The World Bank Implementation Status & Results Report Modernization of Public Finance Management (P144952) Modernization of Public Finance Management (P144952) EAST ASIA AND PACIFIC | Myanmar | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2014 | Seq No: 10 | ARCHIVED on 13-Feb-2020 | ISR37965 | Implementing Agencies: Ministry of Planning and Finance (MOPF), Office of the Auditor General of the Union, Myanma Economic Bank (MEB), Joint Public Accounts Committee Key Dates Key Project Dates Bank Approval Date: 02-Apr-2014 Effectiveness Date: 09-Oct-2014 Planned Mid Term Review Date: 30-Sep-2016 Actual Mid-Term Review Date: 30-Sep-2016 Original Closing Date: 30-Sep-2019 Revised Closing Date: 31-Mar-2021 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The development objective of the project is to support efficient, accountable and responsive delivery of public services through the modernization of Myanmar’s PFM systems and strengthening institutional capacity. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name A. Improving Revenue Mobilization Through Bringing More Revenues from Natural Resources on Budget and Strengthening Tax Administrati on:(Cost $11.94 M) B. Supporting Responsive Planning and Budget Preparations:(Cost $8.57 M) C. Supporting Effective Budget Execution and Financial Reporting:(Cost $17.38 M) D. Fostering External Oversight and Accountability:(Cost $5.36 M) E. Establishing a Sustainable Institutional Platform and Skills-base for PFM:(Cost $6.75 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions Overall Progress: Modernization of Public Finance Management (MPFM) Project has been extended up to March 31, 2021 (an extension of 18 months) as per the Government’s request and revised the project results framework to better capture the results of the project’s core activities, strengthen the theory of change and better link the upstream PFM reforms to downstream service delivery improvements. The Government considers this project as the main vehicle to support the implementation of its PFM reform strategy and the extension allows for the support of the first phases of key contracts which will go beyond the original project closing date of September 30th, 2019. The project extension will also allow for the continuous support to the critical PFM reforms supported by the project, while a follow-on project is being prepared to avoid a gap in 2/13/2020 Page 1 of 11 The World Bank Implementation Status & Results Report Modernization of Public Finance Management (P144952) support. The PDO aimed at supporting efficient, accountable and responsive delivery of services through the modernization of Myanmar’s PFM systems and strengthening institutional capacity remains fully relevant. The overall project implementation is considered moderately satisfactory with project disbursement at 70% as of December 2019. The project has achieved 6 of the 17 revised results indicators reflected in the results framework matrix. The task team is closely monitoring the key work plan activities and is proactively supporting the implementing agencies to complete all tasks and achieve the planned objectives. Recent Implementation Support Missions and Fiscal and PFM workshop: The World Bank has fielded three Implementation Support Missions for the MPFMP and a workshop to facilitate project restructuring, support the implementing agencies to achieve the planned objectives and discuss the sequencing of the PFM modernization strategy to avoid an implementation and funding gap:  ISM in July 1-4: The mission discussed a preparation of a project restructuring paper for an 18 months no-cost extension, introduced the new WB project team and reviewed the overall implementation progress of the project and closing date extension. The mission also met with the Internal Revenue Department (IRD) and the Myanmar Economic Bank (MEB) to follow up on the two large International Competitive Bidding (ICB) procurements related to the ITAS and CBS.  ISM in Aug 12-14: The mission team presented and discussed the proposed project extension and restructuring plan, including changes to the intermediary result indicators .The team also met with IRD management and ITAS project team to discuss the Government’s tax policy and tax administration reforms and the project’s full support to achieve the expected results. The mission met with the management of the Large and Medium Tax payer offices and was briefed on their objectives, results relating to increased tax collections and improved tax payer service, challenges and opportunities.  ISM in Nov 25-27: A joint World Bank - Multi Donor Trust Fund (MDTF) partners mission team met with each of the IAs to (i) review the status and progress of the MPFM project and support implementation, (ii) discuss the changes introduced in the project restructuring and extension and how they have been reflected in the results framework, project work plan and budget, and (iii) examine major procurement packages with a focus on ITAS and CBS, financial management and other implementation aspects such as M&E.The mission also discussed the sequencing of the PFM modernization strategy to identify what core PFM reforms and system modernization go beyond this project and require continued support in the Phase 2 of the MPFMP.  