AFRICAN DEVELOPMENT BANK GROUP

REPUBLIC OF LIBERIA

ADB’S SUPPORT TO THE INTEGRATED PUBLIC FINANCIAL

MANAGEMENT REFORM PROJECT - PHASE II

ECGF DEPARTMENT

January 2017

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TABLE OF CONTENTS

Currency Equivalents

Fiscal Year

Weights and Measurements

Acronyms and Abbreviations

Financing Information

Project Milestones and Timelines

Project Summary

Results-Based Logical Framework

Project Implementation Timeframe

I – STRATEGIC THRUST AND RATIONALE

1.1. Project linkages with country strategy and objectives

1.2. Rationale for the Bank's involvememt

1.3. Donor coordination

II – PROJECT DESCRIPTION

2.1. Project objectives and components

2.2. Technical solution retained and other alternatives explored

2.3. Project type

2.4. Project cost and financing arrangements

2.5. Project’s target area and beneficiaries

2.6. Participatory process for project identification, design, and implementation

2.7. Bank Group experience, lessons reflected in project design

2.8. Key performance indicators

III – PROJECT FEASIBILITY

3.1. Economic and financial performance

3.2. Environmental and social impact

3.3 Fragility analysis

IV – IMPLEMENTATION

4.1. Implementation arrangements

4.2. Monitoring and evaluation

4.3. Governance

4.4. Sustainability

4.5. Risk management

4.6. Knowledge building

V – LEGAL INSTRUMENTS AND AUTHORITY 5.1. Legal instrument

5.2. Conditions associated with Bank’s intervention

5.3. Compliance with Bank policies

VI – RECOMMENDATION

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LIST OF TABLES

Table 1.1: Development Partners’ Interventions and Complementarity with the Project

Table 2.1: Summary of Project Activities by Component

Table 2.2: Project Alternatives Explored

Table 2.3: Project Cost Estimates by Component

Table 2.4: Project Cost Estimates by Sources of Financing

Table 2.5: Expenditure Schedule by Components

Table 2.6: Lessons learned from previous operation and other analytical reports

Table 2.7: Selected PEFA Scores for Improved Performance under IPFMRP Phase II

Table 4.2: Project Implementation Schedule

Table 4.5: Summary of Risks and Mitigation Measures

LIST OF APPENDICES

Appendix 1: Comparative Socio-Economic Indicators

Appendix II: AfDB Projects in the Bank’s Portfolio in Liberia

Appendix III: Similar Projects Financed by the Bank and other Development Partners

Appendix IV: Letter of Request from the Government of Liberia

Appendix V: The Bank’s Value Addition under IPFMRP Phase I

Appendix VI: Map of the Republic of Liberia

i

Currency Equivalents

(as of September 20, 2016)

UA 1 = US$ 1.39

US$ 1 = LRD 97.50

UA 1 = LRD 135.95

Fiscal Year

July 1 – June 30

Weights and Measurements

1metric tonne = 2204 pounds (lbs)

1 kilogramme (kg) = 2.200 lbs

1 metre (m) = 3.28 feet (ft)

1 millimetre (mm) = 0.03937 inch (“)

1 kilometre (km) = 0.62 mile

1 hectare (ha) = 2.471 acres

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Acronyms and Abbreviations

ADF African Development Fund AfDB African Development Bank APRM African Peer Review Mechanism CAG Comptroller and Accountant General COA Chart of Accounts CPIA Country Policy and Institutional Assessment CPPR Country Portfolio Performance Review CSP Country Strategy Paper DeMPA Debt Management Performance Assessment EU European Union FIU Financial Intelligence Unit FC Foreign Costs GAC General Auditing Commission GC Governance Commission GDP Gross Domestic Product GoL Government of Liberia HIPC Highly Indebted Poor Countries IAA Internal Audit Agency IFMIS Integrated Financial Management Information System IMF International Monetary Fund IPFMRP Integrated Public Financial Management Reform Project ISP Institutional Support Project JAS Joint Assistance Strategy LBO Legislative Budget Office LC Local Costs LEITI Liberia Extractive Industry and Transparency Initiative LICPA Liberian Institute of Certified Public Accountants LIPA Liberian Institute of Public Administration LRA Liberia Revenue Authority LRD Liberian Dollar MDAs Ministries, Departments and Agencies MFDP Ministry of Finance and Development Planning MFF Macro Fiscal Framework MTEF Medium Term Expenditure Framework NRTU Natural Resource Tax Unit PAR Project Appraisal Report PBA Performance Based Allocation PCR Project Completion Report PEFA Public Expenditure and Financial Accountability PEMFAR Public Expenditure Management and Financial Accountability Review PFM Public Financial Management PFM RS&AP Public Financial Management Reform Strategy and Action Plan PFMSC Public Financial Management Steering Committee PFMU Public Financial Management Unit PIMA Public Investment Management Assessment PIU Project Implementation Unit PRS Poverty Reduction Strategy RCU Reform Coordination Unit SDG Sustainable Development Goal SIDA Swedish International Development Agency SIGTAS Single Integrated Tax Administration System SoE State Owned Enterprise TA Technical Assistance TADAT Tax Administration Diagnostic Assessment Tool

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TSA Treasury Single Account TSF Transition Support Facility UA Unit of Account UNDP United Nations Development Program USAID United States Agency for International Development WB World Bank

Financing Information

Client Information

BORROWER: Republic of Liberia

EXECUTING AGENCY: Ministry of Finance and Development Planning

Financing Plan

Source Amount

(UA m)

Amount

(US$ m)

ADF-13 Grant PBA 3.19 4.43

ADF-13 TSF Grant - Pillar III Grant 1.00 1.39

ADF-10 Grant PBA (Unused Balance Reallocation)* 0.88 1.22

ADF-10 TSF Grant - Pillar I (Unused Balance Reallocation)* 1.07 1.49

ADF-10 TSF Grant - Pillar III (Unused Balance Reallocation)* 0.12 0.171

World Bank / IDA Grant and Credit (expected) 14.34 20.00

Government Counterpart In-kind Contribution (10%) 0.69 0.969

TOTAL FINANCING AMOUNT 21.29 29.67

*The unused balances reflected here in the amount of UA 2.07 m (US$ 2.88m) include the funds reallocated

from the Liberia: Labor-Based Public Works Project approved on December 8, 2007 for ADF Grant Number

2100155010817.

Project Milestones and Timelines

Project Milestones Timelines

Preparation April 2016

Appraisal September 2016

Peer Review September 2016

Regional Director Clearance October 2016

Negotiation November 2016

Board approval December 2016

Grant Signature December 2016

Effectiveness December 2016

Mid-Term Review June 2018

Completion June 2019

Last disbursement December 2019

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Project Summary

Project

Overview

Project Name: ADB’s Support to the Integrated Public Financial Management Reform Project

- Phase II (IPFMRP II)

Project Objective: To strengthen transparency and accountability in public financial management and

enhance domestic revenue mobilization from the natural resource sector.

Expected Outputs: Strengthened PFM capacity; improved PFM processes and accountability; and

more efficient domestic revenue mobilization from the natural resource sector.

Geographical Scope: Nationwide

Overall Timeframe: 36 months (January 2017 – December 2019)

Grant Amount: UA 6.26 million / US$ 8.72 (AfDB contribution)

Project Direct Beneficiaries: There are two direct beneficiary institutions for this project: (i) the

Ministry of Finance and Development Planning’s (MFDP) PFM Reform Coordination Unit (RCU);

and (ii) the Liberian Revenue Authority (LRA). The RCU will coordinate the activities of all the other

targeted entities. Within MFDP, the targeted units include the Aid Management Unit and the State-

Owned Enterprise Financial Reporting and Coordination Unit. Outside MFDP, entities to benefit from

this ISP include the Internal Audit Agency, Legislative Budget Office, Public Accounts Committee,

Comptroller and Accountant General’s Office, Public Procurement and Concessions Commission,

Liberian Anti-Corruption Commission, and the General Audit Commission. Three professional PFM

institutions will also be supported: the Liberian Institute of Public Administration, Liberia Institute of

Certified Public Accountants, and the Financial Management Training Program. This project will also

promote gender balance in its activities and ensure that women’s participation in the training sessions

reach at least 50% of eligible female staff (i.e., 50% of women professionals in PFM).

Project Components: This project has three components: (i) strengthening transparency and

accountability in public financial management; (ii) enhancing domestic revenue mobilization from

the natural resource sector; and (iii) project management. Activities will include: Upgrade of the

Integrated Financial Management Information System (IFMIS) platform, strengthening the capacity

of institutions in PFM, strengthening debt management, macroeconomic forecasting, financial

reporting, and better domestic revenue mobilization.

Needs

Assessment

The project is needed to address some of the deficiencies in PFM based on scores of D/D+ in the

recently completed 2016 PEFA exercise and the key priorities specified in the Public Financial

Management Reform Strategy and Action Plan (2017-2020). The project is needed at this point in

time to address the fiscal challenges resulting from the low commodity prices and the need for critical

investments in infrastructure, particularly in the power, transport, agriculture and the health sectors.

The health sector needs to be rebuilt in view of the recent Ebola epidemic. The support is therefore

focussed on capacity building, particularly for institutions that are involved in public financial

management; developing improved revenue collection systems; improving budget and expenditures

tracking; and accounting surveillance systems. Support will also be provided to institutions that are

involved in commodity product pricing, taxation administration, accounting, surveillance and process

monitoring in the natural resource sector.

Bank’s

Added Value

The Bank has played a central role in the PFM reform efforts in Liberia. The previous policy-based

operations and institutional support projects have positioned the Bank as a main partner in this area.

The Bank has supported the Customs Office in Liberia by rolling out ASYCUDA in ports of entry.

The Bank has developed a strong relationship with the GoL and other development partners. Efforts

have been made for improved alignment, harmonization, and coordination with other development

partners, as demonstrated by IPFMRP I. This project will be complemented by other DP interventions

in PFM in the years ahead, notably the World Bank and SIDA that have already indicated their interest

in supporting PFM reforms under the new PFM Reform Strategy and Action Plan (2017-2020).

Knowledge

Management

New knowledge will be delivered through: (i) Capacity building initiatives that will help government

officials to produce PFM products (PFM strategy, PFM progress reports); (ii) Development of tailor

made manuals, working practices and tools for continued use; (iii) Procurement information system

and (iv) knowledge transfer from long and short-term technical assistance.

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Results-Based Logical Framework

Country and Project Name: ADB’s Support to the Integrated Public Financial Management Reform Project

- Phase II (IPFMRP II) Project Objective: To strengthen transparency and accountability in public financial management and enhance domestic

revenue mobilization from the natural resource sector.

