Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) PK Sindh Public Sector Management Reform Project (P145617) SOUTH ASIA | Pakistan | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2015 | Seq No: 4 | ARCHIVED on 28-Dec-2016 | ISR24825 | Implementing Agencies: Sindh Revenue Board, Economic Reform Unit, Finance Department Key Dates Key Project Dates Bank Approval Date:28-Jan-2015 Effectiveness Date:28-Apr-2015 Planned Mid Term Review Date:16-Oct-2018 Actual Mid-Term Review Date:-- Original Closing Date:31-Aug-2020 Revised Closing Date:31-Aug-2020 Project Development Objectives Project Development Objective (from Project Appraisal Document) The development objective of the Project is to strengthen public sector performance in the Province of Sindh through improved revenue generation and expenditure management. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Component 1: Results-based financing to provide an incentive for achieving eligible PSM reforms.:(Cost $40.00 M) Component 2: Technical Assistance (TA) to support capacity building and institutional strengthening associated with achievement of eligible PSM reforms.:(Cost $10.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Satisfactory  Moderately Unsatisfactory Overall Implementation Progress (IP)  Moderately Satisfactory  Moderately Unsatisfactory Overall Risk Rating  Substantial  Moderate Implementation Status and Key Decisions 12/28/2016 Page 1 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) Overall progress towards the Project Development Objective (PDO) and implementation progress are rated as 'Moderately Unsatisfactory'. Only one out of seven Disbursement Linked Indicators (DLIs), on transparency of budget formulation and execution, was met in FY2015/16 (ending June 30, 2016) and two of three PDO indicators (increase in revenues from the Sales Tax on Services and improvement in budget credibility) are on track. No progress has been made towards the PDO indicator on reducing the average timeframe for the completion of procurement processes. DLI and non-DLI-related activities in Public Financial Management (PFM), the Sindh Revenue Board (SRB), and development portfolio monitoring have progressed in the past six months. Some steps have been taken in procurement reforms (development of procurement Management Information System), but no progress has been made towards the training and certification of procurement officers (DLI). In view of recent progress, it is expected that most of the DLI targets for the second year of the project (FY2015/16) will be met with a year’s delay by the end of FY2016/17 but only one or two of the third-year targets are likely to be achieved (on internal audit and on transparency of budget formulation and execution). Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  High  Moderate Macroeconomic  --  High  Substantial Sector Strategies and Policies  --  Substantial  Moderate Technical Design of Project or Program  --  Moderate  Moderate Institutional Capacity for Implementation and Sustainability  --  Moderate  Moderate Fiduciary  --  Moderate  Moderate Environment and Social  --  Low  Low Stakeholders  --  Substantial  Moderate Other  --  --  -- Overall  --  Substantial  Moderate Results Project Development Objective Indicators PHINDPDOTBL  Improved collection of Sales Tax on Services (STS) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 39.40 18.00 46.30 3.50 Date 30-Jun-2014 30-Jun-2015 30-Jun-2016 30-Jun-2019 Comments Annual reporting measures cumulative percentage increase from the baseline in real terms. Actual STS revenues were Rs. 49.4 billion in FY2014/15 (a 25% increase from the baseline in nominal terms) and Rs. 61.6 billion in FY2015/16 -- a 56% increase from the baseline in nominal terms. 12/28/2016 Page 2 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) The annual GDP deflator was 3.6% for FY2014/15, which results in a real term increase of 20.8% from the baseline FY2013/14; and 2.0% for FY2015/16, which results in a y-o-y real increase of 21.4% and a cumulative increase from the baseline in real terms of 46.3% in FY2015/16. Therefore, the final target for this indicator (47% real increase from the baseline at the end of the project) is very close to being met. PHINDPDOTBL  Improved credibility of the budget (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 13.48 13.48 9.40 10.00 Date 30-Jun-2012 20-Apr-2015 30-Jun-2016 30-Jun-2019 Comments The composition variance of 9.4% (three year aggregate for the period from FY13/14 to FY15/16) is based on composition variance of 8.8% for FY14/15 and 8.7% in FY15/16 (against a target of 13%). The latter value does not include a one-off budget adjustment involving the entry into the budget of past outlays effected during the period FY02/03 until FY15/16. These outlays consisted of re-investment of revenue from investments by the Government of Sindh. The baseline recorded in the PAD is incorrect, as it was calculated using PI 1 (variation of aggregate actual and budgeted expenditure during past three years) with baseline of 13.48% for FY 2011/12 instead of PI 2 (variance between actual and budgeted expenditure composition during the last three years), as suggested by the definition of the PDO indicator. The correct baseline should have been 39%. The task team does not however see the need for a restructuring to modify the target of the PDO indicator in view of the following considerations: - Composition variance below 10% over a period of three years is consistent with a level of budget credibility