The World Bank Report No: ISR14855 Implementation Status & Results Ukraine Public Finance Modernization Project (P090389) Public Disclosure Copy Operation Name: Public Finance Modernization Project (P090389) Project Stage: Implementation Seq.No: 13 Status: ARCHIVED Archive Date: 07-Jun-2014 Country: Ukraine Approval FY: 2008 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 08-Jan-2008 Original Closing Date 30-Jun-2013 Planned Mid Term Review Date 19-Mar-2012 Last Archived ISR Date 18-Dec-2013 Effectiveness Date 23-Oct-2008 Revised Closing Date 30-Jun-2015 Actual Mid Term Review Date 19-Mar-2012 Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of the Project is to strengthen public financial management by improving operational efficiency and transparency. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Strengthening Institutional Capacity and Operational Effectiveness 2.58 Development of an Integrated Public Financial Management System 61.20 Project Management 1.22 Overall Ratings Previous Rating Current Rating Moderately Unsatisfactory Moderately Unsatisfactory Public Disclosure Copy Progress towards achievement of PDO Overall Implementation Progress (IP) Moderately Unsatisfactory Unsatisfactory Overall Risk Rating Substantial High Implementation Status Overview The World Bank team provided project supervision by means of regular video conferences held on a monthly basis. In December (2013) and January (2014) the Ministry completed the evaluation of the first stage bids for the acquisition of the FMIS system. A bid evaluation report was submitted to the Bank and provisionally cleared by the OPRC in February, subject to clarifications designed to reduce the risks of poor supplier performance. Shortly after this there was a change of Government in Ukraine, following a political crisis and civil unrest. This resulted in changes in key personnel responsible for the project, including the Minister of Finance, the Deputy Minister in charge of the project and the head of the State Treasury. At this time the new Government carried out an internal reappraisal of the project and in late March the Deputy Minister verbally informed the Country Director that the Government would like to cancel the acquisition of the FMIS, due to severe fiscal constraints. In April the new Government wrote to the Bank requesting that the Bank consider Page 1 of 5 The World Bank Report No: ISR14855 either a restructuring of the existing project to support the development of the existing Treasury system (E-Kazna), or a new project also designed to improve the performance of the E-Kazna system. Following further discussions between the task team and the Government at the end of April, the Government indicated that it was interested to continue with the development of a new system (rather than continued development of E-Kazna), but with a reduced scope. In May the Country Director wrote to the Minister recommending that the Bank team work with the Ministry to develop a new requirement specification, revised costings for the proposed FMIS and a business case, to be discussed with the Bank team. The Public Disclosure Copy contracts of a number of staff in the PIU, including the head of the PIU and the Procurement adviser, have been terminated. Locations Country First Administrative Division Location Planned Actual Ukraine Not Entered Ukraine Ukraine Kiev Oblast Kyyivs'ka Oblast' ✔ Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Increased strategic alignment of the budget Text Value Existing budget formulation The Draft 2014 State Budget Fully functional PFMS in use with the public policy priorities . methodologies are not was developed and based on during the planning execution conducive for the use of forecasting and program of 2016 budget. budgets as a policy documents, national target instrument. programs Date 25-Mar-2008 15-May-2014 30-Jun-2015 Comments Reduction of 20% in time required to get Text Value Decision-making processes The determination the Minimum of 20% reduction in necessary information for managerial decisions are delayed because baseline time for such average time for accessing through the use of an integrated information is fragmented business processes was information by key decision- managementand information platform. among several systems and completed. makers as measured by cannot be accessed 1. settlement services/ follow-up survey. efficiently. making payments of spending units by entities; 2. preparation of Public Disclosure Copy reports (consolidated reports) on execution of the state budget, consolidated budget and consolidated reports of key spending units by the bodies of STSU; 