losure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized The World Bank Implementation Status & Results Indonesia Government Financial Management and Revenue Administration Project (P085133) Operation Name: Government Financial Management and Revenue Project Stage: Implementation Seq.No: 13 Status: ARCHIVED Archive : 03-Jun-2013 Administration Project (P085133) Country: Indonesia Approval FY: 2005 Product Line: IBRD/IDA Region: EAST ASIA AND PACIFIC Lending Instrument: Adaptable Program Loan Implementing Agency(ies): Key s Board Approval 21-Dec-2004 Original Closing Planned Mid Term Review 30-Nov-2012 Last Archived ISR 19-Nov-2012 Effectiveness 27-Oct-2005 Revised Closing Actual Mid Term Review 01-Feb-2013 Project Development Objectives Project Development Objective (from Project Appraisal Document) In light of the more limited scope of GFMRAP after the recommended restructuring, the overall Project Development Objective is changed to the following: The objective of the Project is to improve efficiency, governance, integrity and transparency in the Borrower's public financial management. This adjustment scales down the ambition by focusing on public expenditure management and by not being the overarching reform umbrella envisioned in the Project Appraisal Document. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost A. Public Financial Management 66.60 C. Governance and Accountability 5.40 D. Project Governance and Implementation 0.00 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status Overview Page 1 of 7
The main component of the restructured GFMRAP is the development of a new budget and treasury management information system (SPAN). All of the main procurement contracts under SPAN have been completed. The largest contract is for the main systems integrator developing SPAN, which was signed in July 2009. The supporting activities have also been contracted, including consultants for Business Process Improvement (BPI), Project Management and Quality Assurance (PMQA), and Change Management and Communications (CMC). According to the recently revised Transition Plan, SPAN will be gradually rolled out to 216 locations across Indonesia during the second semester of 2013: 178 Treasury branch offices (KPPN); 31 regional offices; and 9 Treasury HQ units. This schedule for roll-out is behind the original plan to have a completed solution (operational acceptance) by end of 2012. The delays in SPAN are due to a range of challenges encountered during the testing phase, which were largely not addressed until they impacted on the development schedule due to weaknesses in the risk identification and mitigation management processes. The target was to have the FY 2013 first semester consolidated financial statements produced by SPAN, but this will now not be achieved. While there are still some critical milestones in the process Integration Tests, User Acceptance Tests, rolling out the infrastructure, and training for the Go-Live stage -- the transition is in line with state budgeting cycle and should be completed by the current project closing date of end-2013. The Government has decided not to proceed with the component that was co-financing the Court Administration and Case Management System (CMCAS) for the Tax Court, as this will be financed solely from the Government budget. However, there are significant concerns about the capacity of the Tax Court to manage the process on its own. Locations No Location data has been entered Results Project Development Objective Indicators Page 2 of 7
Indicator Name Core Unit of Measure Baseline Current End Target Automated treasury payment system enables accurate and timely financial reporting, reduces incidence and size of idle cash balances, and reduces corruption in payments Text Value Treasury system does not enable accurate and timely financial reporting and cannot be used for reducing incidence of idle cash balances nor to ensure proper expenditure controls 31-Mar-2013 Significant progress is being made. The TSA is largely complete. The GFMIS (SPAN) roll out is scheduled by end 2013, with the requirements for new business processes frozen and a new COA introduced for FY2012. Accurate and timely financial reporting, in line with international and national standards, a well function TSA with cash planning minimizing idle cash balances and the enforcement of expenditure controls (and risk mitigation). Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target National government policy priorities are reflected in a Medium Term Expenditure Framework and annual budgets. Text Value No MTEF. An elaborate planing process is in place but the link between planning and budgeting is weak. See indicator. 31-Mar-2013 Discontinued after restructuring, although significant progress continues to be made by the GOI in this area. Reduced leakage in expenditure flows to endusers as measured by Public Expenditure Tracking Surveys. Completion of SPAN Stage I rollout (Treasury, KPPNs, pilot line ministries) demonstrated by, e.g. specified periodic financial reports prepared within a specified time period for Text Value Na. Na. 09-Feb-2009 This component has been dropped. Text Value Treasury system does not enable accurate and timely financial reportingand can n ot be used for reducing See indicator. SPAN fully functional GFMIS in accordance with ITB specifications. Page 3 of 7
