Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004277 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A CREDIT # 50260 IN THE AMOUNT OF SDR 3.2 MILLION (US$5 MILLION EQUIVALENT) AND GRANT # TF012390 IN THE AMOUNT OF USD 18.1 MILLION AND GRANT (POOLED FUNDS) IN THE AMOUNT OF USD 4.6 MILLION AND GRANT # TF0A2366 IN THE AMOUNT OF USD 2.5 MILLION TO THE REPUBLIC OF LIBERIA FOR THE LIBERIA INTEGRATED PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ( P127319 ) December 18, 2017 Governance Global Practice Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective Sep 15, 2017) Currency Unit = Liberian Dollars (LR$) LR$117 = US$1 US$1.42 = SDR 1 FISCAL YEAR July 1 - June 30 Regional Vice President: Makhtar Diop Country Director: Henry G. R. Kerali Senior Global Practice Director: Deborah L. Wetzel Practice Manager: George Addo Larbi Task Team Leader: Donald Herrings Mphande ICR Main Contributors: Oleksii Balabushko Lucy Anyango Musira ABBREVIATIONS AND ACRONYMS ACCA Association of Certified Chartered Accountants CAG Comptroller and Accountant General CAGD Comptroller & Accountant General’s Department CoFoG Classification of Functions of Government CSA Civil Service Agency CSM Civil Service Management EU European Union FMIS Financial Management Information System FMTP Financial Management Training Program FMTS Financial Management Training School GAC General Auditing Commission GDP Gross Domestic Product GEMAP Governance and Economic Management Assistance Program ICR Implementation Completion and Results Report LBO Legislature Budget Office LRA Liberia Revenue Authority LRD Liberian Dollar MFDP Ministry of Finance and Development Planning MoF Ministry of Finance M&As Ministries and Agencies M&E Monitoring and Evaluation MTEF Medium-Term Expenditure Framework NSA Non-State Actor PEMFAR Public Expenditure Management and Financial Accountability Review PFM Public Financial Management IPFMRP Integrated Public Financial Management Reform Project IT Information Technology PAC Public Accounts Committee PAD Project Appraisal Document PEFA Public Expenditure and Financial Accountability Assessment PDO Project Development Objective PFMU Public Financial Management Unit PRS Poverty Reduction Strategy RCU Reform Coordination Unit SOE State-Owned Enterprise SIGTAS Integrated Tax Administration System TSA Treasury Single Account QER Quality Enhancement Review TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 7 A. CONTEXT AT APPRAISAL .........................................................................................................7 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ..................................... 11 II. OUTCOME .................................................................................................................... 12 A. RELEVANCE OF PDOs ............................................................................................................ 12 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 12 C. EFFICIENCY ........................................................................................................................... 16 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 17 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................ 17 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 19 A. KEY FACTORS DURING PREPARATION ................................................................................... 19 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 19 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 21 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 21 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 22 C. BANK PERFORMANCE ........................................................................................................... 22 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 24 V. LESSONS AND RECOMMENDATIONS ............................................................................. 25 VI. COMMENTS ON ISSUES RAISED BY BENEFICIARY/DEVELOPMENT PARTNERS ................. 26 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 30 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 42 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 44 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 45 ANNEX 5. BENEFICIARY’S IMPLEMENTATION AND RESULTS COMPLETION REPORT ............... 46 ANNEX 6. LIST OF SUPPORTING DOCUMENTS ...................................................................... 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name LIBERIA INTEGRATED PUBLIC FINANCIAL MANAGEMENT P127319 REFORM PROJECT ( P127319 ) Country Financing Instrument Liberia Technical Assistance Loan Original EA Category Revised EA Category Not Required (C) Not Required (C) Related Projects Relationship Project Approval Product Line Supplement P156384- Liberia 26-Sep-2016 Recipient Executed Activities Integrated Public Financial Management Reform Project Organizations Borrower Implementing Agency Ministry Of Finance Ministry Of Finance and Development Planning Page 1 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Project Development Objective (PDO) Original PDO The objective of the proposed project is to "Improve budget coverage, fiscal policy management, financial control, and oversight ofgovernment finances in Liberia" In order to achieve the development objective, the project would support the implementation of reform actions identified in the GoL approved PFM Reform Strategy under the following key themes: (i) Improving budget credibility; (ii) Expanding budget coverage and strengthening budget execution; (iii) Strengthening revenue mobilization; (iv) Enhancing transparency and accountability in PFM; (v) Enhancing controls and respect of the PFM legal framework; and (vi) Strengthening treasury management. It will establish tangible improvements in transaction processing, reconciliation, and fiscal and financial reporting procedures; and improve budget management and resource allocation and administrative capacity to gradually develop Liberia's own institutional, organizational, informational, and human resource capacities. The PFM Reform Strategy objectives against each of the themes are addressed in the project components as designed, where one or more objectives have been combined for efficiency and implementation sake. The Strategy is anchored on five basic criteria: sequencing of major actions; simplicity and realism; lessons learned in prior reforms; ownership and sustainability; and partnership and collaboration. PDO as stated in the legal agreement To improve budget coverage, fiscal policy management, financial control, and oversight of government finances in Liberia Page 2 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing P127319 IDA-50260 5,000,000 5,000,000 4,847,787 P127319 TF-12390 18,112,668 18,093,558 18,093,558 P127319 TF-A2366 2,550,490 2,550,490 2,550,000 Total 25,663,158 25,644,048 25,491,345 Non-World Bank Financing Borrower 0 0 0 African Development Bank 4,600,000 0 0 US: Agency for International 3,848,000 0 0 Development (USAID) SWEDEN: Swedish Intl. Dev. 15,101,000 0 0 Cooperation Agency (SIDA) Total 23,549,000 0 0 Total Project Cost 49,212,158 25,644,048 25,491,345 KEY DATES Project Approval Effectiveness MTR Review Original Closing Actual Closing P127319 15-Dec-2011 18-Sep-2012 06-Jun-2016 30-Jun-2016 30-Jun-2017 P156384 26-Sep-2016 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 10-May-2016 4.85 Change in Loan Closing Date(s) KEY RATINGS Outcome Bank Performance M&E Quality Moderately Unsatisfactory Moderately Unsatisfactory Modest Page 3 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 08-Aug-2012 Satisfactory Satisfactory 0 02 15-Mar-2013 Satisfactory Satisfactory 1.67 03 06-Aug-2013 Satisfactory Satisfactory 1.67 04 24-Feb-2014 Satisfactory Satisfactory 4.85 05 15-Oct-2014 Satisfactory Moderately Satisfactory 4.85 06 01-Apr-2015 Satisfactory Moderately Satisfactory 4.85 07 16-Jun-2015 Satisfactory Moderately Satisfactory 4.85 08 03-Feb-2016 Satisfactory Moderately Satisfactory 4.85 09 20-Jul-2016 Satisfactory Moderately Satisfactory 4.85 10 23-Dec-2016 Satisfactory Moderately Satisfactory 4.85 11 12-Jan-2017 Satisfactory Moderately Satisfactory 4.85 SECTORS AND THEMES Sectors Major Sector/Sector (%) Public Administration 100 Other Public Administration 100 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Economic Policy 13 Fiscal Policy 10 Fiscal sustainability 2 Tax policy 8 Trade 3 Trade Facilitation 3 Page 4 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Public Sector Management 88 Public Finance Management 49 Public Expenditure Management 39 Domestic Revenue Administration 8 Debt Management 2 Public Administration 39 Transparency, Accountability and Good 39 Governance ADM STAFF Role At Approval At ICR Regional Vice President: Obiageli Katryn Ezekwesili Makhtar Diop Country Director: Serhii Kulyk Henry G. R. Kerali Senior Global Practice Director: Edward Olowo-Okere Deborah L. Wetzel Practice Manager: Renaud Seligmann George Addo Larbi Task Team Leader(s): Ismaila B. Ceesay Donald Herrings Mphande ICR Contributing Author: Oleksii Balabushko Page 5 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) EXECUTIVE SUMMARY The Integrated Public Financial Management Reform Project (IPFMRP) was a US$30.2million stand-alone investment project. It was approved on December 15, 2011, and closed on June 30, 2017, after a one-year extension. The project was designed in a difficult environment of a fragile country that was recovering from civil war. Implementation was also affected by the Ebola epidemic, which necessitated extension of the project. The Project was jointly financed by USAID, Swedish International Development Agency, EU, World Bank, and included pooled funds from the African Development Bank (AfDB). Development partners financing the operation also carried out joint supervision activities and coordinated support to the broader PFM reform in Liberia. A discrepancy between the project financing amount in the data sheet and component costs is due to financing arrangements by AfDB, where funds were pooled and managed directly by AfDB. The project’s development objective was to improve budget coverage, fiscal policy management, financial control, and oversight of government finances in Liberia. Project performance is summarized below. Relevance Efficacy Efficiency Overall Bank M&E Quality Outcome performance Substantial Modest Modest Moderately Moderately Modest Unsatisfactory Unsatisfactory IPFMRP’s development objective was highly relevant for Liberia. IPFMRP was aligned with the 2009 PFM Act of the Government as well as with the Bank’s Country Assistance Strategy FY09-11 and Country Partnership Strategy FY13-17. Improvements in budget coverage, and setting up of financial controls and oversight of public finances were seen as critical to manage resources for improved service delivery. A stand-alone investment loan was an appropriate instrument to achieve those objectives. The project objective remains relevant today. A follow-up IPFMRP 2 will continue to support the Liberian Public Financial Management reforms going forward. IPFMRP did not fully achieve its objectives. Several of IPFRMP’s interventions were successful, in particular, the procurement reform, establishment of the PAC Secretariat, Legislature Budget Office, and initiation of the integrated financial management information system (IFMIS) roll out. Several of these activities contributed to improvements in efficiency and accountability despite interruption in the project implementation caused by Ebola outbreak in 2014-2015. IPFMRP did not have much impact in the areas of improved budget coverage, fiscal policy management, and had modest impact in improved financial controls because some of the outputs remain incomplete or systems not fully used. IPFMRP’s efficiency was modest. This was largely due to delays in use of the IT systems procured by the project, business processes lagging behind IT, and concerns over sustainability of improvements in the functions which were directly funded by the project. The project was restructured once and extended by one year. The PDO, objectives and components were not changed. IPFMRP supported capacity development and initial steps in fundamental PFM reforms, but in many areas improvements in the efficiency and accountability of the Liberian government are yet to materialize. Out of nine gains expected in the PAD, the ICR team found that only three seem to have materialized, four did not, and there was progress in the other two. Bank performance is rated as moderately unsatisfactory. There were shortcomings in the project results framework, which had seven PDO level composite PEFA indicators, and fourteen intermediate results indicators, which at the same time did not capture some of the key project activities including revenue administration, public procurement and civil society engagement, failure to use M&E to inform decisions, consistent overrating of the PDO and implementation progress, and overly complex design. At the same time, intense supervision provided by the Bank to the client allowed the implementing agencies to move forward with the various project activities. This ICR highlights six lessons. First, complex project designs should be avoided in low capacity environments. Second, project management should be a responsibility of a senior government official who can resolve issues at political level. Third, M&E framework should avoid using composite indicators like PEFA, as they are not sufficiently granular to capture project-level impacts. Fourth, M&E must be a top priority for any project, not a compliance exercise. M&E framework Page 6 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) needs to be continually reviewed and deviations or delays in progress explained, so the Project management could be adjusted to address any issues. Fifth, ICT investments require adequate change management and user support. Sixth, monitoring of project management expenditures and contingency planning to address implementation capacity gaps are required to ensure project management expenses do not crowd out project expenditures. I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. At the time of the preparation of the Integrated Public Financial Management Reform Project (IPFMRP) in 2010, Liberia was recovering from the fourteen years of conflict and was still one of the poorest countries in the world. The Liberian economy was brought to a halt by poor governance and conflict, which started in 1989. Post-conflict recovery was slowed by the global crisis, which made it difficult to realize the gains envisaged under the government’s Poverty Reduction Strategy (PRS) framework. In 2010 Liberia had GDP per capita of around US$300. An estimated 64 percent of the population lived below the national poverty line, and 48 percent of the population lived in extreme poverty. Many working age people were unemployed or underemployed. Around 3.7 percent of work force were registered as unemployed and 78% worked in vulnerable jobs with no guaranteed wages, no job security, and no pension. 2. The fiscal situation deteriorated as a result of slowdown in revenue growth. Revenue growth between FY07/08 and FY08/09 stood at 5.2 percent compared to that of the previous fiscal year’s 36.8 percent increase. Total tax revenues for FY09/10 were nearly US$18 million lower than projected under the PRS because of lower revenues from international trade taxes and corporate profit tax reflecting the impact of the global crisis. 3. The country, despite these shortcomings, attempted to lay the foundations for long-term sustained economic growth. The focus was on development of major transport corridors to open trade and commerce, revitalize agriculture, develop energy infrastructure, and generate employment Economic governance reforms were Government’s top priority, following the Transitional Governance and Economic Management Assistance Program (GEMAP) which ended at heavily indebted poor countries completion point in June 2010. At the same time, Liberia remained a fragile state with substantial political and socio-economic risks. 4. To better implement poverty reduction and development strategies, the Government prioritized spending efficiency and resource mobilization. The Public Financial Management (PFM) reform agenda was informed by the 2008 Public Expenditure Management and Financial Accountability Review (PEMFAR), which included a Public Expenditure and Financial Accountability Assessment (PEFA) report. The PEFA assessment identified a range of weaknesses in Liberia’s PFM systems. The passing of the PFM Act in August 2009 set a basis for legislation and institutional reforms in the PFM area. Among other reform efforts, working conditions of PFM systems were restored and modernization of these systems initiated; a macro-fiscal analysis unit was created; the former Bureau of budget merged into the Ministry of Finance (MoF) as a department; the Debt Management Unit strengthened; the accounting function unified by merging two departments and bringing them under the control of the Comptroller and Accountant General (CAG). 5. In July 2011, the Government approved a comprehensive PFM Reform Strategy to advance PFM reform agenda. This Strategy emphasized pursuing concrete improvements in selected systems, procedures, and resources to enable Liberia gradually develop its own institutional, organizational, and human resource capacities in the subsequent three to four years. The PFM reform agenda of the Government was supported by several development partners. The coordination of donor activities improved after adoption of the PFM Reform Strategy and the IPFMRP Operational Manual, as well as the establishment of the PFM Coordination Unit. Page 7 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) 6. IPFMRP aimed at supporting a comprehensive implementation of the PFM reform agenda and aligning resources of development partners. The project focused on strengthening internal and external audit, oversight capacity of the Legislature, as well as engaging civil society into the public financial management processes. This US$28.55 million project was financed through (a) a Multi Donors Trust Fund(MDTF) of US$18.9 million from Swedish International Development Agency (SIDA)–US$15.1 million; and USAID–US$4.1 million; (b) IDA Credit–US$5.00 million; and (c) AfDB Grant–US$4.6 million. The project became effective on September 18, 2012 and it was scheduled to close on June 30, 2017. The contribution ratios were MDTF–66%, IDA–18% and AfDB–16%. Additionally, the European Union Commission (EC) also supported the project with US$2.5 million under a trust fund arrangement through the Bank. 7. The rationale for the IPFMRP was consistent with, and aligned to, the economic revitalization pillar of the country’s PRS. The pillar recognized the fact that sound PFM was crucial to achieve the nation’s central economic goal of rapid, inclusive, and sustainable growth and development. IPFMRP also shared the vision in ‘Liberia Rising – 2030’ (succeeded by the PRS). The Project’s aim to promote good economic governance through the deepening of PFM reforms was consistent with the World Bank’s governance and anti-corruption agenda, which formed the foundation for the Renewed Strategy for Africa. The Project fitted well under the IDA16 policy framework for fragile states1. The IPFMRP also aimed to support gender mainstreaming by promoting adherence to the United Nations Security Council Resolution 1325 (2000) on rebuilding institutions in post-conflict societies, where among other things, it urged Member States to ensure increased representation of women at all decision-making levels in national, regional, and international institutions and mechanisms for the prevention, management, and resolution of conflict. Theory of Change (Results Chain) 8. The Project had a results framework that could be connected to the key elements of the Project Development Objective (PDO). The Project Appraisal Document (PAD) did not describe in detail the results chain or the logic behind the operation. This was not required by Bank procedures at the time of project preparation. Nonetheless, the linkages can be discerned in several areas. Training and purchase of computers, vehicles and equipment could be viewed as capacity development focused on improving efficiency in selected areas. The roll out of the integrated financial management information system (IFMIS) and Civil Service Management (CSM) system focused on improving financial controls in Liberia. At the same time, there are instances when there are no clear linkages between the PDO and activities as in case with support to improved customs and tax administration. 9. The PDO is broken down into four sub-objectives to establish connection with indicators and activities. The table below links sub-objectives with PDO indicators, intermediate results indicators and key activities under different sub-components. 