The World Bank Implementation Status & Results Report DRC: Strengthening PFM and Accountability (P145747) DRC: Strengthening PFM and Accountability (P145747) AFRICA EAST | Congo, Democratic Republic of | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2014 | Seq No: 12 | ARCHIVED on 05-Jan-2021 | ISR44300 | Implementing Agencies: Ministry of Finance, COREF, COREF Key Dates Key Project Dates Bank Approval Date: 30-Jan-2014 Effectiveness Date: 23-May-2014 Planned Mid Term Review Date: 29-Mar-2018 Actual Mid-Term Review Date: 18-Jun-2018 Original Closing Date: 31-Dec-2018 Revised Closing Date: 31-Dec-2021 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The proposed project development objective is to enhance the credibility, transparency, and accountability in the management and use of central government and selected sub-national governments’ finances. Considering the complementarity with other donor and Bank-funded programs, the proposed MDTF operation will focus on downstream PFM reforms of the central government and public financial management in selected provinces ( Equator, Kasai Oriental and North Kivu). 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) The project development objective (PDO) is to improve domestic revenue mobilization, public expenditure management, and accountability, at central level and in selected provinces. Components Table Name Component 1- Supporting Domestic Revenue Mobilization and Expenditures Management:(Cost $23.00 M) Component 2 - Strengthening Budget Oversight and Improving Transparency:(Cost $7.40 M) Component 3 - Establishing PFM Systems at the Provincial Level:(Cost $33.20 M) Component 4- Project Management:(Cost $8.50 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions 1. The Public Financial Management and Accountability Project (PFMAP- also labeled PROFIT Congo- Projet pour des Finances Transparentes), has been established through a Multi-Donor Trust Fund (MDTF) for PFM reform, administered by the World Bank. While 1/5/2021 Page 1 of 8 The World Bank Implementation Status & Results Report DRC: Strengthening PFM and Accountability (P145747) the funds (US$ 17 million) from The United Kingdom Department for International Development (DfID) have been totally used and the Trust Fund closed at end of December 2018, PROFIT Congo avails an undisbursed balance of US$ 11 million in mid-November 2020 from IDA resources to be committed by end of December 2021. 2. The negative impact of the COVID-19 pandemic is being felt in all sectors of DRC economic activity, as the result of the global slowdown and restrictive measures taken by the Government to limit the spread of the disease. The most recent growth projections reveal a sharp decline in real GDP growth rate of -1.9% for 2020 against a growth of 4.4% achieved in 2019. This contraction, combined with safety measures enacted by the government to protect its staff in the Ministry of Finance and Budget, are having a substantial adverse impact on central and provincial governments revenue collection, as well as spending programs, which are key indicators of the project. Moreover, the COVID19 spill-over effects led the Project Implementation Unit to delay or postpone project activities implementation during the first semester. Activities resumed during the summer with slower pace and are expected to pick up during the last quarter. 3. Despite the delays and issues emerging from the COVID19 pandemic crisis, project implementation continued during the current ISR cycle underpinned by PFM reforms policy dialogue positive outcome. All the main project ratings remain satisfactory, including the progress toward PDO and implementation of project activities as well as fiduciary management and monitoring and evaluation. Disbursements also stand at a satisfactorily level of 81% (or US$44 million out of US$55 million). Components 1. All components are being reasonably implemented despite the COVID19 restrictions, and meeting objectives and expectations, as follow: Component 1 1. During this cycle, main component activities and achievements were recorded in the following areas: 2. Domestic Revenue Mobilization. In addition to usual workshops and trainings, the main project outcomes in this area relate to the launch of the ISYS Regie system in early October. ISYS Regies links the Central Bank, all commercial banks, the 3 revenue administrations, the Treasury and the Ministry of Finance Accounting Department and will significantly enhance the Government ability to monitor and control its overall cash as well as its capacity to timely track, record and reconcile all tax payments while strengthening the Treasury Single Account implementation. The digital system was developed by the Central Bank with support from the French Development Agency in 2018 but was not rolled out for several reasons, including lack of ownership in revenue administration, and issues related to existing legal and regulatory framework for digital payments. The signature by the Prime Minister of the implementing decree to allow for the roll out of the system was introduced by the Bank and agreed upon during policy dialogue discussions. ISYS Regies system is the first step toward gradual digitalization of the government tax and duties payments which is a particularly relevant reform in this time of COVID19. 