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TRANSCRIPT
Document of
The World Bank
Report No: ICR1324
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-H2980)
ON A
GRANT
OF SDR 22.1 MILLION
(US$ 33.4 MILLION EQUIVALENT)
TO
THE ISLAMIC REPUBLIC OF AFGHANISTAN
FOR A
PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT
January 31, 2012
South Asia Region Financial Management Unit
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CURRENCY EQUIVALENTS
(Exchange Rate Effective December 2011)
Currency Unit = Afghani (AFN)
AFN 1.00 = US$ [0.21]
US$ 1.00 = [48.33] AFN
FISCAL YEAR
March 21 - March 20
ABBREVIATIONS AND ACRONYMS
AFMIS Afghanistan Financial Management Information System
ANDS Afghanistan National Development Strategy
ARDS Afghanistan Reconstruction and Development Services
ARTF Afghanistan Reconstruction Trust Fund
APR Annual Performance Review
CAO Control and Audit Office
CSR Civil Service Reform
DFID Department for International Development (UK)
EPAP Emergency Public Administration Project
FBS Fixed Budget Selection
FM Financial Management
GOA Government of Afghanistan
HRM Human Resources Management
IARCSC Independent Administrative Reform and Civil Service Commission
I-ANDS Interim – Afghanistan National Development Strategy
IDA International Development Association
ISA International Standards of Auditing
MIS Management Information System
M&EU Monitoring and Evaluation Unit
MOE Ministry of Economy
MOF Ministry of Finance
MTFF Medium Term Financing Framework
NGO Non Governmental Organization
PACB Public Administration Capacity Building
PAR Public Administration Reform
PEFA Public Expenditure and Financial Accountability
PFEM Public Finance and Expenditure Management
PFM Public Financial Management
PFMR Public Financial Management Reform
PMIS Procurement Management Information System
PPU Procurement Policy Unit
PRGF Poverty Reduction and Growth Facility
PRR Priority Reform and Restructuring
PSIB Programmatic Support for Institutional Building
RIMU Reform Implementation Management Unit
SBD Standard Bidding Documents
Vice President: Isabel M. Guerrero
Country Director: Nicholas J. Krafft
Sector Manager: Jennifer K. Thomson
Project Team Leader: Paul Edwin Sisk
ICR Team Leader: Paul Edwin Sisk
THE ISLAMIC REPUBLIC OF AFGHANISTAN
PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT
CONTENTS
Data Sheet
A. Basic Information ............................................................................................................ 1
B. Key Dates......................................................................................................................... 1
C. Ratings Summary............................................................................................................. 1 D. Sector and Theme Codes ................................................................................................. 2
E. Bank Staff ........................................................................................................................ 2
F. Results Framework Analysis ............................................................................................ 2 G. Ratings of Project Performance in ISRs .......................................................................... 6
H. Restructuring ................................................................................................................... 7
I. Disbursement Profile ........................................................................................................ 7
1. Project Context, Development Objectives and Design ...................................................... 8
2. Key Factors Affecting Implementation and Outcomes ........................................................... 13
3. Assessment of Outcomes ........................................................................................................ 17 4. Assessment of Risk to Development Outcome ....................................................................... 23
5. Assessment of Bank and Borrower Performance ................................................................... 24
6. Lessons Learned ..................................................................................................................... 27
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ......................... 29
Annex 1. Project Costs and Financing ........................................................................................ 30
Annex 2. Outputs by Component ................................................................................................ 31 Annex 3. Economic and Financial Analysis .............................................................................. 36
Annex 4. Bank Lending and Implementation Support/Supervision Processes ........................... 37
Annex 5. Beneficiary Survey Result .......................................................................................... 38 Annex 6. Stakeholder Workshop Report and Results ................................................................ 38
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR .................................... 38
Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ...................................... 59
Annex 9. List of Supporting Documents ..................................................................................... 60
1
A. Basic Information
Country: Afghanistan Project Name: PUBLIC
FINANCIAL
MANAGEMENT
REFORM PROJECT
Project ID: P099980 L/C/TF Number(s): IDA-H2980
ICR Date: 10/19/2009 ICR Type: Core ICR
Lending Instrument: TAL Borrower: GOVERNMENT OF
AFGHANISTAN
Original Total
Commitment:
XDR 22.10M Disbursed Amount: XDR 21.59M
Environmental Category: C
Implementing Agencies: Ministry of Finance/MISFA
Cofinanciers and Other External Partners:
B. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 12/12/2006 Effectiveness: 07/11/2007 07/11/2007
Appraisal: 03/02/2007 Restructuring(s):
Approval: 05/29/2007 Mid-term
Review:
03/02/2009 04/20/2009
Closing: 12/31/2010 12/31/2011
C. Ratings Summary
C.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: High
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Satisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies:
Satisfactory
Overall Bank
Performance:
Satisfactory Overall Borrower
Performance:
Satisfactory
2
C.3 Quality at Entry and Implementation Performance Indicators
Implementation
Performance Indicators
QAG Assessments
(if any) Rating
Potential Problem
Project at any time
(Yes/No):
No Quality at Entry
(QEA):
None
Problem Project at any
time (Yes/No):
No Quality of
Supervision (QSA):
None
DO rating before
Closing/Inactive status:
Satisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 96 97
Sub-national government administration 4 3
Theme Code (Primary/Secondary)
Administrative and civil service reform 17 10
Gender 17
Other public sector governance 17
Other trade and integration 16
Public expenditure, financial management and
procurement
33 90
E. Bank Staff
Positions At ICR At Approval
Vice President: Isabel M. Guerrero Praful C. Patel
Country Director: Nicholas J. Krafft Alastair J. McKechnie
Sector Manager: Jennifer K. Thomson Robert J. Saum
Project Team Leader: Paul Edwin Sisk Paul Edwin Sisk
ICR Team Leader: Paul Edwin Sisk
ICR Primary Author: Sati Achath
F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The objectives of the project were to: (i) develop an efficient and effective public financial
management system; and (ii) develop the human resource capacity of the MOF and CAO to
ensure better operation of public financial management.
3
Revised Project Development Objectives (as approved by original approving authority)
The objectives were not revised.
(a) PDO Indicator(s)
Indicator Baseline
Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target
Values
Actual Value Achieved at
Completion or Target Years
Indicator 1 : Coherence of budget, treasury and revenue estimates with ANDs priorities and
MTFF.
Value
quantitative
or
Qualitative)
At risk Approval by
donors at annual
evaluation of
treasury results
( expenditure and
revenue) vis a vis
ANDS and MTFF
framework.
MTFF now aligned with ANDS
Date
achieved
12/04/2006 12/31/2010 11/30/2011
Comments
(incl. %
achievement)
Indicator 2 : Timeliness of budget, treasury and revenue preparation and execution
Value
quantitative
or
Qualitative)
Irregular and
Moderate
Annual cash plan
realized to within
80% of forecast.
Monthly cash plans provided to
stakeholders with accuracy of
85% on monthly projections.
Date
achieved
12/04/2006 12/31/2010 11/30/2011
Comments
(incl. %
achievement)
Indicator 3 : Level and perception of good governance in PFM operations
Value Moderate 15 % increase of
share of donor
The total amount of the donor
assistance has increased through
4
quantitative
or
Qualitative)
funds through Core
Budget from SY
1385 (base year).
core budget, but the external
budget hasn’t been reported by
the budget department for the
1390 to assess the percentage.
Date
achieved
12/04/2006 12/31/2010 11/30/2011
Comments
(incl. %
achievement)
Indicator 4 : Number of ministries/agencies performing assigned treasury functions
Value
quantitative
or
Qualitative)
Zero ministries
with access.
6 Line Ministries
with online access
for payment
requests and
recording
allotments directly
in AFMIS.
None. The capacity of line
ministries to manage
independently with accountability
the PFM functions remains weak
to delegate them additional PFM
functions for independent
implementation. Line ministries
cannot yet conduct
comprehensive financial
management. High rejection rate,
outsourcing of core functions to
consultants, and lack of adequate
internal audit in line ministries are
examples of this. All line
ministries currently have access to
prepare operating budget Expense
vouchers (EVs) in AFMIS (temp
save). Allotments, commitments,
and payments are posted in a
centralized manner in the
Treasury and provincial
Mustofiats.
Date
achieved
12/04/2006 12/31/2010 11/30/2011
Comments
(incl. %
achievement)
Indicator 5 : Number of line ministries conducting stand alone procurement.
Value
quantitative
1 7 line ministries Institutional development and
capacity assessment for
standalone procurement of six
line ministries; (Public Health,
5
or
Qualitative)
Rural Rehabilitation and
Development, Agriculture,
Education, Energy & Water,
Public Works and Finance) was
done out of which Ministries of
Education, Agriculture and Public
Health only in Consultancy
Services were certified for
standalone procurement. During
3rd Quarter of 1390, Ministry of
Agriculture was re-assessed for
capacity certification and report is
under process.
Also, the institutional
development of seven more line
ministries (Transportation,
Communication and IT, Counter-
Narcotics, Higher Education,
Urban Development, Mines and
Commerce) is under process. All
seven line ministries have
submitted their report on current
procurement structures with
proposed procurement structure
and budgetary information as was
required. PPU has worked and
finalized Institutional
Development report for Ministry
of Communication and IT and the
rest are under finalization stage.
Furthermore, capacity assessment
of these ministries will be done
for standalone procurement after
their institutional development in
addition to those which were not
certified as mentioned in the first
paragraph.
Date
achieved
12/04/2006 12/31/2010 11/30/2011
Comments
(incl. %
achievement)
Indicator 6 : Reliance on international technical assistance diminishing
Value Number of
international
In PFM at 50% of
levels of 1385.
The number of international TA
consultants has decreased and
6
quantitative
or
Qualitative)
advisors in
Treasury,
CAO and
RITEs.
shows a reduction of 30% in all
over MOF. In July 2008, there
were 80 international TA,
whereas in June 2011, it reached
to 56.
Date
achieved
12/04/2006 12/31/2010 11/30/2011
Comments
(incl. %
achievement)
(b) Intermediate Outcome Indicator(s)
Indicator Baseline
Value
Original Target Values
(from approval
documents)
Formally
Revised Target
Values
Actual Value Achieved
at Completion or
Target Years
Indicator 1 : Number of Mustofiats which have implemented restructuring and new processes
of Mustofiat Reform program
Value
(quantitative
or
Qualitative)
Nil 6 Moustoufiats Achieved: All
mustofiats completed
Date
achieved
12/04/2006 12/31/2010 11/30/2011
Comments
(incl. %
achievement)
G. Ratings of Project Performance in ISRs
No. Date ISR
Archived
DO IP Actual Disbursements
(USD millions)
1 11/26/2007 Satisfactory Satisfactory 0.00
2 06/17/2008 Satisfactory Satisfactory 1.20
7
3 12/18/2008 Satisfactory Satisfactory 1.90
4 05/10/2009 Satisfactory Satisfactory 3.86
5 11/24/2009 Satisfactory Satisfactory 10.37
6 06/09/2010 Satisfactory Satisfactory 17.86
7 03/09/2011 Satisfactory Satisfactory 24.72
8 07/11/2011 Satisfactory Satisfactory 27.45
H. Restructuring (if any)
Not Applicable
I. Disbursement Profile
8
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
Country and Sector Background: Afghanistan is a poor country ravaged by a quarter of century
of conflict and political instability. The country had achieved much since December 2001, when
the Afghanistan Interim Administration (AIA) was inaugurated in Kabul. By the time of
Appraisal in 2007, the country had achieved respectable economic growth, with the real value of
non-opium Gross Domestic Product (GDP) increasing by 29 percent in 2002/03, 16 percent in
2003/04, 8 percent in 2004/05, a drought year, and 14 percent in 2005/06. The Government of
Afghanistan (GOA) had also maintained a stable macroeconomic framework as evidenced by the
successful completion of all quarterly reviews under the International Monetary Fund (IMF)
Staff-Monitored Program (SMP, from March 2004 to March 2006) and the first review of the
Poverty Reduction and Growth Facility (PRGF) program. Monetary policy was restrained,
supported by the adherence to strong fiscal discipline and a “no overdraft” rule that prohibited the
Central Bank from financing a deficit.
Achievements in Public Financial Management (PFM). Since 2002 the GOA had made progress
in establishing a functioning public financial management system under the direction of the
Ministry of Finance (MOF). The World Bank assessment of Afghanistan’s public financial
management and procurement performance1
conducted under the auspices of the Public
Expenditure and Financial Accountability (PEFA) program (November 27, 2005), concluded that
while there were weaknesses that threatened longer term sustainability of the MOF performance
and exacerbated the disconnect between public expectations and the actual delivery of services,
the strong achievements in terms of fiscal discipline, cash control, and aggregate transparency
have contributed to macroeconomic stability, as well as to sustained external assistance”
Sector Issues. In order to strengthen the capability and sustainability of the PFM system, MOF
and the Control and Audit Office (CAO) had recognized that it will have to address several
organizational and capacity constraints:
(i) Incomplete re-organization of MOF. While all main departments within MOF had
undergone restructuring under the Priority Reform and Restructuring (PRR) program,
the MOF still required restructuring of its remaining functions to assure that all of its
departments worked as an integrated whole.
(ii) Concentration of Responsibility. A high degree of accountability in financial
management decisions had been achieved by concentrating them in the hands of the
ARTF, Afghanistan Reconstruction and Development Services (ARDS) and in MOF
departments, in a closely monitored “transaction-based” system. However, this has
also the effect of lowering accountability for procurement and financial management
decisions on the part of line ministries and agencies and actually increased the
governance risk of operations.
(iii) Inadequate Human Resources Numbers, Capacity and Management. Engaging
international firms and local consultants to perform basic treasury, budget, audit and
procurement functions had been a default strategy, considering the inadequate
1 Afghanistan: Managing Public Finances for Development; November 27, 2005; conducted under the
auspices of the PEFA Program.
9
technical capacity of the civil service and inadequate incentives to the few who were
qualified to remain in government service.
(iv) Anti-corruption and Maintaining Accountability and Transparency while Reforming.
The control environment on which Afghanistan’s PFM formal controls rested was
undermined by corruption in its various forms and manifestations. This was
increasingly seen as one of the most important threats to Afghanistan’s entire state-
building and to delivering public services.
(v) Maintaining Good Coordination and Momentum in Reform. With several sources of
assistance going to the MOF, there is a risk of disconnects between the programs,
agendas, timing and standards that would impair the smooth functioning the MOF as
the GOA’s apex public finance management organization. Moreover, staff could be
subject to declining motivation and performance (“reform fatigue”) as the process
extended over time.
Rationale for Bank assistance: The project was one element of a wider public administration
reform agenda that had been developed by the government, with the Bank/ARTF support to
contribute to a more effective state through better PFM performance and by building capacity to
sustain this performance. In the same projects that had contributed to maintaining sound PFM, the
Bank had also provided major support for the restructuring of agencies and ministries and
rationalizing the functions and job descriptions of public sector employees in order to pursue
operational efficiencies of service delivery that led to improved developmental outcomes from
public expenditures.
1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)
The objectives of the project were to: (i) develop an efficient and effective public financial
management system; and (ii) develop the human resource capacity of the MOF and CAO to
ensure better operation of public financial management.
Key Indicators were:
Coherence of budget, treasury and revenue estimates with ANDS priorities and MTFF
Timeliness of budget, treasury and revenue preparation and execution
Level and perception of good governance in PFM operations
Number of ministries/agencies performing assigned treasury functions
Number of line ministries conducting stand alone procurement
Reliance on international technical assistance diminishing
Number of Mustofiats which have implemented restructuring and new processes of
Mustofiat Reform program
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
The objectives were not revised.