RESULTS CHAIN

PERFORMANCE INDICATORS

MEANS OF

VERIFICATI

ON

RISKS/

MITIGATION

MEASURES Indicator (including CSI)

Baseline Target

IMP

AC

TS

Improved PFM performance, more efficient revenue collection, and enhanced governance of natural resources

Increased tax revenue as a % of GDP Improved resource governance index Improved CPIA Score (Cluster D)

22 % of tax revenue as a % of GDP (2015) Partially satisfactory score of 62% (2015) CPIA Score (Cluster D) of 3.5 (2015)

24% of tax revenue as a % of GDP (2019) Fully satisfactory score > 71% (2019) CPIA Score (Cluster D) of 3.7 (2019)

IMF Article IV Reports and LRA Reports Natural resource governance institute scores AfDB CPIA

Risk 1: Capacity

constraints: Weak

institutional and

human

resources capacity

could cause delays

or hamper

implementation

Mitigation

measure: This

proposed support

is based on a

recent and realistic

assessment of

implementation

capacity in general

and clearly

sequenced PFM

Reform Strategy.

The project will

provide additional

project

management

capacity.

Risk # 2:

Fiduciary risks:

Government has

made notable

progress in

improving PFM,

but there are still

weaknesses in the

fiduciary and

control

OU

TC

OM

ES

Outcome 1:

Improved PFM efficiency, transparency, and accountability

Improved PEFA scores on fiscal discipline, efficiency, and oversight1

10 PEFA Scores of D/D+ (2016)

5 or less PEFA Scores of D/D+ (PI-2, 4, 11,15,22) (2019)

2019 PEFA Report

Outcome 2: Enhanced knowledge in tax audit techniques in the natural resource sector

Increased proportion of trained tax auditors in the natural resource sector

25% of NRTU staff trained in tax audit techniques in the natural resource sector (2015)

50% of NRTU staff trained in tax audit techniques in the natural resource sector (2019)

Annual PFMU Project Progress Reports

OU

TP

UT

S

Component 1: Strengthening transparency and accountability in public financial management

Output 1: Strengthened efficiency, transparency and accountability in PFM

Increased number of counties on IFMIS Increased timeliness and quality of production of financial statements

IFMIS deployed in 4 counties (2016)

Financial statements produced 5 months of end of FY (2015), with disclaimer audit opinion

IFMIS deployed in 8 counties (2019) IPSAS cash-basis compliant Financial statements produced 4 months of end of FY (2019)

Annual PFMU Progress Reports

1 PI-2: Composition of actual expenditure compared to the approved budget.

PI-4: Stock and monitoring of expenditure payment arrears.

PI-11: Orderliness and participation in the annual budget process.

PI-15: Effectiveness in collection of tax payments.

PI-22: Timelines and orderliness of account reconciliation.

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Increased public oversight of government accounts Increased implementation of internal and external audit recommendations

Public Accounts Committee (PAC) has held 21 public hearings (total) on GAC audit reports (2013-16) 10% of internal and external audit recommendations implemented (2015)

PAC holds 12 public

hearings annually

(2019)

>50% of internal and

external audit

recommendations

implemented (2019)

environment. The

weaknesses are

especially in the

area of corruption

due to weak

prosecution

capacity and

sanctions regime.

Mitigation:

Government has

put in place a PFM

Act (2009), and

PFM Reform

Strategy and

Action Plan

(FY2012-FY2016)

that present a

broadly credible

program for

improvement.

Plans are also

underway

implement a new

PFM Reform

Strategy and

Action Plan

(FY2017-FY2020)

and to grant

prosecutorial

power to the

Liberian Anti-

Corruption

Commission. The

Government’s

commitment to,

and ownership of,

reforms is high.

Risk 3:

Implementation

risk. The risk of

delayed project

take off.

Mitigation: To

mitigate the

negative impact of

this risk, the

project will

continue to be

managed by the

same RCU which

has been

instrumental in the

successful

implementation of

IPFMRP and the

government is

centralizing the

implementation of

all institutional

support projects on

PFM through this

RCU.

Increased number of cases investigated and concluded by the Liberian Anti-Corruption Commission (LACC)

12 cases investigated and concluded (2015)

20 cases investigated and concluded (2019)

Annual LACC reports

Component 2: Enhancing domestic revenue mobilization from the natural resource sector

Output 2 : Sector specific training on tax audits for NRTU staff resource sector

Increased # tax audits in the natural resource sector

No tax audits in the natural resource sector (2015)

8 tax audits undertaken annually in the natural resource sector (2019)

LRA/NRTU Progress Reports

Tax audit training conducted for NRTU staff

Less than 25% of tax auditors trained in NRTU (2015)

50% of NRTU staff undergo tax audit training, ensuring 50% female representation (2019)

Tax compliance monitoring templates for natural resources developed, deployed, and staff trained on their use

None (2015) Tax compliance monitoring templates for natural resources developed, deployed, and staff trained on their use, ensuring 50% female representation (2019)

Benchmarking visits and secondment of NRTU staff to other revenue administrations to facilitate peer to peer learning, draw lessons and develop applicable solutions for Liberia

None (2015)

At least two NRTU staff seconded annually to other revenue administrations in Africa for further hands-on training of which one is female (2019)

Production of Manuals on Policies and Procedures in tax audits for the natural resource sector

None (2015)

Manuals on Policies and Procedures in tax audits for the natural resource sector produced (2019)

Component 3: Project management

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Enhanced Project

Administration and

Management with

timely preparation

and submission of

reports, and annual

work and procurement

plans

- # of project

progress reports

submitted # of financial audit report

None - 4 progress reports

/ year

1 financial report within 6 months after end of each fiscal year

RCU generated reports

COMPONENTS

INPUTS

Component 1: Strengthening transparency and accountability in public financial management (UA 3.40 m / US$ 4.73 m) Component 2: Enhancing domestic revenue mobilization from the natural resource sector (UA 2.67 m / US$ 3.70 m) Component 3: Project management (UA .200 / US$ 0.280)

ADF Grant : UA 6.27 million (US$ 8.72 m) World Bank /IDA Grant: UA 14.34 / US$20 m Government (in kind): UA 0.697 / US$ 0.969

Total Project Financing: UA 21.30 m / US$29.67 m

viii

Liberia: Integrated Public Financial Management Reform Project - Phase II

Project Implementation Timeframe (2017-2020)

YEAR 2016/2017 2017/2018 2018/2019 2019/2020 ACTION

BY

Quarter Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Project Cycle

Activities

Grant approval AfDB

Effectiveness GoL

Launching workshop

AfDB

&GoL

Joint supervision and monitoring (IPRs)

AfDB

Mid-term review

AfDB

Disbursement of funds

AfDB

Submission of annual audit reports

GoL

AfDB project completion report (PCR)

AfDB

All Components

General procurement notice published

GoL

Procurement of goods and technical assistance

GoL

Provision of training

GoL

Submission of progress reports

GoL

PEFA update

GoL

1

REPORT AND RECOMMENDATION OF MANAGEMENT OF THE

ADB BOARD OF DIRECTORS FOR A PROPOSED GRANT TO LIBERIA

TO SUPPORT THE INTEGRATED PUBLIC FINANCIAL MANAGEMENT

REFORM PROJECT - PHASE II (IPFMRP II)

Management submits the following report and recommendation for a proposed ADF grant of

UA 6.27 million (US$ 8.72 m) to finance the Integrated Public Financial Management Reform

Project - Phase II (IPFMRP II). The project will help to consolidate the gains achieved from

the two previous ISPs and will strengthen the capacity of institutions that promote governance,

accountability, and transparency, with an added focus on domestic resource mobilization in the

natural resource sector.

I – STRATEGIC THRUST & RATIONALE

1.1. Project linkages with country strategy and priorities

1.1.1 The proposed operation is fully aligned with Liberia’s development agenda, the

Agenda for Transformation (2012-2017), in particular, Pillars 2-Economic Transformation

and 4-Governance and Public Institutions, which are key measures for the achievement of the

long-term national vision of Liberia Rising by 2030, as well as the Economic Stabilization and

Recovery Plan (ESRP) developed following the Ebola Virus Disease (EVD) outbreak, which

also focuses on strengthening public financial management (Pillar III). It is also consistent

with the PFM Reform Strategy and Action Plan (2012-2016)2 which seeks to consolidate PFM

reforms while ensuring coordination and alignment of donor interventions to GOL priorities,

as well as the emerging PFM Reform Strategy for 2017-2020.

1.1.2 The intervention is in line with the Bank’s Ten-Year Strategy (2013-2022) and

aligned with the core operational priority of Governance and Accountability. It is also

aligned with Sustainable Development Goal 16 on promoting peaceful and inclusive societies

for sustainable development, provide access to justice for all and build effective, accountable

and inclusive institutions at all levels. Sound public financial management also cuts across all

of the Bank’s High-5 priority areas of Light Up and Power Africa, Feed Africa, Industrialize

Africa, Integrate Africa, and Improve the Quality of Life for the People of Africa. The operation

seeks to improve PFM and natural resource governance as well as Pillar 1 of the Governance

Strategic Framework and Action Plan (2014-2018) on enhanced PFM. The project is also

aligned with Pillar 2 of the Country Strategy Paper 2013-2017, notably on enhancing

governance and the efficient management of resources, and has cross-cutting support for Pillar

I on promoting inclusive economic growth through transformative infrastructure investments.

This project also has a focus on women economic empowerment and aligned with the Bank

Group’s Gender Strategy 2014-2018.

1.1.3 The project is consistent with the ADF 13 operational priorities on governance and

accountability, the Bank’s strategy for Addressing Fragility and Building Resilience in Africa

(2014-2019),3 the Bussan New Deal for Engagement in Fragile States. Through this project,

the Bank will contribute to addressing the country’s economic capacity to address the root

2 Liberia’s PFM Reform Strategy and Action Plan (2012-2016) will expire on December 31, 2016 and work is in progress on the

development of the new PFM Reform Strategy and Action Plan (2017-2020). 3 The focus areas of the strategy on fragile states are strengthening state capacity and support institutions and promoting inclusive and equitable

patterns of growth and development.

2

causes of conflict, such as: (i) youth unemployment; (ii) rural under-development; and (iii)

over-exploitation of natural resources. This project is also linked with the West Africa Regional

Integration Strategy Paper (2011-2017) pillar on institutional capacity building particularly

through the provision of cross-licensing opportunities for public financial management

professionals in Liberia, e.g., cross-licensing of Liberian CPAs in Ghana and Nigeria .

1.2. Rationale for the Bank’s involvement

1.2.1 With lower economic growth in Liberia following the EVD crisis and the drop in

international commodity prices, continued progress on public financial management

(PFM) reforms and particularly in domestic revenue mobilization is needed to ensure that

limited resources are used efficiently. Although Liberia has made notable progress in PFM

reforms and capacity in recent years, particularly with donor support including through the

Integrated Public Financial Management Reform Program (IPFMRP), there is a need to

consolidate progress made and continue to address challenges to improve transparency and

accountability in the PFM system. Strengthened capacity and institutions will be necessary to

manage efficiently and transparently government resources in line with its development

strategies, to ensure the society benefits from the country’s resources, and to increase stability.

