IOCUMOMTS Amendment to Supplemental Letter No. 2 UKRAINE May 3, 2012 Interniational Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan No. 4882-UA (Public Finance Modernization Project) Amendment to Project Performance Indicators Letter Dear Sirs and Mesdames: We refer to our letter dated March 25, 2008 setting out the agreed Project performance indicators to be utilized by Ukraine (the Borrower) pursuant to the provisions of Section II.A paragraph I of Schedule 2 to the Loan Agreement for the abovementioned Project. We also refer to the understandings reached between representatives of the Bank and 'cials of the Borrower regarding changes to the performance indicators. The revised performance -di ators are set forth in the Attachment to this Letter and replace the indicators set out in our leiter (Su le ental Letter No. 2) dated March 25, 2008. er, UKRAINE By Authorized Representative Kolobov Yu. Attachment 1 Revised Project Development Outeme (PDO) and Intermediate Result (IR) iAiktaS UKRAINE: PUBLIC FINANCE MODERNIZATION PROJECT ject Development Objective (PDO): dekelopment objectiNe of the Project is to strengthen public financial management by improving operational efficiency and transparency. 'ised Project Development Objetive: de\clopment objectike of thc Pro ject is to strengthen public financial management by improving operational efliciency and transparency. DDropp d Unit of Cumulative Target Values** Data Source/ Responsibility )O Level Results Indicators* e Baseline Frequency for Data ) N= Ne% Measure YR I (2012) YR 2 (2013) YR 3 (2014) YR4 (2015) Methodology Collection R=Revised icator #1: R N/A Existing 2013 State 2014 State 2015 State 2016 State Annual Project MinistR of eased strategic alignment ofthe budget Budget and Budget and llidoos qnd Bdgt and -m-m - Fince get %kith the public polic% formulation Forecast for Forecast for Forecast for Forecast for reports rities. methodologie MTBF periods MTBF periods MTBF periods MTBF periods s are not conducivefor (2014-2015 (2015-2016 (2016-2017 (2017-2018 the use of RR) are based RR) are based RR) are based RR) are budgets as a on economic on economic on economic prepared by polic, and social and social and social using PFMS. instrument. development development development programs. and programs. and programs. and national target national target national target programs. programs. programs. cator #2: C 0o Decision- Establish the Progress in Progress in 20% reduction Twice Surveys and Ministry of iction of 20Wo in time required making baseline system svstem in average time during the their associated Finance :t necessar. information for processes are through a implementation implementation for accessing term of reports: One a delayed due specialized is monitored. is monitored. information by Project. establishing cgrial decisions through the t rgetd sre nMF >f an integrated management 0 to fragmented sur%ey in MoF. ke, decision- baseline. nformation platform. information. STSJ. and makers as another SFLU. measured by establishing follow-up outcome. surve. cator #3: R N/A Public Sector National Development Accounting National Annual Project Ministry of ased transparenc- and accounting is accounting of integrated module of accounting implementation Finance ilit, of public sector financial not compliant standards for PFMS based PFMS partially standards are in reports lingthrogh cmplance~~it %kith ISA or ting through compliance Nith ELi accession public sector on new% chart of (25%) use (via new ational accounting standards Ee sin, are fully accounts prepared with PFMS). flignment \\ith FU accession requirements. eloped and ne unied iirements. approved. (CoA). CoA. INTERMEDIATE RESULTS rmediate Result (Part One): ngthening Institutional Capacity and Operational FffectiNeness ised Intermediate Result (Part One): ne) IInk-diatic remu/1 indi, 1tor #1i: D Inm ICa I)11 wVnllancc 111,[No ,rmediate result indicator #1: N # of local Program The P FM is The PTM is Budget Budget Annual Project Ministry of local budgets are based on budgets budgeting at introduced in introduced at preparation preparation implementation Finance m t n,d mnthod)tMI dns ant local budget some local local le%els. for all 692 for all 692 renorts celNant budgetar\ program programs lexel is optional authorities including local budgets local budgets sports are managed with the O (pilot impl). (up to 346 local councils is based on is based on PFMS. local budgets: (up to 692 PTM (about PTM. about 10,000 local budgets: 20.000 budget supported by budget about 20.000 programs). PFMS (about programs) programs) 20.000 prog). 'rmediate result indicator #2: R Frequency Summary State Budget Detailed State Detailed State State budget Annual Project Ministry of lget data and policy and proposed execution Budget Budget execution implementation Finance: Imptions published in greater regularity budget and performance execution execution performance reports STSU il on the MoF web site. of w\eb budget is published performance performance is published reports execution on the MoF is published is published in detail from published on \\eb site (monthly). (monthly). PFMS Internet. (monthly). database (monthly). R N/A Accounting The Changes to Completion of PFMS is Annual Project Ministry of 'rmediate result indicator #3: and financial development legislation to amendments to operational implementation Finance: Iget execution: reports not and approval implement legislation for based on new reports sTsu roxing the sy stem of PFM b\ unified in of all 19 nat'l PFMS for aligning national ins ofmodernizing accounting public sector, accounting accounting and accounting & accounting and em and reporting standards in not aligned standards for reporting in reporting with reporting lic sector. with the ]AS. public sector. line with nat'l nat'l standards. standards. standards. *,,'d ,,~ d, 1~ ) ic un.m tm \nntual P'rictt \ini1lt of r inedit r'%u/n Inl a 4:\ LI rmedia!eo resh -.ti -. 44. 1 N I ii 1i) .t-,A or1 * N4 orkshons *.4 w%orkshons * 4 workshon * w n I . . I ...I d ... . ( I I - . -- - 1 . - , - - I - 1 - F. S YS1 and SHlU staff and stafT not fanilai for Ms (500 for SUs (500 for SUs (500 for Sncs (200 e: n unt ( trained .with new PFM participants) participants) participants) participants) implementation Finance: legislation & process changes. legislation. * [raining of * Training of * Training of * Training of reports STSU: SFlU 400 staff 400 staff 400 staff 200 staff ermediate Result (Part Two): ,elopment of an Integrated Public Financial Management Sy stem (PFMS) vised Intermediate Result (Part Two): nie) ?rmediate result indicator #1: R N/A Current PFM PFMS Complete PFMS rollout PFMS go-live Annual Project Ministry of slie Financial Management information rebidding PFMS and in Jan 2015. implementation Finance: tern (PFMS) established and systems are completed application operational reports STlSU; SFlU ctioning. fragmented and ICB-3 software acceptance. contract development signed. and testing: :--~Is U- equipment. ?rmediate result indicator #2: R # of None currentiv Prepare * Workshops * Workshops PFMS Annual Project Ministry of F. STU. and KRI stalfitrained stalT trained. PFMS for 3.000 for 6.000 training and implementation Finance: FMS functionality and training and PFMS users PFMS users change mgmt reports STSU: SFlU rations. change mgmt * Training of * Training of completion program for 50 ICT 50 ICT report all users. specialist specialist prepared. 'inte.daeresult/I italar I3 ) banke aIn 'rmediate result indicator #3: R Currently Data Data Data Data Annual Project Ministry of eh and comprehensike fiscal financial %%arehouse w%arehouse %%arehouse trial w%arehouse is implementation Finance: agement reports produced from reports are reporting analysis and operations start tully reports STSIU: SFIU 4S data N%arehouse. fragmented. standards reporting tools with pilot test operational as a defined as a de% eloped and data. part of ED part of ICB-3 tested. integrated documents. PFMS platform for online queries: and timely. comprehensive .__I_reporting.