1 Reference p.9, table 1 – “Africa’s Future and the World Bank’s Support to It”. The relevance of deepening PFM reforms could not be overemphasized for a post-conflict fragile state like Liberia, whose budget at the time of preparing this project was still less than pre-conflict levels (net of the budget allocations against increased humanitarian and infrastructure needs —pre-crisis budget level was US$500 compared to the post- that rose to US$$450 million. Page 8 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Figure 1. Project PDO, Indicators, and Activities Components/Inputs Intermediate PDO Level Results PDO Outcomes Results Indicators Indicators components Support to monitoring of donor funds Extent of unreported budget Improve budget operations (PEFA PI-7) coverage Training, equipment, vehicles (subcomponent 1.2). Free Balance budget preparation module Variance between Multi-year perspective in of IFMIS (subcomponent 2.2) budget appropriations fiscal planning, expenditure and actual policy and budgeting (PEFA- expenditures 12) Improve fiscal Variance between policy management Training in forecasting, equipment revenue forecasts and (subcomponent 1.1), training and vehicles for actual collections customs (subcomponent 3.1), hardware and Improved service delivery and establish foundations for sustainable financial management software for SIGTAS expansion and Increase in customs implementation (subcomponent 3.2), power revenue collections generators, renovations, training for Revenue adjusted for inflation Authority (subcomponent 3.3) Increase in internal revenues adjusted for inflation Roll out of Civil Service Management system Qualified procurement Effectiveness of payroll (subcomponent 2.2) staff in M&A controls (PEFA PI-18) Funding for the Financial Management Training Program, equipment, knowledge exchange (subcomponent 4.1) Funding for the Financial Management Internal audit staff Effectiveness of internal Training Program, equipment, knowledge holding professional controls for non-salary Improve financial exchange (subcomponent 4.2) certification expenditures (PEFA PI-20) control qualifications Consultancy and training (subcomponent 2.4) Proportion of Government balances in Treasury Single Account Roll out of IFMIS, hardware, software licenses; M&As generating training of trainers (subcomponent 2.2). monthly expenditure Renovations and capacity building for country reports through IFMIS treasuries (subcomponent 2.5) Technical assistance, training on accounting Quarterly fiscal reports and reporting (subcomponent 2.3) generated Training and equipment for operating Aid Donor projects in Management Platform (subcomponent 2.4); CAGD-based IFMIS training and consultancy on country systems reports (subcomponent 2.6) Annual financial Quality and timeliness of reports generated annual financial statements through IFMIS (PEFA PI-25) Benchmarks in budget information from MoF met out of nine defined by PEFA PI-6 Improve oversight of government's Technical assistance and training Qualified external audit Scope, nature and follow up finances (subcomponent 4.3) staff in GAC of external audit (PEFA PI-26) Consultancy and training (subcomponent 4.4) Legislative scrutiny of external audit reports (PEFA PI-28) Monitoring and evaluation (subcomponent Annual PEFA self- 5.3) assessment Page 9 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Project Development Objectives (PDOs) 10. The objective of the Project was to improve budget coverage, fiscal policy management, financial control, and oversight of government finances of Liberia. Key Expected Outcomes and Outcome Indicators 11. The PDO is measured by the following key outcome indicators: (i) Budget coverage and policy-based budgeting: • Extent of Unreported Government Operations (PEFA PI-7) • Multi-year perspective in fiscal planning, expenditure policy and budgeting (PEFA PI-12) (ii) Predictability and control in budget execution: • Effectiveness of payroll controls (PEFA PI-18) • Effectiveness of non-salary controls (PEFA PI-20) (iii) Accounting, recording and reporting: • Quality and timeliness of annual financial statements (PEFA PI-25) (iv) External audit and legislative scrutiny: • Scope, nature, and follow-up of external audit (PEFA PI-26) • Extent of legislative scrutiny of annual audit reports (PEFA PI-28) Components 12. The project had five components: 13. Component 1: Enhancing Budget Planning Systems, Coverage, and Credibility (US$1.84 million) aimed to establish comprehensive budget coverage and strengthen fiscal policy and budget management at all levels of government, through: (a) enhanced macro-fiscal framework (US$0.36 million); (b) fiscal reporting and fiscal policy review (US$0.29 million); and (c) enhanced budget framework (US$1.19 million). 14. Component 2: Strengthening PFM Legal Framework, Budget Execution, Accounting and Reporting (US$12.25 million) aimed to strengthen the legal basis for budget management while ensuring that the budget was executed as planned and the quality of information on fiscal operations was improved for more informed government decision making, through: (a) review of PFM legal framework (US$0.05 million); (b) IFMIS rollout to M&As; (c) strengthening financial standards, accounting and reporting (US$0.04 million); (d) treasury, cash, debt and aid management (US$0.62 million); (e) establishment of county treasuries (US$0.49 million); and (f) donor project financial management/use of country systems (US$0.84). 15. Component 3: Revenue Mobilization and Administration (US$5.38 million) supported efforts aimed to improve efficiency and integrity of revenue administration and increase domestic revenue of central government entities, and to integrate revenue systems with overall PFM. It was supported by three sub-components, namely: (a) capacity development of customs (US$0.20 million); (b) tax automation (SIGTAS) (US$4.22 million); and (c) establishment of revenue authority (US$0.96 million). 16. Component 4: Enhancing Transparency and Accountability (US$7.09 million) aimed to improve transparency and accountability in PFM, through: (a) strengthening public procurement oversight (US$0.31 million); (b) strengthening Page 10 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) internal audits and controls (US$1.56 million); (c) strengthening external audit (US$3.23 million); (d) enhancing legislative oversight (US$0.63 million); and (e) civil society and social accountability (US$0.50 million). 17. Component 5: Program Governance and Project Management (US$5.29 million) provided for project and program management function, funding for PFM human resource capacity building, and assure the appropriate sequencing of interventions across the various reform fronts, through: (a) program coordination (US$0.65 million); (b) institutional and capacity building (US$3.16 million); (c) monitoring and evaluation and change management (US$0.46); and (d) project fiduciary (US$0.57 million. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDOs and Outcome Targets 18. The PDO remained unchanged for the duration of the project. Revised PDO Indicators 19. No revisions were made to the PDO indicators during project implementation. Revised Components 20. There were no changes to the design of the components during project implementation. Only changes related to increased funding from the EU financing were made. Other Changes 21. A restructuring was undertaken on May 10, 2016, due to additional US$2,550,490 contribution from the European Union. These additional resources were allocated to broaden implementation of activities under Component 2 of the project – Review of the PFM legal framework, budget execution, accounting and reporting; and component 4 pertaining to enhancing transparency and accountability in PFM. The financing aimed to consolidate IFMIS rollout to additional 10 Ministries and Agencies (M&As), support migration of additional 30 donor-financed projects in the Public Financial Management Unit (PFMU) to IFMIS, and establish pilot county treasuries in 4 counties (Grand Bassa, Bong, Margibi and Nimba). The project was extended by 12 months, from June 30, 2016 to June 30, 2017. These changes were approved through a restructuring on May 10, 2016. Rationale for Changes and Their Implication on the Original Theory of Change 22. The changes did not impact the design of the original theory of change but rather allowed for more ambitious expected outcomes including through wider roll out of IFMIS. Page 11 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Rating: Substantial 23. From project preparation to completion, project objectives aligned well with Bank’s and counterpart’s development priorities. The PDO was aligned with Liberia’s PFM Act. It supported Pillar 1 Improved Efficiency of Budget Preparation and Execution and Enhanced Revenue Administration of the Country Assistance Strategy for FY09-FY11. The PDO remained relevant under the Country Partnership Strategy for FY13-FY17 (Report No.74618-LR) supporting Pillar 3 Governance and Public Sector Institutions. 24. While the objectives were clear, the alignment and linkage between project activities and components and their contribution to PDO could have been clearer. The results chain neither aligned elements of the PDO with indicators nor explained how the different components contribute to these objectives. Enhanced transparency in procurement would have contribute to the oversight of public finance, but was not captured by indicators. Without this, the Bank, beneficiary, implementing agency, and beneficiary institutions lacked a shared understanding of the results chain, why it was important, and how each project activity contributed a link in the chain. B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome 25. The PDO is broken down to four sub-objectives, which are assessed individually based on progress achieved in respective PFM areas and indicators and targets in the results framework. Table 1. Summary of PDO Ratings PDO Rating Overall Rating Negligible Modest PDO 1. To improve budget coverage Negligible PDO 2. To improve fiscal policy management Modest PDO 3. To improve financial control Substantial PDO 4. To improve oversight of government finances 26. PDO 1. To improve budget coverage – was not achieved (rating Negligible). Donor funded activities continue to be outside of the government’s financial statements. The project contributed to improved monitoring of disbursement under the donor-funded projects, but the data is not included into government’s financial statement as was intended by the project. The PDO indicator measuring achievement of the PDO 1 - PEFA PI-7 on Extent of unreported government operations – remained at the baseline of D+, while target was B+. According to assessment of select PEFA indicators commissioned by the Ministry of Finance and Development Planning (MFDP) in 2017, total Budgetary Central Government expenditure reported for the fiscal year 2015/16 was US$613,892,000. The total donor funded expenditures reported by PFMU for the fiscal year 2015/16 was US$96,529,000. This represents 15.7 percent of the reported expenditure not included in the financial statements of the Consolidated Fund Account. This could have been achieved even if the country Page 12 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) systems are not used by including donor funding into financial statements for reporting purposes and accountability to the legislature. 27. PDO 2. To improve fiscal policy management – was not achieved (rating Negligible). Despite initial progress made in the implementation of the Medium-Term Expenditure Framework (MTEF), improvements in fiscal policy management have not yet materialized. The PDO indicator measuring achievement of the PDO 2 – PEFA PI-12 on Multi- year perspective in fiscal planning, expenditure policy and budgeting – was partially achieved and improved from baseline of D+ to C+, but fell short of reaching the target of B+. At the same time, comprehensive review of progress in fiscal policy management did not show significant progress. In addition, several of project outputs have not been used, including budget module and macro-fiscal forecasting capacity financed by the Project in the MFDP. 28. The elements of the MTEF were introduced, but MTEF has not yet become a useful budgeting tool. The MFDP has introduced MTEF and submits budget to the Legislature with estimates for two outer years starting FY12/13. These are important step to lay foundations for future medium term budgeting reform. At the same time, according to the PEFA assessment in 2016 and self-assessment in 2017, there are number of deficiencies that undermine MTEF implementation. These include absence of strategic plans except for Ministry of Education and Ministry of Health; weak linkage between strategic plans and budgeting, and no explanations for changes to expenditure estimates between the second year of the last medium-term budget and the first year of the current medium-term budget. 29. Budget reliability has improved but falls short of expected target. The relevant intermediate indicator measures variation between appropriations and actual expenditures. The indicator shows improved from a baseline of 10 percent to 6.4 percent, which is below the target of 5 percent. The other intermediate results indicator measures variance between revenue forecast and actual revenues, which has deteriorated from baseline value of 5 percent to 8.2 percent at the end of the project. 30. The macroeconomic and revenue forecasting function in the MFDP did not become operational. The MFDP informed the ICR team that the macro-fiscal unit established in 2012 became department in 2014. The project financed training of 5 staff members, vehicle purchase, as well as equipment. At the same time, the MFDP informed the ICR team that they fully relied on the macroeconomic forecast from the IMF and forecasts have not been produced by the unit as of 2017. 31. The budget preparation module procured under the Project is not used by the Government. The Free Balance budget preparation module was procured under the project as was expected to become part of the IFMIS used by the Government. The MFDP informed the implementation completion and results Report (ICR) team that the budget module fails to produce Budget Book in the format required for the budget submission. While the discussions between MFDP and Free Balance are ongoing, the parties failed to reach an agreement before the end of the project. As a result, appropriations have to be entered manually into IFMIS resulting in delays and possible deviations from the approved budget. 32. PDO 3. To improve financial control – partially achieved (rating Modest). IPFMRP’s efforts to improve financial controls were partially achieved by the closing of the project. Progress has been made on improving financial controls and payroll controls as evidenced by the met targets under PDO indicators PEFA PI-18 and PEFA PI-20, but failure to establish adequate Treasury Single Account (TSA), slow roll out of the CSM System, and existence of duplicative manual processes hampered benefits of both IFMIS and CSM in terms of efficiency and time savings. As indicated in the latest 2016 comprehensive PEFA assessment, compliance with internal controls remains an issue, and phasing out of cash rationing has not happened. 33. The TSA was not implemented and centralized payment process was not set up. The introduction of the TSA was envisaged in 2009 PFM Act. During 2014-2016, Government of Liberia bank accounts have been swept at the end of the day into USD and LRD accounts in the Central Bank of Liberia controlled by CAG and then transferred back next day. This practice stopped in 2016. The MFDP developed a concept of the arrangement where balances will be swept to main Page 13 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) accounts in commercial banks and the Central Bank if balances are above one month of average expenditures on operational account and three months on project accounts. In addition, there will be an end of the month reconciliation for reporting. This underutilizes the IFMIS capacity and does not lay the foundations for cash management. 34. There was initial progress with internal controls as a result of first stage of IFMIS roll out and increased capacity of the staff in financial management, but large share of payments is still outside of IFMIS. IFMIS has been rolled out to 50 M&As above the target of 40 M&As. In addition, the Government has established county treasuries, which are already operational in Grand Bassa, Bong, Margibi, and Nimba. A significant part of payments is still initiated and recorded outside of IFMIS as 59 M&As do not yet use the system, but that was not planned under the project. The slower than expected implementation of the system could be partially attributed to suspension of IT Contractor over sanctionable misconduct under IPFMRP: a fraudulent practice of failing to disclose the identity and payment terms of a local agent in Liberia2. IPFMRP also supported training of internal audit staff with 2 ACCAs and 61 certified fraud examiners. Internal auditors have been so far placed in 47 out of 107 M&As, and plans exist to continue roll out under the new operation. 35. Payroll controls have improved due to introduction of the CSM system at Civil Service Agency, but duplicative non-automated processes and slow roll out to M&As undermine the results. The integration and reconciliation between personnel records management by the Civil Service Agency (CSA) and payroll data management by the MFDP has been improved as a result of implementation of the CSM system. At the same time, the system was supposed to be rolled out to five line Ministries by June 30, 2017. The roll out has not happened as of September 2017, and timeline remains unclear. The ICR team was informed that payroll authorizations continue to be done in paper form undermining efficiency gains of the system and delaying processes. 36. MFDP’s Financial Management Training School (FMTS) strengthened financial management and procurement skills within Government of Liberia’s public sector. 132 people earned their Masters in Business Administration and 112 earned graduate diplomas in public procurement through the Intensive Procurement Training Program; there are presently 18 MBA students and 30 procurement students. Some of the students in the program were existing civil servants, however given the lack of personnel at the time of the project initiations, many students were recruited from outside. In order to ensure graduates stay on board they had to do several years of public service or reimburse tuition. Career management framework was not put in place in the CSA or MFDP for the PFM staff, as was envisaged under sub- component 5.2. 37. PDO 4. Improve oversight of government's finances – partially achieved (rating Substantial). The IPFMRP has sought to improve timeliness and quality of the financial statements, external scrutiny by the General Auditing Commission (GAC) and Legislature, and strengthen oversight of public procurement. Many important elements of the oversight have been established or strengthened. While PDO indicators PEFA PI-26 and PI-28 have not been met due to delays in Legislature review, elements of the project focused on procurement oversight, State-Owned Enterprise (SOE) reporting and financial reporting substantially achieved the objective. 38. Financial reporting has improved as evidenced by the PEFA indicators. According to 2016 and partial 2017 PEFA scores, quarterly reports are prepared and disclosed albeit with a delay due to capacity constraints and lack of established business processes to approve reports on time. The Government uses IFMIS and other sources to compile annual financial statements for the consolidated fund. These statements are submitted to Auditor General within six months of the end of year and audited. 39. Important foundations for the external oversight of the budget have being established, but delays in the Legislature review did not allow the results to fully materialize. The GAC completed 2014/15 audit within 13 month, 2015/2016 audit is still ongoing. The PAC Secretariat supported under the project analyzed all the reports. Public Accounts Committee has presented four consolidated public hearing reports on individual audits to the President. The consolidated reports cover PAC hearings and findings on the number of M&As audited by GAC. In 2016, a Special Presidential Task 2 http://www.worldbank.org/en/news/press-release/2017/11/09/world-bank-group-announces-settlement-with-freebalance Page 14 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Force has been established to ensure implementation of PAC recommendations. This has led to some officials being prosecuted and assets recovered. At the same time, legislative reviews of the GAC reports on the financial statements of the Consolidated Fund account 2011/12, 2012/13, 2014/15, all of which have been received by the legislature, have yet to be completed. Public hearings were not organized and final endorsement of the reports by the Legislature did not take place. The PAC Secretariat informed the mission that the MFDP did not attend the meetings, which did not allow hearings to happen. 40. Procurement function has made continuous strides in improving disclosures and fairness of the process . Support to establish online procurement database and improve capacity of M&As by training procurement certified specialist led to improved use of competitive procurement methods and transparency. 