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AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND
PROJECT: INSTITUTIONAL SUPPORT FOR THE INTEGRATED PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT (IPFMRP)
COUNTRY: LIBERIA
PROJECT APPRAISAL REPORT Date: June 2012
Appraisal Team
Team Leader: Kalayu Gebre-selassie, Principal Governance Expert, OSGE.1 Team Members:
Jonathan Nyamukapa, Regional Financial Management Coordinator, ORPF.2/GHFO
Mosetsanagape Mabe-Koofhethile, Principal Procurement Specialist, ORPF.1/LRFO
Brenda Aluoch, Principal Legal Counsel, GECL.1
Sarah Holloway, Consultant Sector Manager: Jean-Luc Bernasconi, OSGE.1 Sector Director: Isaac Lobe Ndoumbe, OSGE Regional Director: Franck Perrault , ORWB Resident Representative: Margaret Kilo, LRFO
Peer Reviewers
Eshetu Legesse, Chief Financial Management Specialist (ORPF.2); Basil Jones, Principal Institutional Development Specialist (OSFU); Adam Amoumoun, Principal Governance Officer (OSGE.2); Achraf Tarsim, Senior Macro Economist (OSGE.1); Wiseman Vwala-Zikhole, Principal Disbursement Officer, (FFCO.3); Alain Pierre Mbonampeka, Country Program Officer (LRFO); Ismaila Ceesay, Lead PFM Specialist and Cluster Leader (World Bank); and Tammy Palmer, Economic Governance Officer (USAID)
Table of Contents
Currency Equivalents .............................................................................................................. ii Fiscal Year ................................................................................................................................ ii
Acronyms and Abbreviations ................................................................................................. ii Loan Information ....................................................................................................................iii Project Summary .................................................................................................................... iv Results Based Logical Framework ......................................................................................... v Project Timeframe ................................................................................................................. vii
I – STRATEGIC THRUST & RATIONALE ....................................................................... 1 1.1. Project linkages with country strategy and objectives ................................................... 1 1.2. Rationale for Bank’s involvement ................................................................................. 1 1.3. Donors coordination........................................................................................................ 4
II – PROJECT DESCRIPTION ............................................................................................. 5
2.1. Project design and components ....................................................................................... 5 2.2. Technical solution retained and other alternatives explored ........................................... 6 2.3. Project type ..................................................................................................................... 7 2.4. Project cost and financing arrangements ........................................................................ 8
2.5. Project’s target area and population .............................................................................. 10 2.6. Participatory process for project identification, design and implementation ............... 10
2.7. Bank Group experience, lessons reflected in project design ........................................ 10 2.8. Key performance indicators .......................................................................................... 12
III – PROJECT FEASIBILITY ........................................................................................... 13 3.1. Economic and financial performance ........................................................................... 13
3.2. Environmental and Social impacts ................................................................................ 13
IV – IMPLEMENTATION ................................................................................................... 14 4.1. Implementation arrangements ....................................................................................... 14 4.2. Monitoring .................................................................................................................... 16
4.3. Governance ................................................................................................................... 16 4.4. Sustainability................................................................................................................. 16
4.5. Risk management .......................................................................................................... 17 4.6. Knowledge building ...................................................................................................... 18
V – LEGAL INSTRUMENTS AND AUTHORITY ........................................................... 19 5.1 Legal instrument........................................................................................................... 19 5.2 Conditions associated with Bank’s intervention .......................................................... 19
5.3. Compliance with Bank Policies .................................................................................... 19
VI – RECOMMENDATION ................................................................................................ 19
Appendix I. Comparative Socio-Economic Indicators
Appendix II. Summary of ADB Portfolio in Liberia Appendix III. Map of Liberia Appendix IV. Summary of Public Expenditure and Financial Accountability (PEFA) 2012
Appendix V. Analytic Work and Underpinnings
i
LIST OF TABLES
Table 1 Donor coordination in Liberia
Table 2.1 Project components
Table 2.2 Comparison of funding modalities
Table 2.3a Project cost estimates by component and subcomponent
Table 2.3b Sources of financing
Table 2.3c Project cost by category of expenditure by component and subcomponent
Table 2.3d Expenditure schedule by year
Table 2.4 Lessons learned from previous operation and other analytical reports
Table 3 Implementation schedule
ii
Currency Equivalents As of 16th April 2012
UA 1 = 112.824 Liberian Dollars
UA 1 = 1.5333 US Dollars
Fiscal Year
1st July – 30
th June
Acronyms and Abbreviations
ADF African Development Fund
AfDB African Development Bank
ASYCUDA Automated System for Customs Data
CAG Comptroller and Accountant General
CoA Chart of Accounts
CPAR Country Procurement Assessment Review
CPPR Country Portfolio Performance Review
EGCSP
FSF
GAC
Economic Governance and Competitiveness Support Program
Fragile State Facility
General Auditing Commission
GOL Government of Liberia
HRMIS Human Resources Management Information System
IFMIS Integrated Financial Management Information System
IMF International Monetary Fund
IPFMRP Integrated Public Financial Management Reform Project
IPSAS International Public Sector Accounting Standards
ISP Institutional Support Project
JAS Joint Assistance Strategy
LBO Legislative Budget Office
MDAs Ministries, Departments and Agencies
MDTF Multi-Donor Trust Fund
MOF Ministry of Finance
MOU Memorandum of Understanding
MFF Macro Fiscal Framework
MTEF Medium Term Expenditure Framework
NSAs Non State Actors
PCR Project Completion Report
PEFA Public Expenditure and Financial Accountability
PEMFAR Public Expenditure Management and Financial Accountability Review
PFM Public Financial Management
PFMU Public Financial Management Unit
PIU Project Implementation Unit
PRS Poverty Reduction Strategy
RCU Reform Coordination Unit
SIDA Swedish International Development Agency
SIGTAS Standard Integrated Tax Administration System
SOE State Owned Enterprise
TA Technical Assistance
UA Unit of Account
USAID United States Agency for International Development
WB World Bank
iii
Loan Information
Client’s information
BORROWER: Government of Liberia
EXECUTING AGENCY: Ministry of Finance
Financing plan
Source Amount (UA) Instrument
FSF
3 million
Grant
IDA 3.2 million Credit
MDTF 12.4 million Grant
Government Nil In kind
TOTAL COST 18.6 million Grant and Credit
Timeframe - Main Milestones (expected)
Preparation February 2012
Concept Note approval March 2012
Appraisal April 2012
Project approval July 2012
Effectiveness August 2012
Mid-term Review June 2014
Completion June 2016
Last Disbursement December 2016
iv
Project Summary
Paragraph Topics covered
Project
Overview
Project name: Integrated Public Financial Management Reform Project (IPFMRP)
Expected Outputs: Government public financial management (PFM) capacity
strengthened; capacity of accountability and integrity institutions strengthened; the
quality and effectiveness of internal and external audit strengthened; and revenue
mobilization and administration capacity improved.
Implementation timeframe: 2012-2016
Project cost: UA 3.0 million (this represents the AfDB share of total program costs)
Project direct beneficiaries: The IPFMRP will strengthen the capacity of key
institutions involved in PFM including the Ministry of Finance (MOF), the General
Auditing Commission (GAC), Ministries and Agencies, State-Owned Enterprises
(SOE), the Legislature/Legislative Budget Office (LBO), and non-state actors (NSAs).
Innovation and best practice: This project represents an innovative approach for the
Bank by proposing a pooled funding arrangement to support a comprehensive
government program for PFM reform. This is an important step for the Bank in
embracing its commitment to agreements such as the Paris Declaration and to the
principles of effective engagement in fragile states.
Needs
Assessment
A comprehensive Public Financial Management Reform Strategy anchored in the
country’s Poverty Reduction Strategy (PRS) was formally approved by the
Government, through the PFM Steering Committee in December 2011. The strategy
seeks to widen and strengthen the foundations for PFM through concrete
improvements in selected systems, in a manner that would enable Liberia to gradually
develop its own institutional, organizational, and human resource capacities in the
medium term. The government, in partnership with development partners, has
implemented a wide range of PFM reforms covering aspects of policy, legislation,
institutional arrangements and PFM systems. However, recent assessments including
the 2012 PEFA identified a range of weaknesses. It is essential that the Bank
continues to support and consolidate the gains that have been attained in PFM.
Bank’s
Added Value
The proposed operation will build on the previous Bank supported reform and
capacity building efforts and complement other development partners’ projects. The
Bank added value derives from a number of factors: (i) experience gained in
implementing one Institutional Support Project (ISP) and two policy-based operations
whose lessons have been fed into the design of this project; (ii) the Bank’s experience
in public sector governance in fragile states will serve as a guide for implementation
of this program; and (iii) the Bank’s field presence will contribute to improved policy
dialogue on the ongoing PFM reforms and portfolio management. The Bank also has
the capacity to strengthen its interventions in Liberia through a blend of aid
instruments: budget support, technical assistance and capacity building, economic and
sector work, and leveraging resources from regional operations and initiatives (e.g. the
WAMZ payment system development project).
