The World Bank Report No: ISR10940 Implementation Status & Results Afghanistan ARTF - Recurrent and Capital Costs (P091258) Public Disclosure Copy Operation Name: ARTF - Recurrent and Capital Costs (P091258) Project Stage: Implementation Seq.No: 10 Status: ARCHIVED Archive Date: 29-Jun-2013 Country: Afghanistan Approval FY: 2002 Product Line: Recipient Executed Activities Region: SOUTH ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 13-May-2002 Original Closing Date 30-Jun-2006 Planned Mid Term Review Date Last Archived ISR Date 15-Dec-2012 Effectiveness Date 13-May-2002 Revised Closing Date 30-Jun-2018 Actual Mid Term Review Date Project Development Objectives Project Development Objective (from Project Appraisal Document) The development objective of the recurrent cost component of the ARTF is to provide a coordinated financing mechanism so that the Government of Afghanistan can make predictable, timely, and accurate payments for approved recurrent costs related to: i) salaries and wages of civil servants, and ii) government operating and maintenance expenditures, except security. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Civil service salary payments 2172.00 O&M payments 500.00 Incentive Program 29.30 Overall Ratings Public Disclosure Copy Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Substantial Substantial Implementation Status Overview Satisfactory. Disbursements. The total disbursements under the ARTF RC during FY1391 (9 months to Dec 21, 2012) amounted to US$225 million comprising reimbursements of US$ 175 million of SY 1391 and US$ 50 million from SY 1390 ceiling against SY 1390 expenditures. Page 1 of 5 The World Bank Report No: ISR10940 For SY1391, a ceiling of US$225 million was set out in the ARTF Financing Strategy SY1391-1393. The ceiling is made up of US$175 million in recurrent cost base financing and US $50 million for the Incentive Program (IP). At the end of FY1391, i.e. December 20, 2012, the ceiling amount of US$225 million had been transferred in full to the Recurrent Cost account, while a total of US$175 million of the ceiling had been disbursed, leaving a balance of US$50 million. The undisbursed US$50 million relates to the is for the IP; of which Public Disclosure Copy only US$22.5 million was approved for disbursement during the technical review in December 2012 and an additional US$ 6.8 million in May, 2013. To date both the US $ 175 million of baseline and the US$ 22.5 million have been disbursed. A balance amount of US$27.5 million in IP funds was in the TF but unearned as of Dec 21, 2012. For SY1392 a ceiling for the Recurrent Cost Window of US$332 million was set out in the ARTF Financing Strategy SY1391-1393. The ceiling is made up of US$150 million in recurrent cost base financing, US$150 million for the Incentive Program (IP) and US$32 million for the new O&M Facility. FY1392 baseline ceiling of US$150 million and US$32 million has been fully transferred to the RC account. An additional transferred to US$ 50 million was made to restore the buffer. As of May 31 a balance of US$ 127 million was in the TF comprising the balance of the SY 1391 IP of US$ 27 million plus US$ 50 million of the SY 1392 baseline and US$ 50 million of buffer. Monitoring. A new monitoring agent was sourced in 2012 as the contract with Joshi and Bhadary was not renewed for the second year. The new firms is PKF (UK) which was subsequently merged with BDO. J&B completed the monitoring of SY 1390 and made the sampling for SY 1391 and completed monitoring for the first quarter. The BDO Team is currently working to finalize the testing of FY 1391, and is continuing to monitor the expenditure in FY 1392. For consistency, the sampling methodology agreed by the Management Committee with J&B has been applied for the remainder of FY 1391. An initial sample for FY 1392 has been selected and the full sampling methodology was approved by the WB TTL. Field work, testing of transactions on site, has been completed for quarter 1 (by J&B) and quarter 2 by PKF. Testing will be completed by end of July and eligibility with inferences for all of SY 1391 reported