THE POWER OF PARTNERSHIPS Myanmar Multi-Donor Trust Fund Annual Report Inception July 2014 – June 2015 TABLE OF CONTENTS EXECUTIVE SUMMARY ..................................................................................................v Section I: Introduction/Background: The Myanmar Story .............................................1 Section II: The MDTF Program .......................................................................................3 Window 1: Social Development and Inclusion ........................................................................... 4 Window 2: Institutional Strengthening....................................................................................... 9 Window 3: Implementation Support ........................................................................................ 12 Window 4: Private Sector Development .................................................................................. 13 Section III: Program Summary ......................................................................................17 Section IV: Program Administration .............................................................................19 Annex A: Myanmar Multi Donor Trust Fund Financial Report as at June 30, 2015 .......................................................................................................21 Donor Commitments and Deposits (as at June 30, 2015) ........................................................ 21 Disbursements by Activity: Actual and Projections (as at 30 June 2015)..................................22 Donor Contributions Received and Projected........................................................................... 23 Annex B: Myanmar Multi Donor Trust Fund Results Matrix ........................................24 ABBREVIATIONS AND ACRONYMS BE (World) Bank Executed CPF World Bank Group’s Country Partnership Framework CSO Civil Society Organizations DFAT (Australia) Department of Foreign Affairs and Trade DICA Directorate of Investment and Company Administration DLI Disbursement Linked Indicators DTIS Diagnostic Trade and Integration Study EGRA Early Grade Reading Assessment EITI Extractive Industry Transparency Initiative FDI Foreign direct investment FESR Framework for Economic and Social Reforms GoM Government of Myanmar IDA International Development Association IFC International Finance Corporation IMF International Monetary Fund M&E Monitoring & Evaluation MBF Myanmar Business Forum MDTF Multi-Donor Trust Fund MIC Myanmar Investment Commission MNPED Ministry of National Planning and Economic Development MOC Ministry of Commerce MoE Ministry of Education MoF Ministry of Finance MOU Memorandum of Understanding MTFF Medium Term Fiscal Framework PFM Public Finance Management PPD Public-Private Dialogue RE Recipient Executed SC Steering Committee SME Small and medium enterprises UMFCCI Union of Myanmar Federation of Chamber of Commerce & Industry VBF Vietnam Business Forum WBG World Bank Group vi EXECUTIVE SUMMARY This is the first annual report of the MDTF. A semiannual report was delivered to the Steering Committee in May 2015. This annual report builds on that report and covers the period from inception in July 2014 until 30 June 2015. The Myanmar Partnership Multi-Donor Trust Fund (MDTF) was established as a collaboration between the World Bank Group1 (WBG), the Department for International Development (DFID), the Australian Department of Foreign Affairs and Trade (DFAT), and the Government of Myanmar (GoM). The Kingdom of Denmark joined this partnership in December 2014. The objectives of the MDTF are to: (i) Support Myanmar’s transition and the implementation of the Government’s Framework for Economic and Social Reforms (FESR) and National Development Plan; and (ii) Enhance cooperation between the World Bank Group (WBG) and Donors to the Trust Fund. The MDTF Steering Committee (SC) has endorsed five activities falling under three main programs: (i) School Grants and Stipends Program; (ii) Public Financial Management and Public Administration Program; and (iii) Investment Climate and Competitiveness Program. The MDTF is currently valued at US$59,330,034 of which US$32,973,842 has been received from donor partners. Disbursements from the contributions received are approximately 36 percent or US$11,855,474. Disbursements are projected to increase to over 60 percent or approximately US$27,600,000 by the end of June 2016. Although still in the early stages of implementation, activities financed through the MDTF and implemented collaboratively with partners or solely by government have seen impacts at both the household level and public levels. For example, the school grants and stipends program has helped increase operating budgets for schools and make schooling more affordable for the first time in decades; the public sector development program has transformed how budgeting and planning is done in the country through the introduction of top down availabilities driven expenditure ceilings to all spending agencies across the Union, States, and Regions. This work has drawn together public officials and private business owners seeking achievements to inspire greater development and investment in Myanmar. The introduction of self-assessment tax declarations for large taxpayers has not only made the tax system fairer, but also led to an increase in tax effort. Concurrently, support is being provided to the Public Accounts Committee of the Parliament to strengthen parliamentary oversight. Seeds are also being sown through hands-on training to improve procurement, tax administration and governance on all levels. Some key achievements reached through the MDTF activities include: The MDTF’s student stipends and school grants programs. The Ministry of Education (MoE) met the goal of distributing designated funds to more than 200 townships according to a robust and transparent formula. This achievement came three years ahead of schedule. Students, teachers, administrators and parents herald the differences these programs have made. One parent noted: “We no longer worry for children’s learning.”2 1 World Bank Group for the purpose of this MDTF includes the International Bank for Reconstruction and Development and the International Development Association (collectively referred to as the World Bank) as well as the International Finance Corporation. 2 Quote of one parent interviewed in the Qualitative Assessment of Grant and Stipend Program published in March 2015. vii Through the Public Financial Management and Public Administration program, important advances were made in the tax-collection system, including measures to increase transparency and efficiency. Technical assistance was provided on public investment management, debt management, policy-based budgeting, parliamentary oversight, and tax audits using a self-assessment system. The Ministry of Finance (MoF) now is on track to meet recently enacted requirements on publication of the Medium Term Fiscal Framework policy statement, Debt Sustainability Analysis, Budget Strategy Paper and the Citizens’ Budget. Steps also were taken to make the flow of resources more predictable. In addition, direct World Bank assistance was provided to improve Myanmar’s procurement system. Perhaps the most important achievement of the program is the fact that the government has been able to maintain fiscal discipline while changing the structure of public finances in favor of more resources to social and economic sectors. A significant risk identified at the time the reform effort began was one where the pressures on the PFM system could have destabilized service delivery. This risk was effectively managed and mitigated. Work to improve Myanmar’s investment climate and competitiveness led to progress in the revision of regulatory mechanisms and the strengthening of the advocacy role of the private sector. The Directorate of Investment and Company Administration (DICA) issued new regulations liberalizing Foreign Direct Investment and listing activities that no longer qualify for customs duty or commercial tax exemptions. The Myanmar Business Forum (MBF) was established, leading to vital public-private consultations and discussions. viii Section Introduction/Background: I The Myanmar Story Myanmar has embarked on a three-pronged transition since 2011, moving from authoritarian rule to democratic governance, from a centrally directed economy to market-oriented reforms, from over 60 years of conflict to peace. The country has undergone a remarkable series of reforms in the past four years. This ongoing transformation reached another milestone in November 2015, when the former opposition party won the most seats in parliamentary elections and the former governing party accepted defeat. The new government to emerge in 2016 confronts a critical challenge: Making good on the promise of Myanmar’s reforms through sustained, long-term efforts that can translate into tangible improvements in the lives of the majority of the population. Myanmar is among the poorest countries in Asia, has among the worst social indicators in the region, and has one of the lowest levels of access in the world to phones, roads, and other infrastructure. The country holds abundant natural resources but these have not been managed well or tapped with transparency, causing loss of revenue, corruption, and community grievance. Its rich farmland has been mismanaged for decades, leading to high levels of poverty and chronic rural indebtedness. Long isolation has left the country poorly integrated in the region and in the world. In response to many of these challenges, the Government of Myanmar (GoM) outlined an ambitious program for change in the Framework for Social Reforms (FESR), a set of policy priorities published in 2013. The GoM refers to the FESR as a three-year “reform bridge” to keep Myanmar