REPORT NO.: RES31491 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PK SINDH PUBLIC SECTOR MANAGEMENT REFORM PROJECT APPROVED ON JANUARY 28, 2015 TO ISLAMIC REPUBLIC OF PAKISTAN GOVERNANCE SOUTH ASIA Acting Regional Vice President: Ethel Sennhauser Country Director: Patchamuthu Illangovan Senior Global Practice Director: Deborah L. Wetzel Practice Director James Brumby Practice Manager/Manager: Ismaila B. Ceesay Task Team Leader: Charles Victor Blanco, Winston Percy Onipede Cole The World Bank PK Sindh Public Sector Management Reform Project (P145617) ABBREVIATIONS AND ACRONYMS ADP Annual Development Plan CD Country Director DLI Disbursement Linked Indicator EA Environmental Assessment EAD Economic Affairs Division EEP Eligible Expenditure Program ERU Economic Reform Unit FD Finance Department FMIS Financial Management Information System FY Fiscal Year GoP Government of Pakistan GoS Government of Sindh ICT Information and Communications Technology IFR Interim Financial Report IRI Intermediate Results Indicator MD Managing Director MIS Management Information System MOU Memorandum of Understanding MS Moderately Satisfactory MTR Mid-Term Review MU Moderately Unsatisfactory PAO Principal Accounting Officer PDO Project Development Objective PFM Public Financial Management PMIS Procurement Management Information System PKR Pakistan Rupee PPMS Public Procurement Management System PSM Public Sector Management QBER Quarterly Budget Execution Reports SDR Special Drawing Rights SPPRA Sindh Public Procurement Regulatory Authority SRB Sindh Revenue Board STRMRP Sindh Tax Revenue Mobilization Plan STS Sales Tax on Services TA Technical Assistance TPV Third-Party Validation TRU Tax Reform Unit USD United States Dollar WA Withdrawal Application 2 The World Bank PK Sindh Public Sector Management Reform Project (P145617) 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 P145617 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 28-Jan-2015 31-Aug-2020 Organizations Borrower Responsible Agency Sindh Revenue Board,Economic Reform Unit, Finance Islamic Republic of Pakistan Department Project Development Objective (PDO) Original PDO The development objective of the Project is to strengthen public sector performance in the Province of Sindh through improved revenue generation and expenditure management. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-55840 28-Jan-2015 11-Mar-2015 28-Apr-2015 31-Aug-2020 50.00 30.08 18.03 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No 3 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Project Status 1. The Sindh Public Sector Management Reform Project (USD 50 million) was approved by the Bank on January 28, 2015 and became effective on April 16, 2015. The objective of the Project is to strengthen public sector performance in the Province of Sindh through improved revenue generation and expenditure management. The Project consists of two components: (1) Results-based financing to provide an incentive for achieving Public Sector Management (PSM) reforms and (2) Technical Assistance (TA) to support capacity building and institutional strengthening associated with the achievement of eligible reforms.  Result-based Financing: Under Component 1, the Project will reimburse expenditures incurred by the Government of Sindh (GoS) in selected key budget line items, so-called Eligible Expenditure Programs (EEP), through credit disbursements based on the achievement of disbursement-linked indicators (DLIs). The activities comprise increasing tax revenue mobilization, enhancing the performance of public financial management (PFM) systems, improving management of the development portfolio, and strengthening of public procurement.  Technical Assistance (TA): Under Component 2, the Project supports technical consultancies and capacity building activities, including training seminars, conference participation, and equipment purchase. For instance, TA supports the implementation of reform activities of the Sindh Tax Revenue Mobilization Reform Plan (STRMRP), the Sindh Public Financial Management Strategy, and management of the development portfolio, as well as public procurement reforms and Project change management. 2. The Project’s achievements to date1 show good progress, most notably in revenue mobilization. Activities under the Sindh Revenue Board (SRB) have been performing well and shown tangible results. SRB developed and started implementing the Sindh Tax Revenue Mobilization Plan, supported enhanced automation, and helped increase the tax base. Activities have resulted in a significant increase in Sales Tax on Services (STS). In FY 2016-2017, SRB collected STS of PKR 78.64 billion, a 23% increase in real terms from the preceding year (PKR 60.28 billion) and almost double the baseline amount of PKR 39.4 billion. Activities for enhancing SRB’s human resources capacity and automation are currently in progress. In turn, the Project has not yet achieved its targets with respect to conducting more risk-based audits and regularly publishing SRB annual and quarterly reports on the Internet. 3. Project activities related to budget credibility and geo-tagging of development projects have also made progress. In the area of budget transparency and execution, the Project has met its targets for all four years so far through the regular preparation and publication of Quarterly Budget Execution Reports (QBER). Following initial delays of one year, the activities on geo-tagging of development projects of the Annual Development Plan (ADP) are also on track. A related ICT system has been developed and tested in one government department. The ICT system functionalities include mobile applications for geo-tagging and reporting on the physical progress of infrastructure projects, a link to the GoS Treasury system for receiving regular updates on the financial execution of projects, and a dashboard panel information to report data to different levels of management (i.e. districts, line departments, Planning and Development Department). 1An independent Third-Party Validation (TPV) report is available documenting in detail the achievement of Project results. For a detailed status by indicator, please refer to Annex 1. 4 The World Bank PK Sindh Public Sector Management Reform Project (P145617) 4. Meanwhile, some activities related to improving public financial management and debt management have been affected by absence of clarity at the time of the Project’s design. The PDO indicator to improve the credibility of the budget and the indicator related to capturing extra-budgetary releases in FMIS were not properly defined which complicated their accurate measurement. Hence, the associated targets could not yet be achieved. Similarly, targets on proactive feedback mechanism from governmental departments were delayed. Targets for the development of Debt Management and an Internal Audit, as well as for preparing quarterly departmental development plan monitoring reports, faced complications during the Project’s execution. An external debt management manual was prepared and is awaiting approval by the Chief Minister. The sensitivity analysis of debt servicing estimates was included in the Budget Analysis for FY2016-17. The debt database includes complete information for all closed loans (90% of the total), but information on active loans is not always updated in a timely manner. In Internal Audit, a new unit with four internal auditors was set up. However, the planning of audits has taken more time than expected. 5. Project activities aimed at strengthening public procurement in Sindh confronted significant challenges in defining the right scope and commencing implementation. The original Project design did not sufficiently consider the complexity of public procurement reforms and as a result defined unrealistic targets in the context of Sindh. Therefore, activities related to public procurement commenced late, although they are now under way and progressing. A Procurement Management Information System (PMIS), which is a pre-condition for the achievement of other indicators, was established with considerable delay. The Public Procurement Management System (PPMS) system was developed, tested and launched in February 2018. Meanwhile, other issues related to outsourcing, maintenance, and sustainability remain to be clarified and could impact on the achievement of targets. The certification of procurement officials is also behind schedule but has recently started. Even though implementation is ongoing, it is unlikely that the procurement component can make up all delays by the end of the Project. Taken together, the accumulated delays made the achievement of the PDO indicator of “reduced time to process procurement contracts” unrealistic by the Project closing date August 31, 2020 and thus also adversely affect the overall performance of the Project. While the overall thrust of public procurement reforms remains unchanged, their timing and sequencing would need to be set at more realistic levels. 6. Overall, the Project is currently rated Moderately Unsatisfactory (MU). Reflecting the non-achievement of several targets related mostly to strengthening public procurement and some areas of increasing budget credibility, both the Project’s “Progress towards achievement of PDO” and the Project’s “Implementation Progress” are currently rated “MU”. The Project’s Financial Management is currently rated MU, since SRB has not engaged a Financial Management Specialist. After some delay, on May 10, 2018, the Bank received an unqualified Audit Report of the financial statements of the Project for the financial year ending June 30, 2017 prepared by the Director General Audit of Sindh. The Project’s Procurement is also rated MU, reflecting the limitations in implementation performance. 7. As of May 9, 2018, the Project has disbursed around USD 30.4 million or approximately 60% of its Project envelope of USD 50 million and made several disbursements against its eight DLIs. Most of the Project’s disbursements are related to DLIs, which to date have disbursed about USD 27.6 million, representing 69% of total DLIs or 76.7% of DLIs allocated for Year 1 to 4 of the Project (FY14/15 to FY17/18). As of May 9, 2018, the GoS has submitted four withdrawals applications (June 2015, June 2016, June 2017 and March 2018) against the achievements of DLIs:  DLI #1 (Sindh Tax Revenue Mobilization Plan), a one-time DLI, was fully disbursed against in FY14-15.  