The World Bank NI Public Financial Management Modernization Project (P111795) REPORT NO.: RES40375 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 24.18 .82 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 The operation has five components: (1) strengthen the institutional capacity of the Ministry of Finance; (2) design, acquisition and development of a renewed Integrated Administrative and Financial Management System (Sistema de Información para la Gestión Administrativa y Financiera, 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): IADB finances the software contract while the World Bank finances the technical assistance associated with the implementation of the system. Progress towards achieving the PDO and Project Implementation are both rated Moderately Satisfactory. The Public Financial Management Modernization Project has significantly strengthened Nicaragua's public expenditure management and statistical capabilities. Results that can be attributed to the Project include: 100 percent of central government entities adopted multi-annual and results-based budgeting; SIGAF system is operational, helping the government improve efficiency and transparency in its financial management; the digital cartography that covers the entire country has been updated; and a digital platform to collect and process census and survey data captured from mobile devices is now functional. The digital cartography and platform has been used in statistical operations including the recent pilot population and housing census. All activities under component 5: Enhancing of Statistics Management Capacity were successfully completed by August 2019. Although the SIGAF has been deployed for over two years, the software provider has delayed final delivery of key system functionalities such as Treasury and Accounting. The project closing date was extended to June 30, 2020 to help the Ministry of Finance stabilize the SIGAF and ensure that the Contingent Data Center (CDC) meets international standards on information security. On January 17, 2020, the Ministry of Finance signed the fifth amendment of the contract with the SIGAF software provider. The amendment eliminates the payroll subsystem from the contract and postpones the full acceptance of the system to May 29, 2020. The Ministry of Finance is taking measures to stabilize the SIGAF and ensure the sustainability of the system, including: implementing contingency measures to complete missing functionalities and correct deficiencies of the system; developing additional functionalities to the SIGAF to meet the needs of the users; transferring knowledge on the software and the technological infrastructure to the responsible departments of the Ministry of Finance; and providing continuous training to users to ensure appropriation of the system. While the procurement process for an information security assessment on the CDC has suffered some delay, the Government expects to sign 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 Restructuring Paper seeks approval to reallocate resources between disbursement categories. This reallocation will not require a legal amendment since Project activities remain consistent with the PDO and are considered eligible under the Financing Agreement. The Ministry of Finance has requested additional resources under Category 1 (Goods, Non-Consulting Services, Consultants’ services and Training for Parts 1, 2, 3 and 4 of the Project) to finance consultants that will carry out the above-mentioned activities. All activities under Component 5 have been completed, leaving US$479,298.21 unused and unallocated. The Borrower proposes to reallocate the remaining proceeds from Category 3 (Goods, Non-consulting Services, Consultants’ Services and Training for Part 5 of the Project) to Category 1 (Goods, Non-Consulting Services, Consultants’ services and Training for Parts 1, 2, 3 and 4 of the Project). The World Bank NI Public Financial Management Modernization Project (P111795) The reallocation will allow the Government to take measures to ensure that the Project remains on track to meet the PDO and guarantee the sustainability of the SIGAF. The reallocation across categories represents a 3 percent increase in the funding for Category 1 and will reduce the allocation to Category 3 by 6 percent. II. DETAILED CHANGES REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Current Current Actuals + Proposed Disbursement % Ln/Cr/TF Expenditure Allocation Committed Allocation (Type Total) Category Current Proposed IDA-55790- GO,NCS,CS,TR- 001 Pt 1,2,3&4(excl. 15,279,137.04 14,006,243.89 15,758,435.25 100.00 100.00 Currency: 2aii) USD Operating Costs 2,152,504.96 2,088,250.03 2,152,504.96 100.00 100.00 GO, NCS, CS, TR 7,568,358.00 7,089,059.79 7,089,059.79 100.00 100.00 - Part 5 Total 25,000,000.00 23,183,553.71 25,000,000.00