on track toward the country’s 20-year National Development Plan (NDP), which aims to create a democratic society and close the gap with the powerhouse economies of Asia. The FESR states: “By becoming a modern, developed nation, Myanmar will be able to contribute more effectively to maintaining peace and stability in the region as well as in responding to the problems currently causing deep concern in the international community.” Development Partners support the GoM reform agenda by aligning aid with the FESR and NDP strategies, and by working closely with government counterparts to implement the many reform activities now underway. The Myanmar Partnership Multi-Donor Trust Fund (MDTF) was established in 2014 to help donor partners get the most impact possible out of resources designated to support Myanmar’s reform programs. The MDTF is a collaboration between the World Bank Group (WBG), the Department for International Development (DFID), the Australian Department of Foreign Affairs and Trade (DFAT), the Kingdom of Denmark and the Government of Myanmar (GoM). The MDTF has defined two explicit objectives: (i) Support Myanmar’s transition and the implementation of the FESR and National Development Plan; and (ii) Enhance cooperation between the World Bank Group (WBG) and donors to the trust fund. These objectives support the goals of the GoM, Donor Partners and the WBG. The MDTF plays a key role in bolstering GoM’s reforms and increasing chances for lasting success. The WBG’s Country Partnership Framework (CPF) for 2015-2017 stresses that a key challenge to reform “will be to ensure that the political, economic and peacemaking transformation gives voice to the whole population, benefits the country’s most needy and vulnerable, and develops the non-state sector to support broad-based economic growth.” The MDTF provides a strong coordination and planning mechanism between key donors 1 and the GoM. It also serves as a model that enables donor partners to provide financing quickly and efficiently. The MDTF Steering Committee3 (SC) meets twice a year and provides strategic guidance and general oversight of the MDTF. The MDTF provides co-financing to large IDA programs implemented by the GoM, finances stand- alone activities implemented by GoM or the WBG, and provides funds for activities to ensure enhanced support for project implementation and development of evidence-based information to improve reforms. The MDTF’s early activities support reforms or activities launched by GoM in the areas of education, public finance management, and private sector development. MDTF programs in Myanmar are framed by three activity windows: Social Development and Inclusion, Institutional Strengthening, and Private Sector Development. Activity design and implementation draw from international experience and close consultation and collaboration with the GoM. Current MDTF programs pursue major goals that include: (i) Increasing social capital and inclusion through participatory local development and service provision; (ii) Strengthening institutions to deliver improved management of public revenue expenditure and services, and increased access to finance; and (iii) Increasing private sector development, including job creation and investment climate reforms. Through sequenced assistance projects that are national in scope but with local impact, the MDTF ensures involvement in Myanmar that is varied and far-reaching. The MDTF is relatively new and is expected to add additional financing for more activities as other reform programs are identified. The annual report provides a summary of achievements to date and builds on the semiannual report that was delivered to the SC in May 2015. The annual report covers the period from inception (June 2014) until 30 June 2015. The report is divided into four sections: Section I: Introduction/Background – This provides context to explain the rationale and role of the MDTF in Myanmar. Section II: The MDTF Program – This provides a breakdown of the windows and of activities undertaken to date, including program achievements and the outlook for upcoming activities. Section III: Program Summary – This provides an overview of lessons learned and overarching challenges facing the MDTF as it moves forward. Section IV: Program Administration – This provides updated information on the financial status and results framework. 3 The Steering Committee is composed of representatives from the Ministry of National Planning and Economic Development (MNPED), the Ministry of Finance (MoF), the World Bank, the International Finance Corporation, DFID, DFAT and Denmark. Representation is at heads of agency level equivalent or as delegated. 2 Section The MDTF Program II Myanmar Partner Multi-Donor Trust Fund Activities - At a Glance 4 Window 1: Social Development & Inclusion Objective: Help improve and expand Myanmar’s School Grants Program and Student Stipends Decentralizing Funding to Schools Project Program. US $17 million Plus IDA credit of US $80 million Implemented by MoE Window 1: Social Development & Inclusion Objective: Generate evidence that supports improvement of the government’s design and implementation for the grants and stipends programs Monitoring & Evaluation of School Grants and and evidence-based policy dialogue in the education Stipends Program sector. US $2.28 million Implemented by WB Window 2: Institutional Strengthening Objective: To support efficient, accountable and responsive delivery of public services through the Modernizing Public Finance Management modernization of PFM systems and strengthening institutional capacity. US $20 million Plus IDA credit of US $30 million Implemented by MoF Window 2: Institutional Strengthening Objective: Support and coordinate with developmental partners on PFM reforms, support program implementation, assist in linking social Implementation Support for PFM and Public accountability initiatives with government reform Administration Performance Program program. Also provide targeted analytical work on PFM reforms and period evaluation of the project. US $7.233 million Implemented by WB Window 4: Private Sector Development Objective: To improve the competitiveness and dynamism of the private sector to increase trade and investment and create jobs in Myanmar. This will be Policy and Investment Climate Reform achieved by building on the comparative advantages of Myanmar and focusing program interventions on areas of WBG value addition. US $2,712,115 4 Implemented by WB and IFC 4 Additional contribution from DFAT was received end June 2015 toward the investment climate and competiveness program. Endorsement from the SC was received in July 2015 for allocation to this program for an amount of US$2,177,115. The allocation is shown although endorsement received slightly out of the reporting time frame. 3 ROAD TO REFORM: Seen Through the Windows Window 1: Social Development and Inclusion The objective of this window is increased social capital and inclusion through greater participation in local development and enhanced delivery of services. Activities underway under Window 1 are focused in the education sector. They include (i) Myanmar Decentralizing Funding to Schools project; and (ii) Monitoring and Evaluation of the School Grants and Stipends Program. The total MDTF financing under this window is approximately US$19.28 million. The program has seen huge success to date and additional financing in this sector is anticipated, including through the MDTF. Disbursement for the government-executed project from the MDTF grant financing is US$7.2 million as of June 2015, or 42.4 percent of the originally committed $17 million. Total disbursements and commitments under contract for the parallel World Bank-executed M&E program are 96 percent of the original US$2.4 million. Early Grade Reading Assessment in action. CONTEXT Education reform is one of the key priorities set out by the government. The design, implementation and monitoring of socio-economic development indicators and progress have been limited. The 30-year Education Development Plan (2001/02-2030/31) outlines strategies to promote greater access and to improve the quality of basic education. Significant progress has been made in these areas. Enrollment in primary and secondary schools has increased rapidly and public expenditure in education has tripled during the last three years. In the FESR, the GoM designated the education sector as a strategic area for scoring “quick-wins” in its reform program. In the CPF the WBG highlighted concerns over enrollments with figures showing significant increases School Grants program in dropout rates as students in Myanmar get older: Reformed “In education, while primary net enrollment rates have improved over the past two decades, enrollment The reform changed the program in several rates drop from 87 percent in primary school to 58 fundamental ways: (i) Increasing resources percent and 32 percent for middle and high school, flowing to schools; (ii) Regularizing resource respectively." flows; (iii) Granting greater autonomy to schools in how they spend resources; and (iv) Aiming to The GoM took major steps in 2009-10 to address increase community participation and oversight needs in the education sector, establishing the school in how the funds are spent. A more progressive grants program and the student stipends program. and transparent allocation rule was applied The school grants program provides transfers to in the 2014-15 school year that linked grants schools, with the objective of improving educational to enrollments. For the first time, detailed outcomes through strengthening the supply of guidelines and extensive training were provided education. The stipends program provides cash to to township education officers and school heads poor children at risk of dropping out of school. to explain the basic design features. 