Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) LATIN AMERICA AND CARIBBEAN | Panama | Governance Global Practice | IBRD/IDA | Technical Assistance Loan | FY 2011 | Seq No: 9 | ARCHIVED on 22-Mar-2016 | ISR22922 | Implementing Agencies: Key Dates Key Project Dates Bank Approval Date:03-Mar-2011 Effectiveness Date:07-Mar-2012 Planned Mid Term Review Date:21-Nov-2014 Actual Mid-Term Review Date:15-Sep-2014 Original Closing Date:30-Sep-2016 Revised Closing Date:31-Aug-2018 Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of the Project is to assist public agencies of the Borrower in producing, using and disseminating timely and quality performance information, thereby allowing a more efficient, transparent and accountable use of the Borrower#s public budget funds. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Component/Part 1: Developing capacities for results-based planning, budget management and evaluation:(Cost $4.64 M) Component/Part 2: Managing Public Resource Information Efficiently:(Cost $36.91 M) Component/Part 3: Strengthening public procurement and contracting:(Cost $12.95 M) Component/Part 4: Supporting Project Management Capacities:(Cost $0.50 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Unsatisfactory  Moderately Unsatisfactory Overall Implementation Progress (IP)  Moderately Unsatisfactory  Moderately Unsatisfactory Overall Risk Rating  --  Substantial 3/22/2016 Page 1 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) Implementation Status and Key Decisions The project was restructured through Level II restructuring in October 2015, the First Amenment to Loan Agreement was confirmed by the Minister on November 24, 2015, and endorsed by the Comptroller General on December 30, 2015. The restructuring became effective, according to the National legislation on December 30, 2015. The Ministry of Economy and Finance (MEF), in accordance with the First Amendment, has changed the implementing arrangements, by strengthening the role of the DAP in project coordination and fiduciary management, and reflected the new arrangements in the revised Project Operational Manual and the revised Tri-partite Institutional Agreement. The procurement plan was updated (in SEPA) to reflect new activities and remove the cancelled activities. The Directorate of Projects Administration of MEF (DAP) proceeded to open two new accounts i the name of MEF for the loan and government contribution funds that finance activities under component 3, implemented by General Contracting Agency (Dirección General de Contrataciones Públicas, DGCP). The most important implementation results were achieved under Component 2 with the implementation of the financial management information system - ISTMO. ISTMO was extended in January 2016 to eight new institutions, thus increasing the total number of central government entities that use ISTMO to 19 (80% of the central government institutions), leaving the remaining 4 to be integrated to ISTMO in 2016. In parallel to transitioning to ISTMO, the accounts of these institutions were consolidated and transferred to the Treasury Single Account (CUT, la Cuenta Unica de Tesoro). The DGCP has conducted a market research to make evaluation of the available market packages to support public procurement and estimate the range of costs for implementing of a package solution as opposed to the in-house upgrade of PanamaCompra 2. The DGCP prepared a cost-benefit analysis of two alternative options (commercial off-the-shelf solution and in-house development) and made a decision to opt for a commercial package solution. The DGCP is working on finalizing the bidding documents in order to launch a procurement process. The restructured project includes activities related to development of IT applications for management of key functions of MEF, CGR, and DGCP. The Bank ICT specilaist has been providing support to implementing agencies through reviewing and commenting drafts of TOR and bidding documents on (i) public investment system SINIP, (ii) internal document administration in CGR, (iii) an application for Global Positioning System for INEC. The first two are still in the phase of preparation of procurement documents, while the latter has been announced but resulted in inconclusive competition and shall be re-advertised. Similarly, the project will re-advertise the activities related to piloting of program budgeting in Health and Education sector, Methodology for external auditing (financial, compliance and performance) for CGR, and the strategy for implementation of IPSAS accounting standards. Procurement for consultancy to implement project activities under all components has been slow. Multiple iterations in preparation of procurement documents, slow evaluation and adjudication process, coupled with ex ante review of the contract by the CGR add up to a process that takes on average more than 7 months, even for post review contracts. This contributes to the slow project implementation and disbursement. It is hoped that the agreement between MEF and CGR will facilitate a quicker prior review of contracts by CGR thus