3. formulation of revenue forecasts in preparing the budget by the MoF; 4. planning of control Page 2 of 5 The World Bank Report No: ISR14855 and auditing measures by the State Financial Service of Ukraine. Public Disclosure Copy Annual measurement is in progress to determine improvements. Date 25-Mar-2008 15-May-2014 30-Jun-2015 Comments Increased transparency and reliability of public Text Value Public Sector accounting is The Unified chart of accounts National accounting sector financial reporting through compliance not compliant with ISA or EU has been approved. standards are in use (via new with international accounting standards and accession requirements. PFMS). alignment with EU accession requirements. Date 25-Mar-2008 15-May-2014 30-Jun-2015 Comments Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target The local budgets are based on program-target Text Value Program budgeting at local Completed. Budget preparation for all 692 method (PTM) and all relevant budgetary budget level is optional (pilot 692 local budgets were local budgets is based on program passports are managed with the new impl). involved in the experiment PTM, supported by PFMS PFMS. related to the implementation (about 20,000 prog). of PBB at the local level and nearly 42,500 budget programs were approved. Date 23-Mar-2012 15-May-2014 30-Jun-2015 Comments Budget data and policy assumptions published Text Value Summary proposed budget In progress. State budget execution in greater detail. and budget execution State Budget execution performance is published in published on the Internet. detail from PFMS database (monthly). Date 25-Mar-2008 15-May-2014 30-Jun-2015 Public Disclosure Copy Comments Budget execution: Improving the system of Text Value Accounting and financial Changes to legislation to PFMS is operational based on PFM by means of modernizing accounting reports not unified in public implement PFMS for new national accounting and system in public administration sector. administration sector, not accounting and reporting in reporting standards. aligned with the IAS. line with nat’l standards are in progress. 19 NAS nationalaccounting standards for public sector were developed and approved. Page 3 of 5 The World Bank Report No: ISR14855 Date 25-Mar-2008 15-May-2014 30-Jun-2015 Comments MoF, STSU and SFIU staff, and spending units Text Value MoF staff are not familiar with + 14 workshops for SUs Public Disclosure Copy (SUs) are trained on new legislation & process new PFM legislation. (1,700 participants) changes. + Training of 1,400 staff. Date 23-Mar-2012 25-Oct-2013 30-Jun-2015 Comments Public Financial Management System (PFMS) Text Value Current PFM information PFMS system fully established and functioning. systems are fragmented. operational. New budget codes and unified chart of accounts are used in PFMS. Staff and specialist training completed. Date 25-Mar-2008 25-Oct-2013 30-Jun-2015 Comments MoF, STU and KRU staff trained in PFMS Text Value None currently trained. All staff training completed. functionality and operations. Date 25-Mar-2008 25-Oct-2013 30-Jun-2015 Comments Timely and comprehensive fiscal management Text Value Currently financial reports are Data warehouse is fully reports produced. fragmented. operational as a part of integrated PFMS platform for online queries; and timely, comprehensive reporting. Date 25-Mar-2008 25-Oct-2013 30-Jun-2015 Comments Data on Financial Performance (as of 28-Apr-2014) Financial Agreement(s) Key Dates Public Disclosure Copy Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P090389 IBRD-48820 Effective 08-Jan-2008 25-Mar-2008 23-Oct-2008 30-Jun-2013 30-Jun-2015 P090389 TF-90722 Closed 21-Sep-2007 21-Sep-2007 21-Sep-2007 30-Jun-2008 31-Oct-2008 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P090389 IBRD-48820 Effective USD 50.00 50.00 0.00 3.94 46.06 8.00 P090389 TF-90722 Closed USD 0.23 0.22 0.01 0.23 0.00 105.00 Page 4 of 5 The World Bank Report No: ISR14855 Disbursement Graph Public Disclosure Copy Key Decisions Regarding Implementation Following requests from the Ministry of Finance to restructure the project to save costs, the World Bank has agreed to consider a further restructuring of the project, based on implementation of a Financial Management Information System with reduced scope. The World Bank has requested that the Ministry of Finance provide further details of the revised system requirements, revised costing and a revised business case for the proposed investment. Restructuring History Level two Approved on 26-Apr-2012, Level two Approved on 04-Apr-2013 Related Projects There are no related projects. Public Disclosure Copy Page 5 of 5