4 The school grants program was established by ministerial decree in 2009-10. Although a basic framework of the amounts and flow of funds existed, irregular and inconsistent payments to schools hampered implementation. There was poor documentation of objectives, implementation arrangements, performance indicators and monitoring. Resources were earmarked for the program, but school officials did not know when they would receive them. In the 2014-15 school year, the school grants program was reformed with technical and financial assistance of the WB and DFAT. The stipends program initially was stretched thin across townships, causing substantial STUDENT STIPEND PILOT PROGRAM administrative work to support a limited number EXPANDED of students. Selection processes were unclear The pilot program introduced more rigorous and the number of stipends did not meet needs. targeting approaches, increased stipend amounts Receiving stipends was intended to be based on for secondary students, and initiated attendance school attendance, but in the early phase of the requirements. About 37,000 students in eight program it effectively became an unconditional townships were covered in the first pilot phase. cash handout. The program lacked a formal time Officials planned to expand the program each frame with transfers varying year to year and there school year, originally setting a target of providing was no standardized documentation of program stipends to students in 12 new townships in the objectives or implementation requirements. There 2015-16 school year. Initial reporting in 2015 also were no provisions for measuring performances indicated that goal was exceeded by seven or monitoring implementation. An expanded version townships. Under the pilot program, students of the program was piloted in the 2014-15 school receive a stipend between US$6 and US$10 year with technical support and financing through a month depending on their grade level if the MDTF and IDA program. they comply with program conditions such as attending school regularly and passing a year-end Working with development partners, including the exam. WB and DFAT, the GoM already has had an impact in this sector. However, challenges remain. Myanmar remains far from full primary enrollment; progress has been made on legislation and the policy framework for education but the policy framework in particular remains a work in progress, and there is a strong demand for the government to address curriculum and language of instruction to reflect Myanmar's diverse language and cultural context. Capacity to implement reform at all levels also remains a concern, particularly as increasing roles and responsibilities of local authorities will be required for decentralization to take place. The donor-supported Country Education Sector Review (CESR) has provided the foundation for a draft National Education Sector Plan that is expected to inform strategic policy directions of the new Government. APPROACH TO IMPLEMENTATION Development partners have aligned their support to an existing GoM program, integrated this support into the government systems and structures, and use evidenced-based monitoring and evaluation to feed into continuous improvement for the program. The program uses a Disbursement Linked Indicator (DLI) approach that focuses on outcomes achieved by the GoM as opposed to relying solely on inputs. The school grants and student stipends programs were initiatives of the GoM implemented prior to the MDTF’s inception. Development partners recognized the strengths of this program and worked with the MoE to further strengthen it. This collaboration includes: (i) Formalizing the structure; (ii) Developing guidelines and processes for implementation and fund allocation; and (iii) Helping to expand the scale and scope of the program by providing financial resources via the Decentralized Funding to Schools Project (the project) with financing from MDTF and IDA resources. By building on an existing program, the project is fully integrated within MoE operations, resulting in strong government leadership and ownership. 5 The MDTF provides financing to a parallel Monitoring and Evaluation (M&E) program. Qualitative assessments and quantitative surveys are conducted under the management of the World Bank, which is leading the M&E components in close collaboration with the MoE and other stakeholders. Save the Children is carrying out the qualitative research and a local firm, Myanmar Survey Research, will undertake a quantitative survey of school grants and stipends program implementation, in addition to a household survey. This project also uses a DLI approach. Disbursements are directly linked to achieving clearly defined indicators. This approach decreases administration and keeps the focus on achieving goals defined by the indicators. PROGRESS The project is performing well, the World Bank’s implementation progress rating was raised to highly satisfactory based on two factors: (i) GoM’s success in implementing relatively complex, well-defined programs on time and on budget, and (ii) GoM’s willingness to use feedback and recommendations from the M&E program to solve problems and introduce program improvements. The MoE has successfully achieved all its process-related objectives in the project first two years (see the achievement section below). While the project development objective and related results indicators are process-oriented (which is appropriate for a new program for a new implementing agency), MoE seems to be well on track to show increasing access and retention rates and to build its capacity to evaluate learning outcomes (e.g. early grade learning assessments). Equally important, MoE has used program implementation as a learning exercise. It has shown a willingness and capacity to consume annual process and quantitative evaluations and to use lessons to improve its programs from year to year. This attention to monitoring and evaluation and rapid reaction to findings has exceeded expectations. The success of the project and particularly the results-based DLI approach has made this project a prime candidate for additional financing, which currently is being prepared. The additional financing will have two aims: (i) It will help promote a transition within the existing program from output-oriented DLIs (grants transferred, stipends paid) to outcome-oriented DLIs (increase in 5th and 6th grade transition rate, states/regions reporting on early grade reading levels, etc.), and (ii) It will expand the scope of the results-based funding to promote school and cluster-based in-service professional development for teachers, with a focus on teacher mentoring. ACHIEVEMENTS AND IMPACTS The school grants and stipends program with support from the MDTF through the Decentralized Funding for Schools Project and the M&E program has made significant impacts. 5 Achievements of the program include: Grade 5 teacher, Laputta Township: “It has taken nine years now as a teacher in this village. In the meantime, the students had to struggle to remain in school and now they can attend comfortably this year because of stipend program. They now have adequate schooling materials and they are working harder than before. In addition, their parents are interested in school and joined school activities. I am very glad as they become lead in prize-awarding ceremony in school. I would like to suggest to provide the remaining poor students too.” 5 Quotes have been sourced from case studies in “Qualitative Assessment of Myanmar School Grant and Pilot Stipend Programme,” Save the Children, March 6, 2015. 6 • Stipends program, including training and consultations, rolled out to 27 townships (out of 330 total townships). • Initial reporting for school year 2015-16 showed that more than 100,000 students were receiving stipends under the program (There are about 8.6 million students in government schools in Myanmar). • 53.3 percent of stipend recipients in 2014-15 were girls. • School grants program funds for school year 2014-15 were transferred in accordance with the funding formula to about 229 townships; nearly all schools have produced school improvement plans ahead of schedule. • The first transfer for 2015-16 occurred in June 2015 in nearly all townships. • Schools in flood-affected areas received an early transfer of their second payment for 2015-16. • MoE included monastic schools (about 1,800 of them, compared with about 43,000 government schools) in the program in school year 2015-16; this is significant because it shows a capacity and willingness to reach out to non-state schools. • Second DLI disbursement from the World Bank of $22.8 million made to MoE in June 2015, one month ahead of schedule. • MoE increased its own funding for school grants to more than $80 million for 2015-16 and increased the amount of individual grants depending on school size. 6 • Qualitative assessments will continue into 2017. The qualitative analysis provides annual feedback on social and operational issues. • The first phase of the Early Grade Reading Assessment (EGRA) conducted in the Yangon area was shared with MoE in 2015. • Development partners and MoE have begun preparing to add financing to the program and continue to use the results-based funding mechanism. SIX-MONTH OUTLOOK Strong implementation progress is expected to continue during the next six months. The joint World Bank- Australia team will work closely with the MoE and other stakeholders to prepare the additional financing project. Disbursements through June 2016 are estimated to be an additional US$28 million from IDA and the MDTF combined, putting total disbursement at about US$71 million with 17 percent of the disbursements financed from the MDTF. A quantitative analysis, including school surveys and household surveys is expected to be completed in December 2015. This analysis will examine program impacts on enrollments, attendance, dropout rates and overall satisfaction. In preparation for year three of the programs and the additional financing, the World Bank/DFAT are undertaking several reviews. A financial assessment of central capacity is scheduled to be carried out in November 2015 and will continue in the new year to cover selected townships and schools. The World Bank and DFAT are also undertaking conflict assessments in some conflict sensitive states (Rakhine, North Shan and Kachin) in preparation for the roll out of the third year stipends programs to those areas. 