Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank RESTRUCTURING PAPER ON A Report No: PROPOSED PROJECT RESTRUCTURING OF DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT (TF095283-BD) GRANT (EFFECTIVE FROM NOVEMBER 02, 2009) TO THE PEOPLE S REPUBLIC OF BANGLADESH July 21, 2013 Public
Regional Vice President: Country Director: Sector Manager / Director: Task Team Leader: Philippe LeHouerou Johannes Zutt Tony Verheijen Jonas Fallov 2
BANGLADESH DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY P117248 CONTENTS Page A. SUMMARY... 4 B. PROPOSED CHANGES... 5 ANNEX 1: RESULTS FRAMEWORK AND MONITORING... 6 3
STRENGTHENING PUBLIC EXPENDITURE MANAGEMENT PROGRAM: DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT RESTRUCTURING PAPER A. SUMMARY AND PROJECT STATUS 1. This restructuring paper proposes two changes to the Deepening Medium Term Budget Framework and Strengthening Financial Accountability Project (DMTBF): i) a revision of the results framework for the project to adequately capture the achievement of project development objectives, intermediate results; ii) an amendment of the Grant Agreement to enable the project to extend the terms of the position as Communications Specialist from 24 months to 45 months and to remove from the Grant Agreement specific terms of contracts for specialist positions under the Project management Coordination Unit (PMCU). Revision of results framework 2. The DMTBF-project has been effective since November 2009, but saw little implementation progress in the first two years. In recognition of problems with an overly ambitious project design, complicated implementation arrangement and interdependence of components causing a delay in implementation, it was decided to restructure the project design and simplify the implementation arrangement. The restructuring was finalized in February 2012. An independent review prepared jointly between World Bank, DFID and EU from February 2013 has concluded that while considerable progress has been made and significant momentum been created since the restructuring, some targets are likely to be missed. Against this background, the independent review recommended that much of the SPEMP Program should be considered for extension beyond June 30, 2014 provided that sufficient unspent funds remain to finance an extension on a no-cost basis. 3. The most recent implementation support mission (June 23 July 10, 2013) confirmed the overall findings of the independent review and downgraded the overall score for implementation progress to Moderately Unsatisfactory. Given the continued progress at the output-level, the mission concluded that the project can still achieve the envisioned outcome-level results. However, additional time will be required to ensure that activities can be completed, program results are sustainable and a loss of reform momentum is avoided. The mission agreed on an action plan to turn around performance and enable an upgrade of ratings in future. SPEMP donors and government are exploring options for a no-cost to align the implementation period with the time required to achieve envisioned results. In this phase of accelerated implementation and in support of the ongoing discussions on a possible no-cost extension, continuity and adequacy of monitoring and evaluation is increasingly important. 4. During the 2012 restructuring, a revision of the result framework was initiated to simplify the original framework, which contained more than sixty indicators, and reflect the change in component structure. However, when the restructured project resumed implementation and the Component Directors heading each of the 3 components were on board, it was realized that the results framework would have to be further revised to more 4
accurately reflect the activities under each of the 3 components. Furthermore, the structure of the results framework was found not to be fully in line with World Bank standards for the formulation of results frameworks. The work to revise the results framework therefore continued with the support of a World Bank results specialist. 5. The revised version of the results framework agreed after several rounds of consultations between the World Bank, the implementing agency and development partners of the Strengthening Public Expenditure Management Program (SPEMP) was approved by The Joint Donor-Government Committee of SPEMP on November 11, 2012. The revised results framework as approved by the committee is attached as Annex 1. The Results Framework includes targets for FY15 since the Government s Technical Assistance Project Proforma (TPP) includes an additional year. This reflects a common practice by government counterparts to ensure adequate flexibility in light of the fact that a TPP can formally only be revised twice and implementation delays are not uncommon for complex projects. 6. The revised framework provides a clearer structure with 4 PDO-level indicators to adequately enable the measurement against the PDO. There are 17 intermediate results indicators with specific targets enabling an outcome or intermediate outcomelevel assessment linked to the project structure at sub-component level. Based on the revised framework, a number of workshops have been conducted with the Government s project team of the DMTBF-project to enable them to prepare monitoring plans and take over the future monitoring in a sustainable manner. 