1.4 Main Beneficiaries,
The beneficiaries of the project included:
Major departments within MOF and the CAO which would benefit in terms of
developing and implementing the structures, procedures and systems required to carry out
10
their mandates under the new PFM legal framework. The project would also benefit: (i)
the Treasury Department because of systems development; and (ii) MOF in terms of
finishing the procedures for procurement.
Staff in the MOF, line ministries, and CAO who would benefit from training
opportunities and materials for the development of their skills.
Human Resources Management (HRM) Department which would be strengthened to
position it to perform new personnel management functions being developed under the
GOA civil service reform strategy.
Afghan public and international donors who would be assured that government resources
and donor funds are subject to appropriate budget and expenditure controls.
1.5 Original Components (as approved)
The project consisted of four components as follows:
Component 1. Institutional Development (US$ 11.4 million)
1.1 Procurement Institutional Development and Social Accountability. The project would
provide institutional support for the newly created regulatory body (PPU), which required direct
assistance to carry out its functions listed in the Procurement Law. The project would include
funds for the PPU to: (i) retain consultants to create more Standard Bidding Documents (SBDs), a
procurement manual and guidance notes; (ii) develop the website and interactive MIS; and (iii)
assist the PPU for publication, analysis and dissemination of review panel procedures,
documentation and decisions.
1.2 Treasury Systems Development and Roll-out. The project would engage a firm of consultants
to acquire, install, and train national staff on the use of the following modules from FreeBalance
in order to complete the expanded financial management functions in AFMIS – Procurement,
Fixed Assets, and Accounts Receivable. The project would support the roll-out of the AFMIS so
that transaction processing and payment authorization may be decentralized but that payment
processing would remain centralized within Treasury and the Mustofiats. This component would
assist the government in rolling out AFMIS to five or six line ministries which accounted for the
majority of public sector non-military and non-policing functions as well as six Mustofiats.
1.3 Internal Audit Work Practices. The project would support implementation of the expanded
MOF responsibility through development of improved audit methodology and training. The
project would also finance further development and roll-out of internal audit procedures and plans
to the line ministries and provinces, and to improve the capacities of the internal audit staff
through on the job training. The component would also assist with establishing a fraud
investigation unit (FIU) in the MOF’s Internal Audit Department, developing and launching its
basic operational skills, and preparing a roadmap for developing specialist fraud investigation
processes in Afghanistan.
1.4 Support for External Audit
1.4.1 Advisory Services: The project would finance the services of a senior audit advisor for
policy guidance which had been ongoing since 2006 and strengthening of the CAO which would
allow the direct operations advisor firm to concentrate on delivering audit services.
1.4.2 External Audit - Development of Physical Infrastructure. The project would finance
improved physical infrastructure including the Information Technology Center, office furnishings
and on-line access to AFMIS.
1.4.3 External Audit - Parliamentary Oversight. The project would support operationalizing
the decision to establish the Parliamentary Oversight Committee function, and reinforce and
reinvigorate the accountability of the Executive in the management of public finances to the
11
legislature through a timely, comprehensive, and methodical review of audit reports and audited
accounts of the government.
Component 2. Human Resources Capacity Development (US$ 5.0 million)
2.1 Human Resource Capacity Development in Procurement. The training activities of the
procurement capacity building contract outlined in sub-component 1.1 would be delivered under
this sub-component and would be rolled-out more widely, especially to local government entities
as well as to specialist audiences such as decision makers and auditors.
2.2 Human Resource Capacity Development in Financial Management. This sub-component
would assist the MOF Treasury Department and the administration departments of selected line
ministries in developing staff capacity in financial management functions.
2.3 Human Resource Capacity Development in Audit. The project would complete the
classroom training in introductory accounting and auditing that began under the PACB Project for
the first batch of internal auditors of the MOF and staff of the CAO. Additionally, a stream of
internal auditors and CAO auditors intended to provide leadership and more expert skills will be
financed for advanced training.
Component 3: Reform Management (US$ 1.0 million)
3.1.1 Targeted Restructuring of Internal MOF Business Arrangements. The RIMU would assure
that the various functions and relationships between targeted MOF departments were organized to be
mutually supporting in providing efficient PFM. It would draw on the support being offered through
the IARCSC (being supported by an IDA grant supporting reforms in the civil service) to rapidly
review and revise, as needed, decisions made under the PRR for the allocation of functional
responsibilities, lines of authority and reporting, and the level and types of staffing required to exercise
these functions. The IARCSC with financing of the CSR project would assist the MOF/RIMU to
acquire the services of an internationally recognized expert in the operations of macro-level public
finance institutions such as ministries of finance, treasury boards, central banking institutions to
diagnose intra-institutional organizational issues in the MOF, propose solutions and support their
implementation over a period of about 36 months. The RIMU would then work with department
heads and staff to implement any restructuring that is recommended.
3.1.2 Staff Re-grading under the GOA Pay/Grading Policy. The RIMU would arrange with the
IARCSC for applying the new grade and pay policy of the government with support provided
through the CSR project. The IARCSC Pay and Grade Unit would work with the RIMU and
MOF HR Department to re-map the revised job descriptions into the new 8-grade system, and
complete the task of defining new job descriptions to correspond to the new 8-grade system
where this was required.
3.1.3 Support for the Human Resources Management (HRM) Department. The RIMU would
facilitate the strengthening of the HRM Department to perform new personnel management
functions being developed under the GOA civil service reform strategy. It would arrange with the
IARCSC to train and mentor MOF/HRM staff to apply new operational procedures and manuals
as they were developed under the CSR project.
3.1.4 Preparation of New Human Resources Management Initiatives. The MOF aimed to
make three major strategic decisions to sustain the effects of training, pay reform, and improved
personnel management:
Initiating “schemes of service” to permit the MOF to be competitive in recruiting and
retaining professionals in selected professional streams considered critical for the long term
performance of PFM functions within the framework of the new grading and pay system.
12
Reducing the reliance on internationally recruited technical assistance in line
functions of the MOF for establishing the longer term sustainability of Afghanistan’s public
financial management system.
Introducing gender-sensitive personnel practices. The MOF would initiate: (i) a
baseline survey to develop intelligence on the numbers and status of women currently employed
and diagnose issues that impeded their productive contributions; and (ii) design actions that could
be implemented within current legal constraints to remove obstacles and promote further
participation of women in the MOF workforce.
3.1.5 PFMR Project Coordination and Administration. The RIMU would coordinate the
implementation of the components of the project. It would also coordinate through the use of the
annual work plan for MOF, the implementation of the PFMR project with the projects being
financed in parallel, for example the DFID support to the Budget Department.
3.1.6 Monitoring and Evaluation of Results.. The RIMU would temporarily incorporate the
MOF Monitoring and Evaluation Unit (M&EU) to assure coherence between monitoring and
evaluation of results and the development and re-development of reform work programs.
Component 4: Direct Operational Support for PFM Functions (US$ 16.0 million)
4.1 Direct Operations Support for Procurement. Six line ministries were targeted for de-
concentration of procurement following the training and certification under the capacity building
of Component 1. The team leader of the consultants’ team would be located at the ARDS and all
other key staff would be located at the line ministries.
4.2 Direct Operations Support to Treasury Operations. Activities under this sub-component
would include: operational support and on-the-job training in accounting and reporting, cash
management, payroll processing, grant management, and payment processing as well as
maintenance and operation of AFMIS.
4.3 Direct Operations Support to External Audit. This sub-component would first finance the
consultant services to conduct with the CAO the external audit of donor projects. An important
objective is achieving compliance with the International Standards of Auditing (ISAs).
1.6 Revised Components
The components were not revised.
1.7 Other significant changes
There were no changes in the project’s design, scope and scale, funding allocation, and
implementation arrangements. However, there was a change in the project’s schedule as
mentioned below:
The closing date of the project was extended by one year from December 31, 2010 to December
31, 2011. This was because the late mobilization of two key contracts pushed back the
implementation closing date of these key contracts by about one year beyond the project’s
original closing date. Sourcing of these contracts was drawn out over security concerns of
international firms; in both cases a second round of call for proposals was necessary and
negotiations took longer than expected as the cost of security provisions was not set in the
financial proposal and required time for the client to analyze and consider. Additional activities
for the procurement of goods and local individual consultant contracts which were dependent on
outputs of these major contracts were similarly behind the original plan.
13
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
Project Background. The Public Financial Management Reform (PFMR) Project was the fourth
World Bank operation to support public financial management performance and reforms in the
Afghanistan public sector. This series of IDA grants has contributed to the enactment of a
modern, robust legal framework for public financial management, timely and reliable processing
and reporting of transactions under the budget and establishing systems for public sector budget
implementation.
Together with the Civil Service Reform (CSR) Project, PFMRP envisioned to strengthen core
business practices within government, namely human resource and financial management –
through appropriate regulatory, organizational and technical reforms. Reforms in these areas
would provide the supporting organizational environment within which more sector-specific
reforms could be effective. Both projects supported the achievement of specific triggers under
PSIB as well as benchmarks under the Afghanistan Compact. Both projects also supported the
Government’s anti-corruption strategy through identifying and addressing areas that were
vulnerable to corruption and through promoting a rules-based culture within government.
Soundness of background analysis. As part of project preparation, sector background was
studied, main sector issues were analyzed in depth, and government strategies to deal with these
issues were also considered.
Lessons of earlier operations taken into account. A number of lessons learned from
Afghanistan’s previous projects, including EPAP 1, EPAP II, and PACB project were
incorporated into the project design. Some of the lessons included were the following:
For an emergency operation to be effective in a severely damaged post-conflict
environment, intensive Bank supervision is essential.
Contracts for direct operations support need to be separated from capacity building
activities to ensure that both are performed simultaneously.
The expectations for capacity building and institutional strengthening need to be closely
aligned with the availability and skill levels of the government counterparts.
The government needs to continue to engage the services of advisors for as long as it
takes to build sufficient, demonstrable capacity in core public administration areas even
as the roles of the advisors become increasingly transitional.
Risks Assessment. The Technical Annex had identified several risks and mitigation measures as
deemed appropriate at that time were taken during the preparation stage. The table below shows
these risks and mitigation measures along with an assessment of the risks by the ICR team.
Risk Mitigation Measure
ICR Assessment of the
Risks
Lagging training and capacity
development that will limit pool
of qualified personnel
Create new and additional civil
society and university-led
options for professional training
and certification
Duty specific training on-
going in Treasury and
MOF IA so civil service
skills rising but staff are
moving out of civil
service for higher pay.
14
Low recruitment and/or retention
rates for trained personnel that
will slow rate of transfer of
responsibilities to civil service
Complete pay and grading
reform in MOF; explore new
grading options for certified
PFM and procurement
professionals
All Moustoufiats have
gone through restructuring
and pay and grading.
Intensive training used as
incentive for MOF IA
and Treasury civil
servants.
Resistance of staff to reforms Adopt a participatory and
change management approach to
build in-house ownership of
reform
New personnel policies
for the civil service being
developed and supported
by the Independent
Administrative Reform &
Civil Service Commission
(IARCSC)
are properly integrated
into the MOF’s own
Human Resources
Management Department
Incomplete donor coordination
creating reform program gaps
and inconsistencies
Adopt pro-active donor
coordination and mobilization
action within RIMU
Donors in PFM have kept
the general division of
coverage in place at
beginning of PFMR;
moreover GIRA
introduced a PFM
Roadmap which donors
agreed to and which sets
the reform program for
GIRA. Donor consultant
group is working on the
basis of this plan.
Non responsive reform
programming, missing
opportunities and repeating
errors
Manage reform through annual
performance evaluations and
follow-on budget and work
programs by RIMU with
stakeholders
GIRA’s PFM Roadmap
has been agreed to by
donors at the Kabul Donor
Conference July, 2010.
Objectives could be undermined
by pervasive petty and
procurement corruption
Emphasize the social
accountability and greater
disclosure on procurement
Procurement oversight by
ARDS is still in place and
the Bank’s low thresholds
for prior review – no
significant procurement
corruption on WB projects
detected.
15
Reliance on country systems for
project financial management
and procurement implementation
and not on project specific and
project controlled arrangements
The country systems will be
aided by the same project
outputs and monitored by the
project team and the PSIB
supervision
The FM consultant
contract for Treasury
support continued in
place and systems
performed well.
No tradition of accountability or
institutional framework to
support de-concentration
Support to Parliament to
encourage due process applied
for malfeasance and support for
building fraud investigation
capacity
Oversight by Parliament
improved year on year
with close scrutiny of both
budget and audit reports.
2.2 Implementation
Midterm Review. The Bank conducted a Midterm Review (MTR) in April 2009. The objective of
the MTR was to review the overall project implementation status and the advance toward
development objectives. Specifically the MTR reported that: (i) overall project progress was
satisfactory and all the plans and resources were in place to attain the project development
objectives; (ii) on-the-job training with the Treasury Operations Advisor needed to be more
focused and supported by an comprehensive training plan; (iii) Internal audit continued to be
weak because the suspension of Article 61 of the PEFM Law limited the purview of the Internal
Audit of the MoF; and (iv) the draft external audit law then in the Ministry of Justice did not
provide key provisions for the establishment of an independent and modern external audit
function.
The following factors affected project implementation:
Factors outside government control or implementation agency
The continuity of the Task Team, including the TTL and other key sector specialists, from project
inception through completion was a favorable factor which helped project implementation. This
continuity engendered consistency, depth and follow-up in the dialogue with the government and
provided expertise to help the government analyze issues and implement actions as they emerged
during supervision. Further, having the TTL on the ground in Kabul was strongly positive, given
weak implementation capacity and thus the need for Bank assistance in drawing up the TORs for
various consultancies (including: treasury systems development and roll-out; external audit
advisory services; and direct operations support to treasury), and assisting the government in the
contracting process.
Factors subject to government control or implementation agency
(i) Procurement Administration. There were several delays in initiating the procurement actions
with regard to procurement of goods as agreed in the procurement plan because of the lack of
coordination between RIMU and other agencies. One reason was that some key activities were
continuing from the predecessor PACBP.
(ii). The CAO did not accept MOF Internal Audit mandate, under the PEFM Law, to conduct
internal audit in ministries outside the MOF. They used the prevailing CAO Law to support their
own role in internal audit which conflicts with the PFM Law Article 61 which gives IA of MOF
16
the right to conduct internal audit across government. The CAO campaigned against MOF IA 's
right to do its work and interfered with this with instructions to the line ministries not to
cooperate. This led to IA shortfall in its component objectives.
(iii). A major assumption of the PFMR project was that there would be new CAO (Audit Law).
This law was a commitment of the GIRA from 2002 and is still pending - the current legal
framework is inadequate and inappropriate since the CAO is not independent and is tasked with
internal audit functions.
(iv). Serious delays by the Ministry of Telecommunications to provide the means to transmit data
for the AFMIS led to a decision to use private services and this enabled the Treasury to extend
AFMIS real time access to all provincial offices (as well as all line ministry HQs in Kabul). Once
these services were in place Treasury quickly rolled-out the training and began on-line processing
through AFMIS for all budget transactions thereby improving the integrity of all budget and
financial information. This on-line processing contributed to timely in-year budget execution
reporting and full compliance with end of year financial statement presentation to the Parliament.
(v). During the life of the project GIRA amended the Procurement Law and lost key transparency
provisions. This rendered much of the implementation guidance and training material already
developed useless. After considerable discussion the law was again reformed but implementation
guides and training material had to be redone and given again. Fortunately, the both the
performance of the PPU and its consultant firm led to the completion of the legal framework and
implementation guides as well as a best practice approach to deliver training through the Afghan
Civil Services Institute.