2016 PEFA evidenced the improved performance of the procurement system from C to B +, especially on competitive methods – from D to A – and disclosures – from D to B. The procurement database now contains information on vendor registration (404 companies registered), publication of procurement and concession plans, publication of high value contract awards, complaints and tender documents. While no statistics is collected in a regular manner, the ICR team has been provided with anecdotal evidence of significantly increased number of bids per tender. 41. The project supported establishment of SOE oversight function. The SOE unit was established in MFDP in 2013 to monitor financial standing of SOEs consistent with 2009 PFM Act. The scope of oversight expended from 8 SOEs in 2013 to 15 largest SOEs out of total 39, as planned in the original project design. The MFDP uses performance contracts with SOEs. The early results of the performance contract roll-out include improved financial results of SOEs’ net of transfers (from a loss of US$59.6B in FY13/14 to a profit of US$5.3B in FY15/16) and reduced current transfers to SOEs (from US$24.8M in FY13/14 to US$12.3M in FY15/16). Risk going forward include interest-free lending to SOEs, which continues to provide de facto subsidies, and sustainability of the SOE unit due to lack of staff to expand monitoring to cover 100 percent of enterprises. 42. IPFMRP also helped engage civil society in the budgeting process. Over 100 Non-State Actors (NSAs) were trained in PFM, proposal writing, grant management, and/or results-based management. One of the early successes include an accountability scoreboard in Bomi to provide budget information for citizens as well as local officials. The training was focused on laying foundations for citizen engagement. The ICR team has interviewed 9 NSAs and heard overwhelmingly positive feedback on improved engagement, cooperation between local governments and civil society, and great work the NSA Secretariat in the MFDP in engaging the NSAs. 43. Additional results. The project contributed to establishment of the Liberia Revenue Authority (LRA). The activities funded include completion of the LRA Framework, development of the strategic Organogram, publication of the Human Resource Management Manual, as well as provision of furniture, equipment, and vehicles. LRA’s structures and systems are in place and a five-year strategic plan (FY2016/17 – FY2020/21) is operational. PEFA 2016 showed improvement in taxpayer registration and introduction of Taxpayer Identification number, which laid foundation for future improvement of revenue administration. The project provided technical assistance to enhance SIGTAS system, however contract has been cancelled and the Government is currently considering a replacement system to be procured. Justification of Overall Efficacy Rating Rating: Modest 44. IPFMRP substantially achieved the objective of improved oversight of public finances, and partially achieved improved financial controls in Liberia. Several of IPFRMP’s interventions were successful, in particular, procurement reform, establishment of the PAC Secretariat, Legislature Budget Office, and initiation of the IFMIS roll out. Main reason for not fully achieving the targets of PDO indicators was slow review process by the Legislature. Several of these activities contributed to improvements in efficiency and accountability despite interruption in the project implementation caused by Ebola outbreak in 2014-2015. Page 15 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) 45. IPFMRP has not achieved objectives of improved budget coverage and fiscal policy management because the outputs remain incomplete and many of the controls are still manual. As discussed above establishment of macro- forecasting unit in the MFDP did not result in improved forecasting, budget module is not used, and CSM system has not been rolled out. At the same time initial stage of IFMIS roll out was completed as planned under the Project, monitoring of donor funds has improved and initial implementation of the MTEF started. With some effort and support from the IPFMRP II under preparation the impact from the activities under the project could be realized. C. EFFICIENCY Assessment of Efficiency and Rating Rating: Modest 46. The PAD did not provide a cost-benefit analysis of the investments that were going to be made under IPFMRP because the benefits were difficult to quantify. The nature of project activities does not lend itself to standard economic or financial analyses to determine value for money. As a result, the efficiency assessment of IPFMRP is based on a combination of qualitative assessment and a description of the project’s implementation efficiency such as time overruns, cost overruns and operating costs. Based on this analysis and the limited availability of data, IPFMRP’s efficiency is rated Modest. 47. A summary of original approved cost, actual expenditure, and original and actual implementation period is presented below. The project was extended by 12 months from original 4 years to 5 years, but this was as a result of additional EU funding. In terms of disbursements, the Project disbursed 94 percent of the allocated amount. Table 2. Project cost by component Components Allocation, Actual, Percentage US$ US$ of Original Budget Planning Systems, Coverage and Credibility 1,838,000 1,800,415 98% Legal Framework, Budget Execution, Accounting and Reporting 10,258,000 9,049,490 88% Revenue Mobilization and Administration 5,378,000 5,760,228 107% Transparency and Accountability 6,233,000 6,176,735 99% Program Governance and Project Management, including 4,844,000 6,819,278 141% Program Coordination and Financial Management 645,000 1,823,500 283% Additional funding (EU) 3,000,000 Total 31,551,000 29,606,147 94% Note: Additional funding from the EU was not formally distributed by components but commented by the EU, WB and the MFDP to support civil society engagement and FMIS role out to the Justice Sector, thus focusing on component 2, 4 and component 5., but not program coordination and financial management sub-component according to the EU Delegation. 48. The program governance and project management component overspent its original allocation by 41 percent, which indicated inefficient project management. While this component financed capacity development and change management, most of the cost overrun was related to functioning of the RCU. The cost for Program Coordination and Financial Management was over US$ 1.8 million compared to original allocation of US$ 645 thousand. The RCU was in charge of project implementation and coordination of the all PFM reforms in Liberia, which is beyond the project. While the coordination of PFM reforms was an important activity to ensure alignment with Government PFM Strategy and avoid overlaps and duplication by different stakeholders, the cost of this was borne the project. Page 16 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) 49. ICR team compared results claimed under the original project design with achievements documented in the Section B above. The PAD claimed that benefits would be realized through improved macro-fiscal discipline, enhanced aid effectiveness through use of country systems, improved sectoral allocation, improved financial management and control, improved budget credibility and coverage, improved revenue management, improved transparency and accountability, and reduction in inefficiency and corruption. Based on the results framework and PEFA Assessment of 2016, we can say that benefits likely occurred only in a few selected areas. 50. Major gains are yet to materialize despite progress in several areas. Out of nine gains expected in PAD, the ICR team found that only three seem to materialize, four did not, and progress could be observed in other two (See Annex 4 for list of expected benefits). Given Ebola epidemics and initial low capacity, the efficiency could be considered Modest. D. JUSTIFICATION OF OVERALL OUTCOME RATING Moderately Unsatisfactory 51. The ICR team rates the overall outcome of the IPFMRP as Moderately Unsatisfactory. IPFMRP supported capacity development and initial steps in fundamental PFM reforms, but in many areas improvements in the efficiency and accountability of the Liberian government are yet to materialize. Ratings in a satisfactory part of the scale ratings are precluded by the various delays in use of the IT systems procured by the project, business processes sometimes lagging behind IT, and concerns over sustainability of improvements in the functions which were directly funded by the project. At the same time, ability of the government to continue with reforms despite Ebola outbreak is commendable. E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 52. The project intended to support introduction of gender budgeting, however, the initiation of the reform was delayed. Gender budgeting reform was supposed to start in 2013/14, however Ebola outbreak delayed technical assistance. In 2016/17 a Gender Responsive Budgeting Working Group has been created to oversee implementation of the reform. The MFDP through the Budget Call Circular requested the Health Ministry to prepare a Gender Budget Statement (GBS) with associated costs for consideration in the FY2017/18 budget. However, the pilot was delayed. The ICR team was informed by the MFDP that Health Ministry will initiate pilot for FY2018/19 budget. 53. The capacity development efforts supported under the project attempted to promote equal access to training. After the first two batches were admitted to the training programs, the Government and development partners realized that the class was predominantly male. The admission was changed to favor female applicants, which resulted in more balanced classes (see figure below). At the same time, academic support services would be essential to ensure that female student have support required to compensate for on average lower quality education received earlier. Otherwise, some of the female applicants do not graduate due to poor performance. For example, in the 2016 MBA class out of 18 male and 12 female admitted students, 13 male and only 4 female students graduated. Page 17 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Figure 2. FMTP Enrollments by Gender MBA enrollment by gender Procurement program enrollment by gender Source: MFDP presentation Institutional Strengthening 54. IPFMRP helped strengthen PFM institutions, especially the MFDP, LRA, Legislature Budget Office, PAC, and Procurement Commission by improving working conditions, providing training to address critical capacity constraints, and by supporting implementation of the IT systems in human resources, payroll and IFMIS. Mobilizing Private Sector Financing 55. IPFMRP did not mobilize private sector financing. Public financial management is a core state function which is typically financed from the state budget. Poverty Reduction and Shared Prosperity 56. IPFMRP did not explicitly target poverty reduction. However, it can be expected that increased capacity of the government to collect revenues and ensure spending is under control will contribute indirectly to poverty reduction by improving performance of key functions of the government such as PFM, procurement, and revenue administration. Also, the improvement in the PFM system will enable better resource management for service delivery and access to services by citizens, which is an ongoing process. Other Unintended Outcomes and Impacts 57. The initial roll out of treasuries to counties had positive outcome on trust in government and even business development. The success of the county treasury initiative has the potential to promote business development at the county level, as there is already an indication according to the MFDP and that companies in Monrovia are relocating to these counties as the use of checks to pay for goods and services is now available. Page 18 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 58. Alignment with Government’s priorities. The project was prepared in response to efforts of the Government of Liberia to start building foundation for PFM institutions and processes. At the time of inception of the IPFMRP, Liberia did not have any structure or architecture for sound PFM practices. There was an absence of institutions around which to build any meaningful fiscal data to inform policy. The set objectives of the project were in line with those of the Government’s PFM Strategy. 59. Harmonization of donor support. At the time of preparation there were multiple initiatives of development partners which made it difficult to coordinate on donor side, but also posed an undue burden on the government. The project attempted to bring key donors around the table to pursue harmonized support to the Government PFM agenda. The Project also attempted to use country systems to the extent possible including by using MFDP’s Public Financial Management unit for fiduciary issues, while Reform Coordination Unit established for the Project focused on over management of the project activities. Donors participated in the various Technical Working Group Meetings, implementation supervision missions for the project, even during the Ebola Virus Epidemic Outbreak. While contribution to the project was made by EU, USAID, SIDA and AfDB, Australian Aid, Gesellschaft für Internationale Zusammenarbeit (GIZ) and International Monetary Fund (IMF) also played active role in supporting PFM reform efforts in Liberia. 60. Government’s capacity. At the preparation stage, capacity of the Government to implement reform was very low in the post-conflict Liberia. According to the World Governance Indicators, Liberia was at 7th percentile on government effectiveness. The project was designed to address it by focusing on training in financial management, procurement and accounting. 61. Approach to IT investments. The IFMIS and HRMIS expansion and roll out were supported, but little attention was given to laying foundations for the systems through improved regulations and businesses processes. IFMIS implementation is often hampered by lack of clarity regarding system requirements. The project design did not focus on regulatory reforms and business process reengineering and organization framework for PFM. As a result, as noted in the IMF TA report and discovered by the ICR mission, many processes in financial controls and payroll controls are still manual and run in parallel to IT systems. 62. Results framework. The results framework mirrored complex design of the project, was based on PEFA indicators, and had somewhat ambitious targets. The project had seven PDO level and fourteen intermediate results indicators which complicated the monitoring and distorted focus of the project. In addition, results of some activities under the project are not measured including revenue administration, public procurement and civil society engagement. B. KEY FACTORS DURING IMPLEMENTATION Factors subject to Government’s control 63. Coordination and engagement of stakeholders. Steering committee chaired by the Minister of Finance and regular meetings of technical working groups was put in place to ensure higher level coordination. However, during implementation project faced several issues that show coordination of stakeholders did not work well. The IFMIS budget preparation module was accepted and paid without prior consultation with Budget Department. Currently the module is installed but not used. SOE unit was established but at the time the SOE Bureau within the Government continues to exist duplicating functions of SOE oversight. Not having a designated senior government official, for example, Deputy Minister who could lead project implementation in between Steering Page 19 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Committee meetings led to RCU having to take on the role of coordinating agencies across the government and eventually undermined coordination efforts and comprehensive reform process. 64. Political commitment. The commitment of the Government to the reform remained high throughout the project. While implementation of some components lagged behind for reasons discussed above, the management of the MFDP continuously supported the IPFMRP and the PFM reform agenda. The new PFM Strategy recently approved by the Minister of Finance builds on the reforms over last five years and seeks to continue improvements of the PFM in Liberia. 65. Project management. The project management was concentrated in the Reform Coordination Unit. The project supported capacity development of the RCU, however RCU while staffed with consultants still has high staff turnover. There were three heads of RCU in course of 5 years of project implementation, which undermined continuity and led to some delays in implementation. Different beneficiaries also informed the ICR team that changes in fund allocation were not communicated to them in transparent and timeline manner. The PAD envisaged that RCU would coordinate activities, while PFMU will be dealing with fiduciary issues under the project. At the same time, RCU became involved into the financial management early in the project implementation. 66. Sustainability. IPFMRP built capacity through the training programs as well as supporting establishment of the new units including SOE oversight unit in the MFDP. However, most of these initiatives were started outside of the public sector agencies. FMTP, which trained procurement and financial management specialists, was expected to be transferred to the University of Liberia in 2016, but this has not happened and the deadline shifted to 2019. Establishment of the SOE unit in MFDP initiated process of monitoring SOE performance and fiscal risks arising from their activities, however the SOE unit was not transferred to the MFDP, and staff currently wait for the Project Preparation Advance under IPFMPRP2 to continue work. 67. Fiduciary. The project through the PFMU was able to effectively comply with the Financing Agreement covenants. The quarterly IFRs and the annual audited financial statements were submitted to the Bank as and when due; and the reports were acceptable to the Bank in form and content. The procurement procedures were generally followed. At the same time, in 2017 there were concerns around certain expenditures under the project, which triggered in depth financial management review. The review noted additional internal controls put in place but found around US$ 97 thousand potentially ineligible expenditures, which are expected to be addressed by the MFDP by the end of 2017. Factors subject to World Bank control 68. Complex Design. IPFMRP design took into account lessons from the ODI study on PFM reforms in Fragile States. The project tried to incorporate flexibility, sequencing and simplicity. While in many ways this was achieved, the PAD recognizes that while MTEF of macrofiscal planning are too ambitious, the project will still support them based on Government’s commitments. Overall, the project attempted a wide range of PFM reforms. The Concept Note review and QER meeting expressed concerns with too many components and activities, however project proceeded with multiple components and beneficiaries. The project consisted of 5 components with multiple subcomponents across with seven beneficiaries. The team at the review highlighted that the attempt is to cover the whole of the PFM Strategy of the Government. As a result, the project remained a complex operation, demanding in terms of supervision. The moderate risk rating in this case seems to be understated. 69. Supervision. The project was closely supervised with progress and issues reflected in the Aide-Mémoires and ISRs. Action plans for issues that were pending resolutions were prepared and follow-up actions well documented. The Bank team continuously ensured strong collaboration with development partners recognized by the award by the World Bank’s Regional Vice President on “Excellence in Donor Collaboration”. Page 20 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Factors outside the control of government 70. Ebola outbreak. The severe epidemic of Ebola virus disease in Liberia started in March 2014. On May 9, 2015, the World Health Organization declared Liberia free of Ebola, 42 days after safe burial of the last known case-patient. However, another 6 cases occurred during June–July; on September 3, 2015, the country was again declared free of Ebola. Liberia had by then reported 10,672 cases of Ebola and 4,808 deaths. While the response was coordinated between the Government and international community, it stalled institutional reform process for about a year, which was one of the factors leading to a one year extension. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 71. Monitoring and evaluation (M&E) of the project was entrusted to the RCU in cooperation with relevant implementing agencies. M&E specialist was hired into the RCU under the project. Outcome indicators were taken from PEFA methodology. Baselines were taken from 2009 PEFA, and the Project envisaged carrying out PEFA at the end of the Project. Intermediate results indicators were measured based on the Government data. 72. The project results framework was complex and difficult to follow. There were too many indicators: seven at the PDO level and additional fourteen intermediate indicators. Despite twenty one indicators, results expected under activities supported by the project were not captured. Revenue administration was measured only by increase in revenue collection, which is difficult to attribute to the project and is more dependent on tax policy and external factors, SOE oversight and civil society engagement into the budget was not captured at all. Some indicators were poorly formulated. For example, whether revenue increase targets are cumulative or annual was unclear and different ISRs treated indicator differently. 