The World Bank Report No: ISR15145
Implementation Status & Results
Afghanistan
ARTF - Recurrent and Capital Costs (P091258)
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Operation Name: ARTF - Recurrent and Capital Costs (P091258) Project Stage: Implementation Seq.No: 12 Status: ARCHIVED Archive Date: 30-Jun-2014
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 24-Dec-2013
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 2267.00
O&M payments 608.00
Incentive Program 29.30
Overall Ratings
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Previous Rating Current Rating
Progress towards achievement of PDO Satisfactory Satisfactory
Overall Implementation Progress (IP) Satisfactory Satisfactory
Overall Risk Rating Substantial
Implementation Status Overview
Satisfactory.
1392 Plan vs Actual
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
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The World Bank Report No: ISR15145
recurrent cost base financing, US$150 million for the Incentive Program (IP) and US$32 million for the new O&M Facility. Later an amount of US$ 15 million was added to the base
line re the USA preferenced contribution to the RC.
Total disbursements under the ARTF RC in FY1392 amounted to US$ 256.1 million comprising reimbursements of US$ 150 million of SY 1392 base line, US$ 32 million from SY
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1392 O&M ceiling and US$ 29.3 of the SY 1391 IP earned but not disbursed in FY 1391 and US$ 44.8 for 1392 IP. 6 benchmarks for 1392 IP were achieved. Four of these have
been disbursed for US$ 44.8 and 2 for US$ 22.4 were covered by the TR of May 2014 and are pending approval by the IPWG along with the Revenue matching grants for US$ 18.8.
As such, to date a total of US$ 226.8 has been disbursed against the 1393 ceiling, with US$ 40.8 re IP covered in the fourth TR pending for a total of US$ 267 against the original
ceiling of US$ 332 million. The difference of US$ 64 million is attributed to the shortfall in IP ( plan of US$ 150 against US$ 86 million earned )
1393 Plan
The plan for FY 1393 in line with the Financing Strategy is presented in the last column of the Table 1 below but this does not reflect an additional US$ 15 for the Ad Hoc contribution
from the US preferenced to the RC TF which has been disbursed.
Moreover disbursements in 1393 will also include the 1392 IP benchmarks earned but not paid in 1392 included the amounts of revenue matching of US$ 18.8 and 2 structural
benchmarks for 22.4 noted above.
O&M
The O&M facility is intended to incentivize civilian O&M spending. The facility is also intended to promote improved O&M systems in select line ministries. The indicative allocation for
the O&M facility is $32 million for 1392 and $100 million for 1393. The basic principle underlying the facility is as follows. A baseline is defined using the average of O&M spending
(civilian operating budget code 22) for the last two years. For each dollar spent above the baseline, the facility provides an incentive payment of 1.5 dollars up to a maximum of the
indicative allocation for that year. The participating ministries for 1392 were Ministry of Education (MoE) and Ministry of Public Health (MoPH), while the participating ministries for
1393 are MoE, MoPH, Ministry of Public Works (MoPW) and Civil Aviation Authority (CAA).
The performance in 1392 against the benchmark of total O&M appears in the table below. Also in the table is the performance against the targets for the participating ministries.
Table 1. Baseline and Actual O&M Spending for 1392
Actual 1390 Actual 1391 Prorated Baseline 1392 Actual 1392 Incentive
Millions Afs Million US$
Civilian O&M 18,079 19,579 18,829 18,032 0
Participating (MoE+MoPH) 2,296 2,945 2,620 3,756 30.7
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There is proposal now with the IPWG to modify the O&M MOU to move from annual baselines and disbursements to quarterly baselines and disbursements. With an annual baseline,
the determination of the incentive payment can only be made at the end of the year. Quarterly baselines allow disbursement of incentive payments over the course of the year in a
robust fashion, after determination of the amount. The second modification is to provide the flexibility each quarter to exceed the baseline either at the aggregate or at the level of the
participating ministries. This would provide an ex ante incentive at both levels without any ex post double counting. The quarterly baselines for 1393 at the aggregate and at the level
of the participating ministries are presented in the table below.
The amount by which the 1393 O&M allotment could be reduced in response to the 1392 shortfall from the target of total O&M has not yet been decided by the IPWG.
Trust Fund Balance
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The World Bank Report No: ISR15145
The cumulative grant allocation to May 28, 2014 is US$ million 3,074,321,009.24 and the TF balances is US$ 70.9 million reflecting an opening balance in 1393 of US$ 25.9 million,
transfers of US$ 120 million and disbursements of US$ 75 million.
