The World Bank Myanmar Flood and Landslide Emergency Recovery Project (P158194) REPORT NO.: RES29392 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MYANMAR FLOOD AND LANDSLIDE EMERGENCY RECOVERY PROJECT APPROVED ON JULY 14, 2016 TO REPUBLIC OF THE UNION OF MYANMAR SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Acting Country Director: Gevorg Sargsyan Regional Director: Benoit Bosquet Practice Manager/Manager: Abhas Kumar Jha Task Team Leader: Henrike Brecht, Sadig Aliyev, Zuzana Stanton- Geddes The World Bank Myanmar Flood and Landslide Emergency Recovery Project (P158194) ABBREVIATIONS AND ACRONYMS CERC Contingent Emergency Response DOH Department of Highways DRRD Department of Rural Road Development GOM Government of Myanmar IRM Immediate Response Mechanism MOALI Ministry of Agriculture, Livestock and Irrigation MOC Ministry of Construction MOPF Ministry of Planning and Finance PDO Project Development Objective PMU Project Management Unit TOR Terms of Reference The World Bank Myanmar Flood and Landslide Emergency Recovery Project (P158194) BASIC DATA Product Information Project ID Financing Instrument P158194 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 14-Jul-2016 31-Dec-2021 Organizations Borrower Responsible Agency Ministry of Agriculture, Livestock, and Irrigation,Ministry Republic of the Union of Myanmar of Construction,Ministry of Planning and Finance Project Development Objective (PDO) Original PDO To support the recovery in priority areas affected by the 2015 floods and landslides in Myanmar and, in the event of another Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-58890 14-Jul-2016 25-Nov-2016 20-Feb-2017 31-Dec-2021 200.00 24.13 174.30 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Myanmar Flood and Landslide Emergency Recovery Project (P158194) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Myanmar project portfolio has a recent history of late submission of audit reports. Challenges with respect to the compliance with the six-month requirement for submission of audit reports arise in Myanmar largely on account of the need to align with country systems, delays due to low capacity and/or complexity of implementation arrangements. These are discussed further below. The majority of project implementing agencies have been able to submit their audited financial statements within a 2 to 3-month period after the current six-month deadline. Therefore, the proposed extension of the deadline to nine months after the end of the financial year should ensure the project financing agreements covenant for submission of audit reports will be fully complied with. 2. However, there are two projects (Essential Health Services Access Project (P149960) and Decentralizing Funding to Schools Project (P146332)) where longer delays have been experienced. The delays are primarily due to the late submission of project financial statements to the Office of the Auditor General of the Union (OAGM) for audit by the implementing agencies. These two projects are both IPF with Disbursement Linked Indicator components, and they are being implemented nationally. The financial statement preparation process takes time as the manual accounting records from the subnational levels need to be accumulated, reconciled and consolidated. There is targeted ongoing work to automate the process which will continue. It is expected that this work will result in both improved accuracy/reliability of the financial information and a substantial reduction in the time taken for financial statement preparation for future years. 3. There are also other challenges apart from financial statement preparation which are impacting on compliance with the six- month requirement for submission of audit reports: (a) The current practice of the OAGM is not to commence any audit work on the project financial statements until after the project implementing agency has submitted them for audit and then they complete detailed transaction testing of up to 100 per cent; (b) The current OAGM practice of only producing audit reports in the Myanmar language. The financing agreement requires that the audit reports be in English. This has meant that the implementing agencies have needed to get their audit reports translated and then have the translated English version certified by the OAGM which has resulted in further delays1; (c) The OAGM capacity is becoming increasingly stretched. This is because of a combination of a broadening of the OAGM’s mandate to include performance audit, increasing demands from other development partners to audit their projects financial statements and recruitment difficulties due to competition from the private sector. II. DESCRIPTION OF PROPOSED CHANGES 4. In the light of the prevailing country practices/conditions and with the objective of maintaining full alignment with the country systems, the approval from the Country Director, to extend the timeline of the submission of the audit reports for the Myanmar project portfolio to nine months for all active projects (listed in the table below), starting with audit reports due for FY2020, is being requested. All projects negotiated after February 5, 2020 will use the flexibility provided by Bank Policy on IPF in terms of determining the timing of the audit report submission. As of February 14, 2020 Myanmar, has a portfolio of 14 active investment lending projects with a total of 19 separate audit reports. The projects’ financing agreements all included an audit report submission deadline of six months after the close of each financial year. 5. Reference is also made to the meeting between the Recipient’s Deputy Minister, Ministry of Planning, Finance & Industry and representatives of the World Bank on February 5, 2020, where the Recipient requested that the World Bank extend the 1This has not impacted on the audit report delays as Financial Management has reviewed and updated PRIMA on the date the Myanmar language version has been received. However, the formal acknowledgement letter has only been sent to the implementing agencies on receipt of the OAGM certified English version of the audit report. The World Bank Myanmar Flood and Landslide Emergency Recovery Project (P158194) due date of the audited financial statements for various investment lending projects from six (6) months to nine (9) months after the end of the Recipient’s fiscal year. Table: Myanmar Investment Lending Portfolio- Projects where in future the nine-month requirement for submission of Annual Audited Financial Statements will apply Project Project Name Implementing Agency Financing Source ID P146332 Myanmar Decentralizing Funding to School Project DBE IDA5455+TF17814 P157231 Myanmar Decentralizing Funding to School Project DBE TFA4986 P143988 Electric Power Project EPGE IDA5306 P152936 Myanmar National Electrification Project MOEE IDA5727 P152936 Myanmar National Electrification Project DRD IDA5727 P147629 Agricultural Development Support Project DOI, DOA IDA5624 P154389 Myanmar Financial Sector Development FRD IDA5930 P154389 Myanmar Financial Sector Development CBM IDA5930 P144952 Modernization of Public Finance Management MOPF IDA5402+TF17910 P144952 Modernization of Public Finance Management OAG IDA5402+TF17910 P149960 Essential Health Services Access Project MOHS IDA5542 P132500 Myanmar National Community Driven Development DRD IDAH8140 Project IDA56870 P166734 Myanmar National Community Driven Development DRD TFA7173 Project – DFID Additional Financing P158194 Myanmar Flood and Landslide Emergency Recovery DOH IDA5889 Project P158194 Myanmar Flood and Landslide Emergency Recovery DRRD IDA5889 Project P160931 Myanmar South East Asia Disaster Risk Management Treasury Department TFA5031+IDA6080 Project P160931 Myanmar South East Asia Disaster Risk Management YCDC IDA6080 Project P145534 Telecommunications Sector Reform Project PTD IDA5353 The World Bank Myanmar Flood and Landslide Emergency Recovery Project (P158194) Project Project Name Implementing Agency Financing Source ID P146482 Ayeyarwady Integrated River Basin Management DWIR IDA5559 Project P156124 Myanmar EITI Implementation Project MOPF TFA6310+TFA1901 III. SUMMARY OF CHANGES Changed Not Changed Financial Management ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ The World Bank Myanmar Flood and Landslide Emergency Recovery Project (P158194) Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S)