concerned entities Improved Customs revenue performance and time-for-release performance. Increased ratio of revenues to GDP, increase in registered tax payers and filers, reduced tax arrears, and reduced clearance time in Customs. Reviews (including from Minister) verify the completion of at least four high-quality policy analysis products. A Treasury Single Account (TSA) system is functioning with acceptable parameters: all onbudget central government bank accounts and own-revenue bank accounts of line ministries and spending units are incidence and size of idle cash balances, and reduce co rruption in payments. 31-Mar-2013 SPAN in implementation phase is ongoing and nearing completion in 2013. Text Value No information available. See indicator. 07-Dec-2006 This component has been dropped. Text Value The non oil and gas tax Na revenues were 10.6 percent of GDP in 2006. Other data are not recorded by the Indonesian authorities. 31-Jan-2012 This component has been dropped. Number Value 0.00 3.00 4.00 12-Feb-2005 31-Jan-2012 The FPO was established in 2005. Text Value A baseline of >18,000 government cash operations with no cash management standards Minister has consolidated all MOF policy functions in FPO in 2011 (including Tax and Customs). FPO now produces high quality budget analysis, including fiscal risk statement, analysis on balanced budget and modeling and recommendations for subsidy reform (to be implemented in 2012). Substantively completed. Need to progress to active cash management to reduce costs. At least 4. 31-Mar-2013 TSA enforced with consolidation of government funds (no material exceptions). Cash management standards minimizes idle balance in TSA. Page 4 of 7
Annual surveys of stakeholder satisfaction with Tax Court admin. and case management established, action plan adopted and Tax Courtwebsite functioning Verification of effective project governance, external oversight, change management and implementation Text Value Est. user satisfaction < 10% as no formal surveys, no website or case management and tracking system etc. 31-Dec-2004 Text Value No GAAP, PSC or investigation unit. Idle cash balance with BI earns revenue as provided by MOU, although amounts remain significant resulting in a very large cost of carry. 30-Sep-2012 The procurement of this component is now in doubt. The Government has informed the Bank of the intention to fund entire component from the budget, although capacity to do this remains very low. Disagreements with the Bank have centered on the appropriate procurement method (see March 2010 Supervision AM). As per description and set out in loan agreement. 31-Mar-2012 Monitoring and oversight is considered adequate with good capacity in PSSU and in DG Treasury for SPAN. Data on Financial Performance (as of 07-May-2013) Financial Agreement(s) Key s Project Ln/Cr/Tf Status Approval Signing Effectiveness Original Closing Revised Closing P085133 IBRD-47620 Effective 21-Dec-2004 22-Dec-2004 27-Oct-2005 P085133 IDA-40260 Effective 21-Dec-2004 22-Dec-2004 27-Oct-2005 P085133 TF-53556 Closed 22-Dec-2004 22-Dec-2004 27-Oct-2005 31-Dec-2008 31-Dec-2010 P085133 TF-90047 Effective 09-Mar-2007 09-Mar-2007 25-Apr-2007 31-Dec-2012 P085133 TF-91414 Closed 14-Feb-2008 14-Feb-2008 14-Feb-2008 31-Jan-2011 30-Sep-2012 Disbursements (in Millions) Page 5 of 7
Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P085133 IBRD-47620 Effective USD 55.00 55.00 0.00 21.22 33.78 39.00 P085133 IDA-40260 Effective USD 5.00 5.00 0.00 4.97 0.00 99.00 P085133 TF-53556 Closed USD 5.00 4.78 0.22 4.78 0.00 100.00 P085133 TF-90047 Effective USD 3.85 4.92 0.85 4.13 0.80 84.00 P085133 TF-91414 Closed USD 1.35 1.06 0.29 1.06 0.00 100.00 Disbursement Graph Key Decisions Regarding Implementation The project is moving towards the final systems configuration and validation (testing) stages prior to the scheduled deployment of SPAN in 2013. The business process improvements have been agreed and the system has largely been developed. Prior to the live roll-out stage, the Ministry of Finance (MOF) will need to take the following steps: (i) Focus on the change management and communication (CMC) programs, in particular to implement a detailed training strategy for over 4,000 users located in 178 KPPNs across Indonesia, within a tight deployment schedule; (ii) bring a closure to any major issues pending such as reviewing the need for additional software licenses, and finalizing the interfaces with other systems, particularly the SAKTI system that is being developed for use by all 29,000 budget units (SATKERS), to commence in 2014; and (iii) issue new regulations for budget execution to enable the new system and procedures to be rolled out as planned. As with any major ICT development project, a critical issue is the development of a good transition strategy to ensure that the migration from the legacy system to SPAN will run smoothly. The comprehensive transition strategy includes the following features: (i) A cut-over method has been chosen so that during the transition period both the legacy system and SPAN will be used (dual system), but at sites which have started to go-live only SPAN will be used, and the legacy system will not be run; (ii) Up to the go-live point, there will be a daily conversion of the fiscal information from the legacy system to the new SPAN database in order to prepare daily consolidation reports using the new SPAN Chart of Accounts (this went live in March 2012); and (iii) SPAN will be the system that will produce the official consolidated fiscal reports for FY2014. Page 6 of 7
On the status of the other components under GFMRAP, most of the activities (with Parliament, DPR, and the fiscal policy office, FPO) have been completed with the exception of the development of a case management and court administration system (CMCAS) for the Tax Court. The Government has decided to use their owned budget funds for the CMCAS and has therefore requested that this component be dropped from the loan. Restructuring History CD Approval on 05-Jun-2009 Related Projects There are no related projects. Page 7 of 7