3. Budget Management. Main activities focused on supporting improvement in budget preparation process with traditional funding to the central government budget orientation seminars, as well as to the budget strategic allocations decision conferences. Under this activity, the Ministry of Finance and the Ministry of Budget were able to produce the 2021 draft budget that was tabled to the Parliament, on time, including full participation of the line ministries and civil society organizations as well. In addition, the project continued its support to the introduction of results-based budgeting within ministries and institutions to develop Annual Performance Projects (PAP in French) of 11 new sector ministries, and update 39 PAPs which were previously produced using the same methodological approach. Moreover, to facilitate introduction of result-based budgeting, the Council of Ministers, in its 50th session held on September 29, 2020, approved the official roadmap for the migration to program-budgeting in 2024. 4. Procurement. In this area, the project intervention helped to accelerate preparation for the roll out of the new procurement information system (Système d’Information et de Gestion des Marchés Publics-SIGMAP) which is expected to go live in early 2021. SIGMAP is a software developed with project funding. During this cycle, the project helped to organize the training of trainers’ workshop for twenty users from the Procurement Board (Agence de regulation des Marchés Publics-ARMP), the Contracts Management General Directorate (Direction Générale de Controle des Marches Publics-DGCMP) and nine public procurement units from the Congolese Agency for Public Works; the Customs Administration; the Ministry of Rural Development; the Ministry of Health; the Ministry of Primary and Secondary Education; the Ministry of Infrastructure; The Water Utility (REGIDESO); the Roads Office and the Ministry of Planning. Besides, the project assisted in the implementation of the Methodology for Assessing Procurement Systems (MAPS2) study which was completed in June 2020 and provides a joint government and WBG assessment of the DRC procurement system issues and challenges, using a globally recognized instrument. The study findings are expected to be fully endorsed by the government in coming weeks thereby paving the way for the development of a consensual strategy and multiyear action plan to improve the procurement system in DRC. 5. Accounting and cash management. A major milestone was achieved in this area during this cycle with the final completion in mid- November of the official discussions between the IMF, the WBG and the government teams about the draft decree establishing and organizing the National Accounting and Treasury Department (Direction Generale du Tresor et de la Comptabilité Publique- DGTCP). The project helped the government to prepare and finalize the draft decree while the policy dialogue discussions offered the platform to engage on this important and long overdue reform measure. Once the agreed upon decree is signed by the Prime Minister, PROFIT Congo will support the gradual deployment of the DGTCP to start discharging its legal responsibilities related to: (i) exerting internal controls for all salary and non-salary expenditures ; (ii) developing and optimizing overall cash management (i.e. manage the Single Treasury Account and short term debt as well) and, (iii) keeping records, tracking and reporting of all financial and budgetary transactions (for central government and all the 26 provinces and ETDs in the 142 territories). Component 2. Strengthening External Controls. 1. Main activities in this component were focused on continued support to the Court of Accounts institutional strengthening and Citizen Engagement and Participation. 2. Court of Accounts (CoA). The project supported the workshops to complete the legal and regulatory framework of the CoA, especially the preparation of two draft implementation decrees relating respectively to (i) the Court Manual of Procedures and (ii) the Court Staff Manual Regulations. In addition, the project assisted the Court to complete its ongoing investigation on public investments domestically 1/5/2021 Page 2 of 8 The World Bank Implementation Status & Results Report DRC: Strengthening PFM and Accountability (P145747) funded in 2015 and 2016 budgets. Ultimately, the Court is expected to finalize and publish the audit findings and recommendations to concerned authorities (President of the Republic; National Assembly and Senate Heads; Public Attorney) and general public. 3. Citizen Engagement. Furthermore, the project continued consolidating citizen participation in the budget preparation process and facilitating access of civil society to budget information. The project supported training and participation of CSOs in a series of workshops to consolidate past years achievements in civil society knowledge of PFM and public sector issues and reforms, civil society advocacy, preparation of 2021 Finance Bill, and attendance to the Parliament Budget and Finance Commissions (ECOFIN) discussions. Component 3. Support to Provincial Financial Management. 1. The project intervention at the provincial and local level include several areas namely support to strengthening (in 20 provinces) : (i) capacities of the Provincial Assemblies; (ii) institutional and technical capacities of the provincial governments; (iii) institutional and technical capacities of the provincial revenue department; (iv) support for the functioning of the provincial Steering and Monitoring Committee for the reform of public finances and (v) support for the development of the participatory budget as well as the control of the budget by citizens. 