(vi). After serious delays in contracting the TA to assist the CAO with project audit the SY 1387
audits came in nine months late but GIRA performance on audit compliance for SY 1388
( 100%) and 1389 ( only one audit not on time) were the best in the Bank for a portfolio of this
size.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
M&E design. Monitoring and evaluation was based on a set of specific monitoring indicators
that were critical for achieving the project objectives and were clearly linked to results. Specific
benchmarks were agreed between the government and technical assistance providers early on, in
implementation so as to measure specific progress in meeting capacity building objectives.
Intensive supervision by the Bank during the first half of the project period was planned to ensure
that any implementation issues were dealt with promptly. At a minimum, a full supervision
mission was planned twice a year, comprising appropriate specialists from each of the component
areas. The RIMU’s Monitoring and Evaluation Unit (MEU) had introduced a new monitoring
methodology including monitoring the achievement of annual benchmark results, in addition to
the more conventional monitoring of the execution of activities that were agreed in annual work
programs.
M&E implementation. The MEU had led the monitoring and evaluation process and established
a network of M&E focal point persons in each major operating line unit of the ministry.
Implementation data were collected on a regular basis, and Annual Performance Reports were
prepared using a results-based M&E performance framework. Good data was made available
except for donor information of off budget operations.
17
M&E utilization. Appropriate data collected from Annual Performance Reports was evaluated
and used to inform decision-making on certain activities. For example, these data contributed to
the design of the follow-on project, PFMRP II.
2.4 Safeguard and Fiduciary Compliance
Safeguard Compliance. N/A
Fiduciary Compliance. There were no significant deviations or waivers from the Bank’s fiduciary
policies and procedures during the implementation of the project.
2.5 Post-completion Operation/Next Phase
(a) Transition arrangements. PFMR Project II which became effective in August 2011 and is
currently under implementation, has ensured a smooth transition for continuing the project's
future operation.
(b) Monitoring and evaluation. RIMU would be responsible for the monitoring &
evaluation of the project as well as that of the MOF strategic plan, reforms and technical
assistance (TA) to MOF. It has already established a results-based M&E system for the MOF
strategic plan and the PFMRP. The system integrates implementation based M&E system
(inputs, activities, outputs) with results based indicators and mostly focuses on the results i.e.
outcomes and impact of the interventions. The M&E specialists at RIMU would continue to
conduct monitoring and evaluation of the MOF strategic plan, TA and the project with focus on
institutionalization of the system and creating a permanent M&E Unit within the MOF.
(c) List of performance indicators. Indicators developed under PFMR II Project will be monitored
during its implementation. Some of the Indicators are the following:
Donors shift 20% of their off-budget official development assistance to Afghanistan to
on-budget
PEFA ratings for internal audit (P-21) improve to B.
PEFA ratings for external audit (P26) improve to B.
At least 50% of procurement under the budget is done by line
Increased number of functions carried out by regular ministry staff that were previously
carried out by contracted staff.
(d) Future Impact Evaluation. It will be important to conduct an impact evaluation after three
years of project closing in order to assess the sustainability of the project’s achievements. This
evaluation could be done at the end of PFMRP II.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
Satisfactory. The objectives are still, relevant, and important to Afghanistan’s economic
development. They are timely and appropriate to the current needs of the country's public
financial management sector. After several decades of wars and civil strife, building an effective
state - one that can provide security and services to the people - has been at the heart of the
18
reconstruction effort in Afghanistan. The government has made remarkable progress in many
areas such as primary education, basic health services, irrigation rehabilitation, and rural
development. However, the country remains extremely fragile; and security remains a serious
obstacle to the delivery of reconstruction assistance and implementation of reconstruction
programs. Afghanistan’s poverty and social indicators remain among the lowest in the world.
Government capacity is weak despite improvements and the pace of implementation of
reconstruction programs has been short of popular expectations. In particular, strengthening the
country’s public financial management to accelerate aid utilization, provide faster and better
services to Afghan people, and ensure transparency and accountability of public expenditure is a
top priority for the government in taking the reconstruction agenda forward.
3.2 Achievement of Project Development Objectives
Satisfactory. The PFMR Project was successful in achieving its objectives. As a result of various
capacity building tasks during the life of this project, there has been a steady increase in building
basic financial management capacity throughout the government. For example, the MOF has
made good progress in a challenging environment, in creating basic conditions leading to
becoming an accountable, credible and self-managed/directed institution. The principle
components of budget and treasury operations are in place, including a legal and regulatory
framework; cash flow management systems; decentralization of some daily functions to regional
sub-departments; automated internal reporting; and internal audit of its departments. The MOF
has also made progress in establishing the human resources management capacity needed to
recruit and administer its own staffing, qualifying them for a new civil service pay and grading
system, and promoting skills training. This is an important step in building morale, loyalty and
accountability of the MOF staff.
The project has also been instrumental in sensitizing GOA about the role of external auditing and
its importance in providing assurance to all the stake holders. Further, during last few years,
understanding the role of internal and external auditors by all the relevant entities with active
support under the project has improved the audit regime in the governance of
Afghanistan. Other achievements of the project include:
establishment of capacity to devise procurement policy and oversee its implementation in
PPU and the increased capacity of staff working on procurement in the line ministries.
extension of the AFMIS system to the HQ line ministries for temporary posting of
transactions and on-line real time consultations and reporting and to all provinces for on-
line real time processing of all provincial transactions through the AFMIS, thus raising
the integrity of the financial information.
fewer international staff in TA position on PFM and training has been absorbed and
duties of staff continue to expand both in areas formally done by consultants and to new
areas of responsibilities.
The details of the project’s achievements are as follows:
Objective 1: Developing an efficient and effective public financial management system.
(a) Procurement Institutional Development and Social Accountability:
Institutional development and capacity assessment for standalone procurement of six
line ministries; (Public Health; Rural Rehabilitation and Development; Agriculture;
19
Education; Energy & Water, Public Works; and Finance) has been done. Out of these,
Ministries of Education, Agriculture were awarded capacity certification for stand-alone
procurement and Public Health for consultants services only.
Also, the institutional development of seven more line ministries (Transportation,
Communication and IT, Counter-Narcotics, Higher Education, Urban Development,
Mines and Commerce) is under process. All seven line ministries have submitted their
report on current procurement structures with proposed procurement structure and
budgetary information as was required. PPU has worked and finalized Institutional
Development report for Ministry of Communication and IT and the rest are under
finalization stage. Furthermore, capacity assessment of these ministries will be done for
standalone procurement after their institutional development, in addition to those which
were not certified earlier.
PPU website (www.ppu.gov.af) and PMIS have been developed and are operational. The
website contains important information on Public Procurement Law, Rules of Procedures,
Circulars, SBDs, RFPs, RFQs and other documents issued by PPU from time to time and
it is properly functional. Staff of line ministries have been trained on the usage PMIS.
(b) Treasury Systems Development and Roll-out:
AFMIS rollout of core modules has been completed for all line ministries and all
mostoufiats. This is a major milestone reached by the project. For example the payment
requisitions (M - 16) documents are no longer sent to the Treasury for input to AFMIS.
Since the line ministries now have AFMIS, they are required to enter the M - 16
documents which has made the processing more timely and efficient. Likewise, all
moustafiats have been provided with full functionality of AFMIS, including real time
posting (budget execution) and check generation for operating budget. The central
ministries in Kabul have also been provided with online connection with report retrieval
and transaction processing capabilities. AFMIS currently caters to capturing all the
budget execution on real-time basis. The plan is now to start roll out of AFMIS to the
secondary budgetary units.
AFMIS has been upgraded to FreeBalance Financial Accountability Module Version 6.5;
further upgrade is pending securing donor support.
The Qatia (annual national budget execution statement) and the World Bank loan and
grant financial statements are audited and submitted to the National Assembly on 22nd
September every year.
All 34 mustofiats have completed implementation of restructuring and new processes of
Moustoufiat Reform program.
(c ) Internal Audit Work Practices:
Satisfactory progress has been made in strengthening internal audit work practices and
capacity in the Internal Audit Department (IAD) of the MOF. Internal audit is now being
applied comprehensively to departments in the MOF and through a staged approach is
20
being gradually expanded to other ministries. In Solar Year 1387 (ending March 22 ,
2009) , 11 MOF entities, in 1388, 16 MOF entities, in 1389, 105 MOF entities and in
1390 till the end of the 3rd
quarter, 73 MOF entities were audited. Some special cases
were also audited by the IAD on special request of the Minister’s Office. These reports
were reviewed by a team of national and international auditors in the IAD and verified
that the reports were prepared at acceptable standards.
As for internal audit of line ministries, in 1389 as per plan, four line ministries (Rural
Rehabilitation and Development, Energy & Water, Health, Transport and Civil Aviation)
were audited. In 1390, ten ministries were planned to be audited; however, due to
interference of the CAO, only four lines ministries (Agriculture; Mines; Urban
Development; and Information & Culture) were audited.
Fraud Investigation Unit (FIU) was established in the IAD in January 2008 (last quarter
of 1386). Basic and on the job trainings were provided to the staff of this unit and during
on the job training, they investigated four cases, one in the Treasury Department and
three in the Customs Department. In 1388, totally 7 cases were investigated. In 1389, 159
cases were investigated, 82 of which were resolved via direct correspondence with the
relevant officials and the rest 77 were physically investigated by FIU. In 1390, 114 cases
were investigated in the first 9 months. 64 cases were resolved via direct correspondence
with the relevant officials the concerned department and the rest 50 cases were physically
investigated by FIU. Reports of all have been submitted to the Director General of IAD.
(d) Supports for External Audit:
The CAO is a Supreme Audit Institution (SAI) of Afghanistan and it is imperative that its
function is based on the mandate reflecting the vision enshrined in the constitution and
the principles of INTOSAI. The draft law received inputs from the Bank from time to
time and currently it is placed before the National Assembly for enactment. It will
enhance external audit mandate and put the role of CAO in correct perspective in the
public financial management framework in Afghanistan. It will also strengthen auditing
in the government as a whole and clear the blurred line between internal audit and
external audit set up in Afghanistan.
The role of CAO, supported under the project, has also indirectly created an atmosphere
for the development of private sector Accounting and Auditing. The enactment of audit
law will also result in the formation of a Public Accounts Committee in the National
Assembly to discuss audit reports and help the National Assembly in exercising effective
oversight over public expenses and revenues.
The Qatia audit in the CAO has been reported to the legislature on time and has been
strengthened through the application for the first time, of better auditing methodologies
developed by the advisors for the report to provide more focused and useful commentary
on accounting practices. The CAO’s audit program for grants has been strengthened
sufficiently for all CAO audits to have met the reporting timetable for the first time since
the program was put in place in 2002 and for the financial management of the grants to
have been improved such that the proportion of clean audit opinions increased from 66%
in the previous year to 90% and ineligible expenditure amounts for all the projects was
reduced from US$5,611,650 to US$120,134.
21
(e) Targeted Restructuring of Internal MOF Business Arrangements:
Re-structuring of all the MOF departments and re-grading and revision of job
descriptions for all 6100 staff, started at the end of 1387 in line with new Civil Servants
Law and pay and grading system. A proposal was developed and submitted to IARCSC
which was approved at the beginning of 1388 and implemented since then. Also, a further
review of the MOF taskheel took place in 1388 and an additional 680 new positions were
added. Furthermore, in 1389 the MOF taskheel was reviewed and as per the need of
MOF, a number of 256 more positions with job descriptions were created. All the
positions had approved functions and reporting line. The new taskheel also included the
newly established Office of the Deputy Minister for Policy under which there are two
General Directorates (Policy Execution and Strategy Implementation). HRMD was
assisted in developing new job descriptions for all the positions within these two new
departments as well. In 1390, a further review of the taskheel took place and HRMD was
assisted in restructuring it in line with MOF strategic plan.
The new MOF taskheel for 1390 consisted of 7679 positions, which is 9% higher than
that of 1389. The project also facilitated restructuring the Customs Department for the
1391, in terms of developing job description for new positions and in revising the
existing job descriptions.
(f) Staff Re-grading under the GOA Pay/Grading Policy:
About 6750 MOF employees have been transferred to the Pay and Grading System since
1388, accounting for 88% of the MOF total tashkeel. Progress is 88% at Headquarter,
87% at Mustofiats and 89% at Provincial Customs. However, high staff turnover and
security issue in some provinces has made it difficult to achieve 100% of the target. At
HRMD 95% of the staff has been hired under the Pay and Grading System.
Objective 2: Developing the human resource capacity of the MOF and CAO to ensure better
operation of public financial management.
(a) H.R. Capacity Development in Procurement:
About 3550 staff of line ministries and mustofiats were trained in basic, intermediate, and
advanced and special courses in procurement during 1387-1390, with an average of 885
staff trained per year.
(b) H.R. Capacity Development in Financial Management:
In preparation of the rollout of AFMIS, basic training in financial management was
provided to line ministries staff, mustofiat’s staff and Treasury interns. For example, in
1389, more than 700 staff and in 1390, 900 staff of line ministries, and provincial
mustofiats, were trained in the following areas: COA, Data Entry; AFMIS Rollout
Training; Problem Solving & Coordination W/Shop; Financial Management Framework;
Workshop of ARTF, Procurement; and Development Budget AFMIS Rollout training.
The training was very successful as illustrated by the successful rollout of AFMIS.
(c) H.R. Capacity Development in Audit:
22
14 Auditors were given on-the-job training by US Treasury Technical Advisors on
techniques for accomplishing an assessment, procedures for auditing revenue processes
& conducting Risk Assessment in line ministries.
A three month program was conducted in which following training courses were
provided to 81 internal auditors: a) Customs, Revenue & Civil Service Law; b)
Procurement Law & Regulations; c) Financial Mathematics; and d) Toolkits usage.
A training on fraud investigation techniques and methodologies was conducted by UNDP
International consultant.
(d) Support for the HRM Department:
RIMU made good progress in the support and development of the HRMD and
implementation of the administrative reforms, assistance in monitoring and evaluation of
the MOF strategic plan and technical assistance and project coordination and
administration.
A results-framework of the HR operations was produced indicating the targets for the
next three years (1389-1391). A situational analysis of HRMD was prepared and four HR
Coordinators/Consultants were recruited, out of which, one was deployed to the Customs
Department, another to the Revenue Department for implementation of shared services
model. The HRMD Strategic Plan was finalized as well as a performance appraisal
policy. Performance appraisal training materials are in development and the training will
soon be rolled-out to the Customs and Revenue Departments.
About 80 staff of HRMD were given different duty-specific trainings. Training was also
provided to sub-national level HR staff and staff of other MOF Departments.
(e) Preparation of New Human Resources Management Initiatives:
The number of international TA consultants has decreased and shows a reduction of 30%
at the MOF. In July 2008, there were 80 international TA, whereas in June 2011, it
reached to 56. In 2008, at the Treasury Department there were 11 expats, whereas this
number since then has been reduced to only four. But the local contracted staff has
increased from 242 in 2008 to 305 in 2011 at the MOF. Relatively, TA as a % of
government staff in MOF HQ has decreased from 16% in 2008 to 14% in 2011. Most of
these TA staff have a supporting role to government staff, which includes institutional
development and capacity building.
3.3 Efficiency
N/A
3.4 Justification of Overall Outcome Rating
Rating: Satisfactory
Based on the discussion given in Sections 3.1 and 3.2, the overall outcome is rated as Satisfactory.
23
3.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
N/A
(b) Institutional Change/Strengthening
The project resulted in a substantial institutional development impact in the areas of procurement,
treasury, audit, and reform management. For example:
Full legal framework was developed under PPU and structure in place to monitor its
compliance. There is increased procurement capacity and skills in the line ministries,
while training is on-going under the supervision of PPU but delivered through the
Afghanistan Civil Services Institute.
There is a full country coverage of AFMIS for online real time processing of provincial
financial transactions.
Internal Audit Department’s capacity to conduct audits has been elevated to a high
standard to include audits of computer systems. IAD has also raised the capacity of civil
service staff and management in particular – this stands out in MOF, where the reliance
of local consultants had been the rule for higher level functions.