73. The target for PDO level PEFA indicators were ambitious. For seven PDO indicators expectation was that Liberia can improve PFM system performance in from D+ to B for four indicators and C+ for three. Given the very early stage of reform and low capacity, this was not realistic within four-year period. In addition, it is difficult to attribute change in some PEFA indicators - indicator on multi-year perspective covers sector strategies, costing of investments, and debt sustainability analysis, which were not supported by the Project. PEFA indicators are based expert judgement so are not always precise. For example, 2016 PEFA questioned several of 2014 PEFA scores and the quality of the self-assessments was not evaluated, which may pose a risk on inaccurate assessment when done by RCU or external consultant hired given lack of capacity for self-assessment. Consequently, during most of the project implementation period, progress on PDO could only be monitored with intermediate indicators. M&E Implementation 74. The reporting on under the M&E framework was satisfactory throughout the project. The M&E rating in ISRs was Satisfactory during project implementation and the RCU was submitting reports on progress in project implementation and results indicators in a timely manner. M&E Utilization 75. There is little evidence that the M&E framework was utilized as a management tool to guide project Page 21 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) activities, resource allocation or supervision. Deficiencies in design of the results framework, and number of activities not captured in the framework did not allow Government and the Bank team to track progress with indicators over time, discuss delays in progress during the Steering Committee or supervision visits based on indicators. Justification of Overall Rating of Quality of M&E Rating: Modest 76. Results indicators were diligently reported, but deficiencies in design and low utilization of the generated data and information leave in impression that M&E was perceived as a compliance exercise. This is a missed opportunity as better monitoring could have informed proactive actions to address some of the key factors that undermined some project achievements. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE Environmental and social 77. The project did not trigger social and environmental safeguards. The project was an environmental assessment Category “C” Technical Assistance project. The project did not trigger any social safeguards policies. However, it was expected to have positive social impacts through improved public confidence in Government in the management of public finances in a more transparent and accountable manner. The related outcomes have been covered by this report. Fiduciary 78. The project complied with fiduciary-related financing agreement covenants. The project submitted quarterly interim unaudited financial reports and annual audited financial statements on time and in an acceptable formed. In- depth financial management review conducted in 2017 found around US$ 97 thousand potentially ineligible expenditures, which are expected to be addressed by the MFDP by the end of 2017. There were no procurement or disbursement-related covenants in financing agreement. Fiduciary-related issues that impacted project performance are highlighted in section III of this report. C. BANK PERFORMANCE Quality at Entry 79. Project preparation was carried out with an adequate number of specialists who provided the technical skill mix necessary to address sector and fiduciary concerns. The Bank provided adequate human and financial resources to ensure quality preparation and appraisal work (details in Annex 4). The project was consistent with the CAS at the time of approval and with Government priorities in the sector at the time as expressed in the PFM Act and PFM Strategy. The Bank had a close working relationship with the Borrower during preparation and appraisal. 80. The project design was complex despite concerns raised at the QER and simplicity requirement stressed in the PAD section on lessons learned. Sections III and IV describe in details implication of the project design on its implementation. One of the key challenges in implementation was coordination across all stakeholders. Page 22 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Quality of Supervision 81. The Bank team conducted routine missions and reporting was generally timely. The task team supported the RCU through the procurement processes and risks were monitored. As outlined above, arrangements for FM, procurement and safeguards were all generally adequate. The RCU appreciated procurement advice provided by the Bank over many years. The Bank was responsive to the capacity needs of the PFMU, RCU, and other beneficiary institutions, whose staff undertook various training to improve their capacity in implementing the project. 82. On the fiduciary side, Bank team was proactive in their supervision efforts , going beyond the review of FMRs, audit reports and procurement activities in PROCYS. A fiduciary in-depth review was conducted and recommendations communicated to the MFDP. 83. The Bank team failed to objectively reflect lack of progress in ISR ratings. Despite delays or issues in critical activities of the project (SIGTAS expansion, budget module activation), the team only downgraded Component 1 once from Satisfactory to Moderately Satisfactory. The lack of progress in achieving PDO indicators was apparent however from the beginning of the project and through the last filed ISR in December 2016, ISR rating was satisfactory. 84. The Mid-Term Review was carried out in June 2016, but was not used to improve the results framework or address deficiencies in the project implementation. MTR could have provided an opportunity to reflect on the project’s successes and challenges, analyze the M&E situation, consult with stakeholders and set the strategic direction for the last phase of implementation. 85. Justification of Overall Rating of Bank Performance 86. The overall rating for Bank performance is Moderately Unsatisfactory. There were shortcomings in the project results framework, failure to use to inform decisions, ad overly complex design. At the same time, intense supervision and continuous support provided by the Bank to the client allowed the implementing agencies to move forward with the various project activities. While the results have not always been achieved, important foundations for future PFM systems including SOE oversight, external audit, internal audit, and revenue administration have been created. Page 23 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) D. RISK TO DEVELOPMENT OUTCOME Moderate 87. Risk to development outcome is considered to be Moderate in view of further steps needed to improve PFM systems in Liberia, but also agreement with the Government on the follow up project. The Government has demonstrated its commitment to sustain the achievements of IPFMRP by requesting the follow-on IPFMRP 2. The new PFM Strategy has been approved by the Ministry of Finance. In areas where IPFMRP has made progress but failed to achieve intended results such as budget credibility and financial controls could be supported under the new operation with additional focus on results. IPFMRP investments in equipment, human capacity, and IT systems could serve as a foundation for Liberia PFM system going forward. Improved external scrutiny, transparency of procurement process, SOE oversight need to be sustained, which requires resources and Government commitment. 88. Risks to these IPFMRP outcomes could arise if budget limitations make it difficult for the Government to maintain some of the capacity created. Some of the institutions established under IPFMRP, notably RCU, SOE unit employed staff paid under the project. Despite previously reached agreements, the Government did not manage to convert SOE unit staff into public servants. Sustainability of the FMTP remains a challenge. Transition of the program to the University of Liberia planned for 2016 has been delayed till 2019. In addition, the program envisaged a two- year internship paid by the project with graduates hired by M&As at the end of the two-year period. While the absorption rates were fairly high, some M&As did not hire FMTP graduates due to lack of funds or vacancies. If the IPFMRP 2 will continue supporting these institutions, this risk will be mitigated, but only for the duration of the project. 89. Established institutions in budget oversight and improved transparency will create higher demand for future reforms. The progress of the IPFMRP on civil society oversight, Legislature oversight and external audit will likely be sustained and will create additional pressure for further improvements of the PFM systems. Page 24 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) V. LESSONS AND RECOMMENDATIONS 90. Complex project design should be avoided especially in low capacity environments, and development partners and Government efforts should be carefully sequenced and aligned. The fact that the project had five components, twenty subcomponents with a number of activities under each subcomponent had caused problems related with coordination and also dilution of government focus. The consolidation of project activities into few major areas with clear responsibility on the Government side would make the implementation easier. In order to avoid overly complex and ambitious design, the PFM reforms should be sequenced starting with ensuring basic financial controls and ordinarily annual budget process, and addressing more advanced reforms such as MTEF or fiscal risk monitoring during follow up operations. In many cases, complexity of projects is a result of pressure from both development partners and donors to cover the entire PFM reform agenda and reflect development partner priorities. These pressures call for a very balanced approach to ensure that reforms could be absorbed within existing Government capacity, be sequenced to ensure that key bottlenecks to service delivery are addressed, and change management related to reforms is not forgotten. Coordination of reform efforts and donor support is a joint responsibility of all developments partners and the government. 91. Project management should be a responsibility of a senior government official who can resolve issues at political level. While a steering committee chaired by Minister of Finance was established, not having a designated senior government official, for example, Deputy Minister who could lead project implementation in between Steering Committee meetings could undermine coordination efforts. In Liberia RCU took on the role of coordinating agencies across the government, but RCU management are technical and not political position, and could be seen as outsiders to the Government. 92. Teams should avoid using composite indicators like PEFA that are not designed and managed for project-level M&E purposes. Clients are generally reluctant to utilize loan proceeds for the gathering of data or the monitoring of indicators. PSMP II’s efforts to use innovative, CPIA-based indicators in order to reduce M&E costs proved to be unworkable in practice because the data was not sufficiently granular to capture project- level impacts and were subject to unanticipated adjustments to methodology. Indicators based on project-generated data and produced on a regular basis may be best suited for public sector reform projects. The results framework’s intermediate indicators should be streamlined to reduce the administrative burden, and facilitate the client’s efforts to monitor and report on their progress. PEFA assessment could be used to assess overall impact of the reform, but not project implementation. The results indicators should be more focused on the specific capacity and system performance issues that will be addressed under the project. One example under IPFMRP is on financial controls: using indicator such as consolidation of cash balances under the TSA instead of composite PEFA indicator could have helped focus everyone efforts on establishing basis for financial controls, and allow to track progress on an ongoing basis. 93. M&E should be a management tool for any project, not a compliance exercise. Teams should continually review and explain to internal and external audiences how project interventions are expected to lead to results and impacts of importance. As part of the constant dialogue around the results chain, the project results framework should be reviewed and updated periodically, and at least during Midterm Review and each restructuring to ensure that indicators are appropriately defined and measured and that the level of ambition of targets matches the project investment. If the IPFMRP used results framework as a management tool, the likelihood of addressing issues with delayed performance improvements would have been higher. The Implementation Status Reports rating should be used for managing the project and be subject of attention of management of the Practice and Country Management Unit to ensure problems are flagged early on and necessary actions are taken. 94. ICT investments require adequate change management and user support. IPFMRP focused on capacity development and training, but less attention was given to implementation of the IFMIS and CSM system. As a result, manual processes and approvals exist in parallel to the systems, undermining efficiency gains. Consideration of business Page 25 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) process changes and engaging future users of the system well before the IT systems are operational will facilitate taking full advantage of new ICT opportunities. 95. Monitoring of project management expenditures and contingency planning to address implementation capacity gaps are required to ensure project management expenses do not crowd out project expenditures. In a post- conflict countries, such as Liberia, development partners and the Bank should take extra care to examine counterpart project management and implementation capacity at policy and technical levels, and have some contingency funds and options to quickly step-in to fill gaps. This and periodic monitoring of project administration and management expenditures with approval of sizeable overruns by senior management in the Government and the Bank TTL should help ensure implementation capacity is adequately supported and at the same time other project activities are not underfunded VI. COMMENTS ON ISSUES RAISED BY BENEFICIARY/DEVELOPMENT PARTNERS 96. All comments of development partners have been incorporated into this report. 97. The MFDP submitted its Implementation Completion and Results Report in August 2017, a summary of which is contained in Annex 5 to this report. To compare the findings of the Government ICR and this ICR, the team prepared a table summarizing key accomplishments identified in the Government’s report, with Bank team comments. As the Government ICR focused on outputs of the projects, and key legislative and institutional changes, the key differences arising relate to some of the systems or institutions established not yet leading to improved PFM system performance. The ICR team has split the achievements identified in the Government ICR into four sub-objectives. PDO 1. To improve budget coverage The database for externally financed project was developed and managed by The aid management has the Aid Management Unit. Records of all donor funding are captured in the improved, yet the aid is not database for ease of accounting and reporting. The Aid Management Platform reported in Government’s (AMP) was developed and upgraded from version 2.6 to 2.10. Staff from the financial statements. Aid Management Unit were trained in using the platform and certified as AMP Business Users and System Administrators. The backlog of transactions for 30 Donor Financed Projects (DFPs) was migrated from the Sun Accounting System onto the IFMIS Production Environment PDO 2. To improve fiscal policy management The MTEF was adopted and launched in FY 2012/2013. The MTEF manual was This is consistent with the ICR subsequently developed and issued to guide budget formulation process. team’s findings, but weak linkage About 100 budget officers of M&As were trained on how to use the manual in between strategic plans and preparing their plans and budgets. The planning and budgeting process were budgeting, and no explanations strengthened with the merger between the Ministry of Finance and the for changes to expenditure Ministry of Planning for Economic Affairs into the Ministry of Finance and estimates between the second Development Planning. year of the last medium-term budget and the first year of the current medium-term budget, undermine usefulness of the MTEF as a budgeting tool. The National Budget was classified into 11 sectors based on common goals and This is consistent with the ICR objectives. Sector Working Groups were established to coordinate the team’s findings. However, preparation and implementation of the Sector strategies. A Budget Working attribution to the IPFMRP is Group was also established within the MFDP to strengthen collaboration with unclear. Page 26 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) stakeholders in the early phase of the budget preparation process and to minimize delays in the passage of the national budget. Public Investment Management Unit was established and staffed within the This is consistent with the ICR Ministry of Finance and Development Planning. team’s findings, but has not yet realized in improvement in PIM practices and sustainability remains an issue – PIM unit was funded by the project and staff were not transferred to MFDP at the time of the ICR mission in September 2017. The Liberia Macro Forecasting Model (LMFM) was developed with the This is consistent with the ICR assistance of the IMF. MFDP staff trained. team’s findings, but no macroeconomic forecast has been produced by the MFDP so far. The draft PFM Bill on the amendments to the PFM Law was endorsed by Senior This is consistent with the ICR Management of the MFDP and approved by the Cabinet. The Bill was team’s findings, but attribution to submitted to the National Legislature for passage. The Local Government Act the IPFMRP is unclear. was developed and passed by the House of Representatives and it is now awaiting passage in the Senate. PDO 3. To improve financial control GoL launched the IFMIS in 2011, and the system has now been rolled-out to 50 There was initial progress with ministries and agencies, representing 91% of the FY 2016/17 Approved internal controls as a result of first National Budget. An ICT and Network Security Policy was developed, approved stage of IFMIS roll out and and circulated to all M&As with IFMIS. increased capacity of the staff in financial management, but large share of payments is still outside of IFMIS as not all of fifty ministries and agencies use FMIS to process all the payments. The Human Resource (HR) and Payroll Management Modules was This is consistent with the ICR operationalized in 2013. The system replaced the Government Accounting team’s findings. Once use of Payroll System (GAPS) used for processing the Liberian dollar payroll. Civil HRMIS replaces still existing servants are biometrically registered. manual procedures benefits of the system could be realized. The Government of Liberia adopted the Cash Basis IPSAS (International Public According to most recent 2016 Sector Accounting Standard) for financial reporting. PEFA assessment, not all the government agencies are using IPSAS compliant standard for reporting, and mandatory disclosure of notes to financial statement is not met. The Cash Management and Financial Approval functions were consolidated to This is consistent with the ICR improve cash and treasury management functions. team’s findings. However, while improvements in institutional structure were made, cash management practices have not Page 27 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) yet changed. The foundation for establishing a robust TSA has been established, however This is consistent with the ICR TSA is not fully implemented. team’s findings. The Internal Audit Agency (IAA) was established by an Act in 2013 to This is consistent with the ICR strengthen internal controls across government. The agency has deployed team’s findings. auditors in 42 functionaries of government. An Internal Audit Manual was developed and has since been used to guide the conduct of internal audit functions across ministries and agencies where the IAA is deployed. The capacity of IAA auditors continues to be strengthened though the targeted This is consistent with the ICR number for chartered auditors of 60 has not been realized. team’s findings. There are only 2 auditors who received certification. PDO 4. To improve oversight of government finances In partnership with the UNDP-CIPS program, 397 procurement staff from 120 This is consistent with the ICR M&As and other recipients of public funds received CIPS Levels 2 & 3 trainings team’s findings. The enhanced in furtherance of the Commission’s procurement professionalization program. capacity is a result of multi donor efforts, but also was financed by IPFMRP. A Vendor database was developed by PPCC and contains the profile of This is consistent with the ICR registered businesses and companies that are qualified to do business with the team’s findings. government. A new General Auditing Commission (GAC) Act was passed in 2014, giving the This is consistent with the ICR Commission more independence and financial autonomy in the discharge of its team’s findings. functions. The GAC completed the backlog of audit reports over the course of the last This is consistent with the ICR PFM Reform Strategy and Action Plan up to FY 2014/15, and also conducted team’s findings. audits of more recent years. The Legislative Budget Office (LBO) and PAC Secretariat were established to This is consistent with the ICR provide technical support to the Legislature in the performance of its oversight team findings role. The PAC completed the analysis of the backlogs of 80 audit reports. Regular hearings on these reports commenced, but some could not be processed due to unavailability of some former public officials. A Non-State Actor (NSA) Secretariat was setup and operationalized within This is consistent with the ICR MFDP. The NSA Secretariat is working with Civil Society Organizations (CSOs) team’s findings. and the media in building their capacities in areas of PFM and Police and Justice. The NSA Secretariat assisted in strengthening the partnership between grant recipient CSOs, local authorities and frontline service providers through structured dialogue and engagement in the 15 counties. The Citizen’s Guide to the Budget was regularly prepared and distributed across This is consistent with the ICR the country. team’s findings. The Financial Management Training Program was established in 2008 under the This is consistent with the ICR auspices of the University of Liberia and other counterparts. The program has team’s findings. graduated 150 students with MBA degrees, with emphasis in Public Financial Management. The Intensive Procurement Component of the Program also graduated over 120 students with post-graduate diplomas in procurement. The State-Owned Enterprises (SOEs) Financial Reporting Unit was set up in the This is consistent with the ICR MFDP in 2013. The Unit monitors the financial operations of SoEs and produces team’s findings. Page 28 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) consolidated reports on the financial affairs of 15 SoEs including the “big” eight (8), highlighting their financial performance, debt and investment analysis, sources of funding, economic viability and their potential fiscal risks. Additional Results The Liberia Revenue Authority (LRA), a successor to the Department of This is consistent with the ICR Revenue under the erstwhile Ministry of Finance, was established in July 1, team’s findings. 