The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) Project for Strengthening Public Financial Management (P161969) EAST ASIA AND PACIFIC | Micronesia, Federated States of | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 6 | ARCHIVED on 23-Dec-2021 | ISR49387 | Implementing Agencies: The Federated States of Micronesia, Department of Finance and Administration Key Dates Key Project Dates Bank Approval Date: 30-May-2018 Effectiveness Date: 01-Oct-2018 Planned Mid Term Review Date: 31-Jan-2021 Actual Mid-Term Review Date: 15-Mar-2021 Original Closing Date: 25-Sep-2023 Revised Closing Date: 25-Sep-2023 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of the project is to improve tax administration and the completeness, reliability and timeliness of financial reports of the National and State Governments. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Strengthening the PFM Environment:(Cost $0.35 M) Financial Management Information System (FMIS):(Cost $5.14 M) Revenue Management System (RMS):(Cost $1.95 M) Change Management and Human Resource Development:(Cost $1.36 M) Project Management:(Cost $2.20 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions Project progress has been made in several areas, however all yearly targets remain behind schedule. Some important achievements include: in- year budget reporting templates and a national accounting classification structure (Chart of Accounts) have been developed and approved by the Steering Committee; the national Financial Management Regulations (FMR) have been finalized, with the formal adoption is anticipated in December 2021; consultation on FMR revision with the States is finishing and it will contribute towards the development of FMR procedural manuals; during the financial year ending September 2021, the CTA has completed 169 audits, which constitutes a significant increase compared to 78 audits in 2020; a draft interim Change Management Strategy has been developed and adopted. The Financial Management Information System (FMIS) and Revenue Management System (RMS), are both in the process of being procured. 12/23/2021 Page 1 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) The disbursement rate continues to be at 29.68 percent against the projection of 76.4 percent, mainly due to the delays in the bidding processes of the two major IT contracts. Procurement of both IT systems is expected to be completed by February 2022 which is expected to boost the disbursement rate thereafter. The 5 million USD equivalent AF and project restructuring is expected to be approved in January 2022. The restructuring includes an 18-month extension of the project’s closing date until March 25, 2025. The additional financing and extension of the project’s closing date will facilitate the procurement and implementation of the new FMIS and RMS. It will also fund incremental project costs incurred during the extension period and will therefore be allocated across all project components. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Low Low Macroeconomic Moderate Moderate Moderate Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Substantial Substantial Institutional Capacity for Implementation and Substantial Substantial Substantial Sustainability Fiduciary Substantial Moderate Moderate Environment and Social Low Low Low Stakeholders Substantial Low Low Other -- Moderate Moderate Overall Substantial Moderate Moderate Results PDO Indicators by Objectives / Outcomes To improve completeness, reliability and timeliness of financial reports of National and State Govts IN01074371 ►PDO-1: In-year budget reports prepared and published by National and all four State governments (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target In-year budget reports Budget template prepared and cleared In-year budget reports drafted and planned for publication by all Value not prepared and not Budget template drafted for testing using actual five Govts meeting published data criteria for timing, accuracy, coverage 12/23/2021 Page 2 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) and comparability to meet criteria of “B” score for PI-28 based on PEFA Framework Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 30-Jun-2023 IN01074373 ►PDO-3: New FMIS used by all five govts for recording and reporting budget, revenue and expenditure (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target New FMIS used for preparation of budget for FY2024 and FundWare accounting Revising bidding Bid evaluation in recording of revenue Value system being phased out document RfP process and expenditure transactions by National and all State governments Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 31-Jul-2023 To improve tax administration IN01074372 ►PDO-2: Revenue Management System installed and in use by CTA for improved revenue accounting (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target “C” score in 2016 self- Bid evaluation in Criteria for “B” score of Value Revising the RfB assessment for PI-20.3 process PI-20.3 met Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 31-Mar-2023 Overall Comments PDO Progress has been made toward achievement of the PDO indicators, however all yearly targets remain behind schedule. The RMS bid evaluation on-going and the contract with the successful bidder is expected to be signed latest by January 2022. The FMIS bid evaluation report is expected to be submitted in December 2021 for the Bank’s review and no-objection. The Treasury Advisor declined to renew his contract which expired at the end of October 2021. This will delay development of the budget reporting templates and the procedural manual. The PIU is in process of recruiting a replacement Treasury Advisor who is expected to join by April 2022. Intermediate Results Indicators by Components Strengthening the Public Financial Management Environment IN01074374 ►IR-1: New chart of accounts for all govts for better management, financial and statistical reporting (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target "C" score in 2016 self- New Uniform Chart of New Uniform Chart of “A” score criteria for Value assessment. Functional Accounts approved by Accounts drafted PI-4 met classification lacking. Steering Committee Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 31-Mar-2023 12/23/2021 Page 3 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) IN01074378 ►IR-2: Procedures Manuals updated with detailed guidance for all five governments (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Procedures Manuals FMR have been in place with detailed finalized, with the guidance for budget formal adoption Operations Procedure formulation, anticipated in Value not covering all required No change accounting, internal December 2021, and areas controls, payroll, fixed will contribute towards assets, cash the development of the management and procedural manuals financial reporting Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 31-Dec-2020 Financial Management Information System (FMIS) IN01074375 ►IR-3: Financial data integrity maintained to meet “B” score for PI-27 (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target “B+” score for PI-27 in “B+” score for PI-27 Value No change No change 2016 self-assessment maintained Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 31-Jul-2023 Revenue Management System (RMS) IN01074376 ►IR-4: Taxpayer accounting in Customs and Tax Administration (CTA) automated (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target All modules of RMS RMS bid evaluation in Value No RMS in place RMS RfB being revised implemented and in process use Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 01-Oct-2022 Change Management and Human Resource Development IN01074377 ►IR-5: Competency framework specifying minimum skillsets adopted and used for all PFM related jobs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Competency framework specifying minimum skillsets required adopted for No competencies defined PFM related jobs Value No change No change for PFM related roles across National and State governments and used for recruitment and training to build 12/23/2021 Page 4 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) gender-balanced workforce Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 31-Jul-2023 IN01074379 ►IR-6: External training program partnerships for PFM related certification and degree courses (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Four (4) external training program No external training partnerships for Value program partnerships in No change No change certification and place degree courses in PFM related disciplines Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 30-Sep-2023 IN01074380 ►IR-7: Number of staff completing external training programs in PFM related disciplines (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 50.00 Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 29-Sep-2023 IN01074381 ►IR-8: Gender-sensitive communication conducted for the project for awareness and building ownership (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target DoFA website enhanced and No communication regularly updated with strategy; regular updates Interim Change Interim Change information for Value and information not management strategy management strategy government staff and released for government adopted adopted citizens with staff and citizens functionality developed for capturing and summarizing feedback Date 29-Jun-2018 19-Mar-2021 06-Dec-2021 31-Mar-2023 IN01074382 ►IR-9: Transparency and citizen engagement in budget preparation and execution by National government (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value DoFA website exists but No change No change DoFA website includes does not provide platform functionality to capture for receiving citizen citizen feedback. feedback. Information on budget preparation stages, final budget and quarterly updates on budget execution posted regularly including: a) summary presented in a citizen-friendly 12/23/2021 Page 5 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) format understandable by non-technical audience; b) summary of citizen- feedback received and government response. Date 30-Apr-2018 19-Mar-2021 06-Dec-2021 30-Jun-2023 Overall Comments IR Progress has been made in several areas toward achievement of the IR indicators, however all yearly targets are behind schedule. Some important achievements include: in-year budget reporting templates and a national accounting classification structure (Chart of Accounts) have been developed and approved by the Steering Committee; the national Financial Management Regulations (FMR) have been finalized, and the formal adoption is anticipated in December 2021; consultation on FMR revision with the States is in progress and it will contribute towards the development of FMR procedural manuals; during the financial year ending September 2021, the CTA has completed 169 audits, which constitutes a significant increase compared to 78 audits in 2020; a draft interim Change Management Strategy has been developed and adopted. However, the Treasury Advisor declined to renew his contract which expired at the end of October 2021. This will delay development of the budget reporting templates and the procedural manual. The recruitment of the HRD/Communication and Gender Specialists have not yet commenced. Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P161969 IDA-D3240 Effective USD 11.00 11.00 0.00 3.27 7.43 31% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P161969 IDA-D3240 Effective 30-May-2018 01-Aug-2018 01-Oct-2018 25-Sep-2023 25-Sep-2023 Cumulative Disbursements 12/23/2021 Page 6 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) PBC Disbursement Achievement Disbursed amount in Disbursement % PBC ID PBC Type Description Coc PBC Amount Status Coc for PBC Restructuring History There has been no restructuring to date. Related Project(s) P176041-ADDITIONAL FINANCING FOR THE PROJECT TO STRENGTHEN PUBLIC FINANCIAL MANAGEMENT 12/23/2021 Page 7 of 7