Fiscal and PFM workshop in Dec 6-7, 2019: A retreat was held in Bagan with MOPFI senior leadership, WB and development partners. The World Bank EFI team (MTI and Governance) and GOM discussed the macro-fiscal policies and initiatives, public financial management reforms and the World Bank’s analytical (PEFA) and operational support, including phase 2 of the Myanmar PFM Project (MPFMP) and Non-Lending Technical Assistance. Reform sequencing and potential support through a follow-up Phase 2 project was discussed in detail through cross-departmental working groups. Fiscal decentralization and local PFM issues were also discussed, building on the recent Subnational Public Expenditure Review. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Moderate Moderate Macroeconomic -- Moderate Moderate Sector Strategies and Policies -- Moderate Moderate Technical Design of Project or Program -- Moderate Moderate Institutional Capacity for Implementation and -- Substantial Substantial Sustainability Fiduciary -- Moderate Moderate Environment and Social -- Low Low Stakeholders -- Moderate Moderate Other -- Substantial Substantial Overall -- Substantial Substantial 2/13/2020 Page 2 of 11 The World Bank Implementation Status & Results Report Modernization of Public Finance Management (P144952) Results PDO Indicators by Objectives / Outcomes Increased tax revenue collection IN00782336 ►Increase in Tax collection from Large Taxpayers (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Taxes collected by LTO from large tax Total tax revenue to GDP payers in FY 2018/19 Baseline: Taxes ratio is 8.49 % as of 30 stood at 3,102,329 Taxes collected by collected by LTO in FY September 2018 million MMK. LTO’s LTO for FY 2020/21 is Value 2015-2016 was according to the collection target for FY estimated at 3,250,000 1,105,670 million MMK. estimates reflected in the 2019/20 is 3,508,246 million MMK citizen budget with 475,889 (13.56% of the target) collected thus far Date 30-Sep-2016 28-Sep-2018 27-Nov-2019 31-Mar-2021 This indicator has been Revised. The initial indicator measuring Tax to GDP ratio goes well beyond the project scope and thus raises attribution questions. As the project is directly supporting the Large Comments: taxpayers office and increased enforcement through the international tax audit advisers, the indicator has thus been focused on its results in terms of increased taxes collected from large taxpayers. Enhanced Fiscal Transparency IN00782337 ►Number of key budget and fiscal documents published on the MoPF website for public access (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Public can access the following 8 documents at www.mof.gov.mm Public can access the 1. Annual budget following 7 documents law at www.mopf.gov.mm 2. Budget 1. Annual budget law The end of project summary (pre-budget 2. Budget summary target for number of statement) (pre-budget statement) key fiscal documents 3. Budget Speech 3. Budget Speech 4. publicly available has 4. Citizens Citizens Budgets 5. been increased to 9, Value 1 (enacted budget) Budgets Annual budget report including a budget 5. Reports of 6. Mid-year budget dashboard and a MEITI for FY 2013-14, report 7. Quarterly report on gender 2014-15, 2015-16 budget report. Budget informed budgeting for 6. Annual budget dashboard not 1 service sector. report operational. Report on 7. Mid-year gender informed budget report budgeting not ready. 8. Quarterly budget report Date 01-Apr-2014 28-Sep-2018 27-Nov-2019 31-Mar-2021 2/13/2020 Page 3 of 11 The World Bank Implementation Status & Results Report Modernization of Public Finance Management (P144952) The indicator focuses on the disclosure of key budget and fiscal information supported by the project. The publication of a budget dashboard and a report on gender informed budgeting for 1 service sector has Comments: been added as part of the project extension. These two new reports are expected to be included in the expanded citizen budget from 2021 onward. Strengthened Budget Credibility IN00782338 ►Composition of expenditure out-turn compared to original approved. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 24.00 3.84 8.35 14.00 Date 01-Apr-2014 28-Sep-2018 27-Nov-2019 31-Mar-2021 A high budget variance is an indicator for PFM weaknesses affecting service delivery. Conversely, the efforts to enhance the credibility of the budget overall, including through enhanced budgeting and reporting is an opportunity to improve budget predictability and execution in key service sectors. Comments: Compositional variances between budget estimate and temporary actual of 2017-18 budget was 3.84%. Compositional variances between budget estimate and provisional actual of 2018 mini transition-budget (April-September) was 8.35% IN00782345 ►Improved budget credibility and budget out-turn in key public service sectors (health, education and transport) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 18.00 -- 18.00 14.00 Date 28-Sep-2018 -- 28-Sep-2018 31-Mar-2021 This