The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) Second Public Financial Management Capacity Strengthening Project (P151492) AFRICA | Somalia | Governance Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2016 | Seq No: 6 | ARCHIVED on 31-May-2019 | ISR36408 | Implementing Agencies: Ministry of Finance, Puntland, Ministry of Finance of Somaliland Hargeisa, Federal Republic of Somalia, Ministry of Finance Federal Government Key Dates Key Project Dates Bank Approval Date: 07-Jul-2015 Effectiveness Date: 09-Sep-2015 Planned Mid Term Review Date: 08-May-2017 Actual Mid-Term Review Date: 08-May-2017 Original Closing Date: 30-Jun-2022 Revised Closing Date: 30-Jun-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective is to establish and strengthen institutional capacity for the management of public funds inCentral Finance Agencies and targeted sectors. Has the Project Development Objective been changed since Board Approval of the Project Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured) To strengthen systems of domestic revenue mobilization, expenditure control and accountability in the Federal Government, Puntland State of Somalia, and Somaliland. Components Table Name Component 4: Public financial management reform oversight, coordination and management:(Cost $3.00 M) Component 1: Strengthening Tax Policy and Inland Revenue Administration Systems:(Cost $12.30 M) Component 2: Strengthening Capacity for Public Financial Management Control and Accountability:(Cost $12.70 M) Component 3: Rapid Response Facility:(Cost $2.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating High High Implementation Status and Key Decisions 6/14/2019 Page 1 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) Additional Financing (AF) and restructuring to the original project was approved by Executive Directors of the International Development Association (IDA) on September 25, 2018 and became effective April 1, 2019. The revised development objective of the project is to “strengthen systems of domestic revenue mobilization, expenditure control and accountability in the Federal Government, Puntland State of Somalia and Somaliland”. After the restructuring the number of Components were reduced from six (6) to four (4): - (i) Component 1: Strengthening Tax Policy and Inland Revenue Administration systems; (ii) Component 2: Strengthening Capacity for the Public Funds Management Transparency and Accountability; (iii) Component 3: Rapid Response Facility; (iv) Component 4 –PFM reform Oversight, Coordination and Management; Due to the revision of the Development Objective and the components, it is too early to assess progress towards the achievement of the Project Development Objective (PDO) and the implementation progress, but despite that, the Somaliland, the Federal Government of Somalia and the Puntland State of Somalia have shown commitment towards the implementation of the project activities as there is noticeable effort by all the three the governments to speed up implementation of the project. Component 1: Strengthening Tax Policy and Inland Revenue Administration systems Sub-Component 1.1: Improving organizational capacity for tax policy: FGS has designated Five (5) staff including one with legal background to handle tax policy activities in the Ministry of Finance. The International Monetary Fund (IMF) has provided initial technical assistance for establishing Tax Policy Unit (TPU), taxation of natural resources such as extractives and fisheries. The stage has been set for TPU staff to receive capacity enhancement including tools to enhance delivery. PSS: A draft structure for the Tax Policy Unit (TPU) has been designed but requires enhancement. A head of the TPU has been deployed. The head of the Unit will be a counterpart to the proposed consulting services. The PSS authorities agreed to embark on a process of refining the TPU structure and in parallel receive capacity to start preparing basic analytical revenue reports. SOMALILAND: The new Minister of Finance has established a Macro-economic Department, including a Tax Policy Unit (TPU). The DFID provided technical assistance (TA) support to the Ministry with forecasting and revenue collection reports, which is used for internal purposes. The head of the TPU has been deployed, who will be the key counterpart, and identify potential staff (trainees), with: basic English language skills; technical skills; and who will be working in the tax policy function over the coming years. Sub-Component 1.2: Improving systems for inland revenue administration: FGS: Large Taxpayer Offices located at two locations (Inland Revenue Department (IRD) Headquarters and the Airport) with Seventeen (17) staff allocated to administer about eighty (80) Large and Medium Taxpayers (LMTOs). With support from IMF TA, ad hoc forms have been designed and two training sessions delivered to LMTO staff. A segmentation criterion was used to identify the taxpayers deployed to the LMTO. PSS: a generic taxpayer segmentation criterion, was availed by UNICORN Consulting Firm to PSS. In addition, PSS has made tangible achievements in the Taxpayer Education and Facilitation. As a result, the FGS plans to obtain and use the same materials developed by PSS. This activity helps promote voluntary compliance, and contributes to restoring citizen trust. SOMALILAND: DFID team is supporting the Inland Revenue Department (IRD) with establishment of the LTO with the initial focus of such support being the three core processes: registration; return processing; and payments. Business process mapping, modernization and automation: in FGS, PSS and Somaliland, Taxpayer Identification Numbers (TINs) have been designed and being issued to taxpayers. In FGS the total number of TINs issued was not readily available; in PSS three hundred (300) taxpayers in 9 regions have been registered while in Somaliland one thousand one hundred and eighty (1180) taxpayers in Hargeisa and five (5) regions have been registered. Training and Capacity Development: FGS: The Director General Revenue (DG-R) has been coordinating training delivered by IMF and the Customs DFID funded consulting firm (Co- Water). PSS: A Planning and Training Section under the Ministry of Finance’s Human Resource and Training Directorate, manages capacity development efforts on behalf of the Inland Revenue Directorate. The Training Section has five (5) staff dedicated to administering training activities for the Ministry Subcomponent 1.3 Taxpayer education and facilitation: In FGS, Ad hoc taxpayer education and communication were implemented by authorities in 2018. Authorities began efforts to improve taxpayer confidence levels by requiring that all revenue collected is receipted through the Somalia Financial Management Information System (SFMIS) and cash banked directly by taxpayers to a Government account. In PSS: There is significant progress in the taxpayer education. They have received support from UNICORN, in drafting a taxpayer education program, key taxpayer education messages, and a taxpayer education manual. The taxpayer service unit composed of five (5) staff has been identified though not yet set up. Subcomponent 1.4 supporting revenue bill consultations: At FGS, The authorities confirmed that the Revenue Bill was approved by Cabinet and submitted to Parliament. The bill submitted to Parliament includes two parts which deal with allocation of taxes and revenue management. A bill on taxation of extractives was concluded with support from IMF and is to be submitted to Parliament soon. Authorities agreed to stepping up consultations with FMS, by convening the Inter-Governmental Fiscal Forum (IGFF). Component 2: Strengthening Capacity for the Public Funds Management Transparency and Accountability This component being implemented by FGS, PSS, and Somaliland consolidates several sub-components which were separate under the main project. The sub-components include; strengthening systems of treasury management, budget execution, procurement, accounting and reporting. FGS, PSS and Somaliland have made a significant progress on several ongoing activities under the project to include: strengthening the oversight arrangements to minimize use of cash payments by the Ministries Departments and Agencies (MDAs); hiring of a PFM/SLFMIS expert to support the SLFMIS and Information and Communications Technology (ICT) team; and audited financial statements of Bank funded projects 6/14/2019 Page 2 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) completed on time. In PSS, training of several Ministries Departments and Agencies (MDAs) and the regional offices of MDAs on the use of the PLFMIS has been undertaken. In Somaliland, the construction of the facility to house the Data Center to support any disaster recovery process of the SLFMIS system is almost complete. In addition, several reports and deliverables on Public Financial Management Technical Assistance (PFM TA) have been submitted. Some of the deliverables are: framework for the establishment of the Treasury Single Account (TSA) and cash management system. Component 3: Rapid Response Facility This component is implemented by all the three governments and is aimed at providing just in time support responding to the authorities’ request for a flexible window within the project to respond to emerging DRM and PFM priorities in a timely manner without the need to reallocate project proceeds for project restructuring. Puntland has not identified activities under this component yet. FGS’s key activity to be funded under this component is the Phase 2 of the Ministry of Finance building. FGS has made good progress and have submitted the Procurement plan, Single source justification for selection of UNOPS and the Terms of Reference in STEP and all these have been cleared by Bank. In Somaliland, the draft ToRs are prepared for the integrated revenue automation system, and the e-payment system, needs assessment. Component 4: PFM reform Oversight, Coordination and Management: In Somaliland PFM donor/oversight group have started meeting and the next meeting is planned for June 12, 2019. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial High High Macroeconomic High High High Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Substantial Substantial Substantial Institutional Capacity for Implementation and Sustainability Substantial Substantial Substantial Fiduciary High High High Environment and Social Low Moderate Moderate Stakeholders Substantial Substantial Substantial Other High High High Overall High High High Results PDO Indicators by Objectives / Outcomes Increase in Domestic Revenue Mobilization IN00683376 ►Revenue instruments (both tax and non-tax) with basic processes automated at the FGS. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 4.00 6/14/2019 Page 3 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) Date 11-Jul-2018 11-Oct-2018 24-May-2019 30-Jun-2022 The following apply for the purposes of this revenue mobilization indicator: (i) instruments include corporate income tax; personal income tax; excise tax; simple broad-based consumption tax; simple GST or VAT based consumption tax; registration tax; property tax; stamp duty; tax on remittances; telecommunications taxes; road tax (including vehicle licenses and drivers permits); business licenses; Comments: telecom licenses; and off-shore fishing licenses. (ii) the processes to be included in computing the indicator include (a) registration, (b) declaration/filing and assessment, (c) taxpayer payment and accounting, and (d) debt collection. Strengthen Systems of Accountability IN00683377 ►FGS - MDA audits (incl. pro-poor sectors) completed and published. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 8.00 75.00 Date 11-Jul-2018 11-Oct-2018 24-May-2019 30-Jun-2022 Transparency in the use of public funds and strategic allocation and use of funds in pro-poor sectors Comments: IN00707821 ►PSS - MDA Audits (incl. pro-poor sectors) completed and published (Percentage) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 75.00 Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00707833 ►SOMALILAND - Audits (incl. pro-poor sectors) completed and published (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 22.00 75.00 Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 Strengthen Systems of Expenditure Controls IN00683378 ►FGS - Appropriated expenditures processed through the system. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 25.00 25.00 50.00 60.00 Date 11-Jul-2018 11-Oct-2018 17-May-2019 30-Jun-2022 Aggregate Fiscal Discipline Comments: IN00707834 ►PSS - Appropriated expenditures processed through the system (Percentage, Custom) 6/14/2019 Page 4 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) Baseline Actual (Previous) Actual (Current) End Target Value 25.00 -- 40.00 60.00 Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00707822 ►SOMALILAND - Appropriated expenditures processed through the system (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 25.00 -- 85.00 60.00 Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 Intermediate Results Indicators by Components Strengthening Tax Policy and Inland Revenue Administration Systems IN00683379 ►FGS revenue administration capacity for tax administration (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 25.00 25.00 80.00 200.00 Date 11-Jul-2018 11-Oct-2018 24-May-2019 30-Jun-2022 Comments: Revenue mobilization IN00683380 ►SL - Revenue mobilization strategy implemented (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Procedures manual for Ad hoc approach to Initiated but not tax administration Value -- revenue mobilization completed disseminated and training conducted Date 31-Dec-2014 11-Oct-2018 24-May-2019 30-Jun-2022 Customs duties based on ad valorem Comments: IN00683381 ►FGS improved tax policy capacity (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 2.00 Date 11-Jul-2018 11-Oct-2018 24-May-2019 30-Jun-2022 Comments: 6/14/2019 Page 5 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) Strengthening Capacity for Public Financial Management Control and Accountability IN00683382 ►SOMALILAND - CIPFA Diploma Certified students gender disaggregated (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 18.00 33.00 Date 11-Jul-2018 11-Oct-2018 24-May-2019 30-Jun-2022 Comments: PFM Knowledge, Skills and Competencies IN00707836 ►PSS - CIPFA Diploma Certified students gender disaggregated (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 33.00 Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00683383 ►FGS - Strengthened audit methods implemented (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Partially implemented - (I) Improved regularity Not Due - As of 2019, audit methods applied the OAG is for Government progressively adopting Financial Statement compliance Audit Audits (FGS and SL) Manual (CAM) and Audit procedures & (II) Percentage of Financial Audit Manual methodology not aligned MDAs with audited Value -- (FAM) that were with INTOSAI Standards financial statements developed with (FGS, PL,SL) using Audit technical assistance of Management Software the INTOSAI & adopting improved development institute methodology (IDI). These were (Puntland) developed based on INTOSAI standards Date 11-Jul-2018 11-Oct-2018 24-May-2019 30-Jun-2022 Comments: Independent oversight and accountability for use of public funds IN00707837 ►PSS - Strengthned Audit methods implemented (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Not due. The (i) Improved regularity procedure manuals audit methods applied Audit procedure and were created in 2018 for Government Value methodology not aligned -- and the project is Financial Statement with INTOSAI standards planning to hire a Audits (FGS & SL); (ii) specialist for the office Percentage of MDAs 6/14/2019 Page 6 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) of the auditor general with audited financial to implement INTOSAI statements using Audit standards Management Software and adopting improved methodology (PL) Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00707838 ►SOMALILAND - Strengthened audit methods implented (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target (i) Improved regularity audit methods applied for government financial statement Not yet achieved - audits (FGS AND SL); Audit procedures and Audit procedure and and (ii) Percentage of Value methodology not aligned -- methodology not MDAs with audited with INTOSAI standards aligned with INTOSAI financial statements Standards using Audit management software and adopting improved methodology (PL) Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00683384 ►FGS - Citizen engagement measured by the number of tax payers consulted / educated (gender disaggregated) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 95.00 1,000.00 Date 11-Jul-2018 11-Oct-2018 24-May-2019 30-Jun-2022 IN00707839 ►PSS - Citizen engagement measured by the number of tax payers consulted/educated (gender disaggregated) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 1,000.00 Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00707840 ►SOMALILAND - Citizen engagment measured by the number of tax payers consulted/educated (gender disaggregated) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 1,000.00 Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00683385 ►FGS - Percentage of Payments made directly to vendors (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 25.00 25.00 22.50 60.00 Date 11-Jul-2018 11-Oct-2018 24-May-2019 30-Jun-2022 6/14/2019 Page 7 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) Comments: Budget and Fiscal Discipline IN00707841 ►PSS - Percentage of payments made directly to vendors (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 25.00 -- 35.00 60.00 Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00707842 ►SOMALILAND - Percentage of payments Made directly to Vendors (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 25.00 -- 25.00 60.00 Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00683386 ►FGS - Improved coverage and classification of data in in-year budget reports (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Achieved - allow comparison to original budget - as per the Timely In year budget budget utilization reports include Only approved budget Value -- report provided - expenditure both at and actuals disclosed Budget reports commitment and at classification in line payment stage with IPSAS requirements Date 11-Jul-2018 11-Oct-2018 24-May-2019 30-Jun-2022 Improved reporting for management decision-making and transparency Open Budget Initiative (OBI) Comments: principles IN00707843 ►PSS - Improved Coverage and classification of data in in-year budget reports (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Achieved - allow comparison to original budget - as per the Timely in-year budget budget utilization reports include Only approved budget Value -- report provided - expenditure both at and actuals disclosed Budget reports commitment and at classification in line payment stage with IPSAS requirements Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00707823 ►SOMALILAND - Improved coverage and classification of data in in-year budget reports (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Only approved budget -- In progress Timely in-year budget and actuals disclosed reports included expenditure both at 6/14/2019 Page 8 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) commitment and at payment stage Date 11-Jul-2018 -- 24-May-2019 30-Jun-2022 IN00683387 ►FGS - Improved information contained in annual financial reports (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Not Achieved - An initial draft has been developed and is to be reviewed internally after the finalization and submission of the FGS annual Donor funds under the Revenue and consolidated accounts. control of government Expenditure reports by Upon the review, the Value -- and Register for organizational and Auditor General is to moveable fixed assets economic classification be engaged for his included review input and concurrence before adoption. It is planned that the new templates shall be adopted by the beginning of July 2019. Date 31-Dec-2014 11-Oct-2018 24-May-2019 30-Jun-2022 Comments: Transparency and accountability IN00707835 ►PSS - Improved Information contained in annual financial reports (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Not Achieved - The improvement of the information available in the financial report (IPSAS) needed an update to the charts of accounts which have Donor funds under the Revenue Expenditure currently been control of the reports by organizational finalized and under a Value -- government and and economic translation process. register for moveable classification Puntland is planning to fixed assets included adopt the charts of accounts in 2019 to be able to produce IPSAS based financial reporting in the 2019 Financial statement of the government. Date 31-Dec-2014 -- 24-May-2019 30-Jun-2022 IN00707824 ►SOMALILAND - Improved information contained in annual financial reports (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Revenue and -- SL - achieved - Annual Donor funds under the Expenditure reports by Financial Statements control of the 6/14/2019 Page 9 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) organizational and submitted in timely government and economic classification manner with coverage register for moveable including revenue, fixed assets included expenditures, financial assets, domestic arrears and cash flow statement; as well as donor funds under the control of the government Date 31-Dec-2014 -- 24-May-2019 30-Jun-2022 Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P151492 IDA-D3700 Effective USD 20.00 20.00 0.00 0.00 19.85 0%% P151492 TF-A0388 Effective USD 16.00 16.00 0.00 15.56 0.44 97% P151492 TF-A0389 Effective USD 4.00 4.00 0.00 2.42 1.58 60% P151492 TF-A8217 Effective USD 6.00 6.00 0.00 0.00 6.00 0%% P151492 TF-A8218 Effective USD 4.00 4.00 0.00 0.00 4.00 0%% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P151492 IDA-D3700 Effective 25-Sep-2018 31-Oct-2018 01-Apr-2019 30-Jun-2022 30-Jun-2022 P151492 TF-A0388 Effective 06-Jul-2015 22-Jul-2015 09-Sep-2015 30-Jun-2018 30-Jun-2022 P151492 TF-A0389 Effective 10-Nov-2015 10-Nov-2015 07-Dec-2015 30-Jun-2018 30-Jun-2022 P151492 TF-A8217 Effective 22-Aug-2018 26-Nov-2018 26-Nov-2018 30-Jun-2022 30-Jun-2022 P151492 TF-A8218 Effective 25-Sep-2018 31-Oct-2018 01-Apr-2019 30-Jun-2022 30-Jun-2022 Cumulative Disbursements 6/14/2019 Page 10 of 11 The World Bank Implementation Status & Results Report Second Public Financial Management Capacity Strengthening Project (P151492) Restructuring History Level 2 Approved on 25-Aug-2016 ,Level 2 Approved on 07-Dec-2017 Related Project(s) P166206-Domestic Revenue Mobilization and Public Financial Management Capacity Strengthening Project 6/14/2019 Page 11 of 11