This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. OFFICIAL USE ONLY IDA/R2007-0100/1 May 3, 2007 Streamlined Procedure For meeting of Board: Tuesday, May 22, 2007 FROM: Vice President and Corporate Secretary Madagascar - Restructuring and Additional Financing of the Governance and Institutional Development Project Project Paper Attached is the Project Paper regarding a proposed Restructuring and Additional Financing of the Governance and Institutional Development Project. (IDA/R2007-0100). This project will be taken up at a meeting of the Executive Directors on Tuesday, May 22, 2007 under the Streamlined Procedure. Distribution : Executive Directors and Alternates President Bank Group Senior Management Vice Presidents, Bank, IFC and MIGA Directors and Department Heads, Bank, IFC and MIGA Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contentsmay not otherwise be disclosed without World Bank Group authorization.
OFFICIAL USE ONLYIDA/R2007-0100/1
May 3, 2007
Streamlined ProcedureFor meeting of
Board: Tuesday, May 22, 2007
FROM: Vice President and Corporate Secretary
Madagascar - Restructuring and Additional Financing of the Governance and Institutional Development Project
Project Paper
Attached is the Project Paper regarding a proposed Restructuring and Additional Financing of the Governance and Institutional Development Project. (IDA/R2007-0100). This project will be taken up at a meeting of the Executive Directors on Tuesday, May 22, 2007 under the Streamlined Procedure.
Distribution:
Executive Directors and AlternatesPresidentBank Group Senior ManagementVice Presidents, Bank, IFC and MIGADirectors and Department Heads, Bank, IFC and MIGA
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Document o f The World Bank
FOR OFFICIAL USE ONLY
Report No: 39614 - MG
PROJECT PAPER
ON A
PROPOSED RESTRUCTURING OF THE
GOVERNANCE AND INSTITUTIONAL DEVELOPMENT PROJECT (CREDIT 3829-MAG)
AND ON A PROPOSED ADDITIONAL FINANCING (CREDIT 3829-1-MAG)
IN THE AMOUNT OF SDR 3.4 MILLION (US$5.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF MADAGASCAR
April 25,2007
Public Sector Reform and Capacity Building Unit (AFTPR) Africa Country Cluster 1 (AFCS1) Africa Region
This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS
BdG CAS CDE C G CNFA cos CQ CR ENAM ENMG
FM GDLN G o M I C ICB IDA IGE IGF
MAP M&E NLIM NSO PDO PEFA PGDI PREA
PRSP QCBS SBD SDR SIGFP
SOE sss UNDP
Currency Unit = Malagasy Ariary (MGA) US$1 = 1,848.50 MGA
US$1.53 = SDR 1
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS
Bureau de Gestion (Management office) Country Assistance Strategy ContrGle des Dkpenses Engage'es (Office Responsible for Control o f Budget Execution) Coordonnateur Gknkral(Genera1 Coordinator) Centre National de Formation Administrative (National Administrative Training Center) Conseil d 'Orientation et de Suivi (Training and Monitoring Council) Consultants' Qualification Comitk Restreint (Restricted Committee) Ecole Nationale de 1 'Administration Malgache (National School o f Administration) Ecole Nationale de la Magistrature et des Grefes (National School o f Magistrates and Court Clerks) Financial Management Global Development Learning Center Government o f Madagascar Individual Consultants International Competitive Bidding International Development Association Inspection Gknkrale de 1 'Etat (Internal Audit Inspectorate attached to Office o f President) Inspection Gknkrale des Finances (Internal Audit Inspectorate attached to Ministry of Economy, Finance and Budget)) Madagascar Action Plan Monitoring and Evaluation National Leadership Institute o f Madagascar National Statistics Office Project Development Objective Public Expenditure and Financial Accountability Assessment Governance and Institutional Development Project Programme de Rkformes pour 1 'Eficacitk de 1 'Administration (Reform Program for the Efficiency o f the Administration) Poverty Reduction Strategy Paper Quality and Cost Based Selection Standard Bidding Documents Special Drawing Rights Systgme Intkgrk de Gestion des Finances Publiques (Integrated Financial Management Information System) Statement o f Expenses Single Source United Nations Development Program
FOR OFFICIAL USE ONLY
MADAGASCAR
I . ' I1 .
I11 . Iv . V . V I . VI1 . VI11 . Ix .
RESTRUCTURING OF THE GOVERNANCE AND INSTITUTIONAL DEVELOPMENT PROJECT (CREDIT 3829-MAG)
AND
ADDITIONAL FINANCING (CREDIT 3829-1-MAG)
Table of Contents
INTRODUCTORY STATEMENT .............................................................................. 1 BACKGROUND AND RATIONALE FOR RESTRUCTURING AND ADDITIONAL FINANCING ....................................................................................... 1 PROPOSED CHANGES .............................................................................................. 3 CONSISTENCY WITH THE CAS AND SAFEGUARDS ......................................... 6 ECONOMIC ANALYSIS ............................................................................................ 6 APPRAISAL OF ADDITIONAL FINANCING .......................................................... 6 EXPECTED OUTCOMES ........................................................................................... 7 BENEFITS AND RISKS .............................................................................................. 7 FINANCIAL TERMS AND CONDITIONS FOR ADDITIONAL FINANCING ...... 8
List o f Annexes
Annex 1: Achievements o f the Overall Program ...................................................................... 9 Annex 2: Revised Project Description by Component ........................................................... 11 Annex 3: Revised Allocation of Credit proceeds ................................................................... 20
Box 1 : Achievements o f the PGDI Program ............................................................................ 9 Box 2: Overview Restructuring and Additional Financing ................................................... 11
List of Tables
Table 1 : Project Components by Financing Sources .............................................................. 19 Table 2: Revised Allocation o f Credit Proceeds (without additionalfinancin a) .................... 20 Table 3: Allocation o f Credit Proceeds for Additional Financing .......................................... 20
Table 5: Thresholds for Procurement Methods and Prior Review ........................................ 35 Table 4: Revised Financial Summary ..................................................................................... 21
This document has a restricted distribution and may be used by recipients only in the performance of their official duties . Its contents may not be otherwise disclosed without World Bank authorization .
i
Project Paper Data Sheet
Date: April 25,2007 Country: Madagascar Project Name: Governance and Institutional Development Project (PGDI) and Additional Financing Project ID : PO74448 and P105026 Recipient: Republic o f Madagascar Responsible agency: Office o f the President
-
Team Leader: Guenter Heidenhof Sector Manager: Helga Muller Country Director: Ritva Reinikka Environmental Category: C
- - P -
Revised estimated disbursements (Bank FY/US$m)
Bank policies? o Y e s * N o
Revised project development obj ectives/outcomes The development objective o f the Governance and Institutional Development Project (PGDI) and the additional financing i s to improve the efficiency and transparency o f government and public services in Madagascar in l ine wi th the Madagascar Action Plan (MAP) - by: (i) reforming the public finance system; (ii) strengthening capacity building and public sector service delivery; (iii) reinforcing the Rule o f Law and the fight against corruption, and (iv) supporting monitoring and evaluation and conducting key statistical surveys for M A P implementation. Does the scaled-up or restructured project trigger any new safeguard policies? N o
[ ] Loan [XI Credit [ ] Grant For Loans/Credits/Grants:
P
For Additional Financing
Total additional Bank financing (US$m.): Proposed terms: Standard Credit (IDA)
US$5 mi l l ion
Financing Plan (US$m.) Source Local Foreign Total
Recipient 3.5 0.5 4.0 IDA 24.0 13.67 37.67 Total 27.5 14.17 41.67
Deviation f i om the init ial amount due to exchange rate fluctuation between SDR and USD. 1
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I. . INTRODUCTORY, STATEMENT
1. This Project Paper seeks the approval o f the Executive Directors to restructure the Governance and Institutional Development Project (Credit 3829 MAG; P074448) and to provide an additional financing (Credit 3829-1-MAG, P105026) for the project in the amount o f SDR 3.4 mi l l ion (US$5 mi l l ion equivalent) for the Republic o f Madagascar.