Monitoring capacity in the RIMU has increased to follow PFM reforms both in MOF and
across the government.
For details see Section 3.2.
(c) Other Unintended Outcomes and Impacts (positive or negative)
N/A
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
N/A
4. Assessment of Risk to Development Outcome Rating: High
The ICR team considers that the risk to development outcome would be high based on the
following factors:
SAI independence is not embedded until an enacted Audit Act meets all of the
requirements of the principles of independence contained in the International Standards
of Supreme Audit Institutions ISSAI 10 “Mexico Declaration on SAI
Independence”. Most especially the new Audit Law: (i) must meet these requirements
and (ii) be enacted in PFMRII.
SAI capabilities will very likely not reach a standard such that the Bank or donors could
rely on CAO to carry out audits of TA projects without oversight and support of an audit
24
agent. Use of foreign audit firms alone is also unlikely to be effective in gaining adequate
access to regions so joint arrangements should be favored.
SAI capacities may not reach a standard such that the CAO can competently audit an
Afghan annual financial statement prepared according to IPSAS. The CAO currently
audits a Qatia statement of budget realization and the assurance that this provides is not
clear and probably does not meet ISSAI standards.
Ad hoc rather than institutionalized arrangement for English language training has not
been sufficiently extensive to support the Afghan scrutiny of English language donor
projects documents and related contracts.
The Afghan resources for its budget are less than half the budget requirement and
extensive donor support has been entrenched.
There is a strong opposition from the CAO in implementing Article 61 Audits. As a
result, some ministries have denied the MOF Internal Audit Dept. access to their internal
audit offices, and benchmarks were not met for the 2nd
quarter 1390 and may not be met
for either the 3rd
or 4th quarter, if CAO maintains the same approach.
The project did initiate improvements in the operation and audit processes in MOF IAD,
and initiated implementation of MOF IAD leadership of internal auditing in GIROA.
Additional efforts and consistent hard work is required before these improvements result
in proper oversight of expenditures and revenues; prevention and detection fraud, waste
and abuse, and a general reduction in corruption.
There seems to be continued misunderstanding of the role of internal audit within some
ministries. The auditing concepts that are generally accepted in the world are not
understood or even accepted in many ministries. Many Ministry internal audit offices are
used as a dumping ground for staff and the audit heads are not fully accepted within the
senior management circle.
In spite of a sound new grading and pay system being adopted, remuneration in the public
sector remains uncompetitive for persons with the skills required to make public financial
management function effectively. The MOF has recognized this, but alone, it is not in a
position to change the underlying structure of public sector employment that permits
competitive remuneration to be determined and applied systematically. Instead, there
continue to be ad hoc arrangements with donors, use of contractors, to operate outside the
civil service, out of necessity.
The deteriorating security may slow down implementation and discourage contractors
from bidding, and agencies may not be able to source high level TA on a timely basis and
at reasonable cost. Further, escalating insurgency-related violence has increased the level
of fragility in the political environment, which is also impacting the ability of the
government to deliver services and programs.
Corruption continues to be widespread and pervasive. Afghanistan’s ranking in
Transparency International’s Corruption Perceptions Index has slipped from 176 out of
180 countries surveyed in 2008 to 179 out of 180 countries surveyed in 2009.
While the Procurement Law and the Appeal and Review mechanism provide a modern
legal system for procurement, effective implementation of the law may encounter
difficulties in the current weak institutional structure and capacity of the government.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Satisfactory.
25
The Bank's performance in the identification, preparation, and appraisal of the project was
satisfactory. During preparation and appraisal, the Bank took into account the adequacy of
project design and all major relevant aspects, such as technical, financial, economic, and
institutional, including procurement and financial management.
Project preparation was carried out with an adequate number of specialists who provided the
technical skill mix necessary to address sector concerns and a good project design. The Bank
provided adequate resources in terms of staff weeks and dollar amount to ensure quality
preparation and appraisal work. The project was consistent with the government priorities in the
sector at the time. The Bank had a consistently good working relationship with the Borrower
during preparation and appraisal.
(b) Quality of Supervision
Rating: Satisfactory.
The Bank's performance during the implementation of the project was satisfactory. The task team
prepared Aide-Memoires regularly and alerted the government and the implementing agencies to
problems with project execution and facilitated remedies in a timely manner, in conformity with
Bank procedures. The Implementation Status Reports (ISRs) realistically rated the performance
of the project both in terms of achievement of development objectives and project
implementation. The task team also monitored fiduciary compliances.
Bank’s procurement and financial management staff worked with the staff of the implementing
agencies to explain the rules and procedures to be applied during project implementation, with
regard to procurement of goods and works, and selection of consultants, accounts and audits,
based on the Grant Agreement. The task team carried out a Mid-Term Review in April 2009, and
assessed progress to date on all project components, the implementation issues and the actions to
be taken to ensure the successful completion of the project.
As mentioned in Section 2.2, one important aspect of the Bank's performance and contribution
was the continuity of the Task Team, including the TTL and other key sector specialists, from
project inception through completion. This continuity engendered consistency, depth and follow-
up in the dialogue with the government and provided expertise to help the government analyze
issues and implement actions as they emerged during supervision. Further, having the TTL on the
ground in Kabul was strongly positive, given weak implementation capacity and thus the need for
Bank assistance in drawing up the TORs for various consultancies (including: treasury systems
development and roll-out; external audit advisory services; and direct operations support to
treasury), and assisting the government in the contracting process. There was considerable input
from technical staff. The project also received support in addressing project issues from the
Country Management Unit (CMU), the Quality Director, Regional Procurement Manager, and the
Sector Manager.
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory.
Based on the Bank performance during lending phase and supervision as discussed above,
overall Bank Performance is rated as Satisfactory.
26
5.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory.
The Borrower had substantial involvement in defining the project's scope and identifying the
agencies and ministries where consultants would be located to best advantage. There were also
strong champions in senior levels of government. Commitment on the part of the MOF, MOE,
CAO, and Treasury Department, was high. The government officials worked closely with the
Bank's project team on a continual basis, and cooperated fully with the task team.
The government consistently demonstrated and maintained full commitment to the project and its
objectives throughout the implementation. Examples of active implementation interventions on
the part of the government are:
directing other donors support to complement the project activities – specifically through
US Treasury Advisors in Treasury to assist with the preparation of TORs for project
activities and in Internal Audit Dept to support the expansion of audit to line ministries;
investing domestic resources in a modern data center for the operation of the AFMIS in
Treasury
preparing a PFM Roadmap for presentation to the entire donor community at the Kabul
Conference (July, 2010) which contains significant actions to support the project ends.
agreeing to memorandums of understanding with donors under the Recurrent Cost
Incentive Program which committed them in FY 2010 to address the legal framework on
internal audit and in FY 2011 to improve the legal framework for external audit.
collectively leading the management and coordination of the project through the Project
Steering Committee which was chaired by the Deputy Minister of Finance and approved
all aide memoires and project budgets.
The government prepared periodic monitoring reports, communicated issues freely and openly.
Given the country context in Afghanistan and the difficulties to find qualified staff, the
government made every effort to comply with Bank covenants.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory.
RIMU performed fully satisfactorily in keeping focus on improvements in basic operational
matters according to a MOF plan, and addressed human resources management issues. The
RIMU: (i) prepared the overall plan of actions with the contributions of the various departments
and donors making contributions; (ii) coordinated actions to assure mutual support and cross-
functional efficiency; (iii) monitored progress; and (iv) evaluated the intended results. It covered
all project-supported activities including those implemented through the MOE and the CAO as
well as activities financed by other donor partners.
The RIMU Director convened periodic meetings of the working level authorities of various
departments to identify and resolve implementation issues that were outside the scope of their
individual authorities. The RIMU assisted the MOF to track and account for commitments to its
27
Annual Strategic Plans for improving MOF performance. It conducted annual reviews from a
strategic perspective (Annual Performance Reviews).
Treasury Department’s performance was highly satisfactory in terms of executing the planned
activities and raising the PFM performance.
Internal Audit Department’s performance was highly satisfactory as it executed the activities
planned and raised the skills of the civil servants in particular. However, IAD’s efforts to extend
coverage to line ministries was stifled by interference from the CAO.
PPU was responsible for both formulating and then overseeing the national procurement legal
and institutional framework. It needed the support of an international firm while the framework
was being developed and training material was prepared. It is currently operating on its own and
the training is on going under the Afghan Civil Service Institute – a best practice for training
approach.
CAO. The direct operations support was very successful and the performance on project audits
in terms of timeliness and quality is among the best in the Bank. Training was also delivered and
planning and execution of audits, in addition to project audits, is improving. One short coming,
however, was the failure to implement a new legal framework for external government audit.
ARDS/ MOE. The role of ARDS was to ensure that all procurement over an agreed threshold
complied with the rules and regulations. ARDS managed to do this even when there was no TA
contract in place between the period of TAs from PFMR to PFMRII.
Financial Management. Performance of the implementing agencies was satisfactory. The project
closed with a ‘Moderately Satisfactory’ FM supervision rating. Annual audited financial
statements were acceptable and submitted on time except for FY 2009 when all the audit reports
in the portfolio were late.
Procurement: Procurement Arrangements. Procurement of all works, goods and technical
services under the project followed the Procurement Guidelines “Procurement under IBRD Loans
and the IDA Credits”. Overall, after initial delays, procurement activities proceeded both at a
satisfactory pace and at acceptable quality levels.
(c) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory.
In light of the performance of the government and implementing agencies as discussed above, the
overall performance of the Borrower was satisfactory.
6. Lessons Learned
Continuity of the team working on the project, especially the TTL, is very important both
for the Bank and the Borrower, as it will engender consistency, depth and follow-up in the
dialogue with the government and provided expertise to help the government analyze issues
and implement actions as they emerged during supervision.
28
PRR. Even though the PRR has been an invaluable tool, in order to make it sustainable, it
is important to find an alternative incentive mechanism which can be continued
indefinitely using national resources.
Corruption Risk The country operating environment carries a high risk to perceived
corruption. Further strengthening of procurement and audit including developing social
accountability and support for the activities of the Public Accounts Committee should
help address these issues.
Internal Audit. Management oversight is key to good governance. This oversight is
constrained by the lack of an effectively operating internal audit function, except in the
MOF. Building internal audit capacity in each line ministry cannot be done in the short
term so implementing the approach provided in the Public Expenditure and Finance Law
which entrusts MOF to establish internal audit throughout the government would be the
most effective and expeditious route to establish the function across government, while at
the same time supporting the development of internal audit in the line ministries, where
feasible.
External Audit. The external accountability of the executive must be strengthened if
confidence in its performance is to be built. Many achievements in PFM are discounted
because there is little independent oversight or assurance that the reports and decisions of
the executive deserve credibility, particularly given the perception of rising corruption. A
new legal framework, training for members of a public accounts committee, and training
and technical support to the CAO are needed.
It is important to recognize that an operation aimed at changing institutions is
fundamentally about changing behavior and attitudes, social relationships and
organizational culture, not strictly installing technical solutions. Granted that the PFMR
was, correctly, focused on installing strict financial management tools to accompany
large and emergency infusions of budget support and development assistance ; for results
to be sustainable, additional efforts would have been required to raise the level of
willing adoption of the new practices.
The PFMR tended, correctly, to measure results in terms of quantitative achievements
(numbers trained, audits received, line ministries adopting rules) but these are more like
necessary conditions for progress; the project could also have taken additional steps to
track changes in the business culture (for example, timeliness and quality of functions;
employee morale; turnover and absenteeism, among other indicators related to business
culture).
It is necessary to accept the use of short term expedient measures that may appear to
contradict a longer term goal; recognizing that the choice of implementation measures
should be pragmatic. The PFMR provided heavy support for using contractual consulting
services to actually perform many PFM functions, even though a longer term goal was to
develop a MOF-led system managed by the civil service. The PFMR resisted
understandable impatience on the part of the GIRA to take responsibility for financial
operations, but was correct in working towards a more macro-level outcome—
maintaining transparency and accountability acceptable to those providing the resources.
29
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies
To fill up after receiving the Borrower’s comments on the Bank’s ICR.
(b) Cofinanciers
NA
(c) Other partners and stakeholders
NA
30
Annex 1. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
(Total rows and percentage column will be calculated by the system)
Components Appraisal Estimate
(US$ million)
Actual /Latest Estimate
(US$ million)
Percentage of
Appraisal
1. Institutional
Development
11.40 9.8
2 - HR Capacity Building 5.00 3
3. Reforms Management 1.00 0.6
4. Direct Operations
Support
16.00 20
Total Baseline Cost 33.40 33.4
Physical Contingencies
Price Contingencies
Total Project Costs 33.40 33.40
Project Preparation Facility
(PPF)
Front-end fee (IBRD only)
Total Financing Required 33.40 33.40
(a) Co-financing
(The appraisal estimate will be pre-populated from the Financing data in SAP/AUS;
Percentage of Appraisal column will be calculated by the system)
Source of Funds Type of
Financing
Appraisal
Estimate
(US$ million)
Actual/Latest
Estimate
(US$ million)
Percentage of
Appraisal
[Government]
[IBRD/IDA] 33.40 33.40
[Donor A] [WB-administered
TF]
[Donor B] [Parallel financing]
31
Annex 2. Outputs by Component
1. INSTITUTIONAL DEVELOPMENT
1.1 Procurement Institutional Development & Social Accountability:
PPU website (www.ppu.gov.af) and PMIS have been developed and operationalized.
The website contains important information as Public Procurement Law, Rules of
Procedures, Circulars, SBDs, RFPs, RFQs and other documents issued by PPU from time
to time and it is properly functional.
Line ministries staff have been trained on the usage PMIS and user name and password
have been created for them, through which they can enter the data (awarded contracts,
bidding opportunities and job announcement).
For public awareness campaigns, three workshops on appeal and review mechanism,
bidding process, public procurement law, rules of procedures and preparation of SBDs
were held at Civil Service Institute, Ministry of Finance and Afghan Builders
Associations. About 150 businessmen, suppliers and contractors participated.
1.2 Treasury Systems Development and Roll-out:
AFMIS connectivity was established for 34 provinces in 1389. These provinces have
been provided with full functionality of AFMIS, including real time posting (budget
execution) and check generation for operating budget. All line ministries in the centre
have been connected to AFMIS and are performing temp save for operating budget
execution.
The Treasury has undertaken a program to establish a world class data center. An IT
advisor under the project has been supporting the data center development.
All mustofiats have been restructured in line with the government pay and grading policy.
Also, implementation of the pay and grading system has been completed in all mustofiats
with around 90% progress.
1.3 Internal Audit Work Practices:
Fraud Investigation Unit (FIU) was established in the IAD in January 2008. Basic and on
the job trainings were provided to the staff of this unit and during on the job training, they
investigated 4 cases, 1 in Treasury Department and 3 in Customs Department. In 1388,
totally 7 cases were investigated. In 1389, 159 cases were investigated, 82 of which were
resolved via direct correspondence with the relevant officials and the rest 77 were
physically investigated by FIU.
Internal audit of MOF entities was done both at central and sub-national levels due to
suspension of article # 61 of the PFEM law. The assigned teams have performed the
audits in accordance with auditing standards and reports were prepared and sent to the
relevant entities with recommendations for improvement. In 1387, 11 MOF entities, in
1388, 16 MOF entities, in 1389 105 MOF entities and in 1390 till the end of the 3rd
quarter, 73 MOF entities were audited.
In 1389, four line ministries (Rural Rehabilitation and Development, Energy & Water,
Health, Transport and Civil Aviation) were audited.
