Public Disclosure Authorized The World Bank RESTRUCTURING PAPER REPORT NO.: RES31490 Public Disclosure Authorized ON A PROPOSED PROJECT RESTRUCTURING OF STRENGTHENING TAX SYSTEMS AND BUILDING TAX POLICY ANALYSIS CAPACITY APPROVED ON APRIL 28, 2017 TO THE ISLAMIC REPUBLIC OF PAKISTAN Public Disclosure Authorized GOVERNANCE SOUTH ASIA Public Disclosure Authorized Regional Vice President: Country Director: Senior Global Practice Director: Practice Manager/Manager: Task Team Leader: Annette Dixon Patchamuthu Illangovan Deborah L. Wetzel Ismaila Ceesay Charles Victor Blanco, Muhammad Waheed
ABBREVIATIONS AND ACRONYMS CD DFID EA EAD FBR FY ICT MMI MS PDO PSDP TAGR TF TIU TOR USD Country Director Department for International Development (United Kingdom) Environmental Assessment Economic Affairs Division Federal Board of Revenue Fiscal Year Information and Communications Technology Market Monitoring and Intervention Unit Moderately Satisfactory Project Development Objective Public Sector Development Program Trust Fund for Accelerating Growth and Reform Trust Fund Tax Intelligence Unit Terms of Reference United States Dollar
BASIC DATA Product Information Project ID P161463 Original EA Category Not Required (C) Approval Date 28-Apr-2017 Financing Instrument Investment Project Financing Current EA Category Not Required (C) Current Closing Date 30-Apr-2018 Organizations Borrower The Islamic Republic of Pakistan Responsible Agency Federal Board of Revenue Project Development Objective (PDO) Original PDO The PDO is to support policy informed decisions in domestic revenue mobilization. Key Results include 1) Produce annual comprehensive tax expenditure analysis 2) Forecast annual tax revenues of FBR and provincial governments Summary Status of Financing TF Approval Signing Effectiveness Closing Net Commitment Disbursed Undisbursed TF-A4946 28-Jul-2017 02-Aug-2017 02-Aug-2017 30-Apr-2018 4.90 0 4.90 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No
I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. Aimed at strengthening tax systems and building tax policy analysis capacity, the Project (USD 4.9 million) was approved by the Bank on April 28, 2017 and became effective on August 2, 2017. The objective of the Project is to support policy informed decisions in domestic revenue mobilization. The Project, which is part of the Department for International Development (DFID) - funded Trust Fund for Accelerating Growth and Reform (TAGR), consists of two components: (1) Updating Tax Administration Data Centers to Strengthen the Federal Board of Revenue s (FBR) Capacity in Information Technology, and (2) Building FBR s Fiscal Research and Tax Policy Analysis Capacity. Under Component 1, the Project will update the Data Centers, including Storage, Servers and Network Equipment, and support the implementation of a change management program. The expected outcome is an integrated Information and Communications Technology (ICT) data center that effectively conveys tax information to decision makers. Under Component 2, the Project will support the set-up of a Tax Intelligence Unit (TIU) and a Market Monitoring and Intervention Unit (MMI), whose aim is to develop the Federal Board of Revenue s (FBR) capacity to carry out sound tax policy analysis. The units will be responsible for designing, organizing, and directing a wide range of macroeconomic and tax analyses (e.g., direct, indirect, customs, trade). 2. Project activities experienced initial delays but are now underway. The reasons for the delay were (i) a request by FBR for additional consultations prior to the start of the Project, (ii) personnel changes within the Government of Pakistan due to the departure of the Secretary of the Economic Affairs Division (EAD), the authorized representative for signing the Grant Agreement, and (iii) the fact that the Project was initially not included in the Public Sector Development Program (PSDP) 2017-18 at the time of budget approval in June 2017, which effectively put a stop on implementation. 