The World Bank Implementation Status & Results Report Integrated Public Financial Management Reform Project (P164783) Integrated Public Financial Management Reform Project (P164783) SOUTH ASIA | Nepal | Governance Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2018 | Seq No: 6 | ARCHIVED on 27-Jul-2021 | ISR47773 | Implementing Agencies: Nepal, Ministry of Finance Key Dates Key Project Dates Bank Approval Date: 27-Jun-2018 Effectiveness Date: 24-Aug-2018 Planned Mid Term Review Date: 30-Nov-2020 Actual Mid-Term Review Date: 05-Nov-2020 Original Closing Date: 30-Jul-2021 Revised Closing Date: 15-Jul-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) Strengthening the effectiveness of selected PFM institutions and procurement institutions, systems and procedures at the federal and subnational levels Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1: Strengthening Public Expenditure and Revenue Management in Federal and Subnational Governments:(Cost $7000000.00 M) Component 2: Strengthening the Office of the Auditor General:(Cost $4000000.00 M) Component 3: Improving Public Procurement:(Cost $4000000.00 M) Component 4: PFM Reform Management and Coordination:(Cost $3000000.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions 1. Significant implementation progress has been made for most of the implementing agencies despite the pandemic challenges resulting in disbursement rate of 44% (USD 3.96 million of USD 9 million) compared to 18.6% as of last ISR of October 2020. 2. The activities implemented by PEFA Secretariat, Financial Comptroller General Office, Office of the Auditor General and Ministry of Federal Affairs and General Administration are progressing well as reflected by the significantly improved disbursement rate. The procurement of activities for slow-moving agencies – National Planning Commission, Public Accounts Committee, Ministry of Finance and Institute of Chartered Accountants of Nepal have also picked up. The Public Procurement Monitoring Office has also initiated the process of contract extension and adjustment of ITC/ILO contract due to the pandemic challenges. 7/27/2021 Page 1 of 9 The World Bank Implementation Status & Results Report Integrated Public Financial Management Reform Project (P164783) 3. Although the government has committed to expedite implementation to ensure utilization of the remaining balance of USD 5.03 million by the Project closing of July 15, 2022, the continuing pandemic challenges may impact implementation progress. While the use of virtual mode will be further encouraged to the extent possible, there are activities that cannot be implemented due to pandemic situation, e.g. establishment of IT excellence centre for capacity building of the Office of the Auditor General is contingent upon completion of the new building, construction of which is severely impacted by the pandemic; pilots of the various developed guidelines requires physical presence due to required interactions with concerned stakeholders who cannot connect virtually; certain capacity building activities, particularly for subnational governments with connectivity issues cannot be conducted virtually etc. Also, as TFA07475 is closing July 30, 2021, it is unlikely that the expenditures incurred till that date will consume the entire remaining balance of USD 1.26 million under TFA07475. Therefore, there is also a need to extend TFA07475. 4. While all other pending activities under the Project are now progressing/ have been initiated despite the pandemic situation, the following main activities are facing challenges: 1. Payment to consultants for IFMIS assessment delayed despite submission of Diagnostic report as the contract requires minimum field presence, which was not possible due to the pandemic. While the government is trying to amend the contract, the COVID- infection of the consultants and their families is delaying the process 2. Development of Project Bank Sectoral Guidelines is yet to be initiated due to lack of National Planning Commission's (NPC) decision on the procurement approach. Nevertheless, NPC has emphasized on retaining the activity given its importance and committed to decide on the approach and start procurement by August 31, 2021. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance High Substantial High Macroeconomic Moderate Substantial Substantial Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Substantial Substantial Substantial Institutional Capacity for Implementation and Substantial Substantial Substantial Sustainability Fiduciary Substantial Substantial Substantial Environment and Social Low Low Low Stakeholders Substantial Substantial Substantial Other -- -- -- Overall Substantial Substantial Substantial Results PDO Indicators by Objectives / Outcomes Strengthening the effectiveness of selected PFM and procurement institutions, systems and procedures IN01024808 7/27/2021 Page 2 of 9 The World Bank Implementation Status & Results Report Integrated Public Financial Management Reform Project (P164783) ►Contracts awarded within the initial bid validity period by 5 key sector agencies and selected Sub National Governments (SNGs) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 30.00 30.00 30.00 70.00 Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 IN01024809 ►Improved aggregate capital budget out-turns at the federal level (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 64.00 64.00 64.00 75.00 Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 IN01024810 ►Comprehensive accounting and reporting procedures in place in Federal and SNGs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target (a) NPSAS based annual financial statements for federal Consolidated annual Consolidated annual level prepared within 9 (a) Consolidated annual financial statements are financial statements months from the end of financial statements are not prepared as per are not prepared as the financial year. (b) Value not prepared as per Nepal Public Sector per Nepal Public SNGs that NPSAS Accounting Standards Sector Accounting cumulatively manage (NPSAS) Standards (NPSAS) 50% of overall SNG budget have their own reporting procedural manual adopted. Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 IN01024896 ►Improved audit planning and quality management for audit of federal and sub-national entities. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Supreme Audit Supreme Audit Institutions (SAI) Institutions (SAI) SAI PMF (indicator 9) Performance Performance SAI PFM (indicator 9) Value Score 2 Management Framework Management Score 3 (PMF) (indicator 9) Score Framework (PMF) 2 (indicator 9) Score 2 Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 Overall Comments PDO The project development objective (PDO) is on track. However, the pandemic challenges have significantly impacted implementation progress, which may continue to impact further. This might result in some of the activities being delayed/ not being completed by the extended Project closing date of July 21, 2022. Due to delay in procurement capacity building, the indicator of contract awarded within the bid validity period may be impacted. Also, the indicator on capital budget out-turns at the federal level may be impacted due to the pandemic. There are no outstanding audit or financial management and procurement issues. The audit of FY 2019/20 has been received with an unqualified audit opinion with no major audit observation. 7/27/2021 Page 3 of 9 The World Bank Implementation Status & Results Report Integrated Public Financial Management Reform Project (P164783) Intermediate Results Indicators by Components Component 2. Strengthening the Office of the Auditor General Nepal IN01024900 ►Timely submission of financial audit reports of SNGs to appropriate authorities within legal time frame (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 60.00 Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 Submission time for audit reports not specified. The practice has been to submit by nine months of FY end. Accordingly, submission of FY 2017/18 audit reports were by nine months. However, submission of FY 2018/19 audit reports were impacted by COVID-19 situation. To address the challenges posed by the Comments: pandemic, NAMS system has been upgraded to enable paperless audit. The system can also cater to remote audit when the applicable systems such as CGAS, TSA etc. have been upgraded to allow for remote audits. IN01024903 ►Number of citizens mobilized and involved in audit process through Civil Society Organizations (CSOs) of which 50% are female. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 80.00 80.00 80.00 400.00 Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 266 people trained on CPA of which 182 (68%) were CSOs representatives in 5 CPA workshops and among them 44% were female. Draft CPA Guideline has been submitted by consultant, upon its Comments: finalization, citizen mobilization process will be mainstreamed. IN01024906 ►Effective audit follow-up (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Score of 0 SAI PMF Score of 0 SAI PMF Score of 0 SAI PMF Score of 2 SAI PMF Value dimension 7 (iii) dimension 7 (iii) dimension 7 (iii) dimension 7 (iii) Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 SAI Thailand is selected to conduct SAI PMF, which has been agreed to be completed by December 2020. The assessment will report on the said dimension. As per the current procedure, OAGN re- examines as per the auditees request as the Financial Procedure & Financial Accountability Act, 2019 Comments: requires Chief Accounting Officer or Responsible Person to settle the irregularities and request to OAGN for re-examination. Based on re-examination, OAGN notifies clearance of the same or otherwise within 15 days of request letter received Strengthening Public Expenditure and Revenue Management in Federal and Subnational Governments IN01024899 ►Credible Medium Term Expenditure Framework (MTEF) in place (Text, Custom) 7/27/2021 Page 4 of 9 The World Bank Implementation Status & Results Report Integrated Public Financial Management Reform Project (P164783) Baseline Actual (Previous) Actual (Current) End Target Basic guidelines for Basic guidelines for difference between MTEF at federal level MTEF at federal level in multi-year estimates Basic guidelines for in place. In addition a place. In addition a and subsequent Value MTEF at federal level in model planning model planning guideline setting of annual place. guideline for SNGs for SNGs have been budget ceilings are have been developed developed by NPC clearly explained. by NPC Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 The existing MTEF guidelines are being updated through consulting support for three tiers of the government. After updating the guidelines, an MTEF software system will be developed for linking with LMBIS and Project Bank. This will support in effective planning and budgeting process with clear linkages Comments: between Project Bank, MTEF and annual budget. Further, Project Bank sector guidelines will also be developed for effective project identification, appraisal, selection and prioritization IN01024902 ►Comprehensive internal control procedures adopted at SNGs. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target An overarching An overarching general general internal control internal control a) No coherent internal framework has been SNGs that framework has been control framework exists prepared by the cumulatively manage prepared by the FCGO. that ensures consistency FCGO. The next step 50% of overall SNG Value The next step is to in these practices across is to prepare individual budget have their own prepare individual the three tiers of guidelines for the 3 internal control manual guidelines for the 3 tiers Government; tiers within this adopted. within this framework. framework. Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Apr-2021 Internal Control Framework has been developed based on international standards. Based on this framework, internal control guidelines for federal and model guidelines for provincial and local Comments: governments are being prepared, for which inception report/ gap analysis report have been submitted. Based on these guidelines, training will be provided to SNGs to adopt the guidelines into their procedures. IN01024905 ►Integrated Financial Management Information System (IFMIS) developed and pilot tested (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Zero Pilots Zero pilots Zero pilots 2 pilot sites Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jul-2021 The Consulting firm -PricewaterhouseCoopers LLP, India - has provided Diagnostic report with proposed design of interim IFMIS solution with cost estimate, which is under review by the Government. The aim is Comments: develop the interim IFMIS solution by the Project closing to the extent possible. IN01024908 ►Enhancing participation and capacity of technical female staff in trainings/ workshops (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0% 0% 30% Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 7/27/2021 Page 5 of 9 The World Bank Implementation Status & Results Report Integrated Public Financial Management Reform Project (P164783) 17% female participation rate in trainings out of 3,743 trainings offered so far. For FY 2019/20, information Comments: on trainings could not be collected due to the pandemic. IN01024909 ►Unified budget guidelines including gender responsive budget proceses introduced to SNGs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target SNGs that No unified budget No unified budget No unified budget cumulatively manage guidelines including guidelines including guidelines including 50% of overall SNG Value gender responsive gender responsive gender responsive budget have adopted budget processes for budget processes for budget processes for the unified budgeting SNGs SNGs SNGs guidelines Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 Consultants are supporting MOF in developing simplified templates/ guidelines to mainstream GRB in SNGs based on the model guidelines issued by federal government. Based on the simplified templates/ Comments: guidelines, training will be provided to SNGs to ensure embedding GRB into their policies, procedures and practice. Public Procurement Improvement IN01024897 ►Complaints resolved following an effective complaints handling mechanism in electronic Government Procurement (e-GP) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 60.00 Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 Comments: No progress IN01024901 ►Basic procurement documents and guidelines developed for sub-national government (out of a master list of sub-national level documents to be prepared) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 80.00 Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 No progress Comments: IN01024904 ►Procuring entities of Key Sector Agencies (KSAs) with at least one certified procurement staff established (As a percentage of the total procuring entities) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.00 10.00 10.00 80.00 Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 Progress on ITC/ILO consultancy contract impacted due to the pandemic as trainings cannot be Comments: conducted. Potential of virtual trainings has not been agreed yet by PPMO. 7/27/2021 Page 6 of 9 The World Bank Implementation Status & Results Report Integrated Public Financial Management Reform Project (P164783) IN01024907 ►System generated performance reporting prepared for KSAs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Generation of Value 0.00 0.00 0.00 Performance Report for KSA's Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jan-2021 No progress Comments: PFM reform management and coordination IN01024898 ►A citizen's engagement strategy is prepared and implemented as per proposed sequence (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Strategy exists and Value No Strategy exists No Strategy exists No Strategy exists implemented Date 31-Jan-2018 27-Nov-2020 27-Nov-2020 30-Jun-2021 Proposals from consultants under evaluation. Upon contract award, consultant will support in development Comments: of strategy for citizen engagement in PFM for three tiers of government.. Overall Comments IR The following intermediate results indicators are on track - Medium Term Expenditure Framework, internal control procedures, gender- responsive budgeting, effective audit follow-up, procurement documents and guidelines, and procurement capacity building of key sector agencies The following indicators may not be achieved by the Project closing of July 22, 2021: - Piloting of IFMIS solution may not be possible due to pandemic challenges causing delays in finalization of the diagnostic report and roadmap development - 30% female participation in trainings/workshops proving difficult to achieve due to low rate of female staff in PFM - Timely submission of financial audits impacted by the pandemic - Number of citizens mobilization, especially female, also impacted by the pandemic The indicator on e-GP has been dropped with cancellation of the activity for the same through March 2021 restructuring. Performance-Based Conditions Data on Financial Performance Disbursements (by loan) 7/27/2021 Page 7 of 9 The World Bank Implementation Status & Results Report Integrated Public Financial Management Reform Project (P164783) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P164783 TF-A7474 Effective USD 10.20 6.12 4.08 2.34 3.78 38% P164783 TF-A7475 Effective USD 4.80 2.88 1.92 1.62 1.26 56% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P164783 TF-A7474 Effective 28-Jun-2018 24-Aug-2018 24-Aug-2018 30-Jul-2021 15-Jul-2022 P164783 TF-A7475 Effective 28-Jun-2018 24-Aug-2018 24-Aug-2018 30-Jul-2021 30-Jul-2021 Cumulative Disbursements PBC Disbursement Achievement Disbursed amount in Disbursement % PBC ID PBC Type Description Coc PBC Amount Status Coc for PBC 7/27/2021 Page 8 of 9 The World Bank Implementation Status & Results Report Integrated Public Financial Management Reform Project (P164783) Restructuring History Level 2 Approved on 31-Mar-2021 Related Project(s) P172722-IPFMRP Additional Financing 7/27/2021 Page 9 of 9