6 School grants now range from US $400 per year for the smallest schools to about $2,000 annually for the largest schools. 7 A concept review of the proposed additional financing has been shared with core donors and is currently being fleshed out. The grants and stipends programs are expected to continue and expand in the context of adding additional DLIs that are more oriented to outcome results (access and retention). The new activity or program that supports teacher professional development is being prepared with a working group appointed by MoE. It will be a priority to ensure active support and buy in from the new government. All final decisions on approach and DLIs will be negotiated and agreed with the new government after April 1, 2016. CHALLENGES AND OPPORTUNITIES Potential Challenges: New Government: The preparation and processing of additional financing will be undertaken after Myanmar’s election season and into the period of forming the new government. This presents risks and opportunities. Discussions on the substance, timing and process of the education programs will need to be broad-based, i.e. briefing and consulting with Myanmar’s parliamentary committee, which represents all major political interventions to build broad political support for the school grants and stipends programs. Professional Development of Teachers: Both the existing MoE and the new government have indicated teacher professional development, particularly in-service programs, is the highest priority for the coming few years. This priority reflects the roughly one-third of primary teachers in the system who have been teaching for two years or less. A key focus of the design of the additional financing component will be ensuring the new Government has buy in and that the Ministry has ownership and leadership of the new design ahead of negotiating the financing agreement. Conflict Sensitivity: As the stipends program expands to government schools in all 15 states and regions during the third year of implementation, there is a risk that non-state schools and those populations currently not using government schools could express concerns about the program. The World Bank/DFAT will undertake conflict assessments in selected states (Rakhine, North Shan and Kachin) that will help provide advice to MoE and the donors on township selection and implementation to minimize any potential risks to the program. World Bank-executed funding for monitoring and evaluation will be used to work closely with government counterparts on building conflict sensitivity into project implementation. Potential Opportunities/Lessons: Improved Delivery: MoE is continuing to improve its delivery of services through the school grants and student stipends programs by using a continuous learning approach based on real time feedback and information from implementation and the M&E program. Parallel M&E program implemented by the Bank has been a useful and powerful tool to support implementation. Having this program implemented by the Bank has enabled the Bank to draw on international experience and expertise to design and manage the project, allowing MoE to focus on implementation. The program is integrated into the MoE. Training and informing MoE staff is ongoing, providing government the opportunity to make evidence-based decisions. Disbursement Linked Indicators: Using DLIs has been successful and could be a model for other projects. This success is particularly notable because it involves a new borrower. Funding is being added to continue support for the school grants and student stipends programs, and to expand into new areas such as in-service training for teachers. The DLI approach decreases administration and empowers the implementing agency with a focus on delivering. Integrated approach builds capacity “on the job.” The project has no implementation unit and finances no consultants with government-executed funding. This approach ensures government systems are strengthened, 8 government staff lead program implementation, and increased financing focuses on project objectives instead of technical assistance. By placing government in management and decision-making positions on project implementation, this approach also ensures engagement with other stakeholders involved in the sector. Window 2: Institutional Strengthening The objective of this window is strengthening institutions to deliver improved management of public revenue, expenditure and services, and increased access to finance. CONTEXT The Myanmar government says improving management of public finances will be a long-term commitment that is vital to keeping the reform process on track to bring lasting social change and shared prosperity to its citizens. In its FESR, the government acknowledges “both the urgency and historic scale of reforms required in Myanmar, involving the development of market mechanisms, changes in economic decision-making and the correction of policy distortions inherited from the previous period.” The WBG’s CPF backs up the FESR approach to phased-in changes in the public sphere, also stressing the importance of such reforms: “A critical prerequisite for Myanmar’s peace and development is to move from centralized and authoritarian rule towards an accountable public sector, including at the local level.” The Myanmar government has established a three-tiered sequence for Public Finance Management (PFM) reforms expected to take eight to 12 years. These activities include: Improving spending controls and revenue management in the short term; more effective use of resources based on better analysis of sophisticated financial data in the medium term, and development of strategically driven budget management systems in the long term. The MDTF provides co-financing to the IDA program through the Modernization of Public Financial Management Project (the PFM project) and a parallel World Bank-executed implementation support activity. These activities provide assistance to the first stage of the GoM’s three-stage strategy: Improving spending controls and revenue management. Work focuses on three main channels: (i) Increasing revenue to combat poverty through delivery of critical public services; (ii) Increasing efficiency of service delivery; and (iii) fostering greater accountability for service delivery. Disbursements from MDTF financing for the PFM project are low at 2.3 percent of the grant amount. Disbursements are at 25.2 percent of the grant amount for the World Bank-executed Implementation Support for PFM and Public Administration Performance Program. APPROACH TO IMPLEMENTATION The PFM project builds on the reform initiative of the government and like the education project utilizes an integrated approach to implementation. Both projects are embedded into the organization structures of the GoM. This approach is strengthening government structures, building capacity and ensuring strong government leadership and ownership of the program. The parallel financing for implementation support by the WB complements the PFM project, providing targeted technical advice and assistance along with enhanced implementation support. 9 The PFM project is being implemented by the MoF, the Ministry of National Planning and Economic Development, the Public Accounts Committee, and the Office of the Auditor General (OAG). Project activities are embedded within existing GoM structures and carried out under government leadership and supervision. This approach has taken more time than creating a Project Implementation Unit (PIU), but has led to strong government ownership while building management capacity among government staff. Reforms supported through the project launched in 2014 by the GoM aim to help policy-makers match targeted funds with policy priorities, build consistency in fiscal transfers to states and regions, and generate feedback to top managers so they know when problems or inefficiencies develop that must be addressed. Government officials also receive training in budgeting, financial reporting and procurement to serve the public more effectively, fairly and efficiently. The PFM project designates developmental finance to support the GoM’s ability to generate more revenue through a transparent manner, use resources to fund policy priorities, and account for the efficient use of resources to parliament and the public. PROGRESS The PFM project and the parallel implementation support activity are progressing well with the implementation pace anticipated to pick up by the end of 2015. By March 2015, the MoF had implemented a Medium Term Fiscal Framework (MTFF) with a formula-based transfer to states and regions for fiscal 2015/16. MoF carried out extensive restructuring, creating a Treasury Department, revamping the Budget Department and establishing the Large Taxpayer Office (LTO). To develop the skills base, more than 2,000 officials across the country began computer training. Recent progress has included several key appointments made by the government, including: PFM REFORM: GOOD GOVERNANCE (i) A full-time project coordinator; (ii) Four staff as AND TRANSPARENCY accountants and procurement assistants; and (iii) Initial work in PFM reforms focused on building a A full-time international procurement specialist. solid