2. Under this ISR cycle, the project continued its support to (i) the budget preparation process in targeted provinces, and (ii) to strengthen citizen and civil society participation in budget process and transparency in local governments (Entités Territoriales Decentralisées- ETDs). In particular, the project supported activities related to: (i) organization of budget conferences for the 2021 financial year, including participation of civil society representatives, in 4 additional provinces, namely Sud-Kivu, Maindombe, Haut Katanga, and Lualaba; (ii) organization of review and approval of 7 provinces 2019 annual budget execution reports and drat laws including for Mongala, Kasai Oriental, Kasai Central, Kasai, Lomami, Kinshasa, and Maindombe, and (iii) implementation of the participatory budget approach cycle in 34 targeted local governments (24 in Kinshasa; and 10 in Sud-Kivu). Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- High High Macroeconomic -- Substantial Substantial Sector Strategies and Policies -- Substantial Substantial Technical Design of Project or Program -- Moderate Moderate Institutional Capacity for Implementation and -- Moderate Moderate Sustainability Fiduciary -- Substantial Substantial Environment and Social -- Low Low Stakeholders -- Substantial Substantial Other -- -- Substantial Overall -- Substantial Substantial Results PDO Indicators by Objectives / Outcomes Improve domestic revenue mobilization, public expenditure management, and accountability IN00918198 1/5/2021 Page 3 of 8 The World Bank Implementation Status & Results Report DRC: Strengthening PFM and Accountability (P145747) ►Annual tax collection rate (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1.00 1.22 5.10 8.00 Date 31-Oct-2012 31-Dec-2019 30-Sep-2020 31-Dec-2021 Target (8% for end of 2020) may not be met due to COVID negative impact on the economy in general, and government revenue in particular. Total revenue reached US$3.20 billion (equivalent to CDF5,817 billion) in September 2020. Compared to its 2015 level (US$3.13 billion equivalent to CDF 2,895 billion), a slight increase of 2.1% in overall tax revenue expressed in $ was registered bringing the Comments: cumulative efforts from 2015 to 5.1% which is insufficient to reach the target value of 8%. It should be noted that, unlike the first 2 quarters of this fiscal year, this upturn in performance was registered after the Government stepped up its overseeing and supervision efforts of the 3 revenue administrations activities through regular reporting at the weekly Council of Ministers. IN00918199 ►Budget execution rate, excluding donor-funded projects (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 50.00 90.52 104.90 70.00 Date 31-Oct-2012 31-Dec-2019 30-Sep-2020 31-Dec-2021 Target for end of 2020 is likely to be reached and exceeded with the revised 2020 budget. Pressure from COVID additional spending and the free education program weighted heavily on the 2020 budget. However, the government decision to submit a revised 2020 budget will help to meet the annual target. Comments: Compared to the 2020 revised budget amount of CDF 5,774 billion (as annualized at end of September 2020), the actuals executed was CDF 6.056 billion or 104.9%. IN00918200 ►Public expenditures audited by the Inspectorate General of Finance (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 47.40 36.90 20.00 Date 31-Oct-2012 31-Dec-2019 30-Sep-2020 31-Dec-2021 Target of 18% is already met and exceeded. IGF only reported on missions related to extractive revenue for 2017 EITI assessment (no information was available for expenditures related missions). The volume of Comments: revenues realized in the extractive industries sector (mining and oil) amounts to CDF1,679 billion to be compared with total revenues of CDF 4,548, billion for three financial agencies, or 36.9%. Intermediate Results Indicators by Components Component 1- Supporting Domestic Revenue Mobilization and Expenditures Management IN00918201 ►Accuracy of domestic revenue projection (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 50.00 84.43 102.90 87.00 1/5/2021 Page 4 of 8 The World Bank Implementation Status & Results Report DRC: Strengthening PFM and Accountability (P145747) Date 01-Dec-2016 31-Dec-2019 30-Sep-2020 31-Dec-2021 Target at end of year 2020 (set at 83%) is likely to be met with the revised 2020 budget. Given the COVID19 pandemic effects on economy and government revenue, the initial budget law is currently under revision at the Parliament. The 2020 amended budget bill is proposing to reduce the tax revenue to CDF Comments: 6,635 billion (minus 54% compared to the initial budget law). Therefore, accuracy of revenue forecasts remain solid, since cumulative at the end of the third quarter of 2020, (i.e. 4,852.2 billion CDF made out of 4,714.03 CDF planned) gives a rate of 102.9%. IN00918204 ►Female staff trained on fiscal and custom administration (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 23.10 0.00 20.00 Date 01-Dec-2016 31-Dec-2019 30-Sep-2020 31-Dec-2021 Result not measured for this year. Given the COVID19 impact and ensuing government restrictive measures, training activities for the 3 revenue administration have been postponed to the fourth quarter. The capacity building activities planned according to the training needs of each of the revenue Comments: administrations in the 2020 Annual Work Plan will