The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) Project for Strengthening Public Financial Management (P161969) EAST ASIA AND PACIFIC | Micronesia, Federated States of | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 3 | ARCHIVED on 22-Mar-2020 | ISR40731 | Implementing Agencies: The Federated States of Micronesia, Department of Finance and Administration Key Dates Key Project Dates Bank Approval Date: 30-May-2018 Effectiveness Date: 01-Oct-2018 Planned Mid Term Review Date: 31-Jan-2021 Actual Mid-Term Review Date: Original Closing Date: 25-Sep-2023 Revised Closing Date: 25-Sep-2023 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of the project is to improve tax administration and the completeness, reliability and timeliness of financial reports of the National and State Governments. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Strengthening the PFM Environment:(Cost $0.35 M) Financial Management Information System (FMIS):(Cost $5.14 M) Revenue Management System (RMS):(Cost $1.95 M) Change Management and Human Resource Development:(Cost $1.36 M) Project Management:(Cost $2.20 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions Project implementation is progressing but is slower than the expected rate due to the absence of a Project Manager for six months and delays in the tender of the key project procurement packages - the Financial Management Information System (FMIS) and the Revenue Management System (RMS). The current disbursement rate is only 10% ($1.1m). A new Project Manager came on board in late December 2019 and project activity has picked up. The bulk of the disbursement under the Project will occur under Component 2 & 3 when the new FMIS and RMS are contracted and installed. It is therefore imperative that the tenders be issued for the new FMIS and RMS as soon as possible. The status of each project components is as follows:- 3/22/2020 Page 1 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) Strengthening the Public Financial Management (PFM) Environment – A full-time consultant is being engaged in the national Treasury Division to carry out the key activities of reviewing and updating the national PFM regulatory framework and guidelines and providing capacity-building support and advice for the Division through the transition to the new financial management system. Requests for Expression of Interest for the position closed on 18 February 2020 and applications are being evaluated. The World Bank (WB) team was informed that the financing from the European Union has been approved to update the PFM regulatory framework and guidance in each of the four states . The national Treasury advisor will have the important role of supporting the Intergovernmental Working Group to coordinate the changes, and facilitate technical consistency of the frameworks, across the national and state governments. Financial Management Information System (FMIS) – The draft bidding documents for the procurement of the new FMIS were prepared by the Systems Requirement Study (SRS) consulting firm in August 2019 however there have been delays in finalizing the documents for several reasons. The project design was based on a cloud-based architecture to reduce implementation and operational cost of the system. Given stable connectivity is essential for the operation of a cloud-based architecture, the project design envisaged execution of a service-level agreement with the telecom provider to secure the required level of service. Th Bank team has been advising FSM to use the 'Platform-as-a-Service' (PaaS) model recommended with a fully managed Private Cloud Computing with Private Dedicated Servers that will provide the National Government and the four States exclusive control over the deployed FMIS and configuration settings for the application-hosting environment for access control based on defined user privileges and data can be backed up in-country). However, at the Steering Committee (SC) it was decided that “the primary storage and processing of financial data is to be hosted inside the FSM”. The Bank has suggested a pragmatic way forward for the authorities to consider piloting the cloud approach in the National Government and one State - and offering or ongoing support to help FSM realize the benefits of the cloud-based services A final Chart of Accounts structure also needs to be approved by the SC for incorporation in the FMIS specifications. It is imperative that these processes come to closure, and the bidding documents submitted to the WB for no objection, so that the tender for the new FMIS can be issued as soon as possible and this key component of the project can move forward. Revenue Management System (RMS) - A full-time Tax Administration Advisor has been onboard for nearly one year supporting the national Customs and Tax Administration (CTA), and has made good progress in developing a Strategic Plan, Compliance Management Plan, and a Tax Audit Plan. Most core business functions can only be updated following the installation of the new RMS. There were delays in bringing the IT Implementation Advisor onboard and he is now in place and developing the technical specifications for the new RMS. Once approved the functional specifications will form the basis for the bidding documents for the new RMS. This process needs to be expedited with the drafted bidding documents submitted for the WB no objection, so the tender can be issued for the new RMS. Change Management and Human Resource Development - Focal points are in place in each of the four States and are making a positive impact to facilitate project implementation. With the full-time Project Manager onboard, other communication and outreach activities are underway, for example a recent PFM Project Implementation workshop. For substantive progress to made in this Component, the procurement process must start to recruit a Change Management Specialist and a Human Resource Development Specialist, to implement the key activities of a change management plan and PFM competency framework respectively. Project Management - The Project Manager departed the project in May 2019 and the position was vacant until October 2019 when the Department of Finance and Administration took the initiative to appoint an Interim Project Coordinator for two months, pending the commencement of the new full-time Project Manager who started in late December 2019. A Project Officer is being recruited to support the Project Manager in the Project Implementation Unit (PIU). Shared services in the form of financial management, procurement, and safeguards support are provided to the PIU by the Central Implementation Unit. The Project Budget has been approved , and a Project Work Plan and Project Report (for the period to end March 2020) are to be submitted. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Substantial Substantial Macroeconomic Moderate Moderate Moderate Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Substantial Substantial Substantial Sustainability Fiduciary Substantial Substantial Substantial 3/22/2020 Page 2 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) Environment and Social Low Low Low Stakeholders Substantial Substantial Substantial Other -- -- -- Overall Substantial Substantial Substantial Results PDO Indicators by Objectives / Outcomes To improve completeness, reliability and timeliness of financial reports of National and State Govts IN00810022 ►PDO-1: In-year budget reports prepared and published by National and all four State governments (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target In-year budget reports prepared and cleared for publication by all five Govts meeting In-year budget reports criteria for timing, Value not prepared and not No change No change accuracy, coverage published and comparability to meet criteria of “B” score for PI-28 based on PEFA Framework Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 30-Jun-2023 IN00810024 ►PDO-3: New FMIS used by all five govts for recording and reporting budget, revenue and expenditure (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target New FMIS used for preparation of budget for FY2024 and FundWare accounting recording of revenue Value No change No change system being phased out and expenditure transactions by National and all State governments Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 31-Jul-2023 To improve tax administration IN00810023 ►PDO-2: Revenue Management System installed and in use by CTA for improved revenue accounting (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target “C” score in 2016 self- Criteria for “B” score of Value No change No change assessment for PI-20.3 PI-20.3 met 3/22/2020 Page 3 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 31-Mar-2023 Intermediate Results Indicators by Components Strengthening the Public Financial Management Environment IN00810025 ►IR-1: New chart of accounts for all govts for better management, financial and statistical reporting (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target "C" score in 2016 self- “A” score criteria for Value assessment. Functional No change No change PI-4 met classification lacking. Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 31-Mar-2023 IN00810149 ►IR-2: Procedures Manuals updated with detailed guidance for all five governments (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Procedures Manuals in place with detailed guidance for budget Operations Procedure formulation, Value not covering all required No change No change accounting, internal areas controls, payroll, fixed assets, cash management and financial reporting Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 31-Dec-2020 Financial Management Information System (FMIS) IN00810146 ►IR-3: Financial data integrity maintained to meet “B” score for PI-27 (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target “B+” score for PI-27 in “B+” score for PI-27 Value No change No change 2016 self-assessment maintained Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 31-Jul-2023 Revenue Management System (RMS) IN00810147 ►IR-4: Taxpayer accounting in Customs and Tax Administration (CTA) automated (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target All modules of RMS Value No RMS in place No change No change implemented and in use 3/22/2020 Page 4 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 01-Oct-2022 Change Management and Human Resource Development IN00810148 ►IR-5: Competency framework specifying minimum skillsets adopted and used for all PFM related jobs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Competency framework specifying minimum skillsets required adopted for PFM related jobs No competencies defined across National and Value No change No change for PFM related roles State governments and used for recruitment and training to build gender-balanced workforce Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 31-Jul-2023 IN00810150 ►IR-6: External training program partnerships for PFM related certification and degree courses (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Four (4) external training program No external training partnerships for Value program partnerships in No change No change certification and place degree courses in PFM related disciplines Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 30-Sep-2023 IN00810151 ►IR-7: Number of staff completing external training programs in PFM related disciplines (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 50.00 Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 29-Sep-2023 IN00810152 ►IR-8: Gender-sensitive communication conducted for the project for awareness and building ownership (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target DoFA website No communication enhanced and strategy; regular updates regularly updated with Value and information not No change No change information for released for government government staff and staff and citizens citizens with functionality developed 3/22/2020 Page 5 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) for capturing and summarizing feedback Date 29-Jun-2018 29-Apr-2019 31-Jan-2020 31-Mar-2023 IN00810153 ►IR-9: Transparency and citizen engagement in budget preparation and execution by National government (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target DoFA website includes functionality to capture citizen feedback. Information on budget preparation stages, final budget and quarterly updates on DoFA website exists but budget execution does not provide platform posted regularly Value No change No change for receiving citizen including: feedback. a) summary presented in a citizen-friendly format understandable by non-technical audience; b) summary of citizen- feedback received and government response. Date 30-Apr-2018 29-Apr-2019 31-Jan-2020 30-Jun-2023 Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P161969 IDA-D3240 Effective USD 11.00 11.00 0.00 1.12 9.34 11% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P161969 IDA-D3240 Effective 30-May-2018 01-Aug-2018 01-Oct-2018 25-Sep-2023 25-Sep-2023 Cumulative Disbursements 3/22/2020 Page 6 of 7 The World Bank Implementation Status & Results Report Project for Strengthening Public Financial Management (P161969) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 3/22/2020 Page 7 of 7