2. The proposed restructuring would require a modification o f the project’s development objective and o f some key performance indicators. While the project’s performance to date has been satisfactory, i t i s now necessary to restructure the project to allow for the following: (i) adjust existing components based on the recommendations o f the midterm review; (ii) add a new component to strengthen the alignment with policy priorities o f the Government o f the Republic o f Madagascar; and (iii) reallocate the credit proceeds.
3. The proposed additional financing would help finance the costs associated with scaled-up activities that would enhance the development impact o f the project. In particular, i t would assist Government in strengthening the monitoring and evaluation framework for its new development strategy - the Madagascar Action Plan (MAP) - and would help conduct some key statistical surveys to support MAP implementation.
11. ADDITIONAL FINANCING
BACKGROUND AND RATIONALE FOR RESTRUCTURING AND
4. The Governance and Institutional Development Project (PGDI) was approved by the Board on October 22, 2003, and declared effective on March 3, 2004. The project i s scheduled to close on June 30, 2009. The project aims at supporting governance and institutional development reforms in the context o f the Government’s development strategy- init ially the PRSP (2003-06) and now the Madagascar Action Plan (MAP) which provides the strategic framework for all development activities in the country for the 2007-12 period. This program i s also supported by other development partners including the European Commission, African Development Bank, France, Norway, Germany, M C A and UNDP. The IDA contribution i s a SDR 21.9 mi l l ion credit o f which SDR 14.95 mi l l ion (about 70% o f the original credit) has been disbursed by April 2007. The remaining funds are fully committed.
5. The initial Project Development Objective was to assist the Government o f Madagascar (GOM) in implementing i ts poverty reduction strategy which i s set out in the 2003 Poverty Reduction Strategy Paper (PRSP) by (i) rationalizing and modernizing budget and public expenditure management, (ii) improving accountability and transparency o f government operations, and (iii) strengthening the capacity o f public institutions to deal wi th complex change processes.
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6. The project has the fol lowing project components:
i. improvement o f transparency and economic governance through supporting a comprehensive reform o f the public finance system in Madagascar, mainly at the central level;
11. capacity building, and strengthening o f local training institutions which focuses o n institutional development and capacity building activities in selected government institutions such as the Ministry o f Finance and Budget, and the Ministry o f Justice; and establishment o f a project management system for the change process to ensure effective implementation o f the reforms.
..
... 111.
7. Since i ts inception, the project has consistently been rated “satisfactory” both with regard to implementation progress and to achieving the development objectives. I t has also met all relevant Wor ld Bank disbursement, procurement and fiduciary obligations. Achievements o f the project are summarized in Annex 1. They include: the deployment o f an integrated financial management system to improve transparency and accountability o f government operations, the strengthening o f internal and external controls, the design o f a new procedural and institutional framework for public procurement, change management support for the key decision-makers within government and comprehensive training and capacity building activities in the areas o f development planning, publ ic financial management and procurement; as we l l as the development o f a regulatory and institutional framework to improve governance and to fight corruption.
8. The project’s midterm review, conducted in 2006, confirmed the good implementation progress and the very high level o f Government ownership, f lexibi l i ty and effective partnership with the Bank. The review in particular commended the flexible and innovative approach o f the project which has allowed it to respond to Government’s needs and adapt to po l icy priorities as they arose. The review noted the need to better adapt the in i t ia l Project components to the pol icy priorities o f the Government and recommended a formal restructuring o f the Project to reflect these adjustments.
9. Given the project’s successful implementation experience to date, the Government has requested the Bank to scale-up activities with the goal o f enhancing the development impact o f the project. The Government has requested additional financing mainly to strengthen baseline data and the monitoring and evaluation framework for i t s new development strategy, the Madagascar Act ion Plan (MAP). The MAP was launched in November 2006 and i s the Government’s second-generation PRSP that lays out an ambitious development plan for 2007-2012. I t outlines the commitments, strategies and actions that are expected to ignite rapid growth and lead to the reduction o f poverty. The MAP recognizes the critical need for improving the country’s statistical base and for developing a comprehensive monitoring and evaluation (M&E) framework that will al low for effective implementation o f the strategy.
10. The project had supported the implementation o f the government’s ini t ial development strategy (PRSP) and provided some l imited funding for monitoring &
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evaluation activities - mainly training and capacity building. At the t ime o f project approval, more substantive funding for monitoring & evaluation was not considered as important as other institutional development needs. This situation changed significantly with the process of elaborating the MAP as i t became apparent that many o f the development areas targeted under the MAP lack reliable statistical data. In addition, there is n o consistent pol icy for monitoring & evaluation in place with a procedural and institutional framework flawed by unclear and often overlapping responsibilities. To address this issue, the Government intends to develop a consistent monitoring & evaluation framework to support the MAP’S implementation. It has identified the need to establish a reliable set o f social and economic data, to strengthen analytical and forecasting capabilities within the public administration and to prepare a National Strategy for Statistical Development.
11. The Government and the Bank agree that the project i s the best instrument to provide support in this regard because of: (i) i t s successful implementation track record to date; (ii) the obvious synergies between the project’s on-going activities and the new demands o f the MAP framework; and (iii) its cross-cutting and multi-sectoral nature that i s appropriate for the challenges o f a multi-dimensional monitoring & evaluation framework.
12. Due to the advanced disbursement and commitment status o f the project, and despite full rationalization and prioritization o f project activities conducted as part o f the project restructuring, the existing project resources are deemed insufficient to address the demand for additional support to the MAP. As a result, the Government has requested additional financing for an amount o f US$5 mil l ion.
111. PROPOSED CHANGES
13. Project development objective. The proposed changes will require a slight modification o f the project’s development objective to reflect the link to the new development strategy o f the Government. The modif ied PDO i s stated as follows: to improve the efficiency and transparency o f government and public services in Madagascar in l ine with the Madagascar Act ion Plan (MAP). Addit ional changes to the project design include: (i) the reorganization o f the existing components, and (ii) the addition o f new project components in l ine with the pol icy priorities o f the Government. A revised Project Description by Component i s provided in Annex 2, a revised allocation o f Credit Proceeds, i s provided in Annex 3; and the revised and updated Results Framework i s attached in Annex 4.
14. Adjustment of existing components. These adjustments will include:
(a) Reorganization of project components. T o better al ign the project to the priorities outlined in the MAP, the existing three project components would be reorganized into the fo l lowing four components: (i) reform o f the public finance system, (ii) capacity building and public sector service delivery, (iii) Rule o f L a w and fight against corruption, and (iv) program coordination. This reorganization would also acknowledge changes to some sub- components since the inception o f the project, in particular the strong emphasis o n leadership development and change management support as a cornerstone o f the capacity building agenda, as w e l l as the comprehensive support to strengthen public financial management and
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procurement in priority ministries (e.g. education, health, nutrition, transport, agriculture, and environment). Annex 3 provides more details about the revised allocation o f Credit Proceeds for the reorganized project components.
(b) Adding of new sub-components. Based on a comprehensive dialogue with the Government and other development partners, project funding has been provided for some activities that emerged during the implementation o f the project. While these activities are in line wi th the objective o f the project to provide assistance for the implementation o f the development strategy o f the Government, they are not explicitly mentioned in the init ial PAD. These activities include:
Increased revenue performance has become a top priority o f the Government. To achieve this, the Government has initiated a reform of the revenue agencies (customs and tax administrations). The project i s providing assistance to improve efficiency and effectiveness o f these administrations through procedural and institutional changes. Project funding i s focusing on modernizing operations, as well as on training and capacity building. This complements ongoing assistance by other development partners, in particular the IMF, France and the World Customs Union.