foundation for revamping fiscal operations The auditor general also appointed full-time staff on every level. Staff recruitment, computer to execute the project. These appointments led training, English-language instruction, technical to renewed vigor within the GoM to implement training, and hands-on training in budgeting, the project. The bank has received international financial reporting and procurement led to competitive bidding documents worth about US$10 significant progress to increase the skills base million for computers and software. Countrywide and create expertise within the GoM. These computer training and English-language instruction efforts provided important steps toward larger has started. PFM goals: Developing good governance in a transparent, fair and efficient tax system so After the international procurement specialist Myanmar can make the most of its resources. began work in August 2015, progress with Both PFM projects carried out with MDTF procurement activities increased. These advances support are embedded in the GoM, ensuring included training and mentoring of project staff on strong local leadership and ownership of the basic procurement and hands-on training on the modernization process. preparation of shopping and bidding documents. The modular training for US$500,000 delivered by the British Council started in May 2015, reaching almost 300 government staff from all project-implementing agencies. This program may be scaled up during the next fiscal year. Computer training, both basic and advanced, is underway for all implementing agencies. In addition, consultant contracts are in the advanced stage for work in the Myanmar Economic Bank and the International Revenue Department. 10 Under the complementary implementation support activity, recruitment of Myanmar-based PFM staff has progressed. Two staff members were selected to provide continuous implementation support and ensure strong development partner coordination. Both staff members are expected to be located in Myanmar by January 2016. Enhanced implementation support missions are conducted on a bimonthly basis to ensure focused support to GoM counterparts. A WB operations specialist spent three months in country, providing intensive implementation support. ACHIEVEMENTS AND IMPACTS PFM project achievements in 2015 include: • The LTO has been established and received the first self-assessment forms for LTO-administered taxpayers in April 2015 with a compliance rate of 95 percent. • The Medium Term Fiscal Framework (MTFF) provided ceilings to ministries, states and regions, increasing predictability of resource availability. • The Law on Budget Documents Presentation to Parliament was passed in 2015. This law requires the publication of the MTFF policy statement, Debt Sustainability Analysis, Budget Strategy Paper and the Citizen’s Budget. • After publishing the Citizen’s Budget, MoF is on track to meet the newly established publishing requirements. • The Extractive Industry Transparency Initiative (EITI) Secretariat has relocated to the MoF. The first EITI report is expected by January 2016. With publication of the EITI report Myanmar’s natural resource baseline information will be made available. • Work is advancing on the Pay and Compensation Review of Civil Service. • The Public Expenditure Review has been completed and the dissemination workshop was held late October 2015. • On the job technical assistance has been provided on public investment management, debt management, tax audits and the MTFF. • Direct World Bank technical assistance is being provided on improving the country procurement system. All information has been shared with Development Partners. • Tax to GDP ratio projected to increase to 8.1 percent of GDP in 2015/16. The variation between budget estimates for 2014/15 and revised estimates for 2014/15 was reduced to less than 10 percent. SIX-MONTH OUTLOOK With key staff in place, training delivered on fundamental processes such as procurement and increased staffing on the World Bank side, the team expects the PFM project to continue increasing its pace of implementation. About US$15 million is expected to be committed during the next year. Disbursements from the MDTF during that period are projected to be more than US$5 million. 11 CHALLENGES AND OPPORTUNITIES Potential Challenges: Newly formed Government: The 2015 election aftermath and subsequent forming of the new government may disrupt the pace of implementation. Government understanding and ownership of the program may need to be rebuilt. The NLD has indicated it will consolidate ministries. The impact of this consolidation could affect the pace and scope of reform programs. Lack of Government Experience: This is the first time the government is implementing an externally financed project. Understanding of procurement rules and financial guidelines is limited, and government is very cautious not to make mistakes. In this regard, implementing agencies apply most cumbersome and constraining internal rules and regulations to ensure no mistakes are made. This slows down implementation. The team has been providing enhanced implementation support to implementing agencies to make them more comfortable and to streamline regulations. Lack of Delegation: Even when annual work plans are approved by the Executive Reform Team, each hiring of TA and procurement of goods is resubmitted individually to the Minister for approval. This becomes very cumbersome and slows down pace of implementation. Conflict Sensitivity: The risk of possible conflict has been included in the PFM program, especially as it relates to supporting the technical aspects of decentralization. For example, issues related to revenue sharing and functional assignments across different levels of government will need to be carefully considered. Managing Expectations: The PFM is a large, complex and far-reaching program that goes to the core of the country’s financial management. Expectations of quick results and impacts must be balanced with the level of reform being undertaken. Development partners and government should be prepared for a long-term commitment with incremental results. Collaboration: Coordination and collaboration with all stakeholders has been strong. Stakeholders need to continue to support the approach being taken for this program but also ensure that the program continues to be demand-led. Potential Opportunities/Lessons: Enhanced resources for implementation support and targeted technical assistance provided through the MDTF give an opportunity for focused support to the government in implementation. This also enables the Bank team to draw on international experience and expertise to design and manage the project so the GoM can focus on implementation. Integrated approach builds capacity “on the job.” The project has no implementation unit. This approach ensures government systems are used and strengthened, and that government staff lead and implement the program. This approach also places government in management and decision-making positions on project implementation and ensures engagement with other stakeholders involved in the sector. Building on an existing initiative increases understanding of the reforms being undertaken. It also is not seen as a “donor-led” reform initiative. Window 3: Implementation Support There are currently no activities under this window. 12 Window 4: Private Sector Development The objective of this window is increasing private sector development, including job creation and investment climate reforms. CONTEXT After decades of international isolation, improving the climate for investment, trade and business development has emerged as a focal point in Myanmar’s transition to a market-based economy. Political, economic and regulatory reforms launched since 2011 by the Myanmar government have yielded progress in many critical sectors, leading Western nations to lift most sanctions that crippled trade and investment during Myanmar’s previous leadership. However, the country still suffers from a weak investment environment and the GoM has targeted this area for improvement. The FESR stresses the need to liberalize trade and investment policies to open up the Myanmar economy while strengthening the private sector, saying that “improving the regulatory environment for business is crucial to enhancing a country’s competitiveness and stimulating economic growth.” In addition, Myanmar has sought to diversify exports, promote tourism and offer tax incentives to attract new businesses. The GoM also aims to take advantage of the country’s strategic location and youthful population of about 50 million people, and to responsibly profit from an abundance of natural resources including oil, gas, minerals, gems, forestry and under-utilized land. The WBG supports Myanmar’s goals for private sector development. In its CPF, the WBG states: “Myanmar has the potential to emulate the successful growth trajectory of other economies in the region” through sustained reforms and economic development. The WBG Myanmar Investment Climate and Competitiveness Program aligns with the government’s ambitious reform agenda to develop policies promoting private sector growth, supporting legal and regulatory reforms, and strengthening the advocacy role of the private sector. The PSD program received an additional AUD $3 million from the Australian DFAT in 2015, translating to a fund transfer for this contribution of US$2,177,115 7 Disbursements as of June 30, 2015 amounted to almost 17 percent of the total allocation of US$2,711,115 for this window. APPROACH TO IMPLEMENTATION The WBG leads the execution of the program through IFC and WB implemented activities. The WBG utilizes a consultative approach to implementation and draws on international expertise and experience. The WBG works collaboratively with the relevant government