1 All these issues are now resolved. The budget for the Project was allocated in January 2018, allowing the opening of the Revolving Fund Account and enabling the Project to commence disbursement. Project implementation has also started. Under component 1, the procurement process for the data center has been launched and is tentatively expected to be completed by December 2018. Under component 2, the terms of reference (TOR) for staff/consultants of the tax policy unit have been approved. Overall, the Project is currently being rated as moderately satisfactory (MS) and has no outstanding audits. II. DESCRIPTION OF PROPOSED CHANGES 3. The proposed restructuring consists primarily of an extension of the Project closing date and related revisions to the results framework. The proposed restructuring responds to a request by the Economic Affairs Department (EAD) of the Government of Pakistan to restructure the Project through an extension of the Project closing date by 14 months from April 30, 2018 to June 30, 2019 (Letter No. 4(3)WB-IV/17 of February 12, 2018). Consistent with this request, the restructuring proposes an extension of the closing date until June 30, 2019 and related revisions of the dates and targets of the results framework, the disbursement estimates, procurement plan and implementation schedule. There are no other substantial changes to the Project. In particular, the Project Development Objective (PDO), the implementation arrangements, the Project cost and the Project s risks and safeguards remain unchanged. The proposed changes of the restructuring are summarized below. Extension of Project Closing Date: To allow for a successful completion of Project activities following the initial delays, it is proposed to extend the Project closing date by 14 months from April 30, 2018 to June 30, 2019. Change in Results Framework: Consistent with the Project s new closing date, the target dates of the results framework are being revised. 1 The Project s PC-1, the Government s internal project concept document, was prepared and approved in January 2017.
Change in Disbursement Estimates: The Project s disbursement estimates have been updated reflecting the new closing date. It is estimated that the Project will disburse its entire funds in FY2019. USD 3.43 million (70%) of the Project amount is expected to be disbursed by December 31, 2018, while the remaining USD 1.47 million (30%) is expected to be disbursed by June 30, 2019. Change in Procurement: The Project s Procurement Plan has been updated in line with the new Project implementation schedule. There are no fundamental changes in substance to the procurement. Change in Implementation Schedule: The sequence of activities remains the same, but the implementation schedule of the Project has been updated reflecting the new closing date of June 30, 2019. Activities under component 1 (Data Center) are now expected to be implemented from February 2018 to December 2018. Activities under component 2 (establishment of two research units) are scheduled to be implemented between March 2018 and June 2019. The proposed changes are outlined in further detail in sections III. and IV. of the Restructuring Paper below. III. SUMMARY OF CHANGES Changed Change in Results Framework Not Changed Change in Loan Closing Date(s) Change in Disbursement Estimates Change in Procurement Change in Implementation Schedule Change in Implementing Agency Change in Project's Development Objectives Change in Components and Cost Cancellations Proposed Additional Financing Proposed Reallocation between Disbursement Categories Change in Disbursements Arrangements Change in Overall Risk Rating Change in Safeguard Policies Triggered Change of EA category Change in Legal Covenants Change in Institutional Arrangements Change in Financial Management
PDO_IND_TABLE The World Bank Other Change(s) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators Produce annual comprehensive tax expenditure analysis Forecast annual tax revenues of FBR and provincial governments Intermediate Indicators IO_IND_TABLE Data Center is equipped with Blade Servers, Primary SAN and relevant networks Date 01-Mar-2018 10-Aug-2017 31-Mar-2019 Data Center servers and software are virtualized using the cloud
OPS_DETAILEDCHANGES_LOANCLOSING_TABLE The World Bank Date 01-Mar-2017 10-Aug-2017 31-Mar-2019 Tax Intelligence Unit and the Market Monitoring and Intervention Unit offices are fully equipped Tax Intelligence Unit and the Market Monitoring and Intervention Unit are staffed with 9 positions supported by the project Unit of Measure: Number Value 0.00 0.00 9.00 Revised Monthly executive and detailed reports on the performance of revenue collections LOAN CLOSING DATE(S) TF Status Original Closing Revised Closing(s) Proposed Closing Proposed Deadline for Withdrawal Applications TF-A4946 Effective 30-Apr-2018 30-Jun-2019 30-Oct-2019 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes
Year Current Proposed 2017 0.00 0.00 2018 0.00 0.00 2019 0.00 4,900,000.00 2020 0.00 0.00 2021 0.00 0.00 2022 0.00 0.00 2023 0.00 0.00