Improving transparency and accountability is further needed to address perceptions of

corruption. Although civil service capacity has improved and numerous sector and reform

strategies have been developed, capacity is still weak, and the strategies need to be effectively

implemented.

1.2.2 The GoL has made significant progress across a range of PFM reforms in recent

years with the support of development partners including the AfDB through the

IPFMRP. These reforms have sought to restore and embed the PFM systems to enable GoL to

better implement its development agendas. As presented in Technical Appendix XI, some of

the reforms include: the introduction of the Free Balance integrated financial information

management system (IFMIS) at the Ministry of Finance and Development Planning (MFDP),

with a roll- out to 36 line Ministries and Agencies (M&As); the introduction of elements of a

Medium-Term Expenditure Framework (MTEF); enhanced budget transparency through on-

line access to budget documents and quarterly fiscal reports; the establishment of the semi-

autonomous Liberia Revenue Authority (LRA); the automation of the collection and

administration of taxes; the transitioning from an Internal Audit Secretariat into a full Internal

Audit Agency that is active in 43 M&As; the establishment of a State-Owned Enterprise (SOE)

reporting unit within MFDP; the launch of Treasury Bill auctions; the adoption of a

decentralized Treasury Management Framework and county treasuries; and the passage of the

GAC Act in 2014, increasing its stability and independence.

1.2.3 Despite this progress, Liberia still faces serious capacity challenges in PFM. The

2016 PEFA indicated improvement since 2012 in 14 of 31 categories, but ten indicators were

still D or D+. A number of key areas still need to be addressed. These include improving budget

comprehensiveness to include donor financing; improving the consultative and orderly

processes around the budgeting process; institutionalization of the MTEF in line M&As;

improving revenue forecasting; strengthening public investment management and monitoring

of project execution; improving debt management and coordination; improving fiscal oversight

of SOEs; improving fiscal reporting across M&As; full operationalization of a robust cash

management framework under a Treasury Single Account; optimizing institutional and

business processes to fully benefit from IFMIS and deepening its implementation to cover

budget planning, treasury management, and pension management; strengthening the role of the

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Controller and Accountant General (CAG) to oversee controllers in M&As; increasing payroll

controls; improving functioning of county treasuries; improving the skills, full integration and

utilization of internal auditors in M&As; improving performance of external audit and

legislative oversight functions and follow up on audit recommendations. Other PFM capacity

challenges include improving public procurement processes; appropriately integrating gender

perspectives into PFM; increasing the capacity to investigate corruption cases; strengthening

the Financial Intelligence Unit (FIU) to counteract anti-money-laundering and counter-

terrorism financing; improving regional governance oversight and accountability through the

African Peer Review Mechanism (APRM); and continuing institutional reforms and capacity

building.

1.2.4 Improved public financial management and revenue mobilization from natural

resources are important for the achievement of the GoL’s national development agenda.

The natural resource sector contributes approximately 14% of Liberia’s GDP and, despite

recent downturn in revenues, will continue to be a critical sector of the economy. The LRA has

limited capacity to conduct audits and effectively monitor compliance. The delay in resolving

some of the regulatory and institutional issues (transfer pricing and beneficial ownership)

continue to challenge revenue mobilization. There is a need to strengthen tax compliance,

enhance transparency in revenue collection, streamline regulatory policies, build skills for tax

and tariff assessments, knowledge on institutional factors affecting natural resource revenue

mobilization, as well as knowledge in transfer pricing. Additionally, there is a need to enhance

Liberia’s progress in transparency of natural resources revenues which has been achieved

through the Liberia Extractive Industry Transparency Initiative (LEITI).

1.2.5 The proposed IPFMRP II will build on IPFMRP Phase I and pave the way for

deeper implementation of the PFM reform agenda through 2020. The main achievements

under IPFMRP Phase I included enhanced budget planning systems with elements of an MTEF,

expanding the coverage of IFMIS to 35 M&As; the preparation, audit, and publication of the

Consolidated Fund financial statements; increased consistency in fiscal outturn publication; the

expansion of internal auditors into 43 M&As; the Public Accounts Committee (PAC) holding

its first seven public hearings on audit reports; and increased transparency of SOEs. The

establishment of the LRA in July 2014 has supported improved tax administration, but key

capacity challenges continue, with a particular gap relating to natural resource sector taxation

which will be addressed by this project. The Bank and other Development Partners’ value

addition under IPFMRP Phase I are detailed in Appendix V.

1.2.6 Development partners are supporting the finalization of the Government’s PFM

Strategy for 2017-2020, which will deepen existing reforms and sustain reform momentum into

the new administration. The proposed operation will contribute to these efforts and support

implementation of the strategy, and address identified weaknesses in the PFM system in

Liberia. The proposed operation has been guided by various analytical and diagnostic reports

which have identified challenges in the PFM systems, revenue administration, investment

management, and debt management, as well broadly identified how to focus support. These

studies have included the 2016 PEFA report, the 2016 Public Investment Management

Assessment (PIMA), and the 2016 Debt Management Performance Assessment (DeMPA). The

Technical Appendix includes a more complete list of all the Analytical Works and

Underpinnings used to inform the design of this ISP.

4

1.2.7 Social context. The EVD crisis slowed the gains that Liberia had made in reducing

poverty and vulnerability during the aftermath of a 10-year civil war. In 2014, GDP

growth was 0.7% down from the estimated 8.7% in 2013. Iron ore and rubber production which

had already slowed down due to lower international prices, were also affected by the ebola-

related quarantines and curfews implemented by the GOL in the bid to contain the ebola crisis.

The epidemic resulted in the disruption of production processes across several sectors. Growth

in manufacturing continued to be constrained by inadequate electricity and the generally weak

business environment. Household incomes suffered from the substantial loss of jobs as

businesses were shut down. The fear associated with the ebola outbreak considerably slowed

down economic activities with large concession companies suspending their investment plans

and relocating some of their expatriate staff out of Liberia. Central to reviving the economy of

Liberia is strengthening the capacity of the tax administration to mobilize domestic resources

and support government investment in critical infrastructure to spur economic growth. The

improved capacity to mobilize domestic revenues will play a central role in reviving the

economy, and reduce poverty and vulnerability in Liberia. Improving the efficiency and

transparency of PFM is also key to addressing fragility by increasing the ability of the state to

deliver services to the people, while also helping to address the negative perceptions about the

incidence of corruption. The proposed operation has been guided by various analytical and

diagnostic reports such as the recent PFM diagnostic identified in the 2016 PEFA report. The

Technical Annexes to this PAR provides the list of the Appendices

1.3. Donor coordination

1.3.1 A significant number of development partners currently provide assistance to

Liberia through budget support, project funding, pooled funds, and multi-donor trust

funds. A PFM Donor Coordination Group, currently chaired by the AfDB, meets monthly with

partners including the IMF, World Bank, European Union, USAID, Embassy of Sweden,

UNDP, GIZ, Embassy of Norway, the MFDP Reform Coordination Unit (RCU) and other

concerned M&As. The existing IPFMRP has integrated support from 5 donors—European

Union, USAID, Sweden, World Bank, and AfDB—in a coordinated PFM reform support

program. This has increased the efficiency of support through coordinated supervision

missions, project administration, and thereby increasing the efficiency of support for

Government and donors while reducing overlap. There is a strong need for building upon this

coordinated approach to continue PFM reform. A common monitoring and evaluation

framework and operational plan has been developed to guide implementation and coordination

of the PFM reforms in Liberia. GoL is committed to improving the effectiveness of aid, by

prioritizing coordinated donor financing through a clear institutional arrangement and

integrating donor funds into the GoL budget. The different thematic areas of support by the

PFM contributing development partners, by funding status, and the areas of complementarity

with IPFMRP II are presented in the table below.

Table 1.1: Development Partners’ Intervention and Complementarity with the Project

Sources of

Financing

Total

(US$ million)

Fiscal

Year (s)

Funding

Status

Areas of

Complementarity with

IPFMRP II

EU 3.00 2016/2017 Ongoing E-procurement

Sweden 15.10 2016/2017 Ongoing Inclusive financial

governance

USAID 7.00 2016/2017 Ongoing IFMIS upgrade

5

1.3.2. During the appraisal mission for IPFMRP II, technical consultations were also

organized with the relevant development partners in terms of their commitments and

prospective areas of future support under the new PFM Reform Strategy (2017-2020). The

IMF expressed future capacity building support through LIPA on the MTEF. The EU is likely

to support GAC’s new professionalization strategy by providing funds for the certification of

more auditors, the fiscal decentralization effort through strengthening of the country treasuries,

and linking the IFMIS platform with the planned aid management platform. The EU, World

Bank, and OECD are also considering design of a transfer pricing scheme for Liberia. With

respect to the bilateral agencies, GIZ will be supporting strengthening the interface between

the Ministry of Lands and Mines with LRA, by providing systems to connect the monitoring

and valuation processes of minerals and precious metals undertaken by the two entities. SIDA

also agreed to maintain its commitment to strengthening PFM reforms in Liberia under the new

PFM Reform Strategy (2017-2020).

II – PROJECT DESCRIPTION

2.1. Project Objective and Components

2.1.1 Project Objectives: The overarching objective of the project is to strengthen

transparency and accountability in public financial management; and enhance revenue

mobilization from the natural resource sector. The project objectives are to be achieved

through: (i) Upgrade of IFMIS infrastructure to better track budget implementation, revenue

collection and government expenditures; (ii) Strengthening the capacity of institutions in PFM;

(iii) Capacity building for Debt Management, Macroeconomic Forecasting and Fiscal

reporting; (iv) Support to revenue mobilization and Administration; and v) Support to Liberia’s

integrity and anti-corruption agencies and CSOs involved in promoting accountability through

monitoring of PFM processes and Governance in general for more efficient use of national

resources.

2.1.2 Project Components: The project has three components: i) Strengthening efficiency,

transparency, and accountability in public financial management; ii) Enhancing domestic

revenue mobilization from the natural resource sector; and iii) Project management. The major

activities under the components are summarized in Table 2.1.

ADF Grant 5.84 2017/18/19 New Budget and expenditure

management, IFMIS,

revenue management, and

inclusive financial

governance

World Bank/IDA Exp. 20.00 2017/18/19 New All of the above

6

Table 2.1: Summary of Project Activities by Component

Components Description of Project Activities by Sub-Component

1.

Strengthening

efficiency,

transparency,

and

accountability

in public

financial

management

UA 3.40 m

(US$ 4.73 m)

Sub-component 1.1: IFMIS infrastructural upgrade

Assessment of the data centre infrastructure upgrade needs

Procurement and installation of hardware: servers, local area network, microwave

radios, switches in counties with high transaction volumes.

