Page 1 INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC2437 Date ISDS Prepared/Updated: 08/16/2006 I. BASIC INFORMATION A. Basic Project Data Country: Tajikistan Project ID: P099840 Project Name: Public Financial Management Modernization Project Task Team Leader: Antonius Verheijen Estimated Appraisal Date: May 1, 2007 Estimated Board Date: August 21, 2007 Managing Unit: ECSPE Lending Instrument: Specific Investment Loan Sector: General public administration sector (100%) Theme: Public expenditure, financial management and procurement (P);Administrative and civil service reform (S) IBRD Amount (US$m.): 0.00 IDA Amount (US$m.): 4.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER/RECIPIENT 0.00 0.00 B. Project Objectives [from section 2 of PCN] Enhance the efficiency and transparency of public sector expenditure management at central and sub-national level by designing and implementing an automated financial management information system and building capacity in core areas of public financial management C. Project Description [from section 3 of PCN] The project is proposed to have the following three components: 1. Building a Public Financial Management Information System (PFMS) The Treasury organization has been established under the Ministry of Finance (MoF) organizational structure in 1998 and an interim treasury system is in place to support basic functions at the central and sub-national level. Linkages with local oblast and rayon offices are weak and the network capacity is not adequate to accommodate a fully fledged public financial management system (PFMS). The establishment of a new integrated PFMS is the next step to realize the objectives set in the PFM reform agenda. Page 2 Based on discussions held with Senior Management of the Ministry of Finance and considering experience in other states in the ECA region (such as Moldova, Georgia, Ukraine etc.), it is proposed that the project take a comprehensive approach to the design of the PFMS, covering all elements of the budget process (planning as well as execution and auditing). The proposed functional coverage of the system is attached in Annex 1. It is also proposed that the system should be rolled out country wide, following testing in Khatlon as a pilot Oblast. This approach would in the end be the most cost effective, and also fit in the broader financial management reform plans of the Ministry of Finance, which also foresee a comprehensive overhaul of the public financial management system, starting with a review of current budget planning practices and their rationalization, following by process automation. The savings that will be gained through the automation of the Treasury and budget planning systems are expected to be considerable and a cost benefit analysis will be conducted during project preparation. Regarding sequencing of the introduction of the PFMS with the planned introduction of budget systems reforms, it is noted that the PFMS would be fully operational for the budget year 2011, which fits the timetable for the full roll out of the planned MTBF by 2013. Thus, whereas careful sequencing is essential, in terms of the overall reform timetable there are mutually beneficial interlinkages between budget system reform and budget system informatization. 2. Capacity building in core aspects of public financial management In view of the depth of planned budget system reforms, and the strains these will pose on the limited capacity in the country, the importance of an extensive capacity building program is beyond doubt. Considering the core capacities required to successfully manage and implement a PFMS and taking into account the expected support by other donors the proposed project would focus on four key issues: ? Budget process rationalization and the introduction of Medium Term Budget Planning, as well as its linkage with the design and implementation of the PFMS ? Intergovernmental fiscal relations, in the context of the implementation of the PARS, coordinated with USAID ? Internal Audit, building on the internal audit strategy to be designed with EU assistance ? Technical skills in IT and web-based systems ? Drafting amendments to existing legal and normative acts and developing new instructions and methodologies with respect to implementation of the PFMS The activities under the component would not only aim to provide essential training (with a specific attention for capacity building for sub-national government), but also would aim to contribute to development of a functioning training infrastructure for public financial management. In this regard, the Government has proposed that the project contribute to the development of the Financial Management Training Center, under the auspices of the Ministry of Finance. Whereas premises have been identified for the Center, these need still to be renovated, and a core group of trainers need to be trained. The preparation mission will explore the extent to which the request for support to a separate training center can be addressed or whether other Page 3 options (such as building on the existing capacity at the Institute for Higher Qualification of Civil Servants (IHQ)) would be more realistic. Experience from the ECA region contains successful examples of both approaches. However, it would certainly be appropriate to invest in the development of a core group of trainers on the above priority issues, regardless of the decision on the institutional ?home? for this capacity. 3. Strengthening capacity for public financial management reform The third and final component would have two main objectives; (i) strengthening project implementation capacity in the Ministry of Finance, which would be implementing the project directly (without a PIU), but would require additional capacity in procurement and project financial management to ensure internal processes will meet Bank fiduciary requirements, and (ii) strengthening capacity to integrate and manage the different aspects of the complex public financial management reform agenda. This would be aided by the Public Financial Management Reform Action Plan that is to be designed under the Public Sector Reform Project. D. Project location (if known) Dushanbe and selected Oblast and Rayon capitals in Tajikistan E. Borrower’s Institutional Capacity for Safeguard Policies [from PCN] The Ministry of Finance has extensive experience with Bank project requirements and should be able to address safeguard policy issues. F. Environmental and Social Safeguards Specialists II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X pending decisions on the inclusion of refurbishment work on the financial management training center in the project, which will be taken during the preparation mission planned for October 2006, the requirements for environmental impact mitigation cannot be fully established. The final determination of the safeguard category will be done during preparation Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Cultural Property (OPN 11.03) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X Environmental Category: C - Not Required Page 4 III. SAFEGUARD PREPARATION PLAN A. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared: 03/06/2007 B. For simple projects that will not require a QER, the target date for preparing the PAD-stage ISDS: N/A C. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing 1 should be specified in the PAD-stage ISDS. to be determined following the conclusions of the preparation meeting IV. APPROVALS Signed and submitted by: Task Team Leader: Mr Antonius Verheijen 08/09/2006 Approved by: Regional Safeguards Coordinator: Mr Wolfhart Pohl 08/14/2006 Comments: Approved Sector Manager: Mr Amitabha Mukherjee 08/14/2006 Comments: Approved. 1 Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons. Page 5