58765 v. 1 Document of The World Bank Report No: RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ANGOLA: ECONOMIC MANAGEMENT TECHNICAL ASSISTANCE PROJECT CREDIT NO 37440 APPROVED BY THE BOARD ON MARCH 27, 2003 TO THE REPUBLIC OF ANGOLA DECEMBER 30, 2010 ABBREVIATIONS AND ACRONYMS EMTA Economic Management Technical Assistance Project PDO Project Development Objective Acting Regional Vice President: Madani M. Tall Acting Country Director: Olivier Godron Acting Sector Manager: Serdar Yilmaz Task Team Leader: Roberto O. Panzardi 2 ANGOLA ECONOMIC MANAGEMENT TECHNICAL ASSISTANCE PROJECT P072205 CONTENTS Page A. SUMMARY AND PROPOSED CHANGES .......................................................... 4 B. PROJECT STATUS.................................................................................................. 4 3 RESTRUCTURING PAPER SUMMARY AND PROPOSED CHANGES 1. The purpose of this Restructuring Paper (RP) is to seek from the Regional Vice President's approval for a third extension of the closing date of the Angola: Economic Management Technical Assistance (EMTA) project, Credit Number 37440- ANG, Project ID: P072205, from December 31, 2010 to February 28, 2011. The Recipient had initially requested an extension of another 12 months (see attached copy) but, upon consultation with the Country Management Unit has agreed, in principle, to a shorter extension of two months so that the project can be restructured. Under the restructuring the undisbursed funds will be canceled and reallocated to another well performing project in the country portfolio. If this request for extension is granted, the accumulative extensions will add up to a total of 38 months, which includes a first extension of 24 months granted on May 28, 2007 and a second extension of 12 months granted on December 22, 2009. With this extension, the total life of the project will be 8 years. 2. The Borrower has reaffirmed its commitment to the project activities and the willingness to restructure the project and request the cancellation of undisbursed credit funds of approximately US$ 4 million in order to allow the consolidation of the country portfolio, with the understanding that cancelled undisbursed funds will be reallocated to another well performing project in the country portfolio which will need additional financing as part of its own restructuring. The implementing entities are in full compliance with the Bank's financial management requirements, and there are no overdue audit reports and interim financial report from these entities. The proposed extension is consistent with the Operation Policy (O.P) 13.30 and the Bank Procedures (B.P) 13.30 and complies with all the requirements PROJECT STATUS 3. The credit of SDR12.3 million (originally US$16.6 million) was approved by the Board on March 27, 2003, and it became effective on December 4, 2003. The objective of the project is to support the government effort to improve efficiency and transparency of public resources management, by improving the institutional framework and building capacity in relevant public institutions to articulate and implement public investment and financial policies and processes. The project comprises four components, namely: (i) support the establishment of methodologies for the preparation, execution and monitoring of sectoral and provincial plans and the public investment program; (ii) support the implementation of the five-year plan for statistics; (iii) support Ministry of Finance's public finance modernization program; and, (iv) support the improvement of the Central Bank's operations and the full implementation of the country's new payment system. 4. The implementing entities are in full compliance with the Bank's financial management requirements, and there are no overdue audit reports and interim financial report from these entities. The project performance ratings in the last Implementation Status and Results report 4 were Moderately Satisfactory, both in terms of probability of achieving Development Objectives and Implementation Progress. There has been significant progress towards the achievement of targets set for the key performance indicators. At the moment, the project has achieved the targets set for 8 out of the 11 intermediate outcome indicators. But, implementation has suffered some delays as a result of: (i) changes of authorities in the Angola administration; (ii) difficulties in the selection process to appoint a new project manager; and, (iii) resignation of the project procurement officer. All these issues have been resolved satisfactorily. Another cause of delay was the high frequency of change of Task Team Leaders (TTLs) for the project, as three TTLs were appointed for the project in the last 12 months. 5 6 Baseline Target Value Progress to date Likelihood of reaching target PDO Indicators 1. Minplan 2009-2013 Zero 5 Sectors and 5 Target Met. 2009-2013 Target Met GoA program prepared: Provinces plan in draft form for all number of sectoral and sectors Provincial plans provincial plans prepared under elaboration with new methodology 2. INE: National Accounts No National National Accounts Base year 2002 ready. Target Not Met prepared and published Accounts prepared and 2003-2007 prepared and according to SNA93 published using shared with partners SNA93 for the years institutions. 2002-present 3. INE: ECP/MDG data No regular IDR2 Final IDR2 field work schedule Target Met produced and published publication finished in June 09. A first annually draft report (using 6 month data) has published in December 2009. 4. MINFIN: General State Not Accounts published Partly achieved. A module Target Not Met Accounts and budget produced for entering assets has including non-financial been created and link assets produced and established with SIGFE. A published total of half a million items already registered in 2008. State Accounts not published. 5. MINFIN: Number of Old 3 large contracts New procurement Target Met large contracts procured outdated procured under new framework has been under the new public legal framework approved by Council of procurement law framework Ministers. It will be sent for Parliament consideration in July 2010. 6. MINFIN: Number of Outdated 10 audits 2007: 37 broad Target Not Met audits by INF with follow- legal inspections; 6 deeper up actions framework audits. New framework not yet approved by MINFIN 2008: 6 Inspections, 2 mgmt audits, 17 examinations in 2 provinces 2009: Information not available. 7. BNA: Number of No system Zero minutes 2007 and 2008: Target Met errors/downtime of RTGS downtime availability above 99%, system for two except Jan 07 (96.63%), consecutive years Jan 08 (98.45), April 08 (96.63), Dec 08 (98.87). 2009 all above 99% availability. 8. BNA: Number of Old 12 Audits with 2007: 11 audits and 37 Target Met Audits by Internal Audit inadapted follow-up actions specific tasks 7 (GAI) with follow-up department 2008: 37 planned and 26 actions ad-hoc audits. 15 recommendations 8