Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Public Financial Management Reform II (P120427) SOUTH ASIA | Afghanistan | Governance Global Practice | Recipient Executed Activities | Technical Assistance Loan | FY 2011 | Seq No: 11 | ARCHIVED on 16-Nov-2016 | ISR25549 | Implementing Agencies: Ministry of Finance Key Dates Key Project Dates Bank Approval Date:14-Jun-2011 Effectiveness Date:09-Aug-2011 Planned Mid Term Review Date:01-Nov-2013 Actual Mid-Term Review Date:01-Nov-2013 Original Closing Date:31-Dec-2014 Revised Closing Date:30-Jun-2017 Project Development Objectives Project Development Objective (from Project Appraisal Document) The proposed PDO is to strengthen public financial management through effective procurement, treasury and audit structures and systems in line with sound financial management standards of monitoring, reporting and control. Has the Project Development Objective been changed since Board Approval of the Project Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured)PHRPDODEL To further strengthen the efficiency and effectiveness of Afghanistan’s procurement, treasury, and audit systems. Components Name Reform Management:(Cost $3.72 M) Procurement Reform:(Cost $32.46 M) Audit Reform and Performance:(Cost $34.27 M) Financial Management Reform:(Cost $39.84 M) Revenue Mobilization:(Cost $3.84 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Satisfactory  Satisfactory Overall Implementation Progress (IP)  Moderately Satisfactory  Satisfactory 11/16/2016 Page 1 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Overall Risk Rating  Substantial  Substantial Implementation Status and Key Decisions Following the ISM of October 2015 the Project was restructured to extend the closing date to June 30, 2017. Additional financing of $41.125m was subsequently agreed, and project design updated (project paper dated January 27, 2016). The results framework including PDO was revised in the new project paper. A new component on Revenue Mobilization was added. Since the project was restructured, there has been both continued implementation progress and significant progress made towards achieving the project’s development objective (PDO). In this regard, the mission has raised its rating and assessed that “Satisfactory” progress is being made towards achievement of the project PDO. There are however a number of key issues that require both attention and prompt action by Government. These include: 1. The Bank supports the envisioned upgrade of the AFMIS application (from version 6.5 to web-based version 7.0) to support the expanded functionality of the system. The government should document its transition plan from AFMIS V6.5 to V.7 to include acceptance performance criteria. Furthermore, a Disaster Recovery Plan (DRP) should be prepared and tested to ensure minimal disruption to operations in the event of catastrophic interruption. 2. Approval of the reorganization and strategic plan of the Afghanistan Revenue Department (ARD) is needed to facilitate implementation of key activities to support revenue mobilization. The Bank also emphasizes the importance of ARD expediting the process of conducting a comprehensive IT assessment, and completing the hiring process of international and local consultants. 3. MoF should produce and implement a detailed plan to reduce the current level of reliance on the PFMR II funded project consultants, such that by July 2017, a significant number of day to day operations and routine functions are carried out by civil servants. Completion of these critical tasks will facilitate the implementation of key public financial management reforms envisioned under the project. The principles of the proposed new follow up operation were also discussed during the mission. The Bank is supportive of a new, flexible approach which builds upon the innovative developments in the Incentive Program and in the Higher Education Sector project which have performance based disbursements. The specifics of the exact instrument would need to be worked out during appraisal but a DLI based instrument or a P4R instrument would, at this stage, intuitively seem to fit the needs of Government. The Government proposed that the recently established Fiscal Performance Improvement Plans (5 year rolling plans) be used as the primary performance framework for the new operation. These initial positive discussions will be followed up with Government, during a mission which will take place shortly. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  Substantial  Substantial Macroeconomic  --  Substantial  Substantial Sector Strategies and Policies  --  Substantial  Substantial Technical Design of Project or Program  --  Moderate  Moderate Institutional Capacity for Implementation and Sustainability  --  Substantial  Substantial Fiduciary  --  Substantial  Substantial Environment and Social  --  Low  Low 11/16/2016 Page 2 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Stakeholders  --  Moderate  Moderate Other  --  High  High Overall  --  Substantial  Substantial Results Project Development Objective Indicators PHINDPDOTBL  Donors shift their off-budget official development assistance to Afghanistan to on-budget. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 62.00 62.00 20.00 Date 01-Sep-2011 01-Oct-2015 30-Jun-2016 30-Jun-2017 PHINDPDOTBL  Reduction in number of days taken by the National Procurement Committee (NPC) to dispose of cases presented to it. (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.00 10.00 7.00 7.00 Date 31-Oct-2015 01-Dec-2015 30-Jun-2016 30-Jun-2017 Comments By law NPC has 28 days to decide on a case; however, on average one week is the milestone for a case to go to NPC unless the package is submitted incomplete by PE or NPA review comments are not addressed on a timely basis. In the case of the latter, the NPA has created follow up mechanisms to push and fast track. PHINDPDOTBL  Establish a database of, and publicly disclose, National Procurement Committee (NPC) decisions. (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 2.00 2.00 1.00 1.00 Date 01-Dec-2015 01-Dec-2015 30-Jun-2016 30-Jun-2017 Comments The NPC decisions are reported immediately after the session takes place and the decision forms are uploaded on NPA website. 11/16/2016 Page 3 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) PHINDPDOTBL  The Supreme Audit Office commences development of a mechanism for citizen participation in audit. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Preparation for citizen participation in audit during FY16 leading to development of The SAO is looking at mechanism for best practice and is in citizen contact with other SAIs. participation in No citizen participation in No citizen participation It expects that the Value audits and audit in audit mechanism will be issuance of developed and Policy policy prepared by December governing 2016. citizen participation in public oversight pf public funds by June 30 2017. Date 01-Dec-2015 01-Dec-2015 30-Jun-2016 30-Jun-2017 PHINDPDOTBL  Increased number of functions carried out by regular ministry staff that were previously carried out by contracted staff. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Plan in place for FY17 to Plans currently work in modify progress. On target: Tashkeel to Treasury has succeeded include in transitioning some key functions that Plans currently work in Plans currently work in Value functions from advisors are currently progress. progress. to civil servants; NPA undertaken by now carries out key national managerial functions consultants. through civil servants. Equivalent FY16 Plan implemented. Date 01-Dec-2015 30-Jun-2016 30-Jun-2016 30-Jun-2017 Comments 11/16/2016 Page 4 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) PHINDPDOTBL  Improved coverage and quality of internal audit. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 49.00 50.00 50.00 50.00 Date 01-Sep-2011 01-Oct-2015 01-Oct-2015 30-Jun-2017 Comments Part year data shows 25% coverage of expenditure and 15% coverage of revenue according to current mandate of IAD MoF. On target to achieve PHINDPDOTBL  Improved coverage and quality of external audit. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 49.00 74.00 75.00 75.00 Date 01-Sep-2011 01-Oct-2015 30-Jun-2016 30-Jun-2017 Overall Comments Audit of 9 large ministries representing more than 75% of government expenditure have been audited as per INTOAI Auditing Standards with the support of a consulting firm. Intermediate Results Indicators PHINDIRITBL  Legal framework, legal documentation and disclosure policy completed and Appeal and Review Committee and the dispute resolution system is functioning (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target During this period, NPA Semi-annual has restructured the The new committee has report on Administrative Review successfully started Appeal and Committee; the new operation in early Review committee will be a September 2015 and Legal framework in place Committee Value semi-independent held 5 sessions. but not operational activity. committee with Debarment notices are Debarment participation of published by a separate notices, if any members from private Debarment Committee publicly sector and Ministry of online. disclosed. Commerce. Date 01-Sep-2011 01-Oct-2015 30-Jun-2016 30-Jun-2017 11/16/2016 Page 5 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Comments A half yearly Appeals and Review Committee disclosure report for each period now needs to be published in accordance with the agreed PDO indicator. PHINDIRITBL  Number of line ministry and mustofiats procurement staff completing duty-specific procurement training. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 711.00 732.00 7800.00 Date 01-Sep-2011 30-Jun-2015 30-Jun-2016 30-Jun-2017 Comments During the reporting period (October 2015 to June 2016), training programs for 732 procurement employees in central and provincial level have been provided. The module and training programs has been reviewed and new version of materials which are aligned with amendments in procurement law and procedure and needs of modern procurement system are currently used. Prior to AF over 6000 staff were trained in life of the project. NPA is thus on target to meet the cumulative total of 7800 over project life time. PHINDIRITBL  Numbers of human resource management staff completing duty-specific training in their respective specialties (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1020.00 956.00 750.00 Date 01-Sep-2011 21-Dec-2014 30-Sep-2016 30-Jun-2017 Comments RIMU reports 956 staff trained in Period October 2015 to September 2016. The breakdown is as follows 235 (October to June progress report) and 721 (July to September) = 956. 11/16/2016 Page 6 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) PHINDIRITBL  LM PFM assessment (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 14 Value 2 assessments underway 14 14 assessments completed Date 01-Sep-2011 30-Jun-2015 30-Jun-2015 31-Dec-2015 PHINDIRITBL  Number of internal audits done to acceptable standards. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 4 34 111 34 Date 01-Sep-2011 01-Oct-2015 30-Jun-2016 30-Jun-2017 PHINDIRITBL  Number of external audits verified as done to international auditing standards (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target With the support of two consulting firms SAO has completed the following audits as per INTOSAI auditing All World Bank Audits. standards; i) all WB All WB grant Four compliance audits grant audits (except one audits and 9 Value Just WB grant audits completed in 1393 and which was completed compliance five underway this shortly after mission); audits year. and ii) compliance audit of 9 ministries representing more than 75% of government expenditure Date 01-Sep-2011 01-Oct-2015 30-Jun-2016 30-Jun-2017 11/16/2016 Page 7 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) PHINDIRITBL  Timely dissemination of in-year budget execution reports. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 30 days from month end 15 days 15 days 14 days Date 01-Sep-2011 01-Oct-2015 30-Sep-2016 30-Jun-2017 Comments Quarterly progress report for Period July-September 2016 shows that posting occurs between 12 and 18 days. The average has been taken to update this intermediate outcome indicator: namely 15 days, To be followed up in next ISM. PHINDIRITBL  AFMIS upgrade to web based version evaluated (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Assessment underway. Implementation Assessment of Demonstration of of Web based version of suitability of web based version 7 capabilities recommendatio Value AFMIS not implemented version of AFMIS provided by supplier and ns of the underway test script report shared assessment with the World Bank. completed. Date 01-Sep-2011 01-Oct-2015 30-Jun-2016 30-Jun-2017 PHINDIRITBL  Legal framework and structures for development and regulation of an accounting profession drafted and training plans for professional accountants established (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Final Version of Law submitted to Ministry of Justice (MOJ) on 09 Training of April 2016. The MoJ accountants have now agreed on the underway. content of the law and Monitoring will process it. Currently Reports, MOJ is amending the The draft law is detailing no legal or oversight expressions, translated Value pending with Ministry of performance framework words and format to in Justice for approval. against target bring in line with MOJ to be split by standards. This process gender in order may take one more that baseline month and then will be can be sent to the institute of established. MoJ for their review and obtain Minister’s approval Date 01-Sep-2011 01-Oct-2015 30-Jun-2016 30-Jun-2017 11/16/2016 Page 8 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) PHINDIRITBL  Timeliness and quality of annual audited financial statements submitted to the legislature and donors (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Qatia and Annual Cash Based Audited Qatia statements Financial submitted to National The revenue account Statements and Assembly within 6 months was submitted to SAO info on of the close of the financial 1393 Qatia submitted on June 10, 2016 and liabilities, year but they do not on time.Cash based subsequent to the Value assets and include cash position of financial statements mission, Qatia audit cash position controlled entities, third prepared for 1393. report was submitted to submitted to party payments and the Parliament on the legislature information about assets & September 21, 2016. within 6 months liabilities of the close of the financial year. Date 01-Sep-2011 01-Oct-2015 30-Jun-2016 30-Jun-2017 Comments Due to the delayed submission of the revenue account by the MOF, SAO was unable to complete the Qatia audit of FY 1394 and submit its report to the Parliament within six months of the close of the fiscal year, as required by PFEM law. The revenue account was submitted to SAO on June 10, 2016 and subsequent to the mission, Qatia audit report was submitted to the Parliament on September 21, 2016. PHINDIRITBL  Disaster recovery plan and testing (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Revised workplan has Disaster been submitted.Disaster recovery plan Revised workplan has Recovery plan still Value no plan in place tested and in been submitted. pending. IT adviser place/implemen being recruited to ted. develop. Date 01-Sep-2011 01-Oct-2015 30-Jun-2016 30-Jun-2017 PHINDIRITBL  Number of internal audit staff trained and accredited (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 112.00 512.00 388.00 546.00 Date 01-Sep-2011 01-Oct-2015 30-Sep-2016 30-Jun-2017 11/16/2016 Page 9 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Overall Comments 388 staff trained and accredited in Period October 2015 to September 2016. The breakdown is as follows 217 (October to June progress report) and 171 (July to September) = 388. Prior to this reporting period 2408 internal staff had been trained under the project. The total at the cumulative total at the end of this 12 month period of reporting (Oct to Sept) stands at 2796 (ie 388+2408) This is well in excess of end target. Annual figures prior to this 12 month period (up to AF) can be found in Annex 3b of the 683 staff Aide memoire for ISM mission October 18-November 4 2015. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P120427 TF-10024 Effective USD 114.13 114.13 0.00 77.90 36.23 68% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P120427 TF-10024 Effective 09-Aug-2011 09-Aug-2011 09-Aug-2011 31-Dec-2014 30-Jun-2017 Cumulative Disbursements Restructuring History 11/16/2016 Page 10 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Level 2 Approved on 01-Sep-2014 ,Level 2 Approved on 19-Dec-2015 Related Project(s) P150632-Second Public Financial Management Reform Project (PFMRP II) - Additional Financing 11/16/2016 Page 11 of 11 Public Disclosure Copy