The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) REPORT NO.: RES34580 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT APPROVED ON MARCH 28, 2016 TO MINISTRY OF FINANCE GOVERNANCE EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Satu Kristiina J. Kahkonen Regional Director: Lalita M. Moorty Practice Manager/Manager: Daniel J. Boyce Task Team Leader: Dmitri Gourfinkel, Iryna Shcherbyna The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) ABBREVIATIONS AND ACRONYMS The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) 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 P146997 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 28-Mar-2016 30-Sep-2019 Organizations Borrower Responsible Agency Ministry of Finance Data-Processing Center Project Development Objective (PDO) Original PDO To improve policy alignment of the budget, consolidate cash balances, improve budget transparency and lay foundations for implementation of an Integrated Financial Management Information System (FMIS) OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-86060 28-Mar-2016 01-Apr-2016 27-Jul-2016 30-Sep-2019 10.00 2.93 7.07 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Note: Formatting instructions for this document. A. Header 1. [All sub-sections must have a continuous paragraph numbering for the entire main text or for each annex per institutional standard.] (a) This is the sub-para numbering for this level. This is the sub-para numbering for this level. This is the sub-para numbering for this level. (i) This is the sub-para numbering for this level. This is the sub-para numbering for this level. (ii) This is the sub-para numbering for this level. This is the sub-para numbering for this level. (iii) This is the sub-para numbering for this level. This is the sub-para numbering for this level. II. DESCRIPTION OF PROPOSED CHANGES Note: Formatting instructions for this document. B. Header 1. [All sub-sections must have a continuous paragraph numbering for the entire main text or for each annex per institutional standard.] (b) This is the sub-para numbering for this level. This is the sub-para numbering for this level. This is the sub-para numbering for this level. (iv) This is the sub-para numbering for this level. This is the sub-para numbering for this level. (v) This is the sub-para numbering for this level. This is the sub-para numbering for this level. (vi) This is the sub-para numbering for this level. This is the sub-para numbering for this level. The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Budget management regulations Budget management 4.92 Revised 3.06 and procedures regulations and procedures PFM IT solutions 3.45 Revised PFM IT solutions 5.73 Change management 1.60 Revised Change management 1.18 TOTAL 9.97 9.97 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-86060 Effective 30-Sep-2019 30-Jul-2021 30-Nov-2021 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2016 30,000.00 0.00 2017 600,000.00 78,000.00 2018 3,300,000.00 1,354,000.00 2019 3,600,000.00 1,500,000.00 2020 2,470,000.00 3,400,000.00 2021 0.00 2,767,800.00 2022 0.00 900,000.00 . The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) . Results framework COUNTRY: Belarus BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT Project Development Objectives(s) To improve policy alignment of the budget, consolidate cash balances, improve budget transparency and lay foundations for implementation of an Integrated Financial Management Information System (FMIS) Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Improve policy alignment of the budget Improved alignment of policies and budgets (Percentage) 16.00 50.00 Consolidate cash balances Increase the level of consolidation of cash balances (by reducing 11.00 7.00 balances outside of TSA) (Percentage) Improve budget transparency Citizens’ budget is published online on annual basis and includes information on budget execution disaggregated at the level of approved budget;information on medium term financial program; and analysis of links between financing Improved budget transparency (Text) Citizen's budget has not been prepared. and results. Citizens’ questions and feedback are published on the website along with responses of the MoF to frequently asked questions. Lay foundations for implementation of FMIS The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Bidding documents for FMIS are prepared based on approved revised business processes and Unified Chart of Future business processes to be supported by IFMIS are Foundations for FMIS (Text) Accounts and cover the following functionality including not fully defined. planning,execution, financial control, accounting and reporting, debt management. Rationale: Action: This indicator has been Revised No change in the content of the indicator. Timeframe for achieving the end target extended by 22 month PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Budget management regulations and procedures Public sector accounting reform Public sector accounting reform is defined as a priority in implementation launched by finalizing Conceptual framework for public sector accounting reform (Text) PFM Strategy, but the reform direction is not defined. development of first 3-4 accounting standards compliant with IPSAS Rationale: Action: This indicator has been Revised No change in the content of the indicator. Timeframe for