32
In 1390 new technical audit manuals were prepared by IAD international advisors in
consultation and involvement of the senior auditors:
1.4 Supports for External Audit:
External audit Report has been submitted every 6 months to the President and Ministry
of Parliamentary Affairs for onward transmission to Parliament.
II. HUMAN RESOURCES CAPACITY DEVELOPMENT
2. 1 H.R. Capacity Development in Procurement:
3532 staff of line ministries and mustofiats has been trained in basic, intermediate, CIPS
and advanced and special courses during 1387-1390, indicating an average of 883 staff
trained per year.
2.2 H.R. Capacity Development in Financial Management:
In 1387, more than 500 and in 1388, more than 1300 staff of all central and provincial
budgetary units and Treasury interns were trained in the following areas.
AFMIS (Afghanistan Financial Management Information System)
Second Phase of AFMIS
New Charts of Accounts Training
Financial Reporting
Payment/Disbursement Procedures
Financial Planning and Commitment Control
Introduction to Treasury
Qatia
SDU Procedures
Results-based Management
Anti Corruption
Overview of Procurement
Taxes Relevant to Government Suppliers & Wage Withholding Tax
Training on the Computerized Payroll System CPS has been provided for 50 accounting
offices and 3 Provincial Mustofiats
In 1389, more than 700 staff and in 1390, 900 staff of Line Ministries, Provincial
Mustofiats, Line Ministries’ Controllers, Financial Officers of Mustofiats, Budget Dept
and Kabul Mustofiat were trained in the following areas:
COA, Data Entry
AFMIS Rollout Training
Problem Solving & Coordination W/Shop
COA and Budget Execution Presentation.
Financial Mgmt Framework
Workshop of ARTF , Procurement
Development Budget AFMIS Rollout training
2.3 H.R. Capacity Development in Audit:
Internal Audit:
33
In 1388, 74 staff including 27 from IAD, 37 from Treasury and 10 from other
departments received English Language training during this period. Additionally, a total
of 25 staff, 24 from IAD and 1 from another department were trained in IT.
In 1389, 10 IT Auditors and 5 other auditors were given preliminary ASYCUDA training.
Also, twenty five newly recruited auditors were given basic trainings in auditing by the
senior auditor. Furthermore, International Audit Advisor provided one month classroom
training to 20 newly recruited auditors on basic internal auditing, usage of toolkits,
introduction to Revenue, Customs, PFEM, and procurement & performance auditing.
In 1390, also 14 auditors were given on the job training by US Treasury Technical
Advisors in techniques for accomplishing an assessment, procedures for auditing revenue
processes & conducting risk assessment in line ministries. They were also provided with
comprehensive training of two weeks on process auditing and internal audit toolkits
effectiveness & usage.
81 internal auditors were trained in a three-month program in the following areas.
a) Customs, Revenue & Civil Service Law,
b) Procurement law & regulations,
c) Financial Mathematics,
d) Toolkits proper usage
External Audit:
In 1389, 120 staff (30 in English, 30 in IT courses, 15 on use of excel sheet for grants
audit, 15 on enterprise audit, 15 on frauds and corruption concepts, 15 on INTOSAI
Auditing Standards) were trained. In 1390, 75 (30 in English, 45 in IT courses) were
trained. All these training programs were conducted by the international consultants and
were appreciated by the participants and were useful to the auditors in carrying out their
work.
III. REFORM MANAGEMENT
3.1.1 Targeted Restructuring of Internal MOF Business Arrangements:
The re-structuring of all MOF Departments and re-grading and revision of job
descriptions for all staff, 6100, started at the end of 1387 in line with new Civil Servants
Law and pay and grading system. A proposal was developed and submitted to IARCSC
which was approved at the beginning of 1388 and was implemented then. Also, a further
review of the MOF taskheel took place in 1388 and an addition of 680 new positions was
added.
In 1389 the MOF taskheel was reviewed and as per the need of MOF, a number of 256
more positions with job descriptions were created. All the positions had approved
functions and reporting line. The new taskheel also included the newly established
Office of the Deputy Minister for Policy under which there are two General Directorates
(Policy Execution and Strategy Implementation)
3.1.2 Staff Re-grading under the GOA Pay/Grading Policy:
About 6740 MOF employees have been hired under the Pay and Grading System
accounting for 88% of the MOF total tashkeel. Progress is 88% at Headquarter, 87% at
Mustofiats and 89% at Provincial Customs. As mentioned above ongoing staff turnover
34
and security issue in some provinces has made it difficult to achieve 100% of the target.
To date, 95% of the HRMD staff has been hired under the Pay and Grading System.
3.1.3 Support for the HRM Department:
Indicator: 25. Number of human resource management staff completing duty-specific training in
their respective specialties (specialties approved and training conducted with IARCSC)
In 1387, totally 30 staff of HRMD were trained with assistance of IARCSC ( 20 staff on
pay and grading policy implementation here at MOF in a one-week workshop, 6 staff on
communications in a one-week workshop and 4 staff on recruitment in a four-day
workshop at IARCSC Training Center). In 1388, all staff of the HRMD received a one-
month general training on HRM with assistance of IARCSC.
In 1389, with assistance of RIMU, a two- month duty specific training was conducted for
all staff of HRMD in the areas of organization development, recruitment, performance
appraisal and record keeping, training and development and employees relations.
In 1390, all staff of HRMD were trained under different duty specific trainings. We have
also had trainings for sub-national level HR staff and staff of other MOF departments.
3.1.4 Preparation of New Human Resources Management Initiatives:
A PFM staff incentive program was drafted under PFMR II project, which would have
assisted in the reduction of the reliance on TA directly. However, the scheme was
removed from PFMR II project later and linked to PAR project of the IARCSC.
There is a reduction of 30% in the number of international TA consultants in the MOF. In
July 2008, there were 80 international TA, whereas in June 2011, it declined to 56.
3.156 Monitoring and Evaluation of Results:
MOF strategic plan was reviewed and updated, which went approved by HE Finance
Minister. As part of the MOF strategic plan, monitoring and evaluation (M&E)
framework was developed in line with MOF strategic goals and objectives. Baseline,
indicators and annual benchmarks were set and performance monitoring plan was
developed.
Annual performance review events were organized in 1388, 1389 and 1390.
IV DIRECT OPERATIONAL SUPPORT FOR PFM FUNCTIONS:
4.1 Direct Operations Support for Procurement:
The facilities for announcement of bidding opportunity, registered bidders and award of
contracts processed through ARDS were created and publications of bidding and job
opportunity as well as outcome of awarded contracts are now made on this site.
4.2 Direct Operations Support to Treasury Operations:
Bank reconciliations are completed within 20 days from month end for operating budget.
Monthly financial statements are posted on Treasury website within 25 days from end of
each month and the annual budget (Qatia) statements are submitted to National Assembly
by 22nd Sep. The WB grant and loan financial statements are submitted to the WB on
35
22nd Sep. Monthly cash plans are provided to stakeholders with accuracy of 85% on
monthly projections.
4.3 Direct Operations Support to External Audit:
Bank Project audit reports were submitted within 6 months of year-end, except for SY
1387, and are done to International Standards on Auditing and the financial statements
are IPS - compliant.
37
Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Robert W. Crown Consultant EASPR
Deepal Fernando Senior Procurement Specialist SARPS
Shawkat M.Q. Hasan Senior Procurement Specialist AFTPC
Ali Hashim Consultant SARFM
Michael John Jacobs Consultant SARFM
Michael G. Jacobson Consultant CICRS
Ronald Points Consultant EASPR
Paul Edwin Sisk Lead Financial Management Spec SARFM
Donna Thompson Sr Financial Management Specia CTRLP
Peter-Armin Trepte Consultant OPCPR
Supervision/ICR
Robert W. Crown Consultant EASPR
Deepal Fernando Senior Procurement Specialist SARPS
Shawkat M.Q. Hasan Senior Procurement Specialist AFTPC
Michael John Jacobs Consultant SARFM
Leslie Isao Kojima Sr Financial Management Specia SARFM
Kenneth O. Okpara Sr Financial Management Specia SARFM
Ronald Points Consultant EASPR
Donna Thompson Sr Financial Management Specia CTRLP
(b) Staff Time and Cost
Stage of Project Cycle
Staff Time and Cost (Bank Budget Only)
No. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY06 18.25
FY07 134.69
FY08 0.00
Total: 152.94
Supervision/ICR
FY06 0.00
FY07 0.00
FY08 73.20
Total: 73.20
38
Annex 5. Beneficiary Survey Results (if any)
N/A
Annex 6. Stakeholder Workshop Report and Results (if any)
N/A
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR
Islamic Republic of Afghanistan
Ministry of Finance
Office of the Deputy Minister for Administration
Reform Implementation and Management Unit
Public Finance Management Reform Project
Borrower’s Evaluation Report
Project Name Public Finance Management Reform
Project
Region South Asia
Country/Area Afghanistan
Project ID P099980
Bank Team Lead Paul Edwin Sisk
Approval Date 29 May 2007
Effectiveness Date 15 Sep 2007
Closing Date 31 Dec 2011
Borrower Islamic Republic of Afghanistan
Implementing Agency Ministry of Finance
Main Loan/Credit # H-298
Total Project Cost US$ 33.4 Million
IDA Commitment US$ 33.4 Million
39
Amount Disbursed tbd After the Grace Period
I. Assessment of Operation’s Objective, Design, Implementation and Operational
Experience
The Public Finance Management Reform (PFMR) Project was launched in Sep 2007 subsequent
to the three other investment operations of the World Bank (WB), the Emergency Public
Administration Project (EPAP), US$ 10.0 million, GRTD-H 0060; the Second Emergency Public
Administration Project (SEPAP), US$8.4 million, GRTD-H 0550; and the Public Administration
Capacity Building project (PACB), US$27.0 million, GRTD-H 1440 to support the functioning
of a sound Public Finance Management (PFM) system in Afghanistan . The main objective of
these projects was to assist the Government of Afghanistan (GOA) to make good and transparent
use of public sector resources in the post conflict environment.
The PFMR project was for a period of three years. It was effective in Sep 2007 and was
supposed to end in Dec 2010; however, as per the recommendation of the WB January 2010
supervision mission to allow for completion of activity under two contracts which were
mobilized late i.e. Control and Audit Office (CAO) Advisor (PKF) contract, closing September
2011 and Treasury Advisor (Deloittes) contract closing March 2011 and request of Ministry of
Finance (MOF) to the WB so that the benchmarks under the project could be achieved, the
closing date was extended to Dec 2011.
The objectives of the PFMR Project were to: (i) develop an efficient and effective public financial
management system; and (ii) develop the human resource capacity of the MOF and CAO to
ensure better operation of public financial management. The objective of the project was well set
and continued to provide support for good progress made under the PACB project. To realize the
objective, the project had four well designed components: (i) Institutional Development, (ii)
Human Resources Capacity Development, (iii) Reform Management and (iv) Direct Operation
Support. The Reform Management Component was a new important activity that contributed a
great deal to a sound function of the PFM system through establishing and implementation of the
administrative reform in MOF, helping the MOF in strategic planning and monitoring &
evaluation of the reforms and achievements in line with the strategic plan.
The Project’s objectives and design were very supportive of the MOF/government goals for an
effective and functioning public finance management system in the country. The design of the
project and the activities and strategies determined therein were the key to an effective public
finance management system. As MOF intends to maintain both the effective public finance
management system both at central and provincial and a sound expenditure management system
to ensure fiscal sustainability, the Project directly addressed this issue and enabled MOF to
effectively manage public resources and bring reforms in the system.
The highlights of these four planned components as assessed are as below:
COMPONENTS
I. INSTITUTIONAL DEVELOPMENT
The Institutional Development Component included assistance to each of the major departments
within MOF and the CAO to develop and implement the structures, procedures and systems
required to carry out their mandates under the new Public Finance Management (PFM) legal
40
framework. Within MOF, the project assisted the Treasury Department with systems
development, assisted Procurement Policy Unit (PPU) to finish the procedures for procurement,
and assisted Internal Audit Department to develop work practice tools for government internal
audit. For the CAO, it provided them advisory services of external audit.
This component had the following sub-components.
1.1 Procurement Institutional Development and Social Accountability: This sub-component included institutional support for the newly created regulatory body, PPU.
The PPU required direct assistance to carry out its functions as per the Procurement Law. The
sub-component assisted PPU to develop an information website and a Procurement Management
Information System (PMIS). Under this sub-component, PPU was also assisted to develop SBDs,
RFPs and RFQs. The project also intended to assist PPU to develop procurement manual and
guidance notes; and to publish, analyze and disseminate review panel procedures, documentation
and decisions. About procurement accountability and disclosure, the project under this sub-
component intended to assist PPU to design an effective and strategic communication and
procurement disclosure strategy, taking into account the specific circumstances that prevail in the
country to raise awareness of the reform agenda and its implications within (i) the government
(politicians, parliamentarians, and public officials), (ii) the private sector (bidders, consultants
suppliers, etc) , and (iii) civil society at large (academia, NGOs, civilians, etc).
1.2 Treasury Systems Development and Roll-out: This sub-component included support for enhancement of the Afghanistan Financial Management
Information System (AFMIS) to meet the increasing demands on the Treasury as well as line
ministries and Mustofiats that would include purchasing, fixed asset and accounts receivable
modules as well as Human Resources Management Information System (HRMIS). It also
included support for the roll out of the AFMIS so that transaction processing and payment
authorization may be decentralized but that payment processing would remain centralized within
Treasury and the Mustofiats. The target for the roll out was five or six line ministries that
accounted for the majority of public sector non-military and non-policing functions and six
Mustofiats.
1.3 Internal Audit Work Practices: As the control of internal audit was transferred from CAO to MOF under the article# 61 of the
Public Finance and Expenditure Management (PFEM) Law and its financial regulations, the sub-
component included support for the development of the Internal Audit Department (IAD) of the
MOF. This consisted of development of improved audit methodology, further development and
roll-out of internal audit procedures and plans to the line ministries and provinces, and
improvement of the capacities of the internal audit staff through on the job training. The sub-
component also assisted with establishing a fraud investigation unit in the MOF, IAD, developing
and launching its basic operational skills and preparing a road map for developing specialist fraud
investigation processes in Afghanistan.
1.4 Supports for External Audit:
This sub-component included advisory services for the CAO to improve the skills of the audit
staff taking into consideration the reforms taking place in CAO and support in implementation of
the new audit law. It also included on the job trainings. The project would also finance improved
physical infrastructure including information & communication technology (ITC), office
furnishings and on line access to AFMIS. This sub-component also consisted of support to
establish the Parliamentary Oversight Committee (PAC) function, and reinforce and reinvigorate
the accountability of the Executive in the management of public finances to the Legislature
through a timely, comprehensive, and methodical review of audit reports and audited accounts of
the government. The CAO would provide management assistance, training, and operating support
to build the capacity of members of the parliamentary committee in their oversight function as
41
well as in supporting secretariat and technical assistance aimed at strengthening the
administrative support to the PAC.
II. HUMAN RESOURCES CAPACITY DEVELOPMENT
This component consisted of providing consultants, training opportunities and materials for the
development of skills of MOF staff, of line ministry staff in procurement and financial
management and of staff of the CAO. By MOF, it is considered to be one of the most important
strategies under the project which helped in attainment of a sustainable PFM system in the
country. This included the following sub-components.
2. 1 H.R. Capacity Development in Procurement:
In particular at sub-national level, more private sector workshops specific training programs for
the PPU staff and a training program for dispute panels
2.2 H.R. Capacity Development in Financial Management:
This sub-component would assist the MOF Treasury Department and the Administration
Departments of selected line ministries in developing staff capacity in financial management
functions. In addition to providing trainers and materials for duty specific training, for developing
a pool of staff with higher accounting skills, the project would also provide funds to reimburse
Treasury staff for attending classes conducted by private entities such as the ACCA.