To address the significant demand in both public and private sectors for leadership development and change management, the Government established in late 2006 the “National Leadership Institute of Madagascar” (NLIM). The NLIM intends to complement technical training which i s provided by other local training institutions, in particular the “Ecole Nationale de l ’Administration Malgache, ENAM” and the “Centre National de Formation Administrative, CNFA” (both are supported by the project). The project has provided seed money to set up the NLIM and to develop i t s curricula and training program and further support i s envisaged for technical assistance, equipment and operating costs.
To strengthen implication of civil society in State affairs i s a key objective o f the MAP. Based on the Government’s request, the project has provided some funding to conduct a pilot citizens score card exercise for a few selected health centers. I t i s envisaged to use the experience from this pilot to enhance and further deepen participatory monitoring o f government activities. The project wi l l provide funding for these activities, mainly for technical assistance. This will complement activities by NGOs and other development partners.
15. Activities supported by additional financing. The additional financing would support the implementation o f activities which would scale-up the project’s impact and development effectiveness. I t would focus on two main areas (i) the development o f a consistent monitoring & evaluation framework to assist MAP implementation and (ii) financial support for key statistical surveys which are considered critical for the MAP. These activities would be summarized under one new project component (Component 4 in Annex 2) “Monitoring and Evaluation o f the MAP and Key Statistical Surveys”. This component has the following sub-components:
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Development o f a consistent monitoring & evaluation framework
This sub-component would focus on developing and implementing a consistent monitoring & evaluation strategy for the whole o f Government. A key element o f this strategy i s the National Strategy for Statistical Development which i s currently being prepared. This strategy wi l l include the development o f a revised regulatory and procedural framework for government statistics which would integrate and coordinate all relevant government activities. In addition, the institutional responsibilities o f the relevant government institutions (e.g. President’s Office, Prime Minister’s Office, Ministry o f Plan, Ministry o f Finance and Budget, Structural Adjustment Secretariat, and National Statistics Office) will need to be clarified. Project funding will provide technical assistance to address these issues; i t wi l l also help modernize the relevant institutions. Significant training and capacity building activities will complement these activities; they will focus on improving the operational efficiency o f the aforementioned key institutions and o f the sector ministries in the area o f monitoring & evaluation. This will include an upgrading o f the capacity o f local training institutions to design and deliver relevant training courses.
Key statistical surveys to support MAP implementation
This sub-component would assist the Government in conducting some key statistical surveys that are important for evaluating the progress o f M A P implementation:
As a top priority, the Government has identified the need to update i t s key economic and social data based on a new population census. The last census was completed in 1993; the economic, social, and administrative structure o f Madagascar has profoundly changed since then. As a consequence, many o f the existing baseline data i s outdated. The Government i s in the process o f soliciting support by development partners for the population census which i s estimated to cost about US$18 million. The project will support a complete cartographic survey o f Madagascar which i s a pre-requisite for the census and would already provide important information about the socio-economic changes in the country. Support will focus on consulting services and equipment; complementary funding for the cartographic survey will be provided by UNFPA and MCA.
Financing will also be provided for strengthening the capacity in the National Statistic Office to develop and implement additional statistical surveys which will provide important information for the implementation o f the Government strategy such as the External Trade Index, the Consumer Price Index, the Industrial Production Index, and the Index of Industrial, Energy and Mining Related Production.
16. Implementation arrangements. The implementation arrangements for the activities covered by the additional financing would be the same as for the ongoing project. The Office o f the President will continue to monitor and coordinate the implementation o f the project. Further details concerning oversight, technical implementation, financial management, monitoring and evaluation are summarized in Annex 5.
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17. Project funding will include the financing o f a limited number o f government s ta f fs salaries until December 3 1, 2007, mainly to recruit technical specialists recruited into the President’s Off ice and in the National Statistics Office. These expenditures are in l ine with the requirements o f recurrent cost financing parameters as specified in BP 6.00 o f April 2004 and the relevant Guidelines o f April 16, 2004. In v iew o f the limited flexibi l i ty in the recurrent budget, the Government i s not able to p i ck up the funding in 2007. Wor ld Bank support would allow the Government to gradually integrate these recurrent expenditures into subsequent budget years.
IV. CONSISTENCY WITH THE CAS AND SAFEGUARDS
18. The restructured project will better reflect the revised implementation priorities set forward by the Government in the MAP. These priorities are in l i ne with the new FY07-11 Country Assistance Strategy (CAS) for Madagascar which emphasizes the importance o f responsible governance and accountability as key systemic elements to create an enabling environment for growth and investment, as well as to improve services to the people. The CAS, which was presented to the Board in April 2007, also emphasizes the need to improve the statistical baseline and the monitoring & evaluation system o f the Government because o f the results-based nature o f both the CAS and the MAP and because o f the critical role o f monitoring & evaluation in ensuring successful implementation o f the MAP
19. The safeguards assessment @.e., environmental category ‘Cy) remains unchanged. The restructuring and additional financing proposal does not involve any exception to Bank policies.
V. ECONOMIC ANALYSIS
20. The economic analysis for the restructured project including the proposed additional financing remains unchanged; the project i s expected to have a significant impact o n the efficiency and effectiveness o f Government operations.
VI. APPRAISAL OF ADDITIONAL FINANCING
21. The activities supported by the additional financing are expected to have a positive fiscal impact. The development o f a new monitoring & evaluation system for the Government and the collection o f baseline data to assess the impact o f government policies will ultimately result in better use o f public resources. The project design corresponds to technical and financial standards and best practice that exist for such interventions. The procurement p lan for the restructured project has been reviewed and approved. The procurement and financial capacity o f the implementing agency has been subject to regular evaluations that have confirmed the overall good quality o f procurement and financial management arrangements.
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VII. EXPECTED OUTCOMES
22. The revised results matrix for the project i s summarized in Annex 4. Expected outcomes include: (i) an increase in the number o f indicators under the Public Expenditure and Financial Accountability Assessment (PEFA) which are rated ‘By and above; (ii) an increase in the percentage o f population reporting an improvement in service delivery for selected public services, and (iii) an improvement in the ranking o f Madagascar in the annual Transparency International Anti-Corruption Perception Index.
23. Some o f the key results indicators to measure implementation progress and success include: (i) an increase in the number o f public institutions executing their annual budgets through the new integrated financial management system; (ii) a significant number o f sector ministries with budget execution rates o f 90 percent and above; (iii) an increase in the percentage o f public procurement processes that are assessed as conforming to the new procurement regulations; (iv) a significant number o f sector ministries that meet the targets o f their annual work plans; (v) an increase in the number o f qualified trainers and staff in the areas o f development planning, public financial management, procurement, and monitoring & evaluation, and (vi) the reduction o f the proportion o f average expenditure paid by households for bribery for public services.
VIII. BENEFITS AND R I S K S
24. Some o f the key benefits o f the project include: (i) increased transparency and accountability o f government operations based on comprehensive public financial management and procurement reforms; (ii) transformation o f the annual budget into a management instrument that supports timely and accurate tracking o f implementation o f government policies; (iii) significantly enhanced government capacity in the areas o f development planning, public financial management, procurement, and monitoring & evaluation. The project also contributes to simplifying complex administrative proceedings and to rationalizing the institutional framework within which the public administration operates. I t builds on modem methodologies (e.g. leadership development, rapid results) to improve operational efficiency o f the administration.
25. The project benefits from a strong sense o f Government ownership and a close affiliation with the Government’s core agenda. Some adjustments are necessary to improve the consistency with the Government’s agenda. To-date, implementation has made good progress as evidenced by the achievements o f the project which are outlined in Annex 1. Implementation capacity o f the Government team has been regularly evaluated with positive results overall.
26. The Project carries substantial risk: its implementation poses a significant challenge for the Government because o f the complexity o f the changes supported by the project activities and the substantive capacity building needs to ensure success and sustainability o f the reforms. To mitigate existing r isks a comprehensive project monitoring and evaluation
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framework (see Annex 4) has been developed that wil l serve as a reference point for the implementation o f the reform program. In addition, independent quality assurance mechanisms have been put in place to evaluate reform implementation on a regular basis and to provide regular feedback about implementation bottlenecks.
