Document of The World Bank Report No: 57909-UA RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF DEVELOPMENT OF THE STATE STATISTICS SYSTEM FOR MONITORING THE SOCIAL AND ECONOMIC TRANSFORMATION PROJECT LOAN NUMBER 4729-UA Board Approval Date: March 25, 2004 TO UKRAINE NOVEMBER 24, 2010 ABBREVIATIONS AND ACRONYMS MoF Ministry of Finance of Ukraine MoE Ministry of Economy of Ukraine SSCU State Statistics Committee of Ukraine NBU National Bank of Ukraine DEVSTAT Development of the State Statistics System for Monitoring the Social and Economic Transformation Project PDO Project Development Objective ICT Information and Communication System PAD Project Appraisal Document PARIS21 Partnership in Statistics for Development in the 21st Century TBAP Time-bound Action Plan GFS Government Finance Statistics BOP Balance of Payment Regional Vice President: Philippe H. Le Houerou Country Director: Martin Raiser Sector Manager: Benu Bidani Task Team Leader: Svetlana Budagovskaya 2 Development of the State Statistics System for Monitoring the Social and Economic Transformation Project (DEVSTAT) CONTENTS Page SUMMARY........................................................................................................................ PROJECT STATUS.......................................................................................................... ANNEX 1: RESULTS FRAMEWORK AND MONITORING .................................... 3 DEVELOPMENT OF THE STATE STATISTICS SYSTEM FOR MONITORING THE SOCIAL AND ECONOMIC TRANSFORMATION PROJECT (DEVSTAT) RESTRUCTURING PAPER SUMMARY 1. The Ministry of Finance of Ukraine submitted a letter dated July 8, 2010 requesting a two year extension of the DEVSTAT Project. The proposed extension is necessary to finalize the development of the integrated data processing system development (ICT system). The ICT system will greatly facilitate the collection of consistent sets of statistics, access to and exchange of statistical data, as well as efficient data storage and management. The data processing system is therefore an integral part of achieving the project's development objective, namely: "To build a sustainable state statistical system, which efficiently provides timely and accurate data for policy decision making and evaluation". 2. The proposed restructuring and project extension are due primarily to delays in the signing of the contract for the development of the integrated data processing system. The $4 million contract ultimately became effective in July 2010 and is estimated to take 25 months to complete. The project closing date was previously extended by one year to December 31, 2010. Other project activities are on track for completion by the end of 2010 and it has been agreed with the Client that this second extension will only include activities relating to the development of the data processing system. 3. The Project has four beneficiaries: State Statistical Committee (SSCU), Ministry of Finance (MoF), Ministry of Economy (MoE) and National Bank of Ukraine (NBU) that implement six components as follows: A. Organizational Development and Management (SSCU); B. Statistical Infrastructure (SSCU); C. Data Development (NBU, MoF, NBU); D. Strengthening of Informational Basis for Decision-Making and Forecasting in the Ministry of Economy (MoE); E. Introduction of Modern Information and Communication Technology (SSCU); F. Project Management (SSCU). 4. The Project Development Objective remains unchanged. Extension of the closing date will allow for the completion of the set of activities related to the development of a modern integrated system for statistical data processing (component E), allowing for full achievement of the project's development objective. This ICT system will serve as the backbone for further quality improvements in data collection, dissemination and exchange as well as data storage and management. 5. In parallel, the proposed restructuring uses the opportunity to modify the existing results framework and monitoring indicators to better measure progress towards achieving project objectives, based on new tools available for measuring statistical capacity. The new tools (PARIS21) allow the results framework to capture in a coherent cross-country comparable way the institutional capacity of the State Statistical 4 Committee. The ICT system which will be implemented during final stage of the project will have a direct bearing on Ukraine's statistical capacity as reflected in the updated result framework. 6. There are no safeguard policy issues associated with this Project. PROJECT STATUS 7. As of November 24, 2010, the amount of loan proceeds disbursed totaled $23.6 million. The total disbursed and committed amounts constitute over 90% of the $32 million loan amount. 8. Since the signing of the ICT system development contract, implementation of the project has been satisfactory. Activities related to the development and improvement of methodologies on sector statistics, Government financial statistics (GFS), balance of payments, as well as monetary and banking statistics (components A, B and C, respectively) have either been completed or are on track to be completed by the end of 2010. Implementation of the related training programs is underway and will be completed by the end of the year although time constraints might result in less study visits than originally planned. A new forecasting model has been elaborated and is being used by the Ministry of Economy, and implementation of all activities under component D is expected to be completed by December 31, 2010. In summary, all activities under the Project, except for the development of the ICT system development for the SSCU (component E), are expected to be completed before the current closing date of the Project (December 31, 2010). The beneficiaries (SSCU, MoF, MoE and NBU) have been informed that all activities not related to ICT system development that have not been completed by December 31, 2010 will not be eligible for financing under the loan and will have to be financed by the Government of Ukraine with its own resources. 