ensure the project meets the targeted proportion of trained women (at least 18%). IN00918206 ►Public procurement contracts awarded outside the public procurement system (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 59.00 0.00 59.00 25.00 Date 01-Dec-2016 31-Dec-2019 30-Sep-2020 31-Dec-2021 Because of errors in initial definition and data, this indicator should be changed. Data for contracts awarded outside the public procurement system are impossible to collect and monitor. Baseline and targets in project documents are related to sole source contracts and not the described contracts. Comments: Government sent a request to revise this indicator in February 2020. As advised by OPCS, baseline (59) was used to allow the system to verify entries and release the ISR. Component 2 - Strengthening Budget Oversight and Improving Transparency IN00918202 ►Delay from completion of the annual audits by Cour des Comptes to submitting the audited financial statements to the parliament (Months, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 7.50 1.00 1.00 2.00 Date 31-Oct-2012 31-Dec-2019 30-Sep-2020 31-Dec-2021 Result not yet measured for this year. Unlike in previous 7 years, and due to COVID-19 impact, the central government's budget reports submission to the Court of Accounts was delayed until November 2, 2020. This delay also affected the submission of the 14 provinces budget reports, except for Haut-Katanga and Comments: Lualaba, whose final audit reports by the Court were adopted. As advised by OPCS, result for last year (1 month) was used to allow the system to verify entries and release the ISR. 1/5/2021 Page 5 of 8 The World Bank Implementation Status & Results Report DRC: Strengthening PFM and Accountability (P145747) Component 3 - Establishing PFM Systems at the Provincial Level IN00918203 ►Territorial Decentralized Entities (TDEs) with participatory budgeting under implementation (Citizen engagement indicator) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1.00 45.00 47.00 50.00 Date 01-Dec-2016 31-Dec-2019 30-Sep-2020 31-Dec-2021 Target at end of year (45) is met and exceeded. The Participatory Budgeting continues being implemented in 47 targeted ETDs, including 24 from Kinshasa, 10 from Sud Kivu and 13 from Nord Kivu Comments: in spite of delays linked to COVID-19. IN00918205 ►Pro-poor expenditure execution rate in provinces (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 6.61 7.80 12.00 Date 01-Dec-2016 31-Dec-2019 30-Sep-2020 31-Dec-2021 End of year target unlikely to be met due to COVID19 impact. Spending on own resources, in favor of education and health, have seen a slight increase, nearly 8% compared to the target value set at 12%. This is progress compared to 2019, especially in the provinces from the former Katanga. COVID-19 has Comments: undermined the ability to mobilize provincial taxes and revenues and to spend in favor of these two pro- poor sectors. IN00918207 ►Internally generated revenue by provinces (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1.00 39.21 0.00 10.00 Date 01-Dec-2016 31-Dec-2019 30-Sep-2020 31-Dec-2021 Target not likely to be met. At end of September 2020, the overall reduction of y-o-y revenue collection was minus 40.5% for the provinces which reported data. COVID-19 continues to have adverse impacts on the overall economy, especially at the provinces level and as a result, revenue mobilization has dropped sharply since March 2020. Unlike the central government, none of the provinces did take any legislative Comments: action to adjust its budget making it impossible to meet this target. The system does not allow to report negative numbers. As advised by OPCS, zero (0.00) percent increase was used to allow the system to verify this entry and release the ISR. Overall Comments IR COVID19 has had adverse impact on many of the project indicators linked: (i) to revenue collection and spending at central and provincial governments given the sharp drop in economic activities from March 2020; as well as, (ii) to training activities that were postponed or canceled due to health restrictions measures taken by the government. Staff touched base with OPCS technical team to help resolve difficulties in reporting negative numbers registered at end of September (such as the 40.5 drop in provincial revenue) or the unavailability of data for some others (i.e. public contract awarded outside of the proc system). OPCS advised to use last available data and to add specific comment on each related indicator. 1/5/2021 Page 6 of 8 The World Bank Implementation Status & Results Report DRC: Strengthening PFM and Accountability (P145747) Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P145747 IDA-D1650 Effective USD 50.00 50.00 0.00 41.24 10.96 79% P145747 IDA-H9070 Closed USD 5.00 4.64 0.36 4.33 0.00 100% P145747 TF-17290 Closed USD 17.00 17.00 0.00 17.00 0.00 100% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P145747 IDA-D1650 Effective 14-Feb-2017 03-Mar-2017 14-Aug-2017 31-Dec-2021 31-Dec-2021 P145747 IDA-H9070 Closed 30-Jan-2014 20-Feb-2014 23-May-2014 31-Dec-2018 31-Dec-2018 P145747 TF-17290 Closed 28-May-2014 28-May-2014 28-May-2014 31-Dec-2016 31-Dec-2018 Cumulative Disbursements 1/5/2021 Page 7 of 8 The World Bank Implementation Status & Results Report DRC: Strengthening PFM and Accountability (P145747) 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) P159160-Public Financial Management and Accountability Project Additional Financing 1/5/2021 Page 8 of 8