departments, the private sector and organizations representing the private sector. The Private Sector Development (PSD) program crosses many sectors and is implemented jointly by the Ministry of National Planning and Economic Development, the Ministry of Commerce, and the Union of Myanmar Federation of Chamber of Commerce & Industry (UFCCI). The PSD program is executed by the IFC and WB with funding from the MDTF. 7 This reflects the exchange rate and net of the 5 percent administrative fees. 13 Activities focus on increasing private sector development, including job creation and investment climate reforms. Other key aspects supporting the GoM include strengthening public-private dialogue, improving corporate governance, supporting economic integration, providing technical assistance on developing inclusive trade policies and implementing business regulatory reforms. PROGRESS The PSD program is gaining momentum. Widespread progress across all activities was achieved during the past year. This included: (i) continued consultations on drafting an investment law; (ii) coordinated activities between government and the private sector through involvement with the Myanmar Business Forum (MBF); and (iii) steps to facilitate trade including changes in customs fines and import/export licensing. Experts from the region and the WBG global investment policy team supported Myanmar in consultations and writing of three drafts of the Investment Law. Initial consultations began in 2014. Meetings were held with members of Parliament and at the request of the leader of the National League for Democracy, the program team met with Daw Aung San Suu Kyi to discuss key elements of the draft Investment Law. Concerns emerging from these meetings included questions about: (i) the role of foreign investment in Myanmar and whether policies would be implemented to ensure local investors benefit from market reforms; (ii) government discretion and how to encourage responsible investment; and (iii) points raised by members of Parliament about how a new Investment Law would affect other laws. Workshops and consultations continued as drafts were revised. Other issues raised related to provisions on land, currency transfer, resolving investor disputes, business conduct and the role of the Myanmar Investment Commission in approving investments and making policy decisions. Discussions with the drafting team also focused on implementing regulations and rationalizing investment incentives. The third draft of the law has been submitted to the Attorney General’s Office. The MBF Secretariat began operating in early 2015 to promote formal dialogue among public and private entities. The IFC coordinated a visit of staff from the government and private sector to attend the Vietnam Business Forum in Hanoi to learn from Vietnam’s experience and build networks to help the MBF develop. Two key government officials also participated in the WBG Global Public-Private Dialogue Conference in Copenhagen in early 2015. The efforts to raise awareness to business concerns and build capacity led to extensive public-private dialogue, giving the government insight into private sector concerns regarding reforms that affect the business environment. The results of the Doing Business 2015 report and the WBG Investment Climate Assessment were discussed with relevant government counterparts to help prioritize the reform process. The PSD program also supported data gathering for the Doing Business 2016 report, including support for the Doing Business team’s work in Myanmar in March 2015 and meetings with key officials. IFC organized an assessment in November 2014 to examine border trade and customs procedures in Myanmar, including consideration of private sector constraints to trade. ACHIEVEMENTS AND IMPACTS The Doing Business 2016 report highlights Myanmar as a top global reformer in the category of starting a business. 14 The PSD Program achievements in 2015 include: • Drafting and consultation of the second and third drafts of the Investment Law completed. • IFC expert from Sudan brought in to support the drafting of implementing regulations for the new investment law. • Preparations underway on implementing regulations for the Investment Law. The third draft of the Investment Law was submitted to the Attorney General’s Office after extensive consultations with the private sector and Civil Society Organizations. • The government secretariat for the MBF began operating in early 2015. The secretariat consists of 13 GoM staff who coordinate MBF activities across the government agencies, working closely with the private sector secretariat at UMFCCI to organize and facilitate public-private sector meetings to discuss issues raised with the government. • 22 Public-Private Dialogue (PPD) meetings have been held and several issues related to customs/ trade facilitation and tourism were raised. Concerns relate to customs valuation of imported cargo for tariff calculation and the lack of effective risk management at customs resulting in excessive inspection of cargo, licensing obstacles for tour operators and hoteliers, rules preventing foreign guests from staying at small guesthouses and the need for more training and skills development. Other trade-related issues discussed involved the simplification of testing of imported foods and the use of risk management practices to eliminate redundant testing that slows down the clearance of goods at ports. • The government has acted on two issues raised through the MBF: (i) Abolishment of bank certificates for obtaining customs clearance; and (ii) Removal of customs fine on import of car spare parts for which no import license is required. In total, nearly 10 issues have been solved with progress seen on solving others. • A draft action plan has been prepared for a Task Force on Business and Trade Promotion focusing on key reforms including construction permits, business startup and licensing. Further discussions are planned with the Task Force to prioritize reforms in the action plan for implementation. • A regional private sector working group meeting was held in Mandalay to obtain information about businesses outside Yangon for dialogue with government. An objective of these regional working group sessions is to ensure the inclusiveness of the MBF. • The Ministry of Commerce issued a new list (negative list) identifying items that still require a license for import/export. This has reduced the number of items requiring import/export licenses by about 40 percent. • Information is being gathered on import/export licensing from the past three years to identify licenses to review as part of procedural mapping and reform intervention with the Ministry of Commerce. • The global team prepared a draft report highlighting trade logistics to target for possible improvements, such as simplifying customs and port procedures. • The local consulting firm gathered information on import/export licensing for the past three years to assess and make recommendations for streamlining procedures. SIX-MONTH OUTLOOK Steady engagement with all stakeholders in Myanmar will be necessary to prevent backsliding on reforms after the elections. The PSD program is being strengthened financially and new staff members are being recruited to 15 work in Myanmar. Resources will be available to ensure pro-active engagement with the new leadership. Reform momentum should be encouraged by positive results in the Doing Business 2016 report. Disbursements during the first six months of 2016 are projected at US$1.27 million. The additional resources provided to the MDTF by DFAT to the PSD program in June 2015 will support ongoing activities, including: (i) Business regulatory reform; (ii) Improving the investment policy framework and corporate governance; and (iii) Improving trade competitiveness and connectivity. The funds will enable the planned expansion of work in these areas along with efforts to move forward to prepare for sector level work in agribusiness and tourism. CHALLENGES AND OPPORTUNITIES Potential Challenges: Newly formed government: This could present both challenges and opportunities. A key challenge will be to continue the momentum for reforms with the new government. There will be many new parliamentarians and senior government officials in policy roles. It will be important to consult frequently and early with these new players to exchange ideas on key legal and regulatory issues and to highlight past achievements. The Investment Law will be considered by the next government and Parliament, therefore it will be necessary to hold workshops or other capacity-building and awareness-raising events with the new leadership. New leaders will have demands on their time and attention that may delay the process of considering new laws. Additional resources have been provided through the MDTF to support this intensified engagement and consultations. Continued support to public-private dialogue: In regard to the MBF, it will be important to ensure the new government continues to support this public-private dialogue process. A key factor will be ensuring that the private sector demonstrates demand for the MBF process to ensure support and continuity from the new government. The UMFCCI will play an important role in this process. Potential Opportunities/Lessons: Additional WBG Staff: The PSD program has been strengthened financially by additional resources from DFAT and additional resources are anticipated from DFID. This will enable increased staff members to be recruited to work in Myanmar. Doing Business 2016: Reform momentum should be encouraged by positive results that will be included in the Doing Business 2016 report. Trade: With the completion of the DTIS report and the TFA Assessment, the government will be in a position to prioritize reforms related to trade facilitation and logistics. With these assessments, the program team will be able to strengthen engagement with key government agencies and the private sector. Agribusiness and Tourism: Scoping work continues for the development of the agribusiness and tourism sector programs. The team looks forward to close engagement with MDTF partners on the development of these initiatives. As the WBG recently has taken on the role of the multilateral co-chair for the Tourism Working Group, the program will be in a position to take on more leadership in coordination of activities involving development partners and government, a role the WBG already performs for the Trade Sector Working Group. 