2.3 H.R. Capacity Development in Audit: The project would complete the classroom training in introductory accounting and auditing that
began under the PACB project for the first batch of internal auditors of the MOF and staff of the
CAO. Additionally, a stream of internal auditors and CAO auditors intended to provide
leadership and more expert skills would be financed for advanced training. The ACCA
professional accountant training now available in Kabul could be used for this purpose for the
staff who would become senior leaders in the IAD and CAO
III. REFORM MANAGEMENT
This component consisted of the support to the Reform Implementation & Management Unit
(RIMU) of MOF in developing annual work plans which would assure the coordination of
actions proposed in various departments, monitoring implementation of these actions so that the
overall results of the project and the MOF Strategic Plan are achieved. It also included support for
RIMU in assuring that new personnel policies for the civil service being developed and supported
by the Independent Administrative Reform & Civil Service Commission (IARCSC) are properly
integrated into the MOF’s own Human Resources Management Department (HRMD). The key
sub-components under this were:
3.1.1 Targeted Restructuring of Internal MOF Business Arrangements:
The RIMU would assure that the various functions and relationships between targeted MOF
departments were organized to be mutually supporting in providing efficient PFM. It included
working of RIMU with Department Heads and staff to implement any restructuring that is
recommended and pursuing a “change management “methodology.
3.1.2 Staff Re-grading under the GOA Pay/Grading Policy:
It included support for RIMU to arrange with the IARCSC for applying the new grade and pay
policy of the government with support provided through the Civil Service Reform Project. Staff
of the MOF HRMD would be trained in creating and grading job descriptions as part of the
process.
3.1.3 Support for the HRM Department:
42
The RIMU would facilitate the strengthening the HRMD to position it to perform new personnel
management functions being developed under the GOA civil service reform strategy.
3.1.4 Preparation of New Human Resources Management Initiatives:
The MOF would be expected to make three major strategic decisions to sustain the effects of
training, pay reform, improved personnel management : (1) Initiation of “schemes of service” to
permit the MOF to be competitive in recruiting and retaining professionals; (2) Reducing the
reliance on internationally recruited technical assistance in line functions ; (3) Introducing
Gender-Sensitive Personnel Practices..
3.1.5 PFMR Project Coordination and Administration:
The RIMU would coordinate the implementation of the components of the project. It would also
coordinate through the use of the annual work plan for MOF, the implementation of the PFMR
project with the projects being financed in parallel, for example, the DFID support to the Budget
Department.
3.1.6 Monitoring and Evaluation of Results:
The RIMU would temporarily incorporate the MOF Monitoring and Evaluation Unit to assure
coherence between monitoring and evaluation of results and the development and re-development
of reform work programs.
IV DIRECT OPERATIONAL SUPPORT FOR PFM FUNCTIONS
This component consisted of assistance in providing direct operation support to PFM Functions.
Because of the limited progress in capacity building of civil service skills in PFM, there was a
need for continuing the direct operations support under a new PFM Technical Assistance
operation. It was projected that by the end of the project the nature of support needed to
procurement, treasury and audit would have evolved to that of supervision, policy advice and
assistance for reform rather for the execution of the day to day operations.
Contribution to building the skills for Afghanistan public sector was planned by two means: (i)
on the job training for civil servants, who will be acquiring basic knowledge under the HR
Development component of this project, with the direct operations consultant firms and (ii) by
including in the technical assistance teams under the direct operations support contracts a larger
share of local advisors with concrete deliverables for the transfer of knowledge and skills for the
operation of the PFM systems. It included the following sub-components:
4.1 Direct Operations Support for Procurement:
The services of a central procurement facilitation consultant at Afghanistan Reconstruction and
Development Services (ARDS) and operation support for the PPU: A different approach was
planned to be envisaged to be followed under the current proposed project, whereby the Team
Leader of the consultants’ team would be located at the ARDS and all other key staff would be
located at the line ministries. Through this modified approach, the procurement facilitating
consultant would not only be able have better interaction with the line ministries, but would also
be able to mentor the line ministries’ procurement staff. For the PPU, it included receiving
direct support through the funding of its director (an international consultant) and core staff who
were tasked with setting up the PPU and making it operational. This short term support was
planned to continue under this component to enable the PPU to begin its functions while a full
complement of local staff were being recruited and trained in all the required functions.
4.2 Direct Operations Support to Treasury Operations:
The project would continue to provide operational support for the Treasury functions through the
services of internationally recruited firms. Activities under this sub-component included:
operational support and on the job training in accounting and reporting, cash management,
43
payroll processing, grant management, payment processing operation and maintenance and
operation of AFMIS.
4.3 Direct Operations Support to External Audit:
This sub component included financing the consultant services to conduct with the CAO the
external audit of donor projects. An important objective was achieving compliance with
international standards of financial management including the use of the International Standards
of Auditing (ISAs). CAO would also make greater use of the advisor in audit of government
financial statements.
II. Assessment of Outcome of the Operation against Agreed Objectives
The objectives of the PFMR Project were to: (i) to develop an efficient and effective public
financial management system; and (ii) develop the human resource capacity of the MOF and
CAO to ensure better operation of public financial management.
The Project results were measured against 6 outcome and 34 output indicators associated with the
project objectives and components activities. Actual performance against the project indicators
and annual benchmarks under each component is satisfactory. This has resulted in significant
improvement and positive impact on MOF performance enabling it to move towards attainment
of its strategic goals and creating an enabling environment for the donor’s assistance to be
channeled through government.
Outcome Indicators
1. Coherence of treasury and revenue estimates with ANDS priorities and MTFF, 2. Timeliness
and predictability of treasury and revenue preparation and execution, 3. Number of ministries
managing some PFM functions independently with ex post control, 4 Percentage of GOA Core
Budget under improved line ministry and Mustofiat units, 5. Percentage of national payroll with
automated payroll processing, 6. Level and perception of good governance in PFM operations
Overall, the performance against the outcome indicators was satisfactory and most of the
benchmarks have been achieved except for line ministries to manage PFM functions
independently, the benchmark for which was 6 line ministries by the end of 1390.
Monthly cash plans are provided to stakeholders with accuracy of 85% on monthly projections.
The capacity of line ministries to manage independently with accountability the PFM functions
remains weak to delegate them additional PFM functions for independent implementation. Line
ministries cannot yet conduct comprehensive financial management. High rejection rate,
outsourcing of core functions to consultants, and lack of adequate internal audit in line ministries
are examples of this. All line ministries currently have access to prepare operating budget
Expense vouchers (EVs) in AFMIS (temp save). Allotments, commitments, and payments are
posted in a centralized manner in the Treasury and provincial Mustofiats.
Concerning indicator no 4, it is worth mentioning that hundred percent of operating budget
execution is captured in AFMIS on real-time transaction processing, including provincial budget
execution. For development budget transactions are recorded on real time basis in the center.
About automated payroll system, as of end of 2nd quarter 1390, more than 622,000 government
employees have been covered, out of whom 406,000 government employees receive their salaries
through direct deposit in their bank accounts, which is fifty percent of the payroll. Payrolls for the
staff having bank deposit are calculated mostly using specific systems or Excel, which comprise
over 50 percent of tashkeel.
44
Related to level and perception of donors of the good governance in PFM operations, regular
PFM assessment is going on. PFM capacity assessment in 14 line ministries has been launched to
prepare for the next steps in PFM capacity building. The PFM systems have been evolving and
new procedures implemented through capacity building and training. The donors have sponsored
PEFA assessment, which places Afghanistan higher than some other middle-income countries.
Output Indicators
1. INSTITUTIONAL DEVELOPMENT
1.1 Procurement Institutional Development & Social Accountability:
Indicators: 7.Number of line ministries and provincial offices of line ministries conducting
stand-alone procurement, 8. Volume of contracting under line ministries and provincial offices of
line ministries conducting stand-alone procurement, 9. Reviews of feedback from public
awareness campaign completed.
Performance under these indicators is rather satisfactory to MOF. End of the project benchmark
was 13 line ministries to conduct stand alone procurement. While the benchmark has yet to be
achieved, efforts are underway to realize the target. Most of the targeted line ministries couldn’t
meet the criteria for standalone procurement due to different factors such as lack of retention of
the qualified staff, lack of support of the ministries’ leadership to the procurement departments
and involvement of different actors in the procurement activities. At provincial level, six
provinces are targeted for institutional development. However, the main issues are ambiguity in
the procurement thresholds for the provinces, lack of provincial budget and inconsistency
between recent cabinet decision and procurement law regarding thresholds for the ministers and
governors.
Regarding volume of contracting, the PPU website and PMIS are developed and operationalized,
which will capture the data and provide the results. However, due to lack of cooperation, only
few ministries have started to feed data into the system. The main challenge is retention of the
trained staff in PMIS. About public awareness campaign, PPU has conducted three workshops
for the private sector. Details are as below:
Institutional development and capacity assessment for standalone procurement of six line
ministries; (Public Health, Rural Rehabilitation and Development, Agriculture, Education,
Energy & Water, Public Works and Finance) was done out of which Ministries of Education,
Agriculture and Public Health only in Consultancy Services were certified for standalone
procurement. During 3rd Quarter of 1390, Ministry of Agriculture was re-assessed for capacity
certification and report is under process. It is worth mentioning that for the institutional
development of the line ministries a Joint Advisory Committee (JAC) comprised of
representatives of PPU, IARCSC and line ministries has been constituted.
Also, the institutional development of seven more line ministries (Transportation,
Communication and IT, Counter-Narcotics, Higher Education, Urban Development, Mines and
Commerce) is under process. All seven line ministries have submitted their report on current
procurement structures with proposed procurement structure and budgetary information as was
required. PPU has worked and finalized Institutional Development report for Ministry of
Communication and IT and the rest are under finalization stage. Furthermore, capacity
45
assessment of these ministries will be done for standalone procurement after their institutional
development in addition to those which were not certified as mentioned in the first paragraph.
At provincial level, for the institutional development, six provinces (Kandahar, Herat, Balkh,
Bamyan, Nangarhar and Kunduz) are targeted for finalization of a unified Procurement structure.
PPU website (www.ppu.gov.af) and PMIS have been developed and operationalized. The
website contains important information as Public Procurement Law, Rules of Procedures,
Circulars, SBDs, RFPs, RFQs and other documents issued by PPU from time to time and it is
properly functional. Line ministries staff are trained on the usage PMIS and user name and
password have been created for them, through which they can enter the data (awarded contracts,
bidding opportunities and job announcement). However, due to lack of cooperation, only few
ministries have started to feed data into the system. Therefore, PPU technical staff are visiting
each line ministry in order to ensure that the trained staff of line ministries in PMIS are entering
data into PPU website properly and resolve any problem occurred.
Regarding public awareness campaigns, it is worth mentioning that three workshops on appeal
and review mechanism, bidding process, public procurement law, rules of procedures and
preparation of SBDs were held at Civil Service Institute, Ministry of Finance and Afghan
Builders Associations during the life of the project. In these workshops, around 150 businessmen,
suppliers and contractors participated.
1.2 Treasury Systems Development and Roll-out:
Indicators: 10. Number of ministries managing some PFM functions independently with ex post
control, 11.Number of PFM units in mustofiats which have implemented restructuring and new
processes of ADB study
Performance in line with above indicators is satisfactory, in particular the second one. The first
indicator is also part of the project agreed outcome indicator and has been redundantly used as
output indicator in the project. Additional AFMIS functions have not been added during the time-
span of the project not allowing delegating additional tasks to line ministries. The systems
development has been mostly limited to expanding the functions that could be completed by the
staff of the Treasury, while the additional functionality offered for line ministries has not been
adopted as practicable. Details of the AFMIS and progress of the 11th indicator are as below:
AFMIS connectivity, which was established for the last of 34 provinces during the early part of
FY 1389, continues to be the backbone for ensuring sound budgetary and payment controls
countrywide. These provinces have been provided with full functionality of AFMIS, including
real time posting (budget execution) and check generation for operating budget. All line
ministries in the centre have been connected to AFMIS and are performing temp save for
operating budget execution. AFMIS coverage at the centre caters to all active budget entities,
which are on the AFMIS network. The central ministries in Kabul have also been provided with
online connection with report retrieval and transaction processing capabilities. AFMIS currently
caters to capturing all the budget execution on real-time basis. The plan is to start roll out of
AFMIS to the secondary budgetary units. The initiative has been taken to begin the process in
providing AFMIS nodes to MoI in the provincial centers and the required equipment have been
setup for delivery.
Based on the assessment of the current IT environment and the envisaged improvements
necessary for supporting AFMIS setup and other treasury initiatives including Electronic
Payment systems, online revenue collections, auto reconciliation etc., the Treasury has
undertaken a program to establish a world class data center. An IT advisor under the project has
46
been supporting the data center development. The integrated and modern data center would have
the capabilities for ensuring physical and data security, besides preparing the grounds for the next
level of treasury reforms. The delay with the completion of civil works has not allowed pursuing
the implementation of the data center on schedule.
Regarding restructuring of Mustofiats, it is worth mentioning that the benchmark is 100%
achieved and all mustofiats have been restructured in line with the government pay and grading
policy. Also, implementation of the pay and grading system has been completed in all mustofiats
with around 90% progress.
1.3 Internal Audit Work Practices:
Indicators: 12. Number of professional fraud investigations conducted (assuming growth at this
stage of development) IA, 13. Number of internal audits completed in line ministries and
Mustofiats to acceptable standards.
Performance particularly with regard to the first indicator is satisfactory and the benchmarks have
been achieved. However, related to the second indicator, the internal audit of the line ministries
couldn’t be achieved to the full extent due to suspension of the article # 61 of the PFEM Law and
interference of the CAO.
Related to indicator number 12, Fraud Investigation Unit (FIU) was established in the IAD in
January 2008 (last quarter of 1386). Basic and on the job trainings were provided to the staff of
this unit and during on the job training, they investigated 4 cases, 1 in Treasury Department and 3
in Customs Department. In 1388, totally 7 cases were investigated. In 1389, 159 cases were
investigated, 82 of which were resolved via direct correspondence with the relevant officials and
the rest 77 were physically investigated by FIU. In 1390, 114 cases have been investigated up to
9th Qaws 1390. Sixty four cases were resolved via direct correspondence with the relevant
officials the concerned department and the rest 50 cases were physically investigated by FIU.
Reports of all have been submitted to the Director General IAD. Also, IT Audit Unit was
established under this IAD in Aug 2008 and much capacity development work has been done so
far. AFMIS & ASYCUDA, the two backbones Information Systems of the country, has been
audited for the first time by this unit.
Regarding internal audit of line ministries and mustofiats, mostly internal audit of MOF entities
was done both at central and sub-national levels due to suspension of article # 61 of the PFEM
law. The assigned teams have performed the audits in accordance with auditing standards and
reports were prepared and sent to the relevant entities with recommendations for improvement.
In 1387, 11 MOF entities, in 1388, 16 MOF entities, in 1389 105 MOF entities and in 1390 till
the end of the 3rd
quarter, 73 MOF entities were audited. Some special cases were also audited by
the IAD on special request of Minister’s Office. These reports were reviewed by a team of
national and international auditors in the IAD and verified that the reports are prepared at an
acceptable standards.
About internal audit of line ministries, in 1389 as per plan, 4 line ministries (Rural Rehabilitation
and Development, Energy & Water, Health, Transport and Civil Aviation) were audited. In 1390,
ten ministries were planned to audited; however, due to interference of CAO, only four lines
ministries (Agriculture, Mines, Urban Development and Information and Culture) were audited.
