Page 1 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE I. Basic Information Date prepared/updated: 02/03/2009 Report No.: AC4127 1. Basic Project Data Country: Sierra Leone Project ID: P108069 Project Name: Sierra Leone Public Financial Management Task Team Leader: Vivek Srivastava Estimated Appraisal Date: February 9, 2009 Estimated Board Date: April 16, 2009 Managing Unit: AFTPR Lending Instrument: Technical Assistance Loan Sector: General public administration sector (100%) Theme: Public expenditure, financial management and procurement (P) IBRD Amount (US$m.): 0.00 IDA Amount (US$m.): 4.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER/RECIPIENT 0.00 UK: British Department for International Development (DFID) 7.50 EC: European Commission 10.70 18.20 Environmental Category: C - Not Required Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies) Yes [ ] No [X] 2. Project Objectives 1. The project development objective (PDO) is to support GoSL in sustainably improving the credibility, control and transparency in fiscal and budget management. The key recipients of the project benefits include many parts of MoFED, Cabinet, NPPA, the Parliamentary Budget and Finance and Public Accounts Committees, and other MDAs. 2. The project will adopt the following key indicators for measuring progress: o Variance between liabilities paid and commitments approved o Variance in expenditure composition for the 20 largest budget heads o Variance in budget deficit (excluding grants) o The share of actual to budgeted spending on HIPC/PRSP priorities compared to the ratio of actual to budget expenditures for all other discretionary primary expenditures o Payment arrears (excluding interest and donor-financed project expenditure) o Number of financial and procurement documents listed in PEFA 10 published through gazette and website. Page 2 o Timely audited Public Accounts with no material qualifications concerning basic control system failures o Percentage of MDA contracts in compliance with plans/approved revisions -------------------- N.B. The DFID and EC contributions have been estimated at current exchange rates less ad hoc estimates of TF administration fees (under negotiation). To hedge against exchange rate risks, actual amount that can be committed in the grant agreement will be less than US$22.2 million. The current costing of the project is based on an amount of US$20 million. 3. Project Description 1. A technical assistance IDA grant of US$4.0 million will be used over a period of four years from June 2009 to May 2013. The IDA grant will be pooled with DFID and EC (referred to as “DPs”) grant resources to support the implementation of the GoSL’s Integrated PFM Reform Program (IPFMRP). The DFID and EC resources will be channeled through a Bank-administered Trust Fund and will be pooled with IDA resources to finance project activities. The IDA contribution will be USD 4 million and commitments from DFID and EC are GBP 5 million and Euro 8 million, respectively. The African Development Bank (ADB) will use its budget support operation (currently under preparation) to support this project by using prior actions and triggers that complement the objectives of this project. 2. The implementation will be undertaken in two phases separated by a detailed mid- term review: (i) Phase 1: June 2009 – May 2011, and (ii) Phase 2: June 2011 – May 2013. Annual work plans will ensure that Platform 1 activities will be given priority in the initial phase. A mid-term review will take place at the end of Phase 1, to review progress and to develop and adapt the design of Phase 2 accordingly. 3. The long term vision of the GoSL is a PFM system that supports the achievement of fiscal discipline; strategic, efficient and effective allocation and use of funds; and value for money, and probity in the use of public funds. 4. The GoSL IPFMRP is a comprehensive sector program for PFM, which builds upon its existing National Action Plan for PFM reform and on the progress achieved to date. It includes three main parts - Core PFM components, Strengthening of revenue administration and Strengthening of external audit - the first of which will be supported by this project: 5. A number of strategic priorities for the core IPFMRP have been identified by GoSL, drawing in part from the analysis provided by the IMF Fiscal Affairs Department (FAD) mission of March 2008 as well as GoSL analysis and the PEFA assessment. The priorities identified are the need to restore budget credibility and supplier confidence, improve cash management, increase adherence to the legal framework (with amendments as needed) and build PFM capacity in MDAs (ministries, departments and agencies). Ongoing reforms supported by the IRCBP will continue to be supported by the IPFMRP Page 3 so that the present momentum will be maintained and the benefits fully realized. These reforms include the rollout of the Integrated Financial Management Information Systems (IFMIS) to remaining MDAs, the verification of government payrolls, improved procurement, the extension and deepening of internal audit, strengthening local government financial management, and legal and regulatory reform. 6. The project adopts an integrated approach in that it provides joint DP support to the MoFED and other PFM actors in the implementation of the GoSL’s integrated reform program. [Footnote: With the exception of the components for the National Revenue Authority and the Audit Service which are being funded separately]. The project support builds on the developments made to date in the core areas of budget management, accounting and control. It draws on the FAD report recommendations, the PEFA assessment and consultancies in budget management, capacity building and the phasing out of DP support for MoFED staff. 