The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Fiscal Performance Improvement Support Project (FSP): (P159655) SOUTH ASIA | Afghanistan | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 4 | ARCHIVED on 15-Oct-2019 | ISR38884 | Implementing Agencies: Ministry of Finance, Islamic Republic of Afghanistan, National Procurement Authority, Supreme Audit Office Key Dates Key Project Dates Bank Approval Date: 19-Dec-2017 Effectiveness Date: 01-Jan-2018 Planned Mid Term Review Date: 30-Jun-2020 Actual Mid-Term Review Date: Original Closing Date: 28-Dec-2022 Revised Closing Date: 28-Dec-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) To contribute to the improvement of domestic revenue mobilization and public expenditures management, and of reinforcing a performance oriented management culture in the Ministry of Finance. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1: Budget as Tool for Development:(Cost $10.00 M) Component 2: Revenue Mobilization:(Cost $40.00 M) Component 3: Treasury Management, Accountability, and Transparency:(Cost $30.00 M) Component 4: Institutional Capacity Building and Performance Management:(Cost $20.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Satisfactory Moderately Satisfactory Overall Risk Rating High High Implementation Status and Key Decisions The Fiscal Performance Improvement Support Project (FSP) is designed to improve management of public finances in Afghanistan by strengthening the capacity of the Ministry of Finance, the National Procurement Authority and the Supreme Audit Office. The FSP supports implementation of the Afghanistan Fiscal Performance Improvement Plan (FPIP) through recipient-executed investment financing. The Project Development Objective (PDO) is: “to contribute to the improvement of domestic revenue mobilization and public expenditures management, and of reinforcing a performance-oriented management culture in the Ministry of Finance”. The project focuses on four key result areas: (i) Improved development budget execution rate; (ii) Increased domestic revenue as a percentage of GDP; (iii) Increased compliance with 10/15/2019 Page 1 of 9 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) audit recommendations; and, (iv) Improvement in core institutional capacity, represented by a reduction in the number of long-term technical assistants. Financing is provided by a US$25 million International Development Association (IDA) grant and a US$75 million grant from the Afghanistan Reconstruction Trust Fund (ARTF), managed by the World Bank on behalf of 34 donors. This was approved by the ARTF Management Committee on December 13, 2017 and the World Bank Board on December 19, 2017. The project is strongly government-owned with an additional US$100 million in parallel financing from the Government of the Islamic Republic of Afghanistan (GoIRA). The FSP provides strategic support at a critical moment in Afghanistan’s development. Improved public financial management and revenue generation is central to the Government’s self-sufficiency agenda. To enable development results in this high-risk operation, the FSP is complemented by tailored World Bank-executed technical assistance and a new programmatic Incentive Program (IP) Plus Development Policy Grant (DPG). This approach creates strong incentives for progress while tangibly supporting Government’s technical reforms at an investment level. The FSP became effective on January 1, 2018. Overall Implementation Progress and progress towards achievement of the PDO are currently rated as "Moderately Satisfactory". Key implementation developments secured to date include: (a) Component 1: Budget as Tool for Development. Implementation by the Ministry of Finance (MoF) of key enhancements to the budget process through a revised budget circular and budget submission template; introducing strategic screening and improved costing information in budget submissions. (b) Component 2: Revenue Mobilization. Implementation by the Afghanistan Revenue Department (ARD) of key re-organization and modernization measures and of electronic filing; helping to increase the number of active tax filers across both the large (20 percent) and small tax payer (3 percent) offices. Continued roll-out of the Automated Systems for Customs Data (ASYCUDA) system, with 18 Customs offices connected. (c) Component 3: Treasury Management, Accountability, and Transparency. Development of four key Electronic Government Procurement (eGP) modules by the National Procurement Authority (NPA); alongside complementary advances in Open Contracting Partnership (OCP) and Open Contract Data Standards (OCDS) implementation. (d) Component 4: Institutional Capacity Building and Performance Management. Development and launch by the MoF Performance Management Team (PMT) of a publicly accessible web-based Afghanistan Performance Management Information System (APMIS); alongside roll- out of FPIP to 110 teams across MoF, the NPA, and Supreme Audit Office (SAO). Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance High High High Macroeconomic High High High Sector Strategies and Policies Substantial Substantial Substantial Technical Design of Project or Program Substantial Substantial Substantial Institutional Capacity for Implementation and Sustainability High High High Fiduciary Substantial Substantial High Environment and Social Low Low Low Stakeholders Substantial Substantial Substantial Other High High High Overall High High High 10/15/2019 Page 2 of 9 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Results PDO Indicators by Objectives / Outcomes To contribute to the improvement of public expenditures management. IN00753699 ►Increased development budget execution rate (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 54.00 93.00 93.00 75.00 Date 30-Aug-2017 21-Dec-2018 21-Dec-2018 28-Dec-2022 Overall GoIRA development budget execution for 1397 was 93 percent, exceeding the Year 1 FSP target (57 percent). Development budget execution rate for 1398 (Year 2 of FSP) will be updated once available, Comments: following fiscal year completion (December 21, 2019). IN00753727 ►Effective implementation by budgetary units on the external audit recommendations (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 15.00 50.24 28.00 60.00 Date 30-Aug-2017 21-Dec-2018 10-Oct-2019 28-Dec-2022 Effective implementation by budgetary units on the external audit recommendations currently stands at 28 percent, slightly below the Year 2 FSP target (30 percent). The Year 2 FSP target is expected to be Comments: exceeded by the end of the year. To contribute to the improvement of domestic revenue mobilization. IN00753700 ►Increased domestic revenue as a percentage of GDP (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.70 13.00 13.00 12.20 Date 30-Aug-2017 21-Dec-2018 21-Dec-2018 28-Dec-2022 The 2018 revenue/GDP ratio was 13 percent, exceeding the Year 1 FSP target (10.9 percent). Revenue/GDP ratio for 2019 (Year 2 of FSP) will be updated once available, following fiscal Comments: year completion (December 21, 2019). To contribute to reinforcing a performance oriented management culture in the Ministry of Finance. IN00753726 ►Improvement in core institutional capacity, represented by a reduction in the number of long-term technical assistants (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 499.00 454.00 454.00 250.00 10/15/2019 Page 3 of 9 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 The number of long-term technical assistants has been reduced to 454 across MoF. This represents a 13.5 percent underachievement on the FSP Year 2 target (400) but reflects the fact that the baseline was Comments: erroneously set at 499 instead of 780. From actual 780, the number of NTAs has been reduced by 60 percent. Intermediate Results Indicators by Components Component 1: Budget as Tool for Development IN00753728 ►Increased budget execution rate of the provinces by implementing new provincial budgeting policy. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 57.00 95.00 95.00 75.00 Date 30-Aug-2017 21-Dec-2018 21-Dec-2018 28-Dec-2022 Provincial budget execution for 1397 was 95 percent, exceeding the Year 1 FSP target (60 percent). Provincial budget execution rate for 1398 (Year 2 of FSP) will be updated once available, following fiscal Comments: year completion (December 21, 2019). IN00753732 ►Improved gender disaggregated statistical analysis and documentation (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target A toolkit has been Gender disaggregated developed for gender budget and Gender disaggregated sensitive budget GBS developed for 12 expenditure data, and Value budget and expenditure analysis, that will help in pilot ministries statistical analysis data not available preparation of gender available for 6 pilot statement for pilot ministries ministries Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 A toolkit has been developed for gender sensitive budget analysis, that will help in preparation of gender statements for pilot ministries. Currently, Gender Budget Statements (GBS) have been developed for 12 Comments: pilot line ministries. IN00753736 ►Large projects are properly appraised with the support of a new PIM Unit to be established (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.00 63.00 100.00 50.00 Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 MoF PIM Unit issued its first PIM Circular in May 2019 mandating that all Project Concept Notes (proposals) go through appraisal. Current achievement on this indicator has therefore reached 100 Comments: percent, well exceeding the FSP Year 2 target (15 percent). IN00753740 ►Effective M&E of development projects through development of a proper M&E system (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target 10/15/2019 Page 4 of 9 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Value 