The World Bank Report No: ISR15475 Implementation Status & Results Indonesia Government Financial Management and Revenue Administration Project (P085133) Public Disclosure Copy Operation Name: Government Financial Management and Revenue Project Stage: Implementation Seq.No: 15 Status: ARCHIVED Archive Date: 30-Jun-2014 Administration Project (P085133) Country: Indonesia Approval FY: 2005 Product Line: IBRD/IDA Region: EAST ASIA AND PACIFIC Lending Instrument: Adaptable Program Loan Implementing Agency(ies): Ministry of Finance Key Dates Board Approval Date 21-Dec-2004 Original Closing Date 30-Jun-2009 Planned Mid Term Review Date 30-Nov-2012 Last Archived ISR Date 14-Dec-2013 Effectiveness Date 27-Oct-2005 Revised Closing Date 31-Dec-2015 Actual Mid Term Review Date 01-Feb-2013 Project Development Objectives Project Development Objective (from Project Appraisal Document) In light of the more limited scope of GFMRAP after the recommended restructuring, the overall Project Development Objective is changed to the following: The objective of the Project is to improve efficiency, governance, integrity and transparency in the Borrower's public financial management. This adjustment scales down the ambition by focusing on public expenditure management and by not being the overarching reform umbrella envisioned in the Project Appraisal Document. Has the Project Development Objective been changed since Board Approval of the Project? ● Yes No Component(s) Component Name Component Cost A. Public Financial Management 66.60 C. Governance and Accountability 5.40 Public Disclosure Copy D. Project Governance and Implementation 0.00 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status Overview Page 1 of 6 The World Bank Report No: ISR15475 At the end of 2013, the World Bank approved the government's request for the second restructuring of the GFMRAP to extend the loan closing date from December 31, 2013 to December 31, 2015. The extension of the project was intended to ensure sustainability after the successful development and deployment of SPAN. The deployment of the system started on January 2, 2014. However, as piloting was expanded across locations, MOF encountered problems with server performance, which in turn Public Disclosure Copy led to the suspension of piloting. MOF is taking steps now to address the server issue. However, as a result of this delay, the June 2014 deadline for operational acceptance can no longer be met. Locations No Location data has been entered Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Automated treasury payment system enables Text Value Treasury system does not At present, SPAN is about to Accurate and timely financial accurate and timely financial reporting, reduces enable accurate and timely start the pilot. Once it is fully reporting, in line with incidence and size of idle cash balances, and financial reporting and cannot rolled out in 2014, all of the international and national reduces corruption in payments be used for reducing end target indicators will be standards, a well function incidence of idle cash expected to realize TSA with cash planning balances nor to ensure proper minimizing idle cash balances expenditure controls and the enforcement of expenditure controls (and risk mitigation). Date 01-Jun-2004 12-Jun-2014 31-Dec-2015 Comments Significant progress is being made. The TSA is largely complete. The GFMIS (SPAN) roll out is scheduled by end 2013, with the requirements for new business processes frozen and a new COA introduced Public Disclosure Copy for FY2012. Intermediate Results Indicators Page 2 of 6 The World Bank Report No: ISR15475 Indicator Name Core Unit of Measure Baseline Current End Target National government policy priorities are Text Value No MTEF. An elaborate See indicator. reflected in a Medium Term Expenditure planing process is in place but Public Disclosure Copy Framework and annual budgets. the link between planning and budgeting is weak. Date 01-Jun-2004 31-Mar-2013 30-Jun-2009 Comments Discontinued after restructuring, although significant progress continues to be made by the GOI in this area. Reduced leakage in expenditure flows to end- Text Value Na. Na. users as measured by Public Expenditure Date 01-Jun-2004 09-Feb-2009 30-Jun-2009 Tracking Surveys. Comments This component has been dropped. Completion of SPAN Stage I rollout (Treasury, Text Value Treasury system does not Starting the pilot phase on See indicator. SPAN fully KPPNs, pilot line ministries) demonstrated by, enable accurate and timely Jan 2014 and roll-out functional GFMIS in e.g. specified periodic financial reports financial reportingand can n ot completion in 2014 accordance with ITB prepared within a specified time period for be used for reducing specifications. concerned entities incidence and size of idle cash balances, and reduce co rruption in payments. Date 01-Jun-2004 12-Jun-2014 31-Dec-2015 