Procurement and installation of software: operating system’s business

productivity, virtualization, network management and security applications

Sub-component 1.2: Strengthen the PFM capacity of beneficiary institutions

Development of HR manual for operationalization of the Comptroller and

Accountant General’s office and provide hardware and software

Conduct refresher training for 50 internal auditors and procure equipment for

Internal Audit Agency

Increase the capacity of State-Owned Enterprise Financial Reporting Unit and

develop an asset registry to consolidate State-Owned Assets

Support capacity building programs for Liberian Institute for Public

Administration (LIPA)

Support professional accounting credentialing programs with emphasis on

International Financial Reporting Standards at the Liberian Institute of Chartered

Public Accountants (LICPA)

Procure office equipment and conduct public hearings led by the Legislative

Budget Office (LBO)

Procure hardware and software for use by the Public Accounts Committee (PAC) Provide training in anti-corruption programs at the Liberian Anti-Corruption

Commission (LACC) and undertake asset verification of existing government

officials

Increase capacity in macro-economic analysis and forecasting, debt management

and sustainability analysis, and aid management

Roll out the Aid Management Platform (AMP) to donors, and undertake training

in Project Management

2. Enhancing

domestic

revenue

mobilization

from the

natural

resource sector

UA 2.67 m

(US$ 3.70 m)

Sub-component 2.1. : Strengthen revenue mobilization from the natural resource

sector

Pay subscription to mineral price and cost data bases to Platts Data base Via

Thomson Reuters Eikon platform, as well as Baltic exchange

Develop Terms of reference and procure the services of the mineral valuation

expert to conduct training for staff at the Liberian Revenue Authority (LRA)

Procure equipment to facilitate grading and sorting of minerals by the Office of

precious minerals at the Ministry of Lands, Mines & Energy

Procure the services of a technical expert to conduct specialized training and

technical support in the natural resource sector

Organize peer to peer learning visits and secondments on tax administration

systems in the natural resource sector (Botswana, South Africa and Ghana)

Procure the services of the external professional firms to conduct effective tax

audits in the natural resource sector

Support audits for selected companies in the natural resource sector

Sub-component 2.2 Enhancing transparency and monitoring of PFM processes for

more efficient use of national resources

Recruit a consultant to conduct scoping of LEITI’s transition to the new 2016 EITI

Standards

Recruit LEITI consultant to examine the licensing and revision processes of

concession agreements & Beneficial Ownership Disclosure

7

Produce the 9th, 10th, and 11th EITI reconciliation report for Liberia on royalties

and tax payments to government and the receipt thereof

Town Hall meetings in the 15 counties to promote sensitization on the importance

of Tax Payments and GOL Revenue Mobilization (APRM)

Train 10 staff of APRM Secretariat staff and 3 National Governing Council

members in effective sensitization and community outreach on revenue

mobilization

Organize and host 6 policy dialogues to strengthen policies on the natural resource

sector with stakeholders and publish policy briefs on the GC website (GC)

Conduct two public policy studies on issues regarding the natural resource sector

(GC)

Support the Financial Intelligence Unit (FIU) gather intelligence and conduct

investigation on illicit financial activities in the natural resource industries

Design and develop software, database and hosting services for FIU

Conduct training sessions on the effective use of software and database (FIU)

Organize awareness and sensitization sessions on anti-money laundering and

counter-terrorism financing regimes (FIU)

3.. Project

management

UA 0.20 m

( US$ 0.28 m)

Preparation of annual work plans and procurement plans

Procurement of project goods and services

Project Supervision, monitoring and reporting

Preparation of Annual Project Audits and Project Completion Reporting

2.2. Technical solution retained and other alternatives explored

2.2.1 During project preparation and appraisal, four options were explored regarding

the modality for delivery of the support to Liberia’s Integrated Public Financial

Management Reform Project. The first option considered was the delivery of the grant as a

budget support; the second was the delivery of the project as a standalone investment project

to be managed as ADF portfolio; the third was Grant delivery under a Technical Assistance

Arrangement; and the fourth was as a Grant support delivery under existing the MoU

arrangement with the World Bank and Government. Option 4 was retained due its advantage

over the first three options. The preferred option in which Partners funds are pooled to pursue

the same objective can benefit from portfolio management and implementation synergy. It also

promotes aid coordination. The option also better addresses Government’s programmatic

approach to addressing the PFM reform challenges as identified in the recent PFM reform

Country Concept Paper 2016 (See Appendix XII). Unlike the first three options, the selected

option provides better opportunity for national capacity building in PFM and monitoring and

implementation. The selected option was also based on lessons learnt in project implementation

in Liberia, including the need to minimise project coordinating units through more efficient use

of available in-country expertise and the need to build capacity of existing institutions; and

place more focus on ensuring program sustainability and improve coordination with other

development partners.

2.2.2 In terms of the funding modality, the proposed operation has adopted the pooled

fund arrangement including use of the existing Reform Coordination Unit in MFDP to

minimise transaction costs and improve development effectiveness. In 2011, to minimise

the burden of having a large number of individual projects, GOL developed the comprehensive

PFM Reform Strategy and requested donors to provide support on a harmonised basis into a

single reform project. The World Bank, USAID, SIDA, and AfDB led the way in the

development and implementation of the IPFMRP Phase I multi-donor support on which the

8

first operation was based. Consistent with the Bank’s commitment to provide a coordinated

and harmonised donor support to PFM reform, the proposed operation will use the existing

modality for channelling funds through the pooled funding arrangement and the special account

maintained at the Central Bank of Liberia. The relative advantages and disadvantages of

different funding modalities are summarized below.

Table 2.2: Project Alternatives Explored

2.3. Project type

2.3.1 IPFMRP II is designed to strengthen the capacity of key public institutions

engaged in public financial management under the existing MOU arrangement with the

Modality Advantages Disadvantages

Option 1

Delivery of the grant as

a budget support

Fast disbursing and ease of access

of funds to the Government of

Liberia

The disbursement of funds

into the Consolidated

Revenue Fund would not

necessarily address the PFM

challenges in Liberia

Option 2

Delivery of the project

as a standalone

investment project to be

managed as ADF

portfolio

High degree of control and

accountability of funds provided

Will use the Bank’s disbursement,

supervision, financial management

and procurement processes

Will create significant

administrative burden for the

Government of Liberia

May lead to weakened aid

coordination and synergy

with the overall reform

program

Not in line with current good

practice donor harmonization

and maximizing aid

effectiveness in fragile states

Option 3

Grant delivery under a

Technical Assistance

Arrangement

High degree of control and

accountability of funds

Significant administrative

burden for the Government

of Liberia

Option 4

Grant support delivery

under the existing MoU

arrangement with the

World Bank and

Government

In line with current good donor

practice

Substantially reduced

administrative burden on the

Government of Liberia

Greater assurance that key parts of

the PFM strategy will be funded

Supports effective coordination of

the reform program and common

approaches to implementation

High level of control over the use

of project funds

Relatively reduced level of

direct control over project

funds although AfDB would

be a key player in the joint

donor working group

9

World Bank and Government. It will help in consolidating the gains from the previous two

phases and address the new emerging challenges. The project will deliver improved capacity

and institutional development through a range of interventions including focussed skills

transfer from technical advisors, delivery of a range of training and skills development courses

and strengthening of local training capacity.

2.4. Project cost and financing arrangements

2.4.1 The AfDB shall provide a grant of UA 6.27 million (US$ 8.72) to finance IPFMRP

Phase II. The GoL will contribute 10% of the total cost of the project (UA 0.627 m) in-kind, as

counterpart fund to pay the salaries of project management staff deployed from the Ministry of

Finance and other government Departments, making the overall project cost of UA 6,897

million (US$ 9,337). GoL contribution will also include the cost of running and maintaining

project vehicles that have been provided by the government, and the cost of office utilities. The

tables presented below provide the summary cost tables for the project.

2.4.2 Detailed Cost Estimates: Tables 2.3 to 2.5 provide the categories of eligible

expenditures that will be financed over the project life.

Table 2.3: Project Cost Estimates by Component

Table 2.2: Project Cost Estimates by Component (in Thousand UA)

(USD Thousands) (UA Thousands)

COMPONENT LC FC Total LC FC Total % of

Total

1. Strengthening transparency and

accountability in public financial

management

1,892 2,838 4,730 1,360 2,040 3,400 54%

2. Enhancing domestic revenue

mobilization from natural resource

sector

1,480 2,220 3,700 1,068 1,602 2,670 42%

3. Project management 0,280 0,000 0,280 0,200 0,000 0,200 0.3%

Total Baseline Costs 3,372 5,058 8,430 2,628 3,642 6,270 99%

Physical contingencies 0,05 0,100 0,150 0,050 0,50 0,1000

Price contingencies 0,040 0,100 0,140 0,050 0,050 0,1000

Total Project Cost 3,462 5,258 8,720 2,728 3,742 6,270 100%

GoL in-kind contribution of 10% 0,627 0,627

Overall Project Cost 3,462 5,258 8,720 3,355 3,742 6,897 FC: Foreign Costs: LC: Cost Costs

10

Table 2.4: Project Cost Estimates by Sources of Financing

Table 2.3: Sources of Financing (in million UA)

Sources of Financing Foreign Local Total % of total

ADF and TSF 3,642 2,628 6,270 90%

GoL in-kind contribution of 10% - 0,627 0,627 10%

Overall Project Cost 6,897 100%

Table 2.5: Expenditure Schedule by Component (in UA million): ADF financing

Table 2.5: Expenditure Schedule by Component (in million UA) (ADF financing

COMPONENTS PY1 PY2 FY2 Total

1. Strengthening transparency and accountability in public

financial management 0,884 1,700 0,816 3,400

2. Enhancing domestic revenue mobilization from natural

resource sector 0,667 1,335 0,668 2,670

3. Project management 0,050 0,100 0,050 0,200

Total Baseline Cost 1,595 3,135 1,534 6,270

Contingencies 0,0050 0,01 0,0050 0,020

Total Project Cost 1,600 3,136 1,536 6,270

GoL in-kind contribution of 10% 0,209 0,209 0,209 0,627

Overall Project Cost 1,809 3,345 1,745 6,897

2.5. Project’s target area and immediate beneficiaries

2.5.1 This ISP shall confer benefits to the entire country, but there are two direct

beneficiary institutions for this project: (i) the Ministry of Finance and Development Planning’s

(MFDP) PFM Reform Coordination Unit (RCU) which coordinates PFM reform activities

within MFDP, line M&As; and oversight and integrity institutions; and (ii) the Liberian

Revenue Authority (LRA). The RCU will coordinate the activities of all targeted entities.

Within MFDP, the targeted units include, amongst others, the Department of Economic

Management, Debt Management Unit, Macroeconomic Policy Unit, Aid Management Unit,

the Budget Department, the Fiscal Affairs Department, the Comptroller and Accountant

General’s Office, the State-Owned Enterprise Financial Reporting and Coordination Unit.