In addition, in 1390 the following new technical audit manuals were prepared by IAD
international advisors in consultation and involvement of the senior auditors:
47
1) Mustofiat Audit Manual
2) Revenue Audit Manual
3) Customs Audit Manual
4) Procurement Audit Manual
5) Process Audit Manual
6) Follow-up Procedure
7) Donor Funded Project Guide
8) Treasury Audit Manual
9) Budget Audit Manual
10) Post Audit Quality Review Manual
11) Fraud Investigation Manual (Revised)
1.4 Supports for External Audit:
Indicator: 14.Annual comprehensive external auditor report to parliament.
Regarding the above indicator, performance is satisfactory. External audit reports have been
submitted every 6 months to the President and Ministry of Parliamentary Affairs for onward
transmission to Parliament.
II. HUMAN RESOURCES CAPACITY DEVELOPMENT
2. 1 H.R. Capacity Development in Procurement:
Indicator: 15.Number of line ministry and Mustofiat procurement staff completing duty-specific
procurement training and accredited.
Performance under the above indicator is satisfactory. On an average basis, the number of staff to
be targeted per annum in the last four years has been 900, which has almost achieved. The
outcome of these trainings is visible. In total, 3532 staff of line ministries and mustofiats has been
trained in basic, intermediate, CIPS and advanced and special courses during 1387-1390,
indicating an average of 883 staff trained per year. Out of this, 1899 staff in basic, 750 staff in
intermediate, 218 in CIPS and advanced and 665 in special courses have been trained. This also
includes training of 732 procurement staff at provincial level (592 in basic and 140 in
intermediate courses).
The outcome of these procurement trainings has been good. In short, thanks to these trainings,
PPU can claim that procurement procedures in line ministries are being more transparent and
legal frameworks are being adhered to by procuring entities. This clearly indicates that the
capacity in line ministries is built and enhanced. The usage and implementation of SBDs,
prepared and issued by PPU is improved. Now the procuring entities in comparison to last two
three years are able to fill in the SBDs and use the evaluation forms as required. All these show
that the result of the capacity building programs are positive and worth investing on.
Type of Training 1387 1388 1389 1390 Total
Basic 546 363 507 483 1899
Intermediate 91 185 208 266 750
Special Course 183 234 173 75 665
CIPS and Advanced 94 124 218
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Total 914 906 888 824 3532
2.2 H.R. Capacity Development in Financial Management:
Indicators: 16. Number of treasury operations staff trained under duty specific program, 17.
Number of treasury operations staff given advanced level training and accredited.
Many staff of the Treasury were trained under duty specific programs and the benchmarks were
achieved. While in advanced training program, out of the of 53 Treasury employees who gave the
Certified Accounting Technician (CAT) Entrance Examination, 11 were successful and
completed the course in Sep 2011. Overall, the performance under the above indicators is
satisfactory to MOF.
In 1387, more than 500 and in 1388, more than 1300 staff of all central and provincial budgetary
units and Treasury interns were trained in the following areas.
AFMIS (Afghanistan Financial Management Information System)
Second Phase of AFMIS
New Charts of Accounts Training
Financial Reporting
Payment/Disbursement Procedures
Financial Planning and Commitment Control
Introduction to Treasury
Qatia
SDU Procedures
Results-based Management
Anti Corruption
Overview of Procurement
Taxes Relevant to Government Suppliers & Wage Withholding Tax
Training on the Computerized Payroll System CPS has been provided for 50 accounting
offices and 3 Provincial Mustofiats
In 1389, more than 700 staff and in 1390, 900 staff of Line Ministries, Provincial Mustofiats,
Line Ministries’ Controllers, Financial Officers of Mustofiats, Budget Dept and Kabul Mustofiat
were trained in the following areas:
COA, Data Entry
AFMIS Rollout Training
Problem Solving & Coordination W/Shop
COA and Budget Execution Presentation.
Financial Mgmt Framework
Workshop of ARTF , Procurement
Development Budget AFMIS Rollout training
Regarding the advanced training, 11 staff of the Treasury completed the two-year CAT program
under Audit Training Program in MOF.
In addition, it is worth mentioning that the Treasury Internship Program started in 1387 with the
purpose of creating a professional cadre which could replace Treasury technical assistance staff
supported through donors’ projects and assisting Treasury in its day to day operations at national
and sub-national levels. During the period 1387-1390, on average basis, 115 interns have been
recruited and trained per annum, around 40% of whom have been hired as civil servants in MOF
49
and line ministries PFM entities. Now, there are 157 interns in total at the Treasury, of whom 100
are working at Mustofiats.
2.3 H.R. Capacity Development in Audit:
Indicators: 18. Number of auditor staff completing and accredited by in-house program, 19.
Number of auditor staff given advanced training and accredited
Performance under the above mentioned indicators is satisfactory. The benchmarks have been
achieved. Many training programs were held and more than 800 staff were trained in the last four
years. These have resulted in greater performance of the IAD as well as CAO.
In House Program - Internal Audit
To build the capacity of the internal audit staff to conduct professional audits, MOF under
PACB Project contracted Bakhter University, earlier called Afghanistan International University
of Management Sciences (AIUMS), on an SSS basis to provide class room training in basic
accounting and auditing to 400 auditors of MOF, CAO and other line ministries in four cycles of
training. The training started in the month of Dalwa FY 1385 (Jan 2007) and completed in the
month of Sunbula FY 1387 (Sep 2008). During this period, a total of 365 government staff were
trained, of whom 92 belonged to MOF IA Dept and 32 to other MOF Depts and the rest 241
related to the CAO, Ministry of Defense, Ministry of Interior, other line ministries, Independent
Offices of the Government and officials of the local commercial banks . Out of the 365 staff, 158
of them were trained in FY 1385 and FY 1386 and 207 of them were trained in FY 1387.
In 1388, 74 staff including 27 from IAD, 37 from Treasury and 10 from other departments
received English Language training during this period. Additionally, a total of 25 staff, 24 from
IAD and 1 from another department were trained in IT.
In 1389, 10 IT Auditors and 5 other auditors were given preliminary ASYCUDA training. Also,
twenty five newly recruited auditors were given basic trainings in auditing by the senior auditor.
Furthermore, International Audit Advisor provided one month classroom training to 20 newly
recruited auditors on basic internal auditing, usage of toolkits, introduction to Revenue, Customs,
PFEM, and procurement & performance auditing. In the same year, 20 internal auditors of IAD
(10 IT auditors, 3 FIU staff & 7 internal auditors) completed specialized IT training in a private
institute within Kabul. And, fourteen internal auditors were given on the job training by US
Treasury Technical Advisors in the techniques for accomplishing an assessment, procedures for
auditing revenue processes & conducting risk assessment in line ministries. In 1390, also 14
auditors were given on the job training by US Treasury Technical Advisors in techniques for
accomplishing an assessment, procedures for auditing revenue processes & conducting risk
assessment in line ministries. They were also provided with comprehensive training of two weeks
on process auditing and internal audit toolkits effectiveness & usage.
In addition, 81 internal auditors were trained in a three-month program in the following areas.
a) Customs, Revenue & Civil Service Law,
b) Procurement law & regulations,
c) Financial Mathematics,
d) Toolkits proper usage
Also, several workshops on process auditing, process flow charting and procedure, toolkits
effectiveness and mustofiats audit manual, treasury audit manual, customs audit manual and
revenue manual was conducted for senior level auditors. The trainings were provided by
internal audit directors. A one- month training to the newly recruited auditors on the basic
50
auditing, toolkits was provided by IAD Audit Advisor. Besides, a one day comprehensive
workshop was conducted by PKF senior consultant on process auditing and more than 30 internal
auditors participated in this workshop.
For the line ministries, IAD provided training on usage of auditing toolkits, and provided on the
job training in a sample revenue audit. The training was provided only to 4 auditors of Ministry of
Information & Culture and could not be provided to other line ministries due to CAO’s
interference & objection. Work shall resume after conflict resolution between CAO & MOF.
In House - External Audit
In 1387, CAO introduced quarterly training program for 30 participants in each program. Three
such programs were completed involving 90. The program includes basic knowledge in audit and
accounts, HR related topics, English and computer courses. In 1388, two more such programs
were completed in which 54 staff were trained. The program includes basic knowledge in audit
and accounts, HR related topics, English and computer courses. The feedback of these programs
was excellent and was found to be quite useful by CAO. Further, a training program with 16
participants on audit of grants was done.
In 1389, 120 staff (30 in English, 30 in IT courses, 15 on use of excel sheet for grants audit, 15
on enterprise audit, 15 on frauds and corruption concepts, 15 on INTOSAI Auditing Standards)
were trained. In 1390, 75 (30 in English, 45 in IT courses) were trained. All these training
programs were conducted by the international consultants and were appreciated by the
participants and were useful to the auditors in carrying out their work.
Advanced Program - Internal Audit
In 1387, A firm called Oriental Consultants was hired in August 2008 to provide advanced
training in accounting and auditing to officials working in different departments of MOF. The
training called CAT started on 6 Sep 2008 and ended in Oct 2011. The first year training was
computer and English courses followed by two years of special CAT training. In total, 112 civil
servants from all MOF departments inclusive of 26 from IAD were admitted. Out of the total, 92
completed the training program in 1390.
Additionally, computer and English trainings are provided to 64 staff of MOF (24 in IT and 40 in
English) to prepare them for attending the next CAT training course in the coming year. Besides,
in 1390 two auditors have been sent to India for Certified Internal Auditor and Certified
Government Auditing Professional courses for four months. The training is conducted in
Association of Government Accounts Organizations of Asia and INGAF by Cowater
International.
CAO. In 1387, the advanced course on computer was organized for 30 staff keeping their
working as auditors in view. Three such programs were organized during the three quarters with
10 participants per program. The course included higher knowledge in MS-Word, MS-Excel and
MS-PowerPoint with some input on internet. The course was very useful. In 1388, the advanced
course on audit of grants was organized comprising of 16 participants. These participants were
also trained in advanced computer. In 1389, 20 staff was sent abroad for international training
programs i.e. 16 to India, 2 to Singapore and 2 to Turkey on various training programs on
professional courses. In 1390, 12 staff were sent abroad for international training program i.e. 9 to
India and 3 to Beijing. In addition, two study tours to European Commission and Turkey were
organized which included 10 persons from CAO.
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III. REFORM MANAGEMENT
3.1.1 Targeted Restructuring of Internal MOF Business Arrangements:
Indicator: 20. Percentage of MOF units with approved functions, reporting and accountabilities
Performance under the above indicator is satisfactory to MOF and the benchmark was 100%
achieved. Annual review of the MOF taskheel took place in line with new civil servants law and
MOF strategic plan.
The re-structuring of all MOF Departments and re-grading and revision of job descriptions for all
staff, 6100, started at the end of 1387 in line with new Civil Servants Law and pay and grading
system. A proposal was developed and submitted to IARCSC which was approved at the
beginning of 1388 and was implemented then. Also, a further review of the MOF taskheel took
place in 1388 and an addition of 680 new positions was added to it ,which went approved.
Furthermore, in 1389 the MOF taskheel was reviewed and as per the need of MOF, a number of
256 more positions with job descriptions were created. All the positions had approved functions
and reporting line. The new taskheel also included the newly established Office of the Deputy
Minister for Policy under which there are two General Directorates (Policy Execution and
Strategy Implementation). HRMD was assisted in developing new job descriptions for all the
positions within these two new departments as well. In 1390, a further review of the taskheel
took place and HRMD was assisted in restructuring it in line with MOF strategic plan. The new
MOF taskheel for 1390 reaches to 7679 positions, 9% higher than that of 1389. Assistance was
also provided in restructuring of the Customs Dept for the 1391, developing job description for
new positions as well as in revising the old job descriptions.
3.1.2 Staff Re-grading under the GOA Pay/Grading Policy:
Indicators: 21. Percentage of MOF tashkeel positions with job descriptions, qualifications and
grades assigned on 8-grade/40 pay-point system, 22.Percentage tashkeel positions in human
resource management with job descriptions, qualifications and grades assigned on the 8-
grade/40 pay-point scale; 23. Percentage of tashkeel positions level 2+ filled by re-grading and
mapping staff into 8-grade/40 pay-point system or hiring; 24. Percentage of tashkeel positions
level 3 and below filled by re-grading and mapping staff into 8-grade/40 pay-point system or
hiring
Performance under the above indicators is satisfactory. The benchmarks have been achieved
almost 90%. The bad security situation in some provinces and increased staff turnover has
impeded the pace with which the target could be achieved 100%.
Since the beginning of the program in 1388, more than 6749 MOF employees have been hired
under the Pay and Grading System accounting for 88% of the MOF total tashkeel. Progress is
88% at Headquarter, 87% at Mustofiats and 89% at Provincial Customs. As mentioned above
ongoing staff turnover and security issue in some provinces has made it difficult to achieve 100%
of the target. To date, 95% of the HRMD staff has been hired under the Pay and Grading System.
Concerning percentage of taskheel positions grade 2 plus and grade 3 and below hired under pay
and grading, it is worth mentioning that MOF has 9 grade 1 positions, 7 of which have been
filled under P&G system and there are 82 grade 2 positions, 65 of which have been filled under
P&G system. The progress is 79%. About grade 3 and below, more than 6677 MOF employees
have been hired under the Pay and Grading System accounting for 87% of the MOF total tashkeel.
3.1.3 Support for the HRM Department:
52
Indicator: 25. Number of human resource management staff completing duty-specific training in
their respective specialties (specialties approved and training conducted with IARCSC)
Performance under the above indicator is satisfactory. Many duty specific trainings were held and
all HRMD staff were trained. In addition, many other general training on HRM, pay and grading
system, civil servants law and HR policies were provided to staff of HRMD both at the
Headquarter and provinces and staff of other MOF departments. Coaching and mentoring of
HRMD staff by the RIMU team is ongoing.
At the end of 1387, totally 30 staff of HRMD were trained with assistance of IARCSC ( 20 staff
on pay and grading policy implementation here at MOF in a one-week workshop, 6 staff on
communications in a one-week workshop and 4 staff on recruitment in a four-day workshop at
IARCSC Training Center). In 1388, all staff of the HRMD received a one-month general training
on HRM with assistance of IARCSC.
In 1389, with assistance of RIMU, a two- month duty specific training was conducted for all staff
of HRMD in the areas of organization development, recruitment, performance appraisal and
record keeping, training and development and employees relations. The training started at end of
Jan 2010 and finished at the end of March 2010. Separate training sessions for each section of the
HRMD were held and each session lasted one or more than one week. Also, HRMD general
awareness trainings for MOF staff at three phases for MOF Central, Provincial and Custom staff
were provided. The main purpose of these trainings was to acquaint the MOF staff with new
HRM policies and regulations. Furthermore, various short training courses were held on
performance appraisal, time management and negotiation.
In 1390, all staff of HRMD were trained under different duty specific trainings. We have also had
trainings for sub-national level HR staff and staff of other MOF departments. Below is the list of
all the trainings conducted under PFMR project.
S/N Training Description Participants
Number of
Participants Year
1
With assistance of IARCSC, a one-week training on
P&G Policy implementation, another one week
training on communication and a four day training on
recruitment was conducted. Staff of
HRMD 30 1387
2 A one-month HRM general training including all five
areas of HRM with assistance of IARCSC.
Staff of
HRMD 70 1388
3
HRM duty specific trainings including all five areas of
HRM was conducted through AIMTIEC institute. The
duration of the training was two months.
Staff of
HRMD 70 1388
4 Outreach training program on Pay and Grading for 1-4
grade managers.
MoF other
Depts Staff 70 1389
5 Outreach training program to educate Grade 1,2,3 & 4
Managers in all Performance Appraisal activities
MoF other
Depts Staff 70 1389
6
HRMD general awareness trainings for MoF staff at
three phases for MoF Central, Provincial and Customs
staff were provided.
