56288 Status: Final <~,l~ ·'Baki' . Project ID & Name P082392: GD Public Sector Modernization TAC Country Grenada Task Team Leader Kathy Lalazarian Sector Manager/Director Veronica E. Zavala Lombardi Country Director Yvonne M. Tsikata Original Board Approval Date 1211512005 Original Closing Date: 12/3112010 Current Closing Date 12/31/2010 Proposed Closing Date [if applicable] 06/30/2012 EA Category C-Not Required Revised EA Category No Change EA Completion Date Not Applicable Revised EA Completion Date Not Applicable Source Revised BORR 0.00 IDA 3.50 Total 3.50 Or .. anization Government of Grenada Grenada 4. Implementing Agency Organization I Department I Location Public Sector Reform Unit I I St. George's, Grenada 1.02 . Fisc~IY ear Annual Cumitlative 2010 0.000 1.02 2011 1.24 2.26 2012 1.24 3.50 Total 3.500 '6! .. PolicyE,xc'eption~.al)d Safeg:u~rd Polici~~r " . "': Does the restructured project require any exceptions to Bank policies? N Does the restructured projects trigger any new safeguard policies? If yes, please select N from the checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The objective of this project is to assist Grenada to begin the process of modernizing its public sector. This includes building the capacity to design and implement public sector modernization initiatives which would address "rightsizing" the public sector and determining which services would best be delivered by an Executive Agency or commercialization. The specific objectives of the project are to (i) improve service delivery in those agencies designated Executive Agencies; (ii) introduce modem human resource management principles into the public sector; (iii) build the capacity of the Government to lead and implement modernization efforts; (iv) encourage sub-regional cooperation through the procurement of select goods and services; and (v) strengthen the enabling environment for small and micro businesses. 7b. Revised Project Development Objectives/Outcomes [if applicable] The proposed revised project development objective is to assist the process of modernizing Grenada's public sector with a focus on improving public sector efficiency in service delivery and management, enhancing private sector collaboration in support of developing small businesses, and promoting regionalization initiatives. PUBLIC SECTOR MODERNIZATION TECHNICAL ASSISTANCE CREDIT RESTRUCTURING PAPER A. SUMMARY 1. The proposed restructuring would reformulate the project development objective (PDO) as stated in the Project Appraisal Document (PAD) to make it consistent with the PDO in the Credit Financing Agreement. The revised PDO would be: "to assist the process of modernizing Grenada's public sector with a focus on improving public sector efficiency in service delivery and management, enhancing private sector collaboration in support of developing small businesses, and promoting regionalization initiatives." 2. The restructuring would also introduce the following: (i) revisions to the results framework and indicators in line with the reformulation of the PDO and proposed changes to project design; (ii) changes to the Project's Component 1 (Executive Agencies and Public Sector Performance Management) to pursue the conversion of select Government functions through the establishment of two new Enhanced Departments instead of Executive Agencies in order to remain within the requirements of Grenada's constitution; (iii) minor revisions to Component 3 (Regional Initiatives) to drop activities that have minimal or no contribution to the achievement of the project development objective and to Component 4 (Public Sector Reform Unit, PSRU, Project Administration) to drop activities that can be pursued under other financing sources such as grants; (iv) revision to the disbursement conditions given that the Enhanced Departments have been legally established; (v) minor reallocation of Credit proceeds to reflect project design changes; (vi) extension of the IDA Credit closing date by 18 months to June 30, 2012; and (vii) revisions to the project implementation plan/schedule as a result of project design changes and extension. These proposed changes would facilitate improvements in project performance while remaining within constitutional restrictions. These proposed changes have been approved by Management. B. PROJECT STATUS 3. The project has been in unsatisfactory status since June 2009 primarily due to the lack of progress under Component 1 which accounts for more than 40% of the Credit. Under this component, the sub-objective is to establish the basis for a performance-based, service-oriented and accountable public sector through the creation of two Executive Agencies (National Lands Agency and the Companies/Intellectual Property Office) by converting Government functions performed by the Supreme Court Registry and various responsibilities related to the use and . administration of land in Grenada. The Government pursued the creation of the two Executive Agencies with the Executive Agency Act, No.4 of2008 (Act). However, the constitutionality of the Act, in particular, Section 11 (1), which contemplates that the Public Service Commission would delegate some of its powers to a Chief Executive Officer of an Executive Agency, was questioned as it contradicts Section 84 (1) of the Constitution. Thus, further progress under Component 1 was stalled pending resolution of the legality and constitutionality of the Executive Agencies created under the Act. 4. A letter from the Attorney General dated February 25, 2010 was sent to the Bank and provided an opinion