2014 by an act of the Legislature. An internal tax appeals office was setup and made more functional, building assurances for recourse and confidence among taxpayers. SIGTAS and ASYCUDA were deployed at various tax and customs collection centers across the country. . Page 29 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Improve budget coverage Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PEFA PI-7 Extent of Unreported Text D+ B B D+ Government Operations 15-May-2015 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Objective/Outcome: Improve fiscal policy management Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PEFA PI-12 Multi-year Text D+ B B C+ perspective in fiscal planning, expenditure policy and 15-May-2015 30-Jun-2017 30-Jun-2017 30-Jun-2017 budgeting Page 30 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Comments (achievements against targets): Objective/Outcome: Improve financial controls Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PEFA PI-18 Effectiveness of Text D+ B B C+ payroll controls 15-May-2015 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Objective/Outcome: Improve financial controls Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PEFA PI-20 Effectiveness of Text C+ B B C+ internal controls for non-salary expenditure 15-May-2015 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Objective/Outcome: Improve oversight of government's finances Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PEFA PI-25 Quality and Text D C+ C+ C+ timeliness of annual financial statements 15-May-2015 30-Jun-2017 30-Jun-2017 30-Jun-2017 Page 31 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PEFA PI-26 Scope, nature and Text D C+ C+ D+ follow-up of external audit 15-May-2015 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PEFA PI-28 Legislative Text D C+ C+ D+ scrutiny of external audit reports 15-May-2015 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): A.2 Intermediate Results Indicators Component: Enhancing Budget Planning Systems, Coverage, and Credibility Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Quarterly fiscal operations Yes/No N Y Y Y Page 32 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) reports (FORs) generated 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Variance between M&As Percentage 10.00 5.00 5.00 12.00 appropriations and actual expenditures 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Variance between revenue Percentage 5.00 3.00 3.00 9.00 forecasts and actual collections 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Component: Legal Framework, Budget Execution, Accounting and Reporting Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Proportion of Government Percentage 0.00 95.00 95.00 0.00 balances in Treasury Single Account 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Page 33 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Donor projects in CAGD-based Number 0.00 30.00 30.00 30.00 IFMIS reports 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion M&As generating monthly Number 2.00 40.00 40.00 50.00 expenditure reports through IFMIS 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Annual financial statements Number 6.00 3.00 3.00 7.00 generated through IFMIS after FY end 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Page 34 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Component: Revenue Mobilization and Administration Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Increase in customs revenue Percentage 23.00 10.00 23.00 40.00 collections adjusted for inflation 31-Dec-2011 11-Nov-2016 11-Nov-2016 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Increase in internal revenues Percentage 263.00 50.00 0.00 50.00 adjusted for inflation 31-Dec-2011 11-Nov-2016 11-Nov-2016 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Qualified procurement staff in Number 40.00 165.00 165.00 182.00 M&As 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Indicator Name Unit of Baseline Original Target Formally Revised Actual Achieved at Page 35 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Measure Target Completion Internal Audit staff holding Number 0.00 60.00 0.00 0.00 professional certifications qualifications 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Benchmarks in budget Number 5.00 7.00 7.00 6.00 information from MoF met out of nine as defined by PEFA PI-6 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Qualified external audit staff in Number 40.00 165.00 165.00 150.00 GAC 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Component: Enhancing Transparency and Accountability Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Page 36 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Qualified procurement staff in Number 40.00 165.00 165.00 182.00 M&As 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Internal Audit staff holding Number 0.00 60.00 0.00 0.00 professional certifications qualifications 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Benchmarks in budget Number 5.00 7.00 7.00 6.00 information from MoF met out of nine as defined by PEFA PI-6 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Qualified external audit staff in Number 40.00 165.00 165.00 150.00 GAC 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Jun-2017 Page 37 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Comments (achievements against targets): Component: Program Governance and Project Management Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Annual PEFA Self-Assessments Yes/No Y Y Y Y 19-Jun-2014 30-Jun-2017 30-Jun-2017 30-Nov-2016 Comments (achievements against targets): Page 38 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: Improve budget coverage Extent of unreported budget operations (PEFA PI-7) Outcome Indicators Intermediate Results Indicators PEFA assessment Key Outputs by Component Reported government budget operations (linked to the achievement of the Objective/Outcome 1) Objective/Outcome 2: Improve fiscal policy management Multi-year perspective in fiscal planning, expenditure policy and Outcome Indicators budgeting (PEFA-12) 1.Variance between budget appropriations and actual 2.Variance between revenue forecasts and actual collections Intermediate Results Indicators 3.Increase in customs revenue collections adjusted for inflation 4.Increase in internal revenues adjusted for inflation 1.Training, equipment, vehicles (subcomponent 1.2). 2.Free Balance budget preparation module of IFMIS (subcomponent 2.2) Key Outputs by Component 3.Training in forecasting, equipment (subcomponent 1.1) (linked to the achievement of the Objective/Outcome 2) 4.Training and vehicles for customs (subcomponent 3.1), hardware for SIGTAS expansion (subcomponent 3.2), power generators, renovations, training for Revenue Authority (subcomponent 3.3) Page 39 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) Objective/Outcome 3: Improve financial control 1. Effectiveness of payroll controls (PEFA PI-18) 2. Effectiveness of internal controls for non-salary expenditures Outcome Indicators (PEFA PI-20) 1. Qualified procurement staff in M&A 2. Internal audit staff holding professional certification qualifications Intermediate Results Indicators 3. Proportion of Government balances in Treasury Single Account 4. M&As generating monthly expenditure reports through IFMIS 1. Roll out of Civil Service Management system (subcomponent 2.2) 2. Funding for the Financial Management Training Program, equipment, knowledge exchange (subcomponent 4.1) 3. Funding for the Financial Management Training Program, Key Outputs by Component equipment, knowledge exchange (subcomponent 4.2) (linked to the achievement of the Objective/Outcome 3) 4. Consultancy and training (subcomponent 2.4) 5. Roll out of IFMIS, hardware, software licenses; training of trainers (subcomponent 2.2). Renovations and capacity building for country treasuries (subcomponent 2.5) Objective/Outcome 4: Improve oversight of Government’s finances 1. Quality and timeliness of annual financial statements (PEFA PI-25) Outcome Indicators 2. Scope, nature and follow up of external audit (PEFA PI-26) 3. Legislative scrutiny of external audit reports (PEFA PI-28) Page 40 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) 1. Quarterly fiscal reports generated 2. Donor projects in CAGD-based FMIS reports 3. Annual financial reports generated through FMIS 4. Benchmarks in budget information from MoF met out of nine Intermediate Results Indicators defined by PEFA PI-6 5. Qualified external audit staff in GAC 6. Annual PEFA self-assessment 1. Technical assistance, training on accounting and reporting (subcomponent 2.3) 2. Training and equipment for operating Aid Management Platform (subcomponent 2.4); training and consultancy on Key Outputs by Component country systems (subcomponent 2.6) (linked to the achievement of the Objective/Outcome 4) 3. Technical assistance and training (subcomponent 4.3) 4. Consultancy and training (subcomponent 4.4) 5. Monitoring and evaluation (subcomponent 5.3) Page 41 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Title Unit Responsibility PREPARATION Ismaila B. Ceesay Lead Financial Management Specialist AFTFM Task Team Leader Anders Jensen Monitoring and Evaluation Specialist AFTDE M&E Jariya Hoffmann Senior Economist AFTP4 Economic Policy Daniela D. Junqueira Counsel LEGAF Legal Martin Serrano Senior Counsel LEGES Legal Daniel Kwabena Boakye Economist AFTP4 Economic Policy Luis M. Schwarz Senior Finance Officer CTRFC Disbursement Khuram Farooq Program Manager HRSSY IFMIS Winter Chinamale Procurement Specialist AFTPC Procurement Charles Taylor Procurement Specialist AFTPC Procurement Maxwell Bruku Daapah Financial Management Specialist AFTFM Financial Management Raymond Muhula Public Sector Specialist AFTPR Public Sector Marie J. Bolou Program Assistant AFTFM Program Assistant Esther Bryant Team Assistant AFTLR Team Assistant Charlotte Hayfron Program Assistant AFCW1 Program Assistant SUPERVISION Donald Herrings Mphande Lead Financial Management Specialist GGO31 Task Team Leader Charles Taylor Procurement Specialist GFM1A Procurement Snr. Financial Management Specialist GGO31 Financial Management Saidu Dani Goje Specialist Sr. Operations Officer GGO31 Operational Support Team Ikechi Okorie Member David Waigwa Wachira Public Sector Specialist GGO19 Public Sector Dolele Sylla Public Sector Specialist GGO13 Public Sector Ismaila B. Ceesay Lead Financial Management Specialist GGO25 Financial Management Khuram Farooq Snr. Financial Management Specialist GGO25 Financial Management Sr. Operations Assistant GGO31 Operational Support Team Marie Bolou Member Zoe Quoi Diggs Duncan Team Assistant AFMLR Team Assistant COMPLETION Donald Herrings Mphande Lead Financial Management Specialist GGO31 Task Team Leader Oleksii Balabushko Sr. Public Finance Specialist GGO19 Contributing Author Lucy Anyango Musira Operations Analyst GGO19 Co-Contributing Author Zoe Quoi Diggs Duncan Team Assistant AFMLR Team Assistant Page 42 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY12 6.935 134,184.11 Total 6.94 134,184.11 Supervision/ICR FY13 10.475 129,270.10 FY14 8.007 161,636.24 FY15 11.070 106,791.92 FY16 16.408 84,835.15 FY17 21.124 148,058.18 FY18 10.685 38,158.69 Total 77.77 668,750.28 Page 43 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) ANNEX 3. PROJECT COST BY COMPONENT Amount at Actual at Project Percentage of Approval Components Approval Closing (US$M) (US$M) (US$M) 1. Enhancing Budget Planning Systems, Coverage 1.84 1.84 0 and Credibility 2. Strengthening PFM Legal Framework, Budget 10.26 12.25 19% Execution, Accounting and Reporting 3. Revenue Mobilization and Administration 5.38 5.38 0 4. Enhancing Transparency and Accountability 6.23 7.09 13.8% 5. Program Governance and Project Management 4.84 5.29 9.3% Total 28.55 31.85 0.00 Financing Source of Funds Type of Co-financing Appraisal Actual/Latest Percentage of Estimate (USD) Estimate (USD) Appraisal IDA-50260 Pooled 5,000,000 4,847,787 TF-12390 Grant 18,112,668 18,093,558 TF-A2366 Grant - 2,550,000 AfDB (Grant)-Pooled Pooled 4,600,000 4,600,000 Page 44 of 77 The World Bank Liberia Integrated Public Financial Management Reform Project ( P127319 ) ANNEX 4. EFFICIENCY ANALYSIS Efficiency gains from improved PFM Benefit described in PAD Progress under the Project Comment The variance in revenue and expenditure Gain has not Improved macro-fiscal discipline outturns have not been reduced. materialized under the project The aid effectiveness has increased as a result Gain materialized Enhanced aid effectiveness of use of the Aid Management Platform and improved donor coordination According to the 2012 PEFA the variance in Gain has not Improved sectoral allocations expenditure composition exceeded 15 percent materialized under the project Financial controls improved as a result of first Gain materialized Improved financial control stage of FMIS roll out Budget coverage have not improved although Gain has not Improved budget credibility and some progress is made in SOE reporting. SOE materialized under the coverage statements still not audited. project Revenue management somewhat improved Gain partially Improved revenue management with introduction of taxpayer identification materialized. number Transparency has improved with procurement Gain materialized Improved transparency disclosures, four GAC report published Inefficiencies have not been removed by FMIS Gain has not Reduction in inefficiencies and CSM due to manual processes still being in materialized under the place project Corruption Perception Index in Liberia Gain has partially Reduction in corruption remained essentially unchanged (ranked 97th in materialized. 2010 and 90th in 2016), however there are important initiatives to fight corruption such as the Presidential Task Force. . Page 45 of 77 ANNEX 5. BENEFICIARY’S IMPLEMENTATION AND RESULTS COMPLETION REPORT REPUBLIC OF LIBERIA Integrated Public Financial Management Reform Project: P127319 Implementation Completion Report PFM REFORM COORDINATION UNIT MINISTRY OF FINANCE AND DEVELOPMENT PLANNING Page 46 of 77 Table of Contents 1. LIST OF ACRONYMS ......................................................................................................... 48 2. EXECUTIVE SUMMARY ..................................................................................................... 50 3. INTRODUCTION ............................................................................................................... 52 4. BACKGROUND OF THE PFM REFORM STRATEGY............................................................... 52 5. BASIC PROJECT INFORMATION......................................................................................... 53 6. RELEVANCE OF THE PROJECT DESIGN AND OBJECTIVES .................................................... 53 7. ACHIEVEMENT OF THE PDO RESULTS INDICATORS ........................................................... 53 8. ACHIEVEMENTS UNDER EACH COMPONENT..................................................................... 55 8.1 Component 1: Enhancing Budget Planning Systems, Coverage, and Credibility ................................ 55 8.2 Component 2: Strengthening PFM Legal Framework, Budget Execution, Accounting and Reporting 56 8.3 Component 3: Revenue Mobilization and Administration ................................................................ 59 8.4 Component 4: Enhancing Transparency and Accountability ............................................................. 60 8.5 Component 5: Program Governance and Project Management ........................................................ 63 9. MONITORING AND EVALUATION DESIGN AND IMPLEMENTATION ................................... 64 10. FIDUCIARY COMPLIANCE................................................................................................ 64 11. MAJOR IMPLEMENTATION CHALLENGES ........................................................................ 64 12. SUSTAINABILITY OF PFM REFORMS ................................................................................ 65 13. KEY LESSONS LEARNT ..................................................................................................... 66 14. CONTRIBUTIONS OF THE WORLD BANK AND OTHER DEVELOPMENT PARTNERS ............. 67 15. ANNEXES ....................................................................................................................... 