (2013 and 2014) reached high levels, they remained low during the first three years of project implementation. Their budget execution level was even lower during the 20 months of implementation of PARCAFIP 2, which resulted in many unrealized activities. At this stage, it is questionable whether the choice of 20 months for the duration of PARCAFIP 2 in the amount of US$10 million had been realistic, when in the case of PARCAFIP 1 the same amount was allocated over a period of 78 months. Indeed, the initial duration of this project at 60 months ( ), had been extended by 18 months (March ) to its initial closing date, which had resulted in satisfactory levels of budget consumption. (b) With respect to the relevance of the indicators. The selected indicators are relevant but have not been monitored consistently throughout project implementation in spite of the fact that an M&E system with an M&E plan were in place. The M&E process has suffered from the irregularity of data reporting and data quality. 7. On the impact. This criterion has only been partially met because only PARCAFIP 1 has had positive and significant results in terms of achieving the expected objectives. As the implementation of the project in its second phase (PARCAFIP 2) has indeed encountered institutional constraints and operational dysfunctions, most of the objectives of this second phase have not been achieved. 8. On the sustainability. This criterion has only been partially achieved. All the activities likely to favor sustainability in the medium and long term have not been carried out, particularly at the level of PARCAFIP On the perspectives. The option of the continuation of the project which had been envisaged by the Government at the beginning of 2016 was rejected by the World Bank. It could, however, be revived in another form, notably through the negotiation of a new project. To continue some of the activities, funding requests have been made to other donors (EU in particular) with a view to resuming some activities over the next year (for example, PEFA evaluation). This option is credible, but it would have been desirable to formalize it within the framework of a consultation with all the donors. A prior consultation between donors proposed by the World Bank would also have been very timely. Given the decisive and/or strategic nature of some activities not carried out in PARCAFIP 2, it seems appropriate for the Government to consider negotiating a new project with the World Bank. 49

68 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable 50

69 Annex 9. List of Supporting Documents Project Appraisal Document for Grant for the Public Financial Management Capacity Building Project (report No TD) (World Bank) Restructuring Paper for restructuring of the Public Financial Management Capacity Building Project (report No ) (World Bank) Project Paper for Proposed Additional Grant for the Public Financial Management Capacity Building Project (Report No TD) (World Bank) Evaluation Finale du Project de Renforcement des Capacités en matière de Gestion des Finances publiques au Tchad (PARCAFIP) (STP PAMFIP Chad) Recueil de Textes sur le Cadre Harmonise de gestion des Finances Publiques (Chad) Rapport sur l Exécution des Lois des Finances Gestion 2013 (Chad) Rapport d Exécution du Budget General de l Etat (Chad) Décret No. 2419/PR/PM/2015 Portant Organisation et Fonctionnement de la Direction Générale de Contrôle des Marches Publics (Chad) Arrêté No. 032/PR/PM/MFB/SG/2010 Instituant un délai de traitement de dossiers dans le circuit de la dépense publique (Chad) Arrêté No. 642/PR/PM/2015 Instituant in calendrier pour la préparation et l élaboration du budget général de l Etat (Chad) Circulaire No. 010/PR/PM/SG/2016 relative à la préparation du Budget General de l Etat pour l exercice 2017 (Chad) 51

70 MAP 52