Comments SPAN in implementation phase is ongoing and nearing completion in 2014. Improved Customs revenue performance and Text Value No information available. See indicator. time-for-release performance. Date 01-Jun-2004 07-Dec-2006 30-Jun-2009 Comments This component has been dropped. Public Disclosure Copy Increased ratio of revenues to GDP, increase Text Value The non oil and gas tax Na in registered tax payers and filers, reduced tax revenues were 10.6 percent arrears, and reduced clearance time in of GDP in 2006. Other data Customs. are not recorded by the Indonesian authorities. Date 01-Jun-2004 31-Jan-2012 30-Jun-2009 Comments This component has been dropped. Page 3 of 6 The World Bank Report No: ISR15475 Reviews (including from Minister) verify the Number Value 0.00 3.00 4.00 completion of at least four high-quality policy Date 12-Feb-2005 31-Jan-2012 31-Dec-2015 analysis products. Comments The FPO was established in Minister has consolidated all At least 4. Public Disclosure Copy 2005. MOF policy functions in FPO in 2011 (including Tax and Customs). FPO now produces high quality budget analysis, including fiscal risk statement, analysis on balanced budget and modeling and recommendations for subsidy reform (to be implemented in 2012). A Treasury Single Account (TSA) system is Text Value A baseline of >18,000 TSA has been fully TSA enforced with functioning with acceptable parameters: all on- government cash operations implemented since FY 2009 consolidation of government budget central government bank accounts and with no cash management funds (no material own-revenue bank accounts of line ministries standards exceptions). Cash and spending units are management standards minimizes idle balance in TSA. Date 01-Jun-2004 31-Mar-2013 31-Dec-2015 Comments Idle cash balance with BI earns revenue as provided by MOU, although amounts remain significant resulting in a very large cost of carry. Annual surveys of stakeholder satisfaction with Text Value Est. user satisfaction < 10% This indicator has been Tax Court admin. and case management as no formal surveys, no dropped during the first established, action plan adopted and Tax website or case management project restructuring Courtwebsite functioning and tracking system etc. Date 31-Dec-2004 30-Sep-2012 31-Dec-2013 Comments The procurement of this Public Disclosure Copy component is now in doubt. The Government has informed the Bank of the intention to fund entire component from the budget, although capacity to do this remains very low. Disagreements with the Bank have centered on the appropriate procurement Page 4 of 6 The World Bank Report No: ISR15475 method (see March 2010 Supervision AM). Verification of effective project governance, Text Value No GAAP, PSC or As per description and set out external oversight, change management and investigation unit. in loan agreement. Public Disclosure Copy implementation Date 01-Jun-2004 31-Mar-2012 31-Dec-2015 Comments Monitoring and oversight is considered adequate with good capacity in PSSU and in DG Treasury for SPAN. Data on Financial Performance (as of 30-May-2014) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P085133 IBRD-47620 Effective 21-Dec-2004 22-Dec-2004 27-Oct-2005 30-Jun-2009 31-Dec-2015 P085133 IDA-40260 Effective 21-Dec-2004 22-Dec-2004 27-Oct-2005 30-Jun-2009 31-Dec-2015 P085133 TF-53556 Closed 22-Dec-2004 22-Dec-2004 27-Oct-2005 31-Dec-2008 31-Dec-2010 P085133 TF-90047 Closed 09-Mar-2007 09-Mar-2007 25-Apr-2007 31-Dec-2012 31-Dec-2013 P085133 TF-91414 Closed 14-Feb-2008 14-Feb-2008 14-Feb-2008 31-Jan-2011 30-Sep-2012 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P085133 IBRD-47620 Effective USD 55.00 55.00 0.00 41.22 13.78 75.00 P085133 IDA-40260 Effective USD 5.00 5.00 0.00 4.97 0.00 99.00 P085133 TF-53556 Closed USD 5.00 4.78 0.22 4.78 0.00 100.00 P085133 TF-90047 Closed USD 5.77 4.13 1.65 3.78 0.35 92.00 P085133 TF-91414 Closed USD 1.35 1.06 0.29 1.06 0.00 100.00 Public Disclosure Copy Disbursement Graph Page 5 of 6 The World Bank Report No: ISR15475 Public Disclosure Copy Key Decisions Regarding Implementation The User Acceptance Test (UAT) was completed in December 2013, and final deployment began January 2, 2014. Deployment of SPAN was to be done in pilot stages, but was put on hold after tests showed that SPAN was unable to process transactions at an acceptable speed. MOF has concluded that additional server capacity is essential to resolve the performance issue and is considering its options for procuring the servers in a timely manner. Final operational acceptance will have to be extended for at least six months (up until the end of 2014) to provide sufficient time for completing pilot, roll out, and stabilization of the system. Restructuring History There has been no restructuring to date., Level 2 RVP Decision on 20-Dec-2013 Related Projects There are no related projects. Public Disclosure Copy Page 6 of 6