0.00 10.00 10.00 100.00 Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 Effective M&E of development projects through proper M&E system has not progress since previous Comments: achievement of 10 percent, standing well short of the FSP Year 2 target (40 percent). Component 2: Revenue Mobilization IN00753729 ►Implement ARD Re-Organization and Modernization Plan (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Provincial Mustofiats now report to the Deputy Minister of Revenue, which was not foreseen Phase 1 Completed: in the plan. Further Leadership Cadre and All regional revenue Value Plan approved by cabinet assessment is required Corporate Support offices report to ARD to understand whether Services established the ARD has sufficient administrative support in place for provincial offices. Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 ARD Re-Organization and Modernization Plan implementation is on track with the FSP Year 2 target of having leadership cadre and corporate support services established. Towards this end, the SLTO has been established and implemented in five key provinces. The SLTO and Audit Departments Tashkeel has been drafted and submitted to the Minister of Finance for approval and further processing by the Independent Administrative Reform and Civil Service Commission (IARCSC). Vacant positions in Kabul Comments: and provincial offices have been appropriately filled while a new organization structure has been drafted for five provincial Mustofiats (Nangarhar, Balkh, Herat, Kunduz and Kandahar) . IN00753733 ►Increased number of active tax filers (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target LTO: 708; MTO: LTO: 195; MTO: 5325; LTO: 233; MTO: 5262; LTO: 380; MTO: Value 11186; STO: 9004 STO: 3137 STO: 3233 10400; STO: 6713 Date 30-Aug-2017 14-Nov-2018 10-Oct-2019 28-Dec-2022 The number of active tax filers increased across the LTO (708), MTO (11,186), and STO (9,004), Comments: exceeding Year 2 FSP targets in each case. IN00753737 ►Staff and business processes are in place for VAT implementation in 2020 (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The 2018 objective is met. This indicator is progressing. VAT staff VAT business No staff or processes in VAT implementation Value have been hired although processes developed place plan completed retention of Tashkeel and staff trained staff is a recurrent problem. The VAT 10/15/2019 Page 5 of 9 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) implementation plan has been completed. VAT regulations and VAT procedures are expected to be completed in 2019. Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 This indicator is on track to meet the FSP Year 2 target of having have VAT staff recruited and trained. Towards this end, the VAT implementation plan has been completed while VAT regulations and VAT Comments: procedures are expected to be completed by end-2019. VAT staff positions are expected to be part of the 1399 Tashkeel. Once approved (by end-2019), staff positions will be filled. IN00753741 ►Percentage increase in custom duties through enhancement of ASYCUDA customs automation (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 5.00 12.80 17.80 100.00 Date 30-Aug-2017 14-Nov-2018 10-Oct-2019 28-Dec-2022 Total customs collection increased by 13.3 percent in 2017 (previously misreported as 12.8 percent) compared to 2016. Import tax and duties increased by a similar percentage (13.8). In 2018, total customs collection increased by 3.9 percent from 2017, and by 17.8 percent from 2016, exceeding the FSP Year 1 Comments: target (10 percent). Import tax and duties decreased by 2.7 percent in 2018, compared to 2017. Percentage increase in customs duties in 2019 (Year 2 of FSP) will be updated once available, following fiscal year completion (December 21, 2019). Component 3: Treasury Management, Accountability, and Transparency IN00753730 ►Web based AFMIS extended to embassies and selected districts, municipalities, and SOEs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target All embassies, 300 No embassy, district, Roll-out to Kabul Roll-out to Kabul districts, 20 Value municipality, and SOE Municipality and two Municipality and two municipalities, and at connected to AFMIS embassies. embassies least 5 SOEs connected to AFMIS Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 AFMIS has been rolled-out to Kabul Municipality and two embassies. However, further roll-out of Free Balance AFMIS solution will not be pursued in the interim as the Government decides on whether to move Comments: to a new platform. IN00753734 ►Afghanistan Institute of Certified Public Accountants (CPA) established and two batches trained (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Curriculum for Law and CPA law has been Tax (F4 & F6) developed. enacted, CPA has Practicing/membership been established with Institute established, Value