The World Bank Report No: ISR15739 Implementation Status & Results Bangladesh Deepening MTBF and Strengthening Financial Accountability (P117248) Public Disclosure Copy Operation Name: Deepening MTBF and Strengthening Financial Accountability Project Stage: Implementation Seq.No: 8 Status: ARCHIVED Archive Date: 28-Jul-2014 (P117248) Country: Bangladesh Approval FY: 2010 Product Line: Recipient Executed Activities Region: SOUTH ASIA Lending Instrument: Technical Assistance Loan Implementing Agency(ies): Finance Division, Ministry of Finance Key Dates Board Approval Date 23-Sep-2009 Original Closing Date 31-Jul-2014 Planned Mid Term Review Date 18-Feb-2013 Last Archived ISR Date 28-Jun-2014 Effectiveness Date 29-Oct-2009 Revised Closing Date 31-Jul-2014 Actual Mid Term Review Date 18-Feb-2013 Project Development Objectives Project Development Objective (from Project Appraisal Document) The project aims to deepen and institutionalize the MTBF and build a more strategic and performance oriented budget management process, while strengthening financial accountability across the expenditure management cycle. The project supports fundamental reforms of operational budget management functions in both central units and line ministries. Enhanced budget process and financial accountability is likely to improve the allocative and operational efficiency in public expenditure management which in turn will enable better provision of key public services in support of the Government's social and economic policy objectives. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Sub Component 1.1 Macro fiscal policy and management 5.83 Sub Component 1.2 : Debt, Treasury and Cash management 2.77 Sub-Component 1.3: Strengthen Budget Management and MTBF 8.18 Public Disclosure Copy Sub Component 1.4: Developing Planning Commisison Capacity in line with MTBF 1.73 Sub-Component 1.5: Legal and Regulatory 0.61 Sub Component 2.1: Accounting and Financial Reporting 16.37 Sub Component 2.2. - Payroll, pensions, GPF, advances, assets, loans 1.46 Component 3: Capacity Building and Training 8.99 Project Management and Coordination 6.55 Overall Ratings Page 1 of 8 The World Bank Report No: ISR15739 Progress towards achievement of PDO Unsatisfactory Unsatisfactory Overall Implementation Progress (IP) Unsatisfactory Unsatisfactory Public Disclosure Copy Overall Risk Rating Moderate Moderate Implementation Status Overview 2 out of 4 Project Development Objective (PDO) level indicators - institutionalizing the MTBF, and implementing iBAS++ as a prerequisite for achieving international standards of financial reporting - will not show any significant result by the project end-date. The other 2 PDO-level indicators regarding the number of ministries producing annual performance reports and percentage of ministries producing quarterly financial management reports – will only be partially achieved. Accordingly, the rating for progress towards achievement of PDO has been maintained as “unsatisfactory”. While there have been achievements in some areas, overall project implementation has remained sluggish and critical activities will not be completed by the closing date. Consequently, the overall implementation progress rating has also been maintained as “unsatisfactory”. The main areas of progress to date and the activities which will not be completed by the closing date are summarized below. Main areas of progress to date: • An upgraded debt management system (DMFAS version 6.0) installed and connected. A draft Medium Term Debt Management Strategy prepared. • Medium-Term Budget Framework rolled out to all line ministries and new budget institutions (Budget Management Wings, Budget Management Committees and Budget Working Groups) formally established. The Finance Minister has ratified the MTBF-roadmap. A FD/Planning Commission (PC) joint working group was established to facilitate technical discussions and progress on issues requiring coordination and joint agreement. • An average of 70 % of line ministries have submitted quarterly financial management reports for in 2014. • Annual Performance Reports submitted by 2 line ministries • Gender budget reporting submitted by 40 line ministries • The Medium Term Strategic Business Plan (MTSBP) of the Ministry of Agriculture has been signed by the Minister and been published. Draft MTSBPs have been formulated for the Power Division, the Local Governance Division, the Ministry of Education and the Ministry of Social Welfare. Draft MTSBPs for the Power Division and the Local Governance Division are at the final stage. • An internal audit manual and strategy have been approved by Finance Division and a decision taken to establish an internal audit unit/cell in Finance Division. • The new classification structure for budgeting, accounting and reporting was finalized by the designated task force based on recommendations received from the IMF. • An Account Code (accounting policies and procedures manual) was drafted to be shared with major stakeholders. • The current iBAS-system has been rolled out to 337 upazilla account offices • iBAS is importing data from 188 branches of the Sonali Bank and 9 branches of the Bangladesh Bank • Electronic fund transfer has been enabled for all CAO offices. Further security enhancements are required. Public Disclosure Copy • 14,170 public officials have participated in training conducted by the