The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Fiscal Performance Improvement Support Project (FSP): (P159655) SOUTH ASIA | Afghanistan | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 9 | ARCHIVED on 24-Sep-2021 | ISR48048 | Implementing Agencies: Ministry of Finance, Islamic Republic of Afghanistan, National Procurement Authority, Supreme Audit Office Key Dates Key Project Dates Bank Approval Date: 19-Dec-2017 Effectiveness Date: 01-Jan-2018 Planned Mid Term Review Date: 30-Jun-2020 Actual Mid-Term Review Date: 16-Jun-2020 Original Closing Date: 28-Dec-2022 Revised Closing Date: 28-Dec-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) To contribute to the improvement of domestic revenue mobilization and public expenditures management, and of reinforcing a performance oriented management culture in the Ministry of Finance. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1: Budget as Tool for Development:(Cost $3.31 M) Component 2: Revenue Mobilization:(Cost $20.16 M) Component 3: Treasury Management, Accountability, and Transparency:(Cost $24.82 M) Component 4: Institutional Capacity Building and Performance Management:(Cost $11.71 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Substantial High Implementation Status and Key Decisions The Fiscal Performance Improvement Support Project (FSP) is designed to improve management of public finances in Afghanistan by strengthening the capacity of the Ministry of Finance, the National Procurement Authority and the Supreme Audit Office. The FSP supports implementation of the Afghanistan Fiscal Performance Improvement Plan (FPIP) through recipient-executed investment financing. The Project Development Objective (PDO) is: “to contribute to the improvement of domestic revenue mobilization and public expenditures management, and of reinforcing a performance-oriented management culture in the Ministry of Finance”. The project focuses on four key result areas: (i) Improved development budget execution rate; (ii) Increased domestic revenue as a percentage of GDP; (iii) Increased compliance with audit recommendations; and, (iv) Improvement in core institutional capacity, represented by a reduction in the number of long-term technical assistants. 9/24/2021 Page 1 of 8 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Financing is provided by a US$25 million International Development Association (IDA) grant and a US$75 million grant from the Afghanistan Reconstruction Trust Fund (ARTF), managed by the World Bank on behalf of 34 donors. This was approved by the ARTF Management Committee on December 13, 2017 and the World Bank Board on December 19, 2017. While US$40 million from initial ARTF grant amount has been cancelled based on June 24, 2020 request for reallocation of these funds for COVID-19 crisis response, the project is still strongly owned and parallel financed by the Government of the Islamic Republic of Afghanistan (GoIRA). The FSP provides strategic support at a critical moment in Afghanistan’s development. Improved public financial management and revenue generation is central to the Government’s self-sufficiency agenda. To enable development results in this high-risk operation, the FSP is complemented by tailored World Bank-executed technical assistance and a new series of Incentive Program (IP) Development Policy Grants (DPGs). This approach creates strong incentives for progress while tangibly supporting Government’s technical reforms at an investment level. The FSP became effective on January 1, 2018. Overall Implementation Progress and progress towards achievement of the PDO are currently rated as “Moderately Satisfactory”. Key implementation developments to date include: (a) Component 1: Budget as Tool for Development. Implementation by the Ministry of Finance (MoF) of key enhancements to the budget process through a revised budget circular and budget submission template; introduction of strategic screening and improvement of costing information in budget submissions. (b) Component 2: Revenue Mobilization. Implementation by the Afghanistan Revenue Department (ARD) of key re-organization and modernization measures and of electronic filing; support to increase the number of active tax filers across both the large (20 percent) and small tax payer (3 percent) offices. Continued roll-out of the Automated Systems for Customs Data (ASYCUDA) system, with majority of Customs offices connected. (c) Component 3: Treasury Management, Accountability, and Transparency. Development of four key Electronic Government Procurement (eGP) modules by the National Procurement Authority (NPA); alongside complementary advances in Open Contracting Partnership (OCP) and Open Contract Data Standards (OCDS) implementation. (d) Component 4: Institutional Capacity Building and Performance Management. Development and launch by the MoF Performance Management Team (PMT) of a publicly accessible web-based Afghanistan Performance Management Information System (APMIS); alongside roll- out of FPIP to 140 teams across MoF, the NPA, and Supreme Audit Office (SAO). The project mid-term review (MTR) was conducted from June 16 through July 11, 2020. The MTR mission worked closely with MoF, NPA and SAO to ensure that the project realigns its activities based on the revised budget without substantial impact on the ability to achieve the PDO. Despite some deterioration in the dynamics of results indicators following the MTR mission, the implementation continued to progress in all three counterpart agencies until August 15, 2021. This report documents the project implementation status as of August 15, 2021. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance High Substantial High Macroeconomic High High High Sector Strategies and Policies Substantial Substantial High Technical Design of Project or Program Substantial Substantial Substantial Institutional Capacity for Implementation and High High High Sustainability Fiduciary Substantial Substantial High Environment and Social Low Low Low 9/24/2021 Page 2 of 8 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Stakeholders Substantial High High Other High High High Overall High Substantial High Results PDO Indicators by Objectives / Outcomes To contribute to the improvement of public expenditures management. IN01033807 ►Increased development budget execution rate (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 54.00 82.00 82.00 75.00 Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 The performance of the indicator deteriorated due to the cancelations or delays in implementation of many development project as a result of COVID-19 reallocations for urgent spending. Nevertheless, the Comments: indicator remains on track and met the third year target of 66%. IN01033810 ►Effective implementation by budgetary units on the external audit recommendations (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 15.00 30.60 30.60 60.00 Date 30-Aug-2017 31-Mar-2020 31-Mar-2020 28-Dec-2022 As of the MTR reporting the indicator remained on track (measured as an average), but most of the pilot ministries still performed poorly. However, situation deteriorated in 2020, since many audits and related Comments: follow-up activities have been delayed. The indicator update for 2020 is still not available as of the preparation of the current report. To contribute to the improvement of domestic revenue mobilization. IN01033808 ►Increased domestic revenue as a percentage of GDP (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.70 11.80 11.80 12.20 Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 The reported estimated value of the indicator for 2020 is significantly affected by the COVID-19 pandemic, but still exceeds the 11.6 percent target for the third year. The revenue decreased by 7% for ACD and Comments: 4.5% for ARD compared with 2019. Non-tax revenue was also significantly reduced, resulting in a total revenue to GDP estimate of 11.8 percent by the end of 2020. 9/24/2021 Page 3 of 8 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) To contribute to reinforcing a performance oriented management culture in the Ministry of Finance. IN01033809 ►Improvement in core institutional capacity, represented by a reduction in the number of long-term technical assistants (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 780.00 492.00 492.00 250.00 Date 30-Aug-2017 18-May-2021 18-May-2021 28-Dec-2022 Despite partial progress the indicator remains off-track significantly exceeding the third year target of 350 Comments: NTAs. Overall Comments PDO No updates are available and proposed for PDO indicator values reported by June 2021 ISR. Intermediate Results Indicators by Components Component 3: Treasury Management, Accountability, and Transparency IN01033813 ►Approved time-bound development and migration plan to a new AFMIS platform (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 30-Aug-2017 18-May-2021 18-May-2021 28-Dec-2022 Development of the system is the responsibility of NSIA. MoF is closely working with NSIA on the development of new system, and, inline with the agreed next steps, will prepare the AFMIS development Comments: and migration plan. The approach was outlined by NSIA and is expected to be formalized by end-2021. IN01033817 ►Afghanistan Institute of Certified Public Accountants (CPA) established and two batches trained (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Associate Associate Memberships Institute established, Memberships of SAFA Value Institute not established of SAFA and CAPA are CPA law enacted, and and CAPA are obtained. curriculum developed obtained. Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 The indicator only partially met the third year target of "Training completed for first batch (including at least 5 females), and reciprocal membership agreement signed with two international/regional accountancy bodies". Despite the progress made on part of establishment of international partnerships, Comments: the training of the first batch will be conducted after the ongoing review of the curriculum by ACCA is completed. IN01033823 9/24/2021 Page 4 of 8 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) ►Rolling out e-GP in the pilot phase in 3 or more departments (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 3.00 3.00 3.00 Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 Different modules of the system have been rolled out to three plus pilots exceeding the third year target. The reported 3 pilots are for the e-tendering module, while the others (e-planning and contract monitoring) Comments: already covered 72 pilot entities. Component 2: Revenue Mobilization IN01033812 ►Implement ARD Re-Organization and Modernization Plan (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target There is no There is no reorganization and reorganization and All regional revenue Value Plan approved by cabinet modernization plan modernization plan offices report to ARD