16 Section Program Summary III The MDTF has provided financing in three main sectors and many achievements have been made. Key lessons and common challenges have emerged. General Lessons Programs should build on government initiatives where possible. They should be integrated and embedded into government structures as opposed to an approach that would develop parallel donor-financed systems. Building from within supports and strengthens local systems, leading to greater government ownership that enhances capacity building as programs continue. To make this approach work, financing for enhanced implementation support is necessary that can ensure additional WB staff members are available on the ground to provide ongoing support. A parallel program of monitoring results is powerful and helps government make well-informed decisions. In addition, using DLIs should be considered where relevant. Development partners working collaboratively and in a coordinated approach allows the GoM to focus on improved management and implementation, increasing chances to achieve lasting success from current reforms. Overarching Challenges Newly elected government may impact implementation of many programs. New government officials will require time to learn and understand reform programs. Intensive consultations and capacity-building will be needed to ensure the momentum now underway will not be lost. 17 18 Section Program Administration IV Financial All financial information in the annual report refers up to June 30, 2015. Program Level The total value of the MDTF as of June 30, 2015 amounts to US$59,330,034. This represents a decrease of approximately 6 percent due to exchange rate fluctuations from the original value of the MDTF of US$63,070,925. Since the last report this devaluation gap has not increased. Contributions received from donor partners’ amount to US$32,973,842. 8 Disbursement at the program level from donor funds received to date (cash on hand) is approximately 36 percent, this is projected to increase to approximately 60 percent by June 2016. An additional contribution of AUD11.5 million was received from DFAT towards the end of the reporting period. This contribution equals about US$8,345,607 available for programming. From this amount, US$2,134,884 has been allocated to the PSD program and was endorsed for allocation by the SC in early July 2015. Additional contributions are anticipated from DFID and DFAT in the coming 12 months. Annex A provides a breakdown of donor contributions by development partner including the breakdown of funds received and projected fund transfers through June 2016. Details on the grant amounts and percentage of disbursement by window and activity are included in Annex A. Activity Level Disbursements at the activity level started slow but picked up during the past six months. All but two activities have disbursements ranging from 28.5 percent to 93.6 percent of the total grant amount. The PFM project experienced a slow start, which is reflected in disbursements of the approved grant of US$20million of only 2.3 percent. This project has experienced a delay in effectiveness with long start-up times to adjust annual work plans by agencies and starting out the first procurement packages. It should also be noted that the MDTF only contributes 17 percent toward the total PFM program, therefore disbursements to the PFM project are overall higher than what is reflected from only the MDTF financing. The coming 12 months should see increased disbursement on the PFM project with more staffing available in country to provide on- going support and guidance. 8 This amount reflects the exchange rate when received and deducts the 5 percent for TF administration. 19 The Improving Trade Competitiveness in Myanmar activity also shows a low disbursement rate of 2.4 percent. As this activity became effective very recently this is to be expected. Cumulative projected disbursements for the MDTF by June 2016 for all programs are estimated at US$ 27,608,3249 or about 61 percent of deposits or funds on hand. Results Framework Positive results are being achieved from the activities. The results framework has been updated to reflect these achievements and is attached in Annex B. New indicators have been included for the new PSD program - Improving Trade Competitiveness in Myanmar. 9 This amount refleuds the exchange rate when received and deducts the 5 percent for TF adminstration. 20 Annex A Myanmar Multi Donor Trust Fund Financial Report as at June 30, 2015 Donor Commitments and Deposits (as at June 30, 2015) Cash on Hand Total Donor Deposits1/ 32,973,842 # # # # # Funds Disbursed/Committed from total Deposits # Investment Inc. Earned 54,259 36.1% Total Receipts 33,028,101 Donor Commitments and Deposits (local and US Currency) Commitments in Donor Currency2/ Donor Donor Commitment Commitment Paid in Unpaid in Paid in Unpaid in Donors Amount in Amount in USD Contribution Contribution USD4/ USD5/ USD at time of as at June 30 Currency Currency Currency Amount AA3/ 2015 Australia AUD 42,100,000 38,535,716 35,375,552 29,100,000 24,451,985 13,000,000 9,372,350 United Kingdom GBP 12,000,000 19,554,716 18,994,000 2,250,000 3,561,375 9,750,000 14,928,713 Denmark DKK 30,000,000 4,980,493 4,960,481 30,000,000 4,960,482 0 0 Total 63,070,925 59,330,034 32,973,842 24,301,063 1/ Total Donor Deposits = Contributions received minus 5% fee. 2/ As per the administration agreements. 3/ Commitments made in currencies other than US$ have been converted at the exchange rate as of the date of the first administration agreement (June 16) prior to their deposit into the fund, and is for indicative purposes only. 4/ Exchange rate used date funds were received by the Bank. 5/ This reflects the value as at June 30, 2015. 21 Disbursements by Activity: Actual and Projections (as at 30 June 2015) Disbursement & Commitment Percentage of: Total Projections Grant Funds Activity Disburs. & Funds on January Amount1/ Transferred Grant July 2015 - Committed Disbursed Hand 2016 - June December 2015 Disbursed 2016 Window 1: Social Development and Inclusion Decentralized Funding to Schools 17,000,000 9,000,000 7,200,000 42.4% 80.0% 0 4,800,000 Project (RE) School Grants & Stipends (BE)2/ 2,280,000 2,280,000 2,134,884 93.6% 93.6% 467,000 1,000,000 Total Window 1 19,280,000 11,280,000 9,334,884 467,000 5,800,000 Window 2: Institutional Strengthening Modernization of PFM Project (RE) 20,000,000 3,000,000 460,000 2.3% 15.3% 1,500,000 4,500,000 Imp. Spt for PFM & Performance 7,277,457 2,000,000 1,553,336 21.3% 77.7% 478,000 1,000,000 Program (BE) Total Window 2 27,277,457 5,000,000 2,013,336 1,978,000 5,500,000 Window 4: Private Sector Development Policy and Investment Climate Reforms 1,534,000 1,534,000 437,301 28.5% 28.5% 414,350 625,000 (IFC) Improving trade competitiveness in 750,000 750,000 18,286 2.4% 2.4% 270,000 650,000 Myanmar (BE) Corporate Governance (IFC) 250,000 250,000 0 Yet to be allocated to activity 177,155 177,155 0 Total Window 4 2,711,155 2,711,155 455,587 684,350 1,275,000 Other TF Management and Administration up to 3% 100,000 51,667 13,500 35,000 Grand Total 49,268,612 19,091,155 11,855,474 24.1% 62.1% 3,142,850 12,610,000 1/ Grant amounts are the SC-endorsed amounts minus 5% fees. The Education & PFM RE projects reflect the Grant Agreements which have been reduced from the “endorsed amount” to remain within the Bank's policy of committing only up to a cap of 85% of total donor contributions as per AAs. This is a risk mitigation tool against exchange rate fluctuations. The GA for the Education project therefore is US$17m and will be revised to $19m (20m - 5%) the PFM can be revised to 21.375m (22m - 5%) on receipt of more funds legally committed to the TF. Additional DFAT funds received June 2015 are indicatively allocated to PSD, PFM and Education. Allocation has not been endorsed by SC yet for Education and PFM and therefore is not reflected in the table. 2/ Projected disbursements exceeds grant amount. Additional financing is anticipated to be added to this activity. Amount will be determined as part of the overall AF project preparation. 22 Donor Contributions Received and Projected October 2015 - January 2016 - Actual Donors December 2015 June 2016 Received Projected Projected Australia 24,451,985 2,336,100 2,336,100 United Kingdom 3,561,375 3,000,000 4,302,050 Denmark 4,960,482 0 0 Total 32,973,842 5,336,100 6,638,150 Percentage Disbursed Against Contributions Received: Actual and Projections July 2015 - January 2016 - Actual December 2015 June 2016 Contribution (Deposits) Cumulative 32,973,842 38,309,942 44,948,092 Disbursement Cumulative 11,855,474 14,998,324 27,608,324 Percent Disbursed against Deposits 36.0% 39.1% 61.4% 23 Annex B Myanmar Multi Donor Trust Fund Results Matrix Myanmar Multi Donor Trust Fund Results Matrix (G) = Gender-disaggregated data Objectives: (i) Support Myanmar’s transition and the implementation of the Framework for Economic and Social Reform (FESR) and National Development Plan. (ii) Enhance cooperation between the World Bank Group and Donors to the Trust Fund. High Level Goals the Outcomes Milestones WBG Instruments MMTF will contribute to Expected by 2019 Window 1: Social Development and Inclusion Outcome 1: Expanded coverage of poor Student Stipends Guidelines adopted that (i) Increased social capital students in the Student Stipend Program. include objectives and performance indicators, (ii) Operation: and inclusion through Increased number of students receiving use objective criteria and clear procedures for Decentralizing participatory local payment program. Baseline 0 to 100,000 targeting stipends funding by educational and Funding to Schools development and service students by 2017/18. With at least 50% of socio-economic status and (iii) define financial Project. provision beneficiaries being females.