Outside MFDP and line M&As, entities to benefit from this ISP include the Internal Audit

Agency, Legislative Budget Office, Public Accounts Committee, Public Procurement and

Concessions Commission, the Liberian Anti-Corruption Commission, and the General Audit

Commission. Some professional institutions will also be supported: the Liberian Institute of

Public Administration, Liberia Institute of Certified Public Accountants, Financial

Management Training Program, Liberian Extractive Industry and Transparency Initiative, the

Governance Commission, and the African Peer Review Mechanism Secretariat.

11

2.6. Participatory process for project identification, design, and implementation

2.6.1 During the preparation mission of the project, consultations were held with the

beneficiary institutions and the donors listed above. To ensure that a harmonized and

collaborative approach was undertaken to support the government’s PFM reform strategy,

consultations were also held with civil society organizations and other relevant stakeholders to

solicit their views on their engagement in this operation.

2.7. Bank Group experience and lessons reflected in project design

2.7.1 As of June 30, 2016 the overall rating of the Bank’s portfolio in Liberia was

satisfactory, with an overall rating of 3.0. The performance rating for Implementation

Progress (IP) and Development Objectives (DO) had average scores of 3.01, and were

satisfactory. The main recommendations that emerged from the 2016 Country Portfolio

Improvement Plan (CPIP) for Liberia relate to the following: i) need to improve quality at entry

to accelerate project effectiveness after approval and project take-off; ii) need to ensure that all

operations are appraised based on recent feasibility and design studies; iii) need to build the

capacity of PIU staff in procurement and contract management; iv) need to closely follow up

on annual work implementation, and budget and procurement plans preparation; v) need to

reduce implementation slippages through desk and field supervision; and vi need to hold

monthly review meeting on outcome of monitoring of project performance, including the

performance of contractors and other service providers. In designing this project, the above key

lessons learnt were taken into account. To accelerate project effectiveness, the existing Project

Implementing Unit with experience in Bank procedures shall be retained to coordinate the

project. Joint supervision will be undertaken based on the pooled fund arrangement and the

MoU between the AfDB and the World Bank. The project as designed has provided adequate

resources to beneficiary institutions for project staff training to enhance the delivery of the

expected outputs. The project design was also guided by the GoL concept paper on the expected

thrust of the GoL 2017-2020 strategy on PFM that is under preparation.4 The new PFM strategy

is being developed by the MFDP in close collaboration with the IMF and World Bank, taking

into account the specific circumstances of Liberia and its fragility. The lessons learned are

summarized below.

12

Table 2.6: Lessons learned from previous operation and other analytical reports

2.7.2 IPFMRP Phase I Pooled Fund Implementation Arrangements – Specific Lessons

Learned

The ongoing IPFMRP is being implemented using a pooled co-financed Multi-Donor

Trust Fund arrangement of US$ 28.6 m that includes the World Bank/IDA (US$ 5 m), SIDA

(US$ 15.1 m), and USAID (US$ 3.85 m). Under the current joint MOU, the GOL and the co-

Lessons Learned Actions taken to integrate lessons into the project

Low levels of in-country capacity had a

negative impact on implementation,

and serious attention should be given to

the design and staffing of the structures

established to coordinate and manage

PFM reforms

This project will be directly based on the Government

of Liberia’s PFM Reform Strategy and Action Plan

which includes detailed work plans taking into

account both technical and human resource

requirements and limitations.

The importance of strong coordination

arrangements for PFM reform is critical

for successful delivery. Fragmented

donor interventions and project

management requirements have placed

a huge burden on scare budgetary

resources and diverted very limited

PFM expertise to servicing donor

requirements as opposed to

contributing to improving the PFM

reform agenda.

This ISP will contribute to a multi-donor support

program to the PFM Reform Strategy and Action

Plan. There is broad consensus on reform priorities as

well as mechanisms to improve donor coordination.

A detailed Operational Manual and Cooperation

Framework has been developed to improve coherence

and coordination among donors and between the PFM

donor working group and the Government of Liberia.

This will greatly reduce the reporting and project

management burden on government. The Liberia

Field Office will enhance further country dialogue

and donor coordination.

The piecemeal approach to capacity

development and separate donor

funding and reporting arrangements

creates unacceptable administrative

burdens on limited PFM capacity in

fragile states

This proposed operation will provide joint funding to

a multi-donor, integrated and coordinated PFM

reform program in which every attempt has been

made to minimize the burden of multiple reporting

and monitoring arrangements and reduces the risk of

uncoordinated interventions.

The joint evaluation of African PFM

reforms identified institutional and

contextual factors that contribute to

successful PFM reforms. One of the

key messages is that donors should

align support as closely as possible to

the government program and avoid

pursuing independent initiatives.

Externally financed support to PFM

reform was most efficient and

effective, when identified explicitly

within the government’s PFM reform

program.

This program is directly aligned with the PFM

Reform Strategy and Action Plan. It is designed

around the needs and priorities identified by the

government through an extensive review,

consultation and planning exercise. As one of the

largest donors in Liberia and as signatory to the Paris

Declaration and Busan New Deal for Engagement in

Fragile States, the proposed operation will be

delivered through the pooled funding arrangement.

13

financiers agreed to use World Bank procurement rules and procedures, with the World

Bank/IDA Task Team Leader serving as the main administrator of the Multi-Donor Trust Fund.

So far, the project implementation arrangement under the pooled account has been satisfactory.

2.7.3 The main lessons that emerged from IPFMRP Phase I pooled fund implementation

arrangements include: (i) the pooled fund leveraged AfDB’s investment into a broader,

coordinated PFM plan that harmonized programs from several donors and reduced the

implementation cost on donors and government, particularly for small grants aimed at

achieving similar objectives; and (ii) ADB’s participation in the pooled fund enhanced donor

coordination in Liberia. To improve the existing collaboration under the pooled fund, it was

agreed during the project appraisal that the existing reporting format of the pooled fund will be

improved to highlight the contributions of all partners to Liberia’s PFM reform program.

2.8. Key performance indicators

2.8.1 The key performance indicators and the expected outcomes at project completion

are outlined in the results-based logical framework. In the short to medium-term, the

expected project outcomes are: (i) improved fiscal discipline, efficiency, and oversight based

on 5 PEFA scores of better than D/D+; and (ii) enhanced domestic revenue mobilization based

on improved governance of the natural resource sector. The table below provides a list of the

selected PEFA scores to be monitored for improved performance under IPFMRP Phase II.

Table 2.7: Selected PEFA scores to be monitored for improved performance

under IPFMRP Phase II

2.8.2 Progress will be measured on a regular basis, through joint supervision missions,

review of Quarterly Progress Reports, review of specific outputs such as audit reports, and

Minutes of meetings from the RCU, which will also be an important vehicle for donor

coordination across the whole PFM Reform Strategy. Objectively verifiable evidence of

progress against meeting the targets will be obtained from World Bank and IMF Mission

Reports, and governance indicators. Collection and analysis of information to monitor

performance will be the responsibility of the RCU. The RCU is responsible for ensuring that

information is collected to assess all targets and indicators against the logframe and for

preparing the comprehensive program performance reports.

Selected PEFA Scores 2007

Score

2012

Score

Score

2016

Score

Score

PI-2 Composition of actual expenditure compared to approved

budget

D D+ D+

PI-4 Stock and monitoring of expenditure payment arrears D+ B D+

PI-11 Orderliness and participation in the annual budget process B B D+

PI-15 Effectiveness in collection of tax payments D+ D+ D+

PI-22 Timelines and orderliness of account reconciliation D C D+

14

III – PROJECT FEASIBILITY

3.1. Economic and financial performance

3.1.1 As an ISP, identifying and quantifying the direct and indirect economic and financial

benefits of capacity building interventions is complicated and it is often difficult to carry out

rigorous cost-benefit economic and financial analysis. While the costs are quantifiable, the

benefits are indirect, and ultimately achieved in the improved public financial governance,

service delivery and better performance of the targeted public financial management

institutions.

3.1.2 The economic justification of the proposed operation is its contribution to a better

functioning government through improved PFM and capacity to implement the national

development strategy. The benefits of the project will flow from improved domestic revenue

mobilization, strengthened budget credibility, budget execution, improved internal controls,

enhanced oversight, and increased transparency in the management of public resources. The

project will also support the development of human resource capacity, thereby ensuring that

the benefits will be sustained over time.

3.2. Environmental and social impact

3.2.1 Environment. Given that the project is an institutional support project, providing

capacity building to government institutions, the operation is not expected to have any direct

adverse environmental impact. The project is classified as Category 3.

3.2.2 Climate Change. The project activities, which focus on building human and

institutional capacity, have no adverse impact on climate change.

3.2.3 Gender. The Government of Liberia is committed to gender mainstreaming by

promoting adherence to the United Nations Security Council Resolution 1325 (2000) on

rebuilding institutions in post-conflict societies. This ISP will also support the implementation

of the 2009 National Gender Policy and Civil Service Reform Strategy by training more

females in PFM. IPFMRP II will ensure that the training program provided through this

operation will be made available to all middle to senior level women in beneficiary institutions.

The project will promote gender balance in its activities and ensure that women’s participation

in training reach at least 50% of all eligible female employees (i.e. 50% of middle to senior

women professionals in PFM).

3.2.4 Social. The aim of the project is to enhance government capacity to implement reform

and manage public resources efficiently and effectively. This will strengthen and leverage the

impact of the national budget on delivery of services, and poverty reduction through increasing

efficiency and effectiveness of resource allocation and budget execution in line with the

national economic growth and poverty reduction strategy. A sound PFM system matters to help

ensure that budget planning are compatible with macroeconomic stability, and that there is a

firm basis for high quality services to be provided to the public.

3.2.5 Private Sector. The project will contribute positively to private sector development

through improved fiscal management. Improved financial governance, particularly creating

15

greater clarity on the level of tax liability of companies operating in the natural resource sector

will improve investor confidence and the future of the Liberian economy.

3.3 Fragility Analysis

3.3.1 Despite progress since the end of the civil war in 2003, Liberia remains a fragile

state with limited access to basic social services and infrastructure development. The country’s

economic capacity to address the root causes of fragility still persists, such as: (i) high youth

unemployment; (ii) negligence of rural development; and (iii) over exploitation of natural

resources. In addition to the above challenges, GoL would need to step up its efforts at national

reconciliation that is essential for sustainability of peace.

3.3.2 The alleviation of fragility can be addressed through the expansion of

opportunities, devolution of power, and inclusion of majority views into decision making

processes. With many of these factors complementary and overlapping, progress must be made

to simultaneously address these issues for sustainability and consolidation of existing peace.

While the country has enjoyed peace and stability for over ten years, the citizens blame

government inability to deliver on social services as well as the high youth unemployment.

This situation could get worse if the current fiscal deficit persists. Hence this ISP is timely and

essential to support the key PFM challenges, and revenue mobilization from the natural

resource sector. More details on the country’s fragility analysis is presented in Appendix XV.

