27 OCT 2015 G o' Nepal ~MiF1raleD Public Expenditure and Finahi A countability Secretariat Ref: Ll L4/qF43FICIAL 1riAfo bS /O~2/7~3 C 6F4 A7$CUMENTS Date: October 27, 2015 International Development Association 1818 H St NW Washington, DC 20433 United States of America Re: Nepal Public Financial Management Multi -Donor Trust Fund Strengthening Public Financial Management Project Phase 2 PFM Grant No.TFOA1065 Performance Monitoring Indicators Dear Sir/Madam We refer to paragraph 2.06 (a) of the Annex to the Grant Agreement for the Strengthening Public Financial Management Project Phase 2 (Project) between Nepal and the International Development Association, acting as administrator of grant funds provided under the Nepal Public Financial Management Multi -Donor trust fund, of even date herewith. We hereby agree that the Performance Monitoring Indicators to monitor and evaluate the carrying out of the Project and the achievement of the objective thereof are those set forth in the Attachment to this letter. Very truly yours, NEPAL Mukunda Raj prakash Ghimire Coordinator PEFA Secretariat Coordinator PEFA Secrp' 2 ATTACHMENT RESULTS FRAMEWORK AND MONITORING Project Development Project Outcome Indicators Use of Project Objective Information PDO: To improve * Percentage of overall budget executed through the Indicates along with the expenditure control and DTCOs where the TSA system has been implemented intermediate outcomes and * Budget Execution Reports and Financial Statements output indicators whether enhance government produced on a real time basis by the TSA system in the the project is on track in the accountability and district and central systems. achievement of the PDO. transparency by * Consolidated financial statements for Pilot Ministries prepared in accordance with Part 1, Cash IPSAS strengthening treasury * Numbers of research studies into high priority PFM system, financial reporting areas completed and disseminated and PFM capacity. * Improved Sustainability of the TSA system (new) * Improved quality of the in-year and end-of-the-year financial statements (new) Intermediate Outcomes Results Monitoring indicators Use of Monitoring Indicator Component 1: Implementation of Treasury Single Account (TSA) System Component 1: * Number of DTCOs/districts where TSA implemented; Indicates the extent to Percentage of overall budget executed through the which TSA system has DTCOs where the TSA system has been implemented been implemented and real * Number of Spending Unit (SU) Bank Accounts Closed; time budget controls have * Implementation of commitment controls in the been strengthened for budgetary entities of GoN (within the piloting enhancing fiscal control ministries) and expenditure efficiency * Number of FCGO, line department and DTCO staff trained; * Roll out of Revenue Management Information System (RMIS) at districts and paying centers. * Online access of real time budget and financial information to line departments * System based monitoring of IT networks and devices * IT Strategy, organization structure and detailed plan prepared and implemented * Conduct of IT/Functional Audit in FCGO Component 2: Strengthening accounting and reporting practices in public and private sector Component 2: * Preparation of consolidated financial statements for a Indicates the extent to number of line departments in accordance with Part 1, which accounting and Cash IPSAS reporting practices have * Number of GoN finance and accounts staff trained in been strengthened in the application of Cash based IPSAS core public sector in Government of Nepal Component 3: Supporting the Capacity Building of the PEFA Secretariat 3 Component 3: * Number of GoN Employees enrolled /completed in Indicates the extent to Diploma/Certificate Courses in local accredited PFM which (i) PFM reforms academic Institution have been initiated as per * Number of National level PPFM Steering committee PFMRP strategy of GoN, meetings supported during the project period (ii) PFM reforms have been * Number of high impact research studies completed and mainstreamed in the GoN, disseminated and (iii) PFM skills and * Carried out repeat PEFA assessment and prepared PFM capacity is being built reform strategy Phase II * Number of seminars & workshops conducted for raising PFM awareness * PFM accreditation courses designed and courses initiated (incl signing of MoU between the PEFA Secretariat, International PFM Institution and local academic Institution) 4 Arrangements for Results Monitoring As at Oct, Achievem Cumulative Target Values** Description (Indicator, PDO Le vel Results Unit of 2010 ent as of - Data Source/ Responsibility definition etc.) ndicators* Measure (SPFM June 2015 YR 1 YR5 (SPFM II) YR6 (SPFM 11) for Data eYR 2 YRS YR4 Methodology Collection baseline) NJune 2016 June 2017 Percentage of overall % of 7 98 35 55 85 98 99 100 - Data from Project Indicates real time budget budget executed through exp. c TSA system Institutions controls in these districts the DTCOs where the TSA < - FCGO system has been implemented Budget Execution Reports No. of Nil 75 32 52 65 75 75 75 - Data from Project Indicates mainstreaming and Financial Statements District c TSA System Institutions- of TSA system produced by the TSA s < FCGO system on a real time basis Preparation of No. Nil 2 - 3 1 2 7 12 - FCGO FCGO Indicates improved consolidated financial financial reporting statements for PILOT practices Ministries in accordance with Part 1, Cash IPSAS; Numbers of research No. 0 1 2 4 5 8 10 - Institutional PEFA Indicates research and studies into high priority c records Secretariat analysis to support PFM PFM areas completed reforms and disseminated Number of No. 8 75 38 60 75 75 75 75 . Admin Data FCGO Indicates rollout of TSA DTCOs/districts where 0 TSA implemented 5 Number of Spending Unit No. o a o > Admin Data FCGO Indicates consolidation of o 0 0 0 0 o0 (SU) Bank Accounts n 0 In 00 bank balances o Closed 2 Number of FCGO, line No. C a D a o a a a > Admin Data FCGO Indicates improvement in o o ooa o a o a -0 department and DTCO W 0 0 I M skills In In n I r-. r- csil staff trained or oriented; and still deployed to 2 perform the functions envisaged No. 0 40 30 35 40 40 50 50 Admin Data; Secretariat Indicates improvement in Number of master : Interviews TSA implementation and trainers trained (TSA and IPSAS and working as consolidation trainers under the project -Fa 76 -Admin Data FCGO; Indicates improved Software redeveloped 0 0 Secretariat functionality of TSA after removing bugs as system reported in current I software, - Admin Data FCGO Indicates improved New features added in _E E functionality of TSA software such as system commitment recording o 00- No.of Nil -0 -o1 Data FCGO RMIS will help faster Roll out of Revenue d t accurate and reconciled districts _ z" Management Information _. cuaeadrcnie Manaemet InormtionZ, " 0reports on revenue side. System (RMIS) at districts and paying centres o- Online access of real time No of Nil 1 Data FCGO Online access will help budget and financial deptts CL CL improve the decision information to line 0 making at line de t . d departments -'x departments 6 i Data FCGO Network enhancement System based monitoring will enable remote of IT networks and momtoring and auto devices switching with better devices 25x system availability - - - - .. . Data FCGO FCGO needs to have a IT Strategy, organization proper resourced IT structure and detailed a. p porganization to discharge pln pits functions effectively implemented E and efficiently i Data FCGO IT audits will help make 0 o environment and 0 landscape more secure Conduct of IT/Functional andsidetify sue x and identify issues that Audit in FCGO - need resolution. U a -0 -a a -0 -0 Admin FCGO Commitment information Implementation of Data Secretariat will lead to better 0j 0 commitment controls in EE decision making at line the budgetary entities of 3 E 25 managers level E (A GoN re a Number of GoN finance No. 0 - - - 40 80 120 Admin Data PEFA and accounts staff Secretariat trained in application of FCGO Cash based IPSAS and still deployed to perform the functions envisaged None 0 AdminData PEFA Design and Rollout of - 0a PFM accreditation o C Secretariat: PFM training curriculum 0 : 0- courses designed and . FCGO in an academic institution courses initiated x . will create sustainable 'E . i%_ 0 human resource capacity. 7 Number of GoN No. Nil Nil - - - - 15 30 21 AdminData PEFA Design and Rollout of Employees - enrolled Secretariat: PFM training curriculum Icompleted in FCGO in an academic institution Diploma/Certificate I will create sustainable Courses in local human resource capacity. accredited PFM academic Institution Number of National level No. 16 4 6 9 16 20 24 2, AdminData PEFA PFM Steering committee Secretariat meetings supported 0 during the project period