(G) management procedures. Achieved Payment of stipends in accordance with the guidelines. Progress: Approximately 37,000 students were selected and received stipends between $6- $10 per month (depending on grade) for 10 months in 2014-2015, in 8 townships. With 5.33% of girls being recipients for the stipends for the school year 2014-15 UPDATED Progress: An additional 100,000 students are expected to receive stipends in 19 additional townships during the school year 2015-16. Outcome 2: Improved reliability and School Grants Guidelines adopted that (i) include transparency of School Grants. Increased objectives and performance indicators and (ii) define financial management procedures. number of townships distributing school Achieved grants according to a formula. Baseline 0 UPDATED Progress: School grant funds were townships to 200 townships by 2017/18. transferred on time and in accordance with the formula in about 229 townships (out of 330 total) 24 High Level Goals the Outcomes Milestones WBG Instruments MMTF will contribute to Expected by 2019 Outcome has been achieved: More than in Myanmar during school year 2014-15. The first Monitoring and 200 townships have distributed their school transfer for school year 2015-16 took place in Evaluation of the grants according to the formula. June 2015. In addition, schools in flood-affected School Grants townships received an early transfer of their Stipends Program. Outcome 3: Strengthen the quality of second and final annual school grant funding for MoE’s monitoring and reporting activities; year 2015-16. Monitor impact of the stipends and grant programs. Quantitative school and household surveys conducted. (G) UPDATED Progress: School and household surveys began in September 2015 and will be completed by December 2015. Initial results will be reported at the January 2016 Project Steering Committee meeting. Random Spot Checks carried out UPDATED Progress: Spot checks against DLI results were conducted during April and May 2015 and confirmed that the program is being implemented according to the guidelines. Based on the verification of DLI results US$22.8 million was disbursed. Qualitative assessments of school grants and stipends programs in 12-15 townships completed. (G) Progress: Qualitative assessments were carried out in 12 townships during the 2014- 15 school year; an assessment report was discussed at the January 2015 Project Steering Committee Meeting. UPDATED Progress: A follow-up assessment and report covering 12 additional townships is under preparation and will be discussed at the 2016 January Project Steering Committee meeting. 25 High Level Goals the Outcomes Milestones WBG Instruments MMTF will contribute to Expected by 2019 Window 2: Institutional Strengthening Outcome 1: Greater funding for service Strengthening tax administration including Institutions delivery by (i) contributing to enhancing the increasing tax collection from large Operation: strengthened to deliver Tax to GDP ratio and (ii) decreasing the taxpayers. Modernization of transparent and compositional variance of budget approved Public Financial Progress: Large Tax Office (LTO) established improved management to expenditure. (i) Baseline 6.2% in FY Management Project April 1, 2014; self-assessment system of public revenue, 2012/13 to over 10% in FY 2108/19 (ii) expenditures and Baseline 24% in FY2011/12 to 14%. established and returns being received. services and increased Progress: Tax to GDP ratio increased to 7.4 UPDATED Progress: LTO received first self- access to finance percent in 2014/15. Reduction in variation of assessment forms for LTO administered Implementation expenditures to less than 20 percent in taxpayers in April 2015 with a compliance Support to Public 2013/14 rate of 95 percent. Financial Management UPDATED Progress: Tax to GDP ratio and Performance projected to increase to 8.1 percent of GDP Program in 2015/16. Reduction in variation between budget estimates for 2014/15 and revised estimates for 2014/15 less than 10 percent. Outcome 2: Foster accountability for Increasing credibility of budget allocations for service delivery. Government commitment line ministries. to fiscal transparency in line with global good Progress: Medium Term Fiscal Framework practice, including report on revenues from (MTFF) provided ceilings to ministries, states natural resources. Baseline (i) key fiscal and regions for 2015/16 increasing documents 1 to 4 annually1 (ii) natural resource information baseline not available to predictability of the resource envelope. available. UPDATED Progress: MTFF implemented Progress: For 2015/16 MoF produced a and required by Law on Budget documents Guide on the Executive’s Proposal. This is in presentation to Parliament passed by addition to the publication of the enacted Parliament in 2015. For FY2015/16 MOF has budget. This raised publication of key further refined the contributions to State and information from 1 to 2 – on-track to meet Regions to reflect fiscal constraints and outcome criteria. equity issues. 1 - Nine core documents include: (i) prebudget statement; (ii) annual Executive budget proposal documentation, (iii) enacted budget, (iv) in-year and year end budget execution reports, (v) audited 26 annual financial statements, (vi) external audit reports, (vii) summary of the Executive budget proposal; (viii) medium term budget proposal, and (ix) summary of enacted budget. High Level Goals the Outcomes Milestones WBG Instruments MMTF will contribute to Expected by 2019 Institutions Outcome 2 (cont.) Key fiscal documents and report on strengthened to deliver revenues from natural resources become transparent and UPDATED Progress: Law on Budget available publicly improved management documents presentation to Parliament Progress: Extractive Industries of public revenue, passed in 2015 requiring publication of the Transparency Initiative process underway expenditures and Medium Term Fiscal Policy Statement, Debt with key milestones met. First report services and increased Sustainability Analysis, Budget Strategy expected in January 2016. access to finance Paper, and the Citizen’s Budget on the April UPDATED Progress: EITI Secretariat Budget session. MOF are on track to meet these legislative requirements. With the EITI moved to MOF; preparatory work for the report to be published in January 2016, first report on-going. On track to be met by natural resource baseline information will be January 2016. made available. 27 High Level Goals the Outcomes Milestones WBG Instruments MMTF will contribute to Expected by 2019 Window 4: Private Sector Development Increased private sector Outcome 1: Improve the business Regulations and procedures for approving Operation: development, including environment by supporting legal and foreign and domestic investment revised Technical Assistance to creation of economic regulatory reforms. and reformed. Progress: DICA issued two support legal and opportunities for men new regulations to: i) liberalize FDI regulatory reform and and women and restrictions; and ii) to list activities that no support investment climate longer qualify for the customs duty and implementation. reforms. commercial tax exemptions Outcome 2: Strengthening the advocacy Enactment of a new investment law. role of the private sector. Progress: New investment law drafted and consultations on first and second drafts with private sector and CSOs undertaken with IFC input and support UPDATED Progress: Third draft submitted to the Attorney General’s Office following consultation with private sector/CSOs. Myanmar Business Forum established and plenary event held. Progress: Myanmar Business Forum (MBF) established. Six Working Groups established with 11 WG meetings held. Three issues-based WGs established on Land, Customs and Taxation. Six public- private WG meetings held with issues raised by private sector to relevant government authorities. Business sentiment survey completed 28 High Level Goals the Outcomes Milestones WBG Instruments MMTF will contribute to Expected by 2019 Increased private sector Outcome 2: (cont.) UPDATED Progress: 22 Public Private development, including Dialogue meetings have been held to creation of economic discuss issues raised by the private sector opportunities for men with the government thank to MBF process: and women and (i) Abolishment of bank certificate for investment climate obtaining customs fine on import of car reforms. spare parts for which no import licence required. Action plan for reform developed which prioritizes implementation efforts. Progress: Engagement with Special Task Force on Business Trade Promotion initiated on regulatory reform with initial focus on Doing Business indicators. Progress: The Ministry of Commerce Outcome 3: Streamlining trade regulations submitted a reform plan for approval by the (non-tariff measures) and trade licensing Cabinet to reduce the number of products requiring license for import. The proposed reform is expected to cut the number import products requiring import license from 100% tariff lines to 50%. 29 The World Bank Group, Yangon Office No.57, Pyay Road, 6 1/2 Mile, Hlaing Township, Yangon, Myanmar Tel: +95 1 654824 Internet: http://www.worldbank.org/en/country/myanmar Email: myanmar@worldbank.org 32