Page 1 INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC4709 Date ISDS Prepared/Updated: 09/16/2009 I. BASIC INFORMATION A. Basic Project Data Country: El Salvador Project ID: P095314 Project Name: Fiscal Management and Public Sector Performance Task Team Leader: Alberto Leyton Estimated Appraisal Date: October 16, 2009 Estimated Board Date: November 24, 2009 Managing Unit: LCSPS Lending Instrument: Technical Assistance Loan Sector: General public administration sector (100%) Theme: Tax policy and administration (25%);Public expenditure, financial management and procurement (25%);Other accountability/anti-corruption (24%);Decentralization (13%);Administrative and civil service reform (13%) IBRD Amount (US$m.): 25.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 2.00 2.00 B. Project Objectives [from section 2 of PCN] The FMPSP TAL#s development objective is to increase the effectiveness and efficiency of revenue and expenditure management. To this end, the project will balance support for the implementation of short-term actions needed to regain fiscal balance, restore tax revenues to previous levels and generate savings and efficiencies in public sector expenditures; with medium term efforts to consolidate and develop institutional capacities that will impact the quality of public expenditures and increase overall accountability and transparency. More specifically the project will: (i) strengthen technical and operational capacities of tax collection agencies and promote effective ways of integration to improve effectiveness and thus increase tax revenues; (ii) support the consolidation and further development of core public financial management systems including multi-year and performance-based budgeting, treasury management, public procurement and supporting information systems; and (iii) support the implementation of policy planning, monitoring and evaluation capacities through the Page 2 development of an integrated national statistics system as well as implementation of the government#s transparency policy based on a new freedom of public information legislation. C. Project Description [from section 3 of PCN] To achieve the proposed objectives, the project will be supported by a TAL in the amount of approximately USD$25 million to be implemented over a five-year period starting in 2010. The proposed project will comprise three main components: (i) strengthening of tax administration capacities; (ii) modernizing the government#s budgeting and financial management systems; and (iii) enhancing information systems and public sector transparency. Component 1: Strengthening of tax administration capacities This component will provide support to the Ministry of Finance in the implementation of a short-term tax collection package as well as developing its institutional capacities for a strengthened tax administration system in the future. The project will particularly focus its attention on overcoming existing weaknesses in each of the two collection agencies; the Internal Revenue Office (DGI) and the Customs Office (DGA) and will analyze and implement integration opportunities geared to strengthening their institutional capacity to control tax evasion and smuggling. The component will encompass three sub-components: Sub-component 1.1 # Support implementation of integrated tax collection procedures and systems: There are a number of integration and coordination opportunities to strengthen control and enforcement capacities for the two collection agencies. The implementation of a single tax- payer account, the development of automatic cross-reference procedures between data bases and information systems, the implementation of joint units to assess common data, and the use of joint control procedures are some of the actions to be supported under this part of the project. Sub-component 1.2 - Strengthening of the Internal Revenue Office: This sub-component will provide support for the strengthening of the DGI via the implementation of institutional development activities based on a strategic plan to be developed. Special attention will be paid to the strengthening of control procedures and systems by developing a specific control strategy, strengthening of the large tax-payers unit, implementation of case selection procedures and cross-referenced analysis, and the redesign of tax returns procedures. This sub-component will also provide support in the areas of human resource management, tax-payers services, and information technology. Sub-component 1.3 - Strengthening of the Customs Office: Similar to the above DGI sub- component, the project will strengthen institutional capacities in the DGA via the implementation of a strategic plan to be developed jointly with the DGI and the Ministry of Finance. Again, attention to control procedures will include, among others, the strengthening and automation of the existing risk management procedures, the adoption of non-intrusive equipment to strengthen and facilitate control at the border#s offices, implementation of electronic transit tracking systems of containers, and selectivity procedures to optimize the use of ex-ante and ex- post documentary and physical control mechanisms. This sub-component will also strengthen other institutional management areas including human resource management, internal auditing including anti-corruption, and information technology. Page 3 Component 2: Modernizing the Government#s budgeting and financial management systems This component will help the Ministry of Finance in reviewing and further modernizing existing budgeting and financial management systems including the public procurement system. The aim of this work is to modernize the Financial Management system known as SAFI and to advance with the full implementation of a multi-annual framework for the budget and the gradual adoption of performance-based budgeting in the Central Government, the implementation of the single treasury account, and the adoption of accounting international standards. This component will also provide support to the review, updating and improvement of the legal framework and supporting instruments for the public procurement system known as COMPRASAL. The component will be comprised of two sub-components: Sub-component 2.1 # Strengthening the functionality of the SAFI and upgrading SAFI#s technological platform: This sub-component will support the improved transparency and efficiency of PFM. It will finance the definition and development of the new version of the SAFI which will include the new functionalities mentioned above and will provide easy and efficient access to users via Internet. The new version