IV – IMPLEMENTATION

4.1. Implementation arrangements

Institutional Arrangements

4.1.1 The project will be managed by the existing PFM Reform Coordination Unit

(RCU), under the current IPFMRP arrangement. The unit is managed by a Project

Coordinator and comprises other staff including a Deputy Coordinator, a Financial

Management Specialist, M&E Officer and an International Procurement Specialist. The unit is

further assisted by Financial Management Officers. There is a Project Technical Committee

that meets monthly to discuss issues affecting project implementation. The Project Steering

Committee is chaired by the Minister of Finance and Development Planning and meets

quarterly. The Project Financial Management Unit at the Ministry of Finance and Development

Planning will handle all fiduciary matters. The coordination with the other DPs will take place

through the joint PFM Working Group that meets quarterly to review plans and implementation

progress. A common monitoring and evaluation framework, and an operational plan have been

developed to guide implementation and coordination of the reforms. One key element of this

operation is the Memorandum of Understanding (MOU) in relation to the Pooled Account

between the Government of the Republic of Liberia, the African Development Bank and the

World Bank. A new MOU that is aimed at extending the current collaboration under the pooled

fund has been prepared.

4.1.2 Financial Management

The Ministry of Finance and Development Planning (MFDP) which has responsibility for

the PFM Reform Coordination Unit, will lead the delivery of all project components

except those under the General Auditing Commission (GAC) related to GAC staff capacity

16

building under Sub-component 1.3 on Support to Integrity and Oversight Institutions, whereby

the GAC will manage its own activities. Financial management of the MFDP managed

components will be handled by the Project Financial Management Unit (PFMU) while the

GAC Finance Department will manage accounting for the GAC component. The PFMU and

RCU handled the IPFMRP Phase I, and currently provides financial management services for

more than eighty AfDB, World Bank, and other donor-financed projects in the country. The

GAC has a stand-alone Finance Department headed by a Chief Financial Officer that manages

GAC’s own budget. The GAC Finance Department was also responsible for the successful

financial management of the GAC component of IPFMRP Phase I. The GAC was set up in

2005, while the PFMU was established by the World Bank in 2006 and both have been in

existence for a considerable period of time. Both MFDP and GAC have controls in place that

provide reasonable assurance on the accuracy and timeliness of reports generated by both.

Technical Annex VII provides more details on the financial management and the fiduciary risk

analysis undertaken for IPFMRP Phase II.

The assessment of both the MFDP and the GAC concluded that there is sufficient FM capacity

to ensure: (a) that project funds are used only for the intended purposes in an efficient and

economical way; (b) the preparation of accurate, reliable and timely periodic and annual

financial reports; (c) that any assets purchased using project funds are adequately safeguarded.

The project FM Risk was assessed as moderate.

4.1.3 Disbursement

Disbursement will make use of the Special Account modality with a segregated USD

‘pooled’ account to be domiciled in the Central Bank of Liberia for use by the co-

financing partners. In line with the MOU, the partners will contribute to the pooled fund. The

Special Account will disburse only towards meeting eligible expenditures for the project.

Replenishments will be in accordance with the Bank’s Disbursement Handbook and the

applicable guides in the MOU with the co-financiers. The reimbursement guarantee may be

used for imports. Technical Annex VII provides details of the financial management and joint

financing arrangements.

4.1.4 Audit

The proposed project will continue to use the GAC to audit project funds, although a

private professional firm of auditors will still be required to audit the GAC component of

the project. The private audit firm will be hired on TORs approved by the co-financing

partners, using selection procedures agreed upon in the signed MOU. Both audit reports,

supported by the relevant management letters, will be required to be submitted to the Bank and

the other co-financing partners annually and within six months of the end of the year audited.

The details of the audit arrangements are set out in Technical Annex VII.

4.1.5 Procurement Arrangements

The RCU will have overall responsibility to carry out the procurement management functions

including preparing procurement plans, contract administration and the procurement

monitoring process. In line with the Paris Declaration on Aid Effectiveness (2005), Accra

Agenda for Action (2008), and Busan High Level Forum on Development Effectiveness

(2011), the proposed operation will adopt the common implementation and procurement

arrangement with IDA as the implementing partner for the pooled account. Thus, procurement

17

will be carried out using the World Bank procurement guidelines and joint supervision missions

will be undertaken. To that end, IDA will serve as primary focal point regarding procurement

matters, in consultation with the AfDB. The modalities followed in using the World Bank

Procurement Guidelines in lieu of the Bank’s are described in the Technical Appendices. In

addition, the MOU provides details of the joint implementation arrangement and Bank’s

fiduciary oversight responsibility.

Under IPFMRP Phase I, use of the World Bank Procurement was justified based on the

following reasons: (i) AfDB and World Bank have harmonized their procurement policies,

procedures and standard bidding documents; (ii) The World Bank’s operational framework for

dealing with complaints is reliable and similar to that of AfDB; (iii) AfDB and IDA are both

signatories of the Cross-Debarment Agreement aimed at ensuring, beyond the mutual

recognition of sanctions, the application by each participating institutions of core principles in

its internal mechanism for addressing and sanctioning violations of its anti-corruption policies.

4.2. Monitoring and Evaluation

4.2.1 MFDP will be responsible for the overall monitoring and evaluation activities in

collaboration with the project component managers and beneficiary institutions. AfDB

and other partners will undertake bi-annual supervision missions as part of the common

implementation framework. Project implementation is scheduled to span 3 years, from January

2017 to December 2019. The government will have to submit quarterly progress reports on the

implementation of the project. The quarterly progress reports will present the status of physical

and financial implementation and highlight any problems that might hamper smooth project

implementation. The reports will review progress made in light of the project’s Results-Based

Logical Framework and include a clear presentation of activities undertaken during the period

under review. The reports will also analyze to what extent the activities undertaken have

contributed to the realization of the anticipated project development objectives. RCU will also

be required to prepare and submit to AfDB, a Project Completion Report within six months of

the final disbursement.

Table 4.2: Project Implementation Schedule

Timeframe Milestone Monitoring process

November 2016 Grant approval AfDB

December 2016 Effectiveness GoL

December 2016 Launching workshop AfDB & GoL

December 2016-December 2019 Procurement of goods and services GoL, AfDB, World Bank

March 2017 Joint supervision and monitoring AfDB

June 2018 Mid-term review AfDB

December 2016-December 2019 Disbursement of funds AfDB

December 2019 Project completion report AfDB

18

4.3. Governance

4.3.1 The project will significantly contribute to good fiscal and public financial governance,

particularly through human resource development and technical assistance provided to RCU.

The project will improve the quality and timeliness of public accounting and auditing and

contribute to improved domestic and international confidence in institutions of governance in

general. Furthermore, strengthened financial management institutions and processes will lead

to increased accountability, reduced public sector corruption and more efficient use of public

resources for poverty reduction. The main risks to project governance arise in procurement

decisions, use of project assets and selection of persons to attend training and capacity building

events. Risks will be mitigated through the preparation of a detailed procurement plan, robust

processes for contractors and participant selection and application of the agreed procurement

rules and procedures. Procurement plans will be prepared by the RCU on the basis of agreed

program plans. Financial management of procurement related expenditure will be carried out

by the PFMU. Further training will be provided to RCU and PFMU staff to ensure that they

are fully aware of all requirements and regulations. Compliance with these controls will be

reviewed during supervision missions. An independent audit will be undertaken every year.

4.4 Sustainability

4.4.1 Sustainability is ensured through a number of factors included in the project design and

approach. These factors comprise: (i) Capacity building initiatives that will help government

officials to produce high PFM products on time (PFM strategy, PFM progress reports); (ii)

Development of tailor made manuals, working practices and tools for continued use. In

addition, the project will help create conditions for macroeconomic stability by contributing to

increased revenue and enhanced fiscal discipline.

4.5 Risk management

4.5.1 The table below outlines the residual risks and mitigation measures.

Table 4.5: Summary of Risks and Mitigation Measures

Risks Level Mitigation measures

Risk 1: Capacity constraints: Weak

institutional and human resources

capacity could cause delays or hamper

implementation.

Moderate Mitigation 1: This support is based on a recent

assessment of implementation capacity in

general and the sequenced PFM Reform

Strategy. The project will provide additional

project management capacity and technical

assistance.

Risk 2: Fiduciary Risks: Government

has made notable progress in improving

PFM, but there are still weaknesses in

the fiduciary and control environment.

The weaknesses are especially in the

area of corruption due to weak

prosecution capacity and sanctions

regime.

Moderate Mitigation 2: Government has put in place a

PFM Act (2009), and PFM Reform Strategy and

Action Plan (FY2012-FY2016) that present a

broadly credible program for improvement.

Plans are also underway implement a new PFM

Reform Strategy and Action Plan (FY2017-

FY2020) and to grant prosecutorial power to the

Liberian Anti-Corruption Commission. The

Government’s commitment to, and ownership of,

reforms is high.

19

Risk 3: Implementation Risk: The

risk of delayed project take off.

Low Mitigation 3: To mitigate the negative impact of

this risk, the project will continue to be managed

by the same RCU which has been instrumental in

the successful implementation of IPFMRP and

the government is centralizing the

implementation of all institutional support

projects on PFM through this RCU.

4.6. Knowledge building

The project will strengthen public financial management. Knowledge will be acquired through

skills transfer from technical assistance, as well as through formal and informal training on the

job, locally and regionally. Knowledge will also be built through direct hands on support from

program advisors to enable beneficiaries to undertake their day to day work. The project will

also help to develop guidance manuals, automated financial management systems and various

reporting tools and models, such as the MTFF and macroeconomic models, internal audit

manuals and IFMIS reporting tools. It will support knowledge and diagnostic work through

training on PEFA self-assessment and monitor the quality of public financial governance in

Liberia. Specific arrangements to ensure that knowledge is transferred will include assigning

counterpart staff to work with external consultants, evaluating technical assistance based on

performance on knowledge transfer, and building local capacity in Liberia.

V – LEGAL INSTRUMENTS AND AUTHORITY

5.1. Legal instrument

The bilateral Protocol of Agreements between the Government of Liberia, ADF, and TSF will

be signed by the parties concerned. The instrument is an ADF-13 PBA Grant of UA 3.19 m,

and ADF-13 TSF Pillar III Grant of UA 1.00 m. It also includes the unused balances re-

allocated from the Liberia: Labor-Based Public Works Project and these funds include the

ADF-10 PBA Grant of UA 0.88 m; ADF-10 TSF Pillar I Grant of UA 1.07 m; and ADF-10

TSF Pillar III Grant of UA 0.12 million.5

5.2. Conditions associated with Bank’s intervention

5.2.1 The Protocol of Agreements will come into effect on the date of its signature by the

Government of Liberia and the African Development Fund. The first disbursement of grant

resources will be contingent on the effectiveness of the Protocol Agreement and subject to

entry into force of the Protocol of Agreement.

