The World Bank Strengthening cash planning and execution () REPORT NO.: RES39103 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF STRENGTHENING CASH PLANNING AND EXECUTION PROJECT APPROVED ON AUGUST 1, 2018 TO THE REPUBLIC OF KOSOVO GOVERNANCE EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Linda Van Gelder Regional Director: Lalita Moorty Practice Manager/Manager: Roberto Adrian Senderowitsch Task Team Leader: Jonida Myftiu The World Bank Strengthening cash planning and execution () ABBREVIATIONS AND ACRONYMS The World Bank Strengthening cash planning and execution () 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 P167597 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 01-Aug-2018 31-Dec-2019 Organizations Borrower Responsible Agency Ministry of Finance Ministry of Finance Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 0 Total Financing 0 Financing Gap 0 DETAILS -NewFin3 The World Bank Strengthening cash planning and execution () Project Development Objective (PDO) Original PDO The PDO is to improve treasury management and expenditure control through modernization of the cash planning and allocations management. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A8232 27-Aug-2018 29-Nov-2018 29-Nov-2018 31-Dec-2019 .18 .02 .16 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. Since the signing and effectiveness of the grant in November 2018, the Project has progressed satisfactorily. The project management team was established in December 2018 and has been proactively advancing implementation. An International Consultant, on board since June 2019, has conducted an assessment of the current situation regarding the cash planning and allocations process. Based on the recommendations provided, the consultant and the Kosovo Treasury team outlined the improved workflow and business process and defined the functional requirements and technical specification for the ICT module that will support the process. The consultant is currently working on the drafting of new business processes and rules. The procurement process for the customized free balance cash management system has started and contract negotiation is about to be completed. However, the implementation will require an extension of the grant current closing date by two months. In this regard, the Project is on track to reach its objectives if extended. 2. The government has requested to extend the closing date of the recipient-executed grant and Project by two months from December 31, 2019 through February 2020. The extension of the closing date will provide sufficient time to complete delivery of the system that is necessary to improve treasury management in Kosovo. In addition, the government has requested to increase the financing percentage of the second disbursement category (Goods) from 50% to 100%, and reallocation of funds between the categories to increase allocation for the second disbursement category (Goods) given projected savings under the first disbursement category (Non-consulting services, consulting services, Training and Operating Costs) with all necessary procurement in place. The World Bank Strengthening cash planning and execution () 3. There is no other procurement activity pending under the Project. There are no outstanding fiduciary issues. There are no overdue audits. II. DESCRIPTION OF PROPOSED CHANGES 4. In a letter dated September 23, 2019, the Government of Kosovo requested for the: (i) extension of the grant closing date by two months, (ii) reallocation between disbursement categories, and (iii) an increase in financing percentage for the second disbursement category. i. The closing date extension from December 31, 2019 until February 29, 20201 will provide sufficient time to deliver the results for such an important and demand-driven support to the Kosovo Treasury. Specifically, it will allow the Kosovo Treasury to complete: a) training of the treasury officers and other staff on the new cash planning and allocation procedure and the new module by the end of January 2020, and b) operational acceptance of the new module and adoption of the new procedures by the end of February 2020. The target dates for results indicators are revised according to the new timeline of the remaining activities. The extension request has been submitted and approved by the secretariat, who administers the SAFE Trust Fund Program. The project cannot be extended beyond end of February, since the said Program is closing on June 30, 2020. ii. The government also requested the reallocation of Euro 5,000 between disbursement categories to account for projected savings under the first disbursement category “Non-consulting services, consulting services, Training and Operating Costs under the Project”. The request indicates the reduction of the allocation under the first disbursement category by Euro 5,000 and increase by the same amount the second disbursement category “Goods under the Project”. iii. Finally, the government requested an increase in the financing percentage of the second disbursement category from 50% to 100% to allow for maximum financing of the implementation of the customized free balance cash management system. The request reflects the lower cost estimate for the system after the definition of the functional requirements now estimated at EUR 110,000 or USD 120,000 (from EUR 213,700 or USD 250,000). This significantly reduced the total costs of the recipient-executed component to EUR 180,000 or USD 200,000 (from EUR 290,700 or USD 340,000) which will be financed by the recipient-executed grant up to EUR 162,500. The government remains committed to settle remaining obligations under this activity in case of higher contract cost. 1The Government requested for a closing date of February 28, 2020. However, for administrative purposes, the Bank proposes to set the closing date until the end of February 2020 which will be February 29, 2020. The World Bank Strengthening cash planning and execution () III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1: Strengthening of Component 1: Strengthening legal and regulatory framework of legal and regulatory 90000.00 Revised 80000.00 for cash planning and framework for cash planning management and management The World Bank Strengthening cash planning and execution () Component 2: Implement an Component 2: Implement an integrated module within KFMIS integrated module within 250000.00 Revised 120000.00 for cash planning and budget KFMIS for cash planning and allocations budget allocations Component 3: Project Component 3: Project 10000.00 No Change 10000.00 supervision (BETF) supervision (BETF) TOTAL 350,000.00 210,000.00 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-A8232 Effective 31-Dec-2019 29-Feb-2020 30-Apr-2020 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed TF-A8232-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: NonCS, CS, TR, OC 77,000.00 18,556.00 72,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: GOODS 85,500.00 0.00 90,500.00 50.00 100 Total 162,500.00 18,556.00 162,500.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed The World Bank Strengthening cash planning and execution () 2019 130,000.00 40,000.00 2020 70,000.00 160,000.00 Note to Task Teams: End of system generated content, document is editable from here.