shortening the period of mobilization of consultants following their selection. Certain improvements in financial management have been achieved with MEF submitting its Interim Financial Reports on time (for the second semester of 2015), and accompanied by the Monitoring and Evaluation Report prepared by DAP. However, the delay with opening an account for DGCP under DAP administration has been slow, which impacted timeliness of payments under component 3. Additional effort is required to document the acquisition and account for the subsequent partial perishing of goods (mostly IT equipment) for DGCP in 2013 in the office fire. This would address some of the questions raised by the previous project audits. Overall, government efforts to re-envigorate the implementation after project restructuring have been positive. Yet, DAP and all entities need to continue working in line with the annual plan to overcome delays and work on delivering results. 3/22/2016 Page 2 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) 3/22/2016 Page 3 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) 3/22/2016 Page 4 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) 3/22/2016 Page 5 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  --  Substantial Macroeconomic  --  --  Low Sector Strategies and Policies  --  --  Moderate Technical Design of Project or Program  --  --  Substantial Institutional Capacity for Implementation and Sustainability  --  --  Substantial Fiduciary  --  --  Substantial Environment and Social  --  --  Low Stakeholders  --  --  Substantial Other  --  --  -- Overall  --  --  Substantial Results Project Development Objective Indicators PHINDPDOTBL  Performance orientation of the budget (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The budget document DIPRENA has DIPRENA is in the Program does not use program prepared TORs for the process of hiring budgeting Value classifications with very development of a consultants for the approach is limited financial normative and development of a introduced in 3/22/2016 Page 6 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) performance information methodological basis of normative and three pilot program budgeting and methodological basis of ministries for for development of program budgeting and the 2018 programmatic structure for development of budget year of budget in three pilot programmatic structure (budget for sectors: health, of budget in three pilot three ministries education and public sectors. are prepared works. using program classification and financial and non financial performance information Date 01-Jun-2011 17-Jul-2015 13-Mar-2016 29-Dec-2017 Comments A consultant to develop normative and methodological documents on program budgeting for DIPRENA was selected and contract signed by MEF. Prior to initiating the activities, the Contract is to be reviewed by the CGR and the instruction to proceed is to be issued by MEF. The hiring process started on 17 of April of 2015. Bank issued No objection to the selection of consultant on October 2, 2015. Other consultancies to support the piloting of program budgeting in sectors (transport and communications, health and education) have similarly been processed for several months. The selected consultants for education and health have taken other assignments in other international projects, so MEF had to issue a new invitation for expression of interest. The decision was made not to extend contract award to the second best consultant, as it lacked specific experience necessary for the assignment. Thus, the long wait for hiring a consultancy resulted in delays and postponements with the initiation of activities. It is expected that the consultant for DIPRENA will start working in April, following the refrendo by CGR. PHINDPDOTBL  Quality of financial information (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 3/22/2016 Page 7 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) In January 2016 eight new central government entities have been The The Accounting integrated to ISTMO, government Manual has been remaining four prepares finalized. The Treasury institutions will be through ISTMO Single Account is covered by ISTMO in and publishes progressively being the course of 2016. The within 6 months implemented. The indicator of of the end of Financial reports do not introduction of the implementation at the the fiscal year provide complete International Public central level stands at consolidated information on government Sector Accounting 84% (21 institution of financial Value revenue and expenditures Standards (IPSAS) 25). The TSA (CUT) is statements of thus impeding the was approved. 