DLI #6 (Transparency in budget formulation, allocation and execution) was fully disbursed against its targets for all four fiscal years (FY14-15, FY15-16, FY16-17, and FY17-18).  DLI #3 (Increased automation of SRB) was fully disbursed against for the first three years and partially disbursed against for the fourth year. 5 The World Bank PK Sindh Public Sector Management Reform Project (P145617)  DLIs #2 (Enhanced SRB HR capacity), DLI #5 (Establishment of internal audit) and DLI #7 (Procurement professionals certified) were fully disbursed against for year one and two (FY14-15 and FY15-16) but not thereafter, given the delays experienced in these areas.  DLI #4 (Risk-based taxpayer audits) was disbursed against only for the first year but not subsequently, given its unrealistic targets in the context of a newly created Tax Audit Department.  DLI #8 (Quarterly departmental development plan monitoring reports) was fully disbursed against only for the first year (FY14-15) and partially disbursed against in year 2, 3 and 4. Table 1 summarizes the status of DLI disbursements in SDR. Table 1: Total Project Disbursements against DLIs (in SDR) Total amount Total amount Gap compared to DLI % disbursed of % disbursed Total disbursed Total DLI DLI allocated allocated allocation Year 1-4 DLI allocation of total DLI (as of May 9, 2018) remaining (Year 1-4) (entire Project) (Year 1-4) allocation DLI1 6,700,000 6,700,000 6,700,000 0 100.0% 0 100.0% DLI2 3,060,000 3,400,000 1,700,000 1,360,000 55.6% 1,700,000 50.0% DLI3 2,720,000 3,060,000 2,465,000 255,000 90.6% 595,000 80.6% DLI4 2,380,000 2,720,000 680,000 1,700,000 28.6% 2,040,000 25.0% DLI5 3,060,000 3,400,000 2,040,000 1,020,000 66.7% 1,360,000 60.0% DLI6 2,380,000 2,720,000 2,380,000 0 100.0% 340,000 87.5% DLI7 2,040,000 2,720,000 1,360,000 680,000 66.7% 1,360,000 50.0% DLI8 2,040,000 2,380,000 1,360,000 680,000 66.7% 1,020,000 57.1% Total 24,380,000 27,100,000 18,685,000 5,695,000 76.7% 8,415,000 69.1% 8. After some delays, the Project has complied with 11 of its 12 legal covenants and partially complied with the remaining covenant. The Project initially experienced delays in complying with its legal covenants. Prior to the Mid- Term Review (MTR), the Project had complied with only 8 of its 12 legal covenants. In particular, the Legal Covenants #4 (Establishment of the Tax Reform Unit), #6 (Public Disclosure of PFM Reform Strategy and Revenue Mobilization Reform Plan), #10 (SPPRA costed multi-year procurement reform plan) and #12 (Sindh Revenue Board Integrity Management System) were not complied with, only partially complied with, or incompletely evidenced. As part of the preparation of the Project Restructuring, the Government and Bank team worked together to ensure compliance with all legal covenants. As of May 9, 2018, 11 out of the 12 legal covenants are complied with. Legal Covenant #4 is partially complied with: a Tax Reform Unit (TRU) has already been established; however, the hiring of Tax Management Specialist and Financial Analyst positions for TRU are not yet approved. Rationale for Restructuring 9. The proposed Project Restructuring responds to a request of the Government of Pakistan and the Government of Sindh. On March 28, 2018, the Government of Pakistan’s Economic Affairs Department (EAD), on behalf of the Government of Sindh’s Planning & Development Department, requested a restructuring of the Sindh Public Sector Management Reform Project (EAD letter No. 8(10)WB-III/12). The Government request proposed changes based on the Project’s Mid-term Review (MTR) mission, which were subsequently discussed in detail with all Project stakeholders and agreed by the Project Steering Committee. To address implementation bottlenecks, the restructuring comprises a comprehensive revision of the Project’s results framework, including the DLIs, and sets more clearly defined and realistic targets. Following the Restructuring Request, the Government of Sindh and the Bank team worked closely together to define detailed targets for all indicators with a view to clarifying reform targets. 10. The Restructuring aims to enable the Project to achieve the PDO by the end of the Project. There is a need for the restructuring to focus on defining clear targets for Project activities that have experienced delays and have not yet 6 The World Bank PK Sindh Public Sector Management Reform Project (P145617) achieved their targets due to over-optimistic planning based on expected implementation capacity, which no longer holds. In substance, the restructuring will (i) maintain the activities on revenue mobilization, (ii) clarify the expected results for improving public financial management, and (iii) adapt the activities on public procurement and expected timelines to the context and complexity of the reform. It is estimated that the revised targets appropriately reflect actual implementation capacities and hence will be achievable for the Project going forward. Section II below provides additional details on the rationale for restructuring specific activities, indicators, and DLI-pricing. II. DESCRIPTION OF PROPOSED CHANGES Overview of Changes 11. Consistent with the Government request, the proposed Level 2 Restructuring seeks to address the main implementation challenges of the Project, focusing on a comprehensive revision and clarification of the results framework and DLIs. The restructuring aims to enable the Project to achieve the PDO by the end of the Project closing date by adapting the original Project’s design and targets to the context in Sindh, while maintaining the general direction and thrust of reforms. In this regard, the restructuring focuses on addressing activities of the Project that have experienced delays and not achieved their targets and disbursements for both the result-based and the technical assistance component. In line with the new results framework, the targets, timing and pricing of DLIs, disbursement estimates, Procurement Plan and implementation schedule have been updated. All other aspects of the Project remain unchanged. In particular, the Project Development Objective (PDO), the implementation arrangements, the Project cost, disbursement categories, and the Project’s risks and safeguards remain the same. Consistent with the Bank’s guidelines, a Level 2 Restructuring is therefore proposed as the appropriate form of restructuring. Changes by Project Activity Revenue Mobilization 12. Activities in the area of revenue mobilization are largely maintained and further strengthened, given their overall positive performance to date. In particular, efforts to increase the registration of taxpayers and enhancing the collection of Sales Tax on Services remain unchanged by the restructuring. Light adjustments are made in areas that have not yet fully reached their results but remain achievable, such as strengthening SRB human resource capacity and promoting the automation of tax administration. Among other, this requires clarifications of the targets and verification protocol for the remaining years of the Project. In the case of Tax Audits, the Restructuring recognizes that the original Project expectations were overly ambitious in terms of scope and timing of implementation. Targets for this area are therefore set at more realistic levels, taking into account that the SRB Tax Audit Departments was newly created. Public Financial Management 13. Activities in public financial management are adjusted and clarified. While the substance of Project activities in the area of public financial management/budget credibility is largely maintained, there is a need for the restructuring to provide clarifications of expected results and targets. Indicators that have proven to be inappropriate, such as the PDO indicator on the “improved credibility of the budget” or the “extra-budgetary releases captured in FMIS”, would need to be updated or removed. A simpler and more straight-forward PDO indicator is proposed which captures budget transparency through the publication of regular annual and quarterly reports. The rationale for elevating this indicator to a PDO indicator is that in a context of significantly increased revenues, effective budget transparency is 7 The World Bank PK Sindh Public Sector Management Reform Project (P145617) very important to increase the trust of citizens in the tax system. This could allow GoS to increase tax collection in a sustainable manner, demonstrating transparency on both the revenue and the expenditure side. The targets and verification protocols of the debt management activities as well as improving management of the development portfolio are also revised and clarified. In the area of Internal Audit, the restructuring adjusts the targets, given the original Project design had overestimated what targets can be realistically achieved. As a result of setting the expectations for internal audit at more realistic levels, there is a need to reallocate Project funds from the associated DLI, which will be converted into a regular non-DLI IRI, to other DLI indicators. Due to the conversion, there will no longer be a DLI allocation for this indicator going forward. Public Procurement 14. Finally, the Project’s expected results in public procurement are adjusted to more realistic levels, given the complexity of the reform and limited results achieved so far. The original Project design did not sufficiently consider the complexity of public procurement reforms and underestimated the time needed for reform. The delayed introduction of the Procurement Management Information System (PPMS) has significantly affected the results that can be realistically expected for the remainder of the Project duration. While the restructured Project will maintain the overall direction of procurement reforms and lay the foundation for the new e-procurement system, the materialization of results is now more realistically expected to take additional time beyond the current Project closing date. From today’s perspective, the PDO indicator “reduced time taken to process procurement contracts” was inappropriate given the context. It is unachievable and hence needs to be removed. Significant delays were also incurred with respect to the DLI for notification of mandatory procurement training certification. The process to select a consulting firm to develop the certification modules took longer than initially anticipated and experienced administrative delays. The notification was only issued on April 20, 2017. There was a hiatus for almost ten months from April 2016, as the Bank had objection to the SPPRA recommended firm for award. The evaluation was ultimately revised, and the contract was signed in February 2017. In SPPRA the frequent turnover at the Managing Director (MD) level considerably delayed decision making. Meanwhile, after the initial delays, the training sessions for certifying public procurement officials are now under way. A Memorandum of Understanding (MOU) was signed with four institutions and two institutions are already holding training sessions, with another two ready to sign the Memorandum of Understanding (MOU) with SPPRA. It is expected that the next DLI will be met after the budget cycle, as most of the officers are very busy in April-June for budget preparation and account closing. Activities related to certifying public procurement therefore remain in place, but targets have been adjusted to realistic levels. Changes to Results Framework 15. The proposed comprehensive and consistent revision of the results framework and targets has been discussed and agreed with the GoS. Changes are concentrated on the indicators and activities that were unclearly defined or set at unrealistic levels, whereas indicators and activities that are on track are being maintained and strengthened. For some indicators that have at least partially been achieved, the substance is largely maintained. However, considering the initial delays in Project implementation, future Project targets are revised to align them more closely with the current timeline of reform implementation. As a matter of principle, no retroactive changes for targets of previous years were made to the results framework.2 Table 2 below summarizes the main changes to each indicator, in particular, whether the indicator has been maintained (no change), revised, or dropped. Detailed updates of the targets and target dates are provided in Annex 6 and in the updated data sheet in Section IV. of the Restructuring Paper. 2Some Project stakeholders had suggested revisions to the language and targets of previous years. However, to maintain the general thrust and ambition of reforms, retroactive changes were not included in the Restructuring. 8 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Table 2: Summary of Proposed Changes to Results Indicators Indicator DLI Type of Revision Rationale for Change PDO 1: Improved collection of Sales Tax on N/A No change Indicator on track. No changes. Services (STS) The indicator was set at unrealistic targets and impacted by a large unexpected variation in the FY16 budget along with an unclear definition of the baseline (i.e. PDO 2: Improved credibility of the budget N/A Dropped (Replaced) PEFA 2.2). The indicator is therefore replaced with the current indicator DLI6, which is more clearly defined and more straightforward to measure. The indicator was unrealistic. Due to significant delays with implementation of the PDO 3: Reduced time taken to process N/A Dropped Procurement Management Information System (PMIS), the indicator is unlikely to procurement contracts be achievable by the Project closing date. The indicator is therefore dropped. IRI #1: Approval & initial implementation of DLI#1 No change3 No changes, as the one-time target has already been met. STRMP IRI#2: Enhanced SRB human resources Targets for this indicator have been revised taking into account the reform context DLI#2 Targets revised capacity for administration while expected achievements have been more clearly defined. No change in The indicator and target remain unchanged in substance, with some clarifications substance to the verification protocol. The funds allocated to the DLI are increased by $1.5 IRI #3: Increased automation of SRB systems DLI#3 Increase of DLI million, as automation will be a critical factor for enabling further increases in the amount future of the already significantly increased revenue collection. IRI #4: Increased Tax base N/A No change Indicator on track. No changes. As the newly created Tax Audit has limited capacity, IRI#5 has been replaced with Targets revised IRI #5: Risk-based audits of taxpayers more realistic targets. The SRB Tax Audit Unit will be expanded, strengthened and DLI#4 Decrease of DLI implemented made more autonomous. Given the adjusted lower targets, the DLI amount has amount been reduced by $1 million. IRI #6: Improved SRB transparency N/A No change Indicator remains relevant. No changes. The targets and verification protocol of the indicator have been adjusted and IRI #7: Debt Management Systems Instituted N/A Targets revised clarified. IRI #8: Increased extra-budgetary releases This indicator was impacted by its imprecise definition and was therefore N/A Dropped captured in FMIS dropped. The DLI has been converted into an IRI. Targets have been adjusted and set at Converted from a more realistic levels. Going forward, there will be no DLI allocations for this IRI #9: Establishment of internal audit DLI#5 DLI to an IRI indicator. Overall, the DLI amount will be reduced by $2 million compared to the Targets revised original allocation. Converted from an The indicator has been converted into a PDO indicator, replacing the current PDO IRI #10: Transparency in budget formulation, IRI to PDO indicator 2. Targets have been maintained, the indicator is on track. Given this DLI#6 allocation and execution No other changes in new PDO indicator will be critical for the overall achievement of the Project substance Development Objective, its DLI allocation has been increased by $1.5 million. Given the complexity of procurement reforms and delays in establishing the IRI #11: Contracts data entered into the N/A Dropped procurement management information system, the achievement of this indicator procurement MIS is not realistic by the Project closing date and is therefore dropped. IRI#12: Contracts processed through e- The achievement of this indicator is unrealistic within the current timeframe of N/A Dropped procurement modules the Project and is therefore dropped. While the indicator experienced delays, certification of procurement officials has IRI #13: Procurement officials certified DLI#7 Targets revised recently started. The indicator is maintained in substance with adjusted targets. IRI#14: Quarterly departmental The indicator has been maintained in substance, but targets have been revised development plan monitoring reports DLI#8 Targets revised and clarified, setting realistic expectations. prepared and published IRI #15: Departments where geotagging of development schemes is implemented and N/A No change The indicator is on track and has been maintained. information published IRI #16: Departments with proactive N/A Targets revised The indicator is maintained with clarified targets. feedback mechanisms established Changes to Disbursement-Linked Indicators 3The indicator remains unchanged compared to the PAD. However, as part of the restructuring, a transmission error in the Project data sheet was corrected, which therefore shows as “revised”, even though there is no change in substance. 9 The World Bank PK Sindh Public Sector Management Reform Project (P145617) 16. In line with the revised results framework, some of the Project’s DLIs have also been adjusted. The overall funding dedicated to DLIs has been maintained unchanged at SDR 27.1 million (approximately USD 40 million). In turn, reflecting the implementation progress to date and future potential, the restructuring proposes some re-allocations both within and among DLIs. For DLIs that were delayed but where progress and results remain achievable during the remainder of the Project period, DLI amounts were shifted from previous years to FY2017-18 and FY2018-19. For DLIs that have not performed well and are unlikely to be achievable given the context, DLI funding has been reduced. In turn, in support of the continued increase of STS, the amounts dedicated to DLI #3 (Increased automation of SRB) and to DLI #6 (Transparency in budget formulation, allocation and execution) – i.e. the new PDO indicator – have been increased by USD 1.5 million, respectively. Annex 3 provides details on the original DLI allocation, disbursements to date and proposed new allocation after the restructuring. 17. The Restructuring clarifies that going forward, disbursements will be made against Eligible Expenditures only when a DLI is fully achieved. Going forward, given that all DLIs have been clearly re-defined between the GoS and the Bank and set at realistic levels, for all future disbursement requests, disbursements will only be made against Eligible Expenditures, when a DLI is fully met. In case a DLI was previously partially achieved and received partial payment, the remainder of the DLI amount can be disbursed upon full achievement of the DLI target. Annex 4 provides an updated version of the Eligible Expenditure Program and DLI disbursements. Annex 5 presents the revised indicative disbursement calendar. Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. 10 The World Bank PK Sindh Public Sector Management Reform Project (P145617) III. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Change in Disbursement Estimates ✔ Change in Implementation Schedule ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Procurement ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators 11 The World Bank PK Sindh Public Sector Management Reform Project (P145617) PDO_IND_TABLE Improved collection of Sales Tax on Services (STS) Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 3.50 23.00 3.50 Revised Date 30-Jun-2014 30-Jun-2017 30-Jun-2019 Improved credibility of the budget Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 13.48 22.20 10.00 Marked for Deletion Date 30-Jun-2012 06-Oct-2017 30-Jun-2019 Reduced time taken to process procurement contracts Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 82.00 90.00 15.00 Marked for Deletion Date 01-Sep-2014 06-Oct-2017 30-Jun-2019 Transparency in budget formulation, allocation and execution (DLI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action FD has: (i) submitted to the Cabinet the a) Budget Strategy Budget Strategy Paper Paper not prepared for FY2019/20; and (ii) b) One quarterly report submitted all four (4) Value submitted to the budget execution New Provincial Assembly reports for FY2018/19 to the Provincial Assembly and published them on FD's website. Date 30-Jun-2014 30-Jun-2019 12 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Intermediate Indicators IO_IND_TABLE Approval and initial implementation of Sindh Tax Revenue Mobilization Reform Plan (DLI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action (i) FD has publicly disclosed the Sindh Tax Revenue Tax Reform Plan Sindh Tax Revenue Mobilization Reform approved in Feb 2014; Mobilization Plan has Value Plan. Revised 2012-13 STS collection been disclosed. FY 16- (ii) SRB’s collection of is PKR 34 billion. 17. STS for FY2013/14 reached PKR 39.43 billion. Date 30-Jun-2014 06-Oct-2017 31-Aug-2020 Enhanced SRB human resources capacity for administration (DLI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Targets for FY014-015 and FY015-016 have been achieved. For SRB has approved a FY016-017 the targets revised staffing plan Staffing and training have not been achieved. as per the Value plan is under Revised (i.e. 75% trained and recommendation of development hired by revised staffing the third-party plan and revised plan in review. accordance to the TVP recommendation). Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Increased automation of SRB systems (DLI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value Zero automated All required elements of SRB has issued all Revised notices; Unique the automation plan notices to at least taxpayer identification have been 90% of non-compliant implemented, including registered taxpayers 13 The World Bank PK Sindh Public Sector Management Reform Project (P145617) system does not exist; the establishment of in FY2018/19 through No third party linkages. linkages with third-party automated systems. databases. This DLI has therefore been met for year 2 (FY15-16) and year 3 (FY16-17). Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Increased tax base Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 4800.00 377.00 25.00 No Change Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Risk based audits of taxpayers implemented (DLI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action SRB has: (i) issued and communicated audit observations to the concerned taxpayers; (ii) finalized the audits initiated in FY2017/18; (iii) initiated assessment Year 1 (FY14-15) target (by SRB Operations achieved. Wing) under the Value System Absent Year 2 (FY15-16) and Revised relevant provisions of Year 3 (FY16-17) not the law; (iv) selected achieved. audit cases according to revised risk-based criteria updated according to the feedback obtained from the completed audit cases initiated in FY2017/18. Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Improved SRB performance transparency Unit of Measure: Text 14 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Indicator Type: Custom Baseline Actual (Current) End Target Action Year 1 (FY14-15) target not achieved. Annual report irregular, Four quarterly reports Year 2 (FY15-16) target Value quarterly reports not and one annual report Revised partially achieved. published published. Year 3(FY16-17) target not achieved. Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Debt management systems instituted Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action a) FD conducts a debt sustainability analysis. Year 1 (FY14-15) and Debt Management Year 2 (FY15-16) targets Value b) Publication of the Revised Systems do not exist. achieved. Year 3 (FY16- above on the FD 17) not achieved. website approved by FS. Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Increased extra-budgetary releases captured in FMIS Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 90.00 Marked for Deletion Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Establishment of internal audit (DLI until Restructuring, IRI thereafter) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value Internal audit function Year 1 (FY14-15) and (i) Four (4) Revised does not exist. Year 2 (FY15-16) targets Government partially achieved. Year Departments 3 (FY16-17) target not including Finance achieved. Department have conducted internal 15 The World Bank PK Sindh Public Sector Management Reform Project (P145617) audits and submitted internal audit reports to their PAOs. (ii) Remaining three (3) PAOs have undertaken actions in response to the forgoing internal audit reports, within a month of such report. Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Transparency in budget formulation, allocation and execution (DLI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action FD has: (i) submitted to the Cabinet the Budget Strategy Paper for FY2019/20; and (ii) submitted all four (4) budget execution a) Budget Strategy reports for FY Year 1 (FY14-15), Year 2 Paper not prepared 2018/19 to the (FY15-16), and Year 3 Provincial Assembly Value (FY16-17) targets Revised b) One quarterly report and published them achieved. submitted to the on FD’s website. provincial assembly Note: The indicator was upgraded to a PDO indicator during the Restructuring. There are no changes in substance. Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Contracts data entered in the procurement MIS Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 75.00 Marked for Deletion 16 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Contracts processed through e-procurement modules Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 50.00 Marked for Deletion Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Procurement officials certified (DLI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action SPPRA has: (i) certified at least Year 1 (FY14-15) target five hundred (500) partially achieved. No certification officers of grade BPS- Value Year 2 (FY15-16) and Revised mechanism exists. 16 or above; and Year 3 (FY16-17) targets (ii) carried out a third- not achieved. party review of the certification process. Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Quarterly developmental development plan monitoring reports prepared and published (DLI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action P&DD has: (i) prepared and published at least twelve (12) quarterly Year 1 (FY14-15) target reports on achieved. implementation of Year 2 (FY15-16) and Value Zero development Revised Year 3 (FY16-17) targets schemes for at least partially achieved. four (4) Government Departments collectively; and (ii) carried out a third- party review. Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 17 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Departments where geo-tagging of development schemes is implemented and information published. Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 5.00 6.00 No Change Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 Departments with proactive feedback mechanisms established Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Collection of community feedback for at least 10% of provincial ADP Value Zero schemes costing over Revised PKR 1 billion in at least four (4) Government Departments. Date 30-Jun-2014 06-Oct-2017 30-Jun-2019 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 0.00 12,341,754.00 2016 0.00 6,717,621.11 2017 0.00 3,469,198.63 2018 0.00 5,000,000.00 2019 0.00 5,000,000.00 2020 0.00 5,000,000.00 2021 0.00 2,471,426.26 18 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Note to Task Teams: End of system generated content, document is editable from here. Annex 1: Project Achievements by Indicator as of April 30, 2018 Indicator DLI Progress as of April 30, 2018 Project Achievements on Revenue Mobilization PDO 1: Improved collection of N/A On track: STS collection increased to PKR 78.64 billion in FY2016-17 compared to the baseline of PKR 39.40 billion. Sales Tax on Services (STS) The achieved growth significantly exceeds the target of 3.5% annual real growth. IRI#1: Approval and initial DLI#1 On track: The Sindh Tax Revenue Mobilization Plan was approved and initial implementation is performing well. implementation of Sindh Tax Revenue Mobilization Plan IRI#2: Enhanced SRB human DLI#2 Delayed but achievable: The indicator has been delayed and requires more clarity on expected achievements. resources capacity for administration IRI#3: Increased automation of DLI#3 On track: The increased automation of Sindh Revenue Board (SRB) systems was approved and is performing well. Sindh Revenue Board (SRB) Although the Automation Plan was developed and approved with a year of delay (in FY2015-16 instead of FY2014- systems 15), all required elements of the Plan have now been implemented, including the establishment of linkages with third-party databases. This DLI has therefore been met on time for Year 2 (FY2015-16) and Year 3 (FY2016-17), and with a one-year delay for Year 1 (FY2014-15), while being partially met for Year 4 (FY2017-18). IRI#4: Increased tax base N/A On track: This indicator is on track and performing well. In 2016-17, 20,906 taxpayers were registered, more than quadrupling the baseline of 4,800 taxpayers. Overall, the Project significantly exceeds its original targets. Baseline: 4,800 FY2014-15 FY2015-16 FY2016-17 Original target registered taxpayers 5,040 5,544 6,376 Actual registered taxpayers 11,234 15,919 20,906 Original target % increase from previous year 5% 10% 15% Actual % increase from previous year (compared to original targets) 134% 216% 277% Actual % increase from previous year (compared to actual previous year) 134% 42% 31% IRI#5: Risk-based audits of DLI#4 Not achieved/Delayed: This DLI could not be achieved so far, as the original Project design did not set the indicator taxpayers implemented at realistic levels, given the recent creation of the Tax Audit Department. The Department has only a few auditors with limited specialized knowledge and skills in tax audits. Adjustments to the targets are needed to make them more realistic and adapted to the context. IRI#6: Improved SRB performance N/A Partially achieved/Delayed: While Annual Reports were prepared for FY2014-15 and 2015-16, quarterly reports are transparency not yet systematically approved and published on the Government’s website. Project Achievements on Budget Credibility PDO 2: Improved credibility of the N/A Not achieved/Measurement challenges: Measurement of this indicator against its baseline and annual