Supplemental Letter No. 2 REPUBLIC OF SERBIA Y lb ,2016 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: IBRD Loan No. 8608-YF (Modernization and Optimization of Public Administration Program) Performance and Monitoring Indicators Dear Sirs and Mesdames: This refers to Section III.A of Schedule 2 to the Loan Agreement between the Republic of Serbia (the Borrower) and the International Bank for Reconstruction and Development (the Bank) for the above-captioned Program. The Borrower hereby confirms to the Bank that the indicators set out in the attachment to this letter shall serve as the basis for the Borrower to monitor and evaluate the progress of the Program and the achievement of the objectives thereof. Very truly yours, REPUBLIC OF SERBIA By Authorized Representative Attachment Attachment to Supplemental Letter No. 2 IBRD Loan No. 8608-YF (Modernization and Optimization of Public Administration Program) Performance and Monitoring Indicators Program Development Objective (PDO): To improve efficiency in public sector employment and finances PDO Level Results 0- Target Values Data Source! Responsibility PDO R Unit Baseline YR1 YR2 YR3 Frequency for Data Remarks' Indicators Methodology Collection PDO Indicator 1: Z % 0 0 70 70 Annual Sample-based PPS DLI#2 Share of public survey (exact administration survey design to employees assigned be determined) of to new pay grades public as per the Law on administration Public Sector employees pay Employees Salary slips against the System. new pay grades PDO Indicator 2: Z Yes/No No Yes Yes Yes Annual Calculation: PPS DLI#3 Total number of Total number of public employees as per administration payroll compared employees at or to Total number under annual ceiling of staff as prescribed by the determined by the Law on Ceilings on annual ceiling the Number of Employees PDO Indicator 3: % 0 100 100 100 Annual Review and count PPS DL#4 Share of redundant of relevant public documents of administration severance employees packages for If not stated otherwise, the DLIs are for all three years of implementation. Program Development Objective (PDO): To improve efficiency in public sector employment and finances PDO Level Results - Target Values Data Source! Responsibility PD itRUnit Baseline YR1 YR2 YR3 Frequency for Data Remarks InictosMethodology Collection receiving eligible public redundancy administration payments pursuant employees to provisions of Calculation: Law on Ceilings on public the Number of administration Employees, Civil employees Servants Law, and receiving Labor Law redundancy payments/eligible public administration employees per Labor Law, Law on Ceilings on the Number of Employees, and Civil Servants Law PDO Indicator 4: % 62 65 68 71 Annual Public PPS DLI#5 Share of public procurement procurement portal. contracts within the Calculation: category of public public authorities over procurement 5,000,000 RSD in contracts within value, signed in a the category of Fiscal Year of the Public Authorities Borrower, in 90 over RSD 5 days or less million in value, between the date of signed in the Issuance of Bidding fiscal year in a Documents and the duration of 90 date of signing of I I days or less Program Development Objective (PDO): To improve efficiency in public sector employment and finances PDO Level Results -Target Values Data Source/ Responsibility Unit Baseline YR1 YR2 YR3 Frequency for Data Remarks Indicators Methodology Collection the Public between date of Procurement issuance of Contracts bidding documents and signing of the public procurement contracts/ All procurement contracts over RSD 5 million in value signed in the fiscal year. PDO Indicator 5: RSD 26.6 29.3 32.2 35.4 Annual Estimate of total PPS DLI#6 Value of Public billion billion billion billion value of public Procurement procurement Contracts awarded framework through Framework agreements in a Agreements (in given year based RSD) on PPO's public procurement database. PDO Indicator 6: % 60 70 80 90 Annual Calculation: PPS DLI#8 Percentage of Value of commitments in commitments budget execution entered in FMIS system entered within deadline within the required prescribed by deadline per the legislation/ Value Law on Deadlines of total for Payments in commitments Commercial entered in FMIS x Transactions 100 Program Development Objective (PDO): To improve efficiency in public sector employment and finances PDO Level Results 0-4 Target Values Data Source! Responsibility ILe Unit Baseline YR1 YR2 YR3 Frequency for Data Remarks _ _n__c__tor_ Methodology Collection Result Area 1: Improved HRM Intermediate Yes/No No Yes Yes Yes Annual Calculation: PPS Results Indicator Number of public 1.1: At least 70% of administration public employee administration positions assigned employee positions to job grades / assigned to pay Total number of grades according to public the Law on Public administration Sector Employees employee Salary System positions x 100 Intermediate L % 0 0 60 70 Annual Calculation: MPALSG Results Indicator Division of 1.2: Share of public assigned public administration administration employees assigned employees by to new pay grades total number of as per the Law on public Public Sector administration Employees Salary employees x 100. System. Intermediate L Yes/No No No No Yes Annual Sample review of MPALSG - Results Indicator personal data, 1.3: Employee interview of Registry functional individuals, and according to defined review of criteria in the Law customized and on Registry of all routine reports Employees, Elected, and HR Nominated and transaction Appointed and documentation Engaged Persons and audit trail Program Development Objective (PDO): To improve efficiency in public sector employment and finances PDO Level Results -0 Target Values Data Source! Responsibility PD Unit Baseline YR1 YR2 YR3 Frequency for Data Remarks' Indicators Methodology Collection within Public Funds Beneficiaries Intermediate l % 0 0 30 60 Biannual Calculation: MPALSG - Results Indicator Number of re- 1.4: Share of public graded public administration administration employees paid employees paid according to new according to new pay grades as per grades / All the Law on Public public Sector Employees administration Salary System. employees in payroll x 100 Intermediate E Number 0 5 10 17 Biannual Review and count MPALSG - Results Indicator of retrenchment 1.5: Ministries with plans retrenchment plans, identifying redundant positions Result Area 2: Improved FM Intermediate O Number 0 247 317 526 Annual Review of FMIS PPS Results Indicator reports 2.1: IBB included in the FMIS Intermediate E] Number 25 35 45 50 Annual Review of budget PPS Results Indicator inspection reports 2.2: Budget inspections conducted Result Area 3: Improved Procurement Management Program Development Objective (PDO): To improve efficiency in public sector employment and finances PDO Level Results Wo Target Values Data Source! Responsibility Unit Baseline YR1 YR2 YR3 Frequency for Data Remarksi Indicators Methodology Collection Intermediate El Number 3,300 3,600 4,000 4,400 Annual PPO's Annual PPO Results Indicator Report/Collection 3.1: Public through PPO's procurement database of contracts awarded concluded through framework contracts agreements for all contracting authorities Intermediate E] Number 1,810 2,000 2,200 2,400 Annual PPOs Annual PPO Results Indicator Report /Database 3.2: Public of procurement procurement officers certified officers certified