68 Page 47 of 77 1. List of Acronyms ACCA Association Certified Chartered Accountants AER Annual Economic Review AfDB African Development Bank AMP Aid Management Platform ASYCUDA Automate System for Custom Data CAG CBO Comptroller and Accountant General Community Based Organization CFE Certified Fraud Examiners CIPS Chartered Institute of Procurement and Supply CSDRMS Commonwealth Secretariat Debt Recording and Management System CSA CSM Civil Service Agency Civil Service Management CSO Civil Society Organization DFID Department for International Development DFP Donor Financed Project EAAPAC Eastern Africa Association of Public Accounts Committees EU European Union EVD Ebola Virus Disease FAD Fiscal Affairs Department FMTP Financial Management Training Program GAC General Auditing Commission GAPS Government Accounting Payroll System GBS Gender Budgeting Statement GFS Government Finance Statistic HR Human Resource HRMIS Human Resource Management Information System IAA Internal Audit Agency ICR Implementation Completion Report IPTP Intensive Procurement Training Program IFRS International Financial Reporting Standards IIA Institute of Internal Auditors IFMIS Integrated Financial Management Information System IMF International Monetary Fund IPFMRP Integrated Public Financial Management Reform Project LBO Legislative Budget Office LMC Liquidity Management Committee LRA Liberia Revenue Authority MBA Master of Business Administration MoH Ministry of Health MFAU Macro Fiscal Analysis Unit MFDP Ministry of Finance and Development Planning Page 48 of 77 MTEF Medium Term Expenditure Framework MTFF Medium Term Fiscal Framework NSA Non-State Actors PAC Public Accounts Committee PDO Project Development Objective PEFA Public Expenditure Financial Accountability Assessment PEMFAR Public Expenditure Management and Financial Accountability Review PFM Public Financial Management PFMRCU PFM Reforms Coordination Unit PFM RS&AP PFM Reforms Strategy & Action Plan PFMU Project Financial Management Unit PPCC Public Procurement and Concession Commission PRS Poverty Reduction Strategy Southern African Development Corporation Public Accounts Committees SADCOPAC Sida Swedish International Cooperation Development Agency SIGTAS Standard Integrated Government Tax Administration System SNAO Swedish National Auditing Office SoEs State-Owned Enterprises TMC Treasury management Committee UNDP United Nations Development Program USAID United States Agency for International Development WAAPAC West Africa Association of Public Accounts Committees Page 49 of 77 2. Executive Summary The Liberia Integrated Public Financial Management Reform Project (IPFMRP) was launched in 2012 to provide support to PFM operations over a period of four years. The IPFMRP, underpinned by the results of various diagnostic assessments, was instituted as a vehicle to implement the PFM Reforms Strategy and Action Plan (2011-2016). The project’s principal objectives were to improve budget coverage, fiscal policy management, financial control, and oversight of government finances. At the end of original project completion date of June 30, 2016, the Government’s request for a one year no cost extension was granted by the Bank to continue with the implementation of programs that were affected by the outbreak of the Ebola Virus Disease (EVD) in 2014. The overall funding of the project amounted to US 31.5 million: Initial funds of USD28.5 million came from World Bank, Sida, AfDB and USAID. Additional funding of USD 3 million was provided by EU to support reform activities in the areas of Civil Society and Social Accountability and PFM in the Justice System. The IPFMRP officially closed on June 30, 2017, and the next few months will be devoted to administrative closure, preparation of the project implementation report and the design of a follow on project. While concerted efforts were devoted in implementing the reform earmarked by the project, only three of the project’s seven Development Indicators were attained fully, while the fourth progressed but felt short of target. The achieved indicators include (i) Effectiveness of payroll controls, (ii) Effectiveness of internal controls for non-salary expenditures and (iii) the Quality and timeliness of annual consolidated financial statements. These improvements were due primarily to the installation of the IFMIS, the HR and Payroll Management System and the deployment of internal auditors across government entities. Conversely, the effective implementation of the MTEF, provision of adequate information on off-budget expenditure, timely submission of audit reports to the National Legislature are indicators that fell short of target. Regular conduct of public hearings on the consolidated accounts and the implementation of audit recommendations did not also progress. Regarding achievements of the project intermediate indicators, 64% was achieved. That is, 9 out of 14 indicators met target. The others made progress, but felt short of the desired end of project target. Number of key factors affected the implementation of the project. They include the outbreak of the Ebola Virus Disease in 2014, changes in the operational leadership of the project, staff turnover and frequent changes of personnel within M&As and the temporary suspension of the IFMIS service provider in 2013, among others. Some important lessons were learned at the conclusion of the project, including the following: ❖ Close coordination between the World Bank, IMF and other donors during the design and implementation of PFM project is critical to avoiding duplication of support to PFM programs. Partners should be able to identify clearly their areas of intervention prior to implementation. ❖ The use of country system should be encouraged. It strengthens ownership of the reforms and builds capacity in borrowing country. Front line PFM staff should be identified and well remunerated for efficient delivery & sustainability of PFM reforms. Page 50 of 77 ❖ Change management is a critical element for communicating progress of reform. Hence, an effective Change Management and Communication Strategy, incorporating both the technical and human side of change, should be developed to guide the change process. ❖ Reform programs should be realistic and implementable. Clear & concise measurable indicators are needed to effectively track and measure progress. Reporting template that is acceptable to all should be developed prior to implementation of projects. ❖ Government’s engagement with civil society organizations (CSOs) is crucial for promoting governance, transparency and accountability. A secretariat for coordinating Non State Actors PFM activities should be independent of the Ministry. The PFM Reform Coordination Unit, within the Ministry of Finance & Development Planning, serves as the coordinating hub of the reform, with oversight from the PFM Steering Committee (chaired by the Finance Minister) and the Technical Committee (headed by the Deputy Minister for Fiscal Affairs). The Unit is headed by a Coordinator and assisted by a Deputy Coordinator and a host of other PFM staff. Page 51 of 77 3. Introduction The Government of Liberia implemented the Integrated Public Financial Management Reform Project (IPFMRP), with the aim of improving budget coverage, fiscal policy management, financial control, and oversight of government finances. IPFMRP was implemented in support of the PFM Strategy and Action Plan under the following seven thematic areas: (i) Improving budget credibility; (ii) Expanding budget coverage and strengthening budget execution; (iii) Strengthening revenue mobilization; (iv) Enhancing transparency and accountability in PFM; (v) Enhancing controls and respect of the PFM legal framework; and (vi) Strengthening treasury management. The project was implemented over a period of five years (2011 – 2017) with significant progress recorded under each Component as detailed herein. In 2014, implementation of the project activities was disrupted as the result of the outbreak of the Ebola Virus Disease. A one year No-Cost extension was granted after the official closing date of June 2016, to allow the completion of activities that were affected by the Ebola outbreak. Despite the severity of the Virus, implementation of the PFM Reform Strategy & Action Plan was moderately successful. This project Implementation Completion Report (ICR) is the Government’s final report that summarizes results (outcomes) of the implementation of the IPFMRP, which includes the status of the Project Development Objective (PDO) level indicators and intermediate indicators; challenges, and lessons learnt. A PEFA Self-Assessment was conducted in May 2017 to reassess the seven IPFMRP PDOs and intermediate indicators. 4. Background of the PFM Reform Strategy Several studies conducted at the request of the Liberian Government identified a range of weaknesses in Liberia‘s Public Financial Management (PFM) systems. The 2008 Public Expenditure Management and Financial Accountability Review (PEMFAR), the first comprehensive assessment of public expenditure and financial management systems in Liberia, as well as IMF FAD‘s TA Report from 2009, were the earliest post-war diagnoses of Liberia’s PFM Systems. The PEMFAR included a PEFA PFM Performance Report that reflected findings of an assessment conducted jointly by the World Bank, AfDB, the IMF, UNDP, DFID, Swedish National Auditing Office (SNAO), and the Government of Liberia between September and December 2007. These diagnostic studies formed the bedrock for developing Liberia’s first post-war PFM Strategy and Action Plan (2011-2016). The PFM Strategy and Action Plan was approved by the Government of Liberia in July 2011 and revised in October 2013. The original and revised Strategy and Action Plan (2011 – 2016) was consistent with, and aligned to, the economic revitalization pillar of Liberia‘s Poverty Reduction Strategy (PRS) and the vision enshrined in Liberia Rising - 2030. This pillar was anchored on the fact that rapid and sound public financial management is crucial to achieving rapid, inclusive, and sustainable economic growth and development. The Strategy, as revised, focused on seven thematic areas and sought to improve credibility of the budget, strengthen revenue mobilization and administration; enhance transparency and Page 52 of 77 accountability in PFM, strengthen controls and respect for the PFM legal framework; and improve accounting and reporting across M&As. In 2012, the government with support from its Development Partners (AfDB, EU, Sida, USAID, and the World Bank) launched the Integrated Public Financial Management Reform Project (IPFMRP) to support the implementation of the Strategy and Action Plan. 5. Basic Project Information Approval Date (as of board presentation) December 15, 2011 Effective Date September 18, 2012 Closing Date June 30, 2017 Total Project Cost US$ 28.55 million Commitment Amount US$ 5.00 million Additional Funding US$ 3.00 million Current Team Leader Donald Herrings Mphande Previous Team Leader Ismalia Ceesay Implementing Agency Ministry of Finance & Development Planning 6. Relevance of the Project Design and Objectives The elaborate design of the project supported the Agenda for Transformation, Liberia’s medium term development strategy. The indicators set for monitoring and evaluating the project outcomes were necessary in contributing to the achievement of the project development objectives (PDOs). The project objectives, which identified the need to improve budget coverage, strengthen fiscal policy management, financial control, and oversight of government finances and the activities in achieving those objectives, were relevant and remained well on course throughout the period of the project implementation. The objectives were consistent with the World Bank Country Partnership Strategy (2013-2017), which focused on improving public investment, budget management, efficiency of public finances and a more transparent and accountable use of public resources. The IPFMRP officially closed on June 30, 2017. 7. Achievement of the PDO Results Indicators Three of the seven PDO level indicators achieved target, one improved but fell short of while three remained unchanged as determined by 2017 PEFA Self-assessment. While the three indicators did not meet PEFA criteria for better scores, it is worth noting that significant progress was made towards achieving each. Summary justification for each indicator is outlined below: ❖ PI 7: Extent of unreported Government operations: The score remained unchanged at D+, missing a target of B+ because donor projects managed by Project Financial Management Unit (PFMU) and other M&As are not consolidated into the financial statements of the Consolidated Fund account by the MFDP. However, balances of thirty (30) donor-funded projects, including the IPFMRP, Page 53 of 77 were brought into IFMIS as part of a wider plan of bringing all DFPs on IFMIS to aid reporting and accounting and ensure consolidation. ❖ PI-12. Multi-year perspective in fiscal planning, expenditure policy and budgeting: The score improved from D+ to C+ but not enough to meet the target of B+. The current National Budget provides two outer years’ projections, while the criterion for this PEFA indicator requires three outer years’ projections for a higher score. Also, changes in the multi-year expenditure estimates in the rolling MTEF budget are not explained, thus the reason for a lower score. ❖ PI-18. Effectiveness of payroll controls This indicator improved from D+ to meet the target score of B+. The improvement in the score has largely been due to integration of personnel records and payroll data between CSA and MFDP. Further gains could be made by improving the ability of the CSA to obtain information on changes to personnel records in a timely manner, regular routine reconciliation meetings between MFDP and CSA, and a regular updating of personnel records. ❖ PI-20. Effectiveness of internal controls for non-salary expenditure PI -20 also improved from the low score of C+ to meet the target score of B+. The improvement in the score is partly because of the rollout of IFMIS to 50 M&As, the expansion of the work of the IAA to over 40 M&As and the improvement of internal control processes in the office of the Comptroller & Accountant General. ❖ PI-25. Quality and timeliness of annual financial statements Quality and timeliness of annual financial statements improved from a low score of D in 2012 to B+ in 2017, thus exceeding the target score of C+. This marked improvement has mainly been because of compliance with the reporting requirements of the Cash Basis IPSAS adopted by the Government of Liberia, coupled with improvement in timely submission ❖ PI-26. Scope, nature and follow-up of external audit This indicator remained unchanged from the low score of D+, thus missing the target score of C+. The primary reason for the poor score is delays in submission of audit reports by the Auditor General to the Legislature, which has also been a result of late response by auditees to audit queries raised by the Auditor General. ❖ PI-28: Legislative scrutiny of external audit reports Based on the 2011 PEFA assessment framework, the score remains at a low D+, missing the project target score of C+. The low score is attributed to delay by the Legislature in reviewing the audit reports of the Consolidated Fund submitted by the Auditor General for the fiscal years 2012/13, 2013/14 and 2014/15. The 2011 PEFA assessment framework uses MI method to calculate this score. The score is however better at C+ if it is based on the 2016 refined PEFA assessment framework which uses M2 method to calculate the score. The better score is influenced by the coverage of the audit and the use of international standards Page 54 of 77 by the GAC in the conduct of the audit. 8. Achievements Under Each Component 8.1 Component 1: Enhancing Budget Planning Systems, Coverage, and Credibility Objective: The objective of this component is to establish comprehensive budget coverage and strengthen fiscal policy and budget management at all levels of government. ❖ The Medium Term Expenditure Framework (MTEF) budgeting was adopted and launched in FY 2012/2013 with a view to providing a clear link between annual budget processes and national development priorities as outlined in the Government’s National Development Strategies (The Agenda for Transformation (AfT) and the Vision 2030). The MTEF manual was subsequently developed and issued to guide budget formulation process. About 100 budget officers of M&As were trained on how to use the manual in preparing their plans and budgets. The planning and budgeting process were strengthened with the merger between the Ministry of Finance and the Ministry of Planning for Economic Affairs into the Ministry of Finance and Development Planning. With the adoption of MTEF, the budgeting has improved in content and presentation. ❖ The National Budget was classified into 11 sectors based on common goals and objectives. Sector Working Groups were established to coordinate the preparation and implementation of the Sector strategies. A Budget Working Group was also established within the MFDP to strengthen collaboration with stakeholders in the early phase of the budget preparation process and to minimize delays in the passage of the national budget. These budget working groups increased wider participation and consultation among stakeholders in the budget formulation process. ❖ Public Investment Management Unit was established and staffed within the Ministry of Finance and Development Planning. The Unit has continued to play a crucial role in budget formulation by ensuring that prioritized projects are brought onto the national budget for implementation. An Excel based Project Management Platform (PMP) has been developed and is populated with information for all public sector projects that are financed through the national budget since 2012. ❖ The Citizen’s Guide to the Budget was regularly prepared and distributed across the country. The Citizen’s Guide is a summarized and simplified representation of the national budget that informs citizens about how the resources of the country are being allocated and used for service delivery. The Guide provides an opportunity for citizens to participate and serve as social accountability agents during the budget formulation and execution processes. ❖ The database for externally financed project was developed and managed by the Aid Management Unit. Records of all donor funding are captured in the database for ease of accounting and reporting. The Unit produces and publishes quarterly and annual aid reports on Page 55 of 77 a timely basis due partly to the configuration of the Aid Management Platform. A National Aid Policy was developed for enhancing and guiding aid coordination during budget formulation and execution. ❖ The State-Owned Enterprises (SOEs) Financial Reporting Unit was set up in the MFDP in 2013. The Unit monitors the financial operations of SoEs and produces consolidated reports on the financial affairs of 15 SoEs including the “big” eight (8), highlighting their financial performance, debt and investment analysis, sources of funding, economic viability and their potential fiscal risks. The consolidated reports are published regularly although the preparation and publication are delayed. Monitoring of the SoEs financial affairs has contributed in part to a 79% decrease (US$24.8M to US$5.3M) in subventions to SoEs between 2013 and 2016, and a steady increase in SoEs’ contributions to the National Budget over the same period. Some SoEs have adopted the International Financial Reporting Standards (IFRS) as the framework for reporting. ❖ The Liberia Macro Forecasting Model (LMFM) was developed with the assistance of the IMF. The model provides the technical basis for estimating macroeconomic trends which are necessary in preparing the medium-term fiscal framework and the annual budget framework paper. Improved fiscal forecasting combined with effective aggregate control have enhanced budget credibility, timely production and publication of various macroeconomic and financial reports including fiscal outturns and the Medium Term Fiscal Framework paper. The development of this model follows comprehensive training of staff from the Macro Fiscal Analysis Unit (MFAU) (now Economic Management Department) in macro-modelling techniques and revenue forecasting. ❖ Fiscal Outturn and Annual Economic Reviews (AER) reports are produced regularly and published. Fiscal outturn reports are periodic publications that provide comparisons of actual revenue and expenditure with approved budget, presented in accordance with the Government Finance Statistics (GFS) classification. The AER provides information to policy makers on the prevailing macroeconomic outlook and recommends policy interventions that are needed to address issues emanating from the review. These regular publications have created more public access to government’s fiscal information and improved resources for educational institutions and policy makers. 