5 The unused balances reflect the reallocated funds from the Liberia: Labor-Based Public Works Project

approved on December 8, 2007 under ADF-10 (Grant Number 2100155010817).

20

5.3. Compliance with Bank Policies

5.3.1 In view of the need to adopt a joint financing modality and harmonized implementation

arrangements, it is recommended that the Board of Directors approves a waiver to apply the

World Bank Rules and Procedures for procurement of all eligible expenditures specified in this

Appraisal Report. The project complies with all applicable Bank policies.

VI – RECOMMENDATION

Management recommends that the Board of Directors approves UA 6.27 m (US$ 8.72 m),

including the ADF-13 PBA Grant of UA 3.19 m, and ADF-13 TSF Pillar III Grant of UA 1.00

m. Management also recommends that the Board of Directors approves the utilization of the

unused balances from the Liberia: Labor-Based Public Works Project for utilization under

IPFMRP Phase II for the purposes and conditions stipulated in this report, i.e., ADF-10 PBA

Grant of UA 0.88 m; ADF-10 TSF Pillar I Grant of UA 1.07 m; and ADF-10 TSF Pillar III

Grant of UA 0.12 million.

I

APPENDIX 1

COMPARATIVE SOCIO-ECONOMIC INDICATORS 2000 2011 2012 2013 2014 2015 2016

LBR

Indicators Unit 2000 2011 2012 2013 2014 2015 (e) 2016 (p)

National Accounts

NY.GNP.MKTP.CDNY.GNP.MKTP.CDGNI at Current Prices Million US $ 549 1,305 1,508 1,589 1,627 ... ...

NY.GNP.PCAP.CD.ADBN

YGNI per Capita US$ 190 320 360 370 370 ... ...

NY.GDP.MKTP.CD.ADBNY.GDP.MKTP.CDGDP at Current Prices Million US $ 661 1,538 1,802 2,603 2,053 2,750 2,869

NY.GDP.MKTP.KD.ADBNY.GDP.MKTP.KDGDP at 2000 Constant prices Million US $ 661 887 961 1,045 1,052 1,057 1,086

NY.GDP.MKTP.KD.ZG.ADBNY.GDP.MKTP.KD.ZGReal GDP Growth Rate % 0.0 7.9 8.3 8.7 0.7 0.4 2.8

NY.GDP.PCAP.KD.ZG.ADBNY.GDP.PCAP.KD.ZGReal per Capita GDP Growth Rate % -5.2 4.6 5.4 6.1 -1.7 -1.9 0.3

NE.GDI.TOTL.ZS.WEON

EGross Domestic Investment % GDP 23.5 37.0 41.0 42.5 22.7 29.6 44.2

NE.GDI.FPUB.ZS.WEON

E Public Investment % GDP 12.7 4.9 4.0 5.2 7.6 8.5 8.9

DeductionN

E Private Investment % GDP 10.8 32.1 36.9 37.3 15.1 21.1 35.3

NY.GNS.TOTL.ZS.WEON

YGross National Savings % GDP ... ... ... ... ... ... ...

Prices and Money

FP.CPI.TOTL.ZG.ADBF

PInflation (CPI) % 5.3 8.5 6.8 7.6 9.9 7.7 7.0

PA.NUS.FCRF.ADBPA.NUS.FCRFExchange Rate (Annual Average) local currency/US$ 41.0 72.2 73.5 77.5 83.9 84.5 84.7

FM.LBL.MONY.ZG.ADBF

MMonetary Growth (M2) % -97.1 49.5 15.9 21.8 5.2 ... ...

FM.LBL.GDP.MQMY.ZS.ADBF

MMoney and Quasi Money as % of GDP % 0.2 10.8 10.5 8.4 10.3 ... ...

Government Finance

GB.RVC.IGRT.ZS.WEOG

CTotal Revenue and Grants % GDP 17.1 26.5 29.0 41.9 27.3 33.0 31.6

GB.XPD.TOTL.ZS.WEOG

CTotal Expenditure and Net Lending % GDP 16.8 27.1 32.1 42.4 30.2 45.2 38.0

GB.FIS.IGRT.ZS.WEOG

COverall Deficit (-) / Surplus (+) % GDP 0.3 -0.6 -3.0 -0.3 -2.9 -9.9 -5.6

External Sector

TX.QTY.MRCH.ZG.WEOTG.WEO.TXG_R.ZGExports Volume Growth (Goods) % ... ... 75.1 20.4 -3.3 -13.4 13.5

TM.QTY..MRCH.ZG.WEOTG.WEO.TMG_R.ZGImports Volume Growth (Goods) % ... ... 2.9 11.7 10.7 30.7 -6.9

TT.PRI.MRCH.ZG.WEOTG.WEO.TTT.ZGTerms of Trade Growth % ... ... -26.7 -3.1 -19.2 -19.8 7.1

BN.CAB.FUND.CD.WEOBG.CAB.CDCurrent Account Balance Million US $ -93 -519 -647 -721 -495 -1,014 -917

BN.CAB.GDP.ZS.WEOBG.WEO.ADB.CAB.GDP.ZSCurrent Account Balance % GDP -14.0 -33.7 -35.9 -27.7 -24.1 -36.9 -32.0

FI.RES.IGLD.MM.ADBFI.RES.TOTL.MOExternal Reserves months of imports 0.0 3.0 2.9 2.8 2.9 ... ...

Debt and Financial Flows

DT.SRV.ANTE.ZS.WEODT.WEO.TDS.PAI.EXP.ZSDebt Service % exports 0.0 3.8 4.6 2.1 6.2 8.1 4.8

DT.DOD.DECT.GDP.ZSG.WEODT.WEO.ADB.DOD.GDP.ZSExternal Debt % GDP 712.3 10.7 10.4 11.9 17.8 24.3 28.3

DT.NFL.TOTL.CD.ADBDC.DAC.NTF.CDNet Total Financial Flows Million US $ 632 617 2,086 -1,841 842 ... ...

DT.ODA.ALLD.CD.ADBDC.DAC.ODA.CDNet Official Development Assistance Million US $ 67 761 566 535 744 ... ...

BN.KLT.DINV.CD.ADBDC.UNC.PVF.FDI.CDNet Foreign Direct Investment Million US $ 21 785 985 1,061 302 ... ...

Source : AfDB Statistics Department; IMF: World Economic Outlook, October 2015 and International Financial Statistics, October 2015;

AfDB Statistics Department: Development Data Portal Database, March 2016. United Nations: OECD, Reporting System Division.

Notes: … Data Not Available ( e ) Estimations ( p ) Projections Last Update: April 2016

LiberiaSelected Macroeconomic Indicators

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

%

Real GDP Growth Rate, 2004-2016

0

5

10

15

20

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inflation (CPI),

2004-2016

-40.0

-35.0

-30.0

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

2,0

04

2,0

05

2,0

06

2,0

07

2,0

08

2,0

09

2,0

10

2,0

11

2,0

12

2,0

13

2,0

14

2,0

15

2,0

16

Current Account Balance as % of GDP,

2004-2016

Goal 1: Eradicate extreme poverty and hunger 19901 20002 20133

Employment to population ratio, 15+, total (% ) 57.3 57.7 59.2

Malnutrition prevalence, weight for age (% of children under 5) ... 22.8 20.4

Poverty headcount ratio at $1,25 a day (PPP) (% of population) ... ... 83.8

Prevalence of undernourishment (% of population) 39.2 30.1 31.4

Goal 2: Achieve universal primary education

Literacy rate, youth female (% of females ages 15-24) ... ... 37.2

Literacy rate, adult total (% of people ages 15 and above) ... ... 42.9

Primary completion rate, total (% of relevant age group) ... ... 65.2

Total enrollment, primary (% net) ... ... 40.6

Goal 3: Promote gender equality and empower women

Proportion of seats held by women in national parliaments (% ) ... 5.3 11.0

Ratio of female to male primary enrollment ... 73.6 91.6

Ratio of female to male secondary enrollment ... 72.7 82.0

Goal 4: Reduce child mortality

Immunization, measles (% of children ages 12-23 months) ... 41.0 80.0

Mortality rate, infant (per 1,000 live births) 143.9 88.0 59.8

Mortality rate, under-5 (per 1,000) 216.5 125.5 83.2

Goal 5: Improve maternal health

Births attended by skilled health staff (% of total) ... 50.9 46.3

Contraceptive prevalence (% of women ages 15-49) 8.1 10.4 14.8

Maternal mortality ratio (modeled estimate, per 100,000 live births) 1900.0 1300.0 770.0

Goal 6: Combat HIV/AIDS, malaria, and other diseases

Incidence of tuberculosis (per 100,000 people) 219.0 261.0 304.0

Prevalence of HIV, female (% ages 15-24) ... ... 0.3

Prevalence of HIV, male (% ages 15-24) ... ... 0.1

Prevalence of HIV, total (% of population ages 15-49) ... 2.5 1.0

Goal 7: Ensure environmental sustainability

CO2 emissions (kg per PPP $ of GDP) 3.2 1.0 0.7

Improved sanitation facilities (% of population with access) 10.3 15.4 18.2

Improved water source (% of population with access) 58.0 67.3 74.4

Goal 8: Develop a global partnership for development

Net total ODA/OA per capita (current US$) 59.2 67.0 187.6

Internet users (per 1000 people) ... 0.3 37.9

Mobile cellular subscriptions (per 1000 people) ... 29.6 571.2

Telephone lines (per 1000 people) 2.2 2.2 0.0

Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update :

UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports,

Note : n,a, : Not Applicable ; … : Data Not Available,1 Latest year available in the period 1990-1995; 2 Latest year available in the period 2000-2004; 3 Latest year available in the period 2005-2013

PROGRESS TOWARD ACHIEVING THE MILLENNIUM DEVELOPMENT GOALS

Liberia

May , 2014

0

100

200

300

400

1990 2000 2013

Incidence of tuberculosis (per 100,000 people)

SH.TBS. INCD

0

20

40

60

80

1990 2000 2013

Employment to population ratio, 15+, total (%)

SL.EMP.TOTL.SP.ZS

0

20

40

60

80

1990 2000 2013

Primary completion rate, total

SE.PRM.CMPT.ZS

0

20

40

60

80

100

1990 2000 2013

Ratio of female to male primary enrollment

SE.ENR.PRIM.FM.ZS

0

50

100

150

200

1990 2000 2013

Mortality rate, infant (per 1000 live births)

SP.DYN.IMRT.IN

0

500

1000

1500

2000

1990 2000 2013

Maternal mortality ratio (modeled estimate, per 100,000 live births)

SH.STA.MMRT.NE

0

200

400

600

1990 2000 2013

Mobile cellular subscriptions (per 1000 people)

IT.CEL.SETS.P3

0

20

40

60

80

1990 2000 2013

Improved water source(%)