Knowledge
Management
The proposed operation will contribute to knowledge building in the area of PFM in
fragile states. Knowledge will be acquired through skills and knowledge transfer from
long and short term advisors and training providers to local counterparts and
institutions, supplemented by regional courses and study visits, development of
technical manuals and on the job support. The Bank will capture and disseminate
knowledge and experience through sharing the findings of regular supervision
missions, progress reports, PEFA report and the Project Completion Report. Lessons
learned and experience gained will therefore be available to inform future operations.
v
VII. Results Based Logical Framework
Country and Program Name: Liberia: Institutional Support Project for Integrated Public Financial Management Reform Project Purpose of the program: Improved budget coverage, fiscal policy management, financial control, and oversight of government finances
RESULTS CHAIN
PERFORMANCE INDICATORS MEANS OF
VERIFICATI
ON
RISKS/MITIGATION
MEASURES Indicator (including CSI)
Baseline Target
IMP
AC
T
Impact: Improved PFM performance leading to effective and efficient use of public resources as a basis for macroeconomic stability and improved delivery of public services
a. Percentage of government budget spent on priority sectors
1
b. Corruption perception index c. CPIA rating
a. Pro-poor spending 60% (2010) b. CPI score 3.2 (2011) c. CPIA score 3.72 (2011)
a. Pro-poor spending upheld at 65% by 2016 b. 3.7 (2016) c. 4.0 (2016)
PEFA report Transparency International report CPIA- AfDB
Risk # 1: Macroeconomic risk: Liberia’s vulnerability to macroeconomic shocks due to its dependence on imported food and fuel as well as on primary exports and foreign direct investment. Mitigation measures: Continued implementation of fiscal and monetary policy supported by IMF program, AfDB budget support operations and policy dialogue will help to monitor and mitigate risks. Risk # 2: Implementation capacity constraints: Weak institutional and human resources capacity could cause delays or hamper implementation Mitigation measures: This proposed support is based on a recent and realistic assessment of implementation capacity in general and a clearly sequenced PFM Reform Strategy. The program will provide additional project management capacity. Risk #3 Fiduciary Risks: Government has made notable progress in PFM, but there are still weaknesses in the fiduciary control environment. Mitigation measures: Government has put in place a PFM Act, and a PFM Reform Strategy that present a broadly credible program for improvement, supported by technical assistance from the Bank and other donors. Implementation of the Bank’s operation, fiduciary assessments and audit requirements will
OU
TCO
ME
Outcome: Improved fiscal discipline, and efficiency and effectiveness of public expenditure
Aggregate expenditure and revenue outurns compared with original approved budget
Effectiveness in collection of tax
Effectivess of payroll control and internal audit
Quality and timeliness of in-year budget reports and annual financial statements
Effectiveness of external and legislative scrutiny of external audit report
Baseline 2012 PI-1, & PI-3 score D PI-15 score D+ PI-18, & PI-21 score D+ PI-24, & PI-25 score D/D+ PI-27 & PI-28 score D/D+
Target 2016 All the selected PEFA scores improved to B/B+
MOF report
OU
TPU
TS
Output 1: Enhanced Budget Planning, and Credibility
Transition to medium term and policy based budgeting
Single year, line item budgets
MTEF based budget prepared for 2014
MOF reports
Output 2: Improved Budget Execution, Accounting and Reporting
a. IFMIS fully operational b. GOL producing fully IPSAS compliant financial statements (FS)
a. IFMIS rolled out at MOF b. No IPSAS compliant FS
a. IFMIS rolled out to all MDAs by 2015 b. IPSAS compliant Financial statements prepared within 3 months of year end by 2016
PFM progress reports & Supervision Mission reports
Output 3: Improved Revenue administration capacity
a. Coverage of ASYCUDA++ b. Revenue Authority fully established
a. 1 port has ASYCUDA++ b. Draft Revenue Authority bill
b. ASYCUDA ++ operational in all ports by 2015 b. Liberia Revenue Authority established by 2013
PFM progress reports & Supervision mission reports
1The priority sectors for support are health, education, governance and private sector development/economic growth
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Output 4: Improved budget transparency and accountability
a. Number of operational internal audit units and committees b. Scope of External audit coverage across GOL c. Legislative Budget Office effectively supporting oversight
a. 1 Internal Audit Unit in the MOF b. Not all MDAs audited and 2 years of audit backlog c. 3 months delays in budget approval
a. Internal audit Units & Committees established in 50% of Ministries and Agencies by 2015. b. Full external audit reports published, and no audit backlog by 2015 c. Budget approved by July 2014
PFM progress reports, Audit Reports and Supervision mission reports
provide specific safeguards. Risk 4: Corruption: Many aspects of political and governance arrangements undermine good governance. Weak internal controls and limited procurement and PFM capacity increase the risk of conflict of interest, bribery, and patronage. Mitigation measures: include: on-going efforts to strengthen the Liberia Anti-corruption Commission, the Public Procurement and
Concessions Commission, the
deployment of 16 competent auditors to high spending entities, and the enacting of the 2009 PFM Act and the 2010 Freedom of Information Act. Risks in PFM are mitigated by internal controls in IT-based PFM systems, the strengthening of the internal and external audit functions, and undertaking procurement compliance audit.
Output 5: Improved project management and PFM capacity building
Number of staff with recognized PFM qualification.
30 qualified PFM graduates
155 qualified staff (of which 22 female) in procurement, financial management and audit by 2015 90% of women professionals in PFM benefitted from the training and capacity building activities
PFM progress reports and Supervision mission report
KEY
AC
TIV
ITIE
S
ACTIVITIES INPUTS
Technical assistance in all technical areas outlined above
Short term training and professional development programs for PFM staff
Establishment of partnership and service delivery arrangements with local training providers and regional institutions
Purchase of IT equipment & production of technical, guidance and training manuals
Renovation of essential buildings and facilities
ADF/FSF : UA 3 million
Other donors: UA 15.62 million (WB, SIDA and USAID)
Implementation support supervision missions
Note: This logframe is based on the overall IPFMRP. The AfBD project outlined in this document will co-finance the project.
vii
Project Timeframe
YEARS 2012/13 2013/14 2014/15 2015/16 Action by
Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
ACTVITIES
Project life cycle
Grant approval
AfDB
Effectiveness
GOL
Launching workshop
AfDB & GOL
Joint supervision and monitoring
AfDB
Mid-term review
AfDB
Disbursement of funds
AfDB
Submission of annual audit
reports GOL
AfDB Project completion report
AfDB
All Components
General Procurement Notice
published GOL
Procurement of goods, and
technical assistances GOL
Provision of training GOL
Submission of progress reports GOL
PEFA Updates GOL
GOL
1
REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARDS OF DIRECTORS
ON A PROPOSED GRANT TO LIBERIA FOR AN INSTITUTIONAL SUPPORT
FOR THE INTEGRATED PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT
Management submits the following Report and Recommendation on a proposed grant for UA 3.0
million from the Fragile State Facility for ADF-12 to finance the Institutional Support for the
Integrated Public Financial Management Reform Project (IPFMRP).
I – STRATEGIC THRUST & RATIONALE
1.1. Project linkages with country strategy and objectives
1.1.1 The proposed operation is firmly anchored in the objective and structure of the
country’s second Poverty Reduction Strategy (PRS, 2012-2017), known as Agenda for
Transformation through Action, in particular Pillar IV - Governance and Public Institutions,
which recognizes the fact that sound public financial management is crucial to achieve the
overarching goal and long-term national vision, Liberia RISING 2030. The strategy will guide
development activities in Liberia and focuses on key investments in infrastructure, people and
institutions. The rationale for the proposed operation is also aligned to the government led Public
Financial Management Reform Strategy and Action Plan (2011-2014). The Strategy provides a
comprehensive framework on which to base further development assistance to ensure that the
interventions are coordinated, and aligned with Government of Liberia’s (GOL) priorities.
1.1.2 The proposed operation is consistent with the Joint Assistance Strategy (JAS) 2008-
2011 (extended to December 2012) priorities, and contributes towards: Pillar I “Rebuilding
core state functions and institutions” and Outcome – 1 “improving efficiency of budget preparation
and execution and enhanced revenue administration”. It is also consistent with the Bank’s Medium
Term Strategy 2008-2012 and its Governance Strategic Direction and Action Plan (GAP, 2008-
2012) which promotes support to building capable and responsive states by strengthening
transparency and accountability in the management of public resources. The project is in line with
the ADF-12 operational priorities and the Strategy for Enhanced Engagement in Fragile States, all
of which emphasise promoting good financial and economic governance through the deepening of
PFM reform and capacity building. It also proposes an innovative approach to engagement in a
fragile state by supporting a pooled funding arrangement within a comprehensive, government led
reform program, in line with the Bank’s commitment to the Paris Declaration.
1.2. Rationale for Bank’s involvement
1.2.1 Developing and sustaining human capital remains a great challenge. The prolonged
conflict had a devastating effect on the human capital of Liberia, with many of the most qualified
and experienced persons leaving the country. It is evident that the key institutions of government
are critically short of the necessary skilled and qualified professionals to give the basis for strong
and effective government. A human resource training needs analysis funded by the Bank2 under the
first Institutional Support Project (ISP) has identified critical skill gaps in public finance. Much has
been done to support human capacity building efforts under previous reform projects, but this is a
medium term undertaking, and sustained support for this work is still required. A capacity building
implementation framework is developed to support directly Liberia’s PFM reform and capacity
buiding strategy. The program plans to contribute towards developing organizational and human
capacity in Liberia.
2 Training Need Assessment and Staff Training Plan prepared by FJP Development and Management Consultants (2011)
2
1.2.2 Notwithstanding the difficulties mentioned above, the government, in partnership
with multilateral and bilateral development partners, has implemented a wide range of PFM
reforms covering aspects of policy, legislation, and institutional arrangements and systems.
There have been improvements in the quality of Liberia’s fiscal institutions and the GOL has made
steady progress in PFM reforms over the past few years, (including adoption of a PFM Act, launch
of an Integrated Financial Management Information System (IFMIS) in MOF, signficant
organisational restructuring in MOF, adoption of an internal audit strategy and achievement of
HIPC completion point), showing that the government is firmly committed to governance reform
over the medium to long term. These reforms have sought to restore working conditions of PFM
systems and to initiate their modernization to enable Government to better implement its poverty
reduction and development strategies. The proposed operation will enable the Bank to remain
engaged, and consolidate PFM reform in Liberia.
1.2.3 The project will build on the achievement of the Bank’s first ISP3, and consolidate the
Bank’s support to Liberia’s PFM Reform Strategy and Action Plan. Since the launch of the
first ISP, commendable progress has been registered in a number of areas, including: (i) Country
PFM systems have been significantly strengthened; (ii) project management processes are
improving, and (iii) there are plans to use theIFMIS for all government expenditure regardless of
source of funds. However, there is no doubt that many challenges remain, primarily in continuing
the process of capacity development and strengthening PFM on a sustainable basis. The Project
Completion Report (PCR) of the first ISP noted that in order to sustain reform and build on the
gains from the previous projects, Bank support to PFM reform needs to continue its support in line
with Good Practice4 in supporting PFM. The program will provide support in the same technical
areas of PFM reform as the previous operation in order to provide continuity in the reform process
and consolidate earlier gains.
1.2.4 The proposed operation also complements the ongoing policy-based operation, the
Economic Governance and Competitiveness Support Program (EGCSP, 2011-2013)5. The
EGCSP supports institutional reform in the areas of customs administration, business enabling
environment, financial transparency and accountability, and extractive industry governance. The
proposed operation complements the EGCSP through building the capacity of key institutions
including Internal Audit, General Audit Commission (GAC), Legislative Budget Office (LBO) and
Non-State Actors (NSAs) to enhance external oversight and accountability which is critical for the
delivery of the reform program under the EGCSP.
3 Institutional Support Project for Governance, Economic Management, and Poverty Reduction Approved by the Board
of Directors on 27th
October 2006, Ref. ADF/BD/WP/2006/97 4 Includes support to: (i) a country-led PFM reform strategy and action plan; (ii) a more coordinated approach; and (iii)
a shared information pool with a framework for measuring results. 5 Approved by the Board of Directors on 21
st June 2011, Ref: ADF/BD/WP/2011/59.
3
1.2.5 The proposed operation has been guided by various analytical and diagnostic reports
as well as consultations during the project preparation and appraisal missions. The analytical
underpinning for the design of the operation is provided by the 2008 Public Expenditure
Management and Financial Accountability Review (PEMFAR), the draft 2012 Public Expenditure
and Financial Accountability Asssessment (PEFA), the annual PFM reform progress reports, the
IMF technical assessment report, the USAID PFM assessment report, OPEV Evaluation Report
(Joint PFM Evaluation and Bank’s Assistance to Fragile States), OECD Report on International
Engagement in Fragile States (2011), the JAS mid-term Review and Country Portfolio Assessment
(2010), and the PCR for ISP I. The main conclusions and recommendations are summarised in
Technical Annex B1.
4
1.2.6 Recent PFM performance assessments and analytical reports identified a range of
weaknesses in Liberia’s PFM systems, which are the basis to design and prioritise
interventions under this project. The key challenges are summarized in Box. The IPFMRP has
been designed to ensure that all of the key challenges are addressed through the various project
components.
1.2.7 The operation will help intensify and sustain reform efforts in Liberia. To realize the
gains that have occurred and to address the weakness and challenges in PFM, the Liberian
authorities, along with development partners have adopted a comprehensive PFM Reform Strategy.
The strategy seeks to widen and strengthen the foundation of public financial management through
concrete improvements in selected systems, in a manner that would enable Liberia to gradually
develop its own institutional, organizational, and human resource capacities in the medium term.
The proposed operation will contribute to effective implementation of the strategy and addresses the
identified weaknesses in the PFM systems.
1.3. Donors coordination
1.3.1 Donor support to Liberia is coordinated by the Ministry of Finance. A significant
number of development partners currently provide assistance to Liberia. Aid flows to Liberia are
channelled through four modalities: Budget Support, Pooled Funding, Liberia Reconstruction Trust
Fund, and Project Support. GOL is committed to improving the effectiveness of aid, by moving
from project financing to coordinated donor financing through a much clearer institutional
arrangement for aid coordination and integration of donor funds into the GOL budget. In this regard
a draft aid policy was developed in September 2011 with the aim of improving effectiveness of aid
and providing guidance on mobilisation of high quality aid, and mechanisms for dialogue, and
mutual accountability.
1.3.2 There is now a strong basis for improved donor coordination for PFM reform. Support
from development partners to PFM reform process has, until recently, been provided through
bilateral initiatives which resulted in problems with coordination, funding gaps and overlapping of
donor support for certain reform activities. The recent joint evaluation of PFM reform in Africa
(OPEV 2011), identified the urgent need to move to more harmonized and coordinated donor
support to PFM reform. The evaluation of Fragile State Facility (OPEV, 2012) also recommends
investing in existing donor coordination and promote more concerted, harmonised and coordinated
international efforts. GOL has developed the framework for this to happen through the Reform
Coordination Unit (RCU). The adoption of the PFM Reform Strategy, and the associated IPFMRP
as well as the PFM Operational Manual have markedly improved the framework for donor
coordination in Liberia.
1.3.3 The Ministry of Finance requested donors to harmonize and align their support to
IPFMRP. Two key donors (USAID and SIDA) have entered into a World Bank Trust Fund
arrangement to support IPFMRP, and the AfDB is expected to co-finance the program through a
pooled funding arrangement. The contributions of the various partners are shown in Table 2.2b. A
partnership and cooperation agreement is being developed to better coordinate support to the
IPFMRP. Complementarity between the development partners will be achieved through the PFM
Working Group, and common implementation arrangements. This project proposes an innovative
approach for the Bank by using a pooled funding arrangement, whereby individual donor funds are
not specifically ring-fenced to support any particular project component. This is an important step
for the Bank in embracing its commitment to the Paris Declaration and the principles of effective
engagement in fragile states.
5
II – PROJECT DESCRIPTION
2.1. Project design and components
2.1.1 Project objectives: The overarching goal of the project is “Improved budget coverage,
fiscal policy management, financial control, and oversight of government finances in Liberia”.
Through strengthened institutional capacity for the delivery of effective PFM and oversight, the
government will be able to expand and deepen the scope of reforms to reduce corruption, improve
service delivery, and thereby reduce poverty.
2.1.2 Project Components: The project supports has five components which are mutually
reinforcing: (i) enhancing budget planning and credibility, (ii) strengthening budget execution,
accounting and reporting; (iii) strengthening revenue administration; (iv) enhancing transparency
and accountability; and (v) project management and capacity building. The major activities under
each component are summarized in Table 2.1 below.
Table 2.1 : Project components Components Component description
Component 1: Enhancing Budget Planning, and Credibility
Training in macroeconomic modeling, financial programming and revenue forecasting
Technical support to the medium-term expenditure framework (MTEF)
Support for strengthening planning and budget preparation processes
Technical support in establishing a fiscal monitoring framework for SOEs
Provision of computers, and accessories and vehicles.
Component 2: Strengthening Budget Execution, Accounting and Reporting
Technical support to continue strengthening the PFM legal framework
Technical support for the roll-out of the Free Balance-based budget preparation, execution, and fiscal reporting modules of the IFMIS
Support to build capacity in implementing guidelines for producing IPSAS Cash Standard financial statements
Design of the budgeting, accounting, and reporting tools within IFMIS
Training the staff of the Public Financial Management Unit (PFMU) in the CAG Accounting Services Unit on the implementation of project accounting, and establishing County Treasuries
Component 3: Strengthening Revenue Administration
Training on customs administration
Technical Assistance (TA) for implementation of Single Integrated Tax Administration System (SIGTAS) roll-out and training
Establishment of a Revenue Authority
Procurement of hardware and related software
Component 4: Enhancing Transparency and Accountability
TA support, training and provision of essential equipment to strengthen the Public Procurement and Concessions Commission
TA support for establishing the Internal Audit Governance Board and Secretariat, and internal audit operational tools and manuals
Training of internal auditors across MDAs
Short-term training and certification for GAC staff/external auditors
Provision of logistical support to facilitate the work of the LBO and the legislative committees
Training and seminars on budget analysis for LBO
Provision of grants to NSAs to build their capacity in the analysis and monitoring of budget preparation, approval, and execution
Component 5: Project Management and capacity building
In-service and specialized training programs in PFM, and procurement
Hiring an international procurement specialist to build procurement capacity
Design of a career path for PFM staff and associated training
Support to monitor, evaluate, and review progress on all components
2.1.3 The IPFMRP is based directly on the stated objectives and priorities of GOL as
expressed in the medium term PFM Reform Strategy. The approach has been designed to cover
all the main elements of the PFM framework, in some cases, to complete on-going reforms (e.g. the
full implementation and roll out of the IFMIS) and in other cases to build capacity in critical
functions, such as internal and external audit. The main activities of the program are focused on
6
building stronger PFM systems and capacity building and transfer of knowledge through (i)
technical assistance to train staff in their respective areas with key counterpart staff identified; (ii)
on the job training; (iii) local, regional and limited overseas training focused on a few key areas
which are essential for the development of high level technical qualifications and strong analytical
skills; (iv) provision of essential equipment and facilities and (v) professional development
programs in the PFM Training School.
2.1.4 The project directly addresses the identified weaknesses in the PFM systems in a
coordinated and properly phased approach. The project design includes specific activities to
address the problems and challenges identified in the PEMFAR and PEFA reports. Further
consideration of the specific weaknesses being addressed and the challenges in each of the project
components is summarised in Technical Annex B2.
2.2. Technical solution retained and other alternatives explored
2.2.1 During AfDB project preparation and appraisal, several options were explored regarding
the areas of intervention, the number of institutions/beneficiaries to support, and the modality of the
capacity building to be provided. In terms of the project implementation approach and types of
support to be provided, taking into account the lessons learned and recommendations from various
analytical reports as well as the PCR for ISP I, it was agreed that in order to realize the gains that
have occurred from the previous Bank projects, Bank intervention would need to continue to focus
on institutional capacity building with a greater focus on: (a) ensuring sustainability and improved
coordination with other development partners, and (b) strengthening the supply and demand side of
governance. This will require strengthening the PFM institutions (e.g. key departments in the
MOF), and accountability institutions such as external audit, the Legislature, and support to the civil
society and social accountability initiative.
2.2.2 In terms of the funding modality, previous ISP support has been provided through stand-
alone, bi-lateral operations in specific areas of the PFM reform agenda. However, it is clear that
operating in this way, the Bank and other development partners were creating excessive and
distracting burdens on GOL as a direct unintended consequence of increasing levels of donor
assistance. The Project Implementation Unit (PIU) used for the first ISP had only three projects at
the time the ISP was launched but by the end of the project, the Unit was providing administrative
and financial management support to 53 projects with a combined value of over US$ 500 million.
Due to donor requirements, all these projects were being provided with financial management and
procurement support outside government systems. In an environment where capacity is weak, this
was a huge distraction to the efforts of the small numbers of staff with financial management
expertise from the essential function of good PFM. In view of this, the proposed operation has
adopted a common implementation arrangement including use of the existing Reform Coordination
Unit in the MOF as opposed to a parallel PIU to minimise transaction costs and improve
development effectiveness.
2.2.3 To attempt 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 have led
the way in the development of a multi-donor support program to the IPFMRP, on which this
proposed operation is based. Two key donors (USAID and SIDA) have already entered into a
World Bank Trust Fund arrangement to support IPFMRP. Consistent with the Bank’s commitment
to provide a coordinated and harmonised donor support to PFM reform, the proposed operation will
co-finance the IPFMRP through a pooled funding arrangement. The relative advantages and
disadvantages of different funding modalities are summarised in Table 2.2 below.
7
Table 2.2 Comparison of funding modalities MODALITY ADVANTAGES DISADVANTAGES
Option 1
Stand alone Grant
funds direct to GOL
via a Special Account
High degree of control and
accountability for funds provided
Will use tried and tested disbursement,
supervision, financial management and
procurement processes
Will create significant administrative
burdens for the GOL
May lead to weakened coordination and
synergy within the overall reform
program
Not in line with current good practice in
donor harmonization and maximizing
aid effectiveness in fragile states
Option 2
Pooled funding
arrangement aligned
with Trust Fund
Totally in line with current good donor
practice
Substantially reduced administrative
burden on GOL
Will provide greater assurance to GOL
that key parts of the PFM reform
program will be funded
Supports effective coordination of the
reform program and common
approaches to implementation
Would still provide a high level of
control over the use of project funds
Somewhat reduced level of direct
control over targeting and accountability
for use of funds although AfDB would
be a key player in the joint donor group
2.2.4 The proposed operation adopts a comprehensive approach to capacity building that would
enhance the state building agenda through promoting the use of of country systems and
strengthening state and non-state actors. The project promotes the use of country systems, in
particular migration of donor funded projects into the GOL budget, and a single reform agenda
with clear performance targets to mitigate the risk that external assistance can do harm. As one of
the largest donors in Liberia and a signatory to the Paris Declaration, it is recommended that AfDB
enter into this pooled funding arrangement. Such an arrangement will provide GOL with the
assurance that it has the funds to pursue what is a comprehensive and challenging PFM reform
agenda (thereby maximising the benefit of the AfDB investment). It will also enable GOL to
allocate funds in line with their own needs and priorities, rather than being driven by development
partner priorities. This approach, whilst innovative for the Bank is consistent with the Banks’
endorsement of the Paris Declaration, the recommendations of recent OPEV evaluations and OECD
report on aid effectiveness in fragile states. A Memorandum of Understanding (MOU) is being
developed to coordinate support to PFM reform in Liberia (Technical Annex C2).
2.3. Project type
2.3.1 This is an innovative institutional support project in terms of effectively
implementing the Bank’s commitment to development effectiveness. Innovation comes from the
proposed funding modality, which will provide funds through a pooled funding arrangement. This
approach has not been used by the Bank before, so we have drawn on the extensive experience of
our co-financiers in ensuring that project design, governance and reporting arrangements will
provide sufficient safeguards to support effective use of the Bank’s financial contribution. This type
of operation was selected in order to provide a coordinated support to country-led PFM reform and
capacity building program and consolidate gains from earlier Bank support. The proposed operation
is entirely complementary to, and based upon support being provided by other donors in pursuit of
the objectives set out in the GOL medium term PFM Reform Strategy 2011-15. It will deliver
improved capacity and institutional development through a range of interventions including the
provision of specialist technical assistance, basic and specialised training in PFM and procurement,
support to development of new working systems and procedures, use of Information Technology
(IT) to strengthen public financial governance, and twining arrangements with and experience
8
sharing visits to peer institutions in the region. A capacity building implementation framework has
been developed to guide and coordinate all interventions under this project.
2.4. Project cost and financing arrangements
2.4.1 The total cost of the whole IPFMRP (including taxes and duties) is estimated at UA 18.62
million. A price contingency of 5% and physical contingencies of 3% have been factored into the
project cost. Details of the full project cost are presented in the Technical Annex B2.
2.4.2 The Bank will finance 16.1% or UA 3 million of the project cost using the Fragile State
Facility, and the remaining 84% or UA 15.62 million will be financed by the World Bank, USAID,
and SIDA. The Government will not be required to provide any financial contribution but will be
responsible for the provision of office accommodation and associated utilities. Annex C1 provides
justification of request for waiver of counterpart contribution and finance taxes and duties
associated with the project implementation in line with the Bank’s Policy on Eligible Expenditures .
2.4.3 The estimated project cost by component and subcomponents, source of finance, category
and schedule of expenditures are summarised in Tables 2.3a, b, c, and d below.
Table 2.3a: Project cost estimates by component and subcomponent
Component (US$ ‘000) (UA ‘000)
1. Enhancing Budget Planning, Coverage and Credibility
1.1 Macro-Fiscal Framework 355 232
1.2 Fiscal Reporting and Fiscal Policy Review 292 190
1.3 Enhanced Budget Frameworks 1,191 777
Subtotal Component 1 1,838 1,199
2. Strengthening Budget Execution, Accounting and Reporting
2.1 Revision of PFM Legal Framework 50 33
2.2 IFMIS Roll Out to MDAs 8,220 5,361
2.3 Strengthening Financial Standards, Accounting and Reporting 40 26
2.4 Treasury/Cash, Debt and Aid Management 614 400
2.5 Establishment of County Treasuries 494 322
2.6 Donor Project FM Integration into Country Systems 840 548
Subtotal Component 2 10,258 6,690
3. Strengthening Revenue Administration
3.1 Capacity Building of Customs Operations 200 130
3.2 Tax Automation (SIGTAS) 4,218 2,751
3.3 Establishment of Revenue Authority 960 626
Subtotal Component 3 5,378 3,507
4. Enhancing Transparency and Accountability
4.1 Public Procurement 313 204
4.2 Internal Audit 1,555 1,014
4.3 External Audit 3,235 2,110
4.4 Legislative Oversight 630 411
4.5 Civil Society and Social Accountability 500 326
Subtotal Component 4 6,233 4,065
5. Project Management and capacity building
5.1 Program Coordination 645 421
5.2 Institutional and Capacity Building 3,165 2,064
5.3 Monitoring and Evaluation and Change Management 462 301
5.4 Project Fiduciary/Audit 572 373
Subtotal Component 5 4,844 3,159
TOTAL PROGRAM COSTS 28,550 18,620 Note: Exchange Rates 1UA= 1.533 USD
9
Table 2.3b: Sources of financing
Sources of Financing Total (US$ ‘000) Total (UA ‘000) Percentage
ADF Grant 4,600 3000 16.1%
World Bank 5,000 3261 17.5%
SIDA 15,100 9848 52.9%
USAID 3,850 2511 13.5%
Total 28,550 18620 100%
Table 2.2c: Project cost by category of expenditure
*All figures includes price and physical contingencies
Table 2.3d: Project Expenditure Schedule
Components UA ‘000 US$ ‘000 Total
US$ ‘000 2012/13 2013/14 2014/15 2015/16 Total 2012/13 2013/14 2014/15 2015/16
1. Enhancing Budget Planning, Coverage and Credibility
1.1 Macro-Fiscal Framework 0 130 88 14 232 0 199 135 21 355 1.2 Fiscal Reporting and Fiscal
Policy Review 18 73 50 50 190 28 112 76 76 292
1.3 Enhanced Budget
Frameworks 8 386 370 13 777 12 592 567 20 1191
Subtotal Component 1 26 589 507 76 1199 40 903 778 117 1838
2. Strengthening Budget Execution, Accounting and Reporting 2.1 Revision of PFM Legal
Framework 33 0 0 0 33 50 0 0 0 50
2.2 IFMIS Roll Out to MDA 2255 1400 1049 659 5362 3457 2146 1608 1010 8221 2.3 Strengthening Financial
Standards, Accounting and
Reporting 26 0 0 0 26 40 0 0 0 40
2.4 Treasury/Cash, Debt and Aid
Management 372 29 0 0 400 570 44 0 0 614
2.5 Establishment of County
Treasuries 27 117 100 79 322 41 179 153 121 494
2.6 Donor Project FM
Integration into Country Systems 83 119 181 164 548 128 182 278 252 840
Subtotal Component 2 2795 1664 1330 902 6691 4286 2551 2039 1383 10259
3. Strengthening Revenue Administration
3.1 Customs Operations 42 89 0 0 130 64 136 0 0 200
3.2 Tax Automation 860 871 553 467 2751 1319 1335 848 716 4218
3.3 Revenue Authority 138 398 90 0 626 212 610 138 0 960
Subtotal Component 3 1040 1357 643 467 3507 1595 2081 986 716 5378
4. Enhancing Transparency and Accountability
4.1 Public Procurement 7 93 65 39 204 7 143 100 60 313
4.2 Internal Audit 282 508 97 128 1015 282 779 148 196 1556
4.3 External Audit 238 818 357 697 2110 238 1255 547 1069 3236
4.4 Legislative Oversight 104 126 93 89 412 104 193 143 136 632 4.5 Civil Society and Social
Accountability 6 102 102 117 327 6 156 156 180 501
Subtotal Component 4 637 1647 713 1070 327 637 2526 1094 1641 6238
5. Project Management
5.1 Program Coordination 182 93 78 68 421 279 143 119 104 645 5.2 Institutional Capacity
Building 550 370 553 592 2065 843 568 848 908 3167
5.3 Monitoring & Evaluation and
Change Management 133 56 56 56 301 204 86 86 86 462
5.4 Project Fiduciary/ Audit 115 86 86 86 373 176 132 132 132 572
Subtotal Component 5 980 606 773 802 3160 1502 929 1185 1230 4846
Total Program Cost 5478 5863 3967 3318 18620 8400 8990 6082 5087 28550 *All figures includes price and physical contingencies
Category of Expenditure Total (US$ ‘000) Total (UA ‘000) Percentage %
A. Works 1,295 845 4.5%
B. Goods 8,564 5585 30%
C. Services 12,764 8324 44.5%
D. Operating cost 5,927 3866 21%
TOTAL PROGRAM COSTS 28,550 18,620 100%
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2.5. Project’s target area and population
2.5.1 The beneficiaries will include: the, Comptroller and Accountant General’s Department,
Revenue Departments, Budget Department, PFM Reform Coordination Unit, Aid Management
Unit, Debt Management Unit, and Macro-Fiscal Unit, the General Auditing Commission, Internal
Audit Secretariat, the Ways and Means Committee, the Legislative Budget Office and the Public
Accounts Committee, State Owned Enterprises, and the Public Procurement and Concessions
Commission. Minstries and Agencies, Non-state Actors and CSOs will also be key stakeholders and
beneficiaries of the reforms supported under the program.
2.6. Participatory process for project identification, design and implementation
2.6.1 The preparation and appraisal missions held discussions with high level officials and
potential beneficiaries. Discussions were also held with other key development partners to ensure
consistency and coordination with other development initiatives. The proposed operation is based
on the Government’s medium term PFM Reform Strategy and action plan which was prepared
through a broad participatory process, which involved consultation with a range of actors including
Ministries and Agencies, civil society organizations, parliamentary committees and development
partners. To contribute to better donor coordination, the Bank’s missions were timed to coincide
with the World Bank appraisal mission in November 2011, and PEFA mission in April 2012.
2.6.2 During implementation, the institutional mechanisms and project activities (such as the
work with non-state actors and the support for the Legislature) provide opportunities to share
progress and lessons with a wider audience and seek feedback on results. The GOL has
demonstrated their high level of support for this project through their commitment to coordinate and
implement a multi-donor support program to the IPFMRP.
2.7. Bank group experience, lessons reflected in project design
2.7.1 The performance of the Bank Group portfolio in Liberia is broadly satisfactory. Currently there are ten (10) on-going operations in the Bank Group portfolio in Liberia (including
the multinational WAMZ project) with a total approved amount of UA 106.3 million6. The average
project size is UA 11.2 million, the average age is two years and three months with a cumulative
average disbursement rate of 29%. The delay between approval and effectiveness of first
disbursement is 11 months and 10 days. In May 2012, the country’s portfolio performance showed
an overall rating of 2.53%, Implementation Progress rating of 2.61 and Development Objective
rating of 2.45. The establishment of the Liberia Field Office continues to enhance dialogue and
improve the quality of portfolio management and donor coordination.
2.7.2 The Bank’s support under the previous ISP was generally regarded as effective. The
Bank has approved one ISP in the area of governance. This project “The Institutional Support
Project for Economic Management and Good Governance” (ISP I) was in response to the urgent
need to rebuild key institutions of governance after the end of the civil war. Despite significant
delays in project implementation, project overall performance was strong. Evidence from thePCR
shows the project made tangible contributions to increasing capacity and developing sustainable
foundations for further strengthening of PFM systems and performance. It has helped to address
critical skill gaps and improve the performance of PFM functions in macroeconomic and fiscal
analysis, revenue administration, and timely budget preparation and execution. A summary of the
major achievements and lessons learned from the previous operation is attached in Technical Annex
B1.
6 Infrastructure (mainly Water and Sanitation) accounts for 25%, Multi-sector (32%), Social Sector (19%), Agriculture
(15%), multinational (5%), and Private Sector (4%).
11
2.7.3 The design of this proposed project has benefitted from the experience and lessons
from the previous operation, review of numerous analytical reports7, and discussions with the
development partners. The lessons learned are summarized in Table 2.3 below. It also takes into
account lessons learned from Bank experience in similar PFM and ISP projects in other countries.
Analysis of Bank experience is outlined in Technical Annex B1 and serves to add strength to the
messages summarised below.
Table 2.4: Lessons learned from previous operation and other analytical reports
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 GOL) PFM
reform strategy and action plan which includes detailed
work plans taking account of both technical and human
resource requirements and limitations. New arrangements
have recently been established including a central Reform
Coordination Unit staffed with high level technical
expertise. Project design also provides funding for a
procurement expert.
The importance of strong coordination arrangements
for PFM reform: Fragmented donor interventions and
project management requirements have placed a huge
burden on extremely scarce GOL resources and diverted
very limited PFM expertise to servicing donor
requirements as opposed to leading the reform agenda. It
is widely acknowledged that future support to GOL
should be provided in a way that harmonizes and
coordinates all interventions and allows GOL to focus
PFM resources on reforms and internal needs, rather
than meeting donor requirements.
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 group and GOL. This
will greatly reduce the reporting and project management
burden on government. The Liberia Field Office will
enhance further country dialogue and donor coordination.
Scope of Bank supervision and measuring results -
the focus of supervision is compliance with
procurement, disbursement timetables and Bank
conditions. There is a limited focus on the measurement
of results.
The RCU will be providing regular progress reports
against the indicators and targets. A common result
measurement framework and implementation support
supervision mission has been developed to reduce the
administrative burden on GOL and make reporting against
performance and results much more comprehensive and
streamlined.
The current piecemeal approach to capacity
development and separate donor funding and
reporting arrangements creates unacceptable
administrative burdens on limited PFM capacity in
fragile states (OECD, 2011)
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
minimise the burden of multiple reporting and monitoring
arrangements and reduces the risk of uncoordinated
interventions..
The joint evaluation of African PFM reforms identified
what factors – institutional and contextual – contribute
to successful PFM reform and how donors can best
support PFM reform given the influence of contextual
factors on the process of change. One of the key
messages is that donors should align support as
closely as possible to the Government programme
and avoid pursuing independent initiatives.
Externally financed support to PFM reform was most
efficient and effective, when it directly financed, or
supported through technical assistance, and interventions
identified explicitly within the Government PFM reform
program.
This program is directly aligned with the GOL PRS and
the integrated PFM Reform Strategy. It is designed around
the needs and priorities identified by GOL through an
extensive, review, consultation and planning exercise. As
one of the largest donors in Liberia and a signatory to the
Paris Declaration, the proposed operation will be delivered
through a pooled funding arrangement.
7 This includes: (a) the AfDB Portfolio Performance Review, March 2011, (b) the ISP I project completion report, November 2011,
(c) joint evaluation of PFM reform, 2011, and (d) the OECD report on International Engagement in Fragile States, 2011
12
Evaluation of the Bank’s Assistance to Fragiles
States recommended that the Bank should practice
and promote more concerted, harmonised and
coordinated international efforts. It should also invest
more effort in existing donor coordination framework
(OPEV, 2012)
The proposed operation has adopted a coordinated
approach to support a country-led PFM reform agenda..
The Bank has made efforts to promote a coordinated and
harmonised implementation and management arrangement
building on the existing partnership framework with
development partners in Liberia.
PFM reform programmes should attend to the
basics, build on existing systems, sequence the
approach, and aim for simplicity: Pre-packaged
reform programmes should be avoided as interventions
need to be adapted to existing capacities, however weak
they may be.
The operation builds on reform efforts that have been
achieved so far and on ongoing interventions in a
sequenced and phased manner, consistent with the newly
designed PFM Reform Strategy document, to avoid reform
overload.8 This is necessary particularly in the light of low
capacity within the civil service.
2.8. Key performance indicators
2.8.1 The key performance indicators are set out in the Results based logframe. The achievement
of the program’s overall development objectives will be measured by the following key outcome
indicators, based around the PEFA assessment framework:
(i) Budget, credibility, coverage and policy-based budgeting:
Improved aggregate expenditure outturn compared with approved budget (PEFA PI-
1)
Extent of Unreported Government Operations (PEFA PI-7)
Multi-year perspective in fiscal planning, expenditure policy and budgeting (PEFA
PI-12)
(ii) Predictability and control in budget execution:
Effectiveness in collection of tax payment (PEFA PI-15)
Effectiveness of payroll controls (PEFA PI-18)
Competition, value for money and control in procurement (PEFA PI-19)
Effectiveness of non-salary controls (PEFA PI-20)
Effectiveness of internal audit (PEFA pi-21)
(iii) Accounting, recording and reporting:
Quality and timeliness of annual financial statements (PEFA PI-25).
(iv) External audit and legislative scrutiny:
Scope, nature, and follow-up of external audit (PEFA PI-26)
Extent of legislative scrutiny of annual audit reports (PEFA PI-28)
2.8.2 Progress will be measured on a regular basis through a variety of means including: regular
Bank supervision missions, submission of Quarterly Progress Reports, review of specific outputs
such as audit reports, and Minutes of meetings from theRCU, which will also be an important
vehicle for donor coordination across the whole PFM Reform Strategy. Objectively verifiable
evidence of progress against meeting the higher level targets will be obtained from IMF Mission
Reports, and governance indicators.
2.8.3 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.
8 The strategy has been developed by the MoF in close collaboration with the IMF and the WB, taking into account the
specific circumstances of Liberia and its fragility.
13
The RCU will provide inputs to this process where targets are directly linked to the broader PFM
reform strategy which they are responsible for monitoring.
III – PROJECT FEASIBILITY
3.1. Economic and financial performance
3.1.1 The economic and financial benefits from the project should be significant.
Identifying and quantifying the direct and indirect economic and financial benefits of capacity
building interventions is not straightforward. It is difficult to carry out rigorous cost-benefit and
financial analysis. While the costs are quantifiable (see section 2.4), the benefits are indirect, and
ultimately seen in improved public financial governance, service delivery and better performance of
the public financial management institutions. 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 program will follow from
improved budget credibility, strengthened budget execution, better 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 impacts
3.2.1 Environment and climate change. The project will not have a negative impact on the
environment. The proposed project is environmentally classified as Category 3 by ORQR.
3.2.2 Gender. The proposed operation will support government efforts and plans to
enhance gender budgeting and gender mainstreaming into development programs. Specifically, the IPFMRP program will support training in gender budgeting, which Government
has initiated to facilitate a gender analysis in the formulation of government budgets and allocation
of resources. The GOL is committed to gender mainstreaming by promoting adherence to the
United Nations Security Council Resolution 1325 (2000) on rebuilding institutions in post-conflict
societies9. The program will also support implementation of the 2009 National Gender Policy and
the Civil Service Reform Strategy by developing gender budgeting capacity skills and promoting
training and mentoring of female employees. The IPFMRP will ensure that the training program
provided will be made available to all middle to senior level women in beneficiary institutions. It
will promote gender balance in its activities and ensure women’s participation in training sessions
reaches 90% of eligible female employees (i.e. 90% of women professionals in PFM).
3.2.3 Social. The aim of the project is to enhance government capacity to implement reforms
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.
9 In this resolution, the Security Council “urges Member States to ensure increased representation of women at all
decision-making levels in national, regional, and international institutions and mechanisms for the prevention,
management, and resolution of conflict”.
14
3.2.4 Impact on Private Sector Development. The project will contribute positively to private
sector development. Improved macro economic policy and financial governance will improve the
confidence of the private sector in the future of the Liberian economy.
IV – IMPLEMENTATION
4.1. Implementation arrangements
4.1.1 Executing Agency: The Ministry of Finance (MOF) is the executing agency for the
program. The MOF is due to merge with the Ministry of Planning and Economic Affairs probably
before end of 2012, but the existing MOF structures that will support this program will be retained
unchanged, so there will be no impact on IPFMRP implementation. The proposed operation will use
the existing structure and project management units within the MOF. Day to day program
implementation and supervision of activities will be vested in the Reform Coordination Unit (RCU).
A PFM Steering Committee, chaired by the Minister of Finance will be responsible for strategic
oversight and policy guidance. Coordination with development partners will take place through a
joint PFM Working Group which will meet quarterly to review plans, and implementation progress.
A common monitoring and evaluation framework and operational plan have been developed to
guide implementation and coordination of the reform efforts. The RCU has a Coordinator, Resident
IMF Adviser, Capacity Building Officer, Financial Management Specialist, and Monitoring and
Evaluation Specialist. This core team will be supported by additional staff (including a Procurement
Specialist) recruited specifically for this operation. Technical Annex B3 provides details of the
implementation arrangements.
4.1.2 Financial Management: Responsibility for Financial Management will be vested in the
existing Project Financial Management Unit (PFMU) in the MOF. The PFMU already handles the
financial management for most donor financing in the country, including some on-going Bank
financed projects. It is manned by qualified and experienced accounting professionals, who are
familiar with the unit’s current accounting software (Sun Accounting), as well as experienced in
producing financial reports with the form and content expected by development partners. During the
life of the proposed program, the PFMU is expected to be transformed into a constituent part of the
CAG’s Accounting Services Unit, migrating from Sun Accounting to the IFMIS (Free-balance)
software.
4.1.3 The GAC will be responsible for project management of the the sub component for
External Audit, in line with GAC’s objective to maintain and further enhance its institutional
independence from the Executive. The GAC has an established accounting department in which
accounting for the proposed operation will be mainstreamed. The Commission’s accounting is
currently manual, with regular reports generated in Excel. The existing manual system is based on
established procedures and has sufficient controls to provide reasonable assurance on the accuracy
and timeliness of reports generated therefrom. The GAC has a stand-alone finance department
headed by a Chief Financial Officer that currently successfully manages the GAC’s own budget.
4.1.4 The assessment of both the PFMU and the GAC concluded that there is sufficient financial
management (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 residual FM risk is rated as moderate.
4.1.5 Regarding the use of country systems, the project is expected to migrate to the IFMIS
during the course of implementation; the PFMU is expected to be incorporated into the CAG’s
department, while the bulk of the project audit will be conducted by the Auditor General. In
15
championing the use of a common financial management arrangement and the existing PFMU for
financial management, and piloting the use of the GAC for audit, efforts have been made to align
the Bank’s requirements for the proposed operation with those of the co-financing partners.
Technical Annex B4 provides details of the financial management, and the fiduciary risk analysis.
4.1.6 Disbursement: Disbursement will make use of the Special Account modality, with a
segregated USD ‘pooled’ account to be opened in the Central Bank of Liberia for use by the co-
financing partners. The partners will contribute to the ‘pool’ in the agreed proportions of their
contributions. The Special Account will disburse only towards meeting eligible expenditures (as
defined in the appraisal report). The request for disbursement and subsequent replenishment will be
in accordance with the project appraisal report, the applicable Memorandum of Understanding with
the co-financier, and as will be specified in the Disbursement Letter. Replenishments will be based
on interim unaudited financial reports covering the preceding quarter(s), a forecast of project
expenditure for the following six months, and the Aide Memoire following the joint supervision and
evaluation missions (“JSEM”) to be held every six months. Exemption will be sought for the Bank
to pay taxes, in line with the practices of the co-financing partners. Technical Annex B4 and C.2
provide details of the financial management and joint financing arrangements.
4.1.7 Audit: External audit and oversight of all government financing is the responsibility of the
General Auditing Commission of Liberia. The proposed operation will pilot the use of 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 Terms of Reference
approved by the co-financing partners, using selection procedures agreed in the 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 within six months of the end of the year audited. The
details of the audit arrangements are set out in Technical Annex B4.
4.1.8 Procurement: 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, Accra Agenda for Action, and
Bussan High Level Forum on Development Effectiveness, the proposed operation will adopt a
common implementation and procurement arrangement with the IDA as the implementing partner
for a Multi Donor Trust Fund (MDTF). The procurement arrangement is proposed to be carried out
using the WB Procurement Guidelines.10
To that end, IDA will serve as primary focal point
regarding procurement matters, in consultation with the Bank. The modalities followed in using the
WB Procurement Guidelines in lieu of the Bank’s are described in Technical Annex B5. In
addition, a Memorandum of Understanding (Technical Annex C2) provides details of the joint
implementation arrangement and Bank’s fiduciary oversight responsibility.
4.1.9 Parallel financing would require the use of two sets of rules (AfDB and World Bank) and
would create significant administrative burden for Government and undermine the limited resources
and capacity in Liberia. Instead, joint financing would facilitate the implementation of the project
from the Borrower’s perspective, and enable the Bank to shift its support to the project to carrying
out regular and targeted capacity building activities. Further, the use of the WB Procurement
Guidelines is acceptable based on the following reasons; (i) Bank and WB have harmonized their
procurement policies, procedures and standard bidding documents; (ii) The WB’s operational
framework for dealing with complaints is reliable and similar to that of the Bank; (iii) The Bank
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
10 Section 1.17 (b) of the Bank’s Rules and Procedures for Procurement of Goods and Works (May 2000 Edition) provide that:
“where the Bank finances on a Joint basis with financiers, other than the Borrower, the Bank will require as a condition for its
financing that these Rules apply, unless the Board of Directors authorizes a waiver.
16
in its internal mechanism for addressing and sanctioning violations of its anti-corruption policies. In
line with the Bank’s Rules and Procedures (section 1.17 (b)), Management seeks from the Board of
Directors a waiver to use the WB procurement procedures, in lieu of the Bank’s Rules and
Procedures for the procurement of all activities and eligible expenditures under the components
described in the this report.
4.2. Monitoring
4.2.1 MOF will be responsible for the overall monitoring and evaluation activities in
collaboration with the project component managers and/or beneficiary institutions. The Bank will
undertake bi-annual supervision missions as part of the common implementation framework and
joint donor supervision and evaluation missions. Government will submit quarterly progress reports
on the implementation of the program. The reports will review progress made in light of the
Results-Based Logical Framework and include a clear presentation of activities undertaken during
the period under review. The reports will also analyze the extent to which the activities undertaken
have contributed to the realization of the anticipated outputs and outcomes. The Bank will also
prepare a Project Completion Report within three months of the final disbursement to draw lessons
for future interventions. Table 3. Project implementation schedule
Timeframe Milestone Monitoring process
July 2012 Board Approval Board Resolution
August 2012 Effectiveness Bank
September 2012 Project start-up Bank/GOL
September 2012 – December 2015 Procurement of goods & services GOL
Quarter 1 and 3 of each fiscal year Joint supervision mission Bank and GoL
June 2014 Mid-term Review Bank
June 2016 Project Completion Report Bank
4.3. Governance
4.3.1 Robust governance arrangements have been put in place to manage the implementation,
monitoring, review and audit of this project, as outlined in sections 4.1 and 4.2, above. 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. The establishment of a permanent AfDB field presence in Liberia
will also provide a stronger foundation for review of project governanace and performance.
4.4. Sustainability
4.4.1 Sustainability has been an important consideration during appraisal and will be ensured
through a number of factors included in project design. However, achieving an appropriate balance
between delivering tangible project outcomes and establishing sustainable capacity in a low
capacity post-conflict environment like Liberia is nevertheless challenging. The PCR for the
previous ISP identified some very positive examples of sustainable impacts from that operation.
These have included a commitment to ensure that staff trained by the project were incentivised to
17
remain in their roles and clear evidence that GOL were continuing with capacity building and
training programs developed under ISP I. Measures to ensure sustainability are summarised below:
Ensuring that GOL counterparts and component managers are identified and assigned;
Putting in place a performance management frameworks for the project to measure progress
and results across all components;
Focusing on the production of high quality outputs forming the regular program of work of
the beneficiary organisations – such as the MTEF, and internal and external audit reports,
and LBO scrutiny reports. The project will ensure that production of these reports will be
institutionalised into the regular practices of the GOL;
Developing tailor made manuals, working practices and tools for capacity building program
and continued use after the end of the project;
Developing basic financial management capacity through the FM Training School, which
envisages training graduates for the core financial management functions.It is envisaged that
graduates from the training school will be deployed to support the implementation of the
program at the all levels. It is also expected that the training program would ensure that
PFM resource strength remains in place within the civil service after program
implementation by ensuring that the FM Training School has institutionalised capacity to
continue to deliver the traning courses;
On systems maintenance and ICT support for PFM improvement in the country, the
program will put in place a coherent maintenance and support organizational set up. The
capacity building initiatives provide for knowledge transfer between a selected group of
consultants and civil servants to enable retention of skills as consultants move out. To allow
for sustainable maintenance and upkeep of the systems, the program will deploy a functional
support team of FreeBalance and Crystal Reporting experts to ensure that in-house capacity
is developed;
The GOL’s commitment to PFM reforms is affirmed, among other actions taken, by its
financing of the customs automation (ASYCUDA) through the government budget
consistent with the agreement reached under the AfDB’s budget support operation.
4.5. Risk management
4.5.1 Macroeconomic risk: The recent global financial crisis has highlighted Liberia’s
vulnerability to macroeconomic shocks due to its dependence on fuel as well as on primary exports.
The probability of this risk arising is medium, and the impact would be medium. Mitigation
measures include continued implementation of fiscal and monetary policy supported by an IMF
program, continued implementation of budget support operations as well as policy dialogue through
the Field Office which will help to monitor and mitigate the macro-economic risks. The program
will also directly contribute to building macroeconomic management capacity in GOL to support
sustained improvements to economic management.
4.5.2 Implementation capacity constraints: Weak institutional and human resources capacity
could cause delays or hamper implementation. The probability of this risk arising is medium and the
impact would be high. Mitigation measures are the fact that this proposed support is based on a
recent assessment of implementation capacity and a clearly sequenced PFM Reform Strategy. The
program will provide additional project management capacity.
4.5.3 Fiduciary risks: Government has made notable progress in improving PFM, but there are
still weaknesses in the fiduciary control environment. The weaknesses are especially evident in the
area of corruption due to weak prosecution capacity and sanctions regime. The probability of this
risk arising is medium and the impact would be high. Mitigation measures include the PFM Act,
and GOL PFM Reform Strategy which presents a credible program for improvement, supported by
technical assistance from the Bank and other donors. The Government’s commitment to, and
18
ownership of, reforms is high. The project will also directly contribute to building capacity for
improved fiduciary control through support to improved financial management information systems
and internal audit.
4.5.4 Corruption risks:. Weak internal controls and limited procurement and financial
management capacity increase the risk of conflict of interest, bribery, and patronage. This may lead
to the misuse or misappropriation of project funds or assets. The probability of this risk arising is
medium and the impact would be high. Mitigation measures at the GOL level include (a) ongoing
efforts to strengthen the Liberia Anti-corruption Commission (LACC) including the revision a bill
that empower LACC to prosecute corruption cases, (b) the deployment of sixteen
competent auditors to high spending entities, and (c) implementation of the 2009 PFM Act and the
2010 Freedom of Information Act. At the project level, corruption risks will partly mitigated
through; (a) the successful establishment of internal controls embedded in IT-based financial
management systems, (b) support to the legislature, and external audit to improve their scrunity of
PFM, (c) support to civil society organisations to improve accountability to the public, and (d)
robust financial management, publication of procurement plans and contract awards, and post
procurement review.
4.6. Knowledge building
4.6.1 Knowledge will be acquired through skills transfer from technical assistance, as well as
through formal and informal training on the job, locally and regionally. In addition to the specific
technical areas in beneficiary institutions, the capacity building implementation framework has
identified needs across the beneficiaries for improved understanding of PFM in general. The on-
going PFM training program will continue and will significantly increase the numbers of people
with recognized PFM, audit and procurement qualifications.
4.6.2 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 macro economic 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.
4.6.3 Specific arrangements to ensure that knowledge is transferred will include; (a) assigning
counterpart staff to work with external consultants, (b) evaluating all technical assistance based on
performance on knowledge transfer and building local capacity, and (c) putting in place an exit
strategy to sustain capacity building efforts in Liberia.
19
V – LEGAL INSTRUMENTS AND AUTHORITY
5.1 Legal instrument
5.1.1 The Protocol of Agreement between the Republic of Liberia and the African Development
Bank for an amount of ADF Grant of UA 3 million from Fragile State Facility.
5.2 Conditions associated with Bank’s intervention
5.2.1 Conditions Precedent to Entry into Force: The Protocol of Agreement shall enter into force
on the date of signature by the Government of the Republic of Liberia and the African Development
Bank.
5.2.2 Conditions Precedent to First Disbursement: The first disbursement of the grant shall be
conditional upon: (a) the entry into force of the Protocol of Agreement; and (b) evidence of having
opened a special account in the Central Bank of Liberia for the deposit of the proceeds of the grant;
and (c) signing of a Memorandum of Understanding between the Government of the Republic of
Liberia and the World Bank, and the African Development Bank, by no later than three (3) months
after the date of entry into force.
5.3. Compliance with Bank policies
5.3.1 In view of the need to adopt a joint financing modality and harmonised implementation
arrangements, it is recommended that the Board of Directors approves a waiver for (a) the program
to apply the World Bank Rules and Procedures for procurement of all eligible expenditure as
specificed in the Appraisal Report; and (b) 100% financing of the total program cost in line with the
Bank Group's Policy on Eligible Expenditures (Technical Annex C1). The project complies with all
other applicable Bank policies.
VI – RECOMMENDATION
6.1 Management recommends that the Boards of Directors approves the proposed grant of UA 3.0
million to the Government of the Republic of Liberia from the Fragile State Facility for the purposes
and subject to the conditions stipulated in this report. Acceptance of this recommendation would
represent adoption of an innovative, pooled funding arrangement in line with the Bank’s
commitment to the Paris Declaration principles
I
Appendix I. Comparative Socio-Economic Indicators
Liberia - Development Indicators
Social Indicators Liberia
Africa Developing countries 1990 2011 *
Area ( '000 Km²) 111 30,323 80,976
Total Population (millions) 2.1 4.1 1,044.3 5,732.2
Population growth (annual %) -1.5 3.3 2.3 1.3
Life expectancy at birth, total (years) 48.5 59.1 56.0 67.1
Mortality rate, infant (per 1,000 live births) 138.4 91.3 78.6 46.9
Physicians per 100,000 People … 1.0 58.3 109.5
Births attended by skilled health staff (% of total) … 46.3 50.2 64.1
Immunization, measles (% of children ages 12-23 months) … 64.0 77.9 80.7
School enrollment, primary (% gross) … 96.0 100.4 107.2
Ratio of girls to boys in primary education (%) … 90.7 90.9 100.0
Literacy rate, adult total (% of people ages 15 and above) … 59.1 65.1 80.3
Access to Safe Water (% of Population) 57.0 68.0 64.5 84.3
Access to Sanitation (% of Population) 40.0 17.0 41.0 53.6
Human Develop. (HDI) Rank (Over 187 Countries) … 182 n.a n.a
Human Poverty Index (% of Population) … 35.2 34.7 …
Liberia
Economy 2000 2009 2010 2011
GNI per capita, Atlas method (current US$) 139 196 205 …
GDP (current Million US$) 661 879 1,300 1,409
GDP growth (annual %) 36.1 4.6 5.7 5.9
Per capita GDP growth (annual %) 29.8 -0.1 1.6 2.6
Gross Domestic Investment (% of GDP) 23.5 66.9 76.0 80.4
Inflation (annual %) 5.3 7.6 7.8 8.5
Budget surplus/deficit (% of GDP) 0.3 -1.6 1.3 -2.0
Trade, External Debt & Financial Flows 2000 2009 2010 2011
Export Growth, volume (%) … … … …
Import Growth, volume (%) … … … …
Terms of Trade (% change from previous year) … … … …
Trade Balance ( mn US$) -2 -410 -652 -717
Trade balance (% of GDP) -0.2 -46.6 -50.2 -50.9
Current Account ( mn US$) -93 -292 -532 -547
Current Account (% of GDP) -14.0 -33.2 -40.9 -38.8
Debt Service (% of Exports) … 352.4 168.8 0.8
External Debt (% of GDP) 625.2 191.1 8.1 8.5
Net Total Inflows ( mn US$) 631.6 1,663.2 … …
Net Total Official Development Assistance (mn US$) 67.4 505.0 … …
Foreign Direct Investment Inflows (mn US$) 20.8 217.8 248.0 …
External reserves (in month of imports)
0.0 1.8 1.8 …
Private Sector Development & Infrastructure 2000 2005 2010 2011
Time required to start a business (days) … … 20 6
Investor Protection Index (0-10) … … 3.7 3.7
Main Telephone Lines (per 1000 people) 2.4 0.6 1.5 …
Mobile Cellular Subscribers (per 1000 people) 0.5 50.3 393.4 …
Internet users (000) 0.2 6.3 0.7 …
Roads, paved (% of total roads) 6.2 … … …
Railways, goods transported (million ton-km) … … … …
Source: ADB Statistics Department, based on various national and international sources * Most recent year
Last Update: Oct. 2011
II
Appendix II. Summary of Bank Portfolio in Liberia as at 31st May 2012
*Amount approved in USD or Euros. Rate used are those at approval date.
Project name approval
date Signature
Date effective-
ness closing
date
Net approved amount (UAm)
amount disbursed
(UAm)
disb.
(%)
Social sector
Labor-based Public Works Project 18.12.2007 29.02.2008 03.04.2009 31.12.2013 15,240,000 10,101,649 66%
Labor-based Public Works Project (suppl) 29.06.2011 11.08.2011 23.01.2012 31.12.2013 5,000.000 0 0%
Water Supply/ Sanitation sector
Urban Water & Sanitation Project 19.05.2010 28.05.2010 26.01.2012 30.06.2015 24,630,000 71,427 0,3%
Water Sector Reform Study*
13.01.2009 28.05.2009 12.08.2009 30.4.2012 1,446,356 550,916 62%
Multisector
Economic Governance and competitiveness 21.06.2011 11.08.2011 12.12.2011 31.12.2013 30,000,000 14,000,000 47%
Support to various Ministries and Public Agencies for Capacity Building - FSF Pillar III
22.04.2009 * * * 3,868,366 1,295,778 34%
Private Sector Liberia Bank for Development & Investment*
10.06.2009
30.12.2011
_
30.06.2012
3,227,035
0
0%
Equity in Access Bank* 05.11.2008 05.11.2008 05.11.2008 n/a 775,391 775,391 100%
Agriculture
Agriculture Sector Rehabilitation Project 29.04.2009 14.05.2009 30.03.2010 30.04.2016 12,500,000 2,007,924 16%
Smallholder Agricultural Productivity and Commercialization
02.05.2012 - - - 4,000,000 0 0%
Multinational WAMZ-Payment System Development Project (The Gambia, Guinea, Sierra-Leone and Liberia)
09.11.2010 09.11.2010 02.02.2011 31.12.2012 5,000,000 0 0%
TOTAL (only national) 101,257,147 31,205,033 30.4%
TOTAL (including multinational) 106,257,147 31,205,033 30.8%
III
Appendix III. Map of Liberia
IV
Appendix IV. Summary of the draft PEFA 2012 Assessment in comparison with PEFA
2007
Indicator Description SCORE
2007
SCORE
2012
(Draft)
CHANGE
PFM OUTTURNS: Credibility of the Budget
PI-1 Aggregate expenditure outturn compared with
original approved budget
B D DOWN
PI-2 Composition of expenditure outturn compared
with original approved budget
D D+ UP
PI-3 Aggregate revenue outturn compared with
original approved budget
A D DOWN
PI-4 Stock and monitoring of expenditure payment
arrears
D+ B UP
KEY CROSS CUTTING ISSUES: Comprehensiveness and Transparency
PI-5 Classification of the budget C C NO CHANGE
PI-6 Comprehensiveness of information included in
budget documentation
C B UP
PI-7 Extent of unreported government operations D+ D+ NO CHANGE
PI-8 Transparency of inter-governmental fiscal
relations
NO
SCORE NO
SCORE
NO CHANGE
PI-9 Oversight of aggregate fiscal risk from other
public sector entities
D D NO CHANGE
PI-10 Public access to key fiscal information C C NO CHANGE
BUDGET CYCLE
C (i) Policy Based Budgeting
PI-11 Orderliness and participation in the annual
budget process
B B NO CHANGE
PI-12 Multi-year perspective in fiscal planning,
expenditure policy, and budgeting
D+ C UP
C (ii) Predictability and Control in Budget Execution
PI-13 Transparency of taxpayer obligations and
liabilities
C B UP
PI-14 Effectiveness of measures for taxpayer
registration and tax assessment
C C+ UP
PI-15 Effectiveness in collection of tax payments D+ D+ NO CHANGE
PI-16 Predictability in the availability of funds for
commitment of expenditures
C+ C DOWN
PI-17 Recording and management of cash balances,
debt, and guarantees
C+ B UP
PI-18 Effectiveness of payroll controls D+ D+ NO CHANGE
PI-19 Competition, value for money, and controls in
procurement
D+ C UP
PI-20 Effectiveness of internal controls for non-salary
expenditure
C+ C+ NO CHANGE
PI-21 Effectiveness of internal audit D+ D+ NO CHANGE
C (iii) Accounting, Recording, and Reporting
PI-22 Timeliness and regularity of accounts
reconciliation
D C UP
V
Indicator Description SCORE
2007
SCORE
2012
(Draft)
CHANGE
PI-23 Availability of information on resources
received by service delivery units
D D NO CHANGE
PI-24 Quality and timeliness of in-year budget reports C D+ DOWN
PI-25 Quality and timeliness of annual financial
statements
D D NO CHANGE
C (iv) External Scrutiny and Audit
PI-26 Scope, nature, and follow up of external audit D D+ UP
PI-27 Legislative scrutiny of the annual budget law C+ C+ NO CHANGE
PI-28 Legislative scrutiny of external audit reports No Score D N/A
DONOR PRACTICES
D-1 Predictability of direct budget support No Score D N/A
D-2 Financial information provided by donors for
budgeting and reporting on project and program
aid
D D+ UP
D-3 Proportion of aid that is managed by use of
national procedures
D D NO CHANGE
VI
Appendix V. Analytic work and underpinnings
Analytical themes Analytical work Institution
Strategy - 2008 -2012 Joint Assistance Strategy
- Medium Term PFM Reform Strategy
- PRSP II- Agenda for Transformation
- Country Strategy mid-term review, and Portfolio
Performance Review (May 2011)
- OECD 2011 Report on International Engagement in
Fragile States – Republic of Liberia
- AfDB & World
Bank
- GOL/MOF
- GOLR
- GOL
- OECD
Macroeconomic
Framework
- 2011, December, Letter of Intent, Memorandum of
Economic and Financial Policies, and Technical
Memorandum of Understanding
- Seventh Review under the Enhanced Credit Facility,
December 2011
- 2012 Debt Management Strategy Progress Report
- Budget Framework Paper, 2010/11-2012/2013
- Economist Intelliogence Unit, Country Report –
Liberia, December 2011
- Enhanced Heavily Indebted Poor Countries (HIPC)
Initiative Completion Point Document and Multilateral
Debt Relief Initiative (MDRI), June 2010
- GOL/IMF
- IMF
- GOL
- GOL
- EIU
- World Bank/IMF
Public Financial
Management
- Public Expenditure and Financial Accountability
(PEFA) assessment (2012)
- ISP I – Project Completion Report, 2011
- Training Need Assessment and Staff Training Plan,
2011
- USAID PFM Assessment Report, 2011
- OPEV Joint PFM Evalution Report, 2012
- OPEV – Bank’s Assistance to Fragile States
- PFM reform implementation reports, 2011 & 2012
- Public Expenditure Management and Financial
Accountability Assessment (PEMFAR, 2009)
- PFM Capacity Building Implementation Framework,
May 2011
- PFM Reform Operational Manual, 2011
- PFM Reform M&E Framework, 2011
- 2010 Corruption Perceptions Index
- GOR/WB/AfDB/
EC
- AfDB
- GOL/AfDB
- USAID
- AfDB
- AfDB
- GOL
- GOL/IMFWB/Af
DB
- GOL
- GOL
- GOL
- Transparency
International
AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND
BOARDS OF DIRECTORS
Resolution N° B/LR/2012/31 - F/LR/2012/43
Adopted by the Boards of the Bank and the Fund on a lapse-of-time basis on 10 September 2012
Grant to the Republic of Liberia to assist in the financing of the Institutional Support
for the Integrated Public Financial Management Reform Project (IPFMRP)
THE BOARDS OF DIRECTORS,
HAVING REGARD to: (i) Articles 1, 2 and 32 of the Agreement establishing the African Development Bank
(the "Bank"); (ii) Articles 1, 2 and 26 of the Agreement Establishing the African Development Fund (the "Fund");
(iii) the Strategy for Enhanced Engagement in Fragile States approved by the Boards of Directors of the Bank
and the Fund on 3 March 2008, in particular the Supplemental Financing Window (SFW) of the Fragile States
Facility (FSF); (iv) Resolution B/BD/2008/05 - F/BD/2008/03 approved by the Boards of Directors of the Bank
and the Fund on 28 March 2008 establishing a Fragile States Facility; (v) the Operations Guidelines of the FSF
approved by the Boards of Directors of the Bank and the Fund on 17 July 2008; and (vi) the Appraisal Report
contained in document ADB/BD/WP/2012/102/Approval - ADF/BD/WP/2012/66/Approval (the "Appraisal
Report");
RECALLING the Document relating to the Country Strategy 2008-2011 Mid-Term Review, Portfolio
Performance Review and Request for Extension approved by the Boards of Directors of the Bank and the
Fund on 31 May 2011 confirming, inter alia, the eligibility of the Republic of Liberia to receive financing
from the SFW of the FSF;
DECIDE as follows:
1. To award to the Republic of Liberia, from the resources of the SFW of the FSF, a grant of an amount
not exceeding the equivalent of Three Million Units of Account (UA 3,000,000) to assist in the
financing of the Institutional Support for the Integrated Public Financial Management Reform Project
(IPFMRP);
2. To authorize the President to conclude with the Republic of Liberia, a Protocol of Agreement on the
terms and conditions specified in the General Conditions Applicable to Protocols of Agreement for
Grants of the Fund and in the Appraisal Report;
3. The President may cancel the Grant if the Protocol of Agreement is not signed within one hundred
and eighty (180) days from the date of approval of the Grant; and
4. This Resolution shall become effective on the date above-mentioned.
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