9. As noted above, the design and development of ICT system (Component E) has suffered significant delays. The system design contract was completed in 2008, and architecture of the system as well as technical requirements finalized. However, finalization of the ICT system development contract experienced lengthy delays due to a complex contract review and clearance process. The process of finalizing the ICT system development contract was time consuming requiring several rounds of clarifications. The new contract eventually became effective in July 2010. An extension through December 31, 2012 is being sought to allow for full completion of this contract. 10. Implementation of the ICT contract will require the completion of a number of related activities. The Bank and the Borrower have agreed on a time-bound action plan (TBAP) for the Project implementation/completion by the new closing date, December 2012. 11. The Borrower has prepared a list of activities that will be completed by the end of 2010. For these activities, the Bank will provide payments during the 4 months period after December 31, 2010 to finance eligible expenditures incurred before this date. It was agreed with the Borrower that this process should be controlled and monitored by both the Bank and the Borrower. 5 12. Project audit requirements have been met, and there are no outstanding audit reports or reports that are not satisfactory to the Bank. The FY2009 audit report was provided to the Bank in June 2010; auditors issued an unqualified opinion on the Project financial statements. The audit report and management letter were accepted by the Bank (the Bank's letter dated September 27, 2010). PROPOSED CHANGES 13. Results/indicators as written in the Annex were elaborated based on those that were included in the PAD and Supplemental Letter to the Loan Agreement, as well as on PARIS21 methodology that was chosen later (in 2006) to measure capacity development of the State Statistics Committee of Ukraine. PARIS21 provides the Bank and beneficiaries with a useful tool to track the results of capacity building efforts over time. This was not included in the original results framework because it was not available at the time of project design but was used later on for assessment of implementation progress as a supplement. Annex 3 presents a comprehensive set of indicators that were developed to allow assessment of implementation progress of the Project towards the PDO and specific interim results of the project components 14. Closing date. The proposed extension would constitute the second extension of the closing date. The extension has been discussed with the MoF, and it was agreed that the extension will solely include activities related to the development of the ICT system, i.e. the remaining activities under Part E (Introduction of Modern Information and Communication Technology) and Part F (Project Management) of the Project. The time bound action plan for the Project has been elaborated and agreed with the SSCU. The TBAP describes actions required to develop ICT and to monitor the implementation process. 15. In the letter of the MoF dated July 8, 2010, the Borrower requested extending the Loan closing date by two years. The team proposes that the Bank approve an extension of the closing date from December 31, 2010 to December 31, 2012 for components E and F to finalize the development of ICT system for the SSCU. Other beneficiaries of the Project will complete all activities by the current closing date (i.e. December 31, 2010). 6 ANNEX 1: Results Framework and Monitoring UKRAINE: Development of the State Statistics System for Monitoring the Social and Economic Transformation Project (DEVSTAT) Project Outcome Indicators Core D=Droppe Baseline Cumulative Target Values* d (2005/2006)1 C=Continu 2005 2006 2007 2008 2009 2010 2011 2012 ed Unit of Value Target N= New measurement value R=Revised Sustainable state statistical system N Average score 2.9 n/a 2.9 3.0 3.0 3.2 3.1-4 established providing steady supply of statistical of timely and accurate social and capacity based economic data readily available to on PARIS21 users as reflected in improved methodology statistical capacity score Intermediate Results Intermediate Result (Component A): 1. Workload due to centralized reporting and its processing is shrunk: the number of statistical forms is decreased by at least 12% at Project completion; 2. Annual increase of the number of interviewers undergone training by 15%; 3. Decrease of respondent's reporting burden on filling in of the structural business survey form to 9 hours at Project completion. Revised Intermediate Result (Component A): 1. Improved efficiency of statistical system by re-allocation of function between central and local statistical offices through piloting