The World Bank NI Public Financial Management Modernization Project (P111795) REPORT NO.: RES42485 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NI PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT APPROVED ON DECEMBER 7, 2010 TO REPUBLIC OF NICARAGUA GOVERNANCE LATIN AMERICA AND CARIBBEAN Regional Vice President: J. Humberto Lopez Country Director: Yaye Seynabou Sakho Regional Director: Robert R. Taliercio Practice Manager/Manager: Adrian Fozzard Task Team Leader(s): Josef S. Trommer, Alberto Leyton The World Bank NI Public Financial Management Modernization Project (P111795) I. BASIC DATA Product Information Project ID Financing Instrument P111795 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 07-Dec-2010 30-Jun-2020 Organizations Borrower Responsible Agency Instituto Nacional de Información de Desarrollo Republic of Nicaragua (INIDE),Ministerio de Finanzas y Crédito Público Project Development Objective (PDO) Original PDO The objective of the Project is to enhance the efficiency and transparency of the Recipient’s public expenditure management andstrengthen the Recipient’s statistics management capacity. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-55790 08-Dec-2014 15-Dec-2014 25-Feb-2015 30-Jun-2020 25.00 25.00 0 IDA-48070 07-Dec-2010 09-Dec-2010 06-May-2011 31-Dec-2017 10.00 10.01 0 TF-14059 27-Feb-2013 14-Mar-2013 14-Mar-2013 19-Aug-2015 3.35 3.35 0 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank NI Public Financial Management Modernization Project (P111795) I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES This Restructuring Paper seeks approval to extend the closing date of the Nicaragua Public Financial Management Modernization Project (PFMMP), IDA Credit 5579-NI (the Credit), from June 30 to August 31, 2020. If approved, this would entail a cumulative extension of 32-months of the Credit’s closing date. The Government of Nicaragua requested the extension of the Credit on June 15, 2020 as COVID-19 negatively impacted the Project Implementation Unit’s (PIU) ability to complete all closure obligations and requirements by June 30, 2020. As of June 17, 2020, 100 percent of the funds had been disbursed. The two-month extension of the closing date would allow the Government to finalize all ongoing project closure obligations and no new activities or procurement process (except for the audit) would be carried out during this period; a detailed list of activities to be completed during this period was prepared by the Recipient. The PFMM Project has five components: (1) strengthen the institutional capacity of the Ministry of Finance; (2) design, acquisition and development of the renewed SIGAF; (3) implementation of SIGAF and Public Financial Management (PFM) capacity building in Central Government agencies; (4) project management; and (5) enhance statistics management capacity. Project activities supporting the implementation of the SIGAF are co-financed by the Inter- American Development Bank (IADB); the IADB finances the software contract while the World Bank finances the technical assistance associated with the implementation of the system. Implementation Progress is currently rated Moderately Satisfactory, and the team confirms that the Project Development Objective is expected to be Moderately Satisfactory at closing. The PFMM Project has significantly strengthened Nicaragua's public expenditure management and statistical capabilities. Project results include: (i) 100 percent of central government entities adopted multi-annual and results-based budgeting; (ii) SIGAF system is operational, helping the Government improve efficiency and transparency in its financial management; (iii) the digital cartography that covers the entire country has been updated; and (iv) a digital platform to collect and process census and survey data captured from mobile devices is now functional. The digital cartography and platform have been used in statistical operations including the housing census in 2017 and the pilot census in 2018. Notwithstanding progress, though the Integrated Administrative and Financial Management System (Sistema de Información para la Gestión Administrativa y Financiera, SIGAF) has been deployed for over two years, the software provider has delayed final delivery of key system functionalities in Treasury and Accounting. The last Bank-approved extension of the closing date (from November 30, 2019 to June 30, 2020) was granted so the Ministry of Finance would have time to stabilize the SIGAF and ensure that the Contingent Data Center (CDC) meets international standards on information security. Despite substantial progress in delivering missing functionalities, the software provider was still unable to meet the established timeframe. The Government is currently evaluating the scope and quality of the SIGAF sub-systems, and taking measures to stabilize the SIGAF and ensure the sustainability of the system, including: (i) implementing contingency measures to complete missing functionalities and correct deficiencies of the system; (ii) developing additional functionalities to the SIGAF to meet the needs of the users; (iii) transferring knowledge on the software and the technological infrastructure to the responsible departments of the Ministry of Finance; and (iv) providing technical assistance to users to ensure appropriation of the system. While the procurement process for an information security assessment on the CDC was delayed, the Government signed the contract in March 2020. This will determine whether the CDC meets international information security standards and the measures needed to help the Government comply with such standards. This activity is expected to be completed by The World Bank NI Public Financial Management Modernization Project (P111795) June 30. The remaining system inconsistencies are expected to be fixed by the software provider during the guarantee period ending on December 2020. The performance of the Recipient remains satisfactory. The Project is not subject to suspension of disbursements; and there are no outstanding audit reports or audit reports. II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-Dec-2017, 03- IDA-48070 Closed 31-Dec-2015 May-2018 31-Dec-2018, 30-Nov- IDA-55790 Effective 31-Dec-2017 31-Aug-2020 31-Dec-2020 2019, 30-Jun-2020 19-Aug-2015, 28-Sep- TF-14059 Closed 19-Apr-2015 2015