7. In addition to revising the Results Framework, it is proposed to amend the Grant Agreement to remove reference to specific key performance indicators and to stipulate that the Government will monitor the project in accordance with indicators acceptable to the Bank. The indicators to be monitored will be those set out in this restructuring paper, as agreed with the Government. Extension of position as communications specialist 8. The Government of Bangladesh has requested the World Bank for an extension of the position of the communications specialist for the project for another 21 months to coincide with the closing date of the project (by letter from Economic Relations Division (ERD) dated November 06, 2012). The services of the communications specialist will continue to be needed to assist in, among other things, preparation of workshops, seminars, and the joint newsletter for the SPEMP-program. Since the Grant Agreement specifies a 24 months term of the position of communications specialist, an extension will require an amendment of the Grant Agreement. 9. To avoid any potential future amendments of the Grant Agreement solely due to changes in contract periods for positions under the Project Management Coordination Unit (PMCU), it is proposed to remove the specific term for the position of the communication specialist as well as for the policy and institutional reform specialist (for which the Grant Agreement specifies a 30 months term) from Section I, A 1 (c) of Schedule 2 to the Grant Agreement. 5
B. PROPOSED CHANGES The results framework is proposed to be revised for the project to adequately capture the achievement of project development objectives, intermediate results. An amendment to the Grant Agreement is proposed to enable the project to extend the terms of the position of Communications Specialist and to remove from the Grant Agreement specific terms of contracts for specialist positions under the Project management Coordination Unit (PMCU). 6
Core Annex 1: Results Framework and Monitoring Project Development Objective (PDO): Deepening MTBF and Strengthening Financial Accountability Project To deepen and institutionalize the MTBF and build a more strategic and performance oriented budget management process, while strengthening financial accountability across the expenditure management cycle. PDO Level Results Indicators* Unit of Measure Baseline* 2010-11 Cumulative Target Values** FY12 l FY 13 FY14 FY15 Frequency Data Source/ Methodology Responsibility for Data Collection Remarks Indicator One: Line Ministries (LM) with MTBF meeting specific criteria (3) % MTBF implemente d in all LMs BMCs/BWGs formed in all LMs 0 60 80 90. Sources: LM to self report on BMC, BWG etc. Other two criteria to be assessed in budget circulars and budget documents report by the DMTBF & SFA Project DMTBF Project C.1 Completeness test based on three criteria: BMCs,BWGs, BMWs/BS/Ss operational consistent with ToR suggested by FD;Baseline estimates used as the basis for determination of bdgt ceilings; Unified budget format used in MTBF and other Budget documents. Indicator Two: LMs reporting annual performance results as per guidelines No. LM Nil 0 2 3 5 reports against KPIs/Output Indicators published and tabled in Parliament reports by the DMTBF &SA Project Guidelines provide the standards for performance reports Indicator Three: LMs producing quarterly financial management reports meeting FD requirements % Irregular and with considerable time lag 0 60 80 90 Quarterly FD s Websites for Rules and Guidelines LM Websites FD/DMTBF & SFA Project Indicator Four: Government annual financial statements prepared as per IPSAS cash based standard consistent with COFOG and GFSM 2001. Y/N/P N N N P Y *in 2011, other than the progress made in the critical areas such as roll out of MTBF< the major focus was on conducting baseline analysis and diagnostic studies. In this context, the baseline for the purpose of M&E framework has been taken as FY2010-11. 7
Core INTERMEDIATE RESULTS IR Level Results and Outputs Indicators* Unit of Measure Baseline FY12 FY13 FY14 FY15 Frequency Data Source/ Methodology Responsibility for Data Collection Intermediate Result (Component One): 1.1 Macro Fiscal Policy and Management: Strengthened capacity for macro-fiscal forecasts, fiscal policy and analysis Indicator 1.1.1: Deviation between forecasts in the original MTMF and actual results regarding: Budget deficit to GDP ratio Debt to GDP ratio % 1.0-2.7 =/-0.9 =/-1.5 =/-0.8 =/-1.0 =/-0.7 =/-0.5 =/0.5 =/-0.2 FD/MTMF, National Accounts TDM Wing, FD/ FD/DMTBF & SFA project FD / DMTBF & SFA project Remarks While the DMTBF & SA Project is expected to contribute to the above result areas through more timely and reliable forecast of key policy variables above, these variables are also influenced by Government Policy decisions Multi-sector macro-economic forecasting model with user guide developed and used for MTMF Intermediate Result (Component One): 1.2 Improved Debt, Treasury and Cash Management Indicator 1.2.1: Debt management entities provide annual report to the government No. No No 1 4 FD, BB, ERD, NSD, FD Reports to include an evaluation of how the borrowings, derivatives, and other debt-related transactions have complied with the requirements set in the DM strategy. Indicator 1.2.2: Cash balances calculated daily and consolidated by FD N/Y/P Cash flow plan formulated by FD technical committee N N P Y Quarterly / Cash flows plans submitted by FD to Technical Committee FD Monthly cash flows plans are built on financial plans from LMs showing expected timing of revenue receipts and of expenditure commitments, consolidated for the Government as a whole. Intermediate Result (Component One): 1.3 Strengthened Budget Management and MBTF Indicator 1.3.1: Variance between original budget and actual budget out-turn for % -8.1 +/- 7.0 +/-6.0 +/-5.0 +/-5.0 FD/Budget in Brief and appropriation FD While the project is expected to contribute to stronger budget management, the end result will also be influenced by other factors such as 8