project, of which 2,800 over the last 6 months. To date, 62 government officials have been enrolled in overseas master’s programs under the scholarship program and 35 have so far completed. Targets that will not be achieved by the closing date: • Introduction of FBEs in line ministries. • Macroeconomic model will not be used as the basis of the government’s Medium Term Macro Framework (MTMF). • Envisioned number (22700) of government officials trained. • Envisioned number of line ministries (5) with budgets based on Medium Term Strategic Business Plans. • Introduction of an adequate legal frame work. • Development and testing of iBAS++ Page 2 of 8 The World Bank Report No: ISR15739 Locations Country First Administrative Division Location Planned Actual Bangladesh Dhaka Dhaka Division ✔ Public Disclosure Copy Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target LMs with MTBF meeting specific criteria Percentage Value 0.00 0.00 80.00 Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments MTBF rolled out to all LMs BMW/Bs are not yet fully BMCs/BWGs formed in all operational. FD is now LMs regularly monitoring whether ToR is being followed. LMs reporting annual performance results as Number Value 0.00 2.00 3.00 per guidelines Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Ministries of Health and Targets are yearly numbers Primary Education have (not cumulative) submitted performance reports for FY13. Ministries of Education and Agriculture, and Power Division have been selected to prepare APRs for FY14. None of them submitted complete APRs by the deadline. LMs producing quarterly financial management Percentage Value 0.00 37.00 80.00 reports meeting FD requirements. Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Irregular and with All 59 LMs submitted The Q4 reports are due by Public Disclosure Copy considerable time lag quarterly financial end of July. management reports for Q1 of FY14. 59% submitted reports in Q2 and 37% in Q3 of FY14. Government annual financial statements Text Value No No Partial prepared as per IPSAS cash based standard Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 consistent with COFOG and GFSM 2001. Comments Designated task force has "Partial" refers to the iBAS++ recommended new budget system being ready to support classification system for the change in gov't annual approval by FD and C & AG. financial statements. The Page 3 of 8 The World Bank Report No: ISR15739 Account Code drafted. changed statements Accounting procedures themselves can only be manual is foreseen to be observed end of FY2014-15, completed after the i.e. after project closure. Public Disclosure Copy completion of iBAS++. But as iBAS++ and classification chart yet to be finalized, no result against this indicator. Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Deviation between forecasts in the original Text Value a) 1.0 a. +/- 0.7 MTMF and actual results regarding : a) budget b) -2.7 b. +/--0.5 deficit to GDP ratio b) debt to GDP ratio Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Actuals for FY13 are a) -0.7 and b) -4.0, respectively. FY14 figures will only be available in September 2014. Debt management entities provide annual Number Value 0.00 4.00 report to government Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments No report has yet been Reports to include an provided, since the Medium evaluation of how the Term Debt Management borrowings, derivatives, and Strategy has not been other debt-related formally approved yet. transactions have complied with the requirements set in the DM strategy. Cash balances calculated daily and Text Value No No Partial consolidated by FD Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Cash plans for all four "Partial" means that cash quarters of FY14 have been balances are calculated Public Disclosure Copy prepared. monthly. Variance between original budget and actual Text Value -8.1 +/- 5.0 outturn fo previous FY Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Actual figure for FY 13 is -9.0, which is higher than the targeted +/- 6.0. Figure for FY14 only available in September 2014. Page 4 of 8 The World Bank Report No: ISR15739 Line ministries receiving regular oversight from Text Value Oversight is focused only on 100% oversight on quality of 100 % oversight on financial Finance Division related to MTBF budget processes MBFs and budget estimates reporting and financial data entry achieved performance Public Disclosure Copy Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Target for FY13 achieved. Oversight of financial reporting and performance (the FY14 target) initiated, but not yet complete. Line ministries producing gender budget Number Value 20.00 40.00 35.00 reports Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Line ministries with budgets based on medium Number Value 0.00 1.00 5.00 term strategic business plans Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments MTSBP for Ministry of Agriculture finalized and published. Draft MTSBPs for Local Government Division and Power Division are at final stage. Draft MTSBPs for Ministries of Social Welfare and Education are at an initial stage. Adequate legal and regulatory support to the Text Value No - exisiting legal and No - list of rules, regulations Partial reforms provided regulatory framework and guidelines inconsistent with evolving reforms Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments List of Rules, Regulations & "Partial" means that revised/ Guidelines prepared. Three new GFR and Treasury rules Guidelines/ Circulars have have been promulgated Public Disclosure Copy been issued. First draft of revised GFR prepared. iBAS functionality enhanced and applied as an Text Value No No Budget and ledger integrated FMIS across line ministries, functionality available. departments, subordinate and upazilla levels Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Functional requirements specified, technical specifications in progress. Technical architecture, System Requirement Page 5 of 8 The World Bank Report No: ISR15739 Specifications and Software Design Descriptions finalized. Programming in nascent stage (about 10% of code Public Disclosure Copy written). Government financial statements are prepared Text Value Statements are delayed and No - reporting has not Partial (system ready) on IPSAS cash basis in a timely manner do not comply with progressed beyond baseline international standards and iBAS++ system not ready Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Business requirements for "Partial" means that the generation of financial system is prepared for statements under IPSAS producing financial (cash-based) defined as part statements based on IPSAS of iBAS++-development. The cash basis. The statement development of iBAS++ is itself willonly be available in delayed. the following fiscal year iBAS used for Self Accounting Entities (SAEs) Text Value None for seven SAEs No Partial based on improved accounting standards and Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 procedures Comments Software developed for RHD, "Partial" means that software Dept of Public Works, Public is developed to interface all 7 Health Engineering, Post SAEs. Office, & Railways. Software development in Forest and Defense has been deferred. Budget classification revised to meet budget Percentage Value 0.00 50.00 100.00 preparation and consolidation of accounting Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 data for financial reporting consistent with Comments Chart of accounts does not Overall structure has been IPSAS comply with int'l standards finalized by task force and submitted to MoF for approval. Detailed economic coding is being reviewed bytask force sub-committee. Public Disclosure Copy Other iBAS enhancements Percentage Value 0.00 75.00 100.00 Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Accounting data are Pensioner and employee "100 % target achievement" inaccurate and fragmented software has been developed means that software has been and collection of data developed and tested and initiated. 47% of pensioner databases fully populated. data and 59% of employee datahave been collected. Public servants receiving PFM training Percentage Value 7.00 53.10 89.00 Page 6 of 8 The World Bank Report No: ISR15739 Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments 7 % corresponds to 1661 53.10 % corresponds to 100 % corresponds to 22700 public servants 14,170 public servants public servants Public Disclosure Copy Public servants reporting positive training Percentage Value 0.00 97.70 80.00 outcomes Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments No framework for reporting 4-level framework for training training outcomes evaluation adopted. Number of training days engaged in Number Value 0.00 20302.00 1400.00 PFMtraining & capacity building activities Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments No record of formal training Training and capacity building days spent for providing includes study tours, training & capacity building in academic programs PFM area (Master’s), foreign courses, e- learning trainings, workshopsand seminars. Number of management reports prepared Number Value 0.00 7.00 2.00 Date 28-Feb-2010 30-Jun-2014 31-Jul-2014 Comments Targets are yearly numbers (not cumulative). Reports contain comprehensive statement of all activities, evaluation, and feedback. Data on Financial Performance (as of 16-Jul-2014) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P117248 TF-95283 Effective 29-Oct-2009 29-Oct-2009 29-Oct-2009 31-Jul-2014 31-Jul-2014 Disbursements (in Millions) Public Disclosure Copy Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P117248 TF-95283 Effective USD 52.50 52.50 0.00 50.98 1.52 97.00 Disbursement Graph Page 7 of 8 The World Bank Report No: ISR15739 Public Disclosure Copy Key Decisions Regarding Implementation The Ministry of Finance, SPEMP donors and the World Bank have decided to close most project activities on July 31, 2014 as scheduled. A key factor that informed the decision against a project extension was the observed lack of adequate follow-up by the Government and project team on recommendations made during consecutive supervision missions, especially with regard to the development of IBAS++. Concerns also existed about the realism of plans to achieve project objectives during an extension period. However, the closing date for expenditures related to 26 Masters degree candidates has been extended to September 30, 2014 so that they may complete their degree programs. Restructuring History Level two Approved on 05-Mar-2012, Level two Approved on 23-Jul-2013, Level 2 CD Decision on 25-Jun-2014, Level two Approved on 13-Jul-2014 Related Projects There are no related projects. Public Disclosure Copy Page 8 of 8