IX. FINANCIAL TERMS AND CONDITIONS FOR ADDITIONAL FINANCING.
27. and conditions, repayable in 40 years, including a grace period o f 10 years.
Additional financing will be provided by an IDA Credit with standard financial te rms
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Annex 1: Achievements of the Overall Program
The achievements o f the Governance and Institutional Development Project (PGDI) are summarized below. The summary i s based o n the results o f the Mid-Term Review o f the program which was conducted in the second h a l f o f 2006. Current ISR rating i s ‘satisfactory’.
Box 1: Achievements of the PGDI Program2
Public finance reforms
Procurement reforms
Revenue agency reform
Fight against corruption
Strengthening of local training institutions
Major Outputs
Establishment of a reform coordination unit in the Ministry o f Finance and Budget Development of an integrated financial management system and deployment o f the system to all key treasuries Organizational restructuring of the Treasury Establishment of an internal control cadre for the Treasury (Brigade de TrCsor) Institutional strengthening of other internal and external control mechanisms (e.g. Inspection GCnCrale de l’Etat, Auditor General, Finance Commissions o f Parliament) Comprehensive training and capacity building support to institutionalize public finance reforms at the level of the sector ministries New procurement regulations approved by Parliament New procurement oversight authority established and operational Comprehensive training and capacity building to institutionalize procurement reforms at the sector ministries’ level Customs reform action plan developed and implemented. Plan focuses inter alia on modernizing customs operations and on addressing corruption in the customs service
Modern regulatory framework in the fight against corruption developed that includes anti-corruption framework legislation, asset declaration, strengthening of investigative authority, establishment o f a specialized investigative unit to prepare court proceedings etc. Anti-corruption Commission and Anti-corruption Bureau set up and operational Anti-corruption survey(s) conducted and published Capacity o f local training institutions significantly enhanced to deliver training in high priority areas such as development planning, public financial management and procurement National Leadership Institute established and operational Global Development Learning Center under construction to integrate Madagascar into the global distance learning network
Impact
More transparent, timely and accurate reporting and more effective internal control.
Increased capacity in public financial management
Madagascar procurement regulations are in line with international standards
Increased capacity in public procurement More transparent and efficient customs operations meeting revenue targets outlined in the annual budget Entirely new framework for the fight against corruption put in place which i s regarded as an efficient instrument to address corruption in the public sector
More high quality training can be organized and conducted locally
’ Assessment i s based on the results o f the mid-term review o f the Madagascar PGDI, July 28,2006
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’ Area Major Outputs
Leadership development and capacity building
Legal and judicial reforms
Impact
Leadership support for senior government level strengthened results focus and team orientation Establishment o f a reform unit in the President’s Office Development o f the Madagascar Action Plan Introduction and successful application o f the ‘rapid results methodology’ to improve cross-sectoral collaboration and to generate visible and tangible results in the short term (e.g. increased rice production, better primary health care and increased revenue generation at the commune level) Significant reduction o f the backlog o f cases at the lower courts (more than 35,000 case in Antananarivo and other jurisdictions) Development o f a statistical baseline to monitor court performance Establishment o f pilot jurisdictions which operate on the basis of transparent service standards Comprehensive training and capacity building for magistrates and court clerks
Improved consistency o f government policy and focus on results
New development strategy (Madagascar Action Plan) provides orientation and guidance to all government services
Accelerated proceedings at the level o f the lower courts
Monitoring & evaluation framework to oversee performance o f lower courts
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Annex 2: Revised Project Description by Component
The Governance and Institutional Development Project (PGDI) took of f in March 2004. The project aims at supporting governance and institutional reforms in the context o f the Government’s development strategy, which i s the Madagascar Action Plan (MAP). The elements o f the initial project as wel l as the restructuring proposal and the proposed additional financing are summarized in Box 2 below.
Box 2: Overview Restructuring and Additional Financing
Project Development Objective
Component 1
Ini t ial Project
To assist the Government o f Madagascar (GoM) in implementing the poverty reduction strategy which i s set out in the Poverty Reduction Strategy Paper (PRSP) Improvement of transparency and economic governance
(i) Development o f an integrated financial management system
(ii) Strengthening o f internal and external controls
(v) Public financial management and procurement in selected public institutions strengthened
Comments
Component was reorganized to integrate all reforms o f the public finance system.
New sub-component focuses on revenue agency refarms
Change management, coordination and monitoring & evaluation was transferred to component 2
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Component 3
Initial Project
strengthening of local training institutions
(i) Support for the Ministry o f Budget and Finance
(ii) Support for the Ministry o f Justice
(iii) Pilot service delivery improvement
(iv) Strengthening o f local training institutions
(v) Establishment o f a Distance Learning Center
I Project Management
ComponentQ ~
Component 5
Proposed Restructuring and Additional Financing
Capacity building and public sector service delivery
(i) Change management capacity and leadership quality improved
(ii) Management capacity in selected public institutions strengthened
(iii) Service delivery processes in selected public sector institutions improved
(iv) Local training institutions strengthened
(v) Global Development Learning Center established
Rule of Law and fight against corruption
(i) Quality of legal and judicial services in selected areas improved
(ii) Regulatory and institutional framework for the fight against corruption developed
(iii) Implication o f civil society in State affairs strengthened
(iv) (Finance) commissions of Parliament (National Assembly and Senate) strengthened
Monitoring & evaluation of the MAP and key statistical surveys
(i) Procedural and institutional framework for the implementation of the MAP strengthened (ii) Key statistical surveys to support MAP implementation conducted
Program Coordination
Comments
New component reflects
(i) strong emphasis of change management and leadership development as a key element o f the government’s capacity building agenda.
(ii) integrates financing o f the National Leadership Institute (NLIM)
(iii) integrates support for Distance Learning Center under the sub- component that deals with local training institutions
New component reflects emphasis of government’s development strategy on legal and judicial reforms, the fight against corruption, as well as more transparent government operations
New subcomponent focuses on support to civil society activities to monitor State affairs
New component for which additional financing i s requested
N o change to old project management component
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The revised components and main changes to the existing project are summarized below:
Project Component 1 - Reform o f Public Finance System (US$16 million)
The objective o f this component is to support in a holistic manner the reform o f the public finance system in Madagascar. The restructuring o f the component reflects the Government request to incorporate revenue agency reforms and comprehensive capacity building activities at the sector ministry level into the reform agenda. In addition, the component will support simplification o f budget preparation and execution procedures. The restructuring reflects implementation experience with public finance reforms since the inception o f the project, in particular the need to increase assistance for the institutionalization o f public finance reforms at the leve l o f the Malagasy public administration.
The component comprises the following sub-components:
a. Improvement of the budget preparation and execution processes (US$1 1 .O million). Support wi l l focus on improving transparency and timeliness o f the public preparation process, including the development o f a budget framework paper and the strengthening o f the relevant planning and preparation functions in the Ministry o f Finance. , The sub- component will continue to finance the development o f an integrated financial management system (SystBme Inte'gre' de Gestion des Finances Publiques, SIGFP) which will provide timely, accurate and up-to-date information on budget allocations, commitment and actual expenditures. A t the time o f negotiations o f the init ial project the development o f this system was estimated to cost US$25.0m. In the course o f the project implementation these cost estimates have been adjusted downwards to US$11 .Om (excluding capacity building). The savings from this sub-component have been used to support revenue agency reforms, and to substantially increase the assistance for change management, institutional development and capacity building.
b. Strengthening of internal and external control mechanisms (US$0.5 million). Project support will focus on improving the operational efficiency o f the Malagasy institutions that provide fiduciary oversight and control. These institutions include: the General Government Inspectorate (Inspection Gkne'rale de 1 'Etat - IGE), the Commitment Control (ContrGZe des De'penses Engage'es - CDE), the internal control cadre o f the Treasury (Brigade du Trksor), the Auditor General (Cour des Comptes) and the general internal control cadre (Inspection Ge'ne'rale des Finances - IGF).
c. Reform of the public procurement system with the objective to upgrade it to international standards (US$1.5 million). Continued support wi l l be provided for public procurement reforms, in particular the implementation o f the new procurement regulations have consolidated the fragmented legal, institutional and organizational framework for processing public procurement. To ensure that the new regulations will be adequately applied assistance wil l continue to be provided for the new Procurement Oversight Institution as well as for procurement entities in the sector ministries.