achieving the end target value is extended by 12 months. Program budgeting methodology is Program budgeting methodology does not clearly link approved, allows looking at different Program budgeting methodology (Text) objectives and resources. social dimensions, including gender, in selected relevant programs. The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target 100% of sovereign loan guarantees are included in debt Debt management reports do not cover contingent Enhanced quality of debt management reports (Text) management reports. Risk analysis of government liabilities contingent liabilities is produced Rationale: On track without support from the project. Based on IMF's TA delivered in 2017 the MoF proceeded with assessment of Action: This indicator has been Marked for Deletion contingent liabilities on their own. The MoF prepared first assessment of the fiscal risks stemming from the state-owned enterprises as of January 1, 2018, the report will be prepared on a quarterly bases Tax expenditure estimates are prepared as part of the Tax expenditures assessment (Text) Tax expenditure assessments not conducted annual budgeting process Rationale: On track without support from the project. Partnering with the Ministry of Taxes and Duties (MoTD) beginning with 2016 the MoF started preparing estimates of actual tax expenditures for the value added tax, corporate income tax, custom duties, and property taxes as part of the annual budget preparation process and presenting them in the budget explanatory materials. Methodology for assessing efficiency of the tax expenditures is under development. The IMF also supported MoF’ Action: This indicator has been Marked for Deletion efforts to improve revenue forecasting and tax expenditures assessment by providing the authorities with the revenue forecasting models, including a VAT model, which also allow to assess tax expenditures, providing training on the use of the models, as well as preparing Belarus tax expenditure assessment based on alternative methodology. The PFMMP didn’t contribute to achieving this indicator due to initial delays with launching the tender, weak response from the market and subsequent failure of contract negotiations. Improved capacity for macroeconomic forecasting for medium Financial programming model is used for preparation of No financial programming model is used term budgeting (Text) macroeconomic forecast Rationale: On track without support from the project. MoE's capacity for macroeconomic forecasting had been improved with support Action: This indicator has been Marked for Deletion from the IMF (financial programming model as well as training provided). In addition to it the authorities reviewed the gaps in forecasting methodologies and developed and approved a list of social and economic indicators required to prepare The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target draft budgets and medium term financial programs, as well as assigned responsibilities and timeline for their collection (Resolution of the Council of Ministers N303 dated April 19, 2018). PFM IT solutions Unified Chart of Accounts integrated Methodological basis for public sector financial and budget with the budget classification and Integration of budget and financial reporting based on reporting has not been integrated and deviates from guidelines for its application are international standards (Text, Custom) (Text) applicable international standards. approved. Future business processes to be supported by FMIS are not Modernization of business processes (Text) Revised business processes approved fully defined. Action: This indicator has been Revised The ASFS at the republican level operates at two A uniform distribution of the load on the ASFS and efficient geographically distant sites. There is no full-fledged backup data processing and backup through "Active-Active" system; there is a high probability of data loss in the event geographically distributed cluster. Modern IT infrastructure of an accident. Domain and postal structures of the ASFS with server virtualization software and virtualization are scattered. The IT infrastructure at the Oblast level is Reliability and fault tolerance of the ASFS (Text) management centers is established at the republican and outdated. oblast levels (12 sites) including virtual machines control It is not possible to deploy a fault-tolerant cluster (FTC) center and capabilities to deploy a fault-tolerant cluster allowing for control of computing resources using the new (FTC) equipment Action: This indicator is New Centralized storage of databases of MoF territorial bodies There is no centralized storage of the ASFS databases for ASFS centralized storage capacity (Text) and local finance bodies at MoF is ensured through high- planning and execution of local budgets. It is not possible speed and reliable data storage system. The capability to The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target to operate the ASFS segment in emergency (abnormal) operate the ASFS in emergency (abnormal) mode using the mode using the backup equipment backup equipment is ensured Action: This indicator is New IO Table SPACE The World Bank BELARUS PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT (P146997) Note to Task Teams: End of system generated content, document is editable from here. Please delete this note when finalizing the document