of two tier organizational model across the country; 2. Reporting and processing burden diminished: number of statistical forms decreased by 12%; 3. Time need to fill in the structural business survey form decreased from 9.6 hours to 8.4 hours 1. Improved efficiency of statistical N Yes/No No No No prototype Yes Achieved system by re-allocation of function of two prototype in 2008 between central and local statistical tier of two tier offices through piloting of two tier organizati organizatio organizational model across the onal nal model country model is develope implement d and ed across piloted in the country 7 oblasts 7 Project Outcome Indicators Core D=Droppe Baseline Cumulative Target Values* d (2005/2006)1 C=Continu 2005 2006 2007 2008 2009 2010 2011 2012 ed Unit of Value Target N= New measurement value R=Revised 2..Reporting and processing burden C Decrease in 4.61 4.61 9.22 16.59 18.89 21.66 Achieved diminished: number of statistical number of in 2007 forms decreased by 12% statistical forms, (%) 3. Time need to fill in the structural C Hours to 9.1 9.1 9.0 8.9 8.7 8.6 8.4 business survey form decreased from complete the 9.6 hours to 8.4 hours form Intermediate Result (Component B): no indicators Revised Intermediate Result (Component B): 1. Statistical business register established, fully operative and regularly updated; 2. Automated statistical classification system compliant with EU standards introduced 1. Statistical business register N Average score 2.7 n/a 2.7 2.8 2.8 2.9 3.1-4 established, fully operative and of statistical regularly updated capacity under category "Statistical registers" based on PARIS21 methodology 2. Automated statistical classification N Average score 2.8 n/a 2.8 3.0 3.0 3.0 3.1-4 system compliant with EU standards of statistical introduced capacity under category "Classification s" based on PARIS21 methodology Intermediate Result (Component C): 1. Increase the reliability of regional estimates of main poverty indicators (measured through decrease of coefficient of variation to 10%) at Project completion; 2. Increase share of responses for the basic enterprise statistics surveys by 10 percent points at Project completion; 3. The number of processed reports given other characteristics remain unchanged (i.e. timeliness and quality of statistical products) due to introduction of sample survey s of small enterprises was reduced by 70% at Project completion; 4. Reduced processing and publication terms for labor force surveys to 80 days at Project completion Revised Intermediate Result (Component C): 1. Achieved full compliance with the international statistical standards; 2. Increase of rate of response in basic enterprise surveys from 70% to 80%; 3. Reduce the number of processed reports by 70% as a result of small enterprises sample survey 8 Project Outcome Indicators Core D=Droppe Baseline Cumulative Target Values* d (2005/2006)1 C=Continu 2005 2006 2007 2008 2009 2010 2011 2012 ed Unit of Value Target N= New measurement value R=Revised 1. Achieved full compliance with the N Average score 2.8 n/a 2.8 3.1 3.1 3.2 3.1-4 international statistical standards of statistical capacity under category "Methodologic al basis" based on PARIS21 methodology 2. Increase of rate of response in C Response rate, 72 72 73 77 84 83 Achieved basic enterprise surveys from 70% to % in 2009 80% 3. Reduce the number of processed C Number of 0 0 0 0 78 80 80 reports by 70% as a result of small reports enterprises sample survey reduced, % Intermediate Result (Component D): no indicators Revised Intermediate Result (Component D): 1. Upgraded short- and medium- forecasting models are introduced and used for analysis 1. Upgraded short- and medium- C Yes/No No No No No No Yes Achieved forecasting models are introduced in 2010 and used for analysis Intermediate Result (Component E): 1. Growth of average monthly numbers of SSCU WEB-site access by 5% annually; 2. The share of regional statistics departments, represented by WEB-pages has reached 1005 at Project completion; 3. The number of surveys undertaken with electronic data collection methods (including distance one) has reached at least 10 Revised Intermediate Result (Component E): 1. Websites created and available for users in all regional offices; 2. Increased implementation of surveys using electronic data collection methods; 3. Number of staff at the central and local level that received certified training and re-training in core statistical software products (SPSS&SYBASE); 4. Integrated system for statistical data processing managed by meta data is developed 1. Websites created and available for C Number of 26 26 27 27 27 27 Achieved users in all regional offices offices in 2006 2. Increased implementation of C 0 0 0 0 0 35 Achieved surveys using electronic data % of surveys in 2010 collection methods by 10% 9 Project Outcome Indicators Core D=Droppe Baseline Cumulative Target Values* d (2005/2006)1 C=Continu 2005 2006 2007 2008 2009 2010 2011 2012 ed Unit of Value Target N= New measurement value R=Revised 3. Number of staff at the central and C Number of 0 0 0 0 210 231 292 local level that received certified trained staff training in core statistical software products (SPSS&SYBASE) 4. Integrated system for statistical C Yes/No No No No No No No Yes data processing managed by meta data is developed Note: 1/Baseline is 2005, except for indicators based on the PARIS21 methodology, for which the baseline is 2006. 10