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d. Support for revenue agency reforms (US$1 .O mil l ion) (new sub-component). Increased revenue performance has become a top pr ior i ty o f the Government. To achieve this the Government has initiated a reform o f the revenue agencies (customs and tax administrations). The Project i s providing assistance to improve efficiency and effectiveness o f these administrations through procedural and institutional changes. Project funding will focus o n modernizing operations, as well as o n training and capacity building. This complements ongoing assistance by other development partners, in particular the IMF, France and the Wor ld Customs Union.
e. Related capacity building support for public sector institutions (US$2.0 million). To ensure the sustainability o f public financial management and procurement reforms, significant investments in capacity building (awareness creation, training and monitoring) at a l l relevant levels o f the public service will be provided to ensure that the changes to the regulatory and institutional framework will be adequately applied. Support wi l l focus o n training and capacity building activities for a l l key ministries, in particular health, education, public works, transport, environment and agriculture.
Funding under this component will be provided for goods and equipment, in particular in soft and hardware including the installation o f a wide-area network, consulting services including specialized training and project management; rehabilitation and maintenance o f offices; as well as for training and capacity building activities. .
Project Component 2 - Capacity building, and public sector service delivery (US$12.5 million)
The objective o f this component i s to support the change management and institutional development processes in the context o f the implementation o f the Government’s development strategy (Madagascar Act ion Plan, MAP). This will include leadership training and development for senior government officials to manage and implement far-reaching reforms. Support will also include an upgrading o f local training institutions as well as the establishment o f a Global Development Learning Center (GDLN) and o f a National Leadership Institute o f Madagascar (NLIM).
The component comprises the following sub-components:
Improvement o f change management capacity and leadership quality (US$6.0 million). The project will support change management processes in the context o f the implementation o’f the MAP, in particular in the President’s Office, in the Prime Minister’s Off ice and in pr ior i ty ministries such as education, health, transport and public works. Based o n the demand o f the Government, the support for this sub-component has been significantly scaled-up. Assistance will include leadership support (coaching and advising) o f senior government officials (President, Prime Minister, Ministers, Permanent Secretaries) by the Leadership Center o f Harvard University and the Kennedy School o f Government, in the United States. The program wil l focus o n key leadership challenges both at the institutional and individual levels to ensure consistency and to improve efficiency o f the core government team. Support will also include the pi lot ing o f innovative change management methodologies such as the “rapid results” approach to
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accelerate reform implementation and to assist Government to overcome existing procedural and institutional constraints that hamper the effective implementation o f the reform program.
Strengthening of management capacity in selected public institutions (US$2.0 million). To assure adequate implementation o f the development strategy o f the Government project support will be provided to selected public sector institutions (Ministries o f Finance, Education, Health, Transport, Public Works, Agriculture and Justice) to adequately manage and decisively implement the reforms outlined in the Madagascar Action Plan (MAP). This will include set up and support for dedicated technical teams in the targeted institutions that are tasked to monitor the reform activities. Specialized technical assistance wil l be provided in the area o f institutional and procedural development.
Improvement o f service delivery processes in selected public sector institutions (US$O.S million). Key objective i s to improve service delivery and produce visible results in the short term. Targeted services include customs, land titling, primary health and nutrition services and the lower courts. Support under this project will focus on developing service standards, on capacity building, workshops as well as beneficiary and impact assessments aimed at reforming selected public services.
Strengthening of local training institutions (US$3.0 million). Local training institutions play a major role in the provision o f capacity building required under this project. They wil l be enabled to deliver high-quality training and capacity building, in particular in the areas o f public finance management, general administration, monitoring & evaluation, legal and judicial reforms. Support wi l l be provided to the following institutions:
> National Leadership Institute of Madagascar (NLIM) (new element of the sub- component). To address the significant demand in both public and private sectors for leadership development and change management the Government established in late 2006 the NLIM. The institute intends to complement technical training which i s provided by other local training institutions, in particular the “Ecole Nationale de 1 ’Administration Malgache (ENAM) and the Centre National de Formation Administrative (CNFA), both are supported by the Project. The project has provided seed money to set up the institute and to develop i t s curricula and training program. Further support i s envisaged for technical assistance, equipment and operating costs o f NLIM.
> National School o f Administration (Ecole Nationale de Z’Administration Malgache, ENAM). World Bank support has been provided for the following areas: (i) review and modernization o f curricula and training materials; (ii) organizational restructuring o f the school to modernize school administration and improve operational efficiency.
P National Center for Administrative Training (Centre National de Formation Administrative, CNFA). World Bank support i s focusing on the development o f
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new curricula and updated training material, on the training o f professional staff, on some equipment to increase the capacity o f the center and modernize i t s training facilities, and o n providing h n d s for training o f technical level c i v i l servants mainly at the sub-national levels o f Government.
P National School for Magistrates and Clerks of the Court (Ecole Nationale de la Magistrature et des Greffees, ENMG). The project will continue to support ENMG to complement the legal/judicial reforms initiated by the Government. The support wi l l focus o n the modernization o f the curricula and the training program, on equipping the new facilities o f the school, o n the training o f trainers and other professional staff, o n providing funds for training o f magistrates, clerks and other personnel in the judic ia l system and o n other specialized technical assistance to enable the school t o fulfill i t s mandate.
Establishment of a Global Development Learning Center (GDLN) (US$1 .O million). Support wi l l continue to be provided for the establishment o f a GDLN and for the integration o f Madagascar into the GDLN network. The project wil l finance the construction o f the GDLN including the equipment and other installations. I t will support the development o f a training program. The project wi l l also finance operating costs for the center o n a decreasing basis. The f i rs t year, the project will cover 80% o f the center's operating costs. This will be reduced by 20 percent for each o f the fo l lowing years.
Project Component 3 - Rule of law and fight against corruption (US$2.17 million)
The objective o f the component i s to assist Government in promoting transparency, accountability and good governance; and in particular, in reducing corruption. Project assistance, which i s closely coordinated with other development partners, will focus o n support for legal and judic ia l reforms, o n strengthening the institutional and procedural framework in the fight against corruption, o n improving the implication o f c i v i l society in State affairs, and o n enhancing the oversight function o f Parliament.
The component comprises the fol lowing sub-components:
Improvement of the quality o f legal and judicial services (US$0.6 mil l ion). Project support will be provided to expedite c i v i l and commercial proceedings with the objective to significantly reduce the backlog and to increase the efficiency o f the proceedings. To further improve the efficiency o f the judiciary service standards and evaluation methods used in judicial work will be examined and re-evaluated. Technical assistance will be provided for the design and the dissemination o f these methods. T o ensure effective oversight and to combat corruption the internal control cadre o f the Ministry o f Justice, the Judicial Services Inspectorate, will be further strengthened. The existing system o f oversight will be rationalized.
Development of a regulatory and institutional framework to fight corruption (US$1 .O million). The project will continue to provide assistance to the Anti-Corruption Bureau and the Anti-Corruption Commission which were established in 2002 as key
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instruments o f the Government to reduce corruption. Support includes technical advisory services as wel l as support for surveys and other instruments that establish and track baseline information about the incidence o f corruption. Additional support wi l l be provided to harmonize and further develop the regulatory framework for governance and corruption in Madagascar, including an anti-corruption legislation and decrees to operationalize the regulations o f the law.
Implication of civil society in State affairs (US0.2 million) (new sub-component). The strengthening o f c iv i l society and o f “social accountability” are key objectives o f the MAP. Based on Government request the project has provided some funding to conduct a pilot citizens score card exercise for a few selected health centers. I t i s envisaged to use the experience from this pilot to enhance and further deepen participatory monitoring o f government activities. The project will continue to provide funding for these activities, mainly for technical assistance. This will complement activities by NGOs and other development partners.