13 adding new entities to the Central monitoring of budget central government the Treasury Single Government execution entities are using account in parallel to that include ISTMO for budget their integration to disclosure of execution, the ISTMO. The consultancy adherence to remaining are for implementation accounting scheduled for inclusion IPSAS is to be re- standards as of January 2016 advertise due to the low (either IPSAS response of consultants or National). to the first invitation to expression of interest Date 30-Aug-2013 17-Jul-2015 13-Mar-2016 30-Jun-2018 Comments Additional eight new institutions were added in January 2016. The total number of entities that use ISTMO is 21 out of 25, or 84% of the total central entities. Delays in integrating these entities compared to the original plan are explained by the considerable challenges with consolidation and clean-up of the multiple institutional accounts some of which had reconciliation problems with budget execution, accounting and Comptroller's records, given the past budget execution practices that led to generation of budget execution records, when actually transfers were made to institutional accounts but no payments made. The system of CGR ex ante controls often were delayed, which led to payments being made with some 120 days following the submission of invoices. The benefit of integration of accounts in CUT and ISTMO is that from now on forward, the system will be able to provide reliable information of the status of budget execution and financial accounts. The integration of the remaining entities shall coincide with the beginning of new quarter, to enable financial statistics to be consolidated on a quarterly basis. PHINDPDOTBL  Transparency in Public Procurement (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target DGCP has conducted a Government market research on the Limited functionality of the procurement availability and costing procurement system information DGCP has prepared of the commercial off- Panama Compra, lack of generated legal amendments for the-shelf (COTS) SW standard bidding through the the law #22 on public solutions for a Panama documents, lack of upgraded Value procurement and is Compra 3, The strategy competent personnel, and platform finalizing the bidding to implement COTS has the legal and normative Panama document for Panama been confirmed and framework do not ensure Compra 3 and Compra 3. approved by the DGCP. transparency in public disseminated It is finalizing the bidding procurement by DGCP semi- document for Panama annually Compra 3. 3/22/2016 Page 8 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) Date 17-Jul-2015 17-Jul-2015 01-Feb-2016 29-Jun-2018 Comments The DGCP initially was developing an approach to buy a commercial off-the-shelf (COTS) package for the upgrade of Panama Compra. Then they changed their view to the in-house development on the basis of the existing Panama Compra 2. However, further analysis of the acquisition of program source code and more detailed comparison of the functional needs and the existing system capabilities led the DGCP to revert their choice to the COTS solution. The Bank asked to provide functional, economic and implementation time estimation analysis to make a sound justification of the strategy for Panama Compra upgrade. Such analysis was conducted along with the market research of the available COTS options. The DGCP identified 6 vendors that provide software solutions for procurement systems that could be considered for replacement of PanamaCompra 2. Given the weak IT capacity in the DGCP, the solution to move ahead with the customised standard commercial software was accepted as the most optimal by DGCP and agreed by the MEF. The Bank team, as well finds the justification of acquiring COTS as appropriate in this case. The DGCP is working on finalizing the Standard Bidding Documents for Supply and Installation of Information Systems. Overall Comments The PDO indicators were streamlined and reduced from 5 to 3. The indicator on internal audit has been dropped, but the indicator on public procurement was consolidated into one. Intermediate Results Indicators PHINDIRITBL  Intermediate Result indicator 1.1: Budget planning (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Procurement for the design of the normative and methodological Program basis on program budgeting is Consultancy on the use budgeting is in its final introduced in Program budgeting is not of logical framework for phases (ex ante review three sectors in used for alignment of defining program Value by the CGR). line with sector strategies with indicators has been Consultancies for pilot normative planned expenditures delivered training to ministries are re- framework government officials. advertised due to approved by unsuccessful first MEF attempt in hiring a fully qualified consultants. Date 01-Jun-2011 17-Jul-2015 13-Mar-2016 29-Dec-2017 3/22/2016 Page 9 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) PHINDIRITBL  Intermediate Result indicator 1.2: Evaluation of effectiveness of public policies (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The public policy effectiveness DPP is in the process of There is no methodology evaluation DPP is working on the hiring a consultancy for for evaluation of public methodology is TOR for methodology designing a Value programs and no developed and of evaluation of public methodology of systematic evaluations are has been used policies. evaluation of public carried out for analysis of policies. public