indicator measures the variation between allocated budget (adjusted for in year allocations) and actual spending in the ministries of Education, Health & Sports, and Transport and Communication, representing essential services for citizens in general and for the poor and the vulnerable in particular. Comments: While this is a medium term reform effort, an initial 10% reduction in budget variance is sought by the end of this extended project. Efficient budget preparation process IN00782339 ►Budget preparation process including (i) issuance of ceilings (ii) preparation of medium-term fiscal framework (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 01-Apr-2014 28-Sep-2018 29-Mar-2019 31-Mar-2021 Overall Comments PDO The PDO remains fully relevant. However, the project results framework has been enhanced to better capture the results of the project’s core activities, strengthen the theory of change and better link the upstream PFM reforms to downstream service delivery improvements. Changes to PDO indicators include: 2/13/2020 Page 4 of 11 The World Bank Implementation Status & Results Report Modernization of Public Finance Management (P144952) (i) the indicator on Tax to GDP ratio revised to reflect project's support of the Large Taxpayer Office (LTO). Tax to GDP ratio goes well beyond the project scope and thus raises attribution questions. As the project is directly supporting the Large taxpayers office and increased enforcement through the international tax audit advisers, the indicator has thus been focused on its results in terms of increased taxes collected from large taxpayers (ii) the indicator on fiscal transparency updated by focusing on the key budget and fiscal documents supported by the project and disclosed on the MOPFI website. It increases attribution by removing the publication of the EITI report, not directly supported by the project and objectivity enhances objectivity by removing a reference to an ill defined good global practices. It increases ambition by adding the publication of a budget dashboard yet to be produced. (iii) a PDO indicator added on the budget outturn and credibility in key public sectors, such as health, education and transport to measure an important aspect of PFM improvement to essential services for citizens in general and for the poor and the vulnerable in particular. The efforts to enhance the credibility of the budget overall, including through enhanced budgeting and reporting, is an opportunity to improve budget predictability and execution in key service sectors Intermediate Results Indicators by Components A. Improving Revenue Mobilization and Strengthening Tax Administration IN00782340 ►Number of large and medium tax-payers completing self-assessment (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 861.00 2,825.00 2,300.00 Date 01-Apr-2014 28-Sep-2018 26-Nov-2019 31-Mar-2021 LTO has 955 taxpayers and MTO-1 1870 taxpayers under self-assessment as of November 26, 2019 Comments: IN00782346 ►Modernization of tax administration information system (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target MoPF / IRD decided to terminate the Delivery of an There is no integrated supplier’s contract, integrated tax tax information and considering the information system for Value -- administration system at substantial delays and testing in IRD IRD. shortcoming and to re- headquarters, LTO bid using limited and MTO. international bidding. Date 30-Sep-2015 -- 27-Nov-2019 31-Mar-2021 The tax administration modernization and implementation of the new tax administration law do require a modern and integrated tax administration information system supported by the project. The procurement and delivery of such a system is a key milestone for the project. This intermediary indicator thus aims to Comments: measure the delivery of the integrated tax management system, while implementation is foreseen over a period of 3 years. B. Supporting Responsive Planning and Budget Preparations IN00782341 2/13/2020 Page 5 of 11 The World Bank Implementation Status & Results Report Modernization of Public Finance Management (P144952) ►Improving information base for linking budgets to plans- number of departments submitting recurrent and capital budget forms electronically (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 40.00 Date 01-Apr-2014 28-Sep-2018 27-Nov-2019 31-Mar-2021 Indicator supports implementation of electronic budget submission for both current and capital budget and moving to a more sustainable web-based solution. WB provided technical assistance through workshops on electronic budget submission to all line agencies during the last two fiscal years. Planning Department Comments: has already piloted the Electronic Forms started for the 2018 Six Months Plan, 2018-19 FY and 2019-20 FY. C. Supporting Effective Budget Execution and Financial Reporting IN00782342 ►Timeliness of reconciled budget execution reports (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Treasury Department Treasury Department reconciles budget reconciles budget execution reports execution reports monthly, and submits Value >6 months monthly, and submits to