Strengthening of finance commissions o f Parliament (US$0.37 million). Project support will focus on enhancing the capacity o f the finance commissions o f the two chambers o f Parliament (National Assembly and Senate) in the area o f public finance, in particular, to scrutinize the work o f the Auditor General and to strengthen i t s role as an external oversight institution (analyze the reports o f the Auditor General and to initiate a Parliamentary debate about the findings). Assistance will be provided for training and capacity building o f the members o f the Public Finance Committees, some basic equipment to enable research and preparation o f reports as wel l as for some funds to commission studies and evaluations in the areas o f public finance.
Project Component 4 - Monitoring & evaluation o f the MAP and key statistical surveys (US$5.0 million) (new component for which additionalfinancing is requested)
This new project component aims at scaling-up the impact o f project activities and at improving i t s development effectiveness. Financing would focus on two main areas (i) the development o f a consistent monitoring & evaluation framework to assist MAP implementation and (ii) financial support for key statistical surveys which are considered critical for the MAP.
The component comprises the following sub-components:
Development of a consistent monitoring & evaluation framework (US$2.5 million). Funding would focus on developing and implementing a consistent monitoring & evaluation strategy for the whole o f Government. A key element o f this strategy i s the National Strategy for Statistical Development which i s currently being prepared. This strategy will include the development o f revised regulatory and procedural framework for government statistics which would integrate and coordinate all relevant government activities. In addition, the institutional responsibilities o f the relevant government institutions (e.g. President’s Office, Prime Minister’s Office, Ministry o f Plan, Ministry o f Finance, Structural Adjustment Secretariat, and National Statistics Office) will need to
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be clarified. Project funding will provide technical assistance to address these issues; it will also help modernize the relevant institutions. Significant training and capacity building activities wil l complement these activities; they wil l focus on improving the operational efficiency o f the aforementioned key institutions and o f the sector ministries in the area o f monitoring & evaluation. This will include an upgrading o f the capacity o f local training institutions to design and deliver relevant training courses.
Key statistical surveys to support MAP implementation (US$2.5 million). Funding would assist government in conducting some key statistical surveys that are important for evaluating the progress o f M A P implementation: As a top priority the government has identified the need to update its key economic and social data based on a new population census. The last census was completed in 1993; the economic, social, and administrative structure o f Madagascar has profoundly changed since then. As a consequence, many o f the existing baseline data i s outdated. The government i s in the process o f soliciting support by development partners for the population census which i s estimated to cost about US$18 million. The project will support a complete cartographic survey o f Madagascar which i s a prerequisite for the census and would already provide important information about the socio-economic changes in the country. Support will focus on consulting services and equipment. Financing will also be provided to strengthen the capacity in the National Statistic Office to develop and implement additional statistical surveys which will provide important information for the implementation o f the Government strategy such as the External Trade Index, the Consumer Price Index, the Industrial Production Index, and the Index o f Industrial, Energy and Mining Related Production.
Project Component 5 - Program Coordination (US$2.0 million)
The objective o f this component i s to support the Bureau de Gestion (BdG) du Programme pour la Bonne Gouvernance, le De'veloppement Institutionnel et la Re'duction de la Pauvrete' (PGDI) to administrate and supervise the PGDI project activities. The project will finance the recurrent costs (salaries and operation costs) o f the BdG, o f the National Coordinator and other technical advisors who are deemed necessary to ensure adequate project implementation. Funding will also include external auditing and accounting assistance (consultants). Additional short term consultants will be recruited for the assistance to the BdG during the supervision o f the project, in particular for regular independent audits o f implementation progress and impact assessments. The project will also fund additional equipment and relevant training o f the BdG staff,
Project funding for components 2 and 4 will include the financing o f a limited number o f government staffs salaries until December 3 1, 2007, mainly to recruit technical specialists recruited into the President's Office and in the National Statistics Office. These expenditures are in l ine wi th the requirements o f recurrent cost financing parameters as specified in BP 6.00 o f April 2004 and the relevant Guidelines o f April 16, 2004. In view o f the limited flexibility in the recurrent budget the Government i s not able to pick up the funding in 2007. Wor ld Bank support would allow the Government to gradually integrate these recurrent expenditures into subsequent budget years.
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Project Component
A summary o f the cost o f the program and the financing plan i s shown below:
IDA Govern men t * Total
Table 1: Project Components by Financing Sources
1. Reform o f public finance system 2. Capacity building and public sector service delivery 3. Rule o f law and fight against
US$m US$m US$m 16.0 2.0 18.0 12.5 0.7 13.2
2.17 0.7 2.87 corruption 4. Monitoring & evaluation o f the MAP 5.0 0.0 5.0 and key statistical surveys - new component 5. Program coordination 2.0 0.6 2.6
Total costs 37.67** 4.0 41.67
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Expenditure Category Current Amount*
Annex 3: Revised Allocation of Credit proceeds
Revised Allocation of Credit Proceeds
The revised allocation o f Credit proceeds, the allocation o f Credit proceeds for the additional financing and the revised financial summary are shown below:
Works
Table 2: Revised Allocation of Credit Proceeds (without additionalfinancing)
million Percentage Percentage 2.54 100% 2.78 100%
~
Goods Consultants’ Services and Audits Training Operating Costs** Refunding o f Project Preparation Advance* * * Total Project Costs
I US$ 1 Financing I US$ million I Financing I
5.07 100% 5.98 100% 13.19 100% 14.22 100%
6.11 100% 7.70 100% 1.51 85% 1.30 85% 1.58 d a 0.69
Total 13.5 7.9 8.0 7.5 0.77 37.67" Financing Sources (YO of Total) IDA** 91 % 92% 89% 87% 67% - Government of 9 yo 8% 11% 13% 33% - Madagascar
Total 100% 100% 100% 100% 100% - * Deviation f rom the init ial Credit amount due to exchange rate fluctuation between SDR and USD ** Al l expenditure categories are fimded 100% except for operating costs (program management) which are funded 85% o f the amount.
The revised Project Design Summary (Project Results Framework and Results Monitoring Matrix) are summarized below. The results framework has been entirely revamped to improve the results focus o f the project based on discussions wi th Government in the context o f a workshop organized in January 2007.
Project Development Objective:
DO. To improve the efficiency and transparency o f government and public services in Madagascar in l ine wi th the Madagascar Action Plan (MAP).
Intermediate Results per Component
Zomponent I: Reform of the mblic finance system
. . Budget preparation and execution improved
!. Internal and external control mechanisms strengthened.
I. Public procurement system operates in l ine w i th international standards
I. Revenue agencies (customs, tax administration) strengthened.
i. Public financial management and procurement in selected public institutions strengthened.
Outcome Indicators
1. Number o f Indicators under the Public Expenditure and Financial Accountability Assessment (PEFA) rated ‘B’ and above.
2. Percentage o f population reporting improvement in service delivery (access and quality) for selected prioritized public services.
3. Ranking o f Madagascar in the annual Transparency International Anti-Corruption Perception Index.
Results Indicators for Each Component
l a . Number o f PEFA budget preparation and execution indicators (indicators 1 through 17) rated ‘B’ and above.
executing their annual budgets through the integrated financial management system (SIGFP).
lb. Number o f public institutions
2. Number o f PEFA indicators measuring the internallexternal control mechanisms and budget reporting rated ‘B’ and above.
3. Percentage o f reviewed procurement processes in selected public institutions that are assessed as conforming to the new procurement regulations.
difference between planned and actual revues generated by revenue agencies
5. Number o f sector min is t r ies wi th budget execution rates o f 90 percent and above.
4. Reduction o f the percentage
U s e of results
Information w i l l be used to assess performance o f services, to target non-compliant services and to improve overall service delivery approach.
Use of Results
Information w i l l be used to guide the implementation o f the Government’s public finance reforms and to determine technical assistance and capacity building needs.