8.2 Component 2: Strengthening PFM Legal Framework, Budget Execution, Accounting and Reporting Objective: The objective of this component is to strengthen the legal basis for budget management while ensuring that the budget is executed as planned and the quality of information on fiscal operations is improved for more informed government decision making. ❖ The draft PFM Bill on the amendments to the PFM Law was endorsed by Senior Management of the Ministry of Finance & Development Planning and approved by the Cabinet. The Bill was submitted to the National Legislature for passage. The draft bill contains provisions for strengthening fiscal responsibilities, efficient budget execution and financial management functions, strengthening SoE governance, internal controls, cash management, accountability Page 56 of 77 and reporting, including sanctions for various breaches of the law. It will also provide the legal basis for harmonizing Liberia’s fiscal year with its neighbours as part of the efforts to support economic and fiscal integration. ❖ GoL launched the Integrated Financial Management Information System (IFMIS) in 2011, and the system has now been rolled-out to 50 Ministries and Agencies, representing 91% of the FY 2016/17 Approved National Budget. All government expenditure are processed through the system. The use of IFMIS has helped to strengthen controls over budget execution, improved transaction processing time and timely reporting. The application was upgraded from version 6.5e to a web based version 7.0 to improve efficiency and effectiveness. Over three hundred (300) staff from 50 M&As were trained on the budgeting, purchasing, expenditure, and reporting modules to effectively use the Freebalance application. Today, M&As need not converge at MFDP to process transactions. Staff at M&As remain at their respective offices to initiate and approve transactions on the system. ❖ The Human Resource (HR) and Payroll Management Modules was operationalized in 2013. The system replaced the Government Accounting Payroll System (GAPS) used for processing the Liberian dollar payroll. The Liberian dollar salary payments (with the exception of the pension payroll) are now captured on the HR Management module. The introduction of this system has improved the civil service payroll management and provided a linkage between the personnel and payroll information. ❖ Civil servants are biometrically enrolled, and the Civil Service Agency (CSA) is now sufficiently resourced to manage the CSM module (enrol employees, edit and print payroll), a function previously performed by the Ministry of Finance and Development Planning. The CSA conducted a biometric verification and enrolment exercise of GoL employees, and over two thousand “ghost” employees were deleted from the payroll as the result of the exercise. The exercise was intended to validate GoL employees and eliminate “ghost” workers from the payroll. ❖ The backlog of transactions for 30 Donor Financed Projects (DFPs) was migrated from the Sun Accounting System onto the IFMIS Production Environment. The stage is set to move the remaining DFPs managed by PFMU unto the IFMIS. Additionally, customized IFMIS financial reporting templates and tools have been designed and are being used by M&As in preparing their financial reports. ❖ The Local Government Act was developed and passed by the House of Representatives and it is now awaiting passage in the Senate. This represents a major step towards political, administrative and fiscal devolution with extensive impact on government financial management regulations in the long term. Meanwhile, the Government established County Treasuries in four pilot counties: Bong, Grand Bassa, Margibi and Nimba, and the national budget is now executed in those counties for two Sectors – Health and Internal Affairs using the IFMIS application. The allotment, Page 57 of 77 payment and accounts consolidation processes of the county level budgets are prepared at the respective treasuries for these two entities. The establishment of these treasuries coupled with the subsequent deployment of the IFMIS is part of the Government decentralization vision which has improved service delivery in these counties. ❖ An Information and Communication Technology (ICT) and Network Security Policy was developed, approved and circulated to all IFMIS installed M&As. The policy is being implemented for regulating users of the system and improving the IFMIS business process. Information Technology (IT) Security Consultants, assessed the implementation of their earlier recommendations and noted marked improvements in the security environment. ❖ The Government of Liberia adopted the Cash Basis IPSAS (International Public Sector Accounting Standard) for financial reporting. Public Sector entities are now able to produce financial statements for submission to the Comptroller and Accountant General. Consolidated financial statements are regularly prepared in accordance with the IPSAS and submitted to the General Auditing Commission for audit. The quality of these financial statements has improved over the years with respect to presentation and content. This is evident by the 2016 and 2017 PEFA Assessments scores that showed improvement in PI-25: Quality and Timeliness of Annual Financial Statements from C+ to B+. ❖ The Cash Management and Financial Approval functions were consolidated to improve cash and treasury management functions. Treasury and Cash Management Committees (CMC) were reconfigured and meet relatively regularly to take decisions on overall liquidity policy and allotments to avoid over commitment and arrears. A revised cash forecasting template was developed and is being used for preparing cash flow forecasts and for informing decision making by the two committees. ❖ The foundation for establishing a robust TSA has been established. Most of the Central Government bank accounts, including operational accounts of M&As are now resident at the Central Bank of Liberia. However, the TSA strategy has not been fully implemented. There is no formal agreement between the Government and the Central Bank to govern the implementation of the TSA. This agreement is necessary to support the cash management process. ❖ The Aid Management Platform (AMP) was developed and upgraded from version 2.6 to 2.10. Staff from the Aid Management Unit were trained in using the platform and certified as AMP Business Users and System Administrators. Twenty eight (28) M&As and twenty four (24) staff from donor organizations were also trained on the usage of the AMP for accounting and reporting. The quality of the reports generated from the AMP are evidence of success of the trainings conducted. Page 58 of 77 ❖ A comprehensive review of IFMIS business processes across Ministries and Agencies was conducted and the appropriate re-engineering of the processes was also carried out. The exercise improved IFMIS workflow and enhanced process efficiencies and controls. 8.3 Component 3: Revenue Mobilization and Administration The objective of this component is to complement efforts aimed at improving the efficiency and integrity of revenue administration and increase domestic revenue of central government entities, and to integrate revenue systems with overall PFM. The key outcomes under this component are: ❖ The Liberia Revenue Authority (LRA), a successor to the Department of Revenue under the erstwhile Ministry of Finance, was established in July 1, 2014 by an act of the Legislature. The LRA moved to a new headquarters, and has structured its internal systems and processes for improving efficiency in revenue generation. Accordingly, internal manuals and Standard Operating Procedures (SOPs) for various operational units were developed to enhance operational effectiveness and efficiency. During the three years of the LRA’s operations, the Authority has taken stringent measures to penalize professional misconduct. In 2015/16, 72 cases of staff misconduct were investigated, 7 were transferred to the Liberia National Police for further investigation and onward prosecution, while 11 staff were dismissed. The rest were retained. ❖ Significant technical assistance and logistics were provided to strengthen the Authority’s tax collection capabilities. SIGTAS and ASYCUDA were deployed at various tax and customs collection centers across the country. Domestic tax revenue increased by 14% from FY 2010/11 to FY2015/16, while Customs increased by 64% during the same period. These increases have been partly attributed to the automation of the tax system, improved controls and the strong integrity program adopted by LRA. Meanwhile, forensic audit of the two systems was conducted to lend assurances to the integrity of systems. Recommendations from the audit were subsequently implemented. The systems are also linked to IFMIS to provide revenue data for budgeting, accounting and reporting purposes. ❖ The taxpayers’ services program was restructured to enable it address growing customers’ concerns, and to effectively communicate adequate taxpayers’ education messages. For 2016/17, Call Centers recorded 360 inquiries of which 270 or 75% were resolved, while the Customer Service Help Desks also resolved 90% of its 422 customers’ inquiries. ❖ An internal tax appeals office was setup and made more functional, building assurances for recourse and confidence among taxpayers. During the FY2014/15, five (5) appeals and dispute cases from the business community were resolved, and in 2015/16, twelve (12) protests and objections were also resolved. Tax compliance rate as measured by tax payers filing improved by more than 70%. Page 59 of 77 8.4 Component 4: Enhancing Transparency and Accountability The objective of this component is to improve transparency and accountability in PFM by increasing the Government‘s ability to report on and account for the revenues it collects and for public expenditures and to strengthen the GAC and Legislature, enabling them to execute better their oversight function as assigned under the Liberian Constitution and the PFM Act. The outcomes from implementation are listed below: ❖ Compliance with the Public Procurement and Concession Commission (PPCC) Act has improved significantly over the years, evidenced by the PEFA scores for PI-19, Transparency of Public Procurement, which has improved from D+ in 2008 to B+ in 2016, and reports of the last two Implementation Support Missions. The improvements are as a result of persistent capacity development programs organized by PPCC for procurement officers and comptrollers from across M&As. These training has resulted to improvement in preparation and publication of procurement documentations. During FYs2014/15 and 2015/16, over 1,000 procurement practitioners from across the country were trained. The immediate outcomes of these trainings are reflected in the quantity and quality of procurement plans and bid documents that are published on PPCC’s website (ppcc.gov.lr). Over 55 tenders and 1,200 procurement plans were published during the last three years. ❖ In partnership with the UNDP-CIPS program, 397 procurement staff from 120 M&As and other recipients of public funds received CIPS Levels 2 & 3 trainings in furtherance of the Commission’s procurement professionalization program. Successful CIPS level 3 trainees are expected to sit the CIPS level 4 training in November 2017. The initiative complements the post-graduate diploma program at the Intensive Procurement Training Program (IPTP) which has also trained over 120 procurement officers during the last four years. ❖ A Vendor database was developed by PPCC and contains the profile of registered businesses and companies that are qualified to do business with the government. The database enables PPCC to track and enforce vendors’ compliance. It also provides a strong basis for the development of a national e-procurement system. The launching of the database is enhancing efficiency in public procurement, increasing the level of participation of businesses and companies in public tenders, and facilitating the implementation of the Small Business Act. The PPCC website was revamped and currently hosts the vendor database, bidding documents, procurement plans, complaints and rulings, among others. ❖ The Internal Audit Agency (IAA) was established by an Act in 2013 to strengthen internal controls across government. The agency has deployed auditors in 42 functionaries of government including the eight (8) largest ministries: the Ministries of Finance and Development Planning, Health, Education, Public Works, Lands, Mines and Energy, Agriculture, Internal Affairs, and Foreign Affairs. The deployment of the IAA auditors in M&As has helped to improve adherence to established controls procedures. The IAA conducted payroll verification audits with findings that led to the deletion of names from the payroll. It reviews budgetary transactions and donor projects, including the IPFMRP. The IAA conducted, fixed assets and government-financed project Page 60 of 77 audits, results of which led to public officials being reprimanded. The IAA has truly added value to Government’s financial management initiatives. ❖ An Internal Audit Manual was developed and has since been used to guide the conduct of internal audit functions across ministries and agencies where the IAA is deployed. The Agency also adopted a risk-based audit methodology in order to efficiently deploy available resources to achieve maximum results. ❖ The capacity of IAA auditors continues to be strengthened though the targeted number for chartered auditors of 60 has not been realized. Currently, there are 2 ACCAs and 61 Certified Fraud Examiners (CFEs). While CFE were not listed as one of the required certifications for this indicator, this batch of CFEs has performed well and currently forms the fulcrum of the IAA. ❖ A new General Auditing Commission (GAC) Act was passed in 2014, giving the Commission more independence and financial autonomy in the discharge of its functions. On the basis of the new Act, GAC reports to the National Legislature and prepares its own budget for approval by the Legislature. ❖ The GAC completed the backlog of audit reports over the course of the last PFM Reform Strategy and Action Plan up to FY 2014/15, and also conducted audits of more recent years. The commission, in the face of current capacity challenges conducts a mix of audits, including financial, IT and procurement. The Commission maintains a well-functioning website that hosts all of the audit reports that were recently completed. ❖ A professionalization program was initiated in support of the new Human Resource Manual developed by the GAC. The manual defines career path for GAC auditors. As part of this initiative, 26 auditors are enrolled in various professional certification programs. Currently the Commission has 3 CPAs, 1 ACCA, 1 CA, 1 CISA and 51 CFEs. ❖ GAC was itself audited in 2016 for 6 consecutive years, 2008/2009 - 2013/2014 since it became a commission in 2005 by a peer supreme audit institution. The final audit report was communicated to the Public Accounts Committee (PAC) during the same year, and copies posted on the Commission’s website. ❖ The Legislative Budget Office (LBO) and PAC Secretariat were established to provide technical support to the Legislature in the performance of its oversight role. The LBO produces analytical and Mid-term Budget Performance reports, as well as Legislative Guide to the Budget. This has enhanced the budget scrutiny process, though progress towards early passage of the budget remains uneven. From the 2016 PEFA assessment report, PI-27, Legislative Scrutiny of the Annual Budget Law showed slight progress with an aggregate score of B+ as compared to the 2012 score which rate the indicator C+. Three of the four dimensions under this indicator were rated A. Page 61 of 77 ❖ The conduct of public hearings on the Auditor General’s reports has been institutionalized by the National Legislature. The PAC completed the analysis of the backlogs of 80 audit reports. Regular hearings on these reports commenced, but some could not be processed due to unavailability of some former public officials. Three (3) sets of consolidated public hearing reports containing recommendations were submitted to the President for action. A Special Presidential Task Force was setup and it has begun taking steps to implement recommendations from the PAC public hearings reports. ❖ Several capacity enhancement programs were conducted for the PAC members and the Secretariat, media and civil society organizations to ensure adequate participation in public hearings and to communicate results to the public. New PAC members were regularly orientated upon taking office to abreast them with the workings of the committee. The PAC Secretariat is now headed by two graduates from Financial Management Training Program who replaced the consultants that were initially recruited during the early days of the Secretariat. The two graduates are paid by the National Legislature, through the budget. ❖ The PAC regained its regional and internal recognition during the course of the project implementation. It headed the West Africa Association of Public Accounts Committees (WAAPAC) from 2014-2016, and currently chairs the Africa Organization of Public Accounts Committees (AFROPAC) since 2016. Liberia’s PAC has also established affiliate memberships with both Southern African Development Corporation Public Accounts Committees (SADCOPAC) and Eastern Africa Association of Public Accounts Committees (EAAPAC). ❖ A Non-State Actor (NSA) Secretariat was setup and operationalized within MFDP. The NSA Secretariat is working with Civil Society Organizations (CSOs) and the media in building their capacities in areas of PFM and Police and Justice. The Secretariat enhanced the capacities of these groups, including women based organizations through trainings on the budget cycle, proposal writings, grant and results based management which culminated to an increase in the number of organizations benefitting from grants. 25 CSOs were awarded grants to undertake sensitization and educational programs in PFM and Justice in the fifteen counties. The grants capacitated these CSOs to monitor government’s financial management practices on the one hand, and access to justice especially in far-to-reach counties on the other. Today, there are more media coverage on and community engagements with local officials which can be partly attributed to the training and sensitization by the NSAs. ❖ The NSA Secretariat assisted in strengthening the partnership between grant recipient CSOs, local authorities and frontline service providers through structured dialogue and engagement in the 15 counties. This has further strengthened social accountability at local and community levels, as CSOs and CBOs have been recognized by local authorities and frontline service providers as Page 62 of 77 partners and not opposition as was the case prior to the launch of the Civil Society and Social Accountability program. There is now a strong constituency of CSOs and Community Based Organizations working on PFM issues, evident by the increased number of organizations benefitting from NSA grants. ❖ Citizens’ access to budget information increased through the dissemination of county level budget fact sheets and budget guide booklets to various counties and the public, especially in communities that are difficult to access. Additionally, there is increased public access to documents from various government functionaries. Citizens can readily access the Auditor General reports on the Consolidated Funds account, SOEs and County and Social Development Fund. Consolidated reports on public hearings conducted by PAC, budget performance and other reports produced by PAC are also accessible to the public on GAC website. 8.5 Component 5: Program Governance and Project Management The objective of this component is to provide a robust project and program management function that caters to the needs of integrated coordination and monitoring of the implementation of the program, serve as the enabling component for delivery of PFM human resource capacity, and assure the appropriate sequencing of interventions across the various reform fronts. The Project was managed by a PFM Reform Coordination Unit (RCU) headed by a Coordinator, with assistance from a Deputy Coordinator and other key staff including an International Procurement Specialist, Financial Management Specialist, PFM Specialist, M&E Officer, Capacity Building Officer, Change Management Officer and a host of others officials. The PFM Steering and Technical Committees provided oversight functions. Monitoring and evaluation, as well as change management were conducted throughout the project implementation by the RCU. Periodic implementation progress reports were prepared and published. The Reform Coordination Unit (RCU) in collaboration with Component Heads supported efforts to develop a new PFM Strategy and Action Plan (2017 - 2020). The new strategy will give rise to the IPFMRP II which seeks to consolidate, deepen and sustain the gains made in PFM, and to strengthen areas that remain weak and to support new priorities in PFM. IPFMRP II is expected to commence in mid-2018. Under the tutelage of the International Procurement Specialists, two graduates from the FMTP were trained to carry out procurement functions. The two staffs are now very resourced, serving as National Procurement Counterparts with capabilities of administering procurement with very minimum supervision. The Unit facilitated the conduct of the 2012 and the 2016 PEFA Assessments as well as the 2014 PEFA Self-Assessment of its PFM systems. These reports were validated and published on the PEFA website. 8.5.1 Institutional and Capacity Building ❖ The Financial Management Training Program was established in 2008 under the auspices of the University of Liberia and other counterparts. The program has graduated 150 students with MBA Page 63 of 77 degrees, with emphasis in Public Financial Management. The Intensive Procurement Component of the Program also graduated over 120 students with post-graduate diplomas in procurement. All of the graduates have been absorbed within the civil service and deployed in various institutions performing critical functions in their respective fields. Many of the graduates have excelled rapidly in public service: some as Ministers, Commissioners, Superintendents, directors among others. Additional 18 and 30 MBA and procurement students respectively are nearing completion of their respective courses. Women enrollment in the FMTP increased over time, from 3% in 2007 to 40% in 2017, and IPTP, from 5% to 88% over a period of four years. ❖ Logistical support to enhance the work of components was provided. IT equipment, including Local Area Network (LAN), computers and accessories, battery bank, printers Vehicle, furniture and fixtures were provided as needed to facilitate and support the components. 9. Monitoring and Evaluation Design and Implementation The Results Framework contained in the PAD included seven PDOs and 14 intermediate indicators. Most of the indicators supported the achievements of the project development objectives and measured progress towards those objectives. While PEFA methodology remains relevant in assessing PFM systems, the Government believes that for measuring transparency, the Open Budget Index would have served as a more effective measure of transparency and would have been used to assess whether the government makes key budget documents available to the public. The use of relevant service level indicators should be explored for measuring service delivery activities. The Ebola Outbreak in 2014 affected project implementation, however a midterm review of the project in 2015, did not find the need to make any change to the project. 