that the establishment of the Executive Agencies as contemplated by the Act 1 is unconstitutional and it can no longer be pursued. Moreover, Government enacted the Corporate Affairs and Intellectual Property Act, No. 19 of2009 which allowed for the separation of the Corporate Affairs and Intellectual Property Office from the Supreme Court Registry, and the Deeds and Land Registry (Amendment) Act, No. 21 of2009, which facilitated the separation of the Deeds and Land Registry from the Supreme Court Registry and the eventual merger of various departments and functions currently performed by the Supreme Court, the Ministry of Finance's Inland Revenue and Valuation, and Surveys Department. Accordingly, Government remains committed to the underlying objectives of increasing public sector efficiency and has therefore proposed to strengthen the same institutions as have been identified under the project but as Enhanced Departments. The proposed restructuring of Component 1 reflects the support to the Enhanced Departments to remain within constitutional restrictions. 6. Implementation of the other three project components has progressed, although at varying speeds. Component 2 (Strengthening the Grenada Industrial Development Corporation) is expected to be completed in September 2010. For Component 3, the CARICAD diagnostic review of the Public Sector Reform Unit (PSRU) has been completed and a Memorandum of Understanding has been signed with st. Vincent and the Grenadines to participate in pooled procurement. However, project activities that would facilitate pooled procurement have yet to start. Component 4 (PSRU and Project Administration) activities have been progressing slowly. As of end-August 2010, disbursements under the Credit stood at about SDR658,165 (approximately 26% of the Credit in SDR). C. PROPOSED CHANGES 7. Project's Development Objectives: The proposed restructuring would reformulate the PD~ as stated in the PAD to make it consistent with the PD~ in the Credit Financing Agreement. The revised PD~ would be: "to assist the process of modernizing Grenada's public sector with a focus on improving public sector efficiency in service delivery and management, enhancing private sector collaboration in support of developing small businesses, and promoting regionalization initiatives." The change is being made to: (i) reflect the Government's decision to no longer pursue the establishment of Executive Agencies; and (ii) bring consistency to the PD~ statements in the PAD and Credit Agreement. 8. Resultsllndicators: The restructuring proposes revisions to the project's results framework and indicators. In particular, the outcome-level indicators would be revised to ensure alignment and consistency with the revised formulation of the project development objective. Likewise, the intermediate-outcome level indicators would be revised to align them with changes being introduced in the project components and to realistically capture what can be delivered at end-of- project after restructuring. (See Annex 1 for details.) 9. Components: The following changes to the project components would be made: Component 1. Enhanced Departments and Public Sector Performance Management. Under this component, the project would no longer pursue the creation of Executive Agencies. Instead, the project would continue to pursue the conversion of selected Government functions through the establishment of two new Enhanced Departments - (i) Deeds and Land Registry and (ii) Corporate Affairs and Intellectual Property Office - to 2 remain within constitutional restrictions. Accordingly, reference to "Executive Agencies" has been dropped from the Component title. Component 3. Regional Initiatives. With the completion of the CARICAD Diagnostic Review, this component would be revised to focus on activities that would facilitate the implementation of a regional pooled procurement scheme: (i) analysis of training needs; (ii) training to facilitate regional pooled procurement implementation; and (iii) design of a regional pilot procurement payment and inventory management system. Component 4. Public Sector Reform Unit and Regional Initiatives. From this Component, the following key activities would be dropped because alternative grant financing have become available: (i) consultancy services of a local IT specialist in the Public Sector Reform Unit, and (ii) consultancy services for monitoring and evaluation. Funds under this Component would be reallocated to additional financing requirements for project administration in view of the Credit closing date extension. 10. Financing. Total project costs would not change. However, costs by Component would change under the proposed restructuring primarily to reflect current price levels for contracts that have yet to be committed largely under Component 1 and dropping some activities. The new project costs breakdown is provided in the table below. e . T abliP rOJec t C ost . Project Costs (US$m.) Components/Activities Current Proposed Enhanced Departments and Performance Management 1.50 1.731 Strengthening the Grenada Industrial 0.50 0.455 Development Corporation Regional Initiatives 0.40 0.281 Public Sector Reform Unit and Regional 0.76 0.693 Initiatives Total Baseline Cost 3.16 3.16 Contingencies 0.34 0.34 Front end 0.00 0.00 Total Project Costs 3.50 3.50 11. Disbursement Arrangements. With the Enhanced Departments now established by law (See paragraph 4), the disbursement condition requiring the enactment of enabling legislation for their creation would now be dropped. 12. Reallocations. The proposed restructuring would require reallocations by expenditure categories as per the table below. 3 Table 2. Allocations of Credit Proceeds Category of Ex ~enditure Allocation % of Financing Current Revised Current in Revised in Current Revised SDR SDR (using PAD original exchange rate of SDRI = USD1.40) 1) Goods, No change 1,748,000 1,634,000 100% No change training, works and consultants' services for the Project, with the exception of Parts 1 (B) and 3 (A) (ii) 2) Goods and No change 321,000 368,000 100% No change works for Part 1 (B) under the Project 3) Consultants' No change 93,000 93,000 100% No change services for Part 3 (A) (ii) under the Project 4) Operating No change 95,000 162,000 100% No change Expenditure 5) Unallocated No change 243,000 243,000 Total Amount 2,500,000 2,500,000 13. Procurement. The Procurement Plan ofthe project has been updated to reflect project changes. 14. Closing date. The closing date for the IDA Credit is proposed to be extended from December 31, 2010 to June 30, 2012 to enable the Government to implement remaining 4 activities under the restructured project and to achieve the project's development objective. This would be the first extension of the Credit's closing date. A detailed action plan and implementation schedule for the restructured project has been agreed with Government. 15. Implementation schedule. A detailed implementation schedule has been agreed with Government to facilitate satisfactory completion of the restructured project. D. APPRAISAL SUMMARY 16. The proposed restructuring has no effect on the project's economic or financial viability. There are no new social or environmental issues. It does not trigger new risks nor exceptions to Bank policy. The restructured project also complements the Grenada Economic and Social Development Policy Credit (PI17000, Cr4715-GD) as it finances critical activities necessary to achieve the program's desired outcomes in the area of improving business climate and competitiveness. 5 ANNEX 1: Results Framework and Monitoring GRENADA: PUBLIC SECTOR MODERNIZATION TECHNICAL ASSISTANCE CREDIT Project DeveloI!ment Objective (PDO}: (from PAD Annex 3) : Modernize Grenada's public sector through improved service delivery of select functions, improved management capacity of the Public Sector Reform Unit, and increased regional cooperation. Revised Project DeveloI!ment Objective: To assist in the I!rocess of modernizing Grenada's I!ublic sector with a focus on imI!roving I!ublic sector efficiency in service delivery and management, enhancing I!rivate sector collaboration in sUI!I!ort of develoI!ing small businesses, and I!romoting regionalization initiatives. D=Dropped Cumulative Target Values** PDO Level Results ... ... C=Continue Unit of Data Source/ Responsibility for 0 N=New Baseline Frequency Indicators* U R=Revised Measure End-of Project (June Methodology Data Collection 2012) June 2011 Original from PAD: D % TBDinPAD Bi-annually Cost of PSRU increase providing Improved management in cost services and capacity of the public service to effective time it takes to deliver services ness and provide those efficienc services (report More cost effective and y ofPSRU and efficient public services individual EAs, pooled Increased capacity of the public procurement) sector to implement D modernization projects Stronger enabling environment for small business development PSRU: progress in staffing with adequate number of qualified personnel by end of project. Number of proposals prepared, 6 acceoted and under implementation. Number of goods and services jointly procured N # of days 10 days to By June 2011,50% (5 Improved or atleast Annually Doing Business PSRUIPCU register a days) decrease in maintained June 2011 The number of days needed to company number of days to target levels register a business and receive and receive register a business and a company certificate has company receive a company decreased lowering the overall certificate, certificate and lower the number of days to start a and 20 days overall number of days business to complete to start a business by all 25% (15 days) (ref. D registration DPL Program activities as Document - Operations of June 1, Policy Matrix) 2009 (ref. DPL Program Document- Operations Policy Matrix N # of days 60 days to By June 2011, 50% (30 Improved or atleast Annually Doing Business PSRUIPCU register days) decrease in maintained June 2011 The number of days needed to property number of days needed target levels register property deeds has deeds, and to register property decreased, lowering the number 77 days to deeds, lowering the of days to register a property complete all overall number of days D property to register property by registration 39% (47 days) (ref. activities as DPL Program of June 1, Document) 2009 (Ref. DPL Program 7 Document) The number of small N # of As of Total of25 OIDC Total of 30 OIDC Annually OIDC OIDC//PCU businesses started OIDC February trainees commenced trainees commenced new Monitoring/Trac trainees 2010,20 new businesses businesses er Study that OIDC commen trainees ced new commenced business new es businesses Economies of scale explored at N Activitie As of Legal and procurement Initiated activities to Semi-nnually Project's PSRU/PCU OECS regional level through s October documents to facilitate strengthen the capacity Progress pooled procurement initiated 2009,MOU pooled procurement and collaboration to to Reports on Pooled process in place operationalize pooled Procurement procurement with St. signed with Vincent (e.g., joint St. Vincent training comRleted) PSRU: progress in staffing with Revised/Ado Staffing Strategic Continued PSRU key positions Semi-annually PSRU Staffing PSRU/PCU adequate number of qualified pted from profile in action plan implementation of adequately filled with Reports personnel by end of Project Original PSRU following action plan qualified personnel CARICAD's diagnostic review now being pursued INTERMEDIATE RESULTS Intermediate Result (Component One): Executive Agencies and Performance Management: Increased public sector efficiency and improved service in EA functions J ! I , Revised Intermediate Result (Component One): Enhanced Departments and Performance Management: Increased efficiency and improved services in enhanced departments Establishment ofEA 's to take D over functions ofpreexisting agencies, as a means of D providing better services Amalgamation of divisions into N Physical Amended the Physical amalgamation in Deeds and Land Registry Semi-annually Project's Progress PSRU/PCU Enhanced Departments to align and Deeds and place and operational Office and CAIPO Reports and coordinate functions for D operationa Land operational I Registry Act deeds and land registry and ----- _._- - ~ ~~- amalgama (CAP7~~ ' - ~--~ - - _ . _ ... _._- '------ ~-- .~ ~ 8 corporate affairs and tion through the intellectual property office enactment of the Deeds and Land Registry (Amendment ) Act No. 21 of2009; and Enacted the Corporate Affairs and Intellectual Property Act No. 21 of 2009, to establish a separate lands registry, and a separate corporate affairs and intellectual property office, respectively from the Office of the Registrar of the High Court (Ref. DPL Program Document) Institutional framework D specified and in place according to timetable i % of staff with requisite Revised % of staff Approximate 50% 60% Semi-annually Reports from Enhanced -1 target values ly40%on Enhanced Departments, defined skills and competencies June 2010 Departments and PSRUIPCU compared to pre-reform period PSRU Evidence of administrative D policy decisions or legislative changes providing the necessary and sufficient 9 delegations or devolutions of authority to Agency managers Active collaboration from the N Evidence of Legal, organizatiooal and Legal, organizatiooal and Reports from PSRUIPCU Public Service Commission to administrativ administrative changes being administrative changes Semi-annually PSRU facilitate effective management e policy or finalized under implementation and legislative Public Sector Commission of new Government changes to supports effective divisionslEnhanced facilitate management of Enhanced Departments al ignment of Departments new and pre- existing functions % agreed performance targets D and indicators in place and I reviewed annually and fully I achieved Results of customer satisfaction D surveys undertaken at end of each year Intermediate Result (Component Two): Strengthening GIDC Revised Intermediate Result (Component Two): No change How many events (training, C # of As of Management Infonnation Regular conduct of Semi-annually GIDC reports GIDCIPCU etc.)? How many people events February System and Train the Trainers training and sustained trained? 2010, held Program in place achievements as of original 13 closing date of December entrepreneu 2010 rial skills training workshops with 320 0 pax, 20 business managemen t courses with 271 pax, 250 trainees developed business plans 10 Amount invested in training C Amount As of February D 2010, EC$92,344 % users of GIDC services C %of Sustained 85% of original Sustained 85% of original Semi-annual GIDC reports GIDCIPCU (trainees and employers) users end-project target end-project target indicate satisfaction with the program % users of GIDC training and C %of Sustained 85% of original Sustained 85% of original Semi-annual GIDC reports GIDCIPCU report that they are applying to users end-project target end-project target their work and are satisfied with the results Intermediate Result Comopnent 3: Regional Initiatives: Increased pooled procurement; Increased diagnostic and management capacity of Grenada's public service Revised Intermediate Result (Component Three): Increased collaboration with other OECS countries on pooled procurement Number of goods or services D procured by pooled procurement methods between Grenada and atleast one other OECS country Signing of the Memorandum of C IMOU Understanding between signedIDone Grenada and one other OECS country Joint training/collaborative N Atleast one joint training Annually PSRUlProject's PSRUIPCU efforts undertaken to conducted Progress Reports operationaiize MOU on pooled procurement Intermediate Result (Component Four): Public Sector Reform Unit: Increased capacity of the PSRU to undertake public sector reform Revised Intermediate Result (Component Four): No change PSRU staff designing and C 3 from PAD Modernization efforts Modernization efforts Semi-annually PSRU Reports PSRUIPCU implementing new continue with PSRU taking continue with PSRU taking modernization projects lead lead PSRU staff and other civil Moved from % of staff 50% 85% Semi-annually PSRU Reports PSRUIPCU servants trained by CARICAD Component 3 report that they are applying with revised targets their training to their work and satisfied with results ..... -- -- ---~ ------ _ ....... _ - - - - - - - - - - - '------------------_ ..... __ .. _--- ~------ ------_ _ - - - .. 11 *Please indicate whether the indicator is a Core Sector Indicator (see further http://coreindicators) **Target values should be entered for the years data would be available, not necessarily annually. 12