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Intermediate Results per Component
Component 11: Capacity building and public sector service delivery
6. Change management capacity and leadership quality improved.
selected public institutions strengthened.
8. Service delivery processes in selected public sector institutions improved.
9. Local training institutions (NLIM, ENAM, CNFA, ENMG) strengthened.
10. Global Development Learning Center established.
7. Management capacity in
Component 111: Rule o f Law and fight against corruption
1 1. Quality o f legal and judicial services in selected areas improved.
institutional framework for the fight against corruption developed.
13, Implication o f c iv i l society in State affairs strengthened.
14. Finance commissions o f Parliament (National Assembly and Senate) strengthened.
12. Regulatory and
Results Indicators for Each Component
6. Percentage o f sector ministries that meet the targets o f their annual work plans.
7. Number o f qualified staff in selected public institutions in the areas o f development planning, public financial management, procurement, and monitoring & evaluation.
8a. Number o f successfully completed
8b. Increase in percentage o f user who Rapid Results Initiatives.
are satisfied w i th the delivery o f selected public services.
9. Increased number o f students completing training courses at NLIM, ENAM, CNFA, ENMG.
10. Number o f qualified trainers in local training institutions in the areas o f development planning, public financial management, procurement, and monitoring & evaluation.
1 la . Number o f courts that operate in l ine with agreed service standards
1 l b Improved rating o f Madagascar under the W B I Rule o f L a w indicator.
12. Reduction o f the proportion o f average expenditure paid by household for bribery for public services.
exercises completed.
commissions with knowledge about public finance.
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13. Number o f citizens scorecard
14. Number o f staff attached to both
Use o f Results
Information w i l l be used to ref ine the implementation o f the MAP and to assess efficiency o f reform management.
Information w i l l be used to refine the implementation o f the reforms and to assess efficiency o f reform management.
Service standards include the average time required to process a case at the level o f the lower courts, or the number o f cases assigned to and decided by a magistrate
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Intermediate Results per Component
Component IV: Monitoring & evaluation of the MAP and key statistical surveys
15. Procedural and institutional framework for the implementation o f the MAP strengthened.
16. Preparatory work for the Population Census 200819 launched .
Component V: Program Coordination
17. Reform program timely and effectively implemented.
Results Indicators for Each Component
15a. Annual budget i s in line with M A P
15b. Number o f sector min is t r ies that priorities.
have developed annual, fully costed M A P implementation plans that are integrated into the annual budget
16. Number o f cartographic surveys completed.
17a. Annual progress reports o f satisfactory quality and submitted on time.
17b. Percentage o f output in the annual work plan that are completed as init ial ly planned.
Use of Results
Information wil l be used to refine the implementation o f the M A P and to refine the development strategy for Madagascar.
Information wil l be used to identify program delays and bottlenecks, and to adjust program implementation strategy.
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30
Annex 5: Implementation Arrangements
I. Organization and Oversight
Leadership and coordination. To strengthen coordination o f governance related activities the Government created in November 2005 the Reform Program for the Efficiency o f the Administration (Programme de Re'formes pour 1 'Efjcacite' de 1 'Administration, PREA) which i s the key instrument to monitor and implement the Government's Good Governance Program. The PREA i s headed by a National Coordinator (Coordonnateur Ge'ne'ral - CG) who reports to the Secretary o f Planning (Se'cretaire Ci la Planzjkation de la Pre'sidence) in the President's Office who i s at the same time the Chief o f Staff. Political guidance and oversight i s provided by the Oversight Committee (Conseil d 'Orientation et de Suivi - COS) consisting o f al l Permanent Secretaries o f the Government and o f representatives from civi l society, from the private sector, from the regions and communes, and from the donor community. The Oversight Committee which i s led by the Chief o f Staff meets once a year and approves the annual work plan for the project. Key policy decisions are submitted by the Oversight Committee to the Council o f Ministers.
Implementing entities. Implementation arrangements will remain unchanged: the project wil l continue to be implemented by the Office o f the President under the authority o f the National Coordinator P E A who reports to the Chief o f Staff. The National Coordinator i s supported by the Project Bureau (Bureau de Gestion, BdG) which will continue to ensure the day-to-day management o f the project. The BdG has a number o f technical staff in the areas o f monitoring & evaluation, procurement, financial management and communication. This unit i s responsible for: (a) procurement, including all contracting o f works, goods and services; (b) project monitoring, reporting and evaluation; (c) the contractual relationship with IDA, and (d) financial record keeping, in particular the designated Account and disbursements. The BdG operates on the basis o f an annual work plan which i s validated by the above mentioned Oversight Committee. A Standing Committee (Comite' Restreint - CR) i s available to advise the BdG on implementation issues. This Committee consists o f the Cabinet Secretary, and the Permanent Secretaries o f the Ministries o f Finance and Budget, Planning, Civ i l Service, Justice, Decentralization, Territorial Administration, and Communication. I t i s led by the Chief o f Staff in the President's Office and meets at least once every three months.
Implementation o f the reforms i s ensured by implementation teams that have been created at the level o f the sector ministries that receive support from the project. A key role o f the BdG i s to support these implementation teams and to facilitate their work. The teams operate on the basis o f the annual work plan. They report to the BdG on a regular basis.
The BdG has implemented the existing project in a satisfactory manner; i t has met all relevant disbursement, procurement and fiduciary obligations. The successful implementation o f the project activities i s mainly based on the efficient work o f the BdG whose performance has been evaluated on a regular basis.
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11. Financial Management and Disbursement
Financial management arrangements: In accordance w i th Bank policy and procedures, the financial management arrangements o f the PGDI (Governance and Institutional Development Project) responsible for the implementation o f all components/activities eligible under the additional financing has been reviewed on March 6, 2007 to determine whether they are acceptable to the Bank. This review i s an update since the Financial Management (FM) system o f this entity has already been assessed in the context o f the ongoing project. The review report i s part o f the project fi les. The overall conclusion o f this review determined that the PGDI continues to maintain an adequate financial management system in l ine w i th the requirements o f the OP/BP 10.02. The financial management risk i s assessed as being moderate.
The project financial management i s strengthened by the following salient features:
Existence o f qualified and skilled accounting staff very knowledgeable with Bank procedures; Adequate internal control system including suitable authorization procedures, appropriate segregation o f duties and responsibilities, reliable budgeting system, and adequate measures for safeguarding assets; U s e o f an accounting system in compliance wi th generally accounting standards and IDA requirements, and providing reliable and timely information; Appropriate documentation o f the policies and procedures applied by the project, covering management o f finances, accounting, procurement and financial reporting; Use o f an integrated computerized system facilitating the management o f project operations and capable o f producing in a timely manner al l relevant information required for managing and monitoring project activities, and appraising project’s overall progress towards the achievement o f its objectives.
However, to further improve the system the update o f the PGDI Chart o f accounts will be required to reflect new components/activities to be supported under the additional financing and satisfy reporting requirements. The preparation o f this new Chart i s presently underway. The form and content o f quarterly Financial Monitoring Reports (FMRs) will be determined as part o f project appraisal and be agreed at negotiations. Models o f these reports will be presented in the annex o f the project accounting manual o f procedures.
The project financial statements will be audited annually by an international accounting firm acceptable to IDA, in accordance with International Standards o f Auditing. For this purpose, the contract with the current external auditors will be amended in order to include the audit o f the supplemental financing. The new contract should be submitted to IDA prior to credit effectiveness. The terms o f reference o f the audit has already been reviewed by the financial management specialist o f the Bank/IDA to ensure the adequacy o f the audit scope. The auditors will be required to: (i) express an opinion on the project financial statements; (ii) carry out a comprehensive review o f the internal control procedures and provide a management report outlining any recommendations for their improvement. The audit reports wil l be submitted to IDA not later than six months after the end o f each fiscal year.
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Flow of funds and Disbursement arrangements: procedures would continue to be fol lowed throughout project. The BdG would also continue to prepare FMR to
Transaction-based the implementation
disbursement period o f the
track expenditures for the project.