10. Fiduciary Compliance The project finances were managed by the Project Financial Management Unit (PFMU), within the Ministry of Finance and Development Planning. The Unit conducted project accounting using the Sun Accounting System in accordance with IPSAS. The Unit regularly produced Interim Unaudited Financial Reports during the life cycle of the project implementation. The IPFMRP Monitoring and Supervision Mission consistently rated the project financial management as “Satisfactory”. The General Auditing Commission, which audited the project, consistently issued Unqualified/Unmodified Reports on the project annual financial statements. As for Procurement, there were no major procurement challenges that hindered successful project implementation. However, there were issues of effective monitoring and timely signing of contracts and quality of evaluation reports. The IPFMRP supervision Mission continuously rated procurement management as either “Satisfactory” or “Moderately Satisfactory” during project implementation. 11. Major Implementation Challenges ❖ The Outbreak of the Ebola Virus Disease: The Ebola Virus Disease of 2014 affected implementation of the reform programs. There were only limited activities taken place, and many Page 64 of 77 of the offices implementing the reforms were operating at a reduced level. This caused delayed and affected momentum of project implementation and led to a one year no cost extension of the project. ❖ Frequent Replacement of Key Government Personnel: During the project implementation, staff turnover rate in some implementing M&As was high. Many staff left to seek new opportunities and better wages, while others were replaced or transferred to new positions. Some of these staff were directly involved with the management and implementation of the reform in their respective ministries or departments and had undergone some basic PFM training. This affected implementation. As a way forward, the Government needs to develop a retention strategy and improve remuneration of critical staff involved in implementing PFM reforms. ❖ Changes in Operational Leadership: Implementation was hampered by three different changes in the project leadership during the latter part of the project cycle. This contributed to a lack of focus and continuity of priorities, hampered effective decision making and contributed to delays in project implementation. ❖ Coordination with Implementing Agencies: Delay in providing fund balances affected planning and spending decisions of components. Adequate adherence to coordination mechanism outlined in Project Operational Manual will be critical in future project implementations. ❖ Absence of a Harmonized Reporting Format: Reporting on project implementation progress was initially constrained due to the lack of harmonized reporting framework acceptable to all PFM Development Partners. Different reporting demands from individual partners posed serious challenge. A harmonized reporting template, as a way forward, should be put in place and agreed upon by all stakeholders. ❖ Suspension of FreeBalance Inc. by the World Bank: FreeBalance, the Service Provider of the IFMIS software, was suspended by the World Bank in 2013. This suspension prevented the government from entering into contracts with FreeBalance for the provision of services using the project. As the result, the upgrade of the IFMIS from version 6.5e to version 7.0 and the procurement of additional licenses had to be financed using government funding. This affected the timely completion of the upgrade and disrupted the IFMIS operations, as sourcing funding from government to support the activity was a challenge. 12. Sustainability of PFM Reforms The Government of Liberia has developed a new PFM Strategy and Action Plan to deepen and sustain the reform and support new priorities that are consistent with its Development Policy. The new strategy contains provisions for strengthening institutional capacity through sustained training in various PFM Programs, including Planning, budgeting, procurement, Financial Management, Accounting, Economics, among others. Gaps identified in SoE’s governance, cash and treasury management, financial reporting, have also been factored in the PFM Strategy and Action Plan 2017- 2020 and the proposed amendments Page 65 of 77 to the PFM Law. 13. Key Lessons Learnt ❖ Institutionalizing PFM Reform within Government Structures (Use of Country System): Implementation of reform within the MFDP and other government entities has a long lasting effect on the county’s use of country system and endeavour to strengthen its PFM system. The level of capacity, both human and material, that have been developed during the period of implementation of the project has helped to promote and sustain the reforms. The use of civil servants in delivering the reform promotes a lasting effect and sense of ownership of the reform. ❖ Change Management & Communication of PFM Reforms: The absence of a coherent and robust Change Management and Communication Strategy posed challenges to the mode of effective communication over the course of implementing PFM Reforms. However, the PFM Reform Coordination Unit did tremendously well to change and communicate reforms among key stakeholders. It is important that going forward, a Change Management and Communication Strategy should be formulated by the Secretariat and approved by the Senior Management and relevant stakeholders for implementation. ❖ Project Design & Coordination of Support: The design of the project was elaborate and a positive move for Liberia and supported the country’s medium term development policy, the Agenda for Transformation and the PFM Strategy and Action Plan (20112016). The reform programs were realistic and implementable. However, close coordination between donor partners in supporting reforms is critical to avoiding duplication of support to PFM programs. Partners should be able to clearly identify their areas of intervention prior to implementation. ❖ M & E Reporting Template: M&E strategy provided a framework for reporting on results and outcomes. However, during some stages in the project implementation, there were disagreements among the stakeholders especially the Development Partners on the reporting format. As the result, the reporting format had to be changed on number of occasions to satisfy partners’ preferences. This affected reporting on PFM progress and in some cases delayed the publication of reports. It is important to develop a harmonized reporting framework and template acceptable to all stakeholders including our development partners. ❖ Government’s Collaboration with Non-State Actors: Government’s engagement with Civil Society Organizations (CSOs) through the NSA Secretariat is crucial for a sound PFM system. The NSA Secretariat, serving as a bridge between government and the NSAs, issued grants and trained CSOs to disseminate information on the national budget and the roles of citizens in the budget process. These engagements have created the platform and provided the opportunity for CSOs and the media to get involved in public financial management. CSOs involvement in government’s financial management promotes good governance, transparency and accountability. Page 66 of 77 14. Contributions of the World Bank and Other Development Partners The Government of Liberia recognizes the role played by its development partners in the design and implementation of the IPFMRP. Specific acknowledgement is made of the numerous technical assistant missions whose works provided the needed resources and focus for a smooth implementation of the IPFMRP. The regular reviews by project Implementation Supervision Review Missions (ISRMs), led by the Bank, had a two-prone outcome for the IPFMRP: it kept implementation on the right trajectory, and also enhanced the capacity of project team. Besides, timely approval of operational requests (No Objections) by the Bank helped to accelerate the implementation of programs. The Bank also provided support to the RCU procurement sub-unit which has strengthened the project procurement function. Page 67 of 77 15. Annexes 15.1 Annex 1: IPFMRP Results Indicators A. PDO Level Indicators No. Baseline(2007/ End of End of Project 2008) PEFA project Actual Indicator Targets – 2017 PEFA Summarized Reasons for Scores SelfAssessment 1 PI 7: Extent D B D+ Donor projects are still not included in of the consolidated financial statements. unreported The amounts of off-budget expenditure Government funded by cash advances carried Not Achieved operations forward could not be established. 2 PI-12. B+ C+ The planning and budgeting process Multiyear remains weak, while the MTEF budget D does not provide for three years’ perspective in fiscal estimates into the future. Not achieved planning, expenditure policy and budgeting 3 B+ There is relatively strong integration PI-18. between personnel records and payroll Effectiveness D B+ Achieved data while verification of the payroll of payroll continues to be carried out through the controls biometric system. 4 PI-20. B+ IFMIS installation to 50 M&As coupled Effectiveness with the expansion of the work of the of internal C IAA has improved compliance and controls for internal control processes in many B+ Achieved non-salary M&As. However, controls are weak expenditure against emergency expenditure and use of emergency procedures for procurement. Page 68 of 77 5 B+ Improvement is due to IFMIS PI-25. deployment and compliance with the Quality and D IPSA reporting requirements. However, timeliness C+ comprehensive information on donor Achieved of annual projects and end of year outstanding financial debt are still not adequately reflected statements in the statements. 6 PI-26. The major reason for this score is due Scope, to delays in submitting the AG’s audit nature and D C+ D+ Not reports to the legislature. This is due to follow-up of Achieved the late response by auditees to audit external queries raised by the Auditor General. audit 7 PI-28. C+ D+ Not Hearings on the Consolidated Fund Legislative Achieved Audit Reports submitted by the AG for scrutiny of D FYs 2012/13, 2013/14 and 2014/15 external have not been held. Besides, public audit hearings audit recommendations have not being reports implemented. B. INTERMEDIATE INDICATORS No. Performance Baseline End of End-of Project: Indicators Values Project Actual (2007/08) Targets Comments (2017) 1 Indicator One: No Yes Yes Target Achieved: Fiscal reports Quarterly (Outturns, SoEs, fiscal Aid, Public Debt, etc) regularly operations published on the MFDP website. The reports National Budget, Budget Framework generated Paper and the Annual Economic Reviews are also published. However, timeliness remains a challenge. Check: www.mfdp.gov.lr Page 69 of 77 2 Indicator Two: 10% 5% 6.4% Target Not Achieved: This has improved Budget but not at the desired target level of 5%. credibility: The PEFA 2016 score for this indicator Variation (PI-1) is C. between M&As Variance= ∑(Appropriation –Actual appropriations Expenditure) and actual Aggregate Expenditures Appropriation 3 Indicator 5% 3% 8.3% Target Not Achieved: Given the data Three: Budget available this has not been achieved as Credibility: per the target level of 3%. However, the Variation PEFA 2016 assessment rates this between indicator (PI-4) is B. revenue Variance=(Approved revenue-Actual forecasts and collection) actual collections Indicative value= Variance Planned revenue 4 Indicator Four: 0 95 320 Target Achieved: The CAG Office Proportion of manages 320 accounts that are Government considered to be part of the TSA in the balances in Central Bank of Liberia. Treasury Single Account 5 Indicator Five: 0 30 30 Target Achieved: 30 Donor Projects have Donor projects been migrated onto IFMIS in CAGD based IFMIS 6 Indicator Six: 2 40 50 Target Achieved: All 50 M&As M & As connected to IFMIS are producing generating quarterly expenditure reports, including monthly/quarte all of the big Ministries: Ministry of rly expenditure Health, Ministry of Education, Ministry reports through of agriculture, Ministry of Public Works, Ministry of IFMIS Finance and Development Planning, etc.. Page 70 of 77 7 Indicator Seven: 6 3 5.5 months Target Not Achieved: Financial statements for the consolidated funds are due no later Timeliness of than October 31st (4 months after FY ends). annual financial For the last three years, the statements have statements: been late for an average of two months as Months after outlined below: FY end • FY2013/14 statement was issued to the AG on December 15, 2014, • FY 2014/15 was issued to the AG on January 25, 2016, and • FY2015/16 Statement was issued on December 15, 2016. This indication was not been achieved as per the 3 months end of project target period. However, the PEFA 2016 rated this dimension as C, while the 2017 PEFA Self-Assessment, using the 2016 PEFA Framework, rated it B due to improvements in the reporting requirements of Cash Basis IPSAS, the Government financial reporting framework. 8 Indicator Eight: US$23M 40% 64% Target Achieved::The average rate of (FY10/11 increase is 64% using FY 2010/11 as a base Increase in baseline) year. Below are the customs data over the customs revenue Actual last 6 years: collection baseline: 2010/11:118m; 2011/12:161m; adjusted for US$118.4 2012/13:160m; inflation M 2013/14:176m; 2014/15:178m; 2015/16:194m Note: computation is based on the actual baseline of US$118.4M 9 Indicator Nine: US$263M 50% 14% Target Not Achieved: The average rate of Increase (FY10/11 increase is 14% using FY 2010/11 as a base in Internal baseline) year. Below are the annual internal revenue Revenues Actual collected for the following periods: adjusted for baseline:U inflation S$227.2M 2010/11:227m; 2011/12:272m; 2012/13:349m;2013/14:294m;2014/15:259m; 2015/16:259m Page 71 of 77 10 Indicator Ten: 0 60 Over 120 Target Exceeded: i) Over one hundred twelve (120) officers attained post-graduate Qualified diplomas in Procurement. ii) Under the PPCC- procurement UNDP CIPS program, 397 procurement staff staff in M&As from 120 GOL agencies, and other recipients of public funds have received CIPS Levels 2 & 3 trainings. Candidates who satisfactorily completed CIPS level 3 training will be permitted to do CIPS level 4 training expected to be held in November 2017 11 Indicator Eleven: 0 60 63 Target Achieved: The IAA currently has two Internal Audit (2) ACCAs and sixty one (61) Certified Fraud staff holding examiners (CFEs). This is commendable, but professional although CFE was not classified as chartered in the project results chain, it has been included in certifications computing results. qualifications 12 Indicator 3 7 7 Target Achieved: Seven key budget Twelve: information documents are produced annually: i) Citizens’ Guide; ii) Budget Fact Benchmarks in Sheet; iii) FAQs; iv) Budget Information budget Billboards; v)Posters vi) brochures and information vii)the Electronic billboard at the MFDP. from MoF met These are in addition to the publication of out of nine as the draft and approved budgets, and the defined by open budget outreach programs that are PEFA PI-6 carried out in the counties. 13 Indicator 10 165 57 Target Not Achieved: There are 6 chartered Thirteen: auditors (3 CPAs, 1 CA, 1 ACCA, and 1 CISA) Qualified and 51 CFEs. However, Under the GAC’s new external audit professionalization program, 19 auditors are staff in GAC expected to sit their exams in September 2017, 13 for ACCA and 6 auditors for CAT. 7 auditors are also expected to sit CISA exam in December 2017. CFE was not classified as chartered in the project results chain but has been included in computing the results. Page 72 of 77 14 Indicator No Yes Yes Target Achieved: Two PEFA Self- Fourteen: Assessments (2014 & 2017) and two full external PEFA assessments (2012 & 2016) Annual PEFA were conducted during the course of the selfassessments project life. 15.2 Annex 2: Summary of Disbursement by Component as at June 30, 2017 Total Total Component Allocation Disbursement Disbursement Number (US$ (US$ Million) (%) Component Description Million) Enhancing Budget Planning Systems, Coverage, 1 and Credibility 1.84 1.80 98% Strengthening PFM Legal Framework, Budget 2 Execution, Accounting and Reporting 10.26 8.88 87% 3 Revenue Mobilization and Administration 5.38 105% 5.64 4 Enhancing Transparency and Accountability 6.23 98% 6.13 5 Program Governance and Project Management 4.84 140% 6.78 6 Additional Financing - 0% 3.00 Total 93% 31.55 29.23 Page 73 of 77 15.3 Annex 3: Overall scores of PIs in 2007, 2012 and 2016 assessments A. Budget Credibility 2007 2012 2016 Score Score Score PI-1 Aggregate expenditure outturn compared to approved budget B D C PI-2 Composition of actual expenditure compared to approved D D+ D+ PI-3 Overall(aggregate)revenue outturn compared to approved A D B PI-4 Stock and monitoring of expenditure payment arrears D+ B C+ B.KEYCROSS-CUTTINGISSUES: Comprehensiveness and PI-5 Budget classification C C B PI-6 Comprehensiveness of information included in budget C B A PI-7 Extent of unreported government operations D+ D+ D+ PI-8 Transparency of intergovernmental fiscal relations NA NA NA PI-9 Oversight of general fiscal risks by other public sector entities D D C PI- Public access to key fiscal information C C B C.BUDGETCYCLE C(i) Policy-based budgeting PI- Orderliness and participation in the annual budget process B B D+ PI- Multi- D+ C+ C C(ii)Predictability and controls over budget execution PI- Transparency of taxpayer obligations C+ B B PI- Effectiveness of taxpayer registration and tax assessment C B B PI- Effectiveness in collection of tax payments D+ D+ D+ PI- Predictability of funds available for expenditure commitment C+ C C+ PI- Recording and management of cash balances, debt and C+ B B+ PI- Effectiveness of payroll controls D+ D+ C+ PI- Competition, value for money, and procurement controls NA C B+ PI- Effectiveness of internal controls over non-salary expenditure C+ C+ C+ PI- Effectiveness of internal audit C D+ C+ C(iii)Accounting, recording, and reporting PI- Timeliness and orderliness of account reconciliation D C D+ PI- Availability of information on resources received by service deliver D D B PI- Quality and timeliness of in-year budget reports. C D+ C+ PI- Quality and timeliness for annual financial statements D D+ C+ C(iv)External controls and audits PI- Scope and follow-up nature of external audits D D+ D+ PI- Legislative scrutiny of the annual budget law C+ C+ B+ PI- Review of external audit reports by the legislature NR D D+ D.DONORPRACTICES D-1 Predictability of direct budget support NR D D Page 74 of 77 D-2 Financial information provided by donors for budgeting and reporting D D+ D+ on project and program aid D-3 Portion of aid that is managed through the use of national D D D 15.4 Annex 4: Performance indicator summary of the seven (7) Project Development Indicators Indicators: 2011 PEFA Assessment Framework Overall Dimensions PI Performance Indicator (PI) Year (i) (ii) (iii) (iv) Score 2016 Score B D D+ PI 7: Extent of unreported Government operations 2017 score B D D+ PI-12. Multi-year perspective in fiscal planning, expenditure 2016 Score C A D D C+ policy and budgeting 2017 score C A C C C+ 2016 Score B C C C C+ PI-18. Effectiveness of payroll controls 2017 score A B B B B+ PI-20. Effectiveness of internal controls for non-salary 2016 Score B C C C C+ expenditure 2017 score B A B B B+ PI-25. Quality and timeliness of annual financial statements 2016 Score C B C C+ 2017 score B A A B+ 2016 Score B D D D+ PI-26. Scope, nature and follow-up of external audit 2017 score B D C D+ 2016 Score D B C D+ PI-28. Legislative scrutiny of external audit reports 2017 score D B B D+ Seven Project Development Indicators: 2016 PEFA Assessment Framework Overall PI Dimensions Score Performance Indicator (PI) D1 D2 D3 D4 PI 6: Central government operations outside financial reports D D B D+ PI 16: Medium-term perspective in expenditure budgeting A B C D C+ Page 75 of 77 PI 23: Payroll controls A B B B B+ PI 25: Internal controls on non-salary expenditure A B B B+ PI 29: Annual financial reports B B A B+ PI 30: External audit D D C A D+ PI 31: Legislative scrutiny of audit reports D B B A C+ Page 76 of 77 ANNEX 6. LIST OF SUPPORTING DOCUMENTS 1. Liberia Public Financial Management Reform Strategy 2. Liberia Country Assistance Strategy for FY09-FY11 3. Liberia Country Partnership Strategy for FY13-FY17 (Report No.74618-LR) 4. Liberia PEFA 2008 5. Liberia PEFA 2013 6. Liberia PEFA 2016 7. Liberia PFM Self-Assessment Reports 8. Project Appraisal Document – Integrated Public Financial Management Reform Project (Report No.64363-LR, P127319) 9. Quality Enhance Review Minutes for Integrated Public Financial Management Reform Project 10. Concept Note Review Minutes for Integrated Public Financial Management Reform Project 11. Decision Note for Integrated Public Financial Management Reform Project 12. Project Implementation Status Reports 13. Project Supervision Aide Memoirs Page 77 of 77