corresponding to a 'B' score in PEFA indicator PI 2, which would be an improvement from the C score for this indicator in the 2013 PEFA assessment report for the province. - The targets are not unrealistic in the context of public financial management in Sindh province. Indeed, since the project started, the Government of Sindh has met the indicator targets for FY14/15 and FY15/16. PHINDPDOTBL  Reduced time taken to process procurement contracts (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 82.00 82.00 82.00 15.00 Date 01-Sep-2014 14-Oct-2015 30-Nov-2016 30-Jun-2019 Comments This indicator has not been measured since the FY2013/14 baseline, as the SPPRA does not yet have a system of tracking procurement processes undertaken by various contracting authorities in the province. The Bank team has therefore recommended that the SPPRA hire a consultant to review a representative sample of procurement processes to update the value of this indicator, using the same methodology as the study that was conducted to establish the baseline. 12/28/2016 Page 3 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) Overall Comments Due to the delay in the implementation of the Sindh Public Procurement Regulatory Authority (SPPRA) Management Information System (MIS), the value of this indicator cannot be updated at present without commissioning an audit of a representative sample of procurement processes undertaken by various contracting authorities of Sindh province. It is however unlikely that this indicator has improved from the baseline given that there has been no change in procurement procedures, process automation, or training of procurement officers in contracting authorities. Intermediate Results Indicators PHINDIRITBL  Approval and initial implementation of Sindh Tax Revenue Mobilization Reform Plan (DLI) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target (i) FD has publicly disclosed the Sindh Tax Sindh Tax Revenue Sindh Tax Revenue Revenue Tax Reform Plan approved Mobilization Plan has Mobilization Plan has Mobilization Value in Feb 2014; 2012-13 STS been disclosed. FY 13- been disclosed. FY 13- Reform Plan. collection is PKR 34 billion. 14 STS recovery was 14 STS recovery was 42 (ii) SRB’s 42 billion. billion. collection of STS for FY2013/14 reached PKR 42 billion. Date 30-Jun-2014 30-Jun-2015 30-Jun-2015 30-Jun-2015 Comments This DLI was achieved in the first year of the project and was applicable only to that year (FY2013/14). PHINDIRITBL  Enhanced SRB human resources capacity for administration (DLI) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Staffing and training plan has been prepared SRB has and approved, but approved a Staffing and training needs to be updated to revised staffing Staffing and training plan is plan has been reflect revised staffing Value plan as per the under development prepared and needs. Training plans for recommendatio approved. incoming staff and SRB n of the third management have been party review. prepared, but not yet implemented. Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments The second-year target for this DLI has not been met, but is likely to be met at the end of FY2016/17. 12/28/2016 Page 4 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) PHINDIRITBL  Increased automation of SRB systems (DLI) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target A detailed automation SRB has plan has been prepared issued all Zero automated notices; A detailed automation and the SRB has notices to at Unique taxpayer plan has been drafted. implemented several least 90% of Value identification system does It will be approved and key actions under the non-compliant not exist; No third party implemented after due plan. The second-year registered linkages. appraisal by the Bank. DLI target is likely to be taxpayers in achieved by the end of FY2018/19. FY2016/17. Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments The DLI target for the second year was not met in FY2015/16 but it is expected to be met by the end of FY2016/17. The World Bank will review the automation plan as part of an overall ICT assessment of the SRB that will be conducted in early 2017. Key milestones that have already been achieved under the automation plan include the following: - Linkage of the SRB database with those of the Federal Board of Revenue and the National Database and Registration Authority - E-filing and online payment through internet or mobile banking and ATMs of all major commercial banks -- based on automated invoices displayed online - Issuance of e-notices to short-filers and non-filers started in September 2016 and is due to be completed in March 2017. PHINDIRITBL  Increased tax base (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 4,800.00 267.00 295.00 25.00 Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments The number of registered STS taxpayers reached 12,574 in FY2014/15 and 18,977 in FY2015/16. This amounts to a cumulative increase of 295% from the baseline established in FY2013/14. This means that by the end of the second year of implementation, the end target for the project was already exceeded by more than ten times. However, only 62% of registered taxpayers filed their tax returns in FY2014/15, a share that dropped to 58% in FY2015/16, even though the number of STS filers actually increased by 41% -- from 7,853 in FY2014/15 to 11,085 in FY2015/16. 