7. Prioritization is guided by a set of three conceptual “platforms”. The desired Platform 1 outcome is one in which budgets are credible and transparent so as to enhance the confidence of all stakeholders that the Government can translate an approved budget into actual revenue and expenditure, both in aggregate and at the agency level. Building on the budget discipline achieved in the first platform, Platform 2 interventions focus on improved allocation of all available resources in accordance with sectoral strategies and reallocations arising from changes in cash flow projections. Platform 3 activities should see a strong effort to achieve greater efficiency and probity in resource use leading to improved service delivery. This outcome logically follows on from the predictable funding achieved in platform 1 and the improved allocation of resources achieved in platform. This is shown in figure 1. 8. The phasing of activities is not dictated solely by their attribution to platforms. The programming over 2009-2013 takes into account the need to complete and consolidate ongoing reforms, and to initiate major reforms that have a long lead time, such as capacity building. Project interventions are organized under the following five components. Components 1 and 2 address different stages of the budget cycle; component 3 addresses cross-cutting issues, component 4 supports demand side accountability arrangements and component 5 is for project management. Component 1 - Strengthening Macrofiscal Coordination and Budget Management (USD 2.07 million) The key outcomes of this component will include improved budget credibility associated with a more appropriately developed and managed aggregate fiscal position, delivery by the MoFED of predictable funding in accordance with budgets, constrained MDA budgets and control of the in year position contributing to Platform 1 objectives, and improved strategic prioritization contributing to Platform 2 objectives. Page 4 Component 2 – Reinforcing Key Aspects of the Control System to Support ImprovedService Delivery (USD 3.17 million) The key outcomes of this component include an updated legal framework, robust public procurement practices, tightened payroll controls, strengthened internal audit, improved accounting procedures operating in the MoFED and MDAs, and further publication of PETS contributing to an effective control environment in MDAs. Striving for these internal controls will be reinforced through strengthened scrutiny of public finances by Parliament. More effective internal controls support Platforms 1 and 3 objectives. Component 3 – Establishing and Maintaining Sustainable and Capable Central Finance Functions (USD 11.36 million) This component will undertake various cross-cutting activities including all aspects of training and HR capacity development that are required to support the main PFM functions that are being strengthened in the other three components. This component will be undertaken by the Capacity Building Sub-Committee of the PFM Oversight Committee. Component 4 - Assisting Non-state Actors’ Scrutiny (USD 1.0 million) This component will assist the development of the analytic and dissemination capacity of non-state actors in exercising scrutiny of the use of public resources, as well as building a constituency for reform of the PFM system across an array of non-state actors. Component 5 – Project Coordination and Administration (USD 1.5 million) A project administration unit will be established within the MoFED within the Directorate of PFM Reforms and will be staffed with a Project Manager who will also have monitoring and evaluation responsibilities for the IPFMRP, a Procurement Specialist and a Project Accountant. The tasks of this unit will include administration of grant agreements, management of bank accounts, fiduciary management and monitoring and evaluation. 9. The project will finance consulting services, workshops, training, study tours, IT equipment, vehicles, office equipment, operating expenses and salaries (on a declining basis). 10. Overall oversight will be provided by an existing PFM Oversight Committee and its sub-committees. Day to day implementation will be coordinated and led by a Director for PFM Reform to be recruited into the MoFED. The Director for PFM Reform will be supported by a Project Administration Unit including a Project Administrator, a Project Accountant and a Procurement Specialist. Page 5 4. Project Location and salient physical characteristics relevant to the safeguard analysis This is a national program that will focus on core PFM institutions and systems throughout Sierra Leone. 5. Environmental and Social Safeguards Specialists Mr Warren Waters (AFTQK) 6. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: N.A As indicated in the Decision Meeting Memo, no formal ASPEN clearance is required as the project design remains unchanged and the Category is unchanged from 'C'. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: N.A 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. N.A 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. N.A 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. N.A Page 6 B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Indigenous Peoples Plan/Planning Framework: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Pest Management Plan: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: The project does not trigger any safeguard policies. C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank's Infoshop? No Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? No All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? N/A Page 7 Have costs related to safeguard policy measures been included in the project cost? N/A Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? N/A Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? N/A D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Vivek Srivastava 02/02/2009 Environmental Specialist: Social Development Specialist Mr Warren Waters 01/21/2009 Additional Environmental and/or Social Development Specialist(s): Approved by: Sector Manager: Ms Helene Grandvoinnet 02/02/2009 Comments: