The World Bank Implementation Status & Results Report Public Financial Management Improvement Project (P162850) Public Financial Management Improvement Project (P162850) MIDDLE EAST AND NORTH AFRICA | West Bank and Gaza | Governance Global Practice | Special Financing | Investment Project Financing | FY 2018 | Seq No: 2 | ARCHIVED on 03-Apr-2019 | ISR36221 | Implementing Agencies: Ministry of Finance and Planning, Ministry of Finance and Planning Key Dates Key Project Dates Bank Approval Date: 01-Jun-2018 Effectiveness Date: 19-Jul-2018 Planned Mid Term Review Date: 04-May-2020 Actual Mid-Term Review Date: -- Original Closing Date: 30-Jun-2022 Revised Closing Date: 30-Jun-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective (PDO) is to enhance the expenditure controls, financial accountability and procurement management of the Palestinian Authority. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1: Improving Budget Expenditure Management and Control:(Cost $1.07 M) Component 2: Improving Financial Accountability of the PFM System:(Cost $1.00 M) Component 3: Modernizing Public Procurement:(Cost $0.80 M) Component 4: Project Implementation Support and Management Costs:(Cost $0.63 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions Overall progress: This ISR captures the findings of the implementation support mission carried out between March 4-7, 2019. Despite the early stages of the project, good progress has been achieved under all the project components. Component one: Improving budget expenditure management control: a new payroll system is being designed for the EU to lead implementation phase. Linking e-referrals of health cases with the commitment control system, as well as improving financial control and cash planning are among the project’s top priorities. The team, based in the field, is following up closely with the MOFP to agree on concrete actions. Component two: Improving financial accountability of the PFM system: the Ministry of Finance and Planning (MoFP) achieved good progress with clearing previous financial statements backlog, yet more needs to be done. Technical support for both MoFP and the State Audit and 4/3/2019 Page 1 of 7 The World Bank Implementation Status & Results Report Public Financial Management Improvement Project (P162850) Administrative Control Bureau (SAACB) will be provided to help address the backlog and improve the bank reconciliation process. The project is also contributing to SAACB’s capacity building. Component three: Modernizing public procurement: the High Council or Public Procurement Policies (HCPPP) aims at launching the portal by July 1, 2019 through a Cabinet decree reconfirming its mandatory use by law. The target for 2019 will be for at least 20 line ministries/authorities at the central level and 12 municipalities to use the portal. HCPPP is also working on the establishment of the Dispute Review Unit. The national standard bidding documents for Goods and Works and the standard request for proposal for consultants’ services are also being finalized. Component 4: Project implementation support and management costs: The Project Management Unit (PMU) is almost fully operational. The Project Coordinator is now on board and with the support of the PFM unit at the Ministry, the project is moving forward. An annual implementation plan is now in place. The next implementation support mission is planned for September/October 2019 Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance High High High Macroeconomic High High High Sector Strategies and Policies Substantial Substantial Substantial Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Sustainability Substantial Substantial Substantial Fiduciary Substantial Substantial Substantial Environment and Social Low Low Low Stakeholders Moderate Moderate Moderate Other -- -- -- Overall Substantial Moderate Moderate Results PDO Indicators by Objectives / Outcomes Enhance expenditure control of the PA IN00677001 ►Improved process for budget allotments established that increases predictability to line ministries based on cash forecasts (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target No institutionalized Quarterly budget procedure of allotments for 7 pilot commitments control line ministries are (CCS) and cash determined by a MoFP Value -- No value yet forecasts. Adhoc Cash ad hoc Committee Committee has been taking into account established but will need budget affordability to be strengthened for and cash availabilities 4/3/2019 Page 2 of 7 The World Bank Implementation Status & Results Report Public Financial Management Improvement Project (P162850) cash planning for (cash planning) in quarterly allotments. order to reduce the risk of arrears. The data is provided to the Committee by the Accountant General Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 Enhance expenditure control in the health sector IN00677002 ►Reduction in the gap between the budgeted and actual expenditure on referrals to less than 10 percent (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Gap between budgeted and actual expenditures less than 10 percent. An ad hoc Gap is currently over a Committee at the MoH 100 percent. There is no conducts a quarterly Value forecasting and control of -- No value yet review of referrals- Referrals-related budget related expenditure expenditures. projections vs the available budget measured on commitment basis Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 Enhance financial accountability of the PA IN00677003 ►Public disclosure of audited financial statements takes place within two years of the end of reporting period (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 Enhance procurement management of the PA IN00677004 ►Public procuring entities disclose their procurement plans, procurement notices and contract awards on the single portal procurement web (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 80% of procurement entities at the central level and 50% of municipalities post their procurement Value Zero -- No value yet plans, procurement notices and contract awards on the single portal procurement website Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 4/3/2019 Page 3 of 7 The World Bank Implementation Status & Results Report Public Financial Management Improvement Project (P162850) HCPPP plans to officially launch the portal on July 1st, 2019. Comments: Intermediate Results Indicators by Components Component 1: Improving expenditure management and control IN00677005 ►A Commitment Control System (CCS) is established in line ministries (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target All line ministries implement a CCS with policy notes and No CCS in general, but a manual of Value commitment recording -- Not yet implementation that piloted in 6 line ministries will serve as a guide for calibrating quarterly budget allotments of the ministries Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 IN00677009 ►The role of the Financial Controllers (FC) is amended in line with the new proposed CCS and good international practices (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The FC’s function is FC’s function is ill- redefined in line with defined and not in line the new CCS and with (i) the new proposed inspired by good CCS, and (ii) good Value -- No value yet international practices. international practices Policy notes and with more autonomy manual of devolved to line implementation of the ministries FC are issued Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 IN00677010 ►E-Referrals (MoH) and IFMIS (MoFP) are interconnected for exchange of data (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target E-Referrals (MoH) and No link between both IT IFMIS (MoFP) systems systems and thus no are interconnected meaningful analysis of enabling exchange of Value -- No value yet referrals-related data for a better expenditure vs. monitoring of the commitments is possible referral-related expenditure Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 IN00677011 ►The Payroll and HR systems (MoFP and GPC respectively) are interconnected (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target No interconnection Both systems are Value -- No value yet between both systems at interconnected to allow 4/3/2019 Page 4 of 7 The World Bank Implementation Status & Results Report Public Financial Management Improvement Project (P162850) MoFP (Payroll) and GPC exchange of data (HR system) so that between MoFP and shared information is GPC and subsequently missing to develop a development of a wage bill control wage bill control procedure procedure Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 The proposal of the new payroll design system should be finalized by the Ministry early April. The EU will then take over the implementation phase. The project will continue to monitor and report on this indicator Comments: as it progresses. Component No. 2: Improving financial accountability of the PFM system IN00677006 ►MOFP publicly disseminates audited financial statements and holds an event to engage the public (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 Component No. 3: Modernizing Public Procurement IN00677007 ►A Dispute Review Unit (DRU) responsible for administrative review of appeals from aggrieved bidders, established in accordance with the PPL (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Appeals from aggrieved bidders concerning alleged non-compliance by procuring entities in conducting procurement Value No DRU exists -- No value yet proceedings are reviewed by a robust DRU in accordance with the PPL, and decisions are publicly disclosed via the single procurement portal Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 By May 1, 2019, HCPPP along with representatives from other PA agencies should develop: (i) the procedures for solicitation and selection of the DRU experts; and (ii) a proposed financial compensation Comments: scheme. The outcome will be submitted to the Cabinet for endorsement. Once this step is completed, the process of selecting the DRU experts will be launched. Component No. 4: Project Management Arrangements IN00677008 ►Training for middle management employees conducted at the Palestine Public Finance Institute will include a minimum of 20% female employees (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 4/3/2019 Page 5 of 7 The World Bank Implementation Status & Results Report Public Financial Management Improvement Project (P162850) The Project will track all training at the PFI and the gender ratio. 8.6% of middle Training for middle Value managers trained are -- No value yet managers will reach female. 20% female employees by the end of the project Date 28-Nov-2017 13-Aug-2018 14-Mar-2019 30-Jun-2022 Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P162850 TF-A6949 Effective USD 3.00 3.00 0.00 0.35 2.65 12% P162850 TF-A9433 Effective USD 0.50 0.50 0.00 0.00 0.50 0% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P162850 TF-A6949 Effective 28-Jun-2018 28-Jun-2018 19-Jul-2018 30-Jun-2022 30-Jun-2022 P162850 TF-A9433 Effective 27-Jan-2019 27-Jan-2019 26-Feb-2019 30-Jun-2022 30-Jun-2022 Cumulative Disbursements 4/3/2019 Page 6 of 7 The World Bank Implementation Status & Results Report Public Financial Management Improvement Project (P162850) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 4/3/2019 Page 7 of 7