12/28/2016 Page 5 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) PHINDIRITBL  Risk based audits of taxpayers implemented (DLI) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target SRB has: (i) The SRB has appointed carried out a a Board Member for strategic review Audit and hired five to enhanced Risk-based audit plan auditors, including some criteria has been prepared. secondees from the objectivity; and After due approval by Value System Absent Federal Board of (ii) approved a the Board, its Revenue. However, compliance risk implementation will audits to date are not yet management commence. conducted according to strategy, in a risk-based order to methodology. increase the audits’ hit rate Date 30-Jun-2014 02-Oct-2015 30-Nov-2016 30-Jun-2019 Comments The DLI target for the second year was not met in FY2015/16 but is likely to be achieved by the end of FY2016/17. The World Bank will be sharing with the SRB the methodology for risk-based audit that has been developed under the tax component of the TAGR (Trust Fund for Accelerating Growth and Reforms) program. SRB auditors will also participate in training workshops to be organized under the TAGR program in 2017. PHINDIRITBL  Improved SRB performance transparency (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target SRB is finalizing the combined Annual Reports for FY2014/15 and FY2015/16. The Four quarterly Annual report irregular, Annual Report for and one annual Value quarterly reports not Same as baseline. FY2014/15 had been report published prepared already in published FY2015/16 but could not be published because it was not approved by the Chief Minister at the 12/28/2016 Page 6 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) time. Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 PHINDIRITBL  Debt management systems instituted (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target a) Complete loan by loan Finance Department debt stock has completed (opening and The Debt Management reconciliation of Sindh closing) and Unit of the Finance debt portfolio in flow details Department prepared January 2016 with included in the debt sensitivity collaboration of budget analysis according to the Economic Affairs documents for World Bank guidelines in Debt Management Division. Working on FY 2017/18. b) Value June 2016. The draft Systems do not exist. publication in the Publication of External Debt Budget Analysis for FY annual debt Management Manual 2015-16 is under way. statistics has been prepared and The sensitive analysis bulletin in-line is currently awaiting of debt servicing with with approval by the Finance respect of exchange international Secretary. rate and interest rate is best practices being prepared. having a lag of not more than three months. Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 PHINDIRITBL  Increased extra-budgetary releases captured in FMIS (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- -- 90.00 Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments This indicator has not been properly measured since the start of the project primarily due to the unclear definition of the indicator. The indicator's definition does not specify how the denominator of the total extra-budgetary releases is to be established, nor does it specify whether the percentage applies to number of such releases or amount of funds involved in such releases. As a result, the Finance Department (FD) has been unable to report on this indicator. The team therefore proposes to provide technical assistance to the FD to measure this indicator with reference to the findings of the 2013 Public Expenditure and Financial Accountability (PEFA) assessment. The project indicator was established based on the low score for PEFA sub-indicator indicator PI-7 (ii): ‘income/expenditure information on 12/28/2016 Page 7 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) donor-funded projects that is included in fiscal reports’ due to the flow of project funds through designated (assignment) accounts outside the FMIS. Total volumes of external funds disbursed could be obtained from the federal Economic Affairs Department, which obtains regular disbursement reports from all major donors. [According to the PEFA report, the volume of unreported extra-budgetary expenditures other than donor-financed projects (sub-indicator PI-7 (i) represented less than 1% of total expenditure, so did not constitute a problem This continues to be the case.] PHINDIRITBL  Establishment of internal audit (DLI) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target (i) At least seven (7) Government Departments (in addition to the FD) have: (A) conducted Internal Audit charter internal audits; has been approved and and (B) Internal Audit charter Internal Audit submitted their has been further Commission has been internal audits revised and established. Recruitment Internal audit function does reports to their Value strengthened. Risk- for the Internal Audit not exist. PAOs. (ii) At based audit scheme Department is least five (5) being prepared with underway. An internal PAOs have audits to be conducted. audit of the Finance undertaken Department has been actions in completed. response to the foregoing internal audit reports, within a month of receipt of such reports. Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments The DLI target for the second year was not met in FY2015/16 but is likely to be met by the end of FY16/17. The Finance Department expects that internal audits will be conducted in two additional departments (Department of Education, Department of Energy) by the end of FY2016/17. 