submitted for Cabinet submitted for Cabinet approval approval Date 30-Aug-2017 31-Jan-2021 31-Jan-2021 28-Dec-2022 The indicator is off-track. The ARD currently manages its organizational structure through own Tashkeel, but the relevant changes are not guided by a broader reorganization and modernization plan requiring a Comments: formal approval of the Cabinet. IN01033816 ►Increased number of active tax filers (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target LTO: 195; MTO: 5325; LTO: 1,153; MTO: LTO: 1,153; MTO: LTO: 380; MTO: Value STO: 3137 13,249; STO: 8,517 13,249; STO: 8,517 10400; STO: 6713 Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 The indicator exceeded the third year targets for each of the taxpayer groups. Comments: IN01033820 ►Staff and business processes are in place for VAT implementation in 2020 (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Preparation for the VAT Preparation for the VAT business No staff or processes in Value implementation is in VAT implementation is processes developed place progress in progress and staff trained Date 30-Aug-2017 18-May-2021 18-May-2021 28-Dec-2022 The indicator is partially on track. Although the ARD has been preparing for the VAT implementation by drafting selected business processes and technical specifications for the SIGTAS VAT module, further Comments: validation is needed, especially for key documents requiring formal approval either by the VAT Steering Committee or ARD Director General. IN01033822 9/24/2021 Page 5 of 8 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) ►Percentage increase in custom duties through enhancement of ASYCUDA customs automation (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 5.00 91.00 91.00 100.00 Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 Despite the slight setback the indicator exceeds the third year target (60 percent). Comments: Component 4: Institutional Capacity Building and Performance Management IN01033814 ►Establishment of Asset Inventory Management System (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 30-Aug-2017 31-Jan-2021 31-Jan-2021 28-Dec-2022 The indicator is on track. The asset management system for MoF is already developed and is currently Comments: being populated with the information on the asset inventory. IN01033818 ►Improvement in performance management coverage, represented by an increase in the number of teams adopting FPIP (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 90.00 140.00 140.00 140.00 Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 The number of teams adopting FPIP within MoF, SAO, and NPA has increased to 140, exceeding the Comments: third year target (120). IN01033821 ►Transparency and citizen engagement in reform planning, represented by timely publication of annual and mid-year FPIP assessment reports (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 30-Aug-2017 31-Dec-2020 31-Dec-2020 28-Dec-2022 APMIS developed and used to publish 2018, 2019, 2020 FPIP plans. Deputy Minister for Finance Comments: launched town hall budget hearings in five zones. Component 1: Budget as Tool for Development IN01033811 ►Increased budget execution rate of the provinces by implementing new provincial budgeting policy. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target 9/24/2021 Page 6 of 8 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Value 57.00 87.00 87.00 75.00 Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 Provincial budget execution for 2020 was 87 percent, exceeding the third year target (69 percent), but affected by COVID-19 pandemic. However, the implementation of the policy is still affected by the Comments: limitations for communication with provinces. IN01033815 ►Gender budget statements developed for key ministries (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 5 ministries 20 ministries 20 ministries 12 ministries Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 A toolkit has been developed for gender sensitive budget analysis, that will help in preparation of gender statements for pilot ministries. Currently, Gender Budget Statements (GBS) have been developed for 20 Comments: pilot line ministries. IN01033819 ►Large projects are properly appraised with the support of a new PIM Unit to be established (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.00 100.00 100.00 50.00 Date 30-Aug-2017 21-Dec-2020 21-Dec-2020 28-Dec-2022 Since 2019 MoF mandated that all Project Concept Notes (proposals) go through appraisal. In Comments: 2020 indicator value remained at the level of 100 percent well exceeding the third year target (30 percent). Overall Comments IR No updates are available and proposed for intermediate result indicator values reported by June 2021 ISR. Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P159655 IDA-D2630 Effective USD 25.00 25.00 0.00 24.94 0.00 100% P159655 TF-A6277 Effective USD 75.00 35.00 40.00 20.00 15.00 57% Key Dates (by loan) 9/24/2021 Page 7 of 8 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P159655 IDA-D2630 Effective 19-Dec-2017 25-Dec-2017 01-Jan-2018 28-Dec-2022 28-Dec-2022 P159655 TF-A6277 Effective 19-Dec-2017 25-Dec-2017 01-Jan-2018 28-Dec-2022 28-Dec-2022 Cumulative Disbursements PBC Disbursement Achievement Disbursed amount in Disbursement % PBC ID PBC Type Description Coc PBC Amount Status Coc for PBC Restructuring History Level 2 Approved on 16-Sep-2020 Related Project(s) There are no related projects. 9/24/2021 Page 8 of 8