The World Bank Togo Economic Governance Project (P158078) REPORT NO. RES53145 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF TOGO ECONOMIC GOVERNANCE PROJECT APPROVED ON OCTOBER 3, 2017 TO MINISTRY OF ECONOMY AND FINANCE GOVERNANCE WESTERN AND CENTRAL AFRICA Regional Vice President: Ousmane Diagana Country Director: Coralie Gevers Regional Director: Abebe Adugna Practice Manager/Manager: Gael J. R. F. Raballand Task Team Leader(s): Saidou Diop, Jean Charles Amon Kra The World Bank Togo Economic Governance Project (P158078) ABBREVIATIONS AND ACRONYMS AE Commitment Authorization (Autorisation d’engagement) ARMP Public Procurement Regulatory Authority (Autorité de régulation des marches publics) COVID-19 Corona Virus Disease 2019 CP Payment Credit (Crédit de paiement) CSO Civil Society Organization DLI Disbursement Linked Indicator EU European Union FCFA Franc of the African Financial Community (Franc de Communauté financière africaine) HR Human Resource IDA International Development Association IFR Interim Financial Report IGF Inspection General of Finance (Inspection Générale des finances) IRI Intermediate Results Indicator ISR Implementation Status & Results Report IT Information Technology MAPS Methodology for Assessing Procurement Systems MEF Ministry of Economy and Finance (Ministère de l’économie et des finances) MTDS Medium-Term Debt Strategy NDP National Development Plan OTR Togo Revenue Office (Office des recettes togolaise) PAGE Economic Governance Support Project (Projet d’appui à la gouvernance économique) PDO Project Development Indicator PFM Public Financial Management PIM Public Investment Management PIP Public Investment Plan PPP Public-Private Partnerships RBF Results Based Financing TA Technical Assistance US$ United States Dollar The World Bank Togo Economic Governance Project (P158078) BASIC DATA Product Information Project ID Financing Instrument P158078 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 03-Oct-2017 31-Oct-2022 Organizations Borrower Responsible Agency Ministry of Economy and Finance Project Development Objective (PDO) Original PDO The project development objective is to improve public investment management, domestic revenue mobilization and public accountability and monitoring mechanisms for better service delivery in priority sectors. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D2340 03-Oct-2017 21-Dec-2017 20-Apr-2018 31-Oct-2022 15.00 9.35 5.24 TF-A8463 04-Sep-2018 12-Apr-2019 12-Apr-2019 31-Oct-2022 4.50 2.38 2.12 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Togo Economic Governance Project (P158078) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Togo Economic Governance Project (PAGE) was approved by the Board of Executive Directors on October 3, 2017, became effective on April 20, 2018. Co-financed by the World Bank (US$15 million International Development Association, IDA, Grant) and the European Union -EU- (Euro 5 million, Grant), it supports the Government of Togo’s (GoT) 2018-22 National Economic Development Plan. The Project Development Objective (PDO) is: “To improve public investment management (PIM), domestic revenue mobilization (DRM), and public accountability and monitoring mechanisms for better service delivery in priority sectors.” The Project combines Technical Assistance (TA) and Results- Based Financing (RBF) and includes four components: (i) management of public investments and public-private partnership (PPP); (ii) supporting domestic resource mobilization (DRM); (iii) increasing public accountability and citizen engagement; and (iv) project implementation support. 2. Progress towards the Project Development Objective (PDO) remains Satisfactory, with all PDO indicators having been achieved despite the impact of COVID-19 and the growing security challenges in the North. Among others, key results include: (i) increasing the share of public investment projects included in the budget with completed appraisals from 0 in 2016 to 100 percent since 2020; (ii) increasing the share of registered taxpayers from 0 to 37 percent after the completion of the taxpayer census of Lomé in April 2019; (iii) increasing filing taxpayers in Lomé with a turnover exceeding 10 million CFAF, from 0 in 2016 to 38.5 percent in 2020; (iv) a 15-percentage-point increase in the average satisfaction of users of basic services in maternal and child health, primary education and urban water surveyed from the baseline in 2020; and (v) improving large taxpayers’ rate of satisfaction with the Togo Revenue Office (OTR), from 44 percent in 2016 to 65 percent in 2020. Meanwhile, all eleven intermediate results indicators (IRIs) have been met. 3. Overall Project Implementation Progress (IP) continues to be Satisfactory. The Government has reported that all eight Performance-based Conditions (PBCs) have been met, with three amply exceeding their targets. The Tax Policy Unit (UPF) has been operational since July 2021. This includes the development of its working tools, in particular, a strategic plan, an action plan, and the updating of the methodological guide for increased mobilization of domestic resources. The regular publication of a citizen budget since 2020 has contributed to improving Togo’s international ranking according to the Budget International Partnership (BIP) in transparency (31/100 in 2021) and budgetary control (39/100 in 2021) against (0/100) before 2020. 4. The Project has disbursed approximately 60 percent as of September 30, 2022. Total disbursement is projected to reach 68 percent by the original closing date of October 31, 2022, i.e., at closing, an unspent balance of approximately US$6.24 million is expected. Many activities have been achieved or implemented at a lower cost than initially anticipated, while the support for the implementation of the Treasury’s banking software, representing approximately US$2 million of the expected balance at project closing, was discontinued. 5. The current status of each of the Project’s components is detailed below:  Component 1: Management of Public Investments and Public-Private Partnership (PPP): Inter-ministerial coordination has been strengthened through the operationalization of the Public Investment Plan (PIP) Committee and the development of tools and methodologies for better PIM. The Project has supported the PIP Committee in the selection of investment projects to be included in the annual finance law. Key achievements include: (i) the development of a manual of procedures for the selection, prioritization, and programming of public investment The World Bank Togo Economic Governance Project (P158078) projects as well as operationalization tools; (ii) training of all stakeholders in the use of the manual; (iii) supporting program budgeting reform through quality review of programs and use of Commitment Authorization (Autorisation d’ Engagement, AE) and Payment Credit (Crédit de Paiement, CP) in sectoral programs; (iv) the modernization of the Procurement Regulation Authority (Agence de Régulation des Marchés Publics, ARMP) website, and the ongoing public procurement system assessment using the Methodology for Assessing Procurement Systems (MAPS II). The MAPS will inform the strategic policy and plans of ARMP and guide the revision of the public procurement code; (iv) shortlisting and interviews of key staffing positions in the Ministry of Economy and Finance (MEF); and (v) Technical specifications of the teleworking system for the public administration.  Component 2: Supporting Domestic Resource Mobilization (DRM): To date, all eight (8) Performance-Based Conditions (PBCs) under this component, amounting to US$5 million, have been achieved and disbursed. The Project, through a combination of PBCs and TA, has helped to improve OTR capacity and has been supporting the establishment of the Tax Policy Unit (UPF). The selection of the key staff of the UPF has been finalized. The operationalization of the UPF, which began in July 2021, has continued with the development of the 2022-2026 strategic plan with an action plan and the updating of the methodological guide for increased mobilization of domestic resources.  Component 3: Increasing Public Accountability and Citizen Engagement: The Project has reinforced public accountability mechanisms and citizen participation in budget preparation and implementation processes. Activities supported include: (i) follow-up missions to monitor the implementation of General Inspectorate of Finance (Inspection Générale des Finances, IGF) recommendations; (ii) training of National Assembly Finance Committee members covering budget policy debate and program-based budgeting; (iii) supporting the implementation of priority actions of the operational plan of the Court of Auditors; (iv) drafting and publication of the 2021 Citizens’ Budget; (v) developing risk-based audits of four sector ministries (Education, Health, infrastructure, and Mining); and (vi) training civil society organizations (CSOs) on the budget process and monitoring of budget execution especially citizens’ feedback on the quality and accessibility of public services in three priority sectors (maternal and child health, primary education and water supply in urban areas).  Component 4: Project Implementation Support: Project implementation has been well-managed, as evidenced by the above project implementation progress and achievement of all PDO indicators, IRIs, and PBCs. The action plan resulting from the diagnostic study of the Permanent Secretariat is under implementation, including a training plan to support the reorganization of the Permanent Secretariat for the Monitoring of Policy Reforms and Financing Programs (SP-PRPF). 6. The proposed restructuring is intended to extend the project closing date by eight months from October 31, 2022, to June 30, 2023, reallocate funds within project components, and update project disbursement estimates and implementation schedule. While all PDO indicators have been achieved, project extension would allow a deepening of impact by consolidating project achievements. Specifically, the additional time would allow for implementing incomplete TA activities foreseen in the Project’s workplan but partially delayed by containment measures related to the Corona-Virus Disease 2019 (COVID-19). Importantly, these activities include those related to ensuring full operationalization of the Tax Policy Unit (UPF), continuing to further strengthen the capacity of key departments of MEF, and completing the roll-out of developed tools and systems (for which project support was introduced in June 2020) intended to facilitate MEF teleworking. Project extension will also facilitate the opportunity for project savings to be utilized towards additional discrete (new) activities aligned with and supplementarily to the PDO and PDO indicators. II. DESCRIPTION OF PROPOSED CHANGES The World Bank Togo Economic Governance Project (P158078) 7. This Restructuring Paper (RP) seeks the approval of the Country Director for the proposed restructuring of the Togo Economic Governance Project (PAGE). This restructuring proposal is in response to the request from the Government of Togo (GoT) through a letter dated June 22, 2021 (n°1245/MEF/SG/DGCTP/DDPF/DPF). The restructuring is additionally informed by the June 2022 PAGE Project Evaluation of the EU, which co-finances the Project. This restructuring would constitute the Project’s second, with a first level-two restructuring approved on June 3, 2020, to reallocate resources to finance additional activities intended to respond to the COVID-19 crisis. 8. The following changes are proposed to the Project: (a) Extension of the project closing date from October 31, 2022, to June 30, 2023, to support the implementation of incomplete TA activities and discrete (new) activities; and according: (b) Change to the project disbursement schedule; and (c) Change to the project implementation schedule. The Project Development Objective (PDO), institutional arrangements, and overall design remain unchanged and unaffected by the proposed restructuring changes. 9. Activities to be implemented during the extension period are fully in line with the PDO and PDO indicators. These include: (i) supporting full operationalization of the Tax Policy Unit (UPF) and implementation of its action plan derived from the Strategic Plan, mainly the acquisition of appropriate software for fiscal policy impact analysis and revenue forecasting, in addition to supporting UPF’s early-establishment payment of salary of the six experts); (ii) roll-out of MEF teleworking system; (iii) drafting of the manual of physical follow-up of public investments aimed at consolidating improvements in PIM; (iv) capacity building on preparing budget execution reports (Comptes Administratifs) based on the performance-based budget framework, to support Program Budgeting and enhanced execution of the PIP; (v) support to the OTR in the development and operationalization of discrete DRM-related activities including acquisition of equipment for the implementation of a single modern customer relationship management system; acquisition of topographic and computer equipment for the modernization of Cadastral services; and (vi) support for the implementation of the action plan for the professionalization of public procurement in Togo. 10. Based on a detailed review of the implementation progress of activities and disbursements, no additional reallocation of project funds is proposed; except for the minor correction within project components presented in Table 1 (below). This reallocation ensures that there are sufficient resources to implement activities planned during the project extension period. Table 1: Summary of resource allocation by Component (US$ million) Total EU funding Revised Revised Allocation IDA Total Revised Project Components Allocation Reallocation Revised (restructu funding Allocation (June Allocation ring June 2020) 2020) Management of Public Investments and PPPs 7.86 0.56 0.56 7.30 7.86 1.1 Enhancing planning of public investments 1.26 0.56 0.56 0.70 1.26 including PPPs 1.2 Ensuring selection and budgeting of high- 0.40 0.40 0.40 quality public investments The World Bank Togo Economic Governance Project (P158078) Total EU funding 1.3 Enhancing the implementation of public Revised 1.20 1.20 1.20 investments Allocation IDA Total Revised Project Components 1.4 Strengthening the capacity of MEF and (restructu 5.00 funding Allocation 5.00 ring June 5.00 supporting the COVID-19 response Supporting DRM 2020) 6.10 1.20 1.20 4.90 6.10 2.1. Strengthening capacity for tax policy 0.90 0.2 0.2 0.90 1.10 2.2. Broadening tax base through tax 4.20 3.00 1.20 (1.20) 3.00 administration improvements 2.3. Enhancing taxpayer services to promote 1.00 2.00 1.00 1.00 1.00 voluntary compliance Increasing Public Accountability and Citizen 3.48 3.48 2.48 2.48 1.00 Engagement 3.1 Strengthening capacity for formal 0.80 0.80 0.80 0.80 oversight and accountability institutions 3.2 Strengthening civil society engagement in 0.56 0.56 0.56 0.56 the budget process 3.3 Citizen engagement in priority sectors 2.12 1.12 1.12 1.00 2.12 Project implementation support 2.36 0.56 0.56 1.80 2.36 4.1 Project management and reform 1.50 1.50 1.50 Coordination 4.2 Monitoring, evaluation, independent 0.86 0.86 0.56 0.56 0.30 review, and communication Part executed by IDA 0.80 0.80 0.80 0.80 Total 20.60 5.60 0 5.60 15.00 20.60 11. The described proposed changes will positively impact the PDO. While all PDO indicators, IRIs, and PBCs have been met to date, completion of delayed and supplementary activities will deepen the impact by consolidating project achievements. As activities to be implemented during the project extension period are fully aligned with the PDO and PDO indicators, no changes to these or to the Project’s broader Results Framework are proposed as part of this project restructuring. 12. Financial management and procurement arrangements remain unchanged. The Project is in full compliance with the World Bank’s financial management requirements. There are no overdue audit reports or interim financial reports. III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Disbursement Estimates ✔ The World Bank Togo Economic Governance Project (P158078) Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-D2340 Effective 31-Oct-2022 30-Jun-2023 30-Oct-2023 TF-A8463 Effective 31-Oct-2022 30-Jun-2023 31-Aug-2023 The World Bank Togo Economic Governance Project (P158078) OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2018 1,046,015.00 0.00 2019 1,207,005.00 1,207,005.00 2020 2,033,370.00 2,033,370.00 2021 3,725,775.00 2,325,900.00 2022 4,516,630.00 4,097,254.00 2023 2,471,205.00 5,745,652.00 .