targets has budget experienced challenges. A large unexpected variation in the FY16 budget along with a problematic definition of the baseline (i.e. PEFA 2.2) contributes to difficulties in assessing this indicator against its baseline and annual targets. The indicator would require replacement with an indicator that is more clearly defined and easier to measure. IRI#7: Debt management systems N/A Partially achieved/Delayed: Some intermediary targets could be achieved for FY2014-15 and FY2015-16, but targets instituted for FY2016-17 could not yet be met. An external debt management procedure and operation manual was prepared and published by the Finance Department (FD) but not yet notified by the Government. FD conducts sensitivity analysis of debt servicing estimates with respect to the exchange rate and interest rate. Overall, the indicator requires more clarity on expected achievements and sequencing of the targets. IRI#8: Increased extra-budgetary N/A Not achieved: The incomplete definition of the indicator has hampered its reliable evaluation. It is proposed to releases captured in FMIS remove the indicator. IRI#9: Establishment of internal DLI#5 Partially achieved/delayed: A new Internal Audit unit including terms of reference and structure was created in May audit 2017, and four internal auditors were hired by FD. A risk-based internal audit plan was prepared with delay; however, to date no audits have been carried out. The DLI could be converted into an IRI with more realistic targets. IRI#10: Transparency in budget DLI#6 On track: To date, targets for this indicator have been consistently achieved in FY14-15, FY15-16, FY16-17, and FY17- formulation, allocation and 18. FD has fully met the DLIs by submitting to the Cabinet Budget Strategy Papers for FY2015-16 and FY2016-17, and execution publishing quarterly budget execution reports for FY2015-16. It is proposed to convert the indicator into a PDO indicator while retaining its status as a DLI. IRI#14: Quarterly departmental DLI#8 Partially achieved: This indicator was partially achieved. Three Quarterly Budget Execution Reports (QBER) for FY development plan monitoring 2016-17 have been prepared and published within two weeks of each quarter's end. The Budget Strategy Paper for reports prepared and published FY2017-18 is due to be submitted to the Provincial Assembly in June per the budget calendar. Some clarifications would be needed to the targets. 19 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Indicator DLI Progress as of April 30, 2018 IRI#15: Departments where N/A On track: This indicator is on track and performing well. geotagging of development schemes is implemented and information published IRI#16: Departments with N/A Not achieved/Delayed: This indicator has experienced a two-year delay. Some clarifications would be needed for proactive feedback mechanisms the targets. established Project Achievements in Public Procurement PDO 3: Reduced time taken to N/A Not achieved/Delayed: No progress could be made on this indicator, which was unrealistic, due to significant delays process procurement contracts with implementation of the Procurement Management Information System (PMIS). At the current pace, the indicator is unlikely to be achieved by the Project closing date. It could be removed during the Restructuring. IRI#11: Contracts data entered in N/A Not achieved/Delayed: Given the delays in the establishment of PMIS, this indicator is also behind schedule. The the procurement MIS indicator requires more clarity on expected achievements and sequencing of the targets. IRI#12: Contracts processed N/A Not achieved/Delayed: No progress has been made, and achievement is unrealistic in the remaining time frame of through e-procurement modules the Project. It is proposed to remove the indicator. IRI#13: Procurement officials DLI#7 Not achieved/Delayed: Certification of procurement officials has experienced delays but has recently started and certified could potentially still be achieved going forward if targets are set at realistic levels. Annex 2: Total Project Disbursements against DLIs (in USD)* Total amount Total amount Gap compared to DLI % disbursed of % disbursed of Total disbursed (as Total DLI DLI allocated allocated (entire allocation Year 1-4 DLI allocation total DLI of May 9, 2018) remaining (Year 1-4) Project) (Year 1-4) allocation DLI1 10,000,000 10,000,000 10,000,000 0 100.0% 0 100.0% DLI2 4,500,000 5,000,000 2,500,000 2,000,000 55.6% 2,500,000 50.0% DLI3 4,000,000 4,500,000 3,625,000 375,000 90.6% 875,000 80.6% DLI4 3,500,000 4,000,000 1,000,000 2,500,000 28.6% 3,000,000 25.0% DLI5 4,500,000 5,000,000 3,000,000 1,500,000 66.7% 2,000,000 60.0% DLI6 3,500,000 4,000,000 3,500,000 0 100.0% 500,000 87.5% DLI7 3,000,000 4,000,000 2,000,000 1,000,000 66.7% 2,000,000 50.0% DLI8 3,000,000 3,500,000 2,000,000 1,000,000 66.7% 1,500,000 57.1% Total 36,000,000 40,000,000 27,625,000 8,375,000 76.7% 12,375,000 69.1% * USD amounts are approximate due to exchange rate fluctuations. For exact amounts, refer to the figures in SDR (commitment currency) in Table 1 in the main text. 20 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Annex 3: Pricing of DLIs under Sindh Public Sector Management Reform Project (in SDR and USD million)* S Amount in FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19 TOTAL*** DLI No millions (SDR/USD) (SDR/USD) (SDR/USD) (SDR/USD) (SDR/USD) (SDR/USD) Approval and Original Allocation 6.7 10 6.7 10 initial Disbursed 6.7 10 6.7 10 implementatio Gap** 0 0 0 0 1 n of Sindh Tax After Revenue Restructuring 6.7 10 6.7 10 Mobilization Reform Plan Enhanced SRB Original Allocation 1.36 2 0.34 0.5 0.68 1 0.68 1 0.34 0.5 3.4 5 human Disbursed 1.36 2 0.34 0.5 0 0 0 0 0 0 1.7 2.5 2 resources Gap 0 0 0 0 0.68 1 0.68 1 0.34 0.5 1.7 2.5 capacity for After administration 1.36 2 0.34 0.5 0 0 0.68 1 1.02 1.5 3.4 5 Restructuring Original Allocation 1.36 2 0.34 0.5 0.68 1 0.34 0.5 0.34 0.5 3.06 4.5 Increased Disbursed 1.36 2 0.34 0.5 0.68 1 0.085 0.125 0 0 2.465 3.625 3 automation of Gap 0 0 0 0 0 0 0.255 0.375 0.34 0.5 0.595 0.875 SRB After 4.08 6 1.36 2 0.34 0.5 0.68 1 0.34 0.5 1.36 2 Restructuring (+1.02) (+1.5) Risk based Original Allocation 0.68 1 0.68 1 0.68 1 0.34 0.5 0.34 0.5 2.72 4 audits of Disbursed 0.68 1 0 0 0 0 0 0 0 0 0.68 1 4 taxpayers Gap 0 0 0.68 1 0.68 1 0.34 0.5 0.34 0.5 2.04 3 implemented After 2.04 3 0.68 1 0 0 0 0 0.68 1 0.68 1 Restructuring (-0.68) (-1) Establishment Original Allocation 1.36 2 0.68 1 0.34 0.5 0.68 1 0.34 0.5 3.4 5 of Internal Disbursed 1.36 2 0.68 1 0 0 0 0 0 0 2.04 3 5 Audit Gap 0 0 0 0 0.34 0.5 0.68 1 0.34 0.5 1.36 2 After 2.04 3 1.36 2 0.68 1 0 0 0 0 0 0 Restructuring (-1.36) (-2) Transparency in Original Allocation 0.68 1 0.68 1 0.34 0.5 0.68 1 0.34 0.5 2.72 4 budget Disbursed 0.68 1 0.68 1 0.34 0.5 0.68 1 0 0 2.38 3.5 6 formulation, Gap 0 0 0 0 0 0 0 0 0.34 0.5 0.34 0.5 allocation and After 3.74 5.5 execution 0.68 1 0.68 1 0.34 0.5 0.68 1 1.36 2 Restructuring (+1.02) (+1.5) Procurement Original Allocation 0.68 1 0.68 1 0.34 0.5 0.34 0.5 0.68 1 2.72 4 professionals Disbursed 0.68 1 0.68 1 0 0 0 0 0 0 1.36 2 7 certified Gap 0 0 0 0 0.34 0.5 0.34 0.5 0.68 1 1.36 2 After 0.68 1 0.68 1 0 0 0.68 1 0.68 1 2.72 4 Restructuring Quarterly Original Allocation 0.68 1 0.68 1 0.34 0.5 0.34 0.5 0.34 0.5 2.38 3.5 departmental Disbursed 0.68 1 0.34 0.5 0.17 0.25 0.17 0.25 0 0 1.36 2 development Gap 0 0 0.34 0.5 0.17 0.25 0.17 0.25 0.34 0.5 1.02 1.5 8 plan monitoring reports After prepared and Restructuring 0.68 1 0.34 0.5 0.17 0.25 0.17 0.25 1.02 1 2.38 3.5 published Original Allocation 13.5 20 4.08 6 3.4 5 3.4 5 2.72 4 27.1 40 Funds Disbursed 13.5 20 3.06 4.5 1.19 1.75 0.935 1.375 0 0 18.685 27.625 Remaining Funds 0 0 1.02 1.5 2.21 3.25 2.465 3.625 2.72 4 8.415 12.375 TOTAL Disbursement Rate 100% 75% 35% 27.5% 0% 69% After 13.5 20 3.06 4.5 1.19 1.75 3.23 5.25 6.12 8.5 27.1 40 Restructuring Notes: * Due to exchange rate fluctuations, numbers in USD equivalents are only approximates (commitment currency is SDR). ** Gap = Planned amount of disbursement - Actual amount of disbursement. Number in red means gap exists. *** Indicates change in DLI amount compared to allocation before restructuring. The World Bank PK Sindh Public Sector Management Reform Project (P145617) Annex 4: Eligible Expenditure Budget Programs (USD Million)* FY FY FY FY FY FY Identified EEPs 13- 14 14-15 15-16 16-17 17-18 18-19 Total Tax Administration Improvement 18.7 20.6 22.7 24.9 27.4 30.2 144.5 Public Financial Management and Monitoring of 9.4 10.3 11.4 12.5 13.7 15.1 72.4 Development Expenditure Public Procurement 0.4 0.4 0.4 0.5 0.5 0.6 2.8 TOTAL 28.5 31.3 34.4 37.9 41.7 45.9 219.7 Disbursements of Credit Component 20 4.5 1.75 5.25 8.5 40 * Amounts in USD are approximate due to exchange rate fluctuations. Annex 5: Updated Indicative Disbursement Schedule – DLI-Based Disbursement Verification and Agreement Amount to be No. of DLIs to be Submission of DLI results report to Performance & IFRs Period on DLI Results between the Disbursed (USD Achieved the Bank along with IFR & WA* Bank and Government Million)** 1 From Mar 1, 2014 till Credit One month of Project Effectiveness 10 signature 8 effectiveness 2 Project signing till June 2015 March 15, 2015 May 15, 2015 10 3 Jul - Dec, 2015 & 7 March 15, 2016 May 15, 2016 4.5 Jan – Jun, 2016 4 Jul - Dec, 2016 & 7 March 15, 2017 May 15, 2017 1.75 Jan – Jun, 2017 5 Jul - Dec, 2017 & 7 March 15, 2018 May 15, 2018 5.25 Jan – Jun, 2018 6 Jul - Dec, 2018 & 7 March 15, 2019 May 15, 2019 8.5 Jan – Jun, 2019 TOTAL 36 40 Million * The submission date for DLI results to the Bank is tentative. In previous years, GoS submitted withdrawal applications for achieved DLI targets under Component 1 in March of each year. This was done in view of receiving the reimbursements of funds against EEP for achieved DLIs in provincial Account-I for budget allocations. ** Amounts in USD are approximate due to exchange rate fluctuations. The World Bank PK Sindh Public Sector Management Reform Project (P145617) Annex 6: Revised Results Framework and Monitoring PAKISTAN: Sindh Public Sector Management Reform Project Project Development Objectives PDO Statement The development objective of the Project is to strengthen public sector performance in the Province of Sindh through improved revenue generation and expenditure management. Project Development Objective Indicators Target Values Data Source/ Responsibility for Indicator Name Unit of Measure Baseline FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 Frequency Methodology Data Collection Percentage 39.4 billion Improved collection of PRs (FY13-14) Annual Financial 1 3.5% 3.5% 3.5% 3.5% 3.5% Annually SRB Sales Tax on Services Statements (STS) 10% Improved credibility of 10% Variance is (no longer Audited Financial the budget (indicator (no longer 2 Percentage 13.48% for FY 13% 13% 12% applicable, Annually statements for FD dropped during the applicable, 2011/12 indicator the year Restructuring) indicator dropped) dropped) Transparency in budget Process a) Budget FD has: (i) FD has: (i) FD has: (i) FD has: (i) FD has: (i) Monthly/ FD documents/ FD formulation, allocation Strategy submitted to the submitted to the submitted to the submitted to the submitted to Annually website and execution (DLI) Paper not Cabinet the Cabinet the Cabinet the Cabinet the the Cabinet the documents (converted into a PDO prepared Budget Strategy Budget Strategy Budget Strategy Budget Strategy Budget Strategy indicator during the Paper for Paper for Paper for Paper for Paper for Restructuring, b) One FY2015/16; and FY2016/17; and FY2017/18; and FY2018/19; and (ii) FY2019/20; and previously Intermediate quarterly (ii) submitted at (ii) submitted all (ii) submitted all submitted all four (ii) submitted all 2a Results Indicator #10) report least two (2) four (4) quarterly four (4) (4) quarterly four (4) budget (new) submitted to quarterly budget budget execution quarterly budget budget execution execution the provincial execution reports reports for execution reports reports for reports for FY assembly for FY2014/15 to FY2015/16 to the for FY2016/17 to FY2017/18 to the 2018/19 to the the Provincial Provincial the Provincial Provincial Provincial Assembly, and Assembly, and Assembly, and Assembly and Assembly and published them published them published them published them on published them in FD’s website. in FD’s website. in FD’s website. FD’s website. on FD’s website. Reduced time taken to Percentage 82 days 15% process procurement - 10% (no longer SPPRA contracts (indicator (no longer 3 5% 10% applicable, Annually monitoring SPPRA dropped during the applicable, indicator reports Restructuring) indicator dropped) dropped) The World Bank PK Sindh Public Sector Management Reform Project (P145617) Intermediate Results Indicators Target Values Data Source/ Responsibility for Unit of Methodology Data Collection Indicator Name Baseline FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 Frequency Measure Area 1: Increasing revenue mobilization through tax policy reforms and increased administrative efficiency in tax collection: 1 Approval and initial Tax Reform (i) FD has publicly FY 14-15 Government FD implementation of Plan disclosed the only Accounts and FD Sindh Tax Revenue approved in Sindh Tax website Mobilization Reform Feb 2014; Revenue Plan (DLI) 2012-13 STS Mobilization collection is Reform Plan. 34 billion. (ii) SRB’s collection of STS for FY2013/14 reached PKR 39.43 billion. 2 Enhanced SRB human Process Staffing and SRB has SRB has: (i) has SRB has: (i) SRB has (i) hired and SRB has Annually SRB documents/ SRB resources capacity for training plan approved an hired and trained approved a trained at least 80 % approved a TPV reports administration (DLI) is under enhanced at least 50% of revised staffing of the staff revised staffing development staffing and the staff plan as per the sanctioned as per plan as per the . training plan and sanctioned as per recommendati the revised staffing recommendation a human approved staffing on of the third- plan; and (ii) carried of the third-party resources policy plan; and (ii) party review; out a third-party review. acceptable to the carried out a and (ii) has review of the Association. third-party review hired and revised staffing plan of the staffing trained at least and the plan and the 75% of the implementation implementation staff thereof. thereof. sanctioned as per the revised staffing plan. Increased automation Zero SRB has SRB has: (i) SRB has: (i) SRB has: (i) issued SRB has issued all SRB SRB reports SRB of SRB systems (DLI) automated developed and piloted the implemented all notices to at least notices to at documents/ notices; approved an automation plan; the 90% of non- least 90% of non- TPV reports Unique automation plan (ii) established automation compliant compliant 3 Percentage taxpayer for tax collection linkages with plan; and (ii) registered taxpayers registered identification and third-party carried out a in FY2017/18 taxpayers in system does administration. databases; and third-party through automated FY2018/19 not exist; No (iii) carried out a database systems; (ii) carried through third-party review analysis. out a third-party The World Bank PK Sindh Public Sector Management Reform Project (P145617) third-party of the review of the automated linkages automation automation systems. systems. systems; (iii) reviewed the recommendations made by the foregoing third- party review; and (iv) approved a follow-up automation implementation plan. 4 Increased tax base Percent 4800 5% 10% 15% 20% 25% Annually SRB reports SRB Risk-based audits of Process/ System SRB has SRB has (i) SRB has: (i) SRB has: SRB has: Annually SRB reports SRB taxpayers implemented percentage absent. developed risk- conducted audits conducted (i) selected audit (i) issued and (DLI) based criteria for of taxpayers as audits of cases according to communicated the carrying out per the risk-based taxpayers as the risk-based audit of taxpayer criteria; and (ii) per the risk- criteria. The risk observations to audits and fraud established a hit based criteria, identification and the concerned investigations. rate benchmark resulting in: (A) assessment process taxpayers; (baseline). a hit rate of shall be properly (ii) finalized the 85%, or (B) a documented audits initiated in hit rate identifying therein FY2017/18; increase of at the specific risks (iii) initiated least 5% involved in each assessment (by (against case selected for SRB Operations benchmark), audit; Wing) under the during the (ii) finalized the relevant 5 initial nine audit plan for each provisions of the months of of the selected audit law; FY2016/17; cases specifying (iv) selected and (ii) when therein the nature, audit cases applicable, scope and tax according to initiated the periods under audit; revised risk- corresponding and based criteria fraud (iii) issued audit updated investigations. notice to the according to the selected taxpayers feedback about the initiation obtained from of audit the completed proceedings. audit cases initiated in FY2017/18. The World Bank PK Sindh Public Sector Management Reform Project (P145617) Annual Annual report Two quarterly Four quarterly Four quarterly Four quarterly Annually SRB website SRB report published. reports and one and one reports and one reports and one Improved SRB irregular, annual report annual report annual report annual report 6 performance Number quarterly published. published. published. published. transparency reports not published Area 2: Enhancing performance of public financial management systems Debt management Process Debt External debt a) FD conducts a) FD debt a) FD prepares a) FD conducts a Annually FD monitoring FD systems instituted Management management sensitivity database annual debt debt reports, debt Systems do procedure and analysis of debt captures 100% statistics bulletin in sustainability bulletin, budget not exist. operation servicing information on line with sound analysis. analysis, FD manual for GoS estimates w.r.t. debt servicing practices having a website, Budget notified. exchange rate and lag of not more than b) Publication of Strategy Paper and interest rate disbursements six months. the above on the FD website b) Publication of b) FD b) Publication of the approved by FS. the above in the constructs the above on the FD 7 Budget Analysis debt stock website approved for FY2015/16. based on this by FS. information and publishes it in the Budget Analysis for three years (FY16: Actual, FY17: RE, FY18: BE). Increased extra- Not Baseline 65% 75% 80% 90% Annually FD monitoring FD budgetary releases available. established. (no longer (no longer reports captured in FMIS applicable, indicator applicable, 8 Percentage (indicator dropped dropped) indicator during the dropped) Restructuring) Establishment of Text Internal audit FD has: (i) FD has: (i) At least three (i) Four (4) (i) Four (4) Annually FD monitoring & FD internal audit function does established conducted an (3) Government Government audit (converted into a non- not exist. internal audit internal audit(s); Government Departments Departments report/Govt. DLI Intermediate Results functions and and (ii) prepared Departments including Finance including Finance documents 9 Indicator during the identified the a risk-based audit (in addition to Department have Department have Restructuring) audit scheme(s), plan. the FD) have: conducted internal conducted which can be (i) conducted audits and internal audits revised from time internal audits; submitted their and submitted The World Bank PK Sindh Public Sector Management Reform Project (P145617) to time; and (ii) and (ii) internal audit internal audit allocated submitted reports to their reports to their sufficient and their internal PAOs. PAOs. adequate staff audits reports thereof, in to their PAOs. (ii) At least one (1) (ii) Remaining numbers and PAO has undertaken three (3) PAOs with actions in response have undertaken qualifications to the foregoing actions in satisfactory to internal audit response to the the Association. reports, within a foregoing internal month of such audit reports, report. within a month of such report. Transparency in budget Process a) Budget FD has: (i) FD has: (i) FD has: (i) FD has: (i) FD has: (i) Monthly / FD documents/ FD formulation, allocation Strategy submitted to the submitted to the submitted to submitted to the submitted to the Annually website and execution (DLI) Paper not Cabinet the Cabinet the the Cabinet the Cabinet the Budget Cabinet the Budget documents (converted into a new prepared Budget Strategy Budget Strategy Budget Strategy Paper for Strategy Paper for PDO-level indicator 2a Paper for Paper for Strategy Paper FY2018/19; and (ii) FY2019/20; and (ii) during the b) One FY2015/16; and FY2016/17; and for FY2017/18; submitted all four submitted all four Restructuring) quarterly (ii) submitted at (ii) submitted all and (ii) (4) quarterly (4) budget report least two (2) four (4) quarterly submitted all budget execution execution reports submitted to quarterly budget budget execution four (4) reports for for FY 2018/19 to 10 the provincial execution reports reports for quarterly FY2017/18 to the the Provincial assembly for FY2014/15 to FY2015/16 to the budget Provincial Assembly and the Provincial Provincial execution Assembly and published them on Assembly, and Assembly, and reports for published them on FD’s website. published them published them in FY2016/17 to FD’s website. in FD’s website. FD’s website. the Provincial Assembly, and published them in FD’s website. Area 3: Strengthening public procurement performance Contracts data entered Percentage MIS does MIS developed, 25% 25% 50% 75% Annually SPPRA reports SPPRA in the procurement MIS not exist. and tested. (no longer (no longer 11 (indicator dropped . applicable, indicator applicable, during the dropped) indicator Restructuring) dropped) Contracts processed Percentage E- E-procurement System designed System tested 25% 50% Annually SPPRA reports SPPRA through e-procurement procuremen action plan with major (no longer (no longer 12 modules (indicator t systems developed and contracts of applicable, indicator applicable, do not exist. adopted. dropped) The World Bank PK Sindh Public Sector Management Reform Project (P145617) dropped during the one indicator Restructuring) department. dropped) Procurement officials Number No SPPRA has: (i) SPPRA has SPPRA has: (i) SPPRA has certified SPPRA has: (i) Annually SPPRA SPPRA certified (DLI) certification developed a certified at least certified at at least one certified at least reports/TPV mechanism procurement fifty (50) officers least two hundred fifty (150) five hundred reports exists. certification of grade BPS-16 hundred (200) officers of grade (500) officers of action plan of above. officers of BPS-16 or above. grade BPS-16 or setting forth grade BPS-16 above; and (ii) 13 contents, and of above; and carried out a delivery (ii) carried out third-party mechanisms; and a third-party review of the (ii) notified the review of the certification mandatory certification process. certification process. requirements. Area 4: Strengthening management and transparency of the development portfolio Quarterly departmental Number Zero P&DD has P&DD has P&DD has: (i) P&DD has prepared P&DD has: (i) Annually P&DD P&DD development plan piloted the prepared and prepared and and published at prepared and reports/TPV monitoring reports format of published at least published at least nine (9) published at least reports prepared and published dashboard two (2) quarterly least ten (10) quarterly reports on twelve (12) (DLI) reporting on reports on quarterly implementation of quarterly reports implementation implementation reports on development on of development of development implementatio schemes for at least implementation schemes in at schemes during n of four (4) of development least one (1) FY2015/16 for at development Government schemes for at 14 Government least one (1) schemes Departments least four (4) Department. Government during collectively. Government Department. FY2016/17 for Departments at least four (4) collectively; and Government (ii) carried out a Departments; third-party and (ii) carried review. out a third- party review Departments where Number Zero Geo-coding and 1 i. 4 6 6 Annually P&DD reports/ P&DD geo-tagging of photo enforced website development schemes monitoring of ii. Third- 15 is implemented and development party information published schemes is review piloted. conducted . The World Bank PK Sindh Public Sector Management Reform Project (P145617) Departments with Text Zero Implementation 1 i. 3 Collection of Collection of Annually P&DD reports P&DD proactive feedback arrangement, ii. Third-party community community mechanisms established reporting and review feedback for at least feedback for at publishing conducted 10% of provincial least 10% of formats ADP schemes provincial ADP 16 established. costing over PKR 1 schemes costing billion in at least over PKR 1 billion three (3) in at least four (4) Government Government Departments. Departments. Project Development Objective Indicators Indicator Name Description (indicator definition etc.) 1) Improved collection of Sales Tax on Services Measures the overall performance of the Sales Tax on Services (STS) Collection. STS to be measured in real terms, as three and a half percent annual collection growth minus inflation. Performance is cumulative, and over or under- performance adjustable vis-a-vis preceding or succeeding years. 2) Improved credibility of the budget (dropped as PDO indicator) The variance between actual and budgeted expenditure composition during the last three years, excluding contingency items; for the preceding fiscal year. 2a) Improved transparency of the budget (DLI) – (new PDO indicator) Measures transparency and legislative oversight through the budget cycle. 3) Reduced time taken to process procurement contracts (dropped as PDO indicator) Time taken to process procurement contracts proxies procurement performance as measured by days taken from the first advertised tender to signing. Targets measure improvements against baseline; for targeted contracts of education, agriculture, health and irrigation departments with dataset as sampled in the “Review of Procurement Practices and Timelines in Specified Departments of GOS,” dated Oct 2014, and as detailed in the operations manual. No longer applicable following the Project Restructuring of May 2018. Intermediate Results Indicators Indicator Name Description (indicator definition etc.) 1) Approval and initial implementation of Sindh Tax Revenue Mobilization Reform Plan (DLI) Measures approval and implementation progress of STRMP. 2) Enhanced SRB human resources capacity for administration (DLI) Measures SRB human resources capacity development progress. 3) Increased automation of SRB systems (DLI) Measures transparency of taxpayer obligations, effectiveness of systems for taxpayer registration, tax assessment, and collection of tax payments through increased automation of several key systems and in particular the number of notices sent through automated systems. 4) Increased tax base Measures the increase in the registration of the number of taxpayers to assess the increasing width of the tax base. 5) Risk based audits of taxpayers implemented (DLI) Measures use of risk targeted auditing of taxpayers as a key activity to improve compliance and deter tax evasion and its success with the hit rate. 6) Improved SRB performance transparency Measures disclosure of key performance information (defined as debt collection, appeals resolution, tax payer facilitation, pre-service and in-service training conducted, annual taxpayer satisfaction survey and revenue and number of active and inactive tax payers and revenue collected against category) for increased public oversight. The World Bank PK Sindh Public Sector Management Reform Project (P145617) 7) Debt management systems instituted. Measures the degree of implementation of the recommendations of the DeMPA reform plan. 8) Increased extra-budgetary releases captured in FMIS (dropped indicator) Measures the percentage of extra-budgetary releases during the previous fiscal year entered by FD in SAP prior to payment. 9) Establishment of internal audit (dropped as DLI and kept as results indicator) Measures the degree of implementation of internal audit function to be established in GoS based on a plan to be adopted for staffing, mandate, and audit plans to focus on systemic issues. 10) Transparency in budget formulation, allocation and execution (DLI) (converted to PDO Measures transparency and legislative oversight through the budget cycle. indicator in lieu of PDO indicator 2) 11) Contracts data entered in the procurement MIS Measures increased use of the procurement MIS for targeted contracts of the irrigation, health, agriculture, education, local government and works departments. 12) Contracts processed through e-procurement modules Measures the percentage of high value contracts processed through e-procurement systems for targeted contracts of the irrigation, health, agriculture, education, local government and works departments to assess the implementation of the new e–procurement system. 13) Procurement officials certified. (DLI) Measures the increased capacity of the procurement staff. 14) Quarterly departmental development plan monitoring reports prepared and published (DLI) Measures monitoring capacity of P&DD with a focus on the Bank portfolio. 15) Departments where geo-tagging of development schemes is implemented and information Measures improved spatial monitoring and planning capacity and increased transparency. published. 16) Departments with proactive feedback mechanisms established Measures implementation of proactive feedback mechanisms, where government contacts the citizens to elicit views on various aspects of service delivery, for increased citizen oversight of development projects. P&DD has piloted Community Feedback on schemes costing above PKR 1 billion in the provincial ADP. DLI Verification Protocol 1 Approval and initial implementation of Sindh  Publishing means disclosure of the approved Sindh Tax Revenue Mobilization Reform Plan on the Finance Department website during FY 14-15. Tax Revenue Mobilization Reform Plan (DLI)  Approval means approval by the Chief Minister Sindh. 2 Enhanced SRB human resources capacity for  Approval means sanction by the Board of SRB. administration  Staff means staff of basic pay scale 15 or equivalent and above.  Training means pre-service and in-service training conducted as required by the approved SRB training plan as amended from time to time.  The staffing and training plan and HR policy, and any revisions, will be agreed with the Association.  Year 4 TPVs will review the adequacy of the staffing plan, the skills gap, the training systems, and implementation of the staffing plan to meet the SRB human resource capacity needs to meet the annual targets set by the approved tax reform strategy.  Source: SRB documents and TPV reports. 