Staff of
HRMD and
other Depts 100 1389
7 Three Month HRM Internship program at RIMU
Staff of
HRMD 3 1389
53
8 One-day training programs on Time Management,
Communication and Negotiation has been implemented
at Customs and Revenues Depts
Staff of
Revenues &
Customs
Depts 60 1389
9 One-day training workshop on strategic plan and action
plan development was conducted.
Staff of
HRMD 70 1390
10
One-day training workshop on monitoring, evaluation
and reporting for HRMD sections heads was
conducted.
Staff of
HRMD 6 1390
11 One day workshop conducted on time management and
code of conduct for the LTO staff.
Staff of
Revenue
Dept 25 1390
12
Information session on employee relation management
and HRM policies and their implementation to
representatives of Mustofiats
Staff of
Mustofiats 34 1390
13 A two-day training workshop on coordination for
HRMD section heads
Staff of
HRMD 10 1390
14 A one-day general workshop on performance
management system was conducted for the Custom &
Revenue Departments
Staff of
Customs and
Revenue
Dept 25 1390
15 Awareness training on HRM policies was conducted to
senior level staff of the Customs & Revenue
Departments.
Staff of
Customs and
Revenue
Dept 30 1390
S/N Training Description Participants
Number of
Participants Year
16
A general workshop on advance human resources
management is conducted in Custom Academy
for one day for the provincial customs staff
Staff of
Customs Dept 60 1390
17
A five -day general workshop on advance human
resources management conducted for provincial
HR officers Staff of HRMD 70 1390
18
Advance Performance Management System (5
Modules included five separate workshops) 14
sessions of two days duration each. The training
program was successfully completed;
Participants are professionally trained to conduct
performance appraisal process as a management
tool, not only as administrative process. Staff of HRMD 20 1390
19
An orientation training program (HRM) is
conducted for Treasury Department Staff for four
days.
Staff of
Treasury Dept 30 1390
20
A one day information session on Performance
Management System is conducted for property
department staff
Staff of the
Property Dept 25 1390
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21
A half day workshop for LTO of ARD and
provincial officers on recruitment and its process
as well as on performance management was
conducted
Staff of
Revenue Dept 40 1390
22
A one-day workshop on General HRM
(recruitment, performance management, leave
policy and overseas training policy) was
conducted for the provincial LTO officer. Also, in
this event HRM policies and Induction manual
were distributed to them so they can inform their
staff in provinces.
Staff of
Revenue Dept 30 1390
23
A one-day workshop has been given to the
senior employees of CRD regarding the HRMD
newly developed policies, especially in the areas
of Merit based Recruitment, Performance
management, employee relations, leave and code
of conduct.
Staff of
Customs and
Revenue Depts 20 1390
24 A one-day workshop on Performance
Management was conducted for the MTO officers
Staff of
Revenue Dept 40 1390
25
A three- day workshop was conducted for the
MTO covering code of conduct, performance
management and change management.
Certificates were also distributed
Staff of
Revenue Dept 30 1390
Total 1038
3.1.4 Preparation of New Human Resources Management Initiatives:
Indicators: 26. Reduction of Reliance on International TA; 27.Implementation of Schemes of
Service
Performance under the above indicators is rather satisfactory. Efforts were made and a scheme
was designed, but later on it was eliminated from the project.
A PFM staff incentive program was drafted under PFMR II project, which would have assisted in
the reduction of the reliance on TA directly. However, the scheme was removed from PFMR II
project later and linked to PAR project of the IARCSC.
As far as the number of international TA consultants is concerned, it shows a reduction of 30% in
all over MOF. In July 2008, there were 80 international TA, whereas in June 2011, it reached to
56.
3.1.5 PFMR Project Coordination and Administration:
No indicators attached to this activity
3.1.6 Monitoring and Evaluation of Results:
Indicator: 28. Completed Annual Progress Review with donors covering results, modifications
and follow-on work program
Performance under the above indicator is satisfactory. A results-based monitoring and evaluation
system was developed all over the MOF. Reviews were conducted and reports were produced.
MOF strategic plan was reviewed and updated, which went approved by HE Finance Minister.
As part of the MOF strategic plan, monitoring and evaluation (M&E) framework was developed
in line with MOF strategic goals and objectives. Baseline, indicators and annual benchmarks were
55
set and performance monitoring plan was developed. Templates were made to capture data in line
with indicators and annual benchmarks. A network of M&E (a group of 15 persons) was
established all over the ministry. And on the job trainings were provided to them. M&E manual
was developed. The mechanism was put into place and quarterly, semiannual and annual
performance monitoring and reviews were conducted and reports were prepared and submitted to
MOF leadership.
Also, annual performance review events were organized in 1388, 1389 and 1390. These
gatherings were led by MOF top management and chaired by HE Finance Minister with
participation of MOF senior staff from Headquarter and provinces. In these events, annual
performance was reviewed, problems, issues and recommendations were discussed and reports on
the implementation of the recommendations were presented.
Furthermore, monitoring of the MOF Technical Assistance (TA) projects and individual
consultants takes place twice a year and summary reports are prepared and submitted to MOF
leadership.
IV DIRECT OPERATIONAL SUPPORT FOR PFM FUNCTIONS:
4.1 Direct Operations Support for Procurement:
Indicators: 29. Percentages of contracts subject to competitive bidding; 30. Absence of major
delays in processing and payment of contracts; 31. Comparability of prices paid by public sector
to pricing items available in the market price; 32.Regular publication of opportunity and
outcomes of public contracts
Performance under these indicators is fairly good. This is due to the fact that the PMIS has
recently been established and operationalized and feeding data into the system has just started.
Therefore, analysis of the data to provide thorough information on these indicators is not
available.
The facilities for announcement of bidding opportunity, registered bidders and award of contract
are created and publications of bidding and job opportunity as well as outcome of awarded
contracts are commenced. All bidding opportunities and job announcement and outcome of
awarded contracts by line ministries will be published through PPU website and the process has
started. MOF, MRRD and MoE have the major contribution in publication of outcomes of public
contracts.
By ARDS, publication of all procurement opportunities is being done 100% on ARDS website
and also in local newspapers. Publication of outcome of all public contracts which are processed
through ARDS is 100% on ARDS website.
4.2 Direct Operations Support to Treasury Operations: Indicators: 33.Timeliness and regularity of data reconciliation; 34. Timeliness, quality and
dissemination of in-year budget execution reports, 35. Timeliness and quality of annual financial
statements submitted to the legislature and donors, 36. Effectiveness of cash flow planning,
management, and monitoring, 37. Evidence that budgeted resources reach spending units in a
timely and transparent manner.
Performance under above indicators is satisfactory and the benchmarks were achieved.
Bank reconciliations are completed within 20 days from month end for operating budget.
Monthly financial statements are posted on Treasury website within 25 days from end of each
month. Audited Qatia statements are submitted to National Assembly on 22nd Sep. Audited WB
56
grant and loan statements are submitted to the WB on 22nd Sep. Monthly cash plans are provided
to stakeholders with accuracy of 85% on monthly projections. And, more than 90% operating
budget payments are processed within 2 working days from receipt. Actual cash flows are within
85 percent range from the projections developed at the end of the fiscal year and tabled for the
Cash Management Committee. Budgeted resources are allocated based on decisions by line
ministries. Pilots for preparing financial plans to improve the resource allocation have been
conducted and the launch of allotments based on the financial plans for the operating budget is
under preparation.
4.3 Direct Operations Support to External Audit: Indicators: 38. Timeliness and quality of audited financial statements submitted to the legislature
and donors. 39. Standards to which project audits is conducted. 40. Follow-up of audit reports by
the executive or audited entity
Benchmarks have been achieved and performance is satisfactory.
WB Audit Reports have been submitted within 6 months and the audits are done as per the
International Standards with financial statements IPS as compliant. The status of follow up is also
included in the next audit report.
III. Borrower’s Own Performance, Emphasizing Lessons Learned
The Ministry of Finance through its office of the Deputy Minister for Administration provided
full support to implementation of the Project. The Steering Committee of the Project, the leading
body, was formed in Sep 2007 chaired by HE Deputy Minister for Administration. Members of
the Steering Committee were Heads of Treasury, Internal Audit, PPU, RIMU, ARDS of
Ministry of Economy and a representative of the CAO. This Committee was a successor to the
advisory committee overseeing the PACB Project.
Later, in Jan 2011 the Steering Committee leadership was delegated to the Deputy Minister for
Finance and same support was continued to the project implementation under the office of the
Deputy Minister for Finance. The Steering Committee led, oversaw and assisted project
implementation. Throughout life of the project, 11 Steering Committee meetings were held
which created synergy and kept the momentum.
The Reform Implementation and Management Unit provided secretariat support to the Steering
Committee and handled the coordination and monitoring activities of the Project, which well
contributed to the Project effectiveness. This or such set up could be used for handling other
Technical Assistance Projects in the Ministry in the similar way for an effective project
management
The Ministry of Finance did its best to ensure smooth running of the Project as the execution of it
was important for many objectives of the Ministry Strategic Plan to be attained. The way the
Project was managed both by the MOF and the WB was a great example of good governance,
which needs to be considered in the implementation of the other Technical Assistance Project in
the Ministry.
Key lessons learned:
- Supporting Role of the Consultant: The consultants under the project played mostly a
supporting role not an executive role which is a good example to be followed at MOF by
other TA projects.
57
- Working together with Civil Servants: Most of the consultants under the project
worked together with civil servants. This was an important mechanism for transfer of
capacity and sustainability of the project.
- Close Monitoring of the Consultant by the Client: The implementing department
closely monitored the performance of the consultants and ensured that the set benchmarks
are achieved effectively and in a timely fashion.
- Trainings as per the Needs of the Departments: Most training programs under the
project were carefully selected based on the assessments done. This enhanced the
effectiveness of the project outcomes.
- Capacity Building, One of the Most Important Activities: As mentioned above, the
project had a great capacity building program in the areas of Financial Management,
Procurement, Audit and HRM with tangible results. This needs to be further supported
under the next intervention of the WB.
- Central Coordination Body: The project was coordinated by a central body, RIMU.
RIMU mostly served as a one point contact between the WB and the implementing
departments. This arrangement enhanced efficiency and effectiveness of the project.
IV. Performance of the Bank
The WB provided full support and assistance to implementation of the Project. The WB
Supervision Missions took place and provided technical inputs and recommendations to the
project which brought improvements to the project implementation. The cooperation and
assistance of the project task team leader, Mr. Paul Sisk, was outstanding. His technical inputs
and support contributed very positively to the Project’s effectiveness. Timely response to MOF
requests for NOLs and ad hoc visits and meetings of Mr. Paul Sisk with implementing units on
different issues are few examples of this. During life of the project, workshops on procurement
and financial issues were held by the WB for the project staff. These workshops were effective as
direct interaction took place between the WB and project staff on solving different issues.
The Ministry of Finance highly appreciates the WB in general and Mr. Paul Sisk in particular for
their great contribution and support to MOF.
V. Assessment Technical, Institutional, and Financial Sustainability of Activities Initiated
under the Project after Project Closure
The activities initiated under the project are sustainable to a great extent. In Treasury
Department HQ, there are only 4 expatriates and 32 national consultants as compared to 569
Treasury Civil Servants. And the whole system is mostly run and led by the civil servants.
Similarly, in the Internal Audit Department, there are only 4 expatriates and 12 national
consultants as compared to 169 civil servants.
This relatively low presence of the TA staff in the Treasury and Internal Audit Departments, to
some extent, is an indication of the technical, institutional and financial sustainability of the
activities initiated under the project. However, still there is long way to go and to build adequate
58
PFM capacity in particular in line ministries and at sub-national level. Similarly, in the field of
procurement, while much has been done, the Procurement Policy Unit is run by the consultants
hired under the Project and procurement facilitation support is provided to line ministries by
ARDS at Ministry of Economy. To date, as indicated by PPU capacity assessment report, only
three ministries (Education, Agriculture and Public Health only in Consultancy Services) are
certified for standalone procurement. Institutional development and capacity building of line
ministries procurement entities is underway and needs further support. But, the main issue is
retention of the qualified staff. Once the capacity of civil servants is built, they quit and find jobs
with NGOs and donor agencies with higher pay scale. The government pay and grading system
pays relatively more than the previous system; however; still the pay scale is much lower than the
salaries offered by NGOS and donor agencies. And, qualified staff cannot be retained with such
low payment scheme.
Therefore, in order for an adequate capacity to be built in PFM, audit and procurement areas in
national and sub-national levels, we need to build upon good progress made under PFMR project.
The WB and MOF together have realized this need and investment operation continues under the
Second Public Finance Management Reform Project administered by the WB.
Methodology
The Borrower’s Evaluation of the PFMR Project included:
I. Review and examination of the below documents:
Project Technical Annex , 30 April 2007
Project Performance Monitoring Reports 1387,1388,1389 and 1390
Project Steering Committees Meetings Minutes
Aide Memoire Jan 2010
Project Second Quarter Interim Unaudited Financial Monitoring Report,1390
II. Interview and Discussion with:
Mr. Mohammad Aqa, Director General Treasury
Mr. Janis Platais, Chief of Party, Deloitte, Treasury Department
Mr. Mohammad Tamim Shahimy, Training Coordinator, Treasury Department
Mr. Mahmood Qadri, Acting Director General Internal Audit
Mr. Sayed Murtaza, Head of PPU
Mr. Anwar Raufi, Procurement Analyst, PPU
59
Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders
USAID – Kabul
Overall, the report was honest about the successes and shortcomings of the project. There may
need to be more talk about the political economy and how that has affected the outcomes of the
project.
Legal framework: The project did provide guidance and help towards the drafting of the Audit
Act, however since it is still being discussed in parliament and has been since 2002, there may
need to be a concentration of resources elsewhere.
Audit: Progress has been made with the CAO through the provision of technical assistance.
There is more need for more auditors to be trained in international accounting standards, however
the reliance on legislation in order to improve the functions and capabilities of the CAO and
Internal Audit is a sticking point moving forward.
Procurement: The help to the Procurement Policy Unit to train officials in procurement
certification is notable. Increased transparency on contracts awarded is also a welcome
development. However even given the help that was provided, the execution rates of line
ministries are still considered to be low.
Shortcomings: The ICR notes that the number of local consultants increased and international
consultants decreased. The issue of well-paying tashkheel positions and skilled people to fill
them remains a key issue to be addressed. The projects reliance on changes in the legislation law
may have impeded progress in some of the projects work. There should be some discussion about
the risk that project successes may be lost if GIRoA staff leave.
Recommendations: Given the concentration that USAID has placed on public financial
management reform, more coordination is needed between the World Bank and USAID and other
donors. USAID recommends that with the release of this report if the donor community should
set up a PFM working group to enhance donor coordination
DFID – Kabul
Clearly a significant amount has been achieved in the areas covered over the life of the project in
often very difficult circumstances. It does appear however that only two or three out of the seven
PDO indicators were fully met so some explanation of the satisfactory rating could be added to
the document.
IMF – Fiscal Affairs Dept.
The report discusses in detail the project deliverables/outputs, their current status, etc., and could
usefully include a brief executive summary clearly indicating the overall project outcome in
concrete terms and the specific challenges that remain. This would be extremely useful for the
reader so as to get a sense of these while reading the various chapters of the report, which contain
some repetitive discussions partly due to the design of project components with overlapping
objectives (e.g. the objectives of components 2.2 and 4.2 overlap) and the description of
outcomes/achievements in general terms (e.g., “satisfactory”, “of acceptable quality”, etc.).
60
Annex 9. List of Supporting Documents
Project Implementation Plan
Technical Annex: Afghanistan Public Financial Management Reform Project, dated April
30, 2007 (Report No: T7697-AF)
Aide Memoires, Back-to-Office Reports, and Implementation Status Reports.
Project Progress Reports.
Borrower's Evaluation Report dated January 2012
*including electronic files