The Country Financing Parameters for the Recipient country approved by the Association on M a y 16, 2005 al low for a 100 percent disbursement o f a l l El igible Expenditures disbursed as f rom the date o f effectiveness o f the amendment. The disbursement percentage for the recurrent operating costs will remain at 85 percent.
Disbursement mechanisms: While disbursing proceeds f rom the supplemental credit account, IDA may: (i) reimburse the borrower for expenditures paid f rom the borrower's resources; (ii) advance credit proceeds into a designated account opened in a commercial bank acceptable to IDA; (iii) make a direct payment to a third party; (iv) 'enter into special commitments in writing to pay amounts to a third party in respect o f expenditures to be financed out o f the credit proceeds, upon the borrower's request and under terms and conditions agreed the Bank and the borrower. The accounting manual o f procedures describes in details the steps and requirements for requesting a reimbursement, a direct payment to a third party, and applying for a special commitment
IDA establishes a minimum value for applications for reimbursement, direct payment, and special commitment. The minimum value will be documented in the disbursement letter related to the additional financing.
Banking arrangements for the additional financing: T o ensure t imely and reliable f l ow o f funds, the Bureau de Gestion (BdG) o f the PGDI wil l manage a designated account for the additional financing opened in a commercial bank acceptable to IDA. Denominated in US$, disbursements f rom the IDA credit will be deposited o n this account to finance project activities. The authorized allocation for the designated account covering IDA's contribution wou ld be US$0.8 m i l l i on covering IDA's share o f four (4) months o f estimated expenditures. The in i t ia l deposit wil l be l imited to US$0.8 mil l ion. The BdG would be responsible for preparing disbursement requests. The designated Account would finance a l l project eligible expenditures inferior to 20% o f the authorized allocation, and replenishment applications wou ld be submitted at least o n a monthly basis. Further deposits by IDA into the designated account would be made against withdrawal applications supported by appropriate documents. All supporting documents will be retained by the BdG and made available for review by periodic Bank supervision missions and external auditors.
Use o f Statements of Expenses (SOEs): Disbursements will be made against Statement o f Expenses (SOEs) for contracts and goods not requiring the Bank's prior review. Therefore disbursements for a l l contracts for: C i v i l works o f less than US$500,000; Goods o f less than US$250,000; Consulting services, training by f irms and individuals o f less than US$lOO,OOO and US$50,000 respectively; and a l l incremental operating expenses would be made o n the basis o f SOEs and certified by the BdG. SOE statements will be audited annually by independent auditors acceptable to the Bank.
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111. Procurement
Procurement Arrangements. The BdG will continue to carry out all project related procurement activities. Procurement for the project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement.
The general description o f the various items under different expenditure categories i s included in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity and should cover the activities for at least the following 18 months. The procurement activities to be carried out under the restructured project and under the additional financing are described in the following paragraphs.
Procurement procedures for goods and services. Goods o f similar nature, to the extent possible, should be grouped in much larger packages to enable wider competition. All Procurement for goods and services will follow IDA Procurement Guidelines. Consultancy services w i l l be procured in accordance with IDA Consultants Selection Guidelines. The Operations Manual will provide, in addition to the guidelines, guidance to the BdG to conduct procurement.
Procurement of Works. Works procured under this project would include rehabilitation o f offices, construction o f new facilities and other construction activities under the public finance, the capacity building and the monitoring & evaluation components. The procurement wi l l be done using Bank Standard Bidding Documents (SBD) for all ICB and National or agreed SBD as outlined in the Program Procurement Manual and which are consistent wi th IDA guidelines.
Procurement o f Goods. Goods procured under this project would include information technology systems and related goods, vehicles, furniture and various office equipment. The procurement will be done using the Bank's SBD for all I C B and National or agreed SBD as outlined in the Program Procurement Manual and which are consistent with IDA guidelines.
Procurement of non-consulting services. Procurement o f non-consulting services wil l be procured using acceptable SBD consistent with IDA guidelines.
Selection of Consultants. Consultancy services required for the project would cover consultancies to: (i) support the implementation o f public finance reforms, (ii) support the ongoing implementation o f the procurement reform; (iii) support the initiation o f revenue agency reform; (iv) continue to support the leadership development and capacity building programs; (v) strengthen local training institutions including the National Leadership
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Institute o f Madagascar; (vi) support the implementation o f legal and judicial reforms as well as the strengthening o f the Rule o f Law; (vii) support the implementation activities for key statistical surveys; (viii) design, draft bidding documents and supervision o f civi l works under the project; (ix) provide complementary quality assurance to the various reform activities, and (x) establish a monitoring and evaluation system for the project and for the Madagascar Action Plan.
All consulting service contracts costing more than US$lOO,OOO equivalent for f i r m s will be awarded through Quality and Cost Based Selection (QCBS) method. Contracts for specialized assignments estimated to cost less than US$lOO,OOO equivalent may be contracted through Consultants’ Qualification (CQ).
Single Source Selection (SSS) may be employed with prior approval o f the Bank and will be in accordance with paragraphs 3.9 to 3.12 o f the Consultant Guidelines.
All services o f individual consultants (IC) will be procured under individual contracts in accordance with the provisions o f paragraphs 5.1 to 5.4 o f the Guidelines.
Short l is ts o f consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.
Training. This category would cover all costs related to the carrying out o f training and workshops for the different components o f the project, in particular the public finance and the capacity building components. This would include i.e. hiring o f venues and related expenses, stationery as well as per diem and travel costs o f participants. Training programs would be part o f the Project’s Annual Work Plan and Budget and will be included in the procurement plan. Prior review o f all activities wil l be required, only an annual basis, including proposed budget, agenda, participants, location o f training and other relevant details.
Operating Costs. Operating costs shall consist o f some staff salary costs, office supplies, operation and maintenance costs for vehicles and equipment, travel expenses and subsistence expenditures, among others. Operating costs to be financed by the Program would be procured using the implementing agencies administrative procedures which are found to be acceptable.
The procurement procedures and Standard Bidding Documents (SBDs) to be used for each procurement method, as well as model contracts for works and goods procured, are presented in the Program Procurement Manual and they are consistent with IDA guidelines.
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Expenditure Category
1. Works
2. Goods
2. Services Firms
Individual Cons.
Table 5: Thresholds for Procurement Methods and Prior Review Contract Value Contracts Subject to Prior Review
(US$) Threshold Procurement Method
(US$) >500,000 ICB Al l <500,000 NCB Al l Above US$200,000 <50,000 Shopping None >200,000 ICB Al l 50,000-200,000 NCB None <50,000 Shopping None
DC Al l
>100,000 QCBS Al l Above US$lOO,OOO <100,000 QCBS and CQ First contract >50,000 IC Al l <50,000 I C None
I I I I I
Details about the procurement arrangements can be found in the project f i les
Assessment of the Procurement Capacity. The BdG has one full time procurement officer and one full time procurement assistant. A second full-time officer will be recruited shortly. The procurement officer i s fully dedicated to the management o f procurement activities funded by the Grant and possesses a vast experience in handling Bank financed as well as Donor funded projects. Overall, the capacity o f the BdG and the quality o f the procurement staff i s deemed sufficient to continue to implement the restructured project and the additional financing. The Government will submit to the World Bank an updated manual reflecting the changes in the implementation arrangements wi th the integration o f BdG into PREA.
(Revised) Procurement Plan. The Borrower developed a procurement plan for project implementation which provides the basis for the procurement methods. A revised procurement plan for the restructured project and the procurement plan for the additional financing have been agreed to between the Government and the Project Team on March 8, 2007; they are available at the BdG in Antananarivo, Madagascar. They will also be available in the project’s database and in the Bank’s external website. The Procurement Plans will be updated annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
Frequency of Procurement Supervision. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the Implementing Agency has recommended semi-annual supervision missions to visit the field to carry out post review o f procurement actions.