3 Increased automation of SRB  Automation means automated notice system, e-payment system, e-tax payer grievance redressal mechanism, unique tax payer identification number (STPIN) system, and e-tax payer facilitation and education.  Automated notice system means the detection of a possible non-compliance condition in the tax payer’s return through an automated system and the production of a notice by the system. SRB will have various automated system(s) in place to report conditions such as non-filing, short payment, inadmissible (unverifiable or suspicious) input claim. Based on this detection the system will produce an automated notice which may be either dispatched electronically or with an officer’s approval.  Tax identification number means a unique tax payer identification number.  E-grievance redressal system means electronic mechanism to report citizen grievances through a call center or email. A third-party service center should be operational with a mechanism to receive phone calls and emails, log complaints and report follow-up action to; (i) tax payer / citizen; and (ii) management with escalation protocol for no action. 30 The World Bank PK Sindh Public Sector Management Reform Project (P145617) DLI Verification Protocol  E-payment system means payment of taxes to a GoS tax collecting agency from a secure web based facility without the need to physically go to a bank, or government office.  Linkages with at least three government and other registration systems databases means coordinated effort between SRB and other databases. Third party refers to entities whose databases are of interest to SRB for the purpose of tax assessment, consistent with the law and government policy. Possible third parties include FBR, NADRA, CGA and other provincial revenue collecting agencies.  E-tax payer facilitation and education means use of ICT (internet, phones, emails, SMS, etc.) to facilitate actual and potential taxpayers easy access to user friendly, and up-to-date information on the laws, regulations and procedures, making potential taxpayers aware of their liabilities, deadlines, arrears etc., and making available on SRB and government websites guidelines/pamphlets and other taxpayer education measures.  Piloting means that minimum 25% of the relevant business is transacted through the automated system but does not include e-tax payer facilitation and education measures.  Implemented means that minimum 90% of the relevant business is transacted through the automated system.  Third-party review of year 4 will audit the quality and effectiveness of the automation systems for improved tax administration and suggest recommendation.  Third-party review of year 3 will review the effectiveness and use of linkages of the third-party databases with SRB systems.  Source: SRB documentation and TPV reports. 4 Risk based audits of taxpayers implemented  ‘Act’ means the Sindh Sales Tax on Services Act, 2011.  ‘Assessment Order’ means the final order passed under sections 23 or 47 of the Act delineating the amounts held recoverable from the taxpayer.  ‘Audit Notice’ means the Notice issued under Section 28 of the Act to notify the taxpayer about the start of the audit proceedings and to require the taxpayer to furnish the prescribed records and documents for the period(s) selected for audit.  ‘Audit Observation’ means the document communicated to the taxpayer describing the violation(s) of law observed by audit.  ‘Audit Plan’ means the audit plan that lists all selected audit cases, stating inter alia, the nature and scope of the audit (desk audit, issue specific, or comprehensive) and the tax periods that are selected for audit.  ‘Audit Report’ or ‘A/R’ refers to the detailed report marking the conclusion of the audit exercise. It will be issued by the Deputy Commissioner SRB (in charge Audit Wing) with the approval of the competent authority. A/R shall provide inter alia, the nature and scope of audit, audit proceedings, the records examined, third-party information where gathered, as well as the violations of law/rules/procedures as observed during audit along with the quantum of tax-evaded, if any. A/R shall be sent to the relevant Commissioner Operations.  ‘Audit Finalization’ means the completion of audit activities marked by the issuance and communication of the Contravention Report ‘C/R’ and ‘A/R’ to all concerned.  ‘Competent Authority’ for audit purposes means the Commissioner (Audit) SRB.  ‘Contravention Report’ or ‘C/R’ means the summary report preceding the A/R. The C/R shall list-down contraventions of the Act and Rules as detected during the audit along with the quantum of recoverable tax in each instance. The C/R shall be issued by DC (Audit), under intimation to the Competent Authority, and shall be addressed to the relevant Operational Commissioner SRB.  ‘Initiated Assessment’ means the issuance of the Show-Cause Notice to the taxpayer by SRB Operations Wing to initiate assessment of tax as per law following the contravention report.  ‘Risk Based Criteria’ refers to the criteria adopted for selecting cases for audit (see Annex 6a below).  ‘Revised Risk Based Criteria’ means the updated criteria for selection of audit cases based on the feedback from finalized audits of FY2017-18.  ‘Rules’ refer to the Sindh Sales Tax on Services Rules, 2011 and the Sindh Sales Tax Special Procedure (Withholding) Rules, 2014 as the case may be with reference to the context.  ‘Show-Cause Notice” means the Notice issued to the taxpayer by SRB Operations Wing under sections 23 or 47 of the Act. It contains all the contraventions listed in the ‘C/R’ leading to the assessment order regarding the defaulted amounts, if any.  ‘Taxpayer’ means the taxpayer selected for audit as per the ‘Risk-Based Criteria’.  ‘Verification Protocol’ means the instant Protocol. It includes DLI targets, definitions, and risk-based criteria.  Source: SRB audit reports and related documents. 5 Establishment of internal audit  PAO means the Principal Accounting Officer of the department. 31 The World Bank PK Sindh Public Sector Management Reform Project (P145617) DLI Verification Protocol  Departments are identified under the Sindh Government Rules of Business, 1986.  Number of Departments will be counted as total four including Finance Department.  Actions taken are any measures for policy or practice reform or training or counseling or punitive action taken by the PAO to correct the challenge identified by the internal audit.  Source: Government documents and internal audit reports. 6 Transparency in budget formulation,  Budget strategy paper means a document to be presented to the Cabinet by the Finance Department before preparation of budget proposals, allocation and execution laying out the main contours of the budget including government’s policies, priorities and strategic allocation of resources. Medium Term Fiscal Framework for GoS and key macro-economic assumptions must be included.  Budget execution report means a detailed report providing information on budget allocation (original and revised) and actual expenditure incurred.  The required budget execution reports from the second to the fifth year of the program may include one budget execution report from the last quarter of the previous fiscal year.  Budget execution reports must be prepared and published within 60 days of the end of the quarter.  Published means permanent disclosure on the FD website.  Source: FD documents and website. 7 Procurement officials certified.  Certification program as defined in the training strategy approved by SPPRA board as amended from time to time and agreed with the Association.  Staff is BPS 16 and above.  Target is cumulative.  Third-party review will examine the adequacy and effectiveness of the certification program.  Source: SPPRA documents and TPV reports. 8 Quarterly departmental development plan  Format of data collection, reporting and disclosure the nature and number of schemes to be reported, as revised from time to time over the monitoring reports prepared and published implementation years, will be agreed with the Association.  Data collection from the field will include data collected with geo-tagged photos in prescribed format and frequency, including selective use of third-party monitors and community participation.  Departments for the purposes of this DLI are PHED, Irrigation, Works & Services, and one other department. Schemes costing above PKR 500 million will be initially prioritized and on 100% completion of this, other minor schemes may be included.  Development plan is provincial annual development plan schemes and any other WB-financed schemes including the sub-schemes of any umbrella scheme.  Published means permanent disclosure on the P&DD/M&E Cell website.  Third-party review will examine the usefulness of the ICT-based data collection for improved monitoring of civil works execution.  The targets are not cumulative unless where specified.  Piloted means using ICT-based data collection efforts for multiple districts for one targeted department.  Source: P&DD/MEC documents, website and TPV reports. 32 The World Bank PK Sindh Public Sector Management Reform Project (P145617) Annex 6a: Risk-Based Criteria for Tax Audits SRB Audit Wing shall select taxpayers for audit meeting one or more of the following criteria:  Taxpayers depicting certain conspicuous behavioral approaches (e.g. huge transactions but no tax payments, continuous huge input tax adjustment, claiming tax exemptions, abnormal input/output tax ratio, etc.).  Taxpayers selected on the basis of analysis of the correlation between the growth in one sector of GDP and corresponding growth in payments to the treasury i.e. taxpayers experiencing growth in business and taxable revenue due to economic factors but not exhibiting commensurate growth in their monthly SST payments.  Taxpayers/cases with high revenue potential.  Taxpayers whose tax performance is poor compared to their competitors of same size.  Taxpayers that consistently pay little or no tax, particularly entities with a poor tax history in terms of timely lodgment and payment.  Non-compliance in respect of the obligation to reverse charge SSTS i.e. instances where the service recipient is liable to collect and pay SST instead of the service provider.  Persons operating in the cash economy that do not comply with their SSTS obligations, particularly persons that charge sales tax but do not remit the payments to SRB. 33