policies in up to three sectors Date 01-Jun-2011 17-Jul-2015 13-Mar-2016 29-Dec-2017 PHINDIRITBL  Intermediate Result indicator 2.2: Institutional Coverage of the New ISTMO model (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 54.00 84.00 100.00 Date 01-Jun-2011 17-Jul-2015 13-Mar-2016 30-Aug-2018 Comments In January 2016, 21 of 25 central government institutions were using ISTMO for budget execution. Eight new ministries were connected to the system in the beginning of 2016. Their accounts were consolidated through TSA (CUT). The remaining four institutions will be connected in the course of 2016, as long as their accounts and inventories are cleaned and reconciled with the MEF financial records. The slow advancement of this activity is explained by the status of the institutional accounts that have not been reconciled in the past. PHINDIRITBL  Intermediate Result indicator 2.3: Functional Coverage of the New ISTMO model (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target By the end of the Project the The first phase of The first phase of new IFMS ISTMO covers the ISTMO covers the model will following modules: following modules: integrate The current SIAFPA does accounting and accounting and financial functionalities not include functionalities financial reporting, reporting, budget for budget for budget preparation and budget preparation and preparation and preparation, Value is not harmonized with execution, asset execution, asset accounting, national payroll, inventory, accounts inventory, accounts budget procurementand public payable, accounts payable, accounts execution, investment system. receivable, treasury, receivable, treasury, and treasury and and inter-institutional inter-institutional accounting; and agreements agreements it will have interfaces with national debt, 3/22/2016 Page 10 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) Central Bank, Panama Compra 3, and public investment module Date 01-Jun-2011 17-Jul-2015 13-Mar-2016 30-Aug-2018 Comments This phase of ISTMO implementation has an objective to integrate all the central government institutions and gave them access to the same functionality that was developed in phase 1. Interfaces with revenue administration DGI were added, as well as debt management function has been connected with the Treasury system. Once phase one is completed, the new functionality of ISTMO is considered. It is expected to include payroll and interface to the Panama Compra. The second phase envisages the extension of ISTMO to decentralized entities. PHINDIRITBL  Intermediate Result indicator 3.1.: Building capacity of public officials involved in public procurement (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 30.00 Date 01-Jun-2011 17-Jul-2015 13-Mar-2016 30-Aug-2018 PHINDIRITBL  Intermediate Result indicator 3.2: Standardization of processes (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 100.00 Date 01-Jun-2011 17-Jul-2015 13-Mar-2016 29-Jun-2018 PHINDIRITBL  Intermediate Result indicator 3.4.: Increased use of e-procurement platform (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 100.00 Date 01-Jun-2011 30-Jul-2015 30-Jul-2015 31-Jul-2018 3/22/2016 Page 11 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) Overall Comments Of the intermediate indicators selected for the project, the progress has been noted only for implementation of ISTMO. As a results of the work done in the second semester of 2015, 8 new central institutions have been integrated to ISTMO, most of these also are using the Treasury Single Account. The National Accounting Directorate (DNC) is working on extending the coverage of the whole central government by ISTMO. The slowness of the progress is explained by the voluminous work on consolidation and reconciliation of multiple institutional accounts into a TSA (CUT). The remaining sectors (Education and Health) due to a large number of service providers has a large number of institutional accounts that need to be revised and consolidated. There is urgency in launching the bidding process for Panama Compra 3, given the long procurement and system configuration process. Implementation delays were registered with the methodology of transition to IPSAS accounting system, development of a methodology and guides for external audits in line with ISSAI standards, initiation of development of program budgeting, development of the requirements for the SNIP, investment project management software, and development of a methodology for assessment of government programs. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P121492 IBRD-80160 Effective USD 55.00 55.00 0.00 24.19 30.81 44% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P121492 IBRD-80160 Effective 03-Mar-2011 26-Sep-2011 07-Mar-2012 30-Sep-2016 31-Aug-2018 Cumulative Disbursements 3/22/2016 Page 12 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Enhanced Public Sector Efficiency Technical Assistance Loan (P121492) Restructuring History Level 2 Approved on 09-Oct-2015 Related Project(s) There are no related projects. 3/22/2016 Page 13 of 13 Public Disclosure Copy