SH.H2O.SAFE.TO.ZS

III

APPENDIX 1I

(A) AFDB PROJECTS IN THE BANK’S PORTFOLIO IN LIBERIA

(AS OF JULY 30, 2016)

No Project Name Approval date Closing

date

Amount (UA mil)

Agriculture and Rural Development

1 Agriculture Sector Rehabilitation Project (ASRP) 29.04.2009 30.12.2016 12.50

2 Smallholder Agriculture Productivity Enhancement and

Commercialization (SAPEC) 02.05.2012 30.06.2018 34.54

3 Maryland Oil Palm Plantation (MOPP) 12.02.2014 31.12.2018 14.50

Transport

4 Paving Fish Town-Harper Road Project Phase I 04.09.2013 31.12.2017 42.04

5 MRU Road Construction & Trade Facilitation Project 18.12.2014 30.06.2020 52.08

Governance

6 Integrated Public Financial Management Reform Project 10.09.2012 30.03.2017 3.00

7 Supplementary WAMZ Payment System Development

Project 09.11.2010 31.12.2016 5.00

Water and Sanitation

8 Urban Water and Sanitation Project 18.05.2010 31.05.2017 26.09

9 Fostering Innovative Sanitation and Hygiene in Monrovia 11.01.2013 31.12.2016 0.90

Energy

10 CLSG Electricity Networks Interconnection Project 06.11.2013 31.12.2018 8.10

11 CLSG Electricity Project - Rural Electrification 06.11.2013 31.12.2018 16.8

Banking

12 Equity in Access Bank (& supplementary Equity) 04-08/ 12-12 31.12.2018 0.3

Health Sector- Responding to Ebola

13 Regional Project to Strengthen West Africa’s Public Health

Systems in Response to Ebola Crisis 18.08.2014 31.03.2017 12.0

14 Ebola Budget Support – Fight Back Program (EFBP) / Cote

d’Ivoire, Guinea, Liberia and Sierra Leone 01.10.2014 31.12.2016 40.2

15 Post Ebola Recovery Social Investment Fund 21.10.2015 31.12.2019 1.98

Multi-Sector Capacity Building

16 Capacity Building and Technical Support to the National

Housing Authority 21.03.2014 31.06.2016 0.24

17 Technical Assistance and Capacity Building to LISGIS 11.11.2013 30.06.2016 0.78

18 Programme of Assistance to Trade Support Institution in

Liberia (PASTIL) 10.10.2013 31.12.2016 0.66

IV

(B) SUMMARY OF THE BANK’S PORTFOLIO PERFORMANCE IN

LIBERIA (AS OF DECEMBER 31, 2015)6

6Due to the EVD outbreak in Liberia, the formal supervision of Bank projects in the country was temporarily

suspended due to health security concerns of Bank staff, and this negatively affected the indicator on the

number of operations formally supervised twice a year in comparison to the Bankwide supervision

performance. Nevertheless, desk supervision of Bank projects was undertaken to maintain the

implementation rate and to follow up on necessary project related activities.

Indicator 2013 2014 2015 Bankwide

Average size of Project (UA million) 16.5 14.1 14.5 29.2

Operations formally supervised twice a year (%) 67 60 29 82

Time from approval to 1st Disbursment (no. months) 7.4 14 16 10.8

Annual Disbursments Ratio(%) 13 15.5 14 24

Aging operations total number of operations (%) 0 0 0 6.6

Problem Projects (%) 0 0 0 8

Projects at Risk (%) 8 0 0 9

Commitment at Risk (%) 3 0 0 1

Value of Private Sector % (of approved amount) 16 5.3 5 22

Table ….: Portfolio Performance Indicators- 2015

V

APPENDIX III: SIMILAR PROJECTS FINANCED BY THE BANK AND OTHER

DEVELOPMENT PARTNERS IN LIBERIA

Oth

er

En

erg

y

Ro

ad

s

AfDB

China

EU*

France

Denmark

DFID/UK

Germany

Ireland

Norway

SIDA/Sweden

JICA

United States

World Bank**

UN Systems

UNDP

UNMIL

UNICEF

UNHCR

WFP

WHO

FAO

UNWomen

UNESCO

UNAIDS

Economic Transformation Human DevelopmentGovernance and Public

InstitutionsPeace, Security, and Rule of Law

Infrastructure

Partner Se

cu

rit

y

Pe

ac

e a

nd

Re

co

nc

illi

ati

on

Justi

ce

an

d

Ru

le o

f La

w

Jud

icia

l

Re

form

Priv

ate

Se

cto

r

De

ve

lop

me

nt

Ma

cro

ec

on

om

i

c I

ssu

es

Ag

ric

ult

ure

an

d F

oo

d

Se

cu

rit

y

Po

liti

ca

l

Go

ve

rn

an

ce

Pillar I Pillar II Pillar III Pillar IV

Donor Partnerships in Liberia - Agenda for Transformation 2012-2017 (updated October 2012)

Pu

bli

c S

ec

tor

Mo

de

rn

iza

tio

n

& R

efo

rm

Ec

on

om

ic

Go

ve

rn

an

ce

Ed

uc

ati

on

Fo

re

str

y

He

alt

h a

nd

So

cia

l W

elf

are

So

cia

l

Pro

tec

tio

n

Wa

ter a

nd

Sa

nit

ati

on

Min

era

l

De

ve

lop

me

nt

&

Ma

na

ge

me

nt

VI

APPENDIX IV: LETTER OF REQUEST FROM THE

GOVERNMENT OF LIBERIA

VII

APPENDIX V: THE BANK’S VALUE ADDITION UNDER IPFMRP - PHASE I

The Bank’s Board approved US$4.6 m (UA 3m) for the Integrated Public Financial

Management Reform Project (IPFMRP) on September 18, 2012 representing part of its

contribution towards strengthening Liberia’s PFM reform effort. IPFMRP had five inter-

related components each supporting the advancement of seven thematic areas embodied

within the PFM Reform Strategy and Action Plan (FY2012-FY2016): (i) comprehensive

and credible budgeting; (ii) robust IT systems to support PFM operations; (iii) revenue

mobilization; (iv) enhanced transparency and accountability; (v) enhanced controls and

respect of the PFM legal framework; (vi) strengthening treasury management and; (vii)

fiscal decentralization.

(1) Enhanced budget planning systems, coverage and credibility. Based on the 2016

PEFA, PI 1-3 scores representing enhanced budget credibility recorded marked

improvement. Revenue forecasting capacity improved despite the Ebola outbreak. This

improvement was due to increased collaboration between the macro forecasting units in

MFDP and LRA. As part of the effort to transition to MTEF, MFDP prepared and published

an MTEF budgeting manual to guide forecasting estimations. Public investment programs

have now been centralized and controlled through Cabinet, while recurrent expenditures

are budgeted at the level of ministries and agencies. With regard to enhanced budget

coverage, efforts have advanced in migrating 15 donor-financed projects in PFMU into

IFMIS thereby bringing donor-funded expenditure to the scrutiny of the budget preparation

process.

(2) Review of the PFM legal framework, budget execution, accounting and reporting.

The PFM Law (2009) was reviewed and proposed amendments accepted by the MFDP

authorities. IFMIS has also been upgraded to a higher version with better features. As of

FY 2014/15, 69% of the budget was executed in the system. The GoL also prioritized

security ensuring that the current IFMIS platform is more secure. Notable accomplishments

in this area include the first ever adoption of an Information Security Policy that was

promulgated by the Minister of Finance and Development Planning across IFMIS-

connected ministries and agencies. An independent international security firm was hired to

undertake a security audit of the system and provide recommendations on best security

practices that have been implemented. The Civil Service Module of IFMIS was also

deployed thereby establishing better controls between personnel records and payroll

management. The electronic document management system was launched in January 2016,

the objective being to serve as a repository of supporting documentation for transactions.

The project has also completed the development of a system requirement document for e-

procurement. There have also been steady improvements with the preparation and

publication of the Consolidated Fund financial statements by the Comptroller and

Accountant General Department (CAGD).

(3) Revenue Mobilization and Administration. The objective of the third component of

IPFMRP on Revenue Mobilization and Administration was to complement efforts

aimed at improving the efficiency and integrity of revenue administration and

increase domestic revenue of central government entities. This component had three

VIII

sub-components: (a) Capacity Development of Customs; (b) Tax Automation (SIGTAS);

and (c) Establishment of Revenue Authority. The most relevant achievement of the three

sub-components was the establishment of the Liberia Revenue Authority (LRA). LRA was

established in July 2014, but the initiation of recruitment was delayed until January 2015

due to the EVD crisis. The allotted resources for LRA have improved, with a budgetary

allocation of US$ 13.1 m provided in FY2014/15 increasing to US$ 16.1 m in FY2015/16.

Since the establishment of LRA, national revenue performance has improved significantly,

particularly for customs revenues, but the key capacity challenge relates to taxation within

the natural resource sector which will be addressed by this project.

(4) Enhancing transparency and accountability. Scrutiny of the budget has improved

through the analytical reviews conducted by the Legislative Budget Office (LBO). The

budget for FY 2015/16 was passed into law only 2 months later than the statutory deadline

of June 30 (i.e., August 25, 2015), an improvement in comparison to the previous fiscal

years. With regards to ex-post legislative budget oversight, several public hearings have

been held, with 2 consolidated reports covering 11 General Auditing Commission (GAC)

reports tabled before the President of Liberia for action, based on the improved efficiency

of the Public Auditing and Accounts Secretariat.

(5) Other notable achievements under IPFMRP include the fact that the General

Auditing Commission (GAC), having attained enhanced financial and operational

autonomy via the new GAC Act passed December in 2014, GAC completed and

published 18 audits as of FY 2014/15, including the Consolidated Fund financial

statements for FY 2012/13. The Internal Audit Agency (IAA) has also begun to focus on

systemic issues undermining the internal control environment in MD&As, while the use of

the audit tracker has helped create improvements in the implementation of audit

recommendations. The Internal Audit Agency (IAA) now covers more than 70% of

budgeted expenditure in terms of its establishment across MD&As. The non-state actors’

sub-component also continues to make impact in terms of enhancing the public drive for

transparency and accountability on the use of state resources.

The June 2016 joint supervision of the Integrated Public Financial Management Reform

Project (IPFMRP) found that this institutional support project (ISP) was generally on track,

despite some of the activities that were delayed due to the ebola crisis. The likelihood of

the project achieving its development objectives during the remaining implementation

period remains positive and satisfactory. Implementation progress, impaired by the Ebola

outbreak, is also rated moderately satisfactory. In consideration of the remaining project

period and available financial resources, the key priority of the ongoing ISP for the

remaining period is the use of IFMIS as comprehensively as possible, especially at the

county level. The Bank’s contribution to IPFMRP is fully disbursed and the project is

scheduled to close on June 30, 2017.

IX

APPENDIX VI: MAP OF THE REPUBLIC OF LIBERIA