Institute not established licenses for individuals slight change in the CPA law enacted, and and audit firms drafted. name. Development of curriculum developed ACCA scholarship curriculum progressed ongoing partially Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 10/15/2019 Page 6 of 9 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) The CPA law has been enacted through Presidential decree number 251 dated 14/12/1395. Afghanistan Institute of Certified Public Accountants has been established with slight change in the name (Certified Professional Accountants Afghanistan). As part of curriculum, the learning content for ACCA F4 and F6 Comments: (Afghanistan version) has been completed, however, there is still need for exam development, teaching material development, training of trainers and publication of the books. The indicator may not achieve second year target in full without filling some of the current gaps in curriculum. IN00753738 ►Number of IADs in Line Ministries that are strengthened and functioning based on standards set out by IIA (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 4.00 5.00 26.00 Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 Support has been provided to 5 IADs of 5 line ministries. IAD capacity building is currently ongoing in an additional 4 line ministries and 2 independent directorates. Together with the original 5, completing these Comments: may allow IAD to meet and exceed the FSP Year 2 target of 10 IADs. IN00753742 ►Rolling out e-GP in the pilot phase in 3 or more departments (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 3.00 Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 NPA continues to make progress in the development and roll-out of e-GP with four out of the eighteen planned modules currently developed and development of the Afghanistan e-Tendering System (AETS) reaching 60 percent completion. Comments: In the meantime, roll-out of the e-GP system has not commenced. Per the FSP target, roll-out is expected to one procuring entity by end-2019 (Year 2 of FSP). The piloting will commence with the launch of AETS which is scheduled for mid-December 2019. Component 4: Institutional Capacity Building and Performance Management IN00753731 ►Simplification and standardization of MOF Administration business processes (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 43 major business processes (about 70%) have been identified and mapped. Of these, 2 processes are ready to be implemented as MOF Administration simplified, one process Mapping of 70% of MOF Administration business processes not requires Minister relevant MOF business processes Value simplified and approval. These Administration simplified and standardized processes are for processes completed standardized departments of procurement, human resources, finance, general services, state owned enterprises and corporations. Date 30-Aug-2017 09-Apr-2019 09-Apr-2019 28-Dec-2022 10/15/2019 Page 7 of 9 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) 43 major business processes (about 70 percent) have been identified and mapped, below the FSP Year 2 target (100 percent of administration processes). Of these identified and mapped administration processes, two processes are ready to be implemented as simplified, one process requires Minister of Comments: Finance approval. These processes are for the departments of procurement, human resources, finance, general services, and state-owned enterprises and corporations. IN00753735 ►Improvement in performance management coverage, represented by an increase in the number of teams adopting FPIP (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 90.00 110.00 110.00 140.00 Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 The number of teams adopting FPIP within MoF, SAO, and NPA has increased to 110, meeting the Comments: Year 2 FSP target. IN00753739 ►Transparency and citizen engagement in reform planning, represented by timely publication of annual and mid-year FPIP assessment reports (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 30-Aug-2017 09-Apr-2019 10-Oct-2019 28-Dec-2022 Through the Afghanistan Performance Management Information System (APMIS) it has self-developed, Comments: PMT has been able to publish both 2018 and 2019 FPIP plans. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P159655 IDA-D2630 Effective USD 25.00 25.00 0.00 24.72 0.22 99% P159655 TF-A6277 Effective USD 75.00 75.00 0.00 8.00 67.00 11% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P159655 IDA-D2630 Effective 19-Dec-2017 25-Dec-2017 01-Jan-2018 28-Dec-2022 28-Dec-2022 P159655 TF-A6277 Effective 19-Dec-2017 25-Dec-2017 01-Jan-2018 28-Dec-2022 28-Dec-2022 Cumulative Disbursements 10/15/2019 Page 8 of 9 The World Bank Implementation Status & Results Report Fiscal Performance Improvement Support Project (FSP): (P159655) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 10/15/2019 Page 9 of 9