12/28/2016 Page 8 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) PHINDIRITBL  Transparency in budget formulation, allocation and execution (DLI) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Budget Strategy Paper for FY 2016-17 has Budget Strategy Paper been prepared and for FY 2016-17 has summary for CM has been prepared and FD has: (i) been sent for placing summary for CM has submitted to the same in Cabinet. been sent for placing the the Cabinet the Two Quarterly Budget same in Cabinet. Four Budget Execution Reports Quarterly Budget Strategy Paper (QBER) for FY 2015/16 Execution Reports for FY2019/20; have been prepared, a) Budget Strategy Paper (QBER) for FY 2015/16 and (ii) approved and not prepared b) One have been prepared, submitted all Value published on FD’s quarterly report submitted submitted to the four (4) budget website. Third QBER is to the provincial assembly Provincial Assembly, execution being issued and and published on FD’s reports for FY shared with the website. The QBER for 2018/9 to the provincial assembly. the first quarter of Provincial The fourth report shall FY2016/17 has also Assembly and be shared in the month been prepared and published them of June as it can only published. in FD’s website. be prepared after budget has been passed and finalized. Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments The annual targets for this DLI have been achieved in FY2014/15 and FY2015/16. The third year's target is also on track to be achieved by the end of the current fiscal year. PHINDIRITBL  Contracts data entered in the procurement MIS (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 75.00 Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments The SPPRA has hired a firm, which has developed the MIS. The system is currently being tested and is expected to become operational in early 2017. The firm will also provide training of users. 12/28/2016 Page 9 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) PHINDIRITBL  Contracts processed through e-procurement modules (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 50.00 Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments The SPPRA has not yet hired a consultant to develop the functional specifications for an e-procurement system, nor has it approved an e- procurement strategy. Work on this is expected to start in early 2017. PHINDIRITBL  Procurement officials certified (DLI) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The SPPRA is finalizing a contract with a qualified firm to design the certification course SPPRA has SPPRA has prepared a and reached certified at least No certification mechanism paper for Board agreements with six five hundred Value exists. approval. This is still institutes and (500) officers of pending. universities in four cities grade BPS-16 to deliver the course. of above. Trainings are expected to start in March or April 2017. Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments The DLI target for the second year was not met in FY2015/16 but is likely to be met by the end of FY2016/17. PHINDIRITBL  Quarterly developmental development plan monitoring reports prepared and published (DLI) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Consulting firm has The IT system has been P&DD has: (i) been hired and work developed and tested. prepared and underway to meet FY Training of users and published at 14-15 and FY 15-16 rollout to five least twelve targets. The firm shall departments is expected (12) quarterly Value Zero help Planning and to be completed by end reports on Development of March 2017. Reports implementation Department prepare for all five departments of development the quarterly reports on are expected to be schemes during Implementation of completed in FY2018/19 for development schemes FY2016/17. at least four (4) 12/28/2016 Page 10 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) during FY2015/16 for Government at least one Departments; government and (ii) carried department by end out a third party June 2016. review. Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments The DLI target for the second year was not met in FY2015/16 but is likely to be met by the end of FY2016/17, as the system is expected to be launched in January 2017 and the first reports are expected at the end of March 2017. PHINDIRITBL  Departments where geo-tagging of development schemes is implemented and information published. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 1.00 6.00 Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Comments Geo-tagging has started in the Civil Works Department. It will be expanded to four more departments with the rollout of the ADP monitoring system. PHINDIRITBL  Departments with proactive feedback mechanisms established (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 3.00 4.00 7.00 Date 30-Jun-2014 20-Apr-2016 30-Nov-2016 30-Jun-2019 Overall Comments Citizen feedback is currently being collected for the following four services: property registration, motor vehicle registration, payment of pensions; and reimbursement of healthcare expenses. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed 12/28/2016 Page 11 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report PK Sindh Public Sector Management Reform Project (P145617) P145617 IDA-55840 Effective XDR 33.90 33.90 0.00 13.57 20.33 40% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P145617 IDA-55840 Effective 28-Jan-2015 11-Mar-2015 28-Apr-2015 31-Aug-2020 31-Aug-2020 Cumulative Disbursements Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 12/28/2016 Page 12 of 12 Public Disclosure Copy