Document of
              The World Bank

          FOR OFFICIAL USE ONLY

                                      Report No: 73902-LK




          RESTRUCTURING PAPER

                   ON A

    PROPOSED PROJECT RESTRUCTURING
                    OF
 PUBLIC SECTOR CAPACITY BUILDING PROJECT
            CREDIT NO. 4412-LK
                JUNE 5, 2008



                  TO THE

DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA


             DECEMBER 17, 2012
                       ABBREVIATIONS AND ACRONYMS




AGD Auditor General’s Department            PDO      Project Development Objectives
DCS   Department of Census and Statistics   SWOT Strength Weaknesses Opportunities and
                                                 Threats




                Regional Vice President:        Isabel M. Guerrero
                      Country Director:         Diarietou Gaye
                       Sector Manager:          Antonius Verheijen
                     Task Team Leader:          Farah Zahir




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                               Extension of Closing Date


      SRI LANKA – PUBLIC SECTOR CAPACITY BUILDING PROJECT

                                 Restructuring Paper


1.    The closing date for Sri Lanka, Public Sector Capacity Building Project, Credit
No. 4412-LK, P097329 will be extended from December 31, 2012 until December 31,
2013.

2.      The original project development objective (PDO) was to enhance the
effectiveness, efficiency and productivity of two key public service agencies in Sri
Lanka: the Department of Census and Statistics (DCS) and the Auditor General’s
Department (AGD). The revised PDO is to enhance the effectiveness, efficiency and
productivity of the recipient’s Auditor General Department (AGD).

3.     The proposed extension is necessary to ensure the sustainability of the Human
Resource Development initiatives carried out under the project by establishing a
Departmental Training Center for AGD in Ratnapura. There is adequate funding
available in the Designated Account for carrying out the related activities.

4.      This is the second extension to the project. The Government of Sri Lanka had
earlier requested a one-year extension to December 31, 2012 for: (i) completing the
training program of the Department of Census and Statistics (DCS) postponed due to
Island wide Census of Population and Housing; and (ii) utilizing the resources allocated
under the human resource development and communication and external relationship
sub-component under the Auditor General’s Department (AGD). Given the strong
performance of the AGD component in overall implementation and in achieving the
PDOs, the Bank extended the AGD component till December 2012 and cancelled the
DCS component. In August 2012, the PDO and the results framework were revised in
order to reflect appropriately the performance of AGD component in the achievement of
the PDOs. Implementation progress and PDO level results in relation to the revised PDO
have been Satisfactory since the date of the restructuring.

5.      The AGD has prepared its Corporate Plan 2012-2016 recently. The SWOT
analysis of the corporate plan of AGD clearly indicates that one of the major weaknesses
of the Department is lack of training in multidisciplinary streams. During the project,
over 50 percent staff received training in English language, leadership, investigative
audit, performance audit and financial audit. However, the success of foreign training and
study tours was mixed because many times the officials could not attend/participate in
training abroad due to heavy work load. The need for residential Training Center in the
country is a core issue that needs to be addressed for strengthening the AGD to meet the
needs of a sophisticated and dynamic public financial management system. A residential
Training Center of AGD at Ratnapura will enable the Government to increase the
coverage and ease of imparting real time advanced training to its staff with the help of
both national and international experts.

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6.       Keeping in view the excellent track record of engagement and commitment of the
Auditor General and his team over the years on the project, the justification for
supporting a regional training center at Ratnapura is strong. The Auditor General has
been awarded land by the Government and all necessary approvals have been obtained
and shared with the Bank team. The extension will enable AGD to sustain training to
audit staff in regional offices after the conclusion of the project. The detailed plans show
that all activities can be completed by December 31, 2013.




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