Core IR Level Results and Outputs Indicators* Unit of Measure Baseline FY12 FY13 FY14 FY15 Frequency Data Source/ Methodology Responsibility for Data Collection previous FY. s Accounts external and internal shocks Remarks Strengthening LMs budget institutions, incl. Budget Management Wings fully operational consistent with ToR Indicator 1.3.2: LMs receiving regular FD oversight related to MBTF % Oversight focused on budget processes 100% complian ce on Budget calendar 100% oversight on quality of MBFs and budget estimates data entry 100% oversight on financial reporting and financial performan ce 100% oversight on all aspects of budget process: preparation and management FD/LMs FD Introduction of financial reporting by line ministries Introduction of performance reporting Indicator 1.3.3: LM producing Gender Budget reports No. 20 25 30 35 40 Indicator 1.3.4: LMs with budgets based on medium term strategic business plans No. Nil Nil 1 5 10 Selected LMs Websites FD/DMTBF & SA Project Report Intermediate Result (Component One) 1.5 PFM Legal and Regulatory reforms achieved (1.4 moved to a Bank executed project) Indicator 1.5.1: Adequate legal and regulatory support to the reforms provided N (Existing legal and regulatory framework inconsisten t with evolving N P P Y Rules and Guidelines issued FD Revised/ new GFR and treasury rules promulgated 9
Core IR Level Results and Outputs Indicators* Unit of Measure Baseline FY12 FY13 FY14 FY15 Frequency reforms.) Data Source/ Methodology Responsibility for Data Collection Remarks Intermediate Result (Component Two ): 2.1: Public Financial Systems: Improving Accounting and Financial Reporting Indicator 2.1.1: ibas functionality enhanced and applied as an integrated FMIS across line Ministries, Departments, subordinate and Upazila levels Indicator 2.1.2: Government financial statements are prepared on IPSAS cash basis in a timely manner Y % None None None Budget and ledger functionalit y available Y % Statements are delayed, do not comply with internation al standards Functionalit y extended to full IFMIS Quarterly and UAT Reports, Published financial reports None None Partial 100% Published finance accounts CGA CGA Definition: Measurement of the application of ibas as an integrated FMIS rather than a transaction processing system. Improved accuracy & comparability of financial reporting Distribution and re-appropriation of budget electronically Data interface for all transactions originating at BB and Sonali Bank Automated payment processing and ETA to beneficiary accounts Extended network and automation of all Upaziallas Business requirement functionalities are being identified as part of IBAS ++ development to make the system ready for generation of Financial Statement under IPSAS cash base Revised Account Code issued by CAG IPSAS Cash-based reports are prepared Imporved quality and timeliness of financial data Indicator 2.1.3: ibas used for Self Accounting Entities based on improved accounting standards and procedures Y % None for seven SAEs None Partial Partial 100% SAE monthly accounts, Published financial reports CGA, Project ibas is being enhanced for SAEs (RHD, Forest, Dept of Works, Post office & Railways. Revised SAE Account Code 10
Core IR Level Results and Outputs Indicators* Unit of Measure Baseline FY12 FY13 FY14 FY15 Frequency Data Source/ Methodology Responsibility for Data Collection Remarks Indicator 2.1.4: Budget classification revised to meet budget preparation and consolidation of accounting data for financial reporting consistent with IPSAS Y % Chart of Accounts does not comply with internation al standards None None 100% 100% ibas UAT, Published financial reports CGA, FD Enhanced budget classification and chart of accounts implemented Training in new classification prepared and delivered Intermediate Result (Component 2) 2.2 : Improved Systems for Payroll, Pensions, Loans and Advances and Government Provident Fund Indicator 2.2.1: Other ibas enhancements % Accounting data are fragmented and inaccurate None Partial 100% 100% Published financial reports CGA ibas is enhanced to automate pension payment system. Intermediate Result (Component 3) 3.1: Capacity Building and Training for Improved PFM Indicator 3.1.1: Public servants receiving PFM training % 1661 15% (3500) 41% (9200) 89% (20200) 100% (22700) TMIS FD/DMTBF & SA Project Report Top number is cumulative % Number in parenthesis is cumulative number of officials planned to be trained Indicator 3.1.2: Public Servants reporting positive training outcomes % of trainees reportin g positive training results No framework for reporting Training outcomes 70% 70% 80% 85% Post-training follow-up survey (sample of courses delivered) Participant s of orientation workshop and other short duration courses will not be assessed 4 level Donald Kirkpatrick s framework for training evaluation adopted, aligned with training strategy, and being implemented 11
Core IR Level Results and Outputs Indicators* Unit of Measure Baseline FY12 FY13 FY14 FY15 Frequency Data Source/ Methodology Responsibility for Data Collection Remarks for level 2, 3, 4 Intermediate Result (Component 3) 3.2: Creating Institute of Public Finance (IPF) as the Sustainable Institution for PFM Training Indicator 3.2.1: Number of Training days engaged in PFM training & capacity building activities No record of formal training days spent for providing training & capacity building in PFM area 800 1200 1400 5000 annually Per training day includes 6 training hours In case of more than 1 course a day, days are calculated based on 6 hourly days Training & Capacity building includes study tour, academic programs (masters), foreign, e- learning trainings and workshops, seminars Indicator 3.2.2: Number of Management Report Prepared A range of training and capacity building activities are delivered by IPF 1 2 2 2 Bi-annually C3 Evaluation and monitoring procedures implemented (TMIS) Management Reports submitted Report contains comprehensive statement of all activities, evaluation, feedback organized on key PFM skill area, project components and key stakeholder institutions 12