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Monitoring
The MA team finalized 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 by BDO who took over monitoring in SY
1391. An initial sample for FY 1391 was selected and the full sampling methodology was approved by the WB TTL in line with the Technical Proposal. Field work, testing of
transactions on site, has been completed for quarter 1 (by J&B) and quarter 2 and 3 by BDO (SY 1391 had only 3 quarters. Testing covered 5,231 transactions and included target
and randomly selected transaction. Inferences of ineligiblity for the representative samples are made with 95% confidence. Monitoring for FY 1392 were planned on a same strategy
and methodology are well advanced and the report for the first 3 quarters presented to the WB.
Eligibility 1391
Eligibility results for FY 1391 present a deterioration in overall ineligibility of 37.31%, the highest in the ARTF RC history, taking into account that SY 1382 was calculated on a
different basis and in SY 1387 all O&M after the first quarter was ruled ineligible. The performance arises from a deterioration in both O&M and Payroll.
Payroll. 37% of all payroll was found ineligible. Of the total Payroll ineligible expenditures, 56% arises from security salaries being included in the submissions for reimbursement.
This at least does not represent a failure in compliance with controls or provision of documentary support for expenditures.
Ineligibility for O&M including pension came to 57.59 %. . O&M comprise true O&M and pensions.
Ineligibility for O&M came 65% and of the total ineligibility of O&M 58% arises from some exception to the procurement rules and procedures. Ineligibility for pensions came to 20 % ,
the cause of which is 60% of the cases was unavailability of the files for review.
Eligibility SY 1392
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The BDO Team has finalized the testing of samples for the first three quarters of FY 1392 but these are not reflected in the table 4 above since extrapolation has not been applied as
testing of the samples has not been completed.
Monitoring of expenditures up to Q4 of FY 1392 indicates 49% of the sample tested is ineligible for O&M excluding pensions, 15% for payroll. Extrapolation will modify these
percentages for ineligibility for the population.
Locations
Country First Administrative Division Location Planned Actual
Afghanistan Kabul Wilayat-e Kabul ✔
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Results
Project Development Objective Indicators
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Indicator Name Core Unit of Measure Baseline Current End Target
Assurance that goods and services procured Text Value 100% 75% 100%
with ARTF funds are used exclusively for Date 15-Dec-2005 29-May-2014 31-Dec-2018
authorized purposes in obtained through MA
Comments OK Disbursements against SY
agent's review of withdrawal applications
1392 monitored for 3 qrts
only. Work in underway in line
with plan to complete
monitoring by August.
Intermediate Results Indicators
Indicator Name Core Unit of Measure Baseline Current End Target
Disbursement as percentage of annual ceiling Text Value 96.6% 67.7% 100%
Date 15-Dec-2005 29-May-2014 28-Feb-2013
Comments 79 % US$ 283 million), of FY
1392 ceiling has been
"earned". Of this , US$ 241
million has been disbursed.
SY 1392 baseline and O&M
fully disbursed. Of the IP
portion, US$ 44.8 million was
disbursed while another US$
41.2 million will be disbursed
in June, 2014.
Percentage of withdrawal applications Text Value 100% 100% 100%
reviewed and approved by the MA Date 15-Dec-2005 29-May-2014 28-Feb-2013
Comments 100% of withdrawals in 1392
and 1392 that have been
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presented to the WB have
been paid.
Amount of ineligible expenditures reviewed by Text Value $4.6m $0m
the MA pending recovery Date 15-Dec-2005 31-Oct-2013 28-Feb-2013
Comments All identified ineligibles for SY
1392 are recovered by
substitution in the month
following results of monitoring.
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Percentage of eligible payroll expenditures Text Value 84.9% 100%
reviewed by the MA vs submitted Date 15-Dec-2005 31-Oct-2013 28-Feb-2013
Comments For SY 1392 all HQ payroll
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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 31-Oct-2013 28-Feb-2013
Comments This % is the sum of all
groups of expenditures
subject to testing; negligible
amt of prov O&M not covered.
Percentage of Monitoring Agent reports Text Value 95% 100% 100%
accepted by the Bank as TF Administrator Date 15-Dec-2005 29-May-2014 31-Dec-2018
Comments All M&A reports have been
accepted. Final resutls SY
1391 Monitoring Report by
BDO is received reflecting
adjustments relating to docs
not initially available .
ARTF Recurrent Cost Audit reports/opinions Text Value Qualified Adverse opinion 100% Qualified opinion, geographic
accepted by the Bank scope & time limitation
Date 15-Dec-2004 29-May-2014 28-Feb-2013
Comments SY 1391 audit rec'd ,
accepted. SY 1392 not yet
due.
Data on Financial Performance (as of 29-Apr-2014)
Financial Agreement(s) Key Dates
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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 3,074.32 3,074.32 0.00 3,003.42 70.90 98.00
Disbursement Graph
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The World Bank Report No: ISR15145
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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.
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