INTEGRATED SAFEGUARDS DATA SHEET RESTRUCTURING STAGE Note: This ISDS will be considered effective only upon approval of the project restructuring Public Disclosure Copy Report No.: ISDSR1032 Date ISDS Prepared/Updated: 20-Aug-2014 Date ISDS Approved/Disclosed: 21-Aug-2014 I. BASIC INFORMATION 1. Basic Project Data Country: Kosovo Project ID: P101614 Project Name: Public Sector Modernization Project (P101614) Task Team Gregory Kisunko Leader: Estimated 16-Jul-2009 Estimated 04-Feb-2010 Appraisal Date: Board Date: Managing Unit: GGODR Lending Specific Investment Loan Instrument: Sector: Central government administration (100%) Theme: Administrative and civil service reform (44%), Public expenditure, financial management and procurement (41%), Other public sector g overnance (15%) Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and No Emergencies)? Public Disclosure Copy Financing (in USD Million) Total Project Cost: 8.00 Total Bank Financing: 8.00 Financing Gap: 0.00 Financing Source Amount BORROWER/RECIPIENT 0.00 International Development Association (IDA) 4.40 IDA Grant 3.60 Total 8.00 Environmental C - Not Required Category: Is this a No Repeater project? 2. Current Project Development Objectives The project development objectives are to strengthen the performance of the public financial management system; and establish the foundations for effective and Page 1 of 5 fiscally sustainable payroll and human resource management in the core civil ser vice. Proposed New PDO (from Restructuring Paper) Public Disclosure Copy The project development objectives are to strengthen the performance of the public financial management system; and establish the foundations for effective and fiscally sustainable payroll and human resource management in the core civil ser vice. 3. Project Description A. Improving public finance management system performance. The public expenditure and financial accountability (PEFA) assessment conducted in 2007 showed that K osovo had made considerable progress in improving the public financial managemen t system. In particular, the automated treasury system produces reliable reports in a timely manner. However, weaknesses remain. Budgeting still fails to reflec t strategic directions and multi-annual planning, payroll administration is not subject to effective controls, while public procurement often falls short of pro viding value for money. Budget under-execution has also been a persistent proble m in recent years, primarily due to capital under-spending. Though capital budge t execution increased dramatically in 2008, overall low budget execution (around 85 percent) suggests that problems in realistic budget planning and timely exec ution remain. This component would finance technical assistance for PFM reform primarily in two main areas. The first is capacity building for financial management in key bud get organizations. The specific content of this technical assistance would refle ct the priorities of the Government's PFM Reform Action Plan with emphasis likel y to be placed on budget formulation, budget strategy development, multi-year co sting, budget execution planning, in-year management reporting, and budget revie w practices. This assistance would be targeted at agencies that have been identi fied by Public Disclosure Copy the Government and have indicated a strong interest to participate in pr oject activities. Tentative candidates include the Ministries of Education; Heal th; Agriculture, and Justice. Technical assistance would be delivered using the PEMTAG approach of on-the-job-mentoring. The second area is procurement reform. This would focus on: (i) implementing a Quick Gains reform program based on the relevant diagnostic study conducted in 2008; and (ii) upgrading the current e-pr ocurement system with new functionalities for e- transactions and procurement cycle management. B. Improving payroll administration and laying the foundations for a professional civil service. The current legal framework for the civil service established u nder UNMIK does not distinguish the civil service from public sector employment or provide for a grading structure. As a result, there is no consistency among c ivil servants' job titles, levels of responsibility, qualifications, and salarie s. The absence of a pay and grading structure undermines payroll controls and ma kes meaningful policy on civil service pay all but impossible. In addition, the current framework fails to provide any job security, therefore leaving civil ser vants vulnerable to political pressure, while the lack of career structure de-mo tivates staff and contributes to high rates of turnover. Page 2 of 5 The Government has now drafted framework legislation on the civil service. This limits the scope of the civil service to professional and administrative positio ns in central government and municipal administrations, thereby excluding public Public Disclosure Copy employees engaged in service delivery and law enforcement. Therefore the new ci vil service legislation would establish a uniform pay and grading system for the core civil service only. It would also strengthen civil servants' protection fr om political pressure by offering tenure, conditional on satisfactory performanc e. These measures are expected to strengthen incentives for staff to remain in t he civil service and improve their performance. To support these reforms, this component would finance technical assistance and ICT investments for the following activities: (i) technical support for implemen ting the pay and grading reform; (ii) establishing a sustainable training progra m for civil servants on key human resource management functions (recruitment, gr ading, and performance appraisal); and (iii) upgrading the civil service registr y (HRMIS), including linkage of the payroll database and HRMIS to the Treasury s ystem. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) Kosovo - nationwide 5. Environmental and Social Safeguards Specialists 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/ No There will be no civil works and the fund is used BP 4.01 for capacity building and ICT equipment. Natural Habitats OP/BP 4.04 No Forests OP/BP 4.36 No Public Disclosure Copy Pest Management OP 4.09 No Physical Cultural Resources OP/ No BP 4.11 Indigenous Peoples OP/BP 4.10 No Involuntary Resettlement OP/BP No 4.12 Safety of Dams OP/BP 4.37 No Projects on International No Waterways OP/BP 7.50 Projects in Disputed Areas OP/BP No 7.60 II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues Page 3 of 5 1. Describe any safeguard issues and impacts associated with the Restructured project. Identify and describe any potential large scale, significant and/or irreversible impacts: none. Public Disclosure Copy 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: none. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. n/a 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. n/a 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. n/a B. Disclosure Requirements If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/ Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the Yes [ ] No [ ] NA [ ] Public Disclosure Copy World Bank's Infoshop? Have relevant documents been disclosed in-country in a public Yes [ ] No [ ] NA [ ] place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional Yes [ ] No [ ] NA [ ] responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included Yes [ ] No [ ] NA [ ] in the project cost? Does the Monitoring and Evaluation system of the project Yes [ ] No [ ] NA [ ] include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed Yes [ ] No [ ] NA [ ] with the borrower and the same been adequately reflected in the project legal documents? III. APPROVALS Page 4 of 5 Task Team Leader: Gregory Kisunko Approved By Public Disclosure Copy Regional Safeguards Name: Agnes I. Kiss (RSA) Date: 20-Aug-2014 Coordinator: Practice Manager/ Name: Date: Manager: Public Disclosure Copy Page 5 of 5