of the system will support integrated procedures for the multi-annual and results-based budgeting, automatic implementation of the single treasury account including electronic payments, and updating of accounting classifications to align it with international standards. The new technological platform will not only facilitate and optimize automatic procedures and secure full integration and consistency of financial information but will likewise generate operational savings with the use of modern technology. Sub-component 2.2 # Modernizing the legal framework underlying public procurement and enhancing the COMPRASAL procurement system: This sub-component will provide technical assistance to the Government to review and adjust the existing public procurement legal framework as well as to complete the development of the COMPRASAL procurement platform including the design, implementation and full deployment of an online electronic procurement module geared to facilitating procurement procedures as well as securing transparency and eliminating manual and discretional transactions. The sub-component will also support specific activities underlying the design and implementation of procurement policies for the entire government in order to increase its overall efficiency and generate savings by implementing aggregated and large-scale procurement processes for common goods and services, as well as other #quick-gains# initiatives. Component 3: Enhancing information systems and public sector transparency This component will support Government efforts to modernize the institutional framework and to develop instruments to implement an upgraded statistical national system and a new public sector transparency initiative based on the approval of a freedom of public information law. The component will provide technical support to the Technical Secretariat of the Presidency (Secretaría Técnica de la Presidencia, STP) and the Special Secretariat for Strategic Affairs to facilitate implementation of a pilot project at the Ministry of Public Works. The sub-components include: Page 4 Sub-component 3.1 # Supporting the implementation of a new statistical information system and institutional framework: This subcomponent will support the Government#s effort to create an autonomous entity the Instituto Nacional de Estadística (INE) that will centralize the generation and dissemination of statistical and geo-referenced data and provide quality and credible socio economic data. As a first step, the project will support the creation of the Statistics and Geo-Spatial Information Systems (Sistema de Información Geoespacial y Estadística SIGE) conceived as a group of policies, norms, standards, technologies and statistical and geospatial information variables produced by different institutions that will contribute to harmonize the production, use and access of this information and support policy decision making. This support will include investment in a new technological platform, training of staff, review of the current legal framework and an updated national statistics strategy. Sub-component 3.2 # Strengthening the National Monitoring and Evaluation system and introducing a Performance-based Budgeting: This sub-component will help generating and promoting the use of performance information of decision makers to increase public expenditure management that will impact the quality of public expenditures. To this end, the component will support: the M&E functions of the STP and the introduction of the programmatic classification in the NDP, strengthen the design of public programs, carrying out training of key staff across ministries in program design, and support the institutionalization of evaluations to be led by STP. Sub-component 3.3 # Supporting the implementation of the Freedom of Information Law: This sub-component will provide technical support to the new Under-Secretary of Transparency for the revision and consultation of the access to public information legislation and will also support the implementation of the law. To this end, the project will support the development of specific procedures and mechanisms to facilitate and guarantee timely response standards to guarantee information accessibility. The sub-component will also underpin the overall assessment and develop/strengthen the capacities in public sector agencies to fulfill requirements under the law.. Finally, the sub-component will provide technical assistance to set up a Complaints Office at the Transparency Office on the basis of international experience in this field. Sub-component 3.4 # Transparency pilot at the Ministry of Public Works: This sub-component will serve as a practical case to test and validate the procedures and instruments to be developed by the project. Specifically, this pilot will emphasize implementation of new public procurement procedures as well as transparency related activities. The Ministry of Public Works (Ministerio de Obras Publicas) was selected as pilot agency not only due to the specific weight procurement represents in its business cycle but also given the strong commitment demonstrated by new authorities to make transparency one of the flagship initiatives for this administration. D. Project location (if known) The project will be implemented by the Ministry of Finance (Components 1 & 2) and the Technical Secretariat of the Presidency (Component 3). Activities will take place in Central Government agencies located in the capital city of San Salvador. Ministerio de Hacienda de El Salvador Boulevard de los Héroes #1231, San Salvador, El Salvador Page 5 Secretaria Técnica de la Presidencia de la Republica Casa Presidencial, San Salvador, El Salvador E. Borrower’s Institutional Capacity for Safeguard Policies [from PCN] Not applicable F. Environmental and Social Safeguards Specialists Mr Reidar Kvam (LCSDE) II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered Yes No TBD 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 Environmental Category: C - Not Required III. SAFEGUARD PREPARATION PLAN A. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared: 09/30/2009 B. For simple projects that will not require a QER, the target date for preparing the PAD-stage ISDS: 09/30/2009 C. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing 1 should be specified in the PAD-stage ISDS. Not applicable. 1 Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons. Page 6 IV. APPROVALS Signed and submitted by: Task Team Leader: Mr Alberto Leyton 09/04/2009 Approved by: Regional Safeguards Coordinator: Mr Reidar Kvam 09/09/2009 Comments: Sector Manager: Mr Nicholas Paul Manning 09/04/2009 Comments: