world bank...

The World BankGuinea-Bissau Public Sector Strengthening Project (P150827)

REPORT NO.: RES29582

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF

GUINEA-BISSAU PUBLIC SECTOR STRENGTHENING PROJECT

APPROVED ON JUNE 8, 2015

TO

THE REPUBLIC OF GUINEA BISSAU

GOVERNANCE

AFRICA

Regional Vice President: Makhtar Diop Country Director: Louise J. Cord

Senior Global Practice Director: Deborah L. WetzelPractice Manager/Manager: Alexandre Arrobbio

Task Team Leader: Kjetil Hansen, Roberto O. Panzardi

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized


ABBREVIATIONS AND ACRONYMS

AfDB African Development BankBCEAO Banque Centrale des Etats de l'Afrique de l'OuestCAS Country Assistance StrategyCFAF Communauté Financière AfricaineCEM Country Economic MemorandumCPLC Community of Portuguese Language CountriesCSO Civil Society OrganizationDAs Designated AccountsDGA Direccao Geral das Alfandegas (Directorate General of Customs)DGCI Direccao Geral de Contribucoes e Impostos (Directorate General of Contributions and Taxation ECOWAS Economic Community of West African StatesEU European UnionFAD Fiscal Affairs DepartmentFM Financial ManagementIFMIS Integrated Financial Management Information SystemGDP Gross Domestic ProductGGODR Governance Global PracticeHR Human ResourcesHIPC Heavily Indebted Poor Countries (Initiative)IBRD International Bank for Reconstruction and DevelopmentIDA International Development AssociationIFR Interim Financial ReportIGF Inspeccao Géral das Financas (General Inspectorate of Finance)IMF International Monetary FundM&E Monitoring and EvaluationIPF Investment Project FinancingISR Implementation Review and SupportIT Information TechnologyMDTF Multi-Donor Trust FundMTEF Medium-Term Expenditures FrameworkMoEF Ministry of Economy and FinanceNGO Non-Governmental OrganizationODI Overseas Development InstitutePDO Project Development ObjectivePEMFAR Public Expenditure Management and Financial Accountability ReviewPFM Public Financial ManagementPPA Project Preparation AdvancePPP Purchasing Power ParityPSSP Public Sector Strengthening ProjectRCU Reform Coordination UnitSAI Supreme Audit InstitutionSIGFIP Government’s Financial Management Information SystemSOE Statement of ExpendituresSSR Security Sector Reform


TA Technical AssistanceTC Treasury CommitteeTSA Treasury Single AccountTSC Technical Steering CommitteeUNDP United Nations Development ProgramVAT Value Added TaxWAEMU West African Economic and Monetary UnionWBG World Bank Group


Note to Task Teams: The following sections are system generated and can only be edited online in the Portal.

BASIC DATA

Product Information

Project ID Financing Instrument

P150827 Investment Project Financing

Original EA Category Current EA Category

Not Required (C) Not Required (C)

Approval Date Current Closing Date

24-Mar-2015 31-Dec-2018

Organizations

Borrower Responsible Agency

The Republic of Guinea Bissau Ministry of Finance

Project Development Objective (PDO)

Original PDOThe Project Development Objective (PDO) is to assist the Government to re-establish basic systems for public financial management.OPS_TABLE_PDO_CURRENTPDOSummary Status of Financing

Ln/Cr/Tf Approval Signing Effectiveness ClosingNet

Commitment Disbursed Undisbursed

IDA-55950 24-Mar-2015 18-May-2015 22-Jun-2015 31-Dec-2018 2.75 1.69 1.04

IDA-D0310 24-Mar-2015 18-May-2015 22-Jun-2015 31-Dec-2018 2.25 2.19 .01

Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)?No


Note to Task Teams: End of system generated content, document is editable from here.

I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

1. IDA credit of SDR$ 1.9 million (US$XXX equivalent) and grant of SDR 1.6 million (US$XXX equivalent) for the Guinea-Bissau Public Sector Strengthening Project (PSSP) was approved by the Board on March 24, 2015. It became effective 2 months later on June 22, 2015. The Project development objective (PDO) is to assist the Government of Guinea Bissau is to establish basic systems for public financial management. The project is organized into three components:

Component 1- Performance, Control and Transparency of Public Revenues. This Component provides Technical Assistance (TA) to strengthen tax collection and the efficiency, effectiveness and transparency of tax administration through strengthened audits and controls; technical assistance for Customs Administration; and support to strengthening the Treasury Single Account (TSA) Debt and Statistics, including strengthening the Treasury Committee to provide realistic macroeconomic and revenue forecasts and cash management, with the objective to avoid additional borrowing. It also supports the General Directorate for Forecast and Economic Studies to produce statistics and public economic and financial management data;

Component 2 – Expenditure Control, Procurement, Accounting and Reporting. Key outputs of this component are Budget and Internal Control TA through operationalizing of the Integrated Financial Management System; strengthening the Procurement and Public Investment Management systems, and support the purchase of and installation of power generation and IT hardware and equipment to restore basic public financial management functions; and,

Component 3 – Public Financial Management Reform Coordination and Project Management. This component supports the Reform Coordination Unit (RCU) to ensure overall coordination of PFM reforms in Guinea-Bissau, including improved donor coordination. It also ensures that PSSP implementation complies with the World Bank’s fiduciary guidelines and effective implementation of the first two components.

2. The Table 1 summarizes an overview of project components, sub-components, main activities, budget and an assessment of progress. The project has made steady progress except for the sub-components 2.2, 3.1 and 3.3. The project has disbursed about US$3.88 million which represents about 79 percent of the financial amount.

Table 1: The Detailed Project Components


Components Activities Budget

Technical AdvisorLegal ReformsPublication CampaignTechnical AdvisorSimplification of proceduresSydonia++Technical AdvisorMacroeconomic modelingPreparation of forecastsTOFE

2.1 Budget and internal control through operationalization of IFMIS

Interphase of different IFMIS systems; internal controls $0.42 Mn

2.2 Procurement and Public Investment Management

New procedures manuals; standard bidding documents; electronic tools to monitor procuement transactions; procurement performance review mechanism

2.3 Power generation and IT hardware

3 generators and accessories: IT hardware and remote connections; IT related building renovations $0.32 Mn

3.1 PFM Reform Oversight and Implementation RCU technical personnel $0.87 Mn

3.2 Project Management Personnel; equipment; car; operating expenditures $0.57 Mn3.3 PFM and Procurement Education and Training Program Training $0.60 Mn

TOTAL $5.0 Mn

2. Expenditure Control, Procurement, Accounting and Reporting ($1.1 Mn)

3. Public Financial Management Reform Coordination and Project Management ($1.5 Mn)

1. Performance, Control and Transparency of Public Revenues ($2.4 Mn)

1.1 Technical assistance to tax collection $0.81 Mn

1.2 Technical assistance to Customs Administration $0.81 Mn

1.3 Treasury Single Account $0.78 Mn

No Progress

No Progress

No Progress

Progress

Progress

Progress

Progress

Progress

Progress

3. While overall Implementation Progress is rated as Moderately Satisfactory, the project is rated Moderately Unsatisfactory in terms of the achievement of the PDO. This is partly because the indicators originally designed were not aligned with the actual activities supported by the project, which changed with the priorities of successive governments. Following the project restructuring, the rating will be upgraded. Below is a summary of activities and progress:

Draft legislation to modernize tax policy and administration has been validated by the Fiscal Reform Commission, to bring Guinea Bissau in line with regional West African Economic and Monetary Union (WAEMU) standards.

Regulations on General Tax Code, Regime of Penalties, New Sale Tax Code and Code of the Special Consumption Tax (IEC) have been prepared.

A tax information dissemination campaign, agreed with the IMF technical team, to communicate information on the obligation to issue tax invoices; a radio program in Portuguese and Creole languages; publication in newspapers and billboards. Nonetheless, TV spots and workshops for the Directorate General of Contributions and Taxes (DGCI) personnel and taxpayers at large are still pending.

Approximately 4000 new taxpayers were registered and 1000 cash traders obtained their Tax Registration Number (TRN) in 2017.

By end-2017, tax collection reached 33.8 billion XOF compared with 34.6 billion at the end of 2016. The latter included a one-time XOF 4 billion of extraordinary revenue (rescue money from BAO and BDU banks), which were not present in 2017.

Customs has a comprehensive reform strategy and job-training were provided to more than 100 staff from Directorate General of Customs (DGA) as well as to customs agents, freight forwarders and shipping agents.


In December 2017, the Minister of Finance issued a Decree which reduced the number of procedures for import and export from 27 to 9, in line with recommendations from the resident technical advisor.

New simplified regulation was drafted to automate the manifest/bill of landing and improve the implementation of revised warehouse procedures, risks management and custom value control mechanism.

The Asycuda++ system is being fully implemented at Customs in the capital city of Bissau and border customs facilities in Gabu, Sao Domingos and Bafata.

The debt management system, SIGADE 6, has been purchased and installation started towards end 2017. The debt database has been converted and validated into version 6. Training of local staff on SIGADE 6 is ongoing. Next steps include updating debt files into the system from 2016 onwards, which will serve to produce updated debt tables and final implementation is expected towards end of 2018.

The Economic Studies Directorate (DGPEE) and the National Statistical Institute have benefited from a long term international consultant who provided training and helped on the implementation of the macro-economic tools, including implementation of the TCHINTCHOR solution, the computable general equilibrium model (CGEM) and preparation of TOFE.

Improvement of the Single Treasury mechanisms by reducing and finally eliminating DNTs. Improving budget practices in line with WAEMU recommendations, including the adoption of medium-term fiscal

framework for 5 key ministries, manual of procedure for public expenditures, and a budget calendar proposal still needs to be approved by the Minister of Finance and the National Assembly, prior to its implementation in the formulation for the 2019 budget. Also, a proposal to reorganize the Budget Directorate is pending.

Finally, a first technical mission to assess the government’s main IFMIS system (SIGFIP) was carried out in January 2018. A follow up mission is planned for May 2018. This work will culminate in the preparation of an IFMIS master plan for the authorities, including short term measures to improve data recording and reliability and longer-term systems improvements and upgrades.

II. DESCRIPTION OF PROPOSED CHANGES

Amendment of the Result Framework

4. The MTR Mission conducted in June 2017 concluded that the PDO was consistent with the current CAS and focusing on outcomes for which the project could be held accountable for. It was concluded that the project was well focused with specific targeted outcomes of credibility, predictability, control and transparence in fiscal and budget management. It was recommended that special attention would be needed to ensure that interventions and outcomes are likely to be sustained beyond project completion.

5. As regard the Results Framework (RF) outcome indicators, the MTR Mission agreed with the GoGB to change both PDO indicators and Intermediate-level indicators. The changes to the RF aim to align indicators with ongoing project activities, to clarify the unit of measurement, to specify the content for all indicators and to add intermediate-level indicators under Component 1, 2 and 3.


6. The revised RF will measure the outcome by the following three PDO indicators as well as

PDO Indicator 1: Increased tax and custom revenuePDO Indicator 2: Timely reporting of budget execution

7. Following the MTR mission, the Bank received another request from the Minister of Finance in October 2017 to further consolidate the project to focus mainly on improving public expenditure quality and reduce project administrative costs. A second restructuring mission was subsequently organized in December 2017.

Tables 2 and 3 below show the revised budget and results framework.

Table 2: Revised Budget by Component

Component/Subcomponent Original Allocation (US $ million)

Revised Allocation(US $ million)

Component 1: Performance, Control and Transparency of Public Revenues 2.4 2.51.1: Technical Assistance to Tax Collection 0.81 0.811.2: Technical Assistance to Customs Administration 0.81 0.831.3 Treasury Single Account (TSA), Debt and Statistics 0.78 0.87Component 2: Expenditure Control, Procurement, Accounting and Reporting 1.1 1.12.1: Budget and Internal Control TA through Operationalization of the Integrated FMIS

0.42 0.78

2.2 Procurement and Public Investment Management 0.36 02.3: Power generation and IT hardware 0.32 0.32Component 3: Public Financial Management Reform Coordination and Project Management

1.5 1.4

3.1: PFM Reform Oversight and Implementation Structure 0.87 0.63.2: Project Management 0.57 0.73.3: PFM and Procurement Education and Training Program 0.06 0.1TOTAL 5 5

Table 3: Revised Result Framework (Changes on Original PDO and Intermediate Indicators)

Original Status New PDO Indicator 1: Proportion of extra budgetary expenditures (DNT) in relation to total budgetary expenditures (Percentage)

Dropped

Increase in level of consolidation of cash balances as measured by the proportion of total revenues managed through the Treasury Single Account (TSA) (Percentage).

Dropped

PDO Indicator 2: Timely reporting of budget execution (Months)

Retained


PDO Indicator 3. The tax and customs revenue increase by 30% (baseline in XOF billion nominal) (Number)

Added. Original IR1 retained as PDO indicator

Intermediate Results (IR)Proportion of extra budgetary expenditures (DNT) in relation to total budgetary expenditures (Percentage

Dropped

Tax arrears collection improvement (Percentage of recuperated arrears over total arrears) (Percentage, Custom).

Dropped.

Customs arrears collection improvement (Percentage of recuperated arrears over total arrears) (Percentage):

Dropped

Number of bank accounts in commercial banks reduced (Percentage):

Dropped

Bank reconciliations are performed on a regular basis (Days)

Dropped

The budget is executed with less than 20% deviations (Percentage):

Dropped

Reduction of payment arrears as % of GPD (Percentage).

Dropped

Quarterly then monthly budget execution statements are published out of SIGFIP (Months).

Retained

Reform focal points in place in the Tax, Customs, Budget and Treasury Directorates (Number).

Dropped

New/Added Number of tax payers (Number of NIFs issued)

New/Added Increase audit and control by tax and customs administration (number and % of clients)

New/Added Number of steps for import and export (Number)

New/Added Database with reference prices for high volume import/export products (yes/no)

New/Added Customs declarations submitted through Sydonia++ (Percentage)

New/Added Dwell-time for imported and exported goods (Days):

New/Added Delays in external debt payment (Days)


Amendment of the Grant Agreement to extend the Closing Date

8. To allow full completion of all planned project activities, the government has also requested the extension of the project’s closing date for a period of 12 months, from December 31, 2018 to December 31, 2019. There are no outstanding audit reports for the project.

Note to Task Teams: The following sections are system generated and can only be edited online in the Portal.

III. SUMMARY OF CHANGES

Changed Not Changed

Change in Results Framework ✔

Change in Loan Closing Date(s) ✔

Change in Implementation Schedule ✔

Change in Implementing Agency ✔

Change in DDO Status ✔

Change in Project's Development Objectives ✔

Change in Components and Cost ✔

Cancellations Proposed ✔

Reallocation between Disbursement Categories ✔

Change in Disbursements Arrangements ✔

Change in Disbursement Estimates ✔

Change in Overall Risk Rating ✔

Change in Safeguard Policies Triggered ✔

Change of EA category ✔

Change in Legal Covenants ✔

Change in Institutional Arrangements ✔

Change in Financial Management ✔

Change in Procurement ✔

Other Change(s) ✔


Change in Economic and Financial Analysis ✔

Change in Technical Analysis ✔

Change in Social Analysis ✔

Change in Environmental Analysis ✔

IV. DETAILED CHANGE(S)

OPS_DETAILEDCHANGES_RESULTS_TABLE

RESULTS FRAMEWORK

Project Development Objective Indicators PDO_IND_TABLE

Proportion of extra budgetary expenditures (DNT) in relation to total budgetary expendituresUnit of Measure: PercentageIndicator Type: Custom

Baseline Actual (Current) End Target Action

Value 25.00 0.00 15.00 Marked for Deletion

Date 16-Dec-2015 31-Dec-2017 31-Dec-2018

Increase in level of consolidation of cash balances as measured by the proportion of total revenues managed through the Treasury Single Account (TSA)Unit of Measure: PercentageIndicator Type: Custom



Date 16-Dec-2015 15-Sep-2016 31-Dec-2018

Timely reporting of budget executionUnit of Measure: MonthsIndicator Type: Custom


Value 48.00 62.00 6.00 No Change

Date 16-Dec-2015 31-Dec-2017 31-Dec-2018

Increased tax and customs revenue increase by 15%Unit of Measure: NumberIndicator Type: Custom



Value 62.00 85.00 71.00 New

Date 16-Dec-2015 31-Dec-2017 31-Dec-2019

Intermediate IndicatorsIO_IND_TABLE

The tax and customs revenue increase by 30% (baseline in XOF billion nominal)Unit of Measure: NumberIndicator Type: Custom



Date 16-Dec-2015 31-Dec-2017 31-Dec-2018

Tax arrears collection improvement (Percentage of recuperated arrears over total arrears)Unit of Measure: PercentageIndicator Type: Custom



Date 16-Dec-2015 31-Dec-2017 31-Dec-2018

Customs arrears collection improvement (Percentage of recuperated arrears over total arrears)Unit of Measure: PercentageIndicator Type: Custom



Date 16-Dec-2015 15-Sep-2016 31-Dec-2018

Number of bank accounts in commercial banks reduced (Percentage, Custom).Unit of Measure: PercentageIndicator Type: Custom



Date 16-Dec-2015 15-Sep-2016 31-Dec-2018

Bank reconciliations are performed on a regular basisUnit of Measure: DaysIndicator Type: Custom




Date 16-Dec-2015 15-Sep-2016 31-Dec-2018

The budget is executed with less than 20% deviationsUnit of Measure: PercentageIndicator Type: Custom



Date 16-Dec-2015 31-Dec-2017 31-Dec-2018

Reduction of payment arrears as % of GPDUnit of Measure: PercentageIndicator Type: Custom



Date 16-Dec-2015 15-Sep-2016 31-Dec-2018

Quarterly then monthly budget execution statements are published out of SIGFIP (Months, Custom)Unit of Measure: MonthsIndicator Type: Custom


Value 3.00 4.00 1.00 No Change

Date 16-Dec-2015 31-Dec-2017 31-Dec-2018

Reform focal points in place in the Tax, Customs, Budget and Treasury DirectoratesUnit of Measure: NumberIndicator Type: Custom



Date 16-Dec-2015 15-Sep-2016 31-Dec-2018

Number of tax payers (number of NIFs issued)Unit of Measure: NumberIndicator Type: Custom



Value 10399.00 15914.00 20000.00 New

Date 30-Sep-2017 31-Dec-2017 31-Dec-2019

Number of Steps for import and exportUnit of Measure: NumberIndicator Type: Custom


Value 26.00 9.00 6.00 New

Date 30-Sep-2017 31-Dec-2017 31-Dec-2019

Database with reference prices for high volume import/export productsUnit of Measure: Yes/NoIndicator Type: Custom


Value No Yes Yes New

Date 30-Sep-2017 31-Dec-2017 31-Dec-2019

Customs declarations submitted through Sydonia++Unit of Measure: PercentageIndicator Type: Custom


Value 60.00 90.00 100.00 New

Date 30-Sep-2017 31-Dec-2017 31-Dec-2019

Dwell-time for imported and exported goodsUnit of Measure: DaysIndicator Type: Custom


Value 90.00 90.00 45.00 New

Date 30-Sep-2017 31-Dec-2017 31-Dec-2019

Delays in external debt paymentUnit of Measure: DaysIndicator Type: Custom



Value 7.00 6.00 1.00 New

Date 30-Sep-2017 31-Dec-2017 31-Dec-2019

Increase in tax and customs audits and inspectionsUnit of Measure: TextIndicator Type: Custom


Value DGCI: 43 AuditsDGA: 4 Inspections

DGCI: 271 AuditsDGA: 4 Inspections

DGCI: 280 AuditsDGA: 10 Inspections New

Date 31-Dec-2015 31-Dec-2017 31-Dec-2019

OPS_DETAILEDCHANGES_LOANCLOSING_TABLE

LOAN CLOSING DATE(S)

Ln/Cr/Tf StatusOriginal Closing

Revised Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal

Applications

IDA-55950 Effective 31-Dec-2018 31-Dec-2019 30-Apr-2020

IDA-D0310 Effective 31-Dec-2018 31-Dec-2019 30-Apr-2020

Note to Task Teams: End of system generated content, document is editable from here.

world bank...

Documents