by August. PKF has provided a report to April 21, 2013. Eligibility. Monitoring for SY 1391 is still underway and expected to finish, with inferences by August, 2013; monitoring results to date show some improvement over SY 1390 in payroll but a significant deterioration in O&M, However, it is too early to take these results as an advance on how overall eligibility will come out because most procurement is done in the last quarter and this has not yet been tested. Also the percentages noted come from the sample results without inferences. The principal reason for ineligibility continue to be exceptions to the application of procurement regulations although lack of access to documents is also contributing to the decline. Locations Country First Administrative Division Location Planned Actual Afghanistan Kabul Wilayat-e Kabul ✔ Public Disclosure Copy Results Project Development Objective Indicators Page 2 of 5 The World Bank Report No: ISR10940 Indicator Name Core Unit of Measure Baseline Current End Target Assurance that goods and services procured Text Value 100% 67% 100% with ARTF funds are used exclusively for Date 15-Dec-2005 31-May-2013 31-Dec-2018 Public Disclosure Copy authorized purposes in obtained through MA Comments OK Disbursements against SY agent's review of withdrawal applications 1391 ceiling for Q1 and Q 2 are monitored , only 3 qrts in SY 1391. Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Disbursement as percentage of annual ceiling Text Value 96.6% 50% 100% Date 15-Dec-2005 31-May-2013 28-Feb-2013 Comments SY 1391 fully disbursed and Y 1392 40% ( basis line and O&M) Percentage of withdrawal applications Text Value 100% 100% reviewed and approved by the MA Date 15-Dec-2005 30-Nov-2012 28-Feb-2013 Comments 100% of withdrawals in 1390 were reviewed and approved by MA. In a second stage via site visits ineligibles are identified and recovered. Amount of ineligible expenditures reviewed by Text Value $4.6m $0m the MA pending recovery Date 15-Dec-2005 30-Nov-2012 28-Feb-2013 Comments All identified ineligibles for SY 1390 recovered; SY 1391 ineligibles are recovered via substitution. Percentage of eligible payroll expenditures Text Value 84.9% 100% reviewed by the MA vs submitted Public Disclosure Copy Date 15-Dec-2005 30-Nov-2012 28-Feb-2013 Comments For SY 1390 100% of HQ payroll and 97% prov payroll subject to statistical testing( 6 provinces not visited re security). Percentage of eligible O&M expenditures Text Value 72.1% 100% reviewed by the MA vs submitted Date 15-Dec-2005 30-Nov-2012 28-Feb-2013 Page 3 of 5 The World Bank Report No: ISR10940 Comments This % is the sum of all groups of expenditures subject to testing; negligible amt of prov O&M not covered. Public Disclosure Copy Percentage of Monitoring Agent reports Text Value 95% 100% 100% accepted by the Bank as TF Administrator Date 15-Dec-2005 31-May-2013 31-Dec-2018 Comments Final SY 1390 Monitoring Report by Joshi Bhandary All due reports presented and accepted. ARTF Recurrent Cost Audit reports/opinions Text Value Qualified Adverse opinion Qualification made for Qualified opinion, geographic accepted by the Bank ineligibles - these were scope & time limitation covered by substitution docs. Date 15-Dec-2004 31-May-2013 28-Feb-2013 Comments SY 1390 audit rec'd , accepted. SY 1391 not yet due. Data on Financial Performance (as of 08-May-2013) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P091258 TF-50577 Effective 13-May-2002 13-May-2002 13-May-2002 30-Jun-2006 30-Jun-2018 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P091258 TF-50577 Effective USD 1,473.00 2,954.32 0.00 2,826.82 127.50 96.00 Disbursement Graph Public Disclosure Copy Page 4 of 5 The World Bank Report No: ISR10940 Public Disclosure Copy Key Decisions Regarding Implementation Once the final compliance rates for SY 1391 are reported, if there is a deterioration from SY 1390, possible remedies must be discussed again; including pro rata reimbursement of the